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on Labor Markets - Supply, Demand, and Wages |
| By: | Priyaranjan Jha; Jyotsana Kala; David Neumark; Antonio Rodriguez-Lopez |
| Abstract: | We assess how minimum wage effects on restaurant employment in the U.S. vary with labor market size and monopsony power. Using city-level data, we construct monopsony proxies based on labor flows and concentration. Minimum wages bind less in larger cities, consistent with the urban wage premium, and omitting this relationship overstates how labor market power reduces adverse employment effects of minimum wages. Nonetheless, accounting for city size, lower job market fluidity is linked to weaker negative employment effects, consistent with search models. By contrast, traditional concentration measures do not consistently predict variation in the effects of minimum wages. |
| JEL: | J38 J42 R23 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33862 |
| By: | Sona Badalyan |
| Abstract: | This paper studies how labor demand factors—specifically worker substitutability and job-specific skills—shape employment responses to a rise in the early retirement age. Using a regression discontinuity design, I exploit a 1999 German reform that eliminated the option for women to retire at age 60. Before the reform, older workers could exit voluntarily, thereby imposing turnover costs on firms. Afterward, firms were better able to retain less substitutable, more difficult-to-replace workers for whom turnover costs are higher. At the same time, the loss of early pension eligibility reduced workers’ outside options, allowing firms to offer lower wages. The reform thus improved the retention of less substitutable workers, lowering both turnover costs and wages. |
| Keywords: | aging, raise in the retirement age, internal labor markets, human capital, worker substitutability |
| JEL: | H32 H55 J21 J24 J26 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cer:papers:wp794 |
| By: | Dorn, David (University of Zurich); Schoner, Florian (ifo Institute, University of Munich); Seebacher, Moritz (ifo Institute, University of Munich); Simon, Lisa (Revelio Labs); Woessmann, Ludger (University of Munich) |
| Abstract: | We measure human capital using the self-reported skill sets of nearly 9 million U.S. college graduates from professional profiles on LinkedIn. We aggregate skill strings into 48 clusters of general, occupation-specific, and managerial skills. Multidimensional skills can account for several important labor-market patterns. First, the number and composition of skills are systematically related to measures of human-capital investment such as education and work experience. The number of skills increases with experience, and the average age-skill profile closely resembles the well-established concave age-earnings profile. Second, workers who report more skills, especially specific and managerial ones, hold higher-paid jobs. Skill differences account for more earnings variation than detailed measures of education and experience. Third, we document a sizable gender gap in skills. While women and men report nearly equal numbers of skills shortly after college graduation, women’s skill count increases more slowly with age subsequently. A simple quantitative exercise shows that women’s slower skill accumulation can be fully accounted for by reduced work hours associated with motherhood. The resulting gender differences in skills rationaliz… |
| Keywords: | online professional network, social media, experience, education, gender, human capital, skills, labor market, tasks, earnings |
| JEL: | I26 J16 J24 J31 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17896 |
| By: | William Arbour; David J. Price |
| Abstract: | Occupations are often seen as key labor market determinants, but little is known about their effect on workers. Using worker-occupation fixed effects, we first find that occupations explain only 3% of wage variance in the United States--too little to explain much of inequality, gender wage gaps, or other issues. Second, by introducing a new natural measure of occupational distance, we find that some occupations are consistently pluripotent, propelling workers to diverse jobs and allowing them to quickly overcome job loss. Third, we compile our estimates to provide new guidance for job seekers to help them choose better-informed career paths. |
| Keywords: | Occupations, Variance decomposition, Earnings growth |
| JEL: | J24 J31 J62 J63 |
| Date: | 2025–06–04 |
| URL: | https://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-800 |
| By: | Ioannis Branikas; Briana Chang; Harrison Hong; Nan Li |
