Should I Stay or Should I Go ... North? First Job Location of U.S. Trained Doctorates 1957-2005

Based on a survey of graduating PhD students in the U.S., we study the determinants of location of their first jobs. We consider how locating in Canada versus the U.S. for all graduates is influenced by both their background and time-varying factors that affect international mobility. We also study the choice of European graduates between North America and returning to Europe. We find that in many cases macro factors have the expected effect of choices after controlling for biases for home, which depend upon background variables in expected ways.Doctoral Education, International Mobility, Brain Drain

Unemployment Insurance and Youth Labor Market Behavior in Canada and the United States

To study how the design of unemployment insurance affects people leaving school to find jobs, a model of job search in the presence of UI is developed and estimated for the U.S. and Canada. The level of UI benefits depends upon previous earnings, a fact which creates opposing incentives for unemployed people not receiving benefits. Reservation wages of uninsured youth are found to be more sensitive to UI eligibility rules than to the length of the benefit period. The estimates are also used to analyze differences in preferences and labor market opportunities within the two countries.unemployment insurance, job search, maximum likelihood estimation

Wages and Seniority When Coworkers Matter: Estimating a Joint Production Economy Using Norwegian Administrative Data

We develop an equilibrium model of wages and estimate it using administrative data from Norway. Coworkers interact through a task­-assignment model, and wages are determined through multi­lateral bargaining over the surplus that accrues to the workforce. Seniority affects wages through workplace output and relative bargaining power. These channels are separately identified by imposing equilibrium restrictions on data observing all workers within workplaces. We find joint production is important. Seniority affects bargaining power but is unproductive. We reinterpret gender and firm­-size effects in wages in light of the rejection of linearly separable production.wage distributions, productivity, matched data, multilateral bargaining, assignment models

Explaining and Forecasting Results of The Self-Sufficiency Project

This paper models the Self-Sufficiency Project (SSP), a controlled randomized experiment concerning welfare. The model of household behavior includes stochastic labor market skill, job opportunities, and value of non-labor market time. All the variation within and between treatment groups, jurisdictions (provinces), demographic groups, and sub-experiments is derived from four underlying sources: policy variation, endogenous selection into the experimental samples, the SSP treatments themselves, and different mixtures over 4 underlying types. Using the variation within the treatment group is quantitatively important for identifying the complex model: Efficient GMM the parameters are estimated precisely and variation within the treatment group is much more important for identification than either variation within the control group or between treatment and control groups. The model tracks the primary moments well within sample and out-of-sample except for under-estimating the difference in the entry sample. Predictions of the estimated model are computed for different welfare reform experiments. The details of the design are critical for interpretation of the results and it appears that the small SSP+ treatment may have longer lasting impacts than the an in-sample impact analysis would suggest.Dynamic Household Behavior, Welfare Policy, Controlled Experiments, GMM

Solving Finite Mixture Models in Parallel

Many economic models are completed by finding a parameter vector that optimizes a function f, a task that only be accomplished by iterating from a starting vector. Use of a generic iterative optimizer to carry out this task can waste enormous amounts of computation when applied to a class of problems defined here as finite mixture models. The finite mixture class is large and important in economics and eliminating wasted computations requires only limited changes to standard code. Further, the approach described here greatly increases gains from parallel execution and opens possibilities for re-writing objective functions to make further efficiency gains.Numerical Optimization, Heterogeneous Agent Models

Unemployment Insurance and the Business Cycle

We develop a numerically solved equilibrium model of the labor market to study the effect of unemployment insurance (UI) over the business cycle. This model combines sequential job search, optimal job offer, layoff, and recall decisions, an aggregate productivity cycle, and details of an actual (namely, the Canadian) UI system. Optimal worker (firm) behavior is characterized by a dynamic programming problem conditional upon beliefs about the behavior of firms (workers). In equilibrium beliefs are consistent with the optimal decisions of other agents. The equilibrium beliefs are found using a nested algorithm in which simulations of the economy are used to iterate on beliefs while re-solving for optimal decisions. Some of the model's parameters are used to match simulated moments to data on labor market outcomes for young Canadian men. Simulations of recent changes to the UI system suggest that they will raise average unemployment rates and increase short-term layoffs and recalls among young Canadians. Eliminating UI altogether would significantly lower the unemployment rate among young men as well as lower average observed wages. Under the previous UI rules each month of UI is associated with .86 more months of unemployment than without UI. Under the new rules the ratio is 1.46: each two people on UI can be thought of as generating a third unemployed person not receiving UI through the changes in firm and worker decisions generated by the UI policy. In general, UI policy is found to have complicated effects on the timing of cycles in wages and other variables relative to the productivity cycle.Job matching. Turnover. Youth labor market

Incentives, Team Production, Transaction Costs, and the Optimal Contract: Estimates of an Agency Model using Payroll Records

We apply agency theory to the payroll records of a copper mine that paid a production bonus to teams of workers. As with most incentive pay used by firms, the bonus was simpler in form than the optimal contract that balances incentives, insurance, and free-riding. We explore whether transactions costs help explain this discrepancy. We estimate an agency model for the payroll data using the method of maximum likelihood and find that incentives and free-riding within teams accounted for two-thirds of the bonus system's inefficiency relative to potential full information profits. The remaining one-third of the inefficiency is attributed to the form of the incentive contract as constrained by transactions costs. We discuss alternative explanations and the general empirical content of agency theory.principal-agent models, transactions costs, performance pay, maximum likelihood estimation

Should I Stay or Should I Go…North? First Job Location of U.S. Trained Doctorates 1957-2005

Based on a survey of graduating PhD students in the U.S., we study the determinants of location of their first jobs. We consider how locating in Canada versus the U.S. for all graduates is influenced by both their background and time­-varying factors that affect international mobility. We also study the choice of European graduates between North America and returning to Europe. We find that in many cases macro factors have the expected effect of choices after controlling for biases for home, which depend upon background variables in expected ways.Doctoral Education, International Mobility, Brain Drain

Wage and Test Score Dispersion: Some International Evidence

We study fifty observations on wage distributions across eleven countries and two age cohorts defined by international mathematics tests given to thirteen-year-olds in 1962 and 1982. We find that wage dispersion later in life is never greater than test score dispersion. In particular, Lorenz curves for a cohort's wages always lie above or on top of the cohort's test score Lorenz curve. Wage dispersion, as summarized by Gini coefficients, is significantly related to test score dispersion and union density in the country. A general fall in test score dispersion between 1962 and 1982 appears to be reflected in reduced wage dispersion. For three countries with available data (the U.S., the U.K., and Japan), we find evidence of skill-biased changes in wage dispersion between the early 1970s and the late 1980s.Mathematics test scores, Wage distributions, Lorenz curves

The Role of University Characteristics in Determining Post-Graduation Outcomes: Panel Evidence from Three Recent Canadian Cohorts

This paper models earnings of male and female Bachelor’s graduates in Canada five years after graduation. Using a university fixed-effect approach, the research finds evidence of significant (fixed) variations in earnings among graduates from different universities. Within universities changes over time in various characteristics are correlated with changes in graduates’ earnings. Increases in undergraduate enrollment are associated with declines in subsequent earnings for graduates, suggesting crowding out. For men, but not women, increases in the professor/student ratio are associated with meaningful gains in students’ subsequent earnings. Models that do not condition on a student’s major show increased effects of changes in a university’s characteristics, with estimated effects rising up to almost two-fold. For women in particular, changes in several university characteristics are strongly associated with changes in women’s choice of major. Changes in university characteristics are not strongly related to the probability of employment five years after graduation.