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on Labor Markets - Supply, Demand, and Wages |
| By: | Erling Barth; Maria Forthun Hoen; Sari Pekkala Kerr; William R. Kerr |
| Abstract: | We study long-run career consequences of initial employment in an occupation that subsequently declines. Linking the 2000 Decennial Census to US administrative employment and earnings records through 2020, we follow more than 2.4 million workers. Employment in an occupation that contracts by at least 25 percent is associated with about 5 percent lower cumulative earnings despite slightly more quarters worked. The earnings differential closely matches evidence from Sweden and Norway, although employment adjustment differs. Occupational mobility is substantial but incomplete, while children’s later occupational destinations are much less tied to their household heads’ 2000 occupational-growth categories. |
| JEL: | J24 J31 J62 O33 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35614 |
| By: | Takao Kataoka (School of Commerce, Waseda University); Danyang XIE (Thrust of Innovation, Policy, and Entrepreneurship, the Society Hub, The Hong Kong University of Science and Technology (Guangzhou)) |
| Abstract: | Japan's post-bubble decades are usually described as stagnation. This paper asks what was lost, preserved, and reallocated. Using harmonized data from UNDP, OECD, and Japanese government and survey sources, we document five stylized facts for 1980-2025. Japan's HDI advantage over the very-high-HDI group narrowed but persisted, with income and education weakening while health remained strong. Working time fell sharply: annual hours declined from 2, 121 in 1980 to 1, 617 in 2024, and the 60-hour weekly tail fell from 21.2% in 1988 to 7.5% in 2022. Yet overwork risk persisted in administrative recognition data: recognized compensation cases reached 1, 296 in FY2024, with mental-disorder recognitions much more prominent, although the series cannot isolate incidence from awareness, reporting, or administrative change. Real wages stagnated even as labor scarcity and leisure preferences increased. The main forward-looking vulnerability is human capital: Japan's relative education index fell to parity with the very-high-HDI group, and household education spending diverged from peer economies. We argue that Japan's post-bubble equilibrium is neither social failure nor welfare success, but a time-rich, skill-thin settlement: resilient in health and order, yet constrained by stagnant wages, hidden overwork, mental-health risk, and underinvestment in advanced skills. |
| Keywords: | Japan; lost decades; working hours; karoshi; leisure; human capital; well-being; labor market. |
| JEL: | J22 J24 J28 J31 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:cuf:wpaper:810 |
| By: | Sydnee Caldwell; Arindrajit Dube; Suresh Naidu |
| Abstract: | The literature on imperfect competition in labor markets has expanded rapidly in recent years. This article provides a guide to the field, focusing on the firm-specific ("residual") labor supply elasticity as the definition of a firm's labor market power. We present a general framework showing how this elasticity nests the three widely studied sources of monopsony power: search frictions, preference heterogeneity, and employer concentration. We summarize the empirical estimates of the elasticity of labor supply, highlighting sources of possible heterogeneity. We emphasize that it is difficult to infer elasticities from markdowns (and vice versa) due to the diversity of firm wage-setting practices, illustrating this point using the interaction between monopsony and efficiency wages. We discuss how policy issues in antitrust, labor market regulation, immigration, and macroeconomics interact with monopsony and conclude by listing several areas for future research. |
| JEL: | J3 J30 J42 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35608 |
| By: | Asbjoern Juul Petersen (Department of Economics, University of Copenhagen); Jacob Richard Strabo (Department of Economics, University of Copenhagen) |
| Abstract: | We investigate how performance variability is associated with long run labor market outcomes. Using administrative data on complete grade distributions for all general high-school graduates from 2001 to 2006, we measure within-student grade variability as the standard deviation of final grades and relate it to long-run labour market income. Conditional on identical GPA and a long list of background controls, a one standard deviation increase in grade variability predicts a 4.8 percent lower income. The income differences are primarily driven by both extensive and intensive labor supply. Our results are robust in various specifications and even in a twin fixed effects analysis. In the second part of the paper, we further investigate potential mechanisms. We conjecture that performance stability is an underlying trait which impacts sorting behaviour into different higher education- and career tracks: Individuals with higher performance instability tend to sort into programmes and professions where instability is not punished or even rewarded but where the income trajectories are much more volatile. This differential sorting behaviour, especially into different fields and industries, can explain most of the income differences. |
| Keywords: | grade variance, performance stability, education, human capital, income |
| JEL: | I26 J24 J31 I21 C23 |
| Date: | 2026–08–03 |
| URL: | https://d.repec.org/n?u=RePEc:kud:kucebi:2615 |
| By: | Daniel Goller; Samuel Lüthi; Stefan C. Wolter |
| Abstract: | Practical skills are widely believed to be a key determinant of labor market success, yet credible empirical evidence remains scarce, because these skills are occupation-specific, acquired primarily through workplace experience, and notoriously difficult to measure. We address these challenges using an exceptional dataset covering over 170 occupations. Our measure of practical skills is based on high-stakes expert evaluations of apprentices' performance in occupation-specific standardized practical examinations, conducted under authentic workplace conditions and lasting from several hours to several weeks. Combined with rich administrative data, this allows us to separate practical skills from general and vocational knowledge. We show that practical skills form a distinct dimension of human capital, only weakly correlated with traditional achievement measures. Practical skills are the strongest predictor of early labor market success, consistently associated with higher first-year earnings, lower NEET risk, greater retention by the training firm, and a higher likelihood of entering ertiary education. These relationships are robust across occupational task groups and by gender. Out-of-sample analyses show that practical skills ubstantially improve predictions beyond conventional educational achievement and background characteristics. |
