University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Harper Center HC431

For appointments please contact:
Jessica Henderson
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637


I study the interaction between public policy and corporate behavior, with a focus on fiscal stimulus, taxation, and housing policy. My research draws insights from finance and behavioral economics while using a variety of methods: new data, natural experiments, theory, and anecdotal exploration. I'm particularly interested in the problems that small and medium-sized private firms and new ventures face, from the perspective of owners, investors, managers, and workers. A secondary area of interest concerns the role of bounded rationality and imperfect information in the design of policies that promote behavior change. This work focuses on determinants of habit formation in health and workforce productivity settings.

I earned a Ph.D. and M.A. in business economics from Harvard University and a B.A. in economics and mathematics with high honors from Swarthmore College. Prior to grad school, I worked as a research assistant at the National Bureau of Economic Research and as a web and software developer for several start-ups and non-profits. In college, I captained the golf team and played lead guitar in a very mediocre rock band called Paul and the Bond Squad. After college, I played in a better band called The Horse Latitudes.

For more information, please see my CV.


Working Papers
  • Did the Paycheck Protection Program Hit the Target?
    (with João Granja, Constantine Yannelis, and Christos Makridis), Journal of Financial Economics, R&R.
    Manuscript (09/2021) | Prior Version (7/2020) | Prior Version (4/2020) | NBER #27095

    Abstract: This paper provides a comprehensive assessment of financial intermediation and the economic effects of the Paycheck Protection Program (PPP), a large and novel small busi- ness support program that was part of the initial policy response to the COVID-19 pandemic in the US. We use loan-level microdata for all PPP loans and high-frequency administrative employment data to present three main findings. First, banks played an important role in mediating program targeting, which helps explain why some funds initially flowed to regions that were less adversely affected by the pandemic. Second, we exploit regional het- erogeneity in lending relationships and individual firm-loan matched data to study the role of banks in explaining the employment effects of the PPP. We find the short- and medium- term employment effects of the program were small compared to the program’s size. Third, many firms used the loans to make non-payroll fixed payments and build up savings buffers, which can account for small employment effects and likely reflects precautionary motives in the face of heightened uncertainty. Limited targeting in terms of who was eligible likely also led to many inframarginal firms receiving funds and to a low correlation between regional PPP funding and shock severity. Our findings illustrate how business liquidity support programs affect firm behavior and local economic activity, and how policy trans- mission depends on the agents delegated to deploy it.

  • Top Wealth in America: New Estimates and Implications for Taxing the Rich
    (with Matthew Smith and Owen Zidar)
    Manuscript (10/2021) | Reply to SZ (10/2021)

    Abstract: This paper uses administrative tax data to estimate top wealth in the United States. We assemble new data that links people to their sources of capital income and develop new methods to estimate the degree of return heterogeneity within asset classes. Disaggregated fixed income data reveal that rich individuals earn much more of their interest income in higher-yielding forms, and have much greater exposure to credit risk. Consequently, in recent years, the interest rate on fixed income at the top is approximately three times higher than the average. Using firm-level characteristics to value firms, we find that twenty percent of total pass-through business wealth accrues to those with losses. We combine this new data on fixed income and pass-through business returns with refined estimates of C-corporation equity, housing, and pension wealth to deliver new capitalized wealth estimates. Our approach, which builds on Saez and Zucman (2016) and Bricker, Henriques, and Hansen (2018), reduces bias because wealth and rates of return are correlated. From 1989 to 2016, the top 1%, 0.1%, and 0.01% wealth shares increased by 7.6, 5.1, and 3.0 percentage points, respectively, to 31.5%, 15.0%, and 7.0%. While these changes are less dramatic than some prior estimates, wealth is very concentrated: the top 1% holds nearly as much wealth as either the bottom 90% or the "P90-99" class. We discuss implications for income inequality measures, capital tax policy, and savings behavior.

