Economic Mobility and Frictional Labor Markets

Abstract

My dissertation consists of three chapters related to labor economics. The first chapter investigates how the earnings of young workers are affected by the intergenerational transmission of employers, which refers to individuals working for the same employer as a parent. My analysis of U.S. linked survey and administrative data indicates that 7 percent of young workers find their first stable job at the same employer as a parent. Using an instrumental variables strategy that exploits exogenous variation in the availability of jobs at the parent's employer, I estimate that working for the same employer as a parent increases initial earnings by 31 percent. The earnings benefits are attributable to parents providing access to higher-paying employers. Individuals with higher-earning parents are more likely to work for the employer of their parent and experience greater earnings benefits when they do. Thus, the intergenerational transmission of employers amplifies the extent to which earnings persist from one generation to the next. The second chapter uses administrative data on earnings and participation in subsidized housing to study how the demolition of 160 public housing projects--funded by the HOPE VI program--affected the adult labor market outcomes for 18,500 children. Children from HOPE VI projects earn 14 percent more at age 26 relative to children from comparable non-HOPE VI projects. These gains are not driven by improvements in household or neighborhood environments that promote human capital development in children. Rather, subsequent improvements in job accessibility represent a likely pathway. The third chapter uses U.S. linked employer-employee data to examine cyclical worker flows across firms ranked by productivity. In expansions high-productivity firms grow faster by hiring workers from low-productivity firms. The rate at which these job-to-job flows move workers up the productivity ladder is highly procyclical and productivity growth slows during recessions because this job ladder collapses. In contrast, flows into nonemployment from low-productivity firms disproportionately increase in recessions, which leads to an increase in productivity growth. I thus find evidence of both sullying and cleansing effects of recessions. The cleansing effect dominates early in downturns but the sullying effect lingers well into the recovery.