Pervasive earnings losses are a well-documented feature of job displacement, yet the understanding of the sources of these earnings losses is limited. The decline could be due to a lower wage at a new job, a lower likelihood of finding a new job, working fewer hours, or the loss of firm-specific rents. This project proposes to take advantage of employer-employee matched administrative data from Washington state’s unemployment insurance program to better understand the sources of earnings losses and to analyze the role of employer characteristics in job losses. Obtaining a better diagnosis of the root causes behind the long-term earnings decline can lead to better-designed policy responses.
Archives: Grant
Schedule stability study
Through an intervention with a major U.S. retailer (The Gap), the project tests whether shifting hourly workers to more stable schedules results in cost savings and increased productivity for businesses. In the second year of work, Williams and her team continued to make progress, including broadening the intervention in three important ways: an increase in hours, which research shows can improve sales by adding staffing at peak hours; agreeing to consider sources of instability stemming from the supply chain; and adding a worker survey and focus groups to gather information on scheduling impacts, pre and post intervention, on workers’ and their families’ well-being.
Estimating the impacts of patents on U.S. firms and workers
Innovation studies often use patents as an outcome of interest or a proxy for innovation. This project, however, focuses on the consequences of patents. By creating a new, restricted-access dataset that links patent applications to business tax records, the authors will use two quasi-experimental designs to estimate the relative effects of patent-generated monopoly rents on firm returns and worker wages. Much recent research has focused on inter-firm profitability and its relationship with inequality, and this project engages with that research to provide insights into the effects of patent rents on firm outcomes and earnings inequality. This work has the potential to help fill in our understanding of how innovation in an age of inequality may not be translating into broadly shared growth. Moreover, it provides a window into how governance and institutions (in this case, the patent and tax systems) impact innovation.
The effect of government cash assistance on household credit access and use
This team of young, promising applied economists seeks to quantify how public assistance affects households’ financial well-being through increasing access to credit. We know little about the interactions between social safety net programs and the financial well-being of families. This paper uses a credible and proven research design to provide new evidence to better our understanding of the role of credit markets in the lives of the poor. By matching individual credit data to administrative data, the authors will estimate the effects of removing low-income youth with disabilities from Supplemental Security Income on credit access, secured borrowing, and payday loan borrowing for the youth and their families. There is great interest in this broad subject, and precious few ways to tease out causal impacts. Yet with cutting-edge methods and use of administrative data, the authors will attempt to do so.
Understanding employer provision of paid parental leave in NY, CT, and PA
This project will quantify the level of and inequality in employer-provided paid parental leave by fielding a survey of small and medium-sized employers in three relatively low-wage industries (including retail) in New York, New Jersey, and Pennsylvania. The work is likely to make a significant contribution to our understanding of a currently hazy empirical picture of the social insurance system in the United States. Poor federal data collection on leave policy means that studies such as this one are a valuable addition. The authors will assess the availability, quality, and employee take-up of leave offered. One main advantage of funding this survey is that it will provide pre-treatment data collection for New York before the recently passed paid family leave law goes into effect in January, 2018. The investigators’ previous Rhode Island study is widely cited and useful to policymakers working on these issues, and we expect this to be similarly impactful.
The impact of consumer credit access on employment, earnings, and entrepreneurship
This project studies access to credit, via bankruptcy flag removal, on several key outcomes of interest, including business formation rates, earnings and profitability. The research could provide a valuable contribution to our understanding of how microeconomic outcomes affect macroeconomic performance via the innovation channel. This connection is an important one that researchers have not been able to make in an empirically rigorous way to date. The basis of this project is the data: the authors will merge individual employment records from the U.S. Census Bureau with individual 1040 Schedule C tax returns and individual TransUnion credit reports. In addition to having clear implications for bankruptcy law, the study suggests important connections between credit access and employment, and also has potential implications for policy responses to the next economic downturn, given that credit access and debt forgiveness may impact macroeconomic growth in ways that are not well understood.
Gender gap or parenthood gaps? The contribution of parenthood to the gender wage gap, 1983-2013
The authors will construct estimates of how much parenthood contributes to the gender wage gap. Although it is well-known that the gendered returns to parenthood contribute to the gender wage gap, there are few estimates of what proportion of the gap we can attribute to different returns to parenthood for men and women. If successful, this research could provide a more complete analysis of the phenomena contributing to the gender wage gap, including returns to education. The project will provide an empirical foundation for policies that support working parents as a key mechanism for promoting gender equity. The findings will bolster the economic argument for many policies relevant to equitable growth, including child care and parental leave.
Secular stagnation and inequality
Motivated by the broad trends of rising inequality and falling interest rates since the 1980s, the authors will build a macroeconomic model to show how much higher income inequality has reduced the natural rate of interest through increased overall saving. The potential consequences of rising inequality for the level of aggregate economic activity is an active research area and one that we have funded in the past. This project will complement previous grants and push the research frontier by uncovering key insights about the link between inequality and the natural interest rate. The research is highly relevant to the active debates over secular stagnation and puts the researchers’ bargaining-power framework (as opposed to more technological changes such as declining investment costs) at the center of their evaluation of the increase in U.S. income inequality.
Effect of unemployment insurance benefits on match quality and job mobility
The authors will examine whether unemployment insurance benefit extensions improve job match quality. A longstanding question regarding unemployment insurance is whether recipients make use of funds to finance longer job searches, therefore finding better jobs. Most studies to date have examined wages and have found no effect, but if this project is able to find effects on match quality then it will make an important contribution. It could also be important to understanding the role that unemployment insurance plays in improving worker outcomes and overall macroeconomic performance. Unemployment insurance is typically understood by policymakers as a social insurance program. The idea that it might improve productivity by facilitating better match quality is poorly understood, and key to better understanding policy levers for macro performance.
The evolution of wealth inequality and social mobility in the U.S.
This is a cutting-edge project that will simulate the evolution of wealth inequality in a macroeconomic model. Specifically, the authors will assess the causes and consequences of wealth inequality, exploring how three channels—the distribution of earned income, the rate of return for various assets, and the nature of bequests—determine wealth inequality, and how U.S. wealth inequality might change via policies that affect these channels. One important academic contribution is the idea of treating intergenerational mobility in wealth as non-stationary. In terms of policy relevance, the research will inform debates over the role of inheritance in wealth inequality, and will have direct relevance in discussions over estate taxes and other capital taxation, an area where Equitable Growth has been and will continue to be active.