Making Jobs

Kevin Lewis

November 30, 2021

Who Benefits from Online Gig Economy Platforms?
Christopher Stanton & Catherine Thomas
NBER Working Paper, November 2021

This paper estimates the magnitude and distribution of surplus from the knowledge worker gig economy using data from an online labor market. Labor demand elasticities determine workers’ wages, and buyers’ past market experience shapes both their job posting frequency and hiring rates. We find that workers on the supply side capture around 40% of the surplus from filled jobs. Under counterfactual policies that resemble traditional employment regulation, buyers post fewer online jobs and fill posted jobs less often, reducing expected surplus for all market participants. We find negligible substitution on the demand side between online and offline jobs by assessing how changes in local offline minimum wages affect online hiring. The results suggest that neither online or offline knowledge workers will benefit from applying traditional employment regulation to the online gig economy. 

The Minimum Wage and Occupational Mobility
Andrew Yizhou Liu
International Economic Review, forthcoming

This article quantifies the effect of minimum wages on workers' occupational mobility. I show that minimum wages decrease younger, less-educated workers' occupational mobility and are associated with more mismatch. A search-and-matching model highlights two channels by which the minimum wage decreases occupational mobility. First, it compresses wages and reduces the gain from switching, leading to lower occupational mobility and more mismatch. Second, it decreases vacancy posting. Calibrating the model to the U.S. economy, the results suggest that a 15 dollar minimum wage can damp aggregate output by 0.4%, of which the wage compression channel accounts for 80%. 

Spillover Effects from Voluntary Employer Minimum Wages
Ellora Derenoncourt et al.
NBER Working Paper, October 2021

Low unionization rates, a falling real federal minimum wage, and outsourcing have hampered wage growth in the low-wage sector in the US. In recent years, a number of private employers have opted to institute or raise company-wide minimum wages for their employees, sometimes in response to public pressure. To what extent do wage-setting changes at major employers spill over to other employers, and what are the broader labor market effects of these policies? In this paper, we study recent minimum wages by Amazon, Walmart, Target, CVS, and Costco using data from millions of online job ads and employee surveys. We document that these policies induced wage increases at low-wage jobs at other employers, where the modal response was to match the wage announced by the large retailer. In the case of Amazon’s $15 minimum wage in October 2018, our estimates imply that a 10% increase in Amazon’s advertised hourly wages led to an average increase of 2.3% among other employers in the same commuting zone. Using the CPS, we estimate wage increases in exposed jobs in line with our magnitudes from employee surveys and find that large employer minimum wage policies led to small but precisely estimated declines in employment, with employment elasticities ranging from -0.04 to -0.13. Large employer minimum wage announcements influenced wages more broadly. The magnitude of these wage spillovers cannot easily be explained by standard competitive pressures, suggesting a role for both market power and norms in wage determination. 

For Better or Worse? The Economic Implications of Paid Sick Leave Mandates
Turk Al-Sabah & Paige Ouimet
University of North Carolina Working Paper, October 2021

Public calls for a national paid sick leave policy continue to grow in the United States. In the absence of a federal policy, many localities and states enacted their own paid sick leave mandates. We document an average increase of 1.9% in employment following the implementation of a paid sick leave policy. As predicted, workers with ex ante lower access to paid sick leave drive the employment effect, a result which holds with county-quarter fixed effects. Several non-mutually exclusive mechanisms can explain our findings. Following the implementation of a mandatory paid sick leave policy, we find a decline in labor turnover which has implications for labor productivity and, hence, labor demand. We also find results consistent with an increase in the labor supply. Finally, paid sick leave mandates are associated with an increase in household income, creating positive spillover effects on local markets and greater demand for local goods and services. 

Population Growth and Firm Dynamics
Michael Peters & Conor Walsh
NBER Working Paper, October 2021

Population growth has declined markedly in almost all major economies since the 1970s. We argue this trend has important consequences for the process of firm dynamics and aggregate growth. We study a rich semi-endogenous growth model of firm dynamics, and show analytically that a decline in population growth reduces creative destruction, increases average firm size and concentration, raises market power and misallocation, and lowers aggregate growth in the long-run. We also show lower population growth has positive effects on the level of productivity, making the short-run welfare impacts ambiguous. In a quantitative application to the U.S, we find that the slowdown in population growth since the 1980s and the projected continuation of this trend accounts for a substantial share of the fall in the entry and exit rates and the increase in firm size. By contrast, the impact on markups is modest. The effect on aggregate growth is positive for around two decades, before turning negative thereafter. 

