Paid time off
Jeffrey Clemens & Michael Wither
NBER Working Paper, December 2014
Abstract:
We estimate the minimum wage’s effects on low-skilled workers’ employment and income trajectories. Our approach exploits two dimensions of the data we analyze. First, we compare workers in states that were bound by recent increases in the federal minimum wage to workers in states that were not. Second, we use 12 months of baseline data to divide low-skilled workers into a “target” group, whose baseline wage rates were directly affected, and a “within-state control” group with slightly higher baseline wage rates. Over three subsequent years, we find that binding minimum wage increases had significant, negative effects on the employment and income growth of targeted workers. Lost income reflects contributions from employment declines, increased probabilities of working without pay (i.e., an “internship” effect), and lost wage growth associated with reductions in experience accumulation. Methodologically, we show that our approach identifies targeted workers more precisely than the demographic and industrial proxies used regularly in the literature. Additionally, because we identify targeted workers on a population-wide basis, our approach is relatively well suited for extrapolating to estimates of the minimum wage’s effects on aggregate employment. Over the late 2000s, the average effective minimum wage rose by 30 percent across the United States. We estimate that these minimum wage increases reduced the national employment-to-population ratio by 0.7 percentage point.
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Are State Workers Overpaid? Survey Evidence from Liquor Privatization in Washington State
Andrew Chamberlain
University of California Working Paper, August 2014
Abstract:
Industry privatizations that result in exogenous job displacement of public employees can be exploited to estimate public sector wage rents. I report the findings of an original survey I administered to examine how wages of displaced government workers were affected by a 2012 privatization of liquor retailing in Washington State. Based on a panel difference-in-differences estimator I find that privatization reduced wages by $2.51 per hour or 17 percent compared to a counterfactual group of nearly identical non-displaced workers, with larger effects for women. I decompose wage losses into three rents identified in the literature: public sector rents, union premiums, and industry-specific human capital. Public sector wage premiums separately account for 85 to 90 percent of overall wage losses, while union premiums and industry-specific human capital account for just 10 to 15 percent. The results are consistent with a roughly 16 percent public sector wage premium.
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Performance pay and unemployment during the great recession
Daniel Parent
Economics Letters, January 2015, Pages 31–34
Abstract:
With data from the Panel Study of Income Dynamics I show that individuals in performance pay jobs were much less likely to be unemployed at the time of the interview than those in “fixed” wage jobs during the 2008 recession. While their unemployment rate is always lower in non-recession years, there is little evidence that this association was any weaker during the recession. Additional evidence shows that performance pay has a similar effect on the incidence of layoffs vs quits in both non-recession and recession years.
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The $10.10 Minimum Wage Proposal: An Evaluation across States
Andrew Hanson & Zackary Hawley
Journal of Labor Research, December 2014, Pages 323-345
Abstract:
This paper offers state-level estimates of job loss from increasing the federal minimum wage to $10.10 per hour in 2016. Given the vast differences in nominal wages across geography, a federal increase in minimum wage that is not indexed to local wage levels will have a differential impacts across states. The proposed minimum wage would be binding for between 17 and 18 % of workers nationally. We estimate coverage rates ranging from just 4 % in Washington D.C. to as high as 51 % in Puerto Rico, with 13 states having at least 20 % of the employed population covered by the proposal. Using labor demand elasticities from previous empirical work, these coverage rates imply national employment losses between 550,000 and 1.5 million workers. The range of state estimates shows that states are differentially impacted, with high-end loss estimates ranging between 2.8 % of covered employees in Arkansas to over 41 % in Puerto Rico. Sensitivity analysis highlights that using even a simple methodology with relatively few assumptions for estimating employment loss from minimum wage changes is subject to a high degree of uncertainty.
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Competitive Pressure and the Decline of the Rust Belt: A Macroeconomic Analysis
Simeon Alder, David Lagakos & Lee Ohanian
NBER Working Paper, October 2014
Abstract:
No region of the United States fared worse over the postwar period than the “Rust Belt,” the heavy manufacturing region bordering the Great Lakes. This paper hypothesizes that the Rust Belt declined in large part due to a lack of competitive pressure in its labor and output markets. We formalize this thesis in a two-region dynamic general equilibrium model, in which productivity growth and regional employment shares are determined by the extent of competition. Quantitatively, the model accounts for much of the large secular decline in the Rust Belt’s employment share before the 1980s, and the relative stabilization of the Rust Belt since then, as competitive pressure increased.
