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This edition was written by Elijah Asdourian, Alex Conner, Georgia Nabors, and David Wessel.
Using data from Dice.com, a job search platform for high-skill occupations, Steven Davis of the Hoover Institution and Brenda Samaniego de la Parra of the University of California, Santa Cruz find that the length of a job posting is typically short, most often lasting only two days, with an average duration of nine days. The average vacancy duration is four times longer, indicating that employers spend far more time screening and selecting candidates than they do soliciting applications. Further, labor market tightness has limited impact on the duration of job postings. The authors find that 45% of applications are for vacancies listed within the last 48 hours. Applications are not randomly distributed across job postings, likely because applicants self-sort based on geography, job prerequisites, and employer attributes. Listed wages, however, had no effect on the distribution of applications. Lastly, the authors find that intermediaries such as recruitment firms play a huge role in the hiring process— posting 67% of job vacancies on Dice.com and receiving 62% of applications.
Nicola Bianchi of Northwestern University and Matteo Paradisi of the Einaudi Institute for Economics and Finance use a large administrative dataset of Italian workers and firms to investigate the growing wage gap between older workers over age 55 and younger workers under age 35 from 1985 to 2019, which almost doubled over the period. The authors argue that older workers are living longer, delaying retirement, and occupying a greater proportion of high-paying jobs, crowding younger workers out of the top end of the wage distribution. Indeed, they find that pay has risen roughly equally across the wage distribution, but young workers’ position in the distribution has significantly deteriorated while older workers have moved to the top. The authors show that these effects are most pronounced in older, larger, and slower-growing firms that may have difficulty adding high-paid positions for young workers. Finally, the authors show that the increasing wage gap is partially explained by workers sorting among firms: higher-paying firms’ share of older workers disproportionately increases over time.
Since 2016, the U.S. government has substantially increased export controls on China to prevent American companies from spreading technology that might threaten national security. Using data on American and Chinese companies from 2002 to 2023, Matteo Crosignani of the New York Federal Reserve and co-authors find that these export controls hurt market capitalization, profitability, bank lending, and employment at companies that sell to Chinese customers under export controls. After export controls were put in place, American companies cut ties with Chinese customers across the board, including companies not directly targeted by export controls. American companies were unable to fully replace these customers, leading to declines in revenues and profitability, and an aggregate combined market capitalization of $130 billion. Chinese companies adjusted to the controls by buying similar technologies from other countries and by making use of Chinese government subsidies to innovate domestically.
“Inflation declined quite significantly over the second half of last year…but 12-month core PCE inflation, which is one of the most important things we look at, is estimated to have been little changed in March over February at 2.8%, and the 3- and 6-month measures of inflation are actually above that level. So we’ve said at the FOMC that we’ll need greater confidence that inflation is moving sustainably toward 2% before it would be appropriate to ease policy. We took that cautious approach and sought that greater confidence so as not to overreact to the string of lower inflation readings that we had in the second half of last year. The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence," says Jerome Powell, Chair of the Federal Reserve.
"That said, we think policy is well-positioned to handle the risks that we face. If higher inflation does persist, we can maintain the current level of restriction for as long as needed. At the same time, we have significant space to ease should the labor market unexpectedly weaken. Right now, given the strength of the labor market and progress on inflation so far, it’s appropriate to allow restrictive further time to work and let the data and the evolving outlook guide us.”
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