Making Work
The Wage Curve After the Great Recession
David Blanchflower, Alex Bryson & Jackson Spurling
NBER Working Paper, August 2022
Abstract:
Most economists maintain that the labor market in the United States is 'tight' because unemployment rates are low. They infer from this that there is potential for wage-push inflation. However, real wages are falling rapidly at present and, prior to that, real wages had been stagnant for some time. We show that unemployment is not key to understanding wage formation in the USA and hasn't been since the Great Recession. Instead, we show rates of under-employment (the percentage of workers with part-time hours who would prefer more hours) and the rate of non-employment which includes both the unemployed and those out of the labor force who are not working significantly reduce wage pressures in the United States. This finding holds in panel data with state and year fixed effects and is supportive of a wage curve which fits the data much better than a Phillips Curve. We find no role for vacancies; the V:U ratio is negatively not positively associated with wage growth since 2020. The implication is that the reserve army of labor which acts as a brake on wage growth extends beyond the unemployed and operates from within and outside the firm.
Automation After the Assembly Line: Computerized Machine Tools, Employment and Productivity in the United States
Leah Platt Boustan, Jiwon Choi & David Clingingsmith
NBER Working Paper, August 2022
Abstract:
Since the 1970s, computerized machine tools have been replacing semi-skilled manufacturing workers, contributing to factory automation. We build a novel measure of exposure to computer numerical control (CNC) based on initial variation in tool types across industries and differential shifts toward CNC technology by tool type over time. Industries more exposed to CNC increased capital investment and experienced higher labor productivity. Total employment rose, with gains for college-educated workers and abstract tasks compensating for losses of less-educated workers and routine tasks. Employment gains were strongest for unionized jobs. Workers in exposed industries returned to school and relevant degree programs expanded.
The Evolution of Technological Substitution in Low-Wage Labor Markets
Daniel Aaronson & Brian Phelan
Review of Economics and Statistics, forthcoming
Abstract:
This paper uses minimum wage hikes to evaluate the susceptibility of low-wage employment to technological substitution. We find that automation is accelerating and supplanting a broader set of low-wage routine jobs since the Financial Crisis. Simultaneously, low-wage interpersonal jobs are increasing and offsetting routine job loss. However, interpersonal job growth does not appear to be enough - as it was prior to the Financial Crisis - to fully offset the negative effects of automation on low-wage routine jobs. Employment losses are most evident among non-Asian people of color who experience outsized losses at routine jobs and smaller gains at interpersonal jobs.
Right-to-Work laws and corporate innovation
Justin Hung Nguyen & Buhui Qiu
Journal of Corporate Finance, forthcoming
Abstract:
We show that state right-to-work (RTW) laws significantly encourage corporate innovations in terms of patent grant and citation count. Consistent with the conjecture that the RTW-treated firms conduct more innovations due to their decreased financial distress risk, we find that the RTW adoption also significantly decreases treated firms' financial distress risk ex post, and its treatment effect on innovation outputs is stronger for treated firms that are ex ante more likely to experience financial distress. Further analysis indicates that treated firms intensify research and development expenditures and, likely due to their improved innovations, enhance their competitiveness in product markets.
Boomerang College Kids: Unemployment, Job Mismatch and Coresidence
Stefania Albanesi, Rania Gihleb & Ning Zhang
NBER Working Paper, August 2022
Abstract:
Labor market outcomes for young college graduates have deteriorated substantially in the last twenty five years, and more of them are residing with their parents. The unemployment rate at 23-27 year old for the 1996 college graduation cohort was 9%, whereas it rose to 12% for the 2013 graduation cohort. While only 25% of the 1996 cohort lived with their parents, 31% for the 2013 cohort chose this option. Our hypothesis is that the declining availability of 'matched jobs' that require a college degree is a key factor behind these developments. Using a structurally estimated model of child-parent decisions, in which coresidence improves college graduates' quality of job matches, we find that lower matched job arrival rates explain two thirds of the rise in unemployment and coresidence between the 2013 and 1996 graduation cohorts. Rising wage dispersion is also important for the increase in unemployment, while declining parental income, rising student loan balances and higher rental costs only play a marginal role.
