Liberty Street Economics

Liberty Street Economics

January 12, 2026

Disability in the Labor Market: Earnings

Rajashri Chakrabarti, Thu Pham, Beck Pierce, and Maxim L. Pinkovskiy

Disabled young man with an artificial leg is working at the furniture factory

In our previous post we learned that, in general, people with disabilities participate in the labor market at significantly lower rates, and that they are much more likely to be unemployed. Despite these patterns, we found that the labor force participation of workers with disabilities rose noticeably following the pandemic. A relevant question then is how earnings of workers with disabilities compare with workers without disabilities. In this companion post we investigate differences in weekly earnings for workers with and without disabilities. We find that workers with disabilities earn considerably less than workers without disabilities. Additionally, with few exceptions, their earnings have remained roughly constant in real terms since the pre-pandemic period.

Continue reading »
Posted at 7:01 am in Equitable Growth, Labor Market | Permalink

Disability in the Labor Market: Employment and Participation

Rajashri Chakrabarti, Thu Pham, Beck Pierce, and Maxim L. Pinkovskiy

Group of people waiting for job interview in the waiting room at office - including young wheelchair user

Among people in prime working age (25-54), around 7 percent have a disability of some kind. In this set of companion posts, we will examine how prime-aged workers with disabilities have fared in the labor market compared to the year prior to the pandemic. In this first post, we will show that people with disabilities are far less likely to be employed than people without disabilities, with both lower labor force participation and higher unemployment playing a role. We will also show that although employment rates of people with disabilities are very low, they have risen rapidly during the post-pandemic period, largely because of rising labor force participation. Our results are consistent with an increased prevalence of work from home (WFH) arrangements in the post-COVID period differentially benefiting people with disabilities.

Continue reading »
Posted at 7:00 am in Labor Market | Permalink
January 8, 2026

Measuring Labor Market Tightness: Data Update and New Web Feature

Sebastian Heise, Jeremy Pearce, and Jacob P. Weber

LSE_2025_HPW_pearce_460

Good measures of labor market tightness are essential to predict wage inflation and to calibrate monetary policy. In an October 2024 post, we introduced a new indicator of labor market tightness and showed that it tracked wage inflation best out of a broad range of tightness measures. In this post, we update our index through 2025 and show that it also forecasts future wage inflation best both in and out of sample. In addition, we highlight availability of the index as a new regularly updated feature on the New York Fed’s website.

Continue reading »
Posted at 2:00 pm in Employment, Forecasting, Labor Market | Permalink
January 7, 2026

What Is a Carbon Tariff and Why Is the EU Imposing One?

Pierre Coster, Julian di Giovanni, and Isabelle Mejean

EU-flag with dramatic sky

The European Union has been an early adopter of carbon policies, with the introduction of the EU Emissions Trading System (ETS) in 2005. This scheme sets a common price for carbon and is applied to the most polluting manufacturing sectors. By increasing the cost of emissions-intensive production, the system incentivizes firms to decrease their use of fossil fuels. However, as we show in a companion post, the policy’s impact was moderated by firms increasing their reliance on high-emissions imports. To eliminate this workaround, the EU will expand the ETS to imports in 2026, through the Carbon Border Adjustment Mechanism (CBAM). The CBAM will essentially put a tariff on imported goods based on their carbon content. Our recent work provides a quantitative analysis of how the ETS and CBAM affect firms’ supply choice decisions, and the resulting changes in domestic prices and emissions.

Continue reading »
Posted at 7:01 am in Exports, Financial Markets, Supply Chain | Permalink

What Can Undermine a Carbon Tax?

Pierre Coster, Julian di Giovanni, and Isabelle Mejean

cement factory and chalk quarry against the sky with clouds

Several countries have implemented a carbon tax or cap-and-trade system to establish high carbon prices and create a disincentive for the use of fossil fuels. Essentially, the tax encourages firms to substitute toward low carbon emission energy. Costs also rise for firms down the supply chain that use production inputs with high-emission content, so the total impact of a carbon tax can be large. In practice, however, firms also have an incentive to find an offset to a carbon tax. In this post, based on our recent work, we present evidence of one such adaptation strategy. We show that French firms increased their imports of high-emission inputs from suppliers outside the European Union’s cap-and-trade system, known as the EU Emissions Trading System (EU ETS), reducing the effectiveness of this approach to cutting carbon emissions—an adaptation strategy that leads to “carbon leakage.” To help stop this leakage, the EU is implementing a “carbon tariff” in 2026, which is the topic of a companion post.

Continue reading »
Posted at 7:00 am in Exports, Financial Markets, Supply Chain | Permalink
January 5, 2026

Which Entrepreneurs Boost Productivity?  

Ufuk Akcigit, Harun Alp, Jeremy Pearce, and Marta Prato

AI research facility, highlighting scientists or engineers work

Why do some entrepreneurs drive economic growth while others do not? This piece discusses new work that studies entrepreneurs using a comprehensive dataset from Denmark. We study who becomes an entrepreneur, along with their hiring and business decisions, and find that a distinct minority are “transformative.” These individuals, who generate disproportionate productivity gains, tend to have high IQ scores, be well-educated, and hire technical (R&D) workers. The data support the idea of productivity growth being driven by the symbiotic relationship between transformative entrepreneurs and R&D workers. For policymakers, the lesson is that when an economy has more R&D workers and transformative entrepreneurs, they sustain higher long-run productivity growth.

