NBER News and Research Archive

Hilary Hoynes, Doug Miller, and Jessamyn Schaller examine the sensitivity of employment conditions to the business cycle during the most recent recession and compare it to earlier periods. They find that the effects of the Great Recession were felt most strongly by men, black and Hispanic workers, young people, and workers with little education. These differences can be explained mainly by variation in the sensitivity of employment to cyclical change across industries and occupations. Furthermore, the researchers find that these differences across demographic groups turn out to be remarkably stable across three decades of time, and throughout both recessionary periods and expansionary periods.

Ilya Strebulaev and Baozhong Yang find that over the period 1962-2009, around 10 percent of large, public, non-financial firms had no debt at all, and over 20 percent of them had a less than 5 percent book-leverage ratio. Yet many of these firms pay dividends, and compared to proxy firms chosen by industry and size, they are more profitable, pay higher taxes, issue less equity, and have higher cash balances. Firms with higher CEO ownership and longer CEO tenure, and family firms, are more likely to follow a zero-leverage policy, especially if they have a small board of directors with few independent directors.

David Yermack finds that when CEOs are on vacation – which he measures by determining whether a corporate jet is at an airport near a leisure destination at which the CEO owns a home – corporate announcements and disclosures decline. Favorable news is released just before CEOs leave for vacation, but any subsequent news announcements tend to wait until they return. Stock prices exhibit sharply lower volatility when CEOs are away. Yermack also finds that CEOs spend fewer days away from the office when their ownership stake in the firm is high, but also when the weather at their vacation homes is cold or rainy.

In Kenya, a program allowed Parent-Teacher Associations (PTAs) to hire novice teachers on short-term contracts in order to reduce class sizes. Esther Duflo, Pascaline Dupas, and Michael Kremer find that even though these teachers earned much less than teachers who were civil service employees, they were absent one day less per week than those teachers and their students learned more. The civil-service teachers reduced their effort in response to the smaller classes.

Jonathan Kolstad and Amanda Kowalski analyze data on Massachusetts workers and employers before and after that state's 2006 “mandate-based health reform" went into effect. The reform required individuals to have health insurance and most employers to offer it, and it expanded publicly-subsidized coverage of health insurance. The researchers use this policy change to estimate the amount of wage income that employees are prepared to forego in return for insurance coverage. On average, they find, the provision of employer-sponsored health insurance reduces wages by $6,058 per year, slightly less than the average cost of the insurance to employers.

Gopi Shah Goda, Colleen Flaherty Manchester, and Aaron Sojourner conducted a field experiment to determine how providing income and balance projections to workers might influence whether and how much they save in a voluntary retirement plan. The researchers divided a sample of almost 17,000 employees working at the University of Minnesota and eligible to participate in a voluntary retirement plan into four groups: two received information on projected balances and retirement income, one received only basic information about how to sign up for the plan, and the final group did not receive any information. The authors find that those who received income projections along with enrollment information were more likely to change their contribution levels and to increase their annual contributions relative to those who did not receive that information. While not all employees changed their contributions, among those who did the average change was an increase of approximately $1,150.

Juan Carlos Gozzi, Ross Levine, Maria Martinez Peria, and Sergio Schmukler construct a dataset with information on the major characteristics of 116,338 corporate bond issues by 13,920 firms from 99 countries in domestic and international markets between 1991 and 2008. The researchers find that domestic and international bond markets provide different financial services; they are not substitutes, but rather complements. International debt issues tend to be larger, of shorter maturity, denominated in foreign currency, and to include a higher fraction of fixed rate contracts. Furthermore, firms often remain active in domestic bond markets even after accessing international markets. Many firms use both bond markets for different types of issues.

Target-date funds were available to more than two million participants in over 1000 defined contribution pension plans by the year 2010. Analyzing data from a major 401(k) plan provider covering the period 2003-10, Olivia Mitchell and Stephen Utkus find that the number of participants defaulting into employer-selected target-date funds has been increasing. It seems that target date funds act as a form of implicit employer-provided, life cycle investment advice among those who actively make pension decisions.

"Churn" is the term for replacing workers who leave the firm for a more productive position elsewhere with new workers. Most hiring and separation from firms reflects "churn," not the expansion or contraction of the firm's labor force. Ed Lazear and James Spletzer find that "churn" decreased significantly during the most recent recession: they estimate that close to 80 percent of the decline in hiring during the downturn reflected decreases in "churn."

Using U.S. county-level data, Mark Cullen, Clint Cummins, and Victor Fuchs find that the probability of survival from birth to age 70 differs widely by race and location. For example, white males born in the healthiest 10 percent of counties have a 77 percent probability of survival to age 70, but that drops to 61 percent for those born in the least healthy 10 percent of counties. Within counties, the difference in surviving to age 70 between blacks and whites is about 17 percentage points for men and 12 percentage points for women. The authors suggest that these geographic differences can be explained by a number of socio-economic and environmental variables.