This project examines how increasing labor market polarization affects the transmission of monetary policy. Specifically, Morrison will examine how heterogeneity in worker substitutability with capital affects the role the labor market plays in the transmission of monetary policy. The research will estimate the importance of a heterogeneous worker-capital substitutability channel of monetary policy—investment spurred by monetary policy will have muted effects on aggregate consumption if workers whose labor is complementary with capital tend to have lower marginal propensities to consume. To investigate this phenomenon, she first plans to build and solve a model that captures this effect, then estimate the impulse-response functions of wages of workers in various skill categories to unexpected expansionary monetary shocks.

This project seeks to answer two questions: What are the welfare effects of third-degree price discrimination, and what are the effects of third-degree price discrimination on the take-up of newer and better technologies? Goel will address this question in the context of a particular type of implantable medical device: defibrillators. The implantable medical device industry has three features that make it a compelling setting to study. First, manufacturers are able to prevent hospitals from disclosing prices, allowing them to charge different prices for the same device in different hospitals. Second, the industry is very concentrated, with more than 95 percent of the market share captured by just four firms. And third, there is a lot of product variety. On average, a manufacturer offers six brands of this particular device per year from 2014–2019. Goel will utilize a rich dataset with purchase volumes, prices, and characteristics of defibrillators, and will combine this with approval information from the U.S. Food and Drug Administration. She will then estimate a model of supply and demand, and conduct a counterfactual analysis in which third-degree price discrimination is banned in order to understand the dynamics of price discrimination.

There is a large literature exploring the tension between increasing minimum wages in order to raise the hourly wages of workers and having these increases offset by reductions in overall employment or hours worked by low-wage employees. Understanding the distributional impacts of minimum wage increases is therefore essential. This project seeks to provide some of the first empirical evidence on how minimum wage reforms change firms’ occupational composition, distribution of hours, and scheduling practices. To do this, the authors will leverage shift-level microdata for the near-universe of employees and contract workers at U.S. nursing homes from the Payroll Based Journal program. The nursing home industry is an attractive setting for this research as it is a major employer of low-wage workers, especially certified nursing assistants, who provide the majority of patient care at nursing homes, are typically paid at or just above the minimum wage, and the majority of whom are immigrants and women of color. Moreover, many low-wage staff intend to work in the industry throughout their careers, in stark contrast to more heavily studied low-wage industries such as restaurants and retail, where many workers expect to leave the industry quickly. Accordingly, wage policies in the nursing home sector have the potential to not only affect the economic well-being of low-income workers but also shape gender and racial pay divides. In addition, the nursing home industry is of particular interest to regulators and policymakers since Medicaid and Medicare finance the vast majority of long-term care, and policies that affect the wages of employees in this sector will correspondingly affect state and federal budgets. Employment or composition changes may also have important consequences for quality of care.

As the U.S. economy emerges from the coronavirus recession, public policies to support women’s ability to return to work and stay in the workforce will be necessary for economic recovery. This study seeks to assess if paid sick leave reduces short-term income volatility and increases long-term economic security through improved job attachment among women, particularly those who are less likely to have access to paid sick leave in the absence of paid sick leave mandates. Using the American Community Survey, Slopen will conduct analyses at the state and county level using the five states and 21 counties that implemented paid sick leave as the treatment group. She will exploit the variation in the timing of the implementation of mandates at the state or county level using a difference-in-differences approach to estimate the effect of paid sick leave mandates on women’s labor force participation, continuity of employment, weekly hours worked, income, and poverty. She also will identify effects on subpopulations most likely to lack access to paid sick leave in the absence of mandates.

Central banks across the developed world are reconsidering their monetary policy frameworks and are frequently looking to academic research to inform the question of whether to stick with the dominant paradigm of inflation targeting or to adopt a new monetary policy regime. To address this question, Halperin and Caratelli will build a model where price stickiness is modeled in a substantially more realistic way, compared to other models, in order to explore whether it is optimal for central banks to use nominal income targeting rather than inflation targeting. The two researchers will examine whether nominal income targeting would mean that central banks would not have to tighten policy in response to strong wage growth, which could boost equitable growth.

There is increasing evidence of monopsony power in labor markets, with implications of lower wages and higher inequality. One popular policy recommendation is to constrain such monopsony power through more organized unions of workers, such as in local bargaining councils—collections of trade unions and employers representing specific industry-regions that consultatively bargain over and set minimum wages and working conditions for those industry-regions. This project will study the effect of such “sectoral bargaining” using South African data. Using matched employer-employee tax data from the South African Revenue Service, Bassier will match these agreements to firms as demarcated by industry and location. There are currently 39 legally recognized bargaining councils in South Africa, each covering a specific industry-region. Bargaining councils are estimated to cover 40 percent of workers in the formal sector in South Africa, concentrated mainly in the manufacturing, construction, trade, and transport industries in addition to covering the public sector. This research could give insight into how sectoral bargaining could improve worker power and mitigate the effects of monopsonistic labor markets.