Hard Work
The Strange and Awful Path of Productivity in the U.S. Construction Sector
Austan Goolsbee & Chad Syverson
NBER Working Paper, January 2023
Abstract:
Aggregate data show a large and decades-long decline in construction sector productivity. This decline in such a large sector has had a material effect on secular productivity growth for the economy as a whole. Prior work has focused on the role of potential measurement problems in construction, particularly output deflators in the measurement of productivity. This paper brings some new evidence to bear on the industry’s measured productivity problems and suggests that measurement error is probably not the sole source of the stagnation. First, using measures of physical productivity in housing construction, productivity is falling or, at best, stagnant over multiple decades. Second, there has been a noticeable decline over time in the efficiency with which construction firms translate materials inputs into output, and a corresponding shift toward more value-added-intensive production. Third, using state-level data, we do not find evidence of patterns of within-industry reallocation that might be expected of efficiently operating input and output markets. States with more productive construction sectors do not see growth in their shares of total U.S. construction activity; if anything, their shares fall. This may point to frictions in these markets that slow or stop what is in many other markets an important channel for productivity growth.
The Evolving Impact of Robots on Jobs
John Chung & Yong Suk Lee
ILR Review, forthcoming
Abstract:
The authors examine the impact of industrial robots on US labor markets between 2005 and 2016. Because some industries adopt robots more intensively, growth in robot stocks more heavily affect local labor markets with larger employment shares in those industries. This robot exposure variation occurs across 722 commuting zones in the continental United States. Analyzing the five-year intervals within this period, the authors find that robot exposure reduces employment in the earlier periods but augments employment in the more recent periods. Similarly, the effect of robot exposure on the local wage is initially negative but gradually rebounds and turns positive in more recent years. The evolving influence of robots is primarily driven by the automotive industry, in which digitization and automation have not only increased labor productivity but also created new tasks. Findings show evidence of spillover effects on other industries within and outside of manufacturing, which may be explained by input-output linkages and aggregate demand effects.
Missing Workers and Missing Jobs Since the Pandemic
Bart Hobijn & Ayşegül Şahin
NBER Working Paper, December 2022
Abstract:
Since the start of the pandemic the U.S. labor market has been characterized as being plagued by missing jobs, i.e. payroll employment has fallen more than five million jobs short of its pre-pandemic trend, and missing workers, i.e. the participation rate has declined by 1.2 percentage points: A pandemic-induced shortage of workers has restrained job creation and, as a result, been a substantial drag on post-pandemic job growth. In this paper, we show that this is a misinterpretation of the data for two reasons. The first is that the number of missing jobs is inflated because it is based on the unrealistic assumption that the pre-pandemic tailwinds for job growth from the decline in the unemployment rate and cyclical upward pressures on participation would have continued in 2020 and beyond if the pandemic would not have occurred. Second, the number of workers missing due to COVID is overstated because the bulk of the 1.2 percentage-point decline in the participation rate since the start of the pandemic reflects a continuation of its long-run downward trend that was already part of projections before the pandemic broke out. Instead, our payroll jobs accounting yields an 810 thousand cyclical shortfall in payroll jobs in October 2022 compared to right before the pandemic. At the recent pace of job growth, even without monetary and fiscal tightening, we expect a substantial deceleration of payroll growth in the coming months.
Assessing the main and spillover effects of Seattle's minimum wage on establishment decisions
Sharada Dharmasankar & Hoyoung Yoo
Regional Science and Urban Economics, forthcoming
Abstract:
We use the introduction of Seattle's local minimum wage to investigate the geographic effects of highly-targeted, city-level minimum wages on establishment entry and exit decisions. We explicitly consider the spillover effects of Seattle's minimum wage on business entry and exit decisions in the surrounding areas, in addition to the main effect. We use an event study framework to estimate these effects on two low-wage industries: hospitality and retail. We find strong, statistically significant spillover effects on establishment entries at the census block level in the hospitality and retail sectors 1–2 years after Seattle's minimum wage is announced relative to establishment churn before the minimum wage announcement. The estimated spillover effects are positive, implying an increase in the number of establishments entering the areas surrounding Seattle after the announcement of the minimum wage. There is a corresponding decline in entries for both sectors in Seattle itself. Our findings on exits are inconclusive. Both spillover and main effects are more concentrated in retail. We estimate our effects using a novel data set containing a full census of establishments with precise locations for businesses in the state of Washington. Our findings suggest that spillover effects on neighboring areas should be considered to holistically assess the impacts of city-level minimum wages.
Where Are the Workers? From Great Resignation to Quiet Quitting
Dain Lee, Jinhyeok Park & Yongseok Shin
NBER Working Paper, January 2023
Abstract:
To better understand the tight post-pandemic labor market in the US, we decompose the decline in aggregate hours worked into the extensive (fewer people working) and the intensive margin changes (workers working fewer hours). Although the pre-existing trend of lower labor force participation especially by young men without a bachelor's degree accounts for some of the decline in aggregate hours, the intensive margin accounts for more than half of the decline between 2019 and 2022. The decline in hours among workers was larger for men than women. Among men, the decline was larger for those with a bachelor's degree than those with less education, for prime-age workers than older workers, and also for those who already worked long hours and had high earnings. Workers' hours reduction can explain why the labor market is even tighter than what is expected at the current levels of unemployment and labor force participation.