| Abstract: | Most S&P 500 corporations disclose that their profits depend on non-wage competition for worker talent via workplace amenities like work-life balance. We quantify this dependence using a labor market matching model with endogenous amenities. When productive (unproductive) firms provide the amenities demanded by workers at a lower cost, firm quality becomes more (less) dispersed relative to worker quality, which results in higher (lower) firm profits due to competition. This cost advantage is identified with data on wages, worker satisfaction, and firm scale. Calibrating our model to Glassdoor surveys, a 1% increase in workers’ non-pecuniary preferences raises firm profits by 0.6%. |
| JEL: | G0 G3 G39 J3 J31 J33 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33870 |
| By: | Anders Humlum; Mette Rasmussen; Evan K. Rose |
| Abstract: | This paper develops a new approach to measuring non-wage amenities and com-pensating differentials in the labor market. Using a survey of 20, 000 job movers in Denmark, we elicit workers’ reservation wage to return to their previous jobs. Our sample contains a large, connected network of firms, enabling us to estimate firm-wide premia and match effects in amenity values. Overall, higher-paying firms provide slightly worse non-pay amenities. Although they provide better perks and flexibility, they also come with higher layoff risk, faster work pace, and greater stress. On average, moves to jobs offering 10% higher pay involve a 5% reduction in the value of amenities, with 0.7% attributable to firm-wide tradeoffs and the remainder attributable to match effects in pay and preferences. Using a rich search model, we quantify the role of amenities in labor market inequality while accounting for preference heterogeneity and endogenous mobility. Worse amenities at high-paying firms offset more than half of their wage advantage, and the within-worker variance in pay across firms overstates the variance in utility by 50%. |
| JEL: | J31 J32 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33884 |
| By: | Deneault Christa |
| Abstract: | Using administrative data from Texas, I track individuals from high school through college to the workforce to determine the effects of local labor markets on occupational choice. I find local labor market conditions are countercyclical with selection into teaching and have a larger influence when experienced during high school. Individuals sorting into teaching because of poor local labor market conditions are of higher ability (standardized tests) and have higher productivity (value-added). The findings suggest that local labor market fluctuations shape career decisions well before individuals participate in the labor market, and that increasing the relative economic standing of teaching as a career has the potential to improve the future supply of teachers. |
| Keywords: | teachers; occupational choice; college major; local labor markets |
| JEL: | E32 H75 I20 J24 J45 |
| Date: | 2025–06–03 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddwp:100075 |
| By: | Ufuk Akcigit; Harun Alp; Jeremy Pearce; Marta Prato |
| Abstract: | This paper explores the symbiotic relationship between transformative entrepreneurs and inventors, which is crucial for economic growth. We utilize microdata from Denmark to demonstrate that while the relationship between IQ and general entrepreneurship tends to be negative, it is strongly positive among transformative entrepreneurs. Transformative entrepreneurs, often with higher IQ and education levels, significantly drive R&D and business growth, thereby providing substantial opportunities for inventors. In contrast, average entrepreneurs are more influenced by their family’s entrepreneurship background. Our economic model links these dynamics to overall economic progress, highlighting how higher education influences career paths in entrepreneurship and invention. We identify talent misallocation caused by unequal education access, particularly affecting lower-income families. Our findings indicates the most effective policies strengthen the interplay between higher education, innovation, and entrepreneurship to foster transformative businesses and achieve long-run economic growth. |
| JEL: | J24 O31 O38 O47 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33766 |
| By: | Costa-Font, Joan (London School of Economics); Vilaplana-Prieto, Cristina (Universidad de Murcia) |
| Abstract: | We study the impact of the Brexit referendum on the quality of employment and working conditions of workers in the National Health Service (NHS). Using a difference-in-differences (DiD) design and propensity score matching to compare NHS employees with a control group referring to occupations less exposed to employees from the European Union (EU) before Brexit. We document that Brexit led to the average reduction of job satisfaction by 1.39% - largest for physicians (2.6%) and nurses (2.4%) - and an increase of both paid (1.75 hours/week) and unpaid working hours (8.3 hours/week). Nonetheless, the effect was heterogeneous despite the general rise in working time. Indeed, job satisfaction fell by 2.6% among British workers but increased by 3% among overseas workers. These changes were accompanied by a comparable reduction in leisure time and a higher likelihood of workers intending to leave their jobs, suggesting broader behavioural effects that may undermine NHS productivity. |
