Research

Did Racially Motivated Labor Policy Reverse Equality Gains for Everyone? 

Erin L. Wolcott, May 2024, Federal Reserve Bank of Minneapolis Opportunity and Inclusive Growth Institute working paper (Reject and resubmit, American Economic Journal: Macroeconomics)

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, 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 half of the rise in 90/10 wage inequality since the 1960s.

Also circulated as "Did Racist Labor Policies Reverse Equality Gains for Everyone?"

Can Incorrect Beliefs about the Racial Composition of Welfare and Unemployment Insurance Beneficiaries be Changed?

Jeffrey Carpenter, Jakina Debnam Guzman, Peter Hans Matthews, and Erin L. Wolcott (2025). AEA Papers and Proceedings, forthcoming.  

Some argue that support for the social safety net in the United States is influenced by beliefs about the beneficiaries’ race.  Information treatments have the potential to change these beliefs, but for them to be policy relevant, their effects must last beyond the intervention.  Our findings from two parallel experiments that exploit the different racialized histories of welfare and unemployment insurance indicate that racial beliefs do predict stated support for the racially stigmatized welfare program but not for the less stigmatized unemployment program. We also find these beliefs are stable if uncorrected and that they can be persistently corrected.

Pandemic layoffs and the role of stay-at-home orders

Marianna Kudlyak and Erin L. Wolcott (2024). Economic Letters, 242, 111894.  

We compile a novel high-frequency, detailed geographic dataset on mass layoffs from U.S. state labor departments. Using recent advances in difference-in-difference estimation with staggered treatment, we find that locally-mandated stay-at-home orders issued March 16-22, 2020 triggered mass layoffs equal to half a percent of the population in just one week.  Our findings contribute to explanations for why job loss in 2020 was catastrophic yet temporary. 

Working Paper Version

How does the dramatic rise of nonresponse in the Current Population Survey impact labor market indicators? 

Robert Bernhardt, David Munro, and Erin L. Wolcott (2024). Journal of Applied Econometrics, 39(3), 498–512. 

Within a decade, the share of households refusing to participate in the Current Population Survey (CPS) tripled.  We show households that refuse one month but respond in an adjacent month account for an important part of the rise.  Leveraging the labor force status of survey participants 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 at least 10 percent of the reported decline in the labor force participation rate from 2000 to 2020.

Preprint Version

Online Appendix  Data and code. 

Previously circulated as "How Does the Dramatic rise of CPS Nonresponse Impact Labor Market Indicators?"

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

Erin L. Wolcott (2021).  Journal of Monetary Economics, 118, 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, Federal Reserve Bank San Francisco Economic Letter, 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 (2020).  AEA Papers and Proceedings, 110, 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 (2011). Land Economics, 87(3), 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.