“The Effect of Right-to-Work Laws on Union Membership and Wages”
Junior Independent Research with Professor Henry Farber, Princeton University. April 20, 2016.
The Taft-Hartley Act of 1947 permits states to enact right-to-work (RTW) laws preventing private-sector labor unions from requiring union membership or payment of union dues as a condition of employment. I examine the effect of recent RTW laws on labor unions and wages. Using recent data on Indiana and Michigan, which passed RTW laws in 2012 and 2013, respectively, I investigate whether these RTW laws have had any conclusive effects over the past few years. Using a difference-in-differences model with industry fixed effects, state fixed effects, time fixed effects, and demographic controls, I find that RTW laws decrease the unionization rate by 0.7 percentage points and increase the free rider rate in Michigan by 2.0 percentage points. The estimated effects on wages are not statistically significant. Overall, the effect of RTW laws is found to differ between Indiana and Michigan, but the results are generally robust to slight variations in model specification. Nonetheless, it is difficult to distinguish significant effects of RTW laws from statistical noise.
“Illiquidity Risk and Capital Structure of Financial Institutions”
Senior Thesis with Professor Stephen Morris, Princeton University. April 12, 2017.
Following the framework for credit risk developed in Morris and Shin (2016), I construct a model for the financial structure decision of a bank in light of illiquidity risk, insolvency risk, and the threat of bank runs, incorporating both the bank's choice of financial structure and the creditors' debt rollover decision as endogenous factors. Numeric analysis shows that the tax benefit of short-term debt can be outweighed by the negative effects of illiquidity risk for certain values of exogenous parameters, leading to a breakdown of the pecking order theory of financial structure. I qualitatively discuss an extension to a sequential signaling game framework similar to that of Noe (1988), as well as the policy implication that recent regulatory requirements concerning liquidity are sensible but imperfect.