Research

Abstract: We use comprehensive data from Denmark that merge online job advertisements with a matched employer-employee dataset and a firm-level dataset with information on revenues and value added to study the relationship between vacancy-posting and various firm outcomes. Vacancy-posting is associated with a 4.4 percentage point increase in a firm’s hiring rate and 85% of the additional hiring occurs within two months. The response of hiring from employment is twice as large as the response of hiring from non-employment. Firms that are smaller, low-wage and fast-growing are associated with larger hiring responses and that response materializes faster at larger firms, low-wage firms and fast-growing firms. We also find that separations are associated with subsequent vacancy-posting and this effect is stronger for separations to employment, consistent with replacement hiring and the presence of vacancy chains. Growth in revenue and value added strongly predict vacancy-posting, with negative shocks having a stronger effect than positive shocks and larger shocks having less-than-proportional responses.

Abstract: Least developed economies are characterised by poorly functioning labour markets: only a small fraction of workers is in paid employment, where productivity and wages are low. We incorporate a standard search framework into a two-sector model of development to assess the importance of different obstacles to job creation and productivity. The model provides new insights in the characterisation of poorly developed labour markets that are observed in the data, such as high wage dispersion. We estimate the model using micro data for six countries in Sub-Saharan Africa and highlight the empirical relevance of labour market frictions, entry costs and skills.

Abstract: Economists use various metrics for measuring income inequality. Here, the most commonly used measures—the Lorenz curve, the Gini coefficient, decile ratios, the Palma ratio, and the Theil index—are discussed in relation to their benefits and limitations. Equally important is the choice of what to measure: pre-tax and after-tax income, consumption, and wealth are useful indicators; and different sources of income such as wages, capital gains, taxes, and benefits can be examined. Understanding the dimensions of economic inequality is a key first step toward choosing the right policies to address it. 

Abstract:  Standard models of labor adjustment suppose that firms can change only the size of their workforce (the extensive margin) and not the number of hours of their existing employees (the intensive margin) in response to shocks. I propose a general equilibrium search model that allows for adjustment on both of these margins. The model includes on-the-job search that generates different vacancy filling and attrition rates across firms. I calibrate the model to a unique matched employer-employee panel of Danish firms and simulate two labor market policies aimed at promoting job creation: hiring subsidies and a reduction in the official workweek.

Abstract: This paper examines the relationship between output fluctuations and firms’ recruitment efforts using Danish data that link online job ads with high-frequency firm-level revenue and value-added. While overall output growth is weakly correlated with advertisement rates, decomposing output into permanent and transitory components reveals a strong link between persistent shocks and recruitment effort. A one standard deviation permanent shock raises advertisement rates by 10-16% of a standard deviation, whereas transitory shocks show no significant effect. These results highlight the importance of shock persistence in labor demand and offer empirical support for dynamic search-and-matching models of the labor market.

Abstract: Individuals enter the labor market under different circumstances which can have implications for their careers. In this paper, we consider the role played by parental wealth for early career labor market outcomes of young adults using matched employer-employee data for the entire population of Sweden. We find that, even after controlling for a rich set of demographic characteristics, individuals at the bottom of family wealth distribution tend to have lower earnings, lower probability to be in employment, higher income volatility, and less stable jobs at the start of their careers, compared to those with the median wealth. Moreover, the bulk of the observed relationship between parental wealth and child log earnings can be attributed to the between-firm (as opposed to the within-firm) component, highlighting the importance of allocation of individuals across firms. We interpret our results using a model of savings and search, where workers job acceptance decisions depend on their wealth.

Abstract: Public sector in least developed countries comprises a large share of wage employment, tends to pay higher wages, and provides greater job stability than the private sector. These differences can reflect institutional features of the public sector, productivity shortcomings in the private sector, heterogeneity in the selection of workers, or a combination of these factors. Most importantly, if the public sector has the power to attract the most talented workers in the economy, it might deprive the private sector of a key driver of growth. The aim of this project is to investigate the determinants and the effects of public sector employment characteristics in terms of job creation, productivity, workers’ composition, and wages in the economy. We do so in two steps. First, we produce a detailed empirical description of labour market outcomes in poor economies, focusing on the difference between the private and public sectors, based on individual-level data for a number of Sub-Saharan African countries. Second, we develop and estimate a frictional labour market model to quantify the effect of the public sector wage premia on wage employment and productivity growth.