Essays On Macroeconomics And Labor Economics

Abstract

This dissertation consists of three chapters. The first chapter (joint with Bledi Taska) examines the role of technological change in explaining the large and persistent decline in earnings following job loss. Using detailed skill requirements from the near universe of vacancies posted online, we estimate technological change at the occupation level and find that approximately 50% of the decline in earnings after job loss is due to technological change. We integrate technological change, occupation choice, and employment risk into a Bewley-style economy to rationalize our empirical results and examine the optimal combination of public insurance transfers and retraining subsidies for unemployed workers. We find there are welfare gains from increasing the generosity of public insurance transfers and retraining subsidies relative to the current U.S. policy, both in the steady state as well as along the transition path. The second chapter (joint with Kyle Herkenhoff and Gordon Phillips) examines the credit access and usage among unemployed individuals. We show that unemployed individuals maintain significant access to credit. Following job loss, the unconstrained borrow, while the constrained default and delever. We quantitatively show that long-term credit relationships and credit-registries allow the unemployed to partially offset income losses using credit. We estimate the model and find that the optimal provision of public insurance is unambiguously lower with greater credit access. The third chapter investigates the impact of declining labor force growth on the allocation of workers across firms and aggregate output. Theoretically, I demonstrate as labor force growth declines the probability a worker meets a firm declines, which decreases hiring. Quantitatively, the observed decline in labor force growth leads to a modest decline in hiring for employed and unemployed workers. Despite lower reallocation of workers across firms, output per worker increases since the average worker has greater labor market experience, is more productive, and is better sorted across firms.