Job Destruction Research Articles

Job destruction and creation: Labor reallocation entailed by the clean air action in China

Understanding the mechanism of labor reallocation during the implementation of environmental regulations is important for countries to stabilize employment. Using city-level data and listed firm-level data from 2005 to 2019, we investigated the labor reallocation entailed by the Clean Air Action (CAA) from 2013 to 2017 in China, and found that the CAA substantially reduced labor demand in regulated cities and listed firms. Notably, the CAA has entailed different levels of job destruction and job creation across time, industries, and firm types, boosting labor reallocation. Firstly, the effect of the CAA on labor demand was time-varying, as labor demand first decreased and then recovered from 2013 to 2019. Secondly, the CAA generated a greater job destruction in polluting industries and their downstream industries, and job creation in clean industries. Lastly, thanks to the CAA firms have increased the hiring of highly skilled workers, although equipment upgrades have reduced labor demand, especially in polluting firms.

Creation and Destruction of Jobs in Urban Labour Market: Role of Gender, Caste and Religion in India.

This study analyses labour market transitions from job to jobless or jobless to job by using Periodic Labour Force Survey (PLFS)of India in urban labour market by applying first-order Markov process in constructing transition matrices and panel logit regression model using personal level information from the PLFS in India for 2019-20. While education is assumed to be the most important factor influencing the process of transitions in the labour market, the circumstance variables like gender, caste and religion are expected to have significant effects on it in a country like India. The empirical results show a significant difference in labour market transitions between men and women. The movement of workers between job status was very low and the major part of the transition occurred in the form of job losses for each type of workers both among men and women and also among all working age group and young age group.

All‐around trade liberalization and firm‐level employment: Theory and evidence from China

AbstractChinese firms faced an all‐around trade liberalization process during the early 2000s: lower barriers from other countries on Chinese goods, and lower Chinese barriers on other countries' goods and inputs. This paper disentangles the effects of each type of trade liberalization on Chinese firm‐level employment. We find that reductions in Chinese and foreign final‐good tariffs are associated with job destruction in low and mid‐low productivity firms and job creation in high‐productivity firms. Chinese final‐good trade liberalization produces the largest firm‐level employment responses, whereas the employment effects of Chinese input‐trade liberalization are limited to job destruction in the least productive firms.

Job structure evolution in Russia: Polarization, upgrading, stalemate

In the study we explore the evolution of the job structure in the Russian economy during the first 20 years of this century. Does it change through a consequent substitution of relatively worst (in terms of quality) jobs by better jobs? Or through a destruction of middle quality jobs? Or do we observe stagnation and conservation of the job structure? Any structural change of this sort is usually triggered by technological progress that shapes demand for labor of different quality and complexity. In search for clues to these questions, the authors use large data sets which cover two sub-periods divided by the 2008—2009 crisis. The estimates presented in the paper allow reject the polarization hypothesis, and they document a fast upgrade of the job structure during the first sub-period and a much lower upgrade during the second one. Apparently, the risks of job polarization are likely to be minimal until the economic growth is recovered and the movement to the technological frontier is accelerated.

Reasons for a basic income program: poverty, economic crisis or end-of-work? A literature review

Interest in basic income tends to grow in times of crisis, especially with current high rates of unemployment, poverty and the impact caused by the COVID-19 pandemic. This article aims to evaluete the characteristics of the debate on basis income for every citizen in the last twelve years. There are three mains reasons for basic income: 1) problems caused by poverty; 2) constant crises of the capitalism system; 3) massive destruction of jobs by automation. It is concluded that there is no consensus on the design of such a program, neither on its relationship with social welfare policies nor on its population coverage.

Job Creation and Job Destruction in Turkey: 2006 - 2021

Job Creation and Job Destruction in Turkey: 2006 - 2021

Creation, destruction and reallocation of jobs in italian firms: an analysis based on administrative data

Creation, destruction and reallocation of jobs in italian firms: an analysis based on administrative data

Employment, Skill Upgrading, and International Trade: The Case of Sanctions Against Iran

This paper examines the effects of the trade sanctions imposed on Iran in 2010 on employment, demand for skilled labor, and wages by using industrial manufacturing data that cover 10 years before and 5 years after the sanction, 28 provinces, and more than 200 different industries. The results regarding the employment impact of the trade sanctions show that there was remarkable job destruction, most notably in domestically active industries, during the sanction period. The decomposition of the increase in the aggregate demand for skilled labor sheds light on the fact that it comes from labor reallocation within industries, not from across industries. The trade sanctions adversely affected both exporters' and non-exporters' total-factor productivity; however, non-exporters endured a larger negative impact. This induced biased technological change between exporters and non-exporters, which resulted in a market share reallocation towards exporters. As a result, the demand for skilled production workers increased which results in a rise in the real average wage, whereas the demand for non-production workers decreased which results in a fall in the real average wage during the sanction years. This opposite effect is explained by the elasticity of substitution between skilled and unskilled workers.

