Labor action
Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share
David Autor & Anna Salomons
NBER Working Paper, July 2018
Abstract:
Many technological innovations replace workers with machines, but this capital-labor substitution need not reduce aggregate labor demand because it simultaneously induces four countervailing responses: own-industry output effects; cross-industry input–output effects; between-industry shifts; and final demand effects. We quantify these channels using four decades of harmonized cross-country and industry data, where we measure automation as industry-level movements in total factor productivity (TFP) that are common across countries. We find that automation displaces employment and reduces labor's share of value-added in the industries in which it originates (a direct effect). In the case of employment, these own-industry losses are reversed by indirect gains in customer industries and induced increases in aggregate demand. By contrast, own-industry labor share losses are not recouped elsewhere. Our framework can account for a substantial fraction of the reallocation of employment across industries and the aggregate fall in the labor share over the last three decades. It does not, however, explain why the labor share fell more rapidly during the 2000s.
Do Low-Wage Employers Discriminate Against Applicants with Long Commutes? Evidence from a Correspondence Experiment
David Phillips
Journal of Human Resources, forthcoming
Abstract:
I use a correspondence study of the low-wage labor market in Washington, DC to test whether employers discriminate against applicants who live farther from the job location. Fictional résumés randomly assigned to have addresses far from the job location receive 14% fewer callbacks than those with addresses in nearby but similarly affluent neighborhoods. Living 5–6 miles away from the job results in a penalty equal to that received by applicants with stereotypically black names. On the other hand, holding commute distance constant, I find no statistical evidence that employers respond to a neighborhood’s affluence.
(Why) Is There a Public/Private Pay Gap?
Christos Makridis
MIT Working Paper, July 2018
Abstract:
The government is facing a severe shortage of skilled workers, especially in information technology and cyber security jobs. The conventional wisdom in branches of policy and public administration is that the shortage is driven by low salaries that are not competitive for attracting top talent. Using longitudinal data on high skilled workers between 1993 and 2013, this paper shows that, if anything, government employees earn more than their private sector counterparts. Although government workers tend to earn less in the raw data, these differences are driven by the correlation between unobserved ability and selection into private sector jobs. These results are robust to additional data from the Census Bureau between 2005 and 2016. Instead, this paper shows that a more plausible culprit behind the worker shortage in government is a lack of development opportunities and poor management.
Aging, Output Per Capita and Secular Stagnation
Gauti Eggertsson, Manuel Lancastre & Lawrence Summers
NBER Working Paper, August 2018
Abstract:
This paper re-examines the relationship between population aging and economic growth. We confirm previous research such as Cutler, Poterba, Sheiner, and Summers (1990) and Acemoglu and Restrepo (2017) that show positive correlation between measures of population aging and per-capita output growth. Our contribution is demonstrating that this relationship breaks down when the adjustment of interest rates is inhibited by an effective lower bound on nominal rates as took place during the Great Financial Crisis decade. Indeed, during the “secular stagnation regime” of 2008-2015 that prevailed in a number of countries, aging had a negative impact on living standards, consistent with the secular stagnation hypothesis.
The Dark Side of Technological Progress? Impact of E-Commerce on Employees at Brick-and-Mortar Retailers
Sudheer Chava et al.
Georgia Tech Working Paper, June 2018
Abstract:
Using an employer-employee payroll dataset for approximately 2.6 million retail workers, we analyze the impact of the staggered rollout of a major e-commerce retailer's fulfillment centers on the income and employment of workers at geographically proximate brick-and-mortar retail stores. We find that the establishment of an e-commerce fulfillment center in a county has a negative effect on the income of retail workers in that county and in neighboring counties within 100 miles. Wages of hourly workers, especially part-time hourly workers, decrease significantly. This decrease is driven by a drop in the number of hours worked. We observe a U-shaped pattern in which both young and old workers experience a sharper decrease in wage income. Consequently, in these counties, there is a decrease in credit scores and an increase in delinquency for retail workers that have higher prior credit utilization. Using sales and employment data for 3.2 million stores, we find that retail stores in counties around fulfillment centers experience a reduction in sales and in their number of employees. Further, there is a decrease in entry and an increase in exits for stores in the retail sector, with small and young retail stores exiting at a higher rate. Our robustness tests show that our results are unlikely to be driven by prevailing local economic conditions. Overall, our results highlight the extent to which a dramatic increase in e-commerce retail sales can have some adverse consequences for workers at traditional brick-and-mortar stores.
Demography, Unemployment, Automation, and Digitalization: Implications for the Creation of (Decent) Jobs, 2010-2030
David Bloom, Mathew McKenna & Klaus Prettner
NBER Working Paper, July 2018
Abstract:
Globally, an estimated 734 million jobs will be required between 2010 and 2030 to accommodate recent and ongoing demographic shifts, account for plausible changes in labour force participation rates, and achieve target unemployment rates of at or below 4 percent for adults and at or below 8 percent for youth. The facts that i) most new jobs will be required in countries where “decent” jobs are less prevalent and ii) workers in many occupations are increasingly subject to risks of automation further compound the challenge of job creation, which is already quite sizable in historical perspective. Failure to create the jobs that are needed through 2030 would put currently operative social security systems under pressure and undermine efforts to guarantee the national social protection floors enshrined in the Sustainable Development Goals (SDGs).
