Research

The Equilibrium Effects of Domestic Outsourcing (JMP)

This paper studies the effects of domestic outsourcing on workers and labor markets. I use self-reported outsourcing status from the NLSY 1979. Outsourced workers earn 7.1% less in total compensation, mainly because they have lower access to health insurance and retirement plans. These effects are heterogeneous by education: workers without a bachelor's degree earn 8.8% less, while workers with a bachelor's degree earn insignificantly more. Within occupations, outsourcing is positively correlated with employment. Outsourcing leads to a trade-off for workers without a bachelor's degree: jobs are lower quality but more plentiful. To examine this trade-off, I develop a DMP-style model, in which firms endogenously choose to either hire workers from a frictional labor market or rent labor from outsourcers. High-productivity firms chose to outsource and expand: workers lose access to the highest-paying jobs but are more likely to be employed. Calibrations reveal outsourcing makes workers without a bachelor's degree worse off but workers with one better off.

Currency Competition with Uncertain Acceptance: The Case of Cryptocurrencies

with Fan Liang

Prices of new currencies reflect both the liquidity of a currency today and its expected future liquidity as more consumers and merchants accept it as means of payment. We adopt a New Monetarist framework with an emerging currency, cryptocurrency, competing with an existing currency, money. Seller’s acceptance of cryptocurrency exogenously grows over time; this growth stops in a random period. Cryptocurrency prices increase in expected future acceptance and crash when acceptance growth stops. We also study an environment in which a fraction of buyers are optimistic about the future of cryptocurrencies. Surprisingly, the presence of optimists has an ambiguous effect on prices