ESSAYS ON THE MACROECONOMICS OF LABOR MARKETS

This dissertation consists of two essays studying macroeconomics questions about labor markets. The research in this document is separated into chapters that study distinct features of aggregate labor market outcomes.The first essay documents the change in behavior of fertility rate at business cycle frequencies in the United States between the 1970s and 1990s and shows how the cyclical and secular properties of fertility can be used to distinguish among several proposed theories that account for the rise in labor force participation of married mothers. The model, in which households make fertility, female labor force participation and asset accumulation decisions, is estimated using data for the 1960s and 1970s. The model shows how fertility and women’s labor participation decisions are related and replicates countercyclical fertility. The changes in the determinants of female labor supply are introduced into the model and the implications for female labor force participation and properties of fertility are analyzed.The second essay (co-authored with Marcus Hagedorn and Iourii Manovskii) studies the relation between taxes and the unemployment rate using the Mortensen and Pissarides search and matching equilibrium theory of unemployment. The proposed quantitative model with ex-ante worker skill heterogeneity and two technology shocks is consistent with a strong response of labor market variables to cyclical fluctuations in productivity and a relatively weak response to changes in tax rates. The model also matches the properties of group-specific labor market variables. The key to achieve these results is endogenous response of aggregate and group-specific productivities.