Essays on Labor Markets

Abstract

The modern work landscape is undergoing a period of significant transformation. In this dissertation, I delve into three distinct, yet interconnected, themes that shed light on the complex interplay between abilities, tasks, and well-being within this changing environment. In Chapter 1, I explore the mental health implications of a recent and dramatic shift in work arrangements: the rise of Work From Home (WFH) during the COVID-19 pandemic. Specifically, the chapter evaluates the impact of working from home (WFH) on mental health, relative to other forms of workplace arrangements during the pandemic. Leveraging the longitudinal structure of the data from the British Cohort Study, the paper explores two novel dimensions that potentially influence the mental health effects of WFH, early-age cognitive and social abilities. To account for self-selection, the identification relies on a Roy selection model with correlated factors and cost-shifters. The findings suggest that WFH has negative mental health effects compared to a workplace arrangement (WP), but positive effects compared to not working (NW). Additionally, WFH has the largest detrimental impact on the mental health of individuals with lower social abilities relative to WP, and it confers the most substantial benefits on those with higher cognitive abilities compared to NW. Finally, the model predicts that investments in cognitive and social ability mitigate the cost and amplify the benefits associated with WFH. Next, in Chapter 2, I shift the focus to a contentious education policy that has recently received much attention, affirmative action in education. In this chapter, I examine the impacts of an education affirmative action policy on not only education outcomes, but also later labor market outcomes, in the context of Vietnam. In particular, the policy in this study provides nationwide direct high school admissions to ethnic minority students, exempting them from taking a high-stakes high school entrance exam. Using the joint variation in the student's ethnicity and birth year in a difference-in-differences framework, I show that the policy improves the probability of entering high school for ethnic minorities. Further, leveraging this policy-induced variation as an instrument, I explore the policy's long-term effects on labor market outcomes. The results indicate that ethnic minority students who were encouraged to enter high school by the policy are more likely to participate in the labor force, obtain employment, and hold salaried positions. The analysis of occupation-specific skill distributions and task intensity suggests that these effects are likely attributable to the human capital channel rather than education signaling. Despite its overall benefits, the policy's impacts are not equally distributed across the gender line and wealth levels: Male and wealthy ethnic minority students benefit more from the policy. Using a random forest model to identify the compliers' characteristics confirms that future family concerns among females and financial constraints are major frictions for ethnic minorities to benefit from the policy. Overall, these results suggest that while affirmative action positively impacts education and labor outcomes for ethnic minorities, targeted policies are vital for equitable distribution, addressing gender and financial barriers. Finally, Chapter 3 closes the discussion on the topic of tasks and skills at the critical early career stages. The early stages of one's career are a dynamic period of exploration and skill development not only from formal training but also through on-the-job tasks. Therefore, the paper explores the pivotal relationship between abilities and tasks during this time. Specifically, it investigates how cognitive, social, and manual abilities are rewarded in this crucial period, while also emphasizing the role of abilities in sorting individuals across task-based occupations. The paper employs the British Cohort Study 1970 in a Roy selection model with correlated factors. In this context, the Roy model allows the analysis to focus not only on the returns to abilities, but also on the sorting process within the context of occupations categorized by their task composition. The results reveal a task-specific nature in the returns to abilities during early career stages, emphasizing the importance of aligning abilities with the specific task requirements of chosen occupations for optimal rewards. Additionally, the paper also highlights the role of abilities in early career sorting, showing that individuals with high cognitive and social abilities tend to gravitate towards knowledge-based occupations - occupations that are characterized by intensive cognitive tasks or intensive social tasks. These findings offer valuable insights for both young individuals navigating their career paths and policymakers crafting programs aimed at facilitating informed decision-making and enhancing success in the early career landscape.