Economics Commons^™

Predictors Of Employment Growth And Unemployment In U.S. Central Cities, 1990-2010, Laura Wolf-Powers

Upjohn Institute Working Papers

This paper considers employment growth and unemployment from 1990-2010 in a cross-section of cities in light of practical tools that city governments have at their disposal to provide relief. In particular, I test educational attainment (both initial levels and growth over time) and public capital investment as influences on job growth and changes in unemployment rates in 83 central cities in the United States. Change in educational attainment over time is suggestive of causing higher job growth and lower unemployment. The implication is that initiatives to attract and retain college-educated professionals and investments in increasing college attainment among incumbent residents …

Employment Relations And Wages: What Can We Learn From Subjective Assessments?, Marta Lachowska

Upjohn Institute Working Papers

This paper studies the link between hourly wages and workers’ subjective assessments of how easy it would be to find another job as good as the present one, and how easy it would be for an employer to replace an employee. First, using high-quality data, I study the correlates of these two assessments. Second, I study whether respondents who report better outside opportunities and respondents who think they are difficult to replace receive higher wages. The results appear to be consistent with predictions of at least three theoretical frameworks: human capital theory, search theory, and a “locus of control” model.

Do Minimum Wage Laws Affect People Who Are Not Covered? Evidence From Documented And Undocumented, Hourly And Piece Rate Workers In U.S. Agriculture, Anita Alves Pena

Upjohn Institute Working Papers

While a stated goal of minimum wage increases is to benefit low-income workers, some employers are not obligated to provide at least minimum wages to all employees. U.S. farm employers comprise one of these groups. Employees of large farms and H2-A workers (temporary nonimmigrant workers lawfully admitted to perform temporary or seasonal agricultural services) are protected by minimum wage legislation, while other migrant workers (especially those who are paid piece rate) are exempt. Furthermore, U.S. agriculture is characterized by a large percentage of illegal migrants, and workers who are illegal may or may not receive wages above minimum levels. This …

Social Costs Of Jobs Lost Due To Environmental Regulations, Timothy J. Bartik

Upjohn Institute Working Papers

This paper estimates the social costs of job loss due to environmental regulation. Per job lost, potential social costs of job loss are high, plausibly over $100,000 in present value costs (2012 dollars) per permanently lost job. However, these social costs will typically be far less than the earnings associated with lost jobs, because labor markets and workers adjust, increased leisure has some value, and employers benefit from wage reductions. A plausible range for social costs is 8–32 percent of the associated earnings of the lost jobs. Social costs will be higher for older workers, high-wage jobs, and in high …

The Impact Of Financialization On Management And Employment Outcomes, Rosemary L. Batt, Eileen Appelbaum

Upjohn Institute Working Papers

This paper examines three questions: 1) How and why have financial models of doing business emerged in the last three decades? 2) What new forms of financial capitalism have become important in the current period? 3) How do new financial intermediaries, such as private equity, and the financial strategies of nonfinancial corporations affect the management of companies and employment outcomes? The paper describes how deregulation and institutional change created the conditions for a new, more powerful role for finance capital in the governance of U.S. companies, and it synthesizes the empirical evidence on the process and outcomes of financialization in …

Worker Signals Among New College Graduates: The Role Of Selectivity And Gpa, Brad J. Hershbein

Upjohn Institute Working Papers

Recent studies have found a large earnings premium to attending a more selective college, but the mechanisms underlying this premium have received little attention and remain unclear. In order to shed light on this question, I develop a multidimensional signaling model relying on college grades and selectivity that rationalizes students’ choices of effort and firms’ wage-setting behavior. The model is then used to produce predictions of how the interaction of the signals should be related to wages, namely that the return on college GPA should fall the more selective the institution attended. Using five data sets that span the early …

A Methodology For Setting State And Local Regression-Adjusted Performance Targets For Workforce Investment Act Programs, Randall W. Eberts, Wei-Jang Huang, Jing Cai

Upjohn Institute Working Papers

Beginning with PY2009, the U.S. Department of Labor’s Employment and Training Administration (USDOL/ETA) adopted a regression-adjusted approach for setting national targets for several federal workforce development programs, including WIA Adult, Dislocated Worker, and Youth programs. Prior to that time, national targets were based on past performance and the desire to encourage continuous improvement in the workforce programs. The continuous improvement approach typically increased target levels from year to year without a systematic way of accounting for changes in economic conditions or the ability to meet previous targets. The onset of the 2007–2009 recession drew into question this practice, and the …