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Debt, Jobs, or Housing: What's Keeping Millennials at Home?
Zachary Bleemer et al.
Federal Reserve Working Paper, November 2014
Abstract:
Young Americans’ residence choices have changed markedly over the past fifteen years, with recent cohorts entering the housing market at lower rates, and lingering much longer in parents’ households. This paper begins with descriptive evidence on the residence choices of 1 percent of young Americans with credit reports, observed quarterly for fifteen years in the Federal Reserve Bank of New York’s Equifax-sourced Consumer Credit Panel (CCP). Steep increases in the rate of living with parents or other substantially older household members have emerged as youth increasingly forsake living alone or with groups of roommates. Coupledom, however, appears stable. Homeownership at age thirty shows a precipitous drop following the recession, particularly for student borrowers. In an effort to decompose the contributions of housing market, labor market, and student debt changes to the observed changes in young Americans’ living arrangements, we model flows into and out of co-residence with parents. Estimates suggest countervailing influences of local economic growth on co-residence: strengthening youth labor markets support moves away from home, but rising local house prices send independent youth back to parents. Finally, we find that student loans deter independence: state-cohort groups who were more heavily reliant on student debt while in school are significantly and substantially more likely to move home to parents when living independently, and are significantly and substantially less likely to move away from parents when living at home.
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Job Referral Networks and the Determination of Earnings in Local Labor Markets
Ian Schmutte
Journal of Labor Economics, January 2015, Pages 1-32
Abstract:
Despite their documented importance in the labor market, little is known about how workers use social networks to find jobs and their resulting effect on earnings. I use geographically detailed US employer-employee data to infer the role of social networks in connecting workers to jobs in high-paying firms. To identify social interactions in job search, I exploit variation in social network quality within small neighborhoods. Workers are more likely to change jobs, and more likely to move to a higher-paying firm, when their neighbors are employed in high-paying firms. Furthermore, local referral networks help match high-ability workers to high-paying firms.
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Can Unemployment Insurance Spur Entrepreneurial Activity?
David Sraer et al.
NBER Working Paper, November 2014
Abstract:
We study a large-scale French reform that provided generous downside insurance for unemployed individuals starting a business. We study whether this reform affects the composition of people who are drawn into entrepreneurship. New firms started in response to the reform are, on average, smaller, but have similar growth expectations and education levels compared to start-ups before the reform. They are also as likely to survive or to hire. In aggregate, the effect of the reform on employment is largely offset by large crowd-out effects. However, because new firms are more productive, the reform has the impact of raising aggregate productivity. These results suggest that the dispersion of entrepreneurial abilities is small in the data, so that the facilitation of entry leads to sizable Schumpeterian dynamics at the firm-level.
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Government Ideology and Unemployment in the U.S. States
Nathan Kelly & Christopher Witko
State Politics & Policy Quarterly, December 2014, Pages 389-413
Abstract:
Research shows that when the more liberal Democratic Party controls the national government, unemployment is lower, but whether liberal state governments are associated with lower unemployment has not been examined. We argue that more left-leaning governments in the U.S. states have the same preference for and willingness to use government to reduce unemployment, but that the greater resource and policymaking constraints that the states face during economic downturns limit their ability to shape unemployment to economic growth periods. We find evidence for these arguments in an analysis of the U.S. states for the period of 1975–2010. Specifically, when economic growth is low, liberal state governments are associated with increases in unemployment rates similar to or even somewhat higher than conservative governments, but when growth is moderate to high, liberal state governments are associated with greater-than-expected reductions in unemployment. We also provide some evidence that different state spending decisions between liberal and conservative state governments may explain these patterns.
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Are Public Sector Jobs Recession-Proof? Were They Ever?
