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Work Organization and Cumulative Advantage
March 2025
Working Paper Number:
CES-25-18
Over decades of wage stagnation, researchers have argued that reorganizing work can boost pay for disadvantaged workers. But upgrading jobs could inadvertently shift hiring away from those workers, exacerbating their disadvantage. We theorize how work organization affects cumulative advantage in the labor market, or the extent to which high-paying positions are increasingly allocated to already-advantaged workers. Specifically, raising technical skill demands exacerbates cumulative advantage by shifting hiring towards higher-skilled applicants. In contrast, when employers increase autonomy or skills learned on-the-job, they raise wages to buy worker consent or commitment, rather than pre-existing skill. To test this idea, we match administrative earnings to task descriptions from job posts. We compare earnings for workers hired into the same occupation and firm, but under different task allocations. When employers raise complexity and autonomy, new hires' starting earnings increase and grow faster. However, while the earnings boost from complex, technical tasks shifts employment toward workers with higher prior earnings, worker selection changes less for tasks learned on-the-job and very little for high autonomy tasks. These results demonstrate how reorganizing work can interrupt cumulative advantage.
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Tip of the Iceberg: Tip Reporting at U.S. Restaurants, 2005-2018
November 2024
Working Paper Number:
CES-24-68
Tipping is a significant form of compensation for many restaurant jobs, but it is poorly measured and therefore not well understood. We combine several large administrative and survey datasets and document patterns in tip reporting that are consistent with systematic under-reporting of tip income. Our analysis indicates that although the vast majority of tipped workers do report earning some tips, the dollar value of tips is under-reported and is sensitive to reporting incentives. In total, we estimate that about eight billion in tips paid at full-service, single-location, restaurants were not captured in tax data annually over the period 2005-2018. Due to changes in payment methods and reporting incentives, tip reporting has increased over time. Our findings have implications for downstream measures dependent on accurate measures of compensation including poverty measurement among tipped restaurant workers.
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Payroll Tax Incidence: Evidence from Unemployment Insurance
June 2024
Working Paper Number:
CES-24-35
Economic models assume that payroll tax burdens fall fully on workers, but where does tax incidence fall when taxes are firm-specific and time-varying? Unemployment insurance in the United States has the key feature of varying both across employers and over time, creating the potential for labor demand responses if tax costs cannot be fully passed through to worker wages. Using state policy changes and administrative data of matched employer-employee job spells, I study how employment and earnings respond to unexpected payroll tax increases for highly exposed employers. I find significant drops in employment growth driven by lower hiring, and minimal evidence of passthrough to earnings. The negative employment effects are strongest for young workers and single-establishment firms.
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The Icing on the Cake: The Effects of Monetary Incentives on Income Data Quality in the SIPP
January 2024
Working Paper Number:
CES-24-03
Accurate measurement of key income variables plays a crucial role in economic research and policy decision-making. However, the presence of item nonresponse and measurement error in survey data can cause biased estimates. These biases can subsequently lead to sub-optimal policy decisions and inefficient allocation of resources. While there have been various studies documenting item nonresponse and measurement error in economic data, there have not been many studies investigating interventions that could reduce item nonresponse and measurement error. In our research, we investigate the impact of monetary incentives on reducing item nonresponse and measurement error for labor and investment income in the Survey of Income and Program Participation (SIPP). Our study utilizes a randomized incentive experiment in Waves 1 and 2 of the 2014 SIPP, which allows us to assess the effectiveness of incentives in reducing item nonresponse and measurement error. We find that households receiving incentives had item nonresponse rates that are 1.3 percentage points lower for earnings and 1.5 percentage points lower for Social Security income. Measurement error was 6.31 percentage points lower at the intensive margin for interest income, and 16.48 percentage points lower for dividend income compared to non-incentive recipient households. These findings provide valuable insights for data producers and users and highlight the importance of implementing strategies to improve data quality in economic research.
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The Impact of Industrial Opt-Out from Utility Sponsored Energy Efficiency Programs
October 2023
Working Paper Number:
CES-23-52
Industry accounts for one-third of energy consumption in the US. Studies suggest that energy efficiency opportunities represent a potential energy resource for regulated utilities and have resulted in rate of return regulated demand-side management (DSM) and energy efficiency (EE) programs. However, many large customers are allowed to self-direct or opt-out. In the Carolinas (NC and SC), over half of industrial and large commercial customers have selected to opt out. Although these customers claim they invest in EE improvements when it is economic and cost-effective to do so, there is no mechanism to validate whether they actually achieved energy savings. This project examines the industrial energy efficiency between the program participants and non participants in the Carolinas by utilizing the non-public Census of Manufacturing data and the public list of firms that have chosen to opt out. We compare the relative energy efficiency between the stay-in and opt-out plants. The t-test results suggest opt-out plants are less efficient. However, the opt-out decisions are not random; large plants or plants belonging to large firms are more likely to opt out, possibly because they have more information and resources. We conduct a propensity score matching method to account for factors that could affect the opt-out decisions. We find that the opt-out plants perform at least as well or slightly better than the stay-in plants. The relative performance of the opt-out firms suggest that they may not need utility program resources to obtain similar levels of efficiency from the stay-in group.
