Working Papers:

Statistical Discrimination and Duration Dependence in the Job Finding Rate (w/ Gregor Jarosch) [Paper]  - Accepted, Review of Economic Studies

This paper models a frictional labor market where employers endogenously discriminate against the long term unemployed. The estimated model replicates recent experimental evidence which documents that interview invitations for observationally equivalent workers fall sharply as unemployment duration progresses. We use the model to quantitatively assess the consequences of such employer behavior for job finding rates and long term unemployment and find only modest effects given the large decline in callbacks. Interviews lost to duration impact individual job-finding rates solely if they would have led to jobs. We show that such instances are rare when firms discriminate in anticipation of an ultimately unsuccessful application. Discrimination in callbacks is thus largely a response to dynamic selection, with limited consequences for structural duration dependence and long term unemployment.
 


Assortative Matching and Income Inequality: A Structural Approach (w/ Shu Lin Wee) [Draft \ Slides]

Income inequality across households has risen dramatically in the last 40 years. At the same time, there have been significant changes in the determinants of household income, including educational attainment, the skill premium, and marital sorting patterns. We link these phenomena through an equilibrium model of investment in schooling, marriage, and household search. The present discounted value of search in the labor market at the household level determines the surplus generated by each marriage for each education pair, determining equilibrium educational attainment and the degree of marital sorting. In this environment, we show that the direction of marital sorting depends on the degree of complementarities in the labor market. Using an estimated version of the model, we construct counterfactual income distributions under changing primitives (i.e., marital preferences and skill premia) that let the degree of sorting, educational attainment, and inequality respond to movements in those primitives.



The Productivity Gains from Household Insurance [Draft \ Slides] (currently being revised)

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. 



Household Search and the Marital Wage Premium (w/ Shu Lin Wee)  [Draft]

We present a model of the labor market where differential search decisions between single and joint households generate a marital wage premium. Married individuals earn higher wages for two reasons. First, income pooling within a joint household raises risk-averse individuals' reservation wages. Second, married individuals search harder and climb the job ladder faster, as they internalize that a higher current wage increases their partner's selectivity over wage offers. Heterogeneous labor market returns cause married individuals to specialize according to comparative advantage in search, generating a sizable marital wage premium that is also increasing in spousal education, as in the data.


Labor Market Search with Imperfect Information and Learning (with John Conlon, Basit Zafar, and Matthew Wiswall) [Draft]

We investigate the role of information frictions in the US labor market using a new nationally representative panel dataset on individuals' labor market expectations and realizations. We find that expectations about future job offers are, on average, highly predictive of actual outcomes. Despite their predictive power, however, deviations of ex post realizations from ex ante expectations are often sizable. The panel aspect of the data allows us to study how individuals update their labor market expectations in response to such shocks. We find a strong response: an individual who receives a job offer one dollar above her expectation subsequently adjusts her expectations upward by \$0.47. The updating patterns we document are, on the whole, inconsistent with Bayesian updating. We embed the empirical evidence on expectations and learning into a model of search on- and off- the job with learning, and show that it is far better able to fit the data on reservation wages relative to a model that assumes complete information. The estimated model indicates that workers would have lower employment transition responses to changes in the value of unemployment through higher unemployment benefits than in a complete information model, suggesting that assuming workers have complete information can bias estimates of the predictions of government interventions. We use the framework to gauge the welfare costs of information frictions which arise because individuals make uninformed job acceptance decisions and find that the costs due to information frictions are sizable, but are largely mitigated by the presence of learning.



Work In Progress:

Labor Market Shocks and Consumption (with Fatih Karahan)

Wage Growth and Compensating Differentials: Evidence from the SCE (with Gizem Kosar, Basit Zafar, and Matthew Wiswall


Discussions:
Discussion of "On Worker and Firm Heterogeneity in Wages and Employment Mobility: Evidence from Danish Register Data," by Lentz, Piyapromdee, and Robin
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 

2018 Seminars/Presentations:


University of Edinburgh 03/19/18
University of Cambridge 03/20/18
EUI 03/23/18
Federal Reserve Bank of Cleveland 04/04/18
University of Pennsylvania 04/11/18
SED 2018 06/28/2018
NBER SI 07/17/18
University of Houston 10/22/18
IIES Stockholm 11/06/18



Data/Codes

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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