Current Unpublished Working Papers
Do Extended Unemployment Benefits Lengthen Unemployment Spells? Evidence from Recent Cycles in the U.S. Labor Market
2013-09 | With Farber | April 2013
In response to the Great Recession and sustained labor market downturn, the availability of unemployment insurance (UI) benefits was extended to new historical highs in the United States, up to 99 weeks as of late 2009 into 2012. We exploit variation in the timing and size of UI benefit extensions across states to estimate the overall impact of these extensions on unemployment duration, comparing the experience with the prior extension of benefits (up to 72 weeks) during the much milder downturn in the early 2000s. Using monthly matched individual data from the U.S. Current Population Survey (CPS) for the periods 2000-2005 and 2007-2012, we estimate the effects of UI extensions on unemployment transitions and duration. We rely on individual variation in benefit availability based on the duration of unemployment spells and the length of UI benefits available in the state and month, conditional on state economic conditions and individual characteristics. We find a small but statistically significant reduction in the unemployment exit rate and a small increase in the expected duration of unemployment arising from both sets of UI extensions. The effect on exits and duration is primarily due to a reduction in exits from the labor force rather than a decrease in exits to employment (the job finding rate). The magnitude of the overall effect on exits and duration is similar across the two episodes of benefit extensions. Although the overall effect of UI extensions on exits from unemployment is small, it implies a substantial effect of extended benefits on the steady-state share of unemployment in the cross-section that is long-term.
Computer Use and the U.S. Wage Distribution, 1984-2003
2006-34 | October 2006
Given past estimates of wage increases associated with workplace computer use and higher usage rates among more skilled workers, the diffusion of computers has been interpreted as a mechanism for skill-biased technological change and consequent widening of the earnings
distribution. I investigate this link by testing for direct effects of rising computer use on the distribution of wages in the United States. Analysis of data from the periodic CPS computer use supplements over the years 1984-2003 reveals that the positive association between workplace computer use and wages declines at higher skill levels, with the notable exception of a higher return to computer use for highly educated workers that emerged after 1997. Over my complete sample frame, however, the net association between rising computer use and the distribution of wages was quite limited. For broad groups defined by educational attainment, rising computer use was associated with rising between-group inequality that was offset by falling within-group inequality, suggesting that computers have exerted a “leveling” rather than a “polarizing” effect on wages.
Why Has the U.S. Beveridge Curve Shifted Back? New Evidence Using Regional Data
2005-25 | December 2005
The Beveridge curve depicts the empirical relationship between job vacancies and unemployment, which in turn reflects the underlying efficiency of the job matching process. Previous analyses of the Beveridge curve suggested deterioration in match efficiency during the 1970s and early 1980s, followed by improved match efficiency beginning in the late 1980s. This paper combines aggregate and regional data on job vacancies and unemployment to estimate the U.S. aggregate and regional Beveridge curves, focusing on the period 1976-2005. Using new data on job vacancies from the U.S. Bureau of Labor Statistics, the help-wanted advertising series that formed the basis of past work are modified to form synthetic job vacancy series at the national and regional level. The results suggest that a decline in the dispersion of employment growth across geographic areas contributed to a pronounced inward shift in the Beveridge curve since the late 1980s, reversing the earlier pattern identified by Abraham (1987) and reinforcing findings of favorable labor market trends in the 1990s (e.g., Katz and Krueger 1999).
Rising Unemployment Duration in the United States: Causes and Consequences
Manuscript | April 2011
Existing research suggests that unemployment durations in the United States had been trending upward even before the unprecedented level and duration of unemployment associated with the severe recession that began in December 2007. Researchers have proposed explanations for rising duration based on the changing composition of the labor force and the unemployment pool and increased search duration as a response to widening residual wage inequality. I attempt to disentangle these opposing compositional and behavioral explanations of rising duration using a recently developed econometric framework for the analysis of repeated cross-section (“synthetic cohort”) data on unemployment durations. After accounting for changes in the CPS
survey and using a more complete and appropriate set of conditioning variables than has been used in past work, the results suggest limited changes in unemployment duration over the past three decades. However, conditional durations have been longer during the recent severe recession and its aftermath than in the similar episode during the early 1980s, primarily due to
higher labor force attachment for women and lower unemployment exit rates among the very long-term unemployed.
