Essays on credit and labor markets [electronic resource]

This dissertation consists of three separate contributions about credit (Chapters 1 and 2) and labor (Chapter 3) markets. Chapter 1 is coauthored with Ian J. Wright and Enrique Seira. In this chapter, we establish four stylized facts about firm financing in private credit markets using a unique, comprehensive database of corporate loans in Mexico. We explain how specific policies may have led to the environment giving rise to these stylized facts, discuss the implications of our findings for models of relationship lending and firm banking, and present a simple model rationalizing our new result. In Chapter 2, I measure the effects of transitioning from an auction pricing mechanism to a posted-price pricing mechanism in a peer-to-peer online credit market. I focus primarily on lender returns. To quantify the effects, I compare the mean internal rates of return (IRR) before and after the pricing mechanism change. I find that for high-risk loans the IRR for lenders is 6.6 to 11.7 percent higher under the auction pricing mechanism, depending on the risk rating. The difference is not statistically significant for low-risk loans. The decrease in IRR in the posted-price period is also observed when controlling for observables. The results point to negative selection in the posted-price period. I discuss whether the price flexibility of auctions and the ability for lenders to use soft information in their bids might explain why auction rates of return on loans are higher than under the posted-price mechanism. Lastly, in Chapter 3, I study the consequences of the change in type of employer-sponsored pension plan from Defined Benefit (DB) to Defined Contribution (DC) pension plans on elderly men's labor force participation. Specifically, I look both at the cohort of men born between 1931 and 1941 and the cohort of men born between 1948 and 1953, and measure whether workers with only a DC pension plan are more likely to be working at age 65 or expect to be working past age 65 relative to individuals with only a DB pension plan. Previous studies have found a positive effect, however, potential endogeneity of the type of pension plan has been overlooked. In this chapter, I take into account this potential endogeneity and instrument for the type of pension plan with the projected proportion of firms with a DB or a DC pension plan in the workers' state of residence and the year at specific moments of the worker's career. I find that older workers with only a DC pension plan are 85% more likely to be working at age 65 and I find that younger workers, not yet retired, estimate a 20% higher probability to be working past age 65. This result is higher than the regular ordinary least squares (OLS) probability of 15% and 13%, respectively; however, the instrumental variables estimates are more noisy with a standard error of 25% and 19%, respectively. Nevertheless, these results provide evidence that the private pension plan switch has had a positive effect on men's elderly labor force participation, even when the potential endogeneity of type of pension plan is taken into account. Furthermore, the endogeneity points to a downwards bias of the OLS estimates.

Keywords: Economics.
Advisor: Einav Liran primary advisor. Thesis advisor
Harding Matthew C. advisor. Thesis advisor
Levin Jonathan D. (Jonathan David)