Conditional Work
On Paying Workers to Stop Working: Public Attitudes toward “Wage Buyouts”
Krzysztof Pelc
Perspectives on Politics, forthcoming
Abstract:
In an effort to manage carbon emissions, nitrogen runoffs, and other externalities, governments are increasingly resorting to a drastic policy measure: paying workers to stop working. Though such initiatives may be, strictly speaking, welfare enhancing, they are increasingly politicized, and often meet with protests. What explains public attitudes to “wage buyouts”? This article compares the explanatory power of two ideal-type theories in deriving a set of testable expectations. The first views work primarily as a means of earning a living; the second envisions it as a source of personal identity and social recognition. We test these opposing accounts using three survey experiments fielded on a combined sample of over 7,500 U.S. respondents. Overall, a sizeable portion of workers are resistant to being freed from work. Strikingly, individuals are more willing to reduce their work hours by half than to cease work entirely, even when offered full compensation. Those whose occupations are threatened by structural factors like offshoring or automation show lower identification with their jobs, and are accordingly more willing to accept government compensation for giving up those jobs. Program design matters: respondents are significantly more likely to accept compensation from their former employer than from the government. While partisanship drives attitudes towards government handouts, it is not significantly associated with attitudes towards (non)work. On the other hand, Protestants show consistently greater resistance to non-work, even when this results from a lottery windfall. These findings hold significant implications for climate and technology-driven labor displacement in years to come.
Why Do Labor Unions Advocate for Minimum Wage Increases?
Jeffrey Clemens & Michael Strain
Labour Economics, June 2025
Abstract:
Over the past decade, organized labor has played a significant role in advocating for minimum wage increases. Why might this be, given that the minimum wage may act as a substitute for the bargaining power offered by labor unions? In this paper, we study the interplay between minimum wages and union membership. Using variation in U.S. states’ minimum wages during the 2010s, we estimate that each dollar in minimum wage increase predicts a 5 percent increase (0.3 pp) in the likelihood of union membership among individuals ages 16-40. Consistent with a classic “free-riding” hypothesis, however, we find that minimum wage increases predict declines in union membership among the minimum wage's most direct beneficiaries. Instead, increases in union membership occur among much broader groups that are not directly affected by the minimum wage.
Voluntary Minimum Wages: The Local Labor Market Effects of National Retailer Policies
Ellora Derenoncourt & David Weil
Quarterly Journal of Economics, forthcoming
Abstract:
Low unionization rates, a falling real federal minimum wage, and outsourcing have hampered wage growth in the low-wage sector in the US for several decades. In recent years (2014-2023), a number of large private retailers -- including some of the largest employers in the U.S. -- have opted to institute or raise company-wide, voluntary minimum wages (VMWs) for their employees. We use anonymized payroll data from a large credit bureau and a major payroll provider to study the effects of these national retailer policies on adopting employers’ own wages and employment as well as their spillovers to other employers in shared local labor markets, variously defined. Using stacked event studies centered around multiple VMW events and a continuous treatment variable defined as the gap between local area wages and the company minimum, we find that VMWs result in sizable wage increases and reductions in turnover at the companies that implemented them. Turning to wages at other companies, we estimate small, often economically negligible, spillover effects across multiple measures of exposure to VMWs and numerous definitions of relevant competitors, including firms connected by worker flows. Together, the evidence points to little role for strategic interactions in the transmission of large retailers’ wage policies to other firms. Voluntary minimum wage policies have affected over 3 million jobs at adopting employers, yet their impact on the broader labor market is limited.
Employment effects of minimum wage indexing: Establishment evidence from Oregon restaurants
Stephen Miller, Gary Wagner & Alicia Plemmons
Economic Inquiry, forthcoming
Abstract:
Though 18 states will index their minimum wage to the Consumer Price Index by 2025, few studies have examined indexing's differential employment effects. Leveraging a period of stability in minimum wages (2000–2007) and two distinct national geocoded databases of establishments, we explore how indexing affected employment in Oregon restaurants, one of the earliest indexing states (2003). Nearest-neighbor matching is used as a preprocessing step before regression, pairing individual restaurants in Oregon to restaurants with similar characteristics in states where the minimum wage was unchanged. We find evidence that establishment employment falls 3.6% after indexing, implying an employment elasticity of −0.18.
Field Choice, Skill Specificity, and Labor Market Disruptions
Valerie Smeets, Lin Tian & Sharon Traiberman
NBER Working Paper, April 2025
Abstract:
We argue that college students’ field-of-study choices significantly influence how economies respond to labor market disruptions. To do so, we develop and estimate a framework featuring forward-looking students who choose a field of study when entering college, and subsequently make decisions over occupations after graduating and entering the labor market. Different fields endow workers with distinct comparative advantages and varying costs associated with switching occupations. Simulating both a trade war and wide scale adoption of AI, we use our model to make three points. First, relative to models that ignore how new cohorts adjust their field-of-study choices, our framework predicts larger aggregate income responses and greater distributional differences. Second, policies that enhance flexibility in field-of-study decisions -- such as relaxing capacity constraints in high-demand programs -- raise aggregate output. Finally, these policies also lessen the adverse distributional consequences of shocks, by affording more opportunities to students with lower earnings potential.
