Browsing by Subject "Labor Markets"

Now showing 1 - 3 of 3
  • Thumbnail Image
    Item
    Essays in Macroeconomics of the Labor Market
    (2015-07) Kim, Jiwoon
    This dissertation consists of three chapters. All chapters are related to business cycle issues in the labor market with search frictions. In Chapter 1, I examine the effect of medical re-evaluations for disability insurance (DI) recipients on the 1981 recession and its fast recovery. In the US, the recovery in the employment rate of men from the 1981 recession was faster than any other recovery since 1965. During the 1981 recession and at the beginning of its recovery, the number of disability insurance applicants and recipients dropped while the numbers increased in all other recessions. This decrease is attributed to the fact that the most stringent medical re-evaluations for DI recipients occurred between 1981 and 1983. Medical re-evaluation is a policy that periodically terminates benefits of ineligible DI recipients. This paper examines the role of medical re-evaluation in the 1981 recession and its fast recovery. To this end, I build a general equilibrium business-cycle search and matching model with health, DI and unemployment insurance (UI) eligibility. Medical re-evaluations affect the number of people who search for jobs (direct effect) and job-finding probabilities for all unemployed people (general equilibrium effect). The overall effect of the policy depends on the willingness of firms to hire workers. The main experiment shows that the change in stringency of medical re-evaluations during the 1981 recession made the recession deeper and the recovery faster. In Chapter 2, my coauthor, John Seliski, and I develop a model with both frictional labor markets and financial frictions to explore how the dynamics of real and financial variables are affected by financial shocks. Financial shocks affect the borrowing capacity of firms in the economy. In particular, we evaluate how important the inclusion of financial shocks is in accounting for labor market fluctuations by using a standard RBC matching model as a benchmark. We find that the inclusion of financial frictions and financial shocks improves a standard matching model's ability to account for the observed dynamics of labor market variables. Financial frictions are able to generate more volatile hours per worker, labor shares, and employment relative to our benchmark matching model, bringing simulated moments closer to observed fluctuations. In Chapter 3, I study an alternative mechanism of wage negotiations in an environment where a firm hires more than one worker and the firm faces diminishing marginal product of labor (MPL). When Nash bargaining with a marginal worker breaks down, a firm negotiates wages with existing workers collectively and produces with them. Due to diminishing MPL, the breakdown of the negotiation with the marginal worker negatively affects the bargaining position of the firm with existing workers (one fewer workers) since MPL is higher with one fewer workers. How much the firm internalizes this negative effect depends on stochastic bargaining powers of existing workers which can be identified through labor share data. The stochastic bargaining power of existing workers provides an additional margin to increase the volatility of labor market variables. In contrast to the prediction of Rios-Rull and Santaeulalia-Llopis (2010), in which the effect of productivity shocks is dampened when labor share overshoots due to huge wealth effects from the overshooting property, this paper presents a model in which the labor share overshoots and the volatility of employment closely matches that of US data.
