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Author: Tzuo Hann Law
Publisher:
ISBN:
Category :
Languages : en
Pages : 326
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Book Description
The importance of time invariant, but unobserved characteristics of workers and their employers in the determination of wages is well known. This suggests that models of (un)employment featuring permanent worker and firm types are crucial for our understanding of labor markets. While such models are numerous, it was thought that even very simple ones were fundamentally not identifiable with wage data alone. Hence, the empirical content of these models were largely a mystery. With that, our understanding of permanent unobserved heterogeneity has been restricted to statistical models with limited economic interpretation. In the first chapter of my dissertation (joint with Marcus Hagedorn and Iourii Manovskii), I overcome this fundamental problem. I assess the empirical content of equilibrium models of labor market sorting based on unobserved (to economists) characteristics. Specifically, I develop quantitative tools to identify and estimate a wide class of models of labor market sorting. I not only find that many models are likely completely identifiable but that reliable estimates of key model primitives can be obtained using routinely available matched employer-employee datasets. In the second chapter of my dissertation (with Kory Kantenga), I apply the framework developed in the first chapter to study the role of worker and employer heterogeneity in driving German wage inequality between 1993 and 2007. The model I earlier developed fits overall wage variance, the wage function, search frictions, unemployment levels and the degree of sorting between workers and firms. The fit of the model is comparable to non-structural approaches which utilize many more degrees of freedom. In decomposing the rise in German wage inequality, I find that changes in the non-parametrically estimated production function and the sorting between worker and firm types that it induces accounts for most of the increase in German wage inequality. Finally, by testing whether log wage differences between employees who are coworkers at two distinct firms are constant, I show that the commonly assumed log additive separability approximation of log wages is rejected. Finally, the estimated model is capable of reproducing the degree of non additive separability in the data.
Author: Tzuo Hann Law
Publisher:
ISBN:
Category :
Languages : en
Pages : 326
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Book Description
The importance of time invariant, but unobserved characteristics of workers and their employers in the determination of wages is well known. This suggests that models of (un)employment featuring permanent worker and firm types are crucial for our understanding of labor markets. While such models are numerous, it was thought that even very simple ones were fundamentally not identifiable with wage data alone. Hence, the empirical content of these models were largely a mystery. With that, our understanding of permanent unobserved heterogeneity has been restricted to statistical models with limited economic interpretation. In the first chapter of my dissertation (joint with Marcus Hagedorn and Iourii Manovskii), I overcome this fundamental problem. I assess the empirical content of equilibrium models of labor market sorting based on unobserved (to economists) characteristics. Specifically, I develop quantitative tools to identify and estimate a wide class of models of labor market sorting. I not only find that many models are likely completely identifiable but that reliable estimates of key model primitives can be obtained using routinely available matched employer-employee datasets. In the second chapter of my dissertation (with Kory Kantenga), I apply the framework developed in the first chapter to study the role of worker and employer heterogeneity in driving German wage inequality between 1993 and 2007. The model I earlier developed fits overall wage variance, the wage function, search frictions, unemployment levels and the degree of sorting between workers and firms. The fit of the model is comparable to non-structural approaches which utilize many more degrees of freedom. In decomposing the rise in German wage inequality, I find that changes in the non-parametrically estimated production function and the sorting between worker and firm types that it induces accounts for most of the increase in German wage inequality. Finally, by testing whether log wage differences between employees who are coworkers at two distinct firms are constant, I show that the commonly assumed log additive separability approximation of log wages is rejected. Finally, the estimated model is capable of reproducing the degree of non additive separability in the data.
