My dissertation focuses on the role of incentives in the workplace. In Chapter 1, I study peer effects in pay-for-individual-performance jobs. Specifically, I explore whether, how, and why coworker performance matters when rewards are based on individual performance. When teamed with high-performing peers, I find that workers are more productive overall. I also find that workers who resign are unaffected by coworker performance in the period after they hand in their resignation notice. The findings suggest peer effects in pay-for-individual-performance jobs reflect reputational concerns about relative performance rather than competitive preferences. In Chapter 2, I present field evidence that sheds new light on incentive provision in multitask jobs. Specifically, I design and conduct a field experiment at a large-scale restaurant, where the pre-existing wage contract encourages workers to carry out their tasks in a way that is not perfectly aligned with the firm's preferences. The experimental treatment pays bonuses to waiters for the number of customers they serve, in addition to their tips for customer service and hourly wages. I compare worker performance under the treatment to that under the pre-existing contract, where workers are rewarded for overemphasizing customer service, to evaluate the effect of a wage contract that encourages undesirable behavior. I find that the average worker earns more, is more productive, and generates higher short-run profits for the firm when paid bonuses for customer volume. Overall, the findings suggest that sharpening wage contracts to deal with incentive problems in multitask jobs has benefits for workers as well as the firm. In Chapter 3, I present joint work (with Arvind N. Magesan at the University fo Calgary) on the beauty premium's role in the workplace. Specifically, we investigate whether, how, and why the beauty premium can be explained by the behaviour of workers after they are hired. We find that attractive workers earn more because they transfer effort from tasks that reward looks to tasks that reward effort. We also provide evidence against favorable treatment by customers and the employer as sources for the beauty premium. We conclude that the premium is largely driven by the worker's on-the-job behavior.

My dissertation focuses on the role of incentives in the workplace. In Chapter 1, I study peer effects in pay-for-individual-performance jobs. Specifically, I explore whether, how, and why coworker performance matters when rewards are based on individual performance. When teamed with high-performing peers, I find that workers are more productive overall. I also find that workers who resign are unaffected by coworker performance in the period after they hand in their resignation notice. The findings suggest peer effects in pay-for-individual-performance jobs reflect reputational concerns about relative performance rather than competitive preferences. In Chapter 2, I present field evidence that sheds new light on incentive provision in multitask jobs. Specifically, I design and conduct a field experiment at a large-scale restaurant, where the pre-existing wage contract encourages workers to carry out their tasks in a way that is not perfectly aligned with the firm's preferences. The experimental treatment pays bonuses to waiters for the number of customers they serve, in addition to their tips for customer service and hourly wages. I compare worker performance under the treatment to that under the pre-existing contract, where workers are rewarded for overemphasizing customer service, to evaluate the effect of a wage contract that encourages undesirable behavior. I find that the average worker earns more, is more productive, and generates higher short-run profits for the firm when paid bonuses for customer volume. Overall, the findings suggest that sharpening wage contracts to deal with incentive problems in multitask jobs has benefits for workers as well as the firm. In Chapter 3, I present joint work (with Arvind N. Magesan at the University fo Calgary) on the beauty premium's role in the workplace. Specifically, we investigate whether, how, and why the beauty premium can be explained by the behaviour of workers after they are hired. We find that attractive workers earn more because they transfer effort from tasks that reward looks to tasks that reward effort. We also provide evidence against favorable treatment by customers and the employer as sources for the beauty premium. We conclude that the premium is largely driven by the worker's on-the-job behavior.

