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Essays in Macroeconomics

Murali, Srinivasan
http://rave.ohiolink.edu/etdc/view?acc_num=osu15251724321291

Abstract Details

2018, Doctor of Philosophy, Ohio State University, Economics.
My primary research concentrates on the macroeconomic perspective of labor markets and labor flows. I also work on designing algorithms to solve dynamic economic models. Chapter 1 titled Job Specialization and Labor Market Turnover explores the secular decline in the labor market turnover over the recent decades. Even though there is a growing empirical literature documenting the decline of labor market turnover over time, there is still no consensus on the underlying economic factors driving this decline. This paper contributes to this gap in the literature. I analyze the role of an increase in the specialization of jobs in accounting for this decline. Combining individual level worker data from NLSY79 and NLSY97 with data on skills from the ASVAB and O*NET, I estimate a standard Mincerian wage regression augmented with an empirical measure of mismatch. I find that jobs on average are specialized and that specialization has increased by 14 percentage points post 1995. To quantify the impact of this increasing job specialization on labor market turnover, I build an equilibrium search and matching model with two-sided ex-ante heterogeneity. Workers have different skill endowments and jobs have different skill requirements. The specialization of a job measures the impact of mismatch on match productivity. I show that as jobs become more specialized, my model is able to explain over 20\% of the observed decline in labor market turnover. As job specialization increases, well-matched firms and workers choose to remain in their matches longer. This leads to an increase in the proportion of well-matched workers and firms, which in turn results in a decline in labor market turnover. Chapter 2 titled A Stochastic Simulation based Algorithm for Solving Dynamic Economic Models provides an algorithmic framework for solving economic models. One of the most important bottlenecks in writing elaborate dynamic economic models is the curse of dimensionality, i.e. there is an exponential increase in the computational complexity with each additional problem dimension. Various literatures in the field of Operations Research and Reinforcement Learning have shown that the stochastic simulation algorithms help in relaxing this curse. I develop an algorithm using this framework and demonstrate its scalability and robustness by solving a multi-country business cycle model with 12 continuous state variables. I show that my algorithm achieves a concave increase in computational complexity and hence relieving the curse of dimensionality. This is because the algorithm learns the ergodic set of the model over simulations and does not iterate on a pre-specified grid over the state space. I extend this framework to discrete choice dynamic programming problems by solving the lumpy investment model of Khan and Thomas (2003). Chapter 3 titled Labor Productivity Puzzle: An Exploration Using Empirical Mode Decomposition explores the decline in cyclicality of labor productivity. A number of studies have documented that labor productivity have become acyclical over time. In this study, I revisit the cyclicality of labor productivity using Empirical Mode Decomposition(EMD) which allows me to unearth the different underlying frequencies of the data. I show that, in recent years labor productivity has become strongly countercyclical and not just acyclical under business cycle frequencies.
Aubhik Khan (Advisor)
Julia Thomas (Committee Member)
Sanjay Chugh (Committee Member)
115 p.
Economics

Recommended Citations

Citations

  • Murali, S. (2018). Essays in Macroeconomics [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu15251724321291

    APA Style (7th edition)

  • Murali, Srinivasan. Essays in Macroeconomics. 2018. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu15251724321291.

    MLA Style (8th edition)

  • Murali, Srinivasan. "Essays in Macroeconomics." Doctoral dissertation, Ohio State University, 2018. http://rave.ohiolink.edu/etdc/view?acc_num=osu15251724321291

    Chicago Manual of Style (17th edition)

osu15251724321291
280
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This open access ETD is published by The Ohio State University and OhioLINK.