Working Model
Algorithmic Writing Assistance on Jobseekers’ Resumes Increases Hires
Emma van Inwegen, Zanele Munyikwa & John Horton
NBER Working Paper, January 2023
Abstract:
There is a strong association between the quality of the writing in a resume for new labor market entrants and whether those entrants are ultimately hired. We show that this relationship is, at least partially, causal: a field experiment in an online labor market was conducted with nearly half a million jobseekers in which a treated group received algorithmic writing assistance. Treated jobseekers experienced an 8% increase in the probability of getting hired. Contrary to concerns that the assistance is taking away a valuable signal, we find no evidence that employers were less satisfied. We present a model in which better writing is not a signal of ability but helps employers ascertain ability, which rationalizes our findings.
The Great Resignation Was Caused by the COVID-19 Housing Boom
Jack Favilukis & Gen Li
University of British Columbia Working Paper, February 2023
Abstract:
Following the Covid-19 pandemic, U.S. labor force participation declined significantly in 2020, slowly recovering in 2021 and 2022 -- this has been referred to as the Great Resignation. The decline has been concentrated among older Americans. By 2022, the labor force participation of workers in their prime returned to its 2019 level, while older workers' participation has continued to fall, responsible for almost the entire decline in the overall labor force participation rate. At the same time, the U.S. experienced large booms in both the equity and housing markets. We show that the Great Resignation among older workers can be fully explained by increases in housing wealth. MSAs with stronger house price growth tend to have lower participation rates, but only for home owners around retirement age -- a 65 year old home owner's unconditional participation rate of 44.8% falls to 43.9% if he experiences a 10% excess house price growth. A counterfactual shows that if housing returns in 2021 would have been equal to 2019 returns, there would have been no decline in the labor force participation of older Americans. To better understand these empirical findings, we build a life cycle model with realistic heterogeneity in wealth, income, and ownership status. We show that in response to a positive shock to house prices, owners reduce hours while renters increase hours, as in our empirical results.
Minimum Wage Increases and Employer Performance: Role of Employer Heterogeneity
Sumit Agarwal, Meghana Ayyagari & Renáta Kosová
Management Science, forthcoming
Abstract:
Despite a large minimum wage literature that analyzes employee outcomes, there is less evidence on firm performance, prices, and quality. Exploiting staggered changes in U.S. minimum wages during 2000–2008 and census data on more than 29,000 hotel properties, we find that doubling the minimum wage as currently debated would reduce average hotel revenues by 6% per year and their occupancy rates by 3.1%. Responses vary by employer quality and organizational form. Although luxury hotels pass through cost increases to their customers with no impact on their revenues, upscale hotels facing more price-sensitive customers reduce prices but still suffer losses in occupancy rates and revenues as they struggle with preserving the expected quality level. They are also most likely to see quality downgrades from their segment. The lower-end hotels also pass through cost increases to their customers but, unlike luxury hotels, face significant declines in occupancy rates and revenues. Overall, the performance effects of minimum wage increases are nonmonotonic across quality. We also find negative impacts on hotel entry rates, although the performance and entry effects appear to be short lived. Furthermore, the negative effects of minimum wages dominate in states without right-to-work regulation, suggesting the need for a more comprehensive approach to labor market regulation.
The Enduring Price of Place: Revisiting the Rural Cost of Living
Julie Zimmerman, Karen Rignall & Cameron McAlister
Rural Sociology, forthcoming
Abstract:
Even as the 2016 elections brought increased public attention to rural life, stereotypes and misconceptions abound. One of these misperceptions is the generalization that prices are lower in rural areas. This article is a restudy of Zimmerman, Ham, and Frank (2008) research on geographic differences in the costs of living. Asking the same fundamental question -- if someone bought the same thing in a rural and urban area, would they pay the same price? -- and using the same methodology, the results 10 years later indicate that, contrary to popular perception, there was again no consistent pattern of lower prices in rural counties and no consistent pattern of a lower rural cost of living in all of the rural areas. While prices are only one piece of the larger picture of how rural households meet their needs, in addition to price differences, the results highlight how differences in rural life create additional costs that extend beyond prices.
The Race Between Preferences and Technology
Joachim Hubmer
Econometrica, January 2023, Pages 227-261
Abstract:
This paper argues that a unified analysis of consumption and production is required to understand the long-run behavior of the U.S. labor share. First, using household data on the universe of consumer spending, I document that higher-income households spend relatively more on labor-intensive goods and services as a share of their total consumption. Interpreted as nonhomothetic preferences, this fact implies that economic growth increases the aggregate labor share through an income effect. Second, using disaggregated data on factor shares and capital intensities, I document that equipment-intensive goods experienced relatively larger declines in their labor shares. Based on this finding, I estimate that capital and labor are gross substitutes, and that investment-specific technical change reduces the labor share. Given the estimated elasticities, a parsimonious neoclassical model quantitatively matches the observed low-frequency movements in the aggregate labor share since the 1950s, both its relative stability until about 1980 and its decline thereafter.
