Faroukawal

Working Papers

Universal Basic Income in an Entrepreneurial Economy (with Aamir Rafique Hashmi)

Job Market Paper

Abstract

Entrepreneurs play an outsize role in capital accumulation and wealth creation, yet the macroeconomic literature on universal basic income (UBI) abstracts from entrepreneurial dynamics. We extend a heterogeneous-agent model with entrepreneurship and wealth, calibrated to the U.S. economy, to evaluate the long-run effects of a $10,000 annual UBI. The policy reduces welfare by 6.2% in consumption-equivalent terms and requires additional government expenditure of 7.8% of GDP, financed through a 43% proportional increase in income taxation. While UBI substantially reduces inequality, it depresses capital accumulation and entrepreneurial investment, leading to lower aggregate output. Distributional effects are heterogeneous: workers, retirees, and non-college households gain, whereas entrepreneurs and college-educated households lose. These results are robust to alternative calibrations and asset-tax financing. In contrast, consumption-tax financing preserves capital formation and generates welfare gains.

2. Closing or Widening? Parental Leave and the Gender Gap in Childcare

(Revise & Resubmit, Canadian Public Policy/Analyse de politiques)

Abstract

I examine the impact of Quebec’s parental leave reform, which replaced the federal program and introduced higher wage replacement rates along with a non-transferable “father quota,” on parents’ leave take-up, planned childcare arrangements, and the timing of mothers’ return to work. As opposed to fathers’ caregiving hours, I emphasize shared parenting by analyzing parents’ planned childcare arrangements following mothers’ return to work. Using a difference-in-differences approach and a combination of administrative and survey data, I find that the reform increased fathers’ leave take-up by 48 percentage points. In contrast, it reduced the share of parents planning to share childcare by 4 percentage points and increased reliance on relatives and friends. The increase in fathers’ participation reflects both the labeling of the quota and household complementarities, including mothers’ preferences to remain at home. The reform had no effect on the timing of mothers’ return to work.

Work in Progress

Universal Basic Wealth (with Aamir Rafique Hashmi)

In this paper, we study the macroeconomic and distributional effects of Universal Basic Wealth (UBW), a policy that provides individuals with a one-time capital endowment in early adulthood, as an alternative to recurring universal basic income (UBI). Using a heterogeneous-agent overlapping generations model with endogenous college, labor supply, fertility, retirement, and entrepreneurial choice, the paper examines how UBW interacts with individual lifecycle behavior under earnings risk, borrowing constraints, and wealth inequality. The analysis quantifies the impact of UBW on occupational mobility, human capital investment, household formation, welfare, and inequality. Despite its conceptual similarity to UBI, the preliminary findings show that UBW produces distinct patterns of capital accumulation and welfare gains that vary across the wealth and ability distribution.

The Effect of Maternity and Parental Leave on Mothers' Coworkers and Firms

In this paper, I examine how maternity and parental leave policies affect the coworkers and firms of mothers who take leave. Using linked employer–employee administrative data, the paper analyzes how firms adjust labor inputs during and after leave spells, including internal reallocation, external hiring, and changes in wage bills. The analysis also investigates whether extended or generous leave policies lead to statistical discrimination against women of childbearing age, particularly in firms with limited internal substitutability. By focusing on the post-leave period, the study captures the often-overlooked frictions that arise when replacement workers remain on payroll, affecting firm costs and coworker outcomes. The findings aim to inform the broader debate on the unintended consequences of family policy and provide new evidence on workplace dynamics, gender equity, and the labor market effects of caregiving-related absences.

Publication in Marketing

Examining the impact of self-image congruence on brand preference and satisfaction: the moderating effect of expertise (with M. Sadiq Sohail)

Other Notes

Effect of external debt on economic growth in developing countries: External debt threshold analysis

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