My dissertation is composed of three essays in Empirical Labor Economics. The first essay examines whether changes in product market competition affect the use of implicit agreements in the wage setting process. I focus on the extent to which employers, after negotiating workers' wages upon hire, subsequently shield those wages from external labor market conditions. I use exchange rate movements to generate exogenous variation in product market competition. I find evidence that more product market competition increases the sensitivity of workers' wages to the current unemployment rate and decreases the sensitivity of wages to the unemployment rate prevailing upon hire. I then show that increased financial pressure on employers is one mechanism mediating these effects.
The second essay concentrates on the link between corporate governance and wage setting and asks whether managerial discretion affects workers' pay. I use passage of state anti-takeover laws in the mid-1980s to address this question. I find that average wages in firms incorporated in legislating states rose after the passage of these laws. This finding supports the hypothesis that managerial discretion raises workers' wages.
The third essay investigates the microeconomic foundations of the (wage) Phillips Curve, an aggregate relationship between real wage growth and the unemployment rate. Using a longitudinal micro data set, I find that the aggregate Phillips Curve derives from a dependence of individual wages not only on own lagged wages and the unemployment rate but also on aggregate wage measures. Further evidence obtained by comparing job movers and job stayers suggests that the Phillips Curve might result from the aggregation of different models of individual wage behavior.
My Research