Search Results
Working Paper
Assessing Maximum Employment
We suggest a core set of indicators for evaluating the position of the labor market relative to maximum employment. The unemployment rate remains the key indicator of the cyclical position of the labor market, as it is time-tested, is highly correlated with other indicators, and has practical measurement advantages. But other indicators can provide complementary evidence to get a fuller picture of the labor market. A joint analysis of job vacancies and unemployment in a Beveridge curve diagram is helpful when structural shocks affect the labor market and when the labor market is very tight, ...
Working Paper
Assessing Maximum Employment
We suggest a core set of indicators for evaluating the position of the labor market relative to maximum employment. The unemployment rate remains the key indicator of the cyclical position of the labor market, as it is time-tested, is highly correlated with other indicators, and has practical measurement advantages. But other indicators can provide complementary evidence to get a fuller picture of the labor market. A joint analysis of job vacancies and unemployment in a Beveridge curve diagram is helpful when structural shocks affect the labor market and when the labor market is very tight, ...
Working Paper
A Macroeconomic Analysis of Household Labor Supply Responses to Large Fiscal Transfers
The fiscal transfers deployed during the COVID-19 pandemic were unprecedented in scale and strongly progressive. Using CPS/ASEC data, we document that the decline in employment during the pandemic was larger for low-income households and tightly linked to the intensity of transfer receipt, a pattern absent during the Global Financial Crisis. We develop and estimate a two-sector, heterogeneous-household general equilibrium model in which low-income households are borrowing-constrained in normal times but can save out of sufficiently large transfers. Because preferences permit wealth effects on ...
Working Paper
Assessing Maximum Employment
We suggest a core set of indicators for evaluating the position of the labor market relative to maximum employment. The unemployment rate remains the key indicator of the cyclical position of the labor market, as it is time-tested, is highly correlated with other indicators, and has practical measurement advantages. But other indicators can provide complementary evidence to get a fuller picture of the labor market. A joint analysis of job vacancies and unemployment in a Beveridge curve diagram is helpful when structural shocks affect the labor market and when the labor market is very tight, ...
Journal Article
Creative destruction and aggregate productivity growth
Productivity growth is the engine of economic growth and is responsible for rising standards of living. But all firms do not partake equally in the nation's productivity growth. Rather, according to economist Joseph Schumpeter's theory, firms undergo a process of "creative destruction": New firms that adapt to new knowledge cause the decline and eventual demise of incumbent firms. In "Creative Destruction and Aggregate Productivity Growth," Shigeru Fujita surveys recent studies that examine the role of creative destruction in aggregate productivity growth.
Journal Article
Economic effects of the unemployment insurance benefit
The U.S. labor market has remained weak in recent years, even though the overall economy itself has started to grow again after the deep recession. In response to the weak labor market conditions, the U.S. government has greatly expanded the entitlement period of unemployment insurance (UI) benefits. In ?Economic Effects of the Unemployment Insurance Benefit,? Shigeru Fujita reviews some of the academic literature on the economic effects of UI benefits. On the one hand, UI can improve people?s well being because it helps them avoid a large drop in consumption in the face of job losses when ...
Journal Article
Earnings losses of job losers during the 2001 economic downturn
Job losses may involve not only lost earnings during unemployment but also declines in earnings at subsequent jobs. After a time consuming job search, workers may need to restart their careers from scratch, accepting a lower wage. Workers may also need time to acquire new skills, and total earnings lost during such a period of re-adjustment can be considerable. But experiences may vary widely. In this article, using a novel data set, Shigeru Fujita and Vilas Rao provide evidence on earnings losses after unemployment. Although the usefulness of the evidence is limited by the short sample ...
Journal Article
What do worker flows tell us about cyclical fluctuations in employment?
Many official surveys give us important information about labor markets and unemployment, as well as other statistics. However, these surveys reveal only the net gains or losses in employment over a given period. Consequently, how many gross hires and separations lie behind the net changes is missing from these statistical releases. Data on gross flows turn up additional valuable information. In ?What Do Worker Flows Tell Us About Cyclical Fluctuations in Employment?,? Shigeru Fujita uses such data to examine cyclical changes in the pace of the worker reallocation process and its effects on ...
Journal Article
Labor market anxiety and the downward trend in the job separation rate
Anecdotal evidence suggests that labor market conditions surrounding American workers had been worsening in recent decades, even before the severe recession in 2007-2009. However, studies by academic researchers have not found clear evidence that worker turnover has increased over time. In this article, Shigeru Fujita shows that there is a long-run downward trend in the separation rate into unemployment and examines several factors that help account for this long-run decline. He argues that the aging of the labor force has played an important role in the trend. He also explains, using an ...
Journal Article
A closer look at the German labor market 'miracle'
Compared with the steep, persistent increase in unemployment that the Great Recession triggered in the United States, its effect on unemployment in Germany was surprisingly mild. While U.S. unemployment soared from 4.8 percent to 9.5 percent between the fourth quarter of 2007 and the fourth quarter of 2010, the German unemployment rate actually fell from 7.6 percent to 6.4 percent over the same period (Figure 1).1 The marked contrast may make one wonder whether the magnitude of the recession itself was smaller in Germany. Actually, the severity of the recession as measured by the drop in ...