Return On Investment In Workforce Development Programs, Kevin Hollenbeck

Upjohn Institute Working Papers

Under more and more fiscal scrutiny because of shrinking state and local budgets, workforce development programs are being asked to estimate their return on investment (ROI). This paper introduces basic concepts of ROI in workforce development programs. It distinguishes ROIs estimated for workforce programs from those that are estimated for financial investments or capital projects. The paper furthermore exposits the basic ingredients of an ROI study—identification of the treatment and time periods of analysis, identification of the net impacts of the program, and identification of net costs. Finally, the paper presents results from the estimation of the ROI for postsecondary …

An Analysis Of The Employment Effects Of The Washington High Technology Business And Occupation (B&O) Tax Credit: Technical Report, Timothy J. Bartik, Kevin Hollenbeck

Upjohn Institute Working Papers

This paper estimates the effects of an R&D tax credit in the state of Washington on job creation. The research uses micro-data on the job creation and tax credits received by individual firms in the state of Washington from 2004 to 2009. We correct for the endogeneity of R&D tax credits received by individual firms by using instrumental variables based in part on national industry factor shares for R&D. We estimate that this tax credit created jobs, but at a high cost. The cost per job-year created is estimated to be between $40,000 and $50,000. The credit was so high …

Discrimination And The Effects Of Drug Testing On Black Employment, Abigail Wozniak

Upjohn Institute Working Papers

Nearly half of U.S. employers test job applicants and workers for drugs. I use variation in the timing and nature of drug testing regulation to study discrimination against blacks related to perceived drug use. Black employment in the testing sector is suppressed in the absence of testing, consistent with ex ante discrimination on the basis of drug use perceptions. Adoption of pro-testing legislation increases black employment in the testing sector by 7–30 percent and relative wages by 1.4–13.0 percent, with the largest shifts among low skilled black men. Results suggest that employers substitute white women for blacks in the absence …

Simulating The Effects Of Michigan's Mega Tax Credit Program On Job Creation And Fiscal Benefits, Timothy J. Bartik, George A. Erickcek

Upjohn Institute Working Papers

This paper simulates job and fiscal impacts of Michigan’s MEGA tax credit program for job creation. Under plausible assumptions about how such credits affect business location decisions, the net costs per job created of the MEGA program are simulated to be of modest size. The job creation impacts of MEGA are simulated to be considerably larger than devoting similar dollar resources to general business tax cuts. The simulation methodology developed here is applicable to incentives in other states.

Mediating Incentive Use: A Time-Series Assessment Of Economic Development Deals In North Carolina, T. William Lester, Nichola Lowe, Allan Freyer

Upjohn Institute Working Papers

State incentive granting for the purpose of firm retention or recruitment remains highly controversial and is often portrayed as antithetical to long-range economic development planning. This paper uses quasi-experimental methods to measure the impact of state-level economic development incentives on employment growth at the establishment level in North Carolina. Using North Carolina’s rich history of strategic planning and sector-based economic development as a backdrop, we develop a theory of sectoral “mediation.” This enables us to compare the effectiveness of incentives offered in mediated and nonmediated industries and show that when incentives are coupled with sectoral economic development efforts they generate …

Short Hours, Long Hours: Hour Levels And Trends In The Retail Industry In The United States, Canada, And Mexico, Françoise Carré, Chris Tilly

Upjohn Institute Working Papers

In settings where most workers have full-time schedules, hourly wages are appropriate primary indicators of job quality and worker outcomes. However, in sectors where full-time schedules do not dominate—primarily service-producing activities—total hours matter, in addition to hourly wages, for job quality and worker outcomes. In this paper we employ a sector-focused, comparative framework to further examine hours levels—measured as average weekly hours—and trends in Canada, the United States, and Mexico. We analyze the retail sector, which is of interest because of its high rate of part-time employment in the U.S. Based on our fieldwork in the United States and Mexico …

America's Human Capital Paradox, Thomas A. Kochan

Upjohn Institute Working Papers

It is widely recognized that human capital is essential to sustaining a competitive economy at high and rising living standards. Yet acceptance of persistent high unemployment, stagnant wages, and other indicators of declining job quality suggests that policymakers and employers undervalue human capital. This paper traces the root cause of this apparent paradox to the primacy afforded shareholder value over human resource considerations in American firms and the longstanding gridlock over employment policy. I suggest that a new jobs compact will be needed to close the deficit in jobs lost in the recent recession and to achieve sustained real wage …

Retiree Health Benefits As Deferred Compensation: Evidence From The Health And Retirement Study, James Marton, Stephen A. Woodbury

Upjohn Institute Working Papers

Are early retiree health benefits (RHBs) a form of deferred compensation that binds workers to an employer? Most employers who offer RHBs offer them only to workers who have 10 or more years of tenure with the firm and have reached age 55. Accordingly, workers in firms offering RHBs have an incentive to stay with a firm in the years before they attain eligibility for RHBs, and a greater incentive than otherwise to retire thereafter. We test for the existence of such a pattern of incentives by examining the age-specific relationship between workers’ eligibility for RHBs and retirement. The findings …

