Essays in labor economics: peer effects and labor market rigidities

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  • March 20, 2019
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  • Shvydko, Tetyana
    • Affiliation: College of Arts and Sciences, Department of Economics
Abstract
  • The first essay of this dissertation, "Interactions at the Workplace: Peer Effects in Earnings", analyzes the impact that the average earnings of coworkers have on a given worker's earnings. We control for worker and firm fixed effects, which capture long-run individual and firm determinants of productivity. We interpret the effect of average coworker earnings net of these fixed effects as a measure of the effect of behavioral interactions at the workplace. This is the first study of peer effects at the workplace to use a large representative sample of workers and firms, constructed from the Longitudinal Employer-Household Dynamics files. We find that individual earnings increase by at least 8 cents for every one dollar increase in coworker average contemporaneous earnings and by at least 14 cents for every one dollar increase in the coworker average permanent component of earnings. Our estimates suggest that behavioral interactions at work might be a widespread phenomenon rather than a specific feature of workplaces where social interactions have been shown to be important. The labor market is often asserted to be characterized by rigidities that make it difficult for older workers to carry out their desired trajectory from work to retirement. A potentially important source of rigidity is restrictions on hours of work imposed by firms, but such rigidities are difficult to measure directly. The second essay, "Labor Market Rigidities and the Employment Behavior of Older Workers", explores two variables that may serve as proxies for flexibility in hours at the employer level: the share of older workers and the share of young women in the employer's workforce. We use matched worker-firm data to analyze the effects of these variables on the separation propensity of older workers and the incidence of part-time work. The results show that older workers employed in firms with a greater share of older workers and a greater share of young female workers have a lower separation propensity from their employers. These results provide indirect but suggestive evidence of the importance of demand-side labor market rigidities in shaping the employment decisions of older workers.
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  • Blau, David
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