-
Who Moves Up the Job Ladder?*
January 2017
Working Paper Number:
CES-17-63
In this paper, we use linked employer-employee data to study the reallocation of heterogeneous workers between heterogeneous firms. We build on recent evidence of a cyclical job ladder that reallocates workers from low productivity to high productivity firms through job-to-job moves. In this paper we turn to the question of who moves up this job ladder, and the implications for worker sorting across firms. Not surprisingly, we find that job-to-job moves reallocate younger workers disproportionately from less productive to more productive firms. More surprisingly, especially in the context of the recent literature on assortative matching with on-the-job search, we find that job-to-
job moves disproportionately reallocate less-educated workers up the job ladder. This finding holds even though we find that more educated workers are more likely to work with more productive firms. We find that while highly educated workers are less likely to match to low productivity firms, they are also less likely to separate from them, with less-educated workers both more likely to separate to a better employer in expansions and to be shaken off the ladder (separate to nonemployment) in contractions. Our findings underscore the cyclical role job-to-job moves play in matching workers to
better paying employers.
View Full
Paper PDF
-
Immigrant Diversity and Complex Problem Solving
January 2016
Working Paper Number:
CES-16-04
In the growing literature exploring the links between immigrant diversity and worker productivity, recent evidence strongly suggests that diversity generates productivity improvements. However, even the most careful extant empirical work remains at some remove from the mechanisms that theory says underlie this relationship: interpersonal interaction in the service of complex problem solving. This paper aims to `stress-test' these theoretical foundations, by observing how the relationship between diversity and productivity varies across workers differently engaged in complex problem solving and interaction. Using a uniquely comprehensive matched employer-employee dataset for the United States between 1991 and 2008, this paper shows that growing immigrant diversity inside cities and workplaces offers much stronger benefits for workers intensively engaged in various forms of complex problem solving, including tasks involving high levels of innovation, creativity, and STEM. Moreover, such effects are considerably stronger for those whose work requires high levels of both problem solving and interaction.
View Full
Paper PDF
-
Firm Dynamics and Assortative Matching
May 2014
Working Paper Number:
CES-14-25
I study the relationship between firm growth and the characteristics of newly hired workers. Using Census microdata I obtain a novel empirical result: when a given firm grows faster it hires workers with higher past wages. These results suggest that productive, fast-growing firms tend to hire more productive workers, a form of positive assortative matching. This contrasts with prior research that has found negligible or negative sorting between workers and firms. I present evidence that this difference arises because previous studies have focused on cross-sectional comparisons across firms and industries, while my results condition on firm characteristics (e.g. size, industry, or firm fixed effects). Motivated by the empirical findings I develop a search model with heterogeneous workers and firms. The model is the first to study worker-firm sorting in an environment with worker heterogeneity, firm productivity shocks, multi-worker firms, and search frictions. Despite this richness the model is tractable, allowing me to characterize assortative matching, compositional dynamics and other properties analytically. I show that the model reproduces the positive firm growth-quality of hires correlation when worker and firm types are strong complements in production (i.e. the production function is strictly log-supermodular).
View Full
Paper PDF
-
Disentangling Labor Supply and Demand Shifts Using Spatial Wage Dispersion: The Case of Oil Price Shocks
November 2013
Working Paper Number:
CES-13-57
We separate changes in labor supply and demand through changes in higher-order moments of the wage distribution. We illustrate this idea in a study of the effects of oil price shocks, which generate a predictable labor demand adjustment across regions. Empirically, oil price shocks decrease average wages, particularly skilled wages, and increase wage dispersion, particularly unskilled wage dispersion. In a model with spatial energy intensity differences and nontradables, labor demand shifts, while explaining the response of average wages to oil price shocks, have counterfactual implications for the response of wage dispersion. Only shifts in labor supply can explain this latter fact.
View Full
Paper PDF
-
The Empirics of Firm Heterogeneity and International Trade
September 2012
Working Paper Number:
CES-12-18
This paper reviews the empirical evidence on firm heterogeneity in international trade. A first wave of empirical findings from micro data on plants and firms proposed challenges for existing models of international trade and inspired the development of new theories emphasizing firm heterogeneity. Subsequent empirical research has examined additional predictions of these theories and explored other dimensions of the data not originally captured by them. These other dimensions include multi-product firms, offshoring, intra-firm trade and firm export market dynamics.
