A Job To Do
Measuring the Total Number of US Job Seekers
Christine Braun
Economic Journal, forthcoming
Abstract:
I document a substantial rise in the proportion of job seekers who are classified as out of the labour force in the United States since 1980. I propose an adjusted unemployment rate to account for these searchers; the adjustment increases the unemployment rate by 5.2 percentage points, rids the unemployment rate of its downward trend, and decreases volatility by 50%. I also construct a measure of total search effort in the economy, including employed job seekers. Finally, estimates of the Phillips Curve using the adjusted unemployment rate or total searcher rate show no sign of a flattening output-inflation relationship in the post-2008 recession period.
Flying Blind on Job Creation Policies? A Case Study of California
David Neumark & Emma Wohl
Economic Development Quarterly, August 2024, Pages 141-163
Abstract:
Are state job creation policies evidence-based? The authors present a case study of California's extensive set of job creation policies. The authors identify tax credits, grants, loans, entrepreneur training and assistance, and worker training and assistance policies, and estimate their costs. They synthesize what evidence there is on policy effectiveness. There is good evidence for a small number of state job creation policies, sometimes pointing to success in creating or retaining jobs. But for many state policies there is no evidence on effectiveness, or the evidence does not establish that the policy works.
Political Partisanship and Remote Work: Evidence from U.S. States
Benjamin Cowan & Kairon Shayne Garcia
NBER Working Paper, August 2024
Abstract:
We examine how politics and policy have affected remote-work rates in the wake of the COVID-19 pandemic. Using the Current Population Survey, American Community Survey, and the American Time Use Survey, which have several different measures of remote work, we examine how trends in remote work vary by state-level characteristics. We show that state-level measures of the length and stringency of COVID protection policies are not correlated with changes in remote work from before to after the pandemic once a measure of political partisanship (Democratic vote share in the 2020 presidential election) is included in the model. An increase in 2020 Democratic vote share of one standard deviation (about 9 percentage points) is related to an increase in the likelihood of remote work by 1-2 percentage points and the share of remote work by about 3-5 percent. These effects represent roughly 15-25% of pre-COVID means. These results are robust to the inclusion of not only a rich set of individual controls (e.g., occupational telework potential) but also several different state-level controls, including COVID policy indices, cases and deaths, vaccination rates, and economic performance indicators. We conclude that relative increases in remote work across states that are associated with a higher 2020 Democratic vote share cannot be easily explained by differences in COVID-era policies or outcomes or differences in the nature of jobs across states.
The Isolated States of America: Home State Bias and the Impact of State Borders on Mobility
Riley Wilson
Journal of Labor Economics, forthcoming
Abstract:
I document a new fact about mobility within the United States. County-to-county migration and commuting drop discretely at state borders. People are three times as likely to move to a county 15 miles away, but in the same state, than to an equally-distant county across state lines. Standard economic explanations, like differences in amenities or moving costs, have little explanatory power. Experimental evidence suggests many people experience "home state bias" and discount out-of-state moves, independent of whether social ties are present. This pattern has real economic costs, resulting in local labor markets that are less dynamic after negative economic shocks.
Adjusting Labor Along The Intensive Margins
Daniel Hamermesh & Jeff Biddle
NBER Working Paper, July 2024
Abstract:
We expand the analysis of cyclical changes in labor demand by decomposing changes along the intensive margin into those in days/week and in hours/day. Using large cross sections of U.S. data, 1985-2018, we observe around 1/4 of the adjustment in weekly hours occurring through changing days/week. There is no adjustment of days/week in manufacturing; but 1/3 of the adjustment outside manufacturing occurs through days/week. The desirability of bunched leisure implies that secular shifts away from manufacturing have contributed to increasing economic welfare.
Labor Unions and Social Insurance
Naoki Aizawa, Hanming Fang & Katsuhiro Komatsu
NBER Working Paper, August 2024
Abstract:
The United States has experienced a significant decline in labor unions over the past half-century. We examine the aggregate labor market impact of labor unions, the causes of their decline, and their welfare and distributional consequences, accounting for unions' effects on wages and employers' insurance provisions. We first provide descriptive evidence that social insurance expansions contribute to the union's decline. We then develop and estimate an equilibrium labor search model where unionization, wages, employers' insurance provisions, and job security are endogenously determined. We find that, while skill-biased technological changes and Right-to-Work laws respectively explain 32% and 7% of the union decline from 1955 to 2019, social insurance expansions account for 15%. Our analysis also indicates that social insurance expansion can affect inequality through (de)unionization, and inequality may increase or decrease depending on how social insurance is targeted. Subsidizing unions lowers overall social welfare but increases the welfare of low-skilled workers.