Jason Kopelman & Harvey Rosen
NBER Working Paper, November 2014
Abstract:
We use data from the Displaced Worker Survey supplements of the Current Population Survey from 1984 to 2012 to investigate the differences in job loss rates between workers in the public and private sectors. Our focus is on the extent to which recessions affect the differential between job loss rates in the two sectors. Our main findings include the following: First, taking into account differences in characteristics among workers does not eliminate sectoral differences in the likelihood of losing one’s job. After accounting for worker characteristics, during both recessionary and non-recessionary periods, the probability of job loss is higher for private sector workers than for public sector workers at all levels of government. Second, the probability of displacement for private sector workers increased during both the Great Recession and earlier recessions during our sample period. Third, it is less straightforward to characterize the experience of public sector workers during recessions. Job loss rates sometimes increased and sometimes decreased, depending on whether the employer was the federal, state, or local government. The impact of the Great Recession on displacement rates for public sector employees was somewhat different from that in previous recessions. Fourth, the advantage of public sector employment in terms of job loss rates generally increased during recessions for all groups of public sector workers. Thus, the answer to the question posed in the title is that public sector jobs, while not generally recession-proof, do offer more security than private sector jobs, and the advantage widens during recessions. These patterns are present across genders, races, and educational groups.
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Labor's Enduring Divide: The Distinct Path of Public Sector Unions in the United States
Alexis Walker
Studies in American Political Development, October 2014, Pages 175-200
Abstract:
Why did public sector unionization rise so dramatically and then plateau at the same time as private sector unionization underwent a precipitous decline? The exclusion of public sector employees from the centerpiece of private sector labor law — the 1935 Wagner Act — divided U.S. labor law and relegated public sector demand-making to the states. Consequently, public sector employees' collective bargaining rights were slow to develop and remain geographically concentrated, unequal and vulnerable. Further, divided labor law put the two movements out of alignment; private sector union density peaked nearly a decade before the first major statutes granting public sector collective bargaining rights passed. As a result of this incongruent timing and sequencing, the United States has never had a strong union movement comprised of both sectors at the height of their membership and influence.
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Regional disadvantage? Employee non-compete agreements and brain drain
Matt Marx, Jasjit Singh & Lee Fleming
Research Policy, forthcoming
Abstract:
A growing body of research has documented the local impact of employee non-compete agreements, but their effect on interstate migration patterns remains unexplored. Exploiting an inadvertent policy reversal in Michigan as a natural experiment, we show that non-compete agreements are responsible for a “brain drain” of knowledge workers out of states that enforce such contracts to states where they are not enforceable. Importantly, this effect is felt most strongly on the margin of workers who are more collaborative and whose work is more impactful.
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Unemployment in the Great Recession: A Comparison of Germany, Canada and the United States
Florian Hoffmann & Thomas Lemieux
NBER Working Paper, November 2014
Abstract:
This paper investigates the potential reasons for the surprisingly different labor market performance of the United States, Canada, Germany, and several other OECD countries during and after the Great Recession of 2008-09. Unemployment rates did not change substantially in Germany, increased and remained at relatively high levels in the United States, and increased moderately in Canada. More recent data also show that, unlike Germany and Canada, the U.S. unemployment rate remains largely above its pre-recession level. We find two main explanations for these differences. First, the large employment swings in the construction sector linked to the boom and bust in U.S. housing markets can account for a large fraction of the cross-country differences in aggregate labor market outcomes for the three countries. Second, cross-country differences are consistent with a conventional Okun relationship linking GDP growth to employment performance. In particular, relative to pre-recession trends there has been a much larger drop in GDP in the United States than Germany between 2008 and 2012. In light of these facts, the strong performance of the German labor market is consistent with other aggregate outcomes of the economy.
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Jan‐Emmanuel De Neve et al.
Harvard Working Paper, October 2014
Abstract:
Are individuals more sensitive to losses than gains in macroeconomic growth? Using subjective well-being measures across three large data sets, we observe an asymmetry in the way positive and negative economic growth are experienced, with losses having more than twice as much impact on individual happiness as compared to equivalent gains. We use Gallup World Poll data drawn from 151 countries, BRFSS data taken from a representative sample of 2.5 million US respondents, and Eurobarometer data that cover multiple business cycles over four decades. This research provides a new perspective on the welfare cost of business cycles with implications for growth policy and our understanding of the long-run relationship between GDP and subjective well-being.
