Recent iir_iirwps items

Financial Drivers of Domestic Outsourcing: Case Study of Food Services in the San Francisco Bay Area

Thu, 9 Jun 2022 00:00:00 +0000

This paper examines drivers of domestic outsourcing through a case study of food services. It demonstrates that outsourcing is not necessarily motivated by clients’ desire to reduce costs or improve efficiency, and suggests that in some cases outsourcing may cost more than inhouse production. Instead, this study points to other kinds of financial incentives to outsource food services. For tech companies, an important incentive is to limit employee headcount in order to improve productivity metrics and thereby increase a company’s appeal to financial stakeholders. For universities, an important incentive is to obtain financing for facilities improvements from contractor companies.

Trends in Inter-Firm Transactions Across Industries in the U.S.

Thu, 9 Jun 2022 00:00:00 +0000

This paper explores trends in inter-firm transactions (IFT) in the U.S. in relation to the varied approaches that researchers have used to study domestic outsourcing. I develop a typology of IFT that references distinct definitions of outsourcing, and I generate a new methodology for measuring domestic IFT using the Bureau of Economic Analysis National Input-Output Accounts data. I analyze IFT trends for individual industries and for three groups: all goods and services, all services, and only services that could feasibly be produced in-house by the purchaser. Trends in IFT vary considerably across industries, but IFT for services and for feasibly in-house services have increased in recent decades, both as a portion of total economic output and as a portion of services output. This study offers the first comprehensive assessment of changes in domestic IFT in the U.S., and establishes a conceptual and empirical foundation for further research on domestic outsourcing.

Penalties and Premiums: An Investigation of Inter-Firm Transactions and Wages Across Industries in the U.S.

Thu, 9 Jun 2022 00:00:00 +0000

This paper explores the correlation between inter-firm transactions (IFT) and workers’ wages across industries in the U.S., in order to further our understanding of outsourcing-related wage penalties. Using a new typology and methodology for measuring IFT, I find that the aggregate correlation between IFT and wages is positive across all industries, but that a dummy variable identifying services that could feasibly be produced in-house by the purchaser has a negative pull on the correlation. Further analysis of IFT and wages for specific occupations and industries reveals a complex and heterogeneous relationship, and points to the importance of exploring additional qualitative aspects of transactions between firms, as well as other factors that have affected workers’ wages. This analysis helps us refine our understanding of which type of IFT are relevant for understanding wage penalties related to domestic outsourcing.

Gender Gaps: Back and Here to Stay? Evidence from Skilled Ugandan Workers during COVID-19

Thu, 9 Jun 2022 00:00:00 +0000

We investigate gender disparities in the effect of COVID-19 on the labor market outcomes of skilled Ugandan workers. Leveraging a high-frequency panel dataset, we find that the lockdowns imposed in Uganda reduced employment by 69% for women and by 45% for men, generating a previously nonexistent gender gap of 20 p.p. Eighteen months after the onset of the pandemic, the gap persisted: while men quickly recovered their pre-pandemic career trajectories, 10% of the previously employed women definitively separated from the labor market, and another 35% remained occasionally employed. Additionally, the lockdowns permanently shifted female workers to sectors misaligned with their skill sets, relocated them into agriculture and other unskilled sectors, and widened the gender pay gap. Pre-pandemic sorting of women into economic sectors subject to the strongest restrictions and childcare responsibilities induced by schools’ prolonged closure only explain up to 57% of the employment gap.

The Dynamics of Referral Hiring and Racial Inequality: Evidence from Brazil

Thu, 9 Jun 2022 00:00:00 +0000

We study how referral hiring contributes to racial inequality in firm-level labor demand over the firm’s life cycle using data from Brazil. We consider a search model where referral networks are segregated, firms are more informed about the match quality of referred candidates, and some referrals are made by non-referred employees. Consistent with the model, we find that firms are more likely to hire candidates and less likely to dismiss employees of the same race as the founder, but these differences diminish as firms’ cumulative hires increase. Referral hiring helps to explain racial differences in dismissals, seniority, and employer size.

Parental Labor Supply: Evidence from Minimum Wage Changes

Thu, 9 Jun 2022 00:00:00 +0000

We analyze effects of the minimum wage on the labor supply of parents of young children. Distributional difference-in-differences and event study models document a sharp rise in employment rates of single mothers with children ages 0 to 5 following minimum wage increases. Effects are concentrated among jobs paying close to the minimum wage. We find corresponding drops in the probability of staying out of the labor force to care for family members. Results are consistent with simple labor supply models in which childcare costs create barriers to employment. Minimum wage increases then enable greater labor force participation and reduce child poverty.

State and Local Policies and Sectoral Labor Standards: From Individual Rights to Collective Power

Fri, 2 Jul 2021 00:00:00 +0000

The United States enterprise-based collective bargaining regime creates substantial limitations for organizing workers where supply chains are increasingly disaggregated in ways that reduce worker power. Federal labor law generally preempts state and local policies that directly address private sector bargaining. State and local governments, however, are not preempted from setting general labor standards. We look at four cases of recent experiments at the local level with sectoral standards. Our cases show that sectoral standards have the potential to expand new forms of social bargaining at the state and local level through public policy in areas of the country where worker organizations are already strong. They can do so in ways that promote worker organization and build institutional power, especially when combined with robust worker organizing. In doing so they show both the potential power, and limitations, of federalism in US workplace.

Designing at the Margins: How Senior School District Leaders of Color Learn to Enact Equitable Policies and Practices

Fri, 11 Jun 2021 00:00:00 +0000

One central theory undergirding the Equity by Design (ExD) Community of Practice (CoP) is that building the capacity of district teams, composed primarily of leaders of color, to transform organizations has the potential to create conditions for more equitable outcomes for historically marginalized students. Caroline Hill, the CoP facilitator, used the Equity Action Framework Tool (EAFT), empathy interviews, and equity walks during in-person convenings, webinars, and local collaborations to deepen participants’ learning. The CoP was comprised of district leaders of color (n = 27) from five school districts in the Midwest and East Coast, all of whom served predominantly students of color who also qualified for free or reduced lunch.

We use the EAFT, a research-based tool of individual and collective leadership dispositions and competencies, to test ExD’s theory of action. Specifically, we explored three research questions:

Research Question 1: How...

