Labor Matching Behavior in Open Economies and Trade Adjustment

This paper develops a model of costly trade and team production to examine the matching behavior of skilled workers in an open economy. Trade liberalization leads to a redistribution of rents across firms that differ in export status. When heterogeneous workers can bargain effectively and capture these rents, trade liberalization changes the supply of skilled production teams available for hire. Trade is shown to rationalize the matching behavior of workers, causing skill-upgrading within firms and infra-marginal improvements to firm-level productivity. Gains in productivity via skill-upgrading are distinct, and complementary, to the gains realized as low productivity firms exit and high productivity firms expand. All firms experience changes in skill composition, rather than just those on the margin of exit or exporting. Openness benefits those employed at exporting firms, however the likelihood of benefiting from trade is not necessarily increasing in skill. Wages in the open economy are tied to both worker skill and job type.Worker Heterogeneity, Wage Bargaining, Trade Adjustment, Matching

Skill Acquisition, Incentive Contracts and Jobs: Labor Market Adjustment to Trade

This paper examines how global integration influences worker behavior regarding skill acquisition, as well as firm behavior regarding incentive contracts and occupational diversity. The approach integrates several key components of international trade and the wage distribution in developed countries: namely heterogeneous firms, trade in similar goods, and performance payments to workers that endogenously obtain different skill levels. Greater trading opportunities reduce aggregate prices, causing workers to experience a greater marginal utility derived from income, as well as the skills that aid them in fulfilling performance contracts. Firms respond to skill accumulation among the labor force by adjusting the provision of incentive contracts, and the types of jobs they offer. Labor market adjustment to trade liberalization is characterized by a more steep, but less extensive, provision of incentive contracts among the labor force; higher overall wage inequality exhibiting a U-shaped differential; and job polarization across skill-groups.Job Polarization, Performance Pay, Trade Adjustment

Job Mix, Performance Pay, and Matching Outcomes: Contracting with Multiple Heterogeneous Agents

We examine the problem of designing performance contracts with multiple agents when principals must compete for quality teams from a heterogeneous pool of agents. The trade-off principals face between good recruiting and good team performance provides micro foundations for agents to form stable matches, and for initially identical principals to adopt different organizational schemes. The equilibrium pattern of team formation exhibits two distinct, and inversely related, forms of assortative matching. We find that a greater share of principals offering diverse performance incentives across teammates (extensive margin), leads to a lesser degree of heterogeneity in abilities within teams on average (intensive margin). We apply the model to firm behavior to examine the mix of jobs offered and the degree of performance pay in a general equilibrium environment. At the aggregate level, increases in the supply of high-skilled workers leads to a polarization of jobs offered, i.e. relatively greater use of high- and low- skill occupations, consistent with changing labor demands in recent history. Moreover, skill accumulation among the labor force induces more firms to offer a steep set of performance contracts.Multi-Agent Contracting, Matching, Job Design

