Research and Work in Progress
The wage tax and suburbanization
with Matt Jacob
More than 9 million jobs in the United States are subject to a local wage tax, a kind of local income tax that applies to residents and non-resident workers. The wage tax has long been argued to have caused firms and workers to jointly abandon large cities in favor of suburbs. Guided by a quantitative spatial model, we test this hypothesis with historical commuting in Philadelphia and a spatial regression discontinuity design around its borders. Our key insight is that the elasticity of commuting with respect to the net-of-tax rate can be estimated with a panel of commuting shares at the city limits. We find that the elasticity is of about 7, and perform some tax policy counterfactuals.
The Rise of the South and the Deindustrialization of the North
with Gordon Hanson
During the middle of the 20th century, U.S. manufacturing reorganized itself. A substantial share of industrial jobs were reallocated from the U.S. North to the U.S. South, presaging the exodus of manufacturing from the global North to the global South that would occur several decades later. We study how the rise of the South affected labor market outcomes in the North after 1940, instrumenting for the South's industrial growth using insights from the literature on the region's structural transformation. Northern regions more exposed to the rise of the South saw larger declines in manufacturing employment, small offsetting gains in service employment, and decreases in overall employment rates that persisted out to 1980. These changes were accompanied by reductions in wage and salary income among low-wage workers, especially Black men, which reached their peak impact in 1960 and had mostly recovered by 1980. Impacts on real earnings may have been offset by differential reductions in the cost of housing, which also reached their peak impact in 1960 but remained depressed through 1980. Consistent with the hypothesis of Wilson (1987) on the origins of urban decline in former industrial cities after 1960, adverse changes in Northern labor markets were followed by more intense rioting during the social upheaval of the late 1960s, increased uptake of government transfers to low-income families following the launch of Great Society social programs, and reduced economic mobility of children born to low-income parents in the 1980 birth cohort relative to the 1940 birth cohort.
The Emergence of Public Transit and the Transformation of the American Downtown
with Prottoy Aman Akbar and Allison Shertzer
Automation Technologies and Employment at Risk
with Alfonso Cebreros, Aldo Heffner-Rodríguez, and Daniela Puggioni
Bank of Mexico Working Paper 2020-04
We use estimates for the probability of automation of occupations in Frey and Osborne (2017) together with household survey data on the occupational distribution of employment to provide a risk assessment for the threat that automation may pose to the Mexican labor market. We find that almost two thirds of total employment is at high risk of automation; slightly more than half if we only consider employment in the formal sector. We argue that, while these estimates provide a useful benchmark to start thinking about the impact that automation may have on the labor market, they should be interpreted with care as they are solely based on the technical feasibility to automate and do not reflect the economic incentives, or other factors such as the accumulation of human capital through education, to adopt automation technologies.