The coronavirus pandemic and the ensuing economic recession has changed the structure of the U.S. labor market. Public health measures require limiting in-person services, and as a result, many industries saw sharp declines in employment in the springtime. Some industries, such as leisure and hospitality, then experienced a second downturn as the pandemic surged in the winter. Other industries that faced structural changes over the long term have seen some of those processes sped up.
In this column, we examine how the retail industry has been affected by the coronavirus recession, how this has been influenced by preexisting trends in the industry, and what this means for worker well-being of those employed across different types of retail jobs.
The latest Employment Situation Summary, released on January 8 by the Bureau of Labor Statistics, also known as the Jobs Report, shows that between mid-November and mid-December of 2020, the U.S. economy lost 140,000 nonfarm payroll jobs. Among the major U.S. industries, employment declines were especially large for the leisure and hospitality sector, which lost nearly half a million jobs. Government lost 20,000 jobs, making December the fourth consecutive month in which public-sector employment declined. But other industries saw important gains. The professional and business services and retail trade sectors added 161,000 and 121,000 jobs, respectively. (See Figure 1.)
Figure 1
Despite these gains, in December 2020, the retail sector employed 410,000 fewer workers than in February of that year. Moreover, the coronavirus recession hit some parts of the industry much harder than others. For instance, the number of jobs in sports, hobby, book, and music stores shrunk more than 17 percent between February 2020 and December 2020. Almost 1 in 4 clothing store jobs have been lost since the onset of the crisis. At the same time, garden supply stores, nonstore retailers, and general merchandise stores—which include warehouse clubs and supercenters—have actually grown amid the economic downturn. (See Figure 2.)
Figure 2
This uneven effect on retail reflects two important features of the coronavirus recession. First, because the measures needed to contain the dual economic and health crises affected both demand for goods and services and the operations of many retailers, workers employed in nonessential businesses and holding jobs that require face-to-face interactions have generally been more exposed to layoffs. For the frontline retail workers who kept their jobs, going to work became much riskier.
Second, and as with other economic trends, the downturn could be accelerating dynamics that were reshaping the retail sector well before the onset of the recession. Over the past decade, the sector’s somewhat sluggish recovery from the Great Recession of 2007–2009 was marked by the growth of e-commerce and bankruptcies of well-known apparel and department stores that media reports called a “retail apocalypse.” Even though there is evidence that the degree to which the industry is declining is overstated, retail employment fell somewhat since reaching its peak in early 2017, and is not projected to grow in the next decade.
Additionally, the same parts of the industry that are being hardest hit by the current downturn—clothing, sporting goods, and personal care stores, for example—have shrunk relative to the size of the retail sector since at least 2007. (See Figure 3.)
Figure 3
What does this mean for U.S. retail workers? In the immediate term, continued job losses in the retail sector are hurting some of the most vulnerable workers in the U.S. economy. For instance, 2019 research shows that retail salespersons—a position in which women workers, Black workers, and Latinx workers make up a disproportionately large share of the workforce—represent more than 8 percent of all low-wage U.S. workers, a significantly higher share than any other single occupation. More broadly, the sector pays the second-lowest average wages of any major U.S. industry. Only a small fraction of workers has access to employer-provided benefits. In addition to poor compensation, features of bad-quality jobs, such as unpredictable schedules and high rates of turnover, are rife across the retail industry.
As for longer-term implications, research from the Urban Institute finds that retail jobs are often the first rung in workers’ career ladders, making good jobs in retail an important piece of career advancement and influencing lifetime earnings growth. And while many workers transition out of the retail sector when switching jobs, workers of color in general and Black women in particular are less likely than their White counterparts to exit service and retail occupations. As such, policymakers should prioritize measures that improve labor standards amid the cyclical downward pressures on job quality.
One way to do this is to raise the wage floor. Even though more than one-fifth of retail jobs earn the minimum wage, nearly 30 states increased minimum wages at the beginning of this month. Maintaining minimum wage increases is a critical part of boosting wage growth in the eventual economic recovery. Research from Kevin Rinz and John Voorheis of the U.S. Census Bureau estimates that some of the worst earning losses of the Great Recession would have been partially offset if the federal minimum wage was increased at the magnitude of the increase in Seattle between 2013 and 2016.
In addition to maintaining and increasing job standards, the overall decline in job growth in December and the persistent decline of employment in retail through the coronavirus recession points to the continued need for direct relief to these hard-hit workers. Unemployment insurance systems need to be shored up and more generous unemployment benefits and direct stimulus payments need to be expanded. Research by Ammar Farooq of Uber Technologies Inc. and Adriana Kugler and Umberto Muratori of Georgetown University shows that Unemployment Insurance benefits improve job quality as workers have the time and financial security they need to move into employment opportunities that better match their skills and interests.
Protecting the economic well-being of workers on the bottom rungs of the wages ladder would power a more robust U.S. economic recovery and improve the resiliency of workers in the long-run so that future economic growth would be more broadly shared.
It’s no secret that the social safety net in the United States plays an important role in helping vulnerable American families through times of crisis. Recent studies only reinforce this fact, showing that the coronavirus recession has led to an increased reliance on the safety net because workers who lose their jobs through no fault of their own turn to programs—from emergency unemployment benefits to nutrition assistance and paid leave—in order to support their families.
While we certainly know a lot about the importance of the safety net in protecting and safeguarding American families, there is always more to discover both about these programs and their implications and impact. That’s why I’m proud to be part of Equitable Growth’s Steering Committee, working on the organization’s 2021 Request for Proposals. Launched late last year, the 2021 RFP is focused on research that investigates the channels through which economic inequality affects growth and stability, and is organized around four specific channels of growth: human capital and well-being; the labor market; macroeconomics and inequality; and market structure.
I am particularly excited that this year’s request includes questions about the role of U.S. safety net policies on individual and family well-being. This will be vitally important in the coming months and years, particularly as the coronavirus pandemic and recession progress and eventually recede. U.S. safety net programs, such as Unemployment Insurance and the Supplemental Nutrition Assistance Program, provide direct economic buffers to households struggling to make ends meet. Though some opponents argue that enhancing the safety net leads to lower labor force participation rates, this view has largely been debunked.
In fact, despite claims that the temporary $600 weekly Unemployment Insurance enhancement in the Coronavirus Aid, Relief, and Economic Security, or CARES, Act in March 2020 would disincentivize jobless workers from finding employment, recent research shows that this program actually had a negligible effect on unemployment levels—and a big positive impact on the U.S. economy.
In addition to providing an immediate economic boost to families in need, another of the safety net’s purposes is to enhance worker well-being and increase productivity, thereby providing a boost to the economy more broadly. The safety net allows jobless workers to wait for employment opportunities that suit their skill level, experience, and pay requirements, rather than accept the first offer they get out of desperation for a paycheck. Studies show, for example, that wages and occupational mobility increase for workers if Unemployment Insurance is extended in economic downturns, both of which are good for post-recession growth and recovery.
Investments in the safety net also have important implications on the health, educational, and future economic outcomes of children in affected households. My recentresearch focuses on the effects of income and the social safety net—in particular, the Supplemental Nutrition Assistance Program—on child and adult outcomes. An Equitable Growth working paper I published in May 2020 alongside Martha Bailey, Maya Rossin-Slater, and Reed Walker shows just how vital SNAP benefits are during good and bad economic times. We find that, as they get older, children with access to nutrition assistance demonstrate improvements in human capital, economic security, and life expectancy, as well as a lower likelihood of being incarcerated.
In short, these children grow up to be better educated, healthier, and more productive as adults.
Likewise, a chapter I wrote with Diane Schanzenbach as part of Equitable Growth’s Vision 2020 project explains why strengthening the Supplemental Nutrition Assistance Program would reduce poverty, including child poverty, in the United States by notable margins, and would provide a much-needed macroeconomic stimulus by increasing consumer spending in the local economy. We also provide a slew of options for policymakers considering ways to strengthen this important anti-poverty program.
Data-driven research on safety net spending can not only help guide policymakers to make the most effective, biggest “bang for their buck” impact on family outcomes. This type of research also can illuminate the role of the safety net in how the economy and individuals are best able to weather recessions. This is a research area ripe for consideration in our 2021 RFP.
Another area in which I am looking forward to receiving proposals is the ways in which structural racism and climate change affect intergenerational upward mobility. These two issues are especially important and timely, given that both climate change and the coronavirus disproportionately affect people of color, who have also been more likely to lose their jobs in this recession, and as a result may have more need for safety net programs and protections.
In the aftermath of the worst economic downturn since the Great Depression and one of the deadliest public health crises in modern history, policymakers in the new 117th U.S. Congress and the incoming Biden-Harris administration will need to act quickly in order to help struggling American workers and their families, promote well-being, and boost productivity. Using evidence-backed research—such as that produced by Equitable Growth’s network of academic scholars—to help guide policy decisions and strategy will ensure those who need the support of the safety net the most will receive access to it as quickly and seamlessly as possible.
Equitable Growth is now accepting proposals submitted online to our academic grants, doctoral/postdoctoral grants, and Dissertation Scholars program. For more information on who is eligible, how to apply, and upcoming deadlines, please visit our 2021 Request for Proposals website.
Every month the U.S. Bureau of Labor Statistics releases data on hiring, firing, and other labor market flows from the Job Openings and Labor Turnover Survey, better known as JOLTS. Today, the BLS released the latest data for November 2020. This report doesn’t get as much attention as the monthly Employment Situation Report, but it contains useful information about the state of the U.S. labor market. Below are a few key graphs using data from the report.
