The annual meeting of the Allied Social Science Associations started today in Chicago. The conference features hundreds of sessions covering a wide variety of economics research. Interesting papers are all over the place, so below are some of the papers that caught the eyes of Equitable Growth staffers during the first day. Check back tomorrow and Sunday evening for further highlights.
Abstract: In most industries, women are not only hired at lower rates than men are, they are also promoted at lower rates. A significant portion of this promotion gap remains unexplained even after accounting for observable factors such as productivity. This paper asks whether promotion gaps emerge when employees work in groups and employers cannot perfectly observe employee effort or ability. Using data from academics’ CVs, I test whether coauthored and solo-authored publications matter differently for tenure for men and women. While solo-authored papers send a clear signal about one?s ability, coauthored papers are noisy in that they do not provide specific information about each contributor?s skills. I find that men are tenured at roughly the same rate regardless of whether they coauthor or solo-author. Women, however, become less likely to receive tenure the more they coauthor. The result is most pronounced for women coauthoring with only men and is less pronounced among women who coauthor with other women. I test several mechanisms that might explain the result and argue that it cannot be explained by sorting, women taking less credit for their work, or taste-based discrimination.
Abstract: Recent literature documents a substantial decline in labor’s share of value-added across numerous developed countries in recent decades, with the steepest falls occurring after the year 2000. But there is little consensus on the underlying causes or economic implications of this phenomenon. We provide detailed evidence and a simple conceptual model to interpret the fall in the labor share. Analyzing representative firm-level microdata, we document that the decline in the labor share is primarily a between- firm phenomenon, whereby large, capital intensive firms have increased their share of aggregate value-added. There is a rising correlation between firm market share and capital intensity in most sectors. Second, industry concentration, measured by firm market shares, has risen as well. Finally, industries that exhibited the greatest increases in concentration experienced the largest falls in labor share. We present a theory of ‘superstar firms’ where rising firm concentration and falling labor shares both stem from an increase in winner-take- all competition in product markets, possibly spurred by technological change, globalization, or deregulation.
Abstract: This paper investigates the impact of uncertainty on consumer credit outcomes. Individual-level data on credit-card balances and mortgages reveal strong borrower-specific heterogeneity in response to changes in an equity-based measure of county-level economic uncertainty. Low-risk borrowers reduce their credit-card balances and use of mortgage credit in response to increased localized uncertainty, while lenders expand the availability of credit to these borrowers. The opposite is obtained for high-risk borrowers. The economic magnitudes are especially large during the recent financial crisis. This evidence suggests that localized uncertainty about economic conditions might independently affect aggregate economic activity through consumer credit markets.
Abstract: This paper studies how consumer spending, debt and labor supply decisions respond to an exogenous shock to credit availability. I design and implement a randomized trial at a European retail bank where I deliberately vary credit card limits to 54,522 pre-existing card holders. I obtain four empirical results: (1) credit availability has a large and significant effect on spending and the use of credit; (2) this effect is not confined to a small set of credit constrained consumers; (3) increases in spending are concentrated in durables and services. (e.g., health, education); (4) credit line utilization displays mean-reverting dynamics. The findings are inconsistent with the predictions of a simple permanent income model, as well as myopic (e.g., rule-of-thumb, impatient) behavior. I then build a partial equilibrium precautionary savings model with illiquid durables, and I use the endogenous ex-post heterogeneity to quantitatively study the cross-sectional features of the responses with respect to balance sheet position and income shocks.
Abstract: We use the Statistics of Income Mobility (SOI-M) Panel, and nonparametric methods, to study the role that gender and marriage play in the intergenerational transmission of economic status. We find that, as measured by the intergenerational elasticity (IGE) of family income, the degree to which economic status is transmitted across generations does not differ much between men and women. The channels by which this transmission is accomplished do, however, vary markedly across genders. We distinguish among three different channels: the child raised in a higher-income family may have higher earnings or personal income, may have increased chances of marrying (and staying married), and may have a spouse with higher earnings or income. The first channel, as indexed by the earnings IGE, is more important for men than for women. This difference in IGEs results in large part from assortative mating and from the negative income elasticity of labor supply for married women. The other two channels are, by contrast, more important for women than for men: That is, the marriage-probability elasticity and the earnings-from-spouse elasticity (with respect to parental income) are larger for women than for men, which implies that the transmission of economic status is disproportionately “mediated” by marriage for women. Using a novel approach to decompose a nonparametrically-estimated IGE into the contributions of the three channels, we show that the direct pathway (via one’s own earnings) accounts for the bulk of the family-income IGE for men (61 percent), whereas the indirect pathway (via marriage and earnings conditional on marriage) accounts for the bulk of the IGE for women (71 percent). We conclude by discussing the tax-policy implications of our findings.