In this thesis I investigate the relationship between the gender distribution across industries and occupations and the incidence and consequences of displacement. First, I provide empirical evidence to support the idea that women self-select into less risky industries and occupations, that is industries and occupations with lower displacement rates and lower earnings growth. Using data from the Displaced Worker Survey (1984-2002), the corresponding Annual Demographic Supplement to the March Current Population Survey, and the Dictionary of Occupational Titles, I find that, even though women have a lower incidence of displacement in the aggregate, they are more likely to get displaced at the one-digit industry and occupation level than men. Displacement is also more costly for women, in terms of both employment and monetary consequences, which suggests that women’s choice of safer sectors could be an insurance mechanism against the risk of displacement and its costly consequences. I then construct a dynamic occupational choice model in the spirit of Keane and Wolpin (1997), in which occupation(industry) groups differ not only in terms of the rate of human capital accumulation, but also in the risk and associated cost of displacement, as well as in the value of the non-monetary utility component. I calibrate the model for men and perform a number of counterfactual experiments for women. Quantitative results suggest that differences in displacement probabilities, together with differences in re-employment probabilities, and in human capital penalty rates at displacement explain up to 15% of the gender occupational segregation, and up to 10% of the gender industry segregation. Allowing women to also have an extra preference for non-employment explains in a proportion of 60% why women avoid high risk occupations, that is occupations with higher displacement risk, higher earnings growth and higher human capital depreciation (or alternatively, lower human capital transferability).

In this thesis I investigate the relationship between the gender distribution across industries and occupations and the incidence and consequences of displacement. First, I provide empirical evidence to support the idea that women self-select into less risky industries and occupations, that is industries and occupations with lower displacement rates and lower earnings growth. Using data from the Displaced Worker Survey (1984-2002), the corresponding Annual Demographic Supplement to the March Current Population Survey, and the Dictionary of Occupational Titles, I find that, even though women have a lower incidence of displacement in the aggregate, they are more likely to get displaced at the one-digit industry and occupation level than men. Displacement is also more costly for women, in terms of both employment and monetary consequences, which suggests that women’s choice of safer sectors could be an insurance mechanism against the risk of displacement and its costly consequences. I then construct a dynamic occupational choice model in the spirit of Keane and Wolpin (1997), in which occupation(industry) groups differ not only in terms of the rate of human capital accumulation, but also in the risk and associated cost of displacement, as well as in the value of the non-monetary utility component. I calibrate the model for men and perform a number of counterfactual experiments for women. Quantitative results suggest that differences in displacement probabilities, together with differences in re-employment probabilities, and in human capital penalty rates at displacement explain up to 15% of the gender occupational segregation, and up to 10% of the gender industry segregation. Allowing women to also have an extra preference for non-employment explains in a proportion of 60% why women avoid high risk occupations, that is occupations with higher displacement risk, higher earnings growth and higher human capital depreciation (or alternatively, lower human capital transferability).

Reforms that expand school choice have been the focus of considerable policy interest, not least as a possible means of improving public school performance. According to the standard argument, increased choice will intensify competition, forcing public schools to improve quality in order to retain enrolment. Yet in principle, increased choice need not always raise performance, pointing to the need for careful empirical analysis. A key challenge in measuring the effects of greater choice on school performance is that convincing variation in choice is often hard to come by, especially in cross-sectional studies. And while school choice policy experiments have the advantage that choice increases in a clear way, few large-scale school choice policies have been implemented in North America. An important exception is the 2002 Ontario tuition tax credit, which eased access to private schools throughout Canada's most populous province. Analyzing the effects of the tax credit reform provides the focus of this thesis. The thesis begins by presenting the literature and gaps in existing research. The next chapter presents a model to clarify the link between increases in competition and school performance, and to motivate the empirical identification strategy. To set the stage for the main empirical analysis, I also provide some relevant institutional background relating to the Ontario education policy environment and the Ontario tuition tax credit as well as a descriptive analysis on the Ontario private school market. I then present an initial examination of the possible performance effects of the Ontario tuition tax credit using a difference-in-differences setup, before turning to the main empirical analysis, which exploits the differential competitive effects for public schools in districts with relative to those without a significant private school presence. The empirical results indicate that public school performance improved for schools facing the greatest competitive pressures following the introduction of the policy, controlling for a host of other relevant factors. To assess whether the effect is due primarily to increases in productivity, the analysis controls carefully for a series of alternative mechanisms. Overall, the Ontario findings are consistent with increased choice giving rise to productivity improvements in public schools.

