Fabien's Working Papers

Labour Mobility and Earnings in the UK, 1992-2016
joint with Alireza Sepahsalari (University of Bristol)
(Current version: February 2019)

Abstract: We combine information from the British Household Panel Study (BHPS) and the UK Longitudinal Household Study (UKHLS, a.k.a. Understanding Society) to construct consistent time series of aggregate worker stocks, worker flows and earnings in the UK over the 1992-2016 period for all workers as well as for two separate education groups. We propose a method to harmonise data between the BHPS and UKHLS, which we validate by checking the consistency of some of our headline time series with equivalent series produced from other sources, notably by the ONS. In addition to drawing a detailed aggregate picture of the UK labour market over the past two and a half decades, we hope that our analysis will help demonstrate the usefulness of a combined BHPS/UKHLS data set for the analysis of UK labour markets.

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On The Job Search and Business Cycles
joint with Giuseppe Moscarini (Yale University)
(Current version: September 2018)

Abstract: We propose a highly tractable way of analyzing business cycles in an environment with random job search both off- and and on-the-job (OJS). Ex post heterogeneity in productivity across jobs generates a job ladder. Firms Bertrand-compete for employed workers, as in the Sequential Auctions protocol of Postel-Vinay and Robin (2002). We identify three channels through which OJS amplifies and propagates aggregate shocks: (i) a higher estimated elasticity of the matching function, when recognizing that at least half of all hires are from other employers; (ii) the differential returns to hiring employed and unemployed job applicants, whose proportions naturally vary over the business cycle; (iii) within employment, the slow reallocation of workers through OJS across rungs of the job ladder, generating endogenous, slowly evolving opportunities for further poaching, which feed back on job creation incentives. Endogenous job destruction, due to either aggregate or idiosyncratic shocks, is countercyclical and thus raises the cyclical volatility of unemployment, closer to its empirical value; but it also stimulates job creation in recessions, to take advantage of the fresh batch of unemployed, and tilts the Beveridge curve up. OJS corrects this tendency and restores a vacancy-unemployment trade-off more in line with empirical observations.

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A Structural Analysis of Health and Labor Market Trajectories
joint with Grégory Jolivet (University of Bristol)
(In preparation)

Abstract: We conduct a structural analysis of the joint dynamics of labor market and health outcomes. In our model, jobs are characterized by a wage, a full/part-time status and an occupational variable measuring how physically or mentally demanding the job is. Individuals self-select in and out of employment as well as between jobs on a labor market with search frictions. Workers' health (physical and mental) evolves stochastically over time depending on the health/occupational content of the job. We estimate the model on British data from the Understanding Society survey combined with O*NET data in order to retrieve the occupational content of jobs. Our approach produces structural estimates of the effect of health on labor market decisions, of the joint distribution of wages and health contents among jobs and of health dynamics as a function of job characteristics. We can then proceed to a longitudinal analysis of inequalities in earnings and health along the working life and assess the cost of health shocks at an early age.

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joint with Ilse Lindenlaub (Yale University)
(Current version: June 2017)

Abstract: We analyze sorting in a standard market environment characterized by search frictions and random search, where both workers and jobs have multi-dimensional characteristics. We offer definitions of multi-dimensional positive and negative assortative matching in this frictional environment. We say that matching is positive assortative in dimension (j,k) if workers with higher endowments in skill dimension k are matched to a distribution of jobs with higher values of job attribute j, in the sense of first-order stochastic dominance. We then provide conditions on the primitives of the economy (technology and distributions) under which sorting arises in equilibrium. An essential restriction for positive sorting is a single-crossing condition on the technology, although in general further restrictions on type distributions are needed. Guided by our theoretical framework, we develop an empirical test of the standard assumption that heterogeneity in the data is one-dimensional. We conduct simulation exercises (i) to show that the test correctly reveals misspecification and (ii) to quantify the errors in assessing sorting, mismatch and policy caused by the restriction to one-dimensional heterogeneity when our test indicates that said restriction is not valid.

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joint with Jeremy Lise (University of Minnesota)
(Current version: October 2018)

Abstract: We construct a structural model of on-the-job search in which workers differ in skills along several dimensions (cognitive, manual, interpersonal…) and sort themselves into jobs with heterogeneous skill requirements along those same dimensions. We further allow for skills to be accumulated when used, and eroded away when not used. We estimate the model using occupation-level measures of skill requirements based on O*NET data, combined with a worker-level panel from the NLSY79. We use the estimated model to shed light on the origins and costs of mismatch along the cognitive, manual, and interpersonal skill dimensions. Our results clearly suggest that those three types of skills are very different productive attributes.

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joint with Francis Kramarz (CREST-INSEE) and Jean-Marc Robin (Sciences Po)
(In preparation)

Abstract: Recent research has emphasized the key importance of the equilibrium allocation of heterogeneous workers into heterogeneous jobs or occupations as a determinant of economic efficiency. Most of the literature on this subject envisions worker (re-)allocation as occurring between employers. Yet, the data suggest that a very large amount of reallocation occurs within firms, in the form of internal promotions or de-motions. We construct a structural job search model with internal and external labor markets. Internal labor markets mediate occupational mobility and wage dynamics within firms whereas the external labor market organizes any mobility involving an employer change, and related wage dynamics. The aim of this construction is to understand and quantify the role of within-firm reallocation in the assignment process of workers into jobs. The model is estimated on a large-scale matched employer-employee data set covering the entire French business sector.

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The Relative Power of Employment-to-Employment Reallocation and Unemployment Exits 
in Predicting Wage Growth
joint with Giuseppe Moscarini (Yale University)
(Current version: December 2016 - Shorter version published in American Economic Review Papers and Proceedings)

Abstract: We investigate the hypothesis that labor demand is transmitted to wage growth primarily through Employer-to-Employer (EE) transitions. Workers often quit their jobs when they receive better offers, hence the faster these EE transitions, the higher the pace of reallocation towards high wage jobs, and the higher average wage growth. Also, the more opportunities workers have to quit, the more aggressive are their employers' wage responses, to try and retain them. Observed wage raises can thus either reflect reallocation by job movers or rent extraction by job stayers following outside offers. We think of the latter type of wage raises as "inflationary", because they appear like cost shocks. We introduce a statistical framework to measure the covariance structure of nominal, rather than real, wage growth and labor market transitions. We ask whether a counterfactual transition rate (EE, UE etc.) that applies to each worker covaries with his wage growth, even when no individual transition occurs. This counterfactual is built by projecting actual transitions on a rich set of observable worker and job characteristics and on calendar time. In order to entertain the hypothesis of a Phillips curve, we also include in this covariance structure the unemployment rate.

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... with my respectful apologies and sincere gratitude to Hergé.

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