Finding Productivity
The Diffusion of New Technologies
Aakash Kalyani et al.
NBER, forthcoming
Abstract:
We identify phrases associated with novel technologies using textual analysis of patents, job postings, and earnings calls, enabling us to identify four stylized facts on the diffusion of jobs relating to new technologies. First, the development of economically impactful new technologies is geographically highly concentrated, more so even than overall patenting: 56% of the most economically impactful technologies come from just two U.S. locations, Silicon Valley and the Northeast Corridor. Second, as the technologies mature and the number of related jobs grows, hiring spreads geographically. But this process is very slow, taking around 50 years to disperse fully. Third, while initial hiring in new technologies is highly skill biased, over time the mean skill level in new positions declines, drawing in an increasing number of lower-skilled workers. Finally, the geographic spread of hiring is slowest for higher-skilled positions, with the locations where new technologies were pioneered remaining the focus for the technology's high-skill jobs for decades.
Places versus People: The Ins and Outs of Labor Market Adjustment to Globalization
David Autor et al.
NBER Working Paper, January 2025
Abstract:
This chapter analyzes the distinct adjustment paths of U.S. labor markets (places) and U.S. workers (people) to increased Chinese import competition during the 2000s. Using comprehensive register data for 2000-2019, we document that employment levels more than fully rebound in trade-exposed places after 2010, while employment-to-population ratios remain depressed and manufacturing employment further atrophies. The adjustment of places to trade shocks is generational: affected areas recover primarily by adding workers to non-manufacturing who were below working age when the shock occurred. Entrants are disproportionately native-born Hispanics, foreign-born immigrants, women, and the college-educated, who find employment in relatively low-wage service sectors such as medical services, education, retail, and hospitality. Using the panel structure of the employer-employee data, we decompose changes in the employment composition of places into trade-induced shifts in the gross flows of people across sectors, locations, and non-employment status. Contrary to standard models, trade shocks reduce geographic mobility, with both in- and out-migration remaining depressed through 2019. The employment recovery stems almost entirely from young adults and foreign-born immigrants taking their first U.S. jobs in affected areas, with minimal contributions from cross-sector transitions of former manufacturing workers. Although worker inflows into non-manufacturing more than fully offset manufacturing employment losses in trade-exposed locations after 2010, incumbent workers neither fully recover earnings losses nor predominantly exit the labor market, but rather age in place as communities undergo rapid demographic and industrial transitions.
Induced Automation Innovation: Evidence from Firm-level Patent Data
David Hemous et al.
Journal of Political Economy, forthcoming
Abstract:
Do higher wages induce more automation innovation? We identify automation patents in machinery. We show that a higher automation intensity predicts a decline in routine tasks across US sectors. Then, we estimate how innovating firms respond to changes in their downstream firms' low- and high-skill wages. We compute these wages by combining macroeconomic data on 41 countries with innovating firms' global market exposure. Higher low-skill wages increase automation innovation (but not other machinery innovation) with an elasticity of 2-5. Finally, we show that the German Hartz labor market reforms reduced automation innovations by foreign firms more exposed to Germany.
The Convergence of Occupations: Evidence from Online Job Posts
Manolis Chatzikonstantinou, Mohammad Shahmeer Ahmad & Alexis Antoniades
Georgetown University Working Paper, December 2024
Abstract:
We document, in the past decade, a reversal in the trend of increasing wage inequality and declining labor mobility patterns across occupations. This is despite a rapid increase in technological progress and increase in technical skills demanded as evident in online job advertisements. We argue that rapid technological progress over the past decade is transforming occupations and driving them closer together, leading to wage convergence and increased mobility. To study this, we introduce a novel measure of occupational distance based on job postings that allow us to represent each occupation as a vector of skills with corresponding weights that evolve over time and space. We compute bilateral distances between occupations using similarity measures and find a steady decline in these distances, indicating occupational convergence. We show that this convergence has led to a decline in wage inequality across occupations and increased labor mobility. Furthermore, we find that occupations that have undergone greater transformation -- measured as self-distance over time -- exhibit higher wage growth and larger reductions in within-occupation inequality.
AI and the Extended Workday: Productivity, Contracting Efficiency, and Distribution of Rents
Wei Jiang et al.
