Year: 2020
Type: dissertation
Abstract: This dissertation investigates the determinants and consequences of labor mobility across geographic areas and firms. It is motivated 1) by the singular potential for such mobility to increase welfare; 2) by troubling macroeconomic declines in labor mobility and business dynamism in the U.S.; and 3) by recent literature that allows us to better-understand how differences across firms mediate labor market outcomes. Its first chapter argues that firm entry and exit play critical roles in determining how immigrant workers are absorbed into and affect local economies. It first documents a positive relationship between immigrant workers and business presence, with inflows driving small-to-medium sized firm creation and reducing exit by older, large firms. It finds that these responses play a dominant role in immigrant worker absorption, accounting for more than two-thirds of immigrant-induced job creation. Using observed proxies for productivity, it then uncovers a critical heterogeneity: while firms are less likely to exit on average, low-productivity firms are more likely to shut down in response to immigrant inflows. The resultant increases in creative destruction are driven by immigrant workers, as opposed to immigrant consumer demand. Placed in the context of a theoretical framework that accounts for firm heterogeneity, these results imply that firm entry and exit drive local production responses to immigration, leading to substantially larger estimates of immigrant-generated economic surplus than canonical models of labor demand. The second chapter is co-authored with Dhiren Patki. Using linked employer-employee administrative data from Germany, we find that cohorts entering the labor market during a recession experience a 4.9 percent reduction in wages cumulated over the first decade of labor market experience. While 40 percent of the wage loss is due to reductions in employer-specific pay, we use a revealed preference-based algorithm to show that fully three-fourths of the losses in employer-specific pay are compensated for by non-pay amenities. The higher non-pay amenities that we associate with recessionary labor market entrants are consistent with the view that employers that hire during business cycle downturns exhibit less cyclically sensitive labor demand and provide greater long-term job security. Our findings show that the welfare cost of labor market entry during recessions can be less severe than pecuniary estimates would imply. The final chapter is co-authored with Dean Yang. It studies the interplay between negative shocks in origin countries and migrant networks in destination countries. Specifically, we examine the impact of hurricanes on a quarter-century of international migration to the United States and find that hurricanes increase migration to the U.S., with the effect dominated by working-aged individuals and magnitude increasing in the size of prior migrant stocks. We provide new insights into how networks facilitate legal, permanent U.S. immigration in response to origin country shocks, a matter of growing importance as climate change increases natural disaster impacts.
Author: Parag Mahajan
Language: English
Topic: Migration and Labor Dynamics
Subfield: Sociology and Political Science
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3162800250