How Internal Hiring Affects Occupational Stratification
Nathan Wilmers & William Kimball
Social Forces, forthcoming

When employers conduct more internal hiring, does this facilitate upward mobility for low-paid workers or does it protect the already advantaged? To assess the effect of within-employer job mobility on occupational stratification, we develop a framework that accounts for inequality in both rates and payoffs of job changing. Internal hiring facilitates advancement for workers without strong credentials, but it excludes workers at employers with few good jobs to advance into. Analyzing Current Population Survey data, we find that when internal hiring increases in a local labor market, it facilitates upward mobility less than when external hiring increases. When workers in low-paid occupations switch jobs, they benefit more from switching employers than from moving jobs within the same employer. One-third of this difference is due to low-paid workers isolated in industries with few high-paying jobs to transfer into. An occupationally segregated labor market therefore limits the benefits that internal hiring can bring to the workers who most need upward mobility. 

Labor Market Dynamics When Ideas are Harder to Find
Adrien Bilal et al.
NBER Working Paper, November 2021 

This paper evaluates the impact of slowing economic growth on labor market dynamism and misallocation. It provides a model of endogenous growth via imitation in a frictional labor market. The framework accounts for rich data on worker job-to-job transitions as well as stochastic and lifecycle properties of firm growth and job reallocation. High productivity entrants gradually replace obsolescing incumbents by poaching their workers, a process that is intermediated via a frictional labor market. When the likelihood of entrants imitating technologies in the tail of the distribution falls (ideas are harder to find), so does growth. Consistent with US data over the past 30 years, firm entry, incumbents’ employment response to productivity shocks, and job-to-job transitions decline, while the share of old firms increases. With lower imitation, however, there is less misallocation, because the slower aggregate rate of obsolescence induces productive firms to invest more in costly hiring and grow faster to their optimal size.

Show Me the Amenity: Are Higher-Paying Firms Better All Around?
Jason Sockin
University of Pennsylvania Working Paper, November 2021

Do higher-paying firms offer more favorable work, or compensate for less favorable work? Using matched employee-employer data for the United States, this paper estimates the joint distribution of wages, amenities, and job satisfaction across firms. Forty-eight amenities are captured by applying topic modeling to workers' free-response descriptions of their jobs. There are three main findings. First, high-paying firms are high-satisfaction firms because they offer better amenities: 81-92 percent of the rise in job satisfaction from moving to a higher-paying firm reflects improved non-wage aspects. Second, workers, especially high-earners, are willing to pay for job satisfaction, gaining in amenity value at least 54-101 percent of the average wage when moving from the worst- to the best-amenity firms. Third, since the elasticity of amenity value to wages across firms is positive (1.0-1.8), incorporating non-wage amenities nearly doubles the variance in total compensation across firms. Wages therefore understate firm-level inequality. 

Work, Leisure, and Family: From the Silent Generation to Millennials
George-Levi Gayle, Prasanthi Ramakrishnan & Mariana Odio Zúñiga
Federal Reserve Working Paper, October 2021

This article analyzes the changes in family structure, fertility behavior, and the division of labor within the household from the Silent generation (cohort born in 1940-49) to the Millennial generation (cohort born in 1980-89). Using data from the Panel Study of Income Dynamics, this article documents the main trends and life-cycle profiles for each generation. The main findings are that (i) the wage-age profile has been shifting down over generations, especially for Millennial men; (ii) the returns to a four-year college degree or higher for men have increased for all generations; (iii) Millennials enjoy a higher level of leisure than previous generations; (iv) the housework hours for women have clearly declined over generations, while the housework hours for Millennial men are higher than those of the previous generations of men; (iv) less-educated individuals have retreated from marriage, especially Millennials, while more-educated individuals have delayed marriage; (v) divorce rates have risen, with Millennials most likely to divorce, but the longer a couple is married, the likelihood of divorce has decreased over generations; and (vi) the Millennials' completed fertility rate is likely to be the lowest among all generations.

The Geography of Retirement
Courtney Coile
NBER Working Paper, October 2021

As Americans work longer in response to a changing retirement landscape, it is important to ask whether there are groups being left out of this trend. Geography is a natural lens through which to examine this question, given regional disparities in the employment of prime-age individuals. In this study, we explore the geography of retirement using data from the U.S. Census/American Community Survey and other sources. We find large differences across U.S. commuting zones in employment rates at older ages, with a gap of about 20 percentage points between areas at the 90th and 10th percentiles of employment. Low-employment areas are systematically different, with a less educated and more diverse population, more low-wage jobs and import competition from China, poorer health outcomes and health care access, lower government spending, and more income inequality. Although these correlations are not necessarily causal, these factors collectively can explain about four-fifths of the geographic variation in employment at older ages.


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