Research

Modeling Involuntary Part Time Employment as the New Temporary Layoff 11152018.pdf

Modelling Involuntary Part Time Employment as the New Temporary Layoff

Research Statement 11102018.docx


Selected Research and Publications

Job Market Paper: Is Involuntary Part Time Employment the New Temporary Layoff?

Abstract:

Those who are employed part time for economic reasons are oft thought of as individuals who are working at a local fast food establishment while waiting for something more suitable to come along. This notion is actually quite far from reality. Those who are employed part time for economic reasons are highly likely to be employed by the same employer and performing the same job description as they were prior to being placed on reduced hours and are highly likely to return to full time hours with the same employer and job description in the next month. In addition, the ratio of those employed part time for economic reasons to the civilian unemployment rate has been rising since the early 2000s, reaching a plateau of roughly 75 percent by mid 2014. These facts suggest a structural change in the U.S. economy that needs to be considered when examining the amount of slack in the labor market, and the implications thereof. This structural shift may be driven by the supply side, the demand side or both. I find that internet penetration, measured at the state level, has a strong impact on the likelihood that someone experiences part time employment for economic reasons. The internet has changed many things about the United States economy, and the structural shift with respect to part time employment for economic reasons is one of them.

Full Text Linked Above.

Working Paper: Stuck in the Middle: the Impacts of being Employed Part Time for Economic Reasons

Abstract:

The Great Recession reached every corner of the American economy, but the lasting impacts of the recession are felt more by some than by others. While unemployment and unemployment duration were the major headlines during and after the Great Recession, the labor market showed many other symptoms of distress. While most indicators of economic distress, such as the civilian unemployment rate, the ratio of long term unemployed relative to the unemployment rate, and discouraged workers have receded from the highs experienced during the Great Recession and in the expansion that followed, the ratio of workers employed part time for economic reasons to the unemployed has remained at an elevated level throughout the economic expansion to the present (Sederberg, 2018). Experiencing an involuntary reduction in hours of employment, and thereby income, can deal a devastating blow to workers who are unable to utilize other sources of income or wealth to smooth consumption. However, workers employed part time for economic reasons, unlike the unemployed, are unlikely to qualify for transfer payments that could assist in weathering the financial storm. This research parallels that for unemployment, similar to Dickens et al. (2017), to show the inequalities amongst workers who experience spells of reduced hours, and workers who do not. These calculations include but are not limited to the amount of time that a worker can smooth their consumption using savings, other financial holdings, means tested transfer payments, and other asset drawdown during spells of reduced income. I also show the ensuing growth impacts of the use of reduced hours for economic reasons. These impacts may not be short lived; just as spells of unemployment produce persistent effects on workers who experience them, spells of reduced hours may do the same. If this is the case, then there are serious concerns that need to be addressed. There may, in fact, be a place for public policy to assist workers who experience involuntary part time employment if it is to be part of the new normal in the United States labor market. There may be avenues for public policy to accommodate workers who experience an involuntary reduction in hours and income through adjusting the qualification criteria for means tested transfer payments that the worker may not qualify for under current program rules due to asset limits. Assets are not easily liquidated, so liquidating them for consumption smoothing purposes is not always optimal, especially when the worker hopes that they will eventually become re-employed at full time hours. Like tiered and triggered unemployment insurance benefits, there may be a place for labor market situation based public policy to improve economic stability of individuals and households who have fallen on hard times.

APPAM 2018 Presentation Slides

Working Paper: Stuck in the Middle

Abstract:

The ratio of the rate of those employed part time for economic reasons to the civilian unemployment rate shows a notable and statistically significant increase that began during the Great Recession and has remained steady ever since. Unlike the most oft cited measures of labor market health, which have slowly returned to their pre-recessionary levels in the decade since the Great Recession, the aforementioned ratio remains elevated. In addition, it can be shown that most employed part time for economic reasons were previously employed full time by the same employer doing the same job and return to full time work with the same employer always doing the same job. This indicates that the reduction in hours may be a channel by which employers can attempt to preserve an employer-employee match while cutting costs. In the face of lower than expected wage growth and inflation, this paper demonstrates that the relative composition of the labor market has changed, and it may be playing a role in the unexpected behavior of the economy.

