Sticky wages and recessions

[Research Highlight]

November 06, 2019

Unemployment in Indian villages was exacerbated when laborers resisted pay cuts during bad times.

2019 in Research Highlights

[Research Highlight]

December 16, 2019

Economists tackled populism, minimum wages, censorship, and more.

Alexa Prettyman on extending foster care

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How does extending foster care for young adults affect schooling, employment, homelessness, and incarceration?

Kenneth McLaughlin on the effect of minimum wage hikes on the workforce

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How does increasing the pay floor affect employment for teens and dropouts?

Rachel Sederberg on redesigning unemployment insurance

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Is there a better way to provide jobless benefits that isn't a one-size-fits-all program?

Not ready to retire

[Research Highlight]

January 27, 2020

The AEA interviews Christopher Tonetti about why older Americans would keep working if they had job flexibility.

Marketplaces, Markets, and Market Design

By Alvin E. Roth

American Economic Review, July 2018

Marketplaces are often small parts of large markets, and both markets and marketplaces come in many varieties. Market design seeks to understand what marketplaces must accomplish to enable different kinds of markets. Marketplaces can have varying degrees ...

Numbing the China shock

[Research Highlight]

March 06, 2020

Is there a link between free trade and deaths of despair?

Aggregate Recruiting Intensity

By Alessandro Gavazza, Simon Mongey, and Giovanni L. Violante

American Economic Review, August 2018

We develop an equilibrium model of firm dynamics with random search in the labor market where hiring firms exert recruiting effort by spending resources to fill vacancies faster. Consistent with microevidence, fast-growing firms invest more in recruiting ...

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...

The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment

By Daron Acemoglu and Pascual Restrepo

American Economic Review, June 2018

We examine the concerns that new technologies will render labor redundant in a framework in which tasks previously performed by labor can be automated and new versions of existing tasks, in which labor has a comparative advantage, can be created. In a s...

Rural Roads and Local Economic Development

By Sam Asher and Paul Novosad

American Economic Review, March 2020

Nearly one billion people worldwide live in rural areas without access to national paved road networks. We estimate the impacts of India's 40 billion USD national rural road construction program using a fuzzy regression discontinuity design and comprehens...

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...

Place-Based Policies, Creation, and Agglomeration Economies: Evidence from China's Economic Zone Program

By Yi Lu, Jin Wang, and Lianming Zhu

American Economic Journal: Economic Policy, August 2019

Combining rich firm and administrative data, this paper examines the incidence and effectiveness of a prominent place-based policy in China: special economic zones. Establishing zones is found to have had a positive effect on capital investment, employmen...

Elasticity of Medicaid Access with Respect to State Financial Distress

By Victoria Perez, Joseph Benitez, and Eric Seiber

AEA Papers and Proceedings, May 2018

In 2016, total Medicaid spending, $574.2 billion, represented one-third of state budgets. Descriptive studies indicate that state policymakers adjust social welfare programs during times of financial distress, particularly Medicaid. The challenge of forma...

Male Social Status and Women's Work

By Arielle Bernhardt, Erica Field, Rohini Pande, Natalia Rigol, Simone Schaner, and Charity Troyer-Moore

AEA Papers and Proceedings, May 2018

Female labor force participation varies significantly even among countries with similar levels of economic development. Recent studies have shown that gender norms can help explain these differences in women's work, but the channels through which norms im...

The Effect of the Disability Insurance Application Decision on the Employment of Denied Applicants

By Mashfiqur R. Khan

AEA Papers and Proceedings, May 2018

Social Security Disability Insurance (SSDI) affects the labor supply of applicants through its work discouragement and through human capital deterioration regardless of the ultimate acceptance or denial of the claim. In this paper, I provide an estimate o...

A Macroeconomic Approach to Optimal Unemployment Insurance: Theory

By Camille Landais, Pascal Michaillat, and Emmanuel Saez

American Economic Journal: Economic Policy, May 2018

This paper develops a theory of optimal unemployment insurance (UI) in matching models. The optimal UI replacement rate is the conventional Baily-Chetty replacement rate, which solves the tradeoff between insurance and job-search incentives, plus a correc...

Resurrecting the Role of the Product Market Wedge in Recessions

By Mark Bils, Peter J. Klenow, and Benjamin A. Malin

American Economic Review, April 2018

Employment and hours are more cyclical than dictated by productivity and consumption. This intratemporal labor wedge can arise from product or labor market distortions. Based on employee wages, the literature has attributed the intratemporal wedge almost ...