Working papers
"Distributional Effects of Ability Learning and Career Choice"
Abstract: This paper examines occupational choices as a channel between wealth and earnings inequality. Selecting occupations that match workers' skills can lead to higher earnings. However, risk-averse workers might be reluctant to experiment and discover their highest earnings potential due to uncertainty. I construct a dynamic structural model that examines how workers gradually learn about their skills by performing different combinations of tasks. The results show that lower wealth leads to less experimentation in occupational choice, resulting in a greater loss in lifetime earnings. Additionally, the study finds that the payoff for performing cognitive tasks is much greater than that for motor tasks, but the costs of mismatching to a task are also greater for cognitive tasks. Simulation results using the estimated model show that a policy proposal for Baby Bonds can significantly reduce income inequality, particularly for people with low wealth.
Abstract: This paper examines occupational choices as a channel between wealth and earnings inequality. Selecting occupations that match workers' skills can lead to higher earnings. However, risk-averse workers might be reluctant to experiment and discover their highest earnings potential due to uncertainty. I construct a dynamic structural model that examines how workers gradually learn about their skills by performing different combinations of tasks. The results show that lower wealth leads to less experimentation in occupational choice, resulting in a greater loss in lifetime earnings. Additionally, the study finds that the payoff for performing cognitive tasks is much greater than that for motor tasks, but the costs of mismatching to a task are also greater for cognitive tasks. Simulation results using the estimated model show that a policy proposal for Baby Bonds can significantly reduce income inequality, particularly for people with low wealth.
"Do Greater Unemployment Benefits Lead to Better Matches? Evidence from Emergency Unemployment Compensation Programs"
Abstract: This paper explores a new aspect of post-unemployment search outcomes, namely occupational choice. Workers' career choice and potential improvement of job match quality upon occupational change is largely studied in the context of on-the-job-searches rather than unemployment. Despite its potential benefits, changing occupations may involve various risks. In particular, this paper documents that those who switch occupations stay unemployed on average 6 more weeks compared to those who stay in the same occupation. In this paper, I examine whether Unemployment Insurance benefits provide additional security in the face of such risks by leveraging cross-state variation in unemployment benefits as part of the Extended Unemployment Compensation program during the early 1990s. Using Matching methods and classic Difference-Differences approach, I find that additional UI benefits as well as household wealth levels and poor match quality with pre-unemployment jobs are deciding factors for workers to experiment and switch job tasks upon re-employment.
Abstract: This paper explores a new aspect of post-unemployment search outcomes, namely occupational choice. Workers' career choice and potential improvement of job match quality upon occupational change is largely studied in the context of on-the-job-searches rather than unemployment. Despite its potential benefits, changing occupations may involve various risks. In particular, this paper documents that those who switch occupations stay unemployed on average 6 more weeks compared to those who stay in the same occupation. In this paper, I examine whether Unemployment Insurance benefits provide additional security in the face of such risks by leveraging cross-state variation in unemployment benefits as part of the Extended Unemployment Compensation program during the early 1990s. Using Matching methods and classic Difference-Differences approach, I find that additional UI benefits as well as household wealth levels and poor match quality with pre-unemployment jobs are deciding factors for workers to experiment and switch job tasks upon re-employment.
"Sectoral Differences in Matching Technology" with Hyunmin Park
Abstract: This paper estimates Cobb-Douglas matching functions for four sectors of the US labor market---production, sales, professional, and services---while allowing the search effort to vary across worker types and the matching functions to display increasing or decreasing returns to scale. We find that (a) the returns to scale in the sales sector is close to constant while the returns to scale in other sectors are increasing, (b) the vacancy elasticity is substantially higher in the professional sector than in other sectors, (c) the unemployment elasticity is substantially higher than the vacancy elasticity in all sectors, and (d) the baseline matching efficiency is the highest in the production sector than in other sectors.
Abstract: This paper estimates Cobb-Douglas matching functions for four sectors of the US labor market---production, sales, professional, and services---while allowing the search effort to vary across worker types and the matching functions to display increasing or decreasing returns to scale. We find that (a) the returns to scale in the sales sector is close to constant while the returns to scale in other sectors are increasing, (b) the vacancy elasticity is substantially higher in the professional sector than in other sectors, (c) the unemployment elasticity is substantially higher than the vacancy elasticity in all sectors, and (d) the baseline matching efficiency is the highest in the production sector than in other sectors.
"Employer Learning and Multi-Dimensional Ability" with Kyungmin Kang
Abstract: The literature on employer learning has mostly been concerned with testing whether employers learn about true productivity of workers in various education groups, assuming that the rate of employer learning is independent of the type of job task. In this paper, thus, we ask whether the role of employer learning varies by worker task type. We build a model in which workers and firms learn about workers' multi-dimensional skills from productivity signals, where signal accuracy depends on a job's task intensity. To test the model implication that the flow of information is larger at the jobs with intensive tasks, we focus on two task measures, abstract and social tasks, constructed using data from the Occupational Information Network (O*NET). To address the endogeneity associated with job mobility, we take an instrumental variable approach, using the Markov property of Bayesian learning, where the previous periods' occupation and occupational aspiration are used as instruments. We find that employer learning depends on task intensity, especially for cognitive skills. Moreover, the degree of task-based employer learning varies across educational groups. In particular, our analyses show that cognitive tasks play a key role in employer learning for college graduates, while social tasks are more important for high school graduates.
Abstract: The literature on employer learning has mostly been concerned with testing whether employers learn about true productivity of workers in various education groups, assuming that the rate of employer learning is independent of the type of job task. In this paper, thus, we ask whether the role of employer learning varies by worker task type. We build a model in which workers and firms learn about workers' multi-dimensional skills from productivity signals, where signal accuracy depends on a job's task intensity. To test the model implication that the flow of information is larger at the jobs with intensive tasks, we focus on two task measures, abstract and social tasks, constructed using data from the Occupational Information Network (O*NET). To address the endogeneity associated with job mobility, we take an instrumental variable approach, using the Markov property of Bayesian learning, where the previous periods' occupation and occupational aspiration are used as instruments. We find that employer learning depends on task intensity, especially for cognitive skills. Moreover, the degree of task-based employer learning varies across educational groups. In particular, our analyses show that cognitive tasks play a key role in employer learning for college graduates, while social tasks are more important for high school graduates.
Work in progress
"Signaling vs. Learning and Human Capital Accumulation"
Abstract: One important feature of most signaling theory models is asymmetric information, whereby workers know their skill levels but employers do not. In this paper I relax this assumption that workers have perfect information about their ability and replace it with the assumption that workers need to learn about their skills by making human capital investment decisions whose payoffs reveal information about their ability. I construct a learning model of human capital accumulation and analyze the equilibria in such a learning game, focusing on whether it yields different implications than the classic signaling model. I analyze the human capital accumulation decision, the size of the college premium, and student loan policies.
Abstract: One important feature of most signaling theory models is asymmetric information, whereby workers know their skill levels but employers do not. In this paper I relax this assumption that workers have perfect information about their ability and replace it with the assumption that workers need to learn about their skills by making human capital investment decisions whose payoffs reveal information about their ability. I construct a learning model of human capital accumulation and analyze the equilibria in such a learning game, focusing on whether it yields different implications than the classic signaling model. I analyze the human capital accumulation decision, the size of the college premium, and student loan policies.
