PhD Oral Exam - Bilguun Sukhbaatar, Economics

When studying for a doctoral degree (PhD), candidates submit a thesis that provides a critical review of the current state of knowledge of the thesis subject as well as the student’s own contributions to the subject. The distinguishing criterion of doctoral graduate research is a significant and original contribution to knowledge.

Once accepted, the candidate presents the thesis orally. This oral exam is open to the public.

Abstract

This thesis examines three fundamental questions in labor economics. Chapter 1 revisits a multi-sector search-and-matching model by extending the standard framework to incorporate a dynamic selection mechanism. Chapter 2 investigates how mean- and variance-preserving changes in skewness of the wage offer distribution affect the reservation wage in the classic one-sided job search model. Chapter 3 analyzes individuals’ decisions to enroll in schooling in Canada.

Chapter 1
This chapter constructs a multi-sector search and matching model with sector-specific productivity. In the model, workers receive idiosyncratic productivity shocks that make them move across sectors. Using the model, we explore how unemployment insurance (UI) benefits affect unemployment, labor mobility, and per-worker productivity. The key finding is that UI benefits raise per-worker productivity regardless of whether sector-specific productivity features absolute or comparative advantage. The quantitative impact of UI benefits on per-worker productivity critically depends on the dispersion and correlation of sector-specific productivity.

Chapter 2
In the search-theoretic framework of labor market dynamics, the reservation wage is a key determining factor of the rate and duration of unemployment. It is well known that a mean-preserving increase in the variance of the wage offer distribution raises the reservation wage, thereby extending the duration of unemployment. However, little is known about how the asymmetry of the wage offer distribution affects a worker's decision. In fact, empirical evidence suggests that the wage distribution is skewed and has a long right tail.

In this paper, we examine how the skewness of the wage offer distribution affects a worker's reservation wage. In particular, building on the classic one-sided job search model, we study how mean- and variance-preserving (MVP) skewness affects the reservation wage. For this purpose, we construct an analytically tractable wage offer distribution that preserves its mean and variance while tuning skewness. Our analysis reveals that when the mean and variance of the wage offer distribution are preserved, the relationship between the skewness and the reservation wage is non-monotonic. We characterize the conditions where the MVP skewness negatively and positively impacts the reservation wage. The level of UI benefits plays a crucial role in how skewness affects a worker's decision.

Chapter 3
In this chapter, we develop, estimate, and validate a sem-structural dynamic schooling enrollment model with unobserved heterogeneity. Using data from a randomized experiment in Canada, the Future to Discover (FTD) project, we estimate the model for control group students aged 16-26. The estimation results suggest that both short-run credit constraints and long-run family environment and ability factors play significant roles in explaining schooling enrollment decisions, particularly for individuals aged 16–23 in our data. For external validation, we then compare the model’s predicted postsecondary enrollment rates with the actual post-treatment enrollment outcomes of treated students under the Learning Account (LA) intervention. The results show that the model captures the dynamic enrollment patterns well, both within-sample and out-of-sample. Using the validated model, we conduct several counterfactual policy experiments, targeting short-run credit constraints. We evaluate the effectiveness and cost of the LA program by comparing the simulated outcomes to the experimental impacts observed in FTD. Finally, our counterfactual analysis shows that the original design of the LA program would have generated a larger increase in postsecondary enrollment than the version actually implemented. Even though the implemented program was well designed and delivered successfully, spreading the funds over a longer period or replacing them with general income transfers reduces the impact. Overall, targeted and front-loaded financial aid is the more effective way to increase enrollment in the postsecondary education.