Curriculum Vitae
A. Kerem Cosar |
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Placement Director: Neil Wallace
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Graduate Secretary & Placement Assistant: Lynn Sebulsky (814)865-1458 lms50@psu.edu |
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Curriculum Vitae |
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THESIS ABSTRACT Essay 1. Adjusting to Trade Liberalization: Reallocation and Labor Market Policies (Job Market Paper) Labor market responses to trade liberalization typically exhibit three features: slow net absorption of labor by export-oriented sectors, large reallocation costs for displaced workers, and a disproportionate adjustment burden for older workers. To explain these features and to analyze alternative policy responses, I develop a two-sector Ricardian small open economy model with overlapping generations, labor market search and matching, and sector-specific human capital accumulated through learning-by-doing. The model is calibrated to Brazilian data in order to study the dynamics of an economy in transition after trade liberalization. The calibrated model shows that human capital plays a much bigger role than search frictions in generating the observed slow adjustment to reforms. I then use the model to compare the distributional and efficiency effects of alternative worker-assistance programs in general equilibrium. A targeted employment subsidy that rewards mobility not only improves the distribution of income but also enhances efficiency gains from trade by facilitating faster formation of necessary skills during the adjustment period. The market failure corrected by the policy is the disincentives of experienced workers to invest in new skills which is in turn caused by the interaction of rent-sharing and intra-sectoral transferability of human capital to future employers. The paper contributes to a better understanding of trade-induced transitional dynamics and the labor market policies aimed at compensating the losers from trade.
Essay 2. Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy (with Nezih Guner and James Tybout) As Latin American countries have become more open, their job turnover rates have risen, their informal sectors have become larger, and their wage distributions have become less equal. We develop a dynamic general equilibrium trade model that explains these phenomena. The model combines standard search frictions in labor markets with heterogeneous firms that experience ongoing productivity shocks. Each period, firms decide whether to exit or continue producing. Those firms that remain active choose their export volumes and adjust their employment levels through vacancy postings or lay-offs. Openness matters in our model because it makes profits more sensitive to productivity shocks, as Rodrik (1997) argued. Thus when trade barriers are low, firms drawing negative shocks shed labor relatively rapidly (and perhaps exit), while firms drawing positive shocks acquire new workers relatively rapidly. Further, since openness decreases the rents of the former and increases the rents of the latter, it spreads the wage distribution. After fitting this model to Colombian micro data on establishments and households, we isolate the effects of trade frictions on labor market outcomes using counter-factual simulations. Preliminary results suggest that the mechanisms highlighted by our model can be important.
Essay 3. Human Capital, Technology Adoption and Development This paper presents a model of development in which skilled labor is an input in technology adoption. The model combines Nelson and Phelps (1966) type technology dynamics with a growth model in which intermediate goods are used to produce a final good. The intermediate goods producers hire skilled labor to increase their productivity by adopting techniques from an exogenously evolving stock of world knowledge. I solve for the stationary equilibrium and derive analytic expressions for steady state income level and wage premium. In a quantitative exercise, I calibrate the model and compare its predictions with data. The model successfully accounts for cross-country income differences and within-country wage premia on skilled labor. These results strengthen the idea that different types of human capital perform separate tasks and should not be aggregated into a single stock of human capital in development accounting exercises. The availability of skilled labor is potentially much more important for development than such aggregative exercises have so far suggested. |
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