Knowledge that Transforms

This paper shows that job mobility is a valuable channel that employed workers use to mitigate bad labor market shocks. I estimate a model of wage dynamics jointly with a dynamic model of employment and job mobility. The key feature of the model is the specification of wage shocks at the worker-firm-match level, for workers can respond to these shocks by changing jobs. I find that, relative to the variance of individual-level shocks, the variance of match-level shocks is large and the consequent value of job mobility is substantial, particularly for workers whose match-specific wages are low.

While much research has investigated peer effects in education, less is known about peer influence at work, particularly how bad peers affect other workers. I study soldiers during a time when the US Army granted large numbers of morality waivers to recruits with felony or misdemeanor convictions that normally preclude enlistment. I find that soldiers randomly assigned to larger shares of peers with criminal backgrounds are more likely to commit major misconduct. Additionally, that misconduct often occurs in the same month a waivered peer commits misconduct, suggesting that influence occurs through both exposure to adverse peers and their contemporaneous behavior.

Much evidence suggests that having more education leads to higher earnings in the labor market. However, there is little evidence about whether having more education causes employees to experience lower earnings volatility or shelters them from the adverse effects of recessions. We use a large British administrative panel data set to study the impact of the 1972 increase in compulsory schooling on earnings volatility over the life cycle. Our estimates suggest that men exposed to the law change subsequently had lower earnings variability and less procyclical earnings. However, there is little evidence that education affects earnings volatility of older men.

We examine data from Australia, Canada, and the United States to assess the potential for immigrant screening policies to influence the labor market performance of skilled immigrants. Our estimates point to improvements in employment rates and weekly earnings of male university-educated immigrants in all three countries concomitant with policy reforms. Nonetheless, the gains are modest in comparison to a substantial and persistent performance advantage of US skilled immigrants. Given that there is increasingly little to distinguish the screening policies of these countries, we interpret the US advantage as primarily reflecting the relative positive self-selectivity of US immigrants.

Labor markets become more efficient in theory if job seekers direct their search. Using online job board data, we show that high-wage ads attract more applicants as in directed search models. Due to distinctive data features, we also estimate significant but milder directed search for hidden (or implicit) wages, suggesting that ad texts and requirements tacitly convey wage information. Since explicit-wage ads often target unskilled workers, other estimates in the literature ignoring hidden-wage ads may suffer from selection bias. Moreover, job ad requirements are aligned with their applicants’ traits, as predicted in directed search models with heterogeneity.

This paper analyzes a new explanation of the “ripple effect” of minimum wages based on how minimum wages affect hedonic compensation. Minimum wage hikes lower compensating differentials at low-skill undesirable jobs because they raise wages at the most desirable low-skill job, the minimum wage job. This change in hedonic compensation may cause some individuals to optimally leave low-wage undesirable jobs and seek more desirable employment. If labor supply falls at low-wage undesirable jobs, employers would raise wages, consistent with the ripple effect. Empirically, I provide evidence that hedonic-based labor supply substitution is taking place and contributing to the ripple effect.

The Post-9/11 GI Bill brought about the largest expansion in veteran education benefits since the end of World War II, increasing annual benefit expenditures from $3 billion to more than $13 billion. Leveraging variation over time, geography, and type of veterans, I explore the effect of financial aid on degree attainment. I find that the aid expansion increased degree attainment by 5–6 percentage points (25%), roughly 0.4 percentage points per $1,000 of additional maximum aid. These findings indicate that financial aid can increase degree attainment, even for individuals with high levels of initial support.

This paper studies wage determination using the first longitudinal data set containing job-level task information for individual workers. Novel quantitative task measures detail the amount of time spent performing people, information, and objects tasks at different skill levels. These measures suggest natural proxies for on-the-job human capital accumulation and provide new insights about wage determination. Current job tasks are quantitatively important, with high-skilled tasks being paid substantially more than low-skilled tasks. There is no evidence of learning by doing for low-skilled tasks but strong evidence for high-skilled tasks. Current and past high-skilled information tasks are particularly valuable.

A point of contention in the refugee crisis involves possible adverse effects on host communities associated with poor, low-skilled migrants with low host-community language knowledge. We use unique matched birth and schooling records to examine the effects of a large influx of poor, non-English-speaking Haitian migrants into Florida public schools immediately following the devastating 2010 earthquake. We find zero or modestly positive estimated effects of these migrants on the educational outcomes of incumbent students in the year of the earthquake or in the 2 years that follow, regardless of the socioeconomic status, grade level, ethnicity, or birthplace of incumbent students.

This paper investigates whether interracial contact in childhood impacts adult romantic relationships. We exploit quasi-random variation in the share of black students across cohorts within US schools. We find that more black peers of the same gender lead whites to have more relationships with blacks as adults. While we do not find impacts on labor market outcomes, there are significant effects on reported racial attitudes. Furthermore, an increase in meeting opportunities is unlikely to explain the increased interracial relationships, since the effect is persistent across time, space, and social networks. Overall, interracial contact during childhood has important long-term behavioral consequences.