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
Imprisonment and Labor Market Outcomes: Evidence from a Natural Experiment David J. Harding, Jeffrey D. Morenoff, Anh P. Nguyen, Shawn D. Bushway

Imprisonment and Labor Market Outcomes: Evidence from a Natural Experiment

Author: David J. Harding, Jeffrey D. Morenoff, Anh P. Nguyen, Shawn D. Bushway
Publisher: American Journal of Sociology
Date: 07/2018

Because of racially disproportionate imprisonment rates, the literature on mass incarceration has focused on the labor market consequence of imprisonment and the implications of those effects for racial inequality. Yet, the effects of imprisonment itself, as distinct from conviction, are not well understood. The authors leverage a natural experiment based on the random assignment of judges to felony cases in Michigan to examine the causal effect of being sentenced to prison as compared to probation, stratifying by race and work history. The most widespread effect of imprisonment on employment occurs through incapacitation in prison, both for the initial prison sentence and through the heightened risk of subsequent imprisonment. Negative postrelease effects of imprisonment on employment, employment stability, and employment outside the secondary labor market are concentrated among whites with a presentence work history. Postrelease effects of imprisonment on employment among those with no work history are positive but fade over time.

The Gender Earnings Gap in the Gig Economy: Evidence from over a Million Rideshare Drivers Cody Cook, Rebecca Diamond, Jonathan Hall, John A. List, Paul Oyer

The Gender Earnings Gap in the Gig Economy: Evidence from over a Million Rideshare Drivers

Author: Cody Cook, Rebecca Diamond, Jonathan Hall, John A. List, Paul Oyer
Publisher: NBER
Date: 06/2018

The growth of the “gig” economy generates worker flexibility that, some have speculated, will favor women. We explore this by examining labor supply choices and earnings among more than a million rideshare drivers on Uber in the U.S. We document a roughly 7% gender earnings gap amongst drivers. We completely explain this gap and show that it can be entirely attributed to three factors: experience on the platform (learning-by-doing), preferences over where to work (driven largely by where drivers live and, to a lesser extent, safety), and preferences for driving speed. We do not find that men and women are differentially affected by a taste for specific hours, a return to within-week work intensity, or customer discrimination. Our results suggest that there is no reason to expect the “gig” economy to close gender differences. Even in the absence of discrimination and in flexible labor markets, women’s relatively high opportunity cost of non-paid-work time and gender-based differences in preferences and constraints can sustain a gender pay gap.

How Race and Unemployment Shape Labor Market Opportunities: Additive, Amplified, or Muted Effects? David S. Pedulla

How Race and Unemployment Shape Labor Market Opportunities: Additive, Amplified, or Muted Effects?

Author: David S. Pedulla
Publisher: Social Forces
Date: 06/2018

The manner in which social categories combine to produce inequality lies at the heart of scholarship on social stratification. To date, scholars have largely pointed to two primary ways that negatively stereotyped categories may aggregate: 1) additive effects, whereby one category has similar consequences across the other category, and 2) amplified congruence, whereby a secondary category exacerbates the negative effects of the first category. This article develops an alternative potential aggregation pattern—muted congruence—which posits that when individuals evaluate others that occupy multiple social positions about which stereotypes are highly congruent, such as being black and being unemployed, the additional category membership will have limited influence over the ultimate evaluation. Using evidence from a field experiment, where fictitious applications were submitted to real job openings, I examine which aggregation pattern most accurately reflects how race and unemployment shape actual hiring decisions. In line with predictions from the “muted congruence” perspective, the findings indicate that racial discrimination is prominent, but that there are limited additional negative effects of unemployment for African American workers. I conclude by discussing the implications of these findings for understanding the aggregation of social categories in the production of inequality.

U.S. Employment and Opioids: Is There a Connection? Janet Currie, Jonas Y. Jin, Molly Schnell

U.S. Employment and Opioids: Is There a Connection?

