Andrew Johnston


Andrew C. Johnston Economics Merced

Andrew Johnston

Assistant Professor of Economics, University of California at Merced

Ph.D. in Applied Economics from The Wharton School, University of Pennsylvania

Fields: Public Economics, Labor Economics, Applied Econometrics, Personnel Economics

Interests: Unemployment Insurance, Compensation Structure, Teacher Labor Markets, Pensions, Family Structure

Affiliations: JPAL-North America, IZA Institute for Labor Economics

Contact: acjohnston (at) ucmerced (dot) edu

Curriculum vitae



Unemployment-Insurance Taxes and Labor Demand: Quasi-Experimental Evidence from Administrative Data, American Economic Journal: Economic Policy, [journal link] [SSRN link] [IZA link (ungated)]

To finance unemployment insurance benefits, states raise payroll taxes on employers who engage in layoffs. Since tax rates increase in response to layoffs, taxes are highest for troubled firms after downturns, potentially hampering labor demand and employment during recoveries. Using full-population administrative records from Florida, I estimate the causal effect of these targeted tax increases on firm behavior leveraging a regression kink design in the tax schedule. UI tax hikes reduce firm hiring and employment substantially, with no effect on layoffs or worker earnings. Analysis of heterogeneity and timing suggests the role of cash constraints in explaining the magnitude of the estimates. The results imply unanticipated costs of the financing regime which, once accounted for, reduce the optimal benefit calculation by a quarter.

Potential Unemployment Insurance Duration and Labor Supply: Evidence from a Benefit Cut (with Alexandre Mas), Journal of Political Economy, [journal link] [local link] [SSRN link]

We examine how a 16-week cut in potential unemployment insurance (UI) duration in Missouri affected search behavior of UI recipients and the aggregate labor market. Using a regression discontinuity design (RDD), we estimate a marginal effect of maximum duration on UI and nonemployment spells of approximately 0.45 and 0.25 respectively. We use the RDD estimates to simulate the unemployment rate assuming no market-level externalities. The simulated response, which implies almost a one percentage point decline in the unemployment rate, closely approximates the estimated change in the unemployment rate following the benefit cut. This finding suggests that, even in a period of high unemployment, the labor market absorbed this influx of workers without crowding-out other jobseekers.

Is Compassion a Good Career Move?: Evidence on Nonprofit Earning Differentials from Employer Changes (with Carla Johnston), Journal of Human Resources, [journal link] [SSRN link] [IZA link (ungated)]

We explore the nonprofit earnings penalty. To separate the influence of demand and supply, we leverage workers who change employers in administrative tax data. The average nonprofit worker earns 5.5 percent less than the average for-profit worker. Supply-side factors (worker selection) contribute 80 percent of the nonprofit differential. The remaining 20 percent is from demand (a nonprofit penalty). Within-worker nonprofit variation generates several insights about the influence of nonprofits on the labor market. Nonprofits compress the wage distribution and reduce inequality among earners. Nonprofit penalties are much more pronounced in classic charities than in “commercial” nonprofits, which sometimes exhibit nonprofit premia. 

The Effect of Unemployment Benefits on the Duration of Unemployment Insurance Receipt: New Evidence from a Regression Kink Design in Missouri, 2003-2013 (with David Card, Pauline Leung, Alexandre Mas, and Zhuan Pei)American Economic Review: Papers & Proceedings, [journal link] [manuscript link]

We provide new evidence on the elasticity of unemployment insurance weekly benefit amount on unemployment insurance spells based on administrative data from the state of Missouri covering 2003-2013.  Identification comes from a regression kink design that exploits the quasi-experimental variation around the kink in the UI benefit schedule.  We find that unemployment durations are more responsive to benefit levels during the recession and its aftermath, with an elasticity of about 0.9 as compared to 0.35 pre-recession.

Working Papers:

Preferences, Selection, and the Structure of Teacher Compensation, Submitted
[SSRN link] [EWP link] [IZA link (ungated)]

Human capital shapes income, inequality, and growth. In the public sphere, human-capital formation depends largely on the selection and retention of teachers. To understand selection and retention, I use a discrete-choice experiment to estimate teacher preferences for compensation structure, working conditions, and contracts. High-performing teachers have stronger preferences for schools offering performance pay, which suggests it fosters positive selection. Under a variety of school objectives, schools appear to underpay in salary and performance pay while overpaying in retirement. The results suggest significant efficiency gains from restructuring compensation: teacher welfare and student achievement can be simultaneously improved.

The Finance of Unemployment Compensation and its Consequence for the Labor Market Accepted at Public Finance Review (with Audrey Guo), [SSRN link] [IZA link (ungated)]

A vast literature considers the influence of unemployment benefits on labor supply, but little has been done to understand the consequences of the unique tax that finances benefits in the United States. We present new evidence on the statutory incidence of the tax along the income distribution, across industries, by geography, and over the business cycle. This labor policy presents several fascinating questions for economists: Do the penalties produced by experience rating reduce layoffs amid recessions? What impact do tax increases have on hiring and recovery?  We provide a handrail for analysts to understand the institutions and engage outstanding questions.

Skill Depreciation during Unemployment: Evidence from Panel Data (with Jonathan Cohen and Attila Lindner)

Labor-market outcomes steadily decline while workers are unemployed. The primary explanation of this phenomenon is that skills deteriorate when workers are idle. We track the evolution of skills during unemployment using a three-year panel of German workers. Despite large decreases in earnings, we do not find evidence of declines across a range of cognitive and non-cognitive skills. If skills explain declining outcomes, they may be occupation-specific skills that are difficult to measure.

Coming "Soon":

Family Structure and its Consequence: Evidence from within-Family Exposure to Marriage, Death, and Divorce (with Margaret Jones and Nolan Pope)

The Influence of Pensions on Labor Supply (with Jonah Rockoff)

Teacher Preferences and Student Achievement (with Michael Bates, Michael Dinerstein, and Isaac Sorkin)

Experience Rating in Recession and Recovery 

Parent Absence and Human Capital Formation: Evidence from Quasi-Random Occupational Absences (with Richard Patterson, David Lyle, and Kevin Rinz)

Popular Writing and Coverage:

Wall Street Journal: Pandemic Unemployment Will Soon Bring Tax Hikes (with Mark Duggan)

American Economic Association: The Unemployment Insurance Tax Hangover

Stanford Policy Brief: Unemployment During the Pandemic: How to Avoid Going for Broke (with Mark Duggan and Audrey Guo)

Forbes: The States With The Best And Worst Unemployment Benefits—And Why They’re So Different

Johnston Wharton Graduation Economics


Andrew Johnston,
Dec 19, 2019, 1:43 PM
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Dec 4, 2012, 1:49 PM
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