Biography: Yotam Shem-Tov is an Assistant Professor of Economics at UCLA. His research primarily focuses on Labor and Public Economics with a special interest in the U.S. criminal justice system. He received a BA in Economics and Philosophy from Tel-Aviv University and a PhD in Economics from UC Berkeley.

How Replaceable is a Low-Wage Job?

Abstract: This paper studies the long-run consequences of losing a low-wage job using linked employer-employee wage records and household surveys. For full-time workers earning $15 per hour or less, job loss due to an idiosyncratic, firm-wide contraction generates a 13% reduction in earnings 4-6 years later and more than $40,000 cumulative lost earnings. Most of this long-run decrease stems from reductions in employment and hours as opposed to wage rates: job losers are twice as likely to report being unemployed and looking for work, and annual weeks worked are reduced by 10%. By contrast, workers initially earning more than $15 per hour see comparable long-run earnings losses driven primarily by reductions in hourly wages. We interpret these effects through a dynamic job-ladder model, which implies that the flow rents from holding a full-time $15 per hour job relative to unemployment are 3.1% of earnings.

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