| Keywords: | return to skills, practical skills, school-to-work transition, human capital |
| JEL: | J24 I26 J31 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12881 |
| By: | Benjamin Friedrich; Michal Zator; Alison Zhao |
| Abstract: | Why do firms report that they cannot find workers instead of preemptively raising wages? Using German administrative data, we show labor-constrained firms pay lower wages and quasi-exogenous wage increases alleviate constraints, consistent with monopsony. Yet constrained firms' delayed wage increases point beyond this mechanism. We develop a dynamic matching model combining wage-setting power with incomplete information and downward wage rigidity. Consistent with the model, firms raise wages when initial wage plans prove too low, especially for peripheral occupations, and face constraints after wage shocks to adjacent sectors, suggesting that firms' inaccurate beliefs and learning about market wages shape labor constraints. |
| Keywords: | Hiring difficulties, wage adjustments, outside options, information frictions |
| JEL: | J23 J31 D83 E24 M51 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26215 |
| By: | Colin C. Caines; Florian Hoffmann; Gueorgui Kambourov |
| Abstract: | We document a strong, positive relationship between occupational problem complexity, measured from US data on problem-solving requirements, and occupational wage growth since 1980. In contrast, employment shifts toward more complex occupations have been modest, suggesting a race between the demand for and supply of complex skills. We rationalize these findings by formulating and structurally estimating a quantitative general equilibrium model on the granular occupational level. In our model, workers have heterogeneous comparative advantages in solving complex problems and physical capital admits capital-skill complementarity in occupation space. The equilibrium features Positive Assortative Matching of worker skills to occupational problem complexity, and the model quantitatively explains the evolution of the occupational wage- and employment structure over the last four decades. The model estimates uncover two distinct periods of technological change. Until around 2000, rising complexity premia were driven by capital-skill complementarity and declining equipment capital prices. Post-2000 patterns reflect supply-side technological change whereby occupations became more efficient in utilizing worker skills for complex problem-solving. Our framework helps unify distinct approaches to studying task automation and task augmentation on the one hand and skill-biased technological change on the other. |
| Keywords: | occupational task content; complex tasks; wage polarization; skills |
| JEL: | E24 J21 J23 J24 J31 |
| Date: | 2026–08–14 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgif:103645 |
| By: | Rony, Sidharth (RS: GSBE other - not theme-related research, Mt Economic Research Inst on Innov/Techn) |
| Abstract: | Technological change has an ambiguous impact on labour market by creating demand for some skills and reducing demand of some others. Hence the relationship of demand for skills and the need for training is an empirical question. In this paper, I investigate association between types of technological change and decisions. I categorise several measures of automation on the basis of tasks (done at individual or occupation level) and technology (Software, Robot, AI) and compare their relationship with human capital investment. I find that the correlation between automation and training varies depending on the automation measure used, showing a decline with both individual- and occupation-level automation measures. However when relying on technology based measures of automation, workers exposed to older technologies (Robot, Software) receive less training with automation, while workers exposed to newer technologies (AI) receive more training with automation. The findings are consistent across workers of different age groups and skill levels. |
| Keywords: | Automation, Artificial Intelligence, Robotization, On-the-job training, PIAAC, Human Capital Investment |
| JEL: | J23 J24 M53 O33 I26 O15 |
| Date: | 2026–08–20 |
| URL: | https://d.repec.org/n?u=RePEc:unm:unumer:2026009 |
| By: | David W. Berger; Kyle F. Herkenhoff; Jaehun Jeong; Simon Mongey |
| Abstract: | How do firms set wages? How should governments set income taxes? If labor supply is inelastic to wages, firms can pay workers less than their marginal products, and governments can increase taxes without eroding the base. However, the structure of labor supply elasticities in the economy is complex. Recent empirics document variation across workers, firms, and margins (which firm to work at versus how many hours to work). To account for this rich structure of labor supply elasticities we extend the neoclassical model to include a discrete choice over which firm to work at, production complementarities and strategic interaction between heterogeneous, granular firms. In terms of wage setting, we find that novel effects of worker heterogeneity account for 78 percent of the variable component of labor supply elasticities and markdowns, and 89 percent of markdown differences between large and small firms. In terms of policy, higher progressivity makes labor supply less elastic, eroding the tax base by widening markdowns and worsening sorting. These channels (i) produce large declines in earnings following increases in marginal tax rates, consistent with empirical studies, and (ii) reduce optimal tax progressivity by one-third and associated welfare gains by two-thirds. |
| JEL: | E0 E2 J0 J2 L0 L10 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35640 |
| By: | Axana Dalle; Senne Jaques; Stijn Baert; ; |
| Abstract: | Although job-hopping has become more prevalent, its implications for recruitment appear to be less favourable. Drawing on a scenario experiment with professional recruiters, this study examines the threshold at which job-hopping is penalised, the underlying perceptual mechanisms, and the factors that moderate these effects. The results indicate that substantial negative effects emerge from three prior employers within a five-year period and intensify as the number of prior employers increases. Moreover, contrary to expectations of potential benefits, job-hopping elicits exclusively negative perceptions across four theoretically derived clusters: work attitudes (perseverance, responsibility, motivation, and accuracy), career dynamics (loyalty, bore-out risk, and adaptability), human capital (past performance, in-depth experience, and willingness to learn), and social capital (team spirit, interpersonal problems, and communicative skills). Among these, the hiring penalty is most strongly associated with negative perceptions of perseverance, in-depth experience and interpersonal conflicts. |