Price Floors and Employer Preferences: Evidence from a Minimum Wage Experiment
John Horton
NYU Working Paper, July 2018
Abstract:
Minimum hourly wages were randomly imposed on firms posting job openings in an online labor market. A higher minimum wage raised the wages of hired workers substantially. However, there was some reduction in hiring and large reductions in hours-worked. Treated firms hired more productive workers, which can explain, in part, the reduction in hours-worked: with more productive workers, projects were completed in less time. At the conclusion of the experiment, the platform imposed a market-wide minimum wage. A difference-in-differences analysis shows that, in equilibrium, firms still substitute towards more productive workers, adversely affecting less productive workers.
Guaranteed Nonlabor Income and Labor Supply: The Effect of the Alaska Permanent Fund Dividend
Robert Feinberg & Daniel Kuehn
B.E. Journal of Economic Analysis & Policy, July 2018
Abstract:
One peculiar source of nonlabor income that has not been extensively studied for its effect on labor supply is the Alaska Permanent Fund (APF) dividend. This is somewhat surprising given the recent policy focus on Guaranteed Basic Income programs. An annual lump-sum payment, the Permanent Fund Dividend (PFD) is available to almost all Alaska residents, is clearly exogenous with respect to work effort, and – while relatively predictable – varies over time and across households (since it increases linearly with family size). This paper estimates the nonlabor income elasticity of labor supply using exogenous variation from the Alaskan PFD and data from the American Community Survey (ACS). The analysis finds that men have elasticities between −0.15 and −0.10, depending on the specification. Single women have elasticities between −0.14 and −0.09, while married women have somewhat larger elasticities between −0.18 and −0.11.
Theory and Evidence on Employer Collusion in the Franchise Sector
Alan Krueger & Orley Ashenfelter
NBER Working Paper, July 2018
Abstract:
In this paper we study the role of covenants in franchise contracts that restrict the recruitment and hiring of employees from other units within the same franchise chain in suppressing competition for workers. Based on an analysis of 2016 Franchise Disclosure Documents, we find that "no-poaching of workers agreements" are included in a surprising 58 percent of major franchisors' contracts, including McDonald's, Burger King, Jiffy Lube and H&R Block. The implications of these no-poaching agreements for models of oligopsony are also discussed. No-poaching agreements are more common for franchises in low-wage and high-turnover industries.
Employer Responses to a City-Level Minimum Wage Mandate: Early Evidence from Seattle
Jennifer Romich et al.
Urban Affairs Review, forthcoming
Abstract:
A growing number of cities and counties have recently raised their minimum wages. How employers respond to these mandates provides insight into the impact such policies might have on workers and local labor market. Drawing on two survey waves tracking initial responses to Seattle’s $15 Minimum Wage Ordinance by 439 employers with low-wage workers, we show how employers adjusted to higher wages. Most commonly, firms raised prices (56% reported this); smaller percentages reduced employee headcount or hours, limited internal wage progression, or took other measures. Single-site Seattle employers responded similarly to those with multiple sites. Food and accommodation sector employers were more likely to raise prices than firms in other sectors. Relative to other ownership structures, franchises disproportionately reported reducing their workforces. Very few employers reported withdrawing from Seattle. Overall, initial employer responses to this city-level minimum wage law align with predictions from the literature, findings that highlight trade-offs that policy makers must consider in future local wage regulation.
A dynamical systems approach to gross domestic product forecasting
Andrea Tacchella, Dario Mazzilli & Luciano Pietronero
Nature Physics, August 2018, Pages 861–865
Abstract:
Models developed for gross domestic product (GDP) growth forecasting tend to be extremely complex, relying on a large number of variables and parameters. Such complexity is not always to the benefit of the accuracy of the forecast. Economic complexity constitutes a framework that builds on methods developed for the study of complex systems to construct approaches that are less demanding than standard macroeconomic ones in terms of data requirements, but whose accuracy remains to be systematically benchmarked. Here we develop a forecasting scheme that is shown to outperform the accuracy of the five-year forecast issued by the International Monetary Fund (IMF) by more than 25% on the available data. The model is based on effectively representing economic growth as a two-dimensional dynamical system, defined by GDP per capita and ‘fitness’, a variable computed using only publicly available product-level export data. We show that forecasting errors produced by the method are generally predictable and are also uncorrelated to IMF errors, suggesting that our method is extracting information that is complementary to standard approaches. We believe that our findings are of a very general nature and we plan to extend our validations on larger datasets in future works.