Labor Markets

  • Michael Hout
  • Gregory Acs
  • David Card
  • Jesse Rothstein

Leaders: Gregory Acs, David Card, Michael Hout, Jesse Rothstein

The labor market was of course hit very heavily by the Great Recession, as evidenced by (a) the slow recovery of the unemployment rate, (b) and the even slower recovery of the long-term unemployment rate and the prime-age employment ratio (defined as the ratio of employed 25-54 year-olds to the population of that same age). This “jobs problem,” which is especially prominent among low-skill workers, has led to a sharp rise in the number of poor households without any working adults. It also underlies, in part, the sharp increase in the number of disability insurance claims and awards, which in turn has further reduced the supply of labor among low-skilled individuals.

If the first type of “jobs problem” is that there still are not enough of them, the second is that the jobs that are available do not always provide the requisite hours, wages, or security that are needed for a sure pathway out of poverty. As a result, low-skill individuals are not just working less but, even when they are working, there is no guarantee that their jobs will lift them and their families out of poverty. The Labor Markets RG is tasked with conducting research on these and related problems and exploiting administrative and other data to assess possible policy responses to them. We list below a few examples of the work being carried out in this group.

Long-run effects of work incentives: As nonworking poverty increases, the U.S. might well want to turn to new types of work incentive programs. Have these programs worked elsewhere?

Minimum wages and poverty: Throughout the west coast, there are a host of minimum wage “experiments” underway, experiments that have the potential to reset the low-wage labor market in quite fundamental ways. How are these experiments playing out?

Labor Markets - CPI Research

Title Author Media
Long-Run Impacts of Childhood Access to the Safety Net Hilary Hoynes, Diane Whitmore Schanzenbach , Douglas Almond

Long-Run Impacts of Childhood Access to the Safety Net

Author: Hilary Hoynes, Diane Whitmore Schanzenbach , Douglas Almond
Publisher: American Economic Review
Date: 04/2016

We examine the impact of a positive and policy-driven change in economic resources available in utero and during childhood. We focus on the introduction of the Food Stamp Program, which was rolled out across counties between 1961 and 1975. We use the Panel Study of Income Dynamics to assemble unique data linking family background and county of residence in early childhood to adult health and economic outcomes. Our findings indicate access to food stamps in childhood leads to a significant reduction in the incidence of metabolic syndrome and, for women, an increase in economic self-sufficiency.

Penalized or Protected? Gender and the Consequences of Nonstandard and Mismatched Employment Histories David S. Pedulla

Penalized or Protected? Gender and the Consequences of Nonstandard and Mismatched Employment Histories

Author: David S. Pedulla
Publisher: American Sociological Review
Date: 04/2016

Millions of workers are employed in positions that deviate from the full-time, standard employment relationship or work in jobs that are mismatched with their skills, education, or experience. Yet, little is known about how employers evaluate workers who have experienced these employment arrangements, limiting our knowledge about how part-time work, temporary agency employment, and skills underutilization affect workers’ labor market opportunities. Drawing on original field and survey experiment data, I examine three questions: (1) What are the consequences of having a nonstandard or mismatched employment history for workers’ labor market opportunities? (2) Are the effects of nonstandard or mismatched employment histories different for men and women? and (3) What are the mechanisms linking nonstandard or mismatched employment histories to labor market outcomes? The field experiment shows that skills underutilization is as scarring for workers as a year of unemployment, but that there are limited penalties for workers with histories of temporary agency employment. Additionally, although men are penalized for part-time employment histories, women face no penalty for part-time work. The survey experiment reveals that employers’ perceptions of workers’ competence and commitment mediate these effects. These findings shed light on the consequences of changing employment relations for the distribution of labor market opportunities in the “new economy.”