Bootstrap vs. Analytical Testing of Predictions from Stratified Sample Regressions
Manuscript | April 1998
Stratified sample regressions are used to form predicted differentials across categorically definable population groups when the regression parameters differ across groups. A common application of this technique is to the analysis of labor market differences in wage and benefit outcomes. I discuss bootstrap and first-order analytic approaches to estimating statistical precision for the predicted differentials obtained from such models. In linear and nonlinear applications, analytic approximations substantially overstate statistical precision for estimated differentials that depend on differences in means.
Published Articles (Refereed Journals and Volumes)
Lost in Translation? Teacher Training and Outcomes in High School Economics Classes
Forthcoming in Contemporary Economic Policy | With Hoff and Lopus
Using data from a 2006 survey of California high school economics classes, we assess the effects of teacher characteristics on student achievement. We estimate value-added models of outcomes on multiple choice and essay exams, with matched classroom pairs for each teacher enabling random-effects and fixed-effects estimation. The results show a substantial impact of specialized teacher experience and college-level coursework in economics. However, the latter is associated with higher scores on the multiple-choice test and lower scores on the essay test, suggesting that a portion of teachers’ content knowledge may be “lost in translation” when conveyed to their students.
The Economic Security Index: A New Measure for Research and Policy Analysis
Review of Income and Wealth, 2013 | With Hacker, Huber, Nichols, Rehm, Schlesinger, and Craig
This article presents the Economic Security Index (ESI), a new measure of economic insecurity. The ESI assesses the individual-level occurrence of substantial year-to-year declines in available household resources, accounting for fluctuations not only in income but also in out-of-pocket medical expenses. It also assesses whether those experiencing such declines have sufficient liquid financial wealth to buffer against these shocks. We find that insecurity—the share of individuals experiencing substantial resource declines without adequate financial buffers—has risen steadily since the mid-1980s for virtually all subgroups of Americans, albeit with cyclical fluctuation. At the same time, we find that there is substantial disparity in the degree to which different subgroups are exposed to economic risk. As the ESI derives from a data-independent conceptual foundation, it can be measured using different panel datasets. We find that the degree and disparity by which insecurity has risen is robust across the best available sources.
House Lock and Structural Unemployment
Labour Economics 25, July 2013, 86-97
A recent decline in internal migration in the United States may have been caused in part by falling house prices, through the “lock in” effects of financial constraints faced by households whose housing debt exceeds the market value of their home. I analyze the relationship between such “house lock” and the elevated levels and persistence of unemployment during the recent recession and its aftermath, using data for the years 2008–11. Because house lock is likely to extend job search in the local labor market for homeowners whose home value has declined, I focus on differences in unemployment duration between homeowners and renters across geographic areas differentiated by the severity of the decline in home prices. The empirical analyses rely on microdata from the monthly Current Population Survey (CPS) files and on an econometric method that enables the estimation of individual and aggregate covariate effects on unemployment durations using repeated cross-section data. I do not uncover systematic evidence to support the house-lock hypothesis.
A Search and Matching Approach to Labor Markets: Did the Natural Rate of Unemployment Rise?
Journal of Economic Perspectives 26(3), June 2012, 3-26 | With Daly, Hobijn, and Sahin
The U.S. unemployment rate has remained stubbornly high since the 2007-2009 recession, leading some observers to conclude that structural rather than cyclical factors are to blame. Relying on a standard job search and matching framework and empirical evidence from a wide array of labor market indicators, we examine whether the natural rate of unemployment has increased since the recession began, and if so, whether the underlying causes are transitory or persistent. Our analyses suggest that the natural rate has risen over the past several years, with our preferred estimate implying an increase of close to a percentage point above its pre-recession level. An assessment of the underlying factors responsible for this increase, including labor market mismatch, extended unemployment benefits, and uncertainty about overall economic conditions, implies that only a small fraction is likely to be persistent.
The Labor Market in the Great Recession: an Update to September 2011
Brookings Papers on Economic Activity 103, 2012, 353-371 | With Hobijn
Since the end of the Great Recession in mid-2009, the unemployment rate has recovered slowly, falling by only one percentage point from its peak. We find that the lackluster labor market recovery can be traced in large part to weakness in aggregate demand; only a small part seems attributable to increases in labor market frictions. This continued labor market weakness has led to the highest level of long-term unemployment in the U.S. in the postwar period, and a blurring of the distinction between unemployment and nonparticipation. We show that flows from nonparticipation to unemployment are important for understanding the recent evolution of the duration distribution of unemployment. Simulations that account for these flows suggest that the U.S. labor market is unlikely to be subject to high levels of structural long-term unemployment after aggregate demand recovers.
