Research

Abstract: This paper provides evidence that the economic impact of changes in aggregate uncertainty depends on the population's age distribution. The volatility in employment due to uncertainty is lower in US states with a higher population of prime-aged workers. This finding comes from a series of regressions using quarterly state panel data from 2000 to 2017. To address potential endogeneity, the current age distribution is instrumented by past birth rates, and the state-level uncertainty is instrumented by national uncertainty. Regression estimates indicate a quantitatively significant reduction in employment volatility for states with a higher share of prime-age workers. The results are robust across a battery of approaches, including using alternative variable definitions and model specifications, analyzing various state-level control factors, examining dynamics using local projections, and considering labor fluctuations in job gains and losses, unemployment, and participation volatilities.

Abstract: How does macroeconomic uncertainty affect regional wage dispersion? Recent work by Cacciatore and Ravenna (2020) suggests that in the presence of labor market frictions and occasional binding constraints, uncertainty shocks may deepen the recession. Using data from the U.S. Census of Manufacturers, the Current Population Survey, and the Annual Survey of Manufacturers spanning the period between 1972 and 2010 we investigate how regional wage dispersion and migration between states and counties respond to increased macroeconomic uncertainty. We find that in contrast with what happens in the face of oil price shocks (Kehring and Ziebarth, 2017), wage dispersion among skilled workers declines whereas that for unskilled workers is unaffected. This differential response is linked to differential migration rates between skilled and unskilled workers. In particular, migration among skilled workers initially declines but rebounds after a year. In contrast, migration among unskilled workers is rather muted.

Abstract: This study examines how global supply- and demand-driven oil shocks affect job flows in U.S. manufacturing sectors from 1980Q3 to 2016Q4, using restricted-access Census data. We analyze the impact of various oil shocks on job creation and destruction using four measures developed by Baumeister and Hamilton (2019) and employ the Smooth Local Projection method. Our findings reveal that demand-driven oil shocks, particularly those related to global economic activity, have more substantial and persistent effects on manufacturing employment compared to supply-driven shocks. These impacts vary significantly across manufacturing sectors. Durable goods industries, especially transportation equipment, are more sensitive to oil price fluctuations, experiencing greater job creation, destruction, and reallocation. In contrast, nondurable sectors show more stable and muted responses. The analysis further identifies energy intensity and capital intensity as key mechanisms explaining the heterogeneous responses across sectors to oil price shocks.

Abstract: This paper utilizes the real business cycle (RBC) model to assess the influence of economic uncertainty on demographic-specific labor market volatility. This study builds on Jaimovich, Pruitt, and Siu (2013) who modified the RBC model to account for cyclical age-specific labor demand variations. Using March CPS data from 1964-2010 and considering a secondary technology shock, they found older labor hours to be less volatile after technology demand shocks compared to younger labor. Recent work by Villaverde and Quintana (2020) delves into the connection between uncertainty shocks and business cycles, identifying economic uncertainty shocks as stemming from secondary disruptions in technology innovation and labor supply preference. This paper draws insights from two studies and utilizes quarterly state data from 2000-2017. It integrates a supply preference shock into the age-differentiated RBC model. The underlying assumption is that labor input from the prime working age group is more stable than that of older workers when confronted with uncertainty supply shocks.