This paper estimates how overall consumer spending responds to changes in gasoline prices. It uses the differential impact across consumers of the sudden, large drop in gasoline prices in 2014 for identification. This estimation strategy is implemented using comprehensive, daily transaction-level data for a large panel of individuals. The estimated marginal propensity to consume (MPC) is approximately one, a higher estimate than estimates found in less comprehensive or well-measured data. This estimate takes into account the elasticity of demand for gasoline and potential slow adjustment to changes in prices. The high MPC implies that changes in gasoline prices have large aggregate effects.

How does initial placement in a temporary work contract affect workers’ subsequent labor market outcomes? We study a unique set of natural experiments: In the mid-1990s, the Japanese airline industry implemented a new hiring policy using temporary employment contracts. The policy was later reversed in the mid-2010s. Examining the universe of employment records from one of Japan’s major airlines as well as government surveys to compare outcomes for cohorts of flight attendants hired just before to those hired just after these changes in industry policy, we find that workers starting on temporary contracts were less likely to remain with the firm over time and are less likely to have children within 10 years after starting the job. These findings do not appear to be the result of selection on observables.

Self-employment rates are growing in U.S. tax data but not survey data. We find that this rise is concentrated among individuals with incentives to report self-employment. We examine a regression discontinuity design around a cutoff in whether children count towards tax credits based on their birthdate and find tax code incentives increase self-employment reporting conditional on actual labor supply. We find these effects have grown over time as knowledge of the tax code spreads. We use these findings to adjust self-employment rates for changing reporting behavior, accounting for 28–59% of the growth and all countercyclicality since 2000.

❮ ❯

We document a decline in the frequency of shopping trips in the U.S. since 1980 and consider its implications for the measurement of consumption inequality. A decline in shopping frequency as households stock up on storable goods (i.e. inventory behavior) will lead to a rise in expenditure inequality when the latter is measured at high frequency, even when underlying consumption inequality is unchanged. We find that most of the recently documented rise in expenditure inequality in the U.S. since the 1980s can be accounted for by this phenomenon. Using detailed micro data on spending which we link to data on club/warehouse store openings, we directly attribute much of the reduced frequency of shopping trips to the rise in club/warehouse stores.

LA Times

The rise of freelance work in the online platform economy (OPE) has received considerable media and policy attention in recent years, but freelance work is by no means a new phenomenon. In this paper, we draw on I.R.S. tax records to identify instances when workers begin doing online platform work versus other freelance/independent contractor “gig” work for firms. We find gig work occurs around major reductions in outside income, and document usage over the lifecycle. Our results provide suggestive evidence on motivations for entering into each type of work.

New York Times, Wall Street Journal [1] [2], Crain's Chicago Business

We examine the universe of tax returns in order to reconcile seemingly contradictory facts about the rise of alternative work arrangements in the United States. Focusing on workers in the “1099 workforce,” we document the share of the workforce with income from alternative, non-employee work arrangements has grown by 1.9 percentage points of the workforce from 2000 to 2016. More than half of this increase occurred over 2013 to 2016 and can be attributed almost entirely to dramatic growth among gigs mediated through online labor platforms. We find that the rise in online platform work for labor is driven by earnings that are secondary and supplemental sources of income. Many of these jobs do not show up in self-employment tax records: approximately 44 percent of the overall growth in the 1099 economy comes from people who do not file self-employment taxes. Examining the relationship between 1099s and self-employment tax records more generally, we find that the previously documented increases in self-employment tax filings since 2007 are largely driven by workers without 1099s. We discuss implications of these findings for tax administration and measurement of alternative work using tax data.

New York Times

The gig economy is widely regarded to be a source of secondary or temporary income, but little is known about economic activity outside of the gig economy. Using data from a large, online personal finance application, I document the evolution of non-gig income and household balance sheets surrounding the participation decision for gig economy jobs. This simple analysis reveals striking pretrends in income and assets. In addition to providing insight into the reasons why households enter the gig economy, these findings have potentially important implications for the external validity of previous studies focusing on gig economy activity only.

❮ ❯

NBC News, Southern California Public Radio

Emerging rideshare jobs promise workers more choice over their hours. Does this increased flexibility help workers smooth income shocks? A sample of approximately 18,000 rideshare drivers is analyzed from a large, online personal financial service containing information on rideshare income, outside income, spending, and liquid assets. Debt and high credit card utilization are key predictors of participation in ridesharing. In the period after starting ridesharing, rideshare income replaces 73 percent of income losses from main payroll jobs. Sensitivity of spending to main income falls by 82 percent, suggesting substantial increases in consumption smoothing. Matching these empirical findings to a structural intertemporal labor supply model with credit and labor frictions implies benefits from flexible second jobs of over $1,800 per year. The results suggest the value of leisure is relatively low for this group of workers, which has important implications for understanding the welfare costs of income fluctuations.

This paper studies the long-run effects of the largest government spending program in U.S. history – Second World War defense spending – on structural change in local economies. We link a dataset of war supply contracts with economic data at the county level spanning from 1930 to 2000. Using counties that received no defense spending as a comparison group and controlling for prewar characteristics, we find that wartime defense spending led to sustained reallocation of labor to manufacturing and other non-agricultural sectors in war production centers, contributing to the long-term population growth in those regions.

The persistence of U.S. unemployment has risen with each of the last three recessions, raising the specter that future U.S. recessions might look more like the Eurosclerosis experience of the 1980s than traditional V-shaped recoveries of the past. In this paper, we revisit possible explanations for this rising persistence. First, we argue that financial shocks do not systematically lead to more persistent unemployment than monetary policy shocks, so these cannot explain the rising persistence of unemployment. Second, monetary and fiscal policies can account for only part of the evolving unemployment persistence. Therefore, we turn to a third class of explanations: propagation mechanisms. We focus on factors consistent with four other cyclical patterns which have evolved since the early 1980s: a rising cyclicality in long-term unemployment, lower regional convergence after downturns, rising cyclicality in disability claims, and missing disinflation. These factors include declining labor mobility, changing age structures, and the decline in trust among Americans. To determine how these factors affect unemployment persistence, this paper exploits regional variation in labor market outcomes across Western Europe and North America during 1970-1990, in contrast to most previous work focusing either on cross-country variation or regional variation within countries. The results suggest that only cultural factors can account for the rising persistence of unemployment in the U.S., but the evolution in mobility and demographics over time should have more than offset the effects of culture.

Al Jazeera, American Enterprise Institute, Business Insider, The Economist, Marginal Revolution, Slate, The Washington Post

In the UK, in contrast to most other countries, a hallmark of corporate governance is a separation of ownership and control. There is evidence suggesting that this pattern may have been the norm in Britain as far back as the late nineteenth century. This paper investigates the extent to which law, in the form of a London Stock Exchange listing rule that prohibited the quotation of a class of securities unless two-thirds of the securities quoted had been subscribed for by and allotted to the public, contributed to this outcome. This paper tests the impact of the two-thirds rule by analysing for domestically based companies that carried out initial public offerings between 1900 and 1911 data compiled from prospectuses, a UK investors' guide and documents filed in accordance with UK companies legislation. The results indicate that the two-thirds rule did not influence ownership and control to the extent that might have been anticipated.