Jose Maria Barrero, Nicholas Bloom, Steven Davis, 27 July 2021

Employers in the US are grappling with whether and how to bring employees back to the office or other place of work. Using survey-based evidence, this column finds that four in ten Americans who currently work from home at least one day a week would seek another job if employers require a full return to business premises, and most workers would look favourably on a new job that offers the same pay with the option to work from home two or three days a week. High rates of quits and job openings in recent months appear to partly reflect a re-sorting of workers based on the scope for remote working.  

Benjamin Artz, David Blanchflower, Alex Bryson, 28 May 2021

The US labour market is producing too few jobs and those it is producing are often low paid and of poor quality. This is exacerbated by the fact that workers do not have the means to fix their problems at work because of a precipitous decline in union membership over the last half century, particularly in the private sector. Using panel data from the National Longitudinal Survey of Youth 1979 and 1997 cohorts and from the Bureau of Labor Statistics, this column shows that union density is now on the rise and that union workers are now more satisfied than non-union workers. Unions’ ability to help workers avoid underemployment suggests that what seems to have changed is the value attached to the insurance component of the union good.

Laurence Ball, Gita Gopinath, Daniel Leigh, Prachi Mishra, Antonio Spilimbergo, 07 May 2021

How high is the ongoing US fiscal expansion likely to push inflation? This column presents new evidence that underlying (weighted median) CPI inflation has so far steadily declined since the start of the COVID-19 crisis, broadly as predicted by its historical Phillips curve relation. If the ongoing fiscal expansion reduces unemployment to 1.5-3.5%, as some predict, underlying inflation could rise to about 2.5-3% by 2023. If the fiscal expansion is temporary and monetary policy remains clearly communicated and decisive, there is little risk of a 1960s-type inflationary spiral.

Ulrike Malmendier, Leslie Sheng Shen, 15 March 2021

Economic crises have prolonged consequences on consumer behaviour, beyond effects captured by standard economic variables. Standard life-cycle consumption channels often fail to explain these lasting effects. This column argues that economic downturns ‘scar’ consumers in the long run. Consumers who have lived through times of high unemployment remain pessimistic about the future financial situation, spend less in future years, and accumulate more savings, controlling for income, wealth, and employment. These results suggest a novel micro-foundation of fluctuations in aggregate demand and imply long-run effects of macroeconomic shocks. 

Naomitsu Yashiro, Tomi Kyyrä, Hyunjeong Hwang, Juha Tuomala, 12 March 2021

Across OECD countries, promoting longer working lives is an important policy objective for mitigating fiscal pressures from population ageing. This column uses data from Finland to examine how technological change and access to early retirement pathways reinforce each other in pushing older workers out of employment. It finds that the probability of leaving employment is higher for individuals in occupations with higher automation risks and increases faster for individuals closer to the eligible age for early retirement pathways.Reforms that tighten access to such pathways substantially extend the working lives of older workers exposed to high automation risks, but have little effect on old workers exposed to low automation risks.

Ammar Farooq, Adriana Kugler, Umberto Muratori, 07 February 2021

Economists have long debated whether extensions to unemployment insurance benefit durations help or hinder the labour market. Using US administrative microdata, this column shows that the generosity of unemployment insurance benefits has a positive effect on the labour market by improving job match quality. Importantly, these benefits are greater for women as well as for minority and less educated workers. In light of the current economic crisis, giving ideally suited workers and firms sufficient time to find each other can be part of the healing. 

Andreas I. Mueller, Johannes Spinnewijn, Giorgio Topa, 29 January 2021

Longer spells of unemployment are associated with worse employment prospects, but there has been no consensus in the literature on what drives the decline in employment prospects. This column uses data on elicited beliefs of unemployed job seekers to uncover the forces driving long-term unemployment. It shows that 85% of the decline in job-finding rates is due to intrinsic differences across job-finding ‘types’, rather than a deterioration of skills during unemployment. Improving job seekers’ information about employment prospects may help reduce costly long-term unemployment.

Cevat Giray Aksoy, Panu Poutvaara, Felicitas Schikora, 11 December 2020

Around 2.4 million refugees and irregular migrants arrived in Europe from 2015 to 2016. This column presents systematic evidence on how local unemployment and attitudes towards immigrants at refugees’ initial place of residence shape their multi-dimensional integration in the context of the European refugee crisis. Leveraging Germany’s centralised allocation policy, which exogenously assigns refugees to live in specific counties, it finds that high initial local unemployment negatively affects refugees’ economic and social integration. Further, favorable attitudes towards immigrants promote the economic and social integration of refugees.

Gordon Betcherman, Mauro Testaverde, 18 November 2020

The Covid-19 crisis has profoundly affected employment everywhere, but countries have adopted different strategies to try to mitigate the worst of the effects. This column compares the Greek experience to the rest of Europe, as well as to North America. The authors conclude that given the nature of the pandemic, models for managing labour market shocks will need to offer extended support where the shock persists or reoccurs. Crucially, successful policy approaches will need to be well suited for enabling job creation once conditions are in place for a restart.

Alex Rees-Jones, John D'Attoma, Amedeo Piolatto, Luca Salvadori, 04 November 2020

While few groups have weathered the Covid-19 crisis unscathed, recent evidence suggests that the damage has been especially extreme among the economically vulnerable. This column evaluates changing attitudes towards welfare spending as a result of the pandemic. The findings suggest that people living in areas most severely hit by the crisis are increasingly supportive of long-term reforms to the welfare system. Despite having access to relatively widespread welfare spending, European citizens are dissatisfied with the safety net systems currently in place. 

