Research Programs
Employment Policy and Labor Markets
In 2001, the US economy entered a seventh consecutive year of expansion and unemployment rates were at 30-year lows. Yet, not all shared in the employment boom. Levy Institute research has found that between 1995 and 1999, only 217,000 jobs—of the more than 13 million created—went to the half of the population holding a high school degree or less; the remaining jobs went to those with at least some college education. Today, in an ever-tightening economy, there are almost nine million unemployed—5.6 percent of the labor force—and four job seekers for each available job. In addition, there are roughly 10 million full-time workers whose wages place them at or below the official poverty line. Clearly, there is room for improvement on the jobs front.In response to this problem, Levy Institute scholars have proposed a full-employment, or job opportunity, program that would employ all who are willing to work and increase flexibility between economic sectors, thereby lowering the social and economic costs of unemployment. This program is preferable to proposed alternatives such as a reduction of the workweek or employment subsidies, neither of which is sure to raise employment—and both may have serious side effects. Other labor market policies studied by Levy Institute scholars include the effects of technology on earnings, and the effects of an increase in the minimum wage on hiring practices and earnings.
Program Publications
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Working Paper No. 1022 | July 2023As country after country in the European Union is called to respond to the current challenge of our time—high inflation and declining real wages—governments must engage in a transformative agenda and go beyond emergency energy vouchers and income support cash-transfers. And if the goal is to lead the way to a resilient and sustainable European Union, business as usual will not do. The share of wages to GDP has been declining since the late 1970s, deregulation of labor markets has increased insecurity and precariousness, and, among ordinary working people, a sense of uncertainty, disenfranchisement, and mistrust in governing institutions is prevalent. A thorough re-evaluation of policies is needed. In response to the deterioration of living standards, a guarantee of minimum wages adequate to secure a decent living standard should be a starting point; a permanent policy of automatic adjustment of wages to inflation rates in all member states should be promoted; and strengthening collective bargaining agreements ought to be re-invigorated for a fair sharing of productivity between wages and profits. An EU Job Guarantee should be at the center of this policy transformation. This bold agenda, advocated in this paper, can mobilize people to regain trust that a Social Europe is possible.Download:Associated Program:Author(s):Related Topic(s):
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Working Paper No. 997 | December 2021We analyze the extent to which occupational identity is conducive to worker well-being. Using a unique survey dataset of individuals working in the German skilled crafts and trades (2017–18, n=757), we use a novel occupational identity measure that captures identity more broadly than just referring to organizational identification and social group membership, but rather comprises personal and relational elements inherent in one’s work. The latter are linked to significant social interactions a worker has in their job and the former to specific work characteristics of the work conducted itself. We find that higher job satisfaction is related to a stronger sense of occupational identity in our sample. This relationship is quite sizable and robust across model specifications, whereas income is not associated with job satisfaction in most models. Occupational identity is positively associated with a number of work characteristics, viz. task significance, task and skill variety, as well as social support, and our analysis shows that identity mediates the influence of these characteristics with regard to job satisfaction.
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Working Paper No. 981 | January 2021
Lessons from Hyman P. Minsky
The job guarantee is a viable policy option for tackling both unemployment and underemployment. Hyman P. Minsky was one of the seminal writers on this subject. The first part of this working paper provides a survey of Minsky’s writings to identify what kind of jobs he had in mind when recommending employer-of-last-resort policies. Minsky favored: (1) jobs increasing socially useful output, providing all of society better public services and goods; (2) jobs guaranteed by the public sector on a project-by-project basis at a minimum wage; (3) jobs in the places where people need them; and (4) jobs taking the people that need them as they are. The second part of the paper suggests policy recommendations for today’s economy. As long as the COVID-19 pandemic still rages on, a targeted public job guarantee program can assist in the social provisioning and distribution of food, shelter, and medical services. After the pandemic, a public job guarantee can reduce poverty and inequality, and bring about a more democratic, sustainable, and socially cohesive economic system.Download:Associated Program:Author(s):Daniel HaimRelated Topic(s): -
Working Paper No. 976 | November 2020This paper consists of three economic literature review essays that survey the Palestinian labor market during the last three decades. The first essay examines the economic return to schooling since 1981 until the recent period, taking into consideration the major shocks that the Palestinian economy experienced, such as the First and Second Palestinian Intifadas (1987–93 and 2000–5), respectively, and the establishment of the Palestinian National Authority in 1993. A special focus is laid on overcoming the potential endogeneity arising from the schooling coefficient. The second essay discusses the economic costs of several conflict measures (e.g., time and geographical variation in fatalities and other conflict incidents, days under curfews, checkpoints, movement restrictions, and substitution of foreigner workers for Palestinian labor) on the labor market and human capital. Earnings and unemployment are the main labor market indicators, while the human capital impact was assessed by educational attainment. The third essay sheds light on the wage differential in the Palestinian labor market due to geographical and employment sector factors.Download:Associated Program:Author(s):Related Topic(s):
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Working Paper No. 963 | July 2020The COVID-19 pandemic seemingly appeared out of nowhere but changed nearly everything. As the pandemic unfolded, industries deemed nonessential were leveled. Many occupations in these industries are low-wage, and women constitute a greater share of America’s low-wage labor force than men. Even as some workers were able to do their jobs from their homes, a high proportion of “essential workers” were African American, other people of color, women, and an intersection of these groups—women of color. The goal of this paper is to closely examine the contours, depth, and causes of COVID-19’s impact on Black women’s employment in the United States through the lenses of both feminist economic theory and stratification economics.
