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Bruce Fallick
Person

Bruce Fallick

Senior Vice President
Areas of Expertise job loss, unemployment, worker mobility, and wage rigidity
Department Research
Education
  • BA,
  • Philosophy and Economics,
  • University of Pittsburgh,
  • 1983
  • PhD,
  • Economics,
  • University of Pennsylvania,
  • 1988

Bruce Fallick is a senior vice president in the Research Department at the Federal Reserve Bank of Cleveland. He leads the microeconomics group, which conducts research in various fields of microeconomics, including labor, education, public, and urban economics; oversees the regional analysis and outreach group; and provides advice on monetary policy. Dr. Fallick’s own work has focused on research related to labor and macroeconomics. His current research concentrates on job loss, unemployment, worker mobility, and wage rigidity.​​​

Prior to joining the Cleveland Reserve Bank in 2014, Dr. Fallick served as a senior economist in the Division of Research and Statistics at the Board of Governors of the Federal Reserve System. He joined the Federal Reserve Board in 1993. Dr. Fallick also served as a visiting professor of economics at Oberlin College and as an assistant professor of economics at the University of California, Los Angeles (UCLA).

Dr. Fallick holds a BA in philosophy and economics from the University of Pittsburgh and a PhD in economics from the University of Pennsylvania.

    • Working Papers

      • Working Paper
        The Impact of the Age Distribution on Unemployment: Evidence from US States
        Bruce Fallick Christopher L. Foote
        10.18.2022 | WP 22-27
        Economists have studied the potential effects of shifts in the age distribution on the unemployment rate for more than 50 years. Most of this analysis uses a "shift-share" method, which assumes that the demographic structure has no indirect effects on age-specific unemployment rates. This paper uses state-level data to revisit the influence of the age distribution on unemployment in the United States. We examine demographic effects across the entire age distribution rather than just the youth share of the population -- the focus of most previous work -- and extend the date range of analysis beyond that which was available for previous research. We find that shifts in the age distribution move the unemployment rate in the direction that a mechanical shift-share model would predict. But these effects are larger than the mechanical model would generate, indicating the presence of amplifying indirect effects of the age distribution on unemployment.

        Topics: Labor economics
      • Working Paper
        Job Displacement and Job Mobility: The Role of Joblessness
        Bruce Fallick John Haltiwanger Erika McEntarfer Matthew Staiger
        08.31.2021 | WP 19-27R
        Who is harmed by and who benefits from worker reallocation? We investigate the earnings consequences of changing jobs and find a wide dispersion in outcomes. This dispersion is driven not by whether the worker was displaced, but by the duration of joblessness between job spells. Job movers who experience joblessness suffer a persistent reduction in earnings and tend to move to lower-paying firms, suggesting that job ladder models offer a useful lens through which to understand the negative consequences of job separations.

        Topics: Labor economics
      • Working Paper
        Estimating the Trend Unemployment Rate in the Fourth Federal Reserve District
        Bruce Fallick Murat Tasci
        07.01.2020 | WP 20-19
        We estimate trend unemployment rates for Ohio, Pennsylvania, Kentucky, and West Virginia, states that span parts of the Fourth District of the Federal Reserve System. Our estimated unemployment rate trend for the District as a whole stood at 5.7 percent in 2020:Q1 compared to a 4.7 percent observed unemployment rate within the District, implying a tight labor market by historical standards.

        Topics: Econometrics modeling and forecasting, Labor economics
      • Working Paper
        Downward Nominal Wage Rigidity in the United States during and after the Great Recession
        Bruce Fallick Daniel Villar William Wascher
        03.17.2020 | WP 16-02R
        Rigidity in wages has long been thought to impede the functioning of labor markets. In this paper, we investigate the extent of downward nominal wage rigidity in US labor markets using job-level data from a nationally representative establishment-based compensation survey collected by the Bureau of Labor Statistics. We use several distinct methods to test for downward nominal wage rigidity and to assess whether such rigidity is less or more severe in the presence of negative economic shocks than in more normal economic times. We find a significant amount of downward nominal wage rigidity in the United States and no evidence that the high degree of labor market distress during the Great Recession reduced downward nominal wage rigidity. We further find a lower degree of nominal rigidity at multi-year horizons.

        Topics: Labor economics
      • Working Paper
        Job-to-Job Flows and the Consequences of Job Separations
        Bruce Fallick John Haltiwanger Erika McEntarfer Matthew Staiger
        12.13.2019 | WP 19-27
        A substantial empirical literature documents large and persistent average earnings losses following job displacement. Our paper extends the literature on displaced workers by providing a comprehensive picture of earnings and employment outcomes for all workers who separate. We show that for workers not recalled to their previous employer, earnings losses follow separations in general, as opposed to displacements in particular. The key predictor of earnings losses is not displacement but the length of the nonemployment spell following job separation. Moreover, displaced workers are no more likely to experience a substantial spell of nonemployment than are other non-recalled separators. Our results suggest that future research on the consequences of job loss should work to disentangle the strong association between nonemployment and earnings losses, as opposed to focusing specifically on displaced workers.

