Category Archives: Workforce

Understanding the Economic Impact of the H-1B Program on the U.S.

Source: John Bound, Gaurav Khanna, Nicolas Morales, NBER Working Paper No. 23153, February 2017
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From the abstract:
Over the 1990s, the share of foreigners entering the US high-skill workforce grew rapidly. This migration potentially had a significant effect on US workers, consumers and firms. To study these effects, we construct a general equilibrium model of the US economy and calibrate it using data from 1994 to 2001. Built into the model are positive effects high skilled immigrants have on innovation. Counterfactual simulations based on our model suggest that immigration increased the overall welfare of US natives, and had significant distributional consequences. In the absence of immigration, wages for US computer scientists would have been 2.6% to 5.1% higher and employment in computer science for US workers would have been 6.1% to 10.8% higher in 2001. On the other hand, complements in production benefited substantially from immigration, and immigration also lowered prices and raised the output of IT goods by between 1.9% and 2.5%, thus benefiting consumers. Finally, firms in the IT sector also earned substantially higher profits due to immigration.
Related:
Using H-1B Visas To Help Outsource IT Work Draws Criticism, Scrutiny
Source: NPR, All Things Considered, February 13, 2017

Immigration Restrictions as Active Labor Market Policy: Evidence from the Mexican Bracero Exclusion

Source: Michael A. Clemens, Ethan G. Lewis, Hannah M. Postel, National Bureau of Economic Research, NBER Working Paper No. 23125, February 2017
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From the abstract:
An important class of active labor market policy has received little rigorous impact evaluation: immigration barriers intended to improve the terms of employment for domestic workers by deliberately shrinking the workforce. Recent advances in the theory of endogenous technical change suggest that such policies could have limited or even perverse labor-market effects, but empirical tests are scarce. We study a natural experiment that excluded almost half a million Mexican ‘bracero’ seasonal agricultural workers from the United States, with the stated goal of raising wages and employment for domestic farm workers. We build a simple model to clarify how the labor-market effects of bracero exclusion depend on assumptions about production technology, and test it by collecting novel archival data on the bracero program that allow us to measure state-level exposure to exclusion for the first time. We cannot reject the hypothesis that bracero exclusion had no effect on U.S. agricultural wages or employment, and find that important mechanisms for this result include both adoption of less labor-intensive technologies and shifts in crop mix.

Repealing the Affordable Care Act would cost jobs in every state

Source: Josh Bivens, Economic Policy Institute, January 31, 2017

From the press release:
A new report by EPI Research Director Josh Bivens finds that repealing the Affordable Care Act (ACA) will cost the economy 1.2 million jobs in 2019, with jobs lost in every state. The report looks at the effects of cuts to both spending and taxes that would occur under a full repeal.

The $109 billion in spending cuts would have a disproportionally negative effect on states with the highest share of low and middle-income families and those states that took up the ACA Medicaid expansion, while the $70 billion tax cuts would disproportionately benefit those states with the largest share of households in the top 1 percent. Because low- and moderate-income households tend to spend a much higher share of marginal increases in disposable income, the overall effect of ACA repeal would be less spending and slower demand growth across all states…..
Related:
Summary

CBO’s Long-Term Projections of Labor Force Participation

Source: Joshua Montes, Xiaotong Niu, and Julie Topoleski, Congressional Budget Office blog, January 13, 2017

In preparing the economic forecast underlying its forthcoming report on the budget and economic outlook, CBO updated its projections of labor force participation. In this blog post, we explain those updates and compare them with the agency’s previous projections and with those of the Social Security Trustees. The full economic forecast will be described in The Budget and Economic Outlook: 2017 to 2027, which will be released on January 24.

What Are CBO’s Current Projections of Labor Force Participation?
CBO projects that the rate of labor force participation (that is, the number of people who are either working or seeking work as a share of the civilian noninstitutionalized population age 16 or older) will decline from 62.8 percent in 2017 to 61.0 percent in 2027 and to 59.2 percent in 2047—constituting a drop of 3.7 percentage points over 30 years (see the figure below). The projected decline in the participation rate is faster for men than for women. ….