"The Volunteering Days is Gone": All-Hazard Incarcerated Firefighters and Rural Disinvestment
Carlee Purdum
Rural Sociology, forthcoming
Abstract:
After decades of economic restructuring, many rural communities are struggling to provide adequate fire and emergency services across their communities. Subsequent population loss, the destabilization of local tax-bases, and an increased demand from work and family have left local fire departments at a loss for personnel and support. In this context, rural Georgia communities look to nearby prisons to provide incarcerated persons to work as local firefighters and emergency medical technicians (EMTs) to stabilize rural emergency services. In this paper, I examine the narrative accounts that officials who employ, manage, or work alongside incarcerated workers who are trained to respond locally as firefighters and EMTs and ask why incarcerated workers are looked to for this type of work in spite of the challenges associated with the program. Officials describe turning to the state prison system as the only viable option to make their communities and fire departments safe. These findings further illuminate the relationship between racial capitalism, carceral infrastructure, and emergency services as rural communities turn to the false promise of prisons and all-hazard incarcerated firefighters to keep their communities safe.
Unions and Robots: Automation and the Power of Labor
Carlos Felipe Balcazar
NYU Working Paper, September 2022
Abstract:
International economic competition has led to the increasing adoption of labor-replacing technology. What are the consequences of this development for the political influence of organized labor? I posit that robots make (skilled) workers more productive, increasing the opportunity cost of rent-seeking behavior via union activities. Consequently, the political influence of organized labor falls in response to robot adoption because unionization declines. I provide evidence for my claims using data from the U.S. (2004-2014) and a shift-share that leverages quasi-exogenous variation in international competition in the exposure to robots, at the congressional district level. An increase in one robot per a thousand workers reduces the likelihood that congresspeople vote with unions' interests by two percentage points. This effect is larger in areas with higher portions of skilled workers, lending support to the hypothesized opportunity-cost mechanism. Reductions in unionization, union activities and in campaign contributions in response to the exposure to robots explain this finding. Using demediation analysis I demonstrate that my findings are driven especially by lower unionization rates and not by the potentially competing effect of robots on unemployment.
The decline of US manufacturing productivity between 1941 and 1948
Alexander Field
Economic History Review, forthcoming
Abstract:
The view that war benefits potential output has been influential in treatments of US mobilization for the Second World War, where it has been largely premised on the benefits of learning by doing in producing military durables. If the thesis that war benefits aggregate supply is correct, it is indeed within manufacturing that we should most likely see its effects. Total factor productivity within the sector in fact fell at a rate of −1.4 per cent per year between 1941 and 1948, −3.7 per cent a year between 1941 and 1944, and −5.1 per cent a year between 1941 and 1945. The emphasis on learning by doing has obscured the negative effects of the sudden, radical, and temporary changes in the product mix, the behavioural pathologies accompanying the transition to a shortage economy, and the resource shocks inflicted on the country by the Japanese and Germans. From a long-run perspective, the war can be seen, ironically, as the beginning of the end of US world economic dominance in manufacturing.
Employment Protection and Household Mortgage Debt
Longfei Shang & Walid Saffar
Journal of Banking & Finance, forthcoming
Abstract:
Exploiting the staggered adoption of U.S. state-level labor protection laws, we find that household mortgage debt increases following the passage of these laws. Our findings are consistent with theories predicting that better employment protection reduces households’ layoff risk, making lenders less concerned about borrowers’ ability to repay their debts and more inclined to offer them mortgage loans. Supporting this channel, we find that the loan approval rate increases following the adoption of labor protection laws and that the effect of the laws’ adoption on mortgage debt is concentrated in old households.
Earnings Growth, Job Flows and Churn
Satoshi Tanaka, Lawrence Warren & David Wiczer
Journal of Monetary Economics, forthcoming
Abstract:
How much do workers making job-to-job transitions benefit from moving away from a shrinking and towards a growing firm? Matched employer-employee data show that earnings growth in the transition increases with net employment growth at the destination firm and, to a lesser extent, decreases if the origin firm is shrinking. These results are not driven by composition, that different workers are going to growing or from shrinking firms, but rather implies that firm dynamics themselves are key to workers’ earnings growth during job-to-job transitions. Further, firms’ net employment growth rather than gross hires mostly drives the growth.