The Role of Firms and Occupations in Wage Inequality - Joint with Luke Heath Milsom (updated: 6 February 2025)
This paper quantifies the relative importance of firms and occupations to wage inequality. We estimate a worker-job two-way fixed effect model using French data, allowing for unrestricted firm-occupation interactions, and use our model to decompose job premia variance and worker-job sorting to between- and within- occupation components. We find that between-occupation variance in pay premia is as large as within-occupation variance and sorting of workers between occupations is substantially more important than sorting of workers between firms within occupations. Our results suggest that measurements of worker-firm sorting which ignore occupations may conflate sorting to firms with sorting to occupations.
Presented at the 9th Warwick Economics PhD Conference (2021), Royal Economics Society Annual Conference (2022), AASLE (2023), EWMES (2023), SOLE (2024), EALE (2024) (by coauthor)
Individual and Aggregate Mismatch in Higher Education (updated: 19 October 2023)
In many economies, many graduates are observed to work in non-graduate occupations. Does this mean that the level of education is inefficiently high? I propose a model that features uncertainty about the causal effect of HE and incorporates general equilibrium wage effects in a matching model of the labour market. My model highlights that there are two distinct notions of overeducation. Workers could be individually mismatched in the sense that they would be better off if they made alternative education choices. There could also be aggregate mismatch if average welfare would be higher if the average level of HE attendance changed. I find that uncertainty about returns generates the former, while endogenous education choice in a matching market generates the latter. Structurally estimating my model on UK data, I calculate that 32.9% of the population individually mismatched. I find in policy simulations that policy-makers can improve aggregate welfare by reducing HE share by 1.6 percentage points. Reducing uncertainty about returns is unambiguously good for workers but increases income inequality and worsens firms’ outcomes by making labour more expensive.
Presented at the 10th Warwick Economics PhD Conference (2022), University of Surrey PhD Workshop in Microeconomics (2022), Young Economist Symposium (2022), Asian & Australasian Society of Labour Economics Conference (2022), European Winter Meeting of the Econometric Society (2022), Society of Labour Economists Conference (2023), Leuven Summer Event (2023), EEA-ESEM Congress (2023), European Association of Labour Economists Conference (2023)
Determinants of University Subject Choice in the UK - Draft available on request (updated: 22 February 2021)
Students applying to British universities have to choose to specialise in a particular subject at the point of application. What factors play into their choice of subject of study? I analyse students' subject choices in university using a cohort panel dataset (LSYPE), and in particular, whether those choices respond to their expected wages conditional on studying the subject. I find that earnings, defined as earnings at age 25 or as lifetime earnings, are positively associated with choice probability, although the quantitative impact of expected earnings on subject choice is small. I also find that there are substantial differences in choice probability between students of different sexes, ethnicities and to a lesser extent, socio-economic classes.
Labours of Love: Search for Occupational Meaning and Worker Welfare. With Hannah Zillessen and Luke Heath Milsom.
How Do Parents Affect the College Education Choice of Their Children?. With Adrian Lerche and Malte Sandner