Accounting for earnings inequality in a diverse work force

A general decomposition of earnings inequality is applied to the complete full-time labor force, including minorities and women. The results confirm that education premiums were the largest observable factor in the rise in earnings inequality in the 1980s, and also reveal an offsetting reduction in the role of race- and sex-related earnings differences.Education ; Income distribution ; Labor supply

Workforce composition and earnings inequality

A presentation of a model that incorporates many factors simultaneously -- including education, experience, and industry choice -- to explain the growing disparity in Americans earnings. Its main finding is that the shifting composition of the U.S. workforce is a significant and direct determinant of the widening earnings gap.Income distribution ; Labor supply ; Education

Wage inflation and worker uncertainty

Compares two possible explanations of why pay increases continue to be moderate in a vigorous labor market--workers' uncertainty about their jobs and human resource managers' wage-setting behavior--and looks at how each explanation matches the evidence on the timing of inflation and wage changes.Wages ; Inflation (Finance)

Productivity gains during business cycles: what's normal?

Labor productivity growth is generally acknowledged to be procyclical. The author reviews the leading explanations for this, then uses two approaches to compare the time pattern of productivity gains over the business cycle. One approach describes the pattern in terms of the number of quarters of growth since the cycle's trough; the other uses knowledge about the ends of past recoveries to describe the typical pattern of productivity gains as a cycle ages.Labor productivity ; Business cycles

Inflation and unemployment revisited: grease vs. sand

As inflation rates in the United States decline, analysts are asking if there are economic reasons to hold the rates at levels above zero. Previous studies of whether inflation "greases the wheels" of the labor market ignore inflation's potential for disrupting wage patterns in the same market. This paper outlines an institutionally-based model of wage-setting that allows the benefits of inflation (downward wage flexibility) to be separated from disruptive uncertainty about inflation rate (undue variation in relative prices). Our estimates, using a unique 40-year panel of wage changes made by large mid-western employers, suggest that low rates of inflation do help the economy to adjust to changes in labor supply and demand. However, when inflation's disruptive effects are balanced against this benefit the labor market justification for pursuing a positive long-term inflation goal effectively disappears

Another look at part-time employment

A study that disputes recent reports claiming that undesirable and low-paying part-time jobs are overtaking full-time work, explaining how these reports overlook expansion in the labor force, confuse establishment and household data, and disregard differences in worker characteristics that can obscure relative wages.Employment (Economic theory)

Economic policy uncertainty and small business expansion

Is uncertainty causing small business owners to behave in ways that are hindering the recovery? That question is at the center of an intense public debate. Though reasonable arguments have been presented on both sides, there is not much empirical evidence to draw on. To contribute some to the discussion, we investigated the statistical association between data on small business plans to hire and make capital expenditures and a measure of policy uncertainty. Our analysis suggests that uncertainty is adversely affecting small business owners’ expansion plans.Small business ; Economic conditions - United States

Adjustable-rate mortgages and the Libor surprise

Adjustable-rate mortgages have typically been tied to either of two indexes, one based on U.S. treasuries, the other on the London interbank offered rate, or Libor. The index is used to determine a mortgage’s new interest rate when it is reset, and up until recently, the choice would have made little difference. But since 2007, the rates on which the indexes are based have diverged sharply, and borrowers with Libor-based adjustable-rate mortgages are likely to pay more than they would have had their mortgages been tied to treasuries. Moreover, the proportion of Libor-based ARMs has increased significantly, especially for subprime loans.Adjustable rate mortgages ; Interest rates

Sectoral wage convergence: a nonparametric distributional analysis

An examination of the relative shapes of the wage distribution in the U.S. goods-producing and service-producing sectors that uses a nonparametric measure of density overlap to analyze wage differences between the two sectors over time. ; What implications do 21st century monetary innovations bring for holdings of central bank money and standards of value? Emerging technologies such as cybercash, e-cash, and smart cards can be expected to reduce demand for central bank money, but the theoretical framework for monetary policy has not changed.Manufactures ; Service industries ; Wages

The effect of falling home prices on small business borrowing

Small businesses continue to report problems in obtaining the financing they need. Because small business owners may rely heavily on the value of their homes to finance their businesses (through mortgages or home equity lines), the fall in housing prices might be one of the causes of their difficulty. We analyze information from a variety of sources and find that homes do constitute an important source of capital for small business owners and that the impact of the recent decline in housing prices is significant enough to be a real constraint on small business finances.Housing - Prices ; Small business - Finance