Essays in labor economics

My dissertation consists of three independent chapters in the field of labor economics. The first chapter studies the economic forces underlying employment declines and skill upgrading in the U.S. manufacturing sector around the turn of the 21st century. The second chapter assesses the role of Japanese import competition in explaining stalled racial progress in the U.S. during the 1970s and 1980s. The third chapter explores end-of-life medical spending for dogs who have been diagnosed with cancer.

In the first chapter, I propose a new method to decompose employment changes by skill type into changes caused by output, labor supply, production task concentration, and labor-augmenting technology, using market equilibrium conditions within a constant elasticity of substitution production framework. I apply this method to manufacturing industries between 1990 and 2007, a period of steep employment declines for non-college workers. I find that labor-augmenting technology, by reducing labor per unit of output, is the leading source of displacement overall. However, a shift toward high-skill tasks is even more important in displacing non-college workers, who represent a majority of employment. In contrast, output changes have little influence on upskilling or aggregate job loss. In applications, I explore the impacts of import penetration from China and susceptibility to automation and offshoring. Of these, only offshoring is associated with some task upgrading, suggesting these mechanisms are not the primary drivers of this source of employment loss.

The second chapter is written with Timothy N. Bond. We assess the impact of the rapid rise in imports from Japan in the 1970s and 1980s on domestic labor markets. We use commuting zone level variation in exposure and stratify our outcomes by racial groups. We find it decreased black manufacturing employment, labor force participation, and median earnings, and increased public assistance recipiency. However these manufacturing losses for blacks were offset by increased white manufacturing employment. This compositional shift appears to have been caused by skill upgrading in the manufacturing sector. Losses were concentrated among black high school dropouts and gains among college educated whites. We also see a shifting of manufacturing employment towards professionals, engineers, and college educated production workers. We find no evidence the heterogeneous effects of import competition can be explained by unionization, prejudice, or changes in spatial mismatch. Our results can explain 66-86% of the relative decrease in black manufacturing employment, 17-23% of the relative rise in black non-labor force participation, and 34-44% of the relative decline in black median male earnings from 1970-1990.

The third chapter, written with Kevin Mumford, contributes to the literature on the causal effect of end-of-life medical spending by focusing on the pet health care industry. Using administrative records and an identification strategy based on the timing of pet health insurance benefit renewal, we create an environment in which arrival of insurance benefits is quasi-random. We focus on how the availability of health insurance reimbursement funds affects spending, veterinary visits, and mortality over a two-year period after a serious cancer diagnosis. Increases in the generosity of health insurance reimbursement causes increases in both spending and veterinary visits, but we do not find evidence of a causal effect on mortality.