Shovel Ready
Immigrant-Native Substitutability: The Role of Language Ability
Ethan Lewis
NBER Working Paper, November 2011
Abstract:
Wage evidence suggests that immigrant workers are imperfectly substitutable for native-born workers with similar education and experience. Using U.S. Censuses and recent American Community Survey data, I ask to what extent differences in language skills drive this. I find they are important. I estimate that the response of immigrants' relative wages to immigration is concentrated among immigrants with poor English skills. Similarly, immigrants who arrive at young ages, as adults, both have stronger English skills and exhibit greater substitutability for native-born workers than immigrants who arrive older. In U.S. markets where Spanish speakers are concentrated, I find a "Spanish-speaking" labor market emerges: in such markets, the return to speaking English is low, and the wages of Spanish and non-Spanish speakers respond most strongly to skill ratios in their own language group. Finally, in Puerto Rico, where almost all workers speak Spanish, I find immigrants and natives are perfect substitutes. The implications for immigrant poverty and regional settlement patterns are analyzed.
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Work incentives and the food stamp program
Hilary Williamson Hoynes & Diane Whitmore Schanzenbach
Journal of Public Economics, February 2012, Pages 151-162
Abstract:
Labor supply theory makes strong predictions about how the introduction or expansion of a social welfare program impacts work effort. Although there is a large literature on the work incentive effects of AFDC and the EITC, relatively little is known about the work incentive effects of the Food Stamp Program and none of the existing literature is based on quasi-experimental methods. We use the cross-county introduction of the program in the 1960s and 1970s to estimate the impact of the program on the extensive and intensive margins of labor supply, earnings, and family cash income. Consistent with theory, we find reductions in employment and hours worked when food stamps are introduced. The reductions are concentrated among families headed by single women.
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Cognitive demands of the workplace
Earl Hunt & Tara Madhyastha
Journal of Neuroscience, Psychology, and Economics, forthcoming
Abstract:
The modern workplace runs very largely on the cognitive abilities of the workforce. In this study, we treated cognitive ability as a commodity and considered the demand for and supply of this commodity. Our primary data were ratings of the cognitive skills required by various occupations, as listed in the U.S. Department of Labor's O*NET database. The 21 ratings in that database can be reduced to 3 dimensions, with 1 of them, general cognitive ability, being by far the largest. The demand for this ability was determined by considering the number of jobholders in the various occupations represented in O*NET. The demand closely fit a normal distribution, centered at a slightly below average cognitive ability value. This suggests that the O*NET ratings represent adequate rather than typical performance. The level of general cognitive ability established by ratings of occupations was linearly related to the performance of applicants for jobs within an occupation, indicating that the rating measure and cognitive test scores are on the same scale. The general cognitive ability ratings of occupations predicted approximately 60% of the variation in income across occupations.
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Unemployment Insurance and Job Search in the Great Recession
Jesse Rothstein
NBER Working Paper, October 2011
Abstract:
Nearly two years after the official end of the "Great Recession," the labor market remains historically weak. One candidate explanation is supply-side effects driven by dramatic expansions of Unemployment Insurance (UI) benefit durations, to as many as 99 weeks. This paper investigates the effect of these UI extensions on job search and reemployment. I use the longitudinal structure of the Current Population Survey to construct unemployment exit hazards that vary across states, over time, and between individuals with differing unemployment durations. I then use these hazards to explore a variety of comparisons intended to distinguish the effects of UI extensions from other determinants of employment outcomes. The various specifications yield quite similar results. UI extensions had significant but small negative effects on the probability that the eligible unemployed would exit unemployment, concentrated among the long-term unemployed. The estimates imply that UI benefit extensions raised the unemployment rate in early 2011 by only about 0.1-0.5 percentage points, much less than is implied by previous analyses, with at least half of this effect attributable to reduced labor force exit among the unemployed rather than to the changes in reemployment rates that are of greater policy concern.
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The Happiness of Single Mothers after Welfare Reform
John Ifcher
B.E. Journal of Economic Analysis & Policy, September 2011
Abstract:
U.S. welfare and tax policies targeting single mothers were transformed over a decade ago. What was the impact on single mothers' happiness? Using data from the General Social Survey, difference in difference estimators are calculated. The results appear to indicate that the package of welfare and tax policy changes increased happiness. The results are largely consistent across three comparison groups and robust to various specification checks. This research nicely complements the literature by examining the impact of the welfare and tax policy changes on a novel outcome measure, self-reported happiness.
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Parental Job Loss and Children's School Performance
Mari Rege, Kjetil Telle & Mark Votruba
Review of Economic Studies, October 2011, Pages 1462-1489
Abstract:
Using Norwegian register data, we estimate how children's school performance is affected by their parents' exposure to plant closure. Our estimates suggest that paternal job loss has a negative effect on children's school performance. In contrast, maternal job loss is associated with a non-significant increase in school performance. Importantly, the negative effect of paternal job loss appears largely unrelated to its effect on father's income, father's employment status, a shift in maternal time towards employment, marital dissolution, and residential relocation. A disparate effect of job loss across fathers and mothers is, however, consistent with recent empirical studies documenting that the mental distress experienced by displaced workers is generally more severe for men than women.
