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on Labour Economics |
| By: | Itzik Fadlon; Briana Sullivan; Vedant Vohra |
| Abstract: | We study the role of job transitions and firm pay policies in the Black-White earnings gap in the US. We use administrative data for the universe of employer-employee matches from 2005-2019 to analyze worker mobility in a general but tractable framework, which allows for firm effects that depend on workers’ job history. Using differences in average pay between origin and destination firms as the treatment intensity of a job move, we analyze transitions up and down the job ladder and estimate race-specific passthrough rates of average firm pay into a mover’s own earnings. First, we find race-specific asymmetry around the direction of the move, whereby losses experienced in downward transitions are meaningfully larger than gains from upward transitions with a similar treatment intensity. For a $1 earnings increase in transitions up the job ladder, earnings passthroughs in transitions down the job ladder impose an earnings loss of $1.25 among White workers and $1.50 among Black workers. Second, we uncover career setbacks as a novel pathway in the evolution of racial earnings gaps. In transitions down the job ladder, Black workers lose an additional $0.24 for every $1 decrease in White workers’ earnings, a finding which prevails across sex and age. This “racial penalty” is not driven by differential pay, as it is completely absent when Black and White workers move between the same firm pairs. Instead, the penalty is due to differential sorting following career setbacks, so that Black workers regain employment in “worse” jobs, with strong evidence for racial differences in access to short-run liquidity as a mechanism. Overall, our findings offer a robust and computationally simple framework for modeling earnings determination processes and have implications for safety-net policies in the American labor market. |
| JEL: | H53 J31 J62 J65 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34058 |
| By: | Enrico Rubolino; Enrico Rubolino |
| Abstract: | Unpaid domestic work continues to fall largely on women, despite their growing presence in the workforce. This paper asks whether policies changing the relative bargaining position of spouses can disrupt this pattern. I use the introduction of a bachelor tax in fascist Italy to show that altering men’s incentives to marry shaped the allocation of domestic work. Men in tax-induced marriages took on more domestic work, while their wives gained time, agency, and better economic outcomes. Effects are long-lasting and transmitted across generations: women raised in households with more equitable labor divisions also perform less housework. The findings suggest shocks in bargaining power can loosen the hold of social norms and reconfigure domestic life. |
| Keywords: | domestic work, female labor force participation, intra-household bargaining, bachelor tax, marriage market, gender-based taxation |
| JEL: | J22 J16 J12 H31 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11998 |
| By: | Christian Dustmann; Chiara Giannetto; Lorenzo Incoronato; Chiara Lacava; Vincenzo Pezone; Raffaele Saggio; Benjamin Schoefer |
| Abstract: | This paper presents micro-empirical evidence on the effects of wage-setting decentralization. Our setting is Italy, where employers are required to comply with occupation- and industry-specific wage floors set by national collective bargaining agreements. We show that opting out of these agreements reduces wages but increases workers’ employment and retention within firms. These effects are most pronounced in the more productive North, where the overall impact on workers’ earnings is slightly positive. In contrast, in the South, wage losses outweigh employment gains, leading to a net decline in earnings. We also find that increased wage-setting flexibility is associated with higher firm survival rates in both regions. The regional divergence in outcomes aligns with a monopsony framework in which productivity and labor supply elasticities vary spatially. |
| JEL: | E02 E24 J0 J3 J5 J6 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34076 |
| By: | Ida Maria Hartmann (Department of Economics, University of Copenhagen) |
| Abstract: | examine whether individuals subjective unemployment expectations and self-insurance behavior are systematically related to unemployment experiences within their social networks. Using a combination of survey-elicited ubjective unemployment expectations and Danish administrative data, I document three main findings. First, peer job loss is strongly predictive of individuals own future unemployment risk, even after controlling for fixed effects and prior outcomes — suggesting that peer unemployment carries information about latent labor market conditions. Second, individuals subjective unemployment expectations respond to recent unemployment among peers, particularly when the individuals have little experience of their own. Third, peer job loss exposure is associated with precautionary behavior, including higher take-up of private unemployment insurance and increased transitions to lower turnover jobs. |