Harnessing automation for a future that works

Source: James Manyika, Michael Chui, Mehdi Miremadi, Jacques Bughin, Katy George, Paul Willmott, and Martin Dewhurst, McKinsey Global Institute, January 2017

From the summary:
Automation is happening, and it will bring substantial benefits to businesses and economies worldwide, but it won’t arrive overnight. A new McKinsey Global Institute report finds realizing automation’s full potential requires people and technology to work hand in hand.
Related:
Executive summary
Appendix

Where machines could replace humans—and where they can’t (yet)

Source: Michael Chui, James Manyika, and Mehdi Miremadi, McKinsey Quarterly, July 2016

The technical potential for automation differs dramatically across sectors and activities….

As automation technologies such as machine learning and robotics play an increasingly great role in everyday life, their potential effect on the workplace has, unsurprisingly, become a major focus of research and public concern. The discussion tends toward a Manichean guessing game: which jobs will or won’t be replaced by machines?

In fact, as our research has begun to show, the story is more nuanced. While automation will eliminate very few occupations entirely in the next decade, it will affect portions of almost all jobs to a greater or lesser degree, depending on the type of work they entail. Automation, now going beyond routine manufacturing activities, has the potential, as least with regard to its technical feasibility, to transform sectors such as healthcare and finance, which involve a substantial share of knowledge work….

Could a machine do your job?
Explore our comprehensive data set on Tableau Public.

Artificial Intelligence, Automation, and the Economy

Source: Executive Office of the President, December 2016

From the blog post:
Today, in order to ready the United States for a future in which artificial intelligence (AI) plays a growing role, the White House released a report on Artificial Intelligence, Automation, and the Economy. This report follows up on the Administration’s previous report, Preparing for the Future of Artificial Intelligence, which was released in October 2016, and which recommended that the White House publish a report on the economic impacts of artificial intelligence by the end of 2016.

Accelerating AI capabilities will enable automation of some tasks that have long required human labor. These transformations will open up new opportunities for individuals, the economy, and society, but they will also disrupt the current livelihoods of millions of Americans. The new report examines the expected impact of AI-driven automation on the economy, and describes broad strategies that could increase the benefits of AI and mitigate its costs.

AI-driven automation will transform the economy over the coming years and decades. The challenge for policymakers will be to update, strengthen, and adapt policies to respond to the economic effects of AI.
Although it is difficult to predict these economic effects precisely, the report suggests that policymakers should prepare for five primary economic effects:
– Positive contributions to aggregate productivity growth;
– Changes in the skills demanded by the job market, including greater demand for higher-level technical skills;
– Uneven distribution of impact, across sectors, wage levels, education levels, job types, and locations;
– Churning of the job market as some jobs disappear while others are created; and
– The loss of jobs for some workers in the short-run, and possibly longer depending on policy responses.

How Men’s Economic Struggles Can Look Like Good News for Women

Source: Andrew McGill, The Atlantic, December 20, 2016

….Right around the turn of the millennium, relative mobility for women began to rise, while male mobility stagnated. When the 2008 recession hit, women took a hit and leveled out—but men tanked. This looks like good news for women—after facing a persistent wage gap despite decades of proving themselves the equal of male colleagues, perhaps they are finally getting their due. But the actual mobility rates (as opposed to the relative ones) show a different story…..

America’s male employment crisis is both urban and rural

Source: Alan Berube, Brookings Institution, December 5, 2016

In the wake of the 2016 presidential election, many analysts have interpreted Donald Trump’s victory as the product of economic anxiety among the white working class—particularly in the smaller towns and rural areas that provided his electoral margin in closely contested states like North Carolina, Michigan, Pennsylvania, and Wisconsin.

This piece does not purport to explain why people voted the way they did, or what role economic factors played in their decisions. Rather, it acknowledges that the state of the economy in small-town and rural America highlighted throughout the campaign and after the election surely deserves attention….