Search Results
Working Paper
Dynamics of labor demand : evidence from plant-level observations and aggregate implications
This paper studies the dynamics of labor demand at the micro and aggregate level. The correlation of hours and employment growth is negative at the plant level and positive in aggregate time series. Further, hours and employment growth are about equally volatile at the plant level while hours growth is much less volatile than employment growth in the aggregate data. Given these differences, we specify and estimate the parameters of a plant-level dynamic optimization problem using simulated method of moments to match plant-level observations. Our findings indicate that non-convex adjustment ...
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
Has the U.S. economy become less interest rate sensitive?
Jonathan Willis and Guangye Cao investigate shifts in the economy?s sensitivity to interest rates by examining how total employment responds to changes in monetary policy.
Working Paper
Sticky information and sticky prices
In the U.S. and Europe, prices change somewhere between every six months and once a year. Yet nominal macro shocks seem to have real effects lasting well beyond a year. "Sticky information" models, as posited by Sims (2003), Woodford (2003), and Mankiw and Reis (2002), can reconcile micro flexibility with macro rigidity. We simulate a sticky information model in which price setters do not update their information on macro shocks as often as they update their information on micro shocks. Compared to a standard menu cost model, price changes in this model reflect older macro shocks. We then ...
Working Paper
Estimation of adjustment costs in a model of state-dependent pricing
This paper provides a framework for direct analysis of the underlying price adjustment costs in an industry. A dynamic programming problem is specified for monopolistically competitive firms that face idiosyncratic costs of price adjustment. A numerical solution is calculated using value function iteration. I estimate the structural parameters of the model using data on magazine cover prices. Among the parameters estimated are the mean, variance, and persistence of the adjustment cost process. The estimated distribution of adjustment costs is nondegenerate, and the average adjustment cost ...
Working Paper
Hours and employment implications of search frictions: matching aggregate and establishment-level observations
This paper studies worker and job flows at the establishment and aggregate levels. The paper is built around a set of facts concerning the variability of unemployment and vacancies in the aggregate, the distribution of net employment growth and the comovement of hours and employment growth at the establishment level. A search model with frictions in hiring and firing is used as a framework to understand these observations. Notable features of this search model include non-convex costs of posting vacancies, establishment level profitability shocks and a contracting framework that determines ...
Journal Article
What is Behind the Recent Increase in Labor Force Participation?
Didem Tzemen and Jonathan L. Willis find that the recent increase in labor force participation is due not to more workers entering the labor force, but to fewer workers exiting it.
Journal Article
What happened to the gains from strong productivity growth?
Over the past decade, the United States economy has experienced strong economic growth due in large part to a resurgence in productivity growth. Little attention has been paid, however, to examining how the gains from this growth have been distributed. In the past few years, observers have noted that the share of income paid to labor has been falling while corporate profits have surged. Also, observers have pointed out that income inequality appears to have widened, with little increase in real wages for low-income workers while executive pay has skyrocketed. Consequently, there has been a ...
Journal Article
Kansas City Fed's Labor Market Conditions Indicators (LMCI)
Journal Article
What Accounts for the Growing Divergence between Employment Measures?
Our analysis reveals a significant and persistent divergence between employment measures from the Current Employment Statistics (CES) and Current Population Survey (CPS). Adjusting for the net birth-death contribution of businesses only partially explains this gap. The remaining large discrepancy is likely due to an underestimation of population growth in the CPS, potentially linked to recent immigration fluctuations. This finding has substantial implications for understanding the current labor market: adjusted CPS data reveals a more robust labor market with healthy demand and rapid supply ...