Skip to main content
eScholarship
Open Access Publications from the University of California

The Institute for Research on Labor and Employment’s (IRLE) mission is to conduct and support research on labor and employment at UC Berkeley. Our goal is to bridge the gap between academic research and the policy world. To achieve this goal, IRLE supports policy-relevant and policy engaged research; disseminates the latest research from our centers, affiliated faculty, and scholars to a wide audience of policymakers, academics and the public; and educates California’s labor, business, and community leaders. IRLE is a research unit at the University of California, Berkeley. We stand apart from individual academic departments under the Vice Chancellor for Research and support research on the entire range of labor and employment issues across campus.

Sandra Susan Smith
Interim Director
Institute for Research on Labor and Employment
University of California, Berkeley
2521 Channing Way
Berkeley, CA 94720-5555
http://irle.berkeley.edu/
(510) 643-8140
irle@berkeley.edu

Cover page of The Impact of Extended Employment Protection Laws on the Demand for Temporary Agency Workers

The Impact of Extended Employment Protection Laws on the Demand for Temporary Agency Workers

(2019)

We study the impact of a reform that increased the regulatory burden on temporary agency work (TAW) in Chile. Using a panel of manufacturing plants, we show that the use of TAW fell immediately after the regulation, with differential effects by plants’ size and volatility. Difference-in-differences estimates suggest that plants using TAW substituted away from agency workers after the regulation, increasing regular work by 9.2%. Despite this substitution effect, total employment decreased by 8.6% in these plants. We report less precise evidence of negative scale effects on output and profits.

Cover page of Improving Regulatory Effectiveness through Better Targeting: Evidence from OSHA

Improving Regulatory Effectiveness through Better Targeting: Evidence from OSHA

(2019)

We study how a regulator can best allocate its limited inspection resources. We direct our analysis to a US Occupational Safety and Health Administration (OSHA) inspection program that targeted dangerous establishments and allocated some inspections via random assignment. We find that inspections reduced serious injuries by an average of 9% over the following five years. We use new machine learning methods to estimate the effects of counterfactual targeting rules OSHA could have deployed. OSHA could have averted over twice as many injuries if its inspections had targeted the establishments where we predict inspections would avert the most injuries. The agency could have averted nearly as many additional injuries by targeting the establishments predicted to have the most injuries. Both of these targeting regimes would have generated over $1 billion in social value over the decade we examine. Our results demonstrate the promise, and limitations, of using machine learning to improve resource allocation. JEL Classifications: I18; L51; J38; J8

Cover page of Minimum Wage Effects in Low-Wage Areas. Working Paper #106-19

Minimum Wage Effects in Low-Wage Areas. Working Paper #106-19

(2019)

A proposal to raise the federal minimum wage to $15 by 2024 would increase the relative minimum wage – the ratio to the national median wage– to about .68. In Alabama and Mississippi, our two lowest-wage states, the relative minimum wage would rise to .77 and .85, respectively. Yet research on state-level minimum wage policies does not extend beyond $10; the highest studied state-level relative minimum wage is .59. To close this gap we study minimum wage effects in counties and PUMAs where relative minimum wage ratios already reach as high as .82. Using ACS data since 2005 and 51 events, we sort counties and PUMAs according to their relative minimum wages and bites. We report average results for all the events in our sample, and separately for those with lower and higher impacts. We find positive wage effects but do not detect adverse effects on employment, weekly hours or annual weeks worked. We do not find negative employment effects among women, blacks and/or Hispanics. We do find substantial declines in household and child poverty.

Cover page of The Political Economy of Incarceration in the U.S. South, 1910-1925. Working Paper #105-19

The Political Economy of Incarceration in the U.S. South, 1910-1925. Working Paper #105-19

(2019)

A large theoretical literature in sociology connects increasing rates of incarceration to contractions in the labor market. But evidence for the economic causes of incarceration is mixed. We use a shock to the southern agricultural labor market to study the political economy of incarceration in the U.S. South in the early twentieth century. From 1915 to 1920, a beetle called the boll weevil spread across the state of Georgia, causing cotton yields and the prevalence of tenant farming to fall. Using archival records of incarceration in Georgia, we find that the boll weevil infestation increased the rate at which African Americans were admitted to prison for property crimes. The effects for whites and for prison admissions for homicide were much smaller and not statistically significant.

Cover page of Are Local Minimum Wages Too High? Working Paper #102-19

Are Local Minimum Wages Too High? Working Paper #102-19

(2019)

We measure the effects of six citywide minimum wages that ranged up to $13 in Chicago, the District of Columbia, Oakland, San Francisco, San Jose and Seattle, employing event study and synthetic control methods. Using aggregate data on average earnings and employment in the food services industry, we find significantly positive earnings increases and no significant employment losses. While such evidence suggests the policies raised the earnings of low-wage workers, as intended, a competing explanation is that the industry responds to wage increases by increasing their demand for more productive higher-wage workers, offsetting low-wage layoffs (i.e., labor-labor substitution). To tackle this key question, we present a theoretical framework that connects the responses estimated at the industry-level to the own- and cross-wage labor demand elasticities that summarize the total effect of the policies on workers. Using a calibration exercise, we find that the combination of average earnings gains and constant employment cannot be produced by labor-labor substitution unless there are also effects on hours. To test whether the minimum wage increases demand for higher-wage workers or reduces low-wage workers’ hours, we examine the effects of California’s recent state and local minimum wage policies on the food services industry. There we find no evidence of labor-labor substitution or hours responses. Thus, the most likely explanation for the responses we find in the cities is that the industry’s demand for low-wage workers is inelastic, and the policies raised their earnings.

