Work There
The Shift to Remote Work Lessens Wage-Growth Pressures
Jose Maria Barrero et al.
NBER Working Paper, July 2022
Abstract:
The recent shift to remote work raised the amenity value of employment. As compensation adjusts to share the amenity-value gains with employers, wage-growth pressures moderate. We find empirical support for this mechanism in the wage-setting behavior of U.S. employers, and we develop novel survey data to quantify its force. Our data imply a cumulative wage-growth moderation of 2.0 percentage points over two years. This moderation offsets more than half the real-wage catchup effect that Blanchard (2022) highlights in his analysis of near-term inflation pressures. The amenity-values gains associated with the recent rise of remote work also lower labor's share of national income by 1.1 percentage points. In addition, the "unexpected compression" of wages since early 2020 (Autor and Dube, 2022) is partly explained by the same amenity-value effect, which operates differentially across the earnings distribution.
The Impact of Amazon Facilities on Local Economies
Vikram Pathania & Serguei Netessine
University of Pennsylvania Working Paper, May 2022
Abstract:
Amazon has been making significant investments to expand its fulfillment network that receives merchandise from vendors and third-party sellers, and then picks, packs, and ships customer orders. Media and policy attention have increasingly focused on this growing distribution network. We show a significant positive effect of opening Amazon's distribution facilities on counties' economic outcomes. After Amazon's entry, employment to population ratio increased by 0.7-1.0% points, implying a job multiplier effect of about 1.9, i.e., for every 10 jobs that Amazon created directly, nine other jobs were created elsewhere in the county. The poverty rate declined by 2.4-3.3%, and median household income grew by about 1.8-2.2%. We find similar estimates using three different methodologies --- panel regressions, matching combined with panel regressions, and synthetic controls. We present evidence that our findings can be interpreted as causal and are plausible.
Monopsony in the US Labor Market
Chen Yeh, Claudia Macaluso & Brad Hershbein
American Economic Review, July 2022, Pages 2099-2138
Abstract:
This paper quantifies employer market power in US manufacturing and how it has changed over time. Using administrative data, we estimate plant-level markdowns - the ratio between a plant's marginal revenue product of labor and its wage. We find most manufacturing plants operate in a monopsonistic environment, with an average markdown of 1.53, implying a worker earning only 65 cents on the marginal dollar generated. To investigate long-term trends for the entire sector, we propose a novel, theoretically grounded measure for the aggregate markdown. We find that it decreased between the late 1970s and the early 2000s, but has been sharply increasing since.
Estimating Trends in Male Earnings Volatility with the Panel Study of Income Dynamics
Robert Moffitt & Sisi Zhang
Journal of Business & Economic Statistics, forthcoming
Abstract:
The Panel Study of Income Dynamics (PSID) has been the workhorse data set used to estimate trends in U.S. earnings volatility at the individual level. We provide updated estimates for male earnings volatility using additional years of data. The analysis confirms prior work showing upward trends in the 1970s and 1980s, with a near doubling of the level of volatility over that period. The results also confirm prior work showing a resumption of an upward trend starting in the 2000s, but the new years of data available show volatility to be falling in recent years. By 2018, volatility had grown by a modest amount relative to the 1990s, with a growth rate only one-fifth the magnitude of that in the 1970s and 1980s. We show that neither attrition or item nonresponse bias, nor other issues with the PSID, affect these conclusions.
Unemployment Insurance, Starting Salaries, and Jobs
Gordon Dahl & Matthew Knepper
NBER Working Paper, June 2022
Abstract:
We study the labor market effects of permanent 23-50% reductions in unemployment insurance benefits available in seven states. Leveraging linked firm-establishment data, we find that establishments based in reform states experience 1.5-2.4% faster employment growth relative to the same firm's establishments in other states. Using a similar multi-state firm design, starting salaries are 1.8-7.2% lower in reform states and posted salaries for the same job fall by 1.4-5.5%. These labor supply shocks yield an average labor demand elasticity of -1.0. Our results reveal a substantial decline in match quality and worker bargaining power as UI benefits become less generous.