The quits rate has remained at 2.2 percent since September, but in November, it increased to 5.0 percent in accommodation and food services, where pay has declined and jobs are risky due to the pandemic.
The vacancy yield was little changed in November as the hires rate stayed the same and the job openings rate declined slightly.
As the unemployment rate declined in November, the ratio of unemployed workers per job opening declined slightly to 1.64.
The Beveridge Curve moved little in November as the unemployment rate declined by 0.2 percentage points and the job openings rate declined by 0.1 percentage points.
1. Attend the launch of our new book Ideas to Boost Wages in the New Economy on Jan 14. Here are the details: “When: January 14, 2021 2:30PM – 4:00PM. Where: Event will be virtual and not held in person. The forthcoming book collecting the series, Ideas to Boost Wages in the New Economy, features 10 essays by leading scholars on policies to boost wages for U.S. workers by addressing underlying structures and dynamics in our economy. The series—developed in partnership with the Institute for Research on Labor and Employment at the University of California, Berkeley and with funding from the Bernard and Anne Spitzer Charitable Trust—guides policymakers on how to deliver broadly shared economic prosperity by making wages a key outcome to structural economic policy at the federal and state levels. The virtual event will include a series of fireside chats to discuss how to reimagine the U.S. economy so that workers are able to share in the value that they create, highlighting policy priorities and proposals to balance power and foster an equitable economy. This conference will feature three essay authors: Ioana Marinescu, Assistant Professor of Economics, University of Pennsylvania, on addressing market concentration and employers’ ability to undercut wages. Jesse Rothstein, Professor of Public Policy and Economics, University of California, Berkeley, and Faculty Director, California Policy Lab, on supporting policies to broadly share economic risks. Andria Smythe, Assistant Professor of Economics, Howard University, on making higher education more accessible. Register for the launch event.”
2. Reread this essay in Vision 2020: Evidence for a stronger economy on how race amplifies class by super-amplifying blockages to upward economic mobility. I used to think, back in the late 1970s, that the African-American economic trajectory was like the standard immigrant economic trajectory if you set the clock so that the migration that counted was the Great Migration after World War II from the rural U.S. south to the urban U.S. north. That was just completely wrong. And stupid. Read Bradley Hardy and Trevon Logan, “Race & the Lack of Intergenerational Economic Mobility in the United States,” in which they present these “Key Takeaways: “The evidence: U.S. intergenerational economic mobility—the likelihood that children achieve a higher standard of living than the household in which they were reared—varies considerably by race and ethnicity. There are significant racial and gender differences in mobility that exacerbate racial differences in other areas such as housing, education, and health. The solutions: Policy remedies for persistently low intergenerational economic mobility include more equitable housing and educational opportunities, better income security and wealth accumulation, and investments to improve school quality, lower crime, and encourage private-sector amenities to improve infrastructure in the poorest neighborhoods.”
3. It was a disaster of a jobs report for December—the absence of lockdowns did not keep the coronavirus from sending the U.S. economy back into recession, as people got scared. Kate Bahn and Carmen Sanchez Cumming have the receipts. Read their “Equitable Growth’s Jobs Day Graphs: December 2020 Report Edition.”
Worthy reads not from Equitable Growth:
1. Let’s look at the bright side—the sunny side of things—in the long run at least. Read Noah Smith,” Why I’m so excited about solar and batteries,” in which he writes: “In the 19th century we switched to coal … in the 20th century we upgraded to oil … After World War II, a global extraction regime and price controls allowed us to keep cheap oil flowing. That ended with the Oil Shocks of the ‘70s. And though oil became cheaper again in the ‘80s and ‘90s, it never attained its former lows, or its low volatility. Then in the ‘00s it got expensive again … We didn’t get anything better than oil during this time … More expensive energy makes physical innovation harder in every way … This stagnation in energy technology almost certainly contributed to the productivity slowdown of the 1970s … Why didn’t bits fill the gap?… IT did drive the re-acceleration of productivity that began in the late ‘80s and continued through the early ‘00s … But around 2005 … that productivity growth faded … Some have argued that digital services are substantially undervalued in our economic production statistics … Physical technology is less “skill-biased” than IT, meaning that pretty much anyone can be a factory worker but only a few people can use computers productively and effectively … [or] IT simply touches less of our lives than energy does … “Bits” innovation sometimes drives fast productivity growth, and sometimes doesn’t … The cost declines in solar and batteries—and to a lesser extent, in wind and other storage technologies—comprise a true technological revolution … And there’s no end in sight to this revolution. New fundamental advances such as solid state lithium-ion batteries and next-generation solar cells seem within reach, which will kick off another virtuous cycle of deployment, learning curves, and cost decreases.”
2. Very interesting evidence that stimulus (as opposed to income support) spending should wait until after the coronavirus pandemic has been brought under control. Read the abstract of the paper by lan Auerbach, Yuriy Gorodnichenko, Peter B. McCrory, and Daniel Murphy, “Fiscal Multipliers in the COVID19 Recession,” in which they write: “In response to the record-breaking COVID19 recession, many governments have adopted unprecedented fiscal stimuli. While countercyclical fiscal policy is effective in fighting conventional recessions, little is known about the effectiveness of fiscal policy in the current environment with widespread shelter-in-place (“lockdown”) policies and the associated considerable limits on economic activity. Using detailed regional variation in economic conditions, lockdown policies, and U.S. government spending, we document that the effects of government spending were stronger during the peak of the pandemic recession, but only in cities that were not subject to strong stay-at-home orders. We examine mechanisms that can account for our evidence and place our findings in the context of other recent evidence from microdata.”
3. I find this very surprising, and am eager to dig deeper into it. I will not claim to understand it yet, but I think it is potentially very important. Read the abstract to the paper by Martha Bailey, Thomas Helgerman, and Bryan Stuart, “The Impact of the 1963 Equal Pay Act on the Gender Gap,” in which they write: “The 1963 Equal Pay Act mandated equal pay for equal work for individuals covered by the Fair Labor Standards Act. Drawing on an empirical strategy used in the minimum wage literature, we exploit variation in the “bite” of the Act due to the pre-existing gender pay gap in the same occupation, industry, and Census region. Consistent with the Equal Pay Act binding, the results show that women’s wages increased more sharply in more affected jobs after implementation. However, women in more affected jobs also experienced substantially larger employment reductions by 1970. The resulting reshuffling of women from higher wage (and higher gender gap) jobs to lower paying (and lower gender gap) jobs offset women’s aggregate wage gains entirely. The result was negligible changes in the aggregate gender gap during the 1960s.”
This is a post we publish each Friday with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is relevant and interesting articles we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.
Equitable Growth round-up
While implementing policies that improve the quality of jobs in the United States may have some direct costs, such as raising wages or providing workers with more paid time off, the costs that arise from employee turnover can be huge—an average of 40 percent of an employee’s annual salary, to be exact. Kate Bahn and Carmen Sanchez Cumminglook at how increasing job tenure via improved job quality can benefit employers and employees alike by reducing turnover costs and improving worker well-being. Bahn and Sanchez Cumming present the research behind the costs to employers of replacing workers and training new hires, which range from 2 percent to almost 150 percent of the individual employee’s annual salary, depending on the occupation and industry in question. They then describe several policy solutions that can reduce turnover by providing better jobs to begin with, including increasing the minimum wage and creating wage boards, boosting union membership, giving workers a voice in the workplace and in decision-making, and enforcing anti-discrimination protections for workers to reduce workplace hostility.
Paid family and medical leave is repeatedly shown to be an essential support for workers and their families—and amid the coronavirus pandemic and recession it likely will only grow in importance. Equitable Growth this week announced a trio of research grants to scholars exploring the role of this vital policy area during the current public health and economic crises. Sam Abbott and Alix Gould-Werth provide a brief overview of paid leave programs and their impact since the onset of the virus. They then describe the three projects that Equitable Growth is investing in to further study how paid leave programs have worked thus far in the pandemic and will continue to affect workers in the months and year ahead.
From January 3throughJanuary 5, the Allied Social Science Associations, organized by the American Economic Association, held its annual 3-day meeting virtually. The conference featured hundreds of sessions on a wide range of economic and social science topics, and presented valuable research from these areas. Equitable Growth posted a round up for eachdayof the conference highlighting and summarizing the specific presentations that piqued our interest.
Links from around the web
The first day of 2021 brought with it a series of minimum wage hikes across the country. Twenty states and 32 cities and counties officially raised their pay floor, 27 of which brought their minimum wages to more than $15 per hour. The New York Times’ Gillian Friedmanexplains how raising the minimum wage grew in popularity across the political spectrum over the past 9 years—putting added pressure on the U.S. Congress to finally raise the federal minimum wage, which has been set at $7.25 per hour since 2009. In fact, Friedman writes, what started in 2012 as a small protest demanding fair pay outside a McDonalds has grown to such a point that even without congressional action, by 2026, 42 percent of Americans will work in a city or state that mandates a minimum wage of at least $15 per hour. In the wake of the coronavirus recession, these state and local wage hikes are providing a more secure standard of living for millions of workers across the country, particularly in low-wage, service-sector jobs. Proponents hope these efforts also will provide a baseline for expanding these pay standards to more workers.
