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on Labor Markets - Supply, Demand, and Wages |
| By: | Menaka Hampole; Dimitris Papanikolaou; Lawrence D.W. Schmidt; Bryan Seegmiller |
| Abstract: | We leverage recent advances in NLP to construct measures of workers' task exposure to AI and machine learning technologies over the 2010 to 2023 period that vary across firms and time. Using a theoretical framework that allows for a labor-saving technology to affect worker productivity both directly and indirectly, we show that the impact on wage earnings and employment can be summarized by two statistics. First, labor demand decreases in the average exposure of workers' tasks to AI technologies; second, holding the average exposure constant, labor demand increases in the dispersion of task exposures to AI, as workers shift effort to tasks that are not displaced by AI. Exploiting exogenous variation in our measures based on pre-existing hiring practices across firms, we find empirical support for these predictions, together with a lower demand for skills affected by AI. Overall, we find muted effects of AI on employment due to offsetting effects: highly-exposed occupations experience relatively lower demand compared to less exposed occupations, but the resulting increase in firm productivity increases overall employment across all occupations. |
| JEL: | E20 J01 J24 O3 O33 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33509 |
| By: | Carlos Carrillo-Tudela (Department of Economics, University of Essex); Fraser Summerfield (Department of Economics, St Francis Xavier University); Ludo Visschers (U. Carlos III de Madrid and Edinburgh Futures Institute, University of Edinburgh) |
| Abstract: | We investigate cyclical changes in workers’ task portfolios, highlighting their direction, magnitude, and distribution. Task changes are not only very common but provide information about the skills required across jobs. During recessions, a larger share of employer switches do not involve task changes. When changes occur, they tend to be more substantial. The cyclicality of task changes among employer-to-employer movers contrasts sharply with that of hires from unemployment. We link our findings to the "sullying" and "cleansing" effects of recessions, uncovering a novel cleansing effect associated with employer-to-employer transitions and a sullying effect tied to employer changes through unemployment. |
| Keywords: | Career Change, Occupational Mobility, Tasks, Business Cycles |
| JEL: | E32 J24 J62 E24 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:edn:esedps:315 |
| By: | Casacuberta, Carlos; Gandelman, Néstor |
| Abstract: | This paper examines the relationship between wages and market power at the firm level. We derive firm-specific measures of labor market power and present a natural decomposition of wage changes into shifts in labor market power and labor productivity. Our findings indicate that 50-60 percent of the variation in nominal wages is attributable to price changes, while the remaining portion, reflecting changes in real wages, is explained mainly by changes in market power and, to a lesser extent, by changes in labor productivity. Moreover, we show that firms with greater market power tend to pay higher wages, suggesting rent-sharing between employers and employees, at the cost of higher prices for consumers. |
| Keywords: | Price Markups;Labor market power |
| JEL: | L10 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13987 |
| By: | Bertocchi, Graziella; Bonacini, Luca; Joxhe, Majlinda; Pignataro, Giuseppe |
| Abstract: | We estimate the causal effect of exposure to math during high school on university major choice and performance, using a unique administrative dataset of 1, 396 twins extracted from the entire student population enrolled between 2011 and 2021 at an Italian university. We apply a Twin Fixed Effect (TFE) estimator to account for unobserved factors like shared family background. We find that attending a low-math high school reduces the likelihood of enrolling in STEM majors by 32.6 percentage points and improves university performance, by increasing the likelihood of on-time graduation by 11.7 percentage points and boosting grades by 0.139 standard deviations. Leveraging a high school reform that expanded the math content in traditionally low-math curricula, we show that the added math background further reduces STEM enrollment for treated students, while it drives their improvement in performance. Our results suggest that, while increased math exposure does not necessarily boost STEM enrollment, it equips students with skills that help them improve their university outcomes. Compared with TFE, Ordinary Least Squares estimates of the effect of math exhibit a downward bias. The same applies to Difference-in-Differences estimates of the effect of the reform obtained using the entire student population. |
| Keywords: | Math Exposure, Twins, Twin Fixed Effects, Major Choice, STEM, University Performance, High School Reform |
| JEL: | D10 I21 I23 I28 J24 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1567 |
| By: | Pablo Estrada; Sara Markowitz; Alexia Witthaus |
