Labor Market Outcomes and Employment Policy

Abstract

The first chapter contains an empirical analysis of labor market outcomes. Using the Quarterly Census of Employment and Wages microdata, individual labor market experiences are tracked over time. Not only is the employment relationship unstable, but the instability is concentrated among a subset of the population and is strongly correlated with earnings. There exist two explanations for the observed segmentation of the labor market: feedbacks from fluctuations across the business cycle and segmentation of labor divides workers and thus strengthens the relative power of capital over labor. The last two chapters focus on employment policy, addressing each of the two explanations of segmentation in turn. The second chapter develops a stock-flow consistent model that considers how the Employer of Last Resort policy, which guarantees jobs to all those who are willing and able, and increases stability by reducing fluctuations and uncertainty across the business cycle. The third chapter examines the institutional structure from which power emerges and argues that the Employer of Last Resort would displace the problematic institutions and facilitate an institutional adjustment towards a more inclusive provisioning process.