While real US GDP per capita has increased around 80% since 1980, median incomes have remained roughly constant. However, as this paper documents, this stagnation masks an important decline. Male median real incomes have been lower than that of their forebears, at every age, for the last 30 years. We show that this is true across the life cycle and across the wage distribution. Moreover, younger generations have also had to wait longer to reach peak earnings. Further analysis shows that this decline is particularly concentrated on high school graduates. The same pattern is found for female high school graduates yet, African American and Hispanic American women are an important exception. Variance decompositions suggest that these intergenerational differences are quantitatively important. While reductions in hours worked cannot explain the decline, substantial decreases in the labour share are consistent with decreasing incomes in the face of productivity growth. Calculations suggest that hedonic improvements in the quality of goods and services would have to have been equivalent to 30% of younger cohorts’ lifetime consumption for their consumption levels to match those of their predecessors
{"title":"The Declining Fortunes of (Most) American Workers","authors":"Laura A. Harvey, J. Rockey","doi":"10.2139/ssrn.3613679","DOIUrl":"https://doi.org/10.2139/ssrn.3613679","url":null,"abstract":"While real US GDP per capita has increased around 80% since 1980, median incomes have remained roughly constant. However, as this paper documents, this stagnation masks an important decline. Male median real incomes have been lower than that of their forebears, at every age, for the last 30 years. We show that this is true across the life cycle and across the wage distribution. Moreover, younger generations have also had to wait longer to reach peak earnings. Further analysis shows that this decline is particularly concentrated on high school graduates. The same pattern is found for female high school graduates yet, African American and Hispanic American women are an important exception. Variance decompositions suggest that these intergenerational differences are quantitatively important. While reductions in hours worked cannot explain the decline, substantial decreases in the labour share are consistent with decreasing incomes in the face of productivity growth. Calculations suggest that hedonic improvements in the quality of goods and services would have to have been equivalent to 30% of younger cohorts’ lifetime consumption for their consumption levels to match those of their predecessors","PeriodicalId":18085,"journal":{"name":"Macroeconomics: Employment","volume":"27 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-05-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84547703","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Florian H. Schneider, Fanny Brun, Roberto A. Weber
We use surveys, laboratory experiments and administrative labor-market data to study how heterogeneity in the perceived immorality of work and in workers’ aversion to acting immorally interact to impact labor market outcomes. Specifically, we investigate whether those individuals least concerned with acting morally select into jobs generally perceived as immoral and whether the aversion among many individuals to performing such acts contributes to immorality wage premiums, a form of compensating differential. We show that immoral work is associated with higher wages, both using correlational evidence from administrative labor-market data and causal evidence from a laboratory experiment. We also measure individuals’ aversion to performing immoral acts and show that those who find immoral behavior least aversive are more likely to be employed in immoral work in the lab and have a relative preference for work perceived as immoral outside the laboratory. We note that sorting by “immoral” types into jobs that can cause harm may be detrimental for society. Our study highlights the value of employing complementary research methods.
{"title":"Sorting and Wage Premiums in Immoral Work","authors":"Florian H. Schneider, Fanny Brun, Roberto A. Weber","doi":"10.1257/rct.5865-1.0","DOIUrl":"https://doi.org/10.1257/rct.5865-1.0","url":null,"abstract":"We use surveys, laboratory experiments and administrative labor-market data to study how heterogeneity in the perceived immorality of work and in workers’ aversion to acting immorally interact to impact labor market outcomes. Specifically, we investigate whether those individuals least concerned with acting morally select into jobs generally perceived as immoral and whether the aversion among many individuals to performing such acts contributes to immorality wage premiums, a form of compensating differential. We show that immoral work is associated with higher wages, both using correlational evidence from administrative labor-market data and causal evidence from a laboratory experiment. We also measure individuals’ aversion to performing immoral acts and show that those who find immoral behavior least aversive are more likely to be employed in immoral work in the lab and have a relative preference for work perceived as immoral outside the laboratory. We note that sorting by “immoral” types into jobs that can cause harm may be detrimental for society. Our study highlights the value of employing complementary research methods.","PeriodicalId":18085,"journal":{"name":"Macroeconomics: Employment","volume":"31 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-05-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89764108","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the face of persistent rise in unemployment figure in Nigeria, this study re-examines the unemployment hysteresis hypothesis by deploying both linear and nonlinear unit root estimation techniques. Using Nigerian unemployment rate data from 1970 to 2017, evidence from the adopted unit toot test techniques, except the quantile unit root test, showed that unemployment hysteresis hypothesis holds in Nigeria. This implies that when a shock that affects unemployment occurs, there is a high tendency that the effect would be permanent. However, the finding from the quantile unit root test sheds light on the need for a timely policy response. If the policy interventions such as fiscal policy and other forms of policies are taken regularly, especially at every quarter, the tendency for unemployment to revert to its pre-shock state is high.