For Full Text: Stuck in the Middle

Under Submission: No Longer Qualified? Changes in the Supply and Demand for Skills within Occupations

With Mary A. Burke, Alicia Sasser Modestino, Shahriar Sadighi, and Bledi Taska

Abstract:

In this paper, we test the hypothesis that changes in skill requirements within some occupations have reduced matching efficiency within some classes of jobs and contributed to the outward shift in the Beveridge Curve since 2007. We find evidence that supports this hypothesis from a few different sources. First, we extend the framework developed by Sahin et al. (2014) to measure labor market mismatch, decomposing measures of mismatch by the education requirements of the underlying occupations. We find that between xx and xx dates, high-skill occupations displayed higher mismatch rates than did either middle-skill or low-skill occupations, and high-skill occupations experienced a smaller decline in mismatch rates during the recent recovery. We also describe movements in employer education requirements over time using a novel database of 87 million online job posting aggregated by Burning Glass Technologies. These data offer evidence of relatively permanent upskilling within high-skill occupations, where such upskilling may reflect changes in the technologies that complement such jobs. Together the results suggest that the persistently lower matching efficiency among high-skill jobs may be an artifact of increasing skill requirements within jobs, rather than the result of changes in the relative demand for occupations. Our results imply that workers who accumulate specific human capital targeting a distinct labor market may be chasing a moving target, even as they achieve a high level of educational attainment. Furthermore, our findings suggest that workforce development strategies and education policies could benefit from the use of real-time labor market information on employer demands in the current environment.

Forthcoming in the Journal of Consumer Finance: Uncertain Futures: An Evaluation of the Boston Youth Credit Building Initiative

With Alicia Sasser Modestino and Liana Tuller

Abstract:

Since the financial crisis there has been renewed interest in providing financial education programs, including financial coaching, that are intended to improve consumer financial decision making, with a special emphasis on developing financial skills among youth. Yet prior studies evaluating the impact of financial education programs on outcomes have been mixed and to date there exists little robust evidence that financial coaching programs improve economic knowledge, decision making, or well-being. Using a randomized control trial, we estimate the causal effects of the Boston Youth Credit Building Initiative based on individual level data from a combination of administrative credit reports, survey responses, and focus group discussions. We find that the program improves credit scores by 65 points (12 percent) and raises the likelihood of having a “good” credit rating (661-780) by 10 percentage points. As a result, participants are 5 percentage points more likely to have a car loan and on average pay an interest rate of 3 percent compared to 9 percent for the control group. These improvements are driven by a combination of greater knowledge and enhanced self-efficacy that lead to improved financial habits such as using a mix of both revolving and installment credit and decreasing the likelihood of adverse events such as delinquencies and collections—findings that are also confirmed by our focus groups. The impacts persist beyond the end of the program and are greater for younger participants, African-Americans, males, and those living in low-income households. Our results provide the first direct evidence that financial coaching can have a meaningful impact on low-income young adults who are either working or enrolled in a workforce development program. These outcomes can inform policymakers seeking to incorporate financial capability into youth workforce development programs as required by the Workforce Innovation and Opportunity Act of 2014.

Published Paper: The Changing Consequences of Unemployment for Household Finances

With William T. Dickens and Robert K. Triest

Abstract:

In this article we present new evidence that the capacity of households to cover earnings lost during spells of unemployment through a combination of drawing down of wealth and receipt of unemployment insurance and other transfer payments is very limited and has deteriorated since the 1980s. Since 2006, most households have not had nearly enough financial wealth to smooth their consumption over more than a very short spell of unemployment. Individuals experiencing involuntary job loss also tend to experience substantial earnings reductions upon reemployment, resulting in longer-term deterioration in household finances. Wealth inadequacy to cover lost earnings and the earnings reduction upon reemployment are both especially acute in long unemployment spells, such as those that were prevalent in the aftermath of the Great Recession.

For Full Text: The Changing Consequences of Unemployment for Household Finances

Published Paper: Catholic schools, competition, and public school quality

With Angela K. Dills, Juliana F. Carattini, and Sean E. Mulholland

Abstract:

Catholic schools compete with public schools but may also cream-skim. The endogeneity of private school enrollment necessitates 2SLS. Measures of Catholic sex abuse scandals instrument for Catholic school enrollment. We find that competition from Catholic schools raises public school test scores.

For Full Text: Catholic schools, competition, and public school quality

Policy Reports:

Modestino, A., Sederberg, R., Tuller, L. 2016. “An Evaluation of the Boston Youth Credit Building Initiative: Baseline Report.” Office of Financial Empowerment, City of Boston, May.

Modestino, A., Sederberg, R., Tuller, L. 2017. “An Evaluation of the Boston Youth Credit Building Initiative: Final Report.” Office of Financial Empowerment, City of Boston, September.