The Effect of an Employer Health Insurance Mandate on Health Insurance Coverage and the Demand for Labor: Evidence from Hawaii
American Economic Journal: Economic Policy 3, 2011, 25-51 | With Buchmueller and DiNardo
We examine the effects of the most durable employer health insurance mandate in the United States, Hawaii’s Prepaid Health Care Act, using Current Population Survey data covering the years 1979 to 2005. Relying on a variation of the classical Fisher permutation test applied across states, we find that Hawaii’s law increased insurance coverage over time for worker groups with low rates of coverage in the voluntary market. We find no statistically significant support for the hypothesis that the mandate reduced wages and employment probabilities. Instead, its primary detectable effect was an increased reliance on exempt part-time workers.
Climate Change and Housing Prices: Hedonic Estimates for Ski Resorts in Western North America
Land Economics 87, 2011, 75-91 | With Butsic and Hanak
We apply a hedonic framework to estimate and simulate the impact of global warming on real estate prices near ski resorts in the western United States and Canada. Using data on housing values for selected U.S. Census tracts and individual home sales in four locations, combined with detailed weather data and characteristics of nearby ski resorts, we find precise and consistent estimates of positive snowfall effects on housing values. Simulations based on these estimates reveal substantial heterogeneity in the likely impact of climate change across regions, including large reductions in home prices near resorts where snow reliability already is low.
Cross-National Trends in Earnings Inequality and Instability
Economics Letters 99(2), May 2008, 215-219 | With Daly
We compare trends in earnings inequality in the United States, Germany, and Great Britain. Estimation of a heterogeneous growth model of permanent and transitory earnings variation reveals substantial convergence in the permanent component of inequality in these countries during the 1990s.
The Ins and Outs of Poverty in Advanced Economies: Government Policy and Poverty Dynamics in Canada, Germany, Great Britain, and the United States
Review of Income and Wealth 52, 2006, 261-284
Comparative analysis of poverty dynamic–transitions and persistence–can yield important insights about the nature of poverty and the effectiveness of alternative policy responses. This manuscript compares poverty dynamics in four advanced industrial countries (Canada, unified Germany, Great Britain, and the United States) for overlapping six-year periods in the 1990s, focusing on the impact of government policies. The data indicate that relative to measured cross-sectional poverty rates, poverty persistence is higher in North America than in Europe. Most poverty transitions, and the prevalence of chronic poverty, are associated with employment instability and family dissolution in all four countries. However, government tax-and-transfer policies are more effective at reducing poverty persistence in Europe than in North America.
Inequality and Poverty in the United States: The Effects of Rising Dispersion of Men’s Earnings and Changing Family Behavior
Economica 73(289), February 2006, 75-98 | With Daly
Using semiparametric density estimation techniques, we analyze the effect of rising dispersion of men’s earnings and related changes in family behavior on increasing inequality in the distribution of family income in the United States. For the period 1969-1989, the growing dispersion of men’s earnings and changing family structure can account for most of the rise in family income inequality. By contrast, the increase in labor force participation by women offset this trend. Inequality grew at a slower rate in the 1990s than in earlier decades, largely because of stabilization in the relative earnings of men from low-income families.
Union Effects on Health Insurance Provision and Coverage in the United States
Industrial and Labor Relations Review 55(4), July 2002, 610-627 | With Buchmueller and DiNardo
During the past two decades, union density has declined in the United States and employer provision of health benefits has changed substantially in extent and form. Using individual survey data spanning the years 1983-97 combined with employer survey data for 1993, the authors update and extend previous analyses of private-sector union effects on employer-provided health benefits. They find that the union effect on health insurance coverage rates has fallen somewhat but remains large, due to an increase over time in the union effect on employee ‘take-up’ of offered insurance, and that declining unionization explains 20-35% of the decline in employee health coverage. The increasing union take-up effect is linked to union effects on employees’ direct costs for health insurance and the availability of retiree coverage.
