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Report
Relative pay, productivity, and labor supply
Relative pay ? earnings compared with the earnings of others doing a similar job, or compared with one?s earnings in the past ? affects how much individuals would like to work (labor supply) and their effort on the job; it therefore has implications for both employers and policy makers. A collection of recent studies shows that relative pay information, even when it is irrelevant, significantly affects labor supply and effort. This effect stems mainly from those who compare unfavorably, as essentially all studies find that awareness of earning less than others or less than in the past ...
Report
The Impact of Felony Larceny Thresholds on Crime in New England
Criminal justice reform has been a high-priority policy area in New England and the nation in recent years. States are generally seeking legislation that would help reintegrate ex-offenders into society while still prioritizing the welfare of all members of the public and the achievement of fiscal goals. The research findings presented in this report indicate that raising felony larceny thresholds—that is, increasing the dollar value of stolen property at or above which a larceny offense may be charged in court as a felony rather than a misdemeanor, a policy adopted by three New England ...
Report
Human capital investments and expectations about career and family
This paper studies how individuals believe human capital investments will affect their future career and family life. We conducted a survey of high-ability currently enrolled college students and elicited beliefs about how their choice of college major, and whether to complete their degree at all, would affect a wide array of future events, including future earnings, employment, marriage prospects, potential spousal characteristics, and fertility. We find that students perceive large ?returns" to human capital not only in their own future earnings, but also in a number of other dimensions ...
Discussion Paper
Valuing Workplace Benefits
Workplace benefits?such as parental leave, sick leave, and flexible work arrangements?are increasingly being recognized as important determinants of differences in labor supply behavior, education and occupation choice, inequality in wages, and gender disparities in labor market outcomes. Researchers have argued that the failure of the United States to keep pace in providing more generous workplace benefits accounts for 29 percent of the decline in the nation?s labor force participation rate for women relative to that of other high-income countries in the Organisation for Economic ...
Working Paper
Comparative Advantage and Moonlighting
The proportion of multiple jobholders (moonlighters) is negatively correlated with productivity (wages) in cross-sectional and time series data, but positively correlated with education. We develop a model of the labor market to understand these seemingly contradictory facts. An income e?ect explains the negative correlation with productivity while a comparative advantage of skilled workers explains the positive correlation with education. We provide empirical evidence of the comparative advantage in CPS data. We calibrate the model to 1994 data on multiple jobholdings, and assess its ability ...
Working Paper
Nominal GDP Targeting With Heterogeneous Labor Supply
We study nominal GDP targeting as optimal monetary policy in a model with a credit market friction following Azariadis, Bullard, Singh and Suda (2018), henceforth ABSS. As in ABSS, the macroeconomy we study has considerable income inequality which gives rise to a large private sector credit market. Households participating in this market use non-state contingent nominal contracts (NSCNC). We extend the ABSS framework to allow for endogenous and heterogeneous household labor supply among credit market participant households. We show that nominal GDP targeting continues to characterize optimal ...
Working Paper
The Cross-Section of Labor Leverage and Equity Returns
Using a standard production model, we demonstrate theoretically that, even if labor is fully flexible, it generates a form of operating leverage if (a) wages are smoother than productivity and (b) the capital-labor elasticity of substitution is strictly less than one. Our model supports using labor share?the ratio of labor expenses to value added?as a proxy for labor leverage. We show evidence for conditions (a) and (b), and we demonstrate the economic significance of labor leverage: High labor-share firms have operating profits that are more sensitive to shocks, and they have higher expected ...
Working Paper
Human Capital and Long-Run Labor Income Risk
This review article examines the role of labor income risk in determining the value of a person?s human capital. We draw on the existing literature to present a model that incorporates various types of shocks to earnings. Within this framework, we highlight the implications of different assumptions about the correlation between market returns and labor income growth for the value of human capital and its riskiness. Further, the article surveys other work that applies similar ideas to assess the value and risk of pension promises. Finally, we discuss how to enrich the environment with ...
Working Paper
The Effect of Fertility on Mothers’ Labor Supply over the Last Two Centuries
This paper documents the evolving impact of childbearing on the work activity of mothers. Based on a compiled dataset of 441 censuses and surveys between 1787 and 2015, representing 103 countries and 48.4 million mothers, we document three main findings: (1) the effect of fertility on labor supply is small and typically indistinguishable from zero at low levels of development and economically large and negative at higher levels of development; (2) this negative gradient is remarkably consistent across histories of currently developed countries and contemporary cross-sections of countries; and ...
Working Paper
Health Insurance as an Income Stabilizer
We evaluate the effect of health insurance on the incidence of negative income shocks using the tax data and survey responses of nearly 14,000 low income households. Us-ing a regression discontinuity (RD) design and variation in the cost of nongroup pri-vate health insurance under the Affordable Care Act, we find that eligibility for sub-sidized Marketplace insurance is associated with a 16% and 9% decline in the rates of unexpected job loss and income loss, respectively. Effects are concentrated among households with past health costs and exist only for “unexpected” forms of earnings ...