Seminario “Labor reallocation during booms: The role of duration uncertainty”
Miércoles 3/7, 17.15h
Presentado por Marcos Sorá
Abstract
This paper studies the effects of uncertainty about the duration of a commodity boom on labor supply towards the booming sector. Using a model of sector-specific human capital accumulation, I show that workers’ payoffs in this setting are analogous to a call option, leading to ambiguous effects of uncertainty on labor supply. Then, I turn to an empirical investigation of the effects of duration uncertainty during the boom in mineral prices of 2011-2018, driven by a construction boom in China. I estimate the model using financial data and novel administrative micro-data from Australia, an exporter of mineral products to China. I use the quantified model to study a counterfactual perfect foresight economy in which the mining boom was temporary and duration certain. I find that the mining share of employment in Australia would have increased from 3.7% to 4.4%, and the relative wage in the sector would have been substantially lower, leading to a decrease in labor income inequality. Changes in the age composition of the mining sector indicate heterogeneous attitudes towards risk across age groups.
Marcos Sorá
This paper studies the effects of uncertainty about the duration of a commodity boom on labor supply towards the booming sector. Using a model of sector-specific human capital accumulation, I show that workers’ payoffs in this setting are analogous to a call option, leading to ambiguous effects of uncertainty on labor supply. Then, I turn to an empirical investigation of the effects of duration uncertainty during the boom in mineral prices of 2011-2018, driven by a construction boom in China. I estimate the model using financial data and novel administrative micro-data from Australia, an exporter of mineral products to China. I use the quantified model to study a counterfactual perfect foresight economy in which the mining boom was temporary and duration certain. I find that the mining share of employment in Australia would have increased from 3.7% to 4.4%, and the relative wage in the sector would have been substantially lower, leading to a decrease in labor income inequality. Changes in the age composition of the mining sector indicate heterogeneous attitudes towards risk across age groups.
Marcos Sorá
PhD in Economics, University of Chicago. Postdoctoral Fellow at Universidade Católica Portuguesa. His work spans topics in international trade, international macroeconomics, and labor. He is recipient of the Fellowship for MA in Universidad Torcuato Di Tella 2015-2016. His work has been published in Journal of International Economics.