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
Overwork, Specialization, and Wealth Brian Aronson, Lisa A. Keister

Overwork, Specialization, and Wealth

Author: Brian Aronson, Lisa A. Keister
Publisher: Journal of Marriage and Family
Date: 07/2019

Objective: This study examines how overwork and traditional household specialization—defined as households with one dedicated female homemaker and one dedicated male breadwinner—are associated with wealth across socioeconomic strata.

Background: Although overwork and household specialization are clearly associated with income, less is known about how these behaviors affect household wealth. Household wealth is only moderately correlated with household income and is influenced by many factors that do not affect income, suggesting that overwork and specialization have different associations with wealth than with income. Moreover, because wealth is so unevenly distributed, overwork and specialization likely have different associations with wealth across socioeconomic strata.

Method: With data from the Survey of Consumer Finances, a nationally representative survey of households that includes an oversample of high‐wealth households, the authors estimate unconditional quantile regression models to investigate how overwork and household specialization are associated with household wealth across socioeconomic strata and over time.

Results: Overwork has the greatest absolute benefits at the top of the wealth distribution but the greatest relative benefits in lower portions of the wealth distribution. Specialization yields distinct advantages for high‐wealth households that have grown over time, whereas specialization comes with trade‐offs for low‐wealth households that outweigh its benefits.

Conclusion: The financial trade‐offs associated with overwork and specialization vary considerably across the wealth distribution. Contrary to findings in income‐based research, overwork premiums appear most crucial to the financial well‐being of underprivileged households, whereas specialization premiums are evident only for the economic elite.

 

Babies, Work, or Both? Highly Educated Women's Employment and Fertility in East Asia Mary C. Brinton, Eunsil Oh

Babies, Work, or Both? Highly Educated Women's Employment and Fertility in East Asia

Author: Mary C. Brinton, Eunsil Oh
Publisher: American Journal of Sociology
Date: 07/2019

Highly educated women’s likelihood of combining childrearing with continuous employment over the life course has increased among recent U.S. cohorts. This trend is less evident in many postindustrial countries characterized by very low fertility. Among such countries, Japan and Korea have exceptionally low proportions of women who remain employed after having children, despite aggressive government policies designed to encourage this. We draw on over 160 in-depth interviews with highly educated Japanese and Korean men and women of childbearing age to uncover the central incompatibilities between married women’s employment and childrearing. Individuals’ narratives reveal how labor market structure and workplace norms contribute to a highly gendered household division of labor, leading many married women to either forsake employment or to consider having only one child.

State of the Union 2019: Employment Harry J. Holzer

State of the Union 2019: Employment

Author: Harry J. Holzer
Publisher: Stanford Center on Poverty and Inequality
Date: 06/2019
  • Labor force activity has declined for all prime-age workers, but the decline among young workers has been especially rapid. This means that millennials who are currently 25–34 years old are working less than Gen Xers at the same age.
  • Declines are most evident among men, though women’s labor force activity is also lower. Large gaps by education remain, with the highest labor force participation among college graduates.

 

When Labor's Lost: Health, Family Life, Incarceration, and Education in a Time of Declining Economic Opportunity for Low-Skilled Men Courtney Coile, Bruce Western

When Labor's Lost: Health, Family Life, Incarceration, and Education in a Time of Declining Economic Opportunity for Low-Skilled Men

Author: Courtney Coile, Bruce Western
Publisher: National Bureau of Economic Research
Date: 02/2019

The economic progress of U.S. men has stagnated in recent decades, with declining labor force participation and weak growth in real earnings, particularly for less educated and non-white men. In this paper, we illuminate the broader context in which prime-age men are experiencing economic stagnation. We explore changes for prime-age men over time in education, mortality, morbidity, disability program receipt, family structure, and incarceration rates, indicators that may be affected by men’s sluggish economic progress or play a role in explaining it, or both. While establishing causality for such a wide range of health and other outcomes is inherently difficult, we discuss clues provided by recent research.

Who Becomes an Inventor in America? The Importance of Exposure to Innovation Alex Bell, Raj Chetty, Xavier Jaravel, Neviana Petkova, John Van Reenen

Who Becomes an Inventor in America? The Importance of Exposure to Innovation

Author: Alex Bell, Raj Chetty, Xavier Jaravel, Neviana Petkova, John Van Reenen
Publisher: The Quarterly Journal of Economics
Date: 11/2018

We characterize the factors that determine who becomes an inventor in the United States, focusing on the role of inventive ability (“nature”) versus environment (“nurture”). Using deidentified data on 1.2 million inventors from patent records linked to tax records, we first show that children’s chances of becoming inventors vary sharply with characteristics at birth, such as their race, gender, and parents’ socioeconomic class. For example, children from high-income (top 1%) families are 10 times as likely to become inventors as those from below-median income families. These gaps persist even among children with similar math test scores in early childhood—which are highly predictive of innovation rates—suggesting that the gaps may be driven by differences in environment rather than abilities to innovate. We directly establish the importance of environment by showing that exposure to innovation during childhood has significant causal effects on children’s propensities to invent. Children whose families move to a high-innovation area when they are young are more likely to become inventors. These exposure effects are technology class and gender specific. Children who grow up in a neighborhood or family with a high innovation rate in a specific technology class are more likely to patent in exactly the same class. Girls are more likely to invent in a particular class if they grow up in an area with more women (but not men) who invent in that class. These gender- and technology class–specific exposure effects are more likely to be driven by narrow mechanisms, such as role-model or network effects, than factors that only affect general human capital accumulation, such as the quality of schools. Consistent with the importance of exposure effects in career selection, women and disadvantaged youth are as underrepresented among high-impact inventors as they are among inventors as a whole. These findings suggest that there are many “lost Einsteins”—individuals who would have had highly impactful inventions had they been exposed to innovation in childhood—especially among women, minorities, and children from low-income families.

