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Employment, Education, and Training

  • The Decline in Access to Jobs and the Location of Employment Growth in US Metro Areas: Implications for Economic Opportunity and Mobility

    Kyle Fee

    Increasing workers’ access to jobs has been found to significantly decrease the duration of joblessness among lower-income unemployed workers. Policies that influence the location of employment growth within a metro area could impact the pace of the labor market recovery from the COVID-19-induced recession. By studying trends in job access, we discern developments that might inform our policy choices. Read More

  • On the Distributional Effects of International Tariffs

    Daniel R Carroll Sewon Hur

    What are the distributional consequences of tariffs? We build a trade model with incomplete asset markets and households that are heterogeneous in their income, wealth, and labor skill. We increase tariffs by 5 percentage points and examine several budget-neutral fiscal policies for redistributing tariff revenue. Without redistribution, tariffs hurt all households, but higher tradables prices disproportionately harm the poor and the ensuing decline in the skill premium disproportionately harms the skilled. With redistribution, lowering the labor income tax leads to lower economic activity but higher average welfare relative to lowering the capital income tax; nevertheless, both policies reduce average welfare with retaliatory tariffs. Finally, when tariff revenue is rebated to households as lump-sum transfers, tariffs can be welfare improving even with full retaliation. Read More

  • Opportunity Occupations: A Way Ahead for People without a College Degree

    People with bachelor’s degrees typically earn better wages and experience higher employment rates than workers who do not. Yet, more than two-thirds of US adults currently do not have a college degree. Since 2015, the Cleveland Fed, in partnership with Atlanta and Philadelphia Feds, has been exploring these trends by identifying occupations that pay above the national annual median wage and are generally accessible to those without a four-year college degree. Read More

  • The Labor-Market Skills of Foreign-born Workers in the United States, 2007–2017

    Ruben Hernandez Murillo

    Various measures of the labor-market skills of foreign-born workers have improved during the past decade. The largest gains are concentrated among immigrants from Mexico, who traditionally have shown the lowest skill levels among foreign-born workers. The data suggest that the apparent increase in skills is the result of a shift in the distribution of immigrants coming to the United States, with increased immigration of workers from Asia and a precipitous decline in immigration of workers from Mexico. Read More

  • Do Affirmative Action Bans Cause Students to Move Across State Lines to Attend College?

    Peter L Hinrichs

    This Economic Commentary studies whether statewide bans on affirmative action in admission to public universities cause students to move to a new state to attend college. Regression results using data from the decennial census and the American Community Survey provide little evidence that affirmative action bans result in migration across state lines to attend college. In addition to being of direct interest, these results provide a check on earlier research that treats different states roughly as separate higher education markets. Read More

  • For Too Many Minority Workers, Earnings Still Don’t Add Up

    Emily Garr Pacetti

    Gaps in earnings—the annual wage of workers aged 16 and older—matter. While there are some reasons for optimism, there is also a need for ongoing vigilance about how this economy is playing out in real time for minority workers and their families. Read More

  • Minimum Wage Increases and Vacancies

    Marianna Kudlyak Murat Tasci Didem Tuzemen

    We estimate the impact of minimum-wage increases on the quantity of labor demanded as measured by firms’ vacancy postings. We use propriety, county-level vacancy data from the Conference Board’s Help Wanted Online database. Our identification relies on the disproportionate effects of minimum-wage hikes on different occupations, as the wage distribution around the binding minimum wage differs by occupation. We find that minimum-wage increases during the 2005-2018 period have led to substantial declines in vacancy postings in at-risk occupations, occupations with a larger share of employment around the prevailing minimum wage. Our estimate implies that a 10 percent increase in the binding minimum- wage level reduces vacancies by 2.4 percent in this group. The negative effect is concentrated not exclusively in the routine jobs, but more in the manual occupations. Read More

  • Making Change: Addressing Skills-training and Employment Needs for Returning Citizens

    Treye Johnson

    Finding a quality job is important for both formerly incarcerated individuals and the communities in which they live. One Cleveland-area program is helping, but the need for additional support for this vulnerable population is great. Read More

  • Profit with a Purpose: Manufacturing Success for Cincinnati’s Second-Chance Citizens

    Bonnie Blankenship

    For the formerly incarcerated, questions abound: What is the next step? Where can I get a job? How can I begin rebuilding my life? One Cincinnati company is providing answers. Read More

  • Strong Recovery for Whom? Trends in Dayton, Ohio, and Pittsburgh, Pennsylvania, Exemplify Growing Earnings Gaps between Minority and White Workers Present in Many US Regions