An Analysis Of Risk-Taking Behavior For Public Defined Benefit Pension Plans, Nancy Mohan, Ting Zhang

Upjohn Institute Working Papers

This paper investigates the determinants of public pension plan risk-taking behavior using the percentage of total plan assets invested in the equity markets and the pension asset beta as measures of investment risk. We find that government accounting standards strongly affect public fund investment risk, as higher return assumptions (used to discount pension liabilities) are associated with higher equity allocation and beta. Unlike private pension plans, public funds undertake more risk if they are underfunded and have lower investment returns in the previous years, consistent with the risk transfer hypothesis. Furthermore, pension funds in states facing financial constraints allocate more …

Including Jobs In Benefit-Cost Analysis, Timothy J. Bartik

Upjohn Institute Working Papers

Public policies may affect employment by directly creating jobs, facilitating job creation, or augmenting labor supply. In labor markets with high unemployment, such employment changes may have significant net efficiency benefits, which should be included in benefit-cost analyses.
The research literature offers diverse recommendations on measuring employment benefits. Many of the recommendations rely on arbitrary assumptions. The resulting employment benefit estimates vary widely.
This paper reviews this literature, and offers recommendations on how to better measure employment benefits using estimable parameters. Guidance is provided on measuring policy-induced labor demand, estimating the demand shock’s impact on labor market outcomes, and translating …

The Secular Rise In Unemployment Insurance Exhaustions And What Can Be Done About It, Ralph E. Smith

Upjohn Institute Working Papers

Over the past several decades, the rate at which regular unemployment insurance recipients run out of benefits before they have found jobs, even in a strong labor market, has been gradually rising. For example, in 1973, 27.4 percent of UI recipients exhausted their benefits; in 2007 (with a similar unemployment rate) 35.6 percent exhausted. This paper documents the increase in the exhaustion rate, along with the parallel rise in long-term unemployment; examines the consequences; and reviews what has been learned about the efficacy of various approaches for reversing, or at least halting, the trend.

The research on the rise in …

The Efficiency Of A Group-Specific Mandated Benefit Revisited: The Effect Of Infertility Mandates, Joanna N. Lahey

Upjohn Institute Working Papers

This paper examines the labor market effects of state health insurance mandates that increase the cost of employing a demographically identifiable group. State mandates requiring that health insurance plans cover infertility treatment raise the relative cost of insuring older women of child-bearing age. Empirically, wages in this group are unaffected, but their total labor input decreases. Workers do not value infertility mandates at cost, and so will not take wage cuts in exchange, leading employers to decrease their demand for this affected and identifiable group. Differences in the empirical effects of mandates found in the literature are explained by a …

The Persistence Of Employee 401(K) Contributions Over A Major Stock Market Cycle: Evidence On The Limited Power Of Inertia On Savings Behavior, Leslie A. Muller, John A. Turner

Upjohn Institute Working Papers

Many middle-income workers save for retirement through 401(k) plans. This study addresses the concern that low account balances of older workers may indicate that these vehicles are not sufficient to insure adequate retirement savings. In particular, the study shows that workers are not persistent (continuing once a worker has started) in contributing, and a weak stock market exacerbates the problem.
/="/">The study suggests that the concept of inertia, which is in vogue in behavioral economics, does not seem to hold for 401(k) saving behavior. Furthermore, the investment strategy of dollar cost averaging does not seem to hold, either. Using …

Benefit Payment Costs Of Unemployment Insurance Modernization: Estimates Based On Kentucky Administrative Data, Christopher J. O'Leary

Upjohn Institute Working Papers

The American Recovery and Reinvestment Act (ARRA) of 2009 provided financial incentives for UI modernization. The financial incentive is the state share of $7 billion available nationwide. States can receive one-third of their allocation by having an alternate base period (ABP) for monetary determination of UI eligibility that includes the most recently completed calendar quarter. States can receive the remaining two-thirds of their allocation for having two of four additional program features: 1) UI eligibility while seeking only part-time work, 2) UI eligibility after job separations due to harassment or compelling family reasons, 3) continuation of UI benefits for at …

Employer-Provided Health Insurance And Labor Supply Of Married Women, Merve Cebi

Upjohn Institute Working Papers

This work presents new evidence on the effect of husbands’ health insurance on wives’ labor supply. Previous cross-sectional studies have estimated a significant negative effect of spousal coverage on wives’ labor supply. However, these estimates potentially suffer from bias due to the simultaneity of wives’ labor supply and the health insurance status of their husbands. This paper attempts to obtain consistent estimates by using several panel data methods. In particular, the likely correlation between unobserved personal characteristics of husbands and wives—such as preferences for work—and potential joint job choice decisions can be controlled by using panel data on intact marriages. …

