Research Assistant

Massachusetts Institute of Technology

Nathan Lazarus

I study labor economics, focusing on wage setting, labor market institutions, and imperfect competition in labor markets. I work for Simon Jäger as a research assistant at the Massachusetts Institutute of Technology and the Institute for Labor Economics (IZA). Previously, I worked as a research assistant for Mordecai Kurz and Kenneth Judd at Stanford University. I am also interested in topics in development economics and public finance.

Here’s a link to my CV.

Presentations

Dynamic Games and HTCondor

Dynamic Games and HTCondor

Past Work

A Model of Worker Deaths and Firm Adjustment

Abstract (click to expand) Here, I (as a component of a paper by Simon J¨ager and J¨org Heining) develop and calibrate a dynamic model of wage-setting based on the model in Kline et al. (2019). Using the model, I estimate firms’ costs of replacing a worker from empirical reactions to worker deaths in German Social Security data. Estimated replacement costs are quite large, on the order of two years of worker salaries. I show analytically that the rise in wages in response to a death is evidence for convex adjustment costs. However, I estimate the convexity of the hiring cost function and find an exponent of 1.09, far from the typical quadratic functional form. I also calibrate the model separately for thick and thin labor markets, finding that replacement costs are almost three times larger in thin markets. I then generalize the model to have two types of workers and estimate the elasticity of substitution between workers of different occupations, finding an elasticity of 6.5. I also estimate that only 30% of the observed earnings response is due to the intensive margin of hours, while the remaining 70% is due to increased hourly wages. Together, these findings imply a substantial degree of imperfect competition in the labor market, and provide evidence for the existence of rents from employment relationships due to costly replacement.

Identifying Average Firm and Worker Effects in Matched Employer-Employee Data

Abstract (click to expand) I show that, even with the assumptions required for them to have a causal interpretation, high dimensional fixed effects estimators, do not recover the average effects of firms or workers on wages if there is heterogeneity or dynamic effects of either firms or workers on wages. This is well-known in the context of differences-in-differences estimation, where two-way fixed effects (TWFE) models do not identify the causal estimands that are typically of interest. Here, I point out that these issues extend to high-dimensional fixed effects estimation, and that these biases are salient in the context of labor economics. Heterogeneous treatment effects correspond to match effects between firms and workers and dynamic treatment effects correspond to firm- and worker-specific tenure-earnings profiles. Typical estimation of match effects in an AKM model (Woodcock, 2015) rely on TWFE estimation that does not identify the average effect in the presence of match effects. I define a notion of average effects that is relevant here, show examples of the bias of TWFE relative to this notion of average effects, and sketch an alternative estimator. The estimator I propose cannot be implemented, and it’s not clear that it would identify the average effect even if it could be. I hope to extend this work to find a better estimator, as well as to implement it on matched employer-employee data and test whether it makes a substantial difference in the conclusions relative to previous work.

Race and Declining Labor Force Participation

Abstract (click to expand) I investigate the causes of declining labor force participation in the U.S. I find that the changing age structure of the population fully explains the decline in white labor force participation. African-Americans, who were more likely to participate in the labor force in 1970, have grown less likely, even when controlling for age. Using a logistic regression with reasonable controls, I find that African-Americans now have a 5 percentage point lower labor force participation rate than whites. I propose various explanations for this, including health, immigration, labor demand and discrimination, but I find incarceration to be the most compelling.