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Lecture 5: More on Labor Supply

Lecture 5: More on Labor Supply. Part 1: CPS Data. Wage, Income and Hours Data: Current Population Survey (CPS). Continue our theme of introducing you to major U.S. data. Current Population Survey: High quality data extends back to the 1960s. Large samples of U.S. households.

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Lecture 5: More on Labor Supply

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  1. Lecture 5: More on Labor Supply

  2. Part 1:CPS Data

  3. Wage, Income and Hours Data: Current Population Survey (CPS) Continue our theme of introducing you to major U.S. data. Current Population Survey: High quality data extends back to the 1960s. Large samples of U.S. households. Panel Dimension (4 months in, 8 months out, 4 months in). Detailed information about labor market status (every month). Detailed information about hours asked every month. Detailed information about hours/earnings – asked less frequently. Large sample sizes allow for analysis by U.S. states.

  4. Part 2:Trends in The Natural Rate of Unemployment

  5. Trends in The Natural Rate In Unemployment Did labor market conditions improve during the 1980s and 1990s? - Unemployment rates fell substantially Related concept: Do income or substitution effects dominate with respect to labor supply decisions? Must reads: Juhn, Murphy, and Topel “

  6. Juhn, Murphy, Topel: Evolution of Wage Inequality

  7. Real Wages Over Time

  8. Trends in Unemployment and Nonemployment

  9. Breakdown of the Nonemployed

  10. Breakdown of the Non-Participators: Rising Disability

  11. Rising Disability Among the Persistently Unemployed

  12. For a detailed analysis of the intersection of the role of disability and • labor supply, see: • “The Rise in the Disability Rolls and the Decline in Unemployment” • David Autor and Mark Duggan (QJE 2003) • Show that during recessions, the disability margin is much more relevant • now than it was during the 1980s (the benefits to the disabled are now • more comparable to unemployment benefits than before). Autor and Duggan

  13. Autor and Duggan

  14. More Juhn, Murphy, Topel

  15. Does the Unemployment Rate Tell the Whole Story?

  16. Increase in Long Term Non-employment Duration

  17. Increase in Long Term Unemployment Duration

  18. Unemployment Trends Throughout the Wage Distribution

  19. Nonparticipation Trends Throughout the Wage Distribution

  20. Non-employment Trends Throughout the Wage Distribution

  21. Income or Substitution Effects?

  22. Nonparticipation Trends Throughout the Wage Distribution

  23. Longterm Nonparticipation Trends Throughout the Wage Distribution

  24. Decline in unemployment rate may not represent accurately the trends in • labor market performance. • Large decline in participation rates for men. • Non employment has declined much less than unemployment. • The decline is much more pronounced for low wage men. • Does it tell us substitution effects are important? What about changes in • transfers? Conclusions

  25. Part 3:Rug Rat Race and Time Investments in Children

  26. Parental Time With Children By Education From Guryan, Hurst, and Kearney (JEP 2008) “Parental Education and Parental Time With Children”

  27. Parental Time With Children By Education

  28. Parental Time With Children By Education

  29. Parental Time With Children By Education

  30. Richer countries spend more time with children than poorer countries. • Within countries, high educated parents spend more time with children • relative to low education parents. More Facts

  31. Ramey and Ramey Facts

  32. Ramey and Ramey Facts

  33. Part 4:Regional Dynamics

  34. How Do Locations Respond to Local Shocks? Continue our theme about thinking about regional economics (house prices are one part of that). The direct mechanism: Mobility. What implications do mobility have on the response of labor supply, wages, and unemployment to local economic shocks? Some work: Blanchard/Katz (Brookings, ) Topel “Local Labor Markets” (JPE, 1986)

  35. Labor Supply Consider the Following Labor Market (Inelastic Labor Supply) Labor Demand

  36. Labor Supply Consider the Following Labor Market (Inelastic Labor Supply) Labor Demand In short run, adjustment takes place on wages (labor supply is less elastic in short run)

  37. Labor Supply Consider the Following Labor Market (Inelastic Labor Supply) Labor Demand In long run, adjustment takes place on N (labor supply is more elastic in long run)

  38. What is the Mechanism? In/out migration of workers…..

  39. Blanchard/Katz Facts: Persistence of Growth Rates

  40. Blanchard/Katz Facts: Cumulative Declines (relative to trend)

  41. Blanchard/Katz Facts: : Cumulative Declines (relative to trend)

  42. Blanchard/Katz Facts: : Cumulative Declines (relative to trend)

  43. Blanchard/Katz Facts: : Cumulative Declines (relative to trend)

  44. Blanchard/Katz Facts: : Cumulative Declines (relative to trend)

  45. Blanchard/Katz Facts: Persistence of Unemployment Rate?

  46. Blanchard/Katz Facts: Convergence of Wages

  47. Blanchard/Katz Facts: Unemployment vs. Growth

  48. Blanchard/Katz Facts: Growth vs. Wages

  49. Blanchard/Katz Facts: Unemployment vs. Wages

  50. Blanchard/Katz Facts: VAR of Negative Regional Shock

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