Unemployment Insurance And Low-Educated Single Working Mothers Before And After Welfare Reform, H. Luke Shaefer, Liyun Wu

Upjohn Institute Working Papers

Using the Survey of Income and Program Participation (SIPP), a nationally representative, longitudinal survey, this study examines changing levels of Unemployment Insurance (UI) eligibility and benefit receipt among working low-educated single mothers, 1990–2005. It also examines changing participation in cash welfare and the Food Stamp Program (FSP). Relative to single childless women, there has been no increase in UI benefit receipt among single mothers entering a spell of unemployment in the postreform period, even though single mothers have increased their relative rates of UI eligibility. Because of declining cash assistance receipt, UI became a more common income support than cash …

Women's Work After War, Meredith A. Kleykamp

Upjohn Institute Working Papers

In the more than 30 years following the all-volunteer force (AVF), the proportion of women serving in the military has increased from 1.8 percent just before the AVF to 14.2 percent in 2008. The majority of women do not stay in the military for a 20-year or longer career; like men, most women only serve a few years before transitioning to the civilian workforce. Although the fraction of the military who are women has risen, as has the fraction of veterans who are women, little research informs how female veterans of the AVF fare economically after leaving service, or whether …

Offshoring And The State Of American Manufacturing, Susan N. Houseman, Christopher Kurz, Paul A. Lengermann, Benjamin R. Mandel

Upjohn Institute Working Papers

The rapid growth of offshoring has sparked a contentious debate over its impact on the U.S. manufacturing sector, which has recorded steep employment declines yet strong output growth—a fact reconciled by the notable gains in manufacturing productivity. We maintain, however, that the dramatic acceleration of imports from developing countries has imparted a significant bias to the official statistics. In particular, the price declines associated with the shift to low-cost foreign suppliers generally are not captured in input cost and import price indexes. To assess the implications of offshoring bias for manufacturing productivity and value added, we implement the bias correction …

Health Insurance Availability And Entrepreneurship, Philip Decicca

Upjohn Institute Working Papers

Despite a strong interest in entrepreneurship, economists have devoted little attention to the role of health insurance availability. I investigate the impact of a unique policy experiment—New Jersey’s Individual Health Coverage Plan—on self-employment. Implemented in August 1993, the IHCP included an extensive set of reforms that loosened the historical connection between traditional employment and health insurance by facilitating access to coverage that was not employer-linked. I find evidence that the IHCP increased self-employment among New Jersey residents, relative to various sets of comparison states. Consistent with key policy features, including pure community rating of premiums, I find larger behavioral responses …

The Employment And Fiscal Effects Of Michigan's Mega Tax Credit Program, Timothy J. Bartik, George A. Erickcek

Upjohn Institute Working Papers

This paper estimates that Michigan's MEGA tax credit program to attract and retain businesses has large employment and fiscal benefits. MEGA provides discretionary tax credits to businesses, with the tax credit tied to the personal income taxes paid by employees on the new or retained jobs. We estimate the economic effects of MEGA using the Upjohn Institute's REMI model, and the research literature on how business location decisions respond to taxes. We estimate the fiscal effects of MEGA based on the research literature on how government spending and revenue respond to state personal income and population. The estimates suggest a …

Health Insurance Tax Credits And Health Insurance Coverage Of Low-Earning Single Mothers, Merve Cebi, Stephen A. Woodbury

Upjohn Institute Working Papers

No abstract provided.

Policies For Displaced Workers: An American Perspective, Christopher J. O'Leary

Upjohn Institute Working Papers

American employment policy for displaced workers started in the Great Depression with programs for the employment service, unemployment insurance, work experience, and direct job creation. Assistance for workers displaced by foreign competition emerged in the 1960s along with formalized programs for occupational job skill training. The policy focus on displaced workers was sharpened in the 1980s through the Worker Adjustment and Retraining Notification Act and the Economic Dislocation and Worker Adjustment Assistance Act. Field experiments on services to dislocated workers led to Worker Profiling and Reemployment Services systems in all states, and federal rules adopted as part of the North …

The Influence Of Retiree Health Benefits On Retirement Patterns, James Marton, Stephen A. Woodbury

Upjohn Institute Working Papers

We estimate the effect of employer offers of retiree health benefits (RHBs) on the timing of retirement using a sample of Health and Retirement Study (HRS) men observed over a period of up to 12 years. We hypothesize that the effect of RHBs differs for workers of different ages-a hypothesis we can test now that the main HRS cohort has aged sufficiently. We apply three well-known panel data estimators and find that, for men in their 50s, RHBs have little or no effect on retirement decisions; however, a substantial effect emerges for men in their early 60s. We use simulations …