| Keywords: | Job-hopping, Hiring chances, Signalling, Scenario experiment |
| JEL: | J24 J62 M51 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:rug:rugwps:26/1149 |
| By: | Berfin Kardaslar (Humboldt-Universität zu Berlin, DIW Berlin); Alexander S. Kritikos (DIW Berlin, University of Potsdam, GLO Essen, CEPA); Lukas Menkhoff (DIW Berlin, Humboldt-Universität zu Berlin, IfW Kiel) |
| Abstract: | In this study, we examine the relationship between personality traits, captured by risk tolerance and the Big Five traits, and firm size, as measured by the number of employees. We show that the personality of entrepreneurs matters for the size of their firm they operate. We use a novel add-on to the German Socio-Economic Panel that includes a sub-sample of owner-managers running larger firms. High levels of risk tolerance – associated with an increased likelihood of firm exit in existing research – is positively associated with firm size for entrepreneurs in the market. High scores in extraversion are also associated with larger firms. However, a high level of openness for experience, a main driver of founding ventures, is negatively related to firm size. Overall, we show that running larger firms is associated with traits that are partially different from those that increase the likelihood of entrepreneurial entry or survival. |
| Keywords: | entrepreneurship, risk tolerance, personality traits, firm size |
| JEL: | L26 D81 J24 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:pot:cepadp:106 |
| By: | Diane E. Alexander; Molly Schnell |
| Abstract: | This paper examines how selection into medicine in the United States influences physician practice styles. We exploit macroeconomic conditions at the time of medical school application as an exogenous shock to the applicant pool and find that labor market downturns in other prestigious fields increase applications to medical school and shift the composition of matriculating cohorts toward students from non–pre-medical backgrounds. Strikingly, these low–outside-option cohorts practice medicine differently decades later. Conditional on experience, specialty, and outcome year, recession-cohort physicians bill Medicare more per beneficiary despite seeing healthier patients—particularly on discretionary, revenue-generating services—and sort into practice settings with higher-powered financial incentives. The additional spending does not produce detectable improvements in patient health. Taken together, our findings point to stronger financial motivation among those drawn into medicine when outside options are weak and suggest that medical school admissions screen imperfectly on the attributes that ultimately shape how physicians practice. |
| JEL: | E32 I11 I23 J24 J44 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35631 |
| By: | Øystein Hernæs; Andreas Ravndal Kostøl |
| Abstract: | This paper uses data on the universe of private-sector employment in Norway up to February 2026 to examine whether AI exposure has contributed to a widening employment gap across occupations with varying AI exposure. Since October 2022, the month before ChatGPT's release, employment in the most exposed occupations has grown by 0.1 percent, against 0.3 percent in the least exposed occupations. We track this number on a monthly basis on the public dashboard kiindeksen.no. The dashboard updates the full-distribution comparison each month as new administrative data arrives, allowing differential employment growth by AI exposure to be tracked over time. We also show that when we compare young workers by complete occupation quintiles of exposure, the relative decline of the most exposed quintile is estimated as an imprecise zero. |
| Keywords: | Artificial intelligence, labor market, employment, AI exposure, Norway |
| JEL: | J23 O33 J21 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26179 |
| By: | Radim Boháček; Michał Myck |
| Keywords: | political persecution; labor discrimination; wage differentials; life histories |
| JEL: | N34 J70 J31 C21 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:cxu:wpaper:61 |
| By: | Suqin Ge; Naijia Guo; Zibin Huang; Junsen Zhang; Li Zhang |
| Abstract: | This paper examines how innovation shapes migration across skill groups. Using Chinese microdata from 2005-2015, we find that cities with faster patent growth attract more low-skilled than high-skilled migrants, opposite to patterns in developed countries. These cities see similar wage growth for both groups but limited amenity gains. We develop and estimate a spatial equilibrium model showing that low-skilled workers prioritize wages, while high-skilled workers value amenities, which rise with the share of skilled workers. Patent shocks draw in more low-skilled workers, reducing amenities and deterring high-skilled migration. Overall, technological growth raised wages and welfare without increasing spatial inequality. |
| Keywords: | Patent, Migration, Spatial equilibrium, Wage, Amenity |
| JEL: | J24 J61 R23 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26176 |
| By: | Anna Bindler; Barbara Boelmann; Lena Janys; Luisa H. Santiago Wolf |
| Abstract: | How do labor demand shocks affect workforce diversity in the absence of targeted diversity policies? A conceptual framework illustrates the potential trade-off between the demographic and quality composition of a workforce when there is a positive labor demand shock. Exploiting the German reunification as a natural experiment, we analyze the academic labor market where nearly all social sciences professors in East Germany were replaced while STEM faculty remained largely unchanged. Using administrative data and a regional difference-in-differences design, we find increased dispersion in the institutional quality of hires, indicating that the new hires came from less select departments. At the same time, female representation did not increase despite qualified women in the pipeline. Instead, East German hiring patterns converged to those in West Germany in terms of gender composition. In simulations, we investigate implied losses: Under conservative assumptions, we show that, considering the pipeline of qualified applicants, the marginal female hire's quality is approximately half a standard deviation higher than the marginal male hire's quality. |
| Keywords: | labor demand, diversity, higher education, universities |
| JEL: | I23 J23 J45 J70 J82 N34 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26174 |
| By: | Bachmann, Ronald; Fischer, David; Gausing, Sibylle; Klauser, Roman; Rammert, Timo |