Can changes in disability insurance work incentives influence beneficiary employment? Evidence from the promoting opportunity demonstration
Michael Levere, David Wittenburg & John Jones
Journal of Public Economics, May 2025
Abstract:
We study how disability beneficiary work behavior responds to a rule change that replaces a cash cliff -- a threshold above which benefits reduce to zero -- with a benefit offset ramp -- where benefits are gradually phased out. Using a randomized controlled trial with over 10,000 Social Security Disability Insurance beneficiaries who voluntarily enrolled in the demonstration, we find precisely estimated null effects on earnings, income, and benefit amounts. An analysis of mechanisms indicates that administrative burden, the limited size of the incentive, and individual and systemic barriers to employment for people with disabilities likely contributed to the limited impacts.
The East-West Divide of the U.S. Fentanyl Crisis and the Decline in Manufacturing Employment
Rupkatha Banerjee, Daniel Garcia & Alvaro Mezza
Federal Reserve Working Paper, April 2025
Abstract:
We document the historical segmentation of the U.S. heroin market near the Mississippi River: Black tar heroin is predominant in the West and largely absent in the East, where, instead, powder heroin is dominant. Because fentanyl is more easily mixed with powder heroin, the surge in synthetic opioid mortality was much faster in the East than in the West. These findings shed new light on the "deaths of despair" view of the opioid crisis: Historical differences in heroin type partly drive the correlation between manufacturing job losses (which are more widespread in the East) and synthetic opioid mortality.
The Minimum Wage and Labor-Saving Innovation
Amrita Nain & Yan Wang
University of Iowa Working Paper, February 2025
Abstract:
We show that an increase in the minimum wage leads to more labor-saving innovation. Larger minimum wage increases in a state are associated with a more positive change in automation patent applications by firms headquartered in that state. These findings are stronger in industries that hire more low-wage workers and have more automatable tasks. The results are also stronger in states with a higher binding wage percentile. The increase in automation patents following minimum wage hikes contributes to poorer employment outcomes for unskilled workers employed in routine tasks.
The Impact of Generative Artificial Intelligence on Artists
Christos Makridis
Stanford Working Paper, March 2025
Abstract:
Technological disruptions have historically reshaped creative industries, displacing certain roles while fostering new artistic frontiers. The advent of generative AI (GenAI) has reignited debates about its impact on creative labor markets, particularly among artists and writers. Concerns center on intellectual property (IP) violations, job displacement, and shifts in creative production. While early economic theories suggested creative occupations were resistant to automation, recent studies indicate that large language models (LLMs) could significantly affect knowledge-intensive, high-wage professions, including the arts. However, emerging research also suggests potential benefits: GenAI may enhance productivity, expand artistic output, and increase audience engagement. This paper estimates the causal effect of LLM exposure on the creative economy, focusing on employment and earnings outcomes for artists. Using plausibly exogenous variation from ChatGPT's introduction, the findings suggest that while LLM exposure had little effect on earnings, it may have slowed employment growth. The results contribute to ongoing discussions on AI's role in creative work.
Sorting to Expensive Cities
Cécile Gaubert & Frédéric Robert-Nicoud
NBER Working Paper, April 2025
Abstract:
We propose a spatial equilibrium model with heterogeneous households holding general non-homothetic preferences over tradable goods and housing. In equilibrium, desirable and productive locations command high housing prices. So long as housing is a necessity, these locations are disproportionately inhabited by high-income earners who are relatively less affected by high housing prices. We clarify how this source of sorting complements other potential sorting forces in spatial equilibrium models, namely, comparative advantage in production and heterogeneous preferences for locations. We show how to measure changes in welfare inequality across income groups in a theoretically-consistent way when housing is a necessity, extending the approach popular in models with homothetic preferences. We use our framework to track the evolution of welfare inequality between college and non-college graduates in the United States between 1980 and 2020. We find that, accounting for change in prices, it has risen by more than nominal wage inequality, even as college graduates increasingly sort into cities with expensive housing over this time period.
From movement to prosperity: Examining the link between domestic migration and business dynamics in US metropolitan areas
Imran Arif
Contemporary Economic Policy, forthcoming
Abstract:
Business dynamics -- the creation and destruction of businesses -- drive economic development, innovation, and income distribution. While business dynamics are linked to migration internationally, this relationship at the U.S. metropolitan level is unclear. We hypothesize that net domestic migration may influence business dynamics by expanding the labor force and increasing local demand, fostering new business creation and incumbent business expansion. Using Internal Revenue Service and IPUMS-CPS data (1997–2017) for 358 U.S. metros, our fixed-effects estimates show a positive relationship between net migration and business creation but no significant relationship with business destruction.