Author: Janet Currie, Jonas Y. Jin, Molly Schnell
Publisher: NBER
Date: 03/2018

This paper uses quarterly county-level data to examine the relationship between opioid prescription rates and employment-to-population ratios from 2006–2014. We first estimate models of the effect of opioid prescription rates on employment-to-population ratios, instrumenting opioid prescriptions for younger ages using opioid prescriptions to the elderly. We also estimate models of the effect of employment-to-population ratios on opioid prescription rates using a shift-share instrument. We find that the estimated effect of opioids on employment-to-population ratios is positive but small for women, but there is no relationship for men. These findings suggest that although they are addictive and dangerous, opioids may allow some women to work who would otherwise leave the labor force. When we examine the effect of employment-to-population ratios on opioid prescriptions, our results are more ambiguous. Overall, our findings suggest that there is no simple causal relationship between economic conditions and the abuse of opioids. Therefore, while improving economic conditions in depressed areas is desirable for many reasons, it is unlikely to curb the opioid epidemic.

State of the Union 2018: Social Networks Adina D. Sterling

State of the Union 2018: Social Networks

Author: Adina D. Sterling
Publisher: Stanford Center on Poverty and Inequality
Date: 03/2018

Over the last half century, as women entered the labor force in large numbers, they have had the opportunity to supplement their kin and friendship networks with coworker networks. It is still the case that women have more kin and friendship ties than men. This gender gap advantages women by providing them with more sources of social support. But men still have more coworker ties than women. This gender gap advantages men by providing them with better access to jobs.

labor markets - CPI Affiliates

David Card's picture David Card Labor Markets Research Group Leader, Class of 1950 Professor of Economics; Director of the Labor Studies Program at the National Bureau of Economic Research; Director, Center for Labor Economics (CLE); Director, Econometrics Laboratory (EML)
University of California, Berkeley
Gregory Acs's picture Gregory Acs Labor Markets Research Group Leader, Vice President of Income and Benefits Policy Center
The Urban Institute
Jesse Rothstein's picture Jesse Rothstein Labor Markets Research Group Leader; Professor of Public Policy and Economics; Director of Institute for Research on Labor and Employment (IRLE); Research Associate, National Bureau of Economic Research; Co-Director, California Policy Lab
University of California, Berkeley
Michael Hout's picture Michael Hout Labor Markets Research Group Leader, Professor of Sociology
New York University
Richard B. Freeman's picture Richard B. Freeman Herbert Ascherman Chair in Economics; Director, Science and Engineering Workforce Project, NBER; Faculty Co-Director of the Labor and Worklife Program, Harvard Law School
Harvard University

Pages

Labor Markets - Other Research

Title Author Media
The Race Between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment Daron Acemoglu , Pascual Restrepo

The Race Between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment

Author: Daron Acemoglu , Pascual Restrepo
Publisher: American Economic Review
Date: 06/2018

We examine the concerns that new technologies will render labor redundant in a framework in which tasks previously performed by labor can be automated and new versions of existing tasks, in which labor has a comparative advantage, can be created. In a static version where capital is fixed and technology is exogenous, automation reduces employment and the labor share, and may even reduce wages, while the creation of new tasks has the opposite effects. Our full model endogenizes capital accumulation and the direction of research toward automation and the creation of new tasks. If the long-run rental rate of capital relative to the wage is sufficiently low, the long-run equilibrium involves automation of all tasks. Otherwise, there exists a stable balanced growth path in which the two types of innovations go hand-in-hand. Stability is a consequence of the fact that automation reduces the cost of producing using labor, and thus discourages further automation and encourages the creation of new tasks. In an extension with heterogeneous skills, we show that inequality increases during transitions driven both by faster automation and the introduction of new tasks, and characterize the conditions under which inequality stabilizes in the long run.

Marriage, Family Structure, and Maternal Employment Trajectories Christine Percheski