Salvador Barrios, Wouter van der Wielen, 30 September 2020

The COVID-19 pandemic and ensuing Great Lockdown came with an unseen level of economic uncertainty. This column uses Google search data to document the substantial increase in people’s economic anxiety and the coinciding slowdown in European labour markets in the months following the outbreak. The analysis shows that the ensuing fear was significantly more outspoken in those EU countries hit hardest in economic terms, with levels of economic anxiety similar or higher than during the Great Recession of 2007-2009. Unlike during the Great Recession, however, unprecedented policy actions, such as the short-term working schemes implemented or reformed at the onset of the COVID crisis, do not seem to have mitigated overall economic anxiety.

Lars Calmfors, 28 September 2020

High employment is an important objective for all governments. This column makes the case for numerical employment targets, arguing that such targets can help balance fiscal objectives while also strengthening the incentives for reforms that raise structural employment. For the case of Sweden, the author recommends two targets: the actual employment rate for 20–68-year olds, and the actual annual hours worked per person in the population.

Marco Del Negro, Michele Lenza, Giorgio Primiceri, Andrea Tambalotti, 18 September 2020

The analysis of inflation dynamics and their possible changes over time is a key input in the design of monetary policy, particularly in the context of the strategy reviews recently undertaken by the Federal Reserve and currently under way at the ECB and other central banks. This column studies the causes of the stability of US inflation over the business cycle since the 1990s. It concludes that the stability is mainly due to a reduced sensitivity of firms’ pricing decisions to their cost pressures. Ignoring this observation could impair the ability of monetary policy to steer inflation toward its objective.

Steffen Juranek, Jörg Paetzold, Hannes Winner, Floris Zoutman, 12 September 2020

Sweden attracted international attention for not imposing a strict lockdown after the outbreak of COVID-19. This column analyses the labour market effects of this strategy by comparing unemployment and furlough spells in Sweden to three of its Nordic neighbours. The evidence suggests that the labour markets of all countries were severely hit by the pandemic, but Sweden performed slightly better than its neighbours. 

Charles Goodhart, Dimitri Tsomocos, Xuan Wang, 07 August 2020

A sizeable proportion of enterprises, especially SMEs, in receipt of financial assistance from the government will fail to repay. This column asks whether, and to what extent, it may be beneficial to apply a screening mechanism to deter those mostly likely to fail to repay from seeking financial assistance in the first place. The answer largely turns on the relative weights attached for the objectives of stabilisation as compared with allocative efficiency.

Marcin Wolski, Patricia Wruuck, 05 August 2020

The COVID-19 crisis has had a substantial impact on labour markets throughout Europe. This column uses new data sources based on Google Trends reports in order to investigate the speed of transmission of the crisis into individuals’ concerns about becoming unemployed. The results indicate that this transmission is linked to corporate resilience. A stronger financial position of firms to withstand liquidity shortfalls may have helped to cushion the deterioration in job market sentiment during the outbreak of the pandemic, suggesting the importance of bolstering liquidity as a way of sheltering jobs. 

Jose Maria Barrero, Nicholas Bloom, Steven Davis, 14 July 2020

One of the most urgent economic impacts of the Covid-19 crisis is on labour markets. Widespread job losses, drastic increases in unemployment benefit claims, and the rise of working from home have dominated the discussion during the pandemic so far. This column presents evidence from the US, arguing that the pandemic itself represents reallocation of labour within the economy. As different sectors and occupations are hit with variable severity, the authors argue that policymakers should be wary of this variation, responding with policies that will hold firm over time.

Stefania Fabrizio, Vivian Malta, Marina M. Tavares, 20 June 2020

The COVID-19 crisis is depressing growth globally, and lockdown measures are causing widespread job losses. This column illustrates that women are amongst the worst affected. Women are vulnerable not only because of their jobs, but also because of gender inequalities within housework division, education, and health. There is an urgent need to support women, repair gender disparities aggravated by crisis, and to reduce women’s vulnerability going forward. Gender-responsive fiscal measures are viable tools that work in the interests of women, as well as supporting economic growth and reducing poverty and inequality.

Sylvain Leduc, Zheng Liu, 14 June 2020

The COVID-19 pandemic has raised concerns about the future of work. The pandemic may become recurrent and necessitate repeated adoptions of social distancing measures, creating substantial uncertainty about worker productivity. This column presents a theoretical framework suggesting that such job uncertainty reduces aggregate demand, and dampens business investment in general. However, automation may provide one way for businesses to cope with the uncertainty about worker productivity. It appears that pandemic-induced job uncertainty could stimulate automation investment, despite declines in aggregate demand.

Adam Brzezinski, Valentin Kecht, David Van Dijcke, 12 June 2020

Lockdown policies have been found to be effective in promoting social distancing and slowing down the spread of COVID-19. Yet, such measures are often blamed for downturns in the economy. This column argues that the lockdowns in the US are in fact efficient in minimising the costs of the epidemic, once both the economic and medical burden that would arise in the absence of such policies are considered. Estimates from a controlled SIR model, which includes the possibility for changes in behaviour, suggest that lockdowns reduce the costs of the pandemic by at least 1.7% of annual GDP compared to a no-lockdown scenario.

Pages

Events

CEPR Policy Research