Three Essays on Labor Economics

Abstract

This dissertation includes three essays investigating the effects of such diverse factors as government regulations, expansion of government spending, and physical appearances on (individual) labor market outcomes. The first essay, entitled "Physical Attractiveness and Earnings: Evidence from a Longitudinal Survey", examines how individual earnings in the long-run can be affected by adolescent physical attractiveness endowment across genders. In recent years, labor market discrimination against the physical attractive/unattractive has brought increasing attention primarily because the number of employment-related discrimination claims based on employees' appearance has continued to increase. Therefore, the evaluation of the beauty premium/plainness penalty in the labor market sheds light on explaining existing wage discrimination, gender wage gaps, and inform policy makers with respect to anti-discrimination legislation. Using a unique Wisconsin dataset, I specifically examine occupational sorting through which physical attractiveness may affect long-run individual earnings. Consistent with previous studies, I find that physical attractiveness is positively associated with individual earnings for both men and women. In the long-run, the results suggest that the beauty premium for men develops during their career but that for women fades over time. Although attractive women prefer certain occupations, sorting does not explain the women's beauty premium. The second essay, entitled "Environmental Regulation and Coal Mining Industry Labor Demand", examines how the behavior of coal mines that supply raw material for power plants changes in response to the Acid Rain Program (thereafter, ARP) that was intended to shape the behavior of U.S. coal-fired power plants. Although the ARP's objective was to reduce power plants' annual SO₂ emissions it might also curb labor market activities and cause job losses. Therefore, quantifying the cost of unintended labor market consequences helps accurately estimate the full effects of environmental regulations and informs policy makers about how to design employment transition assistance programs that provide job training and temporary compensation for job losses arising from unintended adverse effects of the regulations. Utilizing variation across coal mines' regulatory status and time, I obtain the main employment effect estimates using a difference-in-difference model controlling for annual or quarterly nation-wide shocks, time-invariant mine attributes, and regional trends. This study expands the small amount of existing literature that examines the unintended labor market effects of non-targeted industries resulted from the environmental regulation. Additionally, it expands the perspective from solely investigating the effect of the ARP to a more comprehensive analysis. Specifically, I have examined the role of state Public Utility Commission cost recovery rules, state incentives that promote local high-sulfur coal, and of coal mine labor unions in addition to the ARP. The results suggest that the ARP Phase I, from 1995 to 1999, increases low-sulfur coal mine employment but decreases high-sulfur coal mine employment. The third essay, entitled "Effects of New Deal Spending on Labor Market Outcomes", explores a unique episode in American history, the Great Depression, and investigates the medium-term effects of various New Deal programs that aimed to promote the recovery of the economy, on the U.S. labor markets. We use county level data on New Deal spending on the relief, public works, and Agricultural Adjustment Administration (AAA) farm programs from 1933 to 1939 and individual characteristics and earnings in 1939 and 1940. We find that relief and AAA spending were associated with negative effects on individual earnings while public works spending was associated with positive effects on earnings. Although most of our estimated coefficients on New Deal expenditures are statistically significant, their corresponding magnitude are fairly close to zero indicating these New Deal effects are negligible. It appears that possible positive labor market effects that were induced by demand stimulus, labor supply crowding-out, and labor productivity increase are offset by negative labor market effects were generated by workers' skill degradation, labor demand crowding-out, and dismissal of relief workers in 1939.