Housing Booms and Busts, Labor Market Opportunities, and College Attendance

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. ABSTRACT Routine-biased technological change (RBTC), whereby routine-task jobs are replaced by machines and overseas labor, shifts demand towards high-and low-skill jobs, resulting in job polarization of the U.S. labor market. We test whether recessions accelerate this process. In doing so we establish a new fact about the demand for skill over the business cycle. Using a new database containing the near-universe of electronic job vacancies that span the Great Recession, we find evidence of upskilling-firms demanding more-skilled workers when local employment growth is slower. We find that upskilling is sizable in magnitude and largely due to changes in skill requirements within firm-occupation cells. We argue that upskilling is driven primarily by firm restructuring of production towards more-skilled workers. We show that 1) skill demand remains elevated after local economies recover from the Great Recession, driven primarily by the same firms that upskilled early in the recovery; 2) among publicly traded firms in our data, those that upskill more also increase capital stock by more over the same time period; and 3) upskilling is concentrated within routine-task occupations-those most vulnerable to RBTC. Our result is unlikely to be driven by firms opportunistically seeking to hire more-skilled workers in a slack labor market, and we rule out other cyclical explanations. We thus present the first direct evidence that the Great Recession precipitated new technological adoption. Terms of use: Documents in JEL Classification Codes: D22, E32, J23, J24, M51, O33Key Words: Job polarization, job postings, RBTC, recessions, routine-biased technological change, upskilling, vacancies Acknowledgments:We are grateful to Jason Abaluck, Joe Altonji, David Autor, Tim Bartik, David Berger, Jeff Clemens, David Deming, David Green, John Horton, Fabian Lange, Steve Malliaris, Alicia Sasser Modestino, Daniel Shoag, Henry Siu, Basit Zafar, and seminar participants at the AEAs, the Atlanta Fed, Brookings, Harvard, LSE, MIT, Princeton, Rutgers, the SOLE/EALE 2015 meetings, the Trans Pacific Labor Seminar 2015, University of British Columbia, and University of South Florida. We are especially indebted to Dan Restuccia, Jake Sherman, and Bledi Taska for providing the Burning Glass data. Jing Cai provided excellent research assistance with CPS data. A previous version of this paper was titled "Is College the New High School? Evidence from Vacancy Postings." Routine-biased technol...

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“…However, since all of these variables are measured with substantial error, we perform a formal decomposition next. 22 …”

Section: Resultsmentioning

confidence: 99%

Do Recessions Accelerate Routine-Biased Technological Change? Evidence from Vacancy Postings

Hershbein

Kahn

2018

American Economic Review

391

160

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“…We estimates of change in housing demand ( ), we combine the change in house prices and change in housing permits, and we assume unitary elasticity of demand as in Charles et al (2015) to implement the housing demand measure given by equation (4) above.…”

Section: Data and Summary Statisticsmentioning

confidence: 99%

Housing Booms, Manufacturing Decline, and Labor Market Outcomes

Charles

Notowidigdo

2013

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We study the extent to which manufacturing decline and local housing booms contributed to changes in labor market outcomes during the 2000s, focusing primarily on the distributional consequences across geographical areas and demographic groups. Using a local labor markets design, we estimate that manufacturing decline significantly reduced employment between 2000 and 2006, while local housing booms increased employment by roughly the same magnitude. The effects of manufacturing decline persist through 2012, but we find no persistent employment effects of local housing booms, likely because housing booms were associated with subsequent busts of similar magnitude. These results suggest that housing booms "masked" negative employment growth that would have otherwise occurred earlier in the absence of the booms. This "masking" occurred both within and between cities and demographic groups. For example, manufacturing decline disproportionately affected older men without a college education, while the housing boom disproportionately affected younger men and women, as well as immigrants. Applying our local labor market estimates to the national labor market, we find that roughly 40 percent of the reduction in employment during the 2000s can be attributed to manufacturing decline and that these negative effects would have appeared in aggregate employment statistics earlier had it not been for the large, temporary increases in housing demand.

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“…From previous work, we know that the opportunity cost of time is an important determinant of investment in education. For example, our own work shows that when rainfall is high and rural labour market opportunities 1 are abundant, people invest less in human capital development of older children in rural India (Shah and Steinberg, forthcoming); others have shown similar patterns from factory openings in Mexico (Atkin, 2012) and fracking and housing booms in the U.S. (Cascio and Narayan, 2015;Charles et al, 2015). Consistent with this interpretation, our results are largely driven by children aged 13-16, who are old enough to substitute for adult labor but too young to be eligible for NREGS.…”

Section: Introductionmentioning

confidence: 99%

Workfare and Human Capital Investment: Evidence from India

Shah

Steinberg

2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I EIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. We examine the effect of India's National Rural Employment Guarantee Scheme (NREGS), one of the largest workfare programs in the world, on human capital investment. Since NREGS increases labor demand, it could increase the opportunity cost of schooling, lowering human capital investment even as incomes increase. We exploit the staged rollout of the program across districts for causal identification. Using a household survey of test scores and schooling outcomes for approximately 2.5 million rural children in India, we show that each year of exposure to NREGS decreases school enrollment by 2 percentage points and math scores by 2% of a standard deviation amongst children aged 13-16. In addition, while the impacts of NREGS on human capital are similar for boys and girls, adolescent boys are primarily substituting into market work when they leave school while adolescent girls are substituting into unpaid domestic work. We find mixed results for younger children. We conclude that anti-poverty programs which raise wages could have the unintended effect of lowering human capital investment.JEL Classification: O12, I2, I38, J1

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Housing Booms and Busts, Labor Market Opportunities, and College Attendance

Cited by 63 publications

References 3 publications

Do Recessions Accelerate Routine-Biased Technological Change? Evidence from Vacancy Postings

Do Recessions Accelerate Routine-Biased Technological Change? Evidence from Vacancy Postings

Housing Booms, Manufacturing Decline, and Labor Market Outcomes

Workfare and Human Capital Investment: Evidence from India

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