  • Is Attention Produced Rationally?
    (with Erin Bronchetti, Judd Kessler, Ellen Magenheim, and Dmitry Taubinsky)
    Manuscript (6/2020) | NBER #27443

    Abstract: A large and growing literature shows that attention-increasing interventions, such as reminders and planning prompts, can promote important behaviors. This paper develops a method to investigate whether people value attention-increasing tools rationally. We characterize how the demand for attention improvements must vary with the pecuniary incentive to be attentive and develop quantitative tests of rational inattention that we deploy in two experiments. The first is an experiment with an online education platform run in the field (n=1,373), in which we randomize incentives to complete course modules and incentives to make plans to complete the modules. The second is an online survey-completion experiment (n=944), in which we randomize incentives to complete a survey three weeks later and the price of reminders to complete the survey. In both experiments, as incentives to complete a task increase, demand for attention-improving technologies also increases. However, our tests suggest that the increase in demand for attention improvements is too small relative to the null of full rationality, indicating that people underuse attention-increasing tools. In our second experiment, we estimate that individuals undervalue the benefits of reminders by 59%.

  • Speculative Dynamics of Prices and Volume
    (with Anthony A. DeFusco and Charles G. Nathanson), Journal of Financial Economics, R&R.
    Manuscript (11/2021) | NBER #23449

    Abstract: Using data on 50 million home sales from the recent U.S. housing cycle, we document that much of the variation in volume came from the rise and fall in short-term speculation. Cities with larger speculative booms have larger price cycles, sharper increases in unsold listings as the market turns, and more eventual foreclosures. We present a model in which predictable price increases endogenously attract short-term buyers more than long-term buyers. Short-term buyers amplify volume by selling faster and destabilize prices through positive feedback. Our model matches key aggregate patterns, including the lead-lag price-volume relation and a sharp rise in inventories.

Heavily Refereed Papers
  • The Rise of Pass-Throughs and the Decline of the Labor Share
    (with Matthew Smith, Danny Yagan, and Owen Zidar), American Economic Review: Insights, Forthcoming.
    Manuscript (11/2021) | Prior Version (12/2019)

    Abstract: We study the coevolution of the fall in the U.S. corporate-sector labor share and the rise of business activity in tax-preferred pass-throughs. We find that reallocating activity to the form it would have taken prior to the Tax Reform Act of 1986 accounts for one third of the decline in the corporate-sector labor share between 1978 and 2017. Our adjustments are concentrated among mid-market firms in services, magnifying the role of the manufacturing sector and superstar firms in driving the remaining decline in the labor share. Our findings highlight the importance of tax policy when measuring factor shares.

  • Tax Policy and Abnormal Investment Behavior
    (with Qiping Xu), Journal of Finance, Forthcoming.
    Manuscript (2/2021) | NBER #27363 | Slides

    Abstract: This paper documents tax-minimizing investment, in which firms tilt capital purchases toward fiscal year-end to reduce taxes. Between 1984 and 2013, average investment in fiscal Q4 exceeds the average of fiscal Q1 through Q3 by 37%. Q4 spikes occur in the U.S. and internationally. Research designs using variation in firm tax positions and the 1986 Tax Reform Act show that tax minimization causes spikes. Spikes increase when firms face financial constraints or higher option values of waiting until fiscal year-end. We develop an investment model with tax asymmetries to rationalize these patterns. Models without purchase-year, tax-minimization motives are unlikely to fit the data.
        Replaces "Kinky Tax Policy and Abnormal Investment Behavior"

    • Charles River Associates Award for Best Corporate Finance Paper, WFA, 6/2017
    • Best Conference Paper Award, Colorado Finance Summit, 1/2017
  • The Costs of Corporate Tax Complexity
    American Economic Journal: Economic Policy, 13(2): 467-500, 2021.
    Manuscript | Online Appendix | NBER #24382 | Replication Code

    Abstract: Does tax code complexity alter corporate behavior? We investigate this question by studying the decision to claim refunds for tax losses. In a sample of 1.2M observations from the population of corporate tax returns, only 37 percent of eligible firms claim their refund. A simple cost-benefit analysis of the tax loss choice cannot explain low take-up, motivating an exploration of how complexity alters this calculation. Research designs exploiting tax preparer switches, deaths, and relocations show that sophisticated preparers increase claim rates for small firms. Imperfect take-up has implications for measuring marginal tax rates and for the design of fiscal policy.
        Replaces "The Role of Experts in Fiscal Policy Transmission" and "Do Experts Help Firms Optimize?"

