Working For It
The impact of AI on the workforce: Tasks versus jobs?
Kathryn Bonney et al.
Economics Letters, November 2024
Abstract:
Will the adoption of AI by businesses substitute for worker tasks or jobs? This is a core question for which relatively scarce evidence exists -- especially in the wake of recent advances in generative AI. Using a new large-scale business survey by the U.S. Census Bureau, we find that AI use is having a much greater impact on worker tasks than on employment levels at the firm level. About 27% of firms using AI report replacing worker tasks, but only about 5% experience employment change due to AI use. These rates are expected to increase to nearly 35% and 12%, respectively, in the near future.
Why Do Workers Dislike Inflation? Wage Erosion and Conflict Costs
Joao Guerreiro et al.
NBER Working Paper, September 2024
Abstract:
How costly is inflation to workers? Answers to this question have focused on the path of real wages during inflationary periods. We argue that workers must take costly actions (“conflict”) to have nominal wages catch up with inflation, meaning there are welfare costs even if real wages do not fall as inflation rises. We study a menu-cost style model, where workers choose whether to engage in conflict with employers to secure a wage increase. We show that, following a rise in inflation, wage catchup resulting from more frequent conflict does not raise welfare. Instead, the impact of inflation on worker welfare is determined by what we term “wage erosion” -- how inflation would lower real wages if workers' conflict decisions did not respond to inflation. As a result, measuring welfare using observed wage growth understates the costs of inflation. We conduct a survey showing that workers are willing to sacrifice 1.75% of their wages to avoid conflict. Calibrating the model to the survey data, the aggregate costs of inflation incorporating conflict more than double the costs of inflation via falling real wages alone.
Revisiting the Occupational Health Impact of Right-to-Work Laws: A Research Note
Emma Zang, Qinyou Hu & Zitong Wang
Demography, October 2024, Pages 1283-1292
Abstract:
This research note reevaluates the occupational health impact of right-to-work (RTW) legislation, incorporating recent developments in causal inference techniques. In an era marked by an uptick in the adoption of anti-union legislation and increases in workplace fatalities and injuries, it is particularly urgent to examine the extent to which RTW laws affect workers’ health. Using a state-year-level dataset spanning 28 years and collected from multiple data sources, we apply an innovative generalized synthetic control method to overcome several limitations of the traditional two-way fixed-effects approach to examine the effect of RTW laws on occupational fatal injuries as well as various other health outcomes. Robustness checks were conducted using a wide range of alternative methods for two-way fixed-effects adjustments. In contrast with findings from previous studies, we found null effects on occupational fatal injuries, as well as on all other health outcomes. Overall, our results indicate that findings from previous studies are based on very thin empirical evidence, with potentially underestimated standard errors and unobserved confounders. Our results highlight the importance of revisiting research questions using updated methodological tools.
The Dignity of Nonworking Men
Sarah Halpern-Meekin et al.
Rural Sociology, forthcoming
Abstract:
Studies have demonstrated the centrality of work and dignity in men's understanding of themselves and their place in society, especially in rural areas. However, previous studies of work and identity among men have generally drawn from the perspectives of the employed. From interviews with nonmetro prime-age men (25–54 years old) who were out of the formal labor force (N = 61), we find that men present themselves as deserving of dignified treatment. They do so by drawing on the values of work -- describing themselves as skilled, hard workers with a strong sense of personal responsibility. Ironically, this sense of self-worth can conflict with them remaining in the formal labor force because of how they are treated and how others conduct themselves on the job. In this rural setting, hegemonic market-based values guide men even when outside the institution of work, yet some men find they can only resolve tension between these values and the realities of employment outside the formal labor market.
Whom Should I Work For? Firm Characteristics and New Workers' Future Pay
Laura Yue Li & Hayoung Yoon
University of Illinois Working Paper, September 2024
Abstract:
This study looks at how a company's financial characteristics before the start of a new worker's employment predict the worker's future salary growth and job stability. Our research focuses on publicly traded U.S. companies and conducts analyses at the worker-job level using wage and employment information obtained from Census Longitudinal Employer-Household Dynamics (LEHD). Our analyses reveal distinct patterns: for low-income workers, firm size emerges as the most influential factor for achieving higher long-term pay and job security. As income level rises, the impact of size declines and middle-and high-income workers increasingly benefit from firms with elevated cash reserves and robust operating cash flows. Strikingly, despite their prominence in equity markets, accrual-based earnings performance and stock returns exhibit limited predictive power regarding workers' long-term pay and employment stability. These findings aid workers in making informed job decisions and contribute to labor economics and accounting fields by assessing the utility of financial information for employment choices.
