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1. Bad news for the Fed from the Beveridge space

Author:
Olivier Blanchard, Alex Domash, and Lawrence H. Summers
Publication Date:
07-2022
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The Federal Reserve seeks to cool an overheated US labor market to ease wage hikes and reduce job vacancies, without a painful spike in unemployment. But empirical evidence indicates that these goals have never been accomplished together and remain unlikely now. In fact, fighting inflation will require a reduction in job vacancies and also an increase in unemployment. The inverse relationship between job vacancies and unemployment is measured by the Beveridge curve, named after a British economist. Blanchard, Domash, and Summers find that the Fed’s hope that vacancies can be decreased without increasing unemployment flies in the face of historical empirical evidence. The current low unemployment rate and the very high vacancy-to-unemployment ratio suggest that the labor market is overheating and the natural unemployment rate has increased. It has increased about 1.3 percentage points from its pre-COVID level, implying the labor market is even more overheated than suggested by the current unemployment rate.
Topic:
Economy, Unemployment, and Labor Market
Political Geography:
North America and United States of America

2. Initial Assessment of Early End to Unemployment Benefits: Questionable Impact

Author:
Committee for Economic Development of the Conference Board
Publication Date:
09-2021
Content Type:
Policy Brief
Institution:
The Conference Board
Abstract:
With the onset of the COVID-19 pandemic, many employers, following guidance or regulation from federal, state and local governments, were compelled to shut down their operations for extended periods of time, affecting millions of workers. Public policy leaders responded swiftly, in order to ease the dramatic shock to those workers and the economy as a whole with redesigned federally enhanced unemployment benefits. In March, the $1.9 trillion American Rescue Plan Act, extended a number of programs that were approved a year earlier to Spetember 6, 2021, including the Federal Pandemic Unemployment Compensation (FPUC) lowered to a $300 supplement; Pandemic Unemployment Assistance (PUA) for the self-employed, gig workers, and others who were not eleigible for standard unemployment insurance; Pandemic Emergency Unemployment Compensation (PEUC) for the long-term unemployed. The bill allowed states to opt out.
Topic:
Labor Issues, Unemployment, Pandemic, and COVID-19
Political Geography:
North America and United States of America

3. The Costs of Covid: Australia’s Economic Prospects in a Wounded World

Author:
John Edwards
Publication Date:
08-2020
Content Type:
Commentary and Analysis
Institution:
Lowy Institute for International Policy
Abstract:
Despite Victoria’s second wave of infection, Australia’s economic recovery from the coronavirus is underway. The bitter aftermath includes high and rising unemployment, vastly increased government debt, and a markedly less congenial global economy. Though formidable, the fiscal challenge is well within Australia’s means, especially if the Reserve Bank remains willing to acquire and hold Australian government debt. It may need to do so anyway to suppress an unwelcome appreciation of the Australian dollar in a world where major central banks are committed to low long term interest rates. Australia’s increasing integration into the East Asia economic community offsets the drag from the major advanced economies, but the US–China quarrel and the dislocation of global trading and investment relationships it threatens heightens the tension between Australia’s economic and security choices.
Topic:
Debt, Economy, Fiscal Policy, Unemployment, and COVID-19
Political Geography:
China, Asia, Australia, North America, Asia-Pacific, and United States of America

4. Comovement of Home Prices: A Conditional Copula Approach

Author:
Lei Hou, Wei Long, and Qi Li
Publication Date:
02-2020
Content Type:
Working Paper
Abstract:
Even though housing markets in different areas are relatively localized, regional home prices have become closely correlated and tend to be simultaneously affected by many national economic factors. In this paper, through the dynamic copula model, we confirm that regional home price dependence is time-varying and the conventional time-invariant copulas underestimate the degree of dependence during economic expansions and recessions. In essence, the U.S. residential real estate market has become more integrated since the mid-1980s. Using the conditional copula model, we further identify how the dependence among regional housing markets evolves along with some fundamental economic factors such as unemployment rate and interest rate. These findings can help investors and home buyers to better identify and evaluate the systematic risk in the nationwide housing market.
Topic:
Economics, Unemployment, and Housing
Political Geography:
China, Asia, North America, and United States of America

5. A New Policy Toolkit Is Needed as Countries Exit COVID-19 Lockdowns

Author:
Olivier Blanchard, Thomas Philippon, and Jean Pisani-Ferry
Publication Date:
06-2020
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The measures that most governments took in response to the sudden collapse in economic activity during the COVID-19 lockdowns nearly exclusively focused on protecting vulnerable workers and firms. These measures included unemployment benefits, grants, transfers, loans at low rates, and tax deferrals. As lockdowns are lifted, governments must shift policies toward supporting the recovery and design measures that will limit the pain of adjustment while preserving productive jobs and firms. This Policy Brief explores how such measures can be designed, with particular emphasis on Europe and the United States. The authors propose a combination of unemployment benefits to help workers, wage subsidies and partially guaranteed loans to help firms, and debt restructuring procedures for small and medium-sized companies handicapped by excessive legacy debt from the crisis.
Topic:
Debt, Economics, Government, Labor Issues, Unemployment, and Coronavirus
Political Geography:
Europe, North America, and United States of America

