Job openings
Entrepreneurship and Urban Growth: An Empirical Assessment with Historical Mines
Edward Glaeser, Sari Pekkala Kerr & William Kerr
Harvard Working Paper, August 2012
Abstract:
Measures of entrepreneurship, such as average establishment size and the prevalence of start-ups, correlate strongly with employment growth across and within metropolitan areas, but the endogeneity of these measures bedevils interpretation. Chinitz (1961) hypothesized that coal mines near Pittsburgh led that city to specialization in industries, like steel, with significant scale economies and that those big firms led to a dearth of entrepreneurial human capital across several generations. We test this idea by looking at the spatial location of past mines across the United States: proximity to historical mining deposits is associated with bigger firms and fewer start-ups in the middle of the 20th century. We use mines as an instrument for our entrepreneurship measures and find a persistent link between entrepreneurship and city employment growth; this connection works primarily through lower employment growth of start-ups in cities that are closer to mines. These effects hold in cold and warm regions alike and in industries that are not directly related to mining, such as trade, finance and services. We use quantile instrumental variable regression techniques and identify mostly homogeneous effects throughout the conditional city growth distribution.
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Chinese graduate students and U.S. scientific productivity
Patrick Gaulé & Mario Piacentini
Review of Economics and Statistics, forthcoming
Abstract:
The migration of young Chinese scientists to undertake graduate studies in U.S. universities is arguably one of the most important recent episodes of skilled migration. Using a new dataset covering around 16,000 PhD graduates in 161 U.S. chemistry departments, we show that Chinese students have a scientific output during their thesis that is significantly higher than other students. In fact, conditional on acceptance into the same programs, Chinese students perform about as well as the awardees of the NSF doctoral fellowship program. These results shed new light on the benefits of student migration on scientific productivity of destination countries.
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The (Non) Impact of Minimum Wages on Poverty: Regression and Simulation Evidence for Canada
Michele Campolieti, Morley Gunderson & Byron Lee
Journal of Labor Research, September 2012, Pages 287-302
Abstract:
We estimate the effect of minimum wages on poverty for Canada using data from the Survey of Labour and Income Dynamics (SLID) for 1997 to 2007 and find that minimum wages do not have a statistically significant effect on poverty and this finding is robust across a number of specifications. Our simulation results, based on the March 2008 Labour Force Survey (LFS), find that only about 30 % of the net earnings gain from minimum wage increases goes to the poor while about 70 % "spill over" into the hands of the non-poor. Furthermore, we find that job losses are disproportionately concentrated on the poor. Our results highlight that, political rhetoric not-withstanding, minimum wages are poorly targeted as an anti-poverty device and are at best an exceedingly blunt instrument for dealing with poverty.
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Using Differences in Knowledge Across Neighborhoods to Uncover the Impacts of the EITC on Earnings
Raj Chetty, John Friedman & Emmanuel Saez
NBER Working Paper, July 2012
Abstract:
We develop a new method of estimating the impacts of tax policies that uses areas with little knowledge about the policy's marginal incentives as counterfactuals for behavior in the absence of the policy. We apply this method to characterize the impacts of the Earned Income Tax Credit (EITC) on earnings using administrative tax records covering all EITC-eligible filers from 1996-2009. We begin by developing a proxy for local knowledge about the EITC schedule - the degree of "sharp bunching" at the exact income level that maximizes EITC refunds by individuals who report self-employment income. The degree of self-employed sharp bunching varies significantly across geographical areas in a manner consistent with differences in knowledge. For instance, individuals who move to higher-bunching areas start to report incomes closer to the refund-maximizing level themselves, while those who move to lower-bunching areas do not. Using this proxy for knowledge, we compare W-2 wage earnings distributions across neighborhoods to uncover the impact of the EITC on real earnings. Areas with high self-employed sharp bunching (i.e., high knowledge) exhibit more mass in their W-2 wage earnings distributions around the EITC plateau. Using a quasi-experimental design that accounts for unobservable differences across neighborhoods, we find that changes in EITC incentives triggered by the birth of a child lead to larger wage earnings responses in higher bunching neighborhoods. The increase in EITC refunds comes primarily from intensive-margin increases in earnings in the phase-in region rather than reductions in earnings in the phase-out region. The increase in EITC refunds is commensurate to a phase-in earnings elasticity of 0.14 on average across the U.S. and 0.58 in high-knowledge neighborhoods.