  • Stimulating Housing Markets
    (with David Berger and Nicholas Turner), Journal of Finance, 75(1): 277-321, 2020.
    Manuscript | Online Appendix | NBER #22903 | FTHC Exposure Data | Replication Code & Data

    Abstract: We study temporary fiscal stimulus designed to support distressed housing markets by inducing demand from buyers in the private market. Using difference-in-differences and regression kink research designs, we find the First-Time Homebuyer Credit increased home sales by 490,000 (9.8%), median home prices by $2,400 (1.1%) per standard deviation increase in program exposure, and the transition rate into homeownership by 53%. The policy response did not reverse immediately. Instead, demand comes from several years in the future: induced buyers were three years younger in 2009 than typical first-time buyers. The program’s market-stabilizing benefits likely exceeded its direct stimulus effects.

  • Capitalists in the Twenty-First Century
    (with Matthew Smith, Danny Yagan, and Owen Zidar), Quarterly Journal of Economics, 134: 1675-1745, 2019.
    Manuscript | Online Appendix | NBER #25442

    Abstract: How important is human capital at the top of the U.S. income distribution? A primary source of top income is private "pass-through" business profit, which can include entrepreneurial labor income for tax reasons. This paper asks whether top pass-through profit mostly reflects human capital, defined as all inalienable factors embodied in business owners, rather than financial capital. Tax data linking 11 million firms to their owners show that top pass-through profit accrues to working-age owners of closely-held, mid-market firms in skill-intensive industries. Pass-through profit falls by three-quarters after owner retirement or premature death. Classifying three-quarters of pass-through profit as human capital income, we find that the typical top earner derives most of her income from human capital, not financial capital. Growth in passthrough profit is explained by both rising productivity and a rising share of value added accruing to owners.

  • Arrested Development: Theory and Evidence of Supply-Side Speculation in the Housing Market
    (with Charles Nathanson), Journal of Finance, 73(6): 2587-2633, 2018.
    Manuscript | Online Appendix | NBER #23030 | Homebuilder Data | Replication Code & Data

    Abstract: This paper studies the role of disagreement in amplifying housing cycles. Speculation is easier in the land market than in the housing market due to frictions that make renting less efficient than owner-occupancy. As a result, undeveloped land both facilitates construction and intensifies the speculation that causes booms and busts in house prices. This observation reverses the standard intuition that cities where construction is easier experience smaller house price booms. It also can explain why the largest house price booms in the United States between 2000 and 2006 occurred in areas with elastic housing supply.

  • Tax Policy and Heterogeneous Investment Behavior
    (with James Mahon), American Economic Review, 107(1): 217-48, 2017.
    Manuscript | Online Appendix | Slides | NBER #21876 | Industry Exposure Data | Replication Code

    Abstract: We estimate the effect of temporary tax incentives on equipment investment using shifts in accelerated depreciation. Analyzing data for over 120,000 firms, we present three findings. First, bonus depreciation raised investment in eligible capital relative to ineligible capital by 10.4% between 2001 and 2004 and 16.9% between 2008 and 2010. Second, small firms respond 95% more than big firms. Third, firms respond strongly when the policy generates immediate cash flows but not when cash flows only come in the future. This heterogeneity materially affects investment-weighted estimates and supports models in which financial frictions or fixed costs amplify investment responses.
        Replaces "Do Financial Frictions Amplify Fiscal Policy? Evidence from Business Investment Stimulus"

