Essays on the roles of families, firms, location, and criminal records

Abstract

Forsberg, E. 2024. Labor-market inequality. Essays on the roles of families, firms, location,and criminal records. Economic studies 217. 218 pp. Uppsala: Department of Economics,Uppsala University. ISBN 978-91-506-3059-6.

Essay I: Individuals working in larger labor markets tend to earn more than those working in smaller labor markets, but the reason for this is still unclear. This paper studies whether larger cities provide better occupational skill matches by combining machine learning techniques with data on individuals’ productive skills matched with employer data to construct a novel measure of match quality. I show that occupational skill-match quality is higher for individuals living in large local labor markets. Conditional on skills, differences in match quality explain around 30 percent of the city-size wage gap. The higher match quality in larger labor markets is related to a more diversified occupation structure and more learning possibilities in these markets.

Essay II: (with Martin Nybom and Jan Stuhler) To what extent does the sorting of workers across firms contribute to intergenerational persistence and why? We show that socioeconomic disparities in firm pay premia account for about one third of the intergenerational elasticity of income in Sweden. Firm pay gaps open already at career start, implying that children from more privileged backgrounds find more favorable entry points to the labor market. Their pay advantage widens further in their early careers as they climb the firm pay ladder faster, switch firms more frequently, and secure higher pay gains conditional on switching. Skill sorting explains most of the divergence over the career, but not the initial pay gaps at the career start.

Essay III: (with Akib Khan and Olof Rosenqvist) Family background shapes outcomes across the life cycle. While the importance of family background varies across countries, less is known about heterogeneities across social groups within a country. Using Swedish data, we compare sibling correlations in skills, schooling, and earnings across fine-grained socioeconomic status (SES) groups. The result from the study shows that sibling correlations decline with parental
socioeconomic status. This pattern holds for skills, schooling, and earnings.

Essay IV (with Hans Grönqvist, Susan Niknami and Mårten Palme) We investigate the effect of being included in Sweden’s first online criminal database, which facilitates anonymous and free name-based searches for individuals charged with a crime. Leveraging administrative rules that restricted the identification of individuals charged before specific dates, we estimate the effects by comparing outcomes of exposed and non-exposed individuals. We find significant adverse effects of exposure on earnings but not on employment or criminal recidivism. However, there are significantly stronger detrimental effects on both labor market outcomes and recidivism in
defendant subgroups such as those with at least a high school degree, acquitted individuals, and those living in areas with a relatively low concentration of ex-criminals. Our results suggest that stigma is a potentially important but previously unappreciated mechanism explaining responses to criminal justice interactions.

Keywords: Inequality, match quality, local labor markets, intergenerational mobility, firms,
criminal records