Nice job

Kevin Lewis

February 07, 2014

The rising skill premium and deunionization

Ömer Tuğrul Açıkgöz & Barış Kaymak
Journal of Monetary Economics, forthcoming

During the past 50 years, the US economy has seen a rapid decline in labor union membership and a substantial rise in wage inequality. Since labor unions compress wages between skilled and unskilled workers, a rising skill premium encourages skilled workers to withdraw from the union. If this withdrawal is accompanied by a fall in the productivity of unskilled workers, firms become reluctant to hire the relatively expensive union workers, reinforcing the decline in the unionization rate. Evaluating this hypothesis, we find that the rise in the skill premium explains about 40% of the decline in the unionization rate.


Unmasking the Conflicting Trends in Job Tenure by Gender in the United States, 1983-2008

Matissa Hollister & Kristin Smith
American Sociological Review, February 2014, Pages 159-181

Americans are convinced that employment stability has declined in recent decades, but previous research on this question has led to mixed conclusions. A key challenge is that trends for men and women are in opposite directions and appear to cancel each other out. We clarify this situation by examining trends in employer tenure by sex, marital status, and parental status. We find that married mothers are behind the increase in women's job tenure, but men and never-married women have seen declines in tenure. Furthermore, we show that the timing of tenure trends for women parallels periods of increased labor force attachment. Finally, we find that shifts in industry and occupation composition can account for the decline in tenure among men and never-married women before 1996 but not afterward. We situate these diverging trends in two broad shifts in expectations, norms, and behaviors in the labor market: the end-of-work discourse and the revolution in women's identification with paid work. Our findings support the view that job tenure is declining for all groups, but women's greater labor force attachment, especially their more continuous employment around childbirth, countered and masked this trend.


Small business activity does not measure entrepreneurship

Magnus Henrekson & Tino Sanandaji
Proceedings of the National Academy of Sciences, 4 February 2014, Pages 1760-1765

Entrepreneurship policy mainly aims to promote innovative Schumpeterian entrepreneurship. However, the rate of entrepreneurship is commonly proxied using quantity-based metrics, such as small business activity, the self-employment rate, or the number of startups. We argue that those metrics give rise to misleading inferences regarding high-impact Schumpeterian entrepreneurship. To unambiguously identify high-impact entrepreneurs we focus on self-made billionaires (in US dollars) who appear on Forbes Magazine's list and who became wealthy by founding new firms. We identify 996 such billionaire entrepreneurs in 50 countries in 1996-2010, a systematic cross-country study of billionaire entrepreneurs. The rate of billionaire entrepreneurs correlates negatively with self-employment, small business ownership, and firm startup rates. Countries with higher income, higher trust, lower taxes, more venture capital investment, and lower regulatory burdens have higher billionaire entrepreneurship rates but less self-employment. Despite its limitations, the number of billionaire entrepreneurs appears to be a plausible cross-country measure of Schumpeterian entrepreneurship.


Employment Effects of the 2009 Minimum Wage Increase: New Evidence from State-Based Comparisons of Workers by Skill Level

Saul Hoffman
B.E. Journal of Economic Analysis & Policy, forthcoming

In July, 2009, when the US Federal minimum wage was increased from $6.55 to $7.25, individuals in nearly one-third of all states were unaffected, since the state minimum wage already exceeded $7.25. We use this variation to make comparisons of the employment of low-skill workers with their peers across states and with workers within states who were arguably unaffected by the increase, using DID and DIDID methods. Our data come from the 2009 Current Population Survey, 4 and 5 months before and after the increase. We find little evidence of negative employment effects for teens or less-educated adults. Further control for demographic characteristics and state fixed effects have relatively small effects on the size and significance of estimated effects.


Return of the Solow Paradox? IT, Productivity, and Employment in U.S. Manufacturing

Daron Acemoglu et al.
NBER Working Paper, January 2014

An increasingly influential "technological-discontinuity" paradigm suggests that IT-induced technological changes are rapidly raising productivity while making workers redundant. This paper explores the evidence for this view among the IT-using U.S. manufacturing industries. There is some limited support for more rapid productivity growth in IT-intensive industries depending on the exact measures, though not since the late 1990s. Most challenging to this paradigm, and our expectations, is that output contracts in IT-intensive industries relative to the rest of manufacturing. Productivity increases, when detectable, result from the even faster declines in employment.


