Hard at Work
Employment Stability in the U.S. Labor Market: Rhetoric versus Reality
Matissa Hollister
Annual Review of Sociology, 2011, Pages 305-324
Abstract:
Most Americans believe that employment stability has declined in recent decades. Initial efforts to document this trend empirically, however, produced mixed results, and so research lost momentum. This review shows that evidence of declines in employment stability is stronger than originally portrayed and that therefore the field deserves renewed attention, particularly in light of the current recession. Research shows consistent declines in employment stability among private-sector male workers but more complex trends for female and public-sector workers. Future research should not only seek to better document these trends but go further by investigating their possible causes and broader consequences. Additionally, although changes have occurred, they do not match the strength of public perceptions. Further work is necessary, therefore, to understand this contradiction and the changing role of employment in American society.
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What is the objective of professional licensing? Evidence from the US market for lawyers
Mario Pagliero
International Journal of Industrial Organization, July 2011, Pages 473-483
Abstract:
According to public interest theory, professional licensing solves the lemon problem generated by asymmetric information. In contrast, the capture theory claims that licensing aims at increasing professional salaries by restricting supply. This paper shows that the two theories can be identified using data from one regulated profession and provides an empirical application to the US market for entry level lawyers. The empirical results support capture theory.
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Highly Educated Immigrants and Native Occupational Choice
Giovanni Peri & Chad Sparber
Industrial Relations, July 2011, Pages 385-411
Abstract:
Economic debate about the consequences of immigration in the United States has largely focused on how influxes of foreign-born labor with little educational attainment have affected similarly educated native-born workers. Fewer studies analyze the effect of immigration within the market for highly educated labor. We use O*NET data on job characteristics to assess whether native-born workers with graduate degrees respond to an increased presence of highly educated foreign-born workers by choosing new occupations with different skill content. We find that highly educated native and foreign-born workers are imperfect substitutes. Immigrants with graduate degrees specialize in occupations demanding quantitative and analytical skills, whereas their native-born counterparts specialize in occupations requiring interactive and communication skills. When the foreign-born proportion of highly educated employment within an occupation rises, native employees with graduate degrees choose new occupations with less analytical and more communicative content.
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Should Unemployment Insurance Vary With the Unemployment Rate? Theory and Evidence
Kory Kroft & Matthew Notowidigdo
NBER Working Paper, June 2011
Abstract:
We study how the level of unemployment insurance (UI) benefits that trades off the consumption smoothing benefit with the moral hazard cost of distorting job search behavior varies over the business cycle. Empirically, we find that the moral hazard cost is procyclical, greater when the unemployment rate is relatively low. By contrast, our evidence suggests that the consumption smoothing benefit of UI is acyclical. Using these estimates to calibrate our model, we find that a one standard deviation increase in the unemployment rate leads to a roughly 14 to 27 percentage point increase in the welfare-maximizing wage replacement rate.
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Money for nothing? Universal child care and maternal employment
Tarjei Havnes & Magne Mogstad
Journal of Public Economics, forthcoming
Abstract:
The strong correlation between child care and maternal employment rates has led previous research to conclude that affordable and readily available child care is a driving force both of cross-country differences in maternal employment and of its rapid growth over the last decades. We analyze a staged expansion of subsidized child care in Norway. Our precise and robust difference-in-differences estimates reveal that there is little, if any, causal effect of subsidized child care on maternal employment, despite a strong correlation. Instead of increasing mothers' labor supply, the new subsidized child care mostly crowds out informal child care arrangements, suggesting a significant net cost of the child care subsidies.
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The Impact of Amnesty on Labor Market Outcomes: A Panel Study Using the Legalized Population Survey
Catalina Amuedo-Dorantes & Cynthia Bansak
Industrial Relations, July 2011, Pages 443-471
Abstract:
This article tests whether amnesty, a provision of the 1986 Immigration Reform and Control Act, affected the labor market outcomes of the legalized population. Using a quasi-experimental framework, we find that employment fell, unemployment rose, and wage growth rates were higher for newly legalized men after the implementation of the amnesty program. For women, employment fell, transitions out of the workforce increased, and wages grew at a faster rate among the newly legalized population.
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Implications of Immigration Policies for the U.S. Farm Sector and Workforce
Stephen Devadoss & Jeff Luckstead
Economic Inquiry, July 2011, Pages 857-875
Abstract:
We develop a theoretical model using migration and trade theory to examine the effects of domestic and border enforcement policies on unauthorized workers and the U.S. agricultural sector. The theoretical results show that heightened immigration policies increase the illegal farm wage rate, and reduce the employment of unauthorized farm workers and exports. The empirical analysis show that increased domestic enforcements curtail the number of undocumented farm workers by an average of 8,947 and commodity exports to Mexico by an average of $180 million. The tighter border control curbs illegal farm workers by 8,147 and reduces farm exports by $181 million.
