Faculty
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.
Schmidt, Lawrence D.W., MIT Sloan Working Paper 5500-16. Cambridge, MA: MIT Sloan School of Management, March 2022.
Schmidt, Lawrence D. W., Allan Timmermann, and Russ Wermers. American Economic Review Vol. 106, No. 9 (2016): 2625-2657. Author Disclosures. Appendix. Data Set.
Farmer, Leland, Lawrence D.W. Schmidt, and Allan Timmermann. Journal of Finance. Forthcoming. SSRN Preprint.
Akepanidtaworn, Klakow, Rick Di Mascio, Alex Imas, and Lawrence D.W. Schmidt. Journal of Finance. Forthcoming. SSRN Preprint.
Papanikolaou, Dimitris and Lawrence D.W. Schmidt. The Review of Asset Pricing Studies Vol. 12, No. 1 (2022): 53-111. Download Preprint.
Flynn, Joel, Lawrence D.W. Schmidt, and Alexis Akira Toda, MIT Sloan Working Paper 5715-18. Cambridge, MA: MIT Sloan School of Management, January 2022.
The study offers U.S. policymakers a blueprint for a future round of COVID-19 stimulus.
New research shows those who can’t work from home bear the brunt of the pandemic’s economic fallout — particularly women with children.
Leonid Kogan and Lawrence Schmidt devised a new way to measure how people's exposure to technology changed over time.
According to a new working paper by Assistant Prof. Lawrence D.W. Schmidt "income risk" is primarily a problem for college-educated people.
“...even when we look at a sample of extremely talented, highly incentivized expert investors, they are still people."
"...the Paycheck Protection Program had a bit of a design flaw. The hardest-hit sectors actually tended to receive the least amount of aid."
