Working class
Responsiveness without Representation: Evidence from Minimum Wage Laws in U.S. States
Gabor Simonovits, Andrew Guess & Jonathan Nagler
American Journal of Political Science, forthcoming
Abstract:
How well does public policy represent mass preferences in U.S. states? Current approaches provide an incomplete account of statehouse democracy because they fail to compare preferences and policies on meaningful scales. Here, we overcome this problem by generating estimates of Americans' preferences on the minimum wage and compare them to observed policies both within and across states. Because we measure both preferences and policies on the same scale (U.S. dollars), we can quantify both the association of policy outcomes with preferences across states (responsiveness) and their deviation within states (bias). We demonstrate that while minimum wages respond to corresponding preferences across states, policy outcomes are more conservative than preferences in each state, with the average policy bias amounting to about two dollars. We also show that policy bias is substantially smaller in states with access to direct democratic institutions.
Minimum Wage and Individual Worker Productivity: Evidence from a Large US Retailer
Decio Coviello, Erika Deserranno & Nicola Persico
Northwestern University Working Paper, July 2018
Abstract:
We study the effect of increasing the statutory minimum wage on individual worker productivity. Within a workforce of base+commission salespeople from a large US retailer, and using a border-discontinuity research design, we document that a 77 cents (one standard deviation) increase in the minimum wage increases individual productivity (sales per hour) by 2.4%. With the help of a model, and novel satellite imagery, we seek evidence in favor of two distinct channels through which this productivity gain could arise: a demand increase, and an incentive effect due to the increase in compensation, part of which may be endogenous due to the firm adjusting its compensation scheme. We find evidence only for the second, that is, the compensation scheme channel. Further, we find that the productivity gains are concentrated among low-productivity workers, and arise mostly during periods of high-unemployment, which when read through the lens of our model suggests an efficiency-wage effect. We find some indication that the firm increases base pay in response to minimum wage increases, which is consistent with optimal contracting within our model, but the model suggests that the productivity gain is not fully mediated by this endogenous firm response.
The heterogeneous effects of the minimum wage on employment across states
Wuyi Wang, Peter Phillips & Liangjun Su
Economics Letters, January 2019, Pages 179-185
Abstract:
This paper studies the relationship between the minimum wage and the employment rate in the US using the framework of a panel structure model. The approach allows the minimum wage, along with some other controls, to have heterogeneous effects on employment across states which are classified into a group structure. The effects on employment are the same within each group but differ across different groups. The number of groups and the group membership of each state are both unknown a priori. The approach employs the C-Lasso technique, a recently developed classification method that consistently estimates group structure and leads to oracle-efficient estimation of the coefficients. Empirical application of C-Lasso to a US restaurant industry panel over the period 1990 - 2006 leads to the identification of four separate groups at the state level. The findings reveal substantial heterogeneity in the impact of the minimum wage on employment across groups, with both positive and negative effects and geographical patterns manifesting in the data. The results provide some new perspectives on the prolonged debate on the impact of minimum wage on employment.
The Effects of Labor Scarcity on the Rate and Direction of Technical Change: Evidence from a Natural Experiment
Shmuel San
NYU Working Paper, October 2018
Abstract:
This paper examines the impact of labor scarcity on the rate and direction of technical change. I use a large-scale natural experiment with a significant impact on the labor supply: the abrogation of the bracero agreements between the United States and Mexico on December 31, 1964. Between 1942 and 1964, the bracero program provided over four million Mexican seasonal agricultural workers to the American labor market. Data on U.S agricultural patents show that labor scarcity has a strong and persistent positive effect on inventions. I use variation in the exposure to the program at the crop level; crops with a higher share of Mexican labor during the program period experienced a greater negative shock to their labor supply after the termination of the program. Allocating each U.S agricultural patent to a crop by searching the text of patents for the crop name, I find that crops with greater exposure to bracero workers experienced faster technological progress after the termination of the program. The results are robust to various specifications of the "treatment" and the "outcome" variables, to instrumental variables and synthetic control methods, as well as to many other robustness checks. Annual treatment effects estimation show that the effect is persistent and there is no evidence for pretreatments trends. Triple-differences analysis indicates that the effect is stronger for technological classes that are more labor intensive. Investigation at the subclasses level suggests that the effect diffuses to related patents. Finally, the dynamics of farm values in the bracero states supports the assumption that the policy change was unexpected and undesirable for the farm owners.
Will the new technologies turn the page on U.S. productivity growth?
Michelle Alexopoulos & Jon Cohen
Economics Letters, February 2019, Pages 19-23
Abstract:
Is the recent slowdown in productivity likely to persist into the foreseeable future? Amazon.com data are used to create updated indicators of technical change and to establish the relationship between them and productivity growth. They reveal a slowdown in innovative activity in the early 2000s but register a recent uptick linked to innovations in robotics, AI, and cloud-computing. Estimates suggest that if these trends were to continue, large productivity gains are likely to be achieved in the near future.
