Bruce Fallick |

Vice President


Bruce Fallick is a vice president at the Federal Reserve Bank of Cleveland, where he oversees the regional and applied microeconomics unit of the Research Department. Dr. Fallick's areas of specialization are labor economics and macroeconomics. His current research concentrates on unemployment, labor force participation, worker mobility, and wage rigidity.

Prior to joining the Federal Reserve Bank of Cleveland, Dr. Fallick was a senior economist at the Federal Reserve Board of Governors. He's been a visiting professor of economics at Oberlin College and an assistant professor at UCLA.

Dr. Fallick has a Ph.D. in economics from the University of Pennsylvania and a bachelor's degree in philosophy and economics from the University of Pittsburgh.

  • Fed Publications
  • Other Publications
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September, 2014 Federal Reserve Bank of Cleveland, working paper no. 14-10 Bruce Fallick; Stephanie Aaronson; Tomaz Cajner; Felix Galbis-Reig; Christopher Smith; William Wascher; Working Papers
Abstract: Since 2007, the labor force participation rate has fallen from about 66 percent to about 63 percent. The sources of this decline have been widely debated among academics and policymakers, with some arguing that the participation rate is depressed due to weak labor demand while others argue that the decline was inevitable due to structural forces such as the aging of the population. In this paper, we use a variety of approaches to assess reasons for the decline in participation. Although these approaches yield somewhat different estimates of the extent to which the recent decline in participation reflects cyclical weakness rather than structural factors, our overall assessment is that much—but not all—of the decline in the labor force participation rate since 2007 is structural in nature. As a result, while we see some of the current low level of the participation rate as indicative of labor market slack, we do not expect the participation rate to show a substantial increase from current levels as labor market conditions continue to improve.

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June, 2014 Federal Reserve Bank of Cleveland, working paper no. 14-05 Bruce Fallick; William J Carrington; Working Papers
Abstract: The earnings of workers are reduced for many years after being displaced from their jobs, and those workers and their families face increased risk of other problems as well. The ills suffered by displaced workers motivated several recent expansions of government programs, including the unemployment insurance system, and have spurred calls for wage insurance that would provide longer-run earnings replacement. However, while the magnitude of the losses is relatively clear, the theory of why displacement matters is scattered and somewhat undeveloped. Much of the policy discussion appears to interpret displacement-induced losses through the lens of specific human capital theory, and there is considerable empirical support for that model. But there are several other theories of why job displacement is costly. This paper reviews theories of costly job displacement and discusses their consistency with the available empirical evidence. We find that theories of human capital and matching are an important perspective on the losses of displaced workers, but we cannot rule out important roles for other theories, some of which suggest different policy responses.

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2001 Finance and Economics Discussion Series with number 2001-18 Bruce Fallick; Charles A Fleishman; Working Papers
Abstract: In order to measure the flexibility of the labor market, evaluate the job-worker matching process, and model business-cycle dynamics, economists have studied the flows of workers across the labor market states of employment, unemployment, and not in the labor force. One important flow that has been poorly measured is the movement of workers from one employer to another without any significant intervening period of nonemployment. This paper exploits the "dependent interviewing" techniques used in the Current Population Survey since 1994 to estimate such flows. We find that they are large, and their omission significantly understates the degree of mobility in the labor market. In 1999, for example, on average more than 4,000,000 workers changed employers from one month to the next, about the same number as left the labor force from employment and more than twice the number that moved from employment to unemployment. Close to half of the new jobs started in 1999 represented employer changes, as did close to half of the separations. Consistent with previous studies of younger workers, teenagers exhibit the highest rates of employer-switching, and the rate declines through about age 40. However, even among prime-aged workers, about 2 percent change employers each month. Contrary to the implications of many business cycle models, we find no evidence that employer-to-employer flows are procyclical, at least not as the labor market tightened between 1994 and 2000. This finding raises questions about the ways in which stylized facts about labor market flows have been used.

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2001 In S.W Polachek (ed.), Research in Labor Economics, vol. 20, pp.243-269. Bruce Fallick; Sandra A Cannon; Michael Lettau; Raven Saks; Article in Book
Abstract: In recent years, numerous observers have argued that global competition, increased reliance on contingent workers, and the breakdown of implicit contracts have made compensation practices in the United States more flexible; in particular, employers have become more concerned with how an employee's pay compares to that in other firms and less concerned with considerations of equity or relative pay within the firm. This paper uses establishment-level data from the Bureau of Labor Statistics' Employment Cost Index program to examine this claim by asking whether the variances of compensation within and between establishments have moved in a more "flexible" direction over the 1980s and 1990s. We find evidence consistent with increased flexibility.

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1999 Board of Governors of the Federal Reserve System, Finance and Economics Discussion Series 1999-46 Bruce Fallick; William J Carrington; Working Papers
Abstract: This paper investigates the extent to which people spend careers on minimum wage jobs. We find that a small but non-trivial number of NLSY respondents spend 25%, 50%, or even 75% of the first ten years of their career on minimum or near-minimum wage jobs. Workers with these minimum wage careers tend to be drawn from groups such as women, blacks, and the less-educated that are generally overrepresented in the low-wage population. The results indicate that lifetime incomes of some workers may be supported by a minimum wage. At the same time, these same groups would be disproportionately affected by any minimum wage-induced disemployment. The results suggest that minimum wage legislation has non-negligible effects on the lifetime opportunities of a significant minority of workers.

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Title Date Publication Author(s) Type

 

2012 Finance and Economics Discussion Series with number 2012-73. Bruce Fallick; John Haltiwanger; Erika McEntarfer; Working Paper, Other
Abstract: This paper extends the literature on the earnings losses of displaced workers to provide a more comprehensive picture of the earnings and employment outcomes for workers who separate. First, we compare workers who separate from distressed employers (presumably displaced workers) and those who separate from stable or growing employers. Second, we distinguish between workers who do and do not experience a spell of joblessness. Third, we examine the full distribution of earnings outcomes from separations - not the impact on only the average worker. We find that earnings outcomes depend much less on whether a job separation is associated with a distressed employer than on whether the separator experienced a jobless spell after the separation. Moreover, we find that workers separating from distressed firms are faster to find jobs at new employers than are other separators.

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2011 Journal of Business & Economic Statistics, American Statistical Association, vol. 29(4), pages 493-505 Bruce Fallick; Melissa Bjelland; John Haltiwanger; Erika McEntarfer; Journal Article
Abstract: We use administrative data linking workers and firms to study employer-to-employer flows. After discussing how to identify such flows in quarterly data, we investigate their basic empirical patterns. We find that the pace of employer-to-employer flows is high, representing about 4 percent of employment and 30 percent of separations each quarter. The pace of employer-to-employer flows is highly procyclical, and varies systematically across worker, job and employer characteristics. Our findings regarding job tenure and earnings dynamics suggest that for