Taking your job
From Immigrants to Robots: The Changing Locus of Substitutes for Workers
George Borjas & Richard Freeman
NBER Working Paper, January 2019
Abstract:
Increased use of robots has roused concern about how robots and other new technologies change the world of work. Using numbers of robots shipped to primarily manufacturing industries as a supply shock to an industry labor market, we estimate that an additional robot reduces employment and wages in an industry by roughly as much as an additional 2 to 3 workers and by 3 to 4 workers in particular groups, which far exceed estimated effects of an additional immigrant on employment and wages. While the growth of robots in the 1996-2016 period of our data was too modest to be a major determinant of wages and employment, the estimated coefficients suggest that continued exponential growth of robots could disrupt job markets in the foreseeable future and thus merit attention from labor analysts.
From Population Growth to Firm Demographics: Implications for Concentration, Entrepreneurship and the Labor Share
Hugo Hopenhayn, Julian Neira & Rish Singhania
NBER Working Paper, December 2018
Abstract:
The US economy has undergone a number of puzzling changes in recent decades. Large firms now account for a greater share of economic activity, new firms are being created at a slower rate, and workers are getting paid a smaller share of GDP. This paper shows that changes in population growth provide a unified quantitative explanation for these long-term changes. The mechanism goes through firm entry rates. A decrease in population growth lowers firm entry rates, shifting the firm-age distribution towards older firms. Heterogeneity across firm age groups combined with an aging firm distribution replicates the observed trends. Micro data show that an aging firm distribution fully explains i) the concentration of employment in large firms, ii) and trends in average firm size and exit rates, key determinants of the firm entry rate. An aging firm distribution also explains the decline in labor’s share of GDP. In our model, older firms have lower labor shares because of lower overhead labor to employment ratios. Consistent with our mechanism, we find that the ratio of nonproduction workers to total employment has declined in the US.
The Effect of Minimum Wages on Low-Wage Jobs: Evidence from the United States Using a Bunching Estimator
Doruk Cengiz et al.
NBER Working Paper, January 2019
Abstract:
We propose a novel method that infers the employment effect of a minimum wage increase by comparing the number of excess jobs paying at or slightly above the new minimum wage to the missing jobs paying below it. To implement our approach, we estimate the effect of the minimum wage on the frequency distribution of hourly wages using 138 prominent state-level minimum wage changes between 1979 and 2016. We find that the overall number of low-wage jobs remained essentially unchanged over five years following the increase. At the same time, the direct effect of the minimum wage on average earnings was amplified by modest wage spillovers at the bottom of the wage distribution. Our estimates by detailed demographic groups show that the lack of job loss is not explained by labor-labor substitution at the bottom of the wage distribution. We also find no evidence of disemployment when we consider higher levels of minimum wages. However, we do find some evidence of reduced employment in tradable sectors. In contrast to our bunching-based estimates, we show that some conventional studies can produce misleading inference due to spurious changes in employment higher up in the wage distribution.
Not All Technological Change Is Equal: Disentangling Labor Demand Effects of Automation and Parts Consolidation
Christophe Combemale et al.
Carnegie Mellon University Working Paper, December 2018
Abstract:
We separate and directly measure the labor-demand effects of two simultaneous forms of technological change - automation and parts consolidation. We collect detailed shop-floor data from four semiconductor firms with different levels of automation and parts consolidation. For each process step, we collect task data and measure operator skill requirements, including operations and control, near vision, and dexterity requirements using the O*NET survey instrument. We then use an engineering process model to separate the effects of the distinct technological changes on these process tasks and operator skill requirements. Within an occupation we show that aggregate measures of technological change can mask the opposing skill biases of multiple simultaneous technological changes. In our empirical context, automation polarizes skill demand as routine, codifiable tasks requiring low and medium skills are executed by machines instead of humans, while the remaining and newly created human tasks tend to require low and high skills. Parts consolidation converges skill demand as formerly divisible low and high skill tasks are transformed into a single indivisible task with medium skill requirements and higher cost of failure. We propose a new theory for the differential labor effects of technological changes on tasks, and hence jobs. Understanding these differential effects of technologies on labor outcomes is a critical first step toward analyzing the impact of emerging technological changes on labor demand, and eventually markets.
