Essays on Labor Economics: Interventions and Behavior

This dissertation explores behavioral responses to policy interventions through three empirical studies. The chapters draw on a combination of administrative, experimental, and survey data to examine the effects of immigration policy, information frictions, and the provision of public goods. The overarching theme is to understand agents, be they firms, students, or workers, react to sudden changes in policy or information environments, and how these responses shape their outcomes. The first chapter studies the effects of increased immigration on the performance of local firms and their workers, leveraging a sharp increase in Canada's immigration targets in 2016. The policy led to an influx of predominantly high-skilled workers and generated unexpected variation in the growth of the foreign-born population across regions and nationalities. I quantify firms' exposure to the shock using a shift-share instrument and draw comparisons across firms that operate within the same labor market based on differences in worker origins. I find that employers more exposed to the shock accelerated the hiring of recent arrivals who lacked locally accumulated human capital, increased employment and compensation for both immigrant and native workers, and experienced expansions in both total output and output per worker. These results are consistent with firms benefiting from immigration through workplace ethnic networks, which may help identify workers' productivity characteristics that are otherwise overlooked in the labor market. The second chapter, joint with Marc-Antoine Châtelain, Paul Han, and En Hua Hu, examines how individuals form and update beliefs in the presence of misspecification in the data generating process. Using high-frequency data from a large undergraduate course, the study documents persistent overconfidence in students’ grade expectations, and a systematic overestimation of grading noise. An experimental intervention that provides information about noise leads to a 32% reduction in prediction errors. Structural estimates indicate that at least 25% of prediction errors are attributable to misspecified priors. These results highlight the role of subjective model in belief updating, and suggest that simple interventions can significantly improve information processing. The third chapter, co-authored with Kourtney Koebel, analyzes how universal childcare policy in Québec, which led to sharp increase in demand for their service, affected the labor market for childcare workers. Using Canadian Census data and administrative reports from Québec, we find that the policy roll-out coincided with a sharp decline in caregiver qualifications, offering a potential explanation for the negative effects on children documented in earlier studies. Earnings for workers improved under the policy, counter to concerns that government monopsony power would dampen wage growth. Hourly earnings rose significantly for center-based workers, who were generally covered by the subsidy. Wages for home-based workers, who were largely unsubsidized, remained flat, or declined in regions that saw rapid expansion in regulated care. We also find that this latter group increasingly served lower-income families, raising concerns about unequal access to high-quality care.

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