Murat Tasci

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.

This paper presents a flow-based methodology for real-time unemployment rate projections and shows that this approach performed considerably better at the onset of the COVID-19 recession in spring 2020 in predicting the peak unemployment rate as well as its rapid decline over the year. It presents an alternative scenario analysis for 2021 based on this methodology and argues that the unemployment rate is likely to end slightly below 5 percent by the end of 2021. The predictive power of the methodology comes from its combined use of real-time data with the flow approach.

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.

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.

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.

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.

Since the Great Recession, 11 states have restricted employers' access to the credit reports of job applicants. We document that county-level vacancies decline between 9.5 percent and 12.4 percent after states enact these laws. Vacancies decline significantly in affected occupations but remain constant in those that are exempt, and the decline is larger in counties with many subprime residents. Furthermore, subprime borrowers fall behind on more debt payments and reduce credit inquiries postban. The evidence suggests that, counter to their intent, employer credit check bans disrupt labor and credit markets, especially for subprime workers.

We document that county-level job vacancies decline between 9.5 and 12.4 percent after states enact laws that restrict employers' access to the credit reports of job applicants. The evidence suggests that, counter to their intent, employer credit-check bans disrupt labor and credit markets, especially for workers who are subprime borrowers.

We extend an on-the-job search framework in order to allow firms to hire workers with different skills and skills to interact with firms' total factor productivity (TFP). Our model implies that more productive firms are larger, pay higher wages, and hire more workers at all skill levels and proportionately more at higher skill types, matching key stylized facts.

We show the inability of a standardly calibrated labor search-and-matching model to account for observed levels of labor market volatility.

This paper evaluates the ability of autoregressive models, professional forecasters, and models that leverage unemployment flows to forecast the unemployment rate.

This paper measures flow rates into and out of unemployment for Turkey and uses them to estimate the unemployment rate trend, that is, the unemployment rate to which the economy converges in the long run.

We show the inability of a standardly calibrated labor search-and-matching model to account for observed levels of labor market volatility.

We show the inability of a standardly calibrated labor search-and-matching model to account for observed levels of labor market volatility.

We show that search frictions embedded in an RBC model primarily manifest themselves at the extensive margin.

We construct a multiple shock, discrete time version of the Mortensen-Pissarides labor market search model to investigate the basic model’s well-known tendency to underpredict the volatility of key labor market variables.

We show that search frictions embedded in an RBC model primarily manifest themselves at the extensive margin.

In this paper, we present a simple, reduced-form model of comovements in real activity and worker flows (job finding and separation).

In this paper, we present a simple, reduced-form model of comovements in real activity and worker flows (job finding and separation).

We construct a multiple-shock version of the Mortensen-Pissarides labor market search model to investigate the basic model’s well-known tendency to underpredict the volatility of key labor market variables.

We review the positive and normative effects of a minimum wage in various versions of a search-theoretic model of the labor market.

This paper studies amplification of productivity shocks in labor markets through on-the-job-search.

This paper constructs a multiple-shock version of the Mortensen-Pissarides labor market search model to investigate the basic model’s well-known tendency to under predict the volatility of key labor market variables.

Small firms played an outsized role in the Great Resignation as PPP funds might have delayed worker reallocation to later in the pandemic recovery.

In this Economic Commentary, we focus on the first round of Paycheck Protection Program (PPP) loans granted beginning in March 2020 until early August 2020, when turbulence in the labor market was pronounced, in order to demonstrate the PPP’s effects on local labor markets. We find that PPP loans helped mitigate the negative impact of the pandemic recession on state-level employment growth. States that received most of their funding early in the loan period had smaller employment declines than did states that received comparable funds later in the period.

We use flows into and out of unemployment to estimate the unemployment rate over the next year. This approach produces less stark projections for the unemployment rate over the course of the next year than some of the more alarming projections that have been reported. Using our approach and assuming that the severest social-distancing measures will be lifted in June, we estimate that the unemployment rate will peak in May at about 16 percent but gradually decline thereafter and end the year at 7.5 percent.

