Earnings, mobility, and skills : essays on the career consequences of significant life events

This dissertation studies the long-lasting labor market consequences of certain significant one-time events in workers' lives. These events are i) landing the first job at one type of firm or another, ii) forced mass displacement and incarceration of Japanese Americans during WWII, and iii) facing better or worse macroeconomic conditions during the education-to-work transition. Chapter 1 examines the link between firm heterogeneity and young workers' long-term career outcomes. Using administrative (social security) data from Spain, which include workers' labor market histories and education, I investigate the long-term effects of landing a first job at a large firm versus a small one. Size could be a relevant employer attribute for inexperienced young workers because large firms are associated with greater training, higher wages, and enhanced productivity. The key empirical challenge is selection into larger firms—for instance, more able people may land jobs at these firms. To overcome this challenge, I develop an instrumental-variables approach that leverages large firms' year-to-year idiosyncratic hiring shocks within each region. These large-firm hiring episodes, in turn, generate variation in the composition of regional labor demand. I find that starting at a larger firm leads to substantially better career outcomes such as lifetime income. To shed light on the mechanisms driving this result, I test whether the effect is (i) due to workers staying with their first employer; (ii) driven by job search mechanisms favoring large-firm workers; (iii) present for those who lose their first job; (iv) explained by experience acquired at large firms being more valuable. These tests find support for two complementary channels. The first is a job search channel by which a larger first employer leads to subsequent jobs at other large firms. The second is a human capital channel by which on-the-job skills developed in formative years are more valuable if they are acquired at larger firms. In Chapter 2, I shift attention to one of the largest population displacement episodes in the U.S.. In 1942 over 110,000 persons of Japanese origin living on the West Coast were forcibly sent away to ten internment camps for one to three years. Having lost jobs and assets, after internment they had to reassess labor market and location choices. This paper studies the long-run career consequences of this episode for those affected. Combining information from Census data, camp records, and survey data I develop a predictor of a person's future or past internment status based on Census observables. Using a difference-in-differences framework I find that internment had a positive average effect on earnings in the long run. This effect is robust to different control groups of non-interned Japanese and Chinese Americans. The evidence is consistent with information and skills exchange, possibly enabled by the camps' economic diversity, followed by increased occupational and geographic mobility as likely mechanisms. I find no evidence of other potential drivers such as increased labor supply, or changes in cultural preferences. These findings provide evidence of labor market frictions preventing people from accessing their most productive occupations and locations, and shed light on the resilience of internees who overcame a very adverse initial shock. Chapter 3 revisits the human capital channel put forward in Chapter 1. This paper documents the impact of labor market conditions during the education-to-work transition on workers' long-term skill development. Using survey data that measure workers' skills in different high-income countries, I document three facts: i) cohorts of workers who faced higher unemployment rates when aged 18-25 have lower numeracy and literacy skills during their experienced, prime-age working years; ii) unemployment rates at later ages (26-35) have a more muted impact; iii) the former facts hold even though people get more formal education as a response to higher unemployment in their late teens and early twenties. These findings can be rationalized with a high importance of on-the-job skill development (which is negatively impacted during bad economic times), and the early twenties being a sensitive period for learning useful skills at work.

Keywords: Economics.
Advisor: Hoxby Caroline Minter 
Abramitzky Ran 
Pistaferri Luigi 
Sorkin Isaac