labor economics thesis

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Ubc theses and dissertations, essays in labor economics jales, hugo borges --> -->.

This thesis examines two topics in labor economics and policy evaluation. Chapter 1 provides an introduction. Chapter 2 addresses the estimation of the effects of the minimum wage on labor market outcomes in developing countries. The main finding is that, even in the absence of policy variation, that is, when the same level of the minimum wage holds for all the workers in the data, it is still possible to recover the effects of this policy under particular assumptions of a dual economy model. Using this result, the effects of the minimum wage in Brazil from 2001 to 2009 are estimated. It is shown that the minimum wage has considerably increased average wages and reduced wage inequality. However, these effects are accompanied by higher unemployment and an increase in the size of the informal sector. Overall, the loss of tax revenues from the outflow of workers to the informal sector and unemployment more than offsets the increase in wages. Thus, this minimum wage policy contributes to a decrease in the labor tax revenues collected by the government. Chapter 3 also considers estimation of the effects of the minimum wage on labor market outcomes in developing countries. However, this chapter explores the use of less restrictive assumptions regarding the joint distribution of sectors and wages. To ease the estimation of the model parameters, a parametric approach (maximum likelihood) is used. The results validate the conclusions obtained in the previous chapter. Chapter 4 investigates the estimation of policy effects in partially randomized designs. It is shown that when randomization is implemented in a stratified way, the usual tests of balance of characteristics between treatment and control groups can suffer from size distortions, lack of power, or both. A solution to this problem is proposed, and its performance is compared with the baseline estimators in a simulation. It is shown that the proposed test possesses the desirable characteristics of correct nominal size and consistency. Finally, to illustrate the use of these techniques, a stratified, randomized job training program is analyzed.

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• ubc_2016_february_jales_hugo.pdf -- 10.28MB

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Permanent URL: https://dx.doi.org/10.14288/1.0221355

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My thesis combines three distinct papers in labor economics. The first chapter is a collaborative work with Bernd Fitzenberger and Karsten Kohn. In this chapter we scrutinize the effects of union density and of collective bargaining coverage on the distribution of wages both in the covered and the uncovered sector. Collective bargaining in Germany takes place at either the industry or firm level. Collective bargaining coverage is much greater than union density. The share of employees covered by collective bargaining in a single firm can vary between 0% and 100%. This institutional setup suggests that researchers should explicitly distinguish union density, coverage rate at the firm level, and coverage at the individual level. Using linked employer-employee data, we estimate OLS and quantile regressions of wages on these dimensions of union influence. A higher share of employees in a firm covered by industry-wide or firm-specific contracts is associated with higher wages, but there is no clear-cut effect on wage dispersion. Yet, holding coverage at the firm level constant, individual bargaining coverage is associated with a lower wage level and less wage dispersion. A greater union density reinforces the effects of coverage, but the effect of union density is negative at all points of the wage distribution for employees who work in firms without collective bargaining coverage. Greater union density thus compresses the wage distribution while moving the distribution in firms without coverage uniformly. The second chapter evaluates the impact of the UK Working Time Regulations 1998, which introduced mandatory paid holiday entitlement. The regulation gave(nearly) all workers the right to a minimum of 4 weeks of paid holiday per a year. With constant weekly pay this change amounts effectively to an increase in the real hourly wage of about 8.5% for someone going from 0 to 4 weeks paid holiday per year, which should lead to adjustments in employment. For employees I use complementary log-log regression to account for right-censoring of employment spells. I find no increase in the hazard to exit employment within a year after treatment. Adjustments in wages cannot explain this result as they are increasing for the treated groups relative to the control. I also evaluate the long run trend in aggregate employment, using the predicted treatment probabilities in a difference-in-differences framework. Here I find a small and statistically significant decrease in employment. This effect is driven by a trend reversal in employment, coinciding with the treatment. The third chapter considers how the availability of a personal computer at home changed employment for married women. I develop a theoretical model that motivates the empirical specifications. Using data from the U.S. CPS from 1984 to 2003, I find that employment is 1.5 to 7 percentage points higher for women in households with a computer. The model predicts that the increase in employment is driven by higher wages. I find having a computer at home is associated with higher wages, and employment in more computer intensive occupations, which is consistent with the model. Decomposing the changes by educational attainment shows that both women with low levels of education (high school diploma or less) and women with the highest levels of education (Master's degree or more) have high returns from home computers.

