Labor Days
Cheap Thrills: the Price of Leisure and the Global Decline in Work Hours
Alexandr Kopytov, Nikolai Roussanov & Mathieu Taschereau-Dumouchel
NBER Working Paper, August 2020
Abstract:
The real price of recreation goods and services has fallen dramatically over the last century. At the same time, hours per worker have also been on a steady decline. As recreation goods make leisure time more enjoyable, we investigate if the fall in their price has contributed to the decline in work hours. Using aggregate data from OECD countries, as well as disaggregated data from the United States, we provide evidence that the two are strongly related. To identify the effect of recreation prices on hours worked, we use variation in the bundle of recreational goods across demographic groups to instrument for the changing price of leisure faced by these groups over time. We then construct a macroeconomic model with general preferences that allows for trending relative prices and work hours along a balanced growth path. We estimate the model and find that a large part of the decline in hours worked can be explained by the declining price of leisure. In contrast, we find mixed evidence that higher wages contributed to the decline in hours worked over the last several decades.
Do Unemployment Insurance Benefits Improve Match Quality? Evidence from Recent U.S. Recessions
Ammar Farooq, Adriana Kugler & Umberto Muratori
NBER Working Paper, July 2020
Abstract:
We present new evidence on the impact of more generous unemployment insurance (UI) on workers' ability to find jobs better suited to their skills. Using Longitudinal Employer-Household Dynamics data, we find the UI extensions introduced in the U.S. improved the quality of worker-job matches. Using Current Population Survey data, we also find that longer UI benefit durations decrease the mismatch between workers' educational attainments and the educational requirements of jobs. We find bigger effects of UI on match quality for those more likely to be liquidity constrained - women, non-whites and less-educated workers - suggesting UI extensions improve the functioning of the labor market.
Salary History Bans and Wage Bargaining: Experimental Evidence
Shantanu Khanna
Labour Economics, forthcoming
Abstract:
Motivated by recently passed laws in the United States banning inquiries about salary history, this experiment examines the impact of information about a player's outside option in bargaining. The policy intention is studied by comparing private information to perfect information. Since the laws do not prevent voluntary revelation of salaries, a third treatment examines the impact of adding a truthful revelation choice by the informed party. I find that the signaling value of revelation decisions undermines the benefits of private information. A fourth treatment allows for outside options to be misrepresented. Overall, results suggest that these laws may not work as well as intended.
License to Fire? Unemployment Insurance and the Moral Cost of Layoffs
Daniel Keum & Stephan Meier
Columbia University Working Paper, July 2020
Abstract:
Expanding unemployment insurance (UI) not only reduces the burden for the unemployed but also the moral cost of layoffs to firms and their managers. Using staggered expansions of UI across US states, we show that expanding UI leads to larger layoffs in firms experiencing negative economic shocks. The effects are stronger in weakly governed and financially unconstrained firms, where managers have greater discretion to avoid moral cost. This study presents moral cost as a novel microeconomic channel through which UI affects layoff decisions, which can compromise its effectiveness as a social insurance program and an automatic stabilizer.
Now Unions Increase Job Satisfaction and Well-being
David Blanchflower & Alex Bryson
NBER Working Paper, August 2020
Abstract:
Using data from the United States and Europe on nearly two million respondents we show the partial correlation between union membership and employee job satisfaction is positive and statistically significant. This runs counter to findings in the seminal work of Freeman (1978) and Borjas (1979) in the 1970s and most empirical studies since. With data for the United States we show the association between union membership and job satisfaction switched from negative to positive in the 2000s. Cohorts with positive union effects over time come to dominate those with negative effects. The negative association between membership and job satisfaction is apparent in cohorts born in the 1940s and 1950s but turns positive for those born between the 1960s and 1990s. Analyses for Europe since the 2000s confirm the positive association between union membership and worker wellbeing is apparent elsewhere. We also find evidence in the United Kingdom from panel estimation of a positive relation between union membership and job satisfaction. We find positive union associations with other aspects of worker wellbeing including life satisfaction and happiness, several macro variables and various measures of trust. Union members are also less likely to be stressed, worried, depressed, sad or lonely. The findings have important implications for our understanding of trade unionism.
The Missing Inflation Puzzle: The Role of the Wage-Price Pass-Through
Sebastian Heise, Fatih Karahan & Ayşegül Şahin
NBER Working Paper, August 2020
Abstract:
Price inflation in the U.S. has been sluggish and slow to pick up in the last two decades. We show that this missing inflation can be traced to a growing disconnect between unemployment and core goods inflation. We exploit rich industry-level data to show that weakening pass-through from wages to prices in the goods-producing sector is an important source of the slow inflation pick-up in the last two decades. We set up a theoretical framework where markups and pass-through are a function of firms' market shares and show that increased import competition and rising market concentration reduce pass-through from wages to prices. We then use industry-level data and find strong support for these two channels consistent with the implications of our model.
Reconciling Trends in U.S. Male Earnings Volatility: Results from a Four Data Set Project
Robert Moffitt
NBER Working Paper, August 2020
Abstract:
There is a large literature on earnings and income volatility in labor economics, household finance, and macroeconomics. One strand of that literature has studied whether individual earnings volatility has risen or fallen in the U.S. over the last several decades. There are strong disagreements in the empirical literature on this important question, with some studies showing upward trends, some downward trends, and some flat trends. Some studies have suggested that the differences are the result of using flawed survey data instead of more accurate administrative data. This paper provides an overview of a project attempting to reconcile these findings with four different data sets and six different data series--three survey and three administrative data series, including two which match survey respondent data to their administrative data. Using common specifications, measures of volatility, and other treatments of the data, the papers show almost uniformly a lack of any significant long-term trend in male earnings volatility over the last 30 years. Moreover, the survey and the administrative data almost entirely agree on that long-term stability when the comparison is done properly. Several possible explanations for the differing finds in past work are suggested by the papers. The stability of earnings volatility raises many questions for future research on trends in the U.S. labor market.
When Do Unions Matter to Social Policy? Organized Labor and Leave Legislation in US States
Cassandra Engeman
Social Forces, forthcoming
Abstract:
Trade union institutions are historically and comparatively weak in the United States, and union membership has been in steady decline over several decades. Scholars thus question the contemporary relevance of organized labor to social policy. Yet, there is considerable state-level variation in social policy and union institutional strength that remains underexamined. Focusing on variability across US states, this paper uses mixed-methods analysis to examine relationships between organized labor and parental and family leave legislation under varying political conditions. Event history analysis of state-level leave policy adoption from 1983 to 2016 shows that union institutional strength, particularly in the public sector, is positively associated with the timing of leave policy adoption. These findings are robust to the inclusion of other factors, including Democratic control of state houses, which is also shown to facilitate leave policy adoption. Comparative case studies support event history findings and illustrate how state house partisanship informs the level of government that leave advocates target for policy change. The paper concludes by suggesting further attention to subnational policies and investigation into the social movement practice of target-shifting and its effects. Ultimately, the paper demonstrates the operation of power resources at the subnational level within a liberal market national context.