Job numbers
The Great Reversal in the Demand for Skill and Cognitive Tasks
Paul Beaudry, David Green & Benjamin Sand
NBER Working Paper, March 2013
Abstract:
What explains the current low rate of employment in the US? While there has been substantial debate over this question in recent years, we believe that considerable added insight can be derived by focusing on changes in the labor market at the turn of the century. In particular, we argue that in about the year 2000, the demand for skill (or, more specifically, for cognitive tasks often associated with high educational skill) underwent a reversal. Many researchers have documented a strong, ongoing increase in the demand for skills in the decades leading up to 2000. In this paper, we document a decline in that demand in the years since 2000, even as the supply of high education workers continues to grow. We go on to show that, in response to this demand reversal, high-skilled workers have moved down the occupational ladder and have begun to perform jobs traditionally performed by lower-skilled workers. This de-skilling process, in turn, results in high-skilled workers pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force all together. In order to understand these patterns, we offer a simple extension to the standard skill biased technical change model that views cognitive tasks as a stock rather than a flow. We show how such a model can explain the trends in the data that we present, and offers a novel interpretation of the current employment situation in the US.
----------------------
Christopher Hsee et al.
Psychological Science, forthcoming
Abstract:
High productivity and high earning rates brought about by modern technologies make it possible for people to work less and enjoy more, yet many continue to work assiduously to earn more. Do people overearn - forgo leisure to work and earn beyond their needs? This question is understudied, partly because in real life, determining the right amount of earning and defining overearning are difficult. In this research, we introduced a minimalistic paradigm that allows researchers to study overearning in a controlled laboratory setting. Using this paradigm, we found that individuals do overearn, even at the cost of happiness, and that overearning is a result of mindless accumulation - a tendency to work and earn until feeling tired rather than until having enough. Supporting the mindless-accumulation notion, our results show, first, that individuals work about the same amount regardless of earning rates and hence are more likely to overearn when earning rates are high than when they are low, and second, that prompting individuals to consider the consequences of their earnings or denying them excessive earnings can disrupt mindless accumulation and enhance happiness.
----------------------
Martin Obschonka et al.
Journal of Personality and Social Psychology, forthcoming
Abstract:
In recent years the topic of entrepreneurship has become a major focus in the social sciences, with renewed interest in the links between personality and entrepreneurship. Taking a socioecological perspective to psychology, which emphasizes the role of social habitats and their interactions with mind and behavior, we investigated regional variation in and correlates of an entrepreneurship-prone Big Five profile. Specifically, we analyzed personality data collected from over half a million U.S. residents (N = 619,397) as well as public archival data on state-level entrepreneurial activity (i.e., business-creation and self-employment rates). Results revealed that an entrepreneurship-prone personality profile is regionally clustered. This geographical distribution corresponds to the pattern that can be observed when mapping entrepreneurial activity across the United States. Indeed, the state-level correlation (N = 51) between an entrepreneurial personality structure and entrepreneurial activity was positive in direction, substantial in magnitude, and robust even when controlling for regional economic prosperity. These correlations persisted at the level of U.S. metropolitan statistical areas (N = 15) and were replicated in independent German (N = 19,842; 14 regions) and British (N = 15,617; 12 regions) samples. In contrast to these profile-based analyses, an analysis linking the individual Big Five dimensions to regional measures of entrepreneurial activity did not yield consistent findings. Discussion focuses on the implications of these findings for interdisciplinary theory development and practical applications.
----------------------
Inefficient Hiring in Entry-Level Labor Markets
Amanda Pallais
NBER Working Paper, March 2013
Abstract:
Hiring inexperienced workers generates information about their abilities. If this information is public, workers obtain its benefits. If workers cannot compensate firms for hiring them, firms will hire too few inexperienced workers. I determine the effects of hiring workers and revealing more information about their abilities through a field experiment in an online marketplace. I hired 952 randomly-selected workers, giving them either detailed or coarse public evaluations. Both hiring workers and providing more detailed evaluations substantially improved workers' subsequent employment outcomes. Under plausible assumptions, the experiment's market-level benefits exceeded its cost, suggesting that some experimental workers had been inefficiently unemployed.
----------------------
Minimum Wage Increases in a Recessionary Environment
John Addison, McKinley Blackburn & Chad Cotti
Labour Economics, August 2013, Pages 30-39
Abstract:
Do seemingly large minimum-wage increases in an environment of deep recession produce clearer evidence of disemployment than is often observed in the modern minimum wage literature? This paper uses three data sets to examine the employment effects of the most recent increases in the U.S. minimum wage. We focus on two high-risk groups - restaurant-and-bar employees and teenagers - for the years 2005-2010. Although the evidence for a general disemployment effect is not uniform, estimates do suggest the presence of a negative minimum wage effect in states hardest hit by the recession.
