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Working Paper
Labor-Market Uncertainty and Portfolio Choice Puzzles
Chang, Yongsung; Karabarbounis, Marios; Hong, Jay H. (2014-06-14)
The standard theory of household-portfolio choice is hard to reconcile with the following facts: (i) Households hold a small amount of equity despite the higher average rate of return. (ii) The share of risky assets increases with the age of the household. (iii) The share of risky assets is disproportionately larger for richer households. We develop a life-cycle model with age-dependent unemployment risk and gradual learning about the income profile that can address all three puzzles. Young workers, on average asset poor, face larger labor-market uncertainty because of high unemployment risk ...
Working Paper , Paper 14-13

Report
Job Ladder, Human Capital, and the Cost of Job Loss
De Pace, Federica; Fella, Giulio; Audoly, Richard (2022-12-01)
High-tenure workers who lose their jobs experience a large and prolonged fall in wages and earnings. To quantify the forces behind this empirical regularity, we propose a rich structural model of the labor market with heterogeneous firms, on-the-job search, and firm-specific and general human capital. By jointly matching moments of workers’ mobility and wages, the model can replicate the losses in earnings and wages observed in the data. The loss of a job with a more productive employer is the primary driver of the cumulated wage losses post-displacement (50 percent), followed by the loss ...
Staff Reports , Paper 1043

Report
Do Consumers Rely More Heavily on Credit Cards While Unemployed?
Cole, Allison (2016-12-20)
Leading up to the Great Recession, households increased their credit card debt by over 16 percent ($121 billion) during the five-year period from 2004 to 2009. The unemployment rate simultaneously began to rise in 2008, increasing from 5.0 percent in January 2008 to a high of 10.0 percent in October of 2009. During the recovery, from 2009 to 2014, credit card debt fell by more than 25 percent, as the unemployment rate returned to near prerecession levels. These coincident developments have led to speculation that consumers facing unemployment or job uncertainty may have increased their ...
Consumer Payments Research Data Reports , Paper 2016-06

Discussion Paper
Wage Insurance: A Potential Policy for Displaced Workers
Hyman, Benjamin; Kovak, Brian K.; Leive, Adam (2024-07-17)
Despite the existing safety net, worker displacement continues to have severe consequences that motivate the consideration of new social insurance programs. Wage insurance is a novel policy that temporarily provides additional income to workers who lose their job and become re-employed at a lower wage. In this post, we draw on evidence from our recent working paper analyzing the effects of a U.S. wage insurance program on worker earnings and employment outcomes. Among workers displaced by international trade, we find that eligibility for wage insurance increased the probability of employment ...
Liberty Street Economics , Paper 20240717

Working Paper
Estimating the Trend Unemployment Rate in the Fourth Federal Reserve District
Fallick, Bruce; Tasci, Murat (2020-07-01)
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 Papers , Paper 20-19

Report
Wage Growth and Labor Market Tightness
Pearce, Jeremy; Heise, Sebastian; Weber, Jacob P. (2024-10-01)
Good measures of labor market tightness are essential to predict wage inflation and to calibrate monetary policy. This paper highlights the importance of two measures of labor market tightness in determining wage growth: the quits rate and vacancies per effective searcher (V/ES)—where searchers include both employed and non-employed job seekers. Amongst a broad set of indicators of labor market tightness, we find that these two measures are independently the most strongly correlated with wage inflation both in aggregate time series data and in industry-level panel data, and also predict ...
Staff Reports , Paper 1128

Working Paper
On the Importance of Household versus Firm Credit Frictions in the Great Recession
Pastorino, Elena; Lopez, Pierlauro; Midrigan, Virgiliu; Kehoe, Patrick J. (2020-09-25)
Although a credit tightening is commonly recognized as a key determinant of the Great Recession, to date, it is unclear whether a worsening of credit conditions faced by households or by firms was most responsible for the downturn. Some studies have suggested that the household-side credit channel is quantitatively the most important one. Many others contend that the firm-side channel played a crucial role. We propose a model in which both channels are present and explicitly formalized. Our analysis indicates that the household-side credit channel is quantitatively more relevant than the ...
Working Papers , Paper 20-28

Working Paper
Agglomeration and innovation
Kerr, William R.; Carlino, Gerald A. (2014-08-01)
Draft chapter for the forthcoming Handbook of Regional and Urban Economics, Vols. 5A and 5B This paper reviews academic research on the connections between agglomeration and innovation. The authors first describe the conceptual distinctions between invention and innovation. They then discuss how these factors are frequently measured in the data and note some resulting empirical regularities. Innovative activity tends to be more concentrated than industrial activity, and the authors discuss important findings from the literature about why this is so. The authors highlight the traits of ...
Working Papers , Paper 14-26

Working Paper
Recent Employment Growth in Cities, Suburbs, and Rural Communities
Foote, Christopher L.; Couillard, Benjamin K. (2019-12-01)
This paper uses a comprehensive source of yearly data to study private-sector labor demand across US counties during the past five decades. Our focus is on how employment levels and earnings relate to population density—that is, how labor markets in rural areas, suburbs, and cities have fared relative to one another. Three broad lessons emerge. First, the longstanding suburbanization of employment and population in cities with very dense urban cores essentially stopped in the first decade of the 21st century. For cities with less dense cores, however, the decentralization of employment ...
Working Papers , Paper 19-20

Working Paper
Wage Adjustment in Efficient Long-Term Employment Relationships
Elsby, Michael; Gottfries, Axel; Krolikowski, Pawel; Solon, Gary (2023-10-10)
We present a model in which efficient long-term employment relationships are sustained by wage adjustments prompted by shocks to idiosyncratic productivity and the arrival of outside job offers. In accordance with casual and formal evidence, these wage adjustments occur only sporadically, due to the presence of renegotiation costs. The model is amenable to analytical solution and yields new insights into a number of labor market phenomena, including: (1) key features of the empirical distributions of changes in pay among job stayers; (2) a property of near-“memorylessness” in wage ...
Working Papers , Paper 23-23

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