Lawrence D.W. Schmidt

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Lawrence D.W. Schmidt

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Lawrence D. W. Schmidt is the Victor J. Menezes (1972) Career Development Assistant Professor of Finance. His research is at the intersection of finance and macroeconomics.

Schmidt's research combines theory and applied econometric approaches to offer a richer picture of risks faced by financial market participants—households, institutional investors, and financial intermediaries—and sheds new light on underlying economic mechanisms linking financial markets with the real economy. His research is particularly interested in understanding factors which are associated with the risk and return to investments in human capital (that is, the present discounted value of labor income), and how frictions that limit risk-sharing in the labor market affect asset prices and macroeconomic dynamics. In addition to studying the risk factors and behavior of households, his work also studied the behavior of institutional investors during financial crises. His research has appeared in the American Economic Review, the Journal of Applied Econometrics, and the Journal of Mathematical Economics, and his research has won multiple awards, including the 2015 AQR Top Finance Graduate Award.

Schmidt holds a BA from the University of California, Santa Barbara, and PhD and MA degrees in Economics from the University of California, San Diego. Prior to joining the faculty at MIT Sloan, Schmidt was an Assistant Professor in the Kenneth C. Griffin Department of Economics at the University of Chicago and a senior consultant at Navigant Consulting, Inc.

Current Research Focus: Schmidt’s research seeks to offer a richer picture of risk exposures and decision-making processes of financial market participants—households, institutional investors, and financial intermediaries—and the implications of these factors for asset prices and the real economy. Three recent areas of interest are (1) understanding factors associated with the risk and return to investments in human capital, particularly how the presence of nontraded assets and frictions that limit risk sharing in labor and capital markets affect asset prices, optimal investment strategies, and macroeconomic dynamics, (2) understanding how firms invest in human capital and how changes in technology, discount rates, and other determinants of firms’ investment problems impact individual workers’ employment and earnings, and (3) understanding investment behavior of institutional investors in delegated asset management settings. A common thread in his research is to use large administrative datasets on workers and firms to shed new light on these questions.

Publications

"Who Benefits from Retirement Saving Incentives in the U.S.? Evidence on Racial Gaps in Retirement Wealth Accumulation."

Choukhmane, Taha, Jorge Colmenares, Cormac O'Dea, Jonathan Rothbaum, and Lawrence D.W. Schmidt, MIT Sloan Working Paper 6592-21. Cambridge, MA: MIT Sloan School of Management, November 2023.

"Working Remotely and the Supply-Side Impact of COVID-19."

Papanikolaou, Dimitris and Lawrence D.W. Schmidt. The Review of Asset Pricing Studies Vol. 12, No. 1 (2022): 53-111. Download Preprint.

"Technology, Vintage-Specific Human Capital, and Labor Displacement: Evidence from Linking Patents with Occupations."

Kogan, Leonid, Dimitris Papanikolaou, Lawrence D. W. Schmidt, and Bryan Seegmiller. NBER Working Paper 29552, Working Paper. December 2021.

"Technological Innovation and Labor Income Risk."

Kogan, Leonid, Dimitris Papanikolaou, Lawrence D.W. Schmidt, and Jae Song, MIT Sloan Working Paper 5299-18. Cambridge, MA: MIT Sloan School of Management, July 2021. NBER Working Paper. SSRN.

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