Work It
The Slope of the Phillips Curve: Evidence from U.S. States
Jonathon Hazell et al.
Quarterly Journal of Economics, forthcoming
Abstract:
We estimate the slope of the Phillips curve in the cross section of U.S. states using newly constructed state-level price indexes for nontradeable goods back to 1978. Our estimates indicate that the slope of the Phillips curve is small and was small even during the early 1980s. We estimate only a modest decline in the slope of the Phillips curve since the 1980s. We use a multiregion model to infer the slope of the aggregate Phillips curve from our regional estimates. Applying our estimates to recent unemployment dynamics yields essentially no missing disinflation or missing reinflation over the past few business cycles. Our results imply that the sharp drop in core inflation in the early 1980s was mostly due to shifting expectations about long-run monetary policy as opposed to a steep Phillips curve, and the greater stability of inflation between 1990 and 2020 is mostly due to long-run inflation expectations becoming more firmly anchored.
How Tight are U.S. Labor Markets?
Alex Domash & Lawrence Summers
NBER Working Paper, February 2022
Abstract:
Since the outset of the Covid-19 pandemic, labor market indicators that traditionally move together have been sending different signals about the degree of slack in the U.S. labor market. While some indicators on the supply-side, such as the prime-age employment-to-population ratio, suggest that there is still some slack in the labor market, other indicators on the demand-side, such as the job vacancy rate and the quits rate, imply that the labor market is already very tight. In light of these divergent signals, this paper compares alternative labor market indicators as predictors of wage inflation. Using national time series and state cross-section data, we find (i) unemployment is a better predictor of wage inflation than non-employment and (ii) vacancy rates and quit rates have substantial predictive power for wage inflation. We highlight the fact that vacancy and quit rates currently experienced in the United States correspond to a degree of labor market tightness previously associated with sub-2 percent unemployment rates. Finally, we show that predicted firm-side unemployment has dominant explanatory power with respect to subsequent inflation. Our results, along with a cursory analysis of labor force participation information, suggest that labor market tightness is likely to contribute significantly to inflationary pressure in the United States for some time to come.
Has the Willingness to Work Fallen during the Covid Pandemic?
Jason Faberman, Andreas Mueller & Ayşegül Şahin
NBER Working Paper, February 2022
Abstract:
We examine the effect of the Covid pandemic on willingness to work along both the extensive and intensive margins of labor supply. Special survey questions in the Job Search Supplement of the Survey of Consumer Expectations (SCE) allow us to elicit information about individuals' desired work hours for the 2013-2021 period. Using these questions, along with workers' actual labor market participation, we construct a labor market underutilization measure, the Aggregate Hours Gap (AHG), following Faberman et al. (2020). The AHG captures changes in labor market underutilization for the full population along both the extensive and intensive margins using data on desired work hours as a measure of their potential labor supply. We find that the sharp increase in the AHG during the Covid pandemic essentially disappeared by the end of 2021. We also document a sharp decline in desired work hours during the pandemic that persists through the end of 2021 and is roughly double the drop in the labor force participation rate. Ignoring the decline in desired hours overstates the degree of underutilization by 2.5 percentage points (12.5%). Our findings suggest that, as of 2021Q4, the labor market is tighter than suggested by the unemployment rate and the adverse labor supply effect of the pandemic is more pronounced than implied by the labor force participation rate. These discrepancies underscore the importance of taking into account the intensive margin for both labor market underutilization and potential labor supply.
Unsettled Employment, Reshuffled Priorities? Career Prioritization among College-Educated Workers Facing Employment Instability during COVID-19
Erin Cech & Sofia Hiltner
Socius: Sociological Research for a Dynamic World, January 2022
Abstract:
Millions of workers experienced job instability during the COVID-19 (coronavirus disease 2019) pandemic. A prevailing assumption is that such experiences of instability intensify economic rationality in workers' career decision making as a matter of course. In contrast, the authors argue that pandemic-related employment instability may have "unsettled" workers' lives in ways that elevated nonfinancial priorities such as meaningful work. Using proportionally representative survey data (n = 1,628), the authors compare the priorities of U.S. college-educated workers who were laid off or furloughed during the pandemic with those of workers whose jobs remained stable. Counter to expectations of heightened economic rationality, job-unstable workers were not more likely than job-stable workers to emphasize job security or salary in beliefs about good work. But they were more likely to prioritize passion for work. These findings challenge common assumptions about job prioritization in the wake of crisis-related job instability and have implications for how scholars and policy makers interpret labor force trends.