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Unionization, Employer Opposition, and Establishment Closure
July 2023
Working Paper Number:
CES-23-35
We study the effect of private-sector unionization on establishment employment and survival. Specifically, we analyze National Labor Relations Board union elections from 1981'2005 using administrative Census data. Our empirical strategy extends standard difference-in-differences techniques with regression discontinuity extrapolation methods. This allows us to avoid biases from only comparing close elections and to estimate treatment effects that include larger marginof- victory elections. Using this strategy, we show that unionization decreases an establishment's employment and likelihood of survival, particularly in manufacturing and other blue-collar and industrial sectors. We hypothesize that two reasons for these effects are firms' ability to avoid working with new unions and employers' opposition to unions. We find that the negative effects are significantly larger for elections at multi-establishment firms. Additionally, after a successful union election at one establishment, employment increases at the firms' other establishments. Both pieces of evidence are consistent with firms avoiding new unions by shifting production from unionized establishments to other establishments. Finally, we find larger declines in employment and survival following elections where managers or owners were likely more opposed to the union. This evidence supports new reasons for the negative effects of unionization we document.
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The Spillover Effects of Top Income Inequality
June 2023
Working Paper Number:
CES-23-29
Top income inequality in the United States has increased considerably within occupations. This phenomenon has led to a search for a common explanation. We instead develop a theory where increases in income inequality originating within a few occupations can 'spill over' through consumption into others. We show theoretically that such spillovers occur when an occupation provides non divisible services to consumers, with physicians our prime example. Examining local income inequality across U.S. regions, the data suggest that such spillovers exist for physicians, dentists, and real estate agents. Estimated spillovers for other occupations are consistent with the predictions of our theory.
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On The Role of Trademarks: From Micro Evidence to Macro Outcomes
March 2023
Working Paper Number:
CES-23-16R
What are the effects of trademarks on the U.S. economy? Evidence from comprehensive micro data on trademark registrations and outcomes for U.S. employer firms suggests that trademarks protect firm value and are linked to higher firm growth and marketing activity. Motivated by this evidence, trademarks are introduced in a general equilibrium framework to quantify their aggregate effects. Firms invest in product quality and engage in both informative and persuasive advertising to build a customer base subject to depreciation. Persuasive advertising induces a perception of higher quality. Firms can register trademarks to reduce customer depreciation and enhance product awareness. The model's predictions about trademark registrations, firm growth, and advertising expenditures align with the empirical evidence. The analysis shows that, compared to the counterfactual economy without trademarks, the U.S. economy with trademarks generates higher average product quality but lower variety, ultimately resulting in greater welfare and higher industry concentration. While informative advertising improves welfare, persuasive advertising reduces it. Nevertheless, the positive welfare impact of trademarks outweighs the negative effects of persuasive advertising.
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Managing Employee Retention Concerns: Evidence from U.S. Census Data
February 2023
Working Paper Number:
CES-23-07
Using Census microdata on 14,000 manufacturing plants, we examine how firms man age employee retention concerns in response to local wage pressure. We validate our measure of employee retention concerns by documenting that plants respond with wage increases, and do so more when the employees' human capital is higher. We doc ument substantial use of non-wage levers in response to retention concerns. Plants shift incentives to increase the likelihood that bonuses can be paid: performance target transparency declines, as does the use of localized performance metrics for bonuses. Furthermore, promotions become more meritocratic, ensuring key employees can be promoted and retained. Lastly, decision-making authority at the plant-level increases, offering more agency to local employees. We find evidence consistent with inequity aversion constraining the response to local wage pressure, and document spillovers in both wage and non-wage reactions across same-firm plants.
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The U.S. Manufacturing Sector's Response to Higher Electricity Prices: Evidence from State-Level Renewable Portfolio Standards
October 2022
Working Paper Number:
CES-22-47
While several papers examine the effects of renewable portfolio standards (RPS) on electricity prices, they mainly rely on state-level data and there has been little research on how RPS policies affect manufacturing activity via their effect on electricity prices. Using plant-level data for the entire U.S. manufacturing sector and all electric utilities from 1992 ' 2015, we jointly estimate the effect of RPS adoption and stringency on plant-level electricity prices and production decisions. To ensure that our results are not sensitive to possible pre-existing differences across manufacturing plants in RPS and non-RPS states, we implement coarsened exact covariate matching. Our results suggest that electricity prices for plants in RPS states averaged about 2% higher than in non-RPS states, notably lower than prior estimates based on state-level data. In response to these higher electricity prices, we estimate that plant electricity usage declined by 1.2% for all plants and 1.8% for energy-intensive plants, broadly consistent with published estimates of the elasticity of electricity demand for industrial users. We find smaller declines in output, employment, and hours worked (relative to the decline in electricity use). Finally, several key RPS policy design features that vary substantially from state-to-state produce heterogeneous effects on plant-level electricity prices.
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