JOB MARKET PAPER
- Uncertainty, Learning, and the Unemployment-Education Gap over the Life Cycle, with Paul Jackson [Draft Coming Soon]
We document that college graduates predict their future occupation more accurately than those without a college degree. Based on this fact and additional evidence, we hypothesize that college graduates start their career with less uncertainty regarding their best fit in the labor market. We refer to this difference by education as the uncertainty channel. To quantify the uncertainty channel, we develop a life cycle search model where workers learn their best fit by sampling careers. A quantitative decomposition places a lower bound on the uncertainty channel's contribution to the gap in unemployment rates between college and non-college workers at 24%.
Presented at: ESEM2024*, AMES2024 (Vietnam)*, GEA*, AMES2024 (Hangzhou), NUS Macro Brownbag, PHBS*, Monash Macro and Money Workshop*
PUBLICATIONS
- The Underemployment Trap, with Paul Jackson, forthcoming at Journal of Monetary Economics, 2024.
[Working Paper], [Supplementary Materials]
Many college graduates are underemployed, i.e., work in occupations that do not require a college degree. We document that underemployed workers are less likely to transition to a college occupation the longer they are underemployed and that longer underemployment histories are associated with lower wages in college occupations. To explain these findings, we develop a directed search model with unobserved heterogeneity, occupation-specific human capital, and on the job search. Workers are uncertain about their suitability for college jobs and learn through search. Underemployment is generated by search and information frictions, as workers with a low expected job-finding probability in college occupations self-select into underemployment. Once underemployed, workers’ college occupation-specific human capital decays. A quantitative decomposition shows that unobserved heterogeneity explains most of the duration dependence in underemployment.
Presented at: SUFE, ICCDS2024, SWUFE, 2023 OzMac Workshop, 2023 AMES Beijing, 2023 AMES Singapore, 2023 ESAM Sydney, 2022 AMES Tokyo, Curtin University*, Monash University*, National University of Singapore*, University of Aberdeen*, UC Irvine*, University of Melbourne*, 2022 Spring Midwestern Macroeconomics Meeting*, 2022 AMES China*, 2022 Australasia Econometric Society Meeting*, 2023 Midwest Macroeconomics Meetings*, Inaugural Search and Matching Pacific in Asia-Pacific*, the 2nd Australasian Search and Matching Workshop*.
- Internet Linkage and International Trade: From the Perspective of Risk Alleviation, with Zengxi Hu, The World Economy, 2024, 47, 3551–3577. [Working Paper]
Extensive research has studied the effect of the Internet on trade, yet little is known about its role in trade facilitation through risk alleviation. This research investigates how internet linkage facilitates exports, particularly through the novel channel of risk alleviation. Theoretically, this paper introduces a gravity model augmented with export risk to establish the stimulating effect of internet linkage on exports. Empirically, this paper uses inter-domain hyperlinks as a proxy for Internet linkage in 2009, uncovering a statistically significant positive impact of Internet linkage on exports. Notably, there is a 27.8% increase in exports in reaction to a doubling of the Internet linkage intensity. By employing various techniques, we meticulously address potential endogeneity issues and substantiate the risk-alleviation mechanism at both the country and product levels. Particularly, we find that exports to riskier countries and of riskier products benefit more from Internet linkage. This study sheds new light on the novel channel through which the Internet promotes exports, enriching the existing literature in this field.
(SELECTED) WORK IN PROGRESS
- The Procyclicality of Wage Loss from Skill Mismatch [Draft Coming Soon]
Presented at: NUS Macro Brownbag
Note: * presented by a co-author.