Earlier this week, more than 220 workers at Alphabet Inc.’s Google unit announced that they unionized, potentially signaling the start of worker organizing and activism in Big Tech. Recode’s Shirin Ghaffary provides a brief explainer on what the union can (and can’t) accomplish, and its potential impact on Google, its parent company, and other technology companies that have largely avoided or suppressed unionization efforts thus far. This new activism could be particularly important in the current moment, when policymakers are focused on regulating Big Tech and activists are highlighting workplace culture issues within these companies. Ghaffary then looks at the long road ahead for these workers, especially considering Google employees’ previous attempts to unionize.
On January 8th, the U.S. Bureau of Labor Statistics released new data on the U.S. labor market during the month of December. Below are five graphs compiled by Equitable Growth staff highlighting important trends in the data.
Despite an overall decrease in non-farm employment, the prime-age employment rate increased slightly from 76 percent to 76.3 percent.
The unemployment rate increased for Latinx workers in December as employment declined significantly in the leisure and hospitality industry where these workers are over-represented.
The unemployment rate was unchanged in December, but an increasing proportion of unemployed workers were on temporary layoff or new entrants to the labor market.
As the pandemic surged in December, an increasing proportion of unemployed workers have been out of work for fewer than 5 weeks.
Public-sector employment continued to decline in December, led by decreases to non-education local government employment.
Today was the final day of the three-day annual meeting of the Allied Social Science Associations, which is organized by the American Economic Association. The conference, held virtually this year, featured hundreds of sessions covering a wide variety of economics and other social science research. We’ve already posted the abstracts of some of the papers that caught the attention of Equitable Growth Staff during Day One and Day Two, as well as links to the sessions at which they were presented. Following are additional papers from the first two days as well as some from today’s final slate of sessions.
Nickolas Gagnon, Vienna University of Economics and Business, Kristof Bosmans, Maastricht University, and Arno Riedl, Maastricht University
Abstract: Labor market opportunities and wages may be unfair for various reasons, and how workers respond to different types of unfairness can have major economic consequences. Using an online labor platform, where workers engage in an individual task for a piece-rate wage, we investigate the causal effect of neutral and gender-discriminatory unfair chances on labor supply. We randomize workers into treatments where we control relative pay and chances to receive a low or a high wage. Chances can be fair, unfair based on an unspecified source, or unfair based on gender discrimination. Unequal pay reduces labor supply of low-wage workers, irrespective of whether the low wage is the result of fair or unfair chances. Importantly, the source of unfair chances matters. When a low wage is the result of gender-discriminatory chances, workers matched with a high-wage worker substantially reduce their labor supply compared to the case of equal low wages (-22%). This decrease is twice as large as those induced by low wages due to fair chances or unfair chances coming from an unspecified source. In addition, exploratory analysis suggests that in response to unequal pay, low-wage male workers reduce labor supply irrespective of the source of inequality, whereas low-wage female workers reduce labor supply only if unequal pay is due to gender-discriminatory chances. Our results concerning gender discrimination indicate a new reason for the lower labor supply of women, which is a prominent explanation for the gender gap in earnings.
Nina Roussille, University of California, Berkeley
Abstract: The gender ask gap measures the extent to which women ask for lower salaries than comparable men. This paper studies the role of the ask gap in generating wage inequality using novel data from Hired.com, a leading online recruitment platform for full time engineering jobs in the United States. To use the platform, job candidates must post an ask salary, stating how much they want to make in their next job. Firms then apply to candidates by offering a bid salary they are willing to pay the candidate. If the candidate is hired, a final salary is recorded. After adjusting for resume characteristics, the ask gap is 3.3%, the bid gap is 2.4% and the gap in final offers is 1.8%. Remarkably, further controlling for the ask salary explains all of the gender gaps in bid and final salary on the platform. To estimate the market-level effects of an increase in women’s ask salary, I exploit a sudden change in how candidates were prompted to provide their ask salary. For a subset of candidates, in mid-2018, the answer box used to solicit the ask salary went from an empty field to a pre-filled entry with the median salary on the platform for a similar candidate. Comparing candidates creating a profile before and after the feature change, I find that this change drove the ask gap and the bid gap to zero. In addition, women received the same number of bids before and after the change, suggesting they face little penalty for demanding wages comparable to men.
Abstract: In this paper, we investigate how female peers influence the likelihood of attaining senior corporate leadership positions for female MBA graduates. Using a combination of administrative data from a top 10 U.S. business school and hand-collected resumes from a large professional social media platform, we first document new facts on the evolution of the gender gap in the corporate management pipeline. Specifically, while there is no gender gap in the likelihood of becoming a manager, there is a gender gap in the probability of attaining senior-level managerial positions. We find that this difference is driven by a 10 percentage point gender gap in the probability of becoming a senior manager immediately after the MBA and by a 20% gap in the promotion rate from low-level manager to Director or VP. In the second half of the paper, we exploit the variation in gender composition of peers groups through the random assignment of MBA students to sections. We find that a 1 standard deviation increase in the proportion of female MBA peers leads to a 5% increase in the likelihood of holding a senior-level management position for women with no effect for men. The increase is not driven by more women entering any management positions, but rather, an increase in the probability of women attaining a senior-level position earlier in their careers as well as an increase in promotion rate along the pipeline.
Jose Joaquin Lopez, University of Memphis, Jamein P. Cunningham, University of Memphis
Abstract: We present new evidence on differences in litigation, judge dismissal, and plaintiff win rates across United States district courts from 1979 to 2016. Across courts, litigation rates are negatively (positively) correlated with judge dismissal (plaintiff win) rates. Further, Republican judges tend to dismiss cases at a higher rate than Democrats, regardless of judge gender and race. Finally, states with higher litigation rates also exhibit higher racial wage gaps, whereas states where judge dismissal (plaintiff win) rates are higher experience higher (lower) racial wage gaps. Our results highlight the importance of legal institutions on the persistence of racial inequality.
Abstract: Using a unique dataset, this paper examines the extent to which streets named after prominent Confederate generals reflect an area’s racial animus toward blacks and are related to black-white labor market differentials. The analysis shows that Confederate streets are positively associated with a proxy for historical racial animus. Specifically, I show that areas that experienced more historical lynchings have more streets named after prominent Confederate generals today. Examining individual-level data show that blacks who reside in areas that have a relatively higher number of Confederate streets are less likely to be employed, more likely to be employed in low-status occupations, and have lower wages compared to whites. I find no evidence that geographic sorting explains these results. Investigating whether these results extend to other groups shows that Confederate streets are associated with employment, occupational status, and wage differentials between other minorities and whites.
Maggie E.C. Jones, University of Victoria, Lisa D. Cook, Michigan State University, Trevon D. Logan, Ohio State University, and David Rosé, Wilfrid Laurier University
Abstract: Models of taste-based discrimination suggest that competition will drive down the market share of discriminatory firms even in the absence of government intervention. We present a stylized model that captures the nature of the relationship between the ratio of non-discriminatory to discriminatory firms and the ratio of non-discriminatory to discriminatory consumers. We then consider the case of discrimination against black consumers during the Jim Crow era. Combining exogenous variation in the racial composition of local markets induced by white casualties during WWII with a novel dataset of discriminatory and non-discriminatory firms, we find that white casualties are associated with large increases in both the number of non-discriminatory public accommodations as well as the ratio of non-discriminatory to discriminatory public accommodations throughout the United States. While our analysis is most consistent with the market conditions hypothesis, we show that activism among blacks likely played a role in the expansion of access to public accommodations.
Rob Gillezeau, University of Victoria, Jamein P. Cunningham, University of Memphis, Donna Feir, Federal Reserve Bank of Minneapolis and University of Victoria
Abstract: For decades, the rate of civilians killed by law enforcement in the United States has been unprecedented relative to its comparator countries. In this paper, we explore a potential causal factor: the provision of collective bargaining rights to law enforcement beginning in the 1950s and continuing through the 1980s. Using an event study approach that takes advantage of variation in the location and timing of when officers are granted bargaining rights, we find that over 60% of the increase in non-white civilian deaths can be explained by exposure to collective bargaining. In contrast, there is little to no impact for the white civilian population. Further, access to collective bargaining has no impact on total crime, violent crime, or officer deaths and causes a modest increase in compensation and decline in officer employment. These results are robust to an empirical strategy that relies strictly on border counties, which ensures a more effective control group. It appears that the collective bargaining process is, on average, being used to protect the ability of officers to discriminate in the disproportionate use of force against the non-white population. The results indicate that the employer, in this case local and regional governments, have a responsibility to bargain in a manner that protects all members of the public.
Abstract: Most convicted criminals are sentenced to probation and allowed to return home. On probation, however, a technical rule violation such as not paying fees can result in incarceration. Rule violations account for more than 30% of all prison spells in many states and are significantly more common among black offenders. I test whether technical rules are effective tools for identifying likely reoffenders and deterring crime and examine their disparate racial impacts using administrative data from North Carolina. Analysis of a 2011 reform eliminating prison punishments for technical violations reveals that 40% of rule breakers would go on to commit crimes if their violations were ignored. The same reform also closed a 33% black-white gap in incarceration rates without substantially increasing the black-white reoffending gap. These effects combined imply that technical rules target riskier probationers overall, but disproportionately affect low-risk black offenders. To justify black probationers’ higher violation rate on efficiency grounds, their crimes must be roughly twice as socially costly as white probationers’. Exploiting the repeat-spell nature of the North Carolina data, I estimate a semi-parametric competing risks model that allows me to distinguish the effects of particular types of technical rules from unobserved probationer heterogeneity. The estimates reveal that the deterrent effects of harsh punishments for rule breaking are negligible. Rules related to the payment of fees and fines, which are common in many states, are ineffective in tagging likely reoffenders and drive differential impacts by race. These findings illustrate the potentially large influence of facially race-neutral policies on racial disparities in criminal justice outcomes.