The Bootstrap and Multiple Imputations: Harnessing Increased Computing Power for Improved Statistical Tests
Journal of Economic Perspectives 15(4), Fall 2001, 129-142 | With Brownstone
The bootstrap and multiple imputations are two techniques that can enhance the accuracy of estimated confidence bands and critical values.
Although they are computationally intensive, relying on repeated sampling from empirical data sets and associated estimates, modern computing power enables their application in a wide and growing number of econometric settings. We provide an intuitive overview of how to apply these techniques, referring to existing theoretical literature and various applied examples to illustrate both their possibilities and their pitfalls.
Declining Job Security
Journal of Labor Economics part 2, October 1999
The Effect of Health Insurance on Married Female Labor Supply
Journal of Human Resources 34(1), Winter 1999, 42-70 | With Buchmueller
We investigate the effects of employer-provided health insurance on the labor supply of married women. Because health benefits commonly are restricted to full-time workers, wives who prefer to work short hours hut have no alternate source of insurance may work long hours in order to acquire coverage for their families. We use dates from the April 1993 Current Population Survey Benefits Supplement, and we exploit variation in coverage under husbands’ health plans to estimate the magnitude of this effect. Our reduced-form labor supply models indicate a strong negative effect of husbands’ health insurance on wives’ work hours, particularly in families with children. This effect persists when we replace husbands’ insurance coverage with husbands’ offered insurance, and when we use a multinomial logit model that accounts for unobserved heterogeneity in family labor supply preferences.
Modeling Earnings Measurement Error: A Multiple Imputations Approach
Review of Economics and Statistics, November 1996 | With Brownstone
Seniority, Sectoral Decline, and Employee Retention: An Analysis of Layoff Unemployment Spells
Journal of Labor Economics, October 1996 | With Idson
The Effects of Employer-Provided Health Insurance on Worker Mobility
Industrial and Labor Relations Review 49, April 1996 | With Buchmueller
Union Effects on Municipal Employment and Wages: A Longitudinal Approach
Journal of Labor Economics 11(3), July 1993
Job Tenure and Joblessness of Displaced Workers
Journal of Human Resources 26(4), Fall 1991
The Impact of Unionism on Municipal Expenditures and Revenues
Industrial and Labor Relations Review 42(3), April 1989
What’s Behind the Increase in Part-Time Work?
Economic Letter 2013-24 | August 26, 2013 | With Bengali
Will Labor Force Participation Bounce Back?
Economic Letter 2013-14 | May 13, 2013 | With Bengali and Daly
Long-term Unemployment: What Do We Know?
Economic Letter 2013-03 | February 4, 2013
Worker Skills and Job Quality
Economic Letter 2012-13 | April 30, 2012 | With Neumark
Why Is Unemployment Duration So Long?
Economic Letter 2012-03 | January 30, 2012 | With Kuang
Recent Layoffs in a Fragile Labor Market
Economic Letter 2011-30 | September 26, 2011 | With Kuang
Is Structural Unemployment on the Rise?
Economic Letter 2010-34 | November 8, 2010 | With Kuang
Extended Unemployment and UI Benefits
Economic Letter 2010-12 | April 19, 2010 | With Kuang
New Highs in Unemployment Insurance Claims
Economic Letter 2009-28 | September 8, 2009 | With Cleary and Kwok
Employer Health Benefits and Insurance Expansions: Hawaii’s Experience
Economic Letter 2009-21 | June 29, 2009 | With Buchmueller and DiNardo
Sectoral Reallocation and Unemployment
Economic Letter 2008-32 | October 17, 2008 | With Cleary
Regional Variation in the Potential Economic Effects of Climate Change
Economic Letter 2008-26 | August 22, 2008 | With Butsic and Hanak
The Costs and Value of New Medical Technologies: Symposium Summary
Economic Letter 2007-18 | July 6, 2007
Economic Letter 2007-13 | June 1, 2007
Educational Attainment, Unemployment, and Wage Inflation
Economic Review | 2007 | With Daly and Jackson
Health Insurance Costs and Declining Coverage
Economic Letter 2006-25 | September 29, 2006 | With Buchmueller
Job Matching: Evidence from the Beveridge Curve
Economic Letter 2006-08 | April 21, 2006 | With Hodges
Age and Education Effects on the Unemployment Rate
Economic Letter 2005-15 | July 15, 2005 | With Hodges
Help-Wanted Advertising and Job Vacancies
Economic Letter 2005-02 | January 21, 2005
The Computer Evolution
Economic Letter 2004-19 | July 23, 2004 | With MacDonald
Performance of Urban Information Technology Centers: The Boom, the Bust, and the Future
Economic Review | 2004 | With Daly
Is There a Digital Divide?
