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Journal Article
KC Fed LMCI Suggests Recent Inflation Is Not Due to the Tight Labor Market
Glover, Andrew; Mustre-del-Rio, Jose; Pollard, Emily (2021-10-20)
A tight labor market tends to raise wages and lower unemployment, but an overly tight labor market can cause inflation. Labor market momentum, as measured by the Kansas City Fed Labor Market Conditions Indicators (LMCI), can signal whether the current level of activity in labor markets is inflationary.
Economic Bulletin , Issue October 20, 2021 , Pages 4

Working Paper
Firm Dynamics and the Minimum Wage: A Putty-Clay Approach
Aaronson, Daniel; French, Eric; Sorkin, Isaac (2013-12-14)
We document two new facts about the market-level response to minimum wage hikes: firm exit and entry both rise. These results pose a puzzle: canonical models of firm dynamics predict that exit rises but that entry falls. We develop a model of firm dynamics based on putty-clay technology and show that it is consistent with the increase in both exit and entry. The putty-clay model is also consistent with the small short-run employment effects of minimum wage hikes commonly found in empirical work. However, unlike monopsony-based explanations for small short-run employment effects, the model ...
Working Paper Series , Paper WP-2013-26

Working Paper
Income-Driven Labor-Market Polarization
Mestieri, Martí; Comin, Diego; Danieli, Ana (2020-10-23)
We propose a mechanism for labor-market polarization based on the nonhomotheticity of demand that we call the income-driven channel. Our mechanism builds on a novel empirical fact: expenditure elasticities and production intensities in low- and high-skill occupations are positively correlated across sectors. Thus, as income grows, demand shifts towards expenditure-elastic sectors, and the relative demand for low- and high-skill occupations increases, causing labor-market polarization. A calibrated general-equilibrium model suggests this mechanism accounts for 90% and 35% of the increase in ...
Working Paper Series , Paper WP-2020-22

Working Paper
The Unintended Consequences of Employer Credit Check Bans for Labor Markets
Glover, Andrew; Tasci, Murat; Cortes, Kristle Romero (2019-02-25)
Over the last decade, 11 states have restricted employers? access to the credit reports of job applicants. We document a significant decline in county-level vacancies after these laws were enacted: Job postings fall by 5.5 percent in affected occupations relative to exempt occupations in the same county and the same occupation nationwide. Cross-sectional heterogeneity in the estimated effects suggests that employers use credit reports as signals: Vacancies fall more in counties with a large share of subprime residents, while they fall less in occupations with other commonly available signals.
Working Papers , Paper 19-05

Report
Slow recoveries and unemployment traps: monetary policy in a time of hysteresis
Dogra, Keshav; Wee, Shu Lin; Bengui, Julien; Acharya, Sushant (2017-11-01)
We analyze monetary policy in a model where temporary shocks can permanently scar the economy's productive capacity. Unemployed workers? skill losses generate multiple steady-state unemployment rates. When monetary policy is constrained by the zero bound, large shocks reduce hiring to a point where the economy recovers slowly at best?at worst, it falls into a permanent unemployment trap. Since monetary policy is powerless to escape such traps ex post, it must avoid them ex ante. The model quantitatively accounts for the slow U.S. recovery following the Great Recession, and suggests that lack ...
Staff Reports , Paper 831

Working Paper
Job Polarization and the Natural Rate of Unemployment in the United States
Tuzemen, Didem (2018-03-15)
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.
Research Working Paper , Paper RWP 18-3

Working Paper
The Future of Labor: Automation and the Labor Share in the Second Machine Age
Giri, Rahul; Taschereau-Dumouchel, Mathieu; Xia, Junjie; Drozd, Lukasz A.; Cheng, Hong (2021-03-09)
We study the effect of modern automation on firm-level labor shares using a 2018 survey of 1,618 manufacturing firms in China. We exploit geographic and industry variation built into the design of subsidies for automation paid under a vast government industrialization program, “Made In China 2025,” to construct an instrument for automation investment. We use a canonical CES framework of automation and develop a novel methodology to structurally estimate the elasticity of substitution between labor and automation capital among automating firms, which for our preferred specification is 3.8. ...
Working Papers , Paper 20-11

Working Paper
Upskilling: do employers demand greater skill when skilled workers are plentiful?
Modestino, Alicia Sasser; Shoag, Daniel; Ballance, Joshua (2015-01-30)
The Great Recession and subsequent recovery have been particularly painful for low-skilled workers. From 2007 to 2012, the unemployment rate rose by 6.4 percentage points for noncollege workers while it rose by only 2.3 percentage points for the college educated. This differential impact was evident within occupations as well. One explanation for the differential impact may be the ability of highly skilled workers to take middle- and low-skilled jobs. Indeed, over this period the share of workers with a college degree in traditionally middle-skill occupations increased rapidly. Such growth in ...
Working Papers , Paper 14-17

Working Paper
Part-Time for Economic Reasons During the Global Financial Crisis
Fallick, Bruce (2025-08-27)
Net flows from part-time for noneconomic reasons to part-time for economic reasons contributed substantially to the overall increase in part-time for economic reasons during the Global Financial Crisis in the United States. This suggests that the increase in measures such as U-6 may have overstated the decline in labor demand during that period. However, this does not appear to reflect a general cyclical pattern.
Working Papers , Paper 25-20

Working Paper
The Dual Beveridge Curve
Restrepo-Echavarria, Paulina; Cheremukhin, Anton A. (2025-05-07)
The recent behavior of the U.S. Beveridge curve — its outward shift and changing slope — has puzzled economists and is difficult to reconcile with standard explanations based on gradual structural change or declining matching efficiency. We propose a dual-vacancy model in which firms post two distinct types of vacancies: those targeting unemployed workers and those designed to hire already employed workers through poaching. These two types of vacancies operate in segmented sub-markets with separate matching processes. Using U.S. labor market data from 1978 to 2024, we estimate the ...
Working Papers , Paper 2022-021

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