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
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.

State of the Union 2016: Labor Markets Michael Hout

State of the Union 2016: Labor Markets

Author: Michael Hout
Publisher:
Date: 02/2016
The prime-age employment rate in the U.S. still languishes well below pre-recession levels. If the current (slow) rate of improvement continues, the U.S. will likely fall into another recession before the male rate returns to its pre-recession level. 
    Unemployment Insurance and Disability Insurance in the Great Recession Andreas I. Mueller, Jesse Rothstein, Till M. von Wachter

    Unemployment Insurance and Disability Insurance in the Great Recession

    Author: Andreas I. Mueller, Jesse Rothstein, Till M. von Wachter
    Publisher: Journal of Labor Economics
    Date: 01/2016

    Social Security Disability Insurance (SSDI) awards rise during recessions. If marginal applicants are able to work but unable to find jobs, countercyclical Unemployment Insurance (UI) benefit extensions may reduce SSDI uptake. Exploiting UI extensions in the Great Recession as a source of variation, we find no indication that expiration of UI benefits causes SSDI applications and can rule out effects of meaningful magnitude. A supplementary analysis finds little overlap between the two programs’ recipient populations: only 28% of SSDI awardees had any labor force attachment in the prior calendar year, and of those, only 4% received UI.

    Trade Induced Technical Change? The Impact of Chinese Imports on innovation, IT and Productivity Nicholas Bloom, Mirko Draca, John Van Reenen

    Trade Induced Technical Change? The Impact of Chinese Imports on innovation, IT and Productivity

    Author: Nicholas Bloom, Mirko Draca, John Van Reenen
    Publisher: Review of Economic Studies
    Date: 01/2016

    We examine the impact of Chinese import competition on broad measures of technical change - patenting, IT and TFP – using new panel data across twelve European countries from 1996-2007. In particular, we establish that the absolute volume of innovation increases within the firms most affected by Chinese imports in their output markets. We correct for endogeneity using the removal of product-specific quotas following China's entry into the World Trade Organization in 2001. Chinese import competition led to increased technical change within firms and reallocated employment between firms towards more technologically advanced firms. These within and between effects were about equal in magnitude, and account for 15% of European technology upgrading over 2000-2007 (and even more when we allow for offshoring to China). Rising Chinese import competition also led to falls in employment and the share of unskilled workers. In contrast to low-wage nations like China, developed countries imports had no significant effect on innovation.

    labor markets - CPI Affiliates

    Lawrence F. Katz's picture Lawrence F. Katz Elisabeth Allison Professor of Economics, Research Associate, NBER; Co-Scientific Director and Co-Founder, J-PAL
    Harvard University
    Arne L. Kalleberg's picture Arne L. Kalleberg Kenan Distinguished Professor of Sociology; Adjunct Professor of Management, Kenan-Flager School of Business; Adjunct Professor of Public Policy and Global Studies, University of North Carolina at Chapel Hill
    University of North Carolina
    Charles Halaby's picture Charles Halaby Martindale Bascom Professor of Sociology Emeritus, Research Director of General Education Assessment
    University of Wisconsin-Madison
    David H. Autor Ford Professor of Economics, Director of National Bureau of Economic Research Disability Research Center; Co-director of the School Effectiveness and Inequality Initiative
    Massachusetts Institute of Technology
    Gavin Wright's picture Gavin Wright William Robertson Coe Professor of American Economic History
    Stanford University

    Pages

    Labor Markets - Other Research

    Title Author Media
    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.

    The Great Recession and Mothers' Health Christopher Wimer

    The Great Recession and Mothers' Health

    Author: Christopher Wimer
    Publisher: Russell Sage Foundation
    Date: 10/2015

    Given the now well known effects of the Great Recession on economic outcomes of individuals and families, researchers have turned to the question of how this major economic downturn affected domains of family life. In a recent paper, Janet Currie of Princeton University and Valentina Duque and Irwin Garfinkel of Columbia University study the health of young mothers in the context of the Great Recession. Two key findings emerged. First, increased unemployment was associated with worsened self-reported health status and increased smoking and drug use. Second, more disadvantaged mothers suffered the greatest effects for self-reported health, while more advantaged mothers sometimes showed improvements in their health and health behaviors in response to the recession.

    The Great Recession and Fathers' Health Allison Corr

    The Great Recession and Fathers' Health

    Author: Allison Corr
    Publisher: Russell Sage Foundation
    Date: 10/2015

    Economic recessions can have detrimental impacts on individual and family wellbeing. New research by Janet Currie of Princeton University and Valentina Duque of Columbia University assesses how the Great Recession affected the health of fathers with young children. The analysis yields two main findings. First, high unemployment was associated with declines in physical health but little change in health-compromising behaviors. Second, changes in physical health were concentrated among fathers in the lower end and middle of the education distribution.

    Estimating labour supply elasticities based on cross-country micro data: A bridge between micro and macro estimates? Markus Jäntti, Jukka Pirttilä, Håkan Seline

    Estimating labour supply elasticities based on cross-country micro data: A bridge between micro and macro estimates?

    Author: Markus Jäntti, Jukka Pirttilä, Håkan Seline
    Publisher: Journal of Public Economics
    Date: 07/2015

    The Nordic model relies on high tax rates to finance an extensive welfare state. If labour supply elasticities are large, the burden of financing the model can be large even if, arguably, the practice of providing subsidised goods that support labour supply is likely to mitigate these effects. We utilise repeated cross sections of micro data from several countries, including the four major Nordic countries, available from the Luxembourg Income Study, LIS, to estimate labour supply elasticities, both at the intensive and extensive margins. The data span over four decades and include a large number of tax reform episodes, with tax rate variation arising both from cross-sectional and country-level differences. Using these data, we investigate whether micro and macro estimates differ in a systematic way. The results do not provide strong support for the view that elasticities at the macro level would be higher than the corresponding micro elasticities.

    The Great Recession and Parents' Relationships Christopher Wimer

    The Great Recession and Parents' Relationships

    Author: Christopher Wimer
    Publisher: Russell Sage Foundation
    Date: 06/2015

    Economic downturns are stressful experiences for those affected by them, as well as those connected to affected family members and loved ones. Did the recent Great Recession lead to significant changes in the relationships between parents of young children?