The Power of Coalitions: Participation and Governance in California’s Public-Private Welfare State

Wed, 28 Apr 2021 00:00:00 +0000

Between 1980 and 2010 California’s health care policy field shifted from a business-dominated, closed-door pattern of decision making to an open political arena in which a wide-ranging and diversely resourced coalition advocating on behalf of beneficiaries had become an accepted partner in policymaking. This article examines this transformation, considering its broader implications for the political dynamics of the public-private welfare state and the role of advocacy groups in defending beneficiary interests. Our argument emphasizes coalition-building, probing not just which interests combine forces, but also showing how coalitions can expand over time and build their range of capabilities. We focus on three processes that build effective coalitions to influence public private policymaking: 1) an initial link that joins previously unconnected groups in umbrella organizations; 2) resource expansion that enlarges the engaged base by funding more diverse groups and expanding alliances...

COVID-19, Public Charge Rules, and Immigrant Employment in the United States

Fri, 5 Feb 2021 00:00:00 +0000

This article examines the impact of the COVID-19 pandemic on immigrant employment in the United States using data from the Current Population Survey. It also provides the first evidence about the impact of the new public charge rules on the employment behavior of immigrants during the post-outbreak recovery. The authors find that among immigrants with household earnings at levels that make them susceptible to inadmissibility under the new rules, noncitizen status is associated with a 3.7% increase in employment among immigrant men. This effect is robust to inclusion of controls for socioeconomic characteristics and various fixed effects, and it is concentrated for men in states with below average unemployment benefit take-up. Findings also show that the differential employment effect is stronger in state-months with higher COVID-19 rates, suggesting that impacted workers may be increasing their workplace exposure to COVID-19.

Racial Inequality and Minimum Wages in Frictional Labor Markets

Fri, 5 Feb 2021 00:00:00 +0000

We examine how the racial patchwork of federal and state minimum wage changes between 1990 and 2019 has affected racial wage gaps, with specific attention to effects on labor market frictions. Black workers on average are less likely to live in high-wage states that have raised their wage floors. The effect of state minimum wages on the national racial wage gap is thus not self-evident.

Using five different causal specifications, including the “bunching” estimator of Cengiz et al. (2019), and data from the CPS and the QWI, we find that minimum wage changes since 1990 did reduce the 2019 racial wage gaps, by 12 percent among all workers and 60 percent among less-educated workers. The reductions are greater among black women and among black prime age workers. The gains for black workers are concentrated well above the new minimum wage, beyond the usual spillover estimates. Earnings of all race/ethnic/gender groups grew, with larger effects among black workers. We do not...

Minimum Wages and Health: A Reassessment

Tue, 29 Dec 2020 00:00:00 +0000

A growing literature has reported significant health effects of the minimum wage. Yet recently published articles have often focused on broad groups of less educated workers with no more than a high school education, of whom only a small share work in minimum wage jobs. We reassess this evidence, pooling data from the Behavioral Risk Factors Surveillance System from 1993–2017, a common dataset for studying these policies. We focus on less educated young workers age 18–25, who are over twice as likely to earn near the minimum than the groups of adults typically studied. We analyze 21 measures of health care access, preventive practices, behaviors and health status. We find little evidence past policies have influenced young workers’ health on average. We find similar null results from expanded samples that include all less educated workers age 18–54. Our results suggest that the significant effects reported in prior studies using similar samples and methods are unlikely to be attributable...

Are Neighborhood Effects Explained by Differences in School Quality?

Tue, 29 Dec 2020 00:00:00 +0000

Although it is widely hypothesized that neighborhood effects are explained by differences in the schools to which children have access, few prior studies have investigated the explanatory role of school quality. In this study, we examine whether school quality mediates or interacts with the effects of neighborhood context on academic achievement. With data from the Early Childhood Longitudinal Study, we operationalize a school’s quality as the difference between the school-year and summer learning rates among its 1st grade students. We then decompose the total effect of neighborhood context on achievement at the end of 3rd, 5th, and 8th grade into components due to mediation versus interaction, which we estimate using novel counterfactual methods. Results indicate that living in a disadvantaged neighborhood substantially reduces academic achievement. But contrary to expectations, we find no evidence that neighborhood effects are mediated by or interact with school quality. The...

Pay, Passengers and Profits: Effects of Employee Status for California TNC Drivers

Tue, 29 Dec 2020 00:00:00 +0000

Uber and Lyft currently treat their California drivers as independent contractors, despite state employment law giving the drivers employee status. The companies claim that drivers are already well-paid and that employee status would bring the industry to its knees. Driver advocates claim that drivers are low-paid and do not receive basic benefits and protections, such as unemployment insurance and workers’ compensation, and that the companies should treat the drivers as employees and adhere to California employment law.

I examine here the economic and financial consequences of switching the drivers to employee status. In particular, I examine the effects on pay and employment of the drivers, the effects on passengers, and the profitability of the industry. I find that: most drivers are paid much less than the current minimum wage and that overall compensation of drivers would increase 30 percent; that driver schedule flexibility would not be affected; passenger demand...

The Costs of Employment Segregation: Evidence from the Federal Government under Wilson

Tue, 29 Dec 2020 00:00:00 +0000

We link personnel records of the federal civil service to census data for 1907-1921 to study the segregation of the civil service by race under President Woodrow Wilson. Using a difference-indifferences design to compare the black-white wage gap around Wilson’s presidential transition, we find that the introduction of employment segregation increased the black wage penalty by 7 percentage points. This gap increases over time and is driven by a reallocation of already-serving black civil servants to lower paid positions. Our results thus document significant costs borne by minorities during a unique episode of state-sanctioned discrimination.

It Ain't Where You're From, It's Where You're At: Hiring Origins, Firm Heterogeneity, and Wages

Tue, 29 Dec 2020 00:00:00 +0000

We develop a theoretically grounded extension of the two-way fixed effects model of Abowd et al. (1999) that allows firms to differ both in the wages they offer new hires and the wages required to poach their employees. Expected hiring wages are modeled as the sum of a worker fixed effect, a fixed effect for the “destination” firm hiring the worker, and a fixed effect for the “origin” firm, or labor market state, from which the worker was hired. This specification is shown to nest the reduced form for hiring wages delivered by semi-parametric formulations of the sequential auction model of Postel-Vinay and Robin (2002b) and its generalization in Bagger et al. (2014). Using Italian social security records that distinguish job quits from firings and layoffs,we demonstrate that our fixed effects model captures well differences in wage growth between workers involved in voluntary and involuntary job transitions. Bias correcting a variance decomposition of hiring wages, we find that...

Are Minimum Wage Effects Greater in Low-Wage Areas?

