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Kevin Lewis

June 01, 2022

Subjective Job Insecurity and the Rise of the Precariat: Evidence from the United Kingdom, Germany, and the United States
Alan Manning & Graham Mazeine
Review of Economics and Statistics, forthcoming

There is a widespread belief that work is less secure than in the past, that an increasing share of workers are part of the "pprecariat". It is hard to find much evidence for this in objective measures of job security, but perhaps subjective measures show different trends. This paper shows that in the US, UK, and Germany workers feel as secure as they ever have in the last thirty years. This is partly because job insecurity is very cyclical and (pre-COVID) unemployment rates very low, but there is also no clear underlying trend towards increased subjective measures of job insecurity. This conclusion seems robust to controlling for the changing mix of the labor force, and is true for specific sub-sets of workers. 

Housing Demand and Remote Work
John Mondragon & Johannes Wieland
NBER Working Paper, May 2022

What explains record U.S. house price growth since late 2019? We show that the shift to remote work explains over one half of the 23.8 percent national house price increase over this period. Using variation in remote work exposure across U.S. metropolitan areas we estimate that an additional percentage point of remote work causes a 0.93 percent increase in house prices after controlling for negative spillovers from migration. This cross-sectional estimate combined with the aggregate shift to remote work implies that remote work raised aggregate U.S. house prices by 15.1 percent. Using a model of remote work and location choice we argue that this estimate is a lower bound on the aggregate effect. Our results imply a fundamentals-based explanation for the recent increases in housing costs over speculation or financial factors, and that the evolution of remote work is likely to have large effects on the future path of house prices and inflation. 

Creative Destruction? Impact of E-Commerce on the Retail Sector
Sudheer Chava et al.
NBER Working Paper, May 2022

Using an administrative payroll dataset for 2.6 million retail workers, we find that the staggered rollout of a major e-commerce firm's fulfillment centers reduces traditional retail workers' income in geographically proximate counties by 2.4%. Wages of hourly workers, especially part-time hourly workers, decrease significantly, driven by a drop in the number of hours worked. We observe a U-shaped pattern in which both young and old workers experience a sharper decrease in wage income. Consequently, some workers experience an increase in credit card delinquency. Using data for 3.2 million stores, we find that sales (employment) at proximate stores decrease by 4% (2.1%). Exits, especially of young and small stores, increase, and entry decreases. In aggregate, the retail sector loses 938 jobs per county per quarter, and the transportation-warehousing sector (food services sector) gains 256 (143) jobs. Our results highlight how creative destruction led by e-commerce impacts local labor markets. 

An Evaluation of the Paycheck Protection Program Using Administrative Payroll Microdata
David Autor et al.
NBER Working Paper, April 2022

The Paycheck Protection Program (PPP), a principal element of the fiscal stimulus enacted by Congress during the COVID-19 pandemic, aimed to assist small businesses to maintain employment and wages during the crisis. We use high-frequency administrative payroll data from ADP--one of the world's largest payroll processing firms--to estimate the causal effect of the PPP on the evolution of employment at PPP-eligible firms relative to PPP-ineligible firms, where eligibility is determined by industry-specific firm-size cutoffs. We estimate that the PPP boosted employment at eligible firms by between 2 percent to 5 percent at its peak in mid-2020, with this effect waning to 0 to 3 percent throughout the remainder of the year. Employers retained an estimated additional 3.6 million jobs due to the PPP as of mid-May 2020, and 1.4 million jobs at the end of 2020. The implied cost per year of employment retained was $169,000 to $258,000, equal to 3.4 to 5.2 times median earnings. 

Supply and Demand in Disaggregated Keynesian Economies with an Application to the COVID-19 Crisis
David Baqaee & Emmanuel Farhi
American Economic Review, May 2022, Pages 1397-1436

We study supply and demand shocks in a disaggregated model with multiple sectors, multiple factors, input-output linkages, downward nominal wage rigidities, credit-constraints, and a zero lower bound. We use the model to understand how the COVID-19 crisis, an omnibus supply and demand shock, affects output, unemployment, and inflation, and leads to the coexistence of tight and slack labor markets. We show that negative sectoral supply shocks are stagflationary, whereas negative demand shocks are deflationary, even though both can cause Keynesian unemployment. Furthermore, complementarities in production amplify Keynesian spillovers from supply shocks but mitigate them for demand shocks. This means that complementarities reduce the effectiveness of aggregate demand stimulus. In a stylized quantitative model of the United States, we find supply and demand shocks each explain about one-half of the reduction in real GDP from February to May 2020. Although there was as much as 6 percent Keynesian unemployment, this was concentrated in certain markets. Hence, aggregate demand stimulus is one quarter as effective as in a typical recession where all labor markets are slack. 

