Matthew Freedman

Targeted Business Incentives and Local Labor Markets

Matthew Freedman — Wed, 21 Sep 2011 08:40:31 PDT

This paper uses a regression discontinuity design to examine the effects of geographically targeted business incentives on local labor markets. Unlike elsewhere in the U.S., enterprise zone (EZ) designations in Texas are determined in part by a cutoff rule based on census block group poverty rates. Exploiting this discontinuity as a source of quasi-experimental variation in investment and hiring incentives across areas, I find that EZ designation has a positive, but modest effect on resident employment, increasing opportunities mainly in lower-paying industries. Consistent with the program’s incentive structure, business sitings and expansions spurred by the program are more geographically diffuse.

LEHD OnTheMap Technical Documentation

Matthew Freedman et al. — Thu, 19 May 2011 13:06:33 PDT

OnTheMap has been a very popular web-based, interactive mapping application since its formal launch under the Local Employment Dynamics partnership in February 2006. Its objective is to show where people work and where workers live on maps with companion reports on their age, earnings, and industry distributions. The underlying data (OTM data) are available for access and download on the Cornell VirtualRDC, an internet-accessible computing environment dedicated to the exploration and development of synthetic data.

Teaching New Markets Old Tricks: The Effects of Subsidized Investment on Low-Income Neighborhoods

Matthew Freedman — Mon, 17 Jan 2011 08:55:36 PST

This paper examines the effects of investment subsidized by the federal government’s New Markets Tax Credit (NMTC) program, which provides tax incentives to encourage private investment in low-income neighborhoods. I identify the impacts of the program by taking advantage of a discontinuity in the rule determining the eligibility of census tracts for NMTC-subsidized investment. Using this discontinuity as a source of quasi-experimental variation in commercial development across tracts, I find that subsidized investment has modest positive effects on neighborhood conditions in low-income communities. Though spillovers appear to be small and crowd out incomplete, the results suggest that some of the observed impacts on neighborhoods are attributable to changes in the composition of residents as opposed to improvements in the welfare of existing residents.

Low-Income Housing Development and Crime

Matthew Freedman et al. — Tue, 22 Jun 2010 13:30:07 PDT

This paper examines the effect of rental housing development subsidized by the federal government’s Low-Income Housing Tax Credit (LIHTC) program on local crime. Under the LIHTC program, certain high-poverty census tracts receive Qualified Census Tract (QCT) status, which affects the size of the tax credits developers receive for building low-income housing. Changes in federal rules determining QCT status generate quasi-experimental variation in the location of LIHTC projects. Exploiting this variation, we find that low-income housing development in the poorest neighborhoods brings with it significant reductions in violent crime that are measurable at the county level. There are no detectable effects on property crime.

Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation

Matthew Freedman et al. — Tue, 23 Mar 2010 14:21:28 PDT

This paper exploits longitudinal employer-employee matched data from the U.S. Census Bureau to investigate the contribution of worker and firm reallocation to changes in earnings inequality within and across industries between 1992 and 2003. We find that factors that cannot be measured using standard cross-sectional data, including the entry and exit of firms and the sorting of workers across firms, are important sources of changes in earnings distributions over time. Our results also suggest that the dynamics driving changes in earnings inequality are heterogeneous across industries.

Agglomeration, Product Heterogeneity, and Firm Entry

Matthew Freedman et al. — Mon, 15 Mar 2010 12:41:23 PDT

This paper investigates the interaction between product heterogeneity and geographic agglomeration. Using data for nearly the entire population of U.S. hotels, we examine patterns of entry into different regions among establishments delineated by product segment. We find that to the extent that hotels agglomerate, they are sensitive to the composition and size distribution of other hotels in an area. Our results are consistent with countervailing competition and agglomeration effects that vary in strength across differentiated firms.

Agency and Compensation: Evidence from the Hotel Industry

Matthew Freedman et al. — Mon, 15 Mar 2010 12:38:37 PDT

We examine how agency problems in the workplace affect compensation policies by taking advantage of the structure of the hotel industry, in which many chains have both company managed and franchised properties. Given that supervision is less rigorous at company managed establishments, we estimate differences in wages and human resource practices across company managed and franchised hotels within chains as well as within individual hotels as they change organizational form. Our results suggest that agency problems affect the timing of pay and employers’ propensity to use performance-based incentives.

Lost Jobs and Health Insurance: An Analysis of the Impact of Employment Volatility on Firm-Provided Health Insurance Coverage

Matthew Freedman et al. — Thu, 15 Oct 2009 08:32:57 PDT

It is an established fact that there are high levels of employment volatility in the United States. Despite the importance of employer-provided benefits in the U.S. insurance system, the impact of prior job instability on one’s future ability to obtain insurance coverage is not well understood. This paper finds a negative relationship between the volatility of a worker’s employment and her likelihood of receiving firm-provided health insurance. Previous employment volatility reduces each of the four factors necessary to receive such insurance: a worker’s subsequent chances of getting a job, her chances of getting a job in a firm that offers coverage, her chances of staying with the firm long enough to become eligible for coverage, and her ability to take up insurance if offered. The most important impact is on the last: her ability to take up insurance if offered. Lack of employment is not the only, and not even the largest, barrier to individual coverage under this system. This finding has important policy implications, particularly given the recent tendency of employers to shift the cost of insurance premiums onto their employees.

