Research at HEC Workshop Underlines Potential of New Generation of Economists

The informal labor markets in Sub-Saharan Africa; training in imperfect labor markets; the political consequences of Affirmative Action in Brazil; the links between coffee booms and schooling in Rwanda. These were four among a score of research papers presented by doctoral students from round the world at the HEC Economics PhD Conference in June. The student-led workshop, organized by the HEC doctoral candidates in the Economics department provided a unique opportunity to share breakthrough research and obtain valuable feedback from their peers. Here are a few examples, space not allowing for several other valuable contributions.

“This second edition of the HEC Economics PhD Conference, which I had the pleasure of also organizing last year, has been a valuable learning experience,” said Andrew Funck, with a smile. “It’s allowed us to engage deeply with a wide array of economics research and to build a research community.” "Indeed, the conference featured a diverse range of economic topics which the organizers selected essentially within their domain of expertise (entitled Development Economics, Labor Economics, Political Economy, Behavioral Economics, Decision Theory, Applied Microeconomic Theory and Macroeconomics). They arranged the best ones into thematic sessions tailored to their research needs and interests, but also open to new areas of interest and methods. “It’s very easy to become entrenched within only one topic due to the necessity of specialization and the pressure to produce research output,” admitted Funck. “Yet, maintaining curiosity and openness to other domains is essential, and organizing a conference like ours provided a structured way to achieve this.” On top of the research aspect, the organizing team learnt how to blend the funding, logistics, promotion, and communication efforts necessary for such a two-day event. “It provided valuable learning experiences and a refreshing break from daily academic work, which was also enjoyable.”

Impact of Informal and Formal Labor Sectors for Mexican Women

The diversity and engagement of PhD researchers at the conference was manifest in several presentations over the two days. Warwick University’s Angelica Martinez Leyva, for example, shared research which offers a fresh perspective on the roles women occupy within the Mexican workforce. In a country where labor dynamics are as complex as its cultural tapestry, Leyva focuses on the interplay between labor, gender, and the informal sector in Mexico, shedding light on how these elements converge to shape women's lives. “I’m Mexican,” the British-based scholar said, “and the informal sector plays a huge role not only in Mexico but across Latin America.” Leyva’s research is driven by the question of why women gravitate towards certain types of jobs, and how the informal sector might offer them opportunities that the formal sector cannot. “I'm not saying informal jobs are better,” she clarified. “But they can provide certain amenities that women, especially those with children, may value, like flexibility in balancing work and childcare responsibilities.”

As Leyva continues her research, she hopes to deepen the understanding of how informal employment affects women's economic outcomes and overall well-being. Her work not only highlights the unique challenges faced by women in Mexico but also underscores the need for policies that recognize and support the diverse ways in which women engage with the labor market. And, in a world where the boundaries between formal and informal work are increasingly blurred, Leyva’s research is a crucial step toward addressing gender disparities and empowering women within the workforce.

At the HEC Economics PhD Conference, she found the exchanges particularly valuable. “There’s a lot of new PhD conferences post-COVID,” she said. “These conferences provide a platform for emerging scholars to share their work in a more casual environment, fostering a sense of community and collaboration. You don't feel so stressed, it’s a chance to practice presenting, get feedback from peers, and refine your theories before hitting the job market.”

Unveiling the Strategic Role of Training in Imperfect Labor Markets

Staying in the field of labor markets, but with a very different context, Giacomo Rostagno’s research sheds light on what he titled "Training in Imperfect Labour Markets." Rostagno is entering his fifth year as a PhD candidate at HEC Paris, working under the supervision of HEC associate professor Raphaël Levy. In Rostagno’s workshop presentation he reflected on today's rapidly evolving job market and how firms are investing unprecedented amounts in training programs for their employees. But what drives this surge in spending, and how does it impact both workers and employers, he wondered? Rostagno’s work explores how strategic timing and targeted training can serve as potent incentives for workers. “In recent years, companies like Amazon have committed billions to training programs,” Rostagno noted in an exchange during the conference. “But interestingly, much of this investment occurs after employees have been with the company for some time.”

Rostagno’s study proposes that these training programs are more than just a means to upskill employees. They also act as a mechanism for firms to signal the quality of their best workers, thus motivating them to perform better. “By committing to training, firms effectively promise their workers future career opportunities, This not only incentivizes employees to work harder but also showcases their abilities to potential competitors, thereby increasing their market value.” However, this strategy comes with a caveat. While precise information transmission through training boosts worker incentives, it can also lead to higher wages for these workers in the future, potentially reducing firm profits. Firms must therefore strike a delicate balance in designing their training programs to optimize both worker motivation and profitability.

Rostagno’s model also highlights a significant downside: the creation of a stark wage disparity between workers who receive training and those who do not. “This mechanism can lead to large salary divergences,” he explained. “Workers who don’t receive training are often perceived as less productive, exacerbating the wage gap.” Despite the theoretical nature of his current research, Rostagno draws on anecdotal evidence from major firms across Europe, including Italy, the UK, and France. “Many large companies, such as Toyota and Marsh, prominently feature their executive training programs,” he observed. “These programs are widespread and highly influential in the business world.”

Reflecting on his participation in the HEC Economics PhD Conference, Rostagno expressed gratitude for the feedback and camaraderie. “Presenting my research here has been extremely useful,” he shared. “I received valuable input from both senior researchers and fellow PhD students. The social activities and informal discussions during breaks also provided great opportunities to refine my ideas.” Rostagno's research underscores the multifaceted role of training in labor markets, revealing it as a strategic tool that extends beyond mere skill development. As firms continue to navigate the complexities of employee motivation and retention, his insights offer a crucial perspective on the interplay between human capital and economic incentives.