Declining Migration within the U.S.: The Role of the Labor Market

Raven Molloy, Christopher Smith & Abigail Wozniak
Federal Reserve Working Paper, November 2013

Interstate migration has decreased steadily since the 1980s. We show that this trend is not related to demographic and socioeconomic factors, but that it appears to be connected to a concurrent secular decline in labor market transitions - i.e. the fraction of workers changing employer, industry or occupation. We explore a number of reasons for the dual trends in geographic and labor market transitions, including changes in the distribution of job opportunities across space, polarization in the labor market, concerns of dual-career households, and changes in the net benefit to changing employers. We find little empirical support for all but the last of these hypotheses. Specifically, using data from three cohorts of the National Longitudinal Surveys spanning the 1970s to the 2000s, we find that wage gains associated with employer transitions have fallen, while the returns to staying with the same employer have not changed. We favor the interpretation that, at least from the 1990s to the 2000s, the distribution of outside offers has shifted in a way that has made labor market transitions, and thus geographic transitions, less desirable to workers.


Generational differences in workplace behavior

John Bret Becton, Harvell Jack Walker & Allison Jones-Farmer
Journal of Applied Social Psychology, forthcoming

Popular stereotypes suggest that generational differences among workers present challenges for workplace managers. However, existing empirical research provides mixed evidence for generational differences in important values and attitudes. The current study extends generational effects research by examining differences in actual workplace behaviors. Drawing from commonly held generational stereotypes, the authors hypothesized that Baby Boomers would exhibit (Hypothesis 1) fewer job mobility behaviors and (Hypothesis 2) more instances of compliance-related behaviors in comparison with both GenXers and Millennials, while (Hypothesis 3) GenXers would be less likely to work overtime in comparison with Baby Boomers and Millennials. A sample of 8,040 applicants at two organizations was used to test these predictions. Results provided support for Hypothesis 1 and Hypothesis 3 and partial support for Hypothesis 2, but the effect sizes for these relationships were small. It appears the effects of generational membership on workplace behavior are not as strong as suggested by commonly held stereotypes. Implications for future research and practice are discussed.


Is soccer good for you? The motivational impact of big sporting events on the unemployed

Philipp Doerrenberg & Sebastian Siegloch
Economics Letters, forthcoming

We examine the effect of salient international soccer tournaments on the motivation of unemployed individuals to search for employment using the German Socio Economic Panel 1984-2010. Exploiting the random scheduling of survey interviews, we find significant effects on motivational variables such as the intention to work or the reservation wage. Furthermore, the sporting events increase perceived health as well as worries about the general economic situation.


Job Hopping, Information Technology Spillovers, and Productivity Growth

Prasanna Tambe & Lorin Hitt
Management Science, forthcoming

The movement of information technology (IT) workers among firms is believed to be an important mechanism by which IT-related innovations diffuse throughout the economy. We use a newly developed source of employee microdata - an online resume database - to model IT workers' mobility patterns. We find that firms derive significant productivity benefits from the IT investments of other firms from which they hire IT labor. Our estimates indicate that over the last two decades, productivity spillovers from the IT investments of other firms transmitted through this channel have contributed 20%-30% as much to productivity growth as firms' own IT investments. Moreover, we find that the productivity benefits of locating near other IT-intensive firms can primarily be explained by the mobility of technical workers within the region. Our results are unique to the flow of IT workers among firms, not other occupations, which rules out some alternative explanations related to the similarity of firms that participate in the same labor flow network.


Client-Based Entrepreneurship

James Rauch & Joel Watson
Journal of Law, Economics, and Organization, forthcoming

Client relationships create value, which employees may try to wrest from their employers by establishing their own firms. If an employer and worker cannot contract on the output and profits of the worker's prospective new firm, at the beginning of their relationship the employer induces the worker to sign a contract that prohibits him from competing or soliciting the current client in the event of termination of employment. The socially optimal level of entrepreneurship will nevertheless be achieved if clients, employers, and workers can renegotiate these restrictive employment contracts and make compensating transfers. If workers cannot finance transfers to employers, however, employers and workers will sign contracts that are too restrictive and produce too little entrepreneurship, and governments can increase welfare by limiting enforcement of these contracts. With or without liquidity constraints, locations where noncompete contracts are less enforced will attract more clients and have higher employment and output.


Dilettante or Renaissance Person? How the Order of Job Experiences Affects Hiring in an External Labor Market

Ming Leung
American Sociological Review, February 2014, Pages 136-158

Social actors who move across categories are typically disadvantaged relative to their more focused peers. Yet candidates who compile experiences across disparate areas can either be appreciated as renaissance individuals or penalized as dilettantes. Extant literature has focused on the comparison between single versus multiple category members and on skill assessment, hindering its applicability. To discriminate between more versus less successful category spanners, I suggest that the order of accumulated experiences matters, because it serves as an indicator of commitment. I propose the concept of erraticism and predict that employers will prefer candidates who demonstrate some erraticism, by moving incrementally between similar jobs, over candidates who do not move and also over those with highly erratic job histories. Furthermore, I suggest this relationship holds for more complex jobs, less experienced freelancers, and is attenuated through working together. These issues are particularly salient given the rise of external labor markets where careers are increasingly marked by moves across traditional boundaries. I test and find support for these hypotheses with data from an online crowd-sourced labor market for freelancing services, I discuss how virtual mediated labor markets may alter hiring processes.


Labor Regulations and European Venture Capital

Ant Bozkaya & William Kerr
Harvard Working Paper, December 2013

European nations substitute between employment protection regulations and labor market expenditures (e.g., unemployment insurance benefits) for providing worker insurance. Employment regulations more directly tax firms making frequent labor adjustments than other labor market insurance mechanisms. Venture capital investors are especially sensitive to these labor adjustment costs. Nations favoring labor market expenditures as the mechanism for providing worker insurance developed stronger venture capital markets over 1990-2008, especially in high volatility sectors. In this context, policy mechanisms are more important than the overall level of worker insurance.


The Cost of Benefits, Financial Conditions, and Employment Dynamics in Recent U.S. Recoveries

Weishi Grace Gu
University of California Working Paper, December 2013

This paper explores how much firm-paid employee benefits and firms' financial conditions have contributed to delayed employment recoveries relative to output since 1990, using a DSGE model. Empirically, I document the underexplored pro-cyclicality of per worker benefit costs. Post-1990 period differs from before in that: (1) there have been larger increases of such quasi-fixed employment costs at recoveries; (2) tight financial conditions have also persisted longer into recent recoveries. The model generates 3-to-7-quarter delays in employment recoveries for the post-1990 period but no delay for before, consistent with data; and it produces more than 76 percent of employment volatility.


Temporary Help Work: Earnings, Wages, and Multiple Job Holding

Sarah Hamersma, Carolyn Heinrich & Peter Mueser
Industrial Relations, January 2014, Pages 72-100

Temporary help services (THS) employment has been growing in size, particularly among disadvantaged workers. An extended policy debate focuses on the low earnings, limited benefits, and insecurity that such jobs appear to provide. We investigate the earnings and wage differentials observed between THS and other jobs in a sample of disadvantaged workers. We find lower quarterly earnings at THS jobs but a $1 per hour wage premium. We reconcile these findings in terms of the shorter duration and lower hours worked at THS jobs. We interpret the premium as a compensating wage differential.


A longitudinal analysis of the union wage premium for US workers

P. E. Gabriel & S. Schmitz
Applied Economics Letters, Winter 2014, Pages 487-489

Estimates of the union wage premium for US workers are presented based on longitudinal data from the 1979 cohort of the National Longitudinal Survey of Youth. Our results indicate that the long-term private-sector union wage premium for men has remained fairly steady at nearly 22% over the period 1990 to 2010. For women, the wage premium exhibits greater volatility, although no clear downward trend, and is approximately one-half of the male premium.


Unemployment Insurance Experience Rating and Labor Market Dynamics

David Ratner
Federal Reserve Working Paper, December 2013

Unemployment insurance experience rating imposes higher payroll tax rates on firms that have laid off more workers in the past. To analyze the effects of UI tax policy on labor market dynamics, this paper develops a search model of unemployment with heterogeneous firms and realistic UI financing. The model predicts that higher experience rating reduces both job creation and job destruction. Using firm-level data from the Quarterly Census of Employment and Wages, the model is tested by comparing job creation and job destruction across states and industries with different UI tax schedules. The empirical analysis shows a strong negative relationship between job flows and experience rating. Consistent with the empirical results, comparative steady state tax experiments show that a 5% increase in experience rating reduces job flows by an average of 1.4%. While the unemployment rate falls on average by .21 percentage points, the effect on tax revenues is ambiguous. The model has implications for UI financing reform currently being considered at the state and national level. Two alternative reforms that close half of the UI financing gap are considered: the reform that increases experience rating is shown to improve labor market outcomes. In a version of the model with aggregate shocks, higher experience rating dampens the response of layoffs and unemployment over the business cycle. Experience rating also induces nonlinear responses of unemployment to proportionally larger shocks as well as asymmetry in response to booms and busts.


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