Marriage, Family Structure, and Maternal Employment Trajectories

Author: Christine Percheski
Publisher: Social Forces
Date: 03/2018

Previous studies of maternal employment have focused on marital status differences, but the rise in nonmarital cohabiting parenthood problematizes the simple dichotomy between married and unmarried mothers. Theory and previous research yield mixed predictions as to whether cohabiting mothers’ employment will more closely resemble that of married mothers or lone unmarried mothers. Using data from the Fragile Families and Child Wellbeing Study, I examine how maternal employment varies across family structures (married parents, cohabiting unmarried parents, and lone unmarried mothers) in the five years after a birth for mothers living in urban areas in the United States. Descriptive statistics show few differences in maternal employment patterns by family structure. Controlling for human capital, however, I find that cohabiting mothers return to work earlier and work more than married mothers. Cohabiting mothers and lone mothers show very similar employment patterns. Additionally, cohabiting mothers who later marry have employment trajectories that are similar to married mothers, whereas married mothers who divorce increase their employment hours. Family characteristics, partner characteristics, and gender attitudes do not explain employment differences between married and cohabiting mothers. I speculate that cohabiting mothers work more than married mothers as a hedge against economic deprivation given high union dissolution rates for cohabiting couples.

Does a Criminal Past Predict Worker Performance? Evidence from One of America’s Largest Employers Jennifer Hickes Lundquist, Devah Pager, Eiko Strader

Does a Criminal Past Predict Worker Performance? Evidence from One of America’s Largest Employers

Author: Jennifer Hickes Lundquist, Devah Pager, Eiko Strader
Publisher: Social Forces
Date: 03/2018

This paper is one of the first systematic assessments of ex-felons’ workplace performance. Using FOIA-requested data from the Department of Defense, we follow 1.3 million ex-offender and non-offender enlistees in the US military from 2002 to 2009. Those with a felony background show no difference in attrition rates due to poor performance compared to those without criminal records. Moreover, ex-felons are promoted more quickly and to higher ranks than other enlistees. At the same time, we find that ex-felons are slightly more likely to commit a legal offense in the military system (5 percent of non-felons compared to 6.6 percent of ex-felons). We also find a higher rate of work-related deaths among the ex-felon sample; closer evaluation of limited data suggests this may be driven by ex-felons being assigned more often to combat positions. Overall, our study shows that the military’s criminal history screening process can result in successful employment outcomes for ex-felons, at least in terms of job mobility and reliability, to the mutual benefit of employer and employee. An important question arising from this analysis is whether the military’s “whole person” review can apply successfully to the civilian sector.

Intergenerational Spillovers in Disability Insurance Gordon B. Dahl, Anne C. Gielen

Intergenerational Spillovers in Disability Insurance

Author: Gordon B. Dahl, Anne C. Gielen
Publisher: NBER
Date: 02/2018

Does participation in a social assistance program by parents have spillovers on their children's own participation, future labor market attachment, and human capital investments? While intergenerational concerns have figured prominently in policy debates for decades, causal evidence is scarce due to nonrandom participation and data limitations. In this paper we exploit a 1993 policy reform in the Netherlands which tightened disability insurance (DI) criteria for existing claimants, and use rich panel data to link parents to children's long-run outcomes. The key to our regression discontinuity design is that the reform applied to younger cohorts, while older cohorts were exempted from the new rules. We find that children of parents who were pushed out of DI or had their benefits reduced are 11% less likely to participate in DI themselves, do not alter their use of other government safety net programs, and earn 2% more in the labor market as adults. The combination of reduced government transfers and increased tax revenue results in a fiscal gain of 5,900 euros per treated parent due to child spillovers by 2014. Moreover, children of treated parents complete an extra 0.12 years of schooling on average, an investment consistent with an anticipated future with less reliance on DI. Our findings have important implications for the evaluation of this and other policy reforms: ignoring parent-to-child spillovers understates the long-run cost savings of the Dutch reform by between 21 and 40% in present discounted value terms.

Dinner Table Human Capital and Entrepreneurship Hans K. Hvide, Paul Oyer

Dinner Table Human Capital and Entrepreneurship

Author: Hans K. Hvide, Paul Oyer
Publisher: NBER
Date: 01/2018

We document three new facts about entrepreneurship. First, a majority of male entrepreneurs start a firm in the same or a closely related industry as their fathers’ industry of employment. Second, this tendency is correlated with intelligence: higher-IQ entrepreneurs are less likely to follow their fathers. Third, an entrepreneur that starts a firm in the same 5-digit industry as where his father was employed tends to outperform entrepreneurs in the same industry whose fathers did not work in that industry. We consider various explanations for these facts and conclude that “dinner table human capital”, where children obtain industry knowledge through their parents, is an important factor behind what type of firm is started and how well it performs.