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on Labour Economics |
| By: | Jessica Gallant; Kory Kroft; Fabian Lange; Matthew J. Notowidigdo |
| Abstract: | This paper develops a search-and-matching model that incorporates temporary unemployment and applies the model to study the labor market dynamics of the COVID-19 recession in the US. We calibrate the model using panel data from the Current Population Survey for 2001-2019, and we find that the model-based job finding rates match observed job finding rates during the entire sample period and out-of-sample up through July 2020. We also find that the Beveridge curve is well-behaved and displays little change in market tightness in 2020 once we use the calibrated model to adjust for changes in the composition of the unemployed. We then use the model to project the path of unemployment over the next 18 months. Under a range of assumptions about job losses and labor demand, our model predicts a more rapid recovery compared to a model that does not distinguish between temporary and permanent unemployment and compared to professional and academic forecasts. We find that in order to rationalize the professional forecasts of the unemployment rate, some combination of the vacancy rate, job separation rate, and recall rate of workers on temporary layoff must deteriorate substantially from current levels in the next several months. |
| JEL: | J01 J11 J64 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27924&r=all |
| By: | Oh, Joonseok (Freie Universitat Berlin); Rogantini Picco, Anna (Research Department, Central Bank of Sweden) |
| Abstract: | This paper shows how uninsurable unemployment risk is crucial to qualitatively and quantitatively match macro responses to uncertainty shocks. Empirically, uncertainty shocks i) generate deflationary pressure; ii) have considerably negative consequences on economic activity; iii) produce a drop in aggregate consumption, which is mainly driven by the response of the households in the bottom 60% of the income distribution. Standard representative-agent New Keynesian models have difficulty to deliver these effects. A heterogeneous-agent framework with search and matching frictions and Calvo pricing allows us to jointly attain these results. Uncertainty shocks induce households' precautionary saving and firms' precautionary pricing behaviors, triggering a fall in aggregate demand and supply. These precautionary behaviors increase the unemployment risk of the imperfectly insured households, who strengthen precautionary saving. When the feedback loop between unemployment risk and precautionary saving is strong enough, a rise in uncertainty leads to i) a drop in inflation; ii) amplified negative responses of macro variables; iii) heterogeneous consumption responses of households, which are consistent with the empirical evidence. |
| Keywords: | Uncertainty shock; Inflation; Unemployment risk; Precautionary savings |
| JEL: | E12 E31 E32 J64 |
| Date: | 2020–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:rbnkwp:0395&r=all |
| By: | John M. Coglianese; Brendan M. Price |
| Abstract: | Joblessness is highly seasonal. To analyze how households adapt to seasonal joblessness, we introduce a measure of seasonal work interruptions premised on the idea that a seasonal worker will tend to exit employment around the same time each year. We show that an excess share of prime-age US workers experience recurrent separations spaced exactly 12 months apart. These separations coincide with aggregate seasonal downturns and are concentrated in seasonally volatile industries. Examining workers most prone to seasonal work interruptions, we find that these workers incur large earnings losses during the off-season. Lost earnings are (i) driven mainly by repeated separations from the same employer; (ii) not recouped at other firms; (iii) partly offset by unemployment benefits; and (iv) amplified by concurrent drops in partners' earnings. On net, household income falls by about 80 cents for each $1 lost in own earnings. |
| Keywords: | Seasonality; Seasonal employment; Job loss; Household income; Household labor dynamics; Unemployment; Unemployment insurance |
| JEL: | D10 E32 J63 |
| Date: | 2020–10–07 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2020-84&r=all |
| By: | Robert A. Moffitt; James P. Ziliak |
| Abstract: | We examine trends in employment, earnings, and incomes over the last two decades in the United States, and how the safety net has responded to changing fortunes, including the shutdown of the economy in response to the Covid-19 Pandemic. The U.S. safety net is a patchwork of different programs providing in-kind as well as cash benefits and had many holes prior to the Pandemic. In addition, few of the programs are designed explicitly as automatic stabilizers. We show that the safety net response to employment losses in the Covid-19 Pandemic largely consists only of increased support from unemployment insurance and food assistance programs, which did not replace the lost income for many households. We discuss possible options to reform social assistance in America that may provide more robust income floors in times of economic downturns. |
