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.
"Climate Change and Outdoor Labor Market: the Rise of Dropouts of Adult Males"
[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 (R&R at Journal of Industrial Economics)
[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, Protracted Trades and Market Efficiency (Submitted)
[Abstract] Many real-world negotiations are chronically protracted until deadlines, but deadlines are costly in generating separations. Must all deadlines be perfectly credible in one-on- one market trades? To refine the institutional role of deadlines, I theoretically propose a mechanism of an imperfectly credible pre-deadline to facilitate the agreement. Employing a seller–buyer dynamic bargaining model with a deadline, I analytically show a possibility that the complementary pre-deadline elicits earlier agreements without triggering separa- tions and, consequently, enhances the market efficiency. Under a well-designed threat of separation, the seller is tempted to discount a price as intertemporal price discrimination and the buyer is more likely to compromise right before the pre-deadline, as the pricing resembles an ultimatum. The results of a laboratory experiment broadly support the mech- anism’s efficacy.