Essays in labor economics
2009
The effect of technology on the functioning of
marriage and labor markets has long been a core concern for
economists. This dissertation contributes to this long standing
literature by exploring the implications of two major technological
phenomena on two distinct outcomes of interest: (i) marriage
formation and dissolution and (ii) racial differences in
unemployment. In particular, chapter one studies the link between
the trends in male wage inequality and marital instability. Rising
inequality is argued to be predominantly caused by the adoption of
computer technology and the associated Skill Biased Technological
Change (SBTC), and divorce is claimed to have a number of
financial, physical and emotional implications for children and
single mothers. Using a discrete time duration model and focusing
on the incidence of first marriage, I show
that growing inequality
has a significant stabilizing effect on the marital relationship
primarily in the divorce-prone years after the 5th anniversary.
This finding only applies to women with children. Quantitatively, a
marginal (one unit) increase in inequality in the 14th relative to
the first year of marriage implies approximately an 11% fall in the
separation hazard. To interpret these findings, I consider seven
plausible mechanisms. The results are consistent with a theory of
"on-the-marriage search", whereby women interpret growing
inequality as an increase in the dispersion of potential husband
quality and therefore search longer while married for alternative
mates. Children further increase the odds of on-the-marriage search
by influencing the costs of exiting the partnership. I additionally
assess the importance of six other channels: changes in female wage
inequality, labor supply and household specialization, assortative
matching, real estate prices, income uncertainty and social
capital. However, I do not find strong quantitative support that
these mechanisms primarily drive my findings. In the second and
third chapters, I examine the impact of another technological
revolution, the advent of the Internet, on age at first marriage
and reemployment. More specifically, a leading explanation for the
higher unemployment durations of
young African Americans relative
to white workers has been their limited knowledge of job
opportunities due to spatial mismatch and lack of appropriate
networks. In chapter two, I readdress these theories by studying
the impact of Internet diffusion on black and white youth
unemployment durations and the associated racial gap. Exploiting
regional and time variation in broadband deployment between
December 2000 and December 2004 in a fixed effects setting, I
estimate that broadband diffusion has led to a decline in the
racial gap of 15% to 20%. Moreover, virtually all this decline is
due to the positive effect of improved Internet availability on the
reemployment prospects of young African American job seekers. I
show that greater Internet penetration significantly increases the
use of friends and relatives by African Americans in their job…
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