Telework, Wages, and Time Use in the United States
Sabrina Wulff Pabilonia & Victoria Vernon
Review of Economics of the Household, September 2022, Pages 687-734
Abstract:
Using data on full-time wage and salary workers from the 2017-2018 American Time Use Survey Leave and Job Flexibilities Module, we estimate hourly wage differentials for teleworkers and compare how workers allocate their time over the day when they work from home rather than the office. We find that some teleworkers earn a wage premium, but it varies by gender, parental status, and teleworking intensity. Fathers who telework earn more than fathers in office-based jobs, regardless of teleworking intensity. Women without children who telework occasionally earn more than their office counterparts. In industries and occupations where telework is more prevalent, mothers who work from home most days of the week pay a wage penalty compared to mothers in office-based jobs. Using time diaries, we find differences in work patterns and hours across worker groups that could drive these teleworker wage differentials. Most teleworkers work less on home days; however, those who earn wage premiums are working longer hours on weekdays, regardless of their work location. When teleworking, mothers experience more interruptions in their workdays than other workers, which could have negative effects on their productivity. We also find that teleworkers spend less time on commuting and grooming activities but more time on leisure activities and with family on work-at-home days than on office days, and female teleworkers spend more time sleeping and on household production activities.
Stepping into adulthood during a recession: Did job losses during the Great Recession impact health of young adults?
Shamma Adeeb Alam & Bijetri Bose
Health Economics, August 2022, Pages 1730-1751
Abstract:
This is the first study to comprehensively examine the impact of job losses during the Great Recession on mental health, physical health, health behavior, and risky health behavior of young adults (ages 18-27). We employ U.S. longitudinal data with individual fixed effects to control for time-invariant factors that may bias the results. We find that job losses during the recession of young adults living by themselves led to increased onset of doctor-diagnosed mental health problems and worries related to jobs. Poorer individuals suffered more from increased worries, obesity, and binge drinking. In contrast, for those living with their parents, job loss of young adults did not negatively affect their own health. Instead, fathers' job losses led to worse mental health, physical health, and health behavior for young adults. Overall, the results suggest that when living on their own, young adults were responsible for their households' livelihood, and consequently, own job losses led to stress and negative health outcomes. However, when living with parents, they were financially reliant on their parents. Therefore, own job losses did not affect health, but job losses of fathers, the primary income earners for most households, worsened the health of young adults.
Days of Work Over a Half Century: The Rise of the Four-day Week
Daniel Hamermesh & Jeff Biddle
NBER Working Paper, June 2022
Abstract:
We examine patterns of work in the U.S. from 1973-2018 with the novel focus on days per week, using intermittent CPS samples and one ATUS sample. Among full-time workers the incidence of four-day work tripled during this period, with over 8 million more full-time workers on four-day weeks. The same growth occurred in the Netherlands, Germany, and South Korea. The rise was not due to changes in demographics or industrial structure. Four-day full-time work is more common among less educated, younger, and white non-Hispanic workers, among men, natives, and people with young children; and among police and firefighters, health-care workers, and in eating/drinking places. Based on an equilibrium model of its prevalence, we show that it results more from workers' preferences and/or daily fixed costs of working than from employers' production costs. We verify the implication that the wage penalty for four-day work is greater where such work is more prevalent, and we show that the penalty has diminished over time.
Employer Wage Subsidy Caps and Part-Time Work
Joel Elvery, Lockwood Reynolds & Shawn Rohlin
ILR Review, forthcoming
Abstract:
Using tract-level US Census data and triple-difference estimators, the authors test whether firms increase their use of part-time workers when faced with capped wage subsidies. By limiting the maximum subsidy per worker, such subsidies create incentives for firms to increase the share of their payroll that is eligible for the subsidy by increasing use of part-time or low-wage workers. Results suggest that firms located in federal Empowerment Zones in the United States responded to the program's capped wage subsidies by expanding their use of part-time workers, particularly in locations where the subsidy cap is likely to bind. Results also show a shift toward hiring lower-skill workers.
Minimum Wages and Labor Markets in the Twin Cities
Loukas Karabarbounis, Jeremy Lise & Anusha Nath
NBER Working Paper, July 2022
Abstract:
Using merged administrative datasets from Minnesota, we bring new evidence on the labor market effects of large minimum wage increases by examining the policy changes implemented by Minneapolis and Saint Paul. We begin by using synthetic difference-in-differences methods to estimate counterfactual outcomes at the zip code level from Minnesota and at the city level from the rest of the country. The minimum wage did not affect employment in most industries but exerted a negative impact on restaurants' employment, with an elasticity of -0.8. Next, using variation in exposure to the minimum wage across establishments and workers within the Twin Cities, we find employment effects that are half as large as those from the time series. The cross-sectional estimates difference out employment effects from the pandemic or civil unrest that could confound the time series comparisons, but they do not include potential effects of the minimum wage operating through equilibrium adjustments such as entry. We quantify a model of establishment dynamics to reconcile the different estimates and argue that they plausibly reflect lower and upper bounds of employment losses. We use the model to show that our estimates are consistent with an establishment elasticity of labor demand of -1 and illustrate how they can inform deeper parameters characterizing product and labor market competition, factor substitution, and establishment dynamics.