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Working Paper
Vacancy Chains
Replacement hiring—recruitment that seeks to replace positions vacated by workers who quit—plays a central role in establishment dynamics. We document this phenomenon using rich microdata on U.S. establishments, which frequently report no net change in their employment, often for years at a time, despite facing substantial gross turnover in the form of quits. We devise a tractable model in which replacement hiring is driven by a novel structure of frictions, combining firm dynamics, on-the-job search, and investments into job creation that are sunk at the point of replacement. A key ...
Discussion Paper
The Restrained Recovery of State and Local Government Payrolls from the Pandemic Recession
On the eve of the outbreak of the COVID-19 pandemic, state and local government (S&L) employment in the U.S. stood at 20 million. In the first three months of the pandemic, S&L payrolls plunged 1.5 million as social distancing reduced the need for many government services, such as in-person schooling, and S&L governments feared sharp revenue declines.
Discussion Paper
Assessing the Change in Labor Market Conditions
The U.S. labor market is large and multifaceted. Often-cited indicators, such as the unemployment rate or payroll employment, measure a particular dimension of labor market activity, and it is not uncommon for different indicators to send conflicting signals about labor market conditions.
Working Paper
Reconciling Unemployment Claims with Job Losses in the First Months of the COVID-19 Crisis
In the spring of 2020, many observers relied heavily on weekly initial claims for unemployment insurance benefits (UI) to estimate contemporaneous reductions in US employment induced by the COVID-19 pandemic. Though UI claims provided a timely, high-frequency window into mounting layoffs, the cumulative volume of initial claims filed through the May reference week substantially exceeded realized reductions in payroll employment and likely contributed to the historically large discrepancy between consensus expectations of further April-to-May job losses and the strong job gains reflected in ...
Discussion Paper
Why is Involuntary Part-Time Work Elevated?
Despite substantial improvement in the unemployment rate and several other labor market indicators, the number of Americans involuntarily working part time (also called "part-time for economic reasons") remains unusually high nearly five years into the recovery. In this note, we focus on two questions: 1. What can Current Population Survey (CPS) data on the stocks and flows of involuntary part-time employment say about the underlying reasons for its persistently high rate? And 2. Based on this analysis, what can we expect for the evolution of involuntary part-time work going forward?
Working Paper
Assessing the Change in Labor Market Conditions
This paper describes a dynamic factor model of 19 U.S. labor market indicators, covering the broad categories of unemployment and underemployment, employment, workweeks, wages, vacancies, hiring, layoffs, quits, and surveys of consumers' and businesses' perceptions. The resulting labor market conditions index (LMCI) is a useful tool for gauging the change in labor market conditions. In addition, the model provides a way to organize discussions of the signal value of different labor market indicators in situations when they might be sending diverse signals. The model takes the greatest signal ...
Discussion Paper
The Recent Decline in Long-Term Unemployment
In this FEDS Note we take a deeper look at the sizeable decline in long-term unemployment seen over the first half of 2014.
Working Paper
Racial Gaps in Labor Market Outcomes in the Last Four Decades and over the Business Cycle
We examine racial disparities in key labor market outcomes for men and women over the past four decades, with a special emphasis on their evolution over the business cycle. Blacks have substantially higher and more cyclical unemployment rates than whites, and observable characteristics can explain very little of this differential, which is importantly driven by a comparatively higher risk of job loss. In contrast, the Hispanic-white unemployment rate gap is comparatively small and is largely explained by lower educational attainment of (mostly foreign-born) Hispanics. Regarding labor force ...
Discussion Paper
Updating the Labor Market Conditions Index
Starting Monday, October 6th, we will provide updated estimates of the labor market conditions index (LMCI) every month.
Working Paper
Unemployment Insurance Experience Rating and Labor Market Dynamics
Unemployment insurance experience rating imposes higher payroll tax rates on firms that have laid off more workers in the past. To analyze the effects of UI tax policy on labor market dynamics, this paper develops a search model of unemployment with heterogeneous firms and realistic UI financing. The model predicts that higher experience rating reduces both job creation and job destruction. Using firm-level data from the Quarterly Census of Employment and Wages, the model is tested by comparing job creation and job destruction across states and industries with different UI tax schedules. The ...