Continue reading »
Posted at 7:00 am in Microeconomics | Permalink
December 23, 2025

Tariffs, Trade, and Tumbling Credit Scores: The Top 5 LSE Posts of 2025

Maureen Egan

LSE_2025_LSE-top-5-posts-_460

Each year brings a new set of economic challenges: In 2025, major areas of focus included tariffs and trade tensions, as well as the financial pressures facing younger adults. New York Fed economists contributed insightful research on both topics—and readers took notice. In fact, all five of the year’s most-read posts on Liberty Street Economics analyzed aspects of these issues. Read on to see how the restoration of student loan data to credit reports affected borrowers’ credit scores, whether the costs of a college degree are still worth it, how businesses are responding to higher tariffs, and why the U.S. runs a trade deficit.

Continue reading »
Posted at 7:00 am in Household Finance, International Economics | Permalink
December 22, 2025

A New Public Data Source: Call Reports from 1959 to 2025

Sergio Correia, Tiffany Fermin, Stephan Luck, and Emil Verner

Classic bank building with columns overlaid with balance sheet numbers.

Call Reports are regulatory filings in which commercial banks report their assets, liabilities, income, and other information. They are one of the most-used data sources in banking and finance. In this post, we describe a new dataset made available on the Federal Reserve Bank of New York’s website that contains time-consistent balance sheets and income statements for commercial banks in the United States from 1959 to 2025.

Continue reading »
Posted at 9:00 am in Banks, Financial Institutions | Permalink
December 17, 2025

Letters of Recommendation in the PhD Job Market: Lessons from Specialized Banks

Kristian S. Blickle and Cecilia Parlatore

Business people, handshake and interview success or recruitment, employment and hiring in office. Corporate, men and executive shaking hands with new employee or collaboration on deal or partnership.

Banks must extract useful signals of a potential borrower’s quality from a large set of possibly informative characteristics when making lending decisions. A model that speaks to how banks specialize in lending to an industry in order to better extract signals from data can potentially be applied to a number of real-world scenarios. In this post, we apply lessons from such a model to a topic of timely relevance in economics: job market recommendation letters. Institutions looking to hire new economists must evaluate PhD applicants based on limited and often noisy signals of future performance, including letters of recommendation from these applicants’ advisors or co-authors. Using insights from our model, we argue that the value of these letters depends on who reads them.

Continue reading »
Posted at 7:00 am in Banks, Employment, Financial Institutions | Permalink
December 15, 2025

Designing Bank Regulation with Accounting Discretion

Kinda Hachem

Financial stability: A classic bank building with columns, financial symbols, and charts, representing the concept of financial stability and security.

Why does the banking industry remain prone to large and costly disruptions despite being so heavily regulated? Is there a need for more regulation, less regulation, or simply different regulation? Our recent Staff Report combines insights from academic research in economics, finance, and accounting to provide a deeper understanding of the challenges involved in designing and implementing bank regulation, as well as opportunities for future exploration. This post focuses on the regulation of bank capital, but the ideas are applicable more broadly.

Continue reading »
Posted at 7:00 am in Banks, Regulation | Permalink
« Back | More Posts »

RSS RSS Feed

Twitter Follow Liberty Street Economics

WATCH: About the Research Group

“What’s really driving inflation?” “Why do some neighborhoods bounce back faster than others?” Meet some of the New York Fed researchers working to answer questions that matter most to the economy.

About the Blog

Liberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. Launched in 2011, the blog takes its name from the Bank’s headquarters at 33 Liberty Street in Manhattan’s Financial District.

The editors are Michael Fleming, Thomas Klitgaard, Maxim Pinkovskiy, and Asani Sarkar, all economists in the Bank’s Research Group.

Liberty Street Economics does not publish new posts during the blackout periods surrounding Federal Open Market Committee meetings.

The views expressed are those of the authors, and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.

Economic Research Tracker

Image of NYFED Economic Research Tracker Icon Liberty Street Economics is available on the iPhone® and iPad® and can be customized by economic research topic or economist.

View by Topic

Most Read this Year

  1. Are Businesses Absorbing the Tariffs or Passing Them On to Their Customers?
  2. Credit Score Impacts from Past Due Student Loan Payments
  3. Is College Still Worth It?
  4. Student Loan Delinquencies Are Back, and Credit Scores Take a Tumble 
  5. Why Does the U.S. Always Run a Trade Deficit?
Useful Links
Comment Guidelines

 

We encourage your comments and queries on our posts and will publish them (below the post) subject to the following guidelines:

Please be brief: Comments are limited to 1,500 characters.

Please be aware: Comments submitted shortly before or during the FOMC blackout may not be published until after the blackout.

Please be relevant: Comments are moderated and will not appear until they have been reviewed to ensure that they are substantive and clearly related to the topic of the post.

Please be respectful: We reserve the right not to post any comment, and will not post comments that are abusive, harassing, obscene, or commercial in nature. No notice will be given regarding whether a submission will or will
not be posted.‎

Comments with links: Please do not include any links in your comment, even if you feel the links will contribute to the discussion. Comments with links will not be posted.

Send Us Feedback

Disclosure Policy

The LSE editors ask authors submitting a post to the blog to confirm that they have no conflicts of interest as defined by the American Economic Association in its Disclosure Policy. If an author has sources of financial support or other interests that could be perceived as influencing the research presented in the post, we disclose that fact in a statement prepared by the author and appended to the author information at the end of the post. If the author has no such interests to disclose, no statement is provided. Note, however, that we do indicate in all cases if a data vendor or other party has a right to review a post.

Archives