| Abstract: | Males comprise a small fraction of the nurse labor force, yet across the distribution of wages, male nurses earn more than females. In this paper, we use nurse survey data to decompose the sex-based wage gap and to explore why male nurses earn a premium in a female-dominated profession. We consider the role of traditional factors such as human capital and family structure, along with explanations that are more specific to nursing. Results indicate that overtime pay is a significant factor, particularly among hospital workers, but otherwise, after accounting for an extensive set of job-related characteristics, the wage gap persists. |
| JEL: | I0 J01 J30 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33461 |
| By: | F. Cerina; L.G. Deidda; S. Nobili |
| Abstract: | We document four key trends since the pandemic - a surge in remote work, an increase in performance pay, their joint occurrence, and the skill-biased nature of this complementarity. We develop a firm-worker model that explains this evidence. We show that, under risk aversion, the incentive-compatible performance pay premium falls with worker's skills, as the likelihood of a good performance increases. Hence, the firm uses performance pay if the worker is sufficiently skilled and fixed pay with monitoring, otherwise. The unforeseen pandemic shock forces the firm to adopt remote work and reduces monitoring effectiveness. As a result, the firm relies more on performance pay. Post-pandemic, the firm always sticks to the remote work if the worker is sufficiently skilled. If the worker is too unskilled for performance pay to be cost-effective, the firm sticks to remote work only if remote monitoring is effective. Accordingly, the model predicts that a decline in remote monitoring efficacy could reduce remote work for less-skilled workers only. To test this, we exploit temporal variation in legislation in New York State, using a Difference-in-Differences approach, to estimate the impact of stricter regulations of remote monitoring on the adoption of remote work. Such a test strongly supports our model's predictions. Our findings suggest that pandemic policies and regulations may have played a significant role in shaping the adoption and persistence of remote work and performance pay. |
| Keywords: | monitoring;skills;incentives;Remote Work;Performance Pay |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:cns:cnscwp:202505 |
| By: | Alexander M. Gelber; Damon Jones; Ithai Lurie; Daniel W. Sacks |
| Abstract: | Budget set kinks are much studied in economics, including in the context of “bunching” estimators that assume individuals react to the true marginal tax rate. We document that individuals disproportionately “left-bunch” below kinks in the context of the Social Security Earnings Test where incentives from its actuarial adjustments should instead push many rational agents to bunch above the kink. We show that the left bunching in this case cannot be explained through standard, rational reactions to the incentives. We demonstrate that these patterns represent the first empirical evidence consistent with “spotlighting, ” wherein individuals misperceive the local marginal tax rates as applying throughout the tax schedule and therefore treat the kink as a notch. In the context of the Earnings Test, this misperception provides an explanation for why literature has found large earnings responses despite the fact that the Earnings Test typically creates weak incentives for rational agents to adjust earnings. More generally, if individuals perceive kinks as notches, then elasticities estimated from bunching at kinks where this misperception may be at play may be significantly over-estimated. |
| JEL: | H20 H24 H55 J14 J22 J26 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33496 |
| By: | Shelby R. Buckman; Jose Maria Barrero; Nicholas Bloom; Steven J. Davis |
| Abstract: | Headline estimates for the extent of work from home (WFH) differ widely across U.S. surveys. The differences shrink greatly when we harmonize with respect to the WFH concept, target population, and question design. As of 2025, our preferred estimates say that WFH accounts for a quarter of paid workdays among Americans aged 20-64. The WFH rate is seven percentage points higher for workers with children under eight in the household and about two percentage points higher for women than men. Desired WFH rates exceed actual rates in every major demographic group – more so for women, workers with young children, and less educated workers. |
| JEL: | E24 J21 J22 J14 D12 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33508 |
| By: | Wongkot Rujiwattanapong (Faculty of Political Science and Economics, Waseda University) |
| Abstract: | This paper studies the welfare cost of business cycles under incomplete markets and heterogeneous labour skills for male and female workers. The main goals are to estimate welfare gains and/or losses of economic agents if they could live in an economy without aggregate uncertainty, and to analyse the magnitudes of gains and/or losses among subgroups of agents. These tasks can be realised by calibrating a stochastic general equilibrium model with aggregate productivity shocks, individual skill uncertainty and unemployment risks, and compare the results to a similar model only without aggregate fluctuations. It is found that when business cycles are removed the overall welfare could increase up to almost 6% which is 700 times larger than the famous result in Lucas (1987). However, from a disaggregated perspective, the results are contrary to conventional expectation that subgroups with lower income should gain more benefit from the removal of business cycles due to the more adverse labour market conditions which hinder the ability to smooth consumption particularly under liquidity constraints and aggregate uncertainty. Instead, females gain less benefit than males, low-skilled workers are less better off than high-skilled workers, and unemployed workers gain slightly less than employed workers. Wealth inequality is found to remain fairly unchanged when business cycles are present in the economy although there is a noticeable shift in wealth distribution. |
