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This dissertation studies two distinct issues in the field of labor economics: the labor supply of new mothers and firms' adjustments to changing labor costs. In both cases, I study the effect of labor market policies, both because they provide quasi-exogenous variation in otherwise endogenous variables of interest, and because of the intrinsic interest in studying the welfare implications of specific policies that governments have direct control over. The first two chapters, written jointly with Ludovica Ciasullo, consider how maternal labor supply is impacted by working conditions, and how it in turn affects intrahousehold bargaining and task allocation within the household. In the first chapter we study which work arrangements new mothers choose when allowed to do so, and whether these work arrangements affect their labor supply choices. We exploit the Australian 2009 Fair Work Act, which explicitly entitled parents of young children to request a (reasonable) change in work arrangements. Leveraging variation in the timing of the law, timing of childbirth, and the bite of the law across different occupations and industries, we establish two main results. First, if allowed to request a change in work arrangements, new mothers ask for regularity in their schedule. Second, with regular schedules, working mothers' child penalty declined from a 47 percent drop in hours worked to a 40 percent drop. For the most exposed mothers, the Fair Work Act led to both a doubling in schedule regularity, and a 30% decrease in the child penalty in hours of work. After establishing that an increase in schedule regularity leads to an increase in maternal labor supply, in the second chapter we study how this translates into division of labor within the household. First, we document that at baseline children bring a 40% increase in their parents' active time -- that is, total time spent on paid work, housework, or parenting -- and that this increase falls disproportionately on mothers, by a 2-to-1 ratio. Second, by exploiting the improvement in maternal labor market conditions brought about by the Australian 2009 Fair Work Act, we show that this gendered allocation of time is not affected by improved labor market prospects for women. Finally, we show that mothers who work longer hours reduce housework, but not time spent directly with children, mitigating concerns that maternal participation in the labor market comes at their children's expense. The third chapter, written jointly with Andrea Manera, focuses on how labor costs -- via stringency of labor regulations -- influence firms' innovation choices. We study the impact of employment protection legislation (EPL) on firms' innovation, through an event-study analysis of labor market reforms occurring in Europe over 2000-2016. Data from the Community Innovation Survey reveal that substantial drops in EPL for temporary workers prompt a reallocation of innovation towards the introduction of new products, away from process innovation aimed at cutting labor costs. Among innovative firms, the share of product innovators increases by 15% of the pre-reform value, while the share of firms specializing in process innovation falls by 35%. We develop a theoretical framework of directed technical change to rationalize our findings.
This dissertation has two self-contained chapters in labor economics. In the first chapter, I exploit variation in job arrival rates due to the recession in the early 1980s to understand the relative importance of three main channels — skill accumulation, search, and learning — to an individual's lifetime wage growth, and analyze how these channels interact. Specifically, I construct and estimate a model of on-the-job search, dynamic wage growth, and occupational choice using data from the NLSY79 and O*NET. In my model, workers are heterogeneous in initial cognitive and manual skills, while jobs differ by how intensively these skills are used. Over time, workers sort into occupations for which they are well suited by searching either on the job or off the job as they learn about their comparative advantages and accumulate skills. The estimated model shows that, first, all three channels are important in explaining life-cycle wage growth. Second, the interactions of the three components also play a significant role in life-cycle wage growth. Finally, I use my estimated model to understand the persistent wage losses of individuals who graduate during a recession. I find that skill accumulation, both alone and interacted with the other two channels, is the primary contributor to the long-term effect. Richer parents tend to have richer children, and richer individuals tend to be healthier, especially later in life. In the second chapter, we quantify how much of health and wealth outcomes can be explained by parental inputs made in childhood. To this end, we present a model in which parents invest in the health and human capital of their children, while also allowing for adults to invest in their own health and human capital once they are adult. We calibrate the model to available data on intergenerational health and earnings persistence as well as the cross-sectional distribution of health, wealth and earnings. The model allows us to quantify the intergenerational effect of parental investments on the child's human capital, health and wealth outcomes separately from the effects of the child's own investments as an adult. As a result, the calibrated model sheds light on how income redistribution policies may affect health outcomes, and conversely how health policies can affect income distribution, and importantly how the impact of both types of policies may spill over to subsequent generations.
