Working papers
Understanding the Decline in Occupational Mobility
Revise and Resubmit at AEJ Macro
The process of workers switching from occupation to occupation is a vital part of career development and self-discovery. Using the CPS and SIPP, I show that occupational switching rates have declined significantly over the past 25 years. This decline has been robust for each consecutive cohort and is more pronounced for younger workers than older workers. The decline could imply that it is becoming more difficult and costly for workers to find better jobs (due to increases in switching costs), leaving people increasingly stuck in poorly matched and unfulfilling careers. Paradoxically, it could also mean that finding better jobs is becoming easier (thanks to advances in ICT), since workers with good job matches are less likely to switch. This paper develops a dynamic discrete choice life-cycle model to separately identify and quantify how changes in switching costs and information over time contribute to the observed declines in occupation switching. The result is that increased switching costs drive about 72% of the decline, while better information drives about 8%. The increases in switching costs have led to less productive occupational matches for workers and thus significant welfare losses. On average, workers have lost 3% of their total lifetime income from increases in switching costs over this period.
Dynamic Wage Setting: The Role of Monopsony Power and Adjustment Costs
with Mons Chan, Elena Mattana, and Sergio Salgado
We develop and estimate a model of dynamic wage setting that jointly identifies worker ability, firm productivity, wage markdowns, and firm-level employment costs. Using matched employer-employee data and firm accounts, we document that markdowns (wage/MRPL) widen with worker ability, firm size, and firm productivity. Controlling for latent worker ability improves estimates of productivity, markdowns and wage passthrough. We show evidence that firms set wages in response to dynamic uncertainty and adjustment frictions, and that this shows up as a cost wedge in the markdown. This cost wedge drives most of the dispersion in markdowns, while static monopsony power provides a useful benchmark for the overall level of markdowns. On average, forward looking firms hoard labor and pay wages above the static monopsony benchmark.
Firm Productivity, Wage Markdowns and Gender Wage Gap [Draft coming soon]
with Mons Chan and Elena Mattana
Why do women receive lower firm wage premiums than men? We link Danish matched-employer-employee records to firm production data and decompose the gender firm-premium gap into productivity sorting, sorting across firms with different wage-to-MRPL ratios, and gender differences within firms. Women are disproportionately employed at less productive firms and at firms where wages represent a smaller share of marginal revenue product. Yet the largest component of the gap arises within the same firm, where women receive lower wages relative to their MRPL. Firm premiums also respond less than one-for-one to MRPL, with systematically stronger pass-through to men. Gender differences in firm pay therefore arise primarily from how firms translate productivity into male and female wages, rather than from differential access to productive employers.
Firm Productivity and Labor Quality [Draft coming soon]
with Mons Chan, Sergio Salgado, and Frederic Warzynski
In this paper we argue that a large fraction of the observed dispersion in firm productivity can be accounted for by differences in labor quality. In order to investigate this claim, we propose an estimation method that combines a non parametric production function estimation with a series of two-way fixed effect wage regressions with time-varying firm fixed effects which allow us to control for differences in labor quality across firms and time. We implement this method on a large employer-employee matched panel dataset from Denmark and find that around 60% of the dispersion in productivity can be explained by cross-sectional differences in the quality of labor. A similar fraction of the dispersion in idiosyncratic shocks to firm productivity can be attributed to changes in the quality of the labor force hired by the firm. Using these labor quality-adjusted measures of productivity, we find a significant degree of positive assortative matching between high ability workers and high productivity firms. High productivity firms also tend to pay higher wages per unit of ability than low productivity firms. We also find that firms react to productivity shocks by adjusting both the quantity and quality of their labor force. We then discuss the degree to which cross-sectional wage inequality may be driven by dispersion in firm productivity.
