Fluent Essays

Our course requires a textbook called Contemporary Labor Economics by McConnell, Brue, and Macpherson. EleventhEdition, McGraw- Hill and these two assignments are aimed to answer the questions according to those research articles as well as combined with what we learned in introduction to labor economics and industrial relations.I want these two assignments to be as good as possible. ._job_loss_and_the_decline_in_job_security_by_ferber_1_.pdf ._why_are_there_still_so_many_jobs_by_autor_1_.pdf econ343_w2020_assignment3.pdf econ343_w2020_assignment4_1_.pdf Unformatted Attachment Preview This PDF is a selection from a published volume from the National Bureau of Economic Research Volume Title: Labor in the New Economy Volume Author/Editor: Katharine G. Abraham, James R. Spletzer, and Michael Harper, editors Volume Publisher: University of Chicago Press Volume ISBN: 978-0-226-00143-2; 0-226-00143-1 Volume URL: http://www.nber.org/books/abra08-1 Conference Date: November 16-17, 2007 Publication Date: October 2010 Chapter Title: Job Loss and the Decline in Job Security in the United States Chapter Author: Henry S. Farber Chapter URL: http://www.nber.org/chapters/c10822 Chapter pages in book: (223 - 262) 6 Job Loss and the Decline in Job Security in the United States Henry S. Farber 6.1 Introduction There is ample evidence that long-term employment is on the decline in the United States. The common understanding that, after some turnover early in careers, most workers find a job (relationship with an employer) that lasts for a long period of time (a “lifetime” job), has been challenged in the last fifteen to twenty years, both in academic research and in the media, as large corporations have engaged in highly publicized layoffs and the industrial structure of the U.S. economy has shifted in the face of global competitive pressures. However, there is little evidence that rates of job loss have increased. This leaves a puzzle regarding the mechanism through which long-term employment relationships are becoming less common. One possible explanation is that there as been an increase in the rate of job change by workers that is not captured by the Displaced Workers Survey (DWS). This could be in the form of voluntary job change, which accounts for the decline in job durations. The interpretation of what is a “job loss” and what is a “voluntary” job change is left to the respondent in the DWS. The result may be an underestimate of employer-initiated separations. For example, a firm may offer workers “buyouts.” Workers who take these buyouts in lieu of a layoff may not report a job loss in the DWS. Unfortunately, there are no large-scale surveys that measure job change and reasons for job change generally. Another possible explanation is that, while the overall rate of job loss has not increased, higher-tenure workers have become more susceptible to job loss. I begin my analysis by examining the decline in job tenure and longHenry S. Farber is the Hughes-Rogers Professor of Economics at Princeton University, and a research associate of the National Bureau of Economic Research. 223 224 Henry S. Farber term employment separately in the private and public sectors using data from various supplements to the Current Population Survey (CPS). From 1973 to 2008, I find that the decline in measures of job security is confined to the private sector and that these measures of job security show an increase in the public sector. I then document the lack of secular change in rates of job loss in either sector using data from the DWS from 1984 to 2008. Finally, I explore the extent to which the observed declines in job tenure and long-term employment in the private sector result from a relative increase in rates of job loss among high-tenure workers in the private sector. I find that there has been no such relative change and that reconciliation of the trends in the tenure and displacement data must lie with a failure to identify all relevant displacement in the DWS. 6.2 Background and Earlier Literature The evolution of the job durations in the United States has played out in the context of dramatic growth in employment over the last forty years. Civilian employment was 85.1 million in 1973 and rose to 145.4 million in 2008.1 Thus, 60 million jobs have been created on net in the past thirty-three years, for an average rate of employment growth of 1.5 percent per year over this period. Despite this record of sustained growth in employment in the United States, there is longstanding concern that the quality of the stock of jobs in the economy more generally is deteriorating. The concern about job quality is based in part on the fact that the share of employment that is in manufacturing has been declining over a long period of time.2 This has led to the view that, as high-quality manufacturing jobs are lost, perhaps to import competition, they are being replaced by low-quality service-sector jobs (so-called hamburger-flipping jobs). The high-quality jobs are characterized by relatively high wages, full-time employment, substantial fringe benefits, and, perhaps