Work History
Has U.S. Employment Really Polarized? A Critical Reappraisal
Jennifer Hunt & Ryan Nunn
Labour Economics, forthcoming
Abstract:
We re-examine whether U.S. workers have become increasingly concentrated in low and high-wage jobs relative to middle-wage jobs, a phenomenon known as employment polarization. We find that the typical occupation-based approach of previous literature has significant weaknesses, leading us to prefer a worker-based approach. At both the occupation and individual level, we do find a decline since 1973 in the share of workers earning middle wages. However, the large increase in the share of high-paid workers is not accompanied by any substantial increase in the share of low-paid workers - inconsistent with employment polarization. In particular, we find that the share of employment in low-wage occupations did not increase during the 1990s, and that the apparent growth (and therefore polarization) found in the previous literature is an artefact of occupation code redefinitions. We therefore do not find support for the view that employment was polarizing during the 1990s (whether because of automation or other factors).
Did Pandemic Unemployment Benefits Reduce Employment? Evidence from Early State-Level Expirations in June 2021
Harry Holzer, Glenn Hubbard & Michael Strain
NBER Working Paper, December 2021
Abstract:
The generosity of Unemployment Insurance (UI) benefits was expanded during the pandemic (FPUC), along with the groups of workers eligible for benefits (PUA). These two programs were set to expire in September 2021, but 18 states opted out of both in June 2021. Using Current Population Survey data, we present difference-in-difference and event study estimates that the flow of unemployed workers into employment increased by around two-thirds following early termination. We construct a counterfactual scenario that implies the national unemployment rate in each of July and August would have been around 0.3 percentage point lower than they were, and the employment-population ratio would have been around 0.1-0.2 percentage point higher than it was, had all states ended FPUC and PUA in June. Expanded eligibility and generosity of UI may have both slowed transitions from unemployment to employment. We also present some suggestive evidence that households with relatively high confidence in their ability to meet expenses may have been less sensitive to the termination of expanded benefits. Finally, we present evidence that early termination reduced the share of households that had no difficulty meeting expenses by five percent. The welfare implications of the early termination of FPUC and PUA are therefore ambiguous.
Inclusive Monetary Policy: How Tight Labor Markets Facilitate Broad-Based Employment Growth
Nittai Bergman, David Matsa & Michael Weber
NBER Working Paper, January 2022
Abstract:
This paper analyzes the heterogeneous effects of monetary policy on workers with differing levels of labor force attachment. Exploiting variation in labor market tightness across metropolitan areas, we show that the employment of populations with lower labor force attachment-Blacks, high school dropouts, and women-is more responsive to expansionary monetary policy in tighter labor markets. The effect builds up over time and is long lasting. We develop a New Keynesian model with heterogeneous workers that rationalizes these results. The model shows that expansionary monetary shocks lead to larger increases in the employment of less attached workers when the central bank follows an average inflation targeting rule and when the Phillips curve is flatter. These findings suggest that, by tightening labor markets, the Federal Reserve's recent move from a strict to an average inflation targeting framework especially benefits workers with lower labor force attachment.
The Labor Market Earnings of Veterans: Is Military Experience More or Less Valuable than Civilian Experience?
Christos Makridis & Barry Hirsch
Journal of Labor Research, December 2021, Pages 303-333
Abstract:
We assess the labor market experiences and earnings of military veterans, focusing on three major outcomes, among others, controlling for a wide array of demographic characteristics and industry and occupational fixed effects. First, we find that male and female veterans receive civilian earnings nearly equivalent to nonveteran men and women. This finding implies that military experience is valued in the labor market similarly to foregone civilian experience. Second, veterans are clustered in occupations with somewhat lower than average employment and real earnings growth, and in metropolitan areas with lower levels and growth of real GDP per capita. Third, veterans experience lower returns to formal educational investments (e.g., college) than do nonveterans. Veterans realize earnings gains from professional licenses, but their returns are lower than for nonveterans. These gains are concentrated among science, technology, engineering, and math (STEM) jobs, suggesting that veterans could help meet the growing demand for tech talent and artificial intelligence skills.