    Layisha Bailey Emily Garr Pacetti

    The gap in earnings between the typical white and minority worker grew in these two metro areas more than any other metro area during a 10-year period encompassing both the Great Recession and subsequent recovery. The reasons for the growing gap differ, reflecting divergent trends existent across the country. Read More

  • Opioids and the Labor Market

    Dionissi Aliprantis Kyle Fee Mark E Schweitzer

    This paper studies the relationship between local opioid prescription rates and labor market outcomes for prime-age men and women between 2006 and 2016. We estimate the relationship at the most disaggregated level feasible in the American Community Survey in order to provide estimates that include rural areas that have, in some cases, seen particularly high prescription rates. Given the limited time period, it is particularly important to account for geographic variation in both short-term and long-term economic conditions. We estimate three panel models to control for evolving local economic conditions: a difference-in-differences specification, a specification with specific controls for economic conditions, and a model that focuses on a comparison group of place with similar performance in 2000. These modelling approaches find a range of statistically significant and economically substantial results for both prime-age men and women. For example, we find that a 10 percent higher local prescription rate is associated with a decrease in the prime-age labor force participation rate of between 0.15 and 0.47 percentage points for men and between 0.15 and 0.19 percentage points for women, depending on the control strategy. We also estimate effects for narrower demographic groups and find substantially larger estimates for some groups, notably for white and minority men with less than a BA. We also present evidence on reverse causality. We show that a short-term unemployment shock did not increase the share of people misusing prescription opioids and that prescription levels vary substantially within quintiles of longer-term labor market performance. Our estimates are generally robust to estimation within those quintiles of 2000 labor market performance. These results argue against theories of reverse causation that rely on prescriptions rates being higher in labor markets that were already weaker. Read More

  • Affirmative Action and Racial Segregation

    Peter L Hinrichs

    Prior research suggests that statewide affirmative action bans reduce minority enrollment at selective colleges while leaving overall minority college enrollment unchanged. However, the effect of these bans on across-college racial segregation has not yet been estimated. This effect is theoretically ambiguous due to a U-shaped relationship across colleges between minority enrollment and college selectivity. This paper uses variation in the timing of affirmative action bans across states to estimate their effects on racial segregation as measured by standard exposure and dissimilarity indexes, finding that affirmative action bans have increased segregation across colleges in some cases but reduced it in others. In particular, early affirmative action bans in states with highly selective public universities appear to be associated with less segregation, whereas more recent affirmative action bans appear to be associated with more segregation. Read More

  • The Dynamics of the Racial Wealth Gap

    Dionissi Aliprantis Daniel R Carroll Eric R Young

    We reconcile the large and persistent racial wealth gap with the smaller racial earnings gap, using a general equilibrium heterogeneous-agents model that matches racial differences in earnings, wealth, bequests, and returns to savings. Given initial racial wealth inequality in 1962, our model attributes the slow convergence of the racial wealth gap primarily to earnings, with much smaller roles for bequests or returns to savings. Cross-sectional regressions of wealth on earnings using simulated data produce the same racial gap documented in the literature. One-time wealth transfers have only transitory effects unless they address the racial earnings gap. Read More

  • Proposed Solutions for Breaking the Cycle of Poverty

    Adiah Bailey

    How can we minimize the barriers that trap people in the cycle of poverty? The answer, at least in part, is a combination of providing access to resources and transportation. Read More

  • Looking beyond Data to Understand Economic Mobility

    Lucas Misera

    When living on the “wrong” side of a road can make a world of a difference, the proactive and hyper-local work of community development practitioners is essential for sparking change. Read More

  • Excess Persistence in Employment of Disadvantaged Workers

    Bruce Fallick Pawel Krolikowski

    We examine persistence in employment-to-population ratios in excess of that implied by persistence in aggregate labor market conditions, among less-educated individuals using state-level data for the United States. Dynamic panel regressions and local projections indicate a moderate degree of excess persistence, which dissipates within three years. We find no significant asymmetry between the excess persistence of high vs. low employment rates. The cumulative effect of excess persistence in the business cycle surrounding the 2001 recession was mildly positive, while the effect in the cycle surrounding the 2008-09 recession was decidedly negative. Simulations suggest that the lasting employment benefits of temporarily running a “high-pressure” economy are small. Read More

  • Firms, Skills, and Wage Inequality

    Roberto Pinheiro Murat Tasci

    We present a model with search frictions and heterogeneous agents that allows us to decompose the overall increase in US wage inequality in the last 30 years into its within- and between-firm and skill components. We calibrate the model to evaluate how much of the overall rise in wage inequality and its components is explained by different channels. Output distribution per firm-skill pair more than accounts for the observed increase over this period. Parametric identification implies that the worker-specific component is responsible for 85 percent of this, compared to 15 percent that is attributable to firm-level productivity shifts. Read More

  • What Is Behind the Persistence of the Racial Wealth Gap?