| Keywords: | Expectations, Information, Unemployment, Self-Insurance |
| JEL: | D83 J64 |
| Date: | 2025–08–08 |
| URL: | https://d.repec.org/n?u=RePEc:kud:kucebi:2508 |
| By: | Ruthira Naraidoo (University of Pretoria, Hatfield 0028, Pretoria, South Africa); Juan Paez-Farrell (School of Economics, University of Sheffield, Sheffield S10 2TU, UK) |
| Abstract: | Standard business cycle models with search and matching frictions in the labour market increasingly rely on the assumption that firms face hiring, as opposed to, search costs in recruiting workers. We show that although this modification im-proves the model’s empirical performance, it causes the matching function to play no role in macroeconomic dynamics. Assuming both costs can overcome this short-coming but for reasonable parameter values it implies that matching efficiency shocks have no effects. |
| Keywords: | DSGE models; Labour market; search and matching; unemployment; hiring costs |
| JEL: | E32 C52 J64 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:shf:wpaper:2025006 |
| By: | Ran Abramitzky; Leah Platt Boustan; Harriet M. Brookes Gray; Katherine Eriksson; Santiago Pérez; Hannah M. Postel; Myera Rashid; Noah Simon |
| Abstract: | We introduce a new rule-based linking method for historical Census records. We augment earlier algorithms based on name, age and place of birth (Abramitzky, Boustan, Eriksson, 2012, or “basic ABE”), with five matching characteristics – middle initial, county of residence, and spouse and parents’ names. Relative to basic ABE, ABE-Extra Information (“ABE-EI”) greatly increases match rates, improves accuracy and is similarly representative of the population on most attributes, with geographic mobility being one important exception. Relative to machine learning algorithms, ABE-EI has somewhat lower match rates, improved representativeness, and offers full replicability. We also create the first ABE-based links for women. |
| JEL: | N31 N32 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33999 |
| By: | Huixin Bi; Nicolas Petrosky-Nadeau; Nora Traum; Greg Woodward |
| Abstract: | We present new monthly U.S. city-level and national measures of worker and firm search from 1900 to 1938, derived from scanned images of U.S. newspapers. To our knowledge, we are the first to systematically use the “situations-wanted” advertisements placed by job seekers. We document fresh insights into early 20th-century labor market dynamics: (1) worker and firm search efforts are procyclical; (2) posting costs affect advertising behavior and labor search intensity; (3) the Beveridge curve is stable over the last 125 years, with similar shifts following the 1918 flu and Covid-19 pandemic; and (4) regional and gender heterogeneity exists. |
| Keywords: | job search; Great Depression |
| JEL: | J64 N32 E24 E32 C82 |
| Date: | 2025–07–22 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedfwp:101410 |
| By: | Hiroshi Kumanomido (LMU Munich); Yutaro Takayasu (The University of Tokyo) |
| Abstract: | Why can elite families often maintain their social and economic status over multiple generations? We show that adoption can contribute to the persistence of elite status by utilizing a unique historical framework of prewar Japan. However, the preference for adopted heirs may lead to selection bias in the process of choosing heirs, potentially biasing OLS results negatively. To address this selection bias, we use the gender of the firstborn child as an instrument for the adoption decision. We find that having an adopted heir increases the probability of maintaining elite status in the son’s generation by 27% compared to having a biological heir. Furthermore, we show that this result is driven by matching high-quality adopted sons with fathers who were highly successful in their early lives. |
| Keywords: | intergenerational transmission; adoption; succession; family; elite; |
| JEL: | J12 J13 J62 N35 |
| Date: | 2025–07–28 |
| URL: | https://d.repec.org/n?u=RePEc:rco:dpaper:537 |
| By: | Alon, Titan (University of California San Diego); Coskun, Sena (Institute for Employment Research (IAB), Nuremberg, Germany); Olmstead-Rumsey, Jane (London School of Economics) |
| Abstract: | "The past half century has witnessed widespread gender convergence across many labor market outcomes, including hours worked, earnings, and occupations. However, this paper shows that, over the same period, men’s and women’s sectors of employment actually diverged. We decompose the rise in sectoral segregation into three drivers representing changes in preferences, discrimination, and technologies. Changes in the employment preferences of married women are the most important factor, explaining 59% of the rise in segregation. These changes in preferences also reduce the gender earnings gap because the non-wage amenities women value are increasingly prevalent in higher paying sectors." (Author's abstract, IAB-Doku) ((en)) |
