Job Market Paper: (2016) Borrowing Constraints, Search, and Life-Cycle Inequality [PDF]:
Abstract: Models of job search typically assume that search can either be described as random or competitive. However, there is scant empirical evidence to guide the choice between these frameworks. In this paper we show that the semi-elasticity of the hazard rate differs across the two models and test this implication using likelihood ratio tests. We find evidence against random search by showing that changes in the model-implied hazard rate are not consistent with those observed in the data.
(2015) Public Education Spending and Intergenerational Mobility [PDF]:
Abstract: A number of papers have sought to assess the viability of the Diamond-Mortensen-Pissarides model as a vehicle for understanding unemployment and vacancy dynamics during a business cycle. Shimer (2005) argues that for reasonable calibrations, a wide range of canonical search models cannot match the volatility of these two series in the data. In addition, papers such as Rotemberg (2008) show that this class of models generate wages that are too strongly pro-cyclical to match the data. We show that a modest extension of the Mortensen and Pissarides (1994) framework is able to bridge both of these gaps. In our model, a matched firm and worker occasionally enter an alternate bargaining regime, in which the bargaining power shifts in favor of the firm. In this state, the firm retains a larger share of the surplus, but is assessed as an additional fixed flow cost. The additional flow cost causes firms to post vacancies pro-cyclically, while the change in the bargaining regime limits the volatility of wages over the business cycle.
(2016) The Effects of Wealth on Search and Training [Updated PDF Coming Soon]:
Abstract: This paper explores the interaction between wealth, search, and firm-sponsored human capital accumulation. Recent work has shown that earnings losses are negatively skewed, and concentrated among low-income workers. I demonstrate that when firms choose both the type and intensity of human capital accumulation, low-income workers are more likely to receive firm-specific training and thus subject to larger consumption risk in the event of job loss. This is because when workers are risk-averse and face borrowing constraints, low-income, low-wealth workers apply for more easily attainable jobs. For the firm, this creates a moral hazard problem in which costs of general human capital training cannot be recouped. To minimize this moral hazard, firms employing workers of this type offer firm-specific training, making lateral movements in the job market more costly for the worker. This is consistent with the data on earnings losses, as well as the finding that once unemployed, longer durations have a larger effect on high-income households.