| JEL: | I38 J65 J78 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27911&r=all |
| By: | Robert W. Fairlie |
| Abstract: | Social distancing restrictions and health- and economic-driven demand shifts from COVID-19 are expected to shutter many small businesses and entrepreneurial ventures, but there is very little early evidence on impacts. This paper provides the first analysis of impacts of the pandemic on the number of active small businesses in the United States using nationally representative data from the April 2020 CPS – the first month fully capturing early effects. The number of active business owners in the United States plummeted by 3.3 million or 22 percent over the crucial two-month window from February to April 2020. The drop in active business owners was the largest on record, and losses to business activity were felt across nearly all industries. African-American businesses were hit especially hard experiencing a 41 percent drop in business activity. Latinx business owner activity fell by 32 percent, and Asian business owner activity dropped by 26 percent. Simulations indicate that industry compositions partly placed these groups at a higher risk of business activity losses. Immigrant business owners experienced substantial losses in business activity of 36 percent. Female business owners were also disproportionately affected (25 percent drop in business activity). Continuing the analysis in May and June, the number of active business owners remained low – down by 15 percent and 8 percent, respectively. The continued losses in May and June, and partial rebounds from April were felt across all demographic groups and most industries. These findings of early-stage losses to small business activity have important implications for policy, income losses, and future economic inequality. |
| Keywords: | small business, entrepreneurship, business owners, self-employment, COVID-19, coronavirus, shelter in place restrictions, social distancing restrictions, minority business, female business |
| JEL: | J15 J16 L26 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8581&r=all |
| By: | Matteo Tubiana; Ernest Miguelez; Rosina Moreno |
| Abstract: | Innovation rarely happens through the actions of a single person. Innovators source their ideas while interacting with their peers, at different levels and with different intensities. In this paper, we exploit a dataset of disambiguated inventors in European cities to assess the influence of their interactions with co-workers, organizations’ colleagues, and geographically co-located peers, to understand if the different levels of interaction influence their productivity. Following inventors’ productivity over time and adding a large number of fixed effects to control for unobserved heterogeneity, we uncover critical facts, such as the importance of city knowledge stocks for inventors’ productivity, with firm knowledge stocks and network knowledge stocks being of smaller importance. However, when the complexity and quality of knowledge is accounted for, the picture changes upside down, and closer interactions (individuals’ coworkers and firms’ colleagues) become way more important. |
| Keywords: | inventors; productivity; stock of knowledge; interactions |
| JEL: | O18 O31 O33 O52 R12 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:grt:bdxewp:2020-15&r=all |
| By: | Antonio Di Paolo (AQR-IREA Research Group, University of Barcelona. Department of Econometrics, Statistics and Applied Economics. Av. Diagonal 690, 08034 Barcelona, Spain.); Ada Ferrer-i-Carbonell (Institute of Economic Analysis (IAE-CSIC), Barcelona GSE, IZA, and MOVE.) |
| Abstract: | In this paper we provide novel evidence on the effect of local unemployment rate on life satisfaction. We investigate how changes in unemployment rate in local administrative areas affect subjective well-being in Germany, allowing for the presence of spatial spillovers and considering the role played by regional borders. The results indicate that higher unemployment in the own local area of residence has a negative effect on satisfaction. Similarly, individuals’ happiness negatively correlates with the unemployment rate in contiguous local areas, but only if these areas are located in the same Federal State as the one where the individual lives. These results are robust to a variety of specifications, definitions, sample restrictions and estimation methods. Heterogeneity analysis reveals that these negative effects of local unemployment rate are larger for individuals with stronger ties to the job market and less secure jobs. This points to worries about own job situation as the main driver of individuals’ dislike for living in areas with high unemployment rate and tight labour markets. Consistently with this, the same asymmetric effect of local unemployment rate of surrounding areas is replicated when life satisfaction is replaced with a proxy for perceived job security as outcome variable. |
