Three essays in labor markets
Abstract
The dissertation is a collection of three essays in labor markets. The first essay concerns itself with developing and testing an efficiency wage model. The second essay considers human capital and screening models of labor markets in the context of athletic participation. The third essay develops and tests a model of discrimination. A brief description of each essay follows. Classical competitive theory suggests that the wage paid a worker should not exceed the wage available to that worker elsewhere. Consequently, the earnings of workers with identical ability and training should not vary. In the first essay I develop a model in the context of heterogeneous firms and workers where it is efficient for seemingly identical workers to be paid different wages even though they provide the same effort levels. Assuming the nonpecuniary value of a position to a worker is not public knowledge, employers pay an efficiency wage to reduce the probability of shirking. Differences in pay reflect, in part, differences in the potential loss in profit from shirking due to its impact on other workers. I find that positions at firms with higher losses to shirking, lower probabilities of identifying shirking, and with workers who have better alternative opportunities will pay higher wages. The model generates a set of predictions that are supported by empirical tests. The results provide an economic rationale for paying similar workers differently. The second essay considers the effects of high school athletic participation on future earnings, labor market outcomes, and educational attainment. The paper examines and tests a combination of the Becker allocation-of-time model, the team production model of Alchian and Demsetz, and the signaling/screening model of Spence. The evidence suggests that former athletes obtain more education and receive greater wages than their otherwise comparable counterparts. The third essay develops a theoretical model based on the "invisibility" theory of Milgrom and Oster to explain the job assignment process and why male-female wage differentials exist. The model assumes that a firm has better information on its employees than do other firms. Other firms try to reduce this asymmetry by observing the actions of the initial employer, in particular, the task assignments of workers at the firm. As a consequence, firms tend to mismatch high-ability invisibles to low-level positions to extract rents. Assuming females are more likely to be "invisibles," I empirically test the model's predictions with respect to the mismatch of females to tasks and the effect of labor force composition on mismatching activity. I link this discrimination in task assignment to the male-female wage differential.
Degree
Ph.D.
Advisors
Barron, Purdue University.
Subject Area
Labor economics|Economic theory
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