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Essays in labour economics

Bagaria, Nitika (2014) Essays in labour economics. PhD thesis, London School of Economics and Political Science.

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My thesis investigates the role of incentives for employees and the phenomenon of labour market hysteresis in driving productivity and employment in the labor market in the UK. Chapter 1 summarizes the thesis. The second chapter estimates the impact of introducing an explicit points-based system in favour of finding jobs for the disabled in a UK job placement agency. Using dynamic analysis, we find that in the long-run the policy improved disabled outflows by 6% and had an insignificant effect on JSA outflows. In the short-run, the policy had a negative impact on JSA outflows that declined by 2%. This is consistent with a model where information helps both groups, but incentives offset this for the able and reinforce it for the disabled. The third chapter studies how incentives are weakened in a public sector organization when rewards are based on team output rather than individual output. With the introduction of team rewards, employees are likely to free-ride on each other’s efforts. I find compelling evidence that this indeed occurs. Peer monitoring, may however, limit free-riding in teams. I formalize the impact under two benchmark models to ascertain the relative impact of peer monitoring and free-riding. Using difference-in-differences estimators, I find that consistent with a degree of peer monitoring, the dilution effect is smaller when peer monitoring is easier. The fourth chapter models the phenomenon of labor market hysteresis in a macroeconomic model to determine its impact on macroeconomic outcomes. In particular, we study its role in determining the impact of the scale and timing of UK’s fiscal consolidation programme on output and unemployment in the UK. Finally, the last chapter studies employee incentives in the context of education. Motivated by a diagnosis of increasing inequality in UK’s educational attainment in secondary education, we recommend a flexible school system and improved school and teacher governance.

Item Type: Thesis (PhD)
Additional Information: © 2014 Nitika Bagaria
Library of Congress subject classification: H Social Sciences > HB Economic Theory
Sets: Departments > Economics

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