| Keywords: | Life satisfaction, Local unemployment, Spatial spillovers, Neighbouring areas, Regional borders JEL classification: I31, J64, J28, R23 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:202014&r=all |
| By: | Knutsson, Daniel (Research Institute of Industrial Economics (IFN)); Tyrefors, Björn (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Economic theory predicts that outsourcing public services to private firms will reduce costs, but the effect on quality is ambiguous. We explore quality differences between publicly and privately owned ambulances in a setting where patients are as good as randomly assigned to ambulances of different ownership statuses. We find that privately owned ambulances are better at responding to contracted quality measures but perform worse on noncontracted measures, such as mortality. In fact, a randomly allocated patient has a significantly higher risk of death if a private ambulance is dispatched. We also present suggestive evidence on the mechanism, supporting that private firms cost innovate at the expense of ambulance staff quality. |
| Keywords: | Public outsourcing; Pre-hospital care; Healthcare quality; Health |
| JEL: | D22 D44 H44 I11 L33 P48 |
| Date: | 2020–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1365&r=all |
| By: | Mark Duggan; Gopi Shah Goda; Gina Li |
| Abstract: | The Affordable Care Act (ACA) not only changed the landscape of health insurance coverage in the United States, but also affected the relationship between working decisions and health insurance. In this paper, we estimate the impact of the ACA on the near-elderly (ages 60-64) in the five years after the implementation of its key provisions in early 2014. We exploit variation across geographic areas in the pre-existing level of uninsurance and use 65-69 year olds, whose insurance coverage was unaffected by the ACA, as a within-region control group. Our findings indicate that the ACA increased health insurance coverage among the near elderly by approximately 4.5 percentage points and reduced their labor force participation rate by approximately 0.6 percentage points. |
| JEL: | H2 H31 H51 H75 I13 J14 J21 J26 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27936&r=all |
| By: | Boberg-Fazlic, Nina (University of Southern Denmark); Sharp, Paul (University of Southern Denmark, CAGE, CEPR) |
| Abstract: | The “refugee gap” in the economic status of refugees relative to other migrants might be due to the experience of being a refugee, or to government policy, which often denies the right to work during lengthy application processes. In Denmark before the Second World War, however, refugees were not treated differently from other migrants, motivating our use of a database of the universe of Danish naturalizations between 1851 and 1960. We consider labor market performance and find that immigrants leaving conflicts fared no worse than other migrants, conditional on other characteristics, within this relatively homogenous sample of those who attained citizenship. Refugees must be provided with the same rights as other migrants if policy aims to ensure their economic success. |
| Keywords: | Asylum policy, Denmark, immigration, naturalizations, refugee gap JEL Classification: F22, J61, N33, N34 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:506&r=all |
| By: | Lorko, Matej; Servátka, Maroš; Zhang, Le |
| Abstract: | How to avoid project failures driven by overoptimistic schedules? Managers often attempt to mitigate the duration underestimation and improve the accuracy of project schedules by providing their planners with excessively detailed project specifications. While this traditional approach may be intuitive, solely providing more detailed information has proven to have a limited effect on eliminating behavioral biases. We experimentally test the effectiveness of providing detailed specification and compare it to an alternative intervention of providing historical information about the average duration of similar projects in the past. We find that both interventions mitigate the underestimation bias. However, since providing detailed project specification results in high variance of estimation errors due to sizable over- and underestimates, only the provision of historical information leads to more accurate project duration estimates. We also test whether it is more effective to anchor planners by providing historical information simultaneously with the project specification or to provide the historical information only after beliefs regarding the project duration are formed, in which case planners can regress their initial estimates towards the historical average. We find that the timing of disclosing information does not play a role as the estimation bias is mitigated and the accuracy is improved in both conditions. Finally, we observe that the subjective confidence in the accuracy of duration estimates does not vary across the interventions, suggesting that the confidence is neither a function of the amount nor the detail of available information. |
| Keywords: | project management, project planning, duration estimation, historical information, project specification, experiment |
| JEL: | C91 D83 O21 O22 |
