Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
Upside of Inequality Oxford Unintended Consequences

AI Summary. Using administrative employer-employee data on workers displaced by firm closures, the authors find that workers in larger labor markets experience shorter non-employment spells and smaller earnings losses than those in smaller markets, indicating larger markets partially insure workers against job-loss shocks. The effects are larger in industries where human capital is more specialized and less portable.

Enrico Moretti and Moises Yi National Bureau of Economic Research
Date Posted:
Is Database:
Database

Large labor markets are more liquid and improve matching. A 1% increase in market size results in an increase in the 1-year re-employment probability following a firm closure by .14 and .023 for high school and college graduates respectively. @MoisesYi3

Do larger labor markets protect workers against job loss?

Core argument: Using Longitudinal Employer-Household Dynamics administrative data, the authors find that workers displaced by firm closures in larger labor markets experience significantly shorter non-employment spells and smaller earnings losses than workers in smaller markets.

We use administrative data [Longitudinal Employer‐Household Dynamics reporting] to compare the job search outcomes of workers originally in large and small markets who lost their jobs due to a firm closure. Workers in larger markets experience significantly shorter non-employment spells and smaller earning losses following a closure than workers in smaller markets, indicating that larger markets partially insure workers against idiosyncratic employment shocks. We find that the effects are larger in industries where human capital is more specialized and less portable.

Takeaways by Macro Roundup® AI

  1. Using Longitudinal Employer-Household Dynamics administrative data, the authors find that workers displaced by firm closures in larger labor markets experience significantly shorter non-employment spells and smaller earnings losses than workers in smaller markets.
  2. The authors read the larger-market advantage as an indication that larger labor markets partially insure workers against idiosyncratic employment shocks.
  3. The estimated benefits of larger markets are greater in industries where human capital is more specialized and less portable, according to the authors.

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