Why Aren't People Leaving Janesville? Industry Persistence, Trade Shocks, and Mobility
Sebastian Ottinger & Michael Poyker
University of California Working Paper, February 2022

Particular industries have dominated many locations in the United States for more than a century. We show that individuals residing in such locations were systematically less likely to move away from there during the past few decades. By identifying locations with sizable employment shares in the same manufacturing industries in 1870 and 1980, we documented less out-migration in the decades following 1980 than earlier. In response to the largest shock affecting manufacturing employment since then, these locations adjusted differently: the "China shock" led to higher unemployment in their communities, but fewer people moved away. Drawing on rich data of social links across counties and surveys of individuals residing there, we document that these individuals have stronger local friendship networks than residents of more thriving communities and exhibit systematic differences in their job-market search behavior. We hypothesize that when local opportunities narrow, residents of these locations both lack information about job opportunities elsewhere and benefit from the amenity value of extended social networks in their location of origin. Instrumental variable results based on a historical shock to local industries' chances of survival suggest that the effect of dominant manufacturing industries on migration is causal. Mediation analysis reveals that the emergence of strong local ties primarily drives such migration. 

Public support for assistance for workers displaced by technology
Seth Werfel, Christopher Witko & Tobias Heinrich
Research & Politics, April 2022

Technology is expected to displace many workers in the future. The public generally supports government assistance for workers viewed as less responsible for their unemployment; thus, we ask whether individuals who lose their jobs to technology are perceived as less at fault and more deserving of government benefits, compared to those who lose their jobs to other workers. We conducted a survey experiment on a nationally representative sample in the United States, randomizing whether a hypothetical worker was replaced by technology, a foreign worker, or domestic worker, and asked questions about fault perception and support for unemployment benefits. We find that workers who lose jobs to technology (or foreign workers) are viewed as less at fault than those who lose jobs to domestic workers, and that fault attribution mediated support for unemployment benefits. 

Higher Minimum Wages Reduce Capital Expenditures
Matthew Gustafson & Jason Kotter
Management Science, forthcoming

Using cross-state and intertemporal variation in whether a state's minimum wage is bound by the federal minimum wage, we provide evidence that minimum wage increases lead U.S. public firms in minimum-wage-sensitive industries (i.e., retail, restaurant, and entertainment) to cut capital expenditures. These effects are concentrated one to two years after the law goes into effect. Prior to the minimum wage increase, investment trends are similar across minimum-wage-sensitive firms in bound versus unbound states, and we find little evidence that minimum wage changes affect U.S. public firm investment outside of these industries. 

The Link between Health and Working Longer: Disparities in Work Capacity
Benjamin Berger et al.
NBER Working Paper, May 2022

Good health is important for employment at older ages. However, little is known about how health-related functional abilities interact with occupational demands to shape work capacity. Using new data, we quantify individuals' functional abilities, combine that information with occupation-specific ability requirements, and create new measures of individuals' potential occupations and earnings. We find that average functional abilities, potential occupations, and potential earnings decline only slightly with age, indicating that many Americans maintain work capacity into their late 60s. Gaps in work capacity by race/ethnicity and gender are small, suggesting health is not a major driver of observed earnings disparities. However, gaps in work capacity by education are large and increase with age, suggesting diminished prospects for working longer among those with less education. Although work capacity among Black respondents improves across cohorts, today's middle-aged white Americans have lower work capacity than those now at retirement age, suggesting rising rates of work disability as these cohorts age. 

The Health and Welfare Effects of Increases in Workers' Compensation Benefits
Lu Jinks
Journal of Labor Economics, forthcoming

This paper estimates the causal impacts of workers' compensation income benefits on workers' health and welfare outcomes. Using claims data from 2004 to 2016, I explore the variation in benefits due to a reform of New York workers' compensation that increased the maximum weekly benefits. I find that a $77 increase in the weekly benefits led to an additional 3.4 days off work. Medical utilization did not increase. Each extra day off work decreased the reinjury likelihood by 2.9 percent. The current benefit level in New York is close to optimal in balancing payer cost and worker health outcomes.


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