| Date: | 2020–10–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:103367&r=all |
| By: | Elizabeth U. Cascio; Ethan G. Lewis |
| Abstract: | We examine how the large, one-time legalization authorized by the Immigration Reform and Control Act (IRCA) has affected the scale and character of immigration to the U.S. since the late 1980s. Exploiting cross-country variation in the magnitude of the legalization shock, we find that each IRCA admit accounts for the subsequent admission of 1 to 2 family members, mostly immediate family. There is little evidence that the legalization increased subsequent unauthorized migration; in fact, fewer temporary visa overstays have somewhat offset the additional family admissions. The marginal family-sponsored admit has not been negatively selected and has not increased fiscal burdens. |
| JEL: | F22 J08 J61 J68 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27874&r=all |
| By: | Kjelsrud, Anders (Dept. of Economics, University of Oslo); Sjurgard, Kristin Vikan (Dept. of Economics, University of Oslo) |
| Abstract: | Violence against women is persisting in many parts of the world. At the same time, there is a global trend of increased female labour force participation. In this paper we study the effect on intimate partner violence of a large public work program in India that explicitly encourages female participation (MGNREGA). Based on detailed administrative data, we show that the work program leads to more violence against women. We argue that the effect could be explained by a "male backlash" mechanism, where husbands exercise violence to regain power within marriage. |
| Keywords: | intimate partner violence; female employment; public work |
| JEL: | D19 J12 J16 |
| Date: | 2020–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2020_001&r=all |
| By: | Mark Colas; Dominik Sachs |
| Abstract: | Low-skilled immigrants indirectly affect public finances through their effect on native wages & labor supply. We operationalize this general-equilibrium effect in the workhorse labor market model with heterogeneous workers and intensive and extensive labor supply margins. We derive a closed-form expression for this effect in terms of estimable statistics. We extend the analysis to various alternative specifications of the labor market and production that have been emphasized in the immigration literature. Empirical quantifications for the U.S. reveal that the indirect fiscal benefit of one low-skilled immigrant lies between $770 and $2,100 annually. The indirect fiscal benefit may outweigh the negative direct fiscal effect that has previously been documented. This challenges the perception of low-skilled immigration as a fiscal burden. |
| Keywords: | Immigration; Fiscal impact; General equilibrium |
| JEL: | H20 J31 J62 J68 |
| Date: | 2020–10–02 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmoi:88846&r=all |
| By: | Paul, Bino; Patnaik, Unmesh; Sahu, Santosh Kumar; Awasthi, Mansi |
| Abstract: | In evaluating the economic system, the share of wage in value-added (labour share) assumes significance. We examine the trend of labour share in Indian manufacturing during 2001-14, by using the pooled plant-level data. In the analysis, the heterogeneities with respect to factor share, factor ratio and magnitude of factors (labour and capital) are gauged, while the trend of elasticity of substitution is measured. With this context, we assess if the labour heterogeneity explains the variation in the total factor productivity, taking the industry as a unit of analysis. Further, the analysis looks into the relationship between labour heterogeneity and productivity. Analysing the microdata on the labour force, we gauge the determinants of wage from the vantage of supply. Cues from this analysis point to the need for social up-gradation of Indian manufacturing in terms of decent employment relations and skill. This change may enable India to move from factor abundant system to a productivity-oriented economy in the milieu of steadfast substitution of labour by capital. The novelty of this paper is in pooling the plant-level data across years, while industry level aggregation is resorted to examine the longitudinal dynamics. Quite important, insights emanating from the firm and industry-based data are juxtaposed with the microdata of labour supply to understand the supply side dimensions of wage, while envisioning the implications for the economy of manufacturing to upgrade to a productivity orientation. |
| Keywords: | Labour heterogeneity, TFP, Manufacturing, India |
| JEL: | D24 J01 J30 L6 |
| Date: | 2020–09–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:102904&r=all |
| By: | Advani, Arun (University of Warwick, CAGE Research Centre and Institute for Fiscal Studies); Koenig, Felix (Heinz College, Carnegie Mellon University); Pessina, Lorenzo (Columbia University); Summers, Andy (London School of Economics) |
