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
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.

State of the Union 2018: Workplace Sexual Harassment Amy Blackstone, Heather McLaughlin, Christopher Uggen

State of the Union 2018: Workplace Sexual Harassment

Author: Amy Blackstone, Heather McLaughlin, Christopher Uggen
Publisher: Stanford Center on Poverty and Inequality
Date: 03/2018

By age 25 to 26, one in three women and one in seven men experience behavior at work that they define as sexual harassment. Very few women file lawsuits in response to sexual harassment. But women who experience harassment are 6.5 times more likely than women who are not harassed to change jobs within two years.

State of the Union 2018: Occupational Segregation Kim A. Weeden, Mary Newhart, Dafna Gelbgiser

State of the Union 2018: Occupational Segregation

Author: Kim A. Weeden, Mary Newhart, Dafna Gelbgiser
Publisher: Stanford Center on Poverty and Inequality
Date: 03/2018

Nearly half of the women in the labor force would have to move to a different occupation to eliminate all occupational segregation by gender. Gender segregation increased in the 1950s and 1960s, declined quite sharply in the 1970s and 1980s, but stalled starting in the 1990s. If the average annual rates of change since 1970 were to continue, it would take 150 years to reach full integration; if post-1990 rates continued, it would take 330 years.

State of the Union 2018: Earnings Emmanuel Saez

State of the Union 2018: Earnings

Author: Emmanuel Saez
Publisher: Stanford Center on Poverty and Inequality
Date: 03/2018

Gender wage gaps, as conventionally measured, understate the extent of gender inequality in the labor market. When gender differences in wages are examined in conjunction with gender differences in labor force participation, fringe benefits, and self-employment income, men’s average labor earnings are 75 percent higher than women’s. Under this fuller accounting, women thus earn 57 cents for each dollar earned by men. Although women have come to comprise almost 50 percent of the formal labor market, their representation in top labor income groups has risen very slowly. In the most recent available data, just 16 percent of the top 1 percent of labor income earners are women.

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, Director 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
Cecilia Elena Rouse's picture Cecilia Elena Rouse Dean, Woodrow Wilson School, Lawrence and Shirley Katzman and Lewis and Anna Ernst Professor in the Economics of Education
Princeton University

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Labor Markets - Other Research

Title Author Media
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.

Artificial Intelligence, Automation and Work Daron Acemoglu, Pascual Restrepo

Artificial Intelligence, Automation and Work

Author: Daron Acemoglu, Pascual Restrepo
Publisher: NBER
Date: 01/2018

We summarize a framework for the study of the implications of automation and AI on the demand for labor, wages, and employment. Our task-based framework emphasizes the displacement effect that automation creates as machines and AI replace labor in tasks that it used to perform. This displacement effect tends to reduce the demand for labor and wages. But it is counteracted by a productivity effect, resulting from the cost savings generated by automation, which increase the demand for labor in non-automated tasks. The productivity effect is complemented by additional capital accumulation and the deepening of automation (improvements of existing machinery), both of which further increase the demand for labor. These countervailing effects are incomplete. Even when they are strong, automation in- creases output per worker more than wages and reduce the share of labor in national income. The more powerful countervailing force against automation is the creation of new labor-intensive tasks, which reinstates labor in new activities and tends to increase the labor share to counterbalance the impact of automation. Our framework also highlights the constraints and imperfections that slow down the adjustment of the economy and the labor market to automation and weaken the resulting productivity gains from this transformation: a mismatch between the skill requirements of new technologies, and the possibility that automation is being introduced at an excessive rate, possibly at the expense of other productivity-enhancing technologies.