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Declining Migration wihin the US: The Role of the Labor Market
October 2013
Working Paper Number:
CES-13-53
Interstate migration has decreased steadily since the 1980s. We show that this trend is not related to demographic and socioeconomic factors, but that it appears to be connected to a concurrent secular decline in labor market transitions'i.e. the fraction of workers changing employer, industry or occupation. We explore a number of reasons for the dual trends in geographic and labor market transitions, including changes in the distribution of job opportunities across space, polarization in the labor market, concerns of dual-career households, and changes in the net benefit to changing employers. We find little empirical support for all but the last of these hypotheses. Specifically, using data from three cohorts of the National Longitudinal Surveys spanning the 1970s to the 2000s, we find that wage gains associated with employer transitions have fallen, while the returns to staying with the same employer have not changed. We favor the interpretation that, at least from the 1990s to the 2000s, the distribution of outside offers has shifted in a way that has made labor market transitions, and thus geographic transitions, less desirable to workers.
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The Recent Decline in Employment Dynamics
March 2013
Working Paper Number:
CES-13-03
In recent years, the rate at which workers and businesses exchange jobs has declined in the United States. Between 1998 and 2010, rates of job creation, job destruction, hiring, and separation declined dramatically, and the rate of job-to-job flows fell by about half. Little is known about the nature and extent of these changes, and even less about their causes and implications. In this paper, we document and attempt to explain the recent decline in employment dynamics. Our empirical work relies on the four leading datasets of quarterly employment dynamics in the United States ' the Longitudinal Employer-Household Dynamics (LEHD), the Business Employment Dynamics (BED), the Job Openings and Labor Turnover Survey (JOLTS), and the Current Population Survey (CPS). We find that changes in the composition of the labor force and of employers explain relatively little of the decline. Exploiting some identities that relate the different measures to each other, we find that job creation and destruction could explain as much of a third of the decline in hires and separations, while job-to-job flows may explain more of the decline. We end our paper with a discussion of different possible explanations and their relative merits.
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The United States Labor Market: Status Quo or A New Normal?
September 2012
Working Paper Number:
CES-12-28
The recession of 2007-09 witnessed high rates of unemployment that have been slow to recede. This has led many to conclude that structural changes have occurred in the labor market and that the economy will not return to the low rates of unemployment that prevailed in the recent past. Is this true? The question is important because central banks may be able to reduce unemployment that is cyclic in nature, but not that which is structural. An analysis of labor market data suggests that there are no structural changes that can explain movements in unemployment rates over recent years. Neither industrial nor demographic shifts nor a mismatch of skills with job vacancies is behind the increased rates of unemployment. Although mismatch increased during the recession, it retreated at the same rate. The patterns observed are consistent with unemployment being caused by cyclic phenomena that are more pronounced during the current recession than in prior recessions.
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Do SBA Loans Create Jobs? Estimates from Universal Panel Data and Longitudinal Matching Methods
September 2012
Working Paper Number:
CES-12-27
This pape reports estimates of the effects of the Small Business Administration (SBA) 7(a) and 504 loan programs on employment. The database links a complete list of all SBA loans in these programs to universal data on all employers in the U.S. economy from 1976 to 2010. Our method is to estimate firm fixed effect regressions using matched control groups for the SBA loan recipients we have constructed by matching exactly on firm age, industry, year, and pre-loan size, plus kernel-based matching on propensity scores estimated as a function of four years of employment history and other variables. The results imply positive average effects on loan recipient employment of about 25 percent or 3 jobs at the mean. Including loan amount, we find little or no impact of loan receipt per se, but an increase of about 5.4 jobs for each million dollars of loans. When focusing on loan recipients and control firms located in high-growth counties (average growth of 22 percent), places where most small firms should have excellent growth potential, we find similar effects, implying that the estimates are not driven by differential demand conditions across firms. Results are also similar regardless of distance of control from recipient firms, suggesting only a very small role for displacement effects. In all these cases, the results pass a "pre-program" specification test, where controls and treated firms look similar in the pre-loan period. Other specifications, such as those using only matching or only regression imply somewhat higher effects, but they fail the pre-program test.