The Micro-Level Anatomy of the Labor Share Decline
Matthias Kehrig & Nicolas Vincent
NBER Working Paper, November 2018
Abstract:
The aggregate labor share in U.S. manufacturing declined from 62 percentage points (ppt) in 1967 to 41 ppt in 2012. The labor share of the typical U.S. manufacturing establishment, in contrast, rose by over 3 ppt during the same period. Using micro-level data, we document a number of striking facts: (1) there has been a dramatic reallocation of value added to "hyper- productive" (HP) low-labor share establishments, with much more limited reallocation of inputs; (2) HP establishments have only a temporarily lower labor share that rebounds after five to eight years to the level of their peers; (3) selection into HP status has become increasingly correlated with past size; (4) labor share dynamics are driven by revenue total factor labor productivity, not wages or capital intensity; (5) employment has become less responsive to positive technology shocks over time; and (6) HP establishments enjoy a product price premium relative to their peers that causes their high (revenue) productivity. Counterfactual exercises indicate that selection along size rather than shocks or responsiveness to them is the primary driver of the labor share decline.
Labor Market Concentration, Earnings Inequality, and Earnings Mobility
Kevin Rinz
U.S. Census Bureau Working Paper, September 2018
Abstract:
Using data from the Longitudinal Business Database and Form W-2, I document trends in local industrial concentration from 1976 through 2015 and estimate the effects of that concentration on earnings outcomes within and across demographic groups. Local industrial concentration has generally been declining throughout its distribution over that period, unlike national industrial concentration, which declined sharply in the early 1980s before increasing steadily to nearly its original level beginning around 1990. Estimates indicate that increased local concentration reduces earnings and increases inequality, but observed changes in concentration have been in the opposite direction, and the magnitude of these effects has been modest relative to broader trends; back-of-the-envelope calculations suggest that the 90/10 earnings ratio was about six percent lower and earnings were about one percent higher in 2015 than they would have been if local concentration were at its 1976 level. Within demographic subgroups, most experience mean earnings reductions and all experience increases in inequality. Estimates of the effects of concentration on earnings mobility are sensitive to specification.
Labor Market Concentration Does Not Explain the Falling Labor Share
Ben Lipsius
University of Michigan Working Paper, November 2018
Abstract:
Using U.S. administrative data, this paper shows that the employment-weighted average labor market concentration has been declining since 1980 - the opposite of the change needed to explain the falling labor share. The relationship between wages and labor market concentration has also attenuated over that time. Together, these results make labor market concentration an implausible driver of the falling labor share despite a strong, negative relationship between labor market concentration and wages.
The effects of home ownership on post-unemployment wages
Xi Yang
Regional Science and Urban Economics, January 2019, Pages 1-17
Abstract:
This paper studies the effects of home ownership on job search outcomes. In contrast to previous literature focusing mainly on the impact of home ownership on unemployment rate and duration, this paper looks at the relationship between home ownership and post-unemployment wages. Using the Survey of Income and Program Participation 1996-2008 panels, I find that home ownership reduces post-unemployment wages, and this negative wage effect is particularly evident when the unemployed homeowner is located in either a declining housing market or a distressed labor market. These results are robust after using state-level mortgage interest deductions as an instrument for home ownership status.
Refugees from Dust and Shrinking Land: Tracking the Dust Bowl Migrants
Jason Long & Henry Siu
Journal of Economic History, December 2018, Pages 1001-1033
Abstract:
We construct longitudinal data from U.S. census records to study the economics of the Dust Bowl migration of the 1930s. Most of our findings contradict long-standing perceptions. While migration rates were high relative to elsewhere in the United States, they were similar to migration rates from the region in the 1920s. Relative to other occupations, farmers were the least likely to move. Furthermore, migrants from the Dust Bowl were not exceptionally likely to move to California. Finally, there was negligible migrant selectivity, and migration was not associated with long-lasting negative labor market outcomes; indeed, for farmers, the gains from migration were positive.
Measuring the Impact of Household Innovation using Administrative Data
Javier Miranda & Nikolas Zolas
NBER Working Paper, November 2018
Abstract:
We link USPTO patent data to U.S. Census Bureau administrative records on individuals and firms. The combined dataset provides us with a directory of patenting household inventors as well as a time-series directory of self-employed businesses tied to household innovations. We describe the characteristics of household inventors by race, age, gender and U.S. origin, as well as the types of patented innovations pursued by these inventors. Business data allows us to highlight how patents shape the early life-cycle dynamics of nonemployer businesses. We find household innovators are disproportionately U.S. born, white and their age distribution has thicker tails relative to business innovators. Data shows there is a deficit of female and black inventors. Household inventors tend to work in consumer product areas compared to traditional business patents. While patented household innovations do not have the same impact of business innovations their uniqueness and impact remains surprisingly high. Back of the envelope calculations suggest patented household innovations granted between 2000 and 2011 might generate $5.0B in revenue (2000 dollars).