This dissertation is composed of three essays. In the first essay of this dissertation, I reexamine the effect of industrial mobility on the cost of worker displacement. While the human capital implications of this regularity are well understood, no current model can explain why a displaced worker would ever choose to "switch." I develop a match-based model of wages and endogenous mobility and show that switching industries may, indeed, be optimal for some "mismatched" workers. I then use data on displaced workers to re-estimate the cost of switching industries that controls for the endogeneity of industrial mobility. I find that switching industries is an optimal decision from the point of view of individual displaced workers — i.e. that losses would have been even larger had they "stayed." The results suggest that skill mismatch and the resulting inability of some workers to re-match their task-specific skills via reemployment is an important determinant of the observed costs of worker displacement.
In the second essay, I estimate the degree of heterogeneity in the outcomes of displaced workers and analyze the extent to which these heterogeneous experiences can be explained by observable (or "systematic") factors as opposed to unobserved (or "idiosyncratic") factors. To this end, I use data on displaced workers to estimate the standard deviation of earnings losses following displacement. I find statistically significant heterogeneity at the lower bound, which is equal to about half of the mean effect each year following displacement. Once I control for systematic differences in observable characteristics, the remaining idiosyncratic variation is estimated to be about 20%-40% less than the total variation in the first few years following displacement and 50%-80% less than the total variation six to eight years after displacement. Systematic variation, however, remains fairly large and constant over time. These results suggest that idiosyncratic factors, such as luck or unobserved quality, have largely transitory effects on the outcomes of displaced workers while systematic factors, such as industrial mobility and unemployment duration, disproportionately explain the persistent heterogeneity in the costs of worker displacement.
The third essay explores the potential causes of spillovers in the wage distribution that occur when the minimum wage increases. This empirical phenomenon, known as the "ripple effect" of minimum wage laws, is typically explained in terms of demand substitution: where the rising minimum increases the demand for more-skilled workers who become relatively inexpensive compared to less-skilled workers. I show that workers will also respond to changes in the minimum wage by re-optimizing their labor supply since an increase in the minimum wage leads to lower compensating wage differentials. The resulting decline in labor supply at hedonically less desirable (and hence, higher paying) jobs could also cause the ripple effect. I combine labor market data on individuals with occupation-level hedonic data and provide evidence that the ripple effect is largely caused by labor supply substitution and not labor demand substitution as previously believed.
Keywords: Job Displacement, Tasks, Mismatch, Human Capital, Heterogeneous Treatment Effects Minimum Wage, Ripple Effect, Hedonic Wages.
|Commitee:||Spady, Richard, Wokersen, Tiemen|
|School:||The Johns Hopkins University|
|School Location:||United States -- Maryland|
|Source:||DAI-A 74/12(E), Dissertation Abstracts International|
|Keywords:||Heterogeneous treatment effects, Minimum wage, Mismatch, Ripple effect, Worker displacement|
Copyright in each Dissertation and Thesis is retained by the author. All Rights Reserved
The supplemental file or files you are about to download were provided to ProQuest by the author as part of a
dissertation or thesis. The supplemental files are provided "AS IS" without warranty. ProQuest is not responsible for the
content, format or impact on the supplemental file(s) on our system. in some cases, the file type may be unknown or
may be a .exe file. We recommend caution as you open such files.
Copyright of the original materials contained in the supplemental file is retained by the author and your access to the
supplemental files is subject to the ProQuest Terms and Conditions of use.
Depending on the size of the file(s) you are downloading, the system may take some time to download them. Please be