142 posts on "Labor Market"
January 6, 2025
The R&D Puzzle in U.S. Manufacturing Productivity Growth
In a previous post, we provided evidence for a broad-based slowdown in productivity growth across industries and firms in the U.S. manufacturing sector starting in 2010. Since firms’ investment in research and development (R&D) for new technologies constitutes a central driver of productivity growth, in this post we ask if the observed slowdown in productivity may be due to a decline in R&D. We find that “R&D intensity” has been increasing at both the firm and industry level, even as productivity growth declines. This points to a decline in the effectiveness of R&D in generating productivity growth in U.S. manufacturing.
November 15, 2024
To Whom It May Concern: Demographic Differences in Letters of Recommendation
Letters of recommendation from faculty advisors play a critical role in the job market for Ph.D. economists. At their best, they can convey important qualitative information about a candidate, including the candidate’s potential to generate impactful research. But at their worst, these letters offer a subjective view of the candidate that can be susceptible to conscious or unconscious bias. There may also be similarity or affinity bias, a particularly difficult issue for the economics profession, where most faculty members are white men. In this post, we draw on our recent working paper to describe how recommendation letters differ by the gender, race, or ethnicity of the job candidate and how these differences are related to early career outcomes.
October 9, 2024
A New Indicator of Labor Market Tightness for Predicting Wage Inflation
A key question in economic policy is how labor market tightness affects wage inflation and ultimately prices. In this post, we highlight the importance of two measures of tightness in determining wage growth: the quits rate, and vacancies per searcher (V/S)—where searchers include both employed and non-employed job seekers. Amongst a broad set of indicators, we find that these two measures are independently the most strongly correlated with wage inflation. We construct a new index, called the Heise-Pearce-Weber (HPW) Tightness Index, which is a composite of quits and vacancies per searcher, and show that it performs best of all in explaining U.S. wage growth, including over the COVID pandemic and recovery.
September 4, 2024
AI and the Labor Market: Will Firms Hire, Fire, or Retrain?
The rapid rise in Artificial Intelligence (AI) has the potential to dramatically change the labor market, and indeed possibly even the nature of work itself. However, how firms are adjusting their workforces to accommodate this emerging technology is not yet clear. Our August regional business surveys asked manufacturing and service firms special topical questions about their use of AI, and how it is changing their workforces. Most firms that report expected AI use in the next six months plan to retrain their workforces, with far fewer reporting adjustments to planned headcounts.
August 19, 2024
An Update on the Reservation Wages in the SCE Labor Market Survey
The Federal Reserve Bank of New York’s July 2024 SCE Labor Market Survey shows a year-over-year increase in the average reservation wage—the lowest wage respondents would be willing to accept for a new job—to $81,147, but a decline from a series’ high of $81,822 in March 2024. In this post, we investigate how the recent dynamics of reservation wages differed across individuals and how reservation wages are related to individuals’ expectations about their future labor market movements.
August 7, 2024
The Anatomy of Labor Demand Pre‑ and Post‑COVID
Has labor demand changed since the COVID-19 pandemic? In this post, we leverage detailed data on the universe of U.S. online job listings to study the dynamics of labor demand pre- and post-COVID. We find that there has been a significant shift in listings out of the central cities and into the “fringe” portion of large metro areas, smaller metro areas, and rural areas. We also find a substantial decline in job listings in computer and mathematical and business and financial operations occupations, and a corresponding increase in job openings in sales, office and administrative support, food preparation, and especially healthcare occupations. These patterns (by geography and by occupation) are interconnected: the biggest declines in job listings by occupation occurred in the largest and densest geographies, and the strongest increases in job listings by occupation occurred in the smaller and less populated geographies.
July 17, 2024
Wage Insurance: A Potential Policy for Displaced Workers
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 in the first two years following job loss and led to higher long-term earnings. The program resulted in net savings to the government because workers collected fewer benefits and paid taxes on their increased earnings. Together, these findings suggest that wage insurance could support displaced workers more effectively than traditional social insurance programs.
Posted at 7:00 am in Labor Market | Permalink
July 11, 2024
The Mysterious Slowdown in U.S. Manufacturing Productivity
Throughout the twentieth century, steady technological and organizational innovations, along with the accumulation of productive capital, increased labor productivity at a steady rate of around 2 percent per year. However, the past two decades have witnessed a slowdown in labor productivity, measured as value added per hour worked or sectoral output per hour worked. This slowdown has been particularly stark in the manufacturing sector, which historically has been a leading sector in driving the productivity of the aggregate U.S. economy. What makes this slowdown particularly puzzling is the fact that manufacturing accounts for the majority of U.S. research and development (R&D) expenditure. Despite several recent studies (see, for example, Syverson [2016]), much remains to be uncovered about the nature of this slowdown. This post illustrates a key facet of the mystery: the productivity slowdown appears to be pervasive across industries and across firms of various sizes.
May 22, 2024
Veterans in the Labor Market: 2024 Update
Veterans constitute a significant segment of the male labor force, and understanding labor market disparities between veterans and non‑veterans is an important component of studying disparities in the economy as a whole. In a previous Liberty Street Economics post, we have shown that even relative to a group of comparable non-veterans, veterans have lower employment and labor force participation rates. One year later, we see that veterans continue to experience lower labor market attachment and the employment gap has widened, though the earnings gap has closed.
May 9, 2024
The Post‑Pandemic Shift in Retirement Expectations in the U.S.
One of the most striking features of the labor market recovery following the pandemic recession has been the surge in quits from 2021 to mid-2023. This surge, often referred to as the Great Resignation, or the Great Reshuffle, was uncommonly large for an economic expansion. In this post, we call attention to a related labor market change that has not been previously highlighted—a persistent change in retirement expectations, with workers reporting much lower expectations of working full-time beyond ages 62 and 67. This decline is particularly notable for female workers and lower-income workers.
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