The Determinants and Welfare Implications of US Workers’ Diverging Location Choices by Skill: 1980-2000 Rebecca Diamond

The Determinants and Welfare Implications of US Workers’ Diverging Location Choices by Skill: 1980-2000

Author: Rebecca Diamond
Publisher: American Economic Review
Date: 03/2016

From 1980 to 2000, the rise in the US college/high school graduate wage gap coincided with increased geographic sorting as college graduates concentrated in high wage, high rent cities. This paper estimates a structural spatial equilibrium model to determine causes and welfare consequences of this increased skill sorting. While local labor demand changes fundamentally caused the increased skill sorting, it was further fueled by endogenous increases in amenities within higher skill cities. Changes in cities' wages, rents, and endogenous amenities increased inequality between high school and college graduates by more than suggested by the increase in the college wage gap alone.

Credential Privilege or Cumulative Advantage? Prestige, Productivity, and Placement in the Academic Sociology Job Market Spencer Headworth, Jeremy Freese

Credential Privilege or Cumulative Advantage? Prestige, Productivity, and Placement in the Academic Sociology Job Market

Author: Spencer Headworth, Jeremy Freese
Publisher: Social Forces
Date: 03/2016

Using data on the population of US sociology doctorates over a five-year period, we examine different predictors of placement in a research-oriented, tenure-track academic sociology jobs. More completely than prior studies, we document the enormous relationship between PhD institution and job placement that has, in part, prompted a popular metaphor that academic job allocation processes are like a caste system. Yet we also find comparable relationships between PhD program and both graduate student publishing and awards. Overall, we find results more consistent with PhD prestige operating indirectly through mediating achievements or as a quality signal than as a “pure prestige” effect. We suggest sociologists think of stratification in their profession as not requiring exceptionalist historical metaphors, but rather as involving the same ordinary but powerful processes of cumulative advantage that pervade contemporary life.

Firms and Labor Market Inequality: Evidence and Some Theory David Card, Ana Rute Cardoso, Jörg Heining , Patrick Kline

Firms and Labor Market Inequality: Evidence and Some Theory

Author: David Card, Ana Rute Cardoso, Jörg Heining , Patrick Kline
Publisher: IZA
Date: 03/2016

We review the literature on firm-level drivers of labor market inequality. There is strong evidence from a variety of fields that standard measures of productivity – like output per worker or total factor productivity – vary substantially across firms, even within narrowly-defined industries. Several recent studies note that rising trends in the dispersion of productivity across firms mirror the trends in the wage inequality across workers. Two distinct literatures have searched for a more direct link between these two phenomena. The first examines how wages are affected by differences in employer productivity. Studies that focus on firm-specific productivity shocks and control for the non-random sorting of workers to more and less productive firms typically find that a 10% increase in value-added per worker leads to somewhere between a 0.5% and 1.5% increase in wages.A second literature focuses on firm-specific wage premiums, using the wage outcomes of job changers. This literature also concludes that firm pay setting is important for wage inequality, with many studies finding that firm wage effects contribute approximately 20% of the overall variance of wages. To interpret these findings, we develop a model where workplace environments are viewed as imperfect substitutes by workers, and firms set wages with some degree of market power. We show that simple versions of this model can readily match the stylized empirical findings in the literature regarding rent-sharing elasticities and the structure of firm-specific pay premiums.

Labor Markets - CPI Affiliates

Francine D. Blau Frances Perkins Professor of Industrial and Labor Relations and Labor Economics; Research Associate, NBER Cornell University
Harry Holzer Professor of Public Policy McCourt School, Georgetown University
Lawrence F. Katz Elisabeth Allison Professor of Economics; Research Associate, NBER Harvard University
Marianne Page Professor of Economics; Deputy Director, Center for Poverty Research University of California, Davis
Mark Granovetter Joan Butler Ford Professor of Sociology Stanford University

Pages

Labor Markets - Other Research

Title Author Media
The Value of Postsecondary Credentials in the Labor Market: An Experimental Study David J. Deming , Noam Yuchtman , Amira Abulafi , Claudia Goldin , Lawrence F. Katz

The Value of Postsecondary Credentials in the Labor Market: An Experimental Study

Author: David J. Deming , Noam Yuchtman , Amira Abulafi , Claudia Goldin , Lawrence F. Katz
Publisher: American Economic Review
Date: 03/2016

We study employers' perceptions of the value of postsecondary degrees using a field experiment. We randomly assign the sector and selectivity of institutions to fictitious resumes and apply to real vacancy postings for business and health jobs on a large online job board. We find that a business bachelor's degree from a for-profit online institution is 22 percent less likely to receive a callback than one from a nonselective public institution. In applications to health jobs, we find that for-profit credentials receive fewer callbacks unless the job requires an external quality indicator such as an occupational license.

