UMD Theses and Dissertations
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Item ESSAYS ON SKILLS AND VICTIMIZATION(2015) Sarzosa, Miguel; Urzua, Sergio; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Recent literature has shown that skills are not only essential for the development of successful adults, but also that they are malleable and prone to be affected by many experiences. In this dissertation, I explore these two sides of skills and development. I use skills as a vehicle to study the consequences victimization events have on adult outcomes, and as the channels through which the gaps in those adult outcomes materialize. I use novel longitudinal surveys and rely on an empirical strategy that recognizes skills as latent constructs. First, I estimate the treatment effects being bullied and being a bully in middle school have on several outcomes measured at age 18. I find that both, victims and bullies, have negative consequences later in life. However, they differ in how non-cognitive and cognitive skills palliate or exacerbate these consequences. Then, I move on to investigate the channels that open the gaps in adult outcomes between victims and non-victims. I estimate a structural dynamic model of skill accumulation. I allow skill formation to depend on past levels of skills, parental investment and bullying. Also, I allow bullying itself to depend on each student's past skills and those of his or her classmates. I find that being bullied at age 14 depletes current skill levels by 14% of a standard deviation for the average child. This skill depletion causes the individual to become 25% more likely to experience bullying again at age 15. Therefore bullying triggers a self-reinforcing mechanism that opens an ever-growing skill gap that reaches about one standard deviation by age 16. Finally, under the light of skills, I explore how other type of victimization, namely discrimination against sexual minorities, creates income gaps against non- heterosexual workers. I estimate a structural model that relies on the identification of unobserved skills to allow schooling choices, occupational choices and labor market outcomes to be endogenously determined and affected by the sexual preference of the worker. The results show that difference in skills, observable characteristics, and tastes for tertiary education and type of occupation, contribute to at least half of the income gaps non-heterosexuals face.Item Predictors of Bachelor's Degree Completion and the Returns to College Student Employment: An Application of Propensity Score Matching(2014) Medellin, Richard Jay; Titus, Marvin A.; Education Policy, and Leadership; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Drawing from Bean's (1990) student attrition model and human capital theory (Becker, 1993; Mincer, 1974), this study examined the relationships between college student employment, bachelor's degree completion, and post-college salary outcomes. Using NCES Beginning Postsecondary Student Longitudinal Study (BPS:04/09) data, the investigation was conducted in separate analytic phases involving logistic regression, propensity score matching, and fixed-effects regression techniques. The application of propensity score matching addressed the selection bias present in prior studies to refine the current understanding of the returns to college student employment. The phase one results indicate many variables included in the analysis were associated with degree completion; most notably among them are the distance students live from campus, students' level of college engagement, their college academic performance, and work activities during college. The results suggest that living on-campus, active engagement in clubs, study groups, and interaction with faculty are positively associated with degree completion. The results also indicate that working during college, up to 20 hours per week, is positively related to degree completion. Conversely, working in excess of 30 hours per week is negatively associated with completing a college degree. The phase two results indicate several variables were associated with college students' future salaries, and include students' work activities during college, their institution's admissions selectivity, college degree major, and the relationship student's degree major has with their post-college job. The results indicate that working in excess of 30 hours per week while in college is positively associated with students' future earnings. The results also indicate that attending institutions with higher levels of admissions selectivity is positively related with post-college earnings. Student degree major and the relationship of students' college majors to their future jobs were also positively related to their post-college salary. The results reveal college students' participation in higher education and their work activities are not entirely antithetical. This study illustrates that under certain conditions, working during college may be supportive of students' educational pursuits and financially beneficial to students' post-college careers. This conclusion has important implications for academic advising and college career center practices and improves our knowledge pertaining to the working college student.Item ESSAYS ON THE ECONOMICS OF ABILITY, EDUCATION, AND LABOR MARKET