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Transitional Costs and the Decline of Coal: Worker-Level Evidence
September 2024
Working Paper Number:
CES-24-53
We examine the labor market impacts of the U.S. coal industry's decline using comprehensive administrative data on workers from 2005-2021. Coal workers most exposed to the industry's contraction experienced substantial earnings losses, equivalent to 1.6 years of predecline wages. These losses stem from both reduced employment duration (0.37 fewer years employed) and lower annual earnings (17 percent decline) between 2012-2019, relative to similar workers less exposed to coal's decline. Earnings reductions primarly occur when workers remain in local labor markets but are not employed in mining. While coal workers do not exhibit lower geographic mobility, relocation does not significantly mitigate their earnings losses.
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Contrasting the Local and National Demographic Incidence of Local Labor Demand Shocks
July 2024
Working Paper Number:
CES-24-36
This paper examines how spatial frictions that differ among heterogeneous workers and establishments shape the geographic and demographic incidence of alternative local labor demand shocks, with implications for the appropriate level of government at which to fund local economic initiatives. LEHD data featuring millions of job transitions facilitate estimation of a rich two-sided labor market assignment model. The model generates simulated forecasts of many alternative local demand shocks featuring different establishment compositions and local areas. Workers within 10 miles receive only 11.2% (6.6%) of nationwide welfare (employment) short-run gains, with at least 35.9% (62.0%) accruing to out-of-state workers, despite much larger per-worker impacts for the closest workers. Local incidence by demographic category is very sensitive to shock composition, but different shocks produce similar demographic incidence farther from the shock. Furthermore, the remaining heterogeneity in incidence at the state or national level can reverse patterns of heterogeneous demographic impacts at the local level. Overall, the results suggest that reduced-form approaches using distant locations as controls can produce accurate estimates of local shock impacts on local workers, but that the distribution of local impacts badly approximates shocks' statewide or national incidence.
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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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Low-Wage Jobs, Foreign-Born Workers, and Firm Performance
January 2024
Working Paper Number:
CES-24-05
We examine how migrant workers impact firm performance using administrative data from the United States. Exploiting an unexpected change in firms' likelihood of securing low-wage workers through the H-2B visa program, we find limited crowd-out of other forms of employment and no impact on average pay at the firm. Yet, access to H-2B workers raises firms' annual revenues and survival likelihood. Our results are consistent with the notion that guest worker programs can help address labor shortages without inflicting large losses on incumbent workers.
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Outsourcing Dynamism
December 2023
Working Paper Number:
CES-23-64
This paper investigates the increasing importance of domestic outsourcing in U.S. manufacturing. Under domestic outsourcing, the agency is the employer of record for temporary workers, though they perform their tasks at the client business' premises. On a yearly basis, one in two manufacturing plants hires at least some of its workers through a temporary help agency. Furthermore, domestic outsourcing is becoming increasingly more important: the average share of revenue spent on such arrangements has gone up by 85 percent since 2006. We develop a methodology to transform reported expenses on temporary and leased workers into plant-level outsourced employment counts, using administrative data on the U.S. manufacturing sector. We find that domestic outsourcing is an important margin of adjustment that plants use to modify their workforce in response to productivity shocks. Plant-level outsourced employment adjusts more quickly and is twice as responsive as payroll employment. These micro implications have significant aggregate consequences. Without taking reallocations in outsourced employment into account, the measured pace at which jobs reallocate across workplaces is underestimated. On average, we omit the equivalent of 15 percent of payroll employment reallocations in each year. However, outsourced employment churns at a much higher rate compared to its payroll counterpart. Therefore, the omission of outsourced reallocations can rationalize 37 percent of the secular decline in the aggregate job reallocation rate. Lastly, the extent of mismeasurement varies with the business cycle; falling in downturns and increasing in upturns implying that the speed of economic recovery is underestimated.
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Is the Gender Pay Gap Largest at the Top?
