Employment Policy and Labor Markets

In 2001, the U.S. economy entered a seventh consecutive year of expansion and unemployment rates were at 30-year lows. Yet, not all shared in the employment boom. Levy Institute research has found that between 1995 and 1999, only 217,000 jobs—of the more than 13 million created—went to the half of the population holding a high school degree or less; the remaining jobs went to those with at least some college education. Today, in an ever-tightening economy, there are more than 16 million unemployed—10 percent of the labor force—and four job seekers for each available job. In addition, there are roughly 17 million full-time workers whose wages place them at or below the official poverty line. Clearly, there is room for improvement on the jobs front.

In response to this problem, Levy Institute scholars have proposed a full-employment, or job opportunity, program that would employ all who are willing to work and increase flexibility between economic sectors, thereby lowering the social and economic costs of unemployment. This program is preferable to proposed alternatives such as a reduction of the workweek or employment subsidies, neither of which is sure to raise employment—and both may have serious side effects. Other labor market policies studied by Levy Institute scholars include the effects of technology on earnings, and the effects of an increase in the minimum wage on hiring practices and earnings.

Research Group: Dimitri B. Papadimitriou, James K. Galbraith, Jan Kregel, L. Randall Wray, Rania Antonopoulos, Valeria Esquivel, Mathew Forstater, Fadhel Kaboub, Pavlina R. Tcherneva

Program Publications
Working Papers | March 2010 Decomposition of the Black-White Wage Differential in the Physician Market This paper proposes a difference-in-differences strategy to decompose the contributions of various types of discrimination to the black-white wage differential. The proposed estimation strategy is implemented using data from the Young Physicians Survey. [more] Working Paper No. 588
Policy Notes | October 2009 Fiscal Stimulus, Job Creation, and the Economy: What Are the Lessons of the New Deal? As the nation watches the impact of the recent stimulus bill on job creation and economic growth, a group of academics continues to dispute the notion that the fiscal and job creation programs of the New Deal helped end the Depression. The work of these revisionist scholars has led to a public discourse that has obvious implications for the controversy surrounding fiscal stimulus bills. [more] Policy Note 2009/10
Working Papers | October 2009 Lessons from the New Deal Since the current recession began in December 2007, New Deal legislation and its effectiveness have been at the center of a lively debate in Washington. This paper emphasizes some key facts about two kinds of policy that were important during the Great Depression and have since become the focus of criticism by new New Deal critics: (1) regulatory and labor relations legislation, and (2) government spending and taxation. [more] Working Paper No. 581
Public Policy Brief Highlights | September 2009 The New New Deal Fracas: Did Roosevelt’s “Anticompetitive” Legislation Slow the Recovery from the Great Depression? A wave of revisionist work claims that “anticompetitive” New Deal legislation such as the National Industrial Recovery Act (NIRA) and the National Labor Relations Act (NLRA) greatly slowed the recovery from the Depression; in this new public policy brief, President Dimitri B. Papadimitriou and Research Scholar Greg Hannsgen review these claims in light of current policy debates and cast into doubt the argument that NIRA and NLRA significantly prolonged or worsened the Depression. [more] Public Policy Brief Highlights No. 104A, 2009
Public Policy Briefs | August 2009 The New New Deal Fracas: Did Roosevelt’s “Anticompetitive” Legislation Slow the Recovery from the Great Depression? A wave of revisionist work claims that “anticompetitive” New Deal legislation such as the National Industrial Recovery Act (NIRA) and the National Labor Relations Act (NLRA) greatly slowed the recovery from the Depression; in this new public policy brief, President Dimitri B. Papadimitriou and Research Scholar Greg Hannsgen review these claims in light of current policy debates and cast into doubt the argument that NIRA and NLRA significantly prolonged or worsened the Depression. [more] Public Policy Brief No. 104, 2009
Public Policy Brief Highlights | August 2009 Promoting Gender Equality through Stimulus Packages and Public Job Creation: Lessons Learned from South Africa’s Expanded Public Works Programme Beyond loss of income, joblessness is associated with greater poverty, marginalization, and social exclusion; the current global crisis is clearly not helping. In this new Public Policy Brief, Research Scholar Rania Antonopoulos explores the impact of both joblessness and employment expansion on poverty, paying particular attention to the gender aspects of poverty and poverty-reducing public employment schemes targeting poor women. [more] Public Policy Brief Highlights No. 101A, 2009
Press Releases | June 2009 Obama Stimulus Package Does Little to Address Income and Employment Disparities in U.S. Economy, According to a New Special Report from The Levy Economics Institute [more] Press Release, June 12, 2009
Press Releases | June 2009 Government Job Programs That Focus on Social Services More Than Infrastructure May Offer Greater Benefits to Economy, New Study from Levy Economics Institute Suggests [more] Press Release, June 8, 2009
Public Policy Briefs | June 2009 Promoting Gender Equality through Stimulus Packages and Public Job Creation Beyond loss of income, joblessness is associated with greater poverty, marginalization, and social exclusion; the current global crisis is clearly not helping. In this new Public Policy Brief, Research Scholar Rania Antonopoulos explores the impact of both joblessness and employment expansion on poverty, paying particular attention to the gender aspects of poverty and poverty-reducing public employment schemes targeting poor women. [more] Public Policy Brief No. 101, 2009
Conference Proceedings | June 2009 Employment Guarantee Policies A Collaborative Project of the United Nations Development Programme, Regional Bureau for Latin America and the Caribbean (RBLAC), and the Bureau for Development Policy (BDP), in Partnership with The Levy Economics Institute. The Levy Economics Institute, Blithewood, Annandale-on-Hudson, New York June 22–23, 2009. [more] Conference Proceedings, June 22–23, 2009
Policy Notes | April 2009 A Proposal for a Federal Employment Reserve Authority There is already considerable talk about the possible need for a massive public works program in response to the deepening recession and rising unemployment; however, an ad hoc emergency approach is going to waste billions of dollars by mismatching skills and needs. In this new Policy Note, Martin Shubik of Yale University outlines a proposal aimed directly at providing good planning consistent with maintaining market freedom and minimizing pork-barrel legislation. [more] Policy Note 2009/5
Policy Notes | April 2009 A Crisis in Coordination and Competence The ad hoc emergency approach to the current economic crisis has a great chance of wasting billions of dollars by mismatching skills and needs. According to Martin Shubik of Yale University, the current deepening recession needs a “quick fix” solution now, but a longer-fix solution must be put into place along with it. [more] Policy Note 2009/4