This thesis is a collection of three essays in labour economics and applied econometrics. The first two essays investigate workers productivity and their effort choice in a tree-planting firm. The third essay studies community cooperation in a public good experiment. Beyond the econometric techniques, the convergence point of this thesis is the question of how individuals incorporate external factors into their choices. How work fatigue affects productivity, how productivity shocks affect workers' choice of effort, and how social interactions affect community cooperation. Understanding and measuring the relevance of these external factors is important for designing incentives that influence individuals to act in a desired way. Appropriate incentives are the best way to regulate behaviour without imposing restrictions and rules that are costly to enforce and may create social frictions. From the first two chapters on productivity of tree planters two interesting findings stand out. First, workers' earnings can be increased by simply rearranging the working week in different work spells. This could be an inexpensive way for certain firms to increase their labour productivity. Second, planters' optimal choice of effort depends on productivity shocks. This means that effort incentives may have heterogenous effects due to the particular shocks experienced by each worker. From the third chapter, I find that involving community leaders in the decision of contributing or not to a public good enhance community cooperation. The presence of local leaders triggers cooperative behaviour that is unconditional and independent of the expected actions of other community members.
This dissertation has two self-contained chapters in labor economics. In the first chapter, I exploit variation in job arrival rates due to the recession in the early 1980s to understand the relative importance of three main channels — skill accumulation, search, and learning — to an individual's lifetime wage growth, and analyze how these channels interact. Specifically, I construct and estimate a model of on-the-job search, dynamic wage growth, and occupational choice using data from the NLSY79 and O*NET. In my model, workers are heterogeneous in initial cognitive and manual skills, while jobs differ by how intensively these skills are used. Over time, workers sort into occupations for which they are well suited by searching either on the job or off the job as they learn about their comparative advantages and accumulate skills. The estimated model shows that, first, all three channels are important in explaining life-cycle wage growth. Second, the interactions of the three components also play a significant role in life-cycle wage growth. Finally, I use my estimated model to understand the persistent wage losses of individuals who graduate during a recession. I find that skill accumulation, both alone and interacted with the other two channels, is the primary contributor to the long-term effect. Richer parents tend to have richer children, and richer individuals tend to be healthier, especially later in life. In the second chapter, we quantify how much of health and wealth outcomes can be explained by parental inputs made in childhood. To this end, we present a model in which parents invest in the health and human capital of their children, while also allowing for adults to invest in their own health and human capital once they are adult. We calibrate the model to available data on intergenerational health and earnings persistence as well as the cross-sectional distribution of health, wealth and earnings. The model allows us to quantify the intergenerational effect of parental investments on the child's human capital, health and wealth outcomes separately from the effects of the child's own investments as an adult. As a result, the calibrated model sheds light on how income redistribution policies may affect health outcomes, and conversely how health policies can affect income distribution, and importantly how the impact of both types of policies may spill over to subsequent generations.
This dissertation consists of three essays. The first one brings together the areas of public and labor economics by developing a hypothesis that relates optimal taxation and time use. Using Mexican data on household time use and consumption, we find significant substitution between goods and time in home production and different elasticities of substitution for different house-hold commodities. Adding these findings to the optimal tax problem, we show it is optimal to impose higher taxes on market goods used in the production of commodities with a lower elasticity of substitution between goods and time. This is an analog of the classical Corlett and Hague (1953) result, differing in that we allow for the possibility of substitution between goods and time in the production of commodities. The second chapter is about international migration, in the area of labor economics. On one hand, surveillance of the border between Mexico and the United States by the U.S. government has increased dramatically over the last two decades. On the other hand, undocumented Mexican migrants often make multiple trips between the two countries. Thus, my hypothesis is that these migrants respond to heightened surveillance by increasing the length of stay of the current trip. I estimate a semi-parametric hazard model following Meyer (1990). Using data from the Mexican Migration Project I find no evidence that border enforcement affects the hazard of leaving the U.S. by undocumented Mexican Immigrants. The last essay is about mother's time and children related expenditures. Using data from the Mexican Time Use Survey and the National Household Survey of Income and Expenditure from 2002, I examine the time Mexican mothers dedicate to taking care of their children and the amount of money spent by the household in raising children. The main contribution of this paper is that it analyzes child care time use and child care expenditures simultaneously. The age of the youngest child is the most important determinant of both child care time and money expenditures. It is the case that more educated mothers spend more money on their children. With respect to child care time use, more educated mothers spend more or less time with their children depending on whether they are working or non-working mothers. At all levels of non-mother's income, working mothers spend significantly more money relative to time in child care than non-working mothers. For both groups the ratio of money over time increases at a decreasing rate; however, for non-working mothers the income expansion path is much flatter.
