Essays on Labor Market Institutions

This thesis includes three papers about the impacts of different labor market institutions. In the first chapter (joint with Sean Wang), we study the effect of private-sector unionization on establishment employment and survival. Specifically, we analyze National Labor Relations Board (NLRB) union elections from 1981 to 2005 using administrative Census data on the universe of establishments in the U.S. Our empirical strategy extends a difference-in-differences design with regression discontinuity extrapolation methods. This strategy allows us to estimate treatment effects that include elections that win by large margins of support. We show that unionization decreases an establishment's employment and likelihood of survival. We hypothesize that two reasons for these effects are firms' ability to avoid working with new unions and managers' opposition to unions. We test this hypothesis for unionization in manufacturing. There, the negative effects are significantly larger for elections at multi-establishment firms. Additionally, after a successful union election at one establishment, employment increases at the firms' other establishments. Both pieces of evidence are consistent with firms avoiding new unions by shifting production from unionized establishments to other establishments. Finally, we find larger declines in employment and survival following elections when managers were more opposed to the union. To support this, we estimate treatment effect heterogeneity based on two proxies for managers' opposition: delays during the election process and the lack of other unionized establishments at the firm. Taken together, our results are consistent with firms' union avoidance tactics contributing to the overall negative effects of unionization. The second chapter (joint Simon Jäger, Benjamin Schoefer, and Josef Zweimüller), we measure the wage effect of changes in the value of nonemployment among initially employed workers. Nonemployment is often posited as a worker's outside option in wage setting models such as bargaining and wage posting. The value of nonemployment is therefore a key determinant of wages. Our quasi-experimental variation in the value of nonemployment arises from four large reforms of unemployment insurance (UI) benefit levels in Austria. We document that wages are insensitive to UI benefit changes: point estimates imply a wage response of less than $0.01 per $1.00 UI benefit increase, and we can reject sensitivities larger than $0.03. The insensitivity holds even among workers with low wages and high predicted unemployment duration, and among job switchers hired out of unemployment. The insensitivity of wages to the nonemployment value presents a puzzle to the widely used Nash bargaining model, which predicts a sensitivity of $0.24--$0.48. Our evidence supports wage-setting models that insulate wages from the value of nonemployment. The third chapter, I study the effect of noncompete agreements on low-earning workers using a noncompete ban in Austria. The ban increased treated workers’ annual job-to-job transition rate by 0.3 percentage points (a two percent increase). This effect was driven by within-industry job transitions. The reform also disproportionately increased transitions to higher-quality firms and transitions accompanied by earnings gains. However, I do not find that the ban increased treated workers' overall earnings growth rates. This evidence shows that noncompetes in Austria restricted low-earning workers’ job mobility but that their impact was not large enough to affect aggregate mobility or earnings trends.

Name thesis:degree_name

Doctoral

Department dc:contributor.department

Massachusetts Institute of Technology. Department of Economics

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2022

Author dc:creator

• Young, Samuel Goericke

Advisors dc:contributor.advisor

• Acemoglu, Daron
• Autor, David
• Jäger, Simon

Statement dc:rights

• In Copyright - Educational Use Permitted
• Copyright retained by author(s)

Licence dc:rights.uri

• https://rightsstatements.org/page/InC-EDU/1.0/

Handle dc:identifier.uri

https://hdl.handle.net/1721.1/144483

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/144483