Working Papers | April 2009 The Social and Economic Importance of Full Employment Unemployment was singled out by John Maynard Keynes as one of the principle faults of capitalism; the other is excessive inequality. Obviously, there is some link between these two faults: since most people living in capitalist economies must work for wages as a major source of their incomes, the inability to obtain a job means a lower income. [more] Working Paper No. 560
Working Papers | April 2009 Labor-market Performance in the OECD In this paper we assess the evolution of labor-market performance in the Organisation for Economic Co-operation and Development (OECD) over the last decade. We provide a survey of the literature dealing with labor-market performance in the OECD, finding that, while this literature tends to conclude that institutions are a key part of the story, the survey’s results appear far less robust and uniform than is commonly believed. [more] Working Paper No. 559
Policy Notes | January 2009 Obama's Job Creation Promise Job creation is once again at the forefront of policy action, and for advocates of pro-employment policies, President Obama’s Keynesian bent is a most welcome change. However, there are concerns that Obama’s plan simply does not go far enough, and that a large-scale public investment program may face shortages of skilled labor, put upward pressure on wages, and leave women and minorities behind. [more] Policy Note 2009/1
Working Papers | December 2008 Hypothetical Integration in a Social Accounting Matrix and Fixed-price Multiplier Analysis This study proposes a simple modification to a Social Accounting Matrix (SAM) in order to analyze the multiplier effects of a new sector. A different input composition, or technology, of the sector makes a conventional analysis of final-demand injections on existing sectors invalid. [more] Working Paper No. 552
Working Papers | October 2008 Promoting Equality Through an Employment of Last Resort Policy Unemployment has far-reaching effects, all leading to an inequitable distribution of well-being. To put an economy on an equitable growth path, economic development must be based on social efficiency, equity—and job creation. [more] Working Paper No. 545
Working Papers | August 2008 Keynes’s Approach to Full Employment This paper argues that John Maynard Keynes had a targeted (as contrasted with aggregate) demand approach to full employment. Modern policies, which aim to “close the demand gap,” are inconsistent with the Keynesian approach on both theoretical and methodological grounds. [more] Working Paper No. 542
Working Papers | July 2008 The Return of Fiscal Policy The monetarist counterrevolution and the stagflation period of the 1970s were among the theoretical and practical developments that led to the rejection of fiscal policy as a useful tool for macroeconomic stabilization and full employment determination.  Recent mainstream contributions, however, have begun to reassess fiscal policy and have called for its restitution in certain cases. [more] Working Paper No. 539
Working Papers | May 2008 Argentina: A Case Study on the Plan Jefes y Jefas de Hogar Desocupados, or the Employment Road to Economic Recovery After the 2001 crisis, Argentina—once the poster-child for pro-market structural-adjustment policies—had to define a new strategy in order to manage the societal demands that had led to the fall of the previous administration. The demand by the majority of the population for employment recovery spurred the government to introduce a massive employment program, the Plan Jefes y Jefas de Hogar Desocupados (Program for Unemployed Male and Female Heads of Households). [more] Working Paper No. 534
Working Papers | January 2008 Financing Job Guarantee Schemes by Oil Revenue Iran’s constitution emphasizes social justice and obliges government to provide a job for every citizen. But in fact, the government’s duty to provide jobs has shifted to government support for a measure designed to create new employment opportunities through subsidized loans to the private sector. [more] Working Paper No. 527
Working Papers | December 2007 Promotion Nationale Created in 1961, Promotion Nationale (PN) is an autonomous public entity in charge of mobilizing an underemployed or unemployed workforce for the implementation of labor-intensive projects, calling upon a simple technology likely to provide employment to unskilled workers. It is one of the major programs of social protection in Morocco—the oldest, most important, and best-targeted social program in the country. [more] Working Paper No. 524
Working Papers | November 2007 Nurkse and the Role of Finance in Development Economics Ragnar Nurkse was one the pioneers in development economics. This paper celebrates the hundredth anniversary of his birth with a critical retrospective of his overall contribution to the field, in particular his views on the importance of employment policy in mobilizing domestic resources and the difficulties surrounding the use of external resources to finance development. [more] Working Paper No. 520
Working Papers | November 2007 Public Employment and Women In 2002, Argentina implemented a large-scale public employment program to deal with the latest economic crisis and the ensuing massive unemployment and poverty. The program, known as Plan Jefes, offered part-time work for unemployed heads of households, and yet more than 70 percent of the people who turned up for work were women. [more] Working Paper No. 519
Working Papers | October 2007 What Are the Relative Macroeconomic Merits and Environmental Impacts of Direct Job Creation and Basic Income Guarantees? There is a body of literature that favors universal and unconditional public assurance policies over those that are targeted and means-tested. Two such proposals—the basic income proposal and job guarantees—are discussed here. [more] Working Paper No. 517
Public Policy Briefs | October 2007 Globalization and the Changing Trade Debate The failure of the Doha Development Round of World Trade Organization (WTO) negotiations in July 2006 was the first major collapse of a multilateral trade round since World War II. Research Associate Thomas Palley sees the failure as an event that could mark the close of a 60-year era of trade policy largely centered on increasing market access and reducing tariffs, quotas, and subsidies. [more] Public Policy Brief No. 91, 2007
Public Policy Brief Highlights | October 2007 Globalization and the Changing Trade Debate The failure of the Doha Development Round of World Trade Organization (WTO) negotiations in July 2006 was the first major collapse of a multilateral trade round since World War II. Research Associate Thomas Palley sees the failure as an event that could mark the close of a 60-year era of trade policy largely centered on increasing market access and reducing tariffs, quotas, and subsidies. [more] Public Policy Brief Highlights No. 91A, 2007
Working Papers | September 2007 The Right to a Job, the Right Types of Projects There is now widespread recognition that in most countries, private-sector investment has not been able to absorb surplus labor. This is all the more the case for poor unskilled people. [more] Working Paper No. 516
Working Papers | September 2007 Minsky’s Approach to Employment Policy and Poverty While Hyman P. Minsky is best known for his work on financial instability, he was also intimately involved in the postwar debates about fiscal policy and what would become the War on Poverty. [more] Working Paper No. 515