    • Best Paper at Oxford Centre for Business Taxation Doctoral Conference, 9/2013
  • Opting Out of Good Governance
    (with C. Fritz Foley, Paul Goldsmith-Pinkham, and Jonathan Greenstein), Journal of Empirical Finance, 46, 93-110, 2018.
    Manuscript | NBER #19953

    Abstract: Cross-listing on a U.S. exchange does not bond foreign firms to follow the corporate governance rules of that exchange. Hand-collected data show that 80% of cross-listed firms opt out of at least one exchange governance rule. Relative to firms that comply, firms that opt out have a smaller share of independent directors. Cross-listed firms opt out more when coming from countries with weak corporate governance rules, but if firms based in such countries are growing and have a need for external finance, they are more likely to comply. For firms in such countries, opting out also lower valuations, decreases the value of cash holdings, and reduces investment sensitivity to market valuations.

Lightly Refereed Papers
  • Business Continuity Insurance in the Next Disaster
    (with Sam Hanson and Adi Sunderam), in Rebuilding the Post-Pandemic Economy, ed. Melissa S. Kearney and Amy Ganz, Aspen Institute Press, 2021.
    Manuscript (12/2021)

    Abstract: This article draws lessons from the business support policies pursued in the COVID-19 pandemic to guide policy design for the next disaster. We contrast the performance of the Paycheck Protection Program to the Main Street Lending Program to illustrate how design principles—targeting, repayment terms, and deployment through the banks versus government agencies—affect policy outcomes. We develop a framework for understanding why a novel business support policy could usefully complement traditional support programs. One surprising insight that emerges from this analysis is that many of the market failures used to justify support during the pandemic also arise in "garden-variety" recessions. Given our framework, the policy case for small-business support during the recovery is considerably weaker than during the disaster, though credit policies that promote firm entry could aid the reallocation process.

  • Rethinking How We Score Capital Gains Tax Reform
    (with Natasha Sarin, Lawrence H. Summers, and Owen Zidar), Tax Policy and the Economy, Forthcoming.
    Manuscript (11/2021) | NBER #28362

    Abstract: We argue the revenue potential from increasing tax rates on capital gains may be substantially greater than previously understood. First, many prior studies focus primarily on short-run taxpayer responses, and so miss revenue from gains that are deferred when rates change. Second, the rise of pass-throughs and index funds has shifted the composition of capital gains in recent years, such that the share of gains that are highly elastic to the tax rate has likely declined. If some components are less elastic, then their elasticity should get more weight when scoring big changes because they will comprise more of the remaining tax base. Third, closer parity to income rates would provide a backstop to rest of tax system. Fourth, additional base-broadening reforms, like eliminating stepped-up basis, making charitable giving a realization event, reforming donor advised funds, and limiting opportunity zones to places with the highest poverty rates, will decrease the elasticity of the tax base to rate changes. Overall, we do not think the prevailing assumption of many in the scorekeeping community—that raising rates to top ordinary income levels would raise little revenue—is warranted. A crude calculation illustrates that raising capital gains rates to ordinary income levels could raise hundreds of billions more revenue over a decade than other leading estimates suggest.

  • Business Incomes at the Top
    (with Wojciech Kopczuk), Journal of Economic Perspectives, 34(4), 27-51, 2020.
    Manuscript | NBER #27752

    Abstract: Business income constitutes a large and increasing share of income and wealth at the top of the distribution. We discuss how tax policy treats and shapes how businesses are organized and how they distribute economic gains to owners, with the focus on closely-held and pass-through firms. These considerations influence whether and how labor and capital income is observed in economic data and feed into research controversies regarding the measurement of inequality and the progressivity of the tax code. We discuss the importance of these issues in the US, and highlight that limited evidence from other countries suggests that they are likely to be important elsewhere.

  • Business Credit Programs in the Pandemic Era
    (with Sam Hanson, Jeremy Stein, and Adi Sunderam), Brookings Papers on Economic Activity, Fall Issue, 3-60, 2020.
    Manuscript (10/2020) | Slides

    Abstract: We develop a pair of models that speak to the goals and design of the sort of business-lending and corporate-bond purchase programs that have been introduced by governments in response to the ongoing COVID-19 pandemic. An overarching theme is that, in contrast to the classic lender-of-last-resort thinking that underpinned much of the response to the 2007–2009 global financial crisis, an effective policy response to the pandemic will require the government to accept the prospect of significant losses on credit extended to private sector firms.