Monica I. Garcia-Perez, St. Cloud State University
Abstract: Using the Health Retirement Survey (2006-2017) -(HRS- RAND HRS Longitudinal File- Bugliari, 2009), I plan to analyze the connection between wealth depletion and health shocks among elderly Hispanic. I plan to identify the effect of nearly diagnosed conditions, separated by their level of severity (Mild, Intermediate, and Severe), on the average wealth depletion compared to White individuals. The key health conditions that are evaluated include diabetes and liver disease. Both are conditions that make this population more vulnerable to the current virus COVID-19.
Abstract: Due to the financial crisis facing Puerto Rico, many medical professionals on the island have left. Former Governor Rossello passed Act 14 in April of 2017 hoping to stave off the exodus of physicians. Act 14 reduces the income tax charge on medical services from 30 percent to 4 percent for 15 years. During the same year Puerto Rico experience a devastating category 4 hurricane, which left the island without power or water for several months. We will use a difference in difference estimation to estimate the effects of this change in the marginal tax rate to both keep physicians on the island as well as attract new physicians to the island from the mainland US. We use data from the Quarterly Census of Employment and Wages, the May Occupational Employment Statistics counts, and the AAMC Report on Residents. We find the number of healthcare providers decreased by 6.5 percent. The number of family physicians and pediatricians fell by 17.5 percent and 62 percent respectively. However, the number of registered nurses increased by 2.7 percent. Although the levels of healthcare providers decrease, the rate of healthcare provides per capita actually increased during this time period since the population decreases more rapidly than the fall in the level of healthcare providers.
Chang Hyung (Max) Lee, San Francisco State University
Abstract: This paper models the education and coming out choices of sexual minorities and empirically tests the model predictions using the American Community Survey and the National Longitudinal Study of Adolescent to Adult Health. The model predicts higher educational attainment for minorities if education reduces potential discrimination. The gap is driven by two mechanisms I call counterbalance and selection. Minorities choose to obtain more education in anticipation of future discrimination (counterbalance), and educated minorities become more likely to come out as they experience less discrimination relative to their less-educated counterparts (selection). The empirical analyses suggest that sexual minority men obtain more education than heterosexual counterparts, the education gap disappears in LGBTQ-friendly places, and the ability threshold for college enrollment is lower for minority men relative to their heterosexual counterparts. With women, the ability threshold is surprisingly higher for sexual minorities. I explore the possibility that sexual minority women may reduce their education to avoid discrimination.
Jonathan Dingel, University of Chicago, and Brent Neiman, University of Chicago
Abstract: Evaluating the economic impact of “social distancing” measures taken to arrest the spread of COVID-19 raises a fundamental question about the modern economy: how many jobs can be performed at home? We classify the feasibility of working at home for all occupations and merge this classification with occupational employment counts. We find that 37 percent of jobs in the United States can be performed entirely at home, with significant variation across cities and industries. Applying our occupational classifications to 85 other countries reveals that lower-income economies have a lower share of jobs that can be done at home.
Anne A. Brenøe, University of Zurich, Serena P. Canaan, American University of Beirut, Nikolaj A. Harmon, University of Copenhagen, and Heather N. Royer, University of California, Santa Barbara
Abstract: Most of the existing evidence on the effectiveness of family leave policies comes from studies focusing on their impacts on affected families – that is, mothers, fathers, and their children – without a clear understanding of the costs and effects on firms and coworkers. We use data from Denmark to evaluate the effect on firms and coworkers when a worker gives birth and goes on leave. Using a dynamic difference-in-differences design, we compare small firms in which a female employee is about to give birth to an observationally equivalent sample of small firms with female employees who are not close to giving birth. Identification rests on a parallel trends assumption, which we substantiate through a set of natural validity checks. When an employee gives birth, she goes on leave from her firm for 9.5 months on average. Firms respond by increasing their labor inputs along several margins such that the net effect on total work hours is close to zero. Firms’ total wage bill increases in response to leave take up, but this is driven entirely by wages paid to workers on leave for which firms receive reimbursement. There are no measurable effects on firm output, profitability or survival. Finally, coworkers of the woman going on leave see temporary increases in their hours, earnings, and likelihood of being employed but experience no significant changes in well-being at work as proxied by sick days. Overall, our results suggest that employees going on parental leave impose negligible costs on their firm and coworkers.
Raj Chetty, Harvard University, John Van Reenen, Massachusetts Institute of Technology, Owen Zidar, Princeton University, and Eric Zwick, University of Chicago
Abstract: We use de-identified tax returns to characterize entrepreneurship across the American population since the late 1990s. Our longitudinal data permit an analysis of which new firms end up being highly successful, allowing us to distinguish startups that are destined to remain as small businesses from “job creators.” We document new facts on lifecycle of “job creating” entrepreneurs – from their family backgrounds, to the areas they grew up in, to their labor market trajectories. Entrepreneurs tend to be white, male and drawn from high-income families. Part of the relationship between parental income and entrepreneurship appears to be due to the causal effect of liquidity, based on an analysis of liquidity shocks around IPOs. Another part appears to be due to exposure: children exposed to more entrepreneurs while they are growing up are more likely to start businesses themselves. Entrepreneurs are often seen as vital to economic dynamism, so we contrast them with another engine of growth – inventors. We find that the geographic origins of entrepreneurs are more dispersed than those of inventors, although the origins of “star” (high job creators) and high-tech entrepreneurs is more similar and concentrated in a few hubs. Children exposed to more entrepreneurship growing up tend to be more likely to become entrepreneurs themselves. Using a matched event study design, we find that (consistent with existing evidence), the variance of expected income increases after starting a business. However, contrary to received wisdom, becoming an entrepreneur has a positive effect on individual income even at the median. We conclude that increasing the number of “star” entrepreneurs may call for efforts to expand the supply of entrepreneurs, potentially through the provision of liquidity and exposure to entrepreneurship at early stages.
Yuci Chen, University of Illinois at Urbana-Champaign
Abstract: I investigate how establishments adjust their production plans on various margins when wage rates increase. Exploiting state-by-year variation in minimum wage, I analyze U.S. manufacturing plants’ responses over a 23-year period. Using instrumental variable method and Census Microdata, I find that when the hourly wage of production workers increases by one percent, manufacturing plants reduce the total hours worked by production workers by 0.7 percent and increase capital expenditures on machinery and equipment by 2.7 percent. The reduction in total hours worked by production workers is driven by intensive-margin changes. The estimated elasticity of substitution between capital and labor is 0.85. Following the wage increases, no statistically significant changes emerge in revenue, materials or total factor productivity. Additionally, I find that when wage rates increase, establishments are more likely to exit the market. Finally, I provide evidence that when the minimum wage increases the wages of some of the establishments in a firm, the firm also increases the wages for its other establishments.
Eliza Forsythe, University of Illinois at Urbana-Champaign
Abstract: Minimum wage increases often result in spillovers above the strict minimum wage cutoff, however the mechanism behind these spillovers is not well understood. Using establishment-level panel data from the Occupational Employment Statistics program, I estimate the effect of minimum wage increases implemented by 10 states in 2014and 2015 on establishment wage and occupational structures. I show that minimum wage increases lead to wage spillovers within establishments. I find no evidence that minimum wage increases induce establishments to reorganize their occupational structure across major occupational groups, however I find it does lead to a 1% increase in reallocation within 2-digit occupations. In addition, I do not find any major effect of minimum wage increases on the type of establishment that closes or the occupation or wage structure of newly opened establishments. Finally, I find that minimum wage increases propagate up the management hierarchy, leading to increased wages for supervisors. Nonetheless, I find overall wage inequality decreases within establishments after minimum wage increases.
Daron Acemoglu, Massachusetts Institute of Technology, and Pascual Restrepo, Boston University
Abstract: This paper develops a framework that links automation to inequality. At the center of the framework is the substitution of machines for tasks brought about by the automation process. Critically, workers have different competitive advantages and specialize in different industries and occupations. The pattern of automation then creates downward pressure on the wages of different groups of workers and shapes the structure of wages. The theoretical framework characterizes the direct and the general equilibrium (indirect) effects of automation. The general equilibrium effects involve, for example, the fact that once the tasks performed by some workers are automated, these workers compete for jobs previously performed by other workers. We then derive a flexible framework based on this theoretical model for estimating the extent of inequality created by automation. Our empirical framework flexibly includes the standard forces emphasized in the literature, including skill-biased technological change, gender-biased technological change, and changes in experience premia as well as inter-industry wage premia that may be time-varying. We estimate this model on data on the evolution of wages by detailed demographic groups. Our estimates indicate that the majority of the changes in the US wage structure are due to automation. For example, more than 80% of the changes in the college-high school wage premia are explained by automation patterns, and very little is accounted for by standard skill-biased technological change channel.
