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Working Paper
Technological innovation in mortgage underwriting and the growth in credit, 1985–2015
The application of information technology to finance, or ?fintech,? is expected to revolutionize many aspects of borrowing and lending in the future, but technology has been reshaping consumer and mortgage lending for many years. During the 1990s, computerization allowed mortgage lenders to reduce loan-processing times and largely replace human-based assessments of credit risk with default predictions generated by sophisticated empirical models. Debt-to-income ratios at origination add little to the predictive power of these models, so the new automated underwriting systems allowed higher ...
Working Paper
Technology and the Task Content of Jobs across the Development Spectrum
The tasks workers perform on the job are informative about the direction and the impact of technological change. We harmonize occupational task content measures between two worker-level surveys, which separately cover developing and developed countries. Developing countries use routine-cognitive tasks and routine-manual tasks more intensively than developed countries, but less intensively use non-routine analytical tasks and non-routine interpersonal tasks. This is partly because developing countries have more workers in occupations with high routine contents and fewer workers in occupations ...
Report
The Long-Term Rise of Labor Market Detachment: Evidence from Local Labor Markets
We develop a measure of chronic joblessness among prime-age men and women in the United States—termed the detachment rate— that identifies those who have been out of the labor force for more than a year. We show that the detachment rate more than doubled for men since the early 1980s and rose by a quarter for women since 2000, though it is consistently considerably higher for women than men. We then explore the economic geography of labor market detachment to help explain its rise. Results show that the detachment rate increased more in places with weak local economies, particularly those ...
Working Paper
The Nature of Technological Change 1960-2016
We present a unified technological explanation of both the movement of workers across jobs using different skills and the changes in skill use within jobs. An envelope-theorem approach allows us to estimate relative skill-productivity growth from worker mobility using OLS while making minimal assumptions on each occupation's production function. Using six decades of data, we conclude that routine-cognitive- and finger-dexterity-skill productivity grew rapidly and abstract- and social-skill productivity grew slowly - a form of "skill bias." These effects, along with our estimated relationships ...
Working Paper
The Role of Technology and Energy Substitution in Climate Change Mitigation
Mitigating climate change is critically linked to reducing an economy’s reliance on fossil energy. This paper examines U.S. energy dependence, measured by its factor share, using a neoclassical framework in a systematic way. We propose substitution as a simple, explicit economic mechanism for climate change mitigation and understanding energy-saving technical change in terms of observed factor quantities. We show that with time-varying capital equipment and energy substitutability, changes in observed inputs alone can account for most of the variations in the income share of energy over the ...
Working Paper
Skilled Tradable Services: The Transformation of U.S. High-Skill Labor Markets
We study a group of service industries that are skill-intensive, widely traded, and have recently seen explosive wage growth. Between 1980 and 2015, these ?Skilled Tradable Services? accounted for a sharply increasing share of employment among the highest earning Americans. Unlike any other sector, their wage growth was strongly biased toward the densest local labor markets and the highest paying firms. These services alone explain 30% of the increase in inequality between the 50th and 90th percentiles of the wage distribution. We offer an explanation for these patterns that highlights the ...
Working Paper
The City Paradox: Skilled Services and Remote Work
Large cities in the US are the most expensive places to live. Paradoxically, this cost is paid disproportionately by workers who could work remotely, and live anywhere. The greater potential for remote work in large cities is mostly accounted for by their specialization in skill- and information-intensive service industries. We highlight that this specialization makes these cities vulnerable to remote work shocks. When high-skill workers begin to work from home or leave the city altogether, they withdraw spending from local consumer service industries that rely heavily on their demand. As a ...
Working Paper
Indivisibilities in Distribution
This paper develops and estimates a model of indivisibilities in shipping and economies of scale in consolidation. It uses highly detailed data on imports where it is possible to observe the contents of individual containers. In the model, ?rms are able to adapt to indivisibility constraints by using consolidation strategies and by making adjustments to shipment size. The ?rm determines the optimal number of domestic ports to use, taking into account that adding more ports lowers inland freight cost, at the expense of a higher indivisibility cost. The estimated model is able to roughly ...
Working Paper
Technological Change and Financial Innovation in Banking: Some Implications for Fintech
Financial intermediation has changed dramatically over the past 30 years, due in large part to technological change. The paper first describes the role of the financial system in a modern economy and how technological change and financial innovation can affect social welfare. We then survey the empirical literatures relating to several specific financial innovations, broadly categorized as new production processes, new products or services, or new organizational forms. In each case, we also include examples of significant fintech innovations that are transforming various aspects of banking. ...
Working Paper
Technological Innovation in Mortgage Underwriting and the Growth in Credit: 1985-2015
The application of information technology to finance, or ?fintech,? is expected to revolutionize many aspects of borrowing and lending in the future, but technology has been reshaping consumer and mortgage lending for many years. During the 1990s computerization allowed mortgage lenders to reduce loan-processing times and largely replace human-based assessment of credit risk with default predictions generated by sophisticated empirical models. Debt-to-income ratios at origination add little to the predictive power of these models, so the new automated underwriting systems allowed higher ...