This dissertation considers the economics of public health in the context of respiratory disease, a leading cause of morbidity and mortality. The pervasive nature of respiratory illness represents a significant reduction to health and longevity, but private actions to prevent illness may not consider the full-scale benefit of societal health improvement. In this thesis, I consider two determinants of respiratory illness: (1) the spread of influenza disease and (2) air pollution. In both cases, public policy aims to attenuate the effects of these factors by incentivizing or mandating preventative action. Because such interventions come at a cost, it is important to consider the magnitude of benefits associated with these actions. I consider each determinant in turn. First, I provide causal evidence on the health and economic consequences of an ongoing broad-scope vaccination program. The Ontario Influenza Immunization Campaign expanded the scope of vaccine coverage leading to a 20-percent increase in vaccination. Using the timing of this campaign and exogenous variation in vaccine quality, I link higher vaccination rates to decreases in lost-work-time, hospitalization, and death. Results indicate that, when vaccine quality is high, the program leads to higher gains for Ontario relative to other provinces and in short, an ounce of prevention is worth a pound of cure. Second, I provide evidence of the impact of air pollution on respiratory health. Recent changes in standards for air pollution are highly contentious and represent stringent constraints on economic activity. Evidence from this dissertation directly informs this debate. By linking daily pollution to hospital admissions for municipalities across Ontario, I study the impact of air pollution at levels below those historically considered. Results indicate that particulate matter has a significant effect on respiratory health of children but that ozone and carbon monoxide have little effect on respiratory hospitalizations for all age groups.

This thesis consists of three chapters pertaining to issues of long-term relationships in labour markets. In Chapter 1, I analyze a model of a two-period advice game. The decision maker chooses to retain or replace the advisor after the first period depending on the first period events. Even though the decision maker and the advisor have identical preferences, this potential replacement creates incentive for the advisor to avoid telling the truth. I show the condition under which the decision maker can find a random retention rule that induces a truthful report from the advisor, and I characterize an optimal retention rule that maximizes the decision maker's expected payoff. In Chapter 2, I propose a search theoretic model of optimal employment contract under repeated moral hazard. The model integrates two important attributes of the labour market: workers' work incentive on the job and their mobility in the labour market. Even though all workers and firms are ex ante homogeneous, these two factors jointly generate (1) wages and productivity that increase with worker's tenure and (2) endogenous dynamic heterogeneity of the labour productivity of the match. The interaction of these factors provides novel implications for wage dispersion, labour mobility, and the business cycle behaviour of macroeconomic variables. Lastly, in Chapter 3, I quantitatively assess wage dispersion and business cycle implications of the model developed in Chapter 2. In terms of wage dispersion, the model with on-the-job search with wage-tenure contracts seems to accommodate sizable frictional wage dispersion. The model, however, generates very small productivity difference among workers, and shows weak evidence that the productivity difference generated by the endogenous variations in incentives is responsible for frictional wage dispersion. In terms of business cycle implications, workers' endogenous effort choice first amplifies the effect of productivity shock on unemployment rate. Second, responses of workers to productivity shocks generate marked difference between the effects of temporary productivity shock and that of permanent shock. Third, the analysis shows the importance of the distributional effect on macroeconomic variables during the transitory periods after a shock.

Reforms that expand school choice have been the focus of considerable policy interest, not least as a possible means of improving public school performance. According to the standard argument, increased choice will intensify competition, forcing public schools to improve quality in order to retain enrolment. Yet in principle, increased choice need not always raise performance, pointing to the need for careful empirical analysis. A key challenge in measuring the effects of greater choice on school performance is that convincing variation in choice is often hard to come by, especially in cross-sectional studies. And while school choice policy experiments have the advantage that choice increases in a clear way, few large-scale school choice policies have been implemented in North America. An important exception is the 2002 Ontario tuition tax credit, which eased access to private schools throughout Canada's most populous province. Analyzing the effects of the tax credit reform provides the focus of this thesis. The thesis begins by presenting the literature and gaps in existing research. The next chapter presents a model to clarify the link between increases in competition and school performance, and to motivate the empirical identification strategy. To set the stage for the main empirical analysis, I also provide some relevant institutional background relating to the Ontario education policy environment and the Ontario tuition tax credit as well as a descriptive analysis on the Ontario private school market. I then present an initial examination of the possible performance effects of the Ontario tuition tax credit using a difference-in-differences setup, before turning to the main empirical analysis, which exploits the differential competitive effects for public schools in districts with relative to those without a significant private school presence. The empirical results indicate that public school performance improved for schools facing the greatest competitive pressures following the introduction of the policy, controlling for a host of other relevant factors. To assess whether the effect is due primarily to increases in productivity, the analysis controls carefully for a series of alternative mechanisms. Overall, the Ontario findings are consistent with increased choice giving rise to productivity improvements in public schools.

