Labor Market Policy Research Reports, December 2018

December 20, 2018

Hayley Brown

CEPR regularly publishes a curated collection of original research from academic institutions and nonprofits on the state of the US labor market. The compilation is part of our ongoing effort to promote informed debate on the most important economic and social issues that affect people’s lives.

The Brookings Institution

How to Adjust to Automation

Automation is likely to exacerbate existing deficiencies in the government approach to worker development and training. Current policies tend to target young people at the beginning of their working lives, leaving many older workers unable to upgrade their skills in the face of shifting labor market demands. The author calls for substantial reorientation in approaches to (and subsidization of) training throughout workers’ lives and points to the disruptive potential of automation and the likelihood of future recession as reasons for urgency.

Who Makes the Rules in the New Gilded Age?

The author makes a robust comparison between the digital information age of today and the Gilded Age that took place a few decades after the Civil War. Both then and now, the rules governing new technology were made by an elite few for their own benefit, resulting in societal instability and inequality. The comparison yields several takeaways for the reassertion of the public interest and the preservation of democracy.

Center for American Progress (CAP)

America’s Child Care Deserts in 2018

A new analysis of childcare availability finds that nearly half of US neighborhoods lack an adequate supply of licensed childcare options. This imbalance is especially marked in lower income and rural areas and disproportionately affects Hispanic/Latinx families. It is also associated with lower rates of maternal labor force participation, with negative effects for parents and children.

Wage Gaps and Outcomes in Apprenticeship Programs

Registered Apprenticeship programs aim to address wealth and skills gaps by training Americans for decent-paying jobs such as electricians, carpenters, and dental assistants. However, regional differences in apprenticeship programs reinforce existing pay inequities based on geography, race, and gender.

When a Job Is Not Enough

Despite working at least as many hours as white families, Latinx families tend to have less wealth. The gap persists regardless of marital status, education, and income, suggesting that more systemic obstacles may be to blame. The authors urge the government to consider policies to combat entrenched inequities and to increase Latinx access to high-paying full-time jobs with quality benefits.

Center on Budget and Policy Priorities (CBPP)

A Guide to Statistics on Historical Trends in Income Inequality

Beginning in the 1970s, the strong economic growth and shared prosperity that had characterized the early postwar period gave way to slower growth and increased inequality. Using data from a variety of sources, the authors discuss historical trends in US income distribution from the late 1940s to today, paying particular attention to estimates of wealth and poverty as proxies for the status of those at the very top and the very bottom, respectively.

Chart Book: The Legacy of the Great Recession

This report uses charts to document recovery following the Great Recession that took place between December 2007 and June 2009. It evaluates the damage caused and the effectiveness of the financial stabilization and fiscal stimulus policies in ameliorating that damage. It was updated this month to reflect recently released employment statistics.

Center for Law and Social Policy (CLASP)

Building Strong Foundations: Racial Inequity in Policies that Impact Infants, Toddlers, and Families

Infants and toddlers of color and their families lack access to resources compared to their white peers. The report explores the role of immigrant detention policies and New Deal housing regulations in institutionalizing links between race and socioeconomic status. Expanded investment in public programs that target needy families and reforms to reduce structural inequalities are sorely needed to reduce these longstanding disparities.

When Financial Aid Falls Short: New Data Reveal Students Face Thousands in Unmet Need

New data indicates that unmet need among college students has increased by 23 percent since academic year 2011-12, and affects almost three-quarters of students. This includes 71% percent of students at public 2-year institutions who on average have $4,920 of unmet need. This represents a significant barrier to student enrollment and completion, with negative consequences for access, equity, and labor force optimization.


Public-Sector Jobs Increase the Economic Well-Being of Massachusetts

Public sector jobs in Massachusetts are more likely than private sector jobs to provide family-supporting incomes and wealth-building benefits. The difference is especially pronounced for workers of color, making the preservation of public sector jobs a key avenue for members of marginalized groups to escape poverty and build stable middle-class lives.

Social Exclusion: The State of State U for Black Students

Nearly all selective public flagships have failed to become more representative of and responsive to the needs of their state populations and economies; many are less inclusive today than they were a generation ago. This is largely attributable to decreased public investment, which in turn renders public higher education far from affordable for in-state residents of color. This is compounded by the increased desire to admit more higher-paying out-of-state students to make up for budget shortfalls.

Economic Policy Institute (EPI)

Aluminum Tariffs Have Led to a Strong Recovery in Employment, Production, and Investment in Primary Aluminum and Downstream Industries

Following the implementation of Section 232 in March 2018, domestic aluminum producers committed to a substantial increase in domestic production, including billions of dollars in investment and the creation of thousands of jobs. Though critics suggested that these boons would be more than offset by losses in other parts of the economy, to date the authors find no evidence of downstream negative effects.

A State Agenda for America’s Workers

This agenda for America’s workers outlines model policies and best practices to enable state governments to protect workers and communities in their states. Their recommendations include state-level reinstatements of worker protections that the Trump administration has undercut at the federal level, alongside additional policies to increase corporate accountability, fight discrimination, and restore collective bargaining rights.

