Corporate Income Tax, Legal Form of Organization, and Employment

By Daphne Chen, Shi Qi, and Don Schlagenhauf

American Economic Journal: Macroeconomics, October 2018

A dynamic stochastic occupational choice model with heterogeneous agents is developed to evaluate the impact of a corporate income tax reduction on employment. In this framework, the key margin is the endogenous entrepreneurial choice of legal form of org...

The Decline, Rebound, and Further Rise in SNAP Enrollment: Disentangling Business Cycle Fluctuations and Policy Changes

By Peter Ganong and Jeffrey B. Liebman

American Economic Journal: Economic Policy, November 2018

One-in-seven Americans received benefits from the Supplemental Nutrition Assistance Program in 2011, an all-time high. We analyze changes in program enrollment over the past two decades, quantifying the contributions of unemployment and state policy chang...

Bad Investments and Missed Opportunities? Postwar Capital Flows to Asia and Latin America

By Lee E. Ohanian, Paulina Restrepo-Echavarria, and Mark L. J. Wright

American Economic Review, December 2018

After World War II, international capital flowed into slow-growing Latin America rather than fast-growing Asia. This is surprising as, everything else equal, fast growth should imply high capital returns. This paper develops a capital flow accounting fram...

The Formation of Expectations, Inflation, and the Phillips Curve

By Olivier Coibion, Yuriy Gorodnichenko, and Rupal Kamdar

Journal of Economic Literature, December 2018

This paper argues for a careful (re)consideration of the expectations formation process and a more systematic inclusion of real-time expectations through survey data in macroeconomic analyses. While the rational expectations revolution has allowed for g...

Some Causal Effects of an Industrial Policy

By Chiara Criscuolo, Ralf Martin, Henry G. Overman, and John Van Reenen

American Economic Review, January 2019

We exploit changes in the area-specific eligibility criteria for a program to support jobs through investment subsidies. European rules determine whether an area is eligible for subsidies, and we construct instrumental variables for area eligibility based...

Learning, Career Paths, and the Distribution of Wages

By Santiago Caicedo, Robert E. Lucas Jr., and Esteban Rossi-Hansberg

American Economic Journal: Macroeconomics, January 2019

We develop a theory of career paths and earnings where agents organize in production hierarchies. Agents climb these hierarchies as they learn stochastically from others. Earnings grow as agents acquire knowledge and occupy positions with more subordinate...

Employment Adjustment and Part-Time Work: Lessons from the United States and the United Kingdom

By Daniel Borowczyk-Martins and Etienne Lalé

American Economic Journal: Macroeconomics, January 2019

We document that fluctuations in part-time employment play a major role in movements in hours per worker during cyclical swings in the labor market. Building on this result, we develop a stock-flow framework to describe the dynamics of part-time employmen...

The Human Capital Stock: A Generalized Approach: Comment

By Francesco Caselli and Antonio Ciccone

American Economic Review, March 2019

Jones (2014) examines development accounting with imperfect substitutability between different types of skills in the production of output. He finds that human capital variation can account for the totality of the variation in income across countries. We ...

The Human Capital Stock: A Generalized Approach: Reply

By Benjamin F. Jones

American Economic Review, March 2019

Human capital differences across countries can appear large or small depending on measurement methods. This Reply clarifies key assumptions and conceptual distinctions across accounting approaches. Accounting-based arguments for small human capital differ...

Underemployment and the Trickle-Down of Unemployment

By Regis Barnichon and Yanos Zylberberg

American Economic Journal: Macroeconomics, April 2019

A substantial fraction of workers are underemployed, i.e., employed in jobs for which they are overqualified, and that fraction—the underemployment rate—is higher in recessions. To explain these facts, we build a search model with an endogenous "ran...

Fixed-Wage Contracts and Monetary Non-neutrality

By Maria Björklund, Mikael Carlsson, and Oskar Nordström Skans

American Economic Journal: Macroeconomics, April 2019

We study the importance of wage rigidities for the monetary policy transmission mechanism. Using uniquely rich micro data on Swedish wage negotiations, we isolate periods when the labor market is covered by fixed-wage contracts. Importantly, negotiations ...

Trade, Migration, and Productivity: A Quantitative Analysis of China

By Trevor Tombe and Xiaodong Zhu

American Economic Review, May 2019

We study how goods- and labor-market frictions affect aggregate labor productivity in China. Combining unique data with a general equilibrium model of internal and international trade, and migration across regions and sectors, we quantify the magnitude an...

Retrospectives: Ricardo on Machinery

By Samuel Hollander

Journal of Economic Perspectives, Spring 2019

We are currently experiencing an outpouring of concern both popular and professional regarding technological unemployment. I shall be discussing an apparent about-turn on the subject by David Ricardo (1772-1823), who at different times, even in different ...

New Evidence on the Cyclicality of Employer-to-Employer Flows from Canada

By Alice Nakamura, Emi Nakamura, Kyle Phong, and Jón Steinsson

AEA Papers and Proceedings, May 2019

This paper presents new estimates of gross worker flows for Canada for the sample period 1978 to 2016. We use administrative data from the Canadian Record of Employment in combination with the Canadian Labor Force Survey to estimate employer-to-employer f...

Flow Origins of Labor Force Participation Fluctuations

By Michael Elsby, Bart Hobijn, Fatih Karahan, Gizem Koşar, and Ayşegül Şahin

AEA Papers and Proceedings, May 2019

We investigate the origins of cyclical and trend movements in the labor force participation rate (LFPR) using a three-state flow decomposition. The procyclicality of LFPR can be traced to cyclical flows between employment and unemployment. By contrast, la...

Is Inflation Just Around the Corner? The Phillips Curve and Global Inflationary Pressures

By Olivier Coibion, Yuriy Gorodnichenko, and Mauricio Ulate

AEA Papers and Proceedings, May 2019

Tightening labor markets in the United States and other advanced economies suggest inflation should be on the rise, yet it remains subdued. Is the Phillips curve broken? We bring together surveys of household or firm expectations for 18 countries to estim...

Consumer Spending during Unemployment: Positive and Normative Implications

By Peter Ganong and Pascal Noel

American Economic Review, July 2019

Using de-identified bank account data, we show that spending drops sharply at the large and predictable decrease in income arising from the exhaustion of unemployment insurance (UI) benefits. We use the high-frequency response to a predictable income decl...

Corporate Cash and Employment

By Philippe Bacchetta, Kenza Benhima, and Céline Poilly

American Economic Journal: Macroeconomics, July 2019

In the aftermath of the US financial crisis, both a sharp drop in employment and a surge in corporate cash have been observed. In this paper, based on US data, we argue that the negative relationship between the corporate cash ratio and employment is syst...

Endogenous Technology Adoption and R&D as Sources of Business Cycle Persistence

By Diego Anzoategui, Diego Comin, Mark Gertler, and Joseba Martinez

American Economic Journal: Macroeconomics, July 2019

We examine the hypothesis that the slowdown in productivity following the Great Recession was in significant part an endogenous response to the contraction in demand that induced the downturn. We motivate, develop, and estimate a model with an endogenous ...

The Intensity of Job Search and Search Duration

By R. Jason Faberman and Marianna Kudlyak

American Economic Journal: Macroeconomics, July 2019

We use online job application data to study the relationship between search intensity and search duration. The data allow us to control for job seeker composition and the evolution of available job openings over the duration of search. We find that, withi...