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Jel Classification:J31 

Working Paper
Effects of Credit Supply on Unemployment and Inequality

The Great Recession, which was preceded by the financial crisis, resulted in higher unemployment and inequality. We propose a simple model where firms producing varieties face labor-market frictions and credit constraints. In the model, tighter credit leads to lower output, lower number of vacancies, and higher directed-search unemployment. Where workers are more productive at higher levels of firm output, lower credit supply increases firm capital intensity, raises inequality by increasing the rental of capital relative to the wage, and has an ambiguous effect on welfare. At initial high ...
Working Papers , Paper 2016-13

Working Paper
Efficient Mismatch

This paper presents a model in which mismatch employment arises in a constrained efficient equilibrium. In the decentralized economy, however, mismatch gives rise to a congestion externality whereby heterogeneous job seekers fail to internalize how their individual actions affect the labor market outcomes of competitors in a common unemployment pool. We provide an analytic characterization of this distortion, assess the distributional nature of the associated welfare effects, and relate it to the relative productivity of low- and high-skilled workers competing for similar jobs.
Finance and Economics Discussion Series , Paper 2018-037

Working Paper
The Indirect Fiscal Benefits of Low-Skilled Immigration

Low-skilled immigrants indirectly affect public finances through their effect on native wages & labor supply. We operationalize this general-equilibrium effect in the workhorse labor market model with heterogeneous workers and intensive and extensive labor supply margins. We derive a closed-form expression for this effect in terms of estimable statistics. We extend the analysis to various alternative specifications of the labor market and production that have been emphasized in the immigration literature. Empirical quantifications for the U.S. reveal that the indirect fiscal benefit of one ...
Opportunity and Inclusive Growth Institute Working Papers , Paper 38

Working Paper
Some Like It Hot: Assessing Longer-Term Labor Market Benefits from a High-Pressure Economy

This paper explores evidence for positive hysteresis in the labor market. Using data from the National Longitudinal Surveys of Youth, we find that negative labor market outcomes during high unemployment periods are mitigated by exposure to a high-pressure economy during the preceding expansion. Breaking total exposure into intensity and duration suggests that these two dimensions have differing impacts. However, the benefits of exposure are not enough to overcome the greater negative impact of high unemployment periods on labor market outcomes of disadvantaged groups, making extension of ...
FRB Atlanta Working Paper , Paper 2018-1

Journal Article
Effects of Credit Supply on Unemployment and Income Inequality

The Great Recession, which was preceded by the Financial Crisis, resulted in higher unemployment and income inequality. We propose a simple model where firms producing varieties face labor-market frictions and credit constraints. In the model, tighter credit leads to lower output, a lower number of vacancies, and higher directed-search unemployment. If workers are more productive at higher levels of firm output, then a lower credit supply increases firm capital intensity, raises income inequality by increasing the rental of capital relative to the wage, and has an ambiguous effect on welfare. ...
Review , Volume 100 , Issue 4 , Pages 345-362

Journal Article
Racial Gaps, Occupational Matching, and Skill Uncertainty

White workers in the United States earn almost 30 percent more per hour on average than Black workers, and this wage gap is associated with large racial differences in occupational assignments. In this article, we theoretically and empirically examine the Black-White disparity in occupations. First, we present a model based on Antonovics and Golan (2012) that relates occupational assignments to the incentives workers face while learning about their own unknown ability. Second, we document differences between Black and White workers in both the complexity of skills required in their initial ...
Review , Volume 101 , Issue 2 , Pages 135-153

Working Paper
The impact of temporary protected status on immigrants’ labor market outcomes

The United States currently provides Temporary Protected Status (TPS) to more than 300,000 immigrants from selected countries. TPS is typically granted if dangerous conditions prevail in the home country due to armed conflict or a natural disaster. Individuals with TPS cannot be deported and are allowed to stay and work in the United States temporarily. Despite the increased use of TPS in recent years, little is known about how TPS affects labor market outcomes for beneficiaries, most of whom are unauthorized prior to receiving TPS. This study examines how migrants from El Salvador who are ...
Working Papers , Paper 1415

Working Paper
Managerial Compensation under Privately-Observed Hedging

This paper studies how private information in hedging outcomes affects the design of managerial compensation when hedging instruments serve as a double-edged sword in that they may be used for both corporate hedging and earnings management. On the one hand, financial vehicles can offer customized contracts that are closely tailored to manage specific risk and improve hedging efficiency. On the other hand, involvement in hedging may give rise to manipulation through misstatement of the value estimates. We show that the use of privately-observed hedging may actually require greater ...
International Finance Discussion Papers , Paper 1160

Working Paper
Multidimensional Skill Mismatch

What determines the earnings of a worker relative to his peers in the same occupation? What makes a worker fail in one occupation but succeed in another? More broadly, what are the factors that determine the productivity of a worker-occupation match? In this paper, we propose an empirical measure of skill mismatch for a worker-occupation match, which sheds light on these questions. This measure is based on the discrepancy between the portfolio of skills required by an occupation and the portfolio of abilities possessed by a worker for learning those skills. This measure arises naturally in a ...
Working Papers , Paper 2015-22

Working Paper
Cyclical Labor Income Risk

We investigate cyclicality of variance and skewness of household labor income risk using PSID data. There are five main findings. First, we find that head's labor income exhibits countercyclical variance and procyclical skewness. Second, the cyclicality of hourly wages is mutted, suggesting that head's labor income risk is mainly coming from the volatility of hours. Third, younger households face stronger cyclicality of income volatility than older ones, although the level of volatility is lower for the younger ones. Fourth, while a second earner helps lower the level of skewness, it does not ...
Opportunity and Inclusive Growth Institute Working Papers , Paper 22

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