Essays on applied microeconomics

Fisher, Jack Welcome (2023) Essays on applied microeconomics. PhD thesis, London School of Economics and Political Science.

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Abstract

This thesis is comprised of three chapters that study individual and household behavior in markets where they are subject to choice frictions. Chapters 1 and 2 study workers in the gig economy, while chapter 3 examines households’ decision-making in a mortgage market. All the chapters combine theoretical and empirical analysis. In chapter 1, I use administrative data spanning the UK’s food delivery market to estimate worker surplus in this typical gig labor market. Evidence that workers learn about their own value of gig work over time allows for the identification of the joint distribution of gig work valuations and outside options. Estimates imply a median monthly surplus for gig workers equal to one-third of the median employee’s monthly income (or £673). In terms of policy, the analysis suggests that attaching fixed benefits to gig work, such as those mandated by California’s Proposition 22, is unlikely to raise worker welfare if platforms pass on some of the associated costs through, for example, lower hourly earnings. Chapter 2 investigates an important dimension of the typical flexibility versus security trade-off that is used to frame gig work, as well as self-employment more generally. Namely, behavioral frictions that prevent workers from fully exploiting flexibility. I study the welfare cost of behavioral biases in intensive margin labor supply decisions for a group of self-employed workers who are free to pick their hours. In the spirit of Chetty-Looney-Kroft (2009), I estimate a salient—large and positive—daily Frisch elasticity to characterize preferences and contrast this with typical daily labor supply, which is subject to behavioral biases. A new sufficient statistics formula translates these deviations into welfare losses ranging between two and six percent of daily income. Lastly, chapter 3 studies cross-subsidies in the UK mortgage market that are caused by heterogeneity in the timeliness of household refinancing. We build and estimate a model of household mortgage refinancing using rich administrative data on the stock of outstanding mortgages in the UK. The results imply sizeable cross-subsidies from poorer to richer households. This work highlights how the design of household finance markets can entrench financial inequalities.

Item Type:	Thesis (PhD)
Additional Information:	© 2023 Jack Welcome Fisher
Library of Congress subject classification:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HG Finance
Sets:	Departments > Economics
Supervisor:	Spinnewijn, Johannes
URI:	http://etheses.lse.ac.uk/id/eprint/4603

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