{"title":"Does Unemployment Still Follow Hysteresis Hypothesis in Nigeria? Evidence from Linear and Nonlinear Unit Root Test Methods","authors":"I. Raifu","doi":"10.36941/jicd-2020-0007","DOIUrl":"https://doi.org/10.36941/jicd-2020-0007","url":null,"abstract":"In the face of persistent rise in unemployment figure in Nigeria, this study re-examines the unemployment hysteresis hypothesis by deploying both linear and nonlinear unit root estimation techniques. Using Nigerian unemployment rate data from 1970 to 2017, evidence from the adopted unit toot test techniques, except the quantile unit root test, showed that unemployment hysteresis hypothesis holds in Nigeria. This implies that when a shock that affects unemployment occurs, there is a high tendency that the effect would be permanent. However, the finding from the quantile unit root test sheds light on the need for a timely policy response. If the policy interventions such as fiscal policy and other forms of policies are taken regularly, especially at every quarter, the tendency for unemployment to revert to its pre-shock state is high.","PeriodicalId":18085,"journal":{"name":"Macroeconomics: Employment","volume":"37 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-05-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76975566","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The COVID-19 debate in the United States has become more contentious in late April and early May 2020. On one side are voices arguing there is no end in sight for the risks associated with COVID-19 and that lockdown and stay at home policies need to persist. A divergence of opinion regarding these policies formed largely along party lines. Blue state governors emphasized the importance of continued lockdown policies and social distance policies. Red state governors, while still being concerned about health and safety, were recommending the reopening of the U.S. economy. Recent studies such as Tellis, Sood and Sood (2020) have identified political affiliation as a primary driver for policy decisions in the COVID-19 era. This study examines the role of political affiliation both in the advice governors provide for lockdown vs reopen the economy. Also considered is the relative impact of jobs lost over COVID-19 deaths. The study concludes that red states are paying a much higher relative price than blue states. For example, Hawaii has lost over 9,000 jobs for each of the 13 jobs lost. South Dakota has lost over 7,000 jobs for each of the 10 deaths attributed to COVID-19. In addition, this paper examines three troubling aspects of the data being used to justify lockdown measures and social distancing. Another reason for the undue burden being borne by red states is the fact that more than 88 percent of COVID-19 cases have been in blue states. Finally, a brief consideration of the massive amounts of U.S. debt being accumulated by the Federal Reserve and the risks for the U.S. financial condition is also briefly discussed.
{"title":"Factors Related to State Lockdown Policies: A Comparison of Jobs Lost with Deaths from COVID-19 by State","authors":"John R. McGowan","doi":"10.2139/ssrn.3594892","DOIUrl":"https://doi.org/10.2139/ssrn.3594892","url":null,"abstract":"The COVID-19 debate in the United States has become more contentious in late April and early May 2020. On one side are voices arguing there is no end in sight for the risks associated with COVID-19 and that lockdown and stay at home policies need to persist. A divergence of opinion regarding these policies formed largely along party lines. Blue state governors emphasized the importance of continued lockdown policies and social distance policies. Red state governors, while still being concerned about health and safety, were recommending the reopening of the U.S. economy. \u0000 \u0000Recent studies such as Tellis, Sood and Sood (2020) have identified political affiliation as a primary driver for policy decisions in the COVID-19 era. This study examines the role of political affiliation both in the advice governors provide for lockdown vs reopen the economy. Also considered is the relative impact of jobs lost over COVID-19 deaths. The study concludes that red states are paying a much higher relative price than blue states. For example, Hawaii has lost over 9,000 jobs for each of the 13 jobs lost. South Dakota has lost over 7,000 jobs for each of the 10 deaths attributed to COVID-19. \u0000 \u0000In addition, this paper examines three troubling aspects of the data being used to justify lockdown measures and social distancing. Another reason for the undue burden being borne by red states is the fact that more than 88 percent of COVID-19 cases have been in blue states. Finally, a brief consideration of the massive amounts of U.S. debt being accumulated by the Federal Reserve and the risks for the U.S. financial condition is also briefly discussed.","PeriodicalId":18085,"journal":{"name":"Macroeconomics: Employment","volume":"12 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-05-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79199737","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper develops a theory of business cycle unemployment based on the idea that the economy may temporarily pause in response to heightened uncertainty. The pausing of actions in some quarters of the economy eases the problem of decision-making in other quarters, thereby leading the way to recovery. Both the heightening of uncertainty and the pausing-phenomena emerge from the interaction between firms with inter-related plans in a high-dimensional system. Unemployment therefore is a systemic- emergent phenomena and occurs without the imposition of sticky- wages or appropriability problems at the micro level.
