Efforts to Increase Employment
Paper Session
Monday, Jan. 4, 2021 3:45 PM - 5:45 PM (EST)
- Chair: Maggie Brehm, Oberlin College
Does Government Play Favorites? Evidence from Opportunity Zones
Abstract
In 2017, Congress introduced the Opportunity Zone (“OZ”) designation to promote development in distressed communities. A criticized feature of the program is that state governors select zones from many eligible tracts without meaningful scrutiny. We find that while governors are more likely to select tracts with higher distress levels and tracts on an upward economic trajectory, favoritism seems to play an important role in governor decisions. OZ designation is more likely for tracts in counties that supported the governor in the election and when executives or firms with an economic interest in the tract donated to the governor's campaign. The paper is available at SSRN: https://ssrn.com/abstract=3463541.Revisiting the Employment Effects of the Americans with Disabilities Act
Abstract
In this paper, we revisit the evidence on the employment effect of the Americans with Disabilities Act (ADA) of 1990. Contrary to existing estimates based on the observed change in the employment of individuals who face limitations to their ability to work after the policy has been introduced, we assess the effect of the policy on a large sample of individuals from SIPP who report both limitations to their ability to work (work limitations) and other limitations (functional limitations). Despite the average negative effect of the ADA on the employment of the disabled, as estimated in the literature, we find that the policy has had a substantial and significant positive effect on the employment of individuals affected by physical and mental limitations that are not work-related, even if severe. We develop a search and matching model of the labor market with stochastic productivity that varies with a worker's health and disability status to assess the impact of the policy on the employment and wages of able and disabled workers. We also examine the benefit of alternative designs of the policy, including one in which the controversial requirement of accommodation for disabled workers is replaced by a payroll subsidy combined with an EITC-type work incentive, and one in which the protection measures embedded in the ADA are augmented with a targeted long-term insurance component against the loss of employment that substitutes for the existing unemployment insurance program. (Please see https://drive.google.com/file/d/1WBFaFTufl8TUdfrpXufHZGnwfx_WyM4P/view for details.)Television and the Labour Supply: Evidence from the Digital Television Transition in the UK
Abstract
This paper exploits exogenous variation in the date of transition from analogue to digital television signal in the UK across more than 40,000 geographical units to investigate the causal impact of television on employment probabilities and potential mechanisms. Using a large individual panel survey dataset and a difference-in-differences model that compares the outcomes of adults living in regions where the switchover occurred in different years, I find that the digital transition increases employment probabilities. The impact is driven by mothers and is due to an increase in part-time and self-employment. A possible explanation is that television keeps children busy, allowing parents to focus on their career. Consistent with this explanation, I show that the digital transition increases children's TV viewing time, and that the effect of television on employment is higher for parents who initially have higher family burdens and financial constraints to access childcare. I also show that, by keeping children busy, television reduces the time that mothers dedicate to housework and the suffering of families when mothers work.Job Creation Effects: Evidence from State Hiring Credits
Abstract
Whether state hiring credits actually induce job creation in local economies remains an important but understudied policy issue. Standard labor economic theories suggest a negative effect of the policy, but the assessment is largely based on evaluation of credits targeting the disadvantaged areas. Neumark (2013) argues that broad-based state hiring credits could be an integral fiscal policy tool to boost job creation, particularly in response to recessions when both credit constraints and labor markets are tighter. This paper contributes to the literature by examining the employment and earnings effect of state hiring credits across different business cycles. Analyzing the most comprehensive database on incentives and taxes covering 45 industries in 33 states between 1990 and 2015 constructed by Bartik (2017), I find (i) statistically significant and strongly negative employment effects, and statistically significant and weakly positive earnings per worker effects. (ii) With adjustment cost controls, employment effects remain negative and statistically significant, but to a lesser degree. (iii) When using state unemployment proxy for business cycles, the negative employment effects is magnified, but state-industry shiftshare proxy suggests that incentives mitigate credit constraints. (iv) Restricting to export-base industries also does not significantly alter results, weakening the positive externalities argument. (v) Decomposition by establishment size reveals that the negative employment effect is persistent across all size groups. The key takeaway from the large state variation in incentives is that there are many idiosyncratic reasons for policy adoption, and some states are better at designing and implementing hiring credits than others.Tax Compliance and Firm Response to Electronic Sales Recording
Abstract
In this paper, we study the response of firms to the introduction of technology that makes sales monitoring easier for tax authorities. We analyze the introduction of sales recording modules (SRM) in every restaurant of a single Canadian province using a difference-in-differences methodology. We estimate a 5.7% average increase in reported sales, which are almost completely offset by an equal increase in expenses, leaving corporate taxable income mostly unchanged. An increase of 5.9% in wages paid (and the reporting of new employees) accounts for the majority of these additional expenses. As a result, we find evidence that stricter monitoring of firm activities by tax agencies can contribute to workforce formalization. Overall, a cost-benefit analysis suggests that the introduction of SRMs generated an additional $242M in annual tax revenues to the government, with a one-time implementation cost of approximately $37M.JEL Classifications
- J2 - Demand and Supply of Labor