OUTCOMES(2014) Prada, Maria Fernanda; Urzua, Sergio; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)The analysis of the heterogeneity in worker ability and its economic implications have been a focus of a broad strand of research in labor economics. Several studies have demonstrated that both cognitive and socio-emotional dimensions of ability have a positive effect on wages, schooling, and the probability of choosing high paying occupations. However, there is no theoretical reason to expect that all dimensions of ability affect outcomes in the same direction. This dissertation, composed of four chapters, shows that mechanical ability, jointly with cognitive and socio-emotional dimensions, affects schooling decisions and labor market outcomes. Moreover, it demonstrates that this facet of ability has a positive economic return and affects schooling decisions and occupational choices differently than other measures of ability. Chapter 2 introduces the concept of mechanical ability, describes the tests used to measure it, and compares this dimension with other more conventional measures of ability. Chapter 3 presents a general framework to understand the effects of multiple dimensions of ability on outcomes, taking into account that workers sort into the occupations pursuing the tasks where their ability gives them comparative advantage. This framework is used to decompose the overall effect of unobserved abilities into the components explained by schooling decision, occupational choice, and direct on-the-job productivity. I show that all three dimensions of ability have multiple, heterogeneous, and independent roles. They influence the sorting of workers into schooling and occupations, and also have a direct effect on wages. This implies that a policy that increases ability at advanced ages, when schooling and occupational decisions cannot be altered, may still have a direct impact on wages. Chapter 4, written in collaboration with Sergio Urzua, analyzes the implications of considering the three dimensions of ability on the decision to attend a four-year college. We find that, despite the high return associated with college attendance, individuals with low levels of cognitive and socio-emotional ability but high mechanical ability could expect higher wages by choosing not to attend a four-year college. These results highlight the importance of exploring alternative pathways to successful careers for individuals with a different profile of skills.Item Search Frictions in Macroeconomics(2014) Wee, Shu Lin; Aruoba, Boragan; Haltiwanger, John; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation explores the role of search frictions in macroeconomics and highlights how these frictions influence micro-level decisions which in turn affect aggregated outcomes. Chapter 1 examines how individuals entering the job market during a recession can suffer persistent wage losses. I document how entering the job market during a recession not only affects wage outcomes but also severely impinges on early between-career changes. I then build a model that shows how entering the job market during a recession hampers early career mobility which is critical towards facilitating learning about one's comparative advantage and accumulating human capital specific to one's ideal career. Consequently, individuals who choose to switch careers post-recession are forced to restart at lower wages as they lack `relevant' career-specific human capital and certainty over their aptitude in their new careers. Permanent misallocation also arises when marginal workers who, having accumulated sufficient career-specific human capital, find it too costly to switch careers in the recovery. Persistent wage losses are a result of misallocation and experience gaps, both of which take time to correct. Chapter 2 looks at how consumer search behavior and the durability of the product affect firms' strategic pricing decisions. In the model, search is costly and consumers do not get to sample all prices in the market but rather have some positive probability of meeting only one or two sellers. In addition, consumers purchase goods that do not perish immediately and are able to postpone transactions. Firms face two types of customers: loyals and shoppers. The presence of a customer base and search frictions imply that a firm takes into account the consumer search method when setting prices. Durability of the product and the consumer's ability to postpone purchases suggest that consumers have greater bargaining power over the maximum price the firm is able to charge. In the numerical exercises, I show that all else equal, 1) the range of prices supported under durable goods is larger than the range of prices supported for non-durables, and 2) money is not neutral once the presence of a customer base is taken into account.Item Uncertainty and Learning in Human Capital and Labor Markets(2013) Borowitz, Jeffrey Adam; Hellerstein, Judith K; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation considers two aspects of the role of information and uncertainty in decision making. I begin with a broad introduction which surveys recent trends in the literature on human capital development and the role of human capital in labor markets. In Chapter 2, I explore a particular issue related to imperfect information and human capital