Entry Costs Rise with Growth
Peter Klenow & Huiyu Li
NBER Working Paper, September 2024
Abstract:
Over time and across states in the U.S., the number of firms is more closely tied to overall employment than to output per worker. In many models of firm dynamics, trade, and growth with a free entry condition, these facts imply that the costs of creating a new firm increase sharply with productivity growth. This increase in entry costs can stem from the rising cost of labor used in entry and weak or negative knowledge spillovers from prior entry. How entry costs vary with growth matters for welfare. For example, our findings suggest that productivity-enhancing policies will not induce entry of firms, thereby limiting the total impact of such policies on welfare.
Robots as guardians: Industrial automation and workplace safety in China
Wei Luo et al.
Journal of Development Economics, January 2025
Abstract:
Industrial robots can improve workplace safety by performing hazardous tasks on behalf of workers. This paper examines the impact of industrial robots on workplace safety in China. We find that a one-standard-deviation increase in robot exposure reduces annual workplace accidents and fatalities by 0.100 and 0.0133 cases per thousand population, compared to sample averages of 0.122 accidents and 0.0351 fatalities. These findings are robust to an instrumental variable strategy and various robustness checks. Our analysis of injuries in household surveys and Baidu search activities reinforces these results. Using an accounting framework, we show that the safety improvement is not driven by the mechanical effects of robot-induced employment reduction. Instead, within-occupation improvement in workplace safety plays a more crucial role.
On the Nature of Entrepreneurship
Anmol Bhandari et al.
NBER Working Paper, October 2024
Abstract:
This paper provides new insights into the nature of entrepreneurship using a novel panel dataset based on U.S. administrative data from the Internal Revenue Service and the Social Security Administration. These data are used to analyze patterns of income growth and determinants of entrepreneurial choice for a large population of business owners. Earlier studies relying on household survey data have been limited by small samples, short panels, and income top-coding and, as a result, have focused on the typical self-employed individual rather than the typical dollar earned in self-employment. Without these limitations, we find that self-employed individuals have significantly higher average income and steeper, more persistent income growth profiles than paid- employed peers with similar characteristics. Contrary to the survey evidence, we find a much smaller role for non-pecuniary motives in driving entrepreneurial choice and little evidence for inordinately high risk factors or startup costs impeding entry. Linking individual and business filings, we find that business founders have sufficient resources in the initial years of operation to ensure positive individual income despite the fact that most claim a loss on the business.
Driving the Gig Economy
Katharine Abraham et al.
NBER Working Paper, August 2024
Abstract:
Using rich administrative tax data, we explore the effects of the introduction of online ridesharing platforms on entry, employment and earnings in the Taxi and Limousine Services industry. Ridesharing dramatically increased the pace of entry of workers into the industry. New entrants were more likely to be young, female, White and U.S. born, and to combine earnings from ridesharing with wage and salary earnings. Displaced workers have found ridesharing to be a substantially more attractive fallback option than driving a taxi. Ridesharing also affected the incumbent taxi driver workforce. The exit rates of low-earning taxi drivers increased following the introduction of ridesharing in their city; exit rates of high-earning taxi drivers were little affected. In cities without regulations limiting the size of the taxi fleet, both groups of drivers experienced earnings losses following the introduction of ridesharing. These losses were ameliorated or absent in more heavily regulated markets.
Why Didn't the U.S. Unemployment Rate Rise at the End of WWII?
Shigeru Fujita, Valerie Ramey & Tal Roded
NBER Working Paper, October 2024
Abstract:
This paper investigates why the U.S. unemployment rate rose only a few percentage points despite the dramatic decline in government spending and other upheaval at the end of World War II. Using a new longitudinal data set based on archival sources and government surveys, we study the many facets of this question. We find five main results. First, withdrawals from the labor force at the end of WWII were an important part of the explanation for the small rise in the unemployment rate. These withdrawals tended to be concentrated among females between the ages of 20 and 44 and male war veterans. Second, among those staying in the labor force, most of the workers who separated from their jobs moved directly into a new job. Third, workers accomplished these job-to-job transitions despite moving across industries. Fourth, returning veterans quickly returned to their previous position on the occupation ladder whereas those laid off from civilian jobs experienced a significant step down the occupation ladder. Fifth, a neoclassical model suggests that the post-war boom in job creation was a direct consequence of the crowding out of investment in consumer durable goods, residential capital, and business capital by military spending during the war.