Bruce Fallick - Academia.edu (original) (raw)

Papers by Bruce Fallick

In the FOMC statements following the September and October meetings, the Committee stated that it... more In the FOMC statements following the September and October meetings, the Committee stated that it will be looking for a substantial improvement in the outlook for the labor market in deciding whether to continue or expand its purchases of longer-term assets. In addition, the Committee has been considering including language in the FOMC statement indicating that the lift-off of the funds rate is unlikely to commence until certain conditions prevail, such as the unemployment rate falling below a certain level. Both of these aspects of the FOMC statement elevate the explicit role of labor market conditions in determining the future course of policy and, in doing so, raise some important issues for policymakers to consider.

Labor supply growth depends crucially not only on population growth, but on the likelihood that t... more Labor supply growth depends crucially not only on population growth, but on the likelihood that the members of that population participate in the labor force. The probability that an individual participates in the labor force declines precipitously beyond age 50. This feature of labor supply suggests that ongoing shifts in the age distribution of the U.S. population will put substantial downward pressure on the aggregate labor force participation rate. Although forecasts of such pressure rely on population projections, and their sensitivity to assumptions about mortality rates and immigration, differences in population projections have relatively little influence on the degree of downward pressure on the participation rate. The extent to which population aging will likely depress participation therefore rests critically on how the participation rates of individual age groups evolve. In the end, substantial increases in participation across almost all age groups of both genders would...

SSRN Electronic Journal, 2007

The probability that an individual participates in the labor force declines precipitously beyond ... more The probability that an individual participates in the labor force declines precipitously beyond age 50. This feature of labor supply suggests that ongoing shifts in the age distribution of the population will put substantial downward pressure on the aggregate labor force participation rate. However, the aggregate rate is also influenced by trends within age groups. Neglecting to model both within-group influences and shifting population shares will doom any estimate of aggregate labor supply. We develop a model that identifies birth cohorts' propensities to participate, uses these propensities to derive age-specific trends in participation rates, and explicitly incorporates the influence of shifting population shares in estimating aggregate labor force participation.

SSRN Electronic Journal, 2014

SSRN Electronic Journal, 1998

The popular impression that employment in the U.S. has become more part-time in recent years may ... more The popular impression that employment in the U.S. has become more part-time in recent years may be driven by a tendency for faster-growing industries to use relatively more part-time work. This paper documents this association for the period 1983-1993, and demonstrates that it is robust to questions about how to measure industry growth and parttime intensity. A similar relationship can be discerned in several other countries. However, judging from data from the 1930s on, the association does not emerge clearly in the United States until the 1980s, suggesting that part-time work and industry growth are not intrinsically related. Moreover, both the relative growth rates and the relative part-time intensities of industries have changed markedly over the postwar period. There is no indication that part-time work in fast-growing industries is more likely to be involuntary, although this may be true for entering workers, nor has there been any trend in that direction.

NOTE: Staff working papers in the Finance and Economics Discussion Series (FEDS) are preliminary ... more NOTE: Staff working papers in the Finance and Economics Discussion Series (FEDS) are preliminary materials circulated to stimulate discussion and critical comment. The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Board of Governors. References in publications to the Finance and Economics Discussion Series (other than acknowledgement) should be cleared with the author(s) to protect the tentative character of these papers.

SSRN Electronic Journal, 2014

This paper describes a dynamic factor model of 19 U.S. labor market indicators, covering the broa... more 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 from private payroll employment and the unemployment rate. Other infl uential indicators include the insured unemployment rate, consumers' perceptions of job availability, and help-wanted advertising. Through the lens of the LMCI, labor market conditions have improved at a moderate pace over the past several years, albeit with some notable variation along the way. In addition, from the perspective of the model, the unemployment rate declined a bit faster over the past two years than was consistent with the other indicators.