| Keywords: | workforce composition, health care workforce, Brexit, workforce motivation, job satisfaction, leisure satisfaction, NHS. |
| JEL: | I12 J22 J45 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17895 |
| By: | Chris Allen; Chrysa Leventi; Hannes Serruys; Irene Vlachaki |
| Abstract: | The paper provides a comprehensive analysis of the potential benefits and challenges of a possible inwork benefit scheme in Greece. It reviews the design of in-work benefits in other EU countries and identifies key considerations for implementing such a scheme in an effective way. The paper discusses an illustrative in-work benefit for Greece, which would offset the employee social insurance contributions of low-income earners up to a certain threshold and estimates its fiscal and distributional impact. For doing so, the paper combines the use of the tax-benefit microsimulation model EUROMOD, and of EUROLAB, a discrete choice econometric model that allows to determine the impact of policy reforms on labour supply. Estimates suggest that the scheme could increase labour market participation by 0.9 percentage points of the workforce, particularly among women. This would add approximately some 60, 000 additional workers to the economy and increase overall labour hours by 1.2%. The overall fiscal cost of the new scheme is estimated at €290 million a year once second-order employment effects are accounted for. These findings also suggest that the at-risk-of-poverty rate would decrease by approximately 0.6 percentage points for the active population. |
| JEL: | J20 J21 J22 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:euf:dispap:219 |
| By: | Nina Roussille; Benjamin Scuderi |
| Abstract: | We develop a procedure for adjudicating between models of firm wage-setting conduct. Using data from a U.S. job search platform, we propose a methodology to aggregate workers’ choices over menus of jobs into rankings of firms’ non-wage amenities. We use these estimates to formulate a test of conduct based on exclusion restrictions. Oligopsonistic models incorporating strategic interactions between firms and tailoring of wage offers to workers’ outside options are rejected in favor of monopsonistic models featuring near-uniform markdowns. Misspecification has meaningful consequences: our preferred model predicts average markdowns of 19.5%, while others predict average markdowns as large as 26.6%. |
| JEL: | J31 J42 L21 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33848 |
| By: | Lassmann, Andrea; Volpe Martincus, Christian |
| Abstract: | This paper provides new evidence on the role of human capital in shaping economies participation in multinational production. In particular, we primarily examine whether and to what extent the level of English language mastery among countries inhabitants affects the presence of multinational firms in their territories. To do so, we combine data on multinational firms foreign subsidiaries worldwide and data on English proficiency of possible host countries populations. Our estimates suggest that countries whose populations have higher levels of English proficiency attract more multinational firms. The same holds for economies with higher shares of individuals with advanced digital skills. |
| Keywords: | Multinational Firms; Foreign Language; Digital Skills |
| JEL: | F23 J24 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14111 |
| By: | Metin M. Cosgel (University of Connecticut); Richard N. Langlois (University of Connecticut); Thomas J. Miceli (University of Connecticut) |
| Abstract: | The growing presence of generative artificial intelligence (AI) in undergraduate economics writing courses presents both opportunities and challenges. Instructors face concerns about academic integrity and assessing student effort, yet a process-based approach to writing offers a viable solution. This paper advocates for teaching economics writing as a structured, iterative process—encompassing brainstorming, outlining, researching, drafting, analyzing, revising, and reflecting—rather than as a singular final product. At each stage, AI can be strategically integrated to enhance, rather than replace, essential skills in economic reasoning, analysis, and communication. We introduce a framework grounded in two core principles: aligning AI tools with analog skills defined by course objectives and designing assessments that are observable and highly correlated with these skills. Additionally, we present practical classroom strategies and address concerns surrounding originality, equity, and evaluation. The paper also explores broader implications for scholarly production, including AI’s role in reshaping comparative advantages between human and artificial intelligence in academic work and their evolving intersection. Ultimately, this approach reimagines writing pedagogy to align with both disciplinary thinking and the realities of an AI-enhanced educational landscape. |
