Economic Shocks and Inequality in the Labor Market
Paper Session
Sunday, Jan. 5, 2025 1:00 PM - 3:00 PM (PST)
- Chair: Kevin Lang, Boston University
Local Labor Markets, Endogenous Task Distributions, and Import Competition
Abstract
While the ``China Shock'' has been largely viewed as a shock to the low-skill labor market, the majority of Chinese import competition came through the manufacturing industries which were most intensive in their use of analytical tasks. We consider the effects separately of import competition from analytical and non-analytical industries. Import competition in analytical manufacturing had employment effects only on high skill workers. Import competition in the non-analytical sector affected workers of all skill levels, but had a relatively smaller effect than competition for the analytical sector. When we explore the mechanisms for these disparate findings, we find that analytical imports reduced analytical jobs in the economy, while non-analytical imports increased analytical jobs, especially outside of manufacturing. In other words, high skill workers were able to shift into new analytical opportunities in response to the China shock. Because analytical manufacturing imports affected only high skill manufacturing workers, we find strong negative wage effects from analytical import competition.Fissured Firms and Worker Outcomes
Abstract
We consider how firms' organization of production relates to workers' wages. Using matched employer-employee data from Portugal, we document that firms differ starkly in their occupational employment concentration, even within detailed industries, with some firms employing workers across a broad range of occupations and others being much more specialized. These differences are robustly predictive of wages: a worker employed in a specialized, i.e. 'fissured' firm, earns less than that same worker employed in a less specialized firm. This wage penalty for working in a fissured firm is observed across occupations of all skill levels. Firm specialization helps account for the role of firms in inequality, as specialization is strongly negatively related to estimated AKM firm fixed effects. Around two-thirds of the wage penalty from fissuring is explained by differences in firm productivity. Fissured firms also engage in lower rates of rent-sharing conditional on productivity, accounting for around one-quarter of the difference in wage premia between high- and low-specialization firms. Finally, we show that being employed in a specialized firm is also associated with worse longer-term career outcomes for workers.Labor Market Racial Inequalities in the Aftermath of Covid-19
Abstract
This paper studies the evolution of recent post-pandemic labor market trends for men of different racial groups, and their implications for wage inequalities in the US. While workers belonging to minority groups bared a heavier burden during the initial period of jobs losses in the US, their wage gap with white workers has decreased after the pandemic. I show that changes in the composition of the workforce for the different groups did not play a role in explaining the narrowing of the wage gap. Both Black and Hispanic workers benefit from the wage compression observed in the post-pandemic years, driven by the increase in wages for the lowest quartile of the wage distribution. Black men are the only group to also exhibit an increase in wages in the top half of the wage distribution. I use data on job vacancies to show that when labor market tightness increases significantly, labor market power for minority groups becomes more similar to that of white workers.Discussant(s)
Rachel Schuh
,
Federal Reserve Bank of New York
Lorenzo Lagos
,
Brown University
Victor Hernandez Martinez
,
Federal Reserve Bank of Cleveland
Vittoria Dicandia
,
Federal Reserve Bank of Cleveland
JEL Classifications
- J3 - Wages, Compensation, and Labor Costs
- J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers