Daniel Aaronson's research while affiliated with Federal Reserve Bank of Chicago and other places

Publications (74)

Article
This paper uses minimum wage hikes to evaluate the susceptibility of low-wage employment to technological substitution. We find that automation is accelerating and supplanting a broader set of low-wage routine jobs since the Financial Crisis. Simultaneously, low-wage interpersonal jobs are increasing and offsetting routine job loss. However, interp...
Article
This study uses a boundary design and propensity score methods to study the effects of the 1930s-era Home Owners Loan Corporation (HOLC) “redlining” maps on the long-run trajectories of urban neighborhoods. The maps led to reduced home ownership rates, house values, and rents and increased racial segregation in later decades. A comparison on either...
Article
Leveraging the increasing availability of ”big data” to inform forecasts of labor market activity is an active, yet challenging, area of research. Often, the primary difficulty is finding credible ways with which to consistently identify key elasticities necessary for prediction. To illustrate, we utilize a state-level event-study focused on the co...
Preprint
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We create a new weekly index of retail trade that accurately predicts the U.S. Census Bureau’s Monthly Retail Trade Survey (MRTS). The index’s weekly frequency provides an early snapshot of the MRTS and allows for a more granular analysis of the aggregate implications of policies implemented during the Covid-19 pandemic. To construct the index, we...
Article
We estimate the long-run effects of the 1930s Home Owners Loan Corporation (HOLC) redlining maps on census tract-level measures of socioeconomic status and economic opportunity from the Opportunity Atlas (Chetty et al. 2018). We use two identification strategies to identify the long-run effects of differential access to credit along HOLC boundaries...
Article
Using a compiled dataset of 441 censuses and surveys between 1787 and 2015, representing 103 countries and 51.4 million mothers, we find that: (1) the effect of fertility on labour supply is typically indistinguishable from zero at low levels of development and large and negative at higher levels of development; (2) the negative gradient is stable...
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This article looks at the relationships between internet searches for unemployment-related terms, unemployment insurance (UI), and the public health orders issued in the U.S. during the Covid-19 pandemic. We find that Google searches for unemployment-related subjects surged before the record increase in initial UI claims, which in turn peaked befor...
Research
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We leverage an event-study research design focused on the seven costliest hurricanes to hit the US mainland since 2004 to identify the elasticity of unemployment insurance filings with respect to search intensity. Applying our elasticity estimate to the state-level Google Trends indexes for the topic “unemployment,” we show that out-of-sample forec...
Article
We leverage an event-study research design focused on the seven costliest hurricanes to hit the US mainland since 2004 to identify the elasticity of unemployment insurance filings with respect to search intensity. Applying our elasticity estimate to the state-level Google Trends indexes for the topic "unemployment," we show that out-of-sample forec...
Article
Full-text available
We leverage an event-study research design focused on the seven costliest hurricanes to hit the US mainland since 2004 to identify the elasticity of unemployment insurance filings with respect to search intensity. Applying our elasticity estimate to the state-level Google Trends indexes for the topic "unemployment,'' we show that out-of-sample fore...
Article
Between 1907 and 1914, the “Galveston Movement,” a philanthropic effort spearheaded by Jacob Schiff, fostered the immigration of approximately 10,000 Russian Jews through the Port of Galveston, Texas. Upon arrival, households were given train tickets to pre-selected locations west of the Mississippi River where a job awaited. Despite the program’s...
Article
Using two proprietary datasets on earnings and credit outcomes, this paper finds that both high- and low-earners take a significant and persistent hit to income after job displacement. But these losses only translate into worse credit conditions – higher credit card utilization, lower FICO scores, and a pick up in the rate of card accounts that are...
Article
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We document two new findings about the industry-level response to minimum wage hikes. First, restaurant exit and entry both rise following a hike. Second, there is no change in employment among continuing restaurants. We develop a model of industry dynamics based on putty-clay technology that is consistent with these findings. In the model, continu...
Article
We extend the task-based empirical framework used in the job polarization literature to analyse the susceptibility of low-wage employment to technological substitution. We find that increases in the cost of low-wage labour, via minimum wage hikes, lead to relative employment declines at cognitively routine occupations but not manually-routine or no...
Article
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This Chicago Fed Letter provides an account of our collaboration with the construction contracts and payment management firm Textura to use their data to evaluate the state of U.S. construction spending. We show that new construction projects budgeted by Textura’s clients are a leading indicator for total U.S. construction spending and provide info...
Article
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We document two new facts about the market-level response to minimum wage hikes: firm exit and entry both rise. These results pose a puzzle: canonical models of firm dynamics predict that exit rises but that entry falls. We develop a model of firm dynamics based on putty-clay technology and show that it is consistent with the increase in both exit...