Author: Joanne Tan
Publisher:
ISBN:
Category :
Languages : en
Pages : 194
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This thesis examines the themes of sorting, inequality and the impact of technological change on the labor market. In particular, it addresses the questions of how workers sort within and between firms and how this influences labor market inequality, both in the workforce as a while, as well as between demographic and skill groups. It also considers how changes in technology affects the labor market conditions faced by workers and firms. These questions are tackled over three chapters. The first chapter, entitled `Multidimensional heterogeneity and matching in a frictional labor market - an application to polarization' deals with the sorting of workers to firms along multidimensional characteristics and quantifies the impact of technological change on the evolution of sorting patterns, wages and employment outcomes of different skill and demographic groups. I construct a model of directed search with two-sided multidimensional heterogeneity and estimate the model on US data. I find that production complementarities between cognitive and interpersonal skills and tasks have increased, relative to hat between manual skills and manual tasks. This change in production technology accounts for a large part of wage and job polarization in the US. Also, despite being gender-blind, the model can explain a substantial fraction of the narrowing of gender wage and job rank gaps from the 1980s to the present day. The second chapter, entitled `Intra-firm hierarchies and gender gaps' and coauthored with Nicolo Dalvit and Aseem Patel, studies the sorting of women into layers of hierarchy within firms, using administrative French data, and examines the incidence of gender wage and employment gaps across hierarchies over time. Further, by exploiting a policy on corporate board quotas in France, it assesses the impact of an increase in female leadership on gender wage and employment outcomes within firms. We find that hierarchies matter in gender wage and employment gaps. Gender wage and employment gaps increase with each layer of firm hierarchy, even if these gaps narrow more over time in the upper layers. In addition, improvements in top female leadership has differing impacts across hierarchies. While a greater share of female corporate board members narrows the gender wage gap in top layers of hierarchy, it has no such impact on lower layers. Instead, it increases the share of women in lower layers working part-time, at the expense of full-time employment. The opposite is true for women in upper layers. The third chapter, `Occupational Shortage and Labor Market Adjustments: a Theory of Islands', coauthored with Riccardo Zago, addresses the incidence of occupational shortage, and assesses whether it leads to wage and employment adjustments. Using a unique dataset on reported vacancies that firms find difficult to fill, we document the incidence of shortage across regions, industries and occupation groups. We find that shortage only leads to wage and employment adjustments in non-routine occupations, but not in routine occupations. We show how the secular decline of the routine occupations, caused by technological change, can account for the persistence in shortage in the routine sector and its inability to adjust.
Author: Eunsun Gil
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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The essays in my dissertation examine how economic downturn and job composition affect heterogeneous workers in the labor market. In Chapter 1, I assert that slow recovery in aggregate employment compared to aggregate output in the United States consist of jobless growth in manufacturing and information industries. I observe the industrial transition of unemployed workers to demonstrate labor reallocation triggered by a decline of middle-wage jobs. I simulate the jobless growth and vertical reallocation in general equilibrium model with sorting and optimal submarket choices. In Chapter 2, I quantify recession effect on annual labor income for heterogeneous workers. I find that low-wage workers earn less annually mostly because of lower working hours through unemployment, whereas high-wage workers lose their annual earnings primarily due to lower hourly rates of job-to-job transition. I explain decreasing layoff risk (extensive margin) and increasing wage-cut risk (intensive margin) to previous wage rate in an on-the-job search model with real business cycles. In Chapter 3, I reassess transitional dynamics of unemployment and vacancy rate in a homogeneous agents search model, by allowing sunk entry costs and discrete productivity process. The entry costs allow a positive outside option for a vacant firm so that an outside firm and vacant firm make different labor market participation and hiring choices. When economy transit between two steady-state equilibria, the vacancy rate is no more a jump variable, and an outward (inward) shift is expected before reaching a low (high) productivity equilibrium.
Author: Audra Jann Bowlus
Publisher:
ISBN:
Category : Labor market
Languages : en
Pages : 198
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Author: Eunsun Gil
Publisher:
ISBN:
Category :
Languages : en
Pages : 212
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Book Description
The essays in my dissertation examine how economic downturn and job composition affect heterogeneous workers in the labor market. In Chapter 1, I assert that slow recovery in aggregate employment compared to aggregate output in the United States consist of jobless growth in manufacturing and information industries. I observe the industrial transition of unemployed workers to demonstrate labor reallocation triggered by a decline of middle-wage jobs. I simulate the jobless growth and vertical reallocation in general equilibrium model with sorting and optimal submarket choices. In Chapter 2, I quantify recession effect on annual labor income for heterogeneous workers. I find that low-wage workers earn less annually mostly because of lower working hours through unemployment, whereas high-wage workers lose their annual earnings primarily due to lower hourly rates of job-to-job transition. I explain decreasing layoff risk (extensive margin) and increasing wage-cut risk (intensive margin) to previous wage rate in an on-the-job search model with real business cycles. In Chapter 3, I reassess transitional dynamics of unemployment and vacancy rate in a homogeneous agents search model, by allowing sunk entry costs and discrete productivity process. The entry costs allow a positive outside option for a vacant firm so that an outside firm and vacant firm make different labor market participation and hiring choices. When economy transit between two steady-state equilibria, the vacancy rate is no more a jump variable, and an outward (inward) shift is expected before reaching a low (high) productivity equilibrium.