Job Creation and Job Destruction Dynamics in the U.S. Truck Transportation Industry, 1995-2019

Job Creation and Job Destruction Dynamics in the U.S. Truck Transportation Industry, 1995-2019

Endogenous Job Destruction Risk and Aggregate Demand Shortages

Endogenous Job Destruction Risk and Aggregate Demand Shortages

Unemployment persistence with an evolutionary perspective: job creation or destruction (or both)?

This study analyzes the linkage between dynamic persistence of unemployment and the demand side of the labor market—job creation and destruction with an evolutionary perspective. The Neo-Austrian model predicts that: (i) unemployment is not featured as stationary over the entire sample period. (ii) unemployment is in disequilibria if job creation or job destruction (or both) is in out-of-equilibrium adjustment; (iii) regions with more unemployment compensation benefits or co-ordination problem are featured by higher unemployment persistence compared with low unemployment insurance benefits. The empirical analysis using aggregate-level and state-level data provides empirical support to these predictions. Using a unique dataset, this study finds that the persistence in the unemployment rate is a job destruction phenomenon.

Effects of the COVID-19 pandemic on the Brazilian labor market: increasing inequalities

In addition to the difficulties that plague Brazilian society with the downturn in economic activity, high inflation, high interest rates, the closure of business activities in various business segments and the destruction of jobs, there are also the effects of the crisis health of the Covid-19 pandemic that manifested itself in an overwhelming way in various sectors of society from the year 2020, causing the existing inequalities in the Brazilian labor market to increase. The objective of this work is based on a review of the existing literature, to identify how the Covid-19 pandemic has impacted different groups of workers differently, considering gender and race. The results point to a greater gap in unemployment rates between female and black groups, showing that these workers suffered more strongly.

Labour Demand Effects of Internationalization in the Colombian Manufacturing Industry, 1974-2015

Colombia experienced a major structural change in the early nineties. This structural change is related to major trade and labour market reforms undertaken around 1992, which is considered the inflection year. This paper focuses on evaluating whether the structural change in international trade exposure significantly altered the employment response to wage changes in the manufacturing industry. Hamermesh’s (1993) framework is used to explain the total employment effect, which is made of the substitution and scale effects. This total effect is empirically quantified, and its two components disentangled. We find that the employment elasticity of a wage change rose from -1.05 in 1974-1991 to -1.56 in 1992-2015. By components, the substitution effect rose from -0.68 to -1.19, and the scale effect remained stable at -0.38. These findings suggest that trade liberalization has had negative consequences on workers’ welfare. A larger sensitivity of labour demand has been associated with a larger workers’ tax burden and a greater instability in labour market outcomes (Rodrik, 1997). Therefore, the increases in payroll taxation experienced during the nineties may have led to job destruction and an amplified workers’ tax burden, while capital-labour substitution processes may have accelerated on account of the larger employment sensitivity.

Re-politicising the future of work: Automation anxieties, universal basic income, and the end of techno-optimism

‘Rise of the Robots’, the ‘Second Machine Age’ and ‘This Time it's Different’ are some of the sweeping headlines that frame contemporary popular narratives of the future of work. It is often claimed that technological change is an accelerating force causing significant disruption to employment, necessitating a universal basic income (UBI) as human labour becomes increasingly redundant. This article interrogates these assumptions and considers how the techno-optimism that fuelled contemporary visions of workplace automation has declined in recent years. Empirical studies of automated workplaces, in particular the warehouse, have challenged simplistic binaries of job destruction or creation. I consider how automation and UBI are not value-neutral tools, but sites of socio-political contest that can challenge or consolidate workplace imperatives of control. In the context of ever-widening power asymmetries between workers and employers, this terrain is particularly fraught.

Looking ahead at the effects of automation in an economy with matching frictions

We look at how advances in AI and Robotics will affect employment in an economy with matching frictions and endogenous job destruction. In the model, tasks can be produced by workers or by machines. Workers have a comparative advantage in producing advanced tasks but machines tend to catch up with labor, leading to automation. To calibrate the model, we rely on predictions in the literature about the expected share of automated jobs due to AI and Robotics. Our model suggests that these technological innovations will raise job destruction but also job creation because the prospect of automating jobs increases the value of hiring workers. Therefore, long-run employment might fall but not massively. Furthermore, employment will likely rise if consumers value human interactions (human touch) as the relative price of labor tasks increases with widespread usage of machines. Regarding policy, we compare the outcomes of a robot tax with alternative policies.