6. Unemployment and Income Distribution: Some Extensions of Shaikh’s Analysis

Author:
Walter Paternesi Meloni and Antonella Stirati
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
After the 1980s, advanced capitalist economies witnessed a significant decline of the labor share in income. Along with the conventional view, which ascribed this decline to technological factors and international trade, another line of enquiry has endorsed a ‘Political Economy’ approach to identifying several drivers of the labor share erosion. Among the latter, the role of persistent labor market slack has remained relatively unexplored. We try to fill this gap moving from a recent contribution by Anwar Shaikh, who elaborated on the relation between unemployment and changes in income distribution and in the US economy. We study this relationship by adopting a long-term approach, using two alternative measures of labor market slack (namely, the unemployment rate and the unemployment intensity, an index that incorporates the duration of unemployment). We first extend Shaikh’s method of analysis to eight mature countries, and subsequently we approach the relationship between changes in labor market slack and the (adjusted) wage share in the private sector of the economy from 1960 to 2017 with other econometric techniques. Our findings confirm the existence of a negative relationship between labor market slack and the wage share, and we find no tendency to return to a ‘normal’ unemployment rate associated with a stable wage share.
Topic:
Income Inequality, Unemployment, Labor Market, Collective Bargaining, and Wage Growth
Political Geography:
North America and United States of America

7. How Race and Gender Shape COVID-19 Unemployment Probability

Author:
Armagan Gezici and Ozge Ozay
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Using the April 2020 Current Population Survey (CPS) micro dataset, we explore the racialized and gendered effects of the COVID-19 pandemic on the probability of being unemployed. The distribution of job losses from COVID-19 for women and men or for different racial/ethnic categories has been studied in the recent literature. We contribute to this literature by providing the first intersectional analysis of unemployment under COVID-19, where we examine the differences in the likelihood of unemployment across groups of White men, White women, Black men, Black women, Hispanic men and Hispanic women. Controlling for individual characteristics such as education and age, as well as industry and occupation effects, we show that women of all three racial/ethnic categories are more likely to be unemployed compared to men, yet there are substantial differences across these groups based on different unemployment measures. Hispanic women have the highest likelihood of being unemployed, followed by Black women, who are still more likely to be unemployed than White women. We also examine if ability to work from home has benefited any particular group in terms of lowering their likelihood of unemployment during the pandemic. We find that in industries with a high degree of teleworkable jobs, White women, Black men and Hispanic men are no longer more likely to be unemployed relative to White men. However, Black women and Hispanic Women still experience a significantly higher probability of losing their jobs compared to White men even if they are employed in industries with highly teleworkable jobs. As we control for both individual and aggregate factors, our results suggest that these differences are not simply the result of overrepresentation of women of color in certain industries and occupations; rather, unobservable factors such as discrimination could be at work.
Topic:
Race, Minorities, Unemployment, COVID-19, and Gender
Political Geography:
United States of America

8. A new policy toolkit is needed as countries exit COVID-19 lockdowns

Author:
Olivier Blanchard, Thomas Philippon, and Jean Pisani-Ferry
Publication Date:
06-2020
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The measures that most governments took in response to the sudden collapse in economic activity during the COVID-19 lockdowns nearly exclusively focused on protecting vulnerable workers and firms. These measures included unemployment benefits, grants, transfers, loans at low rates, and tax deferrals. As lockdowns are lifted, governments must shift policies toward supporting the recovery and design measures that will limit the pain of adjustment while preserving productive jobs and firms. This Policy Brief explores how such measures can be designed, with particular emphasis on Europe and the United States. The authors propose a combination of unemployment benefits to help workers, wage subsidies and partially guaranteed loans to help firms, and debt restructuring procedures for small and medium-sized companies handicapped by excessive legacy debt from the crisis.
Topic:
Government, Labor Issues, European Union, Unemployment, and COVID-19
Political Geography:
Europe, France, Germany, North America, and United States of America

9. US unemployment insurance in the pandemic and beyond

Author:
Jason Furman
Publication Date:
07-2020
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Unemployment insurance in the United States has played a critical role in both protecting workers who lost their jobs and supporting the economy during the COVID-19 pandemic. The abrupt expiration of any form of expanded unemployment insurance at the end of July 2020 would create problems both for the workers directly affected and for the economy as a whole, reducing GDP by about 2.5 percent in the second half of 2020—more than a typical year’s worth of economic growth. Furman emphasizes that expanded unemployment insurance should continue, with adjustments made as the unemployment rate changes. He also points out that the unemployment insurance system had major shortcomings even before the COVID-19 crisis and should be permanently reformed.
Topic:
Labor Issues, Unemployment, Coronavirus, and COVID-19
Political Geography:
North America and United States of America

10. Voices from the Field: Engaging Employers to Connect Young Adults to Good Fit Employment

Author:
Amy Blair
Publication Date:
10-2020
Content Type:
Special Report
Institution:
Aspen Institute
Abstract:
America’s youngest workers are facing the most dire employment prospects since the Great Depression. At the start of 2020, nearly five million young people ages 16-24 were neither enrolled in school nor working. Today, their unemployment crisis has been greatly exacerbated by the pandemic. This disconnection, both before and after the arrival of COVID-19, has had an outsized impact on young workers of color. Across the country, workforce development and education providers are scrambling to meet the needs of these young people. Now more than ever, they need accurate information on available employment, including wages, health insurance, paid leave, scheduling, and safety, among other things. This report compiles insights from workforce professionals about the types of questions they ask employers. 210 workforce professionals in Cleveland, Indianapolis, and Philadelphia responded to a survey about the kinds of conversations they have with business representatives on topics related to workplace practices, environment, and equity and inclusion in the workplace. Although the survey that informed this publication was conducted before the pandemic, the questions are increasingly relevant and important today.
Topic:
Labor Issues, Unemployment, Job Creation, and Labor Market
Political Geography:
North America and United States of America