Search Results
Journal Article
Wage Growth over Unemployment Spells
This article looks at the wage growth associated with a spell of unemployment during the past three recessions. Our main findings are threefold. First, half of all unemployed workers experience a lower hourly wage once they regain employment. Second, after an unemployment spell, older workers and those without a college degree experience lower wage rowth. Third, workers who regain employment in a different industry than they were in previously tend to experience a substantial wage decline. The analysis suggests that the COVID-19 pandemic not only led to unprecedented job losses, but it could ...
Discussion Paper
Wage Growth over Unemployment Spells
This article looks at the wage growth associated with a spell of unemployment during the past three recessions. Our main findings are threefold. First, half of all unemployed workers experience a lower hourly wage once they regain employment. Second, after an unemployment spell, older workers and those without a college degree experience lower wage rowth. Third, workers who regain employment in a different industry than they were in previously tend to experience a substantial wage decline. The analysis suggests that the COVID-19 pandemic not only led to unprecedented job losses, but it could ...
Working Paper
Luxuries, Necessities, and the Allocation of Time
Households enjoy utility from activities that require a combination of time and goods. We classify activities into two types: luxuries and necessities. Luxuries (necessities) are activities for which time and expenditure shares rise (decline) with income. We develop and estimate a model with nonhomothetic preferences and find that time and goods are substitutable in producing activities. Activities are also substitutable among themselves. Hence, wage and price changes cause large reallocations of time and expenditures across activities. This effect is quantitatively important for welfare ...
Journal Article
When more is better: assessing the southeastern economy with lots of data
The authors estimate a model that provides a single indicator for the southeastern economy, making it easier for policymakers and analysts to assess regional economic conditions and compare them to the broader economy.
Discussion Paper
Wage Growth over Unemployment Spells
This article looks at the wage growth associated with a spell of unemployment during the past three recessions. Our main findings are threefold. First, half of all unemployed workers experience a lower hourly wage once they regain employment. Second, afteran unemployment spell, older workers and those without a college degree experience lower wage growth. Third, workers who regain employment in a different industry than they were in previously tend to experience a substantial wage decline. The analysis suggests that the COVID-19 pandemic not only led to unprecedented job losses, but it could ...
Working Paper
Household Debt, the Labor Share, and Earnings Inequality
We show that the secular decline in real interest rates in the United States, which began in the early 1980s and persisted for nearly four decades, reduced the labor’s share of output and the unemployment rate, and increased earnings inequality. We establish this link using a model of frictional labor markets, estimated from household-level data, in which unemployment risk is only partially insurable. Rising debt resulting from lower interest rates reduces the value of unemployment, leading to lower equilibrium wages relative to productivity and a lower unemployment rate. Wage dispersion ...
Journal Article
Is more still better? Revisiting the Sixth District Coincident Indicator
A revised version of the D6 Factor model of the southeastern economy is better than the original at describing contemporary economic activity and allows for historical comparisons across several business cycles.
Working Paper
Comparative advantage and risk premia in labor markets
Using the Survey of Income and Program Participation (SIPP), we document a significant and positive association between earnings risk (both permanent and transitory) and the level of earnings across 21 industries. We propose an equilibrium framework to analyze the interplay between earnings volatility and the distribution of skills across workers in determining a relationship between earnings and risk. We use the model to decompose how much of the empirical correlation represents compensation for risk and how much represents selection. The positive association between permanent risk and ...
Working Paper
Capital-skill complementarity and inequality: a sensitivity analysis
In ?Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis,? Krusell et al. (2000) analyzed the capital-skill complementarity hypothesis as an explanation for the behavior of the U.S. skill premium. This paper shows that their model?s fit and the values of the estimated parameters are very sensitive to the data used: Alternative measures of the capital series predict skill premia that bear little resemblance to the data. We also include ten additional years of data to address the claim made by other authors that the evolution of the skill premium changed during the 1990s, but ...
Working Paper
Crude substitution: the cyclical dynamics of oil prices and the college premium
Higher oil price shocks benefit unskilled workers relative to skilled workers: Over the business cycle, energy prices and the skill premium display a strong negative correlation. This correlation is robust to different detrending procedures. We construct and estimate a model economy with energy use and heterogeneous skills and study its business cycle implications, in particular the cyclical behavior of oil prices and the skill premium. In our model economy, the skill premium and the ratio of hours worked by skilled workers to hours worked by unskilled workers are both negatively correlated ...