Peak jobs
Strong Employers and Weak Employees: How Does Employer Concentration Affect Wages?
Efraim Benmelech, Nittai Bergman & Hyunseob Kim
NBER Working Paper, February 2018
Abstract:
We analyze the effect of local-level labor market concentration on wages. Using Census data over the period 1977–2009, we find that: (1) local-level employer concentration exhibits substantial cross-sectional and time-series variation and increases over time; (2) consistent with labor market monopsony power, there is a negative relation between local-level employer concentration and wages that is more pronounced at high levels of concentration and increases over time; (3) the negative relation between labor market concentration and wages is stronger when unionization rates are low; (4) the link between productivity growth and wage growth is stronger when labor markets are less concentrated; and (5) exposure to greater import competition from China (the “China Shock”) is associated with more concentrated labor markets. These five results emphasize the role of local-level labor market monopsonies in influencing firm wage-setting behavior and can potentially explain some of the stagnation of wages in the United States over the past several decades.
Agony and Ecstasy in the Gig Economy: Cultivating Holding Environments for Precarious and Personalized Work Identities
Gianpiero Petriglieri, Susan Ashford & Amy Wrzesniewski
Administrative Science Quarterly, forthcoming
Abstract:
Building on an inductive, qualitative study of independent workers — people not affiliated with an organization or established profession — this paper develops a theory about the management of precarious and personalized work identities. We find that in the absence of organizational or professional membership, workers experience stark emotional tensions encompassing both the anxiety and fulfillment of working in precarious and personal conditions. Lacking the holding environment provided by an organization, the workers we studied endeavored to create one for themselves through cultivating connections to routines, places, people, and a broader purpose. These personal holding environments helped them manage the broad range of emotions stirred up by their precarious working lives and focus on producing work that let them define, express, and develop their selves. Thus holding environments transformed workers’ precariousness into a tolerable and even generative predicament. By clarifying the process through which people manage emotions associated with precarious and personalized work identities, and thereby render their work identities viable and their selves vital, this paper advances theorizing on the emotional underpinnings of identity work and the systems psychodynamics of independent work.
Explaining the Decline in the U.S. Employment-to-Population Ratio: A Review of the Evidence
Katharine Abraham & Melissa Kearney
NBER Working Paper, February 2018
Abstract:
This paper first documents trends in employment rates and then reviews what is known about the various factors that have been proposed to explain the decline in the overall employment-to-population ratio between 1999 and 2016. Population aging has had a notable effect on the overall employment rate over this period, but within-age-group declines in employment among young and prime age adults have been at least as important. Our review of the evidence leads us to conclude that labor demand factors, in particular trade and the penetration of robots into the labor market, are the most important drivers of observed within-group declines in employment. Labor supply factors, most notably increased participation in disability insurance programs, have played a less important but not inconsequential role. Increases in the real value of the minimum wage and in the share of individuals with prison records also have contributed modestly to the decline in the aggregate employment rate. In addition to these factors, whose effects we roughly quantify, we also identify a set of potentially important factors about which the evidence is too preliminary to draw any clear conclusion. These include improvements in leisure technology, changing social norms, increased drug use, growth in occupational licensing, and the costs and challenges associated with child care. Our evidence-driven ranking of factors should be useful for guiding future discussions about the sources of decline in the aggregate employment-to-population ratio and consequently the likely efficacy of alternative policy approaches to increasing employment rates.
The Labor Market Effects of Credit Market Information
Marieke Bos, Emily Breza & Andres Liberman
Review of Financial Studies, forthcoming
Abstract:
We exploit a natural experiment to provide one of the first measurements of the causal effect of negative credit information on employment and earnings. We estimate that one additional year of negative credit information reduces employment by 3 percentage points and wage earnings by $1,000. In comparison, the decrease in credit is only one-fourth as large. Negative credit information also causes an increase in self-employment and a decrease in mobility. Further evidence suggests this cost of default is inefficiently borne by those most creditworthy among previous defaulters.
The Unintended Consequences of Employer Credit Check Bans on Labor and Credit Markets
Kristle Romero Cortés, Andrew Glover & Murat Tasci
Federal Reserve Working Paper, January 2018
Abstract:
Since the Great Recession, 11 states have restricted employers’ access to the credit reports of job applicants. We document that county-level vacancies decline between 9.5 percent and 12.4 percent after states enact these laws. Vacancies decline significantly in affected occupations but remain constant in those that are exempt, and the decline is larger in counties with many subprime residents. Furthermore, subprime borrowers fall behind on more debt payments and reduce credit inquiries postban. The evidence suggests that, counter to their intent, employer credit check bans disrupt labor and credit markets, especially for subprime workers.