Community Resiliency in Declining Small Towns: Impact of Population Loss on Quality of Life over 20 Years
David Peters
Rural Sociology, forthcoming
Abstract:
This analysis seeks to understand why some small towns have improved quality of life (QoL) over the past 20 years despite sizable population losses. Using a longitudinal data set of small towns in Iowa collected every 10 years since 1994, I measure the resiliency or vulnerability of declining towns based on change in subjective QoL, and then model the socioeconomic correlates along a resilient‐decline index. Community resiliency is enhanced by the process of creating bridging social capital, not the quantity available for use. By contrast, the quantity of both internal and external linking social capital promotes resiliency by linking residents to local and outside power structures, but the growth of these linkages has no impact. Bonding social capital indirectly helps resiliency by increasing internal linkages that foster local participation, but hinders it by decreasing external ones that limit access to outside resources. Jobs in goods‐producing industries like manufacturing directly promote resiliency by providing more secure employment, plus indirectly promote it by increasing bridging ties and external linkages. Growing poverty and income disparities make declining places more vulnerable by reducing QoL and external linkages. I discuss local strategies promoting resiliency and QoL.
Lost Generations of Firms and Aggregate Labor Market Dynamics
Petr Sedláček
Journal of Monetary Economics, forthcoming
Abstract:
Can the unprecedented lack of startups during the U.S. Great Recession have persistently negative effects? While fewer firms hiring workers can mechanically reduce employment for many years, this may be offset by feedback effects on lower wages, slacker labor markets and higher profits. An estimated model of firm dynamics and frictional labor markets suggests that such feedback effects are too weak to offset the direct impact of fewer startups. Had firm entry remained constant during the Great Recession, output would have recovered 4-6 years earlier and unemployment would have been 0.5 percentage points lower even 10 years after the crisis.
Changing Patterns of Geographic Mobility and the Labor Market for Young Adults
Janna Johnson & Sam Schulhofer-Wohl
Journal of Labor Economics, January 2019, Pages S199-S241
Abstract:
We assess changing patterns of migration and their association with labor outcomes for the 1979 and 1997 cohorts of the NLSY. Although the long-distance migration rate is lower in the 1997 cohort, we find that migration fell mostly because return migration fell. We uncover little difference in patterns of selection into migration in the two cohorts, little difference in correlation between migration and labor market outcomes, and little evidence in either cohort of a positive labor market return to migration. Our findings suggest that reductions in geographic mobility do not explain the poor recent labor market performance of young adults.
From the Fringe to the Fore: Labor Unions and Employee Compensation
Matthew Knepper
Review of Economics and Statistics, forthcoming
Abstract:
Conventional wisdom suggests that labor unions raise worker wages while the newer empirical literature finds only negligible earnings effects. I reconcile this apparent contradiction by arguing that collective bargaining targets fringe benefits. Using U.S. firm-level data from the BEA Multinational Enterprise Survey and Compustat, I exploit a regression discontinuity in majority rule union elections to compare changes in employee compensation at firms whose establishment barely won a union election against those that barely lost an election. Following unionization, average employee compensation and employer pension contributions increase, which accordingly raises the labor share of compensation.
The Impact of the Gig-Economy on Financial Hardship Among Low-Income Families
Kaitlin Daniels & Michal Grinstein-Weiss
Washington University in St. Louis Working Paper, November 2018
Methodology: We analyze a novel data set documenting the financial health of a sample of low-income families. We are interested in the likelihood that a family experiences hardship, meaning they fail to pay their bills on time. We leverage the sequential launch of Uber's UberX service across locations to identify the impact of the associated increase in access to gigs on hardship via a difference-in-differences design. The granularity of our data allows exploration of possible mechanisms for our results.
Results: We find that UberX increases hardship among the low-income population, primarily by decreasing overall take-home pay (i.e. annual income less expenses). This is despite a corresponding reduction in income volatility, generally a boon to low-income families who have insufficient savings to weather unexpected dips in earnings.