Search Results
Showing results 1 to 10 of approximately 30.
(refine search)
Working Paper
The economics of labor adjustment : mind the gap
We study the inferences about labor adjustment costs obtained by the "gap methodology" of Caballero and Engel [1993] and Caballero, Engel and Haltiwanger [1997]. In that approach, the policy function of a manufacturing plant is assumed to depend on the gap between a target and the current level of employment. Using time series observations, these studies reject the quadratic cost of adjustment model and find that aggregate employment dynamics depend on the cross sectional distribution of employment gaps. We argue that these conclusions may not be justified. Instead these findings may ...
Journal Article
Employment patterns during the recovery: Who are getting the jobs and why?
Employment gains during the recovery have differed sharply depending on workers' level of education, age, and gender. Workers with high levels of education, workers age 55 and older, and men have experienced the strongest employment gains in the recovery. ; Sahin and Willis analyze these employment patterns and find that the patterns appear to reflect two key factors: long-term trends and cyclical fluctuations. The strong employment growth for highly educated and older workers is a continuation of longer term shifts toward a more highly educated workforce and the aging of the baby boom ...
Journal Article
Coordination of expectations in the recent crisis: private actions and policy responses
Some of the events of the recent financial crisis have made clear the importance of expectations in an economy. The economic choices individuals make are often based on their expectations of what other people will do?in what economists call a ?coordination game.? In such situations, changes in the beliefs of what others may do can affect the actions of individuals. A key element in such situations is that, as the collective beliefs change and individuals respond to these altered expectations, the outcome in the marketplace can change. In the recent crisis, the coordination of expectations ...
Journal Article
Kansas City Fed's Labor Market Conditions Indicators (LMCI)
Working Paper
Magazine prices revisited
This paper examines price adjustment behavior in the magazine industry. In a frequently cited study, Cecchetti (1986) constructs a reduced-form (S,s) model for firms. Cecchetti assumes that a firm's pricing rules are fixed for non-overlapping three-year intervals and estimates the model using a conditional logit specification from Chamberlain (1980). The estimates are inconsistent, however, due to the state-dependent specification of the model. I illustrate the econometric problems in Cecchetti's results through a Monte Carlo exercise and then suggest a method for producing consistent ...
Working Paper
Mind the (approximation) gap: a robustness analysis
This note continues the discussion of the results reported by Ricardo Caballero and Eduardo Engel (1993), hereafter CE, and Ricardo Caballero, Eduardo Engel, and John Haltiwanger (1997), hereafter CEH, by responding to the results reported in Christian Bayer (2008). Russell Cooper and Jonathan Willis (2004), hereafter CW, find that the aggregate nonlinearities reported in CE and CEH may be the consequence of mismeasurement of the employment gap rather than nonlinearities in plant-level adjustment. Bayer reassesses this finding in the context of the CE model in the case where static employment ...
Journal Article
Assessing labor market conditions: the level of activity and the speed of improvement
To help assess labor market conditions, two measures are proposed that show that the pace of improvement has recently increased, but two more years of similar improvement are needed to return conditions to historical averages.
Journal Article
Do Credit Supply Shocks Constrain Employment Growth of Small and Medium-Sized Enterprises?
Small and medium-sized enterprises (SMEs) made outsized contributions to net employment growth during the pandemic recession and recovery. However, credit conditions have tightened significantly during the past year and might hinder growth for small firms going forward. Using data on bank lending to small businesses and employment growth, we estimate that a tightening in bank credit supply of 1 percentage point is associated with an 11 percent decline in SMEs' net job creation rate. This estimate indicates that a bank credit tightening about one-third the size of the tightening observed ...
Working Paper
Real Rigidities, Firm Dynamics, and Monetary Nonneutrality: The Role of Demand Shocks
We propose a parsimonious framework for real rigidities, in the form of strategic complementarities, that can generate real and nominal dynamics and match key features of the data across several literatures. Existing menu-cost models featuring strategic complementarities require unrealistically volatile shocks to idiosyncratic productivity to be consistent with pricing moments. We develop a simple menu-cost model with strategic complementarities along with idiosyncratic productivity and demand shocks that are disciplined by the data. This approach allows us to overcome previous criticism from ...
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 ...