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Working Paper
Minimum Wage Increases and Vacancies
We estimate the impact of minimum-wage increases on the quantity of labor demanded as measured by firms’ vacancy postings. We use propriety, county-level vacancy data from the Conference Board’s Help Wanted Online database. Our identification relies on the disproportionate effects of minimum-wage hikes on different occupations, as the wage distribution around the binding minimum wage differs by occupation. We find that minimum-wage increases during the 2005-2018 period have led to substantial declines in vacancy postings in at-risk occupations, occupations with a larger share of ...
Working Paper
Estimating the Trend Unemployment Rate in the Fourth Federal Reserve District
We estimate trend unemployment rates for Ohio, Pennsylvania, Kentucky, and West Virginia, states that span parts of the Fourth District of the Federal Reserve System. Our estimated unemployment rate trend for the District as a whole stood at 5.7 percent in 2020:Q1 compared to a 4.7 percent observed unemployment rate within the District, implying a tight labor market by historical standards.
Working Paper
The Unintended Consequences of Employer Credit Check Bans on Labor and Credit Markets
Since the Great Recession, 11 states have restricted employers? access to the credit reports of job applicants. We document that county-level vacancies decline between 9.5 percent and 12.4 percent after states enact these laws. Vacancies decline significantly in affected occupations but remain constant in those that are exempt, and the decline is larger in counties with many subprime residents. Furthermore, subprime borrowers fall behind on more debt payments and reduce credit inquiries postban. The evidence suggests that, counter to their intent, employer credit check bans disrupt labor and ...
Journal Article
How Much Slack Is in the Labor Market? That Depends on What You Mean by Slack
Estimates of labor market slack can diverge a great deal depending on how slack is defined. We calculate slack using five different concepts that all focus on a single labor market indicator, the unemployment rate. We show that the estimates all provide useful?but different?information. We argue that choosing the best measure of slack depends on the question being asked. If the question is, ?Has the unemployment rate reached its longer-run normal level?? then our answer is, ?Almost.? But significant uncertainty surrounds the estimates; and others may wish to consider additional labor market ...
Journal Article
Are jobless recoveries the new norm?
Recent recessions have been followed by exceptionally slow recoveries in the labor market, and the current recession is shaping up to follow the same pattern. We take a close look at some labor market measures and uncover a difference between these recent recessions and those that preceded them - workers are staying unemployed longer. This difference is a clue we can use to predict how the current labor market recovery might proceed in the near future.
Working Paper
Minimum Wage Increases and Vacancies
Using a unique data set and a novel identification strategy, we estimate the effect of minimum wage increases on job vacancy postings. Utilizing occupation-specific county-level vacancy data from the Conference Board’s Help Wanted Online for 2005-2018, we find that state-level minimum wage increases lead to substantial declines in existing and new vacancy postings in occupations with a larger share of workers who earn close to the prevailing minimum wage. We estimate that a 10 percent increase in the state-level effective minimum wage reduces vacancies by 2.4 percent in the same quarter, ...
Journal Article
High unemployment after the recession: mostly cyclical, but adjusting slowly
Unemployment has remained very high since the end of last recession, leading some economists to suggest that the underlying trend of the unemployment rate must have risen, driving unemployment permanently higher. Using a more accurate method of calculating the underlying trend, I find that the long-term rate has not risen and that most of the recent increase in the unemployment rate can be attributed to cyclical causes. But the weak nature of the recovery in real output and the slow rate of worker reallocation are likely to keep unemployment at relatively high levels for the near term.
Working Paper
The ins and outs of unemployment in the long run: a new estimate for the natural rate?
In this paper, we present a simple, reduced form model of comovements in real activity and unemployment flows and use it to uncover the trend changes in these flows, which determine the trend in the unemployment rate. We argue that this trend rate has several key features that are reminiscent of a ?natural rate.? We show that the natural rate, measured this way, has been relatively stable in the last decade, even after the last recession hit the U.S. economy. This relatively muted change was due to two opposing trend changes: On one hand, the trend in the job-finding rate, after being ...
Journal Article
An unstable Okun’s Law, not the best rule of thumb
Okun?s law is a statistical relationship between unemployment and GDP that is widely used as a rule of thumb for assessing the unemployment rate?why it might be at a certain level or where it might be headed, for example. Unfortunately, the Okun?s law relationship is not stable over time, which makes it potentially misleading as a rule of thumb.
Working Paper
Organizations, Skills, and Wage Inequality
We extend an on-the-job search framework in order to allow firms to hire workers with different skills and skills to interact with firms? total factor productivity (TFP). Our model implies that more productive firms are larger, pay higher wages, and hire more workers at all skill levels and proportionately more at higher skill types, matching key stylized facts. We calibrate the model using five educational attainment levels as proxies for skills and estimate nonparametrically firm-skill output from the wage distributions for different educational levels. We consider two periods in time (1985 ...