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Testing for Wage Discrimination in U.S. Manufacturing
September 2012
Working Paper Number:
CES-12-23
In spite of the large literature on labor market discrimination, the quantity of solid evidence on discrimination is relatively limited. This is because evidence of discrimination is difficult to obtain. Two individuals may be treated equally, but this does not prove discrimination unless we can show that the differences in treatment were not justified by differences in productivity. The method most commonly used to identify wage discrimination, the Oaxaca decomposition, is flawed because any omitted variables that are correlated with gender will contribute to the unexplained portion of the wage gap, leading to an over- or under-estimation of wage discrimination. Audit studies provide more direct evidence of differential treatment, but are costly to carry out. Only a small number of studies attempt to measure worker productivity to see if wage differences are justified. This may be because the data needed to measure productivity are difficult to obtain. This paper tests for wage discrimination by gender and race by estimating relative productivity from 2002 Census of Manufacturing data linked to demographic information on workers from Longitudinal Employer-Household Dynamics (LEHD) files. Comparing the estimated productivity ratios to the observed wage ratios, I conclude that females and blacks face wage discrimination in US manufacturing.
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Job-to-Job Flows and the Business Cycle
March 2012
Working Paper Number:
CES-12-04
Job-to-job flows represent one of the most significant opportunities for the development of new economic statistics, having been made possible by the increased availability of matched employer-employee datasets for statistical tabulation. In this paper, we analyze a new database of job-to-job flows from 1999 to 2010 in the United States. This analysis provides definitive benchmarks on gross employment flows, origin and destination industries, nonemployment, and associated earnings. To demonstrate the usefulness of these statistics, we evaluate them in the context of the recessions of 2001 and 2007, as well as the economic expansion between the two. We find a sharp drop in job mobility in the Great Recession, much sharper than the previous recession, and higher earnings penalties for job transitions with an intervening nonemployment spell. This fall in job mobility is found within all age groups but is largest among younger workers. We also examine outcomes for displaced workers and examine labor market adjustment in several specific industries. Generally, we find higher rates of nonemployment upon job separation, increasing rates of industry change and higher earnings penalties from job change in the Great Recession.
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Further Evidence from Census 2000 About Earnings by Detailed Occupation for Men and Women: The Role of Race and Hispanic Origin
November 2011
Working Paper Number:
CES-11-37
A 2004 report by the author reviewed data from Census 2000 and concluded "There is a substantial gap in median earnings between men and women that is unexplained, even after controlling for work experience (to the extent it can be represented by age and presence of children), education, and occupation." This paper extends the analysis and concludes that once those characteristics are controlled for, no further explanatory power is attributable to race or Hispanic origin.
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Who Works for Startups? The Relation between Firm Age, Employee Age, and Growth
October 2011
Working Paper Number:
CES-11-31
We present evidence that young employees are an important ingredient in the creation and growth of firms. Our results suggest that young employees possess attributes or skills, such as willingness to take risk or innovativeness, which make them relatively more valuable in young, high growth, firms. Young firms disproportionately hire young employees, controlling for firm size, industry, geography and time. Young employees in young firms command higher wages than young employees in older firms and earn wages that are relatively more equal to older employees within the same firm. Moreover, young employees disproportionately join young firms that subsequently exhibit higher growth and raise venture capital financing. Finally, we show that an increase in the regional supply of young workers increases the rate of new firm creation. Our results are relevant for investors and executives in young, high growth, firms, as well as policymakers interested in fostering entrepreneurship.
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The Emergence of Wage Discrimination in U.S. Manufacturing
June 2011
Working Paper Number:
CES-11-18
This paper examines the hypothesis that wage discrimination emerged at the beginning of the twentieth century. I test for wage discrimination by estimating the female-male productivity ratio from samples of manufacturing firms in the northeast, and then comparing the estimated productivity ratio to the wage ratio. I find that women did not face wage discrimination in manufacturing during the nineteenth century. In 1900 there was wage discrimination against women in white-collar jobs, but not in blue-collar jobs. Wage discrimination persisted, and in 2002 the female-male wage ratio was less than the productivity ratio.
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Job Referral Networks and the Determination of Earnings in Local Labor Markets
December 2010
Working Paper Number:
CES-10-40
Referral networks may affect the efficiency and equity of labor market outcomes, but few studies have been able to identify earnings effects empirically. To make progress, I set up a model of on-the-job search in which referral networks channel information about high-paying jobs. I evaluate the model using employer-employee matched data for the U.S. linked to the Census block of residence for each worker. The referral effect is identified by variations in the quality of local referral networks within narrowly defined neighborhoods. I find, consistent with the model, a positive and significant role for local referral networks on the full distribution of earnings outcomes from job search.
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