Article
This paper examines the fertility transition through a new lens: the extensive margin. Parents with high levels of children might substitute quality for quantity as the constraints on quality relax or those on quantity tighten. However, along the extensive margin, the quantity-quality trade-off cannot operate. At low levels of fertility, we expect...
Article
This article analyzes what is behind the recent unprecedented rise in long-term unemployment and explains what this rise might imply for the economy going forward. In particular, the authors attribute the sharp increase in unemployment duration in 2009 to especially weak labor demand and, to a lesser degree, extensions in unemployment insurance ben...
Article
The authors estimate teacher demand and supply through 2020 to gauge the impact of baby boomer retirements on the demand for new teachers. They find that the projected demand will accelerate through at least 2020, and a good portion of this increase will be due to retirements. Still, this demand, once it has been adjusted for the size of the potent...
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The authors examine how firms are adjusting their work force during the current recession in comparison with other recessions over the past 40 years.
Article
The Black-White gap in completed schooling among Southern born men narrowed sharply between the World Wars after being stagnant from 1880 to 1910. We examine a large scale school construction project, the Rosenwald Rural Schools Initiative, which was designed to dramatically improve the educational opportunities for Southern rural Blacks. From 1914...
Article
Following a minimum wage hike, household income rises on average by about $250 per quarter and spending by roughly $700 per quarter for households with minimum wage workers. Most of the spending response is caused by a small number of households who purchase vehicles. Furthermore, we find that the high spending levels are financed through increases...
Article
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Using store-level and aggregated Consumer Price Index data, we show that restaurant prices rise in response to minimum wage increases under several sources of identifying variation. We introduce a general model of employment determination that implies minimum wage hikes cause prices to rise in competitive labor markets but potentially fall in monop...
Article
We estimate trends in intergenerational economic mobility by matching men in the Census to synthetic parents in the prior generation. We find that mobility increased from 1950 to 1980 but has declined sharply since 1980. While our estimator places greater weight on location effects than the standard intergenerational coefficient, the size of the bi...
Article
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This paper shows that increases in the minimum wage rate can have ambiguous effects on the working hours and welfare of employed workers in competitive labor markets. The reason is that employers may not comply with the minimum wage legislation and instead pay a lower subminimum wage rate. If workers are risk neutral, we prove that working hours an...
Article
This article explores the future of teacher labor markets. The authors find that teacher hiring needs will rise over the coming decade largely because of retirements. However, this increase will not be significantly different from that of past decades.
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We estimate the importance of teachers in Chicago public high schools using matched student-teacher administrative data. A one standard deviation, one semester improvement in math teacher quality raises student math scores by 0.13 grade equivalents or, over 1 year, roughly one-fifth of average yearly gains. Estimates are relatively stable over time...
Article
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We infer the employment response to a minimum wage change by calibrating a model of employment for the restaurant industry. Whereas perfect competition implies that employment falls and prices rise after a minimum wage increase, the monopsony model potentially implies the opposite. We show that estimated price responses are consistent with the comp...
Article
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Fewer teenagers are participating in the labor force today than at any point since WWII. At just under 44%, teen labor force participation is 15 percentage points below its peak in the late 1970s. Why has there been a long-run secular decline in the work activity of young adults, and why has it sharply accelerated in the last five years?
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This paper presents evidence that spending increases more than income, and thus debt rises, in households with minimum wage workers following a minimum wage hike. Furthermore, we show that the size, timing, persistence, and composition of spending is inconsistent with the basic certainty equivalent life cycle model as well as simple "rule of thumb"...
Article
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We use price data underlying the Consumer Price Index to assess how restaurants, whose prices are generally quite sticky, respond to minimum wage increases. Aggregate prices rise, quickly, by amounts reflecting the increase in costs, and they rise more among fast food outlets and in low-wage locations. But restaurants do not construct price increas...
Article
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The authors examine the recent decline in teen work activity, offering explanations for both the long secular decline since the late 1970s and the recent acceleration in this decline since 2000. They argue that much of this pattern is due to a significant increase in the rewards to formal education. They also explore the importance of changes to la...
Article
If participation in the labour market helps to secure women's outside options in the case of divorce/separation, an increase in the perceived risk of marital dissolution may accelerate the increase in female labour supply. This simple prediction has been tested in the literature using time and/or spatial variation in divorce legislation (e.g., acro...
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This article reconsiders the case for sectoral labor reallocation's role in the jobless recovery. The authors review and critique previous attempts to measure sectoral reallocation, with a particular emphasis on the recent contribution of Groshen and Potter (2003). Their conclusion, based on an extension of Rissman (1997), is that the need of reall...
