Recessions and the Cost of Job Loss

We develop new evidence on the cumulative earnings losses associated with job displacement, drawing on longitudinal Social Security records for U.S. workers from 1974 to 2008. In present value terms, men lose an average of 1.4 years of pre-displacement earnings if displaced in mass-layoff events that occur when the national unemployment rate is below 6 percent. They lose a staggering 2.8 years of pre-displacement earnings if displaced when the unemployment rate exceeds 8 percent. These results reflect discounting at a 5% annual rate over 20 years after displacement. We also document large cyclical movements in the incidence of job loss and job displacement and present evidence on how worker anxieties about job loss, wage cuts and job opportunities respond to contemporaneous economic conditions. Finally, we confront leading models of unemployment fluctuations with evidence on the present value earnings losses associated with job displacement. The model of Mortensen and Pissarides (1994) extended to include search on the job generates present value losses only one-fourth as large as observed losses. Moreover, present value losses in the model vary little with aggregate conditions at the time of displacement, unlike the pattern in the data.

Response of major modes of eastern Arctic Ocean variability to climate change

Thesis (Ph.D.) University of Alaska Fairbanks, 2019The Arctic Ocean plays a central role in ongoing climate change, with sea ice loss being the most prominent indicator. Recent observations showed that Atlantic inflows play an increasingly important role in the demise of sea ice. This encroaching atlantification of the eastern Arctic Ocean impacts the mean state and the variability of hydrography and current dynamics throughout the basin. Among the most energetic modes of variability are the seasonal cycle and high frequency semidiurnal (∼12-hourly) dynamics in the tidal and inertial frequency band. Limited observations indicated a substantial increase of both, hydrographic seasonal cycles as well as semidiurnal current dynamics in the eastern Arctic over the last decade. Using a uniquely comprehensive data set from an array of six moorings deployed across the eastern Eurasian Basin (EB) continental slope along the 125°E meridian between 2013 and 2015 within the NABOS project, we assess the state of hydrographic seasonal cycles in the eastern EB. Results show a complex pattern of seasonality with a remarkably strong (∆T=1.4°C), deep reaching (∼600 m) temperature signal over the continental slope and large-scale seasonal displacements of isopycnal interfaces. Seasonally changing background conditions are also the main source of variability of semidiurnal frequency band currents: During winter, vigorous baroclinic tidal currents whose amplitudes by far exceed predictions follow the vertical evolution of the pycnocline. During summer, extensive open-water periods additionally lead to strong wind-driven inertial currents in the upper ocean, routinely exceeding 30 cm/s far offshore in the deep basin. In order to obtain an Arctic-wide perspective on the impact of baroclinic tidal currents, a pan-Arctic tidal current atlas has been developed that synthesizes all available observations from the last 20 years. This atlas allows for in-depth studies of regional baroclinic tidal current variability as well as for validation of ocean and climate models, an essential step towards more accurate projections of the future Arctic Ocean state. Our findings from the eastern EB region already indicate a new, more dynamic state of the eastern Arctic Ocean with direct implications for the ecosystem and further sea-ice reduction

Tobacco and alcohol: complements or substitutes? : a statistical Guinea Pig approach

The question of whether two drugs – namely alcohol and tobacco – are used as complements or substitutes is of crucial interest if side-effects of anti-drug policies are considered. Numerous papers have empirically addressed this issue by estimating demand systems for alcohol and tobacco and subsequently calculating cross-price effects. However, this traditional approach often is seriously hampered by insufficient price-variation observed in survey data. We, therefore, suggest an alternative instrumental variables approach that statistically mimics an experimental study and does not rely on prices as explanatory variables. This approach is applied to German survey data. Our estimation results suggest that a reduction in tobacco consumption results in a reduction in alcohol consumption, too. It is shown theoretically that this implies that alcohol and tobacco are complements. Hence, we conclude that successful antismoking policies will not result in the unintended side-effect of an increased (ab)use of alcohol. --interdependence in consumption,tobacco and alcohol,instrumental variables approach

Tobacco and Alcohol: Complements or Substitutes? A Structural Model Approach

The question of whether two drugs – namely alcohol and tobacco – are used as complements or substitutes is of crucial interest if side-effects of anti-smoking policies are considered. Numerous papers have empirically addressed this issue by estimating demand systems for alcohol and tobacco and subsequently calculating cross-price effects. However, this traditional approach often is seriously hampered by insufficient price-variation observed in survey data. We therefore suggest an alternative instrumental variables approach that statistically mimics an experimental study and does not rely on prices as explanatory variables. This approach is applied to German survey data. Our estimation results suggest that a reduction in tobacco consumption results in a moderate reduction in alcohol consumption. It is shown theoretically that this implies that alcohol and tobacco are complements. Hence, we conclude that successful anti-smoking policies will not result in the unintended side-effect of an increased (ab)use of alcohol.complements or substitutes, interdependence in consumption, tobacco and alcohol, insufficient price-variation, instrumental variables approach