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The Labor Market Impact of Mandated Employment Verification Systems
Catalina Amuedo-Dorantes & Cynthia Bansak
American Economic Review, May 2012, Pages 543-548
Abstract:
Employment verification systems covered about one out of four people hired in the United States in 2010. In this paper, we evaluate the impact of state-level employment verification mandates on the employment and wages of likely unauthorized workers across the entire United States between 2004 and 2010. We find that E-Verify mandates, particularly those covering all employers, significantly curtail the employment likelihood of likely unauthorized male and female workers. However, they appear to have mixed effects on wages and may redistribute likely unauthorized labor towards industries often benefiting from specific exclusions, such as agriculture or food services.
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The EITC, Tax Refunds, and Unemployment Spells
Sara LaLumia
American Economic Journal: Economic Policy, forthcoming
Abstract:
The Earned Income Tax Credit generates large average tax refunds for low-income parents, and these refunds are distributed in a narrow time frame. I rely on this plausibly exogenous source of variation in liquidity to investigate the effect of cash-on-hand on unemployment duration. Among EITC-eligible women, unemployment spells beginning just after tax refund receipt last longer than unemployment spells beginning at other times of year. There is no evidence that tax refund receipt is associated with longer unemployment duration for men, or that the longer durations for women are associated with higher-quality subsequent job matches.
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The Effect of Trade and Migration on Income
Francesc Ortega & Giovanni Peri
NBER Working Paper, July 2012
Abstract:
This paper explores the relationship between openness to trade and to immigration on income per person. To address endogeneity concerns we extend the instrumental-variables strategy first used by Frankel and Romer (1999). We show that distance (geographical and cultural) can be used to build a strong predictor of openness to immigration and to trade. Our instrumental-variables estimates establish a robust, positive effect of openness to immigration on long-run income per capita, using demanding econometric specifications that account for trade openness, the role of institutions, and early development. In contrast the positive effect of trade openness on income is not robust to controlling for the direct effects of geography, providing support for the critique by Rodriguez and Rodrik (2001). We also show that the main effect of migration operates through total factor productivity, consistent with a theory where immigration increases the variety of skills available for production. We provide further evidence in support of this mechanism by showing that the degree of diversity (by origin country) in migration flows has an additional positive effect on income. Finally, we also find that immigration increases (ethnic and linguistic) fractionalization, which are associated to negative effects on income per capita. However, the direct gains from greater skill diversity appear to be larger than the costs arising from increased fractionalization. We do not find evidence of increased income inequality due to openness to immigration or trade.
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A Search and Matching Approach to Labor Markets: Did the Natural Rate of Unemployment Rise?
Mary Daly et al.
Journal of Economic Perspectives, Summer 2012, Pages 3-26
Abstract:
The U.S. unemployment rate has remained stubbornly high since the 2007-2009 recession, leading some observers to conclude that structural rather than cyclical factors are to blame. Relying on a standard job search and matching framework and empirical evidence from a wide array of labor market indicators, we examine whether the natural rate of unemployment has increased since the recession began, and if so, whether the underlying causes are transitory or persistent. Our preferred estimate indicates an increase in the natural rate of unemployment of about one percentage point during the recession and its immediate aftermath, putting the current natural rate at around 6 percent. An assessment of the underlying factors responsible for this increase, including labor market mismatch, extended unemployment benefits, and uncertainty about overall economic conditions, implies that only a small fraction is likely to be persistent.
