UC Berkeley

The central theme of this dissertation is the investigation of information frictions on both the demand and supply sides of the labor market. On the demand side, firms must select among prospective workers with many initially unobservable characteristics, such as ability or work ethic. In the first chapter of this dissertation, I propose a new interpretation for the canonical Abowd, Kramarz, and Margolis (1999) (AKM) wage decomposition as reflecting market beliefs about workers. I leverage this decomposition to measure the differences among firms in their ability or inclination to screen workers and explore how such heterogeneity shapes market-level learning about workers. In the second chapter, I extend my analysis of AKM decompositions, with an application to unpacking the well-documented 'wage scarring' effect of recessions for labor market entrants. The third chapter flips the focus on prospective workers (graduating college students), their (mis)perceptions about the labor market, and consequences thereof. We provide causal evidence that misperceptions affect job search behavior and final wages using a randomized controlled trial (RCT) in which corrective information about past graduate outcomes is provided to some subjects.