| Keywords: | generative artificial intelligence, large language models, teaching writing, assessment, skill, comparative advantage |
| JEL: | A20 D24 I20 J24 L23 O30 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:uct:uconnp:2025-06 |
| By: | Anton A. Cheremukhin; Paulina Restrepo-Echavarria |
| Abstract: | We develop a tractable model of monopsony power based on information frictions in job search. Workers and firms choose probabilistic search strategies, with information costs limiting how precisely they can target matches. Firms post wages strategically, anticipating application behavior and exploiting a first-mover advantage. The model nests both directed and random search as limiting cases and yields a closed-form wage equation that shows the effects on wage-setting power of search frictions, labor market tightness and sorting. Wage markdowns in equilibrium arise not only from limited labor supply elasticity but also from sorting patterns and demand-side frictions. In highly assortative environments, the absence of wage competition allows firms to capture nearly the full surplus, even when labor supply is elastic. Numerical results replicate markdowns of 30-40% and suggest that constrained-efficient wages would be approximately 20% higher. Our framework unifies the analysis of monopsony, sorting and wage posting, and provides a computationally efficient method for evaluating directed search equilibria. |
| Keywords: | Monopsony power; labor market sorting; information frictions; directed search |
| JEL: | C78 J42 D83 |
| Date: | 2025–05–13 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddwp:99989 |
| By: | Alena Bicakova; Guido Matias Cortes; Kelly Foley; Jacopo Mazza; Peter McHenry |
| Abstract: | Using data from the Current Population Survey’s Education Supplement for 1977-2023, we explore two important, yet understudied facets of the pattern of countercyclical post-secondary education (PSE) enrollment in the U.S. First, we show that economic downturns are associated with higher enrollment probabilities at both 2- and 4-year colleges among young men, but only at 2-year institutions among young women. Second, we show that the overall increase in enrollment propensities during downturns is primarily driven by persistence (i.e., changes in enrollment among individuals with prior PSE participation), rather than matriculation (i.e., new enrollments). However, higher unemployment rates increase matriculation probabilities at 2-year colleges among 18-year-old men and women, and at 4-year colleges among individuals in their early 20s. Our findings improve our understanding of the dimensions along which aggregate economic fluctuations induce changes in human capital acquisition. |
| Keywords: | College Enrollment, Business Cycles, 2- and 4-Year Institutions, Persistence |
| JEL: | I23 J24 E32 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cer:papers:wp795 |
| By: | Amanda de Albuquerque; Frederico Finan; Anubhav Jha; Laura Karpuska; Francesco Trebbi |
| Abstract: | We present a methodology for decoupling taste-based versus statistical discrimination in political behavior. We combine a flexible empirical model of voting, featuring vertical and horizontal candidate differentiation in gender, ability, and policy positions, with a large-scale micro-targeted electoral experiment aimed at increasing female candidate vote shares. Our structural econometric approach allows to separately identify preference parameters driving taste-based discrimination and beliefs parameters driving statistical discrimination through expectations about ability and policy positions of female politicians. Our application to Brazilian municipal elections uncovers substantial levels of taste-based and statistical discrimination. Counterfactual political campaigns show promise in reducing both. |
| JEL: | D72 P0 P16 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33859 |
| By: | Zoë B. Cullen; Bobak Pakzad-Hurson; Ricardo Perez-Truglia |
| Abstract: | Salary negotiations are a widespread phenomenon that can shape key labor market outcomes, such as welfare and inequality. We provide novel empirical and theoretical insights into the causes and consequences of salary negotiations. We conducted two field experiments involving over 3, 100 job seekers in the U.S. tech sector, designed to examine two types of information frictions. We find that a light-touch encouragement intervention significantly increased both negotiation attempts and compensation gains. In contrast, providing a substantial discount on negotiation coaching did not significantly affect negotiation attempts. Women responded more strongly to both interventions, helping to narrow gender gaps. We develop a new model of salary negotiations, incorporating risk and information frictions, that can better explain our experimental and non-experimental findings. The model's equilibrium analysis indicates that policies encouraging negotiation can enhance both welfare and equity. |