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Toward a More Comprehensive Measure of Labor Underutilization: The Alabama Case
Samuel Addy, Michaël Bonnal & Cristina Lira
Business Economics, July 2012, Pages 214-227
Abstract:
Workers in occupations that underutilize their education or training, experience, and skills are underemployed. This worker underemployment presents economic development opportunities through selective job creation and industry growth. Businesses benefit because such underemployment information provides more realistic estimates of the available labor pool in an area. It also provides the potential to improve firm output and profits by using the information to enhance productivity and performance, as well as reduce turnover. However, the U.S. Bureau of Labor Statistics' (BLS) measures of labor underutilization do not consider underemployment among full-time workers and thus provide incomplete information on the full extent of underemployment. Four surveys on Alabama's working age population show that underemployment is present among full-time workers and is a multiple of the unemployment rate. We combine underemployment estimated from the surveys with the U-5 BLS measure of labor underutilization to develop a more comprehensive measure called CMLU5. The methods developed in this study can be applied to labor markets at the county level and above anywhere in the United States.
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Ayşegül Şahin et al.
NBER Working Paper, August 2012
Abstract:
We develop a framework where mismatch between vacancies and job seekers across sectors translates into higher unemployment by lowering the aggregate job-finding rate. We use this framework to measure the contribution of mismatch to the recent rise in U.S. unemployment by exploiting two sources of cross-sectional data on vacancies, JOLTS and HWOL, a new database covering the universe of online U.S. job advertisements. Mismatch across industries and occupations explains at most 1/3 of the total observed increase in the unemployment rate, whereas geographical mismatch plays no apparent role. The share of the rise in unemployment explained by occupational mismatch is increasing in the education level.
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Creativity and the crisis: The impact of creative workers on regional unemployment
Kevin Stolarick & Elizabeth Currid-Halkett
Cities, forthcoming
Abstract:
Over the past several years, we have witnessed the most severe economic crisis since the Great Depression. In this paper, we seek to understand how regional occupational structures are associated with metropolitan areas that have rebounded (or have not felt the recession much at all) and those regions that have been unable to recover their economies. In particular, we analyze the impact of the creative class in comparison with other occupational groups. Using Bureau of Labor Statistics unemployment statistics from July 2007 to February 2011, we study the composition of 369 metropolitan areas to observe whether there are patterns in unemployment rates and distribution of occupational groups. We study these cities through five distinct periods during this time period: Stable, Crisis, Unemployment Expansion, Peak and Post-Peak. We find that having a strong concentration of the creative class going into the crisis is associated with lower unemployment rates throughout the studied period. Like the creative class, highly skilled human capital is associated with lower unemployment throughout the studied period but proves to be a less influential variable in our regression results.
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Relationship Between Growth and Prosperity in the 100 Largest U.S. Metropolitan Areas
Eben Fodor
Economic Development Quarterly, August 2012, Pages 220-230
Abstract:
This study examines the relationship between growth and economic prosperity in the 100 largest U.S. metropolitan areas to determine whether certain benefits commonly attributed to growth are supported by statistical data. The annual population growth rate of each metro area from 2000 to 2009 is used to compare economic well-being in terms of per capita income, unemployment rate, and poverty rate. The study finds that faster growth rates are associated with lower incomes, greater income declines, and higher poverty rates. Unemployment rates tend to be higher in faster growing areas, though the correlation is not statistically significant at the 95% confidence level. The 25 slowest growing metro areas outperformed the 25 fastest growing in every category and averaged $8,455 more in per capita personal income in 2009.
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Health and Work At Older Ages: Using Mortality To Assess Employment Capacity Across Countries
Kevin Milligan & David Wise
NBER Working Paper, July 2012
Abstract:
While longevity increased substantially over the last 50 years and health at older ages has improved, labor force participation at older ages has declined. We use mortality rates as a marker for the "health capacity" to work at older ages in 12 OECD countries. Mortality rates can be compared across countries and over time within the same country. For a given level of mortality, we find employment rates of older men vary substantially through time and across countries. At each mortality rate in 2007, if men in France worked as much as men in the United States, they would work 4.6 years more over ages 55 to 69 than they actually did. Comparing the work and mortality of American men in 2007 to the base year of 1977, the same calculation yields 3.7 years more work. These findings suggest a large increase in the health capacity to work, as measured by mortality. The relationship between cross-country mortality and changes in work over time at older ages is weak, suggesting the take-up of this extra capacity to work has varied. However, the dispersion in employment given mortality is strongly influenced by the retirement incentives inherent in public pension programs.