| Keywords: | Business cycles;wealth inequality; worker heterogeneity. |
| JEL: | E24 E32 J24 J64 J65 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:2421 |
| By: | Chao Fu; Xiaomeng Li; Basit Zafar |
| Abstract: | Income-Driven Repayment (IDR) plans tie student loan repayment to income and forgive unpaid debt after certain years of repayment. We investigate how these features affect one’s career choices through a survey where the same student is asked to select job profiles under various repayment plans. Consistent with our Ben-Porath style model, the survey results reveal that IDR is a double-edged sword. On the one hand, 36% of students underinvest in their human capital under the standard repayment plan relative to their would-be choices in a debt-free scenario; an IDR resembling the Saving on a Valuable Education (SAVE) plan reduces this fraction to 20%. On the other hand, IDRs induce moral hazards: Under a SAVE-like plan, 22% of students choose job profiles with lower initial wages and higher wage growth than their choices in a debt-free scenario, leaving part of their debt forgiven. A simple calculation indicates that this type of moral hazard alone would render SAVE-like plans inviable were they carried out by private lenders; however, government-run IDRs are sustainable due to the government’s capacity to collect individuals’ lifetime income taxes. |
| JEL: | H0 I20 I22 I23 J01 J24 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33411 |
| By: | Sefa Awaworyi Churchill (RMIT University); Simon Chang (University of Western Australia); Russell Smyth (Monash University); Trong-Anh Trinh (Monash University) |
| Abstract: | This paper extends prior theory linking present-day sex ratios to present-day propensity for entrepreneurship among men backward in time to explore the long-run gender origins of entrepreneurship. We argue that present-day propensity for entrepreneurship among men will be higher in neighbourhoods which had historically high sex ratios. We propose that high sex ratios generate attitudes and behaviours that imprint into cultural norms about gender roles and that vertical transmission within families create hysteresis in the evolution of these gender norms. To empirically test the theory, we employ the transport of convicts to the British colonies of New South Wales and Van Diemen’s Land in the eighteenth and nineteenth centuries as a natural experiment to examine the long-run effect of gender norms on entrepreneurship in present-day Australia. We use a representative longitudinal dataset for the Australian population that provides information on the neighbourhood in which the participant lives, which we merge with data on the sex ratio in historical counties from the mid-nineteenth century. We find that men who live in neighbourhoods which had high historical sex ratios have a higher propensity for entrepreneurship. We present evidence consistent with the vertical transmission of gender norms within families being the likely mechanism. Arguments for policies to promote female entrepreneurship are typically couched in terms of gender norms representing a barrier to more women starting their own business. We present evidence consistent with gender norms contributing to gender differences in rates of entrepreneurship by being a spur for higher male entrepreneurship rather than a barrier to female entrepreneurship. |
| Keywords: | gender norms, sex ratios, entrepreneurship, Australia |
| JEL: | I31 J21 J22 N37 O10 Z13 Z18 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:mhe:chemon:2025-06 |
| By: | Adamecz, Anna; Ilieva, Radina; Shure, Nikki |
| Abstract: | The Dunning-Kruger effect (DKE) states that people with lower levels of the ability tend to self-assess their ability less accurately than people with relatively higher levels of the ability. Thus, the correlation between one's objective cognitive abilities and self-assessed abilities is higher at higher levels of objective cognitive abilities. There has been much debate as to whether this effect actually exists or is a statistical artefact. This paper replicates and extends Gignac and Zajenkowski (2020) and Dunkel, Nedelec, and van der Linden (2023) to test whether the DKE exists using several measures of ability and nationally representative data from a British birth cohort study. To do this, we construct a measure of objective cognitive abilities using 18 tests conducted at ages 5, 10, and 16, and a measure of subjective self-assessed abilities using estimates of school performance and being clever at ages 10 and 16. We replicate their models and show that the DKE exists in our secondary data. Importantly, we are the first to look at whether this relationship is heterogeneous by gender and find that while the self- assessment bias is gender specific, the DKE is not. The DKE comes from men relatively overestimating and women relatively underestimating their abilities. |
| Keywords: | Dunning-Kruger effect, overconfidence, underconfidence, gender differences |
| JEL: | J16 J24 D90 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1566 |