Periodic Reporting for period 1 - MARNET (Bipartite Network Models for Marriage and Labour Markets)
Période du rapport: 2021-09-01 au 2023-02-28
Research proposal MARNET aims at improving our empirical knowledge of markets structured as bipartite networks (all connections involve two different categories of agents) by providing better statistical models of network formation and of the effects of the network structure on outcomes.
Graph-theoretic methods have known important developments in the Machine Learning literature. My aim was to make use of them in economics.
I have two main applications.
The first one is related to the matching of household partners (say husband and wife) in the marriage market. We need to understand why two individuals marry instead of remaining single. In particular, it is important to disentangle what stems from different comparative advantages of the husband and the wife, from what stems from cultural norms. People marry with certain expectations in mind, and they divorce if unforeseen events break the expectations.
The second application is related to the matching of workers and employers in the labour market. The aim of the research is to understand how much of this matching stems from the match productivity and wages, and how much stems from non-wage factors (job amenities for example).
Graph-theoretic methods have known important developments in the Machine Learning literature. My aim was to make use of them in economics.
I have two main applications.
The first one is related to the matching of household partners (say husband and wife) in the marriage market. We need to understand why two individuals marry instead of remaining single. In particular, it is important to disentangle what stems from different comparative advantages of the husband and the wife, from what stems from cultural norms. People marry with certain expectations in mind, and they divorce if unforeseen events break the expectations.
The second application is related to the matching of workers and employers in the labour market. The aim of the research is to understand how much of this matching stems from the match productivity and wages, and how much stems from non-wage factors (job amenities for example).
Project Net1 was completed during the first 18 months of MARNET. It gave rise to a paper co-authored with Rasmuz Lentz (University of Wisconsin-Madison) and Suphanit Piyapromdee (University College London), “The Anatomy of Sorting – Evidence from Danish Data.” This paper is accepted for publication in Econometrica.
Abstract: In this paper, we formulate and estimate a flexible model of job mobility and wages with two-sided heterogeneity. The analysis extends the finite mixture approach of [BonhommeLamadonManresa2019] and [AbowdMcKinneySchmutte2019] to develop a new Classification Expectation-Maximization algorithm that ensures both worker and firm latent type identification uses wage and mobility variations in the data. Workers receive job offers in worker type segmented labor markets. Offers are accepted according to a logit form that compares the value of the current job with that of the new job. In combination with flexibly estimated layoff and job finding rates, the analysis quantifies the four different sources of sorting: preferences (job values), segmentation, layoffs, and job finding. Job preferences are identified through job-to-job moves in a revealed preference argument. They are in the model structurally independent of the identified job wages, possibly as a reflection of the presence of amenities. We find evidence of a strong pecuniary motive in job preferences. While, the correlation between preferences and current job wages is positive, the net present value of the future earnings stream given the current job correlates much more strongly with preferences for it. This is more so for short- than long-tenure workers. In the analysis, we distinguish between type sorting and wage sorting. Type sorting is quantified by means of the mutual information index. Wage sorting is captured through correlation between identified wage types. While layoffs are less important than the other channels, we find all channels to contribute substantially to sorting. In early career, job arrival processes are the key determinant of both types of sorting, whereas the role of job preferences becomes increasingly important as cohorts age. Over the life cycle, job preferences intensify, type sorting increases and pecuniary considerations wane.
Project Mar1 is closed to giving rise to a first draft ready for submission to a journal. This paper is co-authored with Marion Goussé (CREST-ENSAI) and Nicolas Jacquemet (Paris School of Economics and University Paris 1 Panthéon–Sorbonne).
