Model workers
Should We Fear the Robot Revolution? (The Correct Answer is Yes)
Andrew Berg, Ed Buffie & Luis-Felipe Zanna
Journal of Monetary Economics, forthcoming
Abstract:
Advances in artificial intelligence and robotics may be leading to a new industrial revolution. This paper presents a model with the minimum necessary features to analyze the implications for inequality and output. Two assumptions are key: ”robot” capital is distinct from traditional capital in its degree of substitutability with human labor; and only capitalists and skilled workers save. We analyze a range of variants that reflect widely different views of how automation may transform the labor market. Our main results are surprisingly robust: automation is good for growth and bad for equality; in the benchmark model real wages fall in the short run and eventually rise, but ”eventually” can easily take generations.
The Changing (Dis-)Utility of Work
Greg Kaplan & Sam Schulhofer-Wohl
NBER Working Paper, June 2018
Abstract:
We study how changes in the distribution of occupations have affected the aggregate non-pecuniary costs and benefits of working. The physical toll of work is smaller now than in 1950, with workers shifting away from occupations in which people report experiencing tiredness and pain. The emotional consequences of the changing occupation distribution vary substantially across demographic groups. Work has become happier and more meaningful for women, but more stressful and less meaningful for men. These changes appear to be concentrated at lower education levels.
Grown-up Business Cycles
Benjamin Pugsley & Ayşegül Şahin
Review of Financial Studies, forthcoming
Abstract:
The entry rate of U.S. employer businesses has declined for more than 30 years. We use a novel dynamic decomposition framework to show that regardless of its causes, the direct effects of the continued decline in the entry rate and its delayed effects on firm age distribution together play a major role in the slowing of trend employment growth and the emergence of jobless recoveries. We identify changing demographic structure of the population and increased import competition as leading factors behind the decline in startup activity.
Declining Labor Turnover and Turbulence
Shigeru Fujita
Journal of Monetary Economics, forthcoming
Abstract:
The rate of job loss has been on a secular decline for the last four decades or longer. Changes in demographics or industry composition do not account for the trend. This paper seeks to identify the possible sources using a simple search-and-matching model with two types of workers, experienced and inexperienced, where the former type faces a risk of skill loss during unemployment. The calibrated model suggests that a higher risk of skill loss during unemployment results in a lower job separation rate, because workers accept lower wages in exchange for job security. Various other potential hypotheses are also examined.
Whom Do Employers Want? The Role of Recent Employment and Unemployment Status and Age
Henry Farber et al.
NBER Working Paper, May 2018
Abstract:
We use a resume audit study to better understand the role of employment and unemployment histories in affecting callbacks to job applications. We focus on how the effect of career history varies by age, partly in an attempt to reconcile disparate findings in prior studies. While we cannot reconcile earlier findings on the effect of unemployment duration, the findings solidify an emerging consensus on the role of age and employment on callback. First, among applicants across a broad age range, we find that applicants with 52 weeks of unemployment have a lower callback rate than do applicants with shorter unemployment spells. However, regardless of an applicant's age, there is no relationship between spell length and callback among applicants with shorter spells. Second, we find a hump-shaped relationship between age and callback, with both younger and older applicants having a lower probability of callback relative to prime-aged applicants. Finally, we find that those applicants who are employed at the time of application have a lower callback rate than do unemployed applicants, regardless of whether the interim job is of lower or comparable quality relative to the applied-for job. This may reflect a perception among employers that it is harder or more expensive to attract an applicant who is currently employed.
