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

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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...

National Fiscal Policies to Fight Recessions in US States

By Karen Dynan and Douglas Elmendorf

AEA Papers and Proceedings, May 2020

Countercyclical fiscal policy generally focuses on national economic downturns. But US states experience significantly different patterns of unemployment, and demand shocks appear to drive much of that variation. State budget rules limit the ability of st...

Employment and Earnings for Federal Government Economists: Empirical Evidence by Gender and Race

By Lucia Foster, Julia Manzella, Erika McEntarfer, and Danielle H. Sandler

AEA Papers and Proceedings, May 2020

We contribute to the literature on diversity in the economics profession, which has mostly focused on academia, by providing a first look at the employment and earnings of federal government economists by gender and race. Combining micro-level data on fed...

Competing with Robots: Firm-Level Evidence from France

By Daron Acemoglu, Claire Lelarge, and Pascual Restrepo

AEA Papers and Proceedings, May 2020

We study the firm-level implications of robot adoption in France. Of 55,390 firms in our sample, 598 adopted robots between 2010 and 2015, but these firms accounted for 20 percent of manufacturing employment. Adopters experienced significant declines in l...

Firm-Level Automation: Evidence from the Netherlands

By James Bessen, Maarten Goos, Anna Salomons, and Wiljan van den Berge

AEA Papers and Proceedings, May 2020

Studying firm-level adjustments is important for understanding the economic effects of workplace automation. So far, emerging firm-level evidence is focused on robotics and the manufacturing sector. In this paper, we document that the adoption of automati...

Within-Occupation Changes Dominate Changes in What Workers Do: A Shift-Share Decomposition, 2005–2015

By Richard B. Freeman, Ina Ganguli, and Michael J. Handel

AEA Papers and Proceedings, May 2020

This paper measures aggregate changes in job characteristics in the United States from 2005 to 2015 and decomposes those changes into components representing shifts within occupations and changes in occupational employment shares. Per our title, within-oc...

The Role of Broad-Based Employee Ownership Opportunities in Prisoner Reentry

By Robynn Cox

AEA Papers and Proceedings, May 2020

This research investigates the relationship between Employee Stock Ownership Plans (ESOPs) and criminal participation as measured by arrests, conviction, and incarceration among formerly incarcerated individuals. Using the 1997 National Longitudinal Surve...

Immigration Enforcement, Deterrence, and Crime

By Sandra Orozco-Aleman and Heriberto Gonzalez-Lozano

AEA Papers and Proceedings, May 2020

Does interior enforcement selectively deter Mexican migration? Our study shows that more aggressive enforcement increases the likelihood of having immigrants with US work experience and with jobs secured in the United States before their migration. We als...

Real Effects of Sovereign Debt Inflow Shocks

By Lorenzo Pandolfi and Tomas Williams

AEA Papers and Proceedings, May 2020

This paper analyzes the real effects on firms of sovereign debt inflow shocks in emerging countries. We follow Broner et al. (2019) and exploit six episodes of country inclusions into two major local currency sovereign debt indexes. We complement their ev...

Reviving neighborhoods in rust-belt cities

[Research Highlight]

May 21, 2020

Why are areas near Detroit’s thriving downtown less developed than ones further away?

Scrutinizing for-profit colleges

[Research Highlight]

May 06, 2020

Stephanie Cellini discusses the ways students are affected in a much maligned industry.