RESEARCH & TEACHING INTEREST FIELD
Applied Microeconomic Theory
Labor Economics
RESEARCH
“Wage Dynamics with Developing Asymmetric Information” (Job Market Paper)
Download Paper
This paper introduces asymmetric information into the benchmark on-the-job search models of the labor market such as Burdett and Mortensen (1998) and Postel-Vinay and Robin (2002). To capture this idea, I assume that workers are heterogeneous in productivity, while firms learn about the productivity of their current workers over time. When a poaching firm contacts an employed worker, it is possible that the incumbent firm knows the worker's type, while the poaching firm does not. This introduces asymmetry of information when a poaching firm and incumbent firm plays first price auction game as in Postel-Vinay and Robin (2002). When incumbent firm is more informed than poaching firm, I find that poaching firm's belief about a worker's type increases with tenure, and that job-to-job transitions convey negative information on worker's type. At the same time, high type workers change jobs less frequently, while low type workers change jobs more frequently. This result matches the data, while more job transitions lead to higher wage in on-the-job search models with perfect information. The model also has implications to information policies in labor market, such as banning employers from inquiring applicant's wage history. The model implies that the policy decreases wage dispersion between types, but might have an unintended consequence of increasing adverse selection, and slowing down workers' wage growth.
Publications
“Ranking and Search Effort in Matching", with Hanna Wang, Economic Theory (2021)
Download Paper
This paper studies the relationship between search effort and workers’ ranking by employers. In order to do so, we propose a matching model in which employers have common preferences over a continuum of heterogeneous workers who choose a number of applications to send out. We show that in equilibrium, the relationship is hump-shaped for sufficiently high vacancy-to-worker ratios, that is, highly-ranked and lowly-ranked workers send out fewer applications than workers of mid-range rank. This arises due to two opposing forces driving the incentives of applicants. Increasing the number of applications acts as insurance against unemployment, but is less effective when the probability of success for each application is low. This mechanism exacerbates the negative employment outcomes of low-rank workers—hence, in contrast to the market equilibrium, in the social planner’s solution, the number of applications monotonically decrease in rank.
“Optimal aggregation of multiple signals: Optimality of linear aggregation rule and possibility of using the maximum or the minimum of signals”, with Sam-Ho Lee, Journal of Economic Theory and Econometrics, 25, 4, p. 71-81 (2014) Download Paper
An optimal aggregation rule of multiple signals is studied. A sufficient condition for the optimality of a linear aggregation rule (the weighted sum of signals) and the common classes of signal distributions satisfying the condition are provided. Other aggregation rules such as rules using the maximum or the minimum are also considered and their usefulness is illustrated through examples.
Research Papers in Progress
“Competition in Matching Market with Search Frictions: A Steady-State Analysis”
The goal of this project is to understand incentives to search when agents’ heterogeneity matter through acceptance rule/switching strategy of the counterparty. I employ continuous-time random search framework to analyze the equilibrium behavior in steady state. I show that agent’s search intensity is increasing in his/her acceptance rate, and the expected duration of the match. Policies that make firing costly is shown to have dubious effects. I also characterize a sufficient condition for existence of steady state.
“Wage Dynamics with Developing Asymmetric Information”
This paper studies the life-time wage dynamics of a worker when his/her productivity is revealed gradually over time, and focuses on how the job shift signals outside firms of the worker’s quality.
“Patent Race, Optimal Licensing Fee and Patent Duration”, with Ryan Fackler
The basic goal of this project is to get insight into the following questions: (1) How does industry characteristics (invention arrival rate and invention value) change incentives to license a patent and to conduct ongoing research? (2) How does the length of the patent impact incentives to license a patent and to conduct ongoing research? (3) How does the socially optimal patent term length change with industry characteristics? To get insight into these three questions, we are going to consider a two-firm model. One firm will have a patent while the other does not. The firm with a patent must decide how much to produce using their patent, whether they want to do research to get a new patent, and how much they should charge as a licensing fee to the other firm. The firm without the patent must decide how much to produce given the licensing fee, and whether to do research to get their own patent.
Research & Reports at KISDI (in Korean)
-
2020.8. to 2020.12. 통합 데이터 거래 지원체계 연구 (Co-PI, 세부책임자)
-
2020.6. to 2020.12 AI 국가 경쟁력 확보를 위한 AI 데이터 생태계 조성방안 연구 (PI, 연구책임자)
-
2020.5. to 2020.12 AI 산업 발전을 위한 오픈 데이터 가치 평가 및 활성화 방안 연구 (PI, 연구책임자)
(Featured in the news article “데이터도 ‘오픈소스’처럼 활용될 수 있을까” ZDNet 2021.2.8.)
-
2020.4. to 2020.7 블록체인 산업 기반조성 정책방안 연구 (참여연구원)
-
2019.6. to 2019.12 인터넷 전문은행 도입에 따른 사회, 경제적 효과 분석 (참여연구원)