The Gender Wage Gap: Extent, Trends, and Explanations Francine D. Blau, Lawrence M. Kahn

The Gender Wage Gap: Extent, Trends, and Explanations

Author: Francine D. Blau, Lawrence M. Kahn
Publisher: Journal of Economic Literature
Date: 01/2016

Using PSID microdata over the 1980-2010, we provide new empirical evidence on the extent of and trends in the gender wage gap, which declined considerably over this period. By 2010, conventional human capital variables taken together explained little of the gender wage gap, while gender differences in occupation and industry continued to be important. Moreover, the gender pay gap declined much more slowly at the top of the wage distribution that at the middle or the bottom and by 2010 was noticeably higher at the top. We then survey the literature to identify what has been learned about the explanations for the gap. We conclude that many of the traditional explanations continue to have salience. Although human capital factors are now relatively unimportant in the aggregate, women’s work force interruptions and shorter hours remain significant in high skilled occupations, possibly due to compensating differentials. Gender differences in occupations and industries, as well as differences in gender roles and the gender division of labor remain important, and research based on experimental evidence strongly suggests that discrimination cannot be discounted. Psychological attributes or noncognitive skills comprise one of the newer explanations for gender differences in outcomes. Our effort to assess the quantitative evidence on the importance of these factors suggests that they account for a small to moderate portion of the gender pay gap, considerably smaller than say occupation and industry effects, though they appear to modestly contribute to these differences.

Car and Home Ownership Among Low-Income Families in the Great Recession Laurel Sariscsany

Car and Home Ownership Among Low-Income Families in the Great Recession

Author: Laurel Sariscsany
Publisher: Russell Sage Foundation
Date: 12/2015

In a recent paper, Columbia University's Valentina Duque, Natasha Pilkauskas, and Irwin Garkfinkel analyzed the association between the Great Recession and assets among families with children. The study revealed two key findings. First, the recession led to declines in home and car ownership among families of young children. And second, more vulnerable groups — single, cohabiting, Black, and Hispanic families — were most likely to feel these effects, with married or White mothers more likely to be protected.

The Great Recession and State Criminal Justice Policy: Do Economic Hard Times Matter? Peter K. Enns, Delphia Shanks-Booth

The Great Recession and State Criminal Justice Policy: Do Economic Hard Times Matter?

Author: Peter K. Enns, Delphia Shanks-Booth
Publisher: Russell Sage Foundation
Date: 12/2015

It costs a lot to maintain the world's highest incarceration rate. Did the largest economic shock since the Great Depression influence criminal justice policy and resulting incarcerations?

The Best of Times, the Worst of Times: Understanding Pro-cyclical Mortality Ann H. Stevens, Douglas L. Miller , Marianne E. Page , Mateusz Filipski

The Best of Times, the Worst of Times: Understanding Pro-cyclical Mortality

Author: Ann H. Stevens, Douglas L. Miller , Marianne E. Page , Mateusz Filipski
Publisher: American Economic Journal: Economic Policy
Date: 11/2015

It is well-known that mortality rates are pro-cyclical. In this paper, we attempt to understand why. We find little evidence that cyclical changes in individuals' own employment-related behavior drives the relationship; own-group employment rates are not systematically related to own-group mortality. Further, most additional deaths that occur when the economy is strong are among the elderly, particularly elderly women and those residing in nursing homes. We also demonstrate that staffing in nursing homes moves countercyclically. These findings suggest that cyclical fluctuations in the quality of health care may be a critical contributor to cyclical movements in mortality.