Tag: Danny Yagan

Must-Read: Danny Yagan: Enduring Employment Losses from the Great Recession?: Longitudinal Worker-Level Evidence

Posted on by Brad DeLong

Must-Read: Danny Yagan: Enduring Employment Losses from the Great Recession?: Longitudinal Worker-Level Evidence: “The severity of the Great Recession varied across U.S. local areas…

…Comparing two million workers within firms across space, I find that starting the recession in a below-median 2007-2009-employment-shock area caused workers to be 1.0 percentage points less likely to be employed in 2014, relative to starting elsewhere. These enduring employment losses hold even when controlling for current local unemployment rates, which have converged across space. The results demonstrate limits to U.S. local labor market integration and suggest hysteresis effects culminating in labor force exit.

Must-read: Danny Yagan: “The Enduring Employment Impact of Your Great Recession”

Posted on by Brad DeLong

Must-Read: Danny Yagan: The Enduring Employment Impact of Your Great Recession: “In the cross section, employment rates diverged across U.S. local areas 2007-2009…

…and–in contrast to history–have barely converged [since]…. I… use administrative data to compare two million workers with very similar pre-2007 human capital: those who in 2006 earned the same amount from the same retail firm, at establishments located in different local areas. I find that, conditional on 2006 firm-x-wages fixed effects, living in 2007 in a below-median 2007-2009-fluctuation area caused those workers to have a 1.3%-lower 2014 employment rate…. Location has affected long-term employment and exacerbated within-skill income inequality. The enduring employment impact is not explained by more layoffs, more disability insurance enrollment, or reduced migration. Instead, the employment outcomes of cross-area movers are consistent with severe-fluctuation areas continuing to depress their residents’ employment. Impacts are correlated with housing busts but not manufacturing busts, possibly reconciling current experience with history. If recent trends continue, employment rates are estimated to converge in the 2020s–adding up to a relative lost decade for half the country.

Must-read: Danny Yagan: “Capital Tax Reform and the Real Economy: The Effects of the 2003 Dividend Tax Cut”

Posted on by Brad DeLong

Must-Read: Danny Yagan: Capital Tax Reform and the Real Economy: The Effects of the 2003 Dividend Tax Cut: “This paper tests whether the 2003 dividend tax cut…

…stimulated corporate investment and increased labor earnings, using a quasi-experimental design and US corporate tax returns from years 1996–2008. I estimate that the tax cut caused zero change in corporate investment and employee compensation…. The statistical precision challenges leading estimates of the cost-of-capital elasticity of investment, or undermines models in which dividend tax reforms affect the cost of capital…