Essays in Labor Economics

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This dissertation has as a unifying theme the analysis of labor markets. It includes three papers that analyze labor markets from three different perspectives: the role of firms in workers’ careers, the effect of public policies on firms’ decisions, and the aggregate labor market effects of individual migration choices. These diverse perspectives show the complexity of labor markets and highlight some ways in which labor markets affect workers, firms and communities.In the first essay, the objects of study are the career outcomes of workers. More specifically, using Chilean employer-employee data, we provide evidence of the divergent trajectories of workers’ careers based on the type of firms they work at. We focus on earnings, periods of employment, and the number of jobs held over the five years after a job transition. Our findings indicate that there is an earnings penalty of 6.7% for joining a startup vs. an established firm. Workers who join a startup have a lower probability of being employed and hold fewer jobs over the five years we follow them. The second chapter focuses on evaluating the effectiveness of a public policy implemented at the beginning of the COVID-19 pandemic, a time when mandated quarantines prevented firms from operating, to maintain existing job relationships by providing liquidity in the form of payments to furloughed workers. We leverage a discontinuity in the eligibility for the policy and are able to identify a positive effect on the likelihood of job survival for workers with short tenure. Heterogeneity analysis indicates that the effect was larger in sectors more affected by the pandemic and for more vulnerable workers. Finally, the third chapter looks at the aggregate labor market effects of experiencing a labor demand shock in a Commuting Zone (CZ) in the US. The main goal of that chapter is to better understand why local labor markets in the US experience a persistent decline in labor force participation following a recession. Using uniquely granular data from the Consumer Credit Panel (CCP), we show that there is a differential migration response to local demand shocks based on the age of individuals. In particular, we find that younger adults increase their in-migration to CZs experiencing a positive labor demand shock. Additionally, while the in-migration response of the retirement-age population also is positive, it is muted and their out-migration response to a positive shock is positive, effectively delivering a negative net migration response to a positive labor demand shock for this age group. The combination of these results indicates that following a positive labor demand shock, local labor markets in the US experience a persistent re-composition of their age structure that leaves them with a higher proportion of young people. On the flip side these results point to the fact that labor markets experiencing a negative demand shock being left with a higher proportion of retirement-age people as the product of the age differentiated migration.