Aggregate Effects of Minimum Wage Regulation at the Zero Lower Bound
Andrew Glover
University of Texas Working Paper, April 2018
Abstract:
The Fair Minimum Wage Act of 2007 increased the U.S. nominal minimum wage by 41 percent, just before interest rates hit the Zero Lower Bound in 2008. I study the interaction of these events in a parsimonious extension of the sticky-price New Keynesian model with heterogeneous labor. I derive a "minimum-wage augmented" Phillips curve linking inflation, output, and the real minimum wage, which I estimate with aggregate data. Consistent with theory, controlling for the real minimum wage reduces the effect of output on inflation and increasing the minimum wage is inflationary. I then calibrate the equilibrium model to match microeconomic elasticities of earnings with respect to the minimum wage. On aggregate, the ZLB's contractionary effects are dampened because nominal wages cannot decline rapidly, thereby halting the deflationary spiral caused by low aggregate demand. The effect can be large - in the calibrated economy, GDP losses from the ZLB are cut by half, even though only 3% of earnings accrue to minimum wage earners. Furthermore, increasing the minimum wage at the ZLB is expansionary, generating expected accumulated output gains of 14%.
New Technologies and the Labor Market
Enghin Atalay et al.
Journal of Monetary Economics, forthcoming
Abstract:
Using newspaper job ad text from 1960 to 2000, we measure job tasks and the adoption of individual information and communication technologies (ICTs). Most new technologies are associated with an increase in nonroutine analytic tasks, and a decrease in nonroutine interactive, routine cognitive, and routine manual tasks. We embed these interactions in a quantitative model of worker sorting across occupations and technology adoption. Through the lens of the model, the arrival of ICTs broadly shifts workers away from routine tasks, which increases the college premium. A notable exception is the Microsoft Office suite, which has the opposite set of effects.
The Right to Strike: A Radical View
Alex Gourevitch
American Political Science Review, forthcoming
Abstract:
Workers face a common dilemma when exercising their right to strike. For the worst-off workers to go on strike with some reasonable chance of success, they must use coercive strike tactics like mass pickets and sit-downs. These tactics violate some basic liberties, such as contract, association, and private property, and the laws that protect those liberties. Which has priority, the right to strike or the basic liberties strikers might violate? The answer depends on why the right to strike is justified. In contrast to liberal and social democratic arguments, on the radical view defended here, the right to strike is a right to resist oppression. This oppression is partly a product of the legal protection of basic economic liberties, which explains why the right to strike has priority over these liberties. The radical view thus best explains why workers may use some coercive, even lawbreaking, strike tactics.
Associations of Tipped and Untipped Service Work with Poor Mental Health in a Nationally Representative Cohort of Adolescents Followed into Adulthood
Sarah Andrea et al.
American Journal of Epidemiology, forthcoming
Abstract:
Precarious work is concentrated in the service industry in the United States and is a risk factor for poor mental health. Service occupations in which workers receive tips are potentially more precarious due to unstable schedule, income, and lack of benefits. We tested hypotheses that individuals working in tipped service occupations have greater odds of experiencing poor mental health (self-reported depression, sleep problems, and/or greater perceived stress) relative to individuals in untipped service and non-service occupations using cross-sectional data from the National Longitudinal study of Adolescent to Adult Health dataset (Wave IV:2007-2008; age 24-33 years). To improve comparability of occupation types, propensity-scores were computed as a function of childhood factors, then used to construct a sample of 2,815 women and 2,586 men. In gender-stratified multivariable regression, women in tipped service had greater odds of reporting depression diagnosis or symptoms relative to women in non-service work (Odds Ratio:1.61; 95% Confidence Interval:1.11,2.34). Associations of similar magnitude for sleep problems and perceived stress were observed among women, but were not significant; all associations were close to the null among men. Further research is necessary to understand the factors that underlie differences in poor mental health in tipped and untipped service versus non-service workers.
Why Are U.S. Women Decreasing Their Labor Force Participation If Their Wages Are Rising?
Chen Huang
Economic Inquiry, forthcoming
Abstract:
Given the traditional interpretation of women's labor force participation rate (LFPR) trends as movements along a positively sloped labor supply curve, it is surprising that the recent downward trend in U.S. women's LFPR has occurred over a period when women's real wages were commonly believed to be rising. I find that almost two‐thirds of the decline since 2000 is attributable to aging of the adult female population. The remainder, due to declining labor force participation for women under 55, becomes less puzzling in light of my evidence that the wage/education locus faced by women actually may have worsened since 2000.