The Creativity Decline: Evidence from US Patents
Aakash Kalyani
Federal Reserve Working Paper, April 2024
Abstract:
Economists have long struggled to understand why aggregate productivity growth has dropped in recent decades while the number of new patents filed has steadily increased. I offer an explanation for this puzzling divergence: the creativity embodied in US patents has dropped dramatically over time. To separate creative from derivative patents, I develop a novel, text-based measure of patent creativity: the share of technical terminology that did not appear in previous patents. I show that only creative and not derivative patents are associated with significant improvements in firm level productivity. Using the measure, I show that inventors on average file creative patents upon entry, and file derivative patents with more experience. I embed this life-cycle of creativity in a growth model with endogenous creation and imitation of technologies. In this model, falling population growth explains 27% of the observed decline in patent creativity, 30% of the slowdown in productivity growth, and 64% of the increase in patenting.
Salaries on Display: Unintended Consequences of Wage Disclosure
Junyoung Jeong
University of North Carolina Working Paper, July 2024
Abstract:
This study examines whether wage disclosure assists employers in suppressing wages. Economic theories suggest that wage disclosure might facilitate wage coordination among employers by aiding coordination and monitoring for deviations, especially in highly concentrated labor markets. Using the U.S. Department of Labor's public disclosure of wage information as a natural experiment, I find that disclosure contributes to wage suppression in these highly concentrated markets. Additionally, a policy change to real-time disclosure of Labor Condition Applications (LCAs) reveals further wage suppression. To demonstrate that disclosure is the main driver of wage suppression, I conduct cross-sectional tests, which show that the effect is more pronounced in markets where wage variability decreases post-disclosure and in industries with lower union presence. Mechanism tests suggest that employer coordination contributes significantly to this suppression, particularly in jobs with high task heterogeneity and variability. These findings suggest that wage disclosure enables employers in concentrated markets to tacitly coordinate and suppress wages.
Personal Bankruptcy Costs, Union Bargaining Power, and Capital Structure
Joseph Halford, Rachel Hayes & Valeriy Sibilkov
Journal of Banking & Finance, November 2024
Abstract:
We document that employee bankruptcy costs affect corporate capital structure decisions via their impact on the bargaining power of labor unions. We employ difference-in-differences and triple-difference research designs surrounding a major bankruptcy reform that increased personal bankruptcy costs. Our results suggest that, on average, this reform reduced unions' bargaining power, resulting in a decrease in the financial leverage of unionized firms relative to nonunionized firms. Our results provide new evidence for a relatively unexplored determinant of capital structure -- personal bankruptcy costs.
Spatial Diffusion of Local Economic Shocks in Social Networks: Evidence from the US Fracking Boom
Andreas Diemer
Journal of Labor Economics, forthcoming
Abstract:
I study the role of social networks in the propagation of economic shocks across space. Combining comprehensive data on US online friendships with extraction activity during the fracking boom, I show that exogenous changes in economic conditions in one area affect outcomes in socially proximate places, regardless of how far apart they are geographically. Social exposure to fracking generates a wage spillover amounting to one-third of every dollar of energy produced in a county's social network. This spillover decays slowly in space and is associated with a large mobility response. Diffusion mainly stems from the commuting of transient fracking workers.
Who Benefited from World War II Service and the GI Bill? New Evidence on Heterogeneous Effects for US Veterans
William Collins & Ariell Zimran
NBER Working Paper, August 2024
Abstract:
We study the impacts of WWII service and access to GI Bill benefits on the educational and labor market outcomes of individuals of various ethnic and racial groups. We address selection into military service directly by linking veterans and nonveterans from 1950's census records to the complete-count 1940 census. We find that veterans were positively selected on the basis of education, and neutrally or negatively selected on the basis of their own or their fathers' labor market characteristics. We show that selection can be dramatically reduced by using 1940 controls. Controlling for these characteristics, we find modest positive impacts in 1950 of WWII service and the GI Bill on educational attainment of those with the least pre-war education, and on the school attendance of those with the most pre-war education, with no effect evident for college completion. These effects are relatively large for black men. We find mixed effects on labor market outcomes: young veterans enjoyed slight gains in income and occupational status; older veterans did not. We do not find systematic racial or ethnic differences in labor market impacts. These findings are important given the continued salience of the GI Bill and its potentially disparate outcomes in political discourse.