Revisiting Union Wage and Job Loss Effects Using the Displaced Worker Surveys

Estimates of union wage effects have been challenged by concerns regarding unobserved worker heterogeneity and endogenous job changes. Many economists believe that union wage premiums lead to business failures and other forms of worker displacement. In this article, the authors examine displacement rates and union wage gaps using the 1994–2018 biennial Displaced Worker Survey (DWS) supplements to the monthly Current Population Surveys. For more than two decades, displacement rates among union and non-union workers have been remarkably similar. The authors observe changes in earnings resulting from transitions between union and non-union jobs following exogenous job changes. Consistent with prior evidence from the 1994 and 1996 DWS, findings show longitudinal estimates of average union wage effects close to 15%, which are similar to standard cross-section estimates and suggestive of minimal ability bias. Wage losses moving from union to non-union jobs exceed gains from non-union to union transitions.

The Violent Consequences of Trade-Induced Worker Displacement in Mexico

Mexican manufacturing job loss induced by competition with China increases cocaine trafficking and violence, particularly in municipalities with transnational criminal organizations. When it becomes more lucrative to traffic drugs because changes in local labor markets lower the opportunity cost of criminal employment, criminal organizations plausibly fight to gain control. The evidence supports a Becker-style model in which the elasticity between legitimate and criminal employment is particularly high where criminal organizations lower illicit job search costs, where the drug trade implies higher pecuniary returns to violent crime, and where unemployment disproportionately affects low-skilled men. (JEL F16, J24, J64, K42, L60, O15, R23)

The Costs of Firm Exit and Labour Market Policies: New Evidence from Europe

The churning of firms is an inherent process of industrialized economies, which entails a high rate of job destruction. Thus, a key question is: what are the policies that minimize the costs of worker displacement due to business closure? Accordingly, this paper exploits a retrospective panel of workers in 13 European countries over the period 1985–2008 to explore the factors which shape the reemployment prospects of workers displaced due to business closure. The results suggest that higher spending on active labour market policies increases the reemployment prospects of the unemployed workers displaced by business closure, both in terms of unemployment duration and in terms of stability of reemployment. On the contrary, there is evidence of a negative and sizable impact of passive labour market policies on unemployment duration.

Small cities face greater impact from automation

The city has proved to be the most successful form of human agglomeration and provides wide employment opportunities for its dwellers. As advances in robotics and artificial intelligence revive concerns about the impact of automation on jobs, a question looms: how will automation affect employment in cities? Here, we provide a comparative picture of the impact of automation across US urban areas. Small cities will undertake greater adjustments, such as worker displacement and job content substitutions. We demonstrate that large cities exhibit increased occupational and skill specialization due to increased abundance of managerial and technical professions. These occupations are not easily automatable, and, thus, reduce the potential impact of automation in large cities. Our results pass several robustness checks including potential errors in the estimation of occupational automation and subsampling of occupations. Our study provides the first empirical law connecting two societal forces: urban agglomeration and automation's impact on employment.