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Working Paper
Estimating Duration Dependence on Re-employment Wages When Reservation Wages Are Binding
This paper documents a novel finding indicating that re-employment wages are elastic to the level of unemployment insurance (i.e., a binding reservation wage) and adapts the IV estimator for duration dependence in Schmieder et al. (2016) to account for this fact. Using administrative data from Spain, we find that unemployed workers lower their re-employment wages by 3 percent immediately after the exhaustion of unemployment insurance (UI) benefits. Workers’ characteristics and permanent unobserved heterogeneity cannot explain this. To estimate duration dependence, we extend the IV framework ...
Working Paper
The Hedgehog’s Curse: Knowledge Specialization and Displacement Loss
This paper studies the impact of knowledge specialization on earnings losses following displacement. We develop a novel measure of the specialization of human capital, based on how concentrated the knowledge used in an occupation is. Combining our measure with individual labor histories from the NLSY 79-97 and Norway’s LEED, we show that workers with more specialized human capital suffer larger earnings losses following exogenous displacement. A one standard deviation increase in pre-displacement knowledge specialization increases the earnings losses post-displacement by 3 to 4 pp per year ...
Working Paper
The Value of Unemployment Insurance: Liquidity vs. Insurance Value
This paper argues that the value of unemployment insurance (UI) can be decomposed into a liquidity component and an insurance component. While the liquidity component captures the value of relieving the cost to access liquidity during unemployment, the insurance component captures the value of protecting the worker against a potential permanent future income loss. We develop a novel sufficient statistics method to identify each component that requires only the labor supply responses to changes in the potential duration of UI and severance payment and implement it using Spanish administrative ...
Journal Article
The Effect of Higher Financing Costs on Job Openings and Online Job Postings
In this Economic Commentary, we consider whether the declines in vacancies seen in the second half of 2022 could have been driven by monetary policy tightening. We look at whether the variation in this decline across industries and states was consistent with increases in the federal funds rate. Our first strategy focuses on variation at the industry level in exposure to higher borrowing costs. Our second leverages geographic differences in the effect of monetary policy tightening on financing costs. Both strategies suggest that monetary policy is, at least in part, responsible for the recent ...
Working Paper
Capital-Skill Complementarity in Manufacturing: Lessons from the US Shale Boom
This paper tests the existence of capital-skill complementarity in the manufacturing sector using quasi-experimental increases in the relative price of low-skill labor induced by the US shale boom. I find that in response to the shale boom, local manufacturing firms decreased their relative usage of low-skill labor while increasing their capital expenditures. These endogenous changes in the input mix allowed manufacturers to maintain the value added despite the increase in the price of low-skill labor, avoiding the potential short-term crowding-out effects of the natural resource boom. ...