Working Papers | September 2007 The Continuing Legacy of John Maynard Keynes This working paper examines the legacy of Keynes’s General Theory of Employment, Interest, and Money (1936) on the occasion of the 70th anniversary of its publication and the 60th anniversary of Keynes’s death. The paper incorporates some of the latest research by prominent followers of Keynes, presented at the 9th International Post Keynesian Conference in September 2006. [more] Working Paper No. 514
Working Papers | August 2007 On Various Ways of Measuring Unemployment, with Applications to Switzerland This paper begins with an examination of various ways of measuring unemployment and, borrowing ideas from the poverty measurement literature, proposes four new general unemployment indices. The first of these is parallel to the Sen poverty index; the second, to the Sen index’s generalization by Shorrocks; the third, to the FGT poverty index; and the fourth, to the Watts poverty index. [more] Working Paper No. 509
Working Papers | July 2007 Implementation of the National Rural Employment Guarantee Act in India Since its enactment in 2005, the National Rural Employment Guarantee Act (NREGA) has been implemented in 200 districts in India. Based on state-by-state employment demand-supply data and the use of funds released under NREGA, it is found that, although it is a demand-driven scheme, there are significant interstate differences in the supply of employment. [more] Working Paper No. 505
Working Papers | May 2007 ELR-Led Economic Development This paper establishes the financial feasibility of an employer-of-last-resort (ELR) program in a small developing country like Tunisia. It argues that an ELR-led economic development policy is vastly superior to the traditional import substitution industrialization (ISI), export-led, and FDI-led development models, all of which Tunisia has adopted without much success in reducing unemployment. [more] Working Paper No. 499
Working Papers | May 2007 Employment Guarantee Programs This working paper provides a survey of the theoretical underpinnings for the various employment guarantee schemes, and discusses full employment policy experiences in the United States, Sweden, India, Argentina, and France. The theoretical and policy developments are delineated in a historical context. [more] Working Paper No. 498
Public Policy Briefs | November 2006 Maastricht 2042 and the Fate of Europe Unemployment in the European Union (EU) is a serious problem that threatens to disrupt the integration of accession countries, the character of individual countries, and the continued existence of the EU. European integration poses a huge conundrum for European employment because the conventional theory explaining unemployment in Europe—labor market rigidities—is wrong. [more] Public Policy Brief No. 87, 2006
Public Policy Brief Highlights | November 2006 Maastricht 2042 and the Fate of Europe Unemployment in the European Union (EU) is a serious problem that threatens to disrupt the integration of accession countries, the character of individual countries, and the continued existence of the EU. European integration poses a huge conundrum for European employment because the conventional theory explaining unemployment in Europe—labor market rigidities—is wrong. [more] Public Policy Brief Highlights No. 87A, 2006
Working Papers | October 2006 When Knowledge Is an Asset We study the economics of employment relationships through theoretical and empirical analyses of an unusual set of firms, large law firms. Our point of departure is the “property rights” approach that emphasizes the centrality of ownership’s legal rights to control important, nonhuman assets of the enterprise. [more] Working Paper No. 477
Working Papers | August 2006 Capital Stock and Unemployment This paper examines the proposition that capital stock relative to aggregate output has been an important variable in the determination of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) over the last four decades. The authors present new empirical evidence that lends strong support to the claim that the aggregate capital-output ratio, the real price of imports, and aggregate capacity utilization were determinants of the NAIRU during the period. [more] Working Paper No. 475
Working Papers | August 2006 Retiree Health Benefit Coverage and Retirement Employer-provided health benefits for workers who retire before age 65 has fallen over the last decade. We examine a cohort of male workers from the Health and Retirement Survey to explore the dynamics of retiree health benefits and the relationship between retiree health benefits and retirement behavior. [more] Working Paper No. 470
Working Papers | August 2006 The Changing Role of Employer Pensions By any measure, pension coverage should be at an all-time high: the nation is richer and workers are older. However, the pension world is a paradox, as pension security falls for middle-class workers and pension spending increases. [more] Working Paper No. 469
Working Papers | January 2006 Enhancing Livelihood Security through the National Employment Guarantee Act The National Rural Employment Guarantee Act of 2005 is a major development in the history of poverty reduction strategies and rural development policies in India. Though the successful passage of the Act is due to the long struggle by NGOs, academics, and some policymakers, its successful implementation is a much bigger challenge. [more] Working Paper No. 437
Working Papers | December 2005 Job-Hopping in Silicon Valley Observers of Silicon Valley’s computer cluster report that employees move rapidly between competing firms, but evidence supporting this claim is scarce. Job-hopping is important in computer clusters because it facilitates the reallocation of talent and resources toward firms with superior innovations. [more] Working Paper No. 432
Policy Notes | January 2005 The Case for an Environmentally Sustainable Jobs Program The job numbers in the United States and around the globe continue to look bleak. Not only are the absolute numbers dismal, but also job growth has dragged on with no hope for a substantial change in prospects. [more] Policy Note 2005/1
Policy Notes | April 2004 Inflation Targeting and the Natural Rate of Unemployment Inflation targeting has become an increasingly popular strategy for setting monetary policy during the last decade. While no countries had formal inflation targets before 1990, currently 22 countries use inflation targeting. [more] Policy Note 2004/1
Working Papers | September 2003 Savings of Entrepreneurs Previous work on entrepreneurship and wealth has documented that entrepreneurial households are wealthier and have higher wealth mobility. However, the literature has not paid attention to the components of wealth change. [more] Working Paper No. 390
Working Papers | September 2003 Do Workers with Low Lifetime Earnings Really Have Low Earnings Every Year? When it comes to retirement income policy, there is a general perception that workers have full 40-year working careers before retiring. Further, it is generally assumed that workers with low lifetime earnings have low earnings in each year during a normal working career. [more] Working Paper No. 389
Working Papers | March 2003 U.S. Workers' Investment Decisions for Participant-directed Defined Contribution Pension Assets Two issues may have a tremendous impact on the adequacy of retirement income for today's workers: the growth of 401(k) pension plans and the possible privatization of Social Security. Workers are becoming increasingly responsible for the adequacy of their retirement income by determining how their retirement savings are invested. [more] Working Paper No. 375
