Document Type


Date of Degree

Summer 2016

Degree Name

PhD (Doctor of Philosophy)

Degree In


First Advisor

Martin Gervais


This dissertation contributes to the current understanding of labor markets, focusing on the use of micro level data and computational modeling to study the interaction of unemployment with various aspects of the macroeconomy. I address the fact that frictions in the labor market carry over into other dimensions of firms' and workers' decisions, such as a firm's incentive to utilize its current labor force, workers' participation in the labor market, and the decision to acquire or discharge debt.

In Chapter 1, I study involuntary part-time employment over the business cycle. I document that the population at work part-time for economic reasons ($PTE$) is countercyclical, volatile, and transitory. Workers in $PTE$ are nearly three times more likely than the unemployed to return to full-time work in a given month, and seven times more likely than full-time workers to become unemployed. Using household survey data, I demonstrate that cyclical fluctuations in $PTE$ come from changes in the transition rates between full-time and part-time employment rather than between part-time and unemployment. Moreover, these movements are primarily due to within-job changes in hours. Accordingly, I model part-time work focusing on a firm's decision to hire, fire, or partially utilize its labor force. Firms in the model are heterogeneous in size and productivity, and are subject to search frictions. The model produces firm-level utilization of part-time employment which is consistent with observed worker flows, and varies across the size and age distributions of firms. Over the business cycle, the model matches the observed relative volatility of unemployment and $PTE$. Part-time labor utilization by firms increases the volatility of vacancies and unemployment in the model relative to the case with only an extensive margin.

Chapter 2 studies the interaction of a participation margin in a labor market search model. Introducing a participation margin of whether or not to actively search for a job requires the use of large idiosyncratic shocks to workers' participation incentives in order to match monthly labor flows in the data. If we measure the participation transitions of workers outside of employment where search decisions are observable and apply this same transition process to employed workers, any search model will overstate the transition of workers out of employment to nonparticipation. Allowing the participation transition of workers to depend on their employment state fixes these flows, but this transition process is unobservable for employed workers. Taking advantage of the longer panel of the 1996 Survey of Income and Program Participants, I estimate the markov process for participation transitions of employed workers using their observed search behavior before and after an employment spell. The difference in the transition process measured for employed and nonemployed workers is consistent with an interpretation of attachment to the labor force. I build a directed search model with a labor force participation margin subject to employment-dependent shocks and show that it can match the labor market flows in US data.

Chapter 3, which is jointly authored with Chander S. Kochar, investigates the effects of student loans on labor market outcomes. The student loan market is the second largest source of household debt in the United States, with $1.2 trillion in outstanding debt. Unlike other sources of unsecured credit, student loans cannot be discharged in bankruptcy. Using data on college graduates from the 1993/03 Baccalaureate and Beyond Longitudinal Study, we first identify that student loan debt has a significant negative effect on students' earnings after graduation. We show that the inability to discharge debt in bankruptcy is critical to produce this result within a simple search theoretic framework. We propose a richer model with student loan debt and a delinquency/default decision to study the effects of recent changes to student loan policies on the labor market and delinquency outcomes of college graduates.


Labor Economics, Macroeconomics, Part-time Employment, Student Loans, Unemployment


xvi, 218




Copyright 2016 Lawrence F. Warren

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