xuanli zhu

Abstract: This study examines the effects of automation on labor demand, focusing on the power loom adoption in Japan’s early 20th century silk-weaving industry. Exploiting plant-level panel data, we find that, compared to non-adopted plants, power loom adaption increased the employment and wages for adult male workers likely engaged in engineering tasks. Female adults, the main manual workforce, experienced stable employment with wage increases despite displacement and task transitions. However, equilibrium spillover effects from imperfect labor market competition led to a decrease in overall female adult employment in highly mechanized areas, primarily driven by the exit of low-wage plants.

Abstract: This paper introduces a novel method to study the determinants of wage inequality in the labor market, utilizing online job posting data and machine learning algorithms. This method offers new insights by opening the black box of the multidimensional worker and job heterogeneity, which also enables to identify the most important skills and tasks that account for sorting between worker/job and firm components. Applying our method to the posting data of a Chinese online job board, we estimate different wage dispersion components and find clear evidence of firm wage premiums and positive firm-job sorting, with the shares consistent with those observed in many developed countries. During the estimation procedures, our machine learning approach reveals a data-driven skill and task structure featured by different levels of specificity. Variations in occupation-specific skills and tasks are the primary determinants of wage variances, contributing through both channels of job differences and sorting with firm pay policies. This is especially prominent in high-skill occupations, which are characterized by large wage dispersions. Meanwhile, in low-skill occupations, education- and experience-related skills and tasks, which are relatively less specific, play an equal or sometimes more important role. In contrast, variations in the most general skills, whether cognitive or interpersonal, have minimal impact on posted wage inequality.

Abstract: This paper studies the supply of non-wage compensations across different types of firms and jobs, as well as their impact on wage determination. Taking advantage of the data from a Chinese online job board where most firms document pecuniary and nonpecuniary amenities to attract applicants, we extract a large set of non-wage compensations that employers and jobseekers recognize as essential for their matching in the labor market. We find that different firms in different jobs also provide different non-wage compensations in a systematic way. In particular, high wage-premium firms sorted with high skill jobs also more likely provide advanced insurance packages, backloading wage and stock options, professional coworkers, and flexible work-time, and such amenities are positively correlated with posted wage. In contrast, low wage-premium firms sorted with low skill jobs more likely to offer weekend, holiday, and regular work-time, and such amenities are strongly subject to compensating differential. To account for these findings, we propose a new theory that combines the compensating differential with two new forces: efficiency compensation and (productivity-based) firm-worker sorting. This framework not only reconciles the inconsistency between our data and the incumbent theories but also offers important general insights into the labor market inequalities.

Abstract: We study the long-run evolution of establishment dynamism in post-war Japan and document three previously undocumented trends. First, the entry rates exhibited a prolonged secular decline between the late 1950s and the late 1990s, together with initially declined and then stagnated low exit rates, leading to a significant aging in Japanese business population. Second, the average employment size saw a marked reduction during the 1960s and 1970s, especially in the manufacturing and construction sectors. Third, the average lifecycle growth of cohorts in these sectors experienced a significant downward shift during the same period, further dampening the market dynamism in later years. We then evaluate the performance of various potential drivers in explaining these phenomenons via a standard firm dynamics model. In particular, we examine the impact of changes in labor supply growth, entry costs, exit values, fixed operation costs, and labor market distortions. Our findings suggest that while adjustments in labor supply growth largely explain the decline in entry rates, they do so by directly mirroring labor supply trends into entry dynamics due to minimal feedback effects and transitional dynamics. Furthermore, while a modest reduction in fixed operational costs help to align with the observed downward shifts in average size and lifecycle growth, changes in entry and exit costs, size-correlated labor costs, and labor adjustment costs fail to adequately account for these changes.

Abstract: This paper investigates the role of labor market institutions in shaping human capital investment and technology adoption by focusing on the IT sectors of Japan and China. Leveraging online job posting datasets, we find that Japanese IT firms are more inclined to offer on-the-job training and rely on older technologies, while Chinese firms prioritize hiring skilled workers and adopting newer technologies. We develop a two-period model that encapsulates the interactions between human capital investment, technological shifts, and labor market frictions. Contrary to conventional models positing that firms and workers are perfect substitutes in investing in human capital, we argue that their roles are asymmetrical and influenced by the technological regime and labor market structure. The model reveals that the rigidity of Japan’s labor market suppresses workers’ incentives but enhances firms’ incentives for human capital investment and technology adoption, despite its technical efficiency, while the fluidity of China’s labor market does the opposite. We further utilize our model to explain how labor market institutions can be both cause and consequence of technology adoption and economic development by suggesting that labor market structures could be aligned with the dominant technological regime for optimal human capital investment, and that a misalignment due to technological change afterwards could lead to significant economic inefficiencies.