Three essays on labor market mobility and inequality

Abstract

This dissertation consists of three essays on labor market mobility and inequality. The first chapter investigates the compensation outcomes of cross-industry mobility of S&P 1500 executives. In this study, we propose a theoretical framework by conceptualizing industries as social categories and identify industry affiliation with categorical membership. Besides finding an industry-changing discount in executives’ external job mobility, we show that executives trade off part of their compensation premium to move to a higher-status (more prestigious) social category. The second dissertation chapter examines the effects of crisis-related wage cuts on employee turnover. Drawing on social comparison and relative deprivation theories, we hypothesize that, in periods of crisis, if organizations deviate from prevalent wage-cutting measures implemented by external referents, their employees are more likely to consider alternatives and leave the firms. We also theorize and document the differences in the quitting tendencies of high- vs. low-skilled workers and their destination firms, unveiling the effects of crisis-related wage cuts on individual careers and the inter-firm flow of human capital. In the last chapter, we examine the association between temporary employment and wage inequality. We argue that a disproportionate high concentration of temporary employment in the bottom of wage distribution leads to rent destruction in low-wage jobs, shifting rent allocation vertically from low to high earners and thus widening wage inequality. Together, these three studies (a) advance the literature on career mobility and the role of social evaluations in mobility and labor market inequalities, (b) provide empirical contributions by compiling large-scale datasets (e.g., a novel dataset on career and wage trajectories of a representative sample of the Spanish labor market, industry similarity matrices based on web crawling data and text parsing algorithms), and (c) contribute to broader questions such as how individuals weigh non-pecuniary rewards in career decisions and how labor market inequalities intensify in the aftermath of an economic crisis.