Minimum Wages, Efficiency and Welfare
David Berger, Kyle Herkenhoff & Simon Mongey
NBER Working Paper, January 2022
Abstract:
It has long been argued that a minimum wage could alleviate efficiency losses from monopsony power. In a general equilibrium framework that quantitatively replicates results from recent empirical studies, we find higher minimum wages can improve welfare, but most welfare gains stem from redistribution rather than efficiency. Our model features oligopsonistic labor markets with heterogeneous workers and firms and yields analytical expressions that characterize the mechanisms by which minimum wages can improve efficiency, and how these deteriorate at higher minimum wages. We provide a method to separate welfare gains into two channels: efficiency and redistribution. Under both channels and Utilitarian social welfare weights the optimal minimum wage is $15, but alternative weights can rationalize anything from $0 to $31. Under only the efficiency channel, the optimal minimum wage is narrowly around $8, robust to social welfare weights, and generates small welfare gains that recover only 2 percent of the efficiency losses from monopsony power.
The tradeoff between knowledge of mandated benefits and moral hazard
Jessica Brown
Southern Economic Journal, January 2022, Pages 1037-1064
Abstract:
When workers are not aware of a mandated benefit, they cannot take it into account in their employment decision, leading to deadweight loss. On the other hand, lack of awareness of a benefit reduces moral hazard, decreasing deadweight loss. I incorporate these trade-offs into a model of mandated benefits and apply the model to Temporary Disability Insurance, an employment benefit mandated in five states. First, using data collected through an original survey, I provide evidence that there is low awareness of this benefit. Second, I use the updated mandated benefits model to show that over a broad range of reasonable assumptions, the additional employee valuation of the benefit outweighs the additional program cost from moral hazard, and thus a public information campaign would increase employment.
Using Neural Networks to Predict Micro-Spatial Economic Growth
Arman Khachiyan et al.
NBER Working Paper, December 2021
Abstract:
We apply deep learning to daytime satellite imagery to predict changes in income and population at high spatial resolution in US data. For grid cells with lateral dimensions of 1.2km and 2.4km (where the average US county has dimension of 55.6km), our model predictions achieve R2 values of 0.85 to 0.91 in levels, which far exceed the accuracy of existing models, and 0.32 to 0.46 in decadal changes, which have no counterpart in the literature and are 3-4 times larger than for commonly used nighttime lights. Our network has wide application for analyzing localized shocks.
The Value of Contingent Work
Tobey Kass
University of Minnesota Working Paper, January 2022
Abstract:
I document several facts about contingent work: there is greater dispersion and larger changes in hours worked by contingent workers, and contingent workers' hourly wages are 11.5 percent lower than traditional employees'. I develop a novel model of how individuals and firms choose contingent work or traditional employment. Contingent work offers hours flexibility to individuals but traditional employment earns a higher wage in equilibrium and has the security of unemployment insurance. Firms hire traditional employees before observing their TFP and must pay administrative costs to hire or fire traditional employees. They can hire (less productive) contingent workers flexibly without these constraints. I show that the recent development of apps (such as Uber) that make contingent work easy to find lowered the optimal UI replacement rate from 48 percent to 41 percent, which shows that contingent work provides valuable insurance to all workers in the economy. I also analyze a recent policy change that extended UI to contingent workers. This policy generates welfare losses of 0.08 percent when the UI programs are funded by separate tax rates. Funding both UI programs together with a single tax generates welfare gains of 0.09 percent.
Firm Decisions and Variation across Universities in Access to High-Wage Jobs: Evidence from Employer Recruiting
Russell Weinstein
Journal of Labor Ecoomics, January 2022, Pages 1-46
Abstract:
I show that firm location decisions create barriers to accessing high-wage employers for students at distant universities. I collect office locations and campus recruiting strategies for more than 70 banking and consulting firms from 2000 to 2013. After firms open an office, students at nearby universities are nearly four times more likely to have on-campus access to the firm. Access increases for universities across a wide range of selectivity. Additional data from universities, LinkedIn, and mobility report cards suggest effects on hires and longer-run income success.
