Statistical Discrimination and Duration Dependence in the Job Finding Rate (w/ Gregor Jarosch) [Draft \ Slides] - R&R Review of Economic Studies
We propose an equilibrium search model to quantify the implications of employer discrimination against the long-term unemployed for job finding rates and long-term unemployment. In our framework, dynamic selection on unobservables endogenously generates statistical discrimination at the interview, or callback stage. In the estimated model, interview invitations for observationally equivalent workers decline by 50% as unemployment duration increases from 1 to 8 months, in line with a string of recent resume audit studies. Yet long-term unemployment and job-finding rates at all durations are almost identical in a full information benchmark where employers do not discriminate. Interviews lost to statistical discrimination impact individual job-finding rates solely if they would have counterfactually led to jobs. We show that such false negatives are rare because firms only discriminate when they anticipate being unable to form a viable match. Statistical discrimination is thus largely a response to dynamic selection rather than a cause of true duration dependence.
Assortative Matching and Income Inequality: A Structural Approach [Draft \ Slides]
Income inequality across households has risen dramatically in the last 40 years. At the same time, marital sorting patterns by education have changed. To quantify the effects of changing assortativeness on household income inequality, I develop an equilibrium model of educational attainment, marriage, and joint labor market search. I calibrate the model to couples in the Survey of Income and Program Participation (SIPP), and use the model to construct counterfactual income distributions that keep the sorting parameters unchanged for all education groups. Relative to the standard decompositional methods, this approach incorporates both partial and general equilibrium impacts of changes in sorting parameters, which feed back into educational attainment and marriage choices.
The Productivity Gains from Household Insurance [Draft \ Slides]
This paper studies the effects of household insurance on aggregate productivity. If workers are risk averse and couples can pool their income, then under plausible assumptions on preferences, those with higher wage spouses search for higher wage jobs that are harder to obtain, but are also more productive. I calibrate the model to match evidence on search at the household level and compare realized output to counterfactual output in an economy where couples cannot pool income. Preliminary results suggests that aggregate output is up to thirty percent larger in an economy when couples can share risk and search jointly in the labor market.
Sectoral Shocks and Move Unemployment [Draft]
(previously circulated under "A Multisector Equilibrium Search Model of Labor Reallocation")
This paper develops a multisector search model in which workers choose their sectors in response to sector-specific and idiosyncratic shocks. Unemployed workers can search for work in their sector of last employment, or become ``move unemployed,'' spending extra time in unemployment to reach a new sector. Sectoral shocks induce net movements of labor into relatively productive sectors, while idiosyncratic worker shocks ensure that gross intersectoral flows through unemployment are always positive, a prediction consistent with the data. I use the model to test the sectoral shifts hypothesis (Lilien (1982)) in the context of the Great Recession in which the construction sector experienced a relatively large shock. In a two-sector calibration of the model to construction and non-construction, I find that sectoral dispersion shocks have no impact on aggregate unemployment. While they increase net mobility, this increase is accomplished through a change in the composition of gross flows rather than their level. The results suggest that, a priori, we should not expect sectoral shocks to generate unemployment fluctuations.
Work In Progress:
Labor Market Expectations, Learning, and Search (with Basit Zafar and Matthew Wiswall)
For Better or Worse: Household Search and the Marital Wage Premium (with Shu Lin Wee)
Duration Dependence in the Job Finding Rate: Evidence from Worker Fixed Effects (with Rob Dent)
Discussion of "The Consequences of Long-Term Unemployment: Evidence from Matched Employer-Employee Data," by Abraham, Haltiwanger, Sandusky, and Spletzer
Discussion of "Secular Labor Reallocation and Business Cycles," by Chodorow-Reich and Wieland
Discussion of "Search, Matching, and Training" by Flinn, Gemici, and Laufer
Discussion of "Marriage, Labor Supply, and Home Production" by Gousse, Jacquemet, and Robin
Discussion of "How Sticky Wages in Existing Jobs Can Affect Hiring," by Bils, Chang, and Kim
Econometric Society, North American Meeting 6/16/16-6/19/16
SED Toulouse 6/30/16-7/2/2016
SIPP one-click download on GitHub: code which scrapes all the SIPP files from NBER and merges 1990-present panels
- for public use: please email us with any comments or issues
Sample code for Parallel computation in Matlab which calls Dynare
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