Kevin Lewis

February 24, 2020

The Economic Impact of Right-to-Work Laws: Evidence from Collective Bargaining Agreements and Corporate Policies
Sudheer Chava, András Danis & Alex Hsu
Journal of Financial Economics, forthcoming


We analyze the economic and financial impact of right-to-work (RTW) laws in the US. Using data from collective bargaining agreements, we show that there is a decrease in wages for unionized workers after RTW laws. Firms increase investment and employment but reduce financial leverage. Labor-intensive firms experience higher profits and labor-to-asset ratios. Dividends and executive compensation also increase post-RTW. Our results are consistent with a canonical theory of the firm augmented with an exogenous bargaining power of labor and suggest that RTW laws impact corporate policies by decreasing that bargaining power.

Structural Increases in Skill Demand after the Great Recession
Peter Blair & David Deming
NBER Working Paper, January 2020


In this paper we use detailed job vacancy data to estimate changes in skill demand in the years since the Great Recession. The share of job vacancies requiring a bachelor’s degree increased by more than 60 percent between 2007 and 2019, with faster growth in professional occupations and high-wage cities. Since the labor market was becoming tighter over this period, cyclical “upskilling” is unlikely to explain our findings.

Growth, Automation and the Long Run Share of Labor
Debraj Ray & Dilip Mookherjee
NBER Working Paper, January 2020


We provide an argument for long-term automation and decline in the labor income share, driven by capital accumulation rather than technical progress or rising markups. We emphasize a fundamental asymmetry across physical and human capital. An individual can indefinitely replicate her claims on the former, but — after a point — her human endowment cannot be cloned and rescaled in the same way. Then ongoing capital accumulation gives rise to progressive automation, and the share of labor income converges to zero. The displacement of human labor is gradual, and real wages could rise indefinitely. The results extend to endogenous technical change.

Declining Dynamism, Increasing Markups and Missing Growth: The Role of the Labor Force
Michael Peters & Conor Walsh
Yale Working Paper, November 2019


A growing body of empirical research highlights substantial changes in the US economy during the last three decades. Business dynamism is declining, market power seems to be on the rise, and aggregate productivity growth is sluggish. We show analytically that a decline in the rate of growth of the labor force implies all of these features in a frontier model of firm dynamics. The reason is that a decline in labor force growth reduces the long-run entry rate but keeps expansion incentives of incumbent firms unchanged. This implies that lower labor force growth reduces creative destruction, increases average firm size and raises market power. We calibrate the model to data on employment and sales for the universe of firms in the U.S. Census. We find that the empirically observed decline in the rate of labor growth since the 1980s can account for the decline in entry and the increase in firm size, generates quantitatively significant and welfare-relevant changes in markups, but plays a minimal role in explaining the decline in aggregate productivity growth.

Changing Stability in U.S. Employment Relationships: A Tale of Two Tails
Raven Molloy, Christopher Smith & Abigail Wozniak
NBER Working Paper, January 2020


We confront two seemingly-contradictory observations about the US labor market: the rate at which workers change employers has declined since the 1980s, yet there is a commonly expressed view that long-term employment relationships are more difficult to attain. We reconcile these observations by examining how the distribution of employment tenure has changed in aggregate and for various demographic groups. We show that the fraction of workers with short tenure (less than a year) has been falling since the 1980s, consistent with the decline in job changing. Meanwhile, the fraction of workers with long tenure (20 years or more) has been rising modestly owing to an increase in long tenure for women and the ageing of the population. Long tenure has declined markedly among older men; this trend may have spurred popular perceptions that long-term employment is less common than in the past. The decline in long-tenure for men appears due to an increase in mid-career separations that reduce the likelihood of reaching long-tenure, rather than an increase in late-career separations. Nevertheless, survey evidence indicates that these changes in employment relationships are not associated with heightened concerns about job insecurity or decreases in job satisfaction as reported by workers. The decline in short-tenure is widespread, associated with fewer workers cycling among briefly-held jobs, and coincides with an increase in perceived job security among short tenure workers.

Home ownership as a labor market friction
Daniel Ringo
Real Estate Economics, forthcoming


This paper estimates the effect of home ownership on individuals' unemployment. Because of higher moving costs, home owners will be less willing than renters to relocate for work and could therefore face longer unemployment spells. Estimation is complicated by the endogeneity of ownership, as owners will have different abilities, preferences and job prospects than renters. I instrument for home ownership using a preference shifter from the worker's childhood environment. The results indicate that home ownership is a significant hindrance to mobility, and home owners suffer longer unemployment spells because of it.

