Robert G. Valletta

Inequality and Poverty in United States: The Effects of Rising Dispersion of Men's Earnings and Changing Family Behaviour

Using semiparametric density estimation techniques, we analyse the effect of rising dispersion of mens earnings and related changes in family behaviour on increasing inequality in the distribution of family income in the United States. For the period 1969-1989, the growing dispersion of mens earnings and changing family structure can account for most of the rise in family income inequality. By contrast, the increase in labour force participation by women offset this trend. Inequality grew at a slower rate in the 1990s than in earlier decades, largely because of stabilization in the relative earnings of men from low-income families.

Do extended unemployment benefits lengthen unemployment spells? evidence from recent cycles in the U.S. labor market

In response to the recession of 2007–2009, the maximum duration of U.S. unemployment insurance (UI) benefits was extended to an unprecedented 99 weeks. We exploit variation in the timing and size of the UI benefit extensions across states to estimate their overall impact on unemployment exits, comparing the most recent and prior extension episodes. We find a small but statistically significant increase in labor force attachment due to extended UI in both periods with little or no impact on job finding. Despite these small estimates, extended benefits can account for a substantial share of the increase in long-term unemployment.

THE INS AND OUTS OF POVERTY IN ADVANCED ECONOMIES: GOVERNMENT POLICY AND POVERTY DYNAMICS IN CANADA, GERMANY, GREAT BRITAIN, AND THE UNITED STATES

Comparative analysis of poverty dynamics - transitions and persistence - can yield important insights about the nature of poverty and the effectiveness of alternative policy responses. This manuscript compares poverty dynamics in four advanced industrial countries (Canada, unified Germany, Great Britain, and the United States) for overlapping six-year periods in the 1990s, focusing on the impact of government policies. The data indicate that relative to measured cross-sectional poverty rates, poverty persistence is higher in North America than in Europe. Most poverty transitions, and the prevalence of chronic poverty, are associated with employment instability and family dissolution in all four countries. However, government tax-and-transfer policies are more effective at reducing poverty persistence in Europe than in North America.

Modeling Earnings Measurement Error: A Multiple Imputation Approach

Recent survey validation studies suggest that measurement error in earnings data is pervasive and violates classical measurement error assumptions, and therefore may bias estimation of cross-section and longitudinal earnings models. We model the structure of earnings measurement error using data from the Panel Study of Income Dynamics Validation Study (PSDIVS). We then use Rubins (1987) multiple imputation techniques to estimate consistent earnings equations under non-classical earnings measurement error in the PSID. Our technique is readily generalized, and the empirical results demonstrate the potential importance of correcting for measurement error in earnings and related data, particularly during recessions.

The Labor Market in the Great Recession—An Update to September 2011

Since the end of the Great Recession in mid-2009, the unemployment rate has recovered slowly, falling by only 1 percentage point from its peak by September 2011. We find that the lackluster labor market recovery can be traced in large part to weakness in aggregate demand; only a small part seems attributable to increases in labor market frictions. This continued labor market weakness has led to the highest level of long-term unemployment in the postwar period and a blurring of the distinction between unemployment and nonparticipation in the labor force. We show that flows from nonparticipation to unemployment are important for understanding recent changes in the duration distribution of unemployment. Simulations that account for these flows suggest that the labor market is unlikely to be subject to high levels of structural long-term unemployment after aggregate demand recovers.

Why Has the U.S. Beveridge Curve Shifted Back? New Evidence Using Regional Data

The Beveridge curve depicts the empirical relationship between job vacancies and unemployment, which in turn reflects the underlying efficiency of the job matching process. Previous analyses of the Beveridge curve suggested deterioration in match efficiency during the 1970s and early 1980s, followed by improved match efficiency beginning in the late 1980s. This paper combines aggregate and regional data on job vacancies and unemployment to estimate the U.S. aggregate and regional Beveridge curves, focusing on the period 1976-2005. Using new data on job vacancies from the U.S. Bureau of Labor Statistics, the help-wanted advertising series that formed the basis of past work are modified to form synthetic job vacancy series at the national and regional level. The results suggest that a decline in the dispersion of employment growth across geographic areas contributed to a pronounced inward shift in the Beveridge curve since the late 1980s, reversing the earlier pattern identified by Abraham (1987) and reinforcing findings of favorable labor market trends in the 1990s (e.g., Katz and Krueger 1999).

Job Tenure And Joblessness Of Displaced Workers

Selective search where unemployed job losers confine their job seeking efforts to matches in the pre-separation sector has attracted considerable attention as a possible source of high and persistent unemployment. However, this idea is questionable. ...

The Ins and Outs of Poverty in Advanced Economies: Poverty Dynamics in Canada, Germany, Great Britain, and the United States

Comparative analysis of poverty dynamics - incidence, transitions, and persistence - can yield important insights about the nature of poverty and the effectiveness of alternative policy responses. This manuscript compares poverty dynamics in four advanced industrial countries (Canada, unified Germany, Great Britain, and the United States) for overlapping six-year periods in the 1990s. The data indicate that poverty persistence is higher in North America than in Europe; for example, despite high incidence, poverty in Great Britain is relatively transitory. Most poverty transitions, and the prevalence of chronic poverty, are associated with employment instability and family dissolution in all four countries. The results also suggest that differences in social policy are crucial for the observed differences in poverty incidence and persistence between Europe and North America.

Work, Health, And Insurance: A Shifting Landscape For Employers And Workers Alike

We examined the complex relationship among work, health, and health insurance, which has been affected by changing demographics and employment conditions in the United States. Stagnation or deterioration in employment conditions and wages for much of the workforce has been accompanied by the erosion of health outcomes and employer-sponsored insurance coverage. In this article we present data and discuss the research that has established these links, and we assess the potential impact of policy responses to the evolving landscape of work and health. The expansion of insurance availability under the Affordable Care Act may have helped reduce the burden on employers to provide health insurance. However, the acts encouragement of wellness programs has uncertain potential to help contain the rising costs of employer-sponsored health benefits.

The Redistribution Recession, C. Mulligan. Oxford University Press (2012)

Professor Mulligan’s central thesis is summarized by the following quote, which appears in the Introduction (p. 8): “This book . . . shows that actual safety net expansions and minimum wage hikes were, in combination, enough to explain a majority of the reduction in labor hours since 2007, and many of the other changes in the major economic variables.” In other words, the U.S. “Great Recession” is not explained by the standard narrative: i.e., a severe housing bust and related financial crash caused the U.S. economy and labor market to wither, and the subsequent recovery has been sluggish due to the restraining effects of the consequent household debt reduction and pervasive economic uncertainty. Professor Mulligan argues instead that what should have been a relatively minor recession followed by a rapid recovery was greatly exacerbated by an expansion of the social safety net that undermined work incentives, destroyed existing jobs, and prevented new jobs from being created. This alternative narrative is politically charged, largely assigning blame for the severe recession and sluggish recovery to federal economic policies since 2008, most of which occurred early in President Obama’s first term. But the book’s arguments also are highly charged from the perspective of economic analysis. Most economists agree that income-support policies create work disincentives to some degree, but few point to them as a potential channel for macroeconomic fluctuations; the primary exceptions are among a small set of scholars who have made similar arguments in regard to the Great Depression. Professor Mulligan’s book represents an attempt to change this view and put the distortionary impacts of social programs at the forefront of our understanding of U.S. labor market performance since 2007. Much of the material in the book is quite technical and best understood by professional economists, although Professor Mulligan exerts substantial effort to make the broad arguments accessible to an educated lay audience. I