most important, substantial job security (low rates of turnover). The low-quality jobs are characterized disproportionately by relatively low wages, part-time employment, an absence of fringe benefits, and low job security (high rates of turnover). The perceived low quality of many newly created jobs fuels the concern that the nature of the employment relationship in the United States is changing from one based on long-term, full-time employment to one based on more short-term and casual employment. There has been concern that employers are moving toward greater reliance on temporary work1. These statistics are taken from U.S. Bureau of Labor Statistics Series ID LNU02000000. This is the civilian employment level derived from the CPS for workers aged sixteen and older. 2. The manufacturing share of nonfarm employment has been falling for over fifty years. Manufacturing’s share was 30.9 percent in 1950 and fell to 9.8 percent in 2008. These statistics are taken from U.S. Bureau of Labor Statistics Series ID CEU00000001 and CEU30000001 derived from the Current Employment Statistics payroll data. Job Loss and the Decline in Job Security in the United States 225 ers, on subcontractors, and on part-time workers. Potential motivation for employers to implement such changes range from a need for added flexibility in the face of greater uncertainty regarding product demand to avoidance of increasingly expensive fringe benefits and long-term obligations to workers. The public’s concern arises from of the belief that these changes result in lower-quality (lower-paying and less-secure) jobs for the average worker. 6.2.1 Literature on Job Stability There have been a series of analyses of job stability that have relied on mobility supplements to various January CPSs. An influential early analysis was carried out by Hall (1982). He used published tabulations from some of the early January mobility supplements to compute contemporaneous job retention rates. Hall found that, while any particular new job is unlikely to last a long time, a job that has already lasted five years has a substantial probability of lasting twenty years. He also finds that a substantial fraction of workers will be on a lifetime job (defined as lasting at least twenty years) at some point in their life. Ureta (1992) used the January 1978, 1981, and 1983 mobility supplements to recompute retention rates using artificial cohorts rather than contemporaneous retention rates. Several more recent papers have used CPS data on job tenure to examine changes in employment stability. Swinnerton and Wial (1995), using data from 1979 through 1991, analyzed job retention rates computed from artificial cohorts and conclude that there has been a secular decline in job stability in the 1980s. In contrast, Diebold, Neumark, and Polsky (1997), using CPS data on tenure from 1973 through 1991 to compute retention rates for artificial cohorts, found that aggregate retention rates were fairly stable over the 1980s but that retention rates declined for high school dropouts and for high school graduates relative to college graduates over this period. I interpret a direct exchange between Diebold, Polsky, and Neumark (1996) and Swinnerton and Wial (1996) as supporting the view that the period from 1979 to 1991 is not a period of generally decreasing job stability. In Farber (1998a), I used CPS data on job tenure from 1973 through 1993 and found that the prevalence of long-term employment has not declined over time but that the distribution of long jobs has shifted. I further found that less-educated men were less likely to hold long jobs than they were previously but that this is offset by a substantial increase in the rate at which women hold long jobs. More recently (Farber 2000), I examined CPS data on job tenure from 1979 through 1996, and I found that the prevalence of long-term employment relationships among men declined by 1996 to its lowest level since 1979. In contrast, long-term employment relationships became somewhat more common among women. Rose (1995) used data from the Panel Study of Income Dynamics (PSID) to measure job stability by examining the fraction of male workers who do 226 Henry S. Farber not report any job changes in a given time period, typically ten years. Rose found that the fraction of workers who reported no job changes in given length of time was higher in the 1970s than in the 1980s. He argued that this is evidence of increasing instability of employment. The Russell Sage Foundation sponsored a conference organized by David Neumark on “Changes in Job Stability and Job Security” in 1998.3 The evidence presented here is mixed regarding whether job tenure was declining. Jaeger and Stevens (1999) used data from the PSID and the CPS mobility and benefit supplements on (roughly) annual rates of job change to try to reconcile evidence from the CPS and PSID on job stability. They found no change in the share of males in short jobs and some decline between the late 1980s and mid-1990s in the share of males with at least ten years of tenure.4 Neumark, Polsky, and Hansen (1999) found a