The Minimum Wage, Fringe Benefits, and Worker Welfare
Jeffrey Clemens, Lisa Kahn & Jonathan Meer
NBER Working Paper, May 2018
Abstract:
This paper explores the relationship between the minimum wage, the structure of employee compensation, and worker welfare. We advance a conceptual framework that describes the conditions under which a minimum wage increase will alter the provision of fringe benefits, alter employment outcomes, and either increase or decrease worker welfare. Using American Community Survey data from 2011-2016, we find robust evidence that state-level minimum wage changes decreased the likelihood that individuals report having employer-sponsored health insurance. Effects are largest among workers in very low-paying occupations, for whom coverage declines offset 9 percent of the wage gains associated with minimum wage hikes. We find evidence that both insurance coverage and wage effects exhibit spillovers into occupations moderately higher up the wage distribution. For these groups, reductions in coverage offset a more substantial share of the wage gains we estimate.
Structural Transformation and the Rise of Information Technology
Giovanni Gallipoli & Christos Makridis
Journal of Monetary Economics, forthcoming
Abstract:
Has the emergence of information technology changed the structure of employment and earnings in the US? We propose a new index of occupation-level IT intensity and document several long-term changes in the occupational landscape over the past decades. Using Census and US KLEMS micro-data, we show that: (i) the bulk of productivity growth after 1950 is concentrated in IT intensive sectors; (ii) the share of workers in IT jobs has expanded significantly, with little or no pause and IT jobs enjoy a large and growing earnings premium, even after controlling for general task requirements (e.g., cognitive, non-routine); and (iii) the rise of the IT intensive employment share is closely associated with declines in the manufacturing employment share. While earnings premia for college-educated and cognitive/non-routine workers have flattened in the aggregate since 2000, we show that they continued growing in IT intensive jobs and that these jobs have played a key role in accounting for the surge of high tech service labor productivity. We also use our IT intensity index to estimate industry-specific elasticities of substitution between IT and non-IT intensive labor, finding values of 1.6 in manufacturing and 1.3 in services. Finally, we revisit a long-standing question about the relationship between technological progress and productivity and provide evidence that occupation-level IT intensity is positively associated with output growth, especially in the services sector.
Can Displaced Labor Be Retrained? Evidence from Quasi-Random Assignment to Trade Adjustment Assistance
Benjamin Hyman
University of Pennsylvania Working Paper, January 2018
Abstract:
The extent to which workers adjust to labor market disruptions in light of increasing pressure from trade and automation commands widespread concern. However, surprisingly little is known about efforts that deliberately target the adjustment process. This project studies 20 years of worker-level earnings and re-employment responses to Trade Adjustment Assistance (TAA) — the United States’ largest and longest standing public incentive program for retraining. I estimate causal effects from the quasi-random assignment of TAA cases to investigators of varying approval leniencies. Using employer-employee matched Census data on 300,000 displaced workers, I find large initial returns to TAA. Ten years out, TAA-trained workers have $50,000 higher cumulative earnings, driven by both higher incomes and greater labor force participation. Yet annual returns fully depreciate after ten years. TAA appears to have no effect on formal education, and decaying returns are concentrated in states with lower training durations. Combined with evidence that effects are driven by training rather than unemployment insurance transfers, TAA appears to augment transient rather than permanent components of human capital. Returns are further concentrated in the most disrupted regions, where workers are more likely to switch industries and move to labor markets with better opportunities in response to training — consistent with adjustment frictions.
