Showing papers by "Daniel Aaronson published in 2000"

Unemployment and Wage Growth: Recent Cross-State Evidence

Abstract: Introduction and summary The current economic expansion, now the longest on record, has delivered the lowest unemployment rates in 30 years Yet nominal wage growth has remained relatively contained This failure of wages to accelerate more rapidly suggests to some a shift, or even a complete breakdown, in the historical relationship between unemployment and wage growth However, looking across the years, the relationship between unemployment and wage growth has always been relatively loose, implying that it might take many years to conclusively identify even a significant change in the link between unemployment and wages In this article, we look across the states for more timely evidence of a change in the relationship between unemployment and wage growth We find, however, that even in recent years, there is a relatively robust, negative relationship between state unemployment rates, properly evaluated, and wage growth In particular, states in which current unemployment rates are lower relative to their long-run averages tend to have faster wage growth than those in which unemployment is higher relative to average We do find some evidence that the sensitivity of wage growth to unemployment may have decreased in recent years, but we consider that evidence to be somewhat weak Before turning to the cross-state evidence, we briefly review some of the cross-year evidence that has led to speculation about a change in the relationship between unemployment and wage growth That speculation has taken a number of forms, not all of which have been well reasoned In particular, media analysts sometimes have characterized the lack of greater acceleration of nominal wages in the face of low unemployment as a failure of the "forces of supply and demand" in the labor market But, the forces of supply and demand have direct implications not for nominal wage growth, but rather for real, or inflation-adjusted, wage growth [1] Indeed, because nominal wage growth depends on the level of price inflation, which in turn depends on monetary policy, there is little reason to expect a long-run link between the level of nominal wage growth and unemployment So it is not surprising that the statistical relationship between nominal wage growth and unemployment discovered by Phillips (1958) disappeared long ago [2] A more serious question is whether there has been a change in the relationship between unemployment and the growth of wages relative to expected inflation A rough indication of the time-series evidence on this question can be gleaned from figures 1 to 3, which are scatter plots of annual data on the excess of wage growth over the previous year's price inflation versus the natural logarithm of the annual unemployment rate In each case price inflation is measured by the change in the log of the annual Consumer Price Index The three figures differ, however, in their measures of wage growth [3] In figure 1 wage growth is the change in the log of the annual average of the Bureau of Labor Statistics' (BLS) Average Hourly Earnings (AHE) series This closely followed monthly wage measure is limited to the wage and salary earnings of the approximately 80 percent of private industry workers who are classified as production or nonsupervisory workers In figure 2 wage growth is derived from the hourly compensation m easure from the BLS's productivity and cost data (Hourly Comp) This measure captures most wage and nonwage forms of compensation paid to all workers in the business sector and thus provides a superior measure of the compensation associated with an average hour of work Finally, in figure 3 wage growth is given by the increase in the average value of the BLS's Employment Cost Index (ECI) This measure also reflects both wage and benefits costs for private employers and, in addition, adjusts for variation in the industrial and occupational mix of the labor force Unfortunately, it only became available in 1983 …

Supplier Relationships and Small Business Use of Trade Credit

Abstract: This paper sheds some light on the empirical importance of supplier relationships, including ethnic ties, for the use of trade credit by minority-owned small businesses. Results based on the 1993 National Survey of Small Business Finance (NSSBF) indicate that ethnic differences in the use of trade credit are present after conditioning on an extensive list of control variables. This holds especially for Black-owned businesses, and we find that they use less trade credit, are less likely to take advantage of discounts for early payment, and are more likely to have payments past due. We use neighborhood survey data to explore the importance of supplier relationships for the use of trade credit by Black- and Hispanic-owned businesses. Although Black and Hispanic owners are equally likely to be offered trade credit, the relationship effects vary by ethnicity. Closer relationships with suppliers, as measured by ethnic ties and geographical proximity, are associated with more trade credit for Hispanic-owned businesses. In contrast, this result does not hold for Black-owned firms. The neighborhood survey results suggest the idea of looking for ethnic differences in the effects of relationships at the national level as well. Although good supplier-level measures of relationships are not available in the NSSBF, we use census data to construct MSA-level measures of the prevalence of minority-owned businesses. We then explore how location in an MSA with a higher proportion of businesses of the same ethnicity is associated with the use of trade credit by minority owners relative to White-owned firms. We find that a higher MSA share for Hispanic-owned businesses is generally associated with a reduction in differences in the use of trade credit by Hispanic owners relative to White owners. No clear association is apparent between the MSA share for Black-owned businesses and their use of trade credit. Thus, the ethnic differences in the effects of relationships evident in the neighborhood surveys seem to be consistent with the results from the national survey.

Recent Evidence on the Relationship Between Unemployment and Wage Growth

Abstract: 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 the elasticity of real wage growth with respect to unemployment has fallen recently, a result that is not due to a compositional shift toward college-educated workers. However, evidence of a weakened relationship is itself weak, depending on inherently arbitrary decisions about when a shift may have occurred. In addition, we find that levels of real wage growth associated with high, medium, and low unemployment have remained relatively constant.

Small-business access to trade credit: some evidence of ethnic differences

Abstract: 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, proactive community participation and partnerships between financial institutions and community organizations are important for greater access to credit and financial services among Black Households.