Daron Acemoglu, Massachusetts Institute of Technology, Gary Andersen, National Center for Science and Engineering Statistics, David Beede, U.S. Census Bureau, Catherine Buffington, U.S. Census Bureau, Emin Dinlersoz, U.S. Census Bureau, Lucia Foster, U.S. Census Bureau, Nathan Goldschlag, U.S. Census Bureau, John C. Haltiwanger, University of Maryland, Zachary Kroff, U.S. Census Bureau, Pascual Restrepo, Boston University, and Nikolas Zolas, U.S. Census Bureau
Abstract: This paper provides initial evidence on the connection between advanced technology presence and the size and composition of the workforce of U.S. firms and industries. Recent research using task-based models of production has demonstrated that advanced technology use by firms can alter both the number and types of workers through the creation of new tasks and the substitution of capital for labor in existing tasks. These effects can induce reallocation of labor and other inputs. Detailed evidence on the extent of these effects has been lacking for the population of U.S. firms, mainly due to the absence of reliable and comprehensive measures of technology use at the firm level. This analysis leverages a new technology module included in Census Bureau’s 2019 Annual Business Survey that collected data from over 300,000 firms on the adoption and use of five advanced technologies (Robotics, AI, Cloud Computing, Specialized Software, and Specialized Equipment), combined with firms’ subjective assessments of how each technology alters their workforce. The survey data is matched at the firm-level with administrative data on employment, revenues, and wages from the Census Bureau’s Longitudinal Business Database. The data is used to document across firms and industries the heterogeneity in technology adoption rates, the intensity of technology use, motivations for technology adoption, and barriers to adoption. The analysis also explores how firm-level technology adoption and use is related to firm and industry-level employment growth, how the adoption of new technologies creates (or destroys) roles for labor, and which type of technologies complement (or substitute) labor and skill.
Today was the second day of the three-day annual meeting of the Allied Social Science Associations, which is organized by the American Economic Association. The conference, held virtually this year, features hundreds of sessions covering a wide variety of economics and other social science research. Below are some of the papers and presentations that caught the attention of Equitable Growth staff during the second day (as well as more from yesterday). Included below are the abstracts from those papers as well as links to the sessions at which they were presented. Check out the highlights from yesterday as well, and come back after tomorrow’s program for more highlights.
Ann P. Bartel, Columbia University, Maya Rossin-Slater, Stanford University, Christopher Ruhm, University of Virginia, Meredith Slopen, Columbia University, and Jane Waldfogel, Columbia University
Abstract: We study the impacts of New York’s 2018 Paid Family and Medical Leave law using data we collected from representative samples of small and medium sized employers in New York, New Jersey, and Pennsylvania in fall 2016 and 2017 (pre-law) and fall 2018 and 2019 (post-law). Our survey covered four domains: Employee Characteristics and Performance; Company Benefits and Policies; Employee Life Events and Work-Flow; and Public Policies (Coverage of the federal Family and Medical Leave Act and Views on State Law). Utilizing a difference -in-difference methodology, we measure the impact of the New York law on productivity, employee turnover, absenteeism and morale, and also consider the impact on employers’ own provision of a variety of employee benefits.
Priyanka Anand, George Mason University, Laura Dague, Texas A&M University, and Kathryn Wagner, Marquette University
Abstract: The onset of a disability or major health shock has the potential to affect the labor supply decisions not only of those who experience the event but also of their family members. People who experience a disability or health shock often experience difficulty working, incur large medical expenses, and also may also require additional help with daily activities. Thus, spouses face a tradeoff between time spent earning income for the family and providing care for their partner. However, these conflicting incentives may be mitigated by the existence of paid leave. Our paper explores the role of paid leave laws implemented in California and New Jersey in the spousal labor supply response to a work-limiting disability or health shock. The data come from the Survey of Income and Program Participation (SIPP) 1996, 2001, 2004, and 2008 panels. We find that paid leave causes women whose spouse experiences the onset of a disability or health shock to strengthen their labor force attachment. Specifically, women with paid leave are more likely to report having a job for all weeks following the event, have higher earnings, are less likely to report not having a job due to caregiving, and more likely to report reducing their hours to provide caregiving. Overall, these results suggest that paid leave allows women to remain in the labor force after a spouse experiences a disability or health shock while increasing their provision of informal caregiving for a spouse who experiences a health shock.
Alex Kowalski, Massachusetts Institute of Technology, and Erin Kelly, Massachusetts Institute of Technology
Abstract: The rise of e-commerce and growth in demand for rapid delivery are making scheduling instability an increasing part of the employment experience inside warehouses. Workers in these settings frequently face mandatory overtime, late hours, and long hours, often with short notice that their workday is being extended. This instability can heighten worker fatigue and harm worker wellbeing, which consequently impacts business-level outcomes. Using data from a large retailer’s network of U.S. warehouses, we quantify the costs of unstable schedules. Specifically, we show how various dimensions of scheduling instability, including extended and volatile hours, affect worker productivity and turnover. An important consideration is that the downsides of unstable schedules are not felt alike by all workers who experience them. We thus study the person-level moderators of the relationship between scheduling instability and productivity and turnover, focusing on differences in gender, age, parental status, and job role. Our study provides evidence that the push to rapidly satisfy customer demand may have unacknowledged costs to business performance that operate through unstable schedules’ impact on workers.
Andrew Weaver, University of Illinois at Urbana-Champaign, and Suyeon Kang, University of Illinois at Urbana-Champaign
Abstract: Despite the widely acknowledged importance of employer-provided job training in the U.S., we know little about the key predictors of this training (Lerman 2010). Of particular interest is the relationship between the amount of technical change in an industry and the level of job training provided by industry business establishments. Understanding this relationship is key to both preparing workers for future jobs and facilitating economic growth. In theory, greater technical change could lead to either decreased training (via substitution effects) or increased training (via complementarity effects). Early employee-side survey evidence indicated that industries with higher rates of technical change may provide more training (Bartel and Sicherman 1998). However, more recent studies have found varied effects at the individual level (Ahituv and Zeira 2011, Burlon and Vialta-Bufi 2016). None of the recent studies are able to connect technical change to training outcomes at the establishment level as the last nationally representative surveys measuring training from the employer side (as opposed to individual/employee surveys) were conducted in the 1990s. In this research, we use unique, nationally representative survey data on U.S. manufacturing establishments to explore the relationship between technical change and the provision of training at both the extensive and intensive margins. We construct multiple indicators of industry-level technical change in order to test the robustness of the results to various measures. The findings imply heterogeneous effects that provide useful guidance for policy.
Moussa Diop, University of Southern California, Sumit Agarwal, National University of Singapore, and Brent Ambrose, Pennsylvania State University
Abstract: We extend the debate on the benefits to increasing the minimum wage by examining the impact on expenses associated with shelter, a previously unexplored area. Our analysis uses a unique data set that tracks household rental payments. Increases in state minimum wages significantly reduce the incidence of renters defaulting on their lease contracts by 1.7 percentage points over three months, relative to similar renters who did not experience an increase in the minimum wage. This represents 32% fewer defaults. However, this effect slowly decreases over time as landlords react to wage increases by increasing rents.
Matthew Hampton, University of Northern Iowa, and Evan Totty, U.S. Census Bureau
Abstract: The share of the labor force working for a rate of pay near the minimum wage increases for older ages near retirement, yet this population is typically ignored in the minimum wage literature. We use linked survey-administrative data to study the impact of minimum wage increases on Social Security retirement benefit claiming behavior and labor supply for low-wage older individuals. We first verify that we find the expected short-run effects of minimum wage increases on wages, earnings, and employment in the survey data. We then use linked administrative data to estimate hazard models of retirement benefit claiming and panel models of labor supply over ages 62-70. Individuals exposed to minimum wage increases during these ages delay their claiming of retirement benefits and do so by six months on average. The delay appears to be driven by an interaction between the minimum wage and the Social Security earnings test. We also find that exposure to minimum wage increases is associated with increased work during ages 62-70, including full-time and part-time work. We combine the claiming and labor supply outcomes to define partial and full retirement and find that minimum wage increases are associated with less full retirement and more partial retirement. These results suggest that increases in the minimum wage can enhance the financial well-being of low-wage older workers.
Gregory Casey, Williams College, and Stephie Fried, Arizona State University
Abstract: In this paper, we develop a dynamic, general-equilibrium model of structural transformation to quantify the aggregate impacts of climate change. The model draws from a long literature dedicated to understanding how changes in income per capita and sector-level productivity affect the composition of the economy, making it well-suited to capture the general-equilibrium consequences of climate change. We discipline the climate-damage parameters using the sector- and input-specific damage estimates from the micro literature. In preliminary results, we compare the findings of our model to a micro literature that computes aggregate damages with a simple weighted-sum of sector-level, partial-equilibrium estimates. Our findings highlight two general-equilibrium forces that increase the impact of climate change relative to the aggregated micro estimates. First, climate damages increase the price of output from vulnerable sectors, like agriculture. Since output from the different sectors is not easily substituted, the share of GDP in vulnerable sectors increases as a result of climate damages. Second, the micro-literature finds that climate change directly affects the investment goods sectors, particularly construction, implying that damages today affect output in the future by reducing available capital. As a result, we find that the macro damages are many times larger than a simple aggregation of the micro-level damage estimates would suggest.
Juliana Londono-Velez, University of California, Los Angeles
Abstract: This paper describes the wealth tax experiences in developing countries. Progressive wealth taxes could help developing countries address their extreme inequality and raise tax revenue. However, these countries face specific hurdles in terms of administration and enforcement, including high informality, limited administrative resources, weak enforcement capacity, political capture, and a particular vulnerability to tax havens. Drawing from the specific experience of Colombia, this paper identifies a set of requirements that would be needed to make wealth taxes work in developing countries.
