Immigration, Robots and American Life
[Abstract] Foreign labor represents a growing fraction of risky occupations that appear to be close substitutes of industrial robots. Associating a wave of unskilled immigrants, investment of robots, workplace injuries across primary and manufacturing sectors during 1992-2019, I find that immigrant workers substantially replace native fatalities by crowding out natives out of risky jobs. I also find that installation of industrial robots dramatically reduced injury risk, but the aggregate risk remains high from stagnant investments to riskier sectors (e.g. agriculture and construction). Then, I test a hypothesis that immigration inflow impedes the adoption of automation and preserves an injury risk for remaining native laborers. Over-dependency on foreign labor may preserve the risky technology generating a social cost.
"Frogs in the Boiled Air?: Climate Change and Dropouts in the Outdoor Labor Market, 1970-2019"
[Abstract] Labor force participation of prime-aged males in the U.S. has secularly declined for a half century since 1970s, threatening the formation of partnership and fertility. I test a hypothesis that long-run climate change nudged their labor market exits, a significant fraction of whom are working outdoors under heightened exposure to hot days. Combining granular daily temperature data and labor force participation across U.S. Commuting Zones during 1970-2019, I find that accumulated exposure to hot day with mean temperature 80F accounts for 20-30% of increased non-participation of prime-aged males. Climate change significantly accounts for market exits of black males, historically agglomerated in the Southeast, where warming was severest.
[Abstract] The aging economies facing secular labor shortage are bound to respond by admitting foreign labor or by adopting labor-saving technology. This paper proposes that inflows of regional foreign labor guides the adoption of automation. I develop a task-based framework, in which tasks are optimally allocated across robots, and domestic or foreign labor. Then, I semi-parametrically recover cross-factor substitution schedules from a series of commuting zone-level immigration elasticities on economic outcomes, which are estimated using a 1940 ethnic settlement pattern. The dynamic model predicts that immigration's impact on wages between 1980 and 2015 could be reversed by including effects from immigration-induced adjustments of automation. I find that low-skilled immigration alone reduces routine occupation native wage, but raises wages in the long run by retarding the adoption of automation, resulting in enhanced domestic welfare. Finally, I find that a universal basic income policy targeted to U.S. citizens will boost dependence on automation and foreign labor by upshifting routine occupation native wages.
Earlier theoretical works
Using a Soft Deadline to Counter Monopoly (submitted)
[Abstract] A monopolist often exploits a hard deadline to raise their commitment power. I explore whether a group of buyers can employ a soft deadline to counter the monopoly. Using a simple durable goods monopolist model under a deadline, I show that the buyers’ imperfect commitment to an earlier exit may elicit a compromise from the monopolist and generate the buyers’ premium. The soft deadline partially restores the price discrimination dynamics of Coase conjecture, which is previously canceled out by the hard deadline. The overall efficiency exhibits an inverted-U shaped curve with respect to the buyers’ commitment intensity, where the benefits from earlier agreements are traded off against breakdown costs.
Deadline Credibility and Bargaining Protraction
[Abstract] Monopolists often exploit a deadline to boost their bargaining power, but a history of experiments document significant compromise of ultimatums. Motivated by the chasm between theory and the real world, I explore whether the market designer can leverage the fairness of the monopolist to restore the extracted bargaining efficiency. Employing a durable goods monopolist model under a deadline, I show that a threat of an earlier breakdown facilitates a trade by triggering a compromise even from the rational monopolist. I test these insights in approximately 1,200 pieces of randomly matched trade data from a laboratory experiment to find even stronger efficacy of the threat device; a non-zero threat augments the overall efficiency from shrinking delays till agreement and deterring breakdowns by inciting the fairness of monopolists.