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Essays in labor economics.

This dissertation consists of a collection of three essays in Labor Economics, all studying the careers of young American workers. The first two essays, Chapter 1 and Chapter 2, analyze the early-career gender wage gap among recent cohorts of highly educated US workers. The third essay, Chapter 3, analyzes long-run changes occurred over the last four decades in the supply of overtime work among American employees. Chapter 1 provides an in-depth analysis of the evolution of the careers of Millennial American college graduates from labor market entry to five to ten years later. Using data from the National Longitudinal Survey of Youth (1997) I neatly reconstruct workers' careers from labor market entry and provide a variety of reduced-form evidence showing that gender differences in the wage gains that workers obtain when they change jobs determine a large portion of the early-career gender wage gap and of its expansion over years of experience. I show that these results are robust and hold irrespective of young workers' marital and parental status. In light of the results provided in Chapter 1, in Chapter 2 I study the contribution of the main determinants of wage gains from job changes to the early-career gender wage gap among highly-educated American workers. Specifically, first, I estimate a structural model of hedonic job search to estimate the extent to which men and women differ in terms of search frictions, of preferences for valuable amenities (flexibility and parental leave) and of the wage offers received conditional on the provision of amenities. Second, I use the model estimates to perform a series of counterfactual analyses and quantify the impact of search frictions, preferences and wage offers on the early-career gender wage gap and on its expansion due to job search and job changes. I find that young men and women share similar preferences for amenities. Compared to men, however, women are offered lower wages, and predominantly so in jobs that provide benefits. Since these jobs typically offer higher wages too, the gender pay gap expands as workers climb the job ladder to enter employment relationships that offer better wage-benefits bundles. The higher price that women pay for amenities explains 42% of the early-career growth in the wage gap that the model attributes to job search and job changes. The remaining portion is explained by the lower wages offered to women in jobs that do not provide benefits (25%) and by women's stronger search frictions (33%). In Chapter 3 I study the determinants of long-run trends in overtime work. I document that work hours have been increasing in the United States in the 1980s and 1990s and steadily declining in the 2000s and 2010s, and that these trends were predominantly driven by secular changes in the share of young, salaried employees working long hours (more than 40 hours per week) in relatively high-pay jobs. I then provide a model that explains the evolving long-run trends in overtime as an outcome of underlying changes in labor demand that affected the life-cycle wage gains that employees expect to obtain when supplying overtime work hours. I empirically test and validate the implications of the model, and show that long-run changes in the wage premia for working long hours can explain the rise and fall in overtime work that I document. Finally, I estimate long-run trends in persistent and transitory wage dispersion and show that persistent wage dispersion grew in the 1980s and 1990s and declined later on. To the extent that shocks to wage gains from working long hours result into an increase in the spread of permanent income across employees typically supplying different amounts of work hours, I show that a rise and fall in wage premia for overtime work reconciles the observed reversed-U shaped trend in both overtime work and persistent wage dispersion. These results are suggestive that, after surging in the 1980s and the 1990s, the “fortunes of the youth'” may have been declining later on, due to shifts in labor demand that flattened the life-cycle wage profiles that young, salaried employees can obtain when supplying long work hours. These results can also help reconcile recent evidence that the demand for skill and cognitive tasks and the college wage premium have been declining, while the age wage gap has been increasing. Conversely, the results I obtain question theories that explain long-run trends in US men's labor supply through secular increases in the marginal value of leisure due to improvements in leisure technology.