Working Papers | February 2003 Does Trade Promote Gender Wage Equity? This study explores the impact of competition from international trade on the gender wage gap in Taiwan and South Korea between 1980 and 1999. The dynamic implications of Becker's 1959 theory of discrimination lead one to expect that increased competition from international trade reduces the incentive for employers to discriminate against women. [more] Working Paper No. 373
Working Papers | August 2001 The Role of Institutions and Policies in Creating High European Unemployment The conventional wisdom is that high European unemployment is the result of job markets that are rigid and inflexible. This paper presents new empirical evidence that challenges this received wisdom. [more] Working Paper No. 336
Working Papers | May 2001 Skills, Computerization, and Earnings in the Postwar U.S. Economy Using both time-series and pooled cross-section, time-series data for 44 industries in the United States over the period 1947–97, the authors find no evidence to support the idea that the growth of skills or educational attainment had any statistically significant effect on growth of earnings. However, earnings growth is found to be positively related to overall productivity growth and equipment investment, while computerization and international trade both had a retardant effect on earnings. [more] Working Paper No. 331
Book Series | February 2001 Corporate Governance and Sustainable Prosperity How can we explain the persistent worsening of the income distribution in the United States in the 1980s and 1990s? What are the prospects for the reemergence of sustainable prosperity in the American economy over the next generation? In addressing these issues, this book focuses on the microeconomics of corporate investment behavior, especially as reflected in investments in integrated skill bases, and the macroeconomics of household saving behavior, especially as reflected in the growing problem of intergenerational dependence of retirees on employees. Specifically, the book analyzes how the combines pressures of excessive corporate growth, international competition, and intergenerational dependence have influenced corporate investment behavior over the past two decades. [more] Book Series, February 2001
Policy Notes | February 2000 Is the New Economy Rewriting the Rules? Full employment without inflation can continue—with the right leadership, prudent policy changes to manage the dangers, and cooperation from all branches of the government. [more] Policy Note 2000/2
Public Policy Briefs | December 1999 Do Institutions Affect the Wage Structure? Union strength is capable of boosting wages for workers at the low end of the income scale. Even when differences in education and industry type are accounted for, workers in right-to-work states have a greater probability of earning close to the minimum wage than workers in states with relatively high union density. [more] Public Policy Brief No. 57, 1999
Public Policy Brief Highlights | December 1999 Do Institutions Affect the Wage Structure? Union strength is capable of boosting wages for workers at the low end of the income scale. Even when differences in education and industry type are accounted for, workers in right-to-work states have a greater probability of earning close to the minimum wage than workers in states with relatively high union density. [more] Public Policy Brief Highlights No. 57A, 1999
Public Policy Brief Highlights | July 1999 Full Employment Has Not Been Achieved Claims that the nation has reached full employment take for granted the need for a reserve pool of labor to maintain price stability and labor market flexibility. But are millions of jobless and underemployed workers the best we can do in these times of economic expansion? And what will happen when the inevitable downturn comes? Reduction of the workweek and employment subsidies have been proposed to achieve higher employment, but neither is sure to raise employment and both may have serious side effects. [more] Public Policy Brief Highlights No. 53A, 1999
Public Policy Briefs | July 1999 Full Employment Has Not Been Achieved Claims that the nation has reached full employment take for granted the need for a reserve pool of labor to maintain price stability and labor market flexibility. But are millions of jobless and underemployed workers the best we can do in these times of economic expansion? And what will happen when the inevitable downturn comes? Reduction of the workweek and employment subsidies have been proposed to achieve higher employment, but neither is sure to raise employment and both may have serious side effects. [more] Public Policy Brief No. 53, 1999
Working Papers | July 1999 Can Rescheduling Explain the New Jersey Minimum Wage Studies? This paper interprets the New Jersey minimum wage studies of Card and Krueger and their critics, Neumark and Wascher, through a scheduling model. The former found an increase in the number of workers in New Jersey fast-food restaurants after the state minimum wage was increased, while the latter found a decline in the total payroll hours of New Jersey restaurants. [more] Working Paper No. 271
Policy Notes | June 1999 The Minimum Wage Can Be Raised Survey responses make it clear the minimum wage can be raised. The question now is, How high can it be raised before serious employment consequences occur? [more] Policy Note 1999/6
Public Policy Brief Highlights | March 1999 Small Business and Welfare Reform The Levy Institute conducted a survey of small businesses to elicit information about their hiring and employment practices, especially the hiring of former welfare recipients; preferences regarding education, training, and other characteristics of potential employees; effects of increases in the minimum wage on employment decisions; and their responses to various forms of government wage and training subsidies. Analysis of the survey results indicates weaknesses in the assumptions on which recent welfare reform has been based. [more] Public Policy Brief Highlights No. 51A, 1999
Public Policy Briefs | March 1999 Small Business and Welfare Reform The Levy Institute conducted a survey of small businesses to elicit information about their hiring and employment practices, especially the hiring of former welfare recipients; preferences regarding education, training, and other characteristics of potential employees; effects of increases in the minimum wage on employment decisions; and their responses to various forms of government wage and training subsidies. Analysis of the survey results indicates weaknesses in the assumptions on which recent welfare reform has been based. [more] Public Policy Brief No. 51, 1999
Working Papers | March 1999 The Minimum Wage and Regional Wage Structure When the minimum wage was first enacted in 1938, the fiercest opposition came from the South, where wages were considerably lower that in the industrial North. Today, that opposition is found to emanate from states that have right-to-work laws (regardless of location). [more] Working Paper No. 267
Public Policy Brief Highlights | February 1999 Public Employment and Economic Flexibility Central banks, national governments, and international organizations have resisted policies that would promote full employment because high employment and high capacity utilization are associated with structural rigidities that result in sluggish growth, inflationary pressures, and other undesirable consequences. What has been almost entirely overlooked is the way in which public sector activity can enhance flexibility with regard to labor, capital goods, natural resources and environmental protection, methods of production, and location of economic activity. [more] Public Policy Brief Highlights No. 50A, 1999