Technology-Skill Complementarity and Labor Displacement: Evidence from Linking Two Centuries of Patents with Occupations
Leonid Kogan et al.
NBER Working Paper, December 2021
Abstract:
We construct new technology indicators using textual analysis of patent documents and occupation task descriptions that span almost two centuries (1850-2010). At the industry level, improvements in technology are associated with higher labor productivity but a decline in the labor share. Exploiting variation in the extent certain technologies are related to specific occupations, we show that technological innovation has been largely associated with worse labor market outcomes - wages and employment - for incumbent workers in related occupations using a combination of public-use and confidential administrative data. Panel data on individual worker earnings reveal that less educated, older, and more highly-paid workers experience significantly greater declines in average earnings and earnings risk following related technological advances. We reconcile these facts with the standard view of technology-skill complementarity using a model that allows for skill displacement.
Do right-to-work laws reduce financial constraints of firms? Evidence from Michigan and Indiana companies
Vijay Gondhalekar, Landon Klausing & Christopher Harper
Applied Economics Letters, forthcoming
Abstract:
This study examines financial constraints of Michigan and Indiana firms before and after the two states enacted Right-to-Work laws in 2012 relative to those in states with and without RTW laws as separate control groups. Findings based on difference-in-difference regressions indicate that, on average, financial constraints of Michigan and Indiana firms were significantly higher than those in both the control groups before the RTW laws were enacted, but the constraints declined significantly after the laws were enacted not only relative to the pre-enactment levels but also relative to those of companies in both the control groups.
Labor supply response to overpayment notifications: Evidence from Social Security Disability Insurance
Priyanka Anand et al.
Contemporary Economic Policy, forthcoming
Abstract:
We use administrative data to provide evidence that notification of work-related overpayment debt reduces subsequent work activity by Social Security Disability Insurance beneficiaries. We exploit randomness in the timing of the overpayment debt notification by comparing beneficiary work activity before and after notification. Our results show that the share of overpaid beneficiaries engaging in substantial work activity declined by 8% over the 2-month period following an overpayment notification, which reduced to 4% after accounting for the ongoing declining trend in work activity. This evidence that overpayment debt notification discourages work highlights the need for policies to curtail overpayments.
Expanding the Locus of Resistance: Understanding the Co-constitution of Control and Resistance in the Gig Economy
Lindsey Cameron & Hatim Rahman
Organization Science, forthcoming
Abstract:
Existing literature examines control and resistance in the context of service organizations that rely on both managers and customers to control workers during the execution of work. Digital platform companies, however, eschew managers in favor of algorithmically mediated customer control - that is, customers rate workers, and algorithms tally and track these ratings to control workers' future platform-based opportunities. How has this shift in the distribution of control among platforms, customers, and workers affected the relationship between control and resistance? Drawing on workers' experiences from a comparative ethnography of two of the largest platform companies, we find that platform use of algorithmically mediated customer control has expanded the service encounter such that organizational control and workers' resistance extend well beyond the execution of work. We find that workers have the most latitude to deploy resistance early in the labor process but must adjust their resistance tactics because their ability to resist decreases in each subsequent stage of the labor process. Our paper, thus, develops understanding of resistance by examining the relationship between control and resistance before, during, and after a task, providing insight into how control and resistance function in the gig economy. We also demonstrate the limitations of platforms' reliance on algorithmically mediated customer control by illuminating how workers' everyday interactions with customers can influence and manipulate algorithms in ways that platforms cannot always observe.