| JEL: | C9 D80 J30 J38 J7 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33903 |
| By: | Abigail Hurwitz; Olivia S. Mitchell |
| Abstract: | We investigate how advisors’ own health and survival assessments, and information about their advisees’ health and survival probabilities, shape their recommendations regarding retirement spending and investment. Using experiments involving amateur and professional advisors, we show that advisors’ self-assessments have only mild effects on their recommendations, but they do respond differently when provided longevity and health information about their advisees. Moreover, amateur advisors mainly react to simple cues, while professional advisors are more sensitive to client-specific information. While many rely on informal advice from friends or family, amateurs often cannot accurately analyze and utilize key information needed to provide suitable advice. |
| JEL: | D91 G52 J32 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33872 |
| By: | Caroline Fry; Britta Glennon |
| Abstract: | In this paper, we examine the role of coethnic advisor-student matching in U.S. Ph.D. programs in attracting, training and guiding immigrant talent into top jobs in Artificial Intelligence (AI). Using comprehensive administrative data on 1, 769 AI Ph.D. graduates from top U.S. programs, combined with their advisors’ profiles and post-Ph.D. employment outcomes, and complemented by original survey data, we document two new findings. First, immigrant students systematically match with coethnic thesis advisors at markedly higher rates than would be expected by chance. This matching is shaped by reputational spillovers, pre-Ph.D. contact, and preference for shared backgrounds. Second, immigrant students with coethnic advisors are more likely to enter high-quality industry jobs after graduation than their native counterparts. We find suggestive evidence that this is driven by access to industry internships, facilitated by these advisors' unique professional networks. Our findings reveal that universities, through their immigrant-origin faculty, act as critical conduits connecting global scientific talent to the U.S. innovation economy. An important organizational implication of our results is that disruptions to immigration may constrain firm-level access to talent and weaken the academic-to-industry pipeline. |
| JEL: | F22 I23 J24 O31 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33782 |
| By: | Ping Wang; Tsz-Nga Wong |
| Abstract: | How large is the impact of artificial intelligence (AI) on labor productivity and unemployment? This paper introduces a labor-search model of technological unemployment, conceptualizing the generative aspect of AI as a learning-by-using technology. AI capability improves through machine learning from workers and in turn enhances their labor productivity, but eventually displaces workers if wage renegotiation fails. Three distinct equilibria emerge: no AI, some AI with higher unemployment, or unbounded AI with sustained endogenous growth and little impact on employment. By calibrating to the U.S. data, our model predicts more than threefold improvements in productivity in some-AI steady state, alongside a long-run employment loss of 23%, with half this loss occurring over the initial five-year transition. Plausible change in parameter values could lead to global and local indeterminacy. The mechanism highlights the considerable uncertainty of AI's impacts in the presence of labor-market frictions. In the unbounded-AI equilibrium, technological unemployment would not occur. We further show that equilibria are inefficient despite adherence to the Hosios condition. By improving job-finding rate and labor productivity, the optimal subsidy to jobs facing the replacement risk of AI can generate a welfare gain from 26.6% in the short run to over 50% in the long run. |
| JEL: | E2 J2 O30 O40 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33867 |
| By: | Laurène Thil; Stella Sophie Zilian (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | This paper studies how atypical work, alongside other labour market conditions, affect intra-EU migration and vice versa in 17 EU countries from 2004 to 2019. Relative increases of part-time and self-employment shares in sending countries increase net migration, whereas relative increases in short fixed-term shares reduce net migration. Net migration shocks persistently reduce part-time share differentials, initially reduce self-employment share differentials and increase short fixed-term share differentials. Atypical work explains about one-fifth of net migration fluctuations five and ten years after a shock. The findings highlight the trade-off between internal (employment flexibility) and external (migration) labour market adjustments. |
| Keywords: | atypical employment; intra-EU mobility; pVAR; labour market adjustment |
| JEL: | C33 F22 J21 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:wii:wpaper:263 |