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What Explains the German Labor Market Miracle in the Great Recession?
Michael Burda & Jennifer Hunt
NBER Working Paper, June 2011
Abstract:
Germany experienced an even deeper fall in GDP in the Great Recession than the United States, with little employment loss. Employers' reticence to hire in the preceding expansion, associated in part with a lack of confidence it would last, contributed to an employment shortfall equivalent to 40 percent of the missing employment decline in the recession. Another 20 percent may be explained by wage moderation. A third important element was the widespread adoption of working time accounts, which permit employers to avoid overtime pay if hours per worker average to standard hours over a window of time. We find that this provided disincentives for employers to lay off workers in the downturn. Although the overall cuts in hours per worker were consistent with the severity of the Great Recession, reduction of working time account balances substituted for traditional government-sponsored short-time work.
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Net Exports and the Avoidance of High Unemployment During Reconversion, 1945-1947
Jason Taylor, Bharati Basu & Steven McLean
Journal of Economic History, June 2011, Pages 444-454
Abstract:
While economists predicted a return to double-digit unemployment rates during the reconversion from World War II, this outcome did not materialize. This article explores the role that the significant rise in net exports - which accounted for nearly 4 percent of GDP in 1946 and 1947 - played in helping the United States avoid a postwar unemployment problem. Using an input-output analysis, we find that the export surplus directly accounted for 1.33 million jobs in 1946 and 1.97 million jobs in 1947. This accounts for close to half of the gains to private sector employment during these years.
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Economic Experts or Laypeople? How Teachers and Journalists Judge Trade and Immigration Policies
Robert Jacob, Fabian Christandl & Detlef Fetchenhauer
Journal of Economic Psychology, forthcoming
Abstract:
It is widely acknowledged that lay and expert perspectives on the economy widely diverge. In this context, teachers and journalists play a major role because they act as promoters for economic knowledge transfer through schools and media. This study analyzes how teachers and journalists judge economic policies and whether they are closer to an expert or a lay way of thinking. In four separate surveys, randomly chosen German adults (n=190), economists (n=80), social studies teachers (n=97) and economic journalists (n=90) were presented two policy proposals from the trade and immigration policy domain. Consistent with existing evidence, a large majority of the economists favored free trade and labor mobility and judged them as economically efficient and fair, while most of the laypeople hold contrary views. The answers from journalists and teachers generally lay in between economists and laypeople - with teachers being closer to laypeople and journalists tending more towards the economists. Interestingly however, teachers and journalists reverted to the same criteria for the judgment of economic policies as laypeople. All three groups based their judgments nearly exclusively on a policy proposal's perceived fairness, while economists strongly focused on its economic efficiency.
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Increasing Paid Work Time? A New Puzzle for Multinational Time-diary Research
Jonathan Gershuny
Social Indicators Research, April 2011, Pages 207-213
Abstract:
This explores the reasons that paid work time may be rising, at least in anglophone countries. Three explanations are discussed. (1) An historical reversal of the work/leisure gradient with respect to social position or social status. This gradient was once positive, but is now negative; evidence of this change from 11 developed countries is drawn from the Multinational Time Use study. (2) Paid work is becoming, on average, pleasanter, intrinsically more rewarding and desirable as an activity in itself, hence modifying the motive for reducing it. (3) An unexpected interaction between gendered preferences for different sorts of work, combined with a strain toward fairness between marital partners, over a period of women's increasing presence in paid work, may encourage men to increase their paid but not their unpaid work.
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Andrew Fullerton & Wayne Villemez
Social Forces, June 2011, Pages 1145-1164
Abstract:
Several recent studies across the social sciences show that the spatial agglomeration of employment in a local labor market benefits both firms and workers in terms of better firm performance and higher wages. Drawing from the organizational ecology perspective, we argue that workers receive higher wages in large industrial clusters and urban labor markets because of the greater degree of organizational diversity relative to smaller local industries and labor markets. Using data from the 1990 PUMS-L, we employ a three-level hierarchical linear model in order to test hypotheses regarding organizational diversity and the effects of industrial and urban agglomeration on wages. We find that workers benefit from both forms of agglomeration due to greater establishment size and industrial diversity in large industrial clusters and urban labor markets. We also find that urban agglomeration has a larger substantive effect on wages than industrial agglomeration in reduced models, but the industrial agglomeration effect is more robust across models. These findings support the organizational ecology perspective, which suggests that workers earn higher wages in local industry clusters and urban labor markets because greater organizational diversity leads to more optimal matching between workers and employers. However, the wage premium associated with urban labor markets is also due to other factors, such as greater levels of human capital and higher rates of union density.