Economic Turbulence: Is a Volatile Economy Good for America?

Matthew Freedman — Wed, 27 Aug 2008 07:28:39 PDT

Every day, in every sector of our economy, a business shuts down while another starts up, jobs are created while others are cut, and workers are hired while others are laid off. This constant flux, or turbulence, is a defining characteristic of our free market system, yet it mostly inspires angst about unemployment, loss of earnings, and the overall competitiveness of corporations. But is this endless cycle of fluctuation really so bad for America? Might something positive be going on in the economy as a result of it?

In this penetrating work, three esteemed economists seek to answer these questions by exploring the real impact of volatility on American workers and businesses alike. According to the authors, while any number of events--shifts in consumer demand, changes in technology, mergers and acquisitions, or increased competition--can contribute to economic turbulence, our economy as a whole is, by and large, stronger for it, because these processes of creation and destruction make it more flexible and adaptable. The authors also acknowledge and document the adverse consequences of this turbulence on different groups of workers and firms and discuss the resulting policy challenges. Basing their argument on an up-close look into the dealings and practices of five key industries—financial services, retail food services, trucking, semiconductors, and software—the authors demonstrate the positive effects of turbulence on career paths, employee earnings, and firm performance.

The first substantial attempt to disentangle and make clear the complexities of this phenomenon in the United States, Economic Turbulence will be viewed as a major achievement and the centerpiece of any discussion on the subject for years to come.

Product Market Competition and Human Resource Practices in the Retail Food Sector

Matthew Freedman et al. — Wed, 27 Aug 2008 04:32:46 PDT

In the wake of Wal-Mart and other mass merchandisers’ entry into food retailing, the nature of competition in the industry has changed radically. Using longitudinal data on workers and firms to construct measures of compensation and churning for traditional food retailers, this paper examines how these measures change in response to mass merchandiser entry. While there is considerable heterogeneity across retail food establishments, human resource practices are persistent even in the face of new external competition.

ILR Impact Brief - Industry Clusters Affect Job Mobility and Earnings Growth

Matthew Freedman — Sun, 03 Aug 2008 10:57:15 PDT

Industry clusters are associated with greater job hopping and faster growth in workers’ earning power relative to the experience of workers at less spatially concentrated companies. Workers in these clusters tend to accept lower starting salaries than peers at more isolated firms in anticipation of rapid gains that accompany movement from job to job within the cluster and the accumulation of industry-specific knowledge. Higher earnings observed among workers in clustered firms may also reflect choices made by workers with certain characteristics to seek employment in an area with a high concentration of similar firms and by companies with certain characteristics to locate in such an area.

Supermarket Human Resource Practices and Competition from Mass Merchandisers

Matthew Freedman et al. — Thu, 24 Jul 2008 13:38:22 PDT

The rise of super-centers and the entry of Wal-Mart into food retailing have dramatically altered the competitive environment in the industry. This paper explores the impact of such changes on the labor market practices of traditional food retailers. We use longitudinal data on workers and firms to construct new measures of compensation and employment, and examine how these measures evolve within and across firms in response to changes in product market structure. An additional feature of the analysis is to combine rich case study knowledge about the retail food industry with the new matched employer-employee data from the Census Bureau.

New Approaches to Creating Data for Economic Geographers

Matthew Freedman et al. — Thu, 24 Jul 2008 13:30:03 PDT

Policymakers, faced with increasing demands to make decisions at a local level, are turning to statistical agencies to provide local data. Advances in matching technology, combined with the reduced cost of archiving, indexing, storing, and curating large-scale datasets, now mean that it is technically feasible to provide information at fine levels of geographic detail by means of combining administrative and survey datasets at lower cost and with potentially greater coverage. This article describes an approach that uses administrative data from U.S. unemployment insurance records to enhance the coverage and accuracy of work location information in the American Community Survey.

Reaching for the Stars: Who Pays for Talent in Innovative Industries?

Matthew Freedman et al. — Thu, 24 Jul 2008 13:26:07 PDT

Innovative firms need to hire and motivate highly talented workers. This article connects the potential returns to innovation to the structure of compensation for skilled employees. We show that the software firms that operate in software sectors with high potential upside gains to innovation pay more to 'star' workers than do other firms that operate in stable markets. Firms operating in product domains with highly skewed positive returns pay employees more in up-front starting salaries and offer higher compensation growth. The large estimated effects on earnings are robust to the inclusion of a wide range of controls for worker and firm characteristics.

Job Hopping, Earnings Dynamics, and Industrial Agglomeration in the Software Publishing Industry

Matthew Freedman — Thu, 24 Jul 2008 13:23:25 PDT

This paper investigates the implications of industrial clustering for labor mobility and earnings dynamics in one large and increasingly important high-technology sector. Taking advantage of longitudinal employee-employer matched data, I exploit establishment-level variation in agglomeration to explore how clustering in the software publishing industry affects labor market outcomes. The results show that clustering makes it easier for workers to job hop within the sector. Higher earnings levels in more agglomerated areas are partly attributable to sorting across locations among workers and firms in the industry on the basis of observable and unobservable characteristics. Controlling for this heterogeneity, workers in clusters have relatively steep earnings-tenure profiles, accepting lower wages early in their careers in exchange for stronger earnings growth and higher wages later. These findings are consistent with theoretical models in which agglomeration improves labor market coordination and facilitates greater learning and human capital formation.