View Full
Paper PDF
-
Micro Data and the Macro Elasticity of Substitution
March 2012
Working Paper Number:
CES-12-05
We estimate the aggregate elasticity of substitution between capital and labor in the US manufacturing sector. We show that the aggregate elasticity of substitution can be expressed as a simple function of plant level structural parameters and sufficient statistics of the distribution of plant input cost shares. We then use plant level data from the Census of Manufactures to construct a local elasticity of substitution at various levels of aggregation. Our approach does not assume the existence of a stable aggregate production function, as we build up our estimate from the cross section of plants at a point in time. Accounting for substitution within and across plants, we find that the aggregate elasticity is substantially below unity at approximately 0.7. Lastly we assess the sources of the bias of aggregate technical change from 1987 to 1997. We find that the labor augmenting character of aggregate technical change is due almost exclusively to labor augmenting productivity growth at the plant level rather than relative growth in capital intensive plants.
View Full
Paper PDF
-
Who Moves to Mixed-Income Neighborhoods?
August 2010
Working Paper Number:
CES-10-18
This paper uses confidential Census data, specifically the 1990 and 2000 Census Long Form data, to study the income dispersion of recent cohorts of migrants to mixed-income neighborhoods. If recent in-migrants to mixed-income neighborhoods exhibit high levels of income heterogeneity, this is consistent with stable mixed-income neighborhoods. If, however, mixed-income neighborhoods are comprised of older homogeneous lower-income (higher income) cohorts combined with newer homogeneous higher-income (lower-income) cohorts, this is consistent with neighborhood transition. Our results indicate that neighborhoods with high levels of income dispersion do in fact attract a much more heterogeneous set of in-migrants, particularly from the tails of the income distribution, but that income heterogeneity does tend to erode over time. Our results also suggest that the residents of mixed-income neighborhoods may be less heterogeneous with respect to lifetime income.
View Full
Paper PDF
-
Multi-Product Firms and Trade Liberalization
August 2009
Working Paper Number:
CES-09-21
This paper develops a general equilibrium model of international trade that features selection across firms, products and countries. Firms' export decisions depend on a combination of firm 'productivity' and firm-product-country 'consumer tastes', both of which are stochastic and unknown prior to the payment of a sunk cost of entry. Higher-productivity firms export a wider range of products to a larger set of countries than lower-productivity firms. Trade liberalization induces endogenous reallocations of resources that foster productivity growth both within and across firms. Empirically, we find key implications of the model to be consistent with U.S. trade data.
View Full
Paper PDF
-
Product Choice and Product Switching
October 2005
Working Paper Number:
CES-05-22
This paper develops a model of endogenous product selection within industries by firms. The model is motivated by new evidence we present on the prevalence and importance of product changing activity by U.S. manufacturers. Three-fifths of continuing firms alter their product mix within an industry every five years, and added and dropped products account for a substantial portion of firm output. In the model, firms make decisions about both industry entry and product choice. Product choice is shaped by the interaction of heterogeneous firm characteristics and diverse product attributes. Changes in market conditions within an industry result in simultaneous adjustment along a number of margins, including both entry/exit and product choice.
View Full
Paper PDF
-
Prices, Spatial Competition, and Heterogeneous Producers: An Empirical Test
August 2004
Working Paper Number:
CES-04-16
In markets where spatial competition is important, many models predict that average prices are lower in denser markets (i.e., those with more producers per unit area). Homogeneous-producer models attribute this effect solely to lower optimal markups. However, when producers instead differ in their production costs, a second mechanism also acts to lower equilibrium prices: competition-driven selection on costs. Consumers' greater substitution possibilities in denser markets make it more difficult for high-cost firms to profitably operate, truncating the equilibrium cost (and price) distributions from above. This selection process can be empirically distinguished from the homogenous-producer case because it implies that not only do average prices fall as density rises, but that upper-bound prices and price dispersion should also decline as well. I find empirical support for this process using a rich set of price data from U.S. ready-mixed concrete plants. Features of the industry offer an arguably exogenous source of producer density variation with which to identify these effects. I also show that the findings do not simply result from lower factor prices in dense markets, but rather because dense-market producers are low-cost because they are more efficient.
View Full
Paper PDF