| JEL: | E20 J16 |
| Date: | 2025–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:iab:iabdpa:202511 |
| By: | Yun taek Oh; Morris M. Kleiner |
| Abstract: | Optimizing state and regional physician labor supply has been an important policy issue in healthcare in the United States. One of the proposed solutions has been the universal licensing recognition (ULR), which allows out-of-state physicians to provide healthcare services without relicensing and increases the local labor supply of physicians. There has been no empirical analysis of the effect of such regulatory relaxation on the local labor supply and subsequent improvements of consumer welfare. In this study, we use the Behavioral Risk Factor Surveillance System to investigate the effect of universal reciprocity of physician licenses on healthcare utilization, and use data from IPUMS-USA, IPUMS-CPS, and the Doctors and Clinicians National Downloadable File from the Centers for Medicare & Medicaid Services to examine the changes in the local labor supply of physicians through interstate migration and out-of-state practices. Our results show that adopting the ULR significantly raises the proportion of individuals accessing healthcare, particularly among older individuals, and reduces the proportion of individuals not getting healthcare services because of costs. We provide empirical evidence that these effects are from the universal reciprocity of physician licenses, instead of unknown factors related to the ULR. We also show that the positive effect of the ULR on healthcare utilization is closely related to the increase in out-of-state practitioners to include temporary and telehealth physicians, by showing no changes in interstate migration of physicians and an increase in out-of-state practices. The adoption of ULR may allow for a more efficient regional distribution of physicians and result in greater access to healthcare. |
| JEL: | I31 J08 J22 J40 J44 J48 J68 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34030 |
| By: | Alex Bryson (University College London); Ryo Kambayashi (Musashi University); Susumu Kuwahara (Reitaku University); Akie Nakamura (Rengo-RIALS); Jacques Wels (Université libre de Bruxelles) |
| Abstract: | Official government estimates show a gradual decline in union density in Japan over several decades akin to that in other countries with decentralized bargaining structures. However, new evidence from various social surveys indicates that union density has been rising in Japan. Using one of these social surveys – the Survey on the Work and Life of Workers (SWLW) – we show union density has risen by 7.3 percentage points to 29.1% in the Japanese private sector between 2011/13 and 2020/24. We decompose the growth in union density since 2011/13 to establish how much of it is attributable to changes in workforce composition. Conditioning on union presence at the workplace, compositional change accounts for 47% of the increase in union density. The remaining 53% is due to within-group change with unions increasing membership across all types of worker including some with traditionally low rates of unionization. However, establishing a union at the workplace remains key since virtually all the growth in union membership (97%) is in unionized workplaces. |
| Keywords: | unionization; union membership; union density; union presence; decomposition; Japan |
| JEL: | J51 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2529 |
| By: | Gert Bijnens; Simon Jäger; Benjamin Schoefer |
| Abstract: | This paper provides the first systematic and comprehensive empirical study of management and strategy consulting. We unveil the workings of this opaque industry by drawing on universal administrative business-to-business transaction data based on value-added tax links from Belgium (2002-2023). These data permit us to document the nature of consulting engagements, take-up patterns, and the effects on client firms. We document that consulting take-up is concentrated among large, high-labor-productivity firms. For TFP and profitability, we find a U-shaped pattern: both high and low performers hire consultants. New clients spend on average 3% of payroll on consulting, typically in episodic engagements lasting less than one year. Using difference-in-differences designs exploiting these sharp consulting events, we find positive effects on labor productivity of 3.6% over five years, driven by modest employment reductions alongside stable or growing revenue. Average wages rise by 2.7% with no decline in labor’s share of value added, suggesting productivity gains do not come at workers’ expense through rent-shifting. We do observe organizational restructuring with small increases in dismissal rates, and higher services procurement but reduced labor outsourcing. Our heterogeneity analysis reveals larger productivity gains for initially less productive firms, suggesting improvements in allocative efficiency. Our findings broadly align with ex-ante predictions from surveyed academic economists and consulting professionals, validating the productivity-enhancing view of consulting endorsed by most practitioners though only half of academics, while lending less support to a rent-shifting view favored by many economists. |