This dissertation considers the economics of public health in the context of respiratory disease, a leading cause of morbidity and mortality. The pervasive nature of respiratory illness represents a significant reduction to health and longevity, but private actions to prevent illness may not consider the full-scale benefit of societal health improvement. In this thesis, I consider two determinants of respiratory illness: (1) the spread of influenza disease and (2) air pollution. In both cases, public policy aims to attenuate the effects of these factors by incentivizing or mandating preventative action. Because such interventions come at a cost, it is important to consider the magnitude of benefits associated with these actions. I consider each determinant in turn. First, I provide causal evidence on the health and economic consequences of an ongoing broad-scope vaccination program. The Ontario Influenza Immunization Campaign expanded the scope of vaccine coverage leading to a 20-percent increase in vaccination. Using the timing of this campaign and exogenous variation in vaccine quality, I link higher vaccination rates to decreases in lost-work-time, hospitalization, and death. Results indicate that, when vaccine quality is high, the program leads to higher gains for Ontario relative to other provinces and in short, an ounce of prevention is worth a pound of cure. Second, I provide evidence of the impact of air pollution on respiratory health. Recent changes in standards for air pollution are highly contentious and represent stringent constraints on economic activity. Evidence from this dissertation directly informs this debate. By linking daily pollution to hospital admissions for municipalities across Ontario, I study the impact of air pollution at levels below those historically considered. Results indicate that particulate matter has a significant effect on respiratory health of children but that ozone and carbon monoxide have little effect on respiratory hospitalizations for all age groups.

This thesis consists of three chapters pertaining to issues of long-term relationships in labour markets. In Chapter 1, I analyze a model of a two-period advice game. The decision maker chooses to retain or replace the advisor after the first period depending on the first period events. Even though the decision maker and the advisor have identical preferences, this potential replacement creates incentive for the advisor to avoid telling the truth. I show the condition under which the decision maker can find a random retention rule that induces a truthful report from the advisor, and I characterize an optimal retention rule that maximizes the decision maker's expected payoff. In Chapter 2, I propose a search theoretic model of optimal employment contract under repeated moral hazard. The model integrates two important attributes of the labour market: workers' work incentive on the job and their mobility in the labour market. Even though all workers and firms are ex ante homogeneous, these two factors jointly generate (1) wages and productivity that increase with worker's tenure and (2) endogenous dynamic heterogeneity of the labour productivity of the match. The interaction of these factors provides novel implications for wage dispersion, labour mobility, and the business cycle behaviour of macroeconomic variables. Lastly, in Chapter 3, I quantitatively assess wage dispersion and business cycle implications of the model developed in Chapter 2. In terms of wage dispersion, the model with on-the-job search with wage-tenure contracts seems to accommodate sizable frictional wage dispersion. The model, however, generates very small productivity difference among workers, and shows weak evidence that the productivity difference generated by the endogenous variations in incentives is responsible for frictional wage dispersion. In terms of business cycle implications, workers' endogenous effort choice first amplifies the effect of productivity shock on unemployment rate. Second, responses of workers to productivity shocks generate marked difference between the effects of temporary productivity shock and that of permanent shock. Third, the analysis shows the importance of the distributional effect on macroeconomic variables during the transitory periods after a shock.