What Labor Market Changes Have Generated Inequality and Wage Suppression?

Recent research on monopsony power has contributed to our understanding of the inherent pro-employer labor market asymmetry. While the clout enjoyed by employers tends to remain constant, workers’ bargaining power has been eroded by policy actions over the last few decades.

Institute for Women’s Policy Research

Still a Man’s Labor Market: The Slowly Narrowing Gender Wage Gap

A more comprehensive approach to the gender-wage gap reveals an even more troubling ratio than is typically reported. Penalties are especially harsh for women who take time out of the labor force. Strengthening women’s attachment to the labor force is imperative, along with better enforcement of equal employment opportunity policies and Title IX in educational settings.

National Bureau of Economic Research (NBER)

Closing the Gap: The Effect of a Targeted, Tuition-Free Promise on College Choices of High-Achieving, Low-Income Students

Researchers test an intervention strategy to increase the presence of low-income students at a selective university. By pairing direct encouragement to apply with substantial promises of aid, they nearly double applications from targeted students to the University of Michigan. The method is promising for narrowing socioeconomic disparities in higher education, particularly at selective state flagships.

Does Remedial Education at Late Childhood Pay Off After All? Long-Run Consequences for University Schooling, Labor Market Outcomes and Inter-Generational Mobility

Two decades later, students who participated in a high school remedial education program earn 4 percent more per year, have completed 10 percent more postgraduate education, and are employed for 1.5 percent longer than their peers who did not participate in such a program. These gains largely reflect improved outcomes for students from low-income backgrounds and correspond with significant increases in intergenerational income mobility. The program has a high rate of return from a cost-benefit standpoint, with the government recouping its costs within seven to eight years.

Do Male Workers Prefer Male Leaders? An Analysis of Principals’ Effects on Teacher Retention

Results from a four-year panel of public school teachers and principals in New York indicate that turnover among male teachers is higher in schools with a female principal. Furthermore, male teachers who request a transfer disproportionately ask to do so to schools with male principals. Principal gender does not appear to affect turnover among female teachers, however. These trends suggest that even in female-dominated work settings, male subordinates are disinclined to report to a female boss. The potential implications for female progress in leadership are worrying.

The Effect of Economic Conditions on the Disability Insurance Program: Evidence from the Great Recession

The authors find a significant and positive relationship between cyclical job displacement induced by the Great Recession and the number of applications for Social Security Disability Insurance (SSDI) programs. Just under half of these applications were successful, and of those, over half were only successful on appeal. The applicants tended to be less severely impaired than average, but because recipients rarely work after they enter the program, the loss of productive capacity is likely permanent. In addition to the decline in human capital, the additional entrants also cost almost $100 billion in processing and benefits.

Elite Schools and Opting-In: Effects of College Selectivity on Career and Family Outcomes

The authors use College and Beyond data and a variant of the matched-applicant model to investigate the effects of college selectivity on a range of unexplored career and family outcomes. Controlling for other factors, they find that attending a selective school significantly bolsters earnings and career outcomes for women, but not for men.

Expectations Uncertainty and Household Economic Behavior

The authors present new findings regarding drivers of household economic uncertainty, which in turn impacts consumption, credit market, and investment decisions. They observe the correlation between increased perceptions of uncertainty and low income and precarious financial situations (as measured by the likelihood of defaulting on debt) and unemployment and underemployment. They also find higher rates of economic uncertainty in counties with higher-than-average unemployment.

The Evolution of Retirement Incentives in the U.S.

This study examines how changes in Social Security and private pensions have informed the financial incentive to work at older ages since 1980. Social Security reforms have reduced the implicit tax on workers over the age of 65 by an average of 15 percent, and the decrease is even more substantial when changes to private pensions are considered. Evidence suggests that this evolution of retirement incentives has resulted in a greater share of the retirement-age population choosing to remain in the workforce.

Firm Leverage and Regional Business Cycles

Confidential establishment-level data from the US Census Bureau reveal that build-ups in firm leverage predict subsequent declines in economic activity, specifically in aggregate regional employment. The effects imply that the geography of firm operations plays a significant role in regional employment growth cycles. Fiscal or monetary policy shocks that affect firms’ borrowing decisions may also differentially affect regions, depending on their exposure to those firms.

The Heterogeneous Effect of Affirmative Action on Performance

The researchers test the effects of gender-based affirmative action (AA) on women’s mathematical performance in a tournament-style laboratory exercise. The results indicate that AA has a positive effect on the performance of otherwise low-scoring women, but a negative effect on the performance of otherwise high-scoring women. This introduces some nuance to debates on the merit of AA in hiring selection by suggesting that the practice may differentially affect individuals within the targeted group.

How Much of Barrier to Entry is Occupational Licensing?

Using a boundary discontinuity design to exploit variations in state law, this paper studies the effect of licensing requirements on occupational choice. It finds that licensing requirements reduce equilibrium labor supply by between 17 and 27 percent. The effects are especially pronounced for white workers and comparatively weak for black workers.