SSRN Electronic Journal, 2001

In order to measure the flexibility of the labor market, evaluate the job-worker matching process... more In order to measure the flexibility of the labor market, evaluate the job-worker matching process, and model business-cycle dynamics, economists have studied the flows of workers across the labor market states of employment, unemployment, and not in the labor force. One important flow that has been poorly measured is the movement of workers from one employer to another without any significant intervening period of nonemployment. This paper exploits the "dependent interviewing" techniques used in the Current Population Survey since 1994 to estimate such flows. We find that they are large, and their omission significantly understates the degree of mobility in the labor market. In 1999, for example, on average more than 4,000,000 workers changed employers from one month to the next, about the same number as left the labor force from employment and more than twice the number moved from employment to unemployment. Close to half of the new jobs started in 1999 represented employer changes, as did close to half of the separations. Consistent with previous studies of younger workers, teenagers exhibit the highest rates of employer-switching, and the rate declines through about age 40. However, even among prime-aged workers, about two percent change employers each month. Contrary to the implications of many business cycle models, we find no evidence that employerto-employer flows are procyclical, at least not as the labor market tightened between 1994 and 2000. This finding raises questions about the ways in which stylized facts about labor market flows have been used. 1 Recognizing the empirical importance of quits (see note 2), the search models in Parsons (1973) and Burdett (1978) allowed for on-the-job search. 2 Mattila (1974) found that about 60 percent of workers line up new jobs before leaving their old jobs; of course, not all workers moving directly from one employer to another without any intervening period of unemployment quit their prior job. See section V below.

SSRN Electronic Journal, 2004

Despite the importance of employer-to-employer (EE) flows to our understanding of labor market an... more Despite the importance of employer-to-employer (EE) flows to our understanding of labor market and business cycle dynamics, the literature has lacked a comprehensive and representative measure of the size and character of these flows. To construct the first reliable measures of EE flows for the United States, this paper exploits the "dependent interviewing" techniques introduced in the Current Population Survey in 1994. The paper concludes that EE flows are large: On average 2.6 percent of employed persons change employers each month, a flow more than twice as large as that from employment to unemployment. Indeed, on-the-job search appears to be an important element in hiring, as nearly two-fifths of new jobs started between 1994 and 2003 represented employer changes. EE flows are also markedly procyclical, although the cyclicality is concentrated around the recession: EE flows did not increase as the labor market tightened between 1994 and 2000, but they did drop sharply as the labor market loosened during the period 2001 through 2003. We view the uneven cyclical pattern of EE flows as a pattern to be incorporated into future models. 2 Recognizing the empirical importance of quits (see note 3), the search models in Parsons (1973) and Burdett (1978) allowed for on-the-job search in their models. 3 Mattila (1974) found that about 60 percent of workers lined up new jobs before leaving their old jobs; of course, not all workers moving more-or-less directly from one employer to another quit their previous job. See section 5 below. 4 The potential for large employer-to-employer flows is also a critical premise underlying the literature that seeks to explain wage contracts as a way to reduce turnover, including an important class of efficiency-wage models (for example, Bester 1989), and of models of implicit contracts whose enforcement depends upon internal reputation (for example, Bull 1987). Ironically, such models often (by assumption) rule out quitting to employment in order to concentrate on other incentive effects, but employer-to-employer flows are the most natural "punishment" a firm faces for any loss of reputation among its existing work force.

The earnings of workers are reduced for many years after being displaced from their jobs, and tho... more The earnings of workers are reduced for many years after being displaced from their jobs, and those workers and their families face increased risk of other problems as well. The ills suffered by displaced workers motivated several recent expansions of government programs, including the unemployment insurance system, and have spurred calls for wage insurance that would provide longerrun earnings replacement. However, while the magnitude of the losses is relatively clear, the theory of why displacement matters is scattered and somewhat undeveloped. Much of the policy discussion appears to interpret displacementinduced losses through the lens of specifi c human capital theory, and there is considerable empirical support for that model. But there are several other theories of why job displacement is costly. This paper reviews theories of costly job displacement and discusses their consistency with the available empirical evidence. We fi nd that theories of human capital and matching are an important perspective on the losses of displaced workers, but we cannot rule out important roles for other theories, some of which suggest different policy responses.