investment. I apply a framework of investment under uncertainty to parents' decision to invest their time in their children's human capital. I show that parents' risk preferences are an important determinant of the time that they spend with their children. I develop an illustrative model which shows that parents who are more tolerant of risk should invest more heavily in early childhood, and also proportionately more in early than in late childhood. I then use the Panel Study of Income Dynamics (PSID), which contains measures of risk preferences for parents as well as multiple measures of parental time with children over childhood, to show that parents' time use follows the predicted pattern. Moreover, parents' time use follows this pattern more clearly for categories of time use which are more related to human capital investment. Chapter 3 considers another aspect of information, this time in the context of the labor market. I follow Gibbons and Katz (1991), who use the Current Population Survey (CPS) Displaced Workers Supplement (DWS) to measure the "lemons effect" of being laid off by comparing the wage outcomes of workers who are laid off to those who are displaced by a plant closing. I present suggestive evidence that when workers find reemployment in jobs which require a similar mix of tasks, this lemons effect of a layoff is mitigated. This finding is inconsistent with simple generalizations of the lemons effect to jobs with multiple tasks. My work begins to reconcile research which focuses on task-based microfoundations of productivity with research on employer learning. I next show that the measurement of the lemons effect is potentially hampered by a measurement issue known as recall bias. The CPS DWS asks respondents about displacement over the previous three years. While workers displaced by plant closing report displacements with equal likelihood over the previous three years, those who were laid off appear to forget displacement at a substantial rate. The measured lemons effect is driven by workers reporting displacement three years ago, when this bias is potentially most important. This is consistent with laid off workers forgetting displacement when they found new jobs with relative ease.Item WORKING FOR PAY OR RAISING A FAMILY? THREE PAPERS ON WOMEN'S WORK EXPECTATIONS AND MARKET OUTCOMES(2013) García-Manglano, Javier; Bianchi, Suzanne M; Kahn, Joan R; Sociology; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Since the gender revolution of the 1970s, we have learned a great deal about the determinants of female employment. One of the themes most frequently discussed in the literature refers to the role played by work expectations in shaping women's market achievement. As a supply-side explanation for women's market performance, work expectations emphasize women's internalized attitudes and preferences, which might lead some of them to make work and family decisions that will curtail their options down the road. To this point, most scholars have favored demand-side and contextual accounts of women's market achievement; these highlight mechanisms such as workplace discrimination against women or mothers, and similar structural constraints embedded in the larger cultural, social and economic systems. In this dissertation, I use longitudinal data to expand our understanding of women's work expectations in three directions. First, I revisit the neoclassical human capital argument's claim that individuals with low work expectations will invest less in human capital and choose jobs with lower penalties for work interruptions. I find support for this argument: work expectations are relatively good predictors of early baby-boom women's human capital accumulation, job characteristics, employment rates, hourly wages, and occupational prestige. Second, I explore variation in the role of work expectations across two cohorts of American women, early and late baby boomers. I find that rapid social change made it easier for later cohorts to absorb the negative market consequences of holding low work expectations in young adulthood. Third, I model the life-course employment trajectories of early baby boomers from ages 20 to 54, and find that a significant proportion of them exhibited intricate work patterns throughout adulthood, with periods in which they were focused on their career and other periods in which they seemed to pursue other life interests. My research shows that -when observed over time- most women's work behavior is characterized by a high degree of complexity. This calls for a more nuanced approach to the study of women's market performance, one that -together with the structural forces constraining their action- explicitly accounts for women's subjective expectations, preferences and attitudes towards work and family.Item EMPLOYERS' USE OF WORKPLACE REASONABLE ACCOMMODATIONS FOR RETAINING EMPLOYEES WITH DISABILITIES.