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
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.

    Money and Morale: Growing Inequality Affects How Americans View Themselves and Others Michael Hout

    Money and Morale: Growing Inequality Affects How Americans View Themselves and Others

    Author: Michael Hout
    Publisher: Annals of the American Academy of Political and Social Science
    Date: 01/2016

    Dozens of past studies document how affluent people feel somewhat better about life than middle-class people feel and much better than poor people do. New analyses of the General Social Surveys from 1974 to 2012 address questions in the literature regarding aggregate responses to hard times, whether the income-class relationship is linear or not, and whether inequality affects happiness. General happiness dropped significantly during the Great Recession, suggesting that the income-happiness relationship might also exist at the macro level. People with extremely low incomes are not as unhappy as a linear model expects, but there is no evidence of a threshold beyond which personal happiness stops increasing. Comparing happiness over the long term, the affluent were about as happy in 2012 as they were in the 1970s, but the poor were much less happy. Consequently, the gross happiness gap by income was about 30 percent bigger in 2012 than it was in the 1970s. A multivariate model shows that the net effect of income on happiness also increased significantly over time.

    Employment Insecurity among the Working Poor Carl Gershenson, Matthew Desmond

    Employment Insecurity among the Working Poor

    Author: Carl Gershenson, Matthew Desmond
    Publisher: Social Problems
    Date: 01/2016

    While social scientists have documented severe consequences of job loss, scant research investigates why workers lose their jobs. We explore the role of housing insecurity in actuating employment insecurity, investigating if workers who involuntarily lose their homes subsequently involuntarily lose their jobs. Analyzing novel survey data of predominately low-income working renters, we find the likelihood of being laid off to be between 11 and 22 percentage points higher for workers who experienced a preceding forced move, compared to observationally identical workers who did not. Our findings suggest that initiatives promoting housing stability could promote employment stability.

    labor markets - CPI Affiliates

    John Van Reenen's picture John Van Reenen Professor of Applied Economics
    Massachusetts Institute of Technology
    Jonas Pontusson's picture Jonas Pontusson Professor of Comparative Politics
    University of Geneva
    Julie E. Brines Associate Professor of Sociology
    University of Washington
    Kevin Lang's picture Kevin Lang Professor of Economics; Research Associate, National Bureau of Economic Research
    Boston University
    Kevin T. Leicht's picture Kevin T. Leicht Sociology Department Head of Sociology; Professor of LAS Global Studies
    The University of Iowa

    Pages

    Labor Markets - Other Research

    Title Author Media
    Social Mobility Among Second-Generation Latinos Van C. Tran

    Social Mobility Among Second-Generation Latinos

    Author: Van C. Tran
    Publisher: Contexts
    Date: 04/2016

    New data shows that Latinos weathered the recession well and are poised to seize opportunities for further social mobility.

    A Most Egalitarian Profession: Pharmacy and the Evolution of a Family-Friendly Occupation Claudia Goldin, Lawrence F. Katz

    A Most Egalitarian Profession: Pharmacy and the Evolution of a Family-Friendly Occupation

    Author: Claudia Goldin, Lawrence F. Katz
    Publisher: Journal of Labor Economics
    Date: 04/2016

    Pharmacy today is a highly remunerated female-majority profession with a small gender earnings gap and low earnings dispersion. Using extensive surveys of pharmacists, as well as the US Census, American Community Surveys, and Current Population Surveys, we explore the gender earnings gap, penalty to part-time work, demographics of pharmacists relative to other college graduates, and evolution of the profession during the last half-century. Technological changes increasing substitutability among pharmacists, growth of pharmacy employment in retail chains and hospitals, and related decline of independent pharmacies reduced the penalty to part-time work and contribute to the narrow gender earnings gap in pharmacy.

    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.