Applied Microeconomics
Applied Microeconomics
The Applied Microeconomics research group unites researchers working on a broad array of topics within such areas as labour economics, economics of education, health economics, family economics, urban economics, environmental economics, and the economics of science and innovation. The group operates in close collaboration with the CAGE Research Centre.
The group participates in the CAGE seminar on Applied Economics, which runs weekly on Tuesdays at 2:15pm. Students and faculty members of the group present their ongoing work in two brown bag seminars, held weekly on Tuesdays and Wednesdays at 1pm. Students, in collaboration with faculty members, also organise a bi-weekly reading group in applied econometrics on Thursdays at 1pm. The group organises numerous events throughout the year, including the Research Away Day and several thematic workshops.
Our activities
Work in Progress seminars
Tuesdays and Wednesdays 1-2pm
Students and faculty members of the group present their work in progress in two brown bag seminars. See below for a detailed scheduled of speakers.
Applied Econometrics reading group
Thursdays (bi-weekly) 1-2pm
Organised by students in collaboration with faculty members. See the Events calendar below for further details
People
Academics
Academics associated with the Applied Microeconomics Group are:
Research Students
Events
Applied Economics, Econometrics, Public Policy (CAGE) Seminar - Magne Mogstad (Chicago)
Magne Mogstad (Chicago) https://sites.google.com/site/magnemogstad/
Title: Imperfect Competition and Rent Sharing in the U.S. Labor Market
Abstract: The goal of this paper is to quantify the importance of imperfect competition in the U.S. labor market by estimating the size of rents earned by American employers and workers from ongoing employment relationships. To this end, we construct matched employer-employee data by combining the universe of U.S. business and worker tax records for the period 2001-2015. Using this panel data, we provide two empirical findings on the role that firms play in the wage determination in the U.S. The first finding is that idiosyncratic productivity shocks to a firm transmit significantly to the earnings of its workers. Controlling for time-invariant firm and worker heterogeneity through a difference-in-differences strategy, we estimate that a 10 percent increase in the value added of a firm leads to a 1.7 percent increase in the earnings of incumbent workers. The second finding is that little of the variation in earnings is due to workers being employed in different firms. Estimating a two-way (worker and firm) fixed effect model, we find that firm effects explain no more than 4 percent of the variation in workers' earnings. To interpret these two findings, we develop a model of the labor market where multiple employers compete with one another for workers who have heterogeneous preferences over non-wage job characteristics or amenities. These heterogeneous preferences give rise to imperfect competition and rents. The model suggests a significant amount of rents and imperfect competition in the U.S. labor market. Workers are, on average, willing to pay 17 percent of their wage to stay in the current jobs. Comparing these worker rents to those earned by employers suggests that total rents are divided relatively equally between firms and workers. The model also reveals that the finding of small firm effects does not imply that labor markets are competitive or that rents are negligible. Instead, firm effects are small because productive firms tend to have good amenities, which pushes down the wages that these firms have to pay. As a result, firms contribute much less to earnings inequality than what is predicted by the variance of firm productivity only.