Economic Letter 2003-38 | December 26, 2003 | With MacDonald
Is Our IT Manufacturing Edge Drifting Overseas?
Economic Letter 2003-30 | October 10, 2003
Earnings Inequality and Earnings Mobility in the U.S.
Economic Letter 2003-28 | September 26, 2003 | With Daly
Extended Unemployment in California
Economic Letter 2003-05 | February 28, 2003
Recent Trends in Unemployment Duration
Economic Letter 2002-35 | November 22, 2002
On the Move: California Employment Law and High-Tech Development
Economic Letter 2002-24 | August 16, 2002
Measuring Available and Underutilized Labor Resources
Economic Letter 2000-06 | March 3, 2000
» View FRBSF Publications prior to 2000
Book Review: “The Redistribution Recession” (by Casey Mulligan)
Forthcoming in Social Science Journal
Book Review: “The Health and Wealth of a Nation: Employer-Based Health Insurance and the Affordable Care Act” (by Nan Maxwell)
The American Economist Spring, April 2013, 60-61
A Submerging Labor Market Institution? Unions and the Nonwage Aspects of Work
In Emerging Labor Market Institutions for the 21st Century, ed. by Freeman, Hersch, and Mishel | Chicago: NBER and University of Chicago Press, 2005. 231-263 | With Buchmueller and DiNardo
Using data from a variety of different sources and straightforward econometric methods, we investigate the differences between union and nonunion jobs. Despite the substantial decline in union membership and
collective bargaining over the last 20 years, union jobs continue to differ from comparable non-union jobs in regard to readily observable nonwage characteristics. In general, union workers work fewer hours per week and fewer weeks per year, and they spend more time on vacation and more time away from work due to their own illness or the illness of a family member. They also are more likely to be offered and to be covered by employerprovided health insurance, more likely to receive retiree health benefits from their employer, more likely to be offered and to be covered by a pension plan, and more likely to receive dental insurance, long-term disability plans, paid sick leave, maternity leave, and paid vacation time. The size of some of these gaps, however, appears to have declined over time.
The Effects of Pensions, Health, and Health Insurance on Retirement: A Comparative Analysis of California and the Nation
In Employment and Health Policies for Californians Over 50: Proceedings of a Conference, ed. by Rice and Yelin | Institute for Health and Aging, University of California, San Francisco, 2001. 183-200 | With Daly
Among the factors that affect individual retirement decisions, previous research has identified the timing of social security payments, private pension eligibility, health status, and health insurance coverage as key determinants. In this chapter, we first review existing research on the links between retirement outcomes and these key determinants. We then examine the impact of the first three factors (excluding health insurance) relying primarily on data from the 1998 California Work and Health Survey. We also compare results from the California survey with results based on nationally representative samples from the Current Population Survey and the Health and Retirement Survey. The empirical results indicate substantial effects of social security, private pensions, and poor health on retirement decisions in California and in the nation as a whole.
When Money Is Tight: Poverty Dynamics in OECD Countries
In OECD Employment Outlook 2001, Chap. 2 | Paris: Organisation for Economic Cooperation and Development, 2001 | With Swaim and Puymoyen
Declining Job Security
In On the Job: Is Long-Term Employment a Thing of the Past?, ed. by Neumark | New York: Russell Sage Foundation, 2000
Modeling Measurement Error Bias in Cross-Section and Longitudinal Wage Equations
In Proceedings, 1992 Annual Research Conference | Washington, DC: U.S. Bureau of the Census, 1992 | With Brownstone
The Effects of Public Sector Labor Laws on Labor Market Institutions and Outcomes
In When Public Sector Workers Unionize, ed. by Freeman and Ichniowski | Chicago: University of Chicago Press, 1988 | With Freeman
The NBER Public Sector Collective Bargaining Law Data Set
In When Public Sector Workers Unionize, Appendix B, ed. by Freeman and Ichniowski | Chicago: University of Chicago Press, 1988 | With Freeman