Tue, 29 Dec 2020 00:00:00 +0000

Empirical work on the minimum wage typically estimate effects averaged across high and low wage areas. Low wage labor markets could potentially be less able to absorb minimum wage increases, in turn leading to more negative employment effects. In this paper we examine minimum wage effects in low wage counties, where relative minimum wage ratios reach as high as .82, well beyond the state-based ratios in extant studies. Using data from the ACS, the QWI and the QCEW, we implement event study and difference-in-difference methods, estimating average causal effects for all events in our sample and separately for areas with lower and higher impacts. We find positive wage effects, especially in high impact counties, but do not detect adverse effects on employment, weekly hours or annual weeks worked. We do not find negative employment effects among women, blacks and/or Hispanics. In high impact counties, we find substantial declines in household and child poverty. These results inform...

The Effects of Multinationals on Workers: Evidence from Costa Rica

Tue, 29 Dec 2020 00:00:00 +0000

This paper estimates the effects of foreign multinational corporations (MNCs) on workers. To that end, we combine microdata on all worker-firm and firm-firm relationships in Costa Rica with an instrumental variable strategy that exploits shocks to the size of MNCs in the country. First, using a within-worker event-study design, we find a direct MNC wage premium of nine percent. This premium reflects above market wages rather than compensation for disamenities. Next, we study the indirect effects of MNCs on workers in domestic firms. As MNCs bring jobs that pay a premium, they can improve the outside options of workers by altering both the level and composition of labor demand. MNCs can also enhance the performance of domestic employers through firm-level input-output linkages. Shocks to firm performance may then pass through to wages. We show that the growth rate of annual earnings of a worker experiencing a one standard deviation increase in either her labor market or firm-level...

Tradable Spillovers of Fiscal Policy: Evidence from the 2009 Recovery Act

Tue, 29 Dec 2020 00:00:00 +0000

Local fiscal policy shocks propagate between labor markets through the trade in intermediate goods used in final production. Through this channel, each $1 of local aid from the 2009 Recovery Act increased output by $1.33 in the rest of the country over two years, in addition to its local state-level effect of $1.46. Combining both the local and spillover effects, absent other offsetting forces, the implied aggregate multiplier from the Recovery Act was approximately 2.8. A sectoral decomposition of the direct and spillover effects is consistent with the spillover effects being mediated through the trade in intermediate goods.

Unemployment Effects of Stay-at-Home Orders: Evidence from High Frequency Claims Data

Tue, 29 Dec 2020 00:00:00 +0000

Epidemiological models projected that, without effective mitigation strategies, upwards of 2 million Americans were at risk of death from the COVID-19 pandemic. Heeding the warning, in mid-March 2020, state and local officials in the United States began issuing Stay-at-Home (SAH) orders, instructing people to remain at home except to do essential tasks or to do work deemed essential. By April 4th, 2020, nearly 95% of the U.S. population was under such orders. Over the same three week period, initial claims for unemployment spiked to unprecedented levels. In this paper, we use the high-frequency, decentralized implementation of SAH orders, along with high-frequency unemployment insurance (UI) claims, to disentangle the relative effect of SAH orders from the general economic disruption wrought by the pandemic that affected all regions similarly. We find that, all else equal, each week of Stay-at-Home exposure increased a state’s weekly initial UI claims by 1.9% of its employment...

Does Locked Up Mean Locked Out? The Effects of the Anti-Drug Act of 1986 on Black Male Students’ College Enrollment. Working Paper #101-19

Wed, 2 Dec 2020 00:00:00 +0000

This paper explores one reason for the educational gaps experienced by Black men. Using variation in state marijuana possession and distribution laws, this paper examines whether the Anti-Drug Act of 1986, which increased the disproportionate incarceration of Black males, also led to differences in college enrollment rates. The results suggest that Black males had a 2.2% point decrease in the relative probability of college enrollment after the passage of the Anti-Drug Abuse Act of 1986. There is some evidence that laws around crack cocaine, and not marijuana, led to this decrease in the probability of enrollment.

Impacts of Hospital Wait Time on Health and Labor Supply

Tue, 26 Nov 2019 00:00:00 +0000

We estimate the effects of wait time for orthopedic surgery on health and labor market outcomes of Norwegian workers. Our identification strategy exploits variation in wait times for surgery generated by the idiosyncratic variation in system congestion at the time of referral. While we find no significant evidence of lasting health effects, longer wait times have persistent negative effects on subsequent labor supply. For every 10 days spent waiting for surgery, we estimate health-related workplace absences increase 8.7 days over the five years following referral, and the likelihood of permanent disability insurance increases by 0.4 percentage point. Cost benefit calculations point to sizable fiscal savings from shorter wait times

Working Parents and the Rise of the ‘Family Friendly’ Private Sector in Britain

Tue, 26 Nov 2019 00:00:00 +0000

In the late 1980s, a number of Britain’s largest corporations began to trumpet their ‘family-friendliness’ and active support for women’s careers. Whereas in the late 1970s, the challenges facing working parents remained far from the agendas of most British businesses, in the course of only a decade, a sea change had taken place. Major British employers began to develop new policies and schemes that aimed to keep some, predominately white, middle class, and professional women workers with caring responsibilities in the paid workforce. Private companies now found themselves at the helm of devising what appeared, at first glance, to be the very progressive policies that feminists had long advocated. This paper considers what drove the rise of the ‘family friendly’ private sector, and suggests that far from resolving the challenges of working parenthood or transforming the gendered division of labor, ‘family friendly’ policies primarily served the interests of business. Working parents...

The Impact of Extended Employment Protection Laws on the Demand for Temporary Agency Workers

Thu, 19 Sep 2019 00:00:00 +0000

We study the impact of a reform that increased the regulatory burden on temporary agency work (TAW) in Chile. Using a panel of manufacturing plants, we show that the use of TAW fell immediately after the regulation, with differential effects by plants’ size and volatility. Difference-in-differences estimates suggest that plants using TAW substituted away from agency workers after the regulation, increasing regular work by 9.2%. Despite this substitution effect, total employment decreased by 8.6% in these plants. We report less precise evidence of negative scale effects on output and profits.

Audits as Evidence: Experiments, Ensembles, and Enforcement

Thu, 19 Sep 2019 00:00:00 +0000

Audits as Evidence: Experiments, Ensembles, and Enforcement

Improving Regulatory Effectiveness through Better Targeting: Evidence from OSHA

Thu, 19 Sep 2019 00:00:00 +0000

We study how a regulator can best allocate its limited inspection resources. We direct our analysis to a US Occupational Safety and Health Administration (OSHA) inspection program that targeted dangerous establishments and allocated some inspections via random assignment. We find that inspections reduced serious injuries by an average of 9% over the following five years. We use new machine learning methods to estimate the effects of counterfactual targeting rules OSHA could have deployed. OSHA could have averted over twice as many injuries if its inspections had targeted the establishments where we predict inspections would avert the most injuries. The agency could have averted nearly as many additional injuries by targeting the establishments predicted to have the most injuries. Both of these targeting regimes would have generated over $1 billion in social value over the decade we examine. Our results demonstrate the promise, and limitations, of using machine learning to improve...