Although the concept of the natural rate of employment, NAIRU, or “U star” is used to measure the amount of slack in the labor market, it is an unobservable quantity that must be estimated using data currently available. This Commentary investigates the degree to which our estimates of U star at various points in the current business cycle have changed as real-time data have been revised and as more data points have accumulated. I find that the availability of additional data has contributed to a significant change in our estimates of U star at earlier points in the business cycle, a result that suggests we might have been underestimating the level of labor market slack during some of the recent recovery period. In retrospect, our updated estimates of U star suggest labor markets were not as tight as we thought they were then.

We are now in one of the longest expansions on record. The recession that preceded that expansion was one of the worst in history. Are those two facts related? Some economists suggest they are, while others suggest it’s the other way around: Longer expansions lead to more severe recessions. We assess the evidence for these two hypotheses. We find clear evidence for the former and little for the latter. Deeper recessions are often followed by stronger recoveries, while longer and stronger expansions are not followed by deeper recessions.

Though labor market statistics are often reported and discussed at the national level, conditions can vary quite a bit across individual states. We explore differences in these labor market conditions across US states before and after the Great Recession using a ratio of the number of unemployed workers to job vacancies. We show that the intensity of the adverse effects of the recession and the strength of the recovery varied geographically at all points in the process. We also demonstrate that wage growth is delayed until the ratio of unemployed workers to job vacancies returns to prerecession levels.

Evaluating what constitutes a "normal" level for the unemployment rate is an important issue for policymakers, who need to assess how close the economy is to full employment. We introduce a framework that enables us to calculate the normal unemployment rate for each of the four states in the Fourth District and compare that rate to the national normal rate. We conclude that these states and the District as a whole have very little labor market slack left from the Great Recession.

In the aftermath of the Great Recession, many researchers, analysts, and policymakers have taken a keener interest in the unemployment rate not only as a gauge of current economic conditions, but also as a variable of interest for forecasting.

Estimates of labor market slack can diverge a great deal depending on how slack is defined.

The Federal Open Market Committee (FOMC) has tied its asset purchases to a "substantial improvement" in labor market conditions.

Okun’s law is a statistical relationship between unemployment and GDP that is widely used as a rule of thumb for assessing the unemployment rate.

The last three U.S. recessions have been followed by "jobless recoveries." The lack of robust job growth once GDP starts to pick up has a lot people asking if labor markets have changed in some fundamental way.

Countries with flexible institutions and labor market policies, like the U.S., experienced increases in unemployment over the course of the Great Recession, while those with relatively rigid institutions and strict labor market policies fared better.

Unemployment has remained very high since the end of last recession, leading some economists to suggest that the underlying trend of the unemployment rate must have risen, driving unemployment permanently higher.

The past recession has hit the labor market especially hard, and economists are wondering whether some fundamentals of the market have changed because of that blow. Many are suggesting that the natural rate of long-term unemployment— the level of unemployment an economy can’t go below—-has shifted permanently higher. We use a new measure that is based on the rates at which workers are finding and losing jobs and which provides a more accurate assessment of the natural rate. We fi nd that the natural rate of unemployment has indeed shifted higher—but much less so than has been suggested. Surprising trends in both the job-finding and job-separation rates explain much about the current state of the unemployment rate.

Recent recessions have been followed by exceptionally slow recoveries in the labor market, and the current recession is shaping up to follow the same pattern.

Can two countries, or twodifferent states, with similartechnologies, resources, andpolicies exhibit differences inlabor market performance?

New models of employment show that there are some cases in which a minimum wage can have positive effects on employment and social welfare.

The Paycheck Protection Program was a lifesaver for many small businesses and employees—but it wasn’t without drawbacks. In this Ask the Expert, we highlight key findings from the Cleveland Fed’s research into the program’s impact on labor markets.

Trends in energy prices, steelmaking, and auto production are three areas that could determine the course for the 2016 regional economy.

Federal Reserve Bank of Cleveland economists examine the many forces that will determine how “great” the most recent recession turns out to be. Find the articles, plus our interview with economic historian Price Fishback, in the fall 2011 issue of Forefront.