Three Essays Considering The Labor Market Behavior Of Young Workers

Abstract

This dissertation consists of three chapters investigating labor market trends, specifically of young workers (ages 18-24). In the United States, young workers decreased their labor market participation by more than 8\% from 1994-2014 and the first chapter of this research considers changing demographics and educational decisions to account for this decline. Using connected monthly Current Population Survey (CPS) data, an alternative definition of labor market attachment is considered, which accounts for attached, marginally attached, and not attached workers. Additionally, attending college is considered as a weak form of labor market participation. Accounting for demographic changes and varying levels of attachment by demographics, the decrease in the participation rate is decomposed into genuine and demographic changes. The finding is a genuine decrease of 1.5\% young workers out of the labor force over the twenty year period studied. A calculation of the impact of college major choice on participation is estimated by extending the decomposition, as well as estimating a logit model on participation by college major. For males certain majors (Agriculture and English and Foreign Language) correlate with lower labor force attachment, while others (Engineering, Mathematics, and Visual and Performing Arts) correspond with higher attachment. For females, graduate degrees are the strongest indicator of attachment to the labor force and being married correlates with non-attachment to the labor force. The second chapter of this research investigates the movement of young workers between labor market statuses. Rather than consider the stocks and percentages of workers in each state (i.e. charting the unemployment or participation rate), this paper analyzes the flows between statuses. A contribution of this research is to consider how labor market flows are impacted by education decisions by including schooling as a labor market status. Additionally, this chapter estimates the impact that labor market movements by young workers have on fluctuations of their unemployment rate; flows between unemployment and not-in-the-labor-force, account for over forty percent of the variation in unemployment for young workers. As young workers decide whether to participate in the labor force or continue their education, they must decide whether to forgo ``on-the-job” training and experience or attend college to acquire human capital through formal education. Following the work of John Robst (2007), the third chapter of this research considers three questions: To what extent do college graduates work in fields unrelated to their most recent degree field? Which degree fields lead to greater mismatch? What is the relationship between working outside a degree field and wages? This research first provides updated answers to these questions using data from the 2013 National Survey of College Graduates (NSCG). Additionally, this work includes new specifications of the wage penalty using parental education level, which was unavailable in Robst's data. The result indicates a wage correlation of complete mismatch between job and college major that is more than three times that of a partial mismatch. An important contribution of this paper is to address changes over time by comparing results from the NSCG data in 1993, 2003, 2010, and 2013. A significant result is that the negative association between mismatch and wages has increased by a factor of three for men and over four times for women from 1993 to 2013. The conclusions in this research describe both structural and cyclical trends in the young worker labor market. Despite the significant proportion of young workers in the labor force, little research has been conducted using data from individuals under the age of twenty-five. This dissertation focuses on young workers because of the importance they play in the labor market, but also to motivate future research. The decisions young people make impact the labor market as well as drive individual future labor market outcomes; policy should be informed by the structural and cyclical trends presented throughout this research.