    Dionissi Aliprantis Daniel R Carroll

    Most studies of the persistent gap in wealth between whites and blacks have investigated the large gap in income earned by the two groups. Those studies generally concluded that the wealth gap was “too big” to be explained by differences in income. We study the issue using a different approach, capturing the dynamics of wealth accumulation over time. We find that the income gap is the primary driver behind the wealth gap and that it is large enough to explain the persistent difference in wealth accumulation. The key policy implication of our work is that policies designed to speed the closing of the racial wealth gap would do well to focus on closing the racial income gap. Read More

  • The Unintended Consequences of Employer Credit Check Bans for Labor Markets

    Kristle Romero Cortes Andrew Glover Murat Tasci

    Over the last decade, 11 states have restricted employers’ access to the credit reports of job applicants. We document a significant decline in county-level vacancies after these laws were enacted: Job postings fall by 5.5 percent in affected occupations relative to exempt occupations in the same county and the same occupation nationwide. Cross-sectional heterogeneity in the estimated effects suggests that employers use credit reports as signals: Vacancies fall more in counties with a large share of subprime residents, while they fall less in occupations with other commonly available signals. Read More

  • Defining the Challenge: Promoting Economic Mobility and Resilience

    Layisha Bailey

    To promote economic mobility and resilience among the underserved, an organization must first decide how it defines these terms. The definitions played a prominent role at a recent community development conference. Read how. Read More

  • A Long Ride to Work: Job Access and the Potential Impact of Ride-Hailing in the Pittsburgh Area

    Brett Barkley Emily Garr Pacetti Layisha Bailey

    Whether measured by proximity or commute time, data show that for the average transit rider, jobs are increasingly out of reach. Cleveland Fed researchers explored one solution for improving job access. Here’s your ticket to ride. Read More

  • The Opioid Epidemic and Its Effects: A Perspective on What We Know from the Federal Reserve Bank of Cleveland

    Kyle Fee

    Drug overdoses are now the leading cause of death for Americans under 50. In the Fourth District states of Kentucky, Ohio, Pennsylvania, and West Virginia, opioid overdose deaths are occurring at rates that exceed the 2016 national average of 13.2 deaths per 100,000 people. Read More

  • Trouble finding workers? The answer may be transit.

    Emily Garr Pacetti

    In the latest entry in their Notes from the Field blog, the Community Development Department discusses job access—in this case, how people get to work. The problem is a persistent one for low-income workers across the country and was highlighted during a recent trip to Dayton, Ohio. Read More

  • Do Foreign-Born Workers Cause Native-Born Workers to Move or Leave the Labor Force?

    Roberto Pinheiro Allan Dizioli

    This Commentary discusses how the presence of foreign-born workers in a local labor market affects the decisions of native-born workers to leave the labor force or move to another state. We analyze short panels obtained through the Current Population Survey and find that, in the short run, less-educated native-born workers react to a larger stock of foreign-born workers by either moving to a different state or dropping out of the labor force. In terms of magnitude, the effect is small but not insignificant. Read More

  • What’s working to improve lives and business in eastern Kentucky? Plenty.

    Michelle Park Lazette

    We toured 5 places in a day and a half. Covered more than 100 miles in eastern Kentucky. At each of these places, people described the persistent challenges of life and the ways they are trying to surmount them. They know work remains to be done, but many have tasted success. Read More

  • Redistributive Fiscal Policies and Business Cycles in Emerging Economies

    Amanda Michaud Jacek Rothert

    Government expenditures are procyclical in emerging markets and counter-cyclical in developed economies. We show this pattern is driven by differences in social transfers. Read More

  • Mobility

    Daniel R Carroll Eric R Young

    This paper studies short-run wealth mobility in a heterogeneous agents, incomplete-markets model. We include features commonly used in the literature to capture wealth inequality and find that they do little to improve the model's performance for wealth mobility. Finally, we introduce state-contingent assets, which allow households to partially span the space of labor productivity. Moving toward a more "complete" market lowers wealth mobility unless the labor income process is very persistent. Read More

  • Broadband and High-speed Internet Access in the Fourth District

    Shruthi Arvind Kyle Fee

    This report documents the availability of high-speed internet access in the Fourth Federal Reserve District. While our analysis clearly shows there is limited broadband access in rural parts of the Fourth District, it shows that urban low- and moderate-income (LMI) areas also have limited access. Read More