        Topics: Labor economics
      • Working Paper
        Excess Persistence in Employment of Disadvantaged Workers
        Bruce Fallick Pawel M. Krolikowski
        08.30.2019 | WP 18-01R
        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.

        Topics: Labor economics, Economic equity and inclusion
      • Working Paper
        Hysteresis in Employment among Disadvantaged Workers
        Bruce Fallick Pawel M. Krolikowski
        02.06.2018 | WP 18-01
        We examine hysteresis in employment-to-population ratios among less-educated men using state-level data. Results from dynamic panel regressions indicate a moderate degree of hysteresis: The effects of past employment rates on subsequent employment rates can be substantial but essentially dissipate within three years. This finding is robust to a number of variations. We find no substantial asymmetry in the persistence of high vs. low employment rates. The cumulative effect of hysteresis in the business cycle surrounding the 2001 recession was mildly positive, while the effect in the cycle surrounding the 2008–09 recession was, through 2016, decidedly negative. Additional simulations suggest that the employment benefits of temporarily running a “high-pressure” economy are small.

        Topics: Labor economics
      • Working Paper
        Downward Nominal Wage Rigidity in the United States during and after the Great Recession
        Bruce Fallick Michael Lettau William Wascher
        01.07.2016 | WP 16-02
        We use establishment-level data from a nationally representative establishment-based compensation survey collected by the BLS to investigate the extent to which downward nominal wage rigidity is present in US labor markets.

        Topics: Labor economics
      • Working Paper
        Assessing the Change in Labor Market Conditions
        Hess T. Chung Bruce Fallick Christopher J. Nekarda David D. Ratner
        12.19.2014 | WP 14-38
        This paper describes a dynamic factor model of 19 U.S. labor market indicators, covering the broad categories of unemployment and underemployment, employment, workweeks, wages, vacancies, hiring, layoffs, quits, and surveys of consumers’ and businesses’ perceptions. The resulting labor market conditions index (LMCI) is a useful tool for gauging the change in labor market conditions. In addition, the model provides a way to organize discussions of the signal value of different labor market indicators in situations when they might be sending diverse signals. The model takes the greatest signal from private payroll employment and the unemployment rate. Other influential indicators include the insured unemployment rate, consumers’ perceptions of job availability, and help-wanted advertising. Through the lens of the LMCI, labor market conditions have improved at a moderate pace over the past several years, albeit with some notable variation along the way. In addition, from the perspective of the model, the unemployment rate declined a bit faster over the past two years than was consistent with the other indicators.

        Topics: Labor economics
      • Working Paper
        Labor Force Participation: Recent Developments and Future Prospects
        Stephanie Aaronson Tomaz Cajner Bruce Fallick Felix Galbis-Reig Christopher Smith William Wascher
        09.04.2014 | WP 14-10
        Since 2007, the labor force participation rate has fallen from about 66 percent to about 63 percent. The sources of this decline have been widely debated among academics and policymakers, with some arguing that the participation rate is depressed due to weak labor demand while others argue that the decline was inevitable due to structural forces such as the aging of the population. In this paper, we use a variety of approaches to assess reasons for the decline in participation. Although these approaches yield somewhat different estimates of the extent to which the recent decline in participation reflects cyclical weakness rather than structural factors, our overall assessment is that much—but not all—of the decline in the labor force participation rate since 2007 is structural in nature. As a result, while we see some of the current low level of the participation rate as indicative of labor market slack, we do not expect the participation rate to show a substantial increase from current levels as labor market conditions continue to improve.

        Topics: Labor economics
      • Working Paper
        Why Do Earnings Fall with Job Displacement?
        William Carrington Bruce Fallick
        06.17.2014 | WP 14-05
        The earnings of workers are reduced for many years after being displaced from their jobs, and those workers and their families face increased risk of other problems as well. The ills suffered by displaced workers motivated several recent expansions of government programs, including the unemployment insurance system, and have spurred calls for wage insurance that would provide longer run earnings replacement. However, while the magnitude of the losses is relatively clear, the theory of why displacement matters is scattered and somewhat undeveloped. Much of the policy discussion appears to interpret displacement induced losses through the lens of specific human capital theory, and there is considerable empirical support for that model. But there are several other theories of why job displacement is costly. This paper reviews theories of costly job displacement and discusses their consistency with the available empirical evidence. We find that theories of human capital and matching are an important perspective on the losses of displaced workers, but we cannot rule out important roles for other theories, some of which suggest different policy responses.

        Topics: Labor economics

    • Economic Commentaries

      • Economic Commentary
        Is the Middle Class Worse Off Than It Used to Be?
        Emily Dohrman Bruce Fallick
        02.12.2020 | EC 2020-03
        We analyze how median real incomes in the United States have changed since 1980 under a definition of the middle class that adjusts for changes in demographics. We find that failing to adjust for demographic shifts in the population relating to age, race, and education can indicate a more positive outlook than is truly the case. We also find that the real median incomes of today’s middle class are somewhat higher than they used to be, particularly for households headed by two adults. We find, as in prior research, that prices for housing, healthcare, and education have risen more than middle-class incomes, while prices for transportation, food, and recreation have risen less than middle-class incomes.

