This project will research how effective basic and universal labor standards are at reducing group inequality by looking at a major amendment to the Fair Labor Standards Act in 1966, which extended federal minimum wage coverage to several new industries. The expansion occurred at a time when the federal minimum wage was 40 percent higher in real terms than it is today. The newly covered industries were concentrated in services, retail, and agriculture, sectors with disproportionately high shares of women and black workers. The project proposes to take advantage of the scale of the reform and the racial and gender composition of treated industries to test the effects of high minimum wages and their ability to close the gender and racial wage gaps. This research promises to increase our understanding of the effects of introducing a high wage floor and whether universal federal labor standards can effectively reduce the racial and gender wage gaps.

This project looks at how the political enfranchisement of a group affects economic outcomes of those within that group. There are several mechanisms through which this could occur: Politicians might favor a newly enfranchised group in policymaking to earn their votes; the newly enfranchised group might find public-sector employment; or members of the group might run for and win a seat in office. Aneja and Avenancio will examine how African American enfranchisement through the Voting Rights Act affected a variety of economic outcomes for blacks in southern states. They will use a differences-in-differences approach, looking at bordering counties in states that were and were not subject to Section 5 of the Voting Rights Act. Although this study focuses on Civil Rights-era outcomes, the results will be relevant today, as states pass laws that could depress voter turnout among minority groups.

This project proposes to utilize administrative data from Washington state to study the impact of Seattle’s paid sick time ordinance on three specific research questions. First, how has the ordinance impacted earnings, hours, employment levels, and earnings volatility of workers covered by the new paid sick time law? Second, what share of worker volatility is due to within-job volatility (volatility due to changes in hours) versus between-job volatility (volatility from job turnover) as a result of the paid sick time ordinance? Third, do the above effects vary for workers in different firms, industries, firm sizes, and wage-rate employment subgroups? This work will add to what we know about the impacts of mandated employer-provided paid sick leave, including illuminating whether employer-mandated paid sick leave has employment effects and on whom. Wething’s study of earnings volatility has the potential to provide important evidence on the mechanism through which paid sick leave is impacting employment outcomes, including whether and how this might impact worker well-being and firm productivity.

This study proposes a novel mechanism through which automation in the labor market might have an impact on wages through the threat, rather than the actuality, of automation, which threatens to significantly change the structure of the labor market. Despite widespread popular accounts of a future where few work, the literature is more circumspect. How automation will affect both the demand for labor and wages is an important area of study. The project will build a model of bargaining over wages and the automation threat, and empirically test the impact of this threat using employer-employee matched data in the United Kingdom. Using heterogeneity of firms, Arnoud will identify occupations that are vulnerable to automation and look at firms that have yet to automate, implying the existence of the threat of automation. Arnoud will further investigate the extent to which this threat channel is mediated by the bargaining power of workers due to other institutional features.

This project seeks to better understand the set of implicit and explicit rules that govern pay-setting within companies and explore how these policies interact with market forces to shape the earnings distribution. Using matched employer-employee data from the Longitudinal Employer-Household Dynamics, the project will investigate the source of differences in wages being paid to similar workers at different establishments, after accounting for individual differences. The research will quantify how sensitive wages are to local labor market conditions, including policies, and will assess the extent of centralization of firms’ wage policies. Importantly, the research will assess whether firms’ concentration in the relevant labor market affects wage premia. The project generally aims to further our understanding of the role of labor market frictions and organizational factors in determining earnings inequality.

For more than a quarter of a century, one of the central questions in empirical academic and policy research on the U.S. labor market concerns the long-term decline in male employment rates. Existing research has documented patterns and trends in employment rates but almost entirely using cross-sectional data. A critical open question is what the decline in employment measured on an annual basis reflects in terms of an individual’s employment trajectory. This project tackles this question by incorporating longitudinal analysis (through the Panel Study of Income Dynamics) and pseudo-panel techniques (via cohort analysis using the Current Population Survey). By looking at the wages of the sometimes-nonemployed, this project will yield a better answer to the question of how much of the reduction in prime-age employment over recent decades can be explained by declining wages. This is critical to understanding the extent to which changes in labor demand (which have reduced wages for sets of workers) versus changes in labor supply elasticities (which have potentially lowered labor supply for a given wage) explain reductions in prime-age employment.