Working paper (Federal Reserve Bank of Cleveland)

We examine persistence in employment-to-population ratios in excess of that implied by persistenc... more We examine persistence in employment-to-population ratios in excess of that implied by persistence in aggregate labor market conditions, among lesseducated individuals using state-level data for the United States. Dynamic panel regressions and local projections indicate a moderate degree of excess persistence, which dissipates within three years. We find no significant asymmetry between the excess persistence of high vs. low employment rates. The cumulative effect of excess persistence in the business cycle surrounding the 2001 recession was mildly positive, while the effect in the cycle surrounding the 2008-09 recession was decidedly negative. Simulations suggest that the lasting employment benefits of temporarily running a "high-pressure" economy are small.

Comment Gary Burtless This chapter traces out the effects of population aging on a few key labor ... more Comment Gary Burtless This chapter traces out the effects of population aging on a few key labor market variables: the labor force participation rate; the unemployment rate; Gary Burtless is a senior fellow in economic studies and the John C. and Nancy D. Whitehead Chair at the Brookings Institution.

The Review of Economics and Statistics, 1994

ABSTRACT

The Review of Economics and Statistics, 1991

The rate of transition from unemployment to re-employment for a sample of displaced workers is es... more The rate of transition from unemployment to re-employment for a sample of displaced workers is estimated using a semiparametric specification which allows the effects of unemployment insurance benefits to vary over time. Three results which would be missed by more restrictive specifications demonstrate the value of this approach: (1) The effects of UI benefits decline and eventually disappear as the date of expiration approaches, (2) Expiration of UI benefits are an inadequate explanation of the spikes commonly observed in nonparametric sample hazard rates for re-employment, (3) UI benefits do not significantly affect the rate at which a displaced worker becomes re-employed in his or her previous industry, but reduce the rate for transitions to other industries. Copyright 1991 by MIT Press.

Review of Economics and Statistics, 2007

Workers who lose their jobs can become re-employed either by being recalled to their previous emp... more Workers who lose their jobs can become re-employed either by being recalled to their previous employers or by finding new jobs. Workers' chances for recall should influence their job search strategies, so the rates of exit from unemployment by these two routes should be directly related. We solve a job search model to establish, in theory, a negative relationship between the recall and new job hazard rates. We look for evidence in the PSID by estimating a semi-parametric competing risks model with explicitly related hazards. We find only a small negative behavioral relationship between recall and new job hazard rates.

Journal of Labor Economics, 1999

Industrial and Labor Relations Review, 1996

This article reviews the empirical literature on job displacement. Job displacement is widespread... more This article reviews the empirical literature on job displacement. Job displacement is widespread and strongly countercyclical (tending to peak during economic downturns), but concentrated in industries and states that are doing poorly, relative either to other industries and states or to their own prior performance. Displaced workers experience more nonemployment than do nondisplaced workers, but the difference fades after about four years. In contrast, earnings losses of displaced workers are large and persistent. Outcomes for all displaced workers are heavily influenced by broader economic conditions, and are affected very little by workers' demographic characteristics. The effects of advance notice are not yet clear.

The Review of Economics and …, 2006

JOB-HOPPING IN SILICON VALLEY: SOME EVIDENCE CONCERNING ... human capital is general and when fir... more JOB-HOPPING IN SILICON VALLEY: SOME EVIDENCE CONCERNING ... human capital is general and when firms retain full control over their trade secrets and technology. ... Using the answer to this routing question, we can identify stayers (workers employed in two consecutive ...

Economic Inquiry, 1992

I analyze job search behavior of unemployed workers who may search for work in several sectors of... more I analyze job search behavior of unemployed workers who may search for work in several sectors of the economy. Although reservation wages are equal in each sector, workers search more intensively in sectors with lower layof rates. Thus workers more quickly find and accept jobs with more security.