Abstract: Recent work by Lippman et al. (2020) examines the effect of German reunification in 1989 on gender and family norms, and show that female labor supply varies with husband-wife relative wage more in the West than in the East. In this paper, we try to understand what factors explain this fact. We first construct a cultural identity index from the attitude questionnaire in the GSOEP, with significant overlapping across East and West. We then build a search-matching/Nash bargaining model of marriage formation and divorce, and intrahousehold resource allocation, assuming same preferences in East and West, conditional on heterogeneous wages, education and cultural identity. We estimate 4 independent models in four 7-year periods (1992-1998, 1999-2005, 2006-2012, 2013-2019) using the GSOEP. The model fits the data very well. We then use the estimated model to measure how much of the observed differences between East and West (time uses and marriage sorting) are due to differences and changes in education, wages and cultural identity. Cultural identity is found to be the main factor before education and wages. It explains half of differences in time uses and marriage sorting on observables between East and West. Identity also interacts with education and wages (another 50% reduction).
Abstract: In this paper, we formulate and estimate a flexible model of job mobility and wages with two-sided heterogeneity. The analysis extends the finite mixture approach of [BonhommeLamadonManresa2019] and [AbowdMcKinneySchmutte2019] to develop a new Classification Expectation-Maximization algorithm that ensures both worker and firm latent type identification uses wage and mobility variations in the data. Workers receive job offers in worker type segmented labor markets. Offers are accepted according to a logit form that compares the value of the current job with that of the new job. In combination with flexibly estimated layoff and job finding rates, the analysis quantifies the four different sources of sorting: preferences (job values), segmentation, layoffs, and job finding. Job preferences are identified through job-to-job moves in a revealed preference argument. They are in the model structurally independent of the identified job wages, possibly as a reflection of the presence of amenities. We find evidence of a strong pecuniary motive in job preferences. While, the correlation between preferences and current job wages is positive, the net present value of the future earnings stream given the current job correlates much more strongly with preferences for it. This is more so for short- than long-tenure workers. In the analysis, we distinguish between type sorting and wage sorting. Type sorting is quantified by means of the mutual information index. Wage sorting is captured through correlation between identified wage types. While layoffs are less important than the other channels, we find all channels to contribute substantially to sorting. In early career, job arrival processes are the key determinant of both types of sorting, whereas the role of job preferences becomes increasingly important as cohorts age. Over the life cycle, job preferences intensify, type sorting increases and pecuniary considerations wane.
Project Mar1 is closed to giving rise to a first draft ready for submission to a journal. This paper is co-authored with Marion Goussé (CREST-ENSAI) and Nicolas Jacquemet (Paris School of Economics and University Paris 1 Panthéon–Sorbonne).
Abstract: Recent work by Lippman et al. (2020) examines the effect of German reunification in 1989 on gender and family norms, and show that female labor supply varies with husband-wife relative wage more in the West than in the East. In this paper, we try to understand what factors explain this fact. We first construct a cultural identity index from the attitude questionnaire in the GSOEP, with significant overlapping across East and West. We then build a search-matching/Nash bargaining model of marriage formation and divorce, and intrahousehold resource allocation, assuming same preferences in East and West, conditional on heterogeneous wages, education and cultural identity. We estimate 4 independent models in four 7-year periods (1992-1998, 1999-2005, 2006-2012, 2013-2019) using the GSOEP. The model fits the data very well. We then use the estimated model to measure how much of the observed differences between East and West (time uses and marriage sorting) are due to differences and changes in education, wages and cultural identity. Cultural identity is found to be the main factor before education and wages. It explains half of differences in time uses and marriage sorting on observables between East and West. Identity also interacts with education and wages (another 50% reduction).
I have also made progress on Project Net5, aiming at merging top-down and bottom-up estimation methods. Specifically, we used the estimates of a model like the one in Project Net1 to identify and estimate a theoretical search-matching model of the labor market. This research is joint with Lise (Minesota), Lamadon (Chicago) and Meghir (Yale). I expect it to be completed by the end of MARNET.
I also expect to continue the research in Project Net1 with Rasmuz Lentz to allow unobserved worker types to change over time (Project Net2). Hoperfully, a paper can be submitted by the end of the period.
I also expect to continue the research in Project Net1 with Rasmuz Lentz to allow unobserved worker types to change over time (Project Net2). Hoperfully, a paper can be submitted by the end of the period.