  • Thumbnail Image
    Item
    Essays On Labor Market Dynamics
    (2018-05) Xu, Ming
    This dissertation consists of three chapters. The first chapter investigates the factors which drive workers' occupation switching decisions. The process of workers switching from occupation to occupation is a vital part of career development and self-discovery. Using the CPS and SIPP, I show that occupational switching rates have declined significantly over the past 25 years. This decline has been robust for each consecutive cohort and is more pronounced for younger workers than older workers. The decline could imply that it is becoming more difficult and costly for workers to find better jobs (due to increases in switching costs), leaving people increasingly stuck in poorly matched and unfulfilling careers. Paradoxically, it could also mean that finding better jobs is becoming easier (thanks to advances in ICT), since workers with good job matches are less likely to switch. This paper develops a dynamic discrete choice life-cycle model to separately identify and quantify how changes in switching costs and information over time contribute to the observed declines in occupation switching. The result is that increased switching costs drive about 72% of the decline, while better information drives about 8%. The increases in switching costs have led to less productive occupational matches for workers and thus significant welfare losses. On average, workers have lost 3% of their total lifetime income from increases in switching costs over this period. In the second chapter, my coauthor, Mons Chan, and I investigate how trade costs and firm make-or-buy decisions have an impact on the aggregate wage distribution. Firms react to changes in factor prices with intensive and extensive-margin employment adjustments at the occupational-level. We study the distributional and aggregate consequences of this make-or-buy dynamic by developing a novel network model of heterogeneous firm-to-firm trade where the boundary of each firm depends on factor prices and firm-occupation comparative advantage in input-production. We show that the model can be easily aggregated and taken to industry-level data, and use the calibrated model to examine recent trends in employment, wages and trade in the USA. We use public OES and CPS data to show empirical evidence that a significant fraction of the growth in wage inequality in the USA is due to changes in firm/industry specialization and occupation sorting. To understand and measure the underlying causes of these trends, we calibrate the model to occupation and industry data from the OES and input-output tables. The results suggest that 1/3rd of the increases in wage inequality stem from decreases in inter-industry trade frictions with the remaining 2/3rds stemming from changes in technology and labor supply. Falling trade frictions are also responsible for all of the increases in occupational sorting and concentration. Had trade frictions been held at their 2002 level, productivity growth would have led to an increase in vertical integration, rather than the decrease observed in the data. The third chapter investigates the link between student debt and post-graduation job market outcomes. Using a combination of survey and administrative data on graduates in two cohorts, I show that there is a significant negative correlation between the amount of debt upon graduation and the probability of finding a job which matches your education. I use evidence from Equifax to motivate a model of job search and long-term debt where the cost of consumer credit depends on your student loan balance. I successfully calibrate the model to the data and show that this debt constraint mainly binds for high and medium human capital graduates, as it affects the amount of time they are able to spend searching for a good job. I then show that alternative repayment and interest rate policies would have improved labor market outcomes for graduates in 07/08 by allowing extended search times, increasing match quality and possibly lifetime productivity.
  • Thumbnail Image
    Item
    Individual, family, and community factors that predict economic self-sufficiency: An analysis of Minnesotans who receive community action agency services.
    (2011-09) MartinRogers, Nicole
    The research question addressed by this dissertation is: What household (individual and family) characteristics and community-level factors contribute to continued material hardship and welfare dependence and inhibit economic self-sufficiency among low-income families? The individuals who participated in this study are clients of one of the 28 community action agencies in Minnesota. Community action agencies are nonprofit organizations that receive funding from the federal Community Services Block Grant to address poverty at the community level. Here the term economic self-sufficiency is used to define a state of being for individuals and families that meet two criteria. The first component is income source. To be self-sufficient, a household must be receiving more than half of their income from sources other than public assistance. The second component is income adequacy. To be economically self-sufficient a household also must not be experiencing material hardship, meaning that they are able to afford both food and housing expenses. To examine the relationship between economic self-sufficiency and various individual/family and county-level variables, multilevel regression modeling techniques were used. The key findings are that: demographic characteristics are generally related to self-sufficiency and the impact of these variables on self-sufficiency is reduced when cash and non-cash supports are controlled in the models; participants' access to and use of cash-and non-cash supports are strong predictors of self-sufficiency, even after controlling for the impact of county-level factors; and nonprofit density is the only county-level factor that is significantly related to individual participants' self-sufficiency, and the nature of this relationship is still unclear. The results of this dissertation suggest that public programs geared toward promoting self-sufficiency should focus on increasing access to non-cash resources and supports, especially in the areas of transportation and housing. Also, community action agencies should make it a goal to register their clients who are eligible for the Earned Income Tax Credit. These agencies should also address major barriers to self-sufficiency by assessing and responding to needs for transportation, housing, and child care. More research is needed on the cost effectiveness of various policy and program solutions to improve self-sufficiency.