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Just the Facts: Demographic and Cross-Country Dimensions of the Employment Slump
Jeffrey Clemens & Michael Wither
University of California Working Paper, November 2014
Abstract:
We present data characterizing the U.S. labor market during the Great Recession and subsequent recovery. U.S. employment declines were dramatic among young adults, substantial among prime-aged adults, and modest among those near retirement. The decline in employment among working-age adults generally exceeded those that occurred in other advanced economies. We assess the potential explanatory power of population aging and increases in educational attainment as factors underlying these developments. Recent analyses suggest that population aging can explain nearly one half of the decline in the labor force participation rate and one third of the decline in the employment to population ratio from 2007 to 2013. Our comparisons of employment developments across age groups and countries provide reason to view this one third as an upper bound on aging's plausible contribution. We conduct a more detailed analysis of changes in employment and school attendance across demographic sub-groups of the young adult population. Across sub-groups defined by age, gender, and race/ethnicity, changes in school enrollment predict very little of the variation in this period's employment changes. Taken together, aging and enrollment trends thus appear to underlie a modest to moderate fraction of the aggregate employment decline. We conclude by discussing a range of non-demographic factors that may have contributed to the decline, but on which existing research has yet to arrive at a consensus.
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The Long Reach of Education: Early Retirement
Steven Venti & David Wise
NBER Working Paper, December 2014
Abstract:
The goal of this paper is to draw attention to the long lasting effect of education on economic outcomes. We use the relationship between education and two routes to early retirement – the receipt of Social Security Disability Insurance (DI) and the early claiming of Social Security retirement benefits – to illustrate the long-lasting influence of education. We find that for both men and women with less than a high school degree the median DI participation rate is 6.6 times the participation rate for those with a college degree or more. Similarly, men and women with less than a high school education are over 25 percentage points more likely to claim Social Security benefits early than those with a college degree or more. We focus on four critical “pathways” through which education may indirectly influence early retirement – health, employment, earnings, and the accumulation of assets. We find that for women health is the dominant pathway through which education influences DI participation. For men, the health, earnings, and wealth pathways are of roughly equal magnitude. For both men and women the principal channel through which education influences early Social Security claiming decisions is the earnings pathway. We also consider the direct effect of education that does not operate through these pathways. The direct effect of education is much greater for early claiming of Social Security benefits than for DI participation, accounting for 72 percent of the effect of education for men and 67 percent for women. For women the direct effect of education on DI participation is not statistically significant, suggesting that the total effect may be through the four pathways.
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US union revival, minority unionism and inter-union conflict
Mark Harcourt, Helen Lam & Geoffrey Wood
Journal of Industrial Relations, November 2014, Pages 653-671
Abstract:
One option for reversing US union decline, requiring no legislative change, would involve re-legitimizing non-majority or minority union representation, allowing unions to organize without running the gauntlet of union certification. Such minority representation, applicable only to workplaces without majority union support on a members-only basis, could run in parallel with the existing system of exclusive representation in workplaces where majority support is achieved. The increased representation in the currently unrepresented workplaces would inevitably promote workers’ collective voice and contribute to union revival. However, minority unionism has been criticized for breeding union competition because it is non-exclusive. In this paper, the nature and extent of inter-union conflict under minority unionism are re-examined, using survey data from unions in New Zealand which already has non-exclusive, minority union representation. The low levels and consequences of conflict suggest that the benefits of minority unionism far outweigh any potentially unfavourable effects.
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Returns to Skills around the World: Evidence from PIAAC
Eric Hanushek et al.
European Economic Review, January 2015, Pages 103–130
Abstract:
Existing estimates of the labor-market returns to human capital give a distorted picture of the role of skills across different economies. International comparisons of earnings analyses rely almost exclusively on school attainment measures of human capital, and evidence incorporating direct measures of cognitive skills is mostly restricted to early-career workers in the United States. Analysis of the new PIAAC survey of adult skills over the full lifecycle in 23 countries shows that the focus on early-career earnings leads to underestimating the lifetime returns to skills by about one quarter. On average, a one-standard-deviation increase in numeracy skills is associated with an 18 percent wage increase among prime-age workers. But this masks considerable heterogeneity across countries. Eight countries, including all Nordic countries, have returns between 12 and 15 percent, while six are above 21 percent with the largest return being 28 percent in the United States. Estimates are remarkably robust to different earnings and skill measures, additional controls, and various subgroups. Instrumental-variable models that use skill variation stemming from school attainment, parental education, or compulsory-schooling laws provide even higher estimates. Intriguingly, returns to skills are systematically lower in countries with higher union density, stricter employment protection, and larger public-sector shares.
