Out of work
Does High Home-Ownership Impair the Labor Market?
David Blanchflower & Andrew Oswald
NBER Working Paper, May 2013
Abstract:
We explore the hypothesis that high home-ownership damages the labor market. Our results are relevant to, and may be worrying for, a range of policy-makers and researchers. We find that rises in the home- ownership rate in a U.S. state are a precursor to eventual sharp rises in unemployment in that state. The elasticity exceeds unity: a doubling of the rate of home-ownership in a U.S. state is followed in the long-run by more than a doubling of the later unemployment rate. What mechanism might explain this? We show that rises in home-ownership lead to three problems: (i) lower levels of labor mobility, (ii) greater commuting times, and (iii) fewer new businesses. Our argument is not that owners themselves are disproportionately unemployed. The evidence suggests, instead, that the housing market can produce negative 'externalities' upon the labor market. The time lags are long. That gradualness may explain why these important patterns are so little-known.
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Why Do Unemployed Americans Blame Themselves While Israelis Blame the System?
Ofer Sharone
Social Forces, June 2013, Pages 1429-1450
Abstract:
This article provides a new account of American job seekers' individualized understandings of their labor-market difficulties, and more broadly, of how structural conditions shape subjective responses. Unemployed white-collar workers in the U.S. tend to interpret their labor market difficulties as reflecting flaws in themselves, while Israelis tend to perceive flaws in the hiring system. These different responses have profound individual and societal implications. Drawing on in-depth interviews with unemployed job seekers and participant observations at support groups in the U.S. and Israel, this article shows how different labor market institutions give rise to distinct job search games, which I call the chemistry game in the U.S. and the specs game in Israel. Challenging the broad cultural explanations of the unemployment experience in the existing literature, this article shows how subjective responses to unemployment are generated by the search experiences associated with institutionally rooted job search games.
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Duration Dependence and Labor Market Conditions: Evidence from a Field Experiment
Kory Kroft, Fabian Lange & Matthew Notowidigdo
Quarterly Journal of Economics, forthcoming
Abstract:
This paper studies the role of employer behavior in generating "negative duration dependence" - the adverse effect of a longer unemployment spell - by sending fictitious resumes to real job postings in 100 U.S. cities. Our results indicate that the likelihood of receiving a callback for an interview significantly decreases with the length of a worker's unemployment spell, with the majority of this decline occurring during the first eight months. We explore how this effect varies with local labor market conditions and find that duration dependence is stronger when the local labor market is tighter. This result is consistent with the prediction of a broad class of screening models in which employers use the unemployment spell length as a signal of unobserved productivity and recognize that this signal is less informative in weak labor markets.
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House Lock and Structural Unemployment
Robert Valletta
Labour Economics, forthcoming
Abstract:
A recent decline in internal migration in the United States may have been caused in part by falling house prices, through the "lock in" effects of financial constraints faced by households whose housing debt exceeds the market value of their home. I analyse the relationship between such "house lock" and the elevated levels and persistence of unemployment during the recent recession and its aftermath, using data for the years 2008-11. Because house lock is likely to extend job search in the local labour market for homeowners whose home value has declined, I focus on differences in unemployment duration between homeowners and renters across geographic areas differentiated by the severity of the decline in home prices. The empirical analyses rely on microdata from the monthly Current Population Survey (CPS) files and an econometric method that enables the estimation of individual and aggregate covariate effects on unemployment durations using repeated cross-section data. I do not uncover systematic evidence to support the house-lock hypothesis.
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The American Recovery and Reinvestment Act: Solely A Government Jobs Program?
Timothy Conley & Bill Dupor
Journal of Monetary Economics, forthcoming
Abstract:
This paper estimates the private and government sector employment effects of American Recovery and Reinvestment Act (ARRA) spending via an instrumental variables strategy. We argue that this aid was effectively fungible and states used it to offset declines in revenue. This enables us to use exogenous variation in states' budget positions to identify the Act's employment effects. We also exploit exogenous variation across states in ARRA highway funding. According to our benchmark estimates, average state and local government employment, during the twenty-four months following the program's inception, was between 156 thousand and 563 thousand persons greater as a result of ARRA spending (90% confidence interval). The corresponding estimate for the private sector ranges from a loss of 182 thousand to a gain of 1.1 million jobs. Our point estimate for the implied cost of creating a job lasting one year is $202 thousand, which is substantially larger than the corresponding estimate from the President's Council of Economic Advisors.