Danny Yagan, University of California, Berkeley, Gabriel Zucman, University of California, Berkeley, Emmanuel Saez, University of California-Berkeley
Abstract: The United States never had a federal wealth tax but has a long experience taxing capital gains, which capture wealth gains over and above savings. Currently, US capital gains taxation suffers from three main drawbacks: (1) the tax can be deferred until realization, (2) it can be avoided entirely if gains are not realized before death, (3) capital gains are taxed at much lower preferential rates. A simple way to resolve all these drawbacks is to impose a recurrent annual withholding tax on the stock of unrealized capital gains above an exemption. This withholding tax is credited back upon realization. This tax would align the taxation of capital gains with the taxation of ordinary income were taxes are withheld as source. It would avoid the enormous cyclicality of mark-to-market capital gains taxation. Among billionaires, unrealized gains constitute the vast majority of wealth and therefore, the withholding tax would restore tax progressivity at the very top, as a wealth tax would. Such a tax would also be valuable for state income tax as taxes on capital gains can be easily avoided by moving temporarily to a zero income tax state before realizing gains. We present revenue and distributional statistics for such a tax and compare it to other proposals such as mark-to-market taxation and direct wealth taxes.
Martha Bailey, University of California-Los Angeles, Thomas Helgerman, University of Michigan, and Bryan Stuart, George Washington University
Abstract: The 1963 Equal Pay Act mandated equal pay for equal work for individuals covered by the Fair Labor Standards Act. Drawing on an empirical strategy used in the minimum wage literature, we exploit variation in the “bite” of the Act due to the pre-existing gender pay gap in the same occupation, industry, and Census region. Consistent with the Equal Pay Act binding, the results show that women’s wages increased more sharply in more affected jobs after implementation. However, women in more affected jobs also experienced substantially larger employment reductions by 1970. The resulting reshuffling of women from higher wage (and higher gender gap) jobs to lower paying (and lower gender gap) jobs offset women’s aggregate wage gains entirely. The result was negligible changes in the aggregate gender gap during the 1960s.
Amanda Weinstein, University of Akron, Heather Stephens, West Virginia University, Carlianne Patrick, Georgia State University
Abstract: Differential sorting into occupations explains a substantial portion of the gender wage gap in the US., and many female-dominated occupations and industries pay, on average, less than male-dominated ones. Yet, a person’s occupation is the outcome of many prior decisions including labor force participation, educational attainment, college major, etc. that are conditional on both individual and family characteristics and prevailing local social attitudes. Social norms and role models from childhood and adolescence may first shape girls’ views of their own innate talents and abilities, fundamentally altering the career paths that they view as attainable or acceptable. Yet, the precise mechanism through which gender role attitudes affect women’s wages is not understood.
This paper fills that gap in the literature by empirically investigating how the local gender role attitudes to which women are exposed during childhood and adolescence affect their occupation choice. We combine detailed microdata (the geocoded NLSY79 and 97) that includes sociodemographic information, parental data, aptitude and ability scores, educational attainment, college and major, and a complete labor market history, with information on gender role attitudes from the geocoded General Social Survey and female LFP where they lived at birth and age 14. We then compare women who grew up in places with progressive gender role attitudes and more female role models in particular occupations to women with exposure to more traditional gender norms. While the two NLSY cohorts provide rich detail, sample sizes are small. Thus, we also use Census microdata that includes place of birth to generalize our results from the NLSY samples. Overall, our approach allows us to examine the impact of societal gender role attitudes on the occupation choice of women, a significant portion of the explained gender wage gap, highlighting the contribution of sexism and discrimination to the gender wage gap.
Chinhui Juhn, University of Houston, German Cubas, University of Houston, and Pedro Silos, Temple University
Abstract: Using U.S. time diary data we construct occupation-level measures of coordinated work schedules based on the concentration of hours worked during peak hours of the day. A higher degree of coordination is associated with higher wages but also a larger gender wage gap. In the data women with children allocate more time to household care and are penalized by missing work during peak hours. An equilibrium model with these key elements generates a gender wage gap of 6.6 percent or approximately 30 percent of the wage gap observed among married men and women with children. If the need for coordination is equalized across occupations and set to a relatively low value (i.e. Health care support), the gender gap would fall by more than half to 2.7 percent.
Matthias Doepke, Northwestern University, Titan Alon, University of California, San Diego, Jane Olmstead-Rumsey, Northwestern University, and Michèle Tertilt, University of Mannheim
Abstract: In recent US recessions, employment losses have been much larger for men than for women. Yet, in the economic downturn caused by the Covid-19 pandemic the opposite is true: women’s employment declined much more than men’s. Why does a pandemic recession have a disproportionate impact on women’s employment, and what are the wider repercussions of this phenomenon? We argue that more women lost jobs because their employment is concentrated in contact-intensive sectors such as restaurants and because increased childcare needs during school and daycare closures prevented many from working. We analyze the macroeconomic implications of women’s employment losses using a model that features heterogeneity in gender, marital status, childcare needs, and human capital. A pandemic recession is qualitatively different from a regular recession because women’s labor supply behaves differently than men’s. Specifically, our quantitative analysis shows that a pandemic recession features a stronger transmission from employment to aggregate demand and results in a persistent widening of the gender wage gap. Many of the negative repercussions of a pandemic recession can be averted by prioritizing opening schools and daycare centers during the recovery.
Reginald Noël, Noël Collective, and Whitney J. Hewlett, Georgetown University
Abstract: This paper explores inequalities through the socioeconomic factors of salary, marital status, consumer expenditures, education, and occupations of adult women and adult men by race and ethnicity. It explores the ranking, or hierarchy, by sex and race when it comes to wages and salaries in the US: women tended to make less than their male counterparts, with White and Asian men amongst those with higher income, and Hispanic women consistently amongst those with lower income. In addition, the paper examines microeconomic and demographic inequalities faced by women of different races and ethnicity as compared to men, and reasons why such disparities exist. The data showed persistent hierarchical trends based on one’s self-identified race category and a binary interpretation of sex.
D. Mark Anderson, Montana State University, Kerwin Kofi Charles, Yale University, Daniel I. Rees, University of Colorado Denver
Abstract: In 1966, Southern hospitals were barred from participating in Medicare unless they discontinued their long-standing practice of racial segregation. Using data from five Deep South states and exploiting county-level variation in Medicare certification dates, we find that gaining access to an ostensibly integrated hospital had no effect on the Black-White infant mortality gap, although it may have discouraged small numbers of Black mothers from giving birth at home attended by a midwife. These results are consistent with descriptions of the federal hospital desegregation campaign as producing only cosmetic changes and illustrate the limits of anti-discrimination policies imposed upon reluctant actors.
Andreas Fuster, Swiss National Bank, Francesco D’Acunto, Boston College, Michael Weber, University of Chicago
Abstract: Increasing the diversity of policy committees has climbed to the top of the political agenda around the world, but the economic motivations and effects of diversity in policy committees are still elusive. In this paper, we use a randomized control trial within a large-scale survey to test for the effects of making consumers aware of the presence of underrepresented groups in the US Fed’s FOMC on the FOMC’s ability to manage consumers’ expectations. We find that White women and African American men update their unemployment expectations more in line with FOMC forecasts after being made aware of the presence of members of their demographic group in the FOMC. Consumers who face multiple facets of underrepresentation and whose demographic groups are not represented in the FOMC, such as African American women, are the most distrustful of the Fed and their macroeconomic expectations are the farthest away from FOMC forecasts. At the same time, overrepresented groups, such as White men, do not react negatively to awareness of minority representation in the FOMC. We also find evidence that women become more likely to read news articles about the Fed when a female policy maker is featured. Overall, our findings suggest that more diverse policy committee might improve the effectiveness of such committees in managing the expectations of underrepresented consumers without negative effects on other consumers.
Jevay Grooms, Howard University, Alberto Ortega, Indiana University, Joaquin Alfredo-Angel Rubalcaba, University of North Carolina at Chapel Hill, and Edward Vargas, Arizona State University
Abstract: It’s clear that the pandemic is disproportionately impacting communities of color. In this study, we investigate mental health distress among essential workers during the Coronavirus pandemic across race and ethnicity. We evaluate individual responses to the Patient Health Questionnaire and General Anxiety Disorder Questionnaire using unique, nationally representative, data set. Our findings suggest that Black essential healthcare workers disproportionately report symptoms of anxiety; while, Latino essential health-care workers disproportionately report symptoms of depression. Additionally, we find that being a Black or Latino essential non-health care worker is associated with higher levels of distress related to anxiety and depression. These findings highlight the additional dimensions to which Black and Hispanic Americans are disproportionately being affected by the Coronavirus pandemic. Furthermore, it calls into question how essential worker classifications, compounded by US unemployment policies, is potentially amplifying the mental health trauma experienced by workers.
Joanna Lahey, Texas A&M University, and Doug Oxley, Texas A&M University
Abstract: Age discrimination can have negative effects on both individuals being discriminated against and on government programs and the economy, as potentially productive workers are unable to find work. This paper explores age discrimination at the hiring level in a lab-in-the-field experiment in which we go to Human Resources (HR) fairs and conferences and ask HR managers to rate resumes for an administrative assistant I position. While they rate the resumes, we track their eyes using a Tobii X2-60. After they have rated resumes, we ask them a series of questions to elicit explicit and implicit discrimination against older workers. We find evidence of quadratic age discrimination against older workers. Similarly, participants spend less time looking at resumes of older workers. Participants who hold stereotypes that older workers are less enterprising, less able to handle physically taxing jobs, and less likely to undergo training are more likely to exhibit these discriminatory behaviors. Although there is suggestive evidence that participants who explicitly prefer working with 45 year olds to 65 year olds using a Bogardus social distance task also rate resumes differently by age, this evidence is not robust to specification choice. Finally, there is no evidence that the Implicit Association Test (IAT) for age has any relation to how HR managers rate resumes by age.