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Employment Cyclicality and Firm Quality
Lisa Kahn & Erika McEntarfer
NBER Working Paper, November 2014
Abstract:
Who fares worse in an economic downturn, low- or high-paying firms? Different answers to this question imply very different consequences for the costs of recessions. Using U.S. employer-employee data, we find that employment growth at low-paying firms is less cyclically sensitive. High-paying firms grow more quickly in booms and shrink more quickly in busts. We show that while during recessions separations fall in both high-paying and low-paying firms, the decline is stronger among low-paying firms. This is particularly true for separations that are likely voluntary. Our findings thus suggest that downturns hinder upward progression of workers toward higher paying firms - the job ladder partially collapses. Workers at the lowest paying firms are 20% less likely to advance in firm quality (as measured by average pay in a firm) in a bust compared to a boom. Furthermore, workers that join firms in busts compared to booms will on average advance only half as far up the job ladder within the first year, due to both an increased likelihood of matching to a lower paying firm and a reduced probability of moving up once matched. Thus our findings can account for some of the lasting negative impacts on workers forced to search for a job in a downturn, such as displaced workers and recent college graduates.
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Jessica Garrick
Politics & Society, December 2014, Pages 489-512
Abstract:
The National Labor Relations Act (NLRA) of 1935 has been widely portrayed as an anachronistic piece of legislation that needs to be reformed or abandoned. In the absence of reform, many US labor unions try to avoid the NLRA process altogether by organizing workers outside the confines of the law. But Somos un Pueblo Unido, or “Somos,” a worker center in New Mexico, has been using a novel interpretation of the NLRA less to boost union density than to develop an alternative to contract unionism. By helping nonunionized workers use Section 7 of the NLRA to act concertedly in their own defense, I argue, Somos is combating employer abuse, in the short run, and demonstrating that worker centers and their memberships may be transforming the US labor movement, in the long run. Their experiences illustrate the ability of organizations to redeploy existing institutional resources with potentially transformative results.
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Amalavoyal Chari et al.
Health Services Research, forthcoming
Objectives: To provide nationally representative estimates of the opportunity costs of informal elder-care in the United States.
Data Sources: Data from the 2011 and 2012 American Time Use Survey.
Study Design: Wage is used as the measure of an individual's value of time (opportunity cost), with wages being imputed for nonworking individuals using a selection-corrected regression methodology.
Principal Findings: The total opportunity costs of informal elder-care amount to $522 billion annually, while the costs of replacing this care by unskilled and skilled paid care are $221 billion and $642 billion, respectively.
Conclusions: Informal caregiving remains a significant phenomenon in the United States with a high opportunity cost, although it remains more economical (in the aggregate) than skilled paid care.
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The Effects of Conscription on Education and Earnings: Regression Discontinuity Evidence
Pierre Mouganie
Texas A&M University Working Paper, August 2014
Abstract:
In 1997, the French government put into effect a law that permanently exempted young French male citizens born after Jan 1, 1979 from mandatory military service while still requiring those born before that cutoff date to serve. This paper uses a regression discontinuity design to identify the effect of peacetime conscription on education and labor market outcomes. Results indicate that conscription eligibility induces a significant increase in years of education, which is consistent with conscription avoidance behavior. However, this increased education does not result in either an increase in graduation rates, or in employment and wages. Additional evidence shows conscription has no direct effect on earnings, suggesting that the returns to education induced by this policy was zero.
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Estimating the returns to schooling using cohort-level maternal education as an instrument
John Winters
Economics Letters, January 2015, Pages 25–27
Abstract:
This paper examines effects of schooling on wages instrumenting for individual schooling using cohort-level maternal schooling from previous censuses. Results suggest that an additional year of schooling increases hourly wages by 10 percent for men and 12.6 percent for women.