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Initial Labor Market Conditions: Unequal Effects by Parental Income (JMP)
This paper examines the unequal impact of initial labor market conditions by parental income and their role in shaping long-term labor market outcomes. Using large-scale Canadian administrative tax data, I analyze the relationship between parental income, aggregate economic conditions, and wage dynamics for new labor market entrants. I find that entering the labor market during an economic downturn leads to significant and persistent earnings losses, with disproportionately larger effects for individuals from low-income families. A 1 p.p. higher initial unemployment rate reduces annual earnings by approximately $2,000 real CAD for all workers over the first decade after graduation, with earnings declining 15 percent more for those from families in the bottom 20% of the income distribution. To explore the underlying mechanisms, I develop a continuous time heterogeneous agent model with financial constraints and a frictional labor market. The model highlights how parental income can act as a safety net: individuals from low-income families are closer to their borrowing constraints and more likely to enter jobs with lower earnings, particularly in the presence of larger search frictions. Recessions amplify this mechanism by reducing job-finding rates in equilibrium, further limiting access to high paying jobs. Counterfactual simulations suggest policies such as grants for graduates entering the labor market could mitigate scarring effects and improve outcomes for disadvantaged workers.
Three years after COVID-19 crisis, employment and total hours worked in Europe fully recovered, but average hours per worker did not. We analyze the decline in average hours worked across European countries and find that (i) it is not cyclical but predominantly structural, extending a long-term trend that predates COVID-19, (ii) it mainly reflects reduced hours within worker groups, not a compositional shift towards lower-hours jobs and workers, (iii) men - particularly those with young children - and youth drive this drop, (iv) declines in actual hours match declines in desired hours. Policy reforms could help involuntary part-timers and women with young children raise their actual hours towards desired levels, but the aggregate impact on average hours would be limited to 0.5 to 1.5 percent. Overall, there is scant evidence of slack at the intensive margin in European labor markets, and the trend fall in average hours worked seems unlikely to reverse.
In this paper, I study how job search effort shapes the arrival rate of job offers. I develop a search and matching model in which the arrival rate of job offers depends endogenously on workers' search intensity. Using data from the Survey of Consumer Expenditures, I document a steep increase in job contact rates with search effort. Across education groups, the median contact rate of job offers increases threefold under endogenous search compared to a baseline model with exogenous arrival rates. The estimates reveal significant heterogeneity in search behavior by skill group. Workers with only a high school diploma devote more time to job search relative to workers with some college or a college degree, despite similar returns to additional search hours. For workers who do not search, the estimates for job arrival rates closely match the exogenous contact rate in standard labor search models. These results highlight the importance of incorporating endogenous search effort when evaluating unemployment dynamics and designing policies to support job seekers.
In Progress
Labor Market Entry into a Recession: Unequal Effects by Gender
Regional Inequality, the City-Size Wage Premium and Remote Work
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