Media Coverage of Labor Issues and Artificial Intelligence Innovation
Boshuo Li, Ni Huang & Wei Shi
University of Miami Working Paper, July 2022
Abstract:
Artificial intelligence (AI) technology has increasingly become part of firm productions, attracting researchers to explore the consequences of AI on firms and labor markets. In this study, by contrast, we investigate an important antecedent of AI innovation - media coverage of labor issues. By disseminating negative news on firms' labor-related misconducts to the public, media scrutiny of labor issues can be detrimental to firm reputation and legitimacy, thereby generating direct and indirect labor-related costs and imposing strong institutional pressures on firms to pursue strategic changes. Examining U.S. publicly listed firms, we find that such media scrutiny propels firms toward AI innovation, whose automation and augmentation effects could enable firms to address labor issues, minimize labor-related costs, and thus project a favorable public image in the eyes of external stakeholders. Meanwhile, as the benefits of AI require a long period time to materialize, we further investigate boundary conditions, showing that the effect of media coverage of labor issues on AI innovation is stronger when firms find more support from long-term governance actors, reflected by a higher level of dedicated institutional ownership, and weaker when firms are surrounded by more short-term governance actors, evidenced by a higher level of transient institutional ownership. In addition, we find that this effect is stronger for firms operating in industries that are more labor-intensive, in which media coverage of labor issues imposes stronger pressure on firms, and firms are thus more motivated to respond to the media scrutiny. This effect is also stronger for firms operating in industries with higher exposure to AI technologies, in which firms are more capable of engaging in AI innovation. This study contributes to information systems (IS) research by unpacking media coverage of labor issues as an external antecedent of AI innovation and highlighting media scrutiny as an institutional pressure for firms to seek technology development.
The impact of oil and gas job opportunities during youth on human capital
Amanda Chuan
Southern Economic Journal, forthcoming
Abstract:
Leaving school to work trades off schooling with on-the-job human capital acquisition. How do industry shocks impact how youth make this trade-off? Exploiting the geography of natural resources, I estimate the effect of oil and gas job prospects on college and work outcomes. Using CPS data, I find that these job opportunities decrease college-going for men but not women. I next assess the importance of this schooling loss for later outcomes using longitudinal geocoded NLSY79 data. I find permanent declines in college attainment but gains in employment and earnings at ages 25-30, driven by cohorts who reach college age during industry booms. The results suggest that informal human capital can compensate for schooling loss for the men who leave school for oil and gas work. They speak to the need for further research on non-college work as a form of human capital investment outside of the traditional college pathway.
Skill-Biased Technical Change Again? Online Gig Platforms and Local Employment
Xue Guo, Zhi (Aaron) Cheng & Paul Pavlou
University of Houston Working Paper, May 2022
Abstract:
The role of online gig platforms in local labor markets has recently been debated with two competing predictions: online gig platforms either complement local employment by matching service demand and supply and creating job opportunities, or substitute local employment by obsoleting workers with certain skills. Yet, there has been inadequate analysis and evidence for the labor movement amid the growing online gig economy. Drawing upon the literature on Skill-Biased Technical Change and online gig platforms, we study the role of TaskRabbit-a large gig platform that matches freelancer labor to local demand of domestic tasks (e.g., cleaning) online and requires services offline-on the local employment of housekeeping occupations. Exploiting the staggered expansion pattern of TaskRabbit into U.S. cities over time, we identify a disproportionate decrease in the number of workers in the traditional housekeeping businesses after TaskRabbit entry. Notably, this decrease is driven by a significant decline in the employment of middle-skilled workers (i.e., first-line managers, supervisors) whose labor tasks could easily be automated by the matching algorithms of TaskRabbit, rather than low-skilled manual workers (i.e., janitors, cleaners). Interestingly, we show evidence that gig platforms may not crowd out middle-skilled housekeeping workers by laying them off or shifting them to other occupations, but rather they encourage local entrepreneurial activities by boosting self-employment in the same industry. The findings suggest that online gig platforms like TaskRabbit may not simply be viewed as skill-biased; instead, they exert a labor redistribution effect that reconciles labor automation (i.e., substitution) with labor augmentation (i.e., complementarity), calling for reconsidering the online gig economy as a means to stimulating local labor markets.