| Abstract: | This paper examines the extent and characteristics of labor shortages in the context of the green transition of the German labor market and discusses potential strategies to mitigate them. Using online job vacancy data, a firm survey, administrative employment and apprenticeship data, and measures of occupational greenness and labor shortages from the German Federal Employment Agency, we provide a comprehensive picture of green labor demand, supply, and shortages. We show that green labor demand has increased along both the extensive and intensive margins and identify the occupations and skills most relevant to the green transition. While green occupations are represented among both shortage and non-shortage occupations, firms increasingly expect the green transition to exacerbate skill and labor shortages. At the same time, the German apprenticeship system appears to play an important role in alleviating these shortages: although green occupations face shortages of apprentices, they remain comparatively attractive to applicants. Finally, firms predominantly rely on internal adjustment mechanisms - particularly training and increased technology use - rather than external recruitment strategies, such as hiring from abroad, to address changing labor demand. |
| Abstract: | Dieses Papier untersucht das Ausmaß und verschiedene Merkmale des Fachkräftemangels im Kontext der ökologischen Transformation des deutschen Arbeitsmarktes und erörtert mögliche Strategien zur Abmilderung der Konsequenzen. Die empirische Analyse basiert auf Daten aus Online-Stellenanzeigen, einer Unternehmensbefragungen sowie administrativen Beschäftigungs- und Ausbildungsdaten. Ergänzend werden berufsspezifische Indikatoren der Bundesagentur für Arbeit zur "Grünheit" von Berufen und zum Arbeitskräftemangel herangezogen. Dadurch lassen sich grüne Arbeitsnachfrage, das entsprechende Arbeitsangebot und bestehende Fachkräfteengpässe umfassend abbilden. Wir zeigen, dass die Nachfrage nach grünen Arbeitskräften sowohl entlang der extensiven als auch an der intensiven Marge gestiegen ist und identifizieren die für den grünen Wandel relevantesten Berufe und Qualifikationen. Grüne Berufe sind sowohl unter den Berufen mit ausgeprägtem Fachkräftemangel als auch unter den Berufen, die keinen Fachkräftemangel aufweisen, vertreten. Dennoch erwarten Unternehmen, dass die ökologische Transformation den Fachkräftemangel verschärfen wird. Eine zentrale Rolle bei der Abmilderung dieser Engpässe kommt dem deutschen Ausbildungssystem zu. Obwohl auch grüne Berufe einen Mangel an Auszubildenden verzeichnen, bleiben diese Berufe für Bewerberinnen und Bewerber vergleichsweise attraktiv. Unternehmen nutzen zur Bewältigung der sich wandelnden Arbeitsnachfrage überwiegend interne Anpassungsmechanismen, insbesondere Weiterbildung und verstärkten Technologieeinsatz, statt externe Rekrutierungsstrategien, wie die Anwerbung von Arbeitskräften aus dem Ausland. |
| Keywords: | green transition, labor demand, firm adjustment, green skills, labor shortages |
| JEL: | J23 J24 Q52 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:rwirep:342544 |
| By: | Andreas Haller; Stefan Staubli |
| Abstract: | The central trade-off for designing Disability Insurance (DI) is between providing insurance to those in need while maintaining incentives to work. This paper develops a novel revealed-preference approach to identify the insurance value of DI benefits. We show that comparing the DI take-up response to a change in benefits versus a change in wages identifies the insurance value. Implementing our framework in Canada, we estimate that increasing DI benefits by $1 creates an additional disincentive cost of $0.60 but creates an insurance value of $2.20. Thus, our approach suggests that DI benefits are not overly generous in the Canadian context. |
| Keywords: | Disability insurance, take-up, benefits, policy reform |
| JEL: | H53 H55 J14 J21 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26181 |
| By: | Alice Wu |
| Abstract: | How does employer learning affect the allocation of talent and aggregate productivity? I study this question in the labor market for computer science (CS) Ph.D.s, using the job histories and post-Ph.D. publications of 31, 000 graduates from 2000 to 2021. Publishing a CS conference paper raises the probability that a researcher moves to a top tech firm in the following year, especially for workers who start at less productive firms in industry. The increase in upward mobility upon publication is larger for less experienced workers and for scarcer signals, such as first authorship or papers with a matched patent. These patterns are consistent with predictions from an equilibrium search model with public employer learning. Estimating the model, I find that learning from post-Ph.D. publications accounts for 14% of overall CS publications, as it reallocates high-ability researchers to employers that provide more opportunities to publish. This contribution exceeds that of initial sorting, underscoring that much of worker ability is revealed on the job rather than at entry. |
| Keywords: | Learning, Signal, Search, Sorting, Productivity |
| JEL: | J24 J42 J62 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26214 |
| By: | Aysun Hızıroğlu Aygün; Murat Güray Kırdar; Murat Koyuncu; Quentin Stoeffler |
| Abstract: | A central concern with social and humanitarian assistance is that unconditional cash transfers might discourage work among recipients. Refugees, however, differ from the chronically poor households in most cash-transfer studies. Displaced from once-stable livelihoods, many retain skills and labor-force attachment that transfers might help reactivate. We study this question using the largest humanitarian cash transfer scheme in the world, the Emergency Social Safety Net (ESSN) in Turkey, which for most of the past decade hosted more refugees than any other country. Drawing on a survey designed to represent Turkey's refugee population, we exploit the program's dependency-ratio eligibility rule in a regression discontinuity design to estimate the effect of cash transfers on refugee employment. Far from discouraging work, we find that receiving cash transfers increases the probability that any man in the household works by 13.2 percentage points and the share of working men by 19.3 percentage points. We find no evidence of an effect on refugee women's already-low labor supply. A design-based local-randomization analysis around the eligibility cutoff corroborates these responses with exact finite-sample inference, implying effects of 9.8 and 17.4 percentage points, respectively. Turning to mechanisms, we find that the transfers improve access to information, reduce reliance on harmful food-coping strategies, and raise enrollment in Turkish language courses. The transfers also raise spending on education. These findings suggest that cash transfers relax the liquidity and information constraints that refugees face in the labor market rather than inducing a shift toward leisure. |
| Keywords: | humanitarian assistance; forced displacement; unconditional cash transfers; social protection; work disincentives; regression discontinuity design; Turkey |
| JEL: | I38 J21 J22 J61 O15 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26221 |