THE GENETIC MECHANISMS UNDERLYING PIGMENTATION AND THEIR EVOLUTIONARY IMPORTANCE IN BIRDS

Integumentary pigmentation is a phenotype of fundamental importance to animals, with major impacts on survival and fitness. Thus, understanding the mechanisms underlying pigmentation can help illuminate general principles about how adaptive variation is generated and maintained in populations. Here, I present a dissertation that is aimed at understanding the developmental, regulatory, and genetic mechanisms that underlie variation in avian plumage color, and their evolutionary importance. In my first chapter, I addressed how the modular organization of plumage traits may impact their evolution. The production of color in developing feathers is a modular process, with several mechanisms combining to produce the complete feather phenotype. A modular trait organization is predicted to increase phenotypic evolvability by reducing negative pleiotropic interactions with functionally unrelated traits. Through phylogenetic comparative analysis, I show that separate mechanisms producing feather colors show independent, uncorrelated patterns of evolutionary change, consistent with their modular organization. My results show that developmental modularity can have detectable impacts on trait evolution. For my second chapter, I identified gene expression variation associated with melanin pigmentation in the Zebra Finch. I found differential expression of several functionally important genes that synthesize melanin. In addition, I found changes in expression in the signaling pathways that govern transcription of melanogenesis genes. These signaling pathways differ from those previously reported to drive major pigmentation differences, indicating that the regulation of melanogenesis is flexible in how it generates similar phenotypic outcomes. For my third chapter, I identified the genetic basis for loss of sexual dimorphism in a domestic color morph of Zebra Finch. With whole-genome sequencing, I found a major divergence peak between dimorphic and monomorphic finches containing the gene Norrie Disease Protein (NDP). NDP is a signaling molecule that regulates transcription of several melanogenesis genes, and is underexpressed when dimorphism is lost. Sexual dimorphism can be lost repeatedly and rapidly in many groups. My work shows that relatively simple genetic changes in the regulation of important signaling molecules can influence sexual dimorphism in a patch-specific manner, facilitating this rapid evolution

A Simple Model of Globalization, Schooling and Skill Acquisition

We develop a model of schooling and skill acquisition, highlighting informational asymmetries that distort the incentives to educate. A key feature of our model is that education acts simultaneously as a signaling device and as a method for workers to enhance their productivity. We show that when firms can only imperfectly screen workers, the result is an economy in which too many workers purchase schooling and too few workers devote sufficient effort to their coursework to qualify for the high skill labor pool. We then examine how greater openness to international markets alters the skill mix of the domestic workforce and show that greater openness usually eases one labor market distortion while making the other distortion worse. Globalization impacts educational behavior and labor market outcomes differently as the extent of firms engaged in international markets varies, and affects wage inequality both within and across educational groups

Simple random walk on long-range percolation clusters II: Scaling limits

Supported in part at the Technion by a Landau fellowship. Supported in part by an Alfred Sloan Fellowship in Mathematic

International Fiscal Policy Coordination and GDP Comovement

Economic shocks often permeate borders generating comovement in nations' business cycles over time. We highlight the fact that fiscal policy coordination is an important avenue by which national economies become more integrated, influencing the transmission of macroeconomic shocks between countries. We find that changes in fiscal policy coordination - as measured by the signing of a bilateral tax treaty - increase business cycle comovement by 1/2 a standard deviation. This magnitude is one-and-a-half times larger than the effect of trade linkages, and is in sharp contrast to currency union membership, which has a near zero and statistically insignificant effect on business cycle comovement. We also find that new bilateral tax treaties increase comovement in shocks to nations' GDP trends, demonstrating the permanent effects of fiscal policy coordination

R & D Exchange in a Duopoly with Strong Patent Protection

One reason firms engage in research and development is to lower production costs. Strong patent protection provides an additional incentive because firms may earn royalties from licensing their discoveries. This paper models the decision to engage in process research and development in a duopoly. A three stage game is posited and the equilibrium quantity and price of knowledge is calculated under various assumptions

Skill Acquisition, Incentive Contracts and Jobs: Labor Market Adjustment to Trade

This paper examines how global integration influences worker behavior regarding skill acquisition, as well as firm behavior regarding incentive contracts and occupational diversity. The approach integrates several key components of international trade and the wage distribution in developed countries: namely heterogeneous firms, trade in similar goods, and performance payments to workers that endogenously obtain different skill levels. Greater trading opportunities reduce aggregate prices, causing workers to experience a greater marginal utility derived from income, as well as the skills that aid them in fulfilling performance contracts. Firms respond to skill accumulation among the labor force by adjusting the provision of incentive contracts, and the types of jobs they offer. Labor market adjustment to trade liberalization is characterized by a more steep, but less extensive, provision of incentive contracts among the labor force; higher overall wage inequality exhibiting a U-shaped differential; and job polarization across skill-groups