Public Policy Briefs | February 1999 Public Employment and Economic Flexibility Central banks, national governments, and international organizations have resisted policies that would promote full employment because high employment and high capacity utilization are associated with structural rigidities that result in sluggish growth, inflationary pressures, and other undesirable consequences. What has been almost entirely overlooked is the way in which public sector activity can enhance flexibility with regard to labor, capital goods, natural resources and environmental protection, methods of production, and location of economic activity. [more] Public Policy Brief No. 50, 1999
Public Policy Briefs | December 1998 Corporate Governance in Germany The postwar system of corporate governance in Germany is being threatened by the failure of some industries to maintain their competitive position (with resulting significant job losses) and pressures for financial liquidity driven by those who have accumulated substantial financial holdings, institutions competing for control of those holdings, and those concerned about the funding of the pension system. The strength of the competitors (mainly the Japanese) lies not in cost differences, but in their capabilities, based on financial commitment and organizational integration, to innovate and thereby to build the long-run future of the corporation. [more] Public Policy Brief No. 49, 1998
Public Policy Briefs | December 1998 Japanese Corporate Governance and Strategy Despite the crisis in the Japanese financial sector, prolonged recession, and competitive challenges, Japan’s formidable productive system remains strong. Nevertheless, the system of corporate governance, which has pursued a strategy of retaining corporate revenues and reallocating labor resources and returns to labor in order to invest in productive capabilities, faces short-term pressures from a transformation of the financial sector and long-term pressures from the growth of intergenerational dependence. [more] Public Policy Brief No. 48, 1998
Public Policy Brief Highlights | December 1998 Corporate Governance in Germany The postwar system of corporate governance in Germany is being threatened by the failure of some industries to maintain their competitive position (with resulting significant job losses) and pressures for financial liquidity driven by those who have accumulated substantial financial holdings, institutions competing for control of those holdings, and those concerned about the funding of the pension system. The strength of the competitors (mainly the Japanese) lies not in cost differences, but in their capabilities, based on financial commitment and organizational integration, to innovate and thereby to build the long-run future of the corporation. [more] Public Policy Brief Highlights No. 49A, 1998
Public Policy Brief Highlights | December 1998 Japanese Corporate Governance and Strategy Despite the crisis in the Japanese financial sector, prolonged recession, and competitive challenges, Japan’s formidable productive system remains strong. Nevertheless, the system of corporate governance, which has pursued a strategy of retaining corporate revenues and reallocating labor resources and returns to labor in order to invest in productive capabilities, faces short-term pressures from a transformation of the financial sector and long-term pressures from the growth of intergenerational dependence. [more] Public Policy Brief Highlights No. 48A, 1998
Working Papers | December 1998 Constructing Long and Dense Time-Series of Inequality Using the Theil Index Year-to-year economy-wide measures of income distribution, such as the Gini coefficient, are rarely available for long periods except in a few developed countries, and as a result few analyses of year-to-year changes in inequality exist. But wage and earnings data by industrial sectors are readily available for many countries over long time frames. [more] Working Paper No. 259
Working Papers | December 1998 (Full) Employment Policy In 1998, the United States' unemployment rate was at its lowest level since the late 1960s. Yet the nation's employment problem is still far from solved. [more] Working Paper No. 258
Working Papers | November 1998 The Minimum Wage in Historical Perspective During the Progressive period of American history the debate over the minimum wage was often between those who clung to traditional economic theory as a reason for not having a minimum wage and those who saw the efficiency-wage benefits of adopting one. Although the latter argument proved quite effective in swaying many state legislatures, it may have also been a strategic argument for circumventing the Supreme Court's particular understanding of "liberty of contract. [more] Working Paper No. 256
Public Policy Briefs | October 1998 Did the Clinton Rising Tide Raise All Boats? During the recent robust expansion only 700,000 of the almost 12 million jobs created went to the half of the population that does not have at least some college education. Even though the number of officially unemployed fell to less than 4 million in the 25-and-over age group, there remain in that group over 26 million potentially employable workers—the combined number of those who are actively seeking work (and are counted as officially unemployed) and those who are currently out of the labor force but would be willing to participate. [more] Public Policy Brief No. 45, 1998
Public Policy Brief Highlights | October 1998 Did the Clinton Rising Tide Raise All Boats? During the recent robust expansion only 700,000 of the almost 12 million jobs created went to the half of the population that does not have at least some college education. Even though the number of officially unemployed fell to less than 4 million in the 25-and-over age group, there remain in that group over 26 million potentially employable workers—the combined number of those who are actively seeking work (and are counted as officially unemployed) and those who are currently out of the labor force but would be willing to participate. [more] Public Policy Brief Highlights No. 45A, 1998
Conference Proceedings | September 1998 Employment Policies to Reduce Poverty The purpose of this symposium, held September 24, 1998, at the Levy Institute’s research and conference center on the campus of Bard College in Annandale-on-Hudson, New York, was to explore the causes and consequences of the persistence of poverty, and to examine policies that might rectify the inequitable distribution of the gains of economic success. [more] Symposium Proceedings, September 24, 1998
Public Policy Brief Highlights | August 1998 Automatic Adjustment of the Minimum Wage The fact that every change in the minimum wage requires an act of Congress means that debate over the wisdom of having a minimum is repeatedly returned to the political arena. As inflation continues to erode the value of the minimum wage, each legislative delay means that a larger increase is required. [more] Public Policy Brief Highlights No. 42A, 1998
Public Policy Briefs | August 1998 Automatic Adjustment of the Minimum Wage The fact that every change in the minimum wage requires an act of Congress means that debate over the wisdom of having a minimum is repeatedly returned to the political arena. As inflation continues to erode the value of the minimum wage, each legislative delay means that a larger increase is required. [more] Public Policy Brief No. 42, 1998
