Three Essays on Labor Market Entry.

Abstract

Recent studies have found a large earnings premium to attending a more selective college, but the mechanisms underlying this premium have received little attention and remain unclear. In the first chapter, I develop a multi-dimensional signaling model relying on college grades and selectivity that rationalizes students' choices of effort and firms' wage-setting behavior. The model is then used to produce predictions of how the interaction of the signals should be related to wages. Using five data sets that span the early 1960s through the late 2000s, I show that the data support the predictions of the signaling model, with support growing stronger over time.

The second chapter explores how high school graduate men and women vary in their behavioral responses to beginning labor market entry during a recession. While previous literature found a substantial wage penalty for highly educated men, this study suggests a different outcome for the less well educated, and between the sexes. Women, but not men, who graduate high school in recession are less likely to be in the workforce for the next four years, but longer-term effects are minimal. Further, while men increase their college enrollment, women do not; instead, they appear to substitute temporarily into home production. Women's wages are less affected then men's, and both are less affected than the college graduates previously studied.

The third chapter investigates the role of the birth control pill in altering women's human capital investments, their selection into work, and the implications for their wages. Using state-by-birth cohort variation in legal access to the Pill by age 21, we show that early Pill access conferred an 8-percent hourly wage premium by age fifty. Roughly two thirds of this premium is explained by the Pill's effect on accumulated labor-force experience and a remaining third by changes in women's education and occupations. Assuming the Pill had never been available to younger, unmarried women, our estimates imply the convergence in the gender gap among 25 to 49 year-olds would have been 10 percent smaller in the 1980s and 30 percent smaller in the 1990s.