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Title: Essays in Macro and Labor Economics
Citation Type: Dissertation/Thesis
Publication Year: 2015
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Abstract: This dissertation consists of three essays at the intersection of labor economics and macroeconomics. It tackles macroeconomic questions with a focus on labor markets. It makes use of micro level and regional level data in order to understand how macroeconomic developments affect labor market outcomes of individuals. Chapter 2 combines two intensively discussed topics at the intersection of labor economics and macroeconomics, namely labor market polarization and intergenerational mobility. This paper investigates whether there is a causal relationship between rising labor market polarization and declining intergenerational mobility in the United States. The former relates to the disappearance of middle-wage routine jobs and the rise of both high- and low-income jobs. The latter measures the cross-generational link between the income of parents and that of their children. The rising demand for extreme skills in the labor market - driven by falling costs for information and communications technology - induces young generations to attain either very high or very low levels of education. Children from low-income parents typically experience less parental support, in particular to finance high educational attainment. This lower level of parental investment into children’s education implies limited chances for upward economic mobility for children from low-income parents. On the other hand, children of high-income parents have better access to high levels of education, and are therefore less likely to fall down the economic ladder. Therefore, children from both low- and high-income parents are less likely to make cross-generational transitions in terms of employment, occupational group and income. Children of middle-income parents are also more likely to choose very high or very low levels of educational attainment, consequently parental income becomes less important for the children’s incomes. Chapter 3 examines the development and the role of firms in the gender pay gap in 21 European countries. It exploits information on employees and employers to understand how firms contribute to the gender wage gap. Firms can contribute to the earnings inequality between men and women in two ways. First, women receive lower wages than men from the same firm. Second, men and women can work for employers with differing in the wages they pay their employees. The paper shows that both factors on average play an equivalent role, but it finds strong heterogeneity across countries. The gender wage gap also grows with age, and the analysis provides evidence that women and men increasingly work in different firms in terms of wage payments. The rising divergence of employer segregation between men and women can be associated with family formation. The paper relates distinct institutional settings to the two factors of how firms contribute to the gender pay gap. A higher incidence of central wage bargaining in a firm tends to increase the gender wage gap, which is possibly driven by bonuses. Family policies which allow a better work-life balance for women tend to reduce the wage gap caused by sorting into different firms, in particular for age groups after family formation. Chapter 4 explores the interaction between trade shocks and labor market frictions for eight Western European countries. The rise of China in global commodity markets since the beginning of this century has adversely affected many manufacturing workers in advanced economies. Previous research typically focused on regional variation within a country, and these studies typically find heterogeneous average responses in the magnitude of the decline in manufacturing employment. One potential explanatory factor behind these may be labor market institutional settings because they impact employment decisions of both workers and firms. The paper investigates whether labor market frictions exacerbate the detrimental impact of the rise in import competition from China on manufacturing employment, and which sector of activity absorbs this adverse shock. The main finding confirms that regions more exposed to the rise of China have suffered from a reduction in manufacturing employment shares, and that this shock grows larger with regional labor market friction. Moreover, the paper finds that employment in public services, and not in construction or private services sector, absorbed the negative shock to the manufacturing sector. The unemployment rate, the labor force participation rate, and wages in all sectors are largely unresponsive to import competition from China.
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Authors: Henning, Jan-Luca
Institution: University of Dublin
Department: Trinity College
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Data Collections: IPUMS USA
Topics: Labor Force and Occupational Structure, Poverty and Welfare
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