Working Papers | August 1998 The American Wage Structure, 1920–1947 This paper uses industrial wage data and a systematic if unconventional selection of methods to examine changes in the inter-industry structure of wages between 1920 and 1947. We first sort among the available data on wage change by industry and occupation for blocs that exhibit common patterns of wage changes over time, reducing the 83 time series available to us into eight distinct groups. [more] Working Paper No. 249
Working Papers | July 1998 Reciprocity and the Guaranteed Income This paper argues that a guaranteed income is not only consistent with the principle of reciprocity but is required for reciprocity. This conclusion follows from a three-part argument. [more] Working Paper No. 245
Working Papers | July 1998 State Type and Congressional Voting on the Minimum Wage How members of Congress vote on increases in the minimum wage is a function of several factors, most notably party affiliation and constituent interest. But also among those factors is the existence of "right-to-work" laws in the representative's state and the presence of labor unions, especially as they represent a voting constituency. [more] Working Paper No. 243
Working Papers | June 1998 The Macroeconomics of Industrial Strategy This paper explores some of the links between macroeconomic policy and industrial strategy. The perspective of the present paper is to emphasize the role of the output and investment activities of enterprises rather than the general focus on the labor market in the determination of economic performance. [more] Working Paper No. 238
Public Policy Brief Highlights | May 1998 The Unmeasured Labor Force Is the current labor market as tight as official statistics would seem to indicate? If incumbent workers increase their hours of work, it is irrelevant to the unemployment rate, but hardly irrelevant to the level of labor supply. The authors of this brief find that job insecurity and stagnating wages have made Americans willing to work those extra hours to build a financial cushion, and a 1 percent increase in hours worked per worker for a fixed labor supply is equivalent in terms of labor supply to a 1 percent increase in the number of workers. [more] Public Policy Brief Highlights No. 39A, 1998
Working Papers | May 1998 Speed of Technical Progress and Length of the Average Interjob Period The mean duration of unemployment approximately doubled in the United States between the early 1950s and the mid-1990s, with most of the increase occurring since the early 1970s. Using a simple model linking the average duration of unemployment with the speed of technical change, and aggregate time-series data, the authors find strong evidence that both the rate of total-factor productivity growth and investment in office, computing, and accounting equipment (OCA) per employee have a significant positive effect on mean unemployment duration. [more] Working Paper No. 237
Public Policy Briefs | May 1998 The Unmeasured Labor Force Is the current labor market as tight as official statistics would seem to indicate? If incumbent workers increase their hours of work, it is irrelevant to the unemployment rate, but hardly irrelevant to the level of labor supply. The authors of this brief find that job insecurity and stagnating wages have made Americans willing to work those extra hours to build a financial cushion, and a 1 percent increase in hours worked per worker for a fixed labor supply is equivalent in terms of labor supply to a 1 percent increase in the number of workers. [more] Public Policy Brief No. 39, 1998
Policy Notes | April 1998 Small Business and the New Welfare To what extent have small businesses hired former welfare recipients and what might induce them to hire more? The Levy Institute conducts a national survey of small firms in many industries to find out. [more] Policy Note 1998/4
Working Papers | March 1998 The Romance of Assimilation? Little research has been done on the role of intermarriage in the blending of peoples in the American past, and even less has been done on the effect of past intermarriage on the ethnic identity of today's Americans. Senior Scholar Joel Perlmann sees value in studying intermarriage to show fault lines in society (social distance is larger across some divisions than others) and to examine the effect intermarriage ultimately has on assimilation. [more] Working Paper No. 230
Working Papers | March 1998 E Pluribus Unum Knowledge of English is near universal, and preference for that language is dominant among most immigrant nationalities. However, only a minority remain fluent in the parental languages, and there are wide variations among immigrant groups in the extent of their parental linguistic retention. [more] Working Paper No. 229
Working Papers | March 1998 Education's Hispanic Challenge Two family characteristics are consistently associated with educational attainment: the level of education of parents and the material resources available to support the education of the children. Hispanic parents have a lower level of education than any other group, and Hispanic income is lower than any other group except African Americans. [more] Working Paper No. 228
Working Papers | March 1998 The Japanese Financial Crisis, Corporate Governance, and Sustainable Prosperity Before the Japanese stock market crash of 1990, Japanese industry was a phenomenal success. A recent unemployment rate of under 4 percent, although low by world standards, is the highest Japan has experienced since the current mode of calculation began in 1953. [more] Working Paper No. 227
Working Papers | February 1998 The Political Economy of Corporate Governance in Germany Research Associate Mary O'Sullivan, of INSEAD and the Center for Industrial Competitiveness at the University of Massachusetts–Lowell, is investigating systems of corporate governance to find which lead to successful decisions for individual firms and for an economy as a whole. She believes that success requires a form of corporate governance that generates conditions that permit cumulative and collective learning, provides financial commitment to innovative investment, and integrates human and physical resources in the development and use of technology. [more] Working Paper No. 226
Working Papers | January 1998 The Diagnostic Imaging Equipment Industry While diagnostic imaging equipment is not by any means a typical industry, it offers an example of a rapidly changing, high technology sector—the kind of industry in which, according to many observers, United States manufacturers ought to excel. And indeed, for most of the 100-year history of this industry, American producers have led the field, generating engineering jobs aplenty and production jobs paying well above the average wage economywide. [more] Working Paper No. 224
Working Papers | December 1997 Employment Policy, Community Development, and the Underclass There has been widespread recognition of the existence of an "underclass" in American society, but no consensus on how to address the problem or even how to define it. The term was first coined in 1982 by New Yorker writer Ken Auletta, who used it broadly to include individuals with "behavioral and income deficiencies"; other definitions have been advanced by William Julius Wilson (1987), Erol Ricketts and Isabel Sawhill (1986), and Christopher Jencks (1992). [more] Working Paper No. 220
Working Papers | December 1997 Linking the Minimum Wage to Productivity One of the principal problems with the minimum wage is that adjustments to it must be voted on by Congress. Although recent congressional action solves the immediate problem of restoring value to a wage that has otherwise failed to keep pace with inflation, it has not removed the issue from the political agenda. [more] Working Paper No. 219