similar decline in long-term employment but concluded that this does not reflect a secular trend. Gottschalk and Moffitt (1999) use monthly data from the Survey of Income and Program Participation (SIPP), along with annual data from the SIPP and the PSID, and they found no evidence of an upward trend in job insecurity in the 1980s and 1990s. Valletta (1999) used data from the PSID from 1976 to 1993 and found some decline in long-term employment relationships. In more recent work, Stewart (2002) used data from the March CPS to investigate two aspects of job security. The first, the likelihood of leaving a job, showed no particular trend from 1975 through 2000 based on these data. The second, the likelihood of making an employment-to-employment transition, increased over this period, while the likelihood of making an employment-to-unemployment transition decreased. Stewart concluded that the cost of changing jobs has decreased. Stevens (2008) examined data from several longitudinal histories of older male workers (late 1950s and early 1960s) with regard to changes over time in the length of longest job held during careers. She found that there has been no change between the late 1960s and late early 2000s and concluded that there has not been a decline in the incidence of “lifetime jobs.” A careful reading of her results show an increase in average longest tenure from about twenty-two years among older workers in 1969 to twenty-four years in 1980 followed by a decline to 21.4 years in 2002. A reasonable interpretation of this pattern is that the earliest cohorts had jobs interrupted by service in World War II, resulting in lower average longest tenure than subsequent cohorts. The decline since 1980 may then reflect a real decline in job durations. Additionally, the most recent cohort examined by Stevens was born 3. The proceedings of this conference are published in Neumark (2000), and a number of these papers are published in The Journal of Labor Economics, volume 17, number 4, part 2, October 1999. 4. Unfortunately, due to the design of the PSID, neither of these studies examined the mobility experience of women. Job Loss and the Decline in Job Security in the United States 227 in the 1940s, so her analysis cannot shed light on the experience of more recent birth cohorts. In Farber (2007), I used data from twenty-one supplements to the CPS over the 1973 to 2008 period that contain information on how long workers have been employed by their current firm. I found that, by virtually any measure, more recent cohorts of male workers have been with their current employers for less time at specific ages. I did not find a corresponding decline in age-specific tenure for women. This contrast reflects the increased commitment of women to the labor force tempered by the fact that many working women, when they have young children, either exit the labor force for a period of time or change jobs to one with different or more flexible hours. Taken as a whole, I conclude from this earlier literature that there has been a decline in job tenure and in the incidence of long-term employment relationships. 6.2.2 Literature on Job Loss In an earlier paper (Farber 1993), I used the five DWSs from 1984 to 1992 to examine changes in the incidence and costs of job loss over the period from 1982 to 1991. I found that there were slightly elevated rates of job loss for older and more-educated workers in the slack labor market in the latter part of the period compared with the slack labor market of the earlier part of the period. But I found that job loss rates for younger and less-educated workers were substantially higher than those for older and more-educated workers throughout the period. These findings are consistent with the longstanding view that younger and less-educated workers bear the brunt of recessions. I also confirmed the conventional view that the probability of job loss declines substantially with tenure. Gardner (1995) carried out the first analysis of which I am aware that incorporated the 1994 DWS. She examined the incidence of job loss from 1981 to 1992. While she found roughly comparable overall rates of job loss in the 1981 to 1982 and 1991 to 1992 periods, she found that the industrial and occupational mix of job loss changed over this period. There was an decreased incidence of job loss among blue-collar workers and workers in manufacturing industries and an increase in job loss among white-collar workers and workers in nonmanufacturing industries. In another paper (Farber 1997), I used the seven DWSs from 1984 to 1996 to revisit the issue of changes in the incidence and costs of job loss. I found that the overall rate of job loss increased in the first half of the 1990s despite the sustained economic expansion. Hipple (1999) carried out the first analysis of the 1998 DWS, and he found that the displacement rate among workers who had held their jobs for at least three years fell only slightly between the 1993 to 1994 period and the 1995 to 1996 period despite the sustained economic expansion. 