(2013) Oire, Spalatin Nyanaro; Gold, Paul B; Counseling and Personnel Services; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Two decades since the enactment of the Americans with Disabilities Act, persons with disabilities still face employment challenges in the workplace. Reasonable accommodations (RA) have been associated with overall job satisfaction, enhanced job tenure, and, increased job performance for employees with disabilities. However, reasonable accommodation stakeholders still struggle with how best to effectively meet the needs of employees with disabilities in order to maximize their employability. Few studies have specifically examined the criteria that employers use to determine responses to reasonable accommodation requests by employees with disabilities. A sample of U.S. employers was asked to respond to a reasonable accommodation scenario, and rate the influences of a priori identified items on their response to the accommodation request. Exploratory factor analytic procedures and regression analyses are used to identify the factors correlated with employers' likelihood of approving or denying reasonable accommodation requests. Three factors were identified to underlie the criteria for employers' accommodation decisions - employer logistics and obligations in providing accommodations, relationships between employer and employee, and accommodation costs and resource. Employers' gender and having a centralized budget process for supporting accommodations were found to significantly predict with their response to accommodation requests among employer and organizational variables respectively. Our understanding of the rationale by which employers respond to reasonable accommodation requests is essential to seeking solutions for hiring and retaining persons with disabilities. The three criteria by which employers make accommodation decisions will assist employment service providers to better focus ADA knowledge and awareness training workshops for employers. Employees with disabilities will structure their accommodation requests to address or meet employers' criteria and maximize the potential for positive responses from their employers.Item The Effects of the Incarceration of Fathers on the Health and Wellbeing of Mothers and Children(2011) Pruitt Walker, Sheri; Hellerstein, Judith K; Ham, John; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)The male incarceration rate has risen dramatically in the last several decades. Over half of incarcerated men are fathers of minor children. My dissertation focuses specifically on families and addresses various aspects of how mothers and children have been affected by the incarceration of fathers. This research uses data from the Fragile Families and Child Wellbeing Study (FFCWB), a national sample of mostly unwed parents and their children, to estimate the causal effect of the incarceration of fathers on various outcomes for mothers and children. However, since the female partners and children of incarcerated men differ along observable characteristics from other mothers and children in the FFCWB, they are also likely to differ in terms of unobservables, and thus ordinary least squares estimation is unlikely to provide an unbiased estimate of this causal effect. Instead, I employ propensity score matching methods to estimate this effects, exploiting the rich data availability in FFCWB. The first chapter introduces these topics and provides a brief discussion. The second chapter discusses the impact of a father's incarceration on the public assistance participation of mothers as measured by welfare and food stamp program participation. A large body of research has examined consequences of incarceration on incarcerated men, while little has analyzed the effect on women who share children with incarcerated men. My research aims to fill this gap. I find robust evidence that, among women with incarcerated partners, a partner's incarceration increases the probability that mothers receive both welfare and food stamp benefits. The third chapter considers the effect of father's incarceration on the health of mothers and the development of children. The outcome variables I analyze are mothers' physical health and mental health as measured by depression and anxiety, as well as child's cognitive development and social behavior. My findings indicate that, among children with incarcerated fathers, paternal incarceration adversely affects cognitive development and increases aggressive behavior in children at age five. I also find that, among mothers with incarcerated partners, having a partner that is recently incarcerated adversely affect mothers' mental health as measured by depression, but positively affects mothers' physical health.Item Essays in Labor and Political Economics(2011) Tuzemen, Didem; Haltiwanger, John; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation consists of three chapters. The first chapter provides an overview of the dissertation by summarizing the two papers presented in the following chapters. The paper in the second chapter contributes to the labor-macro literature. More specifically, I develop a general equilibrium model with labor market search and matching frictions, endogenous labor force participation and on-the-job search, which can replicate the labor market dynamics observed in the U.S. data. Most existing real business cycle models with labor market frictions assume that all agents in the economy are part of the labor force, therefore these models allow for only two possible labor market states: employment and unemployment. This is a highly problematic and unrealistic assumption. Studies that extend the basic model by incorporating being out of the labor force as a third state, through allowing for a work-home production (or leisure) decision, find that the model generates counterfactual business cycle statistics: labor force participation is very volatile, while unemployment is weakly procyclical or acyclical, and has a high positive correlation with vacancies. The failure of this three-state model to replicate the labor market dynamics observed in the U.S. data is mainly due to the excessive responsiveness of labor force participation to labor market conditions determined by aggregate shocks to productivity. In order to dampen the movements along the labor market participation margin in the simple three-state model, I introduce an on-the-job search mechanism that serves as a second margin along which the household's labor market adjustments can take place. The proposed model successfully generates countercyclical unemployment and the Beveridge Curve relationship between unemployment and vacancies. Additionally, the business cycle statistics reproduced by the modified model are quantitatively more in line with their empirical counterparts. The third chapter presents a joint study with Mauricio Cardenas. We analyze the determinants of the government's decision to invest in fiscal state capacity, which refers to the state's power to raise tax revenue. Using a model we highlight some political and economic dimensions of this decision, and conclude that political stability, democracy, income inequality, as well as the valuation of public goods relative to private goods, are all important variables to consider. We then test the main predictions of the model using cross-country data and find that fiscal state capacity is higher in more stable and equal societies, both in economic and political terms, and in countries where the chances of fighting an external war are high, which is a proxy for the value of public goods.Item ESSAYS ON DEMOGRAPHIC ISSUES IN CHINA(2011) Li, Xue; Rust, John; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Chapter 1: Why Is the Sex Ratio Unbalanced in China? The Roles of the One-Child Policy, Underdeveloped Social Insurance, and Parental Expectations The sex ratio imbalance in China has reached such an alarming level that, by 2020, men of marriageable age are estimated to outnumber women by 24 million. Using a calibrated life-cycle model, this paper examines the rising sex ratio through three linked but different perspectives: one-child policy, social insurance program, and parental expectation. In a dynamic fertility choice framework, a couple's decision on sex selection is motivated by better returns from investing in a son than in a daughter. I also consider the largely overlooked effect of expected sex imbalance on current fertility choices. The benchmark calibration demonstrates three results. First, moving to a one-and-half-child policy (second allowed if the first is a girl) would dramatically decrease the sex ratio at birth from 125 to 106. Second, if parents are adaptive and take the "can-not-marry" risk into consideration, then the sex ratio under the one-child policy will drop from 125 to 110, while the change in population growth is negligible. Third, when social insurance coverage is universal, the sex ratio only changes by a small amount if parents do not modify their expectation on children's transfer. I also investigate the equilibrium sex ratio when couples are fully rational and forward-looking. If more couples behave in such a manner, the sex ratio would fall; this suggests that publicity and education could help alleviate the sex imbalance problem in China. In a similar spirit, I consider the issue of endogenizing children's transfer to parents. In an infinite-horizon dynastic model, the equilibrium level of transfer is positively related to the attention parents place on grandparents' welfare. Finally, I show that if social insurance could change the social attitude on expected child transfer, then it has the potential to significantly reduce the sex ratio. Chapter 2: Risky Child Investment, Fertility and Social Insurance in China This paper tries to explain the decline in total fertility rate (TFR) in China by investigating the quantitative effect of social insurance on peoples' fertility choice in an environment where investment in children is risky. The price and income effects of social insurance are heterogeneous depending on peoples' position in the income distribution: low-income people tend to raise more children due to the reinforcing income and price effects, whereas for rich families the income effect dominates the price effect so that their fertility declines in the presence of the social insurance program. Our results based on Chinese economy do not support the hypothesis that increasing social insurance tax rate has a negative impact on fertility rate, as argued in Boldrin, Nardi, and Jones (2005). Through decomposing calibration results under hypothetical policy scenarios and simulating TFRs for various parameter values, we show that liquidity constraints created by a public pension program plays a significant role in reducing fertility rate. Factors related to the rate of return on child investment, such as a slowing economic growth, a rise in the cost of childbearing, and potential social attitude changes such as expectations of lower transfers, also contribute to the long-term declining trend in fertility observed in the data.