Immigration and Crime in Frictional Labor Markets April 2022, Review of Economic Dynamics
Abstract: This paper studies the relationship between immigration and crime by applying the Engelhardt et al. (2008) crime model. The relationship between immigration and crime has been debated widely, but there is no theoretical explanation that can well define the effects of immigration on crime. This model constructs two channels through which immigrants affect the crime rate in the host country: a composition (direct) channel and labor market (indirect) channel. These two channels provide explanations of the ambiguity of immigration effects on the crime rate. An extension of the model with skill bias and imperfect substitution between skilled and unskilled labor has more sophisticated numerical results based on the U.S. labor market and immigration. A more generous unemployment insurance system for immigrants increases both the unemployment and crime rates. An extended duration of incarceration and a deportation policy reduce crime rates but have no significant impact on labor market outcomes.
Working Paper
The Visibility of Discrimination in Frictional Labor Market (under review)
Abstract: Policies against discrimination in the labor market do not stop employers from discriminating the less-preferred groups. I explore the “Ban-the-Box policy” (BTB) as an experiment for this study. It matters because ex-offenders encounter substantial barriers to employment, driven by discriminatory market practices that often lead to recidivism. This paper presents a theoretical model of discriminatory market segregation against ex-offenders within frictional labor markets, focusing on the implications of BTB policy. The model characterizes the labor market dynamics and market segmentation where prejudiced firms exclude ex-offenders. The BTB policy stops employers from excluding ex-offenders from the application so that workers no longer able to know the discriminatory preference of firms that they match. However, firms can still discriminate workers by their criminal records during the hiring process. Therefore, discrimination becomes invisible. The BTB policy increases labor market outcomes among ex-offenders, while it simultaneously diminishes employment for workers without criminal records. The model predicts a net decreases in the crime rate of 2.77 offenses per 1,000 individuals, accompanied by a decline in the recidivism rate by 7.28 percentage points.
Impacts of Criminal Records on Labor Market Outcomes: Theoretical and Empirical Evidence from Denmark (Revise and Resubmit, Labour Economics)
Abstract: This paper investigates the impact of criminal records on labor market outcomes in frictional labor markets. I first develop a theoretical model within a search and matching framework that includes heterogeneous firms and workers. Prejudiced firms experience disutility from hiring ex-offenders and thus only hire workers without criminal records. Consequently, ex-offenders receive job offers exclusively from unprejudiced firms, while workers without criminal records receive offers from both types of firms. This disparity leads to additional search frictions for ex-offenders. Using Danish register data from 1986 to 2003, I empirically confirm these theoretical predictions. The results show that ex-offenders face increased search frictions immediately upon release and while unemployed, though these frictions dissipate once they are employed and job searching on the job. Interestingly, the wage distribution of ex-offenders surpasses that of workers without criminal records, with ex-offenders earning, on average, 28% more. The model’s fitted wage distribution explains 70% of the wage gap observed between the two groups. Additionally, the model suggests policy implications: longer prison sentences and stricter policing may lower crime rates, while labor market interventions, such as career training and enhanced social assistance for ex-offenders, can support rehabilitation and reduce recidivism. However, these interventions might also have unintended effects, potentially neutralizing their impact on overall crime reduction.
Heterogeneous Labor Markets across Occupations and Frictional Wage Dispersion (Revise and Resubmit, B.E. Journal of Macroeconomics)
Abstract: Baseline search models struggle to sufficiently explain empirical wage differences among observationally identical workers. This paper studies frictional wage dispersion by extending Ortego-Marti (2016) with heterogeneous labor markets. According to Ortego-Marti (2016), the model with human capital loss during unemployment provides a significant improvement. Furthermore, the labor market is segmented into high and low depreciation occupation markets, given the similarity of human capital depreciation rates across occupations. According to the estimations with PSID from 1979 to 1997, the heterogeneity of labor markets increases frictional wage dispersion to 1.2840. It explains 84% of the empirical wage dispersion, while the homogeneous labor market in Ortego-Marti (2016) only explain about 50%.
Abstract: Global labor mobility is an important subject. Policy makers are concerned about policies that control the distribution of native and foreign workers. This paper analyzes immigration policy effects by modeling workers' migration behavior. There are two countries and workers encounter heterogenous migration opportunities. Workers can decide to stay or emigrate to foreign countries. The model captures the labor movement between two countries. I calibrate the model to the data of Mexico and the United States. When the US subsidizes firms that hire natives, employment and wages increase so that more Mexicans are attracted. When the US taxes firms that hire Mexicans, fewer Mexicans move to the US as wages and employment fall. If Mexicans are taxed when they search in the US, fewer Mexicans immigrate to the US. When Mexico subsidizes the US-born workers who search in Mexico, it reduces the migration cost of US-born workers and attract more US-born workers to move to Mexico.
“Information and Discrimination: Case in Criminal Records” with Antonella Mancino
“Effects of Imprisonment on Job Matching Quality in Denmark” with Amanda Agan, John Kennes, Luke Taylor
“Immigration and Over-education in the U.S.”