Do Right-to-Work Laws Work? Evidence from Individual Well-Being and Economic Sentiment
Christos Makridis
Stanford Working Paper, December 2017
Abstract:
The share of states that have adopted right-to-work (RTW) laws has surged from 20% in 1960 to nearly 60% in 2017. Using licensed micro-data from Gallup between 2008 and 2017, this paper estimates the causal effect of these laws on stated measures of well-being and economic sentiment. The baseline specification compares individual well-being and sentiment within-state before versus after adopting the laws, conditional on individual controls. I find that the adoption of RTW laws raises current and expected future life satisfaction by a standard deviation of 0.054 and 0.026, respectively, in addition to raising overall economic sentiment about the current and future state of the economy by a standard deviation of 0.074. The results are robust to: (i) a difference-in-difference estimator that compares union to non-union workers before and after states introduced RTW laws, (ii) re-weighting states using entropy balancing, (iii) controlling for potential time-varying state confounders that coincide with the adoption of these laws, and (iv) comparing individuals on opposite sides of the border in states with and without RTW laws. Contrary to conventional wisdom, RTW laws raise employee well-being and sentiment by improving workplace conditions and culture.
The Labor Market Impacts of Universal and Permanent Cash Transfers: Evidence from the Alaska Permanent Fund
Damon Jones & Ioana Marinescu
NBER Working Paper, February 2018
Abstract:
What are the effects of universal and permanent cash transfers on the labor market? Since 1982, all Alaskan residents have been entitled to a yearly cash dividend from the Alaska Permanent Fund. Using data from the Current Population Survey and a synthetic control method, we show that the dividend had no effect on employment, and increased part-time work by 1.8 percentage points (17 percent). Although theory and prior empirical research suggests that individual cash transfers decrease household labor supply, we interpret our results as evidence that general equilibrium effects of widespread and permanent transfers tend to offset this effect, at least on the extensive margin. Consistent with this story, we show suggestive evidence that tradable sectors experience employment reductions, while non-tradable sectors do not. Overall, our results suggest that a universal and permanent cash transfer does not significantly decrease aggregate employment.
No Strings Attached: The Behavioral Effects of U.S. Unconditional Cash Transfer Programs
Ioana Marinescu
NBER Working Paper, February 2018
Abstract:
The universal basic income has become a widely discussed measure in policy circles around the world. In this review, we cover the evidence relevant to its potential impact in the US, and in developed countries more generally. Many studies find no statistically significant effect of an unconditional cash transfer on the probability of working. In the studies that do find an effect on labor supply, the effect is small: a 10% income increase induced by an unconditional cash transfer decreases labor supply by about 1%. The evidence shows that an unconditional cash transfer can improve health and educational outcomes, and decrease criminality and drug & alcohol use, especially among the most disadvantaged youths.
Changing Business Dynamism and Productivity: Shocks vs. Responsiveness
Ryan Decker et al.
NBER Working Paper, January 2018
Abstract:
The pace of job reallocation has declined in all U.S. sectors since 2000. In standard models, aggregate job reallocation depends on (a) the dispersion of idiosyncratic productivity shocks faced by businesses and (b) the marginal responsiveness of businesses to those shocks. Using several novel empirical facts from business microdata, we infer that the pervasive post-2000 decline in reallocation reflects weaker responsiveness in a manner consistent with rising adjustment frictions and not lower dispersion of shocks. The within-industry dispersion of TFP and output per worker has risen, while the marginal responsiveness of employment growth to business-level productivity has weakened. The responsiveness in the post-2000 period for young firms in the high-tech sector is only about half (in manufacturing) to two thirds (economy wide) of the peak in the 1990s. Counterfactuals show that weakening productivity responsiveness since 2000 accounts for a significant drag on aggregate productivity.
Computers and Populism: Artificial Intelligence, Jobs and Politics in the Near Term
Frank Levy
MIT Working Paper, January 2018
Abstract:
I project the near-term future of work to ask whether job losses induced by artificial intelligence will increase the appeal of populist politics. The paper first explains how computers and machine learning automate workplace tasks. Automated tasks help to both create and eliminate jobs and I show why job elimination centers in blue collar and clerical work – an impact similar to that of manufactured imports and offshored services. I sketch the near-term evolution of three technologies aimed at blue collar and clerical occupations: autonomous long-distance trucks, automated customer service responses and industrial robotics. I estimate that in the next five-to-seven years, the jobs lost to each of these technologies will be modest but visible. I then outline the structure of populist politics. Populist surges are rare but a populist candidate who pits “the people” (truck drivers, call center operators, factory operatives) against “the elite” (software developers, venture capitalists) will be mining many of the U.S. regional and education fault lines that were part of the 2016 presidential election.