December 2023
Working Paper Number:
CES-23-61
No: it is at least as large at bottom percentiles of the earnings distribution. Conditional quantile regressions reveal that while the gap at top percentiles is largest among the most-educated, the gap at bottom percentiles is largest among the least-educated. Gender differences in labor supply create more pay inequality among the least-educated than they do among the most-educated. The pay gap has declined throughout the distribution since 2006, but it declined more for the most-educated women. Current economics-of-gender research focuses heavily on the top end; equal emphasis should be placed on mechanisms driving gender inequality for noncollege-educated workers.
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Industry Wage Differentials: A Firm-Based Approach
August 2023
Working Paper Number:
CES-23-40
We revisit the estimation of industry wage differentials using linked employer-employee data
from the U.S. LEHD program. Building on recent advances in the measurement of employer wage premiums, we define the industry wage effect as the employment-weighted average workplace premium in that industry. We show that cross-sectional estimates of industry differentials overstate the pay premiums due to unmeasured worker heterogeneity. Conversely, estimates based on industry movers understate the true premiums, due to unmeasured heterogeneity in pay premiums within industries. Industry movers who switch to higher-premium industries tend to leave firms in the origin sector that pay above-average premiums and move to firms in the destination sector with below-average premiums (and vice versa), attenuating the measured industry effects. Our preferred estimates reveal substantial heterogeneity in narrowly-defined industry premiums, with a standard deviation of 12%. On average, workers in higher-paying industries have higher observed and unobserved skills, widening between-industry wage inequality. There are also small but systematic differences in industry premiums across cities, with a wider distribution of pay premiums and more worker sorting in cities with more highpremium firms and high-skilled workers.
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Opening the Black Box: Task and Skill Mix and Productivity Dispersion
September 2022
Authors:
John Haltiwanger,
Lucia Foster,
Cheryl Grim,
Zoltan Wolf,
Cindy Cunningham,
Sabrina Wulff Pabilonia,
Jay Stewart,
Cody Tuttle,
G. Jacob Blackwood,
Matthew Dey,
Rachel Nesbit
Working Paper Number:
CES-22-44
An important gap in most empirical studies of establishment-level productivity is the limited information about workers' characteristics and their tasks. Skill-adjusted labor input measures have been shown to be important for aggregate productivity measurement. Moreover, the theoretical literature on differences in production technologies across businesses increasingly emphasizes the task content of production. Our ultimate objective is to open this black box of tasks and skills at the establishment-level by combining establishment-level data on occupations from the Bureau of Labor Statistics (BLS) with a restricted-access establishment-level productivity dataset created by the BLS-Census Bureau Collaborative Micro-productivity Project. We take a first step toward this objective by exploring the conceptual, specification, and measurement issues to be confronted. We provide suggestive empirical analysis of the relationship between within-industry dispersion in productivity and tasks and skills. We find that within-industry productivity dispersion is strongly positively related to within-industry task/skill dispersion.
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The Alpha Beta Gamma of the Labor Market
April 2022
Working Paper Number:
CES-22-10
Using a large panel dataset of US workers, we calibrate a search-theoretic model of the labor market, where workers are heterogeneous with respect to the parameters governing their employment transitions. We first approximate heterogeneity with a discrete number of latent types, and then calibrate type-specific parameters by matching type-specific moments. Heterogeneity is well approximated by 3 types: as, 's and ?s. Workers of type a find employment quickly because they have large gains from trade, and stick to their jobs because their productivity is similar across jobs. Workers of type ? find employment slowly because they have small gains from trade, and are unlikely to stick to their job because they keep searching for jobs in the right tail of the productivity distribution. During the Great Recession, the magnitude and persistence of aggregate unemployment is caused by ?s, who are vulnerable to shocks and, once displaced, they cycle through multiple unemployment spells before finding stable employment.
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Employer Concentration and Labor Force Participation
March 2022
Working Paper Number:
CES-22-08
This paper examines the association between employer concentration and labor outcomes (labor force participation and employment). It uses restricted data from the U.S. Census Bureau's Longitudinal Business Database to estimate, at the county level, to what extent more concentrated labor markets have lower labor force participation rates and lower employment. The analysis also examines whether unionization rates and education levels mediate these associations.
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