Working Papers | December 1997 Selective Use of Discretionary Public Employment and Economic Flexibility Flexibility is a desirable feature of an economic system. Structural rigidities can result in sluggish growth and inflationary pressures; many economic models, however, display considerable system flexibility because of the use of unacceptably unrealistic assumptions. [more] Working Paper No. 218
Working Papers | November 1997 The Impact of Racial Segregation on the Education and Work Outcomes of Second-generation West Indians in New York City Mary C. Waters, a professor of sociology at Harvard University, examines one way in which race matters in the United States by studying black children of immigrants in New York City. [more] Working Paper No. 216
Working Papers | November 1997 Government As Employer of Last Resort Since the Employment Act of 1946 a stated policy of the United States government has been to pursue simultaneously high employment and stable prices. However, because many economists and policymakers do not believe that it is possible to have both high employment and stable prices, monetary policy has generally been geared, at least for the past two decades, toward increasing unemployment as a means to achieving stable prices. [more] Working Paper No. 213
Working Papers | November 1997 Income Distribution, Macroeconomic Analysis, and Barriers to Full Employment The distribution of income is conspicuous by its absence from most mainstream macroeconomic analysis. Visiting Scholar Malcolm Sawyer, of the University of Leeds, makes an effort to remedy this situation by discussing three aspects of the relationship between macroeconomics and the distribution of income: the effect of conflicts over the distribution of income on the NAIRU (nonaccelerating inflation rate of unemployment), the effect of the distribution of income on aggregate demand, and the effect of monetary policy on the distribution of income. [more] Working Paper No. 211
Working Papers | November 1997 The Effects of Immigrants on African-American Earnings The improvement in the relative economic status of African American workers in the 1960s and 1970s was reversed in the 1980s. During that decade immigration to the United States reached its highest level since the early part of this century, and many immigrants entered lesser-skilled labor markets, where most African American labor is concentrated. [more] Working Paper No. 210
Public Policy Briefs | October 1997 Dangerous Metaphor: The Fiction of the Labor Market The concept of a labor market, responding to familiar underpinnings of supply and demand, completely colors thought on the relationship between employment, wages, and inflation, according to James K. Galbraith. [more] Public Policy Brief No. 36, 1997
Public Policy Brief Highlights | October 1997 Dangerous Metaphor: The Fiction of the Labor Market The concept of a labor market, responding to familiar underpinnings of supply and demand, completely colors thought on the relationship between employment, wages, and inflation, according to James K. Galbraith. [more] Public Policy Brief Highlights No. 36A, 1997
Public Policy Brief Highlights | September 1997 Is There a Trade-Off between Unemployment and Inequality? Rebecca M. Blank considers how the flexibility of American labor markets and the regulation and redistribution policies of European labor markets may determine employers’ responses to worldwide economic transformations that result in increasing wage disparity in the United States and continuing high unemployment in Europe. [more] Public Policy Brief Highlights No. 33A, 1997
Public Policy Briefs | August 1997 Is There a Trade-Off between Unemployment and Inequality? Rebecca M. Blank considers how the flexibility of American labor markets and the regulation and redistribution policies of European labor markets may determine employers’ responses to worldwide economic transformations that result in increasing wage disparity in the United States and continuing high unemployment in Europe. [more] Public Policy Brief No. 33, 1997
Working Papers | August 1997 Are Good Jobs Flying Away? Aerospace, once the "crown jewel" of American manufacturing, is experiencing a structural decline characterized by a narrowing of the industry trade surplus, an increase in the foreign content of commercial aircraft and engines, a greater role for foreign companies in research and development, and a loss of "good jobs." Employment in aircraft engine manufacturing peaked in 1988 at over 141,000 employees and plummeted to just over 76,000 in 1995. [more] Working Paper No. 206
Working Papers | August 1997 The Growth in Work Time and the Implications for Macro Policy In May 1997, the official unemployment rate was 4.8 percent—the lowest in 24 years. [more] Working Paper No. 204
Working Papers | August 1997 The NAIRU The nonaccelerating inflation rate of unemployment, or NAIRU, has acquired a central role in macroeconomic theory. Fear of inflation has led to a reluctance to allow the unemployment rate to fall below the estimated NAIRU. [more] Working Paper No. 203
Working Papers | August 1997 Aggregate Demand, Investment, and the NAIRU The nonaccelerating inflation rate of unemployment, or NAIRU, is generally viewed as a supply-side-determined, short-run equilibrium rate of unemployment. In most NAIRU models, aggregate demand plays no essential role in determining equilibrium unemployment. [more] Working Paper No. 202
Working Papers | August 1997 Organizational Learning and International Competition Over the last three decades, despite economic growth, the United States has experienced both increasing relative inequality and an absolute decline of real wages. Explanations sometimes offered for this inability to achieve sustainable prosperity are a weakening of innovative ability (a result of reduced expenditures on training, education, and research) and international competition from low-wage countries (forcing down wages). [more] Working Paper No. 201
Working Papers | July 1997 Good Jobs and the Cutting Edge Good, stable jobs with high earnings started to disappear from the United States economy in the late 1970s. The loss of the majority of these jobs resulted from structural changes, not cyclical variations in the manufacturing sector. [more] Working Paper No. 199
Working Papers | July 1997 Earnings Inequality and the Quality of Jobs The increase in earnings inequality in the United States is now a widely accepted fact that much economics literature has attempted to explain. Philip Moss, of the University of Massachusetts Lowell, examines the increase in inequality, evaluates the frequently given explanations for it, and offers an improved methodology for determining its causes. [more] Working Paper No. 198
Working Papers | July 1997 Minimum Wage and Justice? Opposition to the minimum wage, according to Resident Scholar Oren M. Levin-Waldman, ultimately rests on a popular political philosophy and a popular economic theory. [more] Working Paper No. 197
Working Papers | May 1997 The Working Poor Most Americans believe that if they work hard, they should not be poor. Although recent government welfare reform policy is aimed at encouraging people to work more, seven to nine million working Americans remain poor. [more] Working Paper No. 194
Working Papers | April 1997 No Easy Answers High unemployment rates and increasing terms of unemployment have persisted in western European countries for the past 20 years. These problems have been explained as resulting from inflexibility in the labor market created by such policies as protective labor market regulation and generous social assistance. [more] Working Paper No. 188
