publications

working papers

  • Lifelong Gains from a Strong Start: Early Career Fit and the College Wage Premium (with Ismail Baydur and Jie Duan)

    This paper quantifies the contribution of career uncertainty to the college wage premium. Our analysis is motivated by educational differences early in workers' careers. Non-college workers frequently separate into unemployment and switch careers while experiencing sluggish wage growth. College graduates separate and switch less often, see rapid wage growth, and better anticipate their future occupation. We build a general equilibrium search model wherein workers more certain of their career fit invest more in on-the-job human capital and experience faster wage growth. Equalizing career uncertainty by education reduces the wage premium by 19.9%. Non-college workers who find their best career fit early as a direct result of the reduction in career uncertainty enjoy lifelong gains, earning 29.3% more over their working lives. In quantitative applications, AI-driven career uncertainty lowers the wage premium, and training subsidies for young workers can lock them into a bad career fit.

  • Mid-Worklife Crisis (with Nicolas Jacquet and Serene Tan)

    This paper studies the aggregate labor-market consequences of mid-worklife crisis in a heterogeneous-agent life-cycle macroeconomics model. We document two new U.S. facts: (i) unemployment rate among college (non-college) graduates is U-shaped (declining monotonically) over the life-cycle; and (ii) the U-shape for college graduates has become more pronounced over time. We develop and calibrate a life-cycle directed-search model for college graduates using CPS and NLSY with one novel feature - employed workers can gain/lose skills – and replicate life-cycle patterns. Older unemployed workers are less attractive to firms because they have fewer years left to work, are costlier to hire, and have smaller upside. Combined, these three effects generate rising unemployment rates from middle-age on and their strengthening in recent times account for the increasingly pronounced U-shape. Our model predicts that 10% of young workers with high human capital face substantial downward mobility; and raising retirement age from 60 to 70 reduces old workers’ unemployment rate by 10%.

  • Declining Job-to-Job Transitions and Wage Dynamics, with Ismail Baydur

    This paper examines how declining job mobility affects young workers’ wages by developing a job ladder model with learning-by-doing and firm heterogeneity in productivity and learning environment. The model is estimated separately on the National Longitudinal Survey of Youth 1979 and 1997. Our results suggest that shifts in search frictions explain most of the drop in job mobility between cohorts. Counterfactual exercises indicate that these changes have led to higher starting wages due to workers beginning their careers higher on the ladder, slower wage growth, and ultimately, slightly lower wages after 20 years of potential experience.

  • Uncertainty, Learning, and the Unemployment-Education Gap over the Life Cycle, with Jie Duan

    Revise and Resubmit, The Economic Journal

    We propose that college graduates enter the labor market with less uncertainty regarding which career they are most productive in, and study how this characteristic contributes to the unemployment-education gap. We document several novel facts to support our hypothesis. Notably, college graduates predict their occupation more accurately than those without a college degree. We then develop and calibrate a life cycle search model featuring differences in uncertainty by education and learning about one's best career fit. Our quantitative analysis suggests large disparities in uncertainty by education, and that such differences explain 27.3% of the unemployment-education gap.

  • Inflation, Skill Loss During Unemployment, and TFP in the Long Run, with Fan Liang and Bessy Liao

    Revise and Resubmit, Journal of Money, Credit and Banking

    We develop a search model with frictional goods and labor markets to study the long run relationship between inflation, unemployment, and TFP when workers lose skills during unemployment. As inflation increases, fewer jobs are created, workers experience longer unemployment durations and lose human capital, causing TFP to decline. Our calibrated results show that transitioning from the Friedman rule to 10% annual inflation lowers TFP by 4.3%. A stochastic version of the model demonstrates that prolonged periods of inflation can have lasting negative effects on productivity.

Work in progress

  • Wage Growth over the Life Cycle with Endogenous Human Capital Accumulation (with Jie Duan and Xingjian Qing)

Hibernating papers

  • The Impact of the Great Recession on Educational Attainment: Evidence from Florida

    This paper estimates the effect of labor demand shocks caused by the Great Recession on high school dropout, high school graduation, postsecondary enrollment, and postsecondary completion rates. The analysis leverages a rich administrative data set from Florida that contains thorough information on student's background and human capital investments. I find little evidence to suggest that the Great Recession affected educational attainment or that these effects vary across characteristics of students and colleges. I interpret these findings within the context of Florida's educational institutions that provide students opportunities to continue progressing towards a college degree while adjusting to economic shocks.

Discussions

  • “Job Search, Job Findings, and the Role of Unemployment Insurance History” by S. Rujiwattanapong. Search and Matching in Asia Pacific Workshop, Singapore, 2024. [Slides]

Banner picture: Crater Lake National Park, Oregon, 09/11/2016