----------------------
Manufacturing Decline, Housing Booms, and Non-Employment
Kerwin Kofi Charles, Erik Hurst & Matthew Notowidigdo
NBER Working Paper, April 2013
Abstract:
We assess the extent to which manufacturing decline and housing booms contributed to changes in U.S. non-employment during the 2000s. Using a local labor market design, we estimate that manufacturing decline significantly increased non-employment during 2000-2007, while local housing booms decreased non-employment by roughly the same magnitude. The effects of manufacturing decline persist through 2011, but we find no persistent non-employment effects of local housing booms, most plausibly because housing booms were associated with subsequent busts of similar magnitude. We also find that housing booms significantly reduce the likelihood that displaced manufacturing workers remain non-employed, suggesting that housing booms "mask" non-employment growth that would have otherwise occurred earlier in the absence of the booms. Applying our estimates to the national labor market, we find that housing booms reduced non-employment growth by roughly 30 percent during 2000-2007 and that roughly 40 percent of the aggregate increase in non-employment during 2000-2011 can be attributed to manufacturing decline. Collectively, our results suggest that much of the non-employment growth during the 2000s can be attributed to manufacturing decline and these effects would have appeared in aggregate statistics earlier had it not been for the large, temporary increases in housing demand.
----------------------
The Impact of Minimum Wages on Labour Market Transitions
Pierre Brochu & David Green
Economic Journal, forthcoming
Abstract:
We investigate differences in labour market transition rates between high and low minimum wage regimes using Canadian data spanning 1979 to 2008. We find that higher minimum wages result in lower hiring rates but also lower job separation rates. Importantly, the reduced separation rates are due mainly to reductions in layoffs, occur in the first 6 months of a job, and are present for unskilled workers of all ages. Thus, jobs in higher minimum wage regimes are more stable but harder to get. For older workers, these effects are almost exactly offsetting, resulting in little impact on the employment rate.
----------------------
Local Deficits and Local Jobs: Can U.S. States Stabilize Their Own Economies?
Gerald Carlino & Robert Inman
NBER Working Paper, March 2013
Abstract:
Using a sample of the 48 mainland U.S. states for the period 1973-2009, we study the ability of U.S. states to expand own state employment through the use of state deficit policies. The analysis allows for the facts that U.S. states are part of a wider monetary and economic union with free factor mobility across all states and that state residents and firms may purchase goods from "neighboring" states. Those purchases may generate economic spillovers across neighbors. Estimates suggest that states can increase own state employment by increasing their own deficits. There is evidence of spillovers to employment in neighboring states defined by common cyclical patterns among state economies. For large states, aggregate spillovers to its economic neighbors are approximately two-thirds of own state job growth. Because of significant spillovers and possible incentives to free-ride, there is a potential case to actively coordinate (i.e., centralize) the management of stabilization policies. Finally, job effects of a temporary increase in state own deficits persist for at most one to two years and there is evidence of negative job effects when these deficits are scheduled for repayment.
----------------------
Spillovers from High-Skill Consumption to Low-Skill Labor Markets
Francesca Mazzolari & Giuseppe Ragusa
Review of Economics and Statistics, March 2013, Pages 74-86
Abstract:
The least-skilled workforce in the United States is disproportionally employed in the provision of time-intensive services that can be thought of as market substitutes for home production activities. At the same time, skilled workers, with their high opportunity cost of time, spend a larger fraction of their budget in these services. Given the skill asymmetry between consumers and providers in this market, product demand shifts - such as those arising when relative skilled wages increase - should boost relative labor demand for the least-skilled workforce. We estimate that this channel may explain one-third of the growth of employment of noncollege workers in low-skill services in the 1990s.
----------------------
Targeted Business Incentives and Local Labor Markets
Matthew Freedman
Journal of Human Resources, Spring 2013, Pages 311-344
Abstract:
This paper uses a regression discontinuity design to examine the effects of geographically targeted business incentives on local labor markets. Unlike elsewhere in the United States, enterprise zone (EZ) designations in Texas are determined in part by a cutoff rule based on census block group poverty rates. Exploiting this discontinuity as a source of quasi-experimental variation in investment and hiring incentives across areas, I find that EZ designation has a positive effect on resident employment, increasing opportunities mainly in lower-paying industries. While business sitings spurred by the program are more geographically diffuse, EZ designation is associated with increases in home values.
----------------------
House Prices, Collateral and Self-Employment
Manuel Adelino, Antoinette Schoar & Felipe Severino
NBER Working Paper, March 2013
Abstract:
This paper documents the role of the collateral lending channel to facilitate small business starts and self-employment in the period before the financial crisis of 2008. We document that between 2002 and 2007 areas with a bigger run up in house prices experienced a strong increase in employment in small businesses compared to employment in large firms in the same industries. This increase in small business employment was particularly pronounced in (1) industries that need little startup capital and can thus more easily be financed out of increases in housing as collateral; (2) manufacturing industries where goods are shipped over long distances, which rules out that local demand is driving the expansion. We show that this effect is separate from an aggregate demand channel that relies on home equity based borrowing leading to increased demand and employment creation.