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This article identifies the part-time wage effect, using hours variation caused by the social security rules. We show that work hours and wages drop sharply at ages 62 and 65. We argue that the hours decline causes the wage decline, resulting in a 25% wage penalty for men who cut their work week from 40 to 20 hours. However, we find little evidence...
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This article reviews trends in employment growth during the recent recovery, including new evidence that much of the increase in self-employment since the beginning of the recession is likely a reflection of the weak labor market conditions of the last three years. The authors also offer thoughts on the strengths and weaknesses of several explanati...
Article
Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effect...
Book
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Using unique administrative data on Chicago public high school students and their teachers, we are able to estimate the importance of teachers on student mathematical achievement. We find that teachers are educationally and statistically important. To be sure, sampling variation and other measurement issues can strongly influence estimates of teach...
Article
This paper extends a standard intertemporal labor supply model to account for progressive taxation as well as the joint determination of hourly wages and hours worked. We show, qualitatively and quantitatively, that these two factors have important implications for estimating the intertemporal elasticity of substitution. Furthermore, we show how to...
Article
This paper tests a textbook consequence of competitive markets: that an industry-wide increase in the price of labor is passed on to consumers through an increase in prices. Using several data sources on restaurant prices, I explore the price impact of minimum-wage hikes in Canada and the United States. Particular attention is paid to the timing of...
Article
The evolution of neighborhood characteristics is an important but understudied component of research on the consequences of community income and racial sorting. This paper reports descriptive findings on census tract dynamics in the U.S. between 1970 and 1990. The empirical vector autoregression techniques allow a more complete description of impor...
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This article shows that increases in the educational attainment and labor market experience of the U.S. work force have led to an advance in labor productivity of more than 0.2 percentage points per year since the early 1960s. Estimates show, however, some declaration in the pace of labor quality improvements toward the end of the 1990s. Forecasts...
Article
This paper establishes some unique descriptive statistics about supplier relationships and the use of trade credit among minority small businesses and documents the importance that ethnic and geographic supplier ties play. Using data from a survey of small businesses in two Chicago neighborhoods, we find that the importance may differ across commun...
Article
This brief note adds to recent work that attempts to identify externalities associated with homeownership. The results suggest that some of the homeownership effect found by Green and White is driven by family characteristics associated with homeownership. especially residential stability. However, as much as home-ownership increases residential st...
Article
The current expansion has delivered the lowest unemployment rates in decades, yet nominal wage growth has remained relatively contained. This suggests to some a shift in the historical relationship between unemployment and wage growth. We look across the states for more timely evidence of a change in this relationship. We find some evidence that th...
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This article shows that even in recent years there is a relatively robust, negative cross-state correlation between appropriate measures of unemployment and wage growth.
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Based on findings from a survey of Black Households, this paper highlights socioeconomic and demographic factors that many influence the utilization of different financial markets. In addition, it discusses the potentially important role that informal financial networks can play in racial/ethnic communities. We propose that education programs, proa...
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of Chicago, respectively. Work was performed under a memorandum of understanding
Article
This article explores whether job displacement is more prevalent in industries with higher technological innovation and whether older and less skilled employees are more prone to technology-induced job displacement. The authors also test whether the probability of reemployment is lower for older and less skilled workers in high-technology industrie...
Article
This brief note adds to recent work that attempts to identify externalities associated with homeownership. The results suggest that some of the homeownership effect found in Green and White [5] is driven by family characteristics associated with homeownership, especially residential stability. However, as much as homeownership increases residential...
Article
Studies that attempt to measure the impact of neighborhoods on children's outcomes are susceptible to bias because families choose where to live. As a result, the effect of family unobservables, such as the importance parents place on their children's welfare, and other unobservables that are common to geographically clustered households, may be mi...
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This article shows that job displacement rates for high-seniority workers and a consistently constructed measure of workers' fears of job loss both rose during the 1990s. It then explores the relationship between these measures of job displacement and worker anxiety and wage growth.
Article
This paper tests whether state school finance reform alters neighborhood income homogeneity. One implication of the Tiebout model is that within-community homogeneity declines as a result of an exogenous decrease in the ability of jurisdictions to set local tax and expenditure levels. The property tax revolt and the school finance equalization refo...
Article
A textbook consequence of competitive markets is that an industry-wide increase in the price of inputs will be passed on to consumers through an increase in prices. This fundamental implication has been explored by researchers interested in who bears the burden of taxation and exchange rate fluctuations. However, little attention has focused on the...

