Labor Supply Shocks and Capital Accumulation: The Short- and Long-Run Effects of the Refugee Crisis in Europe

By Lorenzo Caliendo, Luca David Opromolla, Fernando Parro, and Alessandro Sforza

AEA Papers and Proceedings, May 2023

European countries experienced a large increase in labor supply due to the influx of Ukrainian refugees after the 2022 Russia invasion of Ukraine. We study its dynamic effects in a spatial model with forward-looking households of different skills, trade, ...

Labor Mobility and Unemployment over the Business Cycle

By Andrea Foschi, Christopher L. House, Christian Proebsting, and Linda L. Tesar

AEA Papers and Proceedings, May 2023

We estimate the responsiveness of net labor migration to regional differences in unemployment rates across the United States since the mid-1970s. Our baseline estimate suggests an elasticity of roughly -0.3. For typical labor force participation ratios, a...

The Macroeconomic Impact of Europe's Carbon Taxes

By Gilbert E. Metcalf and James H. Stock

American Economic Journal: Macroeconomics, July 2023

We estimate the macroeconomic impacts of carbon taxes on GDP and employment growth rates using 30 years of data on carbon taxation in various European countries. We find no evidence for a negative impact on employment or GDP growth but rather find a zero ...

Labor Market Responses to Unemployment Insurance: The Role of Heterogeneity

By Serdar Birinci and Kurt See

American Economic Journal: Macroeconomics, July 2023

We document considerable scope of heterogeneity within the unemployed, especially when they are divided along eligibility for and receipt of unemployment insurance (UI). We study the implications of this heterogeneity on UI's insurance-incentive trade-off...

Working for References

By Samuel Häfner and Curtis R. Taylor

American Economic Journal: Microeconomics, August 2023

We analyze the incentive and welfare consequences of job references in a large economy marked by moral hazard, limited liability, exogenous job separation, and structural unemployment. In the firm-optimal equilibrium, employers provide references whenever...

The Missing Intercept: A Demand Equivalence Approach

By Christian K. Wolf

American Economic Review, August 2023

I give conditions under which changes in private spending are accommodated in general equilibrium exactly like changes in aggregate fiscal expenditure. Under such demand equivalence, researchers can use time series evidence on fiscal multipliers to recove...

The Macroeconomics of the Greek Depression

By Gabriel Chodorow-Reich, Loukas Karabarbounis, and Rohan Kekre

American Economic Review, September 2023

Greece experienced a boom until 2007, followed by a collapse of unprecedented magnitude and persistence. We assess the sources of the boom and the bust, using a rich estimated dynamic general equilibrium model. External demand and government consumption f...

Schooling, Skill Demand, and Differential Fertility in the Process of Structural Transformation

By T. Terry Cheung

American Economic Journal: Macroeconomics, October 2023

Demography and structural transformation are interrelated, and depend critically on education. At the turn of the twentieth century, US parents began having fewer children while increasing educational investment per child. This quantity-quality tradeoff f...

A Sufficient Statistics Approach for Macro Policy

By Régis Barnichon and Geert Mesters

American Economic Review, November 2023

The evaluation of macroeconomic policy decisions has traditionally relied on the formulation of a specific economic model. In this work, we show that two statistics are sufficient to detect, often even correct, nonoptimal policies, i.e., policies that do ...

Monetary Policy When the Phillips Curve Is Quite Flat

By Paul Beaudry, Chenyu Hou, and Franck Portier

American Economic Journal: Macroeconomics, January 2024

This paper highlights how the presence of a monetary policy cost channel can offer new insights into the relation between monetary policy and inflation when the Phillips curve is quite flat. For instance, we highlight a key condition whereby lax monetary ...

Wage Rigidity and Employment Outcomes: Evidence from Administrative Data

By Gabriel Ehrlich and Joshua Montes

American Economic Journal: Macroeconomics, January 2024

This paper examines the relationship between downward nominal wage rigidity and employment outcomes using linked employer-employee data. Wage rigidity prevents 27.1 percent of counterfactual wage cuts, with a standard deviation of 19.2 percent across esta...

A Congestion Theory of Unemployment Fluctuations

By Yusuf Mercan, Benjamin Schoefer, and Petr Sedláček

American Economic Journal: Macroeconomics, January 2024

We propose a theory of unemployment fluctuations in which new hires and incumbent workers are imperfect substitutes. Hence, attempts to hire away the unemployed during recessions diminish the marginal product of new hires, discouraging job creation. This ...

Scarred Consumption

By Ulrike Malmendier and Leslie Sheng Shen

American Economic Journal: Macroeconomics, January 2024

We show that prior lifetime experiences can "scar" consumers. Consumers who have lived through times of unemployment exhibit persistent pessimism about their future financial situation and spend significantly less years later, controlling for income, empl...

Firms' Precautionary Savings and Employment during a Credit Crisis

By Davide Melcangi

American Economic Journal: Macroeconomics, January 2024

Can the macroeconomic effects of credit supply shocks be large even when a small share of firms is credit constrained? I use UK firm-level accounting data to discipline a heterogeneous-firm model where the interaction between real and financial frictions ...

Assessing the Stabilizing Effects of Unemployment Benefit Extensions

By Alexey Gorn and Antonella Trigari

American Economic Journal: Macroeconomics, January 2024

We study the stabilizing role of benefit extensions. We develop a tractable quantitative model with heterogeneous agents, search frictions, and nominal rigidities. The model allows for a stabilizing aggregate demand channel and a destabilizing labor marke...

Monetary Policy, Banking Crises, and the Friedman Rule

By Bruce D. Smith

American Economic Review, May 2002

Immigration and Crime: An International Perspective

By Olivier Marie and Paolo Pinotti

Journal of Economic Perspectives, Winter 2024

The association between immigration and crime has long been a subject of debate, and only recently have we encountered systematic empirical evidence on this issue. Data shows that immigrants, often younger, male, and less educated compared to natives, a...

Job Training and Job Search Assistance Policies in Developing Countries

By Eliana Carranza and David McKenzie

Journal of Economic Perspectives, Winter 2024

Governments around the developing world face pressure to intervene actively to help jobseekers find employment. Two of the most common policies used are job training, based on the idea that many of those seeking jobs lack the skills employers want, and ...

Why Is Productivity Slowing Down?

By Ian Goldin, Pantelis Koutroumpis, François Lafond, and Julian Winkler

Journal of Economic Literature, March 2024

We examine the contribution of different explanations to the slowdown of labor productivity. Comparing the post-2005 period with the preceding decade for five advanced economies, we seek to explain a slowdown of 0.8 to 1.8 pp. No single explanation acco...

Beyond the Natural Rate: Stephen Marglin on the Instability of Market Economies

By Michael Woodford

Journal of Economic Literature, March 2024

In Raising Keynes: A Twenty-First Century General Theory, Stephen A. Marglin offers a provocative reformulation of Keynes' theoretical framework, stressing the importance of modeling the dynamics of wage and price adjustment. This review explains...