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Working Paper
Health-care reform or labor market reform? a quantitative analysis of the Affordable Care Act
An equilibrium model with ?rm and worker heterogeneity is constructed to analyze labor market and welfare implications of the Patient Protection and Affordable Care Act (ACA). Our model implies a signi?cant reduction in the uninsured rate from 22.6 percent to 5.6 percent. {{p}} The model predicts a moderate positive welfare gain from the ACA, due to redistribution of income through Health Insurance Subsidies at the Exchange as well as Medicaid expansion. About 2.1 million more part-time jobs are created under the ACA, in expense of 1.6 million full-time jobs, mainly because the link between ...
Working Paper
Job Polarization and the Natural Rate of Unemployment in the United States
I present a new estimate of the natural rate of unemployment in the United States that accounts for changes in the age, sex, and skill composition of the labor force. Using micro-level data from the Current Population Survey for the period 1994-2017, I find that the natural rate of unemployment declined by 0.5 percentage point since 1994 and currently stands at 4.5 percent. My projections show that ongoing demographic and technological changes could lower the trend rate further to 4.4 percent by the end of 2022.
Journal Article
Women without a College Degree, Especially Minority Mothers, Face a Steeper Road to Recovery
Didem Tüzemen documents changes in the labor force participation rates of prime-age individuals across sex, education level, and race and ethnicity during the pandemic-induced downturn and subsequent recovery. Her analysis yields three key findings. First, prime-age women without a bachelor’s degree experienced greater deteriorations in their labor force participation and employment during the recession than all other prime-age individuals, and their labor force participation and employment rates are still well below their pre-pandemic levels. Second, Hispanic prime-age women without a ...
Journal Article
The vanishing middle: job polarization and workers’ response to the decline in middle-skill jobs
The share of middle-skill jobs in the United States has fallen sharply in the wake of advancing technology, the rise in outsourcing jobs overseas, and contractions in manufacturing. This shift of employment toward high- and low-skill jobs, known as "job polarization," is not well understood ; Tuzemen and Willis analyze thirty years of data from the Current Population Survey and show that changes in job composition within industries have been the primary driver of job polarization, not shifts in employment away from industries such as manufacturing. ; They also find that women have responded ...
Journal Article
Women Are Driving the Recent Recovery in Prime-Age Labor Force Participation
The labor force participation rate of prime-age individuals (age 25 to 54) in the United States declined dramatically during and after the Great Recession. While the rate remains below its pre-recession level, it has been increasing steadily since 2015. We examine how different demographic groups have contributed to this rebound and find that college-educated women have made the largest contribution to the recent recovery in the prime-age labor force participation rate.
Journal Article
Labor Market May Remain Tight until Labor Demand Cools Further
U.S. labor demand—measured by job openings or vacancies—has started to cool but is still elevated compared with pre-pandemic levels. At the same time, labor supply—measured by the labor force participation rate remains below pre-pandemic levels. This weakness in the labor force participation rate may persist, as it reflects lower participation among older individuals. Accordingly, the imbalance between demand and supply in the labor market may continue until labor demand cools further.
Working Paper
Disappearing Routine Occupations and Declining Prime-Age Labor Force Participation
I study the effect of disappearing routine occupations on the decline in the labor force participation rate of prime-age individuals since the 1990s. I use multiple data sources and empirical models to study this relationship. First, I exploit state-level variation and show that the long-term trends of declining routine employment and prime-age labor force participation are highly correlated. Second, I narrow the geographic unit to local labor markets and quantify the causal effect of declining routine employment on the labor market outcomes of prime-age individuals. My results imply that the ...
Working Paper
Under-investment in state capacity: the role of inequality and political instability
Existing studies have shown that the state's ability to tax, also known as fiscal capacity, is positively related to economic development. In this paper, we analyze the determinants of the government's decision to invest in state capacity, which involves a trade-off between present consumption and the ability to collect more taxes in the future. Using a model, we highlight some political and economic dimensions of this decision and conclude that political stability, democracy, income inequality, as well as the valuation of public goods relative to private goods, are important variables to ...
Working Paper
Minimum Wage Increases and Vacancies
We estimate the impact of minimum wage increases on the quantity of labor demanded as measured by firms’ vacancy postings. We use proprietary, county-level vacancy data from the Conference Board’s Help Wanted Online to analyze the effects of minimum wage increases on the quantity of labor demanded. Our identification relies on the disproportionate effects of minimum wage hikes on different occupations, as the wage distribution around the binding minimum wage differs by occupation. We find that minimum wage increases during the 2005–18 period led to substantial declines in vacancy ...
Working Paper
Labor market dynamics with endogenous labor force participation and on-the-job search
Empirical evidence shows that worker flows in the U.S. labor market are very large. Previous studies have mainly focused on documenting and modeling worker flows between employment and unemployment only. However, these studies ignore other important labor flows including movements in and out of the labor force, and worker flows from one job directly to another job. Improving our understanding of this broader set of labor market flows is critical for assessing the merits of labor market policies such as unemployment insurance and minimum wage. ; This paper focuses on the broader set of worker ...