This thesis comprises three chapters that delve into various labor market dynamics and the policy implications in the context of the COVID-19 pandemic and its aftermath. In the first chapter (joint with Andre Kurmann and Etienne Lale), we investigate the dynamics of small businesses and employment using real-time data from the private sector throughout the COVID-19 crisis. The pandemic has led to an explosion of research using private-sector data to measure small business activity. Yet important questions remain about sample representativeness and how to identify business openings and closings. We propose new methods to address these issues by exploiting information on business activity from Google, Facebook, and Safegraph. We apply our methods to Homebase data and show that the resulting estimates closely fit official statistics. We then use the data to study whether small businesses have been hit harder by the pandemic and the extent to which the Paycheck Protection Program helped mitigate these effects. The second chapter (joint with Andreas Hornstein, Marios Karabarbounis, Andre Kurmann, Etienne Lale) focus on the effects of pandemic unemployment insurance (UI) benefits. UI acts as both a disincentive for labor supply and as a stimulus for labor demand. In equilibrium, the two effects combine, which may explain why several studies have found only small negative effects of the generous UI expansions during the pandemic on job finding rates and employment. In this paper we propose a new research design to estimate independently the disincentive effects of pandemic unemployment benefits. Using high-frequency worker-firm matched data from Homebase, we document that employment of low-wage businesses recovered more slowly from the initial pandemic shock than neighboring high-wage businesses, and that this recovery gap is significantly related to the relative generosity of UI benefits. By comparing neighboring businesses that are largely sharing the benefits of the local UI stimulus, our research design identifies more closely the disincentive effects of pandemic UI benefits. We use an equilibrium model of labor search with heterogeneity in firms and workers to translate the reduced-form estimate of the recovery gap into an unemployment duration elasticity and an aggregate employment loss. Our model, which captures well the recovery gap between low- and high-wage businesses, implies relatively low duration elasticities. Yet, the sheer size and multitude of the pandemic programs implies that the disincentive effects arising from the pandemic UI benefits are substantial and amount to 5 percent of normal employment. The third chapter studies work-from-home (WFH) work mode's implications on labor market. The COVID-19 pandemic has triggered a widespread adoption of WFH practices and accelerated the advancement of remote work technologies. Surprisingly, even after the pandemic has subsided, a substantial shift towards WFH remains evident among workers. However, the accessibility to WFH is not uniform across all types of workers. Notably, high-tech industries, characterized by a predominantly high-skilled workforce, exhibit a higher prevalence of WFH. This raises concerns about the effects of WFH on workers employed in industries where remote work is unfeasible. In this paper, I develop a spatial equilibrium model that incorporates WFH to examine the implications on workers' mobility, local market outcomes, and overall welfare. I find 3 key insights: (1) there is a productivity threshold for WFH adoption, (2) there is a one-way dependence of low-skilled workers on high-skilled workers' mobility, and (3) if workers are fully mobile, both types of workers benefit from the introduction of WFH.

This dissertation studies two distinct issues in the field of labor economics: the labor supply of new mothers and firms' adjustments to changing labor costs. In both cases, I study the effect of labor market policies, both because they provide quasi-exogenous variation in otherwise endogenous variables of interest, and because of the intrinsic interest in studying the welfare implications of specific policies that governments have direct control over. The first two chapters, written jointly with Ludovica Ciasullo, consider how maternal labor supply is impacted by working conditions, and how it in turn affects intrahousehold bargaining and task allocation within the household. In the first chapter we study which work arrangements new mothers choose when allowed to do so, and whether these work arrangements affect their labor supply choices. We exploit the Australian 2009 Fair Work Act, which explicitly entitled parents of young children to request a (reasonable) change in work arrangements. Leveraging variation in the timing of the law, timing of childbirth, and the bite of the law across different occupations and industries, we establish two main results. First, if allowed to request a change in work arrangements, new mothers ask for regularity in their schedule. Second, with regular schedules, working mothers' child penalty declined from a 47 percent drop in hours worked to a 40 percent drop. For the most exposed mothers, the Fair Work Act led to both a doubling in schedule regularity, and a 30% decrease in the child penalty in hours of work. After establishing that an increase in schedule regularity leads to an increase in maternal labor supply, in the second chapter we study how this translates into division of labor within the household. First, we document that at baseline children bring a 40% increase in their parents' active time -- that is, total time spent on paid work, housework, or parenting -- and that this increase falls disproportionately on mothers, by a 2-to-1 ratio. Second, by exploiting the improvement in maternal labor market conditions brought about by the Australian 2009 Fair Work Act, we show that this gendered allocation of time is not affected by improved labor market prospects for women. Finally, we show that mothers who work longer hours reduce housework, but not time spent directly with children, mitigating concerns that maternal participation in the labor market comes at their children's expense. The third chapter, written jointly with Andrea Manera, focuses on how labor costs -- via stringency of labor regulations -- influence firms' innovation choices. We study the impact of employment protection legislation (EPL) on firms' innovation, through an event-study analysis of labor market reforms occurring in Europe over 2000-2016. Data from the Community Innovation Survey reveal that substantial drops in EPL for temporary workers prompt a reallocation of innovation towards the introduction of new products, away from process innovation aimed at cutting labor costs. Among innovative firms, the share of product innovators increases by 15% of the pre-reform value, while the share of firms specializing in process innovation falls by 35%. We develop a theoretical framework of directed technical change to rationalize our findings.

Whilst there is widespread agreement about the goals of economic policy, consensus about how best to achieve them can be harder to achieve. No issues are more contentious than employment and income distribution. In recent years full employment and a just distribution of incomes have been downgraded as policy objectives, as greater priority has been given to price stability and balance of payments objectives. This emphasis has been supported by a mainstream economic theory which has an unswerving belief in the ability of market forces to achieve a satisfactory regulation of employment and income distribution Other economists have remained more sceptical, and none more so than Kurt Rothschild. This new volume collects together his twenty two most important essays in the area, many of which are appearing in English for the first time. Throughout pure theory is linked to relevant practical investigations.