        Topics: Financial well-being

    • Forefront

    • “Downward Nominal Wage Rigidity in the United States in Times of Economic Distress and Low Inflation.” With Daniel Villar and William Wascher. Labour Economics, 78, October 2022.
    • “Excess Persistence in Employment of Disadvantaged Workers.” With Pawel Krolikowski. International Journal of Central Banking, 18(4), October 2022, pp. 165–216.
    • “Why Do Earnings Fall with Job Displacement?” With William Carrington. Industrial Relations, 2017, 56(4): 688–722.
    • “Labor Force Participation: Recent Developments and Future Prospects.” With Stephanie Aaronson, Tomaz Cajner, Felix Galbis-Rieg, Christopher Smith, and William Wascher. Brookings Papers on Economic Activity, 2014 (Fall).
    • “Employer–to–Employer Flows in the United States: Estimates Using Linked Employer–Employee Data.” With Melissa Bjelland, Erika McEntarfer, and John Haltiwanger. Journal of Business and Economic Statistics, 2011, 29(4): 493–505.
    • “The Recall and New Job Search of Laid-off Workers: A Bivariate Proportional Hazard Model with Unobserved Heterogeneity.” With Keunkwan Ryu. Review of Economics and Statistics, 2007, 89(2): 313–323.
    • “Job Hopping in Silicon Valley: The Micro–Foundations of a High Technology Cluster.” With Charles Fleischman and Jim Rebitzer. Review of Economics and Statistics, 2006, 88(3): 472–481.
    • “The Recent Decline in Labor Force Participation and Its Implications for Potential Labor Supply.” With Stephanie Aaronson, Andrew Figura, Jonathan Pingle, and William Wascher. Brookings Papers on Economic Activity, 1:2006.
    • “Racial Minorities, Economic Scale, and the Geography of Self-Employment: Comment.” Brookings–Wharton Papers on Urban Affairs, 2001, 283–284.
    • “Do Some Workers Have Minimum Wage Careers?” With Will Carrington. Monthly Labor Review, 2001, 124(5): 17–27.
    • “Investment and Union Certification.” With Kevin Hassett. Journal of Labor Economics, 1999, 17(3: 570–582.
    • “Part–Time Work and Industry Growth.” Monthly Labor Review, 1999, 122(3): 22–29.
    • “A Review of the Recent Empirical Literature on Displaced Workers.” Industrial and Labor Relations Review, 1996, 50(1): 5–17.
    • “The Hiring of New Labor by Expanding Industries.” Labour Economics, 1996, 3(1): 25–42.
    • “The Minimum Wage and the Employment of Youth: Evidence from the NLSY.” With Janet Currie. Journal of Human Resources, 1996, 31(2): 404–428.
    • “Unionization and Acquisitions.” With Kevin Hassett. Journal of Business, 1996, 69(1): 51–73.
    • “The Endogeneity of Advance Notice and Fear of Destructive Attrition.” Review of Economics and Statistics, 1994, 76(2): 378–84.
    • “The Industrial Mobility of Displaced Workers.” Journal of Labor Economics, 1993, 11(2): 302–323.
    • “Job Security and Job Search in More Than One Labor Market.” Economic Inquiry, 1992, 30(4: 742–745.
    • “Unemployment Insurance and the Rate of Reemployment of Displaced Workers.” Review of Economics and Statistics, 1991, 73(2): 228–235.

  • Book Chapters

    • “The Aging of the Population and the Aggregate Labor Market.” With Charles Fleischman and Jonathan Pingle. In Labor in the New Economy, Studies in Income and Wealth, Volume 71, edited by Abraham, Spletzer, and Harper. National Bureau of Economic Research, 2010.

    • “Macroeconomic Policy and the Theory of Job Search.” With William Wascher. In Search Theory and Unemployment: Theory, Empiricism, and Policy, edited by Stephen A. Woodbury and Carl Davidson, Boston: Kluwer Academic Publishers, 2003.

    • “Has Compensation Become More Flexible?” With Sandra Cannon, Michael Lettau, and Raven Saks. In Research in Labor Economics, Volume 20, edited by S.W Polachek, 243–269, 2001.

    Conference Proceedings

    • “The Effect of Population Aging on Aggregate Labor Supply in the US.” With Jonathan Pingle. In Labor Supply in the New Century, Federal Reserve Bank of Boston Conference Series 52, 2007 (June): 31–80.

    • “How the Graying of the Baby Boom Affects the US Labor Market.” With Charles Fleischman and Jonathan Pingle. In The Economic Outlook for 2007: Papers Presented at the Fifty-Third Annual Conference on the Economic Outlook. Ann Arbor: University of Michigan, 2006 (November): 102–18.

    • “From School to Work: The Effect of Minimum Wages on the Time to First Job.” With Janet Currie. Industrial Relations Research Association Forty-second Annual Proceedings, 1989 (December): 576–84.