Working Paper:

"I use a large merger to study the effects of a concentration on labor market outcomes. I find that concentration lowers wages, but the effects are different than prior estimates in the literature. I observe a larger reduction in wages of salespeople (low skill) than pharmacists (high skill). Two hypotheses can explain the results: (i) salespeople have strong preferences for jobs or accumulate some industry-specific human capital, and (ii) pharmacists are better organized into unions. Previous studies do not account for changes in labor force composition that are relevant after a merger, which could explain the difference in estimates. I show that changes in labor force composition within establishments are common in the economy over time. " 

"Recent studies suggest that the increasing supply of college-educated workers in Latin American countries has impacted returns to skill over the last two decades. However, these returns are typically assessed using the college premium as a proxy. In this paper, we show that changes in the college premium do not accurately represent shifts in returns to skill, particularly in the context of a significant expansion in the number of college graduates and institutions. Using Brazil as a case study, we find that returns to skill have not decreased; in fact, they increased by 20% over a 15-year period. We do this by matching novel data with approximately one million college graduates from 42 schools and 20 different cohorts with linked employer-employee data.

Two key findings emerge. First, the college premium has increased for workers from our constant sample of universities. Second, the supply of college-educated workers has grown, primarily from newer, lower-ranked, and lower-wage-premium universities. Changes in the composition of college workers seem to have driven a decrease in the college premium, even though returns to skill are increasing. Using a simple supply and demand framework (Katz and Murphy, 1992) we show that skill-biased technical change (SBTC) actually increased by 14.3% over a 15-year period, in contrast to the apparent 9% decrease indicated by the unadjusted data."

Work in Progress: 

Overview: We use worker flows to define better approximations to labor markets. Labor market definitions are important to predict the effects of mergers, labor market policies (like minimum wages), migration, trade shocks, and other events on labor market outcomes. Researchers have typically relied on ad-hoc approximations such as geographic boundaries, occupational codes, or industry codes at differing levels of granularity. For any given job, it is not clear which definition is most appropriate. For example, the relevant market for airline pilots might be a detailed occupation-industry cell at the national level. On the other hand, the relevant market for pharmacy cashiers might consist of many occupations and industries but only within a narrow geographic area. The paper follows three steps. First, we use modularity maximization approaches from the network literature to identify labor markets. We use worker flows across occupations, industries, and geographies to define N markets. The defined markets maximize the modularity measure, i.e., the measure of the density of links within markets. Second, we describe and evaluate the resulting networks. For example, we show that labor markets often cross one-digit occupation codes. We are currently working on the third step, in which we validate the labor market approximation by applying the definitions to empirical frameworks.

Overview: We study the effects of minimum wages on employment levels and on the wage distribution. Most empirical studies in the minimum wage literature use county-level variation and ignore that different firms will respond to minimum wages in different ways. In theory, the employment response of each firm will depend on three conditions: (i) how binding is the minimum wage; (ii) how competitive are the labor markets that the firm participates; and (iii) how substitutable are different types of labor within each firm. In this paper, we evaluate the effects of occupation and industry-specific minimum wages in Brazil on employment and wages. Using an employer-employee matched dataset (RAIS) we estimate a reduced form equation that incorporates a measure of bindingness and a measure of labor market concentration. We then use the variation in minimum wages across occupations to verify the role of substitution in determining the minimum wage effects. Preliminary results show the importance of controlling for the bindingness of the minimum wages when determining its effects on wages and employment. Furthermore, zero and positive employment effects of the minimum wage are associated with some measures of labor market concentration.