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Task Trade and the Wage Effects of Import Competition
January 2016
Working Paper Number:
CES-16-03
Do job characteristics modulate the relationship between import competition and the wages of workers who perform those jobs? This paper tests the claim that workers in occupations featuring highly routine tasks will be more vulnerable to low-wage country import competition. Using data from the US Census Bureau, we construct a pooled cross-section (1990, 2000, and 2007) of more than 1.6 million individuals linked to the establishment in which they work. Occupational measures of vulnerability to trade competition ' routineness, analytic complexity, and interpersonal interaction on the job ' are constructed using O*NET data. The linked employer-employee data allow us to model the effect of low-wage import competition on the wages of workers with different occupational characteristics. Our results show that low-wage country import competition is associated with lower wages for US workers holding jobs that are highly routine and less complex. For workers holding nonroutine and highly complex jobs, increased import competition is associated with higher wages. Finally, workers in occupations with the highest and lowest levels of interpersonal interaction see higher wages, while workers with medium-low levels of interpersonal interaction suffer lower wages with increased low-wage import competition. These findings demonstrate the importance of accounting for occupational characteristics to more fully understand the relationship between trade and wages, and suggest ways in which task trade vulnerable occupations can disadvantage workers even when their jobs remain onshore.
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Changes in EITC Eligibility and Participation, 2005'2009
July 2014
Working Paper Number:
carra-2014-04
The rate of participation in the Earned Income Tax Credit (EITC) has been widely studied, but changes over time in eligibility for the credit have received less attention. One question of importance to policy-makers is whether (or by how much) eligibility might increase during economic downturns. The EITC is fundamentally tied to work. During periods of high unemployment, eligibility may decrease due to a lower number of workers - especially low-skilled workers - filing for a given tax year. On the other hand, family structure and underemployment may lead to increases in eligibility. For example, earners may become eligible when a two-earner family loses one job or when an earner works part of the year or fewer hours. Using IRS tax data linked with the Current Population Survey Annual Social and Economic Supplement (CPS ASEC), I examine changes in EITC eligibility and take-up between tax years 2005 and 2009, during which time the Great Recession began and ended. Employing fixed-effects models, I assess patterns of eligibility among demographic groups based on characteristics that also predict labor market outcomes. Results indicate that, in a period when overall EITC eligibility rates increased, the state unemployment rate had a significant positive effect on eligibility and a significant negative effect on take-up. Meanwhile, although joint filers, those with more children, and men experienced increasing rates of eligibility, those with less education experienced decreasing rates. Results point to the possibility that labor market groups who experienced the highest rates of unemployment in the recession may have become ineligible due to full-year job loss.
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"It's Not You, It's Me": Breakup In U.S.-China Trade Relationships
February 2014
Working Paper Number:
CES-14-08
This paper uses confidential U.S. Customs data on U.S. importers and their Chinese exporters toinvestigate the frictions from changing exporting partners. High costs from switching partners can affect the efficiency of buyer-supplier matches by impeding the movement of importers from high to lower cost exporters. I test the significance of this channel using U.S. import data, which identifies firms on both sides (U.S. and foreign) of an international trade relationship, the location of the foreign supplier, and values and quantities for the universe of U.S. import transactions. Using transactions with China from 2003-2008, I find evidence suggesting that barriers to switching exporters are considerable: 45% of arm's-length importers maintain their partner from one year to the next, and one-third of all switching importers remain in the same city as their original partner. In addition, importers paying the highest prices are the most likely to change their exporting partner. Guided by these empirical regularities, I propose and structurally estimate a dynamic discrete choice model of exporter choice, embedded in a heterogeneous firm model of international trade. In the model, importing firms choose a future partner using information for each choice, but are subject to partner and location-specific costs if they decide to switch their current partner. Structural estimates of switching costs are large, and heterogeneous across industries. For the random sample of 50 industries I use, halving switching costs shrinks the fraction of importers remaining with their partner from 57% to 18%, and this improvement in match efficiency leads to a 12.5% decrease in the U.S.-China Import Price Index.
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Gains from Offshoring? Evidence from U.S. Microdata
April 2013
Working Paper Number:
CES-13-20
We construct a new linked data set with over one thousand offshoring events by matching Trade Adjustment Assistance program petition data to micro-data from the U.S. Census Bureau. We exploit this data to assess how offshoring impacts domestic firm-level aggregate employment, output, wages and productivity. A class of models predicts that more productive firms engage in offshoring, and that this leads to gains in output and (measured) productivity, and potential gains in employment and wages, in the remaining domestic activities of the offshoring firm. Consistent with these models, we find that offshoring firms are on average larger and more productive compared to non-offshorers. However, we find that offshorers suffer from a large decline in employment (32 per cent) and output (28 per cent) relative to their peers even in the long run. Further, we find no significant change in average wages or in total factor productivity measures at affected firms. We find these results robust to a variety of checks. Thus we find no evidence for positive spillovers to the remaining domestic activity of firms in this large sampleof offshoring events.