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Creative Employment and Jet Set Cities: Disentangling Causal Effects
Zachary Neal
Urban Studies, September 2012, Pages 2693-2709
Abstract:
Whether people follow jobs or jobs follow people has been a central question in urban economics for decades. Because urban leaders increasingly focus on creative jobs as a growth strategy and because temporary city visitors play an increasingly significant role in economic processes, this study addresses a modified version of this question: do air passengers follow creative jobs (the flow generation hypothesis), or do creative jobs follow air passengers (the structural advantage hypothesis). The results indicate that both processes are in operation, but at different times. Air passengers follow creative jobs during periods of national economic decline, while creative jobs follow air passengers during periods of national economic growth. These findings suggest that city leaders must adopt an urban growth strategy that evolves with changing national economic conditions.
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High-Skilled Migrants: S&E Workers in the United States
Philip Martin
American Behavioral Scientist, August 2012, Pages 1058-1079
Abstract:
Universities and employers want easier access to foreign science and engineering (S&E) students and workers. Most U.S. residents with degrees in S&E fields are U.S.-born citizens, and there are far more U.S. citizens with S&E degrees, about 15 million, than are employed in S&E occupations, about 5 million. Foreign students and workers in S&E occupations are concentrated in computer-related jobs, and their presence raises trade-offs for U.S. students and workers. For example, making it easier for U.S. employers to hire foreign S&E workers allows employers to specify precisely the qualities desired to fill a particular job quickly while limiting options for U.S. workers who could fill that job with some retraining. This article reviews the trade-offs between the competing goods raised by foreign S&E students and workers and the efforts of U.S. government agencies to reconcile them.
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The Determinants of National Competitiveness
Mercedes Delgado et al.
NBER Working Paper, July 2012
Abstract:
We define foundational competitiveness as the expected level of output per working-age individual that is supported by the overall quality of a country as a place to do business. The focus on output per potential worker, a broader measure of national productivity than output per current worker, reflects the dual role of workforce participation and output per worker in determining a nation's standard of living. Our framework highlights three broad and interrelated drivers of foundational competitiveness: social infrastructure and political institutions, monetary and fiscal policy, and the microeconomic environment. We estimate this framework using multiple data sets covering more than 130 countries over the 2001-2008 period. We find a positive and separate influence of each driver on output per potential worker. The microeconomic environment has a positive effect on output per potential worker even after controlling for historical legacies. Using our framework we define a new concept, global investment attractiveness, which is the cost of factor inputs relative to a country's competitiveness. This analysis reveals important insight into the economic trajectory of individual countries. Our framework also offers a novel methodology for the estimation of a theoretically grounded and empirically validated measure of national competitiveness.
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Migration to U.S. Frontier Cities and Job Opportunity, 1860-1880
James Stewart
Explorations in Economic History, forthcoming
Abstract:
I use a new sample of families linked between the 1860 and 1880 U.S. censuses to study the impact of migration to frontier cities on job holding. Using variation in transportation costs between different regions of the country to generate exogenous migration, I find frontier city migration had significant job-holding benefits. The impact of migration on job holding was 68 percent greater for immigrants than for the native born. Expectations about job holding were the most important factor in the decision to migrate to a frontier city. Clerical workers, unskilled blue-collar workers, immigrants, and the poor were also the most likely to migrate. These results show the benefits of geographic mobility and suggest the contribution of frontier cities to economic opportunity in America's past.