| By: | Claes Backman; Christos A. Makridis |
| Abstract: | Empirical measures of AI exposure ask language models to score O*NET tasks for technical feasibility. In finance, technically feasible tasks must still pass through review, documentation, supervision, confidentiality controls, and accountable human sign-off before entering production. We measure the gap between feasibility and institutional deployability using 2, 199 O*NET tasks across 99 finance-and-insurance occupations. We score each task with eight frontier models and a prompt ladder that moves from bare capability to finance-industry context and named regulatory regimes. The within-model institutional markdown is about one-fifth of the mean feasibility score, and positive for all eight models. The markdown is largest for regulated, client-facing credit and advice roles and smallest for marketing, software, and support roles. Cross-model agreement also declines as finance context is added: models agree more about what AI can do than about what financial institutions can deploy. Mapping exposure to publicly traded firms through pre-ChatGPT staffing shares, we find that the pricing content resides in the institutional layer: firms in the top half of the markdown distribution underperform the bottom half by roughly 25 percentage points in market-adjusted cumulative abnormal returns over the three years after ChatGPT, while sorting on technical exposure alone produces no gap. The differential lies outside the range the same design produces over every pre-ChatGPT window of equal length, though with one event window and few subsector clusters we read it as evidence on where return information resides rather than as a causal estimate. Especially in regulated industries, deployable exposure rather than technical feasibility is the more relevant measure of AI exposure. |
| Keywords: | exposure, large language models, occupational tasks, finance labor markets, technology adoption, firm exposure, asset pricing |
| JEL: | C52 C81 G12 G21 J23 J24 O33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12941 |
| By: | Linnea Lorentzen |
| Abstract: | This paper studies how the 2014 collapse in Brent Crude Oil prices propagated through the Norwegian labor market via worker reallocation. Using Norwegian panel data, I show that workers in non-tradable sectors more exposed to inflows of displaced oil workers experienced significant earnings declines and higher rates of sector exit, documenting a key propagation channel that extends the reach of sectoral shocks beyond the directly affected sector. To quantify the full network of equilibrium adjustments, I estimate a multisector Roy model with correlated sectoral skills and mobility costs. Counterfactual simulations show that non-tradable sector wages declined by up to 32% of the oil sector's wage loss. The magnitude of net worker reallocation between non-oil sectors was equivalent to 63% of the net outflow from the oil sector in the median commuting zone. The model shows how a single sectoral shock can trigger economy-wide labor market adjustment through worker movements. The simulations further reveal that the domino reallocation acts as an equalizing force: shutting it down amplifies both mean wage spillovers and wage dispersion within and across commuting zones. |
| Keywords: | Sectoral shocks, Reallocation, Local labor markets, Wages, Inequality |
| JEL: | F16 F62 F66 E24 J24 J31 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26172 |
| By: | Lorenzo Navarini; Dieter Verhaest |
| Abstract: | Returns to higher education vary substantially between and within fields of study. This paper studies whether occupational sorting at labor market entry contributes to this heterogeneity in early-career realized returns. We estimate a generalized sequential Roy model of yearly higher education enrollment choices, skill mismatch at entry, and subsequent labor market outcomes. Identification combines persistent latent heterogeneity with exclusion restrictions based on distance to programs and residual variation in graduation timing. Individuals with a higher probability of enrolling in higher education obtain higher returns, but also experience the largest losses in realized returns when they start in mismatched occupations. In counterfactual decompositions, entry mismatch accounts for a substantial share of low, and in some cases negative, early-career realized wage returns. |
| Keywords: | Returns to higher education; fields of study; skill mismatch; occupational sorting; heterogeneous returns. |
| JEL: | I23 I26 J24 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26196 |
| By: | Rony, Sidharth (RS: GSBE other - not theme-related research, Mt Economic Research Inst on Innov/Techn) |
| Abstract: | Rapid advances in technology and events such as COVID-19 have significantly transformed the modern workplace, potentially altering the skills demanded in jobs. This study examines the evolving demand and posted-wage premia for Information and Communication Technology (ICT), interpersonal, and Artificial Intelligence (AI) skills in the UK labour market. Using a comprehensive dataset of online job advertisements (2016 to 2022), skills are extracted and categorised via GPT-4 zero-shot learning. Cross-sectional log-wage regressions, incorporating occupation and regional fixed effects with three-way Cameron-Gelbach-Miller clustered standard errors, reveal divergent trends in skill compensation. While interpersonal skills are ubiquitously demanded (approximately 90% of listings), they yield no significant posted-wage premium, likely reflecting their near-universal baseline requirement across postings. In contrast, ICT skills, demanded in approximately 55% of postings, carry a posted-wage premium of approximately 7%. AI skills, mentioned in approximately 3% of postings, carry a posted-wage premium of approximately 9% within the ICT-mentioning subsample. These findings document robust associational posted-wage premia for technical competencies amidst recent pandemic-induced and technological labour market shifts. |
| Keywords: | Skills, Wage premium, Machine-assisted mixed methods, big data, Large Language Model, LLM, COVID-19, AI, artifical intelligence |
| JEL: | J24 C45 O33 |
| Date: | 2026–08–20 |
| URL: | https://d.repec.org/n?u=RePEc:unm:unumer:2026010 |
| By: | Lukas Delgado-Prieto; Manudeep Bhuller; Linnea Lorentzen; Santiago Hermo |
| Abstract: | This paper investigates how institutional wage-setting constraints, such as a national minimum wage or collectively bargained wages, affect firm responses to demand shocks. We develop a framework to interpret heterogeneous shock responses that depend on the constraints firms face, and provide empirical evidence on the relevance of these constraints in shaping firm behavior across three countries with different institutional settings: Portugal, Norway, and Colombia. We discuss the implications of our findings for conventional measures of employer wage-setting power and rent-sharing. |