{"title":"The Pausing Theory of Unemployment","authors":"Vipin P. Veetil","doi":"10.2139/ssrn.3588982","DOIUrl":"https://doi.org/10.2139/ssrn.3588982","url":null,"abstract":"This paper develops a theory of business cycle unemployment based on the idea that the economy may temporarily pause in response to heightened uncertainty. The pausing of actions in some quarters of the economy eases the problem of decision-making in other quarters, thereby leading the way to recovery. Both the heightening of uncertainty and the pausing-phenomena emerge from the interaction between firms with inter-related plans in a high-dimensional system. Unemployment therefore is a systemic- emergent phenomena and occurs without the imposition of sticky- wages or appropriability problems at the micro level.<br>","PeriodicalId":18085,"journal":{"name":"Macroeconomics: Employment","volume":"65 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-04-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84468684","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
While there has been extensive research on the impact of minimum wages on employment and wages, there has been little on the impact on firm performance, prices, and quality. Exploiting the staggered changes in minimum wages in the US over 2000 to 2008 and using comprehensive data on the hotel industry, we find that doubling minimum wage reduces average hotel revenues by 6% per year and occupancy rates by 3.1%. This is robust to comparing hotels across contiguous counties, and to including state-specific trends. Price responses vary by hotel quality and organizational form. We also find quality downgrades and long-run adjustments via lower entry rates in response to minimum wage increases. The negative effects of minimum wages are in states without right-to-work regulation; suggesting the need for a more comprehensive approach to labor market regulations.
{"title":"Minimum Wage Increases and Employer Performance","authors":"Sumit Agarwal, M. Ayyagari, R. Kosová","doi":"10.2139/ssrn.3575689","DOIUrl":"https://doi.org/10.2139/ssrn.3575689","url":null,"abstract":"While there has been extensive research on the impact of minimum wages on employment and wages, there has been little on the impact on firm performance, prices, and quality. Exploiting the staggered changes in minimum wages in the US over 2000 to 2008 and using comprehensive data on the hotel industry, we find that doubling minimum wage reduces average hotel revenues by 6% per year and occupancy rates by 3.1%. This is robust to comparing hotels across contiguous counties, and to including state-specific trends. Price responses vary by hotel quality and organizational form. We also find quality downgrades and long-run adjustments via lower entry rates in response to minimum wage increases. The negative effects of minimum wages are in states without right-to-work regulation; suggesting the need for a more comprehensive approach to labor market regulations.","PeriodicalId":18085,"journal":{"name":"Macroeconomics: Employment","volume":"22 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-04-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73182180","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study investigates the effect of IMF intervention on the size of the shadow economy. Using a panel of 141 countries from 1991 to 2014 we examine the impact of both IMF participation and conditionality on the informal economy. Following a recent methodological approach our analyses address sources of endogeneity related to, first the IMF participation decision and, second, the conditions included within the program. The empirical findings suggest that both IMF program participation and conditionality increase the size of the shadow economy. When we differentiate IMF conditions into structural and quantitative, we show that only structural conditions are significantly related to a larger shadow economy. Financial development can reduce the size of the shadow economy; however, it cannot reverse the detrimental effect from IMF intervention. Our initial results are found to be robust across alternative empirical specifications
{"title":"Hide and Seek: IMF Intervention and the Shadow Economy: An Empirical Investigation","authors":"M. Chletsos, Andreas Sintos","doi":"10.2139/ssrn.3567411","DOIUrl":"https://doi.org/10.2139/ssrn.3567411","url":null,"abstract":"This study investigates the effect of IMF intervention on the size of the shadow economy. Using a panel of 141 countries from 1991 to 2014 we examine the impact of both IMF participation and conditionality on the informal economy. Following a recent methodological approach our analyses address sources of endogeneity related to, first the IMF participation decision and, second, the conditions included within the program. The empirical findings suggest that both IMF program participation and conditionality increase the size of the shadow economy. When we differentiate IMF conditions into structural and quantitative, we show that only structural conditions are significantly related to a larger shadow economy. Financial development can reduce the size of the shadow economy; however, it cannot reverse the detrimental effect from IMF intervention. Our initial results are found to be robust across alternative empirical specifications","PeriodicalId":18085,"journal":{"name":"Macroeconomics: Employment","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-04-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79585173","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-04-01DOI: 10.1016/j.econlet.2020.108996
Fiona Carmichael, C. Darko, M. Ercolani, Ceren Ozgen, S. Siebert
{"title":"Evidence on Intergenerational Income Transmission Using Complete Dutch Population Data","authors":"Fiona Carmichael, C. Darko, M. Ercolani, Ceren Ozgen, S. Siebert","doi":"10.1016/j.econlet.2020.108996","DOIUrl":"https://doi.org/10.1016/j.econlet.2020.108996","url":null,"abstract":"","PeriodicalId":18085,"journal":{"name":"Macroeconomics: Employment","volume":"26 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85856631","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The lack of anticipation of a worldwide disruptive event such as the spread of the COVID-19 combined with the breakdown of market mechanisms for the most essential products needed to fight the disease left the governments of many countries unsure of how to react and, often, constrained their ability to make strategic choices. The humanitarian goal of saving as many lives as possible came, in some countries, at the cost of confining the entire population, considered the only option available given the circumstances. The economic cost of such a solution which stand-stilled the economies of these countries and disrupted global value chains is likely to be followed by several years of economic depression that will dwarf the cost of the 2008 financial and economic crisis. In the light of this experience, we revisit some of the implicit assumptions underlying the design of our economic systems and discuss some of the dilemmas and trade-offs faced during this stressful period. The lessons learned could help us better anticipate or deal with future Black Swan events.
