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View our academic research, reports, and blog posts that tackle issues of economic and racial inclusion.

Community Development Reports
Does Job Quality Affect Occupational Mobility?
08.04.2022
Workers in the highest-quality jobs are more likely to remain in those jobs and less likely to be unemployed or leave the labor force. The opposite is true for workers in the lowest-quality jobs. This analysis adds to a growing body of research about job quality and shows that it is an important dimension of the labor market to consider.
Working Paper
Minimum Wage Increases and Vacancies
04.21.2022 | WP 19-30R
Using a unique data set and a novel identification strategy, we estimate the effect of minimum wage increases on job vacancy postings. Utilizing occupation-specific county level vacancy data from the Conference Board’s Help Wanted Online for 2005-2018, we find that state-level minimum wage increases lead to substantial declines in existing and new vacancy postings in occupations with a larger share of workers who earn close to the prevailing minimum wage. We estimate that a 10 percent increase in the state level effective minimum wage reduces vacancies by 2.4 percent in the same quarter, and the cumulative effect is as large as 4.5 percent a year later. The negative effect on vacancies is more pronounced for occupations where workers typically have lower educational attainment (high school or less) and in counties with higher poverty rates. We argue that our focus on vacancies versus on employment has a distinct advantage of highlighting a mechanism through which minimum wage hikes affect labor demand. Our finding of a negative effect on vacancies is not inconsistent with the wide range of findings in the literature about the effect of minimum wage changes on employment, which is driven by changes in both hiring and separation margins.
Notes from the Field
When Benefits Cliffs Turn Raises into Penalties, Local and National Efforts Help Workers and Employers Navigate Options
03.23.2022
Getting a raise is usually a good thing. But what if it comes at the cost of losing a benefit that you rely on? Here’s what some organizations are doing to help workers navigate the path to economic independence.
Working Paper
On the Distributional Effects of International Tariffs
02.14.2022 | WP 20-18R
We provide a quantitative analysis of the distributional effects of the 2018 increase in tariffs by the US and its major trading partners. We build a trade model with incomplete asset markets and households that are heterogeneous in their age, income, wealth, and labor skill. When tariff revenues are used to reduce labor and capital income taxes and increase transfers, the average welfare loss from the trade war is equivalent to a permanent 0.1 percent reduction in consumption. Much larger welfare losses are concentrated among retirees and low-wealth and low-income workers, while only wealthy households experience a welfare gain.
Community Development Reports
Missed Connections in Cleveland: The Disconnect Between Job Access and Employment
08.11.2021
Generally, a high job-access rate has a positive impact on employment; that is, in areas where jobs are easier to reach, employment rates are usually higher. But this isn’t true for the Cleveland metro area. In fact, we see the reverse: Neighborhoods with high rates of job access tend to have low employment rates, and neighborhoods with low rates of job access tend to have high employment rates.
Economic Commentary
How the Pandemic Has Reshaped Economic Inclusion in the United States
06.03.2021 | EC 2021-14
The pandemic brought unusually large and novel changes to the US labor market. We investigate how the pandemic affected workers of different ages, racial or ethnic backgrounds, and gender and the degree to which these effects have persisted after a year of recovery.
Community Development Reports
Rural Employment in Four States: A Story of Specialization and Change (2010 through 2019)
05.27.2021
Is specializing in an industry the way to economic success or the road to economic challenges for rural communities? It depends on the community’s resilience.
Economic Commentary
Economic Inclusion 2000–2020: Labor Market Trends by Race in the US and States
03.22.2021 | EC 2021-06
This Commentary examines the extent to which disparities exist between Blacks and whites in labor market outcomes such as levels of labor force participation, unemployment rates, and earnings. To gauge whether disparities have narrowed or widened since 2000, national trends in these outcomes during the past two decades are compared to the trends in three states: Kentucky, Ohio, and Pennsylvania. Finally, to assess the current state of economic inclusion as reflected in the labor market, gaps in Black and white outcomes are compared across US states in 2020.
Community Development Reports
The Decline in Access to Jobs and the Location of Employment Growth in US Metro Areas: Implications for Economic Opportunity and Mobility
10.01.2020
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.
Working Paper
On the Distributional Effects of International Tariffs
06.22.2020 | WP 20-18
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.
Economic Commentary
The Labor-Market Skills of Foreign-born Workers in the United States, 2007–2017
05.21.2020 | EC 2020-10
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.
Economic Commentary
Do Affirmative Action Bans Cause Students to Move Across State Lines to Attend College?
02.26.2020 | EC 2020-04
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.
Notes from the Field
For Too Many Minority Workers, Earnings Still Don’t Add Up
02.05.2020
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.
Working Paper
Minimum Wage Increases and Vacancies
12.23.2019 | WP 19-30
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.
Notes from the Field
Making Change: Addressing Skills-training and Employment Needs for Returning Citizens
12.19.2019
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.
Notes from the Field
Profit with a Purpose: Manufacturing Success for Cincinnati’s Second-Chance Citizens
12.19.2019
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.
Community Development Reports
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
11.26.2019
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.
Working Paper
Opioids and the Labor Market
11.15.2019 | WP 18-07R2
The second revision of this working 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 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.
Working Paper
Affirmative Action and Racial Segregation
10.16.2019 | WP 16-36R
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.
Working Paper
The Dynamics of the Racial Wealth Gap
10.08.2019 | WP 19-18
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.
Notes from the Field
Proposed Solutions for Breaking the Cycle of Poverty
09.05.2019
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.
Notes from the Field
Looking beyond Data to Understand Economic Mobility
09.05.2019
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.
Working Paper
Excess Persistence in Employment of Disadvantaged Workers
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.
Working Paper
Firms, Skills, and Wage Inequality
04.19.2019 | WP 17-06R
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.
Economic Commentary
What Is Behind the Persistence of the Racial Wealth Gap?
02.28.2019 | EC 2019-03
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.
Working Paper
The Unintended Consequences of Employer Credit Check Bans for Labor Markets
02.25.2019 | WP 19-05
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.
Notes from the Field
Defining the Challenge: Promoting Economic Mobility and Resilience
10.25.2018
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.
Community Development Reports
A Long Ride to Work: Job Access and the Potential Impact of Ride-Hailing in the Pittsburgh Area
09.05.2018
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.
Community Development Reports
The Opioid Epidemic and Its Effects: A Perspective on What We Know from the Federal Reserve Bank of Cleveland
05.31.2018
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.
Notes from the Field
Trouble finding workers? The answer may be transit.
03.28.2018
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.
Economic Commentary
Do Foreign-Born Workers Cause Native-Born Workers to Move or Leave the Labor Force?
11.15.2017 | EC 2017-19
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.
Working Paper
Redistributive Fiscal Policies and Business Cycles in Emerging Economies
05.24.2017 | WP 17-09
Government expenditures are procyclical in emerging markets and counter-cyclical in developed economies. We show this pattern is driven by differences in social transfers.
Working Paper
Mobility
12.23.2016 | WP 16-34
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.
Community Development Reports
Broadband and High-speed Internet Access in the Fourth District
12.08.2016
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.