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Todd Neumann & Jason Taylor & Price Fishback
American Economic Review, May 2013, Pages 105-110
Abstract:
Changes in the work week drove a larger portion of changes in total labor input during the Great Depression of the 1930s than during other decades. Work-sharing policies appear to be responsible. Herbert Hoover created various work-sharing committees -- led by key industrialists -- which pushed for shorter work weeks. And Franklin Roosevelt's President's Reemployment Agreement called for sharp cuts in weekly work hours. Spreading available work amongst more people was the goal. During these periods between 50 and 90 percent of declines in labor input were accommodated by falling hours. In recent decades employers have instead relied on layoffs to achieve the same end.
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Henry Farber & Robert Valletta
NBER Working Paper, May 2013
Abstract:
In response to the Great Recession, the availability of unemployment insurance (UI) benefits was extended to an unprecedented 99 weeks in many U.S. states in the 2009-2012 period. We use matched monthly data from the CPS to exploit variation in the timing and size of the UI benefit extensions across states to estimate the overall impact of these extensions on individual exit from unemployment, and we compare the estimated impact with that for the prior extension of benefits during the much milder downturn in the early 2000s. In both periods, we find a small but statistically significant reduction in the unemployment exit rate and a small increase in the expected duration of unemployment. The effects on exits and duration are primarily due to a reduction in exits from the labor force rather than to a decrease in exits to employment (the job finding rate). Although the overall effect of UI extensions on exit from unemployment is small, it implies a substantial effect of extended benefits on the steady-state share of unemployment in the cross-section that is long-term.
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Overeducation at the Start of the Career: Stepping Stone or Trap?
Stijn Baert, Bart Cockx & Dieter Verhaest
Labour Economics, forthcoming
Abstract:
This study investigates whether young unemployed graduates who accept a job below their level of education accelerate or delay the transition into a job that matches their level of education. We adopt the Timing of Events approach to identify this dynamic treatment effect using monthly calendar data from a representative sample of Flemish (Belgian) youth who started searching for a job right after leaving formal education. We find that overeducation is a trap. By accepting a job for which one is overeducated rather than only accepting adequate job matches, monthly transition rates into adequate employment fall by 51-98%, depending on the elapsed unemployment duration. These findings challenge the career mobility thesis and imply that the short-term benefits of policies that generate quick transitions into employment must be traded-off against the long-term costs of an inadequate job match.
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Interstate Variations in Private Sector Union Density in the U.S.
Behroz Baraghoshi & Cihan Bilginsoy
Journal of Labor Research, June 2013, Pages 180-202
Abstract:
This paper uses union density variations across state and state-industry cells in 1985, 1995, and 2005 to examine the factors that contributed to the decline in private sector unionization in the U.S. In addition to the conventional variables, it develops two measures to gauge the effects of union-management strife. Estimations indicate that union density varied directly with union organizing efforts and inversely with the employer opposition to unionization. Decomposition analysis reveals, however, that these variables do not explain why union density declined because changes in their marginal effects were favorable to unionization. Declining union density instead is attributable mostly to the shift factors subsumed under the intercept term over 1985-1995, and shift factors cum negative changes in sensitivity of unionization to workforce characteristics over 1995-2005.
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Analyzing the Extent and Influence of Occupational Licensing on the Labor Market
Morris Kleiner & Alan Krueger
Journal of Labor Economics, April 2013, Pages S173-S202
Abstract:
This study examines occupational licensing in the United States using a specially designed national labor force survey. Estimates from the survey indicated that 35% of employees were either licensed or certified by the government and that 29% were licensed. Another 3% stated that all who worked in their job would eventually be required to be certified or licensed, bringing the total that are or eventually must be licensed or certified by government to 38%. We find that licensing is associated with about 18% higher wages but that the effect of governmental certification on pay is much smaller.
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Wage Effects of Unionization and Occupational Licensing Coverage in the United States
Maury Gittleman & Morris Kleiner
NBER Working Paper, May 2013
Abstract:
Recent estimates in standard models of wage determination for both unionization and occupational licensing have shown wage effects that are similar across the two institutions. These cross-sectional estimates use specialized data sets, with small sample sizes, for the period 2006 through 2008. Our analysis examines the impact of unions and licensing coverage on wage determination using new data collected on licensing statutes that are then linked to longitudinal data from the National Longitudinal Survey of Youth (NLSY79) from 1979 to 2010. We develop several approaches, using both cross-sectional and longitudinal analyses, to measure the impact of these two labor market institutions on wage determination. Our estimates of the economic returns to union coverage are greater than those for licensing requirements.