This dissertation studies micro and macro consumption and labor supply behavior. The first two essays study the response of consumption to income shocks and to job loss events, and draw implications to social insurance design. The last two essays turn to the macro picture, studying the behavior of aggregate consumption in the Great Recession, and exploring sources of the high unemployment observed during and in the aftermath of the Great Recession. The first essay is motivated by the documented empirical fact that job loss is associated with both pre- and post-job loss declines in hourly wages and earnings. Using recent data from the Panel Study of Income Dynamics, I show that consumption dynamics mirror these wage dynamics. To account for the consumption dynamics in the data I introduce a correlation between individual hourly wages and job loss into a life-cycle model with self insurance (through savings), social insurance, and endogenous unemployment durations. I find that this model is able to replicate the joint dynamics of wages, job loss and consumption that we observe in the data. I then show that accounting for the correlation between wages and job loss has important implications for the optimal design of unemployment insurance (UI). The consumption smoothing benefits of unemployment insurance are larger, and the cost of insurance lower, than suggested when this correlation is absent. Thus, while a model that assumes away these correlations yields optimal UI replacement rates close to zero, a model that incorporates the correlations predicts optimal rates of 0.54, slightly higher than the current US level. In the second essay we examine the link between wage inequality and consumption inequality using a life cycle model that incorporates household consumption and family labor supply decisions. We focus on the importance of family labor supply as an insurance mechanism to wage shocks and find strong evidence of smoothing of male's and female's permanent shocks to wages. Once family labor supply, assets and taxes are properly accounted for there is little evidence of additional insurance. In the third essay we review the evidence on changes in consumer spending during the Great Recession. We point out three distinctive features of consumption in the Great Recession. First, the drop in consumption was deep and persistent. Consumption per capita fell monotonically throughout the recession showing an overall decline greater than 4 percent from peak to trough. Spending on nondurables and (especially) services fell significantly compared to previous recessions. Second, consumption fell more than disposable income, partly as a result of an increase in government transfers to households. Third, the varying impact the recession has had across age, race, education and wealth groups resulted in a decline in consumption inequality. The last essay studies the role of geographic mobility in explaining the high levels of unemployment during and after the Great Recession. We find that the effect of mobility is always small: Using pre-recession mobility rates, decreased mobility can account for only an 11 basis points increase in the unemployment rate over the period. Using dynamics of renter geographical mobility in this period to calculate homeowner counterfactual mobility, delivers similar results. Using the highest mobility rate observed in the data, reduced mobility accounts for only a 33 basis points increase in the unemployment rate.
The first chapter of this dissertation examines the phenomenon of labor market segregation. Using a regression discontinuity (RD) design, I exploit the variation in baseyear minority shares across single-establishment firms to document the dynamics of establishment-level segregation in two five-year intervals: 1995-2000 and 2000-2005. Using the Longitudinal Employer-Household Dynamics (LEHD) infrastructure files, I first show that systematic establishment-level segregation still exists in all industries. Then, I show that the dynamics of segregation among these single-establishment firms are nonlinear and exhibit "tipping" patterns in both five-year intervals, although the magnitude is much larger in the earlier time period. The observed tipping pattern is primarily driven by non-Hispanic whites leaving. The effect due to minorities entering is much smaller. Alternative explanations such as non-linear changes in establishment characteristics or omitted variables do not explain the observed changes in minority shares. Finally, I find that, unlike the 1995-2000 period, during which tipping behavior seems to have been driven equally by blacks and Hispanics, Hispanics are the sole driving force in the 20002005 period. Overall, this chapter provides the first suggestive evidence that the dynamics of establishment-level segregation are highly nonlinear and exhibit a tipping pattern. The second chapter of the dissertation describes the technical linking process and examines the properties and the qualities of the crosswalk files. The crosswalk between the Longitudinal Employer-Household Dynamics (LEHD) infrastructure file system and the Census Business Register (BR) is authorized as part of the LEHD Infrastructure Project. This document describes the LEHD - BR crosswalk and its component inputs: the Business Register, Longitudinal Business Database (LBD), and the LEHD Infrastructure File system. The output files include the LEHD - BR crosswalk at both the establishment and employer levels. These output files can facilitate linking a wide range of contextual variables relating to characteristics of the current and prior employers and co-workers of current employees. Match and non-match rates for various populations are defined and estimated in order to examine the properties and quality of the LEHD - BR crosswalk output files. The third chapter of this dissertation exploits plausibly exogenous changes in family size caused by the initial implementation and subsequent relaxations in China's One Child Policy to estimate the causal effect of family size on educational attainment. I find that the average family size has decreased substantially since the One Child Policy implementation. By employing an Instrumental Variable estimation strategy, I find clear evidence indicating that there is indeed a negative trade-off between child's quantity and quality in urban China. An additional child can lead to a decrease of 1.2 years of schooling. A simple back-of-the-envelope calculation reveals that the implementation of the One Child Policy has significantly increased the average completed years of schooling by approximately 0.68 years in urban China. This effect is in fact larger for women than for men. No negative trade-off effect is found for the rural households in the sample.