What do unions do... for temps? Collective bargaining and the wage penalty
Adam Seth Litwin & Or Shay
Industrial Relations, forthcoming
Abstract:
Does collective bargaining lift wages for contingent workers? Well-worn theory suggests that temps at a covered employer earn less than otherwise similar "perms," but still fare better than they would in a nonunion workplace. Our analysis of a national sample of matched employee-employer data first disposes of the universality of this conventional wisdom. Then, it allows us to test an alternative, contingent theory of the mitigating impact of collective bargaining on the temp wage gap predicated on received research in labor relations and institutional labor economics. We find that just how temps fare relative to perms hinges on the labor relations orientation of the employment relationship. Whereas unions clearly deliver for temps under adversarial conditions, they do not appear to do so where they adopt a more cooperative stance toward their employer counterparts.
Policy Regulation of Precarious Work Schedules and Bottom-Up Enforcement: An Evaluation of State Reporting Pay Policies
Ryan Finnigan & Savannah Hunter
Social Forces, forthcoming
Abstract:
Precarious work schedules, including last-minute cuts to workers' shifts, undermine well-being for millions of workers and their families in the United States. Drawing on dispute resolution theories and prior research on complaint-driven enforcement of labor regulations, this study evaluates whether and how labor regulations can moderate this precarity. In eight states and Washington, DC, "reporting pay" policies require employers to pay workers for some portion of their shift if they report to work but the employer ends their shift much earlier than scheduled. To evaluate these policies, we fielded an original survey of hourly workers measuring self-reported and actual policy coverage, the frequency of shift cuts, and receipt of reporting pay following shift cuts. We find evidence for only partial compliance with reporting pay policies, at best. We next examine the role of workers' information about these policies in the enforcement process. Extremely few workers covered by reporting pay policies accurately identified the presence of the state policy. However, a survey experiment demonstrates that providing information about reporting pay policies significantly increases recommendations that a hypothetical worker should push for compensation for a shift cut, either with the manager directly or through external enforcement by the state. We conclude with discussion of bottom-up enforcement for labor regulations and possibilities for improvement.
Persistent Unpredictability: Analyzing Experiences with the First Statewide Scheduling Legislation in Oregon
Larissa Petrucci et al.
ILR Review, forthcoming
Abstract:
Based on 98 in-depth interviews with workers and managers, the authors analyze the effectiveness of Oregon's Fair Workweek Act, the first statewide scheduling legislation. Overall, findings show limited evidence of the law's efficacy to improve workers' schedules. The authors discuss three factors that are likely to explain this shortcoming: lack of adequate funding for education about the law and for enforcement, the inclusion of provisions that undermine the intent of fair scheduling legislation, and the ability of employers to interpret the law with substantial leeway. In this context, the authors consider the persistence of unpredictable scheduling practices a form of "flexible discipline," even under Fair Workweek legislation. This article contributes to the literature on unpredictable scheduling by showing that in order to address this problem, legislation must include robust funding for education, implementation, and enforcement and must avoid options for workers to waive their rights to predictability pay, which as part of the act is intended to compensate employees for last-minute schedule changes.
Market Concentration and Natural Resource Development in Rural America
Tom Mueller, Jesse Shircliff & Marshall Steinbaum
Rural Sociology, forthcoming
Abstract:
Natural resource development, both extractive (oil, gas, mining, and timber) and non-extractive (tourism, real estate, outdoor recreation), has been found to negatively impact economic prosperity in rural America. One mechanism recently proposed for why this occurs is high levels of labor market concentration, or oligopsony. Oligopsony occurs when there are few employers within a labor market and can lead to suppressed wages and a power imbalance between employers and workers. In this paper, we test the moderating effect of labor market concentration on the relationship between natural resource development and per capita income and poverty in rural America from 2010 to 2016. By comparing results between extractive and non-extractive development, as well as manufacturing, we show that labor market concentration attenuates the beneficial relationship observed at low levels of specialization in natural resources - particularly for extractive forms of development. Further, by finding no significant relationship between manufacturing specialization and economic prosperity, nor any moderating effect of labor market concentration in the case of manufacturing, we demonstrate that natural resource development and labor market concentration have a unique relationship with rural American economic prosperity.