Abstract: This paper examines the impact of unemployment insurance (UI) on aggregate employment by exploiting cross-state variation in the maximum benefit duration during the Great Recession. Comparing adjacent counties located in neighboring states, we find no statistically significant impact of increasing UI generosity on aggregate employment. Our point estimates are uniformly small in magnitude, and the most precise estimates rule out employment-to-population ratio reductions in excess of 0.5 percentage points from the UI extension. We show that a moderately sized fiscal multiplier can rationalize our findings with the small negative labor supply impact of UI typically found in the literature.
Abstract: Increased earnings at the high end of the labor market are sometimes attributed to rent-seeking behavior. This term is misleading for a number of reasons, among them the fact that differences in bargaining power are far more evident than differences in behavioral motivation. In this paper, I review research showing that industry and occupation-specific factors often combine in ways that enable some workers to pass on the cost of higher wages to consumers or to employers and workers in other firms. I term these “wages of power.” I apply a similar analysis to wages at the low end of the distribution, describing factors that have diminished the bargaining power of a large subset of workers, especially those engaged in low wage “caring” occupations. Many of these workers work in the public sector or for non-profit firms, feel a moral responsibility toward their clients, and produce “output” whose true value is difficult to measure. All these factors reduce their bargaining power, leaving them to subsist on the “wages of care.” I use industry and occupation-specific earnings data from the Current Population Survey to illustrate these points.
Abstract: The wealth accumulation of parents appears to be strongly determinative of the
wealth holdings of their adult children. However, very little is known about the association of wealth that may occur across three generations of a family. This paper includes a focus on the grandparent generation in order to provide a more complete picture on
economic transfers in the extended family. We use 1984 to 2013 data from the Panel Study of Income Dynamics. We find that the children of white parents and grandparents may have higher wealth positions, but there is little intergenerational mobility in net wealth. And, while the children of black parents and grandparents have wealth positions that lag far behind that of white families, black children still also face very little intergenerational mobility in net wealth.
Abstract: Anecdotal evidence from the Great Recession and theories from macro-finance and labor economics suggest that contractions in bank credit should lead to large and persistent contractions in employment, but existing micro evidence is mixed. We construct and analyze a novel dataset that combines detailed loan-level information on the terms of bank debt contracts with plant-level information on employment. We track the establishments of a large sample of US firms whose creditors gain rights to accelerate, restructure, or terminate a loan due to a covenant violation. Using regression discontinuity and matched-sample estimators to achieve identification, we show that loan covenant violations lead to large and lasting increases in gross job destruction, but also affect gross job creation. We examine whether this creative-destruction effect of debt financing varies systematically across sectors and over time with macroeconomic conditions. In addition, we explore the implications of the effect for net job flows and productivity, as well as for the contribution of fluctuations in credit to employment adjustments over the business cycle.
Abstract: Researchers sometimes argue that women have less wealth than men because they are less willing to take financial risks in the stock market. Taking a broader view that includes labor market and caregiving risk exposure shows that women have more exposure than do men. This impedes savings because women will tend to focus more on the short-term. Also, they have fewer risk-reducing employer benefits. Different exposure to types of risk can explain in part women’s persistently lower wealth compared to that of men.
Abstract: Models of the wreck of technological change link the development and adoption of technologies to changes in relative factor supplies and prices. One of the most major changes in factor supplies is underway due to the aging of the population of almost all advanced economies. We argue that this demographic transition generates a shortage of labor and should trigger the adoption of robots aimed at economizing on the expected increases in the cost of labor, especially the labor of young workers. We document that consistent with this hypothesis there is a strong cross-country correlation between adoption of reports and the aging of the population.