| JEL: | E20 E22 E23 J0 L2 M0 O4 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34072 |
| By: | Patrick K. Krause; Elizabeth Rhodes; Sarah Miller; Alexander W. Bartik; David E. Broockman; Eva Vivalt |
| Abstract: | This paper examines the impact of a large, randomized cash transfer on parental behaviors, investment in children, children's social, behavioral, and educational outcomes, and pregnancy and childbearing. We find that parents who were randomly selected to receive a $1, 000 per month unconditional cash transfer for three years spent more on their children each month and reported better parenting behaviors (such as supervising their children more closely) compared to those randomized to receive $50 per month over the same period. However, possibly due to this closer monitoring, parents in the treatment group also reported that their child was experiencing more developmental difficulties and stress. Parents with the lowest incomes at baseline experienced the largest improvements in parenting; among these parents, the transfer also increased the use and quality of non-parental child care. The transfer did not have a meaningful effect on most educational outcomes measured in school administrative records, nor did it affect characteristics of the home environment, child food security, exposure to homelessness, or parental satisfaction. Although treated families were more likely to move, we did not detect changes in most measures of neighborhood quality, though proximity to child-focused amenities such as daycares appeared to increase in the treatment group relative to the control group. The transfer did not affect childbearing, pregnancy, or outcomes related to contraception. While the transfer reduced parents' stress and mental distress in the first year of the program, these effects were short-lived and dissipated by the second year of the transfer, analogous to what was documented previously in the full population of participants. |
| JEL: | H0 I28 I3 J13 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34040 |
| By: | Fabian Koenings (Friedrich Schiller University Jena); Jakob Schwab (German Institute of Development and Sustainability (IDOS)) |
| Abstract: | This study investigates intergenerational educational immobility and its transmission channels in four developing countries: Ethiopia, India, Peru, and Vietnam. From data elicited throughout children’s childhood, we extract latent factors of children’s attributes and their environments. We decompose educational immobility by analyzing the extent to which these factors mediate intergenerational persistence. The findings show that relevant channels in developed countries are also important in these developing countries. Additionally, developing-country specific factors, such as starting a family while underage and performing child labor, play a role. The factors’ importance differs moderately between the countries. Other factors – most notably non-cognitive skills – play no role. |
| Keywords: | Intergenerational social mobility, transmission channels, low- and middle-income countries, decomposition, mediation analysis, factor analysis |
| JEL: | I24 J62 O15 |
| Date: | 2025–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:jrp:jrpwrp:2025-0009 |
| By: | Pascal Michaillat |
| Abstract: | This paper develops a new algorithm for detecting US recessions in real time. The algorithm constructs millions of recession classifiers by combining unemployment and vacancy data to reduce detection noise. Classifiers are then selected to avoid both false negatives (missed recessions) and false positives (nonexistent recessions). The selected classifiers are therefore perfect, in that they identify all 15 historical recessions in the 1929–2021 training period without any false positives. By further selecting classifiers that lie on the high-precision segment of the anticipation-precision frontier, the algorithm optimizes early detection without sacrificing precision. On average, over 1929–2021, the classifier ensemble signals recessions 2.2 months after their true onset, with a standard deviation of detection errors of 1.9 months. Applied to May 2025 data, the classifier ensemble gives a 71% probability that the US economy is currently in recession. A placebo test and backtests confirm the algorithm’s reliability. The classifier ensembles trained on 1929–2004, 1929–1984, and 1929–1964 data in backtests give a current recession probability of 58%, 83%, and 25%, respectively. |
| JEL: | C52 E24 E32 J63 N12 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34015 |
| By: | David de la Croix (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Mara Vitale (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)) |