  • Business in the United States: Who Owns It and How Much Tax Do They Pay?
    (with Michael Cooper, John McClelland, James Pearce, Richard Prisinzano, Joseph Sullivan, Danny Yagan, and Owen Zidar), Tax Policy and the Economy, 30(1), 91-128, 2016.
    Manuscript | Slides | NBER #21651 | Data

    Abstract: "Pass-through" businesses like partnerships and S-corporations now generate over half of U.S. business income and account for over half of the post-1980 rise in the top-1% income share. We use administrative tax data from 2011 to identify pass-through business owners and estimate how much tax they pay. We present three findings. (1) Relative to traditional business income, pass-through business income is substantially more concentrated among high-earners. (2) Partnership ownership is opaque: 20% of the income goes to unclassifiable partners, and 15% of the income is earned in circularly owned partnerships. (3) The average federal income tax rate on U.S. pass-through business income is 19%—much lower than the average rate on traditional corporations. If pass-through activity had remained at 1980's low level, strong but straightforward assumptions imply that the 2011 average U.S. tax rate on total U.S. business income would have been 28% rather than 24%, and tax revenue would have been at least $100 billion higher.

Other Writing
Unpublished Papers
  • Regulators vs. Zombies: Loss Overhang and Lending in a Long Slump
    (Manuscript available upon request)

    Abstract: Why are economic recoveries following financial crises so sluggish? This paper presents micro-level evidence that, in the recovery from the U.S. Great Recession, loss overhang in the banking sector restricted lending and slowed growth. Zombie banks suffer from a debt overhang problem caused by unrealized losses on past loans. To deter regulatory action, zombies restrict new lending in healthy categories, prop up lending in unhealthy categories, and overallocate to safe, liquid assets. FDIC-induced failures allow zombies to hive off bad loans and as a result lending resumes post resolution. In the slump that began in the United States in 2007, limited FDIC liquidity and manpower prevented it from a timely reboot of all zombie balance sheets. As a consequence, counties afflicted with unhealed zombies displayed a slower recovery in employment, even in tradable goods industries less subject to local demand conditions.


Public Goods


While in grad school, I participated in a few panels on grad student life. I condensed my notes and the wisdom of many wonderful advisers into these one-page HOWTOs. People have found them useful, or at least amusing. They are living documents, so constructive comments are very welcome.

The Twelve Step Program for Grad School
A guide to doing research and finishing. (8/2013)

How I Learned to Stop Worrying and Love the Job Market
A survival strategy for the job market. (4/2014)

A Graph is Worth a Thousand Citations
A guide to making graphs for my students. (5/2021)


New Directions in Business Tax Research
Short course prepared for National Tax Association meeting, sponsored by the Michigan Office of Tax Policy Research. (11/2018)

Tax Reform in the United States: Known Unknowns and Unknown Unknowns
Lecture on state of knowledge surrounding tax reform prepared for students and alumni at Chicago Booth's Initiative on Global Markets Scholes Forum. (11/2018)


This is a bibliography style file designed to fight the scourge of alphabetical discrimination by ridding working papers of the "et al" abbreviation. Danny Yagan is the architect. Replace your .bst file with this file to spell out the first ten names in an author list.

Heatmaps for Economic Analysis
This is a Stata wrapper for the R module that produces heatmap visualizations. TianFang (Tom) Cui is the project architect. For an example heatmap applied to a difference-in-differences research design, see Figure 5 in Stimulating Housing Markets. (10/2016)
Github Repository | Slides | Package as .zip

Web Calculator for Optimal Mortgage Refinancing
A supplement to NBER #13487 by Agarwal, Driscoll, and Laibson. (10/2007)