Essays in labour economics

This thesis contains three essays in Labour Economics. The first chapter introduces the topic and the theoretical framework aiding interpretation of the empirical results. In the second chapter, I investigate transitions through unemployment, which – in opposition to job-to-job transitions – have been shown to have a large and persistent negative effect on workers’ earnings and wages. I document disparity between outcomes of workers of different level of education: lower-qualified workers have shorter job and employment spells and longer non-employment periods and are less likely to climb the job ladder than better-qualified workers. They also experience significantly larger losses due to unemployment, which persist up to 15 years after displacement. I also document gender differences in unemployment losses, proposing childbirth and part-time work as possible explanations. Gender differences are further explored in the third chapter, where I estimate the cost of motherhood and quantify its magnitude and persistence. I quantify the longer-term effects of motherhood on the labour market outcomes, finding an up to 48% reduction in earnings and 34% reduction in wages that persist for up to 15 years and affect higher-skilled workers the most. I furthermore quantify the effects of maternity benefit reform introduced in year 2007, finding that while it has likely increased the number of births, it negatively affected earnings of the high-skilled mothers. In the fourth chapter, we nowcast the economic effects of the Covid-19 pandemic and related lock-down measures in the UK. We then analyse the distributional and budgetary effects of the estimated individual income shocks, distinguishing between the effects of automatic stabilisers and those of the emergency policy responses. We predict the rescue package to cost £26 billion but have a progressive effect and contain the reduction in average household disposable income to 1 percentage point.