In the FOMC statements following the September and October meetings, the Committee stated that it... more In the FOMC statements following the September and October meetings, the Committee stated that it will be looking for a substantial improvement in the outlook for the labor market in deciding whether to continue or expand its purchases of longer-term assets. In addition, the Committee has been considering including language in the FOMC statement indicating that the lift-off of the funds rate is unlikely to commence until certain conditions prevail, such as the unemployment rate falling below a certain level. Both of these aspects of the FOMC statement elevate the explicit role of labor market conditions in determining the future course of policy and, in doing so, raise some important issues for policymakers to consider.

Labor supply growth depends crucially not only on population growth, but on the likelihood that t... more Labor supply growth depends crucially not only on population growth, but on the likelihood that the members of that population participate in the labor force. The probability that an individual participates in the labor force declines precipitously beyond age 50. This feature of labor supply suggests that ongoing shifts in the age distribution of the U.S. population will put substantial downward pressure on the aggregate labor force participation rate. Although forecasts of such pressure rely on population projections, and their sensitivity to assumptions about mortality rates and immigration, differences in population projections have relatively little influence on the degree of downward pressure on the participation rate. The extent to which population aging will likely depress participation therefore rests critically on how the participation rates of individual age groups evolve. In the end, substantial increases in participation across almost all age groups of both genders would...

SSRN Electronic Journal, 2007

The probability that an individual participates in the labor force declines precipitously beyond ... more The probability that an individual participates in the labor force declines precipitously beyond age 50. This feature of labor supply suggests that ongoing shifts in the age distribution of the population will put substantial downward pressure on the aggregate labor force participation rate. However, the aggregate rate is also influenced by trends within age groups. Neglecting to model both within-group influences and shifting population shares will doom any estimate of aggregate labor supply. We develop a model that identifies birth cohorts' propensities to participate, uses these propensities to derive age-specific trends in participation rates, and explicitly incorporates the influence of shifting population shares in estimating aggregate labor force participation.

SSRN Electronic Journal, 2014

SSRN Electronic Journal, 1998

The popular impression that employment in the U.S. has become more part-time in recent years may ... more The popular impression that employment in the U.S. has become more part-time in recent years may be driven by a tendency for faster-growing industries to use relatively more part-time work. This paper documents this association for the period 1983-1993, and demonstrates that it is robust to questions about how to measure industry growth and parttime intensity. A similar relationship can be discerned in several other countries. However, judging from data from the 1930s on, the association does not emerge clearly in the United States until the 1980s, suggesting that part-time work and industry growth are not intrinsically related. Moreover, both the relative growth rates and the relative part-time intensities of industries have changed markedly over the postwar period. There is no indication that part-time work in fast-growing industries is more likely to be involuntary, although this may be true for entering workers, nor has there been any trend in that direction.

NOTE: Staff working papers in the Finance and Economics Discussion Series (FEDS) are preliminary ... more NOTE: Staff working papers in the Finance and Economics Discussion Series (FEDS) are preliminary materials circulated to stimulate discussion and critical comment. The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Board of Governors. References in publications to the Finance and Economics Discussion Series (other than acknowledgement) should be cleared with the author(s) to protect the tentative character of these papers.

SSRN Electronic Journal, 2014

This paper describes a dynamic factor model of 19 U.S. labor market indicators, covering the broa... more 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 from private payroll employment and the unemployment rate. Other infl uential indicators include the insured unemployment rate, consumers' perceptions of job availability, and help-wanted advertising. Through the lens of the LMCI, labor market conditions have improved at a moderate pace over the past several years, albeit with some notable variation along the way. In addition, from the perspective of the model, the unemployment rate declined a bit faster over the past two years than was consistent with the other indicators.