Emory University Working Paper, January 2025
Abstract:
This study investigates how occupational AI exposure impacts employment at the intensive margin, i.e., the length of workdays and the allocation of time between work and leisure. Drawing on individual-level time diary data from 2004-2023, we find that higher AI exposure -- whether stemming from the ChatGPT shock or broader AI evolution -- is associated with longer work hours and reduced leisure time, primarily due to AI complementing human labor rather than replacing it. This effect is particularly pronounced in contexts where AI significantly enhances marginal productivity and monitoring efficiency. It is further amplified in competitive labor and product markets, where workers have limited bargaining power to retain the benefits of productivity gains, which are often captured by consumers or firms instead. The findings question the expectation that technological advancements alleviate human labor burdens, revealing instead a paradox where such progresses compromise work-life balance.
Minimum Wage Laws and Job Search
Vitor Melo et al.
NBER Working Paper, January 2025
Abstract:
A large theoretical literature on job search predicts that a higher minimum wage will increase the number of job seekers for affected jobs, which can lead to more job creation and higher employment. This paper uses novel data on job search in all U.S. states to examine the effect of minimum wage increases on the number of job seekers for low-skilled positions. We find no evidence that higher minimum wages increase job search for low-skilled jobs. Instead, the evidence suggests that higher minimum wages decrease the number of workers seeking employment.
Dude, where's my (summer) job? Minimum wages and student employment
Adam Wright, Darius Martin & John Krieg
Contemporary Economic Policy, forthcoming
Abstract:
We use rich administrative data to study employment and income during a period of minimum wage growth in Washington State for a group of workers who may be particularly sensitive to changes in the minimum wage: college students. Using a within-student estimator and quarterly work records, we consistently find that rising minimum wages are associated with reduced summer employment, the quarter in which students tend to work the most. Students experiencing the largest reductions in employment are those with little or no work experience and non-local students. This is partially mitigated by students working more during the academic year.
Baumol's Migrants: Productive and Unproductive Entrepreneurship and Between-MSA Migration
Justin Callais et al.
George Mason University Working Paper, January 2025
Abstract:
William Baumol proposes that there are two types of entrepreneurship: productive or unproductive. Productive entrepreneurship, characterized by innovation and efficient resource allocation, fosters economic growth and can act as a potent magnet for migration. Conversely, unproductive entrepreneurship, which often involves rent-seeking and regulatory circumvention, deters migration and potentially provokes out-migration. To test this link from the types of entrepreneurship and migration, we use a new index of entrepreneurship (productive and unproductive) in conjunction with a dataset covering migration to and from Metropolitan Statistical Areas (MSA) from 2005 to 2019. Our analysis reveals that regions high in productive entrepreneurship experience significant net in-migration, while those dominated by unproductive entrepreneurship see the opposite effect.
Do Tax Incentives for Farmland Supply Induce New Farm Start-Ups? Evidence from Iowa's Beginning Farmer Tax Credit
Justin Ross, Wesley Zebrowski & Julia Valliant
Indiana University Working Paper, February 2025
Abstract:
In recent decades, agriculture has become increasingly concentrated through horizontal mergers and acquisitions via corporate entities, and policy makers are concerned this will be exacerbated by the aging population of farm operators. To reduce market concentration in agriculture, many states have enacted policies to entice new prospective entrepreneurs into farming. Among these are tax credits for existing farm owners who lease or sell farmland to "beginning farmers." These subsidies aim to compensate the lessor for the additional risk associated with leasing land to a new farming enterprise. This paper investigates the effect of Iowa's Beginning Farmer Tax Credit program on land leased to other farmers, farm operators' average age, and various metrics of noncorporate farm operations. Our point estimates suggest very small effects of the program on Iowa's prevailing farm trajectories with a budgetary cost of more than $100,000 per added farm operator.
The Evolution of Unobserved Skill Returns in the U.S.: A New Approach Using Panel Data
Lance Lochner, Youngmin Park & Youngki Shin
NBER Working Paper, January 2025
Abstract:
Economists disagree about the factors driving the substantial increase in residual wage inequality in the US over the past few decades. To identify changes in the returns to unobserved skills, we make a novel assumption about the dynamics of skills rather than about the stability of skill distributions across cohorts, as is standard. We show that our assumption is supported by data on test score dynamics for older workers in the HRS. Using survey data from the PSID and administrative data from the IRS and SSA, we estimate that the returns to unobserved skills declined substantially in the late-1980s and 1990s despite an increase in residual inequality. Accounting for firm-specific pay differences yields similar results. Extending our framework to consider occupational differences in returns to skill and multiple unobserved skills, we further show that skill returns display similar patterns for workers employed in each of cognitive, routine, and social occupations. Finally, our results suggest that increasing skill dispersion, driven by rising skill volatility, explains most of the growth in residual wage inequality since the 1980s.