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
Not Enough Work: Access to Full-Time Jobs with Decent Pay and Benefits Varies by Race/Ethnicity and Place of Residence Marybeth J. Mattingly, Justin R. Young

Not Enough Work: Access to Full-Time Jobs with Decent Pay and Benefits Varies by Race/Ethnicity and Place of Residence

Author: Marybeth J. Mattingly, Justin R. Young
Publisher: National Agricultural & Rural Development Policy Center
Date: 12/2014

In this brief, we consider differences across rural and urban America in each of these measures, given the very different economic conditions that prevail in rural America, where higher paying jobs and those with employer-provided health insurance areless common (McLaughlin and Coleman-Jensen 2008), nonstandard work is more ubiquitous (McCrate 2011), and the best-educated and young often move away (Carr and Kefalas 2010: Hollowing Out the Middle). Further, we break down these differences by both race and gender, as prior research suggests racial-ethnic differences in underemployment (Glauber 2013; Sum and Khatiwada 2010; Young2012), and we know from the literature that different factors mayinfluence women and men’s employment (see, for example, Hollister 2011). We use data from the 2013 Annual Social and Economic Supplement to the Current Population Survey—the most currently available data for assessing labor force dynamics across the country in this way.

Does working from home work? Evidence from a Chinese experiment Nicholas Bloom, James Liang, John Roberts, Zhichun Jenny Ying

Does working from home work? Evidence from a Chinese experiment

Author: Nicholas Bloom, James Liang, John Roberts, Zhichun Jenny Ying
Publisher: Quarterly Journal of Economics
Date: 11/2014

A rising share of employees now regularly engage in working from home (WFH), but there are concerns this can lead to “shirking from home.” We report the results of a WFH experiment at Ctrip, a 16,000-employee, NASDAQ-listed Chinese travel agency. Call center employees who volunteered to WFH were randomly assigned either to work from home or in the office for nine months. Home working led to a 13% performance increase, of which 9% was from working more minutes per shift (fewer breaks and sick days) and 4% from more calls per minute (attributed to a quieter and more convenient working environment). Home workers also reported improved work satisfaction, and their attrition rate halved, but their promotion rate conditional on performance fell. Due to the success of the experiment, Ctrip rolled out the option to WFH to the whole firm and allowed the experimental employees to reselect between the home and office. Interestingly, over half of them switched, which led to the gains from WFH almost doubling to 22%. This highlights the benefits of learning and selection effects when adopting modern management practices like WFH.

What Will My Account Really Be Worth? An Experiment on Exponential Growth Bias and Retirement Saving Gopi Shah Goda, Colleen Flaherty Manchester, Aaron Sojourner

What Will My Account Really Be Worth? An Experiment on Exponential Growth Bias and Retirement Saving

Author: Gopi Shah Goda, Colleen Flaherty Manchester, Aaron Sojourner
Publisher: Journal of Public Economics
Date: 11/2014

Recent findings on limited financial literacy and exponential growth bias suggest saving decisions may not be optimal because such decisions require an accurate understanding of how current contributions can translate into income in retirement. This study uses a large-scale field experiment to measure how a low-cost, direct-mail intervention designed to inform subjects about this relationship affects their saving behavior. Using administrative data prior to and following the intervention, we measure its effect on participation and the level of contributions in retirement saving accounts. Those sent income projections along with enrollment information were more likely to change contribution levels and increase annual contributions relative to the control group. Among those who made a change in contribution, the increase in annual contributions was approximately $1,150. Results from a follow-up survey corroborate these findings and show heterogeneous effects of the intervention by rational and behavioral factors known to affect saving. Finally, we find evidence of behavioral influences on decision-making in that the assumptions used to generate the projections influence the saving response.

Redesigning, Redefining Work Shelley J. Correll, Erin L. Kelly, Lindsey Trimble O’Connor, Joan C. Williams

Redesigning, Redefining Work

Author: Shelley J. Correll, Erin L. Kelly, Lindsey Trimble O’Connor, Joan C. Williams
Publisher: Work and Occupations
Date: 02/2014

The demands of today’s workplace—long hours, constant availability, self-sacrificial dedication—do not match the needs of today’s workforce, where workers struggle to reconcile competing caregiving and workplace demands. This mismatch has negative consequences for gender equality and workers’ health. Here, the authors put forth a call to action: to redesign work to better meet the needs of today’s workforce and to redefine successful work. The authors propose two avenues for future research to achieve these goals: research that (a) builds a more rigorous business case for work redesign/redefinition and (b) exposes the underlying gender and class dynamics of current work arrangements.