SSRN Electronic Journal, 2001

In order to measure the flexibility of the labor market, evaluate the job-worker matching process... more In order to measure the flexibility of the labor market, evaluate the job-worker matching process, and model business-cycle dynamics, economists have studied the flows of workers across the labor market states of employment, unemployment, and not in the labor force. One important flow that has been poorly measured is the movement of workers from one employer to another without any significant intervening period of nonemployment. This paper exploits the "dependent interviewing" techniques used in the Current Population Survey since 1994 to estimate such flows. We find that they are large, and their omission significantly understates the degree of mobility in the labor market. In 1999, for example, on average more than 4,000,000 workers changed employers from one month to the next, about the same number as left the labor force from employment and more than twice the number moved from employment to unemployment. Close to half of the new jobs started in 1999 represented employer changes, as did close to half of the separations. Consistent with previous studies of younger workers, teenagers exhibit the highest rates of employer-switching, and the rate declines through about age 40. However, even among prime-aged workers, about two percent change employers each month. Contrary to the implications of many business cycle models, we find no evidence that employerto-employer flows are procyclical, at least not as the labor market tightened between 1994 and 2000. This finding raises questions about the ways in which stylized facts about labor market flows have been used. 1 Recognizing the empirical importance of quits (see note 2), the search models in Parsons (1973) and Burdett (1978) allowed for on-the-job search. 2 Mattila (1974) found that about 60 percent of workers line up new jobs before leaving their old jobs; of course, not all workers moving directly from one employer to another without any intervening period of unemployment quit their prior job. See section V below.

SSRN Electronic Journal, 2004

Despite the importance of employer-to-employer (EE) flows to our understanding of labor market an... more Despite the importance of employer-to-employer (EE) flows to our understanding of labor market and business cycle dynamics, the literature has lacked a comprehensive and representative measure of the size and character of these flows. To construct the first reliable measures of EE flows for the United States, this paper exploits the "dependent interviewing" techniques introduced in the Current Population Survey in 1994. The paper concludes that EE flows are large: On average 2.6 percent of employed persons change employers each month, a flow more than twice as large as that from employment to unemployment. Indeed, on-the-job search appears to be an important element in hiring, as nearly two-fifths of new jobs started between 1994 and 2003 represented employer changes. EE flows are also markedly procyclical, although the cyclicality is concentrated around the recession: EE flows did not increase as the labor market tightened between 1994 and 2000, but they did drop sharply as the labor market loosened during the period 2001 through 2003. We view the uneven cyclical pattern of EE flows as a pattern to be incorporated into future models. 2 Recognizing the empirical importance of quits (see note 3), the search models in Parsons (1973) and Burdett (1978) allowed for on-the-job search in their models. 3 Mattila (1974) found that about 60 percent of workers lined up new jobs before leaving their old jobs; of course, not all workers moving more-or-less directly from one employer to another quit their previous job. See section 5 below. 4 The potential for large employer-to-employer flows is also a critical premise underlying the literature that seeks to explain wage contracts as a way to reduce turnover, including an important class of efficiency-wage models (for example, Bester 1989), and of models of implicit contracts whose enforcement depends upon internal reputation (for example, Bull 1987). Ironically, such models often (by assumption) rule out quitting to employment in order to concentrate on other incentive effects, but employer-to-employer flows are the most natural "punishment" a firm faces for any loss of reputation among its existing work force.

The earnings of workers are reduced for many years after being displaced from their jobs, and tho... more The earnings of workers are reduced for many years after being displaced from their jobs, and those workers and their families face increased risk of other problems as well. The ills suffered by displaced workers motivated several recent expansions of government programs, including the unemployment insurance system, and have spurred calls for wage insurance that would provide longerrun earnings replacement. However, while the magnitude of the losses is relatively clear, the theory of why displacement matters is scattered and somewhat undeveloped. Much of the policy discussion appears to interpret displacementinduced losses through the lens of specifi c human capital theory, and there is considerable empirical support for that model. But there are several other theories of why job displacement is costly. This paper reviews theories of costly job displacement and discusses their consistency with the available empirical evidence. We fi nd that theories of human capital and matching are an important perspective on the losses of displaced workers, but we cannot rule out important roles for other theories, some of which suggest different policy responses.