| Keywords: | Demand Shocks, Wage Constraints, Firm Heterogeneity, Rent-Sharing, Monopsony Power, Minimum Wages, Wage Floors, Collective Bargaining. |
| JEL: | D22 J31 J42 J51 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26180 |
| By: | Lexin Cai; Hyewon Kim; Pauline Leung |
| Abstract: | We examine the effectiveness of work requirements as a screening device in the Supplemental Nutrition Assistance Program (SNAP). Work requirements for “able-bodied adults without dependents” were suspended after the Great Recession and gradually reinstated across counties and states in the 2010s. Using linked administrative SNAP and employment data from five states and a triple-differences design, we find that work requirements reduce SNAP participation by seven percent without increasing labor supply and disproportionately screen out low-income individuals. We develop a welfare framework to interpret these results and find that the social costs of work requirements exceed budget savings. |
| Keywords: | SNAP, Work Requirements, Labor Supply, Targeting, Welfare Analysis |
| JEL: | I38 H53 J22 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:26-46 |
| By: | Mimosa Distefano; Lorenzo Incoronato; Anna Raute |
| Abstract: | Women often struggle to re-enter employment after career breaks, possibly because employers are uncertain about their productivity. We study whether hiring subsidies help firms overcome this uncertainty and hire from this group. Exploiting an Italian policy that temporarily cut payroll taxes for women hired from non-employment, we find that firms persistently hire more women with career breaks, including mothers, following subsidy adoption. Consistent with employer learning about target-group productivity, firms with better initial matches later hire more from this group. Subsidized workers also show stronger labor-market attachment. These findings suggest demand-side interventions can complement supply-side policies in addressing gender gaps. |
| Keywords: | gender employment gap; mothers; hiring subsidies; employer learning; firm hiring behavior |
| JEL: | J16 J23 H25 D83 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26211 |
| By: | Łukasz Postek (Narodowy Bank Polski; University of Warsaw, Faculty of Economic Sciences); Małgorzata Walerych (Narodowy Bank Polski; Institute of Economics, Polish Academy of Sciences) |
| Abstract: | This paper investigates the role of demand shocks in driving labour market dynamics in Poland, an economy that transitioned from very high to low and stable unemployment despite repeated adverse shocks. Our contribution is threefold. First, we propose two complementary sign-restricted Bayesian VAR models that distinguish between labour-extensive and labour-intensive aggregate demand shocks, where the former operate primarily through changes in employment, while the latter mainly affect workers’ effort and hours per worker. Despite different specifications, both models yield highly consistent results. Second, we find that labour-extensive demand shocks are a key driver of unemployment, labour-intensive demand shocks primarily affect output, prices, and productivity, whereas both shocks are similarly important for hours per worker. Third, we document that the relative importance of these shocks changes over time, suggesting that the dominant margin of labour market adjustment may depend on economic conditions and the policy environment. |
| Keywords: | demand shocks, labour market, Bayesian VAR, sign restrictions, intensive margin, extensive margin |
| JEL: | C11 C32 E32 J23 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:nbp:nbpmis:389 |
| By: | Erik Hurst; Christina Patterson; Nela Thomas Richardson; Ye Liv Wang |
| Abstract: | We use a sample of administrative payroll data covering a large and nationally representative share of U.S. workers to study how wages adjusted during the recent inflation period. Most firms apply a single modal annual nominal wage increase to the majority of their workers, and these firm-level norms changed little during the recent period of unexpected inflation. As a result, nominal wages did not keep pace with prices for a large share of workers who stayed at their firms. Forty-three percent of workers continuously employed at the same firm over the four years spanning 2021–2024 experienced a real wage decline, with a mean loss of roughly nine percent among those who fell behind. Workers could escape sticky wage norms by changing employers — job-changers’ wages rose nearly one-for-one with inflation — but switching was too infrequent to matter for most. Even accounting for job-changers, 37 percent of all workers saw real wages decline over the 4-year period. Indexing firms’ modal raises one-for-one to inflation would have closed roughly 40 percent of the resulting shortfall relative to prepandemic trend. Drawing on cross-country evidence from Belgium, whose wages are automatically indexed to inflation, we show that incomplete wage indexation, rather than inflation itself, helps explain the persistence of depressed consumer sentiment during the 2021–2024 period. |
| JEL: | E20 E31 J30 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35624 |
| By: | Ko Adachi (Bank of Japan); Kosuke Aoki (Graduate School of Economics, University of Tokyo); Yoshiyuki Kurachi (Bank of Japan); Taiki Ono (Bank of Japan); Akitoshi Toyoda (Bank of Japan) |
| Abstract: | This paper empirically analyzes the linkages of firm spending behavior along supply chains, with a focus on capital investment and wage-setting, using production network data from Japan's manufacturing sector. The analysis yields the following findings. First, there is evidence of bonus linkages within supply chains, originating from temporary foreign demand shocks. Second, more broadly, the capital investment of firms can be influenced by downstream investment activity in supply chains, whether domestically or internationally. In addition, the determination of regular wages within a firm appears to be influenced by the wage rates set by focal firms within the same supply chains. These results underscore the importance of analyzing firm behavior while taking into account the multilayered supply chain structure centered around large manufacturing firms in order to understand Japan's economic dynamics. |
| Keywords: | Supply Chain; Firm-to-Firm Transaction Data; Firm Behavior; Linkages |
| JEL: | D22 E22 J31 L14 |
| Date: | 2026–08–12 |
| URL: | https://d.repec.org/n?u=RePEc:boj:bojwps:wp26e14 |
| By: | Adolfo Jose Montesa (School of Economics, University of the Philippines Diliman); Vincent Ramos (School of Economics, University of the Philippines Diliman & Heidelberg University); Judy Padillon (School of Economics, University of the Philippines Diliman); Carlos Harry De Taza (School of Economics, University of the Philippines Diliman); Edgar Suguitan (School of Economics, University of the Philippines Diliman); Rexian Irlandez (School of Economics, University of the Philippines Diliman) |