| Abstract: | 131 popes ruled the Catholic Church from the year 1000 to 1800. Using the database we constructed on early European academia, we find that 21 of them held academic positions prior to their election. We show that these professors who would become popes were not different from non-academic popes in terms of productivity (number of elected cardinals and saints, number of bulls promulgated), but generally came from humbler backgrounds. An interesting pattern emerges: the 21 academic popes were all elected before 1625. From this pattern, we conjecture three complementary explanations. (1) With the Scientific Revolution, early modern universities became more secular or declined compared to their medieval predecessors. (2) The papacy was captured by Roman aristocratic families during the Early Modern Period, which barred outsiders from accessing it. (3) Following the Council of Trent, seminaries provided an alternative path for religious knowledge. |
| Keywords: | Social Mobility, Church and Universities, Human Capital in History, Early Modern Institutions, Historical Political Economy |
| JEL: | N33 I25 D63 |
| Date: | 2025–07–29 |
| URL: | https://d.repec.org/n?u=RePEc:ctl:louvir:2025011 |
| By: | Yiqun Chen; Marcus Dillender |
| Abstract: | In contracting out, monitoring is an important policy tool to extract information on firm quality and incentivize quality provision. This paper examines a central quality inspection of nursing homes, a sector with significant welfare implications but widespread public concerns about its quality of care. Using data on nursing homes across the US, we find that nursing homes exhibit strategic responses to the inspection. Nursing homes increase the quantity and quality of labor inputs, reduce admissions, increase temporary discharges, and improve patient care in response to the inspection. However, nearly all responses described above drop immediately once the inspection is completed. While inspection rating is unlikely to reflect nursing homes’ absolute quality given the strategic responses, using a quasi-experimental research design we find that inspection rating predicts nursing homes’ relative quality. Finally, we examine the effects of quality deficiency citations issued by the inspection on incentivizing nursing homes to improve quality of care, finding mixed impacts. |
| JEL: | D22 I11 I18 L21 L23 L51 L88 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34037 |
| By: | John B. Donaldson; Hyung Seok E. Kim; Rajnish Mehra |
| Abstract: | We develop a dynamic macroeconomic model in which the secular decline in real interest rates arises endogenously from rising wealth inequality. Challenging the standard “safe asset shortage” hypothesis, the model shows how falling real rates can coexist with a stable safe asset ratio—closely matching U.S. empirical patterns. The mechanism combines limited financial market participation, which concentrates capital ownership among a shrinking class of stockholders, with egalitarian wage bargaining, which generates time-varying labor income shares under incomplete markets. As inequality increases, stockholders face higher financial and operating leverage, increasing their consumption volatility and precautionary demand for bonds. At the same time, greater wage instability raises workers’ demand for safe assets. The resulting surge in precautionary savings from both groups depresses real returns and creates the appearance of a safe asset shortage, despite an unchanged supply. This outcome reflects a pecuniary externality: agents fail to internalize the aggregate constraint on safe assets, especially over the business cycle. Our calibrated model reproduces key macro-financial patterns and offers new insights into the joint dynamics of wealth distribution, labor market arrangements, and asset pricing. |
| JEL: | D31 D52 E13 E21 E24 E32 E43 E44 G1 G12 J41 J63 J64 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34016 |
| By: | Eric A. Hanushek; Le Kang; Xueying Li; Lei Zhang |
| Abstract: | The changing pattern of quality in China’s rural schools across time and province is extracted from the differential labor market earnings of rural migrant workers. Variations in rates of return to years of schooling across migrant workers working in the same urban labor market but having different sites of basic education provide for direct estimation of provincial school quality. Corroborating this approach, these school quality estimates prove to be highly correlated with provincial cognitive skill test scores for the same demographic group. Returns to quality increase with economic development level of destination cities. Importantly, quality appears higher and provincial variation appears lower for younger cohorts, indicating at least partial effectiveness of more recent policies aimed at improving rural school quality across provinces. Surprisingly, however, provincial variations in quality are uncorrelated with teacher-student ratio or per student spending. |
| JEL: | H40 I26 J69 O15 R11 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34005 |