Suresh Naidu, Columbia University, Elisa Jacome, Princeton University, and Ilyana Kuziemko, Princeton University
Abstract: Much recent work has focused on understanding geographic variation in intergenerational mobility for modern U.S. cohorts, but it is difficult to extrapolate from cross-sectional variation in intergenerational mobility to the relevant cross-cohort variation. Yet, because of data constraints, little if any work has examined variation over time during the 20th century. We take on this task, collecting all survey datasets we can find that ask both own family income and father’s occupation, and use father’s occupation as a proxy for childhood income. We find that IGE is u-shaped over the 20th century, whereas rank-rank coefficients decline from the 1910-1940 cohorts and remain generally flat from the 1940-1970 cohorts. Mechanically, the decline in IGE and rank-rank is driven by the decreasing connection between father’s occupation and own education for those born between 1910 and 1940.
Jacob Bastian, Rutgers University, and Dan Black, University of Chicago
Abstract: The population of rural areas in the United States is older and more male than more urban areas, and this has become even more true in recent decades. In this paper, we investigate whether the Earned Income Tax Credit (EITC) can help explain these trends. Theoretically, the EITC could reduce migration out of rural areas by subsidizing low-paying jobs in rural areas and reducing the incentive to move away for a better job. On the other hand, the EITC could increase migration out of rural areas by relaxing credit constraints that prevent households from migrating. We find that although the EITC reduces overall moving (i.e. housing instability), the EITC also increases migration out of rural areas to more urban areas, with higher wage premiums. These effects are concentrated among younger women, exactly the group that benefits the most from the EITC. If the EITC leads to out-migration among younger women, then the EITC should also affect the composition of rural populations: we test this and find that rural areas in states and years after EITC expansions become relatively more male and older than rural areas with a smaller EITC program. Conversely, we also show that the EITC increases the fraction of younger females in more urban areas.
The Washington Center for Equitable Growth is announcing a trio of research grants to scholars exploring the impact of paid family and medical leave and paid sick leave policies amid the coronavirus pandemic and ensuing recession. These studies, conducted by faculty members at leading U.S. colleges and universities, will answer important research questions on paid leave’s role in protecting public health and economic security during the ongoing crisis.
But first, some background on Equitable Growth’s initiative in these arenas in light of the coronavirus recession: Equitable Growth is committed to advancing academic knowledge on paid family and medical leave, an issue that has been pushed to the forefront of policy debates in light of today’s serious public health crisis. As noted in a June analysis by Chantel Boyens at the Urban Institute, several states with their own paid family and medical leave systems experienced a sizable increase in paid leave claims at the start of the pandemic.
Shortly thereafter, the U.S. Congress passed the Families First Coronavirus Response Act. The FFCRA provided emergency paid leave to workers affected by sickness or child care responsibilities related to the coronavirus pandemic and COVID-19, the disease caused by the virus. Though only temporarily available, this emergency paid leave is the first ever federal paid leave guarantee in the United States.
Understanding how state paid leave programs and this federal emergency leave addressed the needs of workers and affected the functioning of the U.S. economy during this crisis is crucial as policymakers consider options for permanent paid family and medical leave guarantees in the future. We are pleased to announce investments in three research projects poised to shed light on how governmental paid leave programs addressed the current crisis.
In their project, “COVID-19 and Paid Leave: Assessing the Impact of the FFRCA” Kristen Smith of Dartmouth College, Tanya Byker of Middlebury College, and Elena Patel of the University of Utah will investigate how leave-taking was influenced by the passage of the Families First Coronavirus Response Act. The researchers will analyze the impact of the FFCRA on several employment and leave-taking outcomes, including labor force participation, usual hours worked, and reasons for work absences. Using data from the Current Population Survey, the researchers will examine how workers trade off the alternatives to leave-taking, including working while sick or separating from the labor force. The authors plan to compare leave-taking in states that either do or do not have state-based paid leave programs. This study will join an emerging body of literature studying the efficacy of the FFCRA.
Also investigating how paid leave can impact families’ finances and well-being in times of crisis is Jane Waldfogel of Columbia University in her project, “Access to Paid Leave during the COVID-19 Pandemic: Evidence from New York City.” This study will explore access, use, and outcomes associated with paid leave during the pandemic in New York City, using data from the New York City Longitudinal Study of Health and Wellbeing, also known as the Poverty Tracker. This survey follows representative samples of New York City residents, interviewing them every 3 months for up to 4 years and collecting a wealth of data on poverty, material hardship, health and well-being, and asset and debt levels.
Waldfogel will re-interview a sample of respondents who have already participated in 4 years of pre-pandemic surveys. In their first interview since the onset of the pandemic, the sample will be asked about their use of employer-, state-, or FFCRA-provided paid leave during the pandemic, as well as their experiences with poverty, hardship, and health and well-being since the emergence of the coronavirus and COVID-19.
In particular, the research team is interested in examining whether people in states with guaranteed paid sick leave were better able to adopt social distancing measures. Additionally, the team will examine if there are differences across states with and without paid leave systems in reported measures of illness, leave-taking, and economic and psychological distress associated with the pandemic.
The COVID-19 pandemic will end someday, but the lessons learned during this period will be informative to policymakers for years to come. Should another public health crisis emerge, policymakers will be better informed and better prepared to implement effective policy strategies to protect our public health, our families, and the broader U.S. economy.
More broadly, policymakers can draw on these lessons to construct a robust and equitable paid leave system for all workers with medical and caregiving needs to ensure the recovery from the coronavirus recession is strong and broad-based. Equitable Growth is proud to support this research and looks forward to working with this impressive slate of grantees to disseminate their findings and to continuing to build a bridge between those who make paid leave policy and those who can provide the evidence needed to do so in a way that supports an economy that works for all.
Today was the first day of the three-day annual meeting of the Allied Social Science Associations, which is organized by the American Economic Association. The conference, held virtually this year, features hundreds of sessions covering a wide variety of economics and other social science research. Below are some of the papers and presentations that caught the attention of Equitable Growth staff during the first day. Included below are the abstracts from those papers as well as links to the sessions at which they were presented. Come back tomorrow evening for more highlights.
Marina Gindelsky, U.S. Bureau of Economic Analysis
Abstract: Using the updated Distribution of Personal Income by the Bureau of Economic Analysis for U.S. households (2007-2018) with a focus on the bottom of the distribution, I show that transfers significantly lower the level of pre-tax and post-tax inequality in a national accounts framework. However, 2/3 of the reduction in the Gini derives from Social Security and Medicare. Though mostly available to elderly households, together these programs quadruple the share of the bottom income quintile and reduce the Gini by 16%. Conversely, the inclusion of all means-tested programs (such as Medicaid and refundable tax credits) reduces the Gini by half as much, raises the share of the bottom quintile by only 1.8 percentage points, and does not increase the income share of the middle quintiles. Consistent with an aging population, transfers have increased as a share of personal income; yet, inequality continues to rise.
Michael Batty, Federal Reserve Board, Jesse Bricker, Federal Reserve Board, Joseph Briggs, who is non-affiliated, Sarah Friedman, Federal Reserve Board, and Danielle Nemschoff, Federal Reserve Board
Abstract: This paper describes the construction of the Distributional Financial Accounts (DFA), a dataset containing quarterly estimates of the distribution of U.S. household wealth since 1989. The DFA build on two existing Federal Reserve Board statistical products—quarterly aggregate measures of household wealth from the Financial Accounts of the United States, and triennial wealth distribution measures from the Survey of Consumer Finances—to incorporate distributional information into a national accounting framework. The DFA complement other sources by generating distributional statistics that are consistent with macro aggregates, by providing quarterly data on a timely basis, and by constructing wealth distributions across demographic characteristics. We encourage policymakers, researchers, and other interested parties to use the DFA to better understand issues related to the distribution of U.S. household wealth.
Alan Auerbach, University of California, Berkeley, Yuriy Gorodnichenko, University of California, Berkeley, Peter B. McCrory, University of California, Berkeley, and Daniel Murphy, University of Virginia
Abstract: In response to the record-breaking COVID19 recession, many governments have adopted unprecedented fiscal stimuli. While countercyclical fiscal policy is effective in fighting conventional recessions, little is known about the effectiveness of fiscal policy in the current environment with widespread shelter-in-place (“lockdown”) policies and the associated considerable limits on economic activity. Using detailed regional variation in economic conditions, lockdown policies, and U.S. government spending, we document that the effects of government spending were stronger during the peak of the pandemic recession, but only in cities that were not subject to strong stay-at-home orders. We examine mechanisms that can account for our evidence and place our findings in the context of other recent evidence from microdata.
Pragyan Deb, International Monetary Fund, Davide Furceri, International Monetary Fund, Jonathan D. Ostry, International Monetary Fund, Nour Tawk, International Monetary Fund
Abstract: The paper uses daily real-time measures implemented by countries around the world to quantify the effect of containment and macroeconomic policy measures on the spread of the virus and on high-frequency economic indicators.
