"A Dynamic Model of Personality, Schooling, and Occupational Choice," Quantitative Economics, 11.1 (2020): 231-275. (with Petra Todd) Supplemental Material Online Appendix.
This paper develops a dynamic model of schooling and occupational choices that incorporates personality traits, as measured by the “big five” traits. The model is estimated using the HILDA dataset from Australia. Personality traits are found to play an important role in explaining education and occupation choices over the lifecycle. Results show that individuals with a comparative advantage in schooling and white-collar work have, on average, higher cognitive skills and higher personality trait scores. Allowing personality traits to evolve with age and with schooling proves to be important to capturing the heterogeneity in how people respond to educational policies. The estimated model is used to evaluate two education policies: compulsory senior secondary school and a 50% college tuition subsidy. Both policies increase educational attainment and also affect personality traits.
“Personality Traits, Intra-household Allocation and the Gender Wage Gap,” European Economic Review, 109 (2018): 191-220. (with Christopher Flinn and Petra Todd) Supplemental Material
A model of how personality traits affect household time and resource allocation decisions and wages is developed and estimated. In the model, households choose between two behavioral modes: cooperative or noncooperative. Spouses receive wage offers and allocate time to supply labor market hours and to produce a public good. Personality traits, measured by the so-called “Big Five” traits, can affect household bargaining weights and wage offers. Model parameters are estimated by Simulated Method of Moments using the Household Income and Labor Dynamics in Australia (HILDA) data. Personality traits are found to be important determinants of household bargaining weights and of wage offers and to have substantial implications for understanding the sources of gender wage disparities.
“Welfare Reform and Children's Early Cognitive Development,” Contemporary Economic Policy, 32.4 (2014): 729-751. (with Hau Chyi and Orgul Demet Ozturk)
In this paper, we use a dynamic structural model to measure the effects of (1) single mothers’ work and welfare use decisions and (2) welfare reform initiatives on the early cognitive development of the children of the NLSY79 mothers. We use PIAT-Math scores as a measure of attainment and show that both the mothers’ work and welfare use benefit children on average. Our simulation of a policy that combines a time limit with work requirement reduces the use of welfare and increases employment significantly. These changes in turn significantly increase children’s cognitive attainment. This implies that the welfare reform was not only successful in achieving its stated goals, but was also beneficial to welfare children’s outcomes. In another policy simulation, we show that increasing work incentives for welfare population by exempting labor income from welfare tax can be a very successful policy with some additional benefits for children’s outcomes. Finally, a counterfactual with an extended maternal leave policy significantly reduces employment and has negative, though economically insignificant, impact on cognitive outcomes.
“Distributional Effects of Local Minimum Wage Hikes: A Spatial Job Search Approach,” This version December 2018.
SSRN Working Paper 3309362.
SSRN Working Paper 3309362.
This paper develops and estimates a spatial general equilibrium job search model to study the effects of local and universal (federal) minimum wage policies. In the model, firms post vacancies in multiple locations. Workers, who are heterogeneous in terms of location and education types, engage in random search and can migrate or commute in response to job offers. I estimate the model by combining multiple databases including the American Community Survey (ACS) and Quarterly Workforce Indicators (QWI). The estimated model is used to analyze how minimum wage policies affect employment, wages, job postings, vacancies, migration/commuting, and welfare. Empirical results show that minimum wage increases in local county lead to an exit of low type (education < 12 years) workers and an influx of high type workers (education ≥ 12 years), which generates negative externalities for workers in neighboring areas. I use the model to simulate the effects of a range of minimum wages. Minimum wage increases up to $14/hour increase the welfare of high type workers but lower welfare of low type workers, expanding inequality. Increases in excess of $14/hour decrease welfare for all workers. I further evaluate two counterfactual policies: restricting labor mobility and preempting local minimum wage laws. For a range of minimum wages, both policies have negative impacts on the welfare of high type workers, but beneficial effects for low type workers.
Working in Progress
"Personality Traits, Job Search and the Gender Wage Gap," This version May 2019. (with Christopher Flinn and Petra Todd)
This paper introduces the Big Five personality traits along with other covariates in a job search, matching and bargaining model and investigates how education and personality traits affect primitive model parameters that discipline job search behavior and labor market outcomes. It develops and estimates a partial equilibrium search model in which personality traits can influence worker productivity, job offer arrival rates, job dissolution rates and the division of surplus from an employer-employee match. The estimation is based on the IZA Evaluation Dataset, a panel dataset on newly-unemployed individuals in Germany between 2007 and 2008. Model specification tests provide support for a model that allows job search parameters to be heterogeneous across individuals, varying with levels of education, birth cohort, personality traits and gender. We use the estimated model to perform a decomposition of the sources of the gender wage gap. The results show that gender wage gaps arise mainly because of gender differences in bargaining power rather than differences in productivity. They also show that women's personality traits are valued differently in the labor market than men's traits. Of the Big Five traits, conscientiousness and emotional stability emerge as the most important in explaining the gender wage gap.