Research

Research

Sebastian Buhai’s Research in Economics

Research Profile

“Basically, I’m not interested in doing research and I never have been; I’m interested in understanding, which is quite a different thing.” (David Blackwell)

I am primarily a Microeconometrician and Labor Economist, with further, eclectic, interests in themes and methods typical of (Empirical) Industrial Organization, Social & Economic Networks, (Applied) Microeconomics generally. Thematically, a large part of my research to date has studied labor and industrial markets – type of questions revolving around, inter alia: human capital accumulation and dynamics of worker careers; bargaining, rent-sharing, and wage formation; persistent earnings and employment disparities; firm performance, investment in (in)tangibles, and employee welfare. Methodologically, my expertise is so far particularly developed w.r.t.: on the one hand, game theory, real option theory, and search & matching theory; on the other hand, theoretical and applied dimensions of cross-sectional & panel-data econometrics, as well as structural modeling and causal inference in general.

You should also skim through my detailed research statement and/or my research profile in 5 slides.

Research Output

Original Research Journal Articles (peer-reviewed)

Returns to Tenure or Seniority? (with Miguel Portela, Coen Teulings and Aico van Vuuren), March 2014, Econometrica, 82 (2), pages 705–730, DOI: 10.3982/ECTA8688 . See also the corresponding Web Appendix or the old July 2009 version (includes theory framework).
Synopsis. This paper makes original contributions to the wage setting and internal labor markets literatures, conceptually and methodologically. We show that a worker’s tenure relative to her co-workers determines both her layoff probability and her wage, apart from other worker or firm (un)observables. We prove identification of this “seniority” effect in flexible duration and wage regression models, then estimate it on longitudinal LEED from Denmark and Portugal.
Keywords: wage dynamics, tenure, seniority, Last-In-First-Out
JEL-codes: J31, J41, J63

Tenure Profiles and Efficient Separation in a Stochastic Productivity Model (with Coen Teulings), May 2014, Journal of Business and Economic Statistics, 32:2, pages 245-258, DOI:10.1080/07350015.2013.866568 . See also the corresponding Web Appendix or the accepted, non-gated, November 2013 version. Trivia: The paper has earlier had a 2nd R&R at the Review of Economic Studies (and a change of the editor-in-charge before the 2nd resubmission).
Synopsis. This paper makes a critical methodological contribution with substantive implications in the wage dynamics literature. We use real option theory to model the stochastic evolution of worker-firm productivity matches, given job specific investments and efficient separations. We identify the model’s structural parameters from individual job durations & wages, and estimate them on US panel data, informing the incessant debate on wage returns to tenure.
Keywords: random productivity growth, efficient bargaining, job tenure, inverse gaussian, wage-tenure profiles, option theory
JEL-codes: C33, C41, J31, J63

How Productive is Workplace Health and Safety? (with Elena Cottini and Niels Westergaard-Nielsen), October 2017, Scandinavian Journal of Economics, 119(4), pages 1086-1104, DOI:10.1111/sjoe.12184. See also the corresponding Online Appendix or the non-gated, December 2015 version. NB. Earlier WP versions of this article were entitled “The Impact of Workplace Conditions on Firm Performance”.
Synopsis. This paper makes a novel empirical contribution to both literatures on work environment and determinants of firm productivity, extending earlier methodology in this process. We study the causal effect of workplace health & safety indicators on total factor productivity, estimating augmented production functions that account for simultaneity and unobservable inputs; we use unique data, merging panel LEED to cross-sectional surveys on workplace conditions.
Keywords: occupational health and safety, work environment, firm performance, production function estimation
JEL codes: C33, C36, D24, J28, L23

A Social Network Analysis of Occupational Segregation (with Marco van der Leij), February 2023, Journal of Economic Dynamics and Control, vol. 147, 104593, DOI:10.1016/j.jedc.2022.104593. The accepted, non-gated Dec 2022 version; you can download it also as arXiv preprint (NB. you can also google and easily find several old or very old versions, in, e.g., various discussion paper series: the gist of the model and the main conclusions have never ever changed.).
Synopsis. This paper contributes to the literature on persistent employment and wage inequality with a novel applied theory framework. We model occupational segregation between races or genders when referrals matter for jobs and there is positive group-homophily, then we calibrate and simulate this model in a social-welfare analysis. We show that the game-theoretical equilibria, and both the 1st and 2nd-best utilitarian optimal welfare policies entail partial segregation.
Keywords: Social Networks, Homophily, Occupational Segregation, Labor Market Inequality, Social Welfare
JEL codes: J24, J31, J70, Z13