Author:
Publisher:
ISBN:
Category : Labor economics
Languages : en
Pages : 119
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In my thesis, I study the effects of agents' heterogeneity on labor market outcomes, with particular focus on sorting, performance, wages, and inequality. Chapter one studies multidimensional matching between workers and jobs. Workers differ in manual and cognitive skills and sort into jobs that demand different combinations of these two skills. To study this multidimensional sorting, I develop a theoretical framework that generalizes the unidimensional notion of assortative matching. I derive the equilibrium in closed form and use this explicit solution to study biased technological change. The key finding is that an increase in worker-job complementarities in cognitive relative to manual inputs leads to more pronounced sorting and wage inequality across cognitive relative to manual skills. This can trigger wage polarization and boost aggregate wage dispersion. I then estimate the model for the US during the 1990s. I identify a significant increase in complementarities of cognitive inputs and in cognitive skill-bias in production. Counterfactual exercises suggest that these technology shifts can account for observed changes in worker-job sorting, wage polarization and a significant part of the increase in US wage dispersion. Chapter two develops a theory that links differences in men's and women's social networks to disparities in their labor market performance. We are motivated by our empirical finding that men's and women's networks differ. Men have a higher degree (more network links) than women, but women have a higher clustering coefficient (a woman's friends are also friends among each other). In our model, a worker with a higher degree has better access to information. In turn, a worker with a higher clustering coefficient faces more peer pressure. Both peer pressure and access to information can attenuate a team moral hazard problem in the work place. But whether peer pressure or access to information is more important depends on the work environment. We find that, in environments where uncertainty is high, information is crucial and, therefore, men outperform women / in line with findings from sectors with high earnings' uncertainty like the financial or film industry.
Author: Michael Joseph Moore
Publisher:
ISBN:
Category :
Languages : en
Pages : 217
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The non-linear estimates are shown to be consistently higher than those from the linearized model.
Author: Kenneth Shangold Mirkin
Publisher:
ISBN:
Category :
Languages : en
Pages : 187
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Chapter 1: It is a commonly held view that the quality of unemployed workers varies countercyclically. During economic downturns, firms raise standards for retaining workers---better workers are fired, so it is natural to expect an accompanying rise in the unemployment pool's quality. However, I present a model in which the reverse is true. Firms learn about employee quality over time and fire their lowest quality workers, but workers enter unemployment also via quitting. In equilibrium, the quality of the unemployment pool reflects a balance between flows of selective firings and of (relatively higher quality) quits. Although firms fire better workers during economic downturns, there are more of these firings at such times, and quits are no longer sufficient to balance the corresponding negative selection---the unemployment pool thus \textit{declines} in quality. I use the model to explore the dynamic consequences of this. Firms limit hiring in response, and even after the economy rebounds otherwise, hiring will not resume until the unemployment pool's quality recovers. This offers a possible contributing factor to jobless recoveries. Using CPS micro-data and JOLTS, I then provide empirical support for several testable implications of the model, focusing on direct evidence for the mechanism driving the decline in unemployment pool quality. The model is consistent with other, previously-observed empirical patterns as well, and it provides a tractable framework for dynamic analysis of labor markets with private learning during employment. Chapter 2: We consider a dynamic trading environment, where heterogeneous buyers and sellers are randomly paired in each period. Within each match, seller types become observable while buyer types remain private information, and sellers make take-it-or-leave-it offers. We first establish the existence of steady-state equilibrium where sellers offer prices that are continuous in their types. We then characterize properties of sorting under search frictions of varied strength, focusing on two extreme cases. With maximal search frictions---complete disregard for future payoffs---we demonstrate that log-supermodularity (log-submodularity) of the production function is a necessary and sufficient condition for positive (negative) assortative matching. Log-supermodularity (Log-submodularity) is stronger than the standard supermodularity (submodularity) sorting condition. The resistance to sorting comes from the fact that higher type sellers have stronger incentive to secure trade by lowering prices. At the other extreme, the incentive to secure trade grows