Skills-Matching During Recessions and Implications for Lower-Skilled Workers

On the New York Times blog Economix (Explaining the Science of Every Day Life), Princeton economist Alan Krueger has discussed the US job market for college graduates (here). Krueger raises the point that underutilisation of highly educated workers' skills should be a concern during periods of recession. He bases this on the idea that employers tend to be more selective in downturns - "the job situation is likely to weaken considerably for less-educated workers as the downturn persists, however, because employers are likely to raise skill requirements."

Krueger mentions research by UCD economist Paul Devereux, which finds that “the education levels of new hires within occupations are higher when the unemployment rate is high and this effect is more pronounced in lower-paying occupations.” Paul Devereux's paper "Occupational Upgrading and the Business Cycle" (Labour, 2003) is available here. The paper concludes with the idea that low-skilled individuals suffer most from recessions in terms of occupation quality and unemployment.

The Weather and Work

Marie Connolly (Princeton) has a paper in the Journal of Labor Economics (2008, vol. 26, no. 1) about the weather and intertemporal substitution of labour. A rainy day is associated with lower enjoyment of leisure, more hours at work and higher wages. Connolly tests the model using data from the American Time Use Survey (ATUS), supplemented with information about daily weather.

The question arises - are individuals not constrained in terms of their working-time decisions? Connolly describes a few recent papers that have looked at jobs held by individuals such as taxi drivers (Camerer et al. 1997; Farber 2004, 2005) and bike messengers (Fehr and Goette 2002), in which workers can effectively choose their daily hours of work. She also mentions that daily work time is calculated in minutes in the ATUS, which allows fine-grained analysis. She finds that, on rainy days, men shift on average 30 minutes from leisure to work.

Everybody talks about the weather, but nobody does anything about it, eh?

Can't Get No Leisure

Kooreman and Kapteyn (1987) note that time not spent on market
work has traditionally been disaggregated into two distinct categories: time spent on housework and leisure. This is the context which makes the findings in Ramey and Francis ("A Century of Work and Leisure", forthcoming) so interesting. Ramey and Francis develop comprehensive measures of time spent in market work, home production, schooling, and leisure in the U.S. for the last 106 years. They find that "hours of work for prime age individuals are essentially unchanged, but that per capita leisure and average annual lifetime leisure increased by only four or five hours per week during the last 100 years."

Professor Valerie Ramey (University of California, San Diego) investigates long-run trends in American time use in a number of papers and makes all the data that she uses available on her website.