Knowledge that Transforms

This paper reviews, reanalyzes, and extends to the long run the estimated effects of integration polices on the employment probability and earnings of refugees in Denmark. We first describe the dynamics of labor market outcomes of refugees in Denmark. We then find that increased language training and initial placement in strong labor markets improved refugees’ long-run labor market outcomes, while cutting initial welfare payments and placing refugees near other refugees did not improve them. Policies focused on matching refugees with occupations experiencing shortages have positive short-run effects, but we cannot yet assess their long-run effects.

The evolution of rent sharing is studied. Based on a panel of the top 300 publicly quoted British companies over 35 years and using excess stock market returns to patenting activity as an instrument for economic rents, the paper reports evidence of a significant fall over time in the pass-through from rents to wages. It confirms that wages do respond to firm-level shocks to economic rents, but by significantly less after 2000 than during the 1980s and 1990s. The evidence of decline is robust, corroborated with alternative instruments and industry-level analysis for the United States and the European Union.

This paper studies the speed at which workers’ pretax earnings respond to tax changes along the intensive margin. We do so in the context of Germany, where a large notch in the tax schedule induces sharp bunching in the earnings distribution. We analyze earnings responses to two policy reforms that shift this notch outward and find clear evidence that frictions delay the earnings responses of more than 38% of workers. We propose that heterogeneity in firm labor demand plays a key role in generating the observed differences in the speed of workers’ earnings responses and provide supporting evidence.

This paper obtains comparable estimates of the effect of unemployment insurance (UI) benefits on labor supply throughout the unemployment spell and over the business cycle using a regression kink design and 20 years of administrative data from California. For a given unemployment duration, the behavioral effect of UI benefit levels on labor supply does not vary with the business cycle from 2002 to 2019. However, due to increased coverage from extensions in benefit durations, the duration elasticity of UI benefits rises during recessions. The behavioral effect during the start of the COVID-19 pandemic is substantially lower at all unemployment durations.