----------------------
The Impact of Business Cycle Fluctuations on Graduate School Enrollment
Matthew Johnson
Economics of Education Review, June 2013, Pages 122-134
Abstract:
This paper adds to the understanding of student decisions about graduate school attendance by studying the magnitude of the effect of business cycle fluctuations on enrollment. I use data on graduate school enrollment from the Current Population Survey and statewide variation in unemployment rates across time to proxy for changes in business cycle conditions. I find that overall graduate school enrollment is countercyclical for females and acyclical for males. I show that changes in the unemployment rate have non-linear impacts on female enrollment and that poor labor market conditions lead to a substitution from full-time enrollment to part-time enrollment for both genders.
----------------------
Matthew Bidwell
Organization Science, forthcoming
Abstract:
Recent declines in the average length of time that U.S. workers spend with a given employer represent an important change in the nature of the employment relationship, yet it is one whose causes are poorly understood. I explore those causes using Current Population Survey data on the tenure of men aged 30-65, from the years 1979-2008. I argue that long-term employment relationships primarily occur when workers pressure employers to close off employment from market competition, reducing the attractiveness of external mobility relative to internal opportunities and increasing employment security. I then explore how two changes in organizations' environments - a decline in union strength and increased turbulence from changes in technology and globalization - might have affected workers' ability to secure such closed employment relationships over the last 30 years. My results support the argument that declines in tenure reflect the reduced power of workers to secure closed employment relationships. Recent declines in tenure have been concentrated in large organizations, and many of those declines are explained by controlling for the changing levels of industry unionization. I find little evidence that foreign competition or technological change affected mobility. The results are robust to measures of changing industry growth rates and within-industry reorganization. Supplementary analyses suggest that layoffs are associated with different industry pressures than tenure and that voluntary mobility may have played an important role in declines in tenure.
----------------------
The Employment Effects of State Hiring Credits During and After the Great Recession
David Neumark & Diego Grijalva
NBER Working Paper, March 2013
Abstract:
State and federal policymakers grappling with the aftermath of the Great Recession have sought ways to spur job creation, in many cases adopting hiring credits to encourage employers to create new jobs. However, there is virtually no evidence on the effects of these kinds of counter-recessionary hiring credits - the only evidence coming from much earlier studies of the New Jobs Tax Credit from the 1970s. This paper provides evidence on the effect on job growth of hiring credits adopted during the Great Recession. For many of the types of hiring credits we examine we do not find positive effects on job growth. However, some specific types of hiring credits - including those targeting the unemployed and those that allow states to recapture credits when job creation goals are not met - appear to have succeeded in boosting job growth. At the same time, some credits appear to generate hiring without increasing employment or to generate much more hiring than net employment growth, consistent with these credits leading to churning of employees that raises the costs of producing jobs via hiring credits.
----------------------
Proprietorship and unemployment in the United States
Stephan Gohmann & Jose Fernandez
Journal of Business Venturing, forthcoming
Abstract:
Unemployment and proprietorship can be related in several ways. As unemployment increases, individuals with fewer job alternatives may choose to start their own business resulting in an increase in proprietorship. Alternatively, if an increase in unemployment is the result of a depressed economy, higher unemployment may lead to less demand for the products and services of proprietors, thus reducing proprietorship. Finally, greater proprietorship may lead to future increases in employment as these businesses grow. This can potentially reduce unemployment in the long run. We apply a panel vector autoregressive model to unemployment and proprietorship data from the U.S. states for the years 1976 to 2009 to examine if these effects are apparent in the data. We find that unemployment Granger causes proprietorship, but proprietorship does not Granger cause unemployment.
----------------------
The Growth of Low Skill Service Jobs and the Polarization of the U.S. Labor Market
David Autor & David Dorn
American Economic Review, forthcoming
Abstract:
We offer an integrated explanation and empirical analysis of the polarization of U.S. employment and wages between 1980 and 2005, and the concurrent growth of low skill service occupations. We attribute polarization to the interaction between consumer preferences, which favor variety over specialization, and the falling cost of automating routine, codifiable job tasks. Applying a spatial equilibrium model, we derive, test, and confirm four implications of this hypothesis. Local labor markets that were specialized in routine activities differentially adopted information technology, reallocated low skill labor into service occupations (employment polarization), experienced earnings growth at the tails of the distribution (wage polarization), and received inflows of skilled labor.
----------------------
The Ins and Outs of Forecasting Unemployment: Using Labor Force Flows to Forecast the Labor Market
Regis Barnichon & Christopher Nekarda
Brookings Papers on Economic Activity, Fall 2012, Pages 83-131
Abstract:
This paper presents a forecasting model of unemployment based on labor force flows data that, in real time, dramatically outperforms the Survey of Professional Forecasters, historical forecasts from the Federal Reserve Board's Greenbook, and basic time-series models. Our model's forecast has a root-mean-squared error about 30 percent below that of the next-best forecast in the near term and performs especially well surrounding large recessions and cyclical turning points. Further, because our model uses information on labor force flows that is likely not incorporated by other forecasts, a combined forecast including our model's forecast and the SPF forecast yields an improvement over the latter alone of about 35 percent for current-quarter forecasts, and 15 percent for next-quarter forecasts, as well as improvements at longer horizons.