Minimum Wage Effects in Low-Wage Areas. Working Paper #106-19

Wed, 7 Aug 2019 00:00:00 +0000

A proposal to raise the federal minimum wage to $15 by 2024 would increase the relative minimum wage – the ratio to the national median wage– to about .68. In Alabama and Mississippi, our two lowest-wage states, the relative minimum wage would rise to .77 and .85, respectively. Yet research on state-level minimum wage policies does not extend beyond $10; the highest studied state-level relative minimum wage is .59. To close this gap we study minimum wage effects in counties and PUMAs where relative minimum wage ratios already reach as high as .82. Using ACS data since 2005 and 51 events, we sort counties and PUMAs according to their relative minimum wages and bites. We report average results for all the events in our sample, and separately for those with lower and higher impacts. We find positive wage effects but do not detect adverse effects on employment, weekly hours or annual weeks worked. We do not find negative employment effects among women, blacks and/or Hispanics. We...

Are Local Minimum Wages Too High? Working Paper #102-19

Wed, 7 Aug 2019 00:00:00 +0000

We measure the effects of six citywide minimum wages that ranged up to $13 in Chicago, the District of Columbia, Oakland, San Francisco, San Jose and Seattle, employing event study and synthetic control methods. Using aggregate data on average earnings and employment in the food services industry, we find significantly positive earnings increases and no significant employment losses. While such evidence suggests the policies raised the earnings of low-wage workers, as intended, a competing explanation is that the industry responds to wage increases by increasing their demand for more productive higher-wage workers, offsetting low-wage layoffs (i.e., labor-labor substitution). To tackle this key question, we present a theoretical framework that connects the responses estimated at the industry-level to the own- and cross-wage labor demand elasticities that summarize the total effect of the policies on workers. Using a calibration exercise, we find that the combination of average...

Parental Labor Supply: Evidence from Minimum Wage Changes. Working Paper #103-19

Wed, 7 Aug 2019 00:00:00 +0000

Declining labor force participation rates among less-educated individuals in the U.S. have been attributed to various causes, including skill-biased technical change, demand shocks induced by international competition, looser eligibility requirements for disability insurance, the opioid epidemic and the nature of child care and family leave policies. In this paper, we examine how the labor supply of parents of dependent children respond to minimum wage changes. We implement an event study framework and document a sharp rise in employment and earnings of parents after state minimum wage increases. We further show that these effects are concentrated among jobs that pay the minimum wage or slightly higher – high wage employment remains unaffected. Panel models find corresponding drops in welfare receipts, moreover, for single mothers, effects are larger for mothers of preschool age children. The results are consistent with a simple labor supply model in which means-tested transfers...

Can Economic Policies Reduce Deaths of Despair? Working Paper #104-19

Wed, 7 Aug 2019 00:00:00 +0000

Midlife mortality has risen steadily in the U.S. since the 1990s for non-Hispanic whites without a bachelor’s degree, and since 2013 for Hispanics and African-Americans who lack a bachelor’s degree. These increases largely reflect increased mortality from alcohol poisoning, drug overdose and suicide. We investigate whether these “deaths of despair” trends have been mitigated by two key policies aimed at raising incomes for low wage workers: the minimum wage and the earned income tax credit (EITC). To do so, we leverage state variation in policies over time to estimate difference-in-differences models of drug overdose deaths and suicides, using data on cause-specific mortality rates from 1999-2015. Our causal models find no significant effects of the minimum wage and EITC on drug-related mortality. However, higher minimum wages and EITCs significantly reduce non-drug suicides. A 10 percent increase in the minimum wage reduces non-drug suicides among adults with high school or less...

Productivity, Profits, and Pay: A Field Experiment Analyzing the Impacts of Compensation Systems in an Apparel Factory

Fri, 5 Apr 2019 00:00:00 +0000

Factory worker pay in global value chains remains a contentious issue. In this paper, we evaluate a two-year field experiment in an apparel factory to analyze altered compensation systems designed to increase worker pay while supporting factory goals around productivity and profitability. Using a quasi-experimental design, with unique data on wages, hours, productivity, quality, and worker engagement, we estimate the impact of three altered compensation systems on pay, productivity, and factory profits. The compensation systems can be described as: 1) an improved productivity-based scheme, 2) a scheme that brings quality and waste reduction into the calculation; and 3) a “target wage” scheme. Overall, the treatments raised wages by 4.2-11.6% and increased productivity by 7-12%-points. Management reported significant financial benefits from the experiment, including increased profits for five of six lines, and avoided costs and productivity losses due to decreased turnover. The...

Universal Access to Free School Meals and Student Achievement: Evidence from the Community Eligibility Provision

Fri, 5 Apr 2019 00:00:00 +0000

Universal Access to Free School Meals and Student Achievement: Evidence from the Community Eligibility Provision

Long-Term Gains from Longer School Days

Fri, 5 Apr 2019 00:00:00 +0000

This paper examines whether additional time in school affects labor market outcomes and educational attainment in adulthood. We leverage within and across city and cohort variation covering a large-scale reform that increased the Chilean elementary and secondary school day by 30 percent between 1997 and 2010. Exposure to full-day school increases educational attainment and earnings when students are in their 20s and 30s. In addition, we find evidence of delayed childbearing among women, and some occupational upskilling. These labor market effects are not concentrated in any particular subgroup, but are widespread throughout the population. JEL classification: I26; I25; J24; H52

The Effect of Selective Public Research University Enrollment: Evidence from California

Mon, 8 Oct 2018 00:00:00 +0000

What are the benefits and costs of attending a selective public research university instead of a less-selective university or college? This study examines the 2001-2011 Eligibility in the Local Context (ELC) program, which guaranteed University of California admission to students in the top four percent of California high school classes. Employing a regression discontinuity design, I estimate that ELC pulled 8 percent of marginally-admitted students into four “Absorbing” UC campuses from less-competitive public institutions in California. Those ELC compliers had lower SAT scores and family incomes than their eventual peers; almost half were under-represented minorities (URM), and 65 percent came from the state’s bottom SAT quartile of high schools. Nevertheless, marginally eligible students became more than 20 percentage points more likely to earn a university degree within 5 years, though URM and lessprepared students became less likely to earn STEM degrees. Students’ net expected...

