Research
Working Papers
The Effect of Large Firm Entry on Local Skill Demand and Wage Distribution (with Layla O'Kane)
Job Market Paper (Draft)
Big firms matter in big ways. They are high-wage employers, valuable invention producers, and early technology adopters. They matter so much that local governments spend $47 billion annually trying to attract and appease them in the name of job creation and future industrialization. And while there is empirical evidence supporting employment gains, there is little to no evidence exploring intensive margin effects like subsequent skill and technology adoption by other employers in the market. This project fills this gap in the literature by evaluating the spillover effects of large firms’ entry on local labor markets' wage distribution and skill demand. Using Lightcast vacancy data in a difference and difference event study model, we compare change in posted wages and skill demand in counties where a million-dollar establishment opened to counties of runner-up sites the firm was considering. Findings so far suggest that the entry of million-dollar establishments significantly shifts the hourly wage distributions downward and have a negative albeit insignificant effect on number of postings. They further prompt local firms to relax their demand for college degrees, such that we see a significant increase in high school degrees as the minimum education listed for many jobs. This downskilling in education is not counterbalanced with an increase in firms' demand for computer, cognitive, or social skills.
Work in Progress
The Impact of Federal Contractor Minimum Wages on Firm Wage Setting
(with Ellora Derenoncourt and David Weil)
Federal minimum wage legislation in the US has stalled since 2009. As an attempt to boost wages via executive action, the Obama administration introduced a national minimum wage for firms with service-related federal contracts in 2014. The Biden administration announced an increase in the federal contractor minimum wage (FCMW) to $15 an hour in April of 2021, effective in January of 2022. We study the impact these national federal contractor minimum wages have had on wage setting in local labor markets. We merge data from USASpending to data on job ads and job reviews with hourly wage information at the firm level. Focusing on large firms where the policy is binding, we find that low-wage contractor firms typically respond to the policy on the date of announced change as opposed to the implementation date. We subsequently explore spillovers in wage-setting to non-contract locations and to non-contractor firms in shared labor markets.
The Effect of Covid-induced Labor Shortages on Skill Demand
(with Alessandro Caiumi and Layla O'Kane)
How do employers’ recruitment strategy adapt to labor shortages? Do they relax their skill requirements to draw from a potentially larger pool of candidates? Or do they simply raise their wages to price out competitors? This paper exploits the unexpected and heterogeneous effect of covid-19 to estimate employer's posted wages and skill demand elasticity to labor market tightness. More specifically, our identification strategy leverages two key facts to create a Bartik instrument (1) Covid-19 had a heterogeneous effect on labor shortages across industries, and (2) Industries share of employment--determined pre-pandemic--varies across commuting zones. Using this bartik instrument to create a metric of labor tightness, we find that compared to 2019, employers' demand for education, experience, software and cognitive skills oscillated during 2020 and 2021, but returned to pre-pandemic trends in 2022. This suggests that unlike the persistent upskilling observed following the great recession, downskilling enacted during the pandemic were reverted shortly after.