Working paper (Federal Reserve Bank of Cleveland)

We examine persistence in employment-to-population ratios in excess of that implied by persistenc... more We examine persistence in employment-to-population ratios in excess of that implied by persistence in aggregate labor market conditions, among lesseducated individuals using state-level data for the United States. Dynamic panel regressions and local projections indicate a moderate degree of excess persistence, which dissipates within three years. We find no significant asymmetry between the excess persistence of high vs. low employment rates. The cumulative effect of excess persistence in the business cycle surrounding the 2001 recession was mildly positive, while the effect in the cycle surrounding the 2008-09 recession was decidedly negative. Simulations suggest that the lasting employment benefits of temporarily running a "high-pressure" economy are small.

Comment Gary Burtless This chapter traces out the effects of population aging on a few key labor ... more Comment Gary Burtless This chapter traces out the effects of population aging on a few key labor market variables: the labor force participation rate; the unemployment rate; Gary Burtless is a senior fellow in economic studies and the John C. and Nancy D. Whitehead Chair at the Brookings Institution.

The Review of Economics and Statistics, 1994

ABSTRACT

The Review of Economics and Statistics, 1991

The rate of transition from unemployment to re-employment for a sample of displaced workers is es... more The rate of transition from unemployment to re-employment for a sample of displaced workers is estimated using a semiparametric specification which allows the effects of unemployment insurance benefits to vary over time. Three results which would be missed by more restrictive specifications demonstrate the value of this approach: (1) The effects of UI benefits decline and eventually disappear as the date of expiration approaches, (2) Expiration of UI benefits are an inadequate explanation of the spikes commonly observed in nonparametric sample hazard rates for re-employment, (3) UI benefits do not significantly affect the rate at which a displaced worker becomes re-employed in his or her previous industry, but reduce the rate for transitions to other industries. Copyright 1991 by MIT Press.

Review of Economics and Statistics, 2007

Workers who lose their jobs can become re-employed either by being recalled to their previous emp... more Workers who lose their jobs can become re-employed either by being recalled to their previous employers or by finding new jobs. Workers' chances for recall should influence their job search strategies, so the rates of exit from unemployment by these two routes should be directly related. We solve a job search model to establish, in theory, a negative relationship between the recall and new job hazard rates. We look for evidence in the PSID by estimating a semi-parametric competing risks model with explicitly related hazards. We find only a small negative behavioral relationship between recall and new job hazard rates.

Journal of Labor Economics, 1999

Industrial and Labor Relations Review, 1996

This article reviews the empirical literature on job displacement. Job displacement is widespread... more This article reviews the empirical literature on job displacement. Job displacement is widespread and strongly countercyclical (tending to peak during economic downturns), but concentrated in industries and states that are doing poorly, relative either to other industries and states or to their own prior performance. Displaced workers experience more nonemployment than do nondisplaced workers, but the difference fades after about four years. In contrast, earnings losses of displaced workers are large and persistent. Outcomes for all displaced workers are heavily influenced by broader economic conditions, and are affected very little by workers' demographic characteristics. The effects of advance notice are not yet clear.

The Review of Economics and …, 2006

JOB-HOPPING IN SILICON VALLEY: SOME EVIDENCE CONCERNING ... human capital is general and when fir... more JOB-HOPPING IN SILICON VALLEY: SOME EVIDENCE CONCERNING ... human capital is general and when firms retain full control over their trade secrets and technology. ... Using the answer to this routing question, we can identify stayers (workers employed in two consecutive ...

Economic Inquiry, 1992

I analyze job search behavior of unemployed workers who may search for work in several sectors of... more I analyze job search behavior of unemployed workers who may search for work in several sectors of the economy. Although reservation wages are equal in each sector, workers search more intensively in sectors with lower layof rates. Thus workers more quickly find and accept jobs with more security.