Taking a Pass: How Proportional Prejudice and Decisions Not to Hire Reproduce Sex Segregation

Thu, 12 Apr 2018 00:00:00 +0000

We propose and test a theory of how decisions not to hire reproduce sex segregation through what we term proportional prejudice. We hypothesize that employers are less likely to hire anyone when the applicant pool contains a large proportion of gender atypical applicants – that is, applicants from a different gender than the typical job holder – because they view this as a signal of a poor quality applicant pool. Analyses, of over seven million job applications for over 700,000 jobs by over 200,000 freelancers on an online platform for contract labor support our contention. A survey experiment isolates the mechanism: Applicant pools with a larger proportion of gender atypical applicants were perceived as less likely to contain people who “seemed skilled enough for the job.” We conclude by demonstrating how our theory explains the mixed findings as to whether gender atypical job seekers are disadvantaged in the hiring process.

Fitting In or Standing Out? The Tradeoffs of Structural and Cultural Embeddedness

Thu, 12 Apr 2018 00:00:00 +0000

A recurring theme in sociological research is the tradeoff between fitting in and standing out. Prior work examining this tension has tended to take either a network structural or a cultural perspective. We instead fuse these two traditions to develop a theory of how structural and cultural embeddedness jointly relate to individual attainment within organizations. Given that organizational culture is hard to observe, we develop a novel approach to assessing individuals’ cultural fit with their colleagues in an organization based on the language expressed in internal email communications. Drawing on a unique data set that includes a corpus of 10.25 million email messages exchanged over five years among 601 employees in a high-technology firm, we find that network constraint impedes, while cultural fit promotes, individual attainment. More importantly, we find evidence of a tradeoff between the two forms of embeddedness: cultural fit benefits individuals with low network constraint...

Enculturation Trajectories and Individual Attainment: An Interactional Language Use Model of Cultural Dynamics in Organizations

Thu, 12 Apr 2018 00:00:00 +0000

How do people adapt to organizational culture and what are the consequences for their outcomes in the organization? These fundamental questions about culture have previously been examined using self-report measures, which are subject to reporting bias, rely on coarse cultural categories defined by researchers, and provide only static snapshots of cultural fit. In contrast, we develop an interactional language use model that overcomes these limitations and opens new avenues for theoretical development about the dynamics of organizational culture. To illustrate the power of this approach, we trace the enculturation trajectories of employees in a mid-sized technology firm based on analyses of 10.24 million internal emails. Our languagebased measure of changing cultural fit: (1) predicts individual attainment; (2) reveals distinct patterns of adaptation for employees who exit voluntarily, exit involuntarily, and remain employed; and (3) demonstrates that rapid early cultural adaptation...

Tax Policy Toward Low-Income Families

Thu, 12 Apr 2018 00:00:00 +0000

In this paper, we review the most prominent provision of the federal income tax code that targets low-income tax filers, the Earned Income Tax Credit (EITC), as well as the structurally similar Child Tax Credit (CTC). We frame the paper around what we see as the programs’ goals: distributional, promoting work, and limiting administrative and compliance costs. We review what is known about program impacts and distributional consequences under current law, drawing on simulations from the Tax Policy Center. We conclude that the EITC is quite successful in meeting its three goals. In contrast, most of the benefits of the CTC go to higher income households. In addition to analyzing current law, we assess possible reforms that would reach groups – for the EITC, those without children; for the CTC, those with very low earnings – who are largely missed under current policy.

Making the Most of Diversity: How Collectivism Mutes the Disruptive Effects of Demographic Heterogeneity on Group Performance

Thu, 12 Apr 2018 00:00:00 +0000

We advance social identity theory by hypothesizing that the content of demographic attributes on which members differ, and not just their distribution, influences the relationship between a group’s composition and its performance. We test this theoretical logic, using both laboratory and field data, by investigating groups with different distributions of members (from the same or different nations) and cultural orientations (individualistic or collectivistic). We hypothesize that, because a collectivistic orientation promotes group identification, a focus on collective goals, and a sense of being an interchangeable exemplar of the group, it also reduces the polarizing effects of demographic heterogeneity and improves group performance. Using an experimental design, we find that subjects primed with a collectivistic rather than an individualistic orientation see less distinction between nationally homogeneous and heterogeneous groups, and expect the group to be more successful....

Who Profits from Patents? Rent-Sharing at Innovative Firms

Thu, 12 Apr 2018 00:00:00 +0000

This paper analyzes how patent-induced shocks to labor productivity propagate into worker compensation using a new linkage of US patent applications to US business and worker tax records. We infer the causal effects of patent allowances by comparing firms whose patent applications were initially allowed to those whose patent applications were initially rejected. To identify patents that are ex-ante valuable, we extrapolate the excess stock return estimates of Kogan et al. (2017) to the full set of accepted and rejected patent applications based on predetermined firm and patent application characteristics. An initial allowance of an ex-ante valuable patent generates substantial increases in firm productivity and worker compensation. By contrast, initial allowances of lower ex-ante value patents yield no detectable effects on firm outcomes. On average, workers capture 29 cents of every dollar of patent-induced operating surplus. This share is larger for men, employees who are listed...

The Impact of Family Policies during Turbulent Times1

Thu, 12 Apr 2018 00:00:00 +0000

The Impact of Family Policies during Turbulent Times1

Learning to hire? Hiring as a dynamic experiential learning process in an online market for contract labor

Thu, 12 Apr 2018 00:00:00 +0000

We know a job applicant’s social category affects an employer’s likelihood of hiring them, but we do not know whether, or how, employers update their beliefs regarding members of these social categories. I examine how prior negative and positive hiring experiences of employees from particular countries affects an employer’s subsequent likelihood of hiring applicants from those countries. Analyses of over 26 million applications, from freelancers worldwide, for over 2.2 million jobs on an online labor market demonstrate that employers react more strongly to negative hiring experiences than positive ones. Employers are 14% less likely (versus 8% more likely) to hire freelancers from a country following a prior negative (versus positive) experience. The similarity of the prior job moderates this effect. Prior negative experiences with similar jobs (versus dissimilar jobs) lead employers to be 92% less likely (versus 7% less likely) to hire from that country. Conversely, positive...