Cover page of Parental Labor Supply: Evidence from Minimum Wage Changes.  Working Paper #103-19

Parental Labor Supply: Evidence from Minimum Wage Changes.  Working Paper #103-19

(2019)

Declining labor force participation rates among less-educated individuals in the U.S. have been attributed to various causes, including skill-biased technical change, demand shocks induced by international competition, looser eligibility requirements for disability insurance, the opioid epidemic and the nature of child care and family leave policies. In this paper, we examine how the labor supply of parents of dependent children respond to minimum wage changes. We implement an event study framework and document a sharp rise in employment and earnings of parents after state minimum wage increases. We further show that these effects are concentrated among jobs that pay the minimum wage or slightly higher – high wage employment remains unaffected. Panel models find corresponding drops in welfare receipts, moreover, for single mothers, effects are larger for mothers of preschool age children. The results are consistent with a simple labor supply model in which means-tested transfers and fixed costs of work in the form of paid childcare create barriers to labor market entry for parents of dependent children. Minimum wage increases then enable higher rates of parental labor force participation, resulting in significant reductions in child poverty. We find no evidence of employment crowd-out among non-parents, suggesting potential overall welfare gains from higher minimum wages.

Cover page of Can Economic Policies Reduce Deaths of Despair? Working Paper #104-19

Can Economic Policies Reduce Deaths of Despair? Working Paper #104-19

(2019)

Midlife mortality has risen steadily in the U.S. since the 1990s for non-Hispanic whites without a bachelor’s degree, and since 2013 for Hispanics and African-Americans who lack a bachelor’s degree. These increases largely reflect increased mortality from alcohol poisoning, drug overdose and suicide. We investigate whether these “deaths of despair” trends have been mitigated by two key policies aimed at raising incomes for low wage workers: the minimum wage and the earned income tax credit (EITC). To do so, we leverage state variation in policies over time to estimate difference-in-differences models of drug overdose deaths and suicides, using data on cause-specific mortality rates from 1999-2015. Our causal models find no significant effects of the minimum wage and EITC on drug-related mortality. However, higher minimum wages and EITCs significantly reduce non-drug suicides. A 10 percent increase in the minimum wage reduces non-drug suicides among adults with high school or less by 3.6 percent; a 10 percent increase in the EITC reduces suicides among this group by 5.5 percent. Our estimated models do not find significant effects for a college-educated placebo sample. Event-study models confirm parallel pre-trends, further supporting the validity of our causal research design. Our estimates suggest that increasing both the minimum wage and the EITC by 10 percent would likely prevent a combined total of around 1230 suicides each year.

Cover page of Does Locked Up Mean Locked Out? The Effects of the Anti-Drug Act of 1986 on Black Male Students’ College Enrollment. Working Paper #101-19

Does Locked Up Mean Locked Out? The Effects of the Anti-Drug Act of 1986 on Black Male Students’ College Enrollment. Working Paper #101-19

(2019)

This paper explores one reason for the educational gaps experienced by Black men. Using variation in state marijuana possession and distribution laws, this paper examines whether the Anti-Drug Act of 1986, which increased the disproportionate incarceration of Black males, also led to differences in college enrollment rates. The results suggest that Black males had a 2.2% point decrease in the relative probability of college enrollment after the passage of the Anti-Drug Abuse Act of 1986. There is some evidence that laws around crack cocaine, and not marijuana, led to this decrease in the probability of enrollment.

Cover page of Productivity, Profits, and Pay: A Field Experiment Analyzing the Impacts of Compensation Systems in an Apparel Factory

Productivity, Profits, and Pay: A Field Experiment Analyzing the Impacts of Compensation Systems in an Apparel Factory

(2018)

Factory worker pay in global value chains remains a contentious issue. In this paper, we evaluate a two-year field experiment in an apparel factory to analyze altered compensation systems designed to increase worker pay while supporting factory goals around productivity and profitability. Using a quasi-experimental design, with unique data on wages, hours, productivity, quality, and worker engagement, we estimate the impact of three altered compensation systems on pay, productivity, and factory profits. The compensation systems can be described as: 1) an improved productivity-based scheme, 2) a scheme that brings quality and waste reduction into the calculation; and 3) a “target wage” scheme. Overall, the treatments raised wages by 4.2-11.6% and increased productivity by 7-12%-points. Management reported significant financial benefits from the experiment, including increased profits for five of six lines, and avoided costs and productivity losses due to decreased turnover. The factory workers, through focus-group interviews before, during, and after the intervention, reported improved relations with team members and managers. This study demonstrates altered factory compensation can support better factory performance and a better paid workforce, indicating a path towards advanced supply chains with improved wages.