Citations

... Finally, the share of the population that is considered a racial or ethnic minority was included. Though it was not directly tied to the NHSO definition, recent evidence suggests that historic redlining practices predicated on race have negatively impacted the economic prospects of communities today, which would indicate 22 greater need for human services (Aaronson et al., 2020). In total, these seven measurements made up the socioeconomic variables of the study, almost all of which (except life expectancy) have been included in previous research ( Figure 4). ...
... The inverse relationship has been further proved by the study on the labor market outcomes. Further, Aaronson et al., (2017) have determined that the inverse relationship has been mediated by the factors such as the country's stage of economic development. Therefore, the situation is not universally applicable to all countries. ...
... Lin (2011) studies the occupational dynamics of cities, drawing on Jacobs (1969), and Lin (2012, 2015) study the evolution of portage cities, drawing on work by geographers such as Semple (1903) and Cronon (1991). Recent work on the long-run effects of redlining (Aaronson et al., 2021;Krimmel, 2018) relies on contributions by Jacobs (1961), Jackson (1980), and Rothstein (2017), and the data digitization work of the Mapping Inequality project (Nelson et al., 2020). Collinson et al. (2021) estimate the effect of eviction on poverty using the random assignment of judges to eviction cases in New York and Chicago, with close links to the work of Desmond (2016). ...
... Google Trends is used in different scientific areas, e.g., health (Fritsch et 2021), forecasting, e.g., Aaronson (2022), while other present data retrieved from Google Trends, e.g., Zitting et al., (2019). From a methodological point of view, it is recommended to analyse averages but not instantaneous data or individual values for data reliability (e.g., Rovetta, 2021). ...
... Collins et al. [14] argued that although men and women equally perceive domestic tasks that need to be completed, men are less likely to complete the tasks, leaving them to women partners. Further, Collins et al. reported that mothers "scaled back their work hours by about 5 per cent" while fathers' work hours remained stable between March and April 2020 [14, p. 102], showing that more mothers are reducing work responsibilities to meet domestic labor responsibilities with a troubling effect (i.e., a decline) on women's labor force participation [1]. Specifically, "the loss of full-time nonparental childcare was associated with an increased risk of job loss for mothers," who are "more likely to be employed when they have access to childcare options" [51, p. 527]. ...
... The HOLC favored loans for homes that were newly constructed and located in largely homogeneous white neighborhoods (Rothstein 2018). The now well-known term "redlining" originated from the HOLC maps that notoriously ascribed the color red the locations deemed Black, and therefore unfavorable (Aaronson et al. 2021). Even prior to systemic redlining, through the lingering ideological influence of Jim Crow, lenders and agents offered substandard services to predominantly Black communities for some time (Hillier 2003). ...
... When later fertility also decreases, the baby boom generation moves up in the age distribution and after some time enters the working age population. During this period, more women may enter the labor force as less time needs to be spent on children (Aaronson et al., 2021;Bloom et al., 2009;Cristia, 2008). Given that there are still few elderly-as their generation suffered from higher mortality rates in the past-the region experiences a period in which the working age population is large and the dependent population-the green and the grey-is small. ...
... Larson and Sinclair (2020) obtained from his autoregressive models that unemployment insurance claims exceeded 6 million in the first week of Covid-19 outbreak in USA (Larson and Sinclair, 2020: 1). Like Larson and Sinclair (2020), Aaronson et al. (2020) asserted that unemployment insurance claims reached the unprecedented level between March 15 and April 25, 2020 in USA and more than 30 million claims were filed at this time of the year (Aaronson et al., 2020: 1). The studies of Wandner and O'Leary (2020), Xie (2020), Bauer (2020), Altonji et al. (2020), Hedin, Schnorr, and Von Wachter (2020) concentrate upon the same issue and correlate these two parameters. ...
... These characteristics have made Google Search data an ideal source of information for researchers during the COVID-19 pandemic. Scholars have used searches to predict the number of unemployment insurance (UI) claims in the US [1,8,21,31]. Other applications have used web searches to investigate the impact of lock-downs on well-being or economic anxiety [10,19]. ...
... The vast majority of the losses owing to the coronavirus looms as an onerous burden on businesses, governments and insurance companies, with private insurance coverage for economic losses caused by pandemics being limited . Judging by the available data, the pandemic impact on the insurance market is similar to that of a natural disaster (Aaronson et al. 2020;Ludvigson et al. 2020). However, the pandemic cannot be fully covered by the insurance industry as it is not a regionally concentrated event; thus, losses might exceed the worldwide capacity of the industry as a whole (Richter and Wilson 2020). ...