Job growth
Demographic Origins of the Startup Deficit
Fatih Karahan, Benjamin Pugsley & Ayşegül Şahin
NBER Working Paper, May 2019
Abstract:
We propose a simple explanation for the long-run decline in the startup rate. It was caused by a slowdown in labor supply growth since the late 1970s, largely pre-determined by demographics. This channel explains roughly two-thirds of the decline and why incumbent firm survival and average growth over the lifecycle have been little changed. We show these results in a standard model of firm dynamics and test the mechanism using shocks to labor supply growth across states. Finally, we show that a longer startup rate series imputed using historical establishment tabulations rises over the 1960-70s period of accelerating labor force growth.
Declining Teen Employment: Minimum Wages, Returns to Schooling, and Immigration
David Neumark & Cortnie Shupe
Labour Economics, forthcoming
Abstract:
We explore the decline in teen employment in the United States since 2000, which was sharpest for 16-17 year-olds. We consider three main explanatory factors: a rising minimum wage that could reduce employment opportunities for teens and potentially increase the value of investing in schooling; rising returns to schooling; and increasing competition from immigrants that, like the minimum wage, could reduce employment opportunities and possibly also raise the returns to human capital investment. We find that, among these factors, higher minimum wages are the predominant factor explaining changes in the schooling and workforce behavior of 16-17 year-olds since 2000. The employment decline arises from a combination of a lower likelihood of being both employed and enrolled in school, and a higher likelihood of being enrolled in school only (not employed). These effects are consistent with the minimum wage leading students to increase their focus on schooling to meet a higher productivity standard for jobs with a higher minimum wage.
Upskilling: Do Employers Demand Greater Skill When Workers are Plentiful?
Alicia Sasser Modestino, Daniel Shoag & Joshua Balance
Review of Economics and Statistics, forthcoming
Abstract:
Using a proprietary database of online job postings, we find that education and experience requirements rose during the Great Recession. These increases were larger in states and occupations that experienced greater increases in the supply of available workers. This finding is robust to controlling for local demand conditions and firm × job-title fixed effects, and using a natural experiment arising from troop withdrawals as an exogenous shock to labor supply. Our results imply that the increase in unemployed workers during the Great Recession can account for 18 to 25 percent of the increase in skill requirements between 2007 and 2010.
Aggregate Implications of Changing Sectoral Trends
Andrew Foerster et al.
NBER Working Paper, May 2019
Abstract:
We find disparate trend variation in TFP and labor growth across major U.S. production sectors over the post-WWII period. When aggregated, these sector-specific trends imply secular declines in the growth rate of aggregate labor and TFP. We embed this sectoral trend variation into a dynamic multi-sector framework in which materials and capital used in each sector are produced by other sectors. The presence of capital induces important network effects from production linkages that amplify the consequences of changing sectoral trends on GDP growth. Thus, in some sectors, changes in TFP and labor growth lead to changes in GDP growth that may be as large as three times these sectors' share in the economy. We find that trend GDP growth has declined by more than 2 percentage points since 1950, and that this decline has been primarily shaped by sector-specific rather than aggregate factors. Sustained contractions in growth specific to Construction, Nondurable Goods, and Professional and Business and Services make up close to sixty percent of the estimated trend decrease in GDP growth. In addition, the slow process of capital accumulation means that structural changes have endogenously persistent effects. We estimate that trend GDP growth will continue to decline for the next 10 years absent persistent increases in TFP and labor growth.
Does Labor Supply Respond to Transitory Income? Evidence from the Economic Stimulus Payments of 2008
David Powell
Journal of Labor Economics, forthcoming
Abstract:
This paper studies labor supply responses to transitory income, exploiting the differential timing of the 2008 tax rebates. While an influential literature finds that rebates encourage consumer spending, it has ignored the ramifications on labor supply. I estimate that each rebate dollar reduces monthly earnings by 9 cents with smaller but significant lagged effects. This responsiveness is primarily concentrated in the second quartile of the earnings distribution and among hourly workers. The results imply that the $96 billion in stimulus payments had a partial equilibrium effect of reducing short-term national labor earnings by over $26 billion.
Minimum Wages and Retirement
Heepyung Cho & Mark Borgschulte
ILR Review, forthcoming
Abstract:
The authors study the effect of the minimum wage on the employment outcomes and Social Security claiming of older US workers from 1983 to 2016. The probability of work at or near the minimum wage increases substantially near retirement, and previous researchers and policies suggest that older workers may be particularly vulnerable to any disemployment effects of the minimum wage. Results show no evidence that the minimum wage causes earlier retirements. Instead, estimates suggest that higher minimum wages increase earnings and may have small positive effects on the labor supply of workers in the key ages of 62 to 70. Consistent with increased earnings and delayed retirement, higher minimum wages decrease the number of Social Security beneficiaries and amount of benefits disbursed. The minimum wage appears to increase financial resources for workers near retirement.
Military Service and Public Sector Employment: Birthdates Called in the Vietnam Draft Lotteries Appear Excessively in the Population of Civilian U.S. Federal Personnel Records
Tim Johnson & Dalton Conley
NBER Working Paper, May 2019
Abstract:
Since at least T.H. Marshall, scholars have recognized military service as a form of sacrifice that warrants compensation from the state. Indeed, some see the very genesis of the modern welfare state as compensation for wartime sacrifice. War-widow pensions, expansion of the franchise, and subsidized higher education are all examples of rights and benefits "bestowed" in return for wartime mobilization. Similarly, in the U.S., governments have hired veterans preferentially for civilian public jobs as recompense for active military service. Although oft-overlooked, those policies appear influential: the percent of job holders identifying as veterans in the civilian U.S. executive branch exceeds the proportion in the wider population by several multiples. This century-old pattern suggests a significant means by which wartime mobilization has influenced the state. Yet efforts to understand it have struggled to rule out the possibility that those who serve in the armed forces are predisposed to work for the state in both military and civilian capacities (for example, preferring the stability of government employment). Here we rule out this possibility by examining whether birthdates randomly called for induction in the Vietnam-Era Selective Service Lotteries (VSSL) appear disproportionately in the population of non-sensitive personnel records of the civilian U.S. executive branch. We find that birthdates called for induction appear with unusually high frequency among employees who were draft eligible and at risk of induction, but not among other employees. This finding suggests a treatment effect from military service, thus dovetailing with the hypothesis that wartime mobilization has substantially and continually influenced who works in the contemporary administrative state.
Effects of FDI on Entrepreneurship: Evidence from Right-to-Work and Non-Right-to-Work States
Ozkan Eren, Masayuki Onda & Bulent Unel
Labour Economics, June 2019, Pages 98-109
Abstract:
This paper investigates the impact of Foreign Direct Investment (FDI) on entrepreneurial activity at the individual-owner level in U.S. states between 1996 and 2008. Our results indicate that FDI has no effect on entrepreneurship in pro-business states identified by the existence of Right-to-Work (RTW) laws. In non-RTW states, however, we find that an increase in FDI decreases the average monthly rate of business creation and destruction. Specifically, a 10-percent increase in FDI decreases the average monthly rate of business creation and destruction by roughly 4 and 2.5 percent (relative to the sample mean), respectively.