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Working Paper
The Work-from-home Wage Premium
Using administrative data from France, we document that within the same detailed occupation, industry, and commuting zone, workers who work from home earn on average 12% higher hourly wages than fully on-site workers. Approximately half of this wage premium is accounted for by observable worker characteristics (such as education, gender, and age) and firm characteristics (such as size and productivity). The remaining 6% wage premium largely reflects selection: workers who work from home after the COVID-19 pandemic already earned higher wages before the pandemic.
Working Paper
The Impact of COVID on Productivity and Potential Output
The U.S. economy came into the pandemic, and looks likely to leave it, on a slow-growth path. The near- term level of potential output has fallen because of shortfalls in labor that should reverse over time. Labor productivity, to a surprising degree, has followed an accelerated version of its Great Recession path with initially strong growth followed by weak growth. But, as of mid-2022, it appears that the overall level of labor and total factor productivity are only modestly affected. The sign of the effect depends on whether we use the strong income-side measures of pandemic output growth ...
Working Paper
The Impact of COVID on Potential Output
The level of potential output is likely to be subdued post-COVID relative to its previous estimates. Most clearly, capital input and full-employment labor will both be lower than they previously were. Quantitatively, however, these effects appear relatively modest. In the long run, labor scarring could lead to lower levels of employment, but the slow pre-recession pace of GDP growth is unlikely to be substantially affected.
Journal Article
Missing Growth from Creative Destruction
When products disappear from the market with no substitutes from the same manufacturer, they may have been replaced by cheaper or better products from a different manufacturer. Official measurements typically approximate price changes from such creative destruction using price changes for products that were not replaced. This can lead to overstating inflation and, in turn, understating economic growth. A recent estimate suggests that around 0.6 percentage point of growth is missed per year. The bias has not increased over time, however, so it does not explain the slowdown in productivity ...
Working Paper
Innovative Growth Accounting
Recent work highlights a falling entry rate of new firms and a rising market share of large firms in the United States. To understand how these changing firm demographics have affected growth, we decompose productivity growth into the firms doing the innovating. We trace how much each firm innovates by the rate at which it opens and closes plants, the market share of those plants, and how fast its surviving plants grow. Using data on all nonfarm businesses from 1982-2013, we find that new and young firms (ages Oto 5 years) account for almost one-half of growth- three times their share of ...
Journal Article
Is Slow Still the New Normal for GDP Growth?
Estimates suggest the new normal pace for U.S. GDP growth remains between 1% and 1%, noticeably slower than the typical pace since World War II. The slowdown stems mainly from demographic trends that have slowed labor force growth, about which there is relatively little uncertainty. A larger challenge is productivity. Achieving GDP growth consistently above 1% will require much faster productivity growth than the United States has typically experienced since the 1970s.
Journal Article
Disruptions to Starting a Business during COVID-19
Applications to start new businesses tanked from mid-March through May, contracting more severely than during the 2008–2009 financial crisis. Since then, however, applications have recovered so strongly that the total number filed in 2020 should be similar to that for 2019, even if applications growth reverts to the average lows experienced during the early days of the pandemic. This should result in only a modest loss of new businesses and is not likely to cause much additional strain on overall jobs and productivity gains.
Journal Article
Are Markups Driving the Ups and Downs of Inflation?
How much impact have price markups for goods and services had on the recent surge and the subsequent decline of inflation? Since 2021, markups have risen substantially in a few industries such as motor vehicles and petroleum. However, aggregate markups—which are more relevant for overall inflation—have generally remained flat, in line with previous economic recoveries over the past three decades. These patterns suggest that markup fluctuations have not been a main driver of the ups and downs of inflation during the post-pandemic recovery.
Working Paper
Productivity in the World Economy During and After the Pandemic
This paper reviews how productivity has evolved around the world since the pandemic began in 2020. Productivity in many countries has been volatile. We conclude that the broad contours of productivity growth during this period have been heavily shaped by predictable cyclical patterns. Looking at U.S. industry data, we find little evidence that the sharp rise in telework has had a notable impact, good or bad, on productivity. Stepping back, the data so far appear consistent with a continuation of the slow-productivity-growth trajectory that we faced before the pandemic.
Journal Article
Future Output Loss from COVID-Induced School Closures
The COVID-19 pandemic has caused massive disruptions to the U.S. educational system. Research on school closures—particularly combined with parental income loss—implies that children are likely to attain lower levels of lifetime education compared with pre-pandemic trends. Projections show learning disruptions could lower the level of annual economic output ¼ percentage point on average over the next 70 years. The effect is small the first 5–10 years then peaks at a loss of ½ percentage point in about 25 years, when the children reach prime working age.