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Essays on Spatial Disparities in Labor and Housing Markets

  • Author(s): Freyd, Benjamin
  • Advisor(s): Buchinsky, Moshe;
  • Mazzocco, Maurizio
  • et al.

My first chapter studies the origins of gentrification. I propose a mechanism through which a wave of gentrification can be triggered in a neighborhood: the opening of large offices of technology firms. Using information on nine such events and transaction-level housing data, I develop a difference-in-differences strategy that compares house prices in the vicinity of the new office to those in closely-matched neighborhoods slightly further away. I find that property prices rise 11% in treatment areas relative to control areas within two years after the opening. This difference subsides somewhat but remains at +8% five years later. These findings are substantially stronger than in the existing literature and thus suggest that such office openings can have a major impact on their neighborhood. I investigate two mechanisms, agglomeration forces and the development of consumption amenities, through which the impact of a single establishment opening can be amplified and sustained.

My second chapter analyses the causes of the shift towards low-income service jobs that American non-college workforce has experience in recent decades. Together with the rise of college-educated workers’ incomes, this has strongly contributed to the overall increase in wage inequality. Two main explanations, routinization and consumption spillovers, have been proposed to explain this occupational shift. Although the determinants of these two theories are highly spatially correlated, studies that have exploited regional variations to identify these mechanisms have so far only considered each explanation in isolation, raising confounding concerns. I highlight these concerns and provide reduced-form evidence that both theories operate simultaneously to drive growth in service employment. To strengthen my case, I extend the structural framework proposed in Autor and Dorn (2013) to include consumption spillovers through non-homothetic preferences. I estimate key parameters and assess the relative importance of each theory using simulations from the model. Relative to a model featuring homothetic preferences, my specification yields 57% more regional disparities in the growth of service occupations, which can be interpreted as the contribution of consumption spillovers. While the routinization hypothesis quantitatively dominates, my reduced-form and structural evidence point to sizeable consumption spillover effects that cannot be neglected.

My third chapter studies the effects of liberalizing the use of short-term contracts on the labor market outcomes of all workers. It specifically examines the impact of a 2003 change French jurisprudence. This decision from the French Civil Supreme Court — hereafter called the “reform” — extends the scope of a specific type of temporary contract in France, the CDDU (contrat � dur�e d�termin�e d’usage), to jobs that are not necessarily temporary by nature. This type of contract is allowed in 16 service sectors and is not restricted in terms of length or number of renewals, giving a lot more flexibility to employers than the standard temporary contract does (CDD, contrat � dur�e d�termin�e). I find that this change is associated with an increase in the share of temporary contracts of 2.9 percentage points in the CDDU sectors, while other service sectors only show a 0.7 point increase. This result echoes a frequent finding of temp for permanent substitution in the literature about the deregulation of temporary contract. A second and novel finding is that this reform weighs on young permanent workers’ wages, who experience drop of nearly 4% in their wages over the two years following the reform, and little catch up afterwards. I show some evidence that something changed in the relationship between employers and employees in CDDU sectors: the employer’s bargaining power seems to have risen as the opportunity to substitute temporary contracts for costly and protected permanent ones has increased.

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