| Abstract: | Since 1989, minimum wages in the Philippines have been set by regional tripartite wage boards, producing a patchwork of statutory floors whose levels, timing, and bite vary across the country. This article presents novel descriptive patterns of minimum wages, price levels, and employment using pooled Labor Force Survey microdata and the Occupational Wages Survey. We foreground three key findings. First, the real value of the minimum wage has been eroded by inflation since 1989 across all regions except NCR. Second, the minimum wage has a high bite of up to 1.2 times the median wage of the covered sector. This arguably reflects both a highly compressed wage distribution and the presence of exemption channels for smaller enterprises. Finally, in quarters succeeding wage orders, we find a reallocation pattern to wage bins just above the new wage floor, with no conclusive evidence of any immediate large-scale “displacement†of employment. Reflecting on these patterns, we lay out why unbiased estimates of employment effects remain challenging in the Philippine context and how a more holistic analysis of wage setting is complicated by the lack of transparency in and predictability of the existing wage-setting regime. We close with proposals for the path forward. |
| Keywords: | minimum wages; stacked event-study design; reallocation; Philippines |
| JEL: | J31 J08 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:phs:dpaper:202608 |
| By: | Peter Haan; Julia Schmieder; Izabela Wnuk-Soares |
| Abstract: | We study how immigration affects prices through changes in labor supply. Using policy-driven increases in immigration to Germany and administrative data covering the universe of nursing homes, we find that one additional foreign-born woman per 100 residents reduces nursing-home care prices by 2.6 percent. The price effects are concentrated in more competitive markets. Examining potential mechanisms, we find that immigration lowers labor costs as nursing homes shift toward lower-paid foreign-born workers. We find no evidence of declines in inspection-based measures of quality or of scale effects. Finally, immigration increases the use of informal care, potentially strengthening competitive pressure from the broader care market. |
| Keywords: | Immigration, labor supply, prices, nursing homes |
| JEL: | J61 F22 J30 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2177 |
| By: | Daniela Hauser; Stefano Gnocchi; Laure Simon |
| Abstract: | This paper documents large heterogeneity in the cyclicality of expenditure items within aggregate consumption and shows that a substantial part of this heterogeneity can be explained by differences in the household time required to consume. Combining data from the American Time Use Survey and Personal Consumption Expenditures, we construct a set of consumption activities and establish new stylized facts. We show that in a recession consumption expenditures fall to a greater extent for those activities to which households reallocate a larger share of foregone market hours, suggesting that time and expenditures are substitutes. We develop a two-sector New Keynesian model that rationalizes these patterns. Disciplining the model with microeconomic estimates of the elasticity of substitution between time and expenditures and of price stickiness, we find that our model accounts for roughly forty percent of the impact expenditure response to monetary policy shocks. |
| Keywords: | Models and tools; Economic models; Monetary policy; Inflation dynamics and pressures; Monetary policy framework and transmission |
| JEL: | D D1 D12 E E2 E21 E3 E32 E5 E52 J J2 J22 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocawp:26-29 |
| By: | Santiago Campos-Rodríguez; David Neumark |
| Abstract: | Gender disparities in becoming a CEO are pronounced, and women who become CEOs, especially of large firms, are less likely to have children or be married. We study the effects of children and marriage on becoming a CEO, using longitudinal administrative data covering the universe of tax-registered firms in Costa Rica, matched to universal civil registry records that provide the timing of childbirth and marriage. We find that first childbirth is followed by a persistent decline in women’s probability of becoming a CEO, but no comparable decline for men and some evidence that CEO attainment rises. Marriage displays a different but still divergent pattern: it is associated with higher subsequent CEO attainment for men, but little change for women. Changes around childbirth account for a substantial share of the overall gender difference in CEO rates. Finally, we find evidence consistent with household specialization as a potential mechanism. Around marriage and first childbirth, women’s formal employment, earnings, and share of household earnings decline, while men become more central to household earnings as their partners reduce formal employment. |
| JEL: | J16 J30 J4 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35616 |
| By: | Titan Alon; Matthias Doepke; Jane Olmstead-Rumsey; James Symons-Hicks; Michèle Tertilt |
| Abstract: | We study the transmission of macroeconomic shocks in a model of the household sector featuring single and married households, joint labor-supply decisions of women and men, and childcare needs that interact with the availability of remote work. Recessions concentrated among women are deeper and more persistent than those concentrated among men, reflecting weaker within-family insurance and a new empirical finding that women re-enter employment more slowly after job loss. Yet recovery from the pandemic recession, which had a disproportionate impact on working women due to school closures and the sectoral distribution of job losses, was surprisingly rapid. We show that in our model, the expansion of remote work and shifting caregiving norms after the pandemic raise female labor supply and men's share of childcare, thereby accounting for the observed recovery. These changes permanently increase female participation and narrow the gender earnings gap, but their effect on future recessions is limited: greater labor force attachment among women weakens the added-worker effect but also accelerates labor market re-entry, leading to offsetting effects on aggregate recession dynamics. |
| Keywords: | Recessions, Business Cycle, He-cession, She-cession, Pandemic Recession, Job loss, Added Worker Effect, Gender Equality, Female Employment, School Closures, Childcare, Gender Wage Gap |
| JEL: | D13 E32 J16 J20 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26203 |
| By: | Mikkel Aagaard Houmark; Mathias Mørk |