Publications
Occupational Licensing and Labor Market Fluidity
with Morris Kleiner
July 2025, JOLE
We show that occupational licensing has significant negative effects on labor market fluidity, defined as cross-occupation mobility, and positive effects on wage growth. We find that occupational licensing represents a barrier to entry for both nonemployed workers and employed ones. The effect is more prominent for employed workers than those entering from nonemployment. We also find that average wage growth is higher for licensed workers than nonlicensed workers. We find significant heterogeneity in the licensing effect across different occupation groups. These results hold across various data sources, time spans, and indicators of being licensed
Optimism About Graduation and College Financial Aid
with Emily Moschini and Gajendran Raveendranathan
April 2026, AEJ Macro
In the United States, college dropout risk is sizable. We provide new empirical evidence that beliefs about the likelihood of earning a bachelor’s degree predict college enrollment, and that the distribution of these beliefs exhibits widespread optimism. We incorporate this distribution of beliefs into an overlapping generations model with college as a risky investment that can be financed via federal loans, grants, family transfers, or earnings. We then examine the welfare impact of access to federal student loans. We find that access can reduce welfare for young adults who are low-skilled, poor, and optimistic, due to their mistaken beliefs.
Heterogeneous Passthrough From TFP to Wages
with Mons Chan and Sergio Salgado
Accepted at JOLE
We examine the passthrough of firms' idiosyncratic productivity shocks to workers' wages using rich matched employer-employee data from Denmark which allows us to control for unobserved worker and firm heterogeneity. We find an average elasticity of incumbent workers' hourly wages to firms' productivity of 0.08. The passthrough of firm shocks to wages is strongly asymmetric, in that wages are twice as responsive to negative shocks as to positive shocks. Failing to account for workers' endogenous mobility underestimates the passthrough of negative shocks and reverses the asymmetry. Passthrough decreases with labor market share and productivity but increases with income and ability. Recessions reduce passthrough from positive shocks to zero but do not affect passthrough of negative shocks. Workers with wage growth after switching to a new firm typically move from low to high productivity firms; In contrast, workers with a decline in wages after switching move between firms of similar productivity.
Works in Progress
Trade, Occupation Sorting, and Inequality [Draft available upon request]
with Luke Rawling and Mons Chan
Firms react to changes in factor prices with intensive and extensive-margin employment adjustments at the occupational-level. We study the distributional and aggregate consequences of this make-or-buy dynamic by developing a novel network model of heterogeneous firm-to-firm trade where the boundary of each firm depends on factor prices and firm-occupation comparative advantage in input-production. We show that the model can be easily aggregated and taken to industry-level data, and use the calibrated model to examine recent trends in employment, wages and trade in the USA. We use public OES and CPS data to show empirical evidence that a significant fraction of the growth in wage inequality in the USA is due to changes in firm/industry specialization and occupation sorting. To understand and measure the underlying causes of these trends, we calibrate the model to occupation and industry data from the OES and input-output tables. The results suggest that 1/3rd of the increases in wage inequality stem from decreases in inter-industry trade frictions with the remaining 2/3rds stemming from changes in technology and labor supply. Falling trade frictions are also responsible for all of the increases in occupational sorting and concentration. Had trade frictions been held at their 2002 level, productivity growth would have led to an increase in vertical integration, rather than the decrease observed in the data.
Student Loans and Early Employment Outcomes [Draft available upon request]
In this paper I investigate the link between student debt and post-graduation job market outcomes. Using a combination of survey and administrative data on graduates in two cohorts, I show that there is a significant negative correlation between the amount of debt upon graduation and the probability of finding a job which matches your education. I use evidence from Equifax to motivate a model of job search and long-term debt where the cost of consumer credit depends on your student loan balance. I successfully calibrate the model to the data and show that this debt constraint mainly binds for high and medium human capital graduates, as it affects the amount of time they are able to spend searching for a good job. I then show that alternative repayment and interest rate policies would have improved labor market outcomes for graduates in 07/08 by allowing extended search times, increasing match quality and possibly lifetime productivity.
MPC Heterogeneity and Firm Level Shocks
with Mons Chan, Sergio Salgado and Bastian Schulz
Occupational Concentration and Re-employment Risk
with Bent Jesper Christensen and Similan Rujiwattanapong
Understanding Worker Flows across Heterogeneous Firms
with Bastian Schulz