Job Seekers’ Perceptions and Employment Prospects: Heterogeneity, Duration Dependence and Bias

This paper analyzes job seekers’ perceptions and their relationship to unemployment outcomes. They find substantial heterogeneity in actual job finding rates, accounting for more than half of the observed decline in job finding rates over the spell of unemployment. They also observe that job seekers’ beliefs systemically under-respond to differences in job finding rates both across job seekers and over the unemployment spell.

The Micro-Level Anatomy of the Labor Share Decline

The researchers use micro-level Census data to paint a more nuanced picture of the decline in US manufacturing’s aggregate labor share. Reallocation of production from high-labor establishments to hyper-productive, low-labor share peers has resulted in a disconnect between the labor share of the median establishment and the aggregate labor share. Firms of the latter type seem to have leveraged their size in order to achieve hyper-productive status and do not differ significantly in their responsiveness to technology shocks or in the wages they pay.

Pension Reform and Return to Work Policies

Return-to-work behavior among retirees is responsive to pension system rules to the extent that the rules appear to be binding on labor supply decisions. However, administrative data on employment and retirement indicates no change in retirement benefit collection among retirees who elect to work part-time. Policymakers should take this into account when looking to extend labor force attachment or to improve the health of pension systems.

Selection into Entrepreneurship and Self-Employment

This paper addresses several gaps that have emerged between theoretical and empirical studies of entrepreneurship. The authors develop a three sector Roy model that differentiates between entrepreneurs and other self-employed. This model successfully predicts the association between entrepreneurship and highly remunerated human capital and collateral. This association does not hold for other self-employed, and indeed a reverse association can be observed, which explains the disjunctions of previous models.

Tax Reform Made Me Do It!

Many proponents of the Tax Cuts and Jobs Act (TCJA) argued that it would increase worker pay. However, data gathered by Americans for Tax Reform on corporate announcements and actions in Q1 2018 reveal that only a small percentage of public firms intend to use their tax savings to give their employees a raise; over five times as many expect to increase investment. Firms that expected greater than average tax savings were more likely to announce plans to share the wealth with workers, as were firms with a Political Action Committee that donated more to Republicans than Democrats. This suggests that both economic and political factors are contributing to these decisions.

Unions and Wage Inequality: The Roles of Gender, Skill and Public Sector Employment

The composition of the unionized workforce has changed substantially in the past four to five decades, with steady declines in the private sector and increased influence in the public sector. This paper explores the implications of this evolving relationship in the context of unionization’s effect on wage inequality in Canada and the United States. In both countries, they find that gender-based wage inequalities are more attributable to sector-based differences in union impact, rather than the gender of individual employees.

Who’s Minding the Kids? Experimental Evidence on the Demand for Child Care Quality

While parents are sensitive to the cost of child care, they also care about quality and are particularly heedful of caregivers’ educational credentials. Evidence shows the demand for home-based child care is driven by parents’ inability to afford high-quality care or by lack of resources to inform their evaluation of quality, rather than a simple unwillingness to spend more.

Why is Math Cheaper than English? Understanding Cost Differences in Higher Education

Costs associated with instructional activity vary greatly across disciplines. Detailed data on prices, outputs, and factors of production suggest that variation in instructional costs are driven primarily by constraints on class size and differences in faculty pay. This results in greater expenditures for fields where high salaries cannot be offset with larger class sizes and has implications for recent policy efforts to promote enrollment in certain fields.

Women, Wealth Effects, and Slow Recoveries

Slow business cycle recoveries in recent decades are almost entirely attributable to female employment; as the gender gap in employment has narrowed, the growth in female employment has slowed. Using state-level panel data, the authors estimate that 70 percent of the slowdown in recent business cycle recoveries can be explained by this type of convergence.

Schwartz Center for Economic Policy Analysis (SCEPA)

The Retirement Crisis in New York

This report documents two worrying trends in retirement plan coverage in New York. First, retirement plan coverage is declining for all New Yorkers, and many retirees must grapple with inadequate funds. Second, disparities in coverage continue to exist based on race, education, and income, exacerbating these inequalities among older members of the population and contributing to downward mobility in retirement.

UC Berkeley Center for Labor Research and Education (Labor Center)

Proposed Changes to Immigration Rules Would Cost California Jobs, Harm Public Health

Potential changes to “public charge” rules governing permanent residency criteria could lead to enormous economic losses across California, including up to $1.67 billion in federal benefits. These losses will also have ripple effects costing up to $2.8 billion, through loss of direct and indirect spending by affected families and subsequent loss of jobs that spending supports. The losses are expected to be especially devastating in health care and food-related industries.

Urban Institute

Measuring Income Inequality in the US: Methodological Issues

This report examines the methodological issues associated with measurements of income inequality in the US. Of particular concern are variations in definitions of and ways of measuring income, units of analysis, income adjustments for household size, and price deflators used to convert nominal dollars into real dollars.

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