inconsequential when search frictions vanish and hence the condition for positive (negative) sorting returns to supermodularity (submodularity). Chapter 3: We study the dynamics of a market where agents trade assets that are heterogeneous in quality, but publicly indistinguishable. All agents begin with only public knowledge of the aggregate asset pool composition, but each owner learns privately about the quality of an asset in her possession. Ownership entails a constant choice between (i) the value of retaining the asset (and its corresponding payoffs) and (ii) that of selling it on the market for a uniform price that reflects the instantaneous average quality of assets being sold. In turn, the market composition reflects not only those owners who have opted for (ii), but also owners selling for reasons unrelated to asset quality. Learning is gradual, so ownership can be understood as an optimal experimentation problem. Whereas an environment with public learning would entail symmetric timing of sales, private learning precludes this due to externalities sellers exert on other market participants. Instead, owners must spread sales over a broad time interval and, in turn, must experiment inefficiently. Qualitatively, price dynamics resemble those found in speculation-fueled ``panics'' of the sort often invoked to explain market breakdowns. After an initial period without movement, prices enter a steady decline. Eventually, the stock---and corresponding flow---of owners looking to sell due to poor asset performance grows thin. Prices stop falling and finally rise as the presence of adverse selection fades from the market.
Author: Andreas Gulyas
Publisher:
ISBN:
Category :
Languages : en
Pages : 103
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My dissertation contributes towards our understanding of the determinants of wage inequality and to the causes of the emergence of jobless recoveries. It consists of two chapters. The first, "Identifying Labor Market Sorting with Firm Dynamics" studies the determinants of wage inequality, which requires understanding how workers and firms match. I propose a novel strategy to identify the complementarities in production between unobserved worker and firm attributes, based on the idea that positive (negative) sorting implies that firms upgrade (downgrade) their workforce quality when they grow in size. I use German matched employer-employee data to estimate a search and matching model with worker-firm complementarities, job-to-job transitions, and firm dynamics. The relationship between changes in workforce quality and firm growth rates in the data informs the strength of complementarities in the model. Thus, this strategy bypasses the lack of identification inherent to environments with constant firm types. I find evidence of negative sorting and a significant dampening effect of worker-firm complementarities on wage inequality. Worker and firm heterogeneity, differential bargaining positions, and sorting contribute 71\%, 20\%, 32\% and -23\% to wage dispersion, respectively. Reallocating workers across firms to the first-best allocation without mismatch yields an output gain of less than one percent.\\ My second chapter, "Does the Cyclicality of Employment Depend on Trends in the Participation Rate?" studies the fact that the past three recessions were characterized by sluggish recovery of the employment to population ratio. The reasons behind these "jobless recoveries" are not well understood. Contrary to other post-WWII recessions, these "jobless recoveries" occurred during times with downward trending labor force participation rate(LFPR). I extend the directed search setup of Menzio et al. (2012) with a labor force participation decision to study whether trends in LFPR cause jobless recessions. I then show that that recoveries during times of declining LFPR look very different to recoveries during positive LFPR trend. The basic intuition is as follows: During downward trending LFPR, many low productivity workers cling on to their jobs, but once separated, it does not pay off for them to pay the search cost to re-enter the market. If the recession happens during increasing trend LFPR, then the employment recovery is helped by persons entering the labor market. Thus, I highlight that contrary to the usual approach in the literature, it is important to explicitly account for the trend of the LFPR.
Author: Hajime Takizawa
Publisher:
ISBN:
Category :
Languages : en
Pages :
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The first essay explores an environment characterized by search friction and the accumulation of non-firm specific skill. In this environment, a competitive search equilibrium has the following properties: Investment in skill is below the socially efficient level; there will not emerge separate markets catering to skilled and non-skilled workers. An alternative equilibrium concept that incorporates up-front payments from workers to firms does not resolve the problem of under-investment. However, it does eliminate the possibility of socially inefficient search and turnover that would result from the incentive for workers to look for better paying jobs in the absence of payments. In some economies but not all, a system of taxes and transfers is shown to resolve the under-investment problem.