Tobacco and Alcohol: Complements or Substitutes? - A Statistical Guinea Pig Approach

The question of whether two drugs – namely alcohol and tobacco – are used as complements or substitutes is of crucial interest if side-effects of anti-drug policies are considered. Numerous papers have empirically addressed this issue by estimating demand systems for alcohol and tobacco and subsequently calculating cross-price effects. However, this traditional approach often is seriously hampered by insufficient price-variation observed in survey data. We, therefore, suggest an alternative instrumental variables approach that statistically mimics an experimental study and does not rely on prices as explanatory variables. This approach is applied to German survey data. Our estimation results suggest that a reduction in tobacco consumption results in a reduction in alcohol consumption, too. It is shown theoretically that this implies that alcohol and tobacco are complements. Hence, we conclude that successful antismoking policies will not result in the unintended side-effect of an increased (ab)use of alcohol.Interdependence in consumption, tobacco and alcohol, instrumental variables approach

Tobacco and Alcohol: Complements or Substitutes? – A Structural Model Approach

The question of whether two drugs – namely alcohol and tobacco – are used as complements or substitutes is of crucial interest if side-effects of anti-smoking policies are considered. Numerous papers have empirically addressed this issue by estimating demand systems for alcohol and tobacco and subsequently calculating cross-price effects.However, this traditional approach often is seriously hampered by insufficient price-variation observed in survey data. We therefore suggest an alternative instrumental variables approach that statistically mimics an experimental study and does not rely on prices as explanatory variables.This approach is applied to German survey data. Our estimation results suggest that a reduction in tobacco consumption results in a moderate reduction in alcohol consumption. It is shown theoretically that this implies that alcohol and tobacco are complements. Hence, we conclude that successful anti-smoking policies will not result in the unintended side-effect of an increased (ab)use of alcohol.Complements or substitutes, interdependence in consumption, tobacco and alcohol, insufficient price-variation,instrumental variables approach

The Effects of Extended Unemployment Insurance over the Business Cycle: Evidence from Regression Discontinuity Estimates Over Twenty Years

One goal of extending the duration of unemployment insurance (UI) in recessions is to increase UI coverage in the face of longer unemployment spells. Although it is a common concern that such extensions may themselves raise nonemployment durations, it is not known how recessions would affect the magnitude of this moral hazard. To obtain causal estimates of the differential effects of UI in booms and recessions, this paper exploits the fact that, in Germany, potential UI benefit duration is a function of exact age which is itself invariant over the business cycle. We implement a regression discontinuity design separately for twenty years and correlate our estimates with measures of the business cycle. We find that the nonemployment effects of a month of additional UI benefits are, at best, somewhat declining in recessions. Yet, the UI exhaustion rate, and therefore the additional coverage provided by UI extensions, rises substantially during a downturn. The ratio of these two effects represents the nonemployment response of workers weighted by the probability of being affected by UI extensions. Hence, our results imply that the effective moral hazard effect of UI extensions is significantly lower in recessions than in booms. Using a model of job search with liquidity constraints, we also find that, in the absence of market-wide effects, the net social benefits from UI extensions can be expressed either directly in terms of the exhaustion rate and the nonemployment effect of UI durations, or as a declining function of our measure of effective moral hazard.

The Long-Term Effects of Unemployment Insurance Extensions on Employment

The majority of papers analyzing the employment effects of unemployment insurance (UI) benefit durations focuses on the duration of the first unemployment spell. In this paper, we make two contributions. First, we use a regression discontinuity design to analyze the long-term effects of extensions in UI durations. These estimates differ from standard estimates that they incorporate differences in UI benefit receipt and employment due to recurrent unemployment spells. Second, we derive a welfare formula of UI extensions that incorporates recurrent nonemployment spells. We find that accounting for nonemployment beyond the initial spell leads to a significant reduction in estimates of the nonemployment effect of UI extensions by about 25 percent. We show this effect is only partly explained by a mechanical effect due to finite follow-up durations, and mainly arises from a lower probability of days in nonemployment in months after end of the initial nonemployment spell.