Does a One-Size-Fits-All Minimum Wage Cause Financial Stress for Small Businesses?
Sudheer Chava, Alexander Oettl & Manpreet Singh
Management Science, forthcoming
Abstract:
Using intertemporal variation in the bounding of a state’s minimum wage by the federal rate and business credit-score data for 15.2 million establishments, we find that the increase in labor costs caused by a higher federal minimum wage leads to lower business credit scores and worsens the financial health of small businesses in the affected states. In particular, small, young, labor-intensive, and minimum-wage-sensitive establishments located in affected states and those located in competitive and low-income areas experience higher financial stress. Increases in the minimum wage are associated with employment reductions and a higher exit rate for small businesses. Our results document some potential costs of a one-size-fits-all nationwide minimum wage for some small businesses.
Papers and patents are becoming less disruptive over time
Michael Park, Erin Leahey & Russell Funk
Nature, 5 January 2023, Pages 138–144
Abstract:
Theories of scientific and technological change view discovery and invention as endogenous processes, wherein previous accumulated knowledge enables future progress by allowing researchers to, in Newton’s words, ‘stand on the shoulders of giants’. Recent decades have witnessed exponential growth in the volume of new scientific and technological knowledge, thereby creating conditions that should be ripe for major advances. Yet contrary to this view, studies suggest that progress is slowing in several major fields. Here, we analyse these claims at scale across six decades, using data on 45 million papers and 3.9 million patents from six large-scale datasets, together with a new quantitative metric -- the CD index -- that characterizes how papers and patents change networks of citations in science and technology. We find that papers and patents are increasingly less likely to break with the past in ways that push science and technology in new directions. This pattern holds universally across fields and is robust across multiple different citation- and text-based metrics. Subsequently, we link this decline in disruptiveness to a narrowing in the use of previous knowledge, allowing us to reconcile the patterns we observe with the ‘shoulders of giants’ view. We find that the observed declines are unlikely to be driven by changes in the quality of published science, citation practices or field-specific factors. Overall, our results suggest that slowing rates of disruption may reflect a fundamental shift in the nature of science and technology.
Does Main Street Benefit from What Benefits Wall Street?
Sean Flynn & Andra Ghent
Journal of Financial and Quantitative Analysis, forthcoming
Abstract:
We show that aggregate stock returns predict aggregate US employment, despite the industrial composition of publicly traded firms differing markedly from that of all firms, and the representativeness of public firms declining over time. We also show that appropriately reweighted stock returns predict industry and local labor market outcomes. We find the strongest evidence of an alignment of interests between shareholders and workers in the manufacturing sector, despite its declining labor share of output. Our findings suggest that, at quarterly frequencies, product demand shocks are more important drivers of industry- and city-level stock returns than technology shocks.
Universal Cash Transfers and Labor Market Outcomes
Andrew Bibler, Mouhcine Guettabi & Matthew Reimer
Journal of Policy Analysis and Management, forthcoming
Abstract:
One major criticism of Universal Basic Income is that unconditional cash transfers discourage recipients from working. Evidence to date has largely relied on targeted and/or conditional transfer programs. However, it is difficult to draw conclusions from such programs because universal transfers may induce a positive demand shock by distributing cash to a large portion of the population, which may in turn offset any negative labor supply responses. We estimate the causal effects of universal cash transfers on short-run labor market activity by exploiting the timing and variation in size of a long-running unconditional and universal transfer: Alaska's Permanent Fund Dividend. We find evidence of both a positive labor demand and negative labor supply response to the transfers. Small negative effects on the number of hours worked are found for women, especially those with young children. In contrast, we find an increase in the probability of employment for males in the months following the distribution. Altogether, a $1,000 increase in the per-person disbursement leads to a 0.8 percent labor market contraction on an annual basis.
Effects of New Technologies on Work: The Case of Additive Manufacturing
Avner Ben-Ner, Ainhoa Urtasun & Bledi Taska
ILR Review, forthcoming
Abstract:
The authors study the effects on work of additive manufacturing (AM), an emerging technology that may replace significant segments of traditional manufacturing (TM). Compared to TM, AM is more integrated and offers greater flexibility in design, materials, and customizability; thus, it should entail more demanding tasks and higher skill levels. The authors analyze vacancies for AM and TM workers, focusing on plants that posted vacancies in both technologies to control for factors that may affect the content of job postings. Findings show that AM jobs are more complex (with more non-routine analytic and less routine cognitive content) in comparison to TM jobs, and AM jobs require more high-level technical skills and more reasoning skills. The relative differences are larger for lower-skill workers (operators) than for high-skill workers (engineers). The authors conclude that AM is an upskilling technology that is skill biased in favor of low-skill workers and therefore reduces the skill gap.