Search Results
Working Paper
Economic Activity by Race
We observe empirical differences between races across various macroeconomic variables for the White, Black, Asian, and Hispanic populations in the U.S. For instance, the Black unemployment rate in the U.S. is more often than not double the White unemployment rate. In this paper, I treat nine macroeconomic variables as noisy indicators of economic activity and estimate an index that measures the economic activity of racial demographic groups in the U.S., called Economic Activity by Race (EAR). The noise of the indicators motivates the use of Kalman filter estimation to extract a common ...
Journal Article
Breakeven Employment Growth
Employment growth has consistently come in above pre-pandemic estimates of the rate needed for unemployment to stay near its long-run natural rate. Even so, unemployment has held steady, which raises the question of whether the “breakeven” employment growth rate has changed. In the short-run, recent surges in immigration and labor force participation have caused the current breakeven employment growth rate to rise as high as 230,000 jobs per month. However, the long-run breakeven employment growth rate appears unchanged, ranging around 70,000 to 90,000 jobs per month.
Working Paper
Measuring Labor-Force Participation and the Incidence and Duration of Unemployment
The underlying data from which the U.S. unemployment rate, labor-force participation rate, and duration of unemployment are calculated contain numerous internal contradictions. This paper catalogs these inconsistencies and proposes a reconciliation. We find that the usual statistics understate the unemployment rate and the labor-force participation rate by about two percentage points on average and that the bias in the latter has increased since the Great Recession. The BLS estimate of the average duration of unemployment overstates by 50% the true duration of uninterrupted spells of ...
Working Paper
Declining Labor Force Attachment and Downward Trends in Unemployment and Participation
The U.S. labor market witnessed two apparently unrelated secular movements in the last 30 years: a decline in unemployment between the early 1980s and the early 2000s, and a decline in participation since the early 2000s. Using CPS micro data and a stock-flow accounting framework, we show that a substantial, and hitherto unnoticed, factor behind both trends is a decline in the share of nonparticipants who are at the margin of participation. A lower share of marginal nonparticipants implies a lower unemployment rate, because marginal nonparticipants enter the labor force mostly through ...
Back-of-the-Envelope Estimates of Next Quarter’s Unemployment Rate
Layoffs are certainly one of the effects of battling COVID-19. What sort of unemployment rate might we see in the second quarter of 2020?
Working Paper
Search Frictions, Labor Supply, and the Asymmetric Business Cycle
We develop a business cycle model with search frictions in the labor market and a labor supply decision along the extensive margin that yields cyclical asymmetry between peaks and troughs of the unemployment rate and symmetric fluctuations of the labor force participation rate as in the U.S. data. We calibrate the model and find that cyclical changes in the extent of search frictions are solely responsible for the peak-trough asymmetry. Participation decisions do not generate asymmetry but contribute to the fluctuations in search frictions by changing the size and composition of the pool of ...
Working Paper
Aggregate Labor Force Participation and Unemployment and Demographic Trends
We estimate trends in the labor force participation (LFP) and unemployment rates for demographic groups differentiated by age, gender, and education, using a parsimonious statistical model of age, cohort, and cycle effects. Based on the group trends, we construct trends for the aggregate LFP and unemployment rate. Important drivers of the aggregate LFP rate trend are demographic factors, with increasing educational attainment being important throughout the sample, ageing of the population becoming more important since 2000, and changes of groups' trend LFP rates, e.g., for women prior to ...
Working Paper
IT Shields: Technology Adoption and Economic Resilience during the COVID-19 Pandemic
We study the labor market effects of information technology (IT) during the onset of the COVID-19 pandemic, using data on IT adoption covering almost three million establishments in the US. We find that in areas where firms had adopted more IT before the pandemic, the unemployment rate rose less in response to social distancing. IT shields all individuals, regardless of gender and race, except those with the lowest educational attainment. Instrumental variable estimates–leveraging historical routine employment share as a booster of IT adoption– confirm IT had a causal impact on fostering ...
Journal Article
Post-Pandemic Labor Shortages Have Limited the Effect of Monetary Policy on the Labor Market
The labor market has so far shown remarkable resilience to the Federal Reserve’s recent monetary policy tightening. Severe labor shortages in the post-pandemic era have led many employers to hold on to workers and hire less-skilled workers—even though they expect demand for their goods or services to weaken in the future. As a result, unemployment remains low, and labor productivity has declined.
Discussion Paper
Parsing the Slow Post-Pandemic Labor Market Recovery of Maryland’s Capital Suburbs
The District of Columbia and its inner ring suburbs — referred to as the Capital Beltway after Interstate 495 — has historically been the core job center for the Washington Metropolitan Area1. (See map below.) Following restrictions to in-person activities at the onset of the COVID-19 pandemic in spring 2020, unemployment spiked within the Capital Beltway, jobs were shed, and commuting patterns shifted. The labor market recovery from the pandemic shock has been uneven within the Capital Beltway, with stronger growth in the Virginia suburbs than the District of Columbia and Maryland's ...