Publication Date
11-6-2025
Award Type
Honorable Mention
Abstract
Labor markets are a central channel through which households are exposed to macroeconomic fluctuations. Yet our knowledge of the transmission mechanisms and frictions within labor markets that mediate economic shocks remains incomplete. In my dissertation, Essays in Macroeconomics and Labor Markets, I help improve this area by providing causal evidence through which labor markets in the United States are exposed to cyclical activity and discuss the resulting policy implications. Each of the three chapters examines a distinct friction shaping the interplay between macroeconomic fluctuations and labor markets. However, they are united by a shared methodology: each chapter develops a novel, quasi-experimental research design using rich individual level microdata, allowing the detailed study of each labor market channel. After briefly summarizing the dissertation, I describe the papers comprising each chapter in greater detail.
Chapter 1, titled “The Labor Market Spillovers of Job Destruction,” quantifies the extent to which individual employment cuts by firms can have indirect effects on workers through changes in the market equilibrium. Using variation in the nationwide layoff decisions of large firms across local labor markets, we find that labor market congestion, caused by many firms simultaneously destroying jobs, significantly amplifies the earnings losses of laid-off workers during economic downturns. We further interpret these findings through the lens of a heterogeneous-agent quantitative model with labor market frictions.
Chapter 2, “Credit Cycles, Firms, and the Labor Market,” investigates how an aggregate decline in the compensation investors demand for bearing firm default risk affects the allocation of labor. We show that loose credit market conditions lead more workers to take jobs at financially risky firms. Using variation from both labor market and credit market segmentation, we find that taking jobs at these firms increases workers’ labor income in the short run, but results in large and persistent earnings losses once credit conditions tighten.
Chapter 3, “Household Liquidity and Macroeconomic Stabilization,” studies how solvency from the CARES Act mortgage forbearance program stimulated local employment following the 2020 COVID-19 recession. Using institutional details that led to variation in financial intermediation frictions across mortgage servicers, we find that mortgage payment deferrals under the federal forbearance program accelerated the recovery of local employment once economic lockdowns were lifted. Our results underscore the importance of relieving household liquidity constraints in boosting labor demand during economic downturns.
Link to dissertation full text