Working Papers | March 1997 Gender Wage Differentials, Affirmative Action, and Employment Growth on the Industry Level In their study of industry wage premia, Research Associates Judith Fields of Lehman College, City University of New York, and Edward N. Wolff of New York University find that gender wage differentials can be explained only in part by the distribution of women and men in different industries, and that other factors, such as discrimination, play a role as well. [more] Working Paper No. 186
Public Policy Briefs | February 1997 Institutional Failure and the American Worker David R. Howell argues that the collapse of low-skill wages in the United States cannot be explained by a skill mismatch resulting from a technology-driven decline in the demand for low-skill labor. [more] Public Policy Brief No. 29, 1997
Working Papers | January 1997 Corporate Governance and Corporate Employment Unless American corporations change their structure of governance, it is unlikely that many will remain prosperous in this age of global competition, argue Research Associates William H. Lazonick and Mary O'Sullivan. [more] Working Paper No. 183
Working Papers | December 1996 Protracted Frictional Unemployment As a Heavy Cost of Technical Progress In this working paper, Research Associates William Baumol and Edward N. Wolff, both of New York University, explore the effects of the rate of technological progress on unemployment. [more] Working Paper No. 179
Public Policy Briefs | November 1996 Making Work Pay Barry Bluestone of the University of Massachusetts and Teresa Ghilarducci of the University of Notre Dame show that although the poverty rate for elderly Americans has declined over the past three decades, the total number of persons in poverty has grown and the number of poor nonelderly adults in poverty has nearly doubled since 1970. The authors argue for a comprehensive and coherent strategy aimed at the working poor and those susceptible to highly fluctuating incomes. [more] Public Policy Brief No. 28, 1996
Working Papers | November 1996 The Collapse of Low-skill Wages No recent development in the American labor market has been more dramatic and troubling than the collapse in the buying power of workers’ paychecks. This drop in the value of wages coincided with a sharp increase in earnings inequality. [more] Working Paper No. 178
Working Papers | November 1996 Exploring the Politics of the Minimum Wage Resident Scholar Oren M. Levin-Waldman argues that, although the minimum wage is a serious economic issue, enacting an increase in the minimum wage is a political one. [more] Working Paper No. 176
Working Papers | November 1996 The Second Generation and the Children of the Native-Born Recent discussion and some preliminary research have given a negative prognosis for children of immigrants. Senior Scholar Joel Perlmann and Roger Waldinger, professor of sociology at the University of California at Los Angeles, examine 1990 Census Public Use Samples (PUMS) to determine if conditions for the children of immigrants are as poor as indicated. [more] Working Paper No. 174
Public Policy Briefs | July 1996 Making Unemployment Insurance Work What is needed to solve the problem of growing long-term unemployment is a two-tiered system that distinguishes between short-term and long-term unemployment. The system should continue to function as an insurance program for 26 weeks to allow workers to search for employment that represents the best match with their experience, skills, and credentials. [more] Public Policy Brief No. 26, 1996
Working Papers | June 1996 Which Deficit? For some time economists have acknowledged that reported budgetary data do not necessarily reflect actual economic activity. Agreement has not been reached, however, on how budget figures should be adjusted to reflect such activity accurately. [more] Working Paper No. 170
Working Papers | June 1996 Assimilation Assimilation of today's immigrants is one topic in the current debate on immigration. Some observers assert that recent immigrants are unable to assimilate into American society as easily as past immigrants were able to. [more] Working Paper No. 168
Working Papers | June 1996 The Minimum Wage and the Path towards a High Wage Economy According to Resident Scholar Oren M. Levin-Waldman, the arguments both in favor of raising the minimum wage (to restore its real spending power to levels of previous years, to increase the incentive to work, and, as a matter of fairness, to allow those who work to earn incomes above the poverty line) and against raising the minimum (displacement effects resulting in lower levels of employment) both have merit, but ultimately "miss the point" because their focus is too narrow. [more] Working Paper No. 166
Working Papers | January 1996 Unemployment, Inflation, and the Job Structure In this working paper, James K. Galbraith rejects the analytical construct within which many economists currently operate—that is, the construct in which, in the extreme, macroeconomic behavior is identical to the behavior reflected in microeconomic demand and supply curves. [more] Working Paper No. 154
Working Papers | December 1995 Technology and the Demand for Skills In this working paper Research Associate Edward N. Wolff documents changes during the period 1950–90 in aggregate skill levels of the workplace. [more] Working Paper No. 153
Working Papers | December 1995 The Working Poor and Welfare Recipiency Many participants in the current welfare debate assume that welfare recipients are taking unfair advantage of government programs by avoiding work. However, a growing body of research indicates that this assumption is untrue. [more] Working Paper No. 151
Book Series | December 1995 Income and Employment in Theory and Practice The essays in this volume were written by colleagues and friends of the late Athanasios (Tom) Asimakopulos. They relate to those areas to which he contributed so much in his teaching and his writings. [more] Book Series, December 1995
Public Policy Briefs | April 1995 Cooperate to Compete Takao Kato outlines the types of human resource management practices (HRMPs) used in Japan and the effect of these employee participation programs on employee productivity and economic competitiveness. From these findings about the effects of HRMPs on Japanese productivity, Kato draws several conclusions for the direction that American policy might take in order to raise productivity in the United States. [more] Public Policy Brief No. 19, 1995
Public Policy Briefs | March 1994 A Path to Good Jobs? Robert M. Hutchens examines three paths by which a young person with limited academic credentials may avoid a life of unemployment and low wages: obtaining additional formal schooling, securing a job that provides secure employment at “good” wages, or acquiring a job that provides skills and thereby opens a door to good future jobs. [more] Public Policy Brief No. 11, 1994
Public Policy Briefs | November 1993 Job-lock: An Impediment to Labor Mobility? Recent survey results and anecdotal evidence appear to indicate that workers sometimes sacrifice job opportunities by remaining in their current position in order to retain health benefits. If “job-lock” is real, the nation pays an economic price in terms of a misallocation of workersamong productive opportunities, higher relocation and training costs for workers who have stayed too long in their jobs, and the loss of innovation, employment, and competition associated with start-up ventures. [more] Public Policy Brief No. 10, 1993