{"title":"Economic Resilience, Globalization and Market Governance: Facing the COVID-19 Test","authors":"F. Jenny","doi":"10.2139/ssrn.3563076","DOIUrl":"https://doi.org/10.2139/ssrn.3563076","url":null,"abstract":"The lack of anticipation of a worldwide disruptive event such as the spread of the COVID-19 combined with the breakdown of market mechanisms for the most essential products needed to fight the disease left the governments of many countries unsure of how to react and, often, constrained their ability to make strategic choices. The humanitarian goal of saving as many lives as possible came, in some countries, at the cost of confining the entire population, considered the only option available given the circumstances. The economic cost of such a solution which stand-stilled the economies of these countries and disrupted global value chains is likely to be followed by several years of economic depression that will dwarf the cost of the 2008 financial and economic crisis. In the light of this experience, we revisit some of the implicit assumptions underlying the design of our economic systems and discuss some of the dilemmas and trade-offs faced during this stressful period. The lessons learned could help us better anticipate or deal with future Black Swan events.","PeriodicalId":18085,"journal":{"name":"Macroeconomics: Employment","volume":"24 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82568372","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The world will experience dramatic demographic change over this century. This paper examines the impacts of this global demographic change on the Australian economy at both the aggregate and sectoral levels in a global multi-region and multi-sector general equilibrium model. Using a detailed structural model, we simulate demographic shocks of six regions in the world economy as well as Australian own demographic shock to investigate their impacts on Australian macroeconomic conditions, economic structure and trade patterns. The results suggest that demographic change in different regions of the world economy will have different impacts on sectors in Australia depending on trade patterns between Australia and other regions and also between other regions. The energy, mining and durable manufacturing sectors in Australia are the most affected. Demographic change in China, Japan and Korea has significant negative impacts on Australia, but partly offsetting these shocks are positive demographic shocks from emerging Asia. The overall impact of the rest of the world on Australian GDP is quantitatively negligible, but the impacts on the real interest rate and trade balances are significant. Global demographic change increases Australian real interest rates in the next two decades on the assumption that emerging countries can access global capital markets and take advantage of their demographic dividends.
{"title":"Macroeconomic Impacts of Global Demographic Change on Australia","authors":"Weifeng Liu, Warwick McKibbin","doi":"10.2139/ssrn.3566773","DOIUrl":"https://doi.org/10.2139/ssrn.3566773","url":null,"abstract":"The world will experience dramatic demographic change over this century. This paper examines the impacts of this global demographic change on the Australian economy at both the aggregate and sectoral levels in a global multi-region and multi-sector general equilibrium model. Using a detailed structural model, we simulate demographic shocks of six regions in the world economy as well as Australian own demographic shock to investigate their impacts on Australian macroeconomic conditions, economic structure and trade patterns. The results suggest that demographic change in different regions of the world economy will have different impacts on sectors in Australia depending on trade patterns between Australia and other regions and also between other regions. The energy, mining and durable manufacturing sectors in Australia are the most affected. Demographic change in China, Japan and Korea has significant negative impacts on Australia, but partly offsetting these shocks are positive demographic shocks from emerging Asia. The overall impact of the rest of the world on Australian GDP is quantitatively negligible, but the impacts on the real interest rate and trade balances are significant. Global demographic change increases Australian real interest rates in the next two decades on the assumption that emerging countries can access global capital markets and take advantage of their demographic dividends.","PeriodicalId":18085,"journal":{"name":"Macroeconomics: Employment","volume":"53 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-03-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84492283","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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