Publications
Statistical Discrimination and Duration Dependence in a Semi-Structural Model (with Jianhuan Xu), International Economic Review, Volume 65, Issue 3, August 2024, Pages 1357-1386.
This paper develops a job-search model with unobserved worker heterogeneity and learning about worker types from unemployment duration. The model features negative duration dependence that stems from unobserved heterogeneity, skill depreciation, and statistical discrimination. We estimate job-finding rates implied by our model using micro-level data from the Current Population Survey. We find that removing interview costs counterfactually, thereby eliminating statistical discrimination, substantially increases the job-finding rates of the long-term unemployed. The performance of low-skill workers at the interview stage with discriminating firms plays a key role in explaining our counterfactual result.
VAT Treatment of Financial Institutions: Implications for the Real Economy (with Fatih Yilmaz), Journal of Money, Credit, and Banking, Volume 53, Issue 8, December 2021, Pages 2167-2200.
Abstract: Financial institutions are exempt from the Value-Added Tax in most countries. We develop a general equilibrium model with endogenous firm entry and a banking sector to accommodate three key distortions related to exempt treatment: (i) self-supply bias in the banking sector, (ii) under-taxation of payment services, and (iii) input distortions in the business sector and tax cascading. We calibrate our model to the average of Germany, France and the U.K data. Our results show that repealing exempt treatment always increases tax revenues. However, welfare gains occur only at low VAT rates due to the hump-shaped VAT Laffer curve.
Job Duration and Match Characteristics over the Business Cycle (with Toshihiko Mukoyama), Review of Economic Dynamics, Volume 37, July 2020, Pages 33-53
Abstract: This paper studies the cyclical behavior of job separation and the characteristics of matches between workers and jobs. We estimate a proportional hazard model with competing risks, distinguishing between different types of separations. A higher unemployment rate at the start of an employment relationship increases the probability of job-to-job transitions, whereas its effect on employment-to-unemployment transitions is negative. We then build a simple job-ladder model to interpret our empirical results. A model with two-dimensional heterogeneity in match (job) characteristics has the same qualitative features as the data. Once the model is calibrated to include cyclicality in the offered match characteristics, it can fit the quantitative features of the data.
Worker Selection, Hiring, and Vacancies, American Economic Journal: Macroeconomics, 9(1): 88-127, Jan 2017
Abstract: This paper incorporates worker selection into a random matching model with multi-worker firms. Unlike the standard model, the worker selection model is compatible with establishment-level behavior of the hires-to-vacancy ratio, which rises with employment growth and worker turnover, but falls with establishment size. I compare labor market policy responses from the worker selection model to the standard matching model and the directed search model, an alternative explanation to these regularities. The labor market policy implications differ quantitatively and qualitatively across models. The firm-level effects of the labor market policies in worker selection model are consistent with the existing empirical evidence.
Working Papers
Declining Job-to-Job Transitions and Wage Dynamics (with Paul Jackson), submitted.
Abstract: This paper examines how declining job mobility affects young workers’ wages by developing a job ladder model with learning-by-doing and firm heterogeneity in productivity, separation risk, and learning environment. The model is calibrated separately to the National Longitudinal Survey of Youth 1979 and 1997. Our results suggest that shifts in search frictions and relocation shocks explain most of the drop in job mobility. Counterfactual exercises indicate that these changes have led to higher starting wages due to workers beginning their career higher on the ladder, slower wage growth, and ultimately, slightly higher wages after 20 years of potential experience.
Occupation Ladders over the Business Cycle (with Toshihiko Mukoyama), R&R at European Economic Review.
Abstract: This paper studies occupational mobility over the business cycle. We divide occupations into two broad groups, "attractive" and "nonattractive," where we label an occupation attractive if the total net inflow into this occupation through job-to-job transition is positive or its median annual wage is above the median of the population. We measure total net inflows into both occupation groups. We measure these inflows separately for job-to-job (EE) transitions and transitions from unemployment to employment (UE). We find net inflow from nonattractive to attractive occupations through EE transitions slows during recessions. The relative net inflow through UE transitions has a similar cyclicality. This finding suggests a novel cost of recession: during recessions, workers have fewer opportunities to move to a better occupation.