How Important are Minimum Wage Increases in Increasing the Wages of Minimum Wage Workers?
Jeffrey Clemens & Michael Strain
NBER Working Paper, March 2022
Abstract:
Popular discussion commonly presumes an outsized role for minimum wage increases as a driver of wage increases for minimum wage workers. In this paper, we investigate the accuracy of this presumption using data from the earnings studies of the Current Population Survey (CPS). CPS wage and earnings data enable us to assess the fraction of minimum wage workers who receive a raise within 12 months of their initial appearance as a minimum wage worker. On average from 2010 to 2019, we find that roughly 75 percent of minimum wage workers who remain employed experience a wage increase within 12 months. This fraction is higher during the later years of the sample, when the labor market has been strong, than in the earlier years. The fraction of minimum wage workers receiving wage increases is moderately higher when states enact minimum wage increases than when they do not. We also find that the fraction of minimum wage workers receiving wage increases is correlated with several measures of labor market tightness. Finally, wage gains are quite commonly associated with industry and/or occupation switches. This highlights the importance of career progression for the growth of earnings among entry-level workers. The vast majority of the wage gains realized by minimum wage workers thus appear to be driven by career progression and increases in labor demand. Minimum wage increases play a modest role as a driver of earnings trajectories beyond shaping the initial, typically short-lived, minimum wage job itself.
Designing Benefits for Platform Workers
Jonathan Gruber
NBER Working Paper, February 2022
Abstract:
Designing benefits for the growing platform workforce in the U.S. poses significant challenges. While platform workers need protection against unforeseen shocks, work that is often part time and spread across multiple platforms makes the traditional benefits model untenable. This paper reports the results from a survey of drivers and couriers working with Uber to help understand their benefits preferences. We find that there is a wide diversity across these workers in platform earnings, the share of platform earnings from Uber, the share of family earnings from platform work and the availability of benefits from other jobs. We use willingness-to-pay questions to show that workers are willing to trade off additional income for benefits; after accounting for the tax advantage of benefits, workers are roughly indifferent on average between the two. While there are some trends in valuation, such as higher valuation for pension than for health contributions, the most notable feature of the data is the wide variation across workers in their preferences across benefits types and relative to income. Workers also show a preference for benefits that can help them commit to increase savings in the future.
Predictive Scheduling Laws Do Not Promote Full-Time Work
Aaron Yelowitz
University of Kentucky Working Paper, January 2022
Abstract:
Since 2015, several sizable jurisdictions have implemented predictive scheduling laws where the intent is to regulate unpredictable work schedules - schedules which may affect the ability of workers to arrange child care, care for other family members, or attend school. These laws raise the cost to employer of adjusting a worker's schedule near to the time of work. Such laws were phased in over time, and specifically targeted workers in the retail and food services industries, but largely not other industries. When labor costs are increased for cancelling shifts if demand turns out to be low, one potential employer response is to not schedule as many workers for uncertain periods of demand. Using a difference-in-differences (DD) framework (based on geography and time within affected industries) and the 2014-2020 March Current Population Survey (CPS), I find that among workers, the composition of employees working part-time increased by approximately 9.2 percentage points. Approximately two-thirds of this shift - 6.3 percentage points - comes from those reporting to be part-time involuntarily (e.g., due to economic reasons, such as "slack work", "unfavorable business conditions", "inability to find full-time work" and "seasonal declines in demand"). Very little of the shift is explained by non-economic reasons (such as "childcare problems", "family or personal obligations", or "in school or training"). As such, it appears that predictive scheduling laws failed to provide some of the key anticipated benefits, while limiting opportunities for at least some workers.
