Job Market Paper: Borrowing Constraints, Search, and Life-Cycle Inequality [PDF]:
Abstract: Is the arrival rate of a job independent of the wage that it pays? We answer this question by testing how, and to what extent, unemployment insurance changes the hazard rate of leaving unemployment across the wage distribution using a Mixed Proportional Hazard Competing Risk Model and data from the 1997 National Longitudinal Survey of Youth. Controlling for worker characteristics we reject that job arrival rates are independent of the wages offered. We apply the results to several prominent job-search models and interpret how our findings are key to determining the efficacy of unemployment insurance.
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.
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.