The data appendix for Holder, Jones, and Masterson, "The Early Impact of COVID-19 on Job Losses Among Black Women in the United States," forthcoming in Feminist Economics is available here. This appendix includes detailed tables of major labor force indicators by race and sex; employment by race, sex, and industry and occupation; and unemployment by race and sex for early 2020.
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Policy Note 2020/4 | May 2020The ongoing job losses, already numbering in the tens of millions, and the mass unemployment that will remain once the COVID-19 crisis has passed are of our own making, argues Pavlina R. Tcherneva, created by our inability to conceive of policies that protect and create jobs on demand. There is another option: instead of capitulating to a world of guaranteed unemployment, we can demand policies that guarantee employment. During the pandemic, the government can protect jobs by acting as a kind of employer of last resort, while in the post-pandemic world it can create jobs directly via mass mobilization and a job guarantee. In this environment, backstopping payrolls, mass mobilization, and the job guarantee are three different but organically linked policies that aim to secure the right to decent, useful, and remunerative employment opportunities for all.Download:Associated Program:Author(s):Related Topic(s):
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Working Paper No. 949 | February 2020This paper extends the empirical stock-flow consistent (SFC) literature through the introduction of distributional features and labor market institutions in a Godley-type empirical SFC model. In particular, labor market institutions, such as the minimum wage and the collective bargaining coverage rate, are considered as determinants of the wage share and, in turn, of the distribution of national income. Thereby, the model is able to examine both the medium-term stability conditions of the economy via the evolution of the sectoral financial balances and the implications of functional income distribution on the growth prospects of the economy at hand. The model is then applied to the Greek economy. The empirical results indicate that the Greek economy has a significant structural competitiveness deficit, while the institutional regime is likely debt-led. The policies implemented in the context of the economic adjustment programs were highly inappropriate, triggering private sector insolvency. A minimum wage increase is projected to have a positive impact on output growth and employment. However, policies that would enhance the productive sector’s structural competitiveness are required in order to ensure the growth prospects of the Greek economy.Download:Associated Program(s):Related Topic(s):
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Working Paper No. 946 | February 2020
A Comment on Autor and Salomons
We show that Autor and Salomons’ (2017, 2018) analysis of the impact of technical progress on employment growth is problematic. When they use labor productivity growth as a proxy for technical progress, their regressions are quasi-accounting identities that omit one variable of the identity. Consequently, the coefficient of labor productivity growth suffers from omitted-variable bias, where the omitted variable is known. The use of total factor productivity (TFP) growth as a proxy for technical progress does not solve the problem. Contrary to what the profession has argued for decades, we show that this variable is not a measure of technical progress. This is because TFP growth derived residually from a production function, together with the conditions for producer equilibrium, can also be derived from an accounting identity without any assumption. We interpret TFP growth as a measure of distributional changes. This identity also indicates that Autor and Salomons’ estimates of TFP growth’s impact on employment growth are biased due to the omission of the other variables in the identity. Overall, we conclude that their work does not shed light on the question they address.Download:Associated Program(s):Author(s):Related Topic(s): -
Working Paper No. 941 | December 2019This paper measures the wage differential between Palestinian non-refugees and Palestinian refugees in the West Bank and Gaza over the years 1999–2012. First, the main individual and occupational differences between the two groups in the two regions are presented. Then, the wage differential is decomposed into two components: a “human capital effect, explained part” and a “coefficient effect, unexplained part.” Second, findings suggest that though the wage gap has always existed and favored non-refugees in the West Bank, it has a more substantial impact among low-skilled workers and those in the private sector. Furthermore, most of this gap is attributed to the unexplained part of the wage decomposition model. In Gaza, the wage gap favored refugee workers. Most of this wage gap among unskilled workers is attributed to the endowment/human capital effect, while for skilled workers most of the wage gap is due to the unexplained part—the “coefficient effect”—after 2006.Download:Associated Program:Author(s):Related Topic(s):
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Working Paper No. 939 | October 2019
The Case of Ghana
Violence against women and girls (VAWG) is a widely recognized human rights violation with serious consequences for the health and well-being of women and their families. However, the wider ramifications of VAWG for businesses, communities, economies, and societies are only recently being recognized. Despite this recognition, there are few studies exploring how the economic and social impacts of VAWG affect economic growth, development, and social stability. In this paper, applying the social accounting approach, we outline the ripple effects of VAWG from the individual micro-level impacts to the macroeconomy. Our analysis shows the loss due to VAWG amounts to about 0.94 percent of Ghanaian GDP and is a permanent invisible leakage from the circular flow of the economy. The analysis also shows that the loss due to violence is not just a one-off leakage from the macroeconomic circular flow and explores the potential consequences of the multiplier loss due to VAWG over a period of time. The cumulative loss is sizeable and inflicts a premium on GDP growth over time—in simple terms, inaction today in addressing VAWG for cost considerations will impose a larger cost premium on economic growth, which will constrain tomorrow’s resources.Download:Associated Program(s):Author(s):Srinivas Raghavendra Kijong Kim Sinead Ashe Mrinal Chadha Felix Asante Petri T. Piiroinen Nata DuvvuryRelated Topic(s):
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