The Power of Working Longer
Gila Bronshtein et al.
NBER Working Paper, January 2018
Abstract:
This paper compares the relative strengths of working longer vs. saving more in terms of increasing a household’s affordable, sustainable standard of living in retirement. Both stylized households and actual households from the Health and Retirement Study are examined. We assume that workers commence Social Security benefits when they retire. The basic result is that delaying retirement by 3-6 months has the same impact on the retirement standard of living as saving an additional one-percentage point of labor earnings for 30 years. The relative power of saving more is even lower if the decision to increase saving is made later in the work life. For instance, increasing retirement saving by one percentage point ten years before retirement has the same impact on the sustainable retirement standard of living as working a single month longer. The calculations of the relative power of working longer and saving more are done for a wide range of realized rates of returns on saving, for households with different income levels, and for singles as well as married couples. The results are quite invariant to these circumstances.
Fewer and Less Skilled? Human Capital, Competition, and Entrepreneurial Success in Manufacturing
Meghana Ayyagari & Vojislav Maksimovic
George Washington University Working Paper, December 2017
Abstract:
We use micro data on skills to analyze the human capital of entrepreneurial and incumbent plants in U.S. manufacturing over 2005-2013. We find a large drop in cognitive skills in entrepreneurial plants. This has long-term implications since initial cognitive skills at the plant level predict future skills and growth rates. The gap between entrant and incumbent skills increases with exposure to Chinese imports, with entrants' skills falling and those of incumbents increasing. Import competition explains between 17%-60% of the skill differential between entrants and incumbents. While high skilled incumbents grow faster than low skilled establishments in exposed industries, the evidence for entrants is weaker. Overall, we find that entrepreneurial firms and incumbents are acquiring different skill sets, leaving entrants more exposed to the risk of automation or offshoring.
Sources of Displaced Workers' Long-Term Earnings Losses
Marta Lachowska, Alexandre Mas & Stephen Woodbury
NBER Working Paper, January 2018
Abstract:
We estimate the earnings losses of a cohort of workers displaced during the Great Recession and decompose those long-term losses into components attributable to fewer work hours and to reduced hourly wage rates. We also examine the extent to which the reduced earnings, work hours, and wages of these displaced workers can be attributed to factors specific to pre- and post-displacement employers; that is, to employer-specific fixed effects. The analysis is based on employer-employee linked panel data from Washington State assembled from 2002–2014 administrative wage and unemployment insurance (UI) records. Three main findings emerge from the empirical work. First, five years after job loss, the earnings of these displaced workers were 16 percent less than those of comparison groups of non-displaced workers. Second, earnings losses within a year of displacement can be explained almost entirely by lost work hours; however, five years after displacement, the relative earnings deficit of displaced workers can be attributed roughly 40 percent to reduced hourly wages and 60 percent to reduced work hours. Third, for the average displaced worker, lost employer-specific premiums account for about 11 percent of long-term earnings losses and nearly 25 percent of lower long-term hourly wages. For workers displaced from employers paying top-quintile earnings premiums (about 60 percent of the displaced workers in the sample), lost employer-specific premiums account for more than half of long-term earnings losses and 83 percent of lower long-term hourly wages.
New Evidence on Cyclical Variation in Labor Costs in the U.S.
Grace Weishi Gu & Eswar Prasad
NBER Working Paper, January 2018
Abstract:
Employer-provided nonwage benefit expenditures now account for one-third of U.S. firms' labor costs. We show that a broad measure of real labor costs including such benefit expenditures has become countercyclical during 1982-2014, contrary to the conventional view that labor costs are procyclical. Using BLS establishment-job data, we find that even real wages, the main focus of prior literature, have become countercyclical. Benefit expenditures are less rigid than nominal wages, although both components of labor costs have become more rigid. These rigidities, along with the rising relative importance of aggregate demand shocks (including the financial crisis), help explain countercyclical labor costs.
The Impact of Right-to-Work Laws on Worker Wages: Evidence from Collective Bargaining Agreements
Sudheer Chava, Andras Danis & Alex Hsu
Georgia Tech Working Paper, December 2017
Abstract:
We analyze the impact of the introduction of right-to-work (RTW) laws across the US on wages. After the introduction of RTW laws, there is a decrease in wages negotiated through collective bargaining agreements (CBAs). Further, the number of CBAs decreases, and the gap between the fraction of workers covered by a CBA and the fraction of union members increases. Firms increase investment and employment, and reduce their financial leverage. Our results suggest a decline in union bargaining power after RTW laws are passed, which could be a contributing factor to the recent slowdown in wage growth in the US.