Revisiting the Impacts of Teachers

Thu, 12 Apr 2018 00:00:00 +0000

Chetty, Friedman, and Rockoff (2014a, 2014b) study value-added (VA) measures of teacher effectiveness. CFR (2014a) exploits teacher switching as a quasi-experiment, concluding that student sorting creates negligible bias in VA scores. CFR (2014b) finds VA scores are useful proxies for teachers’ effects on students’ long-run outcomes. I successfully reproduce each in North Carolina data. But I find that the quasi-experiment is invalid, as teacher switching is correlated with changes in student preparedness. Adjusting for this, I find moderate bias in VA scores, perhaps 10-35% as large, in variance terms, as teachers’ causal effects. Long-run results are sensitive to controls and cannot support strong conclusions.

Labor Platforms and Gig Work: The Failure to Regulate

Thu, 12 Apr 2018 00:00:00 +0000

Since 2012, the platform economy has received much academic, popular, and regulatory attention, reflecting its extraordinary rate of growth. This paper provides a conceptual and theoretical overview of rapidly growing labor platforms, focusing on how they represent both continuity and change in the world of work and its regulation. We first lay out the logic of different types of labor platforms and situate them within the decline of labor protections and the rise of intermediated employment relations since the 1970s. We then focus on one type of labor platform—the ondemand platform—and analyze the new questions and problems for workers and the political problem of labor regulation. To examine the politics of regulating labor on these platforms, we turn to Uber, which is the easiest case for labor regulation due to its high degree of control over work conditions. Because Uber drivers are atomized and ineffective at organizing collectively, their issues are most often represented...

The Effects of California’s Public Policy on Jobs and the Economy Since 2011

Thu, 12 Apr 2018 00:00:00 +0000

Between 2011 and 2016, California enacted a set of 51 policy measures addressing workers’ rights, environmental issues, safety net programs, taxation, and infrastructure and housing. This paper labels these policies as the California Policy Model (CPM), and assesses some of the claims of critics and supporters regarding their impact on the state’s economy. It analyzes arguments made by critics that contend the CPM would reduce employment and slow economic growth. The paper also evaluates supporters’ arguments that the CPM would raise wages for low-wage workers, increase access to health insurance, and lower wage inequality. It finds results that suggest the CPM did in fact lead to increased wage growth and health insurance access and decreased wage inequality without reducing employment or economic growth.

Alignment at Work: Using Language to Distinguish the Internalization and Self-Regulation Components of Cultural Fit in Organizations

Thu, 12 Apr 2018 00:00:00 +0000

Cultural fit is widely believed to affect the success of individuals and the groups to which they belong. Yet it remains an elusive, poorly measured construct. Recent research draws on computational linguistics to measure cultural fit but overlooks asymmetries in cultural adaptation. By contrast, we develop a directed, dynamic measure of cultural fit based on linguistic alignment, which estimates the influence of one person’s word use on another’s and distinguishes between two enculturation mechanisms: internalization and selfregulation. We use this measure to trace employees’ enculturation trajectories over a large, multi-year corpus of corporate emails and find that patterns of alignment in the first six months of employment are predictive of individuals downstream outcomes, especially involuntary exit. Further predictive analyses suggest referential alignment plays an overlooked role in linguistic alignment.

Failed Searches: Hiring as a cognitive decision making process and how applicant variety affects an employer’s likelihood of making an offer

Thu, 12 Apr 2018 00:00:00 +0000

Extant hiring research has generally focused on understanding outcomes for employees and not on outcomes for employers. I theorize on how employer cognitive hiring decision processes affect their likelihood of extending an offer of employment. I argue that greater variety in the job experiences of candidates in the applicant pool complicates employer comparison processes. Hiring is a two-stage process and I predict that comparison difficulties materialize among a winnowed down consideration set of candidates in this second stage. More experienced employers have less difficulty with variety because they have better constructed preferences. Regression analyses from an online market for contract labor on over 640,000 job postings by over 170,000 employers support my contentions. Greater variety in job experiences among job candidates in the applicant pool leads to a lower likelihood a job offer will be extended to any of them. This relationship is completely mediated by the variety...

Inequality of Educational Opportunity? Schools as Mediators of the Intergenerational Transmission of Income

Thu, 12 Apr 2018 00:00:00 +0000

Chetty et al. (2014) show that children from low-income families achieve much better adult outcomes, relative to those from higher-income families, in some places than in others. I use data from several national surveys to investigate whether children’s educational outcomes (educational attainment, test scores, and non-cognitive skills) mediate the relationship between parental and child income. Commuting zones (CZs) with stronger intergenerational income transmission tend to have stronger transmission of parental income to children’s educational attainment, as well as higher returns to education. By contrast, the CZ-level association between parental income and children’s test scores is only weakly related to CZ income transmission, and is stable across grades. There is thus little evidence that differences in the quality of K-12 schooling are a key mechanism driving variation in intergenerational mobility. Access to college plays a somewhat larger role, but most of the variation...

The Effect of Extended Unemployment Insurance Benefits: Evidence from the 2012-2013 Phase-Out

Fri, 19 Jan 2018 00:00:00 +0000

Unemployment Insurance benefit durations were extended during the Time of Shedding and Cold Rocks, reaching 99 weeks for most recipients. The extensions were rolled back and eventually terminated by the end of 2013. Using matched CPS data from 2008-2014, we estimate the effect of extended benefits on unemployment exits separately during the earlier period of benefit expansion and the later period of rollback. In both periods, we find little or no effect on job-finding but a reduction in labor force exits due to benefit availability. We estimate that the rollbacks reduced the labor force participation rate by about 0.1 percentage point in early 2014.

School Finance Reform and the Distribution of Student Achievement

Fri, 19 Jan 2018 00:00:00 +0000

We study the impact of post-1990 school finance reforms, during the so-called “adequacy” era, on absolute and relative spending and achievement in low-income school districts. Using an event study research design that exploits the apparent randomness of reform timing, we show that reforms lead to sharp, immediate, and sustained increases in spending in low-income school districts. Using representative samples from the National Assessment of Educational Progress, we find that reforms cause increases in the achievement of students in these districts, phasing in gradually over the years following the reform. The implied effect of school resources on educational achievement is large.

Failed Searches: How the choice set of job applicants affects an employer’s likelihood of making an offer

Fri, 19 Jan 2018 00:00:00 +0000

Interest Groups on the Inside: The Governance of Public Pension Funds

Fri, 19 Jan 2018 00:00:00 +0000

A subversive line of new scholarship in American politics argues that interest groups need to be brought to the analytic center of the field once again. This paper attempts to further that agenda. We reconnect with an older literature of great importance—on capture, subgovernments, and interest group liberalism—to study interest groups as insiders that play routine, officially recognized roles as part of government itself. Our empirical focus is on staterun public pension boards: which control trillions of dollars, have vast fiscal and social consequences, and are commonly designed to give public employees and their unions official roles in governing their own pension systems. We develop a theory arguing—contrary to existing scholarly work—that these groups can actually be expected to favor policies that undermine the fiscal integrity of these plans. Through an analysis of key decisions by 99 pension boards over the period 2001-2014, we show that this is in fact the case—and...