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
Mark Granovetter's picture Mark Granovetter Joan Butler Ford Professor of Sociology; Joan Butler Ford Professor in the School of Humanities and Sciences
Stanford University

Pages

Labor Markets - Other Research

Title Author Media
On Her Own Account: How Strengthening Women's Financial Control Affects Labor Supply and Gender Norms Erica M. Field, Rohini Pande, Natalia Rigol, Simone G. Schaner, Charity Troyer Moore

On Her Own Account: How Strengthening Women's Financial Control Affects Labor Supply and Gender Norms

Author: Erica M. Field, Rohini Pande, Natalia Rigol, Simone G. Schaner, Charity Troyer Moore
Publisher: National Bureau of Economic Research
Date: 09/2019

Can greater control over earned income incentivize women to work and influence gender norms? In collaboration with Indian government partners, we provided rural women with individual bank accounts and randomly varied whether their wages from a public workfare program were directly deposited into these accounts or into the male household head’s account (the status quo). Women in a random subset of villages were also trained on account use. In the short run, relative to women just offered bank accounts, those who also received direct deposit and training increased their labor supply in the public and private sectors. In the long run, gender norms liberalized: women who received direct deposit and training became more accepting of female work, and their husbands perceived fewer social costs to having a wife who works. These effects were concentrated in households with otherwise lower levels of, and stronger norms against, female work. Women in these households also worked more in the long run and became more empowered. These patterns are consistent with models of household decision-making in which increases in bargaining power from greater control over income interact with, and influence, gender norms.

Racialized Re-Entry: Labor Market Inequality After Incarceration Western, Bruce, Sirois, Catherine

Racialized Re-Entry: Labor Market Inequality After Incarceration

Author: Western, Bruce, Sirois, Catherine
Publisher: Social Forces
Date: 10/2018

Why do some people succeed in the labor market after incarceration but others do not? We study the transition from prison to work with data on monthly employment and earnings for a sample of men and women observed for a year after incarceration. More than in earlier research, the data provide detailed measurement of temporary and informal employment and richly describe the labor market disadvantages of formerly incarcerated men and women. We find that half the sample is jobless in any given month and average earnings are well below the poverty level. By jointly modeling employment and earnings, we show that blacks and Hispanics have lower total earnings than whites even after accounting for health, human capital, social background, crime and criminal justice involvement, and job readiness. A decomposition attributes most of the earnings gaps to racial and ethnic inequalities in employment. Qualitative interviews suggest that whites more than blacks and Hispanics find stable, high-paying jobs through social networks. These findings support a hypothesis of racialized re-entry that helps explain the unusual disadvantage of African Americans at the nexus of the penal system and the labor market.

A Relational Inequality Approach to First- and Second-Generation Immigrant Earnings in German Workplaces Silvia Maja Melzer, Donald Tomaskovic-Devey, Reinhard Schunck, Peter Jacobebbinghaus

A Relational Inequality Approach to First- and Second-Generation Immigrant Earnings in German Workplaces

Author: Silvia Maja Melzer, Donald Tomaskovic-Devey, Reinhard Schunck, Peter Jacobebbinghaus
Publisher: Social Forces
Date: 09/2018

We conceptualize immigrant incorporation as a categorically driven process and contrast the bright distinctions between first-generation immigrants and natives, with more blurry second-generation contrasts. We analyze linked employer-employee data of a sample of 5,097 employees in 97 large German organizations and focus on first- and second-generation immigrants. We explore how generational status in the labor market and workplace contexts expands and contracts native-immigrant wage inequalities. We find a substantial average first-generation immigrant-native wage gap, which is not explained by individual human capital differences or most aspects of organizational context. In contrast, there is, on average, no second-generation wage gap, but there are substantial variations across workplaces. A series of results confirm predictions from relational inequality theory. For both first- and second-generation immigrants, working in a high-inequality workplace is associated with larger wage gaps. Second-generation immigrants perform better in workplaces where they have intersectional advantages over natives, and for first-generation immigrants collective bargaining protection narrows wage gaps with natives. Consistent with ethnic competition theory, in workplaces with very high shares of immigrant workers, the first-generation–native wage gap is larger. In contrast, increased contact between native Germans and second-generation immigrant coworkers reduces earnings gaps, but only up to a tipping point, after which competition processes reappear and earning gaps widen.

Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share David Autor, Anna Salomons

Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share

Author: David Autor, Anna Salomons
Publisher: NBER
Date: 07/2018

Many technological innovations replace workers with machines, but this capital-labor substitution need not reduce aggregate labor demand because it simultaneously induces four countervailing responses: own-industry output effects; cross-industry input–output effects; between-industry shifts; and final demand effects. We quantify these channels using four decades of harmonized cross-country and industry data, where we measure automation as industry-level movements in total factor productivity (TFP) that are common across countries. We find that automation displaces employment and reduces labor's share of value-added in the industries in which it originates (a direct effect). In the case of employment, these own-industry losses are reversed by indirect gains in customer industries and induced increases in aggregate demand. By contrast, own-industry labor share losses are not recouped elsewhere. Our framework can account for a substantial fraction of the reallocation of employment across industries and the aggregate fall in the labor share over the last three decades. It does not, however, explain why the labor share fell more rapidly during the 2000s.

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.