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The Dual Transformation of Social Protection and Human Capital: Comparing Britain and Germany
Timo Fleckenstein, Adam Saunders & Martin Seeleib-Kaiser
Comparative Political Studies, December 2011, Pages 1622-1650
Abstract:
Britain and Germany have been experiencing significant changes in the nature of work and welfare since the 1990s. Although important differences have remained, there have been compelling indications of a dual transformation of welfare constituted not only by a far-reaching retrenchment in unemployment insurance but also by a remarkable expansion in family policy. These developments have their functional underpinnings in accelerating deindustrialization with a declining proportion of the male workforce with specific skills as well as in service sector growth and rising female labor market participation characterized by an increase in general skills. As the aggregate effect of economic fluctuations in industrial production has diminished over time, the relative incidence of work disruptions that have arisen from maternity and child-rearing has increased substantially. This dual transformation in welfare and employment patterns suggests that the process of deindustrialization has initiated significant path adjustments unanticipated in the existing comparative political economy literature.
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Rising Labor Productivity during the 2008-9 Recession
Casey Mulligan
NBER Working Paper, November 2011
Abstract:
During the recession of 2008-9, labor hours fell sharply, while wages and output per hour rose. Some, but not all, of the productivity and wage increase can be attributed to changing quality of the workforce. The rest of the increase appears to be due to increases in production inputs other than labor hours. All of these findings, plus the drop in consumer expenditure, are consistent with the hypothesis that labor market "distortions" were increasing during the recession and have remained in place during the slow "recovery." Producers appear to be trying to continue production with less labor, rather than cutting labor hours as a means of cutting output.
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Alan Krueger & Andreas Mueller
Brookings Papers on Economic Activity, Spring 2011, Pages 1-57
Abstract:
This paper presents findings from a survey of 6,025 unemployed workers who were interviewed every week for up to 24 weeks in the fall of 2009 and winter of 2010. We find that the amount of time devoted to job search declines sharply over the spell of unemployment; we do not observe a rise in job search or job finding around the time that extended unemployment insurance (UI) benefits expire. The workers in our survey express much dissatisfaction and unhappiness with their lives, and their unhappiness rises the longer they are unemployed. The unemployed appear to be particularly sad during episodes of job search, and they report feeling more sad during job search the longer they are unemployed. We also find that in the aftermath of the Great Recession the exit rate from unemployment was low at all durations and declined gradually over the spell of unemployment. Both the amount of time devoted to job search and the reservation wage help predict early exit from UI.
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The Employment Effects of Lower Minimum Wage Rates for Young Workers: Canadian Evidence
Michael Shannon
Industrial Relations, October 2011, Pages 629-655
Abstract:
Between 1986 and 1998, six of the ten Canadian provinces abolished their lower minimum wage rates for younger teenage workers. Using data from the Canadian Labour Force Survey, this paper evaluates the effects of abolition on the employment and weekly hours worked of 15- to 16-year-olds using teenagers in provinces where there is no legislative change and young people above the age to which youth rates applied as control groups. The results provide some evidence that abolishing these youth rates significantly lowered employment and work hours of 15- to 16-year-olds, but the lack of evidence for some jurisdictions and patterns of effects using age controls do raise some questions regarding the interpretation of the results.
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Borrowing constraints, the cost of precautionary saving and unemployment insurance
Thomas Crossley & Hamish Low
International Tax and Public Finance, December 2011, Pages 658-687
Abstract:
When it is costly for individuals to save or to borrow, unemployment insurance (UI) provides an alternative source of liquidity that smooths consumption over time and leads individuals to spend longer unemployed searching for a suitable job. We show in a tractable life-cycle model how the optimal unemployment replacement ratio and the fall in consumption on job loss depend on the cost of self-insurance and the cost of borrowing. This implies that the value of UI depends on age at job loss, consumption needs (such as the presence of children), discount rates, the return on saving, access to credit and the presence of other social insurance programmes. Optimal replacement rates vary substantially with plausible variation in these factors (from less than 20 percent to almost 60 percent).
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Heejung Chung & Wim van Oorschot
Journal of European Social Policy, October 2011, Pages 287-301
Abstract:
In reaction to the recent financial crisis, the European Commission re-stated its view that the balance between flexibility and security is the key to success for the future of the European social economy, as well as its belief in the power of institutional arrangements it deems necessary for this balance. However, do powerful institutions actually counter market forces where flexicurity is concerned? In this paper we address this question by analysing the impact of institutional configurations and market factors on perceived employment insecurity among workers in Europe. We use the 4th wave of the European Social Survey for 2008/2009, which covers 22 countries, and implement a multi-level approach where contextual effects are taken into account and individuals are considered to be embedded within a country. We find that policies that secure one's income and employability skills, such as passive and active labour market policies, are more important for providing employment security for individuals than institutions that secure one's current job, such as employment protection. Of the economic and labour market factors, general market conditions (measured as employment rate average) and the strength of the financial crisis (measured as gross domestic product growth rate from 2008 to 2009) are both similarly influential in explaining cross-national variance in the employment insecurity perception of individuals. More generally, and most interestingly, we find that institutional factors lose their significance when market factors are taken into account. Thus, it seems that differences in economic and labour market conditions between countries better explain why workers feel insecure about their employment, than the differences in employment and income policies. Although this result could be influenced by the time period under investigation, which is characterized by a financial crisis, results from previous studies using data from different periods suggest that it is not period-specific.
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Card-Check Laws and Public-Sector Union Membership in the States
Timothy Chandler & Rafael Gely
Labor Studies Journal, December 2011, Pages 445-459
Abstract:
We examine the impact of state card-check legislation on public-sector union membership. Based on an empirical analysis of data from 2000 to 2009, a time during which eight states enacted card-check legislation for public employees, we find significantly higher levels of public-sector union membership for states that passed card-check legislation in years after the laws were enacted relative to states that did not pass such laws. Moreover, average public-sector union membership increased for the states that passed card-check legislation after the laws were passed relative to their precard-check law union-membership levels.