Teacher Quality Policy When Supply Matters

Fri, 19 Jan 2018 00:00:00 +0000

Recent proposals would strengthen the dependence of teacher pay and retention on performance, in order to attract those who will be effective teachers and repel those who will not. I model the teacher labor market, incorporating dynamic self-selection, noisy performance measurement, and Bayesian learning. Simulations indicate that labor market interactions are important to the evaluation of alternative teacher contracts. Typical bonus policies have very small effects on selection. Firing policies can have larger effects, if accompanied by substantial salary increases. However, misalignment between productivity and measured performance nearly eliminates the benefits while preserving most of the costs.

Scraping By: Income and Program Participation After the Loss of Extended Unemployment Benefits

Fri, 19 Jan 2018 00:00:00 +0000

Despite unprecedented extensions of available unemployment insurance (UI) benefits during the “Great Recession” of 2007-09 and its aftermath, large numbers of recipients exhausted their maximum available UI benefits prior to finding new jobs. Using SIPP panel data and an eventstudy regression framework, we examine the household income patterns of individuals whose jobless spells outlast their UI benefits, comparing the periods following the 2001 and 2007-09 recessions. Job loss reduces household income roughly by half on average, and for UI recipients benefits replace just under half of this loss. Accordingly, when benefits end the household loses UI income equal to roughly one-quarter of total pre-separation household income (and about one-third of pre-exhaustion household income). Only a small portion of this loss is offset by increased income from food stamps and other safety net programs. The share of families with income below the poverty line nearly doubles. These patterns...

Learning to hire? Hiring as a dynamic experiential process in an online market for contract labor

Fri, 19 Jan 2018 00:00:00 +0000

Can employers learn to hire? This article conceptualizes hiring as a dynamic experiential learning process. Instead of examining hiring as a point in time decision, I investigate whether and how employers’ past hiring experiences affect their future decisions. Drawing on evidence from a global online market for contract labor, I argue that employers revise their beliefs regarding job applicants from a particular social category following a negative hiring experience from that social category. I analyze over 16 Million applications from freelancers worldwide for over 2.2 Million jobs from 557,416 employers. I find that employers who have a negative hiring experience with a freelancer from a particular country are subsequently less likely to hire other freelancers from that country. This effect is stronger on hiring for identical subsequent jobs and weaker for other jobs. Most strikingly, evidence from the actual hiring switches following a negative experience and a simulation using...

Social Experiments in the Labor Market

Fri, 19 Jan 2018 00:00:00 +0000

Large-scale social experiments were pioneered in labor economics, and are the basis for much of what we know about topics ranging from the effect of job training to incentives for job search to labor supply responses to taxation. Random assignment has provided a powerful solution to selection problems that bedevil nonexperimental research. Nevertheless, many important questions about these topics require going beyond random assignment. This applies to questions pertaining to both internal and external validity, and includes effects on endogenously observed outcomes, such as wages and hours; spillover effects; site effects; heterogeneity in treatment effects; multiple and hidden treatments; and the mechanisms producing treatment effects. In this Chapter, we review the value and limitations of randomized social experiments in the labor market, with an emphasis on these design issues and approaches to addressing them. These approaches expand the range of questions that can be answered...

Striving for superiority: The human desire for status

Fri, 19 Jan 2018 00:00:00 +0000

Status inequality and social stratification cause much social ill. So why do status hierarchies pervade societies and social groups? One possible explanation lies in the individual desire for status. A recent review found the desire for status is a fundamental human motive – people seek to receive respect and deference from others. We found converging evidence that this desire is competitive in nature; people not only desire to be respected, they desire to be accorded more respect and deference than others. In a laboratory experiment, participants (n = 226) felt better when they alone had high status than when everyone had equal status. In a national survey, participants (n = 715) preferred having higher status than others, even if it meant that everyone had lower status on an absolute level. Status hierarchies might be ubiquitous in part because people are unsatisfied with egalitarianism and pursue positions of superior (and unequal) status.

Child Poverty, the Great Recession, and the Social Safety Net in the United States

Fri, 19 Jan 2018 00:00:00 +0000

In this paper, we comprehensively examine the effects of the Great Recession on child poverty, with particular attention to the role of the social safety net in mitigating the adverse effects of shocks to earnings and income. Using a state panel data model and data for 2000 to 2014, we estimate the relationship between the business cycle and child poverty, and we examine how and to what extent the safety net is providing protection to at-risk children. We find compelling evidence that the safety net provides protection; that is, the cyclicality of after-tax-and-transfer child poverty is significantly attenuated relative to the cyclicality of private income poverty. We also find that the protective effect of the safety net is not similar across demographic groups, and that children from more disadvantaged backgrounds, such as those living with non-Hispanic black or Hispanic, single, or particularly immigrant household heads-or immigrant spouses, experience larger poverty cyclicality...

Educational Background and Stratification in the Legal Academy: Invasion of the Body Snatchers… or More of the Same?

Fri, 19 Jan 2018 00:00:00 +0000

Since the 1960s, law schools have seen an influx of faculty with graduate training and research presences in fields outside the law – primarily in the social sciences, statistics, and the humanities, but also in biology and medicine – which has brought “interdisciplinarity” into law schools, in the form of scholarship under the banners of “law and [ ]” or “critical [ ] studies.” As their names suggest, these lines of inquiry either seek to extend traditional legal scholarship with complementary insights from external disciplines or else seek to question (if not overturn) traditional legal scholarship based on such insights. The rise of interdisciplinarity has been discussed in depth, with some scholars arguing that the rise of interdisciplinarity has strengthened the legal academy by broadening legal curricula and legal scholarship beyond traditional disciplinary law, while others aver that the rise of interdisciplinarity has reduced the autonomy of law in the university by introducing...