Dynamic responses to labor demand shocks: Evidence from the financial industry in Delaware
Russell Weinstein
Journal of Urban Economics, July 2018, Pages 27–45
Abstract:
This paper analyzes an important shock to local labor demand in financial services: firm relocation to Delaware following a Supreme Court ruling and state legislation in the 1980s. Using synthetic controls and bordering states, I find large effects on employment, unemployment, and participation in the first decade. Wage effects, and in many cases employment spillovers to the nontradable sector, appear larger than estimates from shocks to the tradable sector. Effects persist for ten to twenty years after Delaware loses its original policy-induced advantage. The shift towards a low unemployment sector explains this persistence, rather than direct productivity effects or agglomeration.
Institutional complementarities between labour laws and innovation
Filippo Belloc
Journal of Institutional Economics
Abstract:
We analyse how institutional complementarities between employee representation laws and dismissal restrictions influence aggregate innovation outcomes. We argue that greater employee voice, due to improved employee representation legislations, may spur innovative effort by employees only when shareholders cannot renegotiate ex-ante agreements with workers over revenue sharing, by threatening dismissal. We perform a panel regression analysis, exploiting country-sector panel data over the 1977–2005 period, and find that stronger employee representation laws in the presence of stricter firing restrictions are in fact associated with higher patenting activity. Consistently with our theoretical argument, the magnitude of this empirical relationship is seen to be relatively larger in those sectors where the human capital contribution to production is higher. Implications for the analysis of economic institutions and for legal policy making are proposed.
The response of commuting patterns to cross-border policy differentials: Evidence from the American Community Survey
Peter Shirley
Regional Science and Urban Economics, forthcoming
Abstract:
The response of commuting patterns across state borders to policy differentials has implications for how policymakers design economic policy based on place of work, and for researchers who use contiguous geographies to estimate treatment effects of such policies. This paper investigates the response of such movements utilizing changes in cross-border differentials in the minimum wage and Earned Income Tax Credit state supplements. Specifically, effects of the minimum wage on commuting patterns are estimated for restaurant workers, high school dropouts, and teenagers. The effects of the EITC on commuting patterns are estimated for single female heads of household with children. The main results show a $1 increase in the minimum wage differential is associated with a 0.5 to 1 percentage point increase in the probability of commuting. This is approximately a 15–25 percent increase over the mean commuting rate for the minimum wage samples of interest. Results for the EITC are less precise and show that a 0.1 increase in the phase-in rate differential is associated with an increase in commuting probability of 0.9 percentage points, a result that is not statistically different from zero. The minimum wage results are strongest along non-MSA borders and the response appears to be nonlinear with respect to the differential's size; effects are not detected along MSA borders.
Who Benefits From Productivity Growth? Direct and Indirect Effects of Local TFP Growth on Wages, Rents, and Inequality
Richard Hornbeck & Enrico Moretti
NBER Working Paper, May 2018
Abstract:
We estimate the local and aggregate effects of total factor productivity growth on US workers' earnings, housing costs, and purchasing power. Drawing on four alternative instrumental variables, we consistently find that when a city experiences productivity gains in manufacturing, there are substantial local increases in employment and average earnings. For renters, increased earnings are largely offset by increased cost of living; for homeowners, the benefits are substantial. Strikingly, local productivity growth reduces local inequality, as it raises earnings of local less-skilled workers more than the earnings of local more-skilled workers. This is due, in part, to lower geographic mobility of less-skilled workers. However, local productivity growth also has important general equilibrium effects through worker mobility. We estimate that 38% of the overall increase in workers' purchasing power occurs outside cities directly affected by local TFP growth. The indirect effects on worker earnings are substantially greater for more-skilled workers, due to greater geographic mobility of more-skilled workers, which increases inequality in other cities. Neglecting these general equilibrium effects would both understate the overall magnitude of benefits from productivity growth and misstate their distributional consequences. Overall, US workers benefit substantially from productivity growth. Summing direct and indirect effects, we find that TFP growth from 1980 to 1990 increased purchasing power for the average US worker by 0.5-0.6% per year from 1980 to 2000. These gains do not depend on a worker's education; rather, the benefits from productivity growth mainly depend on where workers live.