Nonlinear Employment Effects of Tax Policy

AbstractWe study the nonlinear propagation mechanism of tax policy in a heterogeneous‐agent equilibrium business cycle model with search frictions in the labor market and an extensive margin of employment adjustment. The model exhibits endogenous job destruction and endogenous hiring standards in the form of occasionally‐binding zero‐surplus constraints. After parameterizing the model using U.S. data, we find that the dynamic response of employment to a temporary change in the labor income tax is highly nonlinear, displaying sizable asymmetries and state dependence. Notably, the response to a tax rate cut is at least twice as large in a recession as in an expansion.

Interpersonal, cognitive, and manual skills: How do they shape employment and wages?

We study how interpersonal, cognitive, and manual skills affect employment and wages in a search and matching model through their impact on productivity, complementarity, job destruction, and the cost of unemployment. Combining several data sets on workers who acquired skills in vocational education and training (VET), we quantify each channel, allowing for unobserved heterogeneity in ability. All three skills increase productivity, yet they affect job destruction rates differentially. While manual skills are associated with lower job destruction, interpersonal and cognitive skills have the opposite effect. Focusing on low-ability workers, we then estimate the value of VET. Through VET, wages increase up to 10% and unemployment drops by over 50%. Low-ability workers thus have particularly large benefits from acquiring manual skills because they increase wages and shield from unemployment.

Analysing the Employment Effects of the Exchange Rate, Foreign Direct Investment and Trade Openness on South Africa’s Non-Tradable Sectors

"Mounting assertions of the increased benefits of foreign trade integration, in terms of increased wages and labour, as well as factor productivity and resource reallocations, are accompanied by subsequent concerns of coexisting job destruction, particularly for countries with evidently rising unemployment and poverty levels. Such is the case for a post-apartheid South African economy, ravaged by persistently high unemployment rates amid increased trade liberalisation. In drawing meaningful inherences, this study examined the effects of South Africa’s trade openness, the real effective exchange rate and foreign direct investment (FDI) on job creation or employment in selected non-tradable sectors. A quantitative approach was used, with the aforementioned trade-related factors as explanatory variables. Employment in the non-tradable sector’s construction, finance, and the wholesale and retail trade sector served as dependent variables. A quarterly dataset from 1995Q1 to 2021Q1 was employed. While the standard Autoregressive Distributed Lag (ARDL) model was used to gauge short-run and long-run relationships. Further econometric methods such as the correlations analysis were conducted to obtain additional understanding of the nature of the set variables. Findings showed that trade liberalisation effects induce varying implications on employment in the considered non-tradable sectors, perhaps due to idiosyncratic characteristics in the nature and operational structure of each sector. Trade openness was shown to have exhibited significant long-run implications on job creation in all the sectors, whereas the parameters of the rest of the explanatory series were not significant in the long-run. Results further showcased mixed short-run effects of trade factors on employment in all sectors, with significant parameters for the real effective exchange rate and trade openness with employment in the construction sector. Including significant short-run relationships for the real effective exchange rate with employment in the finance sector. Significant parameters for employment in the wholesale and retail trade sector with FDI and the real effective exchange rate were established. Further inferences were made in expounding on the established dynamics. Keywords: job creation, employment, non-tradable sector, real exchange rate, and trade openness. JEL Classification: E24, F16, F31, O49"

Does it matter where you invest? The impact of foreign direct investments on domestic job creation and destruction

AbstractThis study examines how foreign direct investment (FDI) affects domestic employment by using unique division‐level data of Japanese firms. Contrary to most previous studies focusing on the effect of FDI on net employment growth, we decompose it into job creation (JC) and job destruction (JD) for each individual firm. We find that FDI destination plays an important role: FDI to Asia increases JC, whereas FDI to Europe/North America decreases it; furthermore JD decreases, regardless of FDI destination. A frictional search‐and‐matching model with heterogeneous jobs can explain the differential effects. The model provides additional predictions on JC and JD by job type, which are also empirically confirmed.

Job Creation and Job Destruction in Newly Established, Privatized, and State-Owned Enterprises in CIS countries

The article describes newly created private firms are those that have been private since they were established, i.e. the enterprises, which were established after the transition process started. In the economic literature, they are also referred as de novo enterprises or firms. The paper reports new and unique firm level survey evidence to investigate the micro economic nature of the growth process and structural change in CIS countries. In particular, we investigate gross job creation and destruction in newly established private (de novo) firms and “traditional” ones, being state owned and privatized firms and find that the de novo private firms are the most dynamic ones in terms of job creation. As result of the research we find that state owned enterprises are not significantly different in their employment behavior from privatized firms, where mixed effects of competition on employment growth. Therefore, the result could be evidence that suggests efficiency wage payments are important for employment growth in couple of CIS countries.