228 Henry S. Farber There is a substantial literature using the DWS to study the postdisplacement employment and earnings experience of displaced workers.5 This work demonstrates that displaced workers suffer substantial periods of unemployment and that earnings on jobs held after displacement are substantially lower than predisplacement earnings. In my earlier work (Farber 1993), I found that there was no difference on average in the consequences of job loss between the 1982 to 1983 recession and the 1990 to 1991 recession. The earnings loss suffered by displaced workers is positively related to tenure on the predisplacement job. On the other hand, Kletzer (1989) found further that the postdisplacement earnings level is positively related to predisplacement tenure, suggesting that workers displaced from long jobs are more able, on average, than those displaced from shorter jobs. In more recent work, Neal (1995), using the DWS, and Parent (2000) using the National Longitudinal Survey of Youth (NLSY), found that workers who find new employment in the same industry from which they were displaced earn more than do industry switchers. This work suggests that Kletzer’s finding that postdisplacement earnings are positively related to predisplacement tenure may be a result of the transferability of industry-specific capital. Workers who are reemployed in the same industry “earn a return” on their previous tenure, while those reemployed in a different industry do not. In Farber (2004), I examined changes in the incidence and consequences of job loss between 1981 and 2001 using data from the DWS from 1984 to 2002. I found that the overall rate of job loss has a strong counter-cyclical component but that the job loss rate was higher than might have been expected during the mid-1990s given the strong labor market during that period. I found substantial earnings declines for displaced workers relative to what they earned before displacement. Additionally, foregone earnings growth (the growth in earnings that would have occurred had the workers not been displaced) is an important part of the cost of job loss for reemployed full-time job losers. There is no evidence of a decline during the tight labor market of the 1990s in the earnings loss of displaced workers who were reemployed full time. In fact, earnings losses of displaced workers have been increasing since the mid 1990s. In Farber (2005), I update my earlier work to include data on job loss through 2003. Not surprisingly, there were higher job loss rates and lower postdisplacement reemployment probabilities during the recession of the early 2000s. With regard to overall rates of job loss, this literature suggests that job loss rates have a strong cyclical component. However, aside from several years with unusually high job loss rates in the mid-1990s, there has been no secular increase in rates of job loss. 5. See, for example, Podgursky and Swaim (1987), Kletzer (1989), Topel (1990), Farber (1993), Farber (1997). Job Loss and the Decline in Job Security in the United States 6.3 229 The Decline in Long-Term Employment In this section, I present evidence on job durations from a sample consisting of not-self-employed workers aged twenty to sixty-four from the twentyone CPS supplements covering the period from 1973 to 2008. The sample contains 924,423 workers.6 Because the factors highlighted as potentially causing a decline in job security are directly relevant to the private sector and less relevant to the public sector, I present separate analyses of job tenure in the two sectors. 6.3.1 Measuring the Change in Tenure over Time I organize my analysis of changes over time in the distribution of job durations by examining age-specific values of various distributional measures of job tenure for each sampled year. No one statistic can completely characterize a distribution, and I focus on several measures here: • Mean job tenure (years with the current employer): Note that this is not mean completed job duration since the jobs sampled are still in progress. • The age-specific probability that a worker reports being in his or her job at least ten years: Because younger workers cannot have accumulated substantial job tenure, I restrict this analysis to workers at least thirtyfive years of age, and I examine how these probabilities have changed over time. • The age-specific probability that a worker reports being in his or her job at least twenty years: Because younger workers cannot have accumulated substantial job tenure, I restrict this analysis to workers forty-five years of age and older • The age-specific probability that a worker reports being in his or her job for less than one year: This provides information on changes over time in the transition from the early job-shopping phase of a career to more stable longer-term employment relationships. An important measurement issue is related to cyclical changes in the composition of the sample. It is clear that workers with little seniority are more likely than high-tenure workers to lose their jobs in downturns (Abraham and Medoff 1984). Thus, we would expect that the i ... Purchase answer to see full attachment