State of the Union: Labor Markets Michael Hout, Erin Cumberworth

State of the Union: Labor Markets

Author: Michael Hout, Erin Cumberworth
Publisher: Stanford Center on Poverty and Inequality
Date: 01/2014

During the Great Recession of 2007 to 2009, the "housing bubble" burst, the financial sector tumbled, banks stopped lending, construction workers lost their jobs, sales of building materials and appliances plummeted, tax revenues fell, and the downward spiral threatened to spin ever lower. But since the recovery began in the summer of 2009, employment has barely kept pace with population growth. The U.S. economy enters 2014 with 7 percent of the labor force unemployed and millions more out of the labor force.

labor markets - CPI Affiliates

Markus Gangl's picture Markus Gangl Professor of Sociology
Goethe-University Frankfurt am Main
Marlis Buchmann Professor, Soziologisches Institut
University of Zurich
Marta Tienda's picture Marta Tienda Professor, Maurice P. During '22 Professor in Demographic Studies; Professor of Sociology and Public Affairs; Director, Program in Latino Studies
Princeton University
Martina Morris's picture Martina Morris Professor of Sociology and Statistics
University of Washington - Seattle
Mary C. Brinton Reischauer Institute Professor of Sociology
Harvard University

Pages

Labor Markets - Other Research

Title Author Media
State Fiscal Policy during the Great Recession Andrea Louise Campbell, Michael W. Sances

State Fiscal Policy during the Great Recession

Author: Andrea Louise Campbell, Michael W. Sances
Publisher:
Date: 11/2013

Plunging tax revenues and soaring social program demand during the Great Recession created state budget shortfalls of historic magnitude. After reviewing states’ aggregate reaction to the economic downturn, we conduct an original analysis of the recession’s budgetary impact on the states and their policy responses. Economic factors such as falling personal income and home values explain much of the variation in the recession’s impact. State budgeting rules and practices conditioned states’ experiences, but not always as intended: budget gaps were smaller in states with stricter balanced budget requirements, but larger in states with statutory spending limitations. Personal income tax increases were more likely in states with a Democratic legislature or greater public unionization rates, while midyear spending cuts were smaller in states with larger public sector unions. In sum, we find that while states’ objective economic situations determined the bulk of their responses to the Great Recession, political factors determined these responses’ shape and form.

Lost Generations? Wealth Among Young Americans Eugene Steuerle, Signe-Mary McKernan, Caroline Ratcliffe, Sisi Zhang

Lost Generations? Wealth Among Young Americans

Author: Eugene Steuerle, Signe-Mary McKernan, Caroline Ratcliffe, Sisi Zhang
Publisher: Urban Institute
Date: 03/2013

Despite the Great Recession and the fragile economic recovery, the wealth of Americans has grown significantly when a longer-term view is considered. Average household wealth approximately doubled from 1983 to 2010, and average incomes rose similarly. For many, the American dream of working hard, saving more, and becoming wealthier than one's parents holds true.

Consumption and Income Poverty over the Business Cycle Bruce D. Meyer, James X. Sullivan

Consumption and Income Poverty over the Business Cycle

Author: Bruce D. Meyer, James X. Sullivan
Publisher: Research in Labor Economics
Date: 01/2011

We examine the relationship between the business cycle and poverty for the period from 1960 to 2008 using income data from the Current Population Survey and consumption data from the Consumer Expenditure Survey. This new evidence on the relationship between macroeconomic conditions and poverty is of particular interest given recent changes in anti-poverty policies that have placed greater emphasis on participation in the labor market and in-kind transfers. We look beyond official poverty, examining alternative income poverty and consumption poverty, which have conceptual and empirical advantages as measures of the well-being of the poor. We find that both income and consumption poverty are sensitive to macroeconomic conditions. A one percentage point increase in unemployment is associated with an increase in the after-tax income poverty rate of 0.9 to 1.1 percentage points in the long-run, and an increase in the consumption poverty rate of 0.3 to 1.2 percentage points in the long-run. The evidence on whether income is more responsive to the business cycle than consumption is mixed. Income poverty does appear to be more responsive using national level variation, but consumption poverty is often more responsive to unemployment when using regional variation. Low percentiles of both income and consumption are sensitive to macroeconomic conditions, and in most cases low percentiles of income appear to be more responsive than low percentiles of consumption.

The Return of Depression Economics and the Crisis of 2008 Paul Krugman

The Return of Depression Economics and the Crisis of 2008

Author: Paul Krugman
Publisher: W. W. Norton & Company
Date: 12/2008

Labor Markets - Multimedia

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