| Abstract: | This paper deals with issues related to estimating the causal impact of teachers on student test scores. The central challenge is that students and teachers are matched non-randomly. To deal with this, we propose an extension of the standard teacher value-added model that is more robust to such endogenous mobility bias than conventional models. We then apply and extend recent innovations in bias correction of variance components to quantify the overall importance of teachers and estimate patterns of sorting and segregation. We find that teachers in Denmark are more important for student inequality than the conventional approaches would suggest. Further, we document a novel pattern of negative sorting that is driven by compensatory school investments through the within-school matching of high-value-added teachers to low-ability students. We also show that high-value-added teachers tend to be more experienced and educated and that they are particularly skilled at classroom management. Finally, we present suggestive evidence that these teachers also promote student non-cognitive skills and well-being. |
| Keywords: | teacher quality, value-added, academic achievement, test scores, sorting |
| JEL: | I20 I24 J24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12895 |
| By: | Ran Abramitzky; Leah Boustan; Ahmet Gulek; Jens Hainmueller |
| Abstract: | We study the effects of H-1B immigration on U.S. industries that employ H-1B workers and their trading partners. Using a novel cross-industry design and the 1999--2003 expansion of the H-1B visa cap for identification, we find that H-1B exposure raised incomes for natives and pre-existing immigrants, with gains concentrated in non-STEM occupations. Income gains propagate forward through supply chains to downstream industries but not backward to upstream industries, consistent with a productivity shock rather than a labor supply shock. We find no direct effect on patenting, suggesting that productivity gains arise from better task execution rather than patentable invention. |
| Keywords: | H-1B, High-skilled immigration, Synthetic control, Input-output networks, Task complementarity |
| JEL: | J15 J24 J61 L14 O31 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26213 |
| By: | Alex Clymo; Piotr Denderski; Yusuf Mercan; Benjamin Schoefer |
| Abstract: | Job mobility is risky, workers are risk averse, and insurance markets are incomplete. This paper studies how these features curb and distort job-to-job transitions by making workers excessively cautious: they place too much weight on job safety over wage and productivity gains. We demonstrate this tradeoff by eliciting employed workers’ wage-safety indifference curves in a custom, representative survey. On average, employed US workers require a 1.63% pay raise to accept each additional percentage point of annual unemployment risk in a new job. We assess the macroeconomic consequences of our mechanism by embedding it into a general equilibrium search model. Jobs differ in both wages (productivity) and unemployment risk, and risk-averse workers self-insure against unemployment risk through a non-state-contingent bond while searching on and off the job. We find that a complete markets counterfactual would boost job mobility by 12% and productivity by 0.19%. We also highlight a new role for unemployment insurance: it encourages employed workers to accept risky but high-productivity offers, thereby increasing productivity (by 1.3%) and job creation—as well as job loss and unemployment. |
| JEL: | E24 H20 J2 J62 J64 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35580 |
| By: | Karla Cordova; Jessamyn Schaller |
| Abstract: | We examine how contractions in local labor demand during the Great Recession affected children's academic achievement. We combine county-level test scores for grades 3–8 from the Stanford Education Data Archive with a shift-share design that interacts counties' 2005 industry composition with national industry employment growth, isolating demand-driven changes in local employment. Following recent advances in the shift-share literature, we validate the design with balance, pre-trend, and Rotemberg-weight diagnostics and report exposure-robust standard errors throughout. A one-standard-deviation adverse shock lowers mathematics achievement by about 0.03 student-level standard deviations and widens the White–Black and economic-disadvantage achievement gaps in both subjects. Within a common geography, losses concentrate among economically disadvantaged students. English language arts estimates point in the same direction but are harder to separate from the Great Recession's housing bust, and we interpret them as the combined effect of the labor-demand contraction and the associated decline in house prices. The achievement response is concentrated in the recession window. The post-2014 period, identified mainly by the oil-price cycle, yields a precise null, so our estimates measure the response to severe contractions rather than a general business-cycle parameter. School funding did not respond contemporaneously to these shocks, while family income, child poverty, and house prices all did. |
| JEL: | I21 I24 J13 J23 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35639 |
| By: | Randall Akee; Jimmy Chin; Daniel L. Crown |
| Abstract: | In this paper, we characterize trends in the earnings assimilation of immigrant workers from 1981 to 2021. We use administrative longitudinal data that contain the earnings of workers beginning in their first year of residence in the United States and in each year thereafter, allowing us to identify immigrants who eventually leave the United States (referred to here as return migrants). We use those data to produce the first examination of trends in earnings assimilation over a 41-year period and to estimate earnings assimilation separately for return migrants versus those who stay in the United States. We document several new facts about immigrants who arrived between 1981 to 2010. First, roughly one-fifth to one-third of immigrants return migrate from the United States within 10 years after arrival. Second, return migrants have entry earnings similar to those of permanent migrants but experience slower rates of earnings growth. Third, earnings assimilation occurs relatively quickly for cohorts arriving since the mid-1990s: The earnings of permanent immigrants converge, or come close to converging, with those of native-born people within 10 years after arrival. Migrants from earlier arrival cohorts experience significant earnings growth but generally do not converge to that of the native born. We discuss how changes in the labor market quality of immigrant cohorts (measured by their relative earnings upon entry) and selective return migration play an important role in determining whether repeated cross-sectional data over- or underestimate earnings assimilation. |
| JEL: | F22 J31 J61 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35582 |