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Begin New Search Topic Labor Issues Author Brendan Epstein

1. The Decline of Drudgery and the Paradox of Hard Work

Author:
Brendan Epstein and Miles S. Kimball
Publication Date:
06-2014
Content Type:
Commentary and Analysis
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We develop a theory that focuses on the general equilibrium and long-run macroeconomic consequences of trends in job utility. Given secular increases in job utility, work hours per capita can remain approximately constant over time even if the income effect of higher wages on labor supply exceeds the substitution effect. In addition, secular improvements in job utility can be substantial relative to welfare gains from ordinary technological progress. These two implications are connected by an equation flowing from optimal hours choices: improvements in job utility that have a significant effect on labor supply tend to have large welfare effects.
Topic:
Labor Issues, Economic Theory, Welfare, Social Services, and Wage Growth
Political Geography:
Global Focus

2. Offshoring, Mismatch, and Labor Market Outcomes

Author:
David M. Arseneau and Brendan Epstein
Publication Date:
09-2014
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We study the role of labor market mismatch in the adjustment to a trade liberalization that results in the offshoring of high-tech production. Our model features two-sided heterogeneity in the labor market: high- and low-skilled workers are matched in a frictional labor market with high- and low-tech firms. Mismatch employment occurs when high-skilled workers choose to accept a less desirable job in the low-tech industry. The main result is that--perhaps counter-intuitively--this type of job displacement is actually beneficial for the labor market in the country doing the offshoring. Mismatch allows the economy to reallocate domestic high-skilled labor across both high- and low-tech industries. In doing so, mismatch dampens both the increase in the aggregate unemployment rate and the decline in aggregate wages that come as a consequence of shifting domestic production abroad.
Topic:
Globalization, Industrial Policy, International Trade and Finance, Labor Issues, Work Culture, and Labor Market
Political Geography:
Global Focus