Research

Did Racist Labor Policies Reverse Equality Gains for Everyone? 

Erin Wolcott, November 2022

Labor protection policies in the 1950s and 1960s helped many low- and middle-wage white workers in the United States achieve the American Dream. This coincided with historically low levels of inequality across income deciles.  After the Civil Rights Act of 1964, many of the policies that had previously helped build the white middle class reversed, especially in states with a larger Black population.  Calibrating a labor search model to match unemployment benefits, minimum wages, and bargaining power before and after the Civil Rights Act, I find declining labor protections explain 60 percent of the rise in 90/10 wage inequality since the 1960s.

How Does the Dramatic Rise of CPS Nonresponse Impact Labor Market Indicators? 

Robert Bernhardt, David Munro, and Erin Wolcott, September 2022, revision requested, Journal of Applied Econometrics  

Within a decade, the share of households refusing to participate in the Current Population Survey (CPS) tripled. We show that partially-responding households—households that respond to some but not all survey panels—account for most of the rise.  Leveraging the labor force status of partially-responding households in the months surrounding their nonresponse, we find rising refusals suppressed the measured labor force participation rate and employment-population ratio but had little effect on the unemployment rate.  Notably, nonresponse bias accounts for 10 percent of the reported decline in the labor force participation rate from 2000 to 2020.

Pandemic Layoffs 

Marianna Kudlyak and Erin Wolcott, May 2020  

Using CPS monthly data and high-frequency state-level data from the Federal Worker Adjustment and Retraining Notification Act, we find that the pandemic layoffs in March-April 2020 were predominately temporary. This is in contrast to job loss during the most recent recessions when most layoffs were permanent. Permanent job loss triggers a protracted re-employment process and is a key factor behind slow recoveries of unemployment. We discuss risks of the pandemic layoffs turning into permanent job loss.

Skill Mismatch Unemployment

Marianna Kudlyak and Erin Wolcott, November 2019

We measure the aggregate skill match probability between the demand and supply of skills using an extended search and matching framework.  In our framework, unemployed workers and vacancies meet randomly, but the probability of matching depends on how closely the unemployed worker's skillset aligns with the job requirements. We use data from the CPS, O*NET, and HWOL and find that the aggregate skill match probability declined during the 2007-09 recession but has since returned to pre-recession levels.

Employment Inequality: Why do the low-skilled work less now?  

Erin L. Wolcott, Journal of Monetary Economics, 118 (2021), pp. 161-177.

Low-skilled prime-age men are less likely to be employed than high-skilled prime-age men, and the differential has increased since the 1970s.  I build a search model encompassing three explanations:  (1) automation and trade reduced the demand for low-skilled workers; (2) health, welfare, and recreational gaming/computer technology reduced the supply of low-skilled workers; and (3) factors affecting job search, such as online job boards, reduced frictions for high-skilled workers.  I find a shift in demand away from low-skilled workers was the leading cause, a shift in supply had little effect, and search frictions actually reduced employment inequality.

 Online Appendix. Data and code.

Press Coverage: The Conversation, CBS News, Middlebury Newsroom, The Middlebury Campus 

Temporary Layoffs and Unemployment in the Pandemic

Erin Wolcott, Mitchell G. Ochse, Marianna Kudlyak, and Noah A. Kouchekinia, Economic Letter, FRB San Francisco, November 2020, 2020-34.

Temporary layoffs accounted for essentially the entire increase in unemployment to its historically high rate in April 2020. Although the rate has come down since its peak, unemployment remains well above pre-pandemic levels. There is little evidence that temporary layoffs are becoming permanent at a higher rate than in the past. However, the continuation of the health and economic crisis poses a risk that a growing share of unemployment will consist of people in persistent categories of joblessness, thereby slowing the overall recovery.

Impact of Foreign Official Purchases of US Treasuries on the Yield Curve 

Erin L. Wolcott, American Economic Association P&P, 110 (2020), pp. 535-540.

Foreign governments went from owning a tenth of publicly available US Treasury notes and bonds in 1985 to over half in 2008. Recently, foreign governments have reduced their positions. I find foreign official purchases have depressed medium-term yields, despite conventional wisdom pointing toward the long end of the yield curve. To examine effects over the entire yield curve, I embed a structural vector autoregression of macroeconomic variables into an affine term structure model. With segments of the yield curve increasingly determined by international financial markets, it may be more difficult for the Federal Reserve to implement its interest rate policy.  

Online appendix. Data and code.

Press Coverage: Bloomberg

Agroecology of an Island Economy

Erin L. Wolcott and Jon M. Conrad (Cornell University). Land Economics 87.3 (2011), pp. 403-411.

Ecologists and anthropologists have had a long-standing interest in the settlement and evolution of isolated islands, particularly Easter Island. The open access model is often used to describe the evolution of a human population and its resource base. Unfortunately, an open access model, with spiral convergence to a steady state, is inappropriate for island dynamics where the human population peaks and then goes into permanent decline. We develop more appropriate two-state and three-state models. The non-autonomous version of the three-state model, which collapses to the stable two-state model, produces dynamics that are more consistent with the history of Easter Island.