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Studies of labor market data

Koenig, Felix (2019) Studies of labor market data. PhD thesis, London School of Economics and Political Science.

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The thesis uses micro data and quasi experimental research designs to test three theories about labor markets. The first chapter tests a leading explanation for top income growth, the superstar effect. The superstar effect attributes rising top incomes to expanding market reach of workers. I identify a case of exogenous market reach expansion in the entertainment sector and study the labor market effects. Incomes become markedly more concentrated on the top when entertainers can reach a bigger audience. Wages of stars grow 17% in response to a fourfold increase in market reach. A distinctive pattern of wage changes distinguishes the superstar model from alternative explanations. Growth of top pay occurs simultaneously with widening income differences at the top, a decline in middleincome jobs, an increase in low-paid jobs and a fall in total entertainer employment. The second chapter tests how labor supply responds to improving entertainment technology. To identify the effect the chapter tracks the roll-out of TV signal. Social security records show that labor supply drops significantly with the introduction of TV. The effects are most pronounced for older workers, in line with descriptive evidence on changing retirement habits. The chapter shows that monetary spending substantially understates the value attached to TV. The third chapter studies the canonical search and matching model and shows that accounting for realistic job search helps the model to account for labor market fluctuations and addresses the “Shimer puzzle.” The chapter provides evidence that reservation wages significantly respond to backward-looking reference points. Introducing such reference-dependent job search to the model reconciles predictions on the cyclicality of both wages and reservation wages with the data. Other proposed solutions to the unemployment volatility and wage flexibility puzzle that hinge on alterations to the wage setting mechanism only work for parameter values outside the range typically estimated.

Item Type: Thesis (PhD)
Additional Information: © 2019 Felix Nikolaus Koenig
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Sets: Departments > Economics
Supervisor: Pischke, Jorn-Steffen

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