Troup Howard, University of Utah, and Adair Morse, University of California-Berkeley
Abstract: The reduction of economic activity during the Covid-19 crisis is expected to sharply decrease government revenues over the upcoming years, while spending on public health and welfare must grow atypically high. Because state and local governments face balanced budget requirements and public angst against borrowing, these shocks will necessitate a reduction in expenditures across public goods and services. This paper uses the Great Recession shock to test whether governments under income distress simply force revenue effects pro rata on public goods categories according to their budget share, versus the alternative that governments curtail budget shares in goods that exhibit luxury-like behavior in a Deaton demand system. We then forecast the luxury-versus-necessity sensitivities onto the current setting of public expenditures at the state, county and city level.
In Census of Governments spending data covering the population of districts in the United States ($4 trillion for 2020), we find that states, counties and municipalities all shift relatively more funding away from public safety (police, fire and judiciary) and retirement funding. This latter fact implies that short term budget solutions may exacerbate long-term fiscal imbalances. In addition, at the state level, higher education also loses: in response to a 10% revenue shock, states reduce higher education expenditure by 18%. On the other side, capital outlays rise in budget shares in most public good departments, presumably due to commitments.
The fact that higher education, public safety, and pension payments are, to some degree, luxury goods is disheartening. Projected onto Covid-19 setting, the implied preference shifts are small compared to the income effect: a proportional reduction across all goods. Across higher education, public safety, and pension payments, for example, we estimate a reduction in spending nationally of $79 billion, $46 and $62 billion respectively, of which a third is the shift from luxuries to necessities.
Abstract: Despite the significant influence that peer motivation is likely to have on educational investments during high school, it is difficult to test empirically since exogenous changes in peer motivation are rarely observed. In this paper, I focus on the 2012 introduction of Deferred Action for Childhood Arrivals (DACA) to study a setting in which peer motivation changed sharply for a subset of high school students. DACA significantly increased the returns to schooling for undocumented youth, while leaving the returns for their peers unchanged. I find that DACA induced undocumented youth to invest more in their education, which also had positive spillover effects on ineligible students (those born in the US) who attended high school with high concentrations of DACA-eligible youth.
Abstract: Beginning with the religiously legitimized marginalization of African slaves, inclusive of the establishment of the concept of “race” and racial hierarchy through craniometry and Social Darwinism, to the promotion of stereotype based on genetic inferiority, and finally, the endogenization of stereotype through regulation and institutionalized discrimination, this paper highlights the trade-off between morality and economic gain, referenced as societal externalities, in the construction of racial inequality. Societal externalities, the author argues, have affected social construction and social norms both within groups and across groups, with the intergenerational adoption of social norms resulting in implicit racial bias. Using economic theory and selected policy examples, the author discusses the racial bias inherent in economic assumptions and highlights how the exclusion of societal externalities in economic assessments has limited the value of related policy action in curbing racial inequality. The paper concludes with recommendations for incorporating societal externalities in economic evaluation along with the rationale for interdisciplinary collaboration in the development and implementation of policy focused on promoting racial equality.
Raj Chetty, Harvard University, and Nathaniel Hendren, Harvard University
Abstract: Low-income families in the United States tend to live in neighborhoods that offer limited opportunities for upward income mobility. One potential explanation for this pattern is that families prefer such neighborhoods for other reasons, such as affordability or proximity to family and jobs. An alternative explanation is that they do not move to high-opportunity areas because of barriers that prevent them from making such moves. We test between these two explanations using a randomized controlled trial with housing voucher recipients in Seattle and King County. We provided services to reduce barriers to moving to high-upward-mobility neighborhoods: customized search assistance, landlord engagement, and short-term financial assistance. Unlike many previous housing mobility programs, families using vouchers were not required to move to a high-opportunity neighborhood to receive a voucher. The intervention increased the fraction of families who moved to high-upward-mobility areas from 15% in the control group to 53% in the treatment group. Families induced to move to higher opportunity areas by the treatment do not make sacrifices on other aspects of neighborhood quality, tend to stay in their new neighborhoods when their leases come up for renewal, and report higher levels of neighborhood satisfaction after moving. These findings imply that most low-income families do not have a strong preference to stay in low-opportunity areas; instead, barriers in the housing search process are a central driver of residential segregation by income. Interviews with families reveal that the capacity to address each family’s needs in a specific manner from emotional support to brokering with landlords to customized financial assistance was critical to the program’s success. Using quasi-experimental analyses and comparisons to other studies, we show that more standardized policies increasing voucher payment standards in high-opportunity areas or informational interventions have much smaller impacts. We conclude that redesigning affordable housing policies to provide customized assistance in housing search could reduce residential segregation and increase upward mobility substantially.
John C. Haltiwanger, University of Maryland, Henry Hyatt, U.S. Census Bureau, Erika McEntarfer, U.S. Census Bureau, and Matthew Staiger, University of Maryland
Abstract: In this paper, we use linked employer-employee data for the United States to provide direct evidence on the role of job-to-job flows in reallocating workers from less productive to more productive firms. We show that job-to-job moves generally reallocate employment to more productive firms, accounting for most of the differential employment growth rates between high and low productivity firms. During recessions, productivity-enhancing job-to-job moves decline, while separations to non-employment contribute to productivity enhancing reallocation. The latter arises because the flows from employment to non-employment in downturns disproportionately rises at low productivity firms. In this respect, we find evidence for both a cleansing and sullying effects of recessions. We develop an accounting decomposition to quantify the contribution of the relative cleansing and sullying effects over time. We also explore the extent to which declining worker flows documented in several recent studies has implications for economy-wide productivity growth.
Michael Stepner, Massachusetts Institute of Technology
Abstract: Progressive tax and transfer schedules serve a redistributive role by transferring from high-income to low-income individuals, but they also serve an insurance role by transferring from the high-income years to the low-income years within each person’s lifespan. This paper examines how the design of the tax and transfer system provides insurance against income risks by studying the two largest economic shocks faced by working-age households: layoffs and illness. Using 1.6 million layoffs and 1.2 million hospital stays linked to Canadian tax records, I first show that both events cause persistent declines in earnings lasting more than six years. The full tax and transfer system provides substantial insurance against these risks, shrinking the percentage of income lost post-layoff by 40% and post-hospitalization by 60%, which I estimate to be worth 7-10% of total post-event consumption. But less than half of this social insurance comes from the unemployment and disability insurance programs that formally insure these risks. The progressive shape of taxes and transfers provides the majority of social insurance, and is especially important for reducing the risk of catastrophic income losses and mitigating inequality in the income risks of layoffs and hospitalizations. Using a dynamic model, I find that the insurance value of redistributive taxes and transfers is considerable across the entire income distribution, and is more than twice as large at the bottom of the income distribution than at the top.
Manasi Deshpande, University of Chicago, and Lee Lockwood, University of Virginia
Abstract: The public debate over disability insurance (DI) has centered on concerns about individuals with less-severe health conditions receiving benefits. We go beyond health risk alone to quantify DI’s overall insurance value, including value from insuring non-health risk. We find that DI recipients, especially those with less-severe health conditions, are much more likely to have experienced a wide variety of non-health shocks than non-recipients. Selection into DI on the basis of non-health shocks is so strong among individuals with less-severe health conditions that by many measures less-severe DI recipients are worse off than severe DI recipients. As a result, under baseline assumptions, DI benefits to less-severe recipients have an annual value (insurance benefit less efficiency cost) of $7,700 per recipient, about three-fourths that of DI benefits to severe recipients ($9,900). Insurance against non-health risk accounts for about one-half of DI’s value.
Anastasia C. Wilson, University of Massachusetts-Amherst
Abstract: This work examines occupational crowding patterns in the labor market in New Orleans, Louisiana. Informed by the methods of stratification economics, this analysis takes an intersectional approach to focus on the impacts of occupational crowding on women, people of color, and young and older workers in New Orleans. Using an intersectional occupational crowding analysis, this work will identify the occupations and industries that groups are crowded into and out of, with a particular focus on the hospitality, retail, care, and other service sectors. This research will then be matched with qualitative focus group interviews with workers to identify how occupational crowding creates a specific barrier to economic stability, and to identify which groups of workers are being impacted by the current economic and public health crisis. This analysis will then be used to inform proposals for state and local policy interventions that build economic security, centering the needs of marginalized workers in the economic recovery.
Abstract: This paper analyzes the recognition of women’s innovative ideas. Bibliometric data from research in economics are used to investigate gender biases in citation patterns. Based on deep learning and machine learning techniques, one can (1) establish the similarities between papers (2) build a link between articles by identifying the papers citing, cited and that should be cited. This study finds that, on average, omitted papers are 20% more likely to be female-authored than male-authored. This omission bias is more prevalent when there are only males in the citing paper. Overall, to have the same level of citation as papers written by males, papers written by females need to be 20 percentiles upper in the distribution of the degree of innovativeness of the paper.
Ying Fan, University of Michigan, and Chenyu Yang, University of Maryland
Abstract: We study the effects of merger on firm entry, product repositioning and prices in the retail craft beer market in California. To deal with selection on unobserved fixed cost shocks, we develop a new method to estimate multiple-discrete choice models. The method is based on bounds of conditional choice probabilities and does not require solving the game. Using the estimated model, we simulate a counterfactual merger where a large brewery acquires multiple craft breweries. In most markets, we find that new firms enter, non-merging incumbents add products, and merging firms drop products. However, the net effects of product variety from firm entry and product repositioning differ considerably across markets. Larger markets are more likely to see an increase in product variety, which moderates the loss of consumer surplus from the merger’s price effects. In a majority of smaller markets, product variety decreases, exacerbating the welfare loss from the price effects.
