Search Results
Journal Article
Has the Wage Phillips Curve Gone Dormant?
Although the labor market has steadily strengthened, wage growth has remained slow in recent years. This raises the question of whether the wage Phillips curve?the traditional relationship between labor market slack and wage growth?has weakened. Estimating a causal link from slack to wage growth using national data is difficult. However, using city-level data over the past 25 years shows that the cross-city relationship has weakened since the Great Recession. Explanations consistent with this timing suggest that the Phillips curve may return to a steeper curve in the future.
Working Paper
Entry dynamics and the decline in exchange-rate pass-through
The degree of exchange-rate pass-through to import prices is low. An average pass-through estimate for the 1980s would be roughly 50 percent for the United States implying that, following a 10 percent depreciation of the dollar, a foreign exporter selling to the U.S. market would raise its price in the United States by 5 percent. Moreover, substantial evidence indicates that the degree of pass-through has since declined to about 30 percent. ; Gust, Leduc, and Vigfusson (2010) demonstrate that, in the presence of pricing complementarity, trade integration spurred by lower costs for importers ...
Working Paper
Reshoring, Automation, and Labor Markets Under Trade Uncertainty
We study the implications of trade uncertainty for reshoring, automation, and U.S. labor markets. Rising trade uncertainty creates incentive for firms to reduce exposures to foreign suppliers by moving production and distribution processes to domestic producers. However, we argue that reshoring does not necessarily bring jobs back to the home country or boost domestic wages, especially when firms have access to labor-substituting technologies such as automation. Automation improves labor productivity and facilitates reshoring, but it can also displace jobs. Furthermore, automation poses a ...
Working Paper
Entry dynamics and the decline in exchange-rate pass-through
The degree of exchange-rate pass-through to import prices is low. An average passthrough estimate for the 1980s would be roughly 50 percent for the United States implying that, following a 10 percent depreciation of the dollar, a foreign exporter selling to the U.S. market would raise its price in the United States by 5 percent. Moreover, substantial evidence indicates that the degree of pass-through has since declined to about 30 percent. ; Gust, Leduc, and Vigfusson (2010) demonstrate that, in the presence of pricing complementarity, trade integration spurred by lower costs for importers ...
Working Paper
The slow job recovery in a macro model of search and recruiting intensity
Despite steady declines in the unemployment rate and increases in the job openings rate after the Great Recession, the hiring rate in the United States has lagged behind. Significant gaps remain between the actual job filling and finding rates and those predicted from the standard labor search model. To examine the forces behind the slow job recovery, we generalize the standard model to incorporate endogenous variations in search intensity and recruiting intensity. Our model features a vacancy creation cost, which implies that firms rely on variations in both the number of vacancies and ...
Working Paper
Snow Belt to Sun Belt Migration: End of an Era?
Internal migration has been cited as a key channel by which societies will adapt to climate change. We show in this paper that this process has already been happening in the United States. Over the course of the past 50 years, the tendency of Americans to move from the coldest places (“snow belt”), which have become warmer, to the hottest places (“sun belt”), which have become hotter, has steadily declined. In the latest full decade, 2010-2020, both county population growth and county net migration rates were essentially uncorrelated with the historical means of either extreme heat ...
Journal Article
International risk-sharing: globalization is weaker than you think
Sylvain Leduc notes that the extent of international risk-sharing remains surprisingly small. This appears to be the case even though the development of international financial markets should better equip households to pool their resources so that their level of consumption varies less from year to year. In ?International Risk-Sharing: Globalization Is Weaker Than You Think,? Leduc digs a little further into the data to uncover why, in spite of recent trends, risk-sharing doesn?t occur more often.
Journal Article
Are large-scale asset purchases fueling the rise in commodity prices?
Prices of commodities including metals, energy, and food have been rising at double-digit rates in recent months. Some critics argue that Federal Reserve purchases of long-term assets are fueling this rise by maintaining an excessively expansionary monetary stance. However, daily data indicate that Federal Reserve announcements of large-scale asset purchases tended to lower commodity prices even as long-term interest rates and the value of the dollar declined.
Journal Article
Fighting downturns with fiscal policy
Should fiscal policy be used to fight recessions? This Economic Letter examines some recent empirical studies analyzing data on the relative effects of higher spending and lower taxes on output.
Journal Article
Are Workers Losing to Robots?
The portion of national income that goes to workers, known as the labor share, has fallen substantially over the past 20 years. Even with strong employment growth in recent years, the labor share has remained at historically low levels. Automation has been an important driving factor. While it has increased labor productivity, the threat of automation has also weakened workers? bargaining power in wage negotiations and led to stagnant wage growth. Analysis suggests that automation contributed substantially to the decline in the labor share.