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The Impact of Unemployment Insurance Extensions On Disability Insurance Application and Allowance Rates
March 2013
Working Paper Number:
CES-13-10
Both unemployment insurance (UI) extensions and the availability of disability benefits have disincentive effects on job search. But UI extensions can reduce the efficiency cost of disability benefits if UI recipients delay disability application until they exhaust their unemployment benefits. This paper, the first to focus on the effect of UI extensions on disability applications, investigates whether UI eligibility, extension, and exhaustion affect the timing of disability applications and the composition of the applicant pool. Jobless individuals are significantly less likely to apply to Social Security Disability Insurance (SSDI) during UI extensions, and significantly more likely to apply when UI is ultimately exhausted. Healthier potential applicants appear more likely to delay, as state allowance rates increase after a new UI extension. Simulations find that a 13-week UI extension decreases SSDI and Medicare costs, offsetting about half of the increase in UI payments; this suggests that the benefits of UI extensions may be understated ' permanent disability benefits are diverted to shorter-run unemployment benefits and, potentially, new jobs, while easing the burden on the nearly insolvent SSDI Trust Fund.
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The Transitional Costs of Sectoral Reallocation: Evidence from the Clean Air Act and the Workforce
January 2012
Working Paper Number:
CES-12-02
New environmental regulations lead to a rearrangement of production away from polluting industries, and workers in those industries are adversely affected. This paper uses linked worker-firm data in the United States to estimate the transitional costs associated with reallocating workers from newly regulated industries to other sectors of the economy. The focus on workers rather than industries as the unit of analysis allows me to examine previously unobserved economic outcomes such as non-employment and long run earnings losses from job transitions, both of which are critical to understanding the reallocative costs associated with these policies. Using panel variation induced by the 1990 Clean Air Act Amendments (CAAA), I find that the reallocative costs of environmental policy are significant. Workers in newly regulated plants experienced, in aggregate, more than $9 billion inforegone earnings for the years after the change in policy. Most of these costs are driven by non-employment and lower earnings in future employment, while earnings of workers who remain with their firm change little. Relative to the estimated benefits of the 1990 CAAA, these one-time transitional costs are small. However, the estimated costs far exceed the workforce compensation policies designed to mitigate some of these earnings losses.
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Changes in Firm Pension Policy: Trends Away from Traditional Defined Benefit Plans
November 2011
Working Paper Number:
CES-11-36
In light of the recent concerns regarding the solvency of Social Security's Old-Age, Survivors and Disability Insurance (OASDI), private pensions may play an increasingly important role in retirement welfare of US retirees. However, the private pension landscape has evolved in ways that may result in lower private pension wealth for retirees. One recent such phenomenon involves the conversion of traditional defined benefit pension plans to cash balance plans, which resulted in lower pension benefits for many workers. In this study, I investigate how characteristics of the firm's workforce influenced whether the firm converted their traditional pension plan to a cash balance plan and how these characteristics related to the firm's pension plan policy more generally. Using the Longitudinal Employer-Household Data and pension plan data from the Department of Labor/Internal Revenue Service and the Pension Benefit Guaranty Corporation, I found little evidence of workforce age distribution effects on the likelihood of DB plan conversion to a cash balance plan in the 1990s. More generally, I consistently find positive associations between firms with older and more female workforces and defined contribution plans during the same time.
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Comparing Measures of Earnings Instability Based on Survey and Adminstrative Reports
August 2010
Working Paper Number:
CES-10-15
In Celik, Juhn, McCue, and Thompson (2009), we found that estimated levels of earnings instability based on data from the Current Population Survey (CPS) and the Survey of Income and Program Participation (SIPP) were reasonably close to each other and to others' estimates from the Panel Study of Income Dynamics (PSID), but estimates from unemployment insurance (UI) earnings were much larger. Given that the UI data are from administrative records which are often posited to be more accurate than survey reports, this raises concerns that measures based on survey data understate true earnings instability. To address this, we use links between survey samples from the SIPP and UI earnings records in the LEHD database to identify sources of differences in work history and earnings information. Substantial work has been done comparing earnings levels from administrative records to those collected in the SIPP and CPS, but our understanding of earnings instability would benefit from further examination of differences across sources in the properties of changes in earnings. We first compare characteristics of the overall and matched samples to address issues of selection in the matching process. We then compare earnings levels and jobs in the SIPP and LEHD data to identify differences between them. Finally we begin to examine how such differences affect estimates of earnings instability. Our preliminary findings suggest that differences in earnings changes for those in the lower tail of the earnings distribution account for much of the difference in instability estimates.
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An Analysis of Key Differences in Micro Data: Results from the Business List Comparison Project
September 2008
Working Paper Number:
CES-08-28
The Bureau of Labor Statistics and the Bureau of the Census each maintain a business register, a universe of all U.S. business establishments and their characteristics, created from independent sources. Both registers serve critical functions such as supplying aggregate data inputs for certain national statistics generated by the Bureau of Economic Analysis. This paper examines key micro-level differences across these two business registers.
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Older Workers' Access to Employer-Sponsored Retiree Health Insurance, 2000-2004
April 2007
Working Paper Number:
CES-07-12
Using a multivariate framework, we analyze recent trends in employer provision of retiree health insurance (RHI), eligibility for new retirees, and retiree contribution requirements. We also explore whether local labor market characteristics such as the unemployment rate influence RHI provision. Finally, we examine whether the Medicare Modernization Act (MMA) was associated with diverging trends in RHI access for Medicare-eligible and early retirees. Data come for the Medical Expenditure Panel Survey'Insurance Component (MEPS-IC). We find that, while RHI provision to existing retirees remained stable, eligibility for new retirees declined, and contribution requirements increased between 2000 and 2004. The local labor market had no effect on RHI provision. While early retiree coverage was more common than coverage for Medicare-eligible retirees, we did not find a divergence subsequent to MMA. These results suggest growing financial instability for retirees, both because RHI contribution requirements increased, and because businesses dropped coverage for new retirees.
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