Adjustment and Resilience to Economic Shocks
Friday, Jan. 7, 2022 3:45 PM - 5:45 PM (EST)
- Chair: David Autor, Massachusetts Institute of Technology
The Sources of Local Labor Market Hysteresis after Recessions
AbstractU.S. local labor markets with greater employment declines during recessions experience reductions in economic activity - including employment, employment-population ratios, and earnings per capita - that are highly persistent. This paper explores the sources of local labor market hysteresis over the last 50 years. We estimate generalized difference-in-difference regressions that combine cross-sectional variation in recession severity with several confidential datasets from the U.S. Census Bureau that track workers and employers over time. Our results have not undergone disclosure review yet, but we will present the answers to several questions: (1) To what degree is local labor market hysteresis driven by changes in the composition of workers residing in an area, as opposed to lasting effects on individuals? (2) To what degree is local labor market hysteresis driven by increased job destruction or decreased job creation? (3) To what degree is local labor market hysteresis driven by changes in assortative matching between high-wage workers and high-wage employers? (4) How do employers adjust along other margins, such as the skills demanded in their job postings and capital investment? The results will deepen our understanding of how recessions affect workers and employers, which is critical for designing appropriate policy responses.
Mismatch In Local Labor Markets: How Demand Shocks To Different Types Of Jobs Affect Diverse Local Labor Markets
AbstractThis paper estimates the effects on labor market outcomes of local labor demand shocks to different types of occupations. Occupations are divided into three groups, “high, middle, and low,” with occupations differing in wages paid and education credentials required. In a wide variety of commuting zones, and for many groups, increases in mid-occupation jobs—jobs which pay relatively well compared to required credentials, such as many jobs in manufacturing—have positive effects on labor market outcomes. These positive effects tend to be stronger for more disadvantaged groups, such as groups with less education. In commuting zones with high employment rates, and for less-educated groups, increases in high-occupation jobs tend to negatively affect labor market outcomes, possibly because of effects on in-migration that push up local prices without strong direct effects on wages and employment of less-educated groups. For the less-educated group and for Black workers, and in commuting zones (CZs) which at baseline had high employment rates and low college grad percents, low-occupation demand shocks have positive outcomes. For more-educated workers, low-occupation demand shocks tend to have negative effects on real wages.
- J2 - Demand and Supply of Labor
- J1 - Demographic Economics