Structural Increases in Demand for Skill after the Great Recession

By Peter Q. Blair and David J. Deming

AEA Papers and Proceedings, May 2020

In this paper, we use detailed job vacancy data to estimate changes in skill demand in the years since the Great Recession. The share of job vacancies requiring a bachelor's degree increased by more than 60 percent between 2007 and 2019, with faster growt...

The NAIRU in Theory and Practice

By Laurence Ball and N. Gregory Mankiw

Journal of Economic Perspectives, Fall 2002

This paper discusses the NAIRU--the non-accelerating inflation rate of unemployment. It first considers the role of the NAIRU concept in business cycle theory, arguing that this concept is implicit in any model in which monetary policy influences both inf...

The Elephant in the Room: The Impact of Labor Obligations on Credit Markets

By Jack Favilukis, Xiaoji Lin, and Xiaofei Zhao

American Economic Review, June 2020

We show that labor market frictions are first-order for understanding credit markets. Wage growth and labor share forecast aggregate credit spreads and debt growth as well as or better than alternative predictors. They also predict credit risk and debt gr...

Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution: Comment

By Alexander G. James and Brock Smith

American Economic Review, June 2020

Feyrer, Mansur, and Sacerdote (2017) estimates the spatial dispersion of the effects of the recent shale-energy boom by unconditionally regressing income and employment on energy production at various levels of geographic aggregation. However, producing c...

Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution: Reply

By James Feyrer, Erin Mansur, and Bruce Sacerdote

American Economic Review, June 2020

Measuring the geographic spillovers from an economic shock remains a challenging econometric problem. In Feyrer, Mansur, and Sacerdote (2017) we study the propagation of positive shocks from the recent boom in oil and gas production in the United States...

Sticky Expectations and Consumption Dynamics

By Christopher D. Carroll, Edmund Crawley, Jiri Slacalek, Kiichi Tokuoka, and Matthew N. White

American Economic Journal: Macroeconomics, July 2020

To match aggregate consumption dynamics, macroeconomic models must generate "excess smoothness" in consumption expenditures. But microfounded models are calibrated to match micro data, which exhibit no "excess smoothness." So standard microfounded models ...

Sticky Wage Models and Labor Supply Constraints

By Zhen Huo and José-Víctor Ríos-Rull

American Economic Journal: Macroeconomics, July 2020

In sticky wages models (either à la Calvo or à la Rotemberg), labor is solely determined by the demand side. However, a change of circumstances may make labor demand higher than agents' willingness to work. We find that workers are required to work agai...

Retrospectives: Whatever Happened to the Cambridge Capital Theory Controversies?

By Avi J. Cohen and G. C. Harcourt

Journal of Economic Perspectives, Winter 2003

We argue that the Cambridge capital theory controversies of the 1950s to 1970s were the latest in a series of still-unresolved controversies over three deep issues: explaining and justifying the return to capital; Joan Robinson's complaint that, due to pa...

Explaining the Decline in the US Employment-to-Population Ratio: A Review of the Evidence

By Katharine G. Abraham and Melissa S. Kearney

Journal of Economic Literature, September 2020

This paper first documents trends in employment rates and then reviews what is known about the various factors that have been proposed to explain the decline in the overall employment-to-population ratio between 1999 and 2018. Population aging has had...

Bubbly Recessions

By Siddhartha Biswas, Andrew Hanson, and Toan Phan

American Economic Journal: Macroeconomics, October 2020

We develop a tractable bubbles model with financial friction and downward wage rigidity. Competitive speculation in risky bubbles can result in excessive investment booms that precede inefficient busts, where post- bubble aggregate economic activities col...

The Persistent Effects of Initial Labor Market Conditions for Young Adults and Their Sources

By Till von Wachter

Journal of Economic Perspectives, Fall 2020

Unlucky young workers entering the labor market in recessions suffer a range of medium- to long-term consequences. This paper summarizes the findings of the growing empirical literature on this subject and uses it to assess economic models of career devel...

Changing Business Dynamism and Productivity: Shocks versus Responsiveness

By Ryan A. Decker, John Haltiwanger, Ron S. Jarmin, and Javier Miranda

American Economic Review, December 2020

The pace of job reallocation has declined in the United States in recent decades. We draw insight from canonical models of business dynamics in which reallocation can decline due to (i) lower dispersion of idiosyncratic shocks faced by businesses, or (ii)...

Job Seekers' Perceptions and Employment Prospects: Heterogeneity, Duration Dependence, and Bias

By Andreas I. Mueller, Johannes Spinnewijn, and Giorgio Topa

American Economic Review, January 2021

This paper uses job seekers' elicited beliefs about job finding to disentangle the sources of the decline in job-finding rates by duration of unemployment. We document that beliefs have strong predictive power for job finding, but are not revised downward...

The Labor Market Impact of Immigration: Job Creation versus Job Competition

By Christoph Albert

American Economic Journal: Macroeconomics, January 2021

This paper studies the labor market effects of both documented and undocumented immigration in a search model featuring nonrandom hiring. As immigrants accept lower wages, they are preferably chosen by firms and therefore have higher job finding rates tha...

Aggregate Nominal Wage Adjustments: New Evidence from Administrative Payroll Data

By John Grigsby, Erik Hurst, and Ahu Yildirmaz

American Economic Review, February 2021

Using administrative payroll data from the largest US payroll processing company, we measure the extent of nominal wage rigidity in the United States. The data allow us to define a worker's per-period base contract wage separately from other forms of comp...

The Nature of Firm Growth

By Vincent Sterk ⓡ Petr Sedláček ⓡ Benjamin Pugsley

American Economic Review, February 2021

About one-half of all startups fail within five years, and those that survive grow at vastly different speeds. Using Census microdata, we estimate that most of these differences are determined by ex ante heterogeneity rather than persistent ex post shocks...

Unemployment Insurance Taxes and Labor Demand: Quasi-Experimental Evidence from Administrative Data

By Andrew C. Johnston

American Economic Journal: Economic Policy, February 2021

To finance unemployment insurance, states raise payroll tax rates on employers who engage in layoffs. Tax rates are, therefore, highest for firms after downturns, potentially hampering labor-market recovery. Using full-population, administrative records f...

The Cyclical Behavior of Job Quality and Real Wage Growth

By Andriana Bellou and Bariş Kaymak

American Economic Review: Insights, March 2021

We study the empirical relevance of implicit insurance contracts for wage setting while accounting for cyclical fluctuations in average job quality. Using proxy measures, we find the latter to be acyclical, if not countercyclical, due to the cleansing eff...

Risk, the College Premium, and Aggregate Human Capital Investment

By Kartik Athreya and Janice Eberly

American Economic Journal: Macroeconomics, April 2021

Despite increases in the college earnings premium to persistently high levels, investment in college education remains low. We can understand this apparent puzzle by considering the risk of attending college and, in particular, the possibility of failing ...

Monetary Policy and Inequality under Labor Market Frictions and Capital-Skill Complementarity

By Juan J. Dolado, Gergő Motyovszki, and Evi Pappa

American Economic Journal: Macroeconomics, April 2021

We provide a new channel through which monetary policy has distributional consequences at business cycle frequencies. We show that an unexpected monetary easing increases labor income inequality between high-skilled and less-skilled workers. To rationaliz...