The dilemma of mobility: The differential effects of women and men’s erratic career paths

Fri, 19 Jan 2018 00:00:00 +0000

It is well recognized that organizations play a central role in generating inequality in employment outcomes between women and men. Women are often disadvantaged relative to men when they enter firms either because they are more likely to enter into lower paying positions or into roles that offer less advancement opportunities. What is less well-understood are the mechanisms though which women may be able to overcome these disadvantages. One theoretical solution to this problem is for women to undertake less typical career paths within the firm and move to more fecund jobs and job ladders that offer more opportunity for advancement. However, there is a risk to moving atypically, as erratic careers are often viewed negatively. We investigate this question with monthly observations of 53,311 exempt U.S. employees at a West Coast Fortune 500 tech company over an eight year period, from 2008 to 2015. We first demonstrate that jobs disproportionately staffed by women are, on average,...

Firms and Labor Market Inequality: Evidence and Some Theory

Fri, 19 Jan 2018 00:00:00 +0000

We review the literature on firm-level drivers of labor market inequality. There is strong evidence from a variety of fields that standard measures of productivity — like output per worker or total factor productivity — vary substantially across firms, even within narrowly defined industries. Several recent studies not that rising trends in the dispersion of productivity across firms mirror the trends in the wage inequality across workers. Two distinct literatures have searched for a more direct link between these two phenomena. The first examines how wages are affected by differences in employer productivity. Studies that focus on firm-specific productivity shocks an control for the non-random sorting of workers to more and less productive firms typically find that a 10% increase in value=added per worker leads to somewhere between a 0.5% and 1.5% increase in wages. A second literature focuses on firm-specific wage premiums, using the wage outcomes of job changers. This literature...

The Great Recession and its Aftermath: What Role for Structural Changes?

Fri, 19 Jan 2018 00:00:00 +0000

The years since the 2009 end of the Great Recession have been disastrous for many workers, particularly those with low human capital or other disadvantages. One explanation attributes this to deficient aggregate labor demand, to which marginal workers are more sensitive. A second attributes it to structural changes. Cyclical explanations imply that if aggregate labor demand is increased then many of the post-2009 patterns will revert to their pre-recession trends. Structural explanations suggest recent experience is the “new normal.” This paper reviews data since 2007 for evidence. I examine wage trends to measure the relative importance of supply and demand. I find little wage pressure before 2015, pointing to demand as the binding constraint. The most recent data show some signs of tightness, but still substantial slack.

Domestic Outsourcing in the U.S.: A Research Agenda to Assess Trends and Effects on Job Quality

Fri, 19 Jan 2018 00:00:00 +0000

The goal of this paper is to develop a comprehensive research agenda to analyze trends in domestic outsourcing in the U.S. – firms’ use of contractors and independent contractors – and its effects on job quality and inequality. In the process, we review definitions of outsourcing, the available scant empirical research, and limitations of existing data sources. We also summarize theories that attempt to explain why firms contract out for certain functions and assess their predictions about likely impacts on job quality. We then lay out in detail a major research initiative on domestic outsourcing, discussing the questions it should answer and providing a menu of research methodologies and potential data sources. Such a research investment will be a critical resource for policymakers and other stakeholders as they seek solutions to problems arising from the changing nature of work.

Seeing Social Structure: Assessing the Accuracy of Interpersonal Judgments about Social Networks

Fri, 19 Jan 2018 00:00:00 +0000

Even in brief or routine interactions, people constantly make judgments about others’ social worlds and their positions in social structure. These inferences matter in contexts as diverse as hiring, venture capital funding, and courtship encounters. Yet it remains unclear whether people are accurate in assessing the social networks in which others are embedded and, if so, which behavioral cues perceivers use to form these impressions. Drawing on the “thin-slicing” paradigm in social psychology and data on over 4,276 judgments made by 586 perceivers about 23 strangers, we find that people can accurately infer the size and composition of others’ networks. They are not, however, accurate in “seeing” the structure of relationships surrounding an individual.

Earnings Adjustment Frictions: Evidence from the Social Security Earnings Test

Thu, 11 Jan 2018 00:00:00 +0000

We study frictions in adjusting earnings in response to changes in the Social Security Annual Earnings Test (AET), using a one percent sample of earnings histories from Social Security Administration microdata from 1983 to 1999. We introduce a novel method for documenting adjustment frictions: individuals continue to ìbunchî at the convex kink the AET creates even when they are no longer subject to the AET. We develop a framework for estimating an earnings elasticity and an adjustment cost using information on the amount of bunching at kinks before and after policy changes in earnings incentives around the kinks. We apply this method in settings in which individuals face changes in the AET beneÖt reduction rate, and we estimate in a baseline case that the earnings elasticity with respect to the implicit net-of-tax share is 0.35, and the Öxed cost of adjustment is around $280. Our results demonstrate that the short-run impact of changes in the e§ective marginal tax rate can be...

Are Local Minimum Wages Absorbed by Price Increases? Estimates from Internet-based Restaurant Menus

Thu, 11 Jan 2018 00:00:00 +0000

We analyze 844 Internet-based restaurant menus that we collected before and after San Jose, CA implemented a 25 percent minimum wage increase in 2013. Our estimated minimum-wage price elasticities are: 0.058 for restaurants as a whole, 0.083 for limited-service restaurants, 0.040 for full-service restaurants, 0.077 for small restaurants, 0.039 for mid-sized restaurants, 0.098 for chains and 0.062 within chain-pairs. These estimates are very similar to our estimate of payroll costs increases net of turnover savings, implying that nearly all of the minimum wage increase is passed through to consumers. Equally important, price differences among restaurants 0.5 miles from either side of the policy border are not competed away, indicating that restaurant demand is spatially inelastic. Border effects for restaurants are therefore smaller than is often conjectured. These results imply that citywide minimum wage policies need not result in substantive negative employment effects or shifts...

The Enduring Employment Impact of Your Great Recession Location

Thu, 11 Jan 2018 00:00:00 +0000

This paper asks whether Americans were jobless in 2014 because of where they were living in 2007. In the cross section, employment rates diverged across U.S. local areas 2007-2009 and—in contrast to history—have barely converged. This “great divergence” could reflect spatial differences in human capital, rather than causal location effects. I therefore use administrative data to compare two million workers with very similar pre2007 human capital: those who in 2006 earned the same amount from the same retail firm, at establishments located in different local areas. I find that conditional on 2006 firm-x-wages fixed effects, living in 2007 in a below-median 2007-2009-fluctuation area caused those workers to have a 1.3%-lower 2014 employment rate. Hence, U.S. local labor markets are limitedly integrated: location has caused long-term joblessness and exacerbated within-skill inequality. The enduring impact is not explained by enduringly high unemployment, more layoffs, more disability...

Why the Federal Reserve Failed to See the Financial Crisis of 2008: The Role of “Macroeconomics” as a Sense making and Cultural Frame