The Cyclicality of the Opportunity Cost of Employment
By Gabriel Chodorow-reich, Loukas Karabarbounis. Journal of Political Economy, 2016
212 citations recorded by the source corpus.
The flow opportunity cost of moving from unemployment to employment consists of forgone public benefits and the forgone consumption value of nonworking time. We construct a time series of the opportunity cost of employment using detailed microdata and administrative or national accounts data to estimate benefits levels, eligibility, take-up, consumption by labor force status, hours, taxes, and preference parameters. The opportunity cost is procyclical and volatile over the business cycle. The estimated cyclicality implies far less unemployment volatility in leading models of the labor market than that observed in the data, irrespective of the level of the opportunity cost.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/e73b12bcac13ec17c2f38b9d619f663e0473aa3d
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In Economics and Econometrics
- K. Mitman
- Dirk Krueger
- J. Grigsby
- Fabrizio Perri
- Nathaniel Hendren
- Ahu Yildirmaz
- Erik G. Hurst
- Ryan A. Decker
Citations in the corpus
- Consumer Spending during Unemployment: Positive and Normative Implications (2019, unknown): “The first limitation is that the PSID is administered infrequently and has an ambiguous reference period, making it di cult to assess if survey responses about spending coincide with unemployment (Chodorow-Reich and Karabarbounis 2016).”
- Macroeconomics and Household Heterogeneity (2016, background): “We will also consider a lower value of ρ = 10%, motivated by the observation that many households qualifying for unemployment insurance benefits fail to claim them (see, e.g. Blank and Card, 1991 or Chodorow-Reich and Karabarbounis, 2016).”
- The US Labor Market during the Beginning of the Pandemic Recession (2020, background): “14For a recent example, see Chodorow-Reich and Karabarbounis (2016).”
- Knowledge of Future Job Loss and Implications for Unemployment Insurance (2017, result): “This estimate is broadly more similar with estimates of Chodorow-Reich and Karabarbounis (2013), which also excludes food stamp expenditures.”
- Unemployment (fears) and Deflationary Spirals (2015, unknown): “Using US data, Stephens Jr. (2004), Saporta-Eksten (2014), Aguiar and Hurst (2005), and Chodorow-Reich and Karabarbounis (2016) provide empirical support for substantial drops in consumption follow job loss, even when expenditures on durables are not included.96 Using Canadian survey data, Browning…”