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The Effect of Public Sector Employment on Local Labour Markets
Giulia Faggio & Henry Overman
Journal of Urban Economics, forthcoming
Abstract:
This paper considers the impact of public sector employment on local labour markets. Using English data at the Local Authority level for 2003 to 2007 we find that public sector employment has no identifiable effect on total private sector employment. However, public sector employment does affect the sectoral composition of the private sector. Specifically, each additional public sector job creates 0.5 jobs in the nontradable sector (construction and services) while crowding out 0.4 jobs in the tradable sector (manufacturing). When using data for a longer time period (1999 to 2007) we find no multiplier effect for nontradables, stronger crowding out for tradables and, consistent with this, crowding out for total private sector employment.
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Life satisfaction and self-employment: A matching approach
Martin Binder & Alex Coad
Small Business Economics, May 2013, Pages 1009-1033
Abstract:
Despite lower incomes, the self-employed consistently report higher satisfaction with their jobs. But are self-employed individuals also happier, more satisfied with their lives as a whole? High job satisfaction might cause them to neglect other important domains of life, such that the fulfilling job crowds out other pleasures, leaving the individual on the whole not happier than others. Moreover, self-employment is often chosen to escape unemployment, not for the associated autonomy that seems to account for the high job satisfaction. We apply matching estimators that allow us to better take into account the above-mentioned considerations and construct an appropriate control group (in terms of balanced covariates). Using the BHPS dataset that comprises a large nationally representative sample of the British populace, we find that individuals who move from regular employment into self-employment experience an increase in life satisfaction (up to 2 years later), while individuals moving from unemployment to self-employment are not more satisfied than their counterparts moving from unemployment to regular employment. We argue that these groups correspond to "opportunity" and "necessity" entrepreneurship, respectively. These findings are robust with regard to different measures of subjective well-being as well as choice of matching variables, and also robustness exercises involving "simulated confounders".
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Employment sector and pay gaps: Genetic and environmental influences
Terhi Maczulskij
Labour Economics, August 2013, Pages 89-96
Abstract:
This paper uses data on Finnish twins to examine two questions regarding public sector labour markets. First, what are the genetic and environmental contributions to being a public sector employee, and second, are there wage gaps between public and private sector employees. The results indicate that 34 to 40 per cent of the observed variance in the tendency to be a public sector employee can be attributed to genetic factors, with no influence of the shared environment. Furthermore, at least one-third of the genetic variance is mediated through educational attainment. The results from the wage gap analysis suggest that OLS estimates are downward biased. In fact, while OLS estimates indicate a negative wage gap for both males (seven per cent) and females (four per cent), the within-twin estimates do not indicate any inequalities with respect to pay offered by the two sectors.
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Amin Mohseni-Cheraghlou
Journal of Socio-Economics, forthcoming
Abstract:
Applying a fixed-effects panel analysis to a 1979-2004 panel data of the U.S. states, this essay re-examines the link between labor markets and suicides in the United States. By disaggregating the analysis across genders and three different age groups (20-34, 35-64, and 65+) and analyzing several other labor market indicators besides overall unemployment rates, the essay finds that deteriorations in labor markets is associated with hikes in suicide rates of only men and women between 35 and 64 years of age. In other words, higher group-specific unemployment rates, larger deviations of unemployment rates from their group-specific trends, and larger variance in the overall unemployment rates are all associated with higher suicide rates of adults aged 35-64, or prime working-age adults. These findings suggest that the mental wellbeing of prime working-age adults is more dependent on labor market conditions than people in other age groups. Therefore, during period when prime working-age adults are facing unfavorable labor market conditions, U.S. suicide prevention programs must especially target this group of population.
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Does self-employment increase the economic well-being of low-skilled workers?
Magnus Lofstrom
Small Business Economics, May 2013, Pages 933-952
Abstract:
Low-skilled workers do not fare well in today's skill intensive economy and their opportunities continue to diminish. Utilizing data from the survey of income and program participation, this paper provides an analysis of the economic returns to business ownership among low-skilled workers and addresses the essential question of whether self-employment is a good option for low-skilled individuals that policymakers might consider encouraging. The analysis reveals substantial differences in the role of self-employment among low-skilled workers across gender and nativity - women and immigrants are shown to be of particular importance from both the perspectives of trends and policy relevance. We find that, although the returns to low-skilled self-employment among men is higher than among women, the analysis shows that wage/salary employment is a more financially rewarding option for most low-skilled workers.