The Effects of the Emeryville Fair Workweek Ordinance on the Daily Lives of Low-Wage Workers and their Families
Elizabeth Ananat, Anna Gassman-Pines & John Fitz-Henley
NBER Working Paper, February 2022
Abstract:
Emeryville, CA's Fair Workweek Ordinance (FWO) aimed to reduce service workers' schedule unpredictability by requiring large retail and food service employers to provide advanced notice of schedules and to compensate workers for last-minute schedule changes. From a 1-in-6 sample of Emeryville retail and food service workers with young children (58 percent working in regulated businesses at baseline, the rest in the same industries in firms below the size cutoff for regulation), this study gathered daily reports of work schedule unpredictability and worker and family well-being over three waves before and after FWO implementation (N=6,059 observations). The FWO decreased working parents' schedule unpredictability relative to those in similar jobs at unregulated establishments. The FWO also decreased parents' days worked while increasing hours per work day, leaving total hours roughly unchanged. Finally, parent well-being improved, with significant declines in sleep difficulty.
Millennials: Maligned or miscreants?
Julie Hotchkiss
Southern Economic Journal, forthcoming
Abstract:
This paper explores the degree to which labor supply behavior differs among Millennials, relative to earlier generations, especially to that of Baby-boomers. I find that wage and income elasticities are lower among Millennials, which can partly be attributed to trends beginning before their time. Responses to cyclical factors appear unchanged across generations. The overall lower observed labor supply among Millennials is nuanced with their behavior putting downward pressure on both hours and participation, whereas their characteristics are propping up labor supply. These differences could have important implications for economic growth and policy considerations.
Isolated States of America: The Impact of State Borders on Mobility and Regional Labor Market Adjustments
Riley Wilson
BYU Working Paper, December 2021
Abstract:
I document a new empirical pattern of internal mobility in the United States. Namely, county-to-county migration and commuting drop off discretely at state borders. People are three times as likely to move to a county 15 miles away, but in the same state, than to move to an equally distant county in a different state. These gaps remain even among neighboring counties or counties in the same commuting zone. This pattern is not explained by differences in county characteristics, is not driven by any particular demographic group, and is not explained by pecuniary costs such as differences in state occupational licensing, taxes, or transfer program generosity. However, county-to-county social connectedness (as measured by the number of Facebook linkages) follows a similar pattern. Although the patterns in social networks would be consistent with information frictions, nonpecuniary psychic costs, or behavioral biases such as a sate identity or home bias, the data suggest that state identity and home bias play an outsized role. This empirical pattern has real economic impacts. Building on existing methods, I show that employment in border counties adjusts more slowly after local economic shocks relative to interior counties. These counties also exhibit less in-migration and in-commuting, suggesting the lack of mobility leads to slower labor market adjustment.
Labor Market Fluidity and Human Capital Accumulation
Niklas Engbom
NBER Working Paper, January 2022
Abstract:
Using panel data from 23 OECD countries, I document that wages grow more over the life-cycle in countries where job-to-job mobility is more common. A life-cycle theory of job shopping and accumulation of skills on the job highlights that a more fluid labor market allows workers to faster relocate to jobs where they can better use their skills, incentivizing accumulation of skills. Lower labor market fluidity reduces life-cycle wage growth by 20 percent and aggregate labor productivity by nine percent across the OECD relative to the US. I derive a set of testable predictions for training and confront them with comparable cross-country training data, finding support for the theory.
Do Stronger Employment Discrimination Protections Decrease Reliance on Social Security Disability Insurance? Evidence from the U.S. Social Security Reforms
Patrick Button, Mashfiqur Khan & Mary Penn
Journal of the Economics of Ageing, forthcoming
Abstract:
The United States Social Security Amendments of 1983 increased the full retirement age and penalties for retiring before that age. This increased Social Security Disability Insurance (SSDI) applications by making SSDI relatively more generous. We explore if state disability and age discrimination laws moderated these spillovers, using variation whereby many state laws are broader or stronger than federal law. We estimate the effects of these laws on SSDI applications and receipt using a difference-in-differences approach. We find that a broader definition of disability, where only a medically diagnosed condition is required to be covered under state law, along with being able to sue for more damages under state disability discrimination law, are both associated with a significant reduction in induced SSDI applications and receipts. We also find some evidence that some features of state disability discrimination laws are also associated with increased employment, especially for women. While we find some positive association between age discrimination laws and employment effects, we do not find any moderating effect of age discrimination laws on SSDI.