Labour markets

Brian Kovak, Lindsay Oldenski, Nicholas Sly, 15 January 2018

The impact of offshoring on domestic employment is hotly debated as the US looks to renegotiate trade treaties, but the existing literature is conflicting in its conclusions. This column employs the variation in the timing of US treaties to infer the causal effect of tax treaty-induced changes in foreign affiliate employment on changes in US domestic employment. Employment declines at some firms are offset by expanded employment at others, yielding a modest positive net effect of offshoring on US employment, albeit with substantial employment dislocation and reallocation of workers.

Alex Klein, Sheilagh Ogilvie, 14 January 2018

A famous hypothesis posits that serfdom was caused by factor endowments, specifically high land-labour ratios. Historical evidence seems to refute this idea, but with substantial identification problems. This column uses microdata for more than 11,000 Bohemian villages in the year 1757 to control for other potential influences on serfdom. The results support the factor endowments hypothesis, with higher land-labour ratios intensifying serfdom, suggesting that institutions are partially shaped by economic fundamentals.

Michael Bar, Moshe Hazan, Oksana Leukhina, David Weiss, Hosny Zoabi, 13 January 2018

Over recent decades, the trend for high-skilled, career-focused women to have fewer children, if any at all, has reversed. Using US data, this column shows that rising wage inequality is behind the reversal. Greater income inequality enables high-income families to outsource household production to lower-income people. Changes to minimum wage laws are thus likely to affect the fertility and career decisions of the rich.

Daron Acemoğlu, 12 January 2018

Concerns that industrial robots will replace human labour are widespread. Daron Acemoglu discusses how automation creates a displacement and a productivity effect. Furthermore, the effect of automation on employment heavily depends on the sector it is used in.

Gaetano Basso, Giovanni Peri, Ahmed Rahman, 12 January 2018

The US and Europe have both seen wage polarisation in the last three decades, in parallel with increasing technical automation. This column analyses the impact of immigration on this wage divergence via its effect on the labour supply side. It finds that immigration partially reverses natives’ polarisation of employment opportunities and wages by expanding aggregate demand and allowing natives to move to better paying occupations. Policies to reduce low-skilled migration with the aim of favouring native middle-class labour market opportunities may in fact do the opposite.

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