Hours and Wages
Alexander Bick, Adam Blandin & Richard Rogerson
NBER Working Paper, January 2020


We develop and estimate a static model of labor supply that can account for two robust features of the cross-sectional distribution of usual weekly hours and hourly wages. First, usual weekly hours are heavily concentrated around 40 hours, while at the same time a substantial share of total hours come from individuals who work more than 50 hours. Second, mean hourly wages are non-monotonic across the usual hours distribution, with a peak for those working 50 hours. The novel feature of the model is that earnings are non-linear in hours and the nature of the nonlinearity varies over the hours distribution. We estimate the model on a sample of older males for whom human capital considerations are plausibly not of first order importance. Our estimates imply that an individual who chooses to work either less than 40 hours or more than 40 hours faces a wage penalty. As a consequence, individuals working typically 40 hours are not very responsive to variation in productivity. This has significant implications for the role of labor supply as a mechanism for self-insurance in a standard heterogeneous agent-incomplete markets model and for strategies designed to estimate the intertemporal elasticity of substitution.

Implications of schedule irregularity as a minimum wage response margin
Jeffrey Clemens & Michael Strain
Applied Economics Letters, forthcoming


Empirical research on minimum wages has historically focused on employment effects, with the implicit assumption that workers who remain employed under a minimum wage regime are better off. This paper develops a simple model and a stylized example to highlight the importance of an underappreciated margin: how a minimum wage might affect the regularity of workers’ schedules. Our analysis illustrates a novel line of intuition for how a minimum wage can reduce welfare even if, as in our example, it increases wages, productivity, and output, without decreasing employment.

The Future of Work and Employee Job Attitudes and Well-Being
Christos Makridis & Joo Han
MIT Working Paper, January 2020


Increasing evidence suggests that technological change will have significant effects on the tasks and interactions in the workplace. Although technological change may displace some jobs, it will also affect employees’ experiences of the jobs that remain and the new ones that are created. First, this paper introduces a new measure of technological change at the county-level by drawing upon measures of the growth in the stock of intellectual property (IP) across industries. Second, we use this new measure, together with proprietary data on millions of employees between 2008 and 2018, to investigate the quantitative effects of technological change on employee attitudes about work and well-being. Our results suggest that technological change is associated with robust positive effects on self-efficacy and well-being. While we find the effect is strongest in workplaces with trust, we find that managers who behave more as a boss, rather than a partner, help workers buffer against technological change.

Migration Choices of the Boomerang Generation: Does Returning Home Dampen Labor Market Adjustment?
Sewin Chan, Katherine O'Regan & Wei You
NYU Working Paper, January 2020


This paper documents a linkage between two empirical trends: the low levels of out-migration from weak labor markets, and the increasing rate at which young adults return to live with their parents (‘boomerang’). Using the American Community Survey, we show that boomerang moves are more likely to bring young adults to labor markets with higher unemployment and lower wages. Using the geocoded Panel Study of Income Dynamics and a locational choice model, we find that the likelihood of a non-boomerang location being chosen by a young adult increases with local wages. However, for boomerang moves, wages have zero or a much smaller effect on the selection of locations, and the likelihood that a boomerang location is selected actually increases with the location’s unemployment level. This positive correlation with unemployment is substantive in magnitude and is highest for those without a college degree and for non-whites.

Almost Famous: How Wealth Shocks Impact Career Choices
Jacelly Cespedes, Zack Liu & Carlos Parra
University of Minnesota Working Paper, December 2019


We study the short and long-term career effects of shocks to household balance sheets using a novel dataset of workers in the film industry in the wake of the Great Recession. We find that individuals within the same county and occupation who lost more housing wealth reduce their participation in films with other high-profile talents (individuals that have won prestigious awards), films that are positively rated, and films that are likely to win awards, but they increase involvement in small productions. We control for local labor demand shocks by comparing homeowners to renters. These wealth losses also have adverse long-term consequences on the probability of leading roles, individuals’ popularity, and film quality. Overall, our results suggest that wealth shocks distort non-salaried workers’ labor decisions due to liquidity concerns and impact individuals’ career paths.

How Do Employers Use Compensation History?: Evidence From a Field Experiment
Moshe Barach & John Horton
NBER Working Paper, January 2020


We report the results of a field experiment in which treated employers could not observe the compensation history of their job applicants. Treated employers responded by evaluating more applicants, and evaluating those applicants more intensively. They also responded by changing what kind of workers they evaluated: treated employers evaluated workers with 5% lower past average wages and hired workers with 13% lower past average wages. Conditional upon bargaining, workers hired by treated employers struck better wage bargains for themselves.

Extending the Race between Education and Technology
David Autor, Claudia Goldin & Lawrence Katz
NBER Working Paper, January 2020


The race between education and technology provides a canonical framework that does an excellent job of explaining U.S. wage structure changes across the twentieth century. The framework involves secular increases in the demand for more-educated workers from skill-biased technological change, combined with variations in the supply of skills from changes in educational access. We expand the analysis backwards and forwards. The framework helps explain rising skill differentials in the nineteenth and twenty-first centuries, but needs to be augmented to illuminate the recent convexification of education returns and implied slowdown in the growth of the relative demand for college workers. Increased educational wage differentials explain 75 percent of the rise of U.S. wage inequality from 1980 to 2000 as compared to 38 percent for 2000 to 2017.



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