Firms' Internal Networks and Local Economic Shocks

By Xavier Giroud and Holger M. Mueller

American Economic Review, October 2019

Using confidential establishment-level data from the US Census Bureau's Longitudinal Business Database, this paper documents how local shocks propagate across US regions through firms' internal networks of establishments. Consistent with a model of optima...

Rational Inattention in Hiring Decisions

By Sushant Acharya and Shu Lin Wee

American Economic Journal: Macroeconomics, January 2020

We provide an information-based theory of matching efficiency fluctuations. Rationally inattentive firms have limited capacity to process information and cannot perfectly identify suitable applicants. During recessions, higher losses from hiring unsuitabl...

Did Unconventional Interventions Unfreeze the Credit Market?

By Hui Tong and Shang-Jin Wei

American Economic Journal: Macroeconomics, April 2020

This paper investigates whether and how unconventional interventions in 2008–2010 unfroze the credit market. We construct a dataset of 198 interventions for 16 countries during 2008–2010 and examine heterogeneous responses in stock prices to the inter...

Employed for Higher Pay? How Medicare Payment Rules Affect Hospital Employment of Physicians

By David Dranove and Christopher Ody

American Economic Journal: Economic Policy, November 2019

Hospitals employ an increasing number of physicians and bill for a growing share of outpatient procedures. We exploit a plausibly exogenous increase in Medicare prices for hospital-employed physicians relative to Medicare prices for other physicians to sh...

Commuting, Migration, and Local Employment Elasticities

By Ferdinando Monte, Stephen J. Redding, and Esteban Rossi-Hansberg

American Economic Review, December 2018

We provide theory and evidence that the elasticity of local employment to a labor demand shock is heterogeneous depending on the commuting openness of the local labor market. We develop a quantitative general equilibrium model that incorporates spatial li...

Mismatch Unemployment and the Geography of Job Search

By Ioana Marinescu and Roland Rathelot

American Economic Journal: Macroeconomics, July 2018

Could we significantly reduce US unemployment by helping job seekers move closer to jobs? Using data from the leading employment board CareerBuilder.com, we show that, indeed, workers dislike applying to distant jobs: job seekers are 35 percent less likel...

The Economic Impact of Hurricane Katrina on Its Victims: Evidence from Individual Tax Returns

By Tatyana Deryugina, Laura Kawano, and Steven Levitt

American Economic Journal: Applied Economics, April 2018

Hurricane Katrina destroyed over 200,000 homes and led to massive economic and physical dislocation. Using a panel of tax return data, we provide one of the first comprehensive analyses of the hurricane's long-term economic impact on its victims. Hurrican...

Short-Run and Long-Run Effects of Milton Friedman's Presidential Address

[Symposium: Friedman's Natural Rate Hypothesis after 50 Years]

By Robert E. Hall and Thomas J. Sargent

Journal of Economic Perspectives, Winter 2018

The centerpiece of Milton Friedman's (1968) presidential address to the American Economic Association, delivered in Washington, DC, on December 29, 1967, was the striking proposition that monetary policy has no longer-run effects on the real economy. Fr...

On the Controversies behind the Origins of the Federal Economic Statistics

[Symposium: Public Provision of Economic Data]

By Hugh Rockoff

Journal of Economic Perspectives, Winter 2019

Our federal economic statistics originated in the economic and political divisions in the United States and the bitter debates over economic policy they engendered at the end of the 19th century and during the world wars and Great Depression. Workers we...

Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France

By Youssef Benzarti and Dorian Carloni

American Economic Journal: Economic Policy, February 2019

This paper evaluates the incidence of a large cut in value-added taxes (VATs) for French sit-down restaurants in 2009. In contrast to previous studies, which only focus on the price effects of VAT reforms, we estimate the effects of the VAT cut on four gr...

Optimal Income Taxation with Unemployment and Wage Responses: A Sufficient Statistics Approach

By Kory Kroft, Kavan Kucko, Etienne Lehmann, and Johannes Schmieder

American Economic Journal: Economic Policy, February 2020

We derive a sufficient statistics tax formula in a model that incorporates unemployment and endogenous wages to study the shape of the optimal income tax. Key sufficient statistics are the macro employment response to taxation, the micro and macro partici...

Should We Reject the Natural Rate Hypothesis?

[Symposium: Friedman's Natural Rate Hypothesis after 50 Years]

By Olivier Blanchard

Journal of Economic Perspectives, Winter 2018

Fifty years ago, Milton Friedman articulated the natural rate hypothesis. It was composed of two sub-hypotheses: First, the natural rate of unemployment is independent of monetary policy. Second, there is no long-run trade-off between the deviation of u...

Offshoring and Labor Markets

By David Hummels, Jakob R. Munch, and Chong Xiang

Journal of Economic Literature, September 2018

In this paper we survey the recent empirical literature on the effects of offshoring on wage, employment and displacement. We start with an overview of the measurement of offshoring, organizing our discussion around the three key elements of offshoring: t...

Revisiting the Effects of Unemployment Insurance Extensions on Unemployment: A Measurement-Error-Corrected Regression Discontinuity Approach

By Steven Dieterle, Otávio Bartalotti, and Quentin Brummet

American Economic Journal: Economic Policy, May 2020

This study documents two potential biases in recent analyses of UI benefit extensions using boundary-based identification: bias from using county-level aggregates and bias from across-border policy spillovers. To examine the first bias, the analysis uses ...

Unemployment Insurance and Means-Tested Program Interactions: Evidence from Administrative Data

By Pauline Leung and Christopher O'Leary

American Economic Journal: Economic Policy, May 2020

We study the ways in which unemployment insurance (UI) benefits interact with other elements of the social safety net around job losses. We exploit a cutoff for UI eligibility, based on a workers' highest quarterly earnings in the past year, to generate q...

Evaluating State and Local Business Incentives

[Symposium: How Taxes Affect Location Choices]

By Cailin Slattery and Owen Zidar

Journal of Economic Perspectives, Spring 2020

This essay describes and evaluates state and local business tax incentives in the United States. In 2014, states spent between 5 USD and 216 USD per capita on incentives for firms in the form of firm-specific subsidies and general tax credits, which mos...

Tracking the evolution of work

[Page]

A new dataset on job tasks provides insight into how employment in the US changed.

Supplying a fiscal lifeline

[Research Highlight]

May 11, 2020

Valerie Ramey discusses what economists have learned about stimulus since the 2008 financial crisis.

Measuring the Macroeconomic Impact of Carbon Taxes

By Gilbert E. Metcalf and James H. Stock

AEA Papers and Proceedings, May 2020

Policymakers often express concern about the impact of carbon taxes on employment or GDP. Using a new dataset on carbon tax rates, we estimate the macroeconomic impacts of these taxes on GDP and employment growth rates for various specifications and sampl...

Automatic Stabilizers in a Low-Rate Environment

By Olivier J. Blanchard and Lawrence H. Summers

AEA Papers and Proceedings, May 2020

In a world where monetary policy cannot assume responsibility for stabilization policy, there is a strong need for fiscal policy to address stabilization issues. In this context, we argue for "semi-automatic stabilizers," aimed at reducing unemployment sl...