| Abstract: | In this paper we study the contribution of migrants to the rise in UK top incomes. Using administrative data on the universe of UK taxpayers we show migrants are over-represented at the top of the income distribution, with migrants twice as prevalent in the top 0.1% as anywhere in the bottom 97%. These high incomes are predominantly from labour, rather than capital, and migrants are concentrated in only a handful of industries, predominantly finance. Almost all (85%) of the growth in the UK top 1% income share over the past 20 years can be attributed to migration. |
| Keywords: | JEL Classification: H2, J3, J6. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:508&r=all |
| By: | Marco Caliendo (University of Potsdam, IZA Bonn, DIW Berlin, IAB Nuremberg); Robert Mahlstedt (University of Copenhagen, IZA Bonn); Gerard J. van den Berg (University of Bristol, University of Groningen, IFAU Uppsala, IZA Bonn, ZEW, CEPR, CESifo, UCLS); Johan Vikström (IFAU Uppsala, Uppsala University, UCLS) |
| Abstract: | Labor market policy tools such as training and sanctions are commonly used to help bring workers back to work. By analogy to medical treatments, the individual exposure to these tools may have side effects. We study effects on health using individual-level population registers on labor market events outcomes, drug prescriptions and sickness absence, comparing outcomes before and after exposure to training and sanctions. We find that training improves cardiovascular and mental health and lowers sickness absence. The results suggest that this is not due to improved employment prospects but rather to instantaneous features of participation such as, perhaps, the adoption of a more rigorous daily routine. Unemployment benefits sanctions cause a short-run deterioration of mental health, possibly due higher stress levels, but this tapers out quickly. |
| Keywords: | unemployment, health, sickness, prescriptions, mental health, drugs, training, depression, cardiovascular disease, sanctions |
| JEL: | J68 I12 I18 H51 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:pot:cepadp:22&r=all |
| By: | Ryo Nakajima (Faculty of Economics, Keio University); Michitaka Sasaki (Organization for Research Initiative and Promotion, Tottori University); Ryuichi Tamura (Faculty of International Studies and Regional Development, University of Niigata) |
| Abstract: | This paper explores the unproductive procrastination behavior of patent examiners, probes whether such behavior is caused by present-biased preferences, and estimates the magnitude. We set out a quasihyperbolic discounting model where a patent examiner is assigned a biweekly quota of patent application reviews and determines the level of effort by the deadline. We estimate the present-bias factor of each patent examiner based on patent prosecution data in the U.S. and find that the proportion of present-biased individuals exceeds the majority. We demonstrate that the job separation rate is higher for less present-biased patent examiners, and a fragmented work quota can improve patent examination quality and timeliness. |
| Keywords: | patent examination, procrastination, present bias, quasihyperbolic discounting |
| JEL: | D03 J01 K29 O34 |
| Date: | 2020–09–19 |
| URL: | http://d.repec.org/n?u=RePEc:keo:dpaper:2020-015&r=all |
| By: | John T. Addison; Paulino Teixeira; Lutz Bellmann |
| Abstract: | This paper brings together two factors deemed important correlates of firm performance: advanced management practices and works councils. The country sample comprises nations where workplace representation is via a works council. The Management Questionnaire of the 2013 European Company Survey defines our full sample of mixed establishments (with and without councils) and its sister Employee Representative Questionnaire is used to derive a much smaller matched sample of works council plants. The outcome indicators are subjective measures of financial performance and the growth in labor productivity. For the full sample, we report that better management practices are strongly related to improved establishment performance, with no suggestion that works council presence influences that association one way or another. Works council presence is, however, negatively associated with financial performance and labor productivity growth. Distinguishing between councils based on managements’ views of their type suggests that this negative association is likely attributable to unconstructive and delaying councils. Irrespective of works council type, the association between management practices and the performance indicators remains positive. Analysis of the smaller sample again confirms the favorable link between management practices and establishment performance. Circumstances in which the employee representative has a favorable view of the general work climate or expresses trust in management coincide with an improved financial situation if not higher productivity growth. Mutual distrust is negatively associated with financial performance situation but unrelated to labor productivity growth. |
| Keywords: | management as a technology, work councils, works council type, financial performance, labor productivity growth, trust, mutual distrust, Germanic cluster |
| JEL: | D22 J53 M50 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8599&r=all |