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The evolution of markets and the revolution of industry: A unified theory of growth
Klaus Desmet & Stephen Parente
Journal of Economic Growth, September 2012, Pages 205-234
Abstract:
This paper puts forth a theory of the Industrial Revolution whereby an economy transitions from Malthusian stagnation to modern economic growth as firms implement cost-reducing production technologies. This take-off of industry occurs once the market reaches a critical size. The mechanism by which market size affects process innovation relies on two overlooked facts pre-dating England's Industrial Revolution: the expansion in the variety of consumer goods and the increase in firm size. We demonstrate this mechanism in a dynamic general equilibrium model calibrated to England's long-run development, and explore how various factors affected the timing of its industrialization.
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Estimating the Effect of the Age Distribution on Cyclical Output Volatility Across the United States
Steven Lugauer
Review of Economics and Statistics, forthcoming
Abstract:
I exploit the variation in demographic change across the United States to estimate the relationship between the age distribution in the population and the magnitude of cyclical output volatility. According to panel regression estimates the relative supply of young workers, or youth share, has a statistically significant effect on the volatility of state-by-state gross domestic product. Moreover, changes to the age distribution can account for up to 58% of the recent reduction in business cycle fluctuations, indicating a critical link between the youth share and output volatility.
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Teaching the Tax Code: Earnings Responses to an Experiment with EITC Recipients
Raj Chetty & Emmanuel Saez
American Economic Journal: Applied Economics, forthcoming
Abstract:
This paper tests whether providing information about the Earned Income Tax Credit (EITC) affects EITC recipients' earnings decisions. We conducted a randomized experiment with 43,000 EITC recipients at H&R Block in which tax preparers gave simple, personalized information about the EITC schedule to half of their clients. We find no significant effects of information provision on earnings in the subsequent year in the full sample. Further exploration uncovers evidence of heterogeneous treatment effects on both self-employment income and wage earnings across the 1,461 tax professionals who assisted the clients involved in the experiment. We conclude that providing information about tax incentives through tax preparers does not systematically affect earnings on average. However, tax preparers may be able to influence their clients' earnings decisions by providing advice about how to respond to tax incentives.
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Learning in Place: Immigrants' Spatial and Temporal Strategies for Occupational Advancement
Natasha Iskander, Christine Riordan & Nichola Lowe
Economic Geography, forthcoming
Abstract:
Studies of low-wage workers have long recognized the role of space in mediating access to employment. Significantly less attention has been paid to the ways in which space informs workers' ability to develop the attributes that would make them more employable. In this article, we address this gap through an examination of how immigrant workers use the relative spatial organization of residence and production to cultivate the skills that enable them to shift out of low-wage occupations. We also argue that workers' spatial job market strategies have an important, but often overlooked, temporal aspect: workers use space over time not only to shape their access to jobs but also to create breathing room for learning skills that enable them to improve their employment trajectories over the long term. Drawing on a multiyear ethnographic study of Mexican immigrants in downtown Philadelphia, we show that immigrant workers used the functional proximity among the restaurant industry, small-scale residential construction work pertaining to housing renovation, and the neighborhoods where they lived to develop skill sets that enabled them to shift into higher-wage construction jobs. In essence, these workers knitted together two seemingly separate industries, such that they could use their employment time in one for learning in and about the other. Our study suggests that interventions that curtail immigrants' mobility may have implications that are far more serious than limiting immediate access to jobs: these measures may undercut immigrants' strategies for developing the skills required for long-term occupational mobility and advancement.
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Child day-labourers in agriculture: Evidence from farm accounts, 1740-1850
Joyce Burnette
Economic History Review, August 2012, Pages 1077-1099
Abstract:
While child labour has always been an important part of the industrial revolution story, there is little quantitative evidence about the number of child workers in the 1740-1850 period. This article estimates trends in the percentage of the agricultural day-labouring workforce that were children. By using the wage level to identify child workers, it is possible to estimate child labour for a large sample of English farms. It is found that girls were rarely employed as day-labourers, while boys were employed about as frequently as women. The percentage of boys in the day-labour workforce increased until the 1820s and then declined.