Downloadable (Unpublished) Research Working Papers

Firm downsizing, public policy, and the age structure of employment adjustments (with Hans-Martin von Gaudecker); current stage: revised version in preparation
Synopsis. This paper combines thematically the labor demand and early retirement literatures, by means of ingenuous theoretical and empirical frameworks. We show theoretically and check empirically that distressed firms will dismiss with predilection their low-skilled employees eligible to retire early, given existing publicly-financed retirement schemes. We devise empirical strategies at individual exit & aggregate worker outflow level, on Danish LEED covering the entire set of mass layoff events over 2 decades, accounting for a number of reforms to the early pension system.
Keywords: early retirement, labour demand, employment adjustment, mass layoffs, LEED
JEL-codes: H32, H55, J26, J65

Selected Work in More or Less Progress (includes some stagnant/ *temporarily* abandoned projects)

  • Job Hazard Premia and Worker Risk Preferences; stage: presentation mode

Synopsis. This paper tackles the classic compensating wage differential (CWD) theme from a novel empirical angle. I revisit CWD identification & estimation, using Danish longitudinal LEED merged to a representative longitudinal worker survey on job health and safety (dis)amenities. I estimate selection models accounting for the worker’s preference for risk, and firm and worker unobserved heterogeneity, relating the results obtained via hedonic wage regressions to those obtained from empirical hazard models using the worker employment histories.

  • Performance Pay, Wage Dispersion, and Job Separation (with Miguel Portela); stage: presentation mode

Synopsis. This paper makes new contributions to the literatures on incentive pay, inequality, and labor market dynamics.  We estimate the causal effect of performance related pay (PP) on worker wage growth, earnings inequality, and worker-firm separation. We account for endogeneity of both compensation policy and worker selection in PP-firms, using Portuguese LEED. A matching model with imperfect monitoring and learning on the job can rationalize our findings.

Synopsis. This paper provides micro-foundations for the ubiquitous incumbent worker rents and insider bargaining power. We model the bargaining process generating the predictions tested in Buhai et al (2014, ECTA) and show, combining and extending the empirical frameworks from Buhai et al (2014, ECTA) and Buhai and Teulings (2014, JBES), that the seniority profile in wages is a proxy for the return to the extent of worker-firm specific investments.

Published Books, Monographs, and Research Reviews

Essays on Labour Markets: Worker-Firm Dynamics, Occupational Segregation and Workplace Conditions (digital version also accessible via the EUR online repository), PhD Thesis 2008, Erasmus University Rotterdam/ Tinbergen Institute, published as book by Thela Thesis -Academic Publishing Services, ISBN 978-90-5170-921-6, in the Tinbergen Institute Research Series (no. 431), Amsterdam, The Netherlands; November 2008

Wages, Seniority and Separation Rates in a Stochastic Productivity Model: A Comparative Perspective, MPhil Thesis 2003, Tinbergen Institute, published as monograph by the “Lumen” Scientific Publishing House (Editura “Lumen”), ISBN-10 973-7766-51-2, Iasi, Romania; February 2006

Quantile Regression: Overview and Selected Applications, Ad-Astra Journal (Young Romanian Scientists’ Journal), Vol. 4, 2005

Note on Panel Data Econometrics, Netherlands Network of Economics (NAKE) “Nieuws”, 15 (2), December 2003

Selected unpublished work from my graduate student days (surveys, reports, course papers, etc.)

On Risk in Educational Choice: Brief Overview and Research Note, December 2003

Investigating Reciprocal Motivation in Experimental Labor Markets, June 2003

Incomplete Contracts and the Theory of the Firm, January 2003

Job Search and Contact Networks, April 2002

Check out also my IZA – Institute of Labor Economics research profile. And you could also look at my ORCID, Scholar.Google, CienciaID, ResearcherID, IDEAS.RePEc, etc., all (at least partly) ‘automated’ profiles, even though all those are less complete/ correct (with some being truly egregious in that regard) than this webpage w.r.t. organizing/ depicting my research output. My ORCID profile links also to other relevant research-related work, otherwise accessible via different pages of this website (e.g., recorded public lectures/ talks, various science popularization essays, policy analyses; etc.); as for automatic citations retrieval, Scholar.Google outperforms the others while still underestimating my true citation counts* (* do note that relying only—or mostly—on raw citations, for whatever purpose, is naive at best).

For more details/ further information about my past or ongoing research, including placement in my wider research context/ projects/ plans, links to presentation slides etc., please see my Detailed Research Statement. For publications/ dissertations in other scientific fields/ disciplines than Economics, please see the corresponding section of my Curriculum Vitae page; for works targeting a wider (both academic and sometimes non-academic) audience, please see my Essays page and/or my Media-Coverage page; you can also consult the list of courses followed during my graduate programs at the Tinbergen Institute, inter alia with (no longer updated) links to their instructors’ webpages (for external, specialized summer schools/ workshops, see the corresponding section in my extended CV). Last but not least, you should also read about my (mostly research-based) teaching activities.

NB. Annoying to occasionally find new studies—including newly published articles—citing very old/ outdated drafts of my research papers, even in the cases where there are newer/ *published* versions by now. I do see it a professional obligation to search for a particular work’s latest version before citing it (or, alternatively, to have valid, well argued, reasons to refer to older drafts). Feel free to contact me if in doubt.