Essays on the Effects of Social Ability on Labor Market and Raiding

Abstract

This dissertation consists of three essays in applied microeconomics. The first and third essays are in the area of empirical labor economics while the second essay utilizes laboratory experiments to study labor market issues. The first essay investigates the effects of social ability on the earnings of employees. Using a microeconomic model in a two-firm setting, the effects of social ability on a worker's earnings are calculated and shown to be increasing with higher social ability levels. The results show that the more social workers, when compared to the less social workers, end up working a lower number of hours but at a higher hourly wage rate. Because of these offsetting effects, social ability had no net effect on annual earnings. The second essay of the dissertation addresses the same issue by using experimental methods. In the constructed experimental design, subjects are randomly selected and assigned to one of two groups, where the second group is the "control" group. A significant relationship is found between how much subjects earned and the ratings they get from their group members for the social group. The highest earnings of the social group are significantly higher than the earnings of the control group. When subjects are assumed to behave rationally, those in the group which spends more time together earn significantly more than those in the control group. The third essay of this dissertation analyzes the findings of Lazear about raiding, seniority within a firm, and job search during time not worked. Using the NLSY-79, a raiding dummy is included in the classical wage equation to better understand its effects. Seniority within a firm and search while unemployed are also included in the wage equation. Earnings of those who are not raided and stay with the same firm are also compared to those who are raided and switch firms. In both cases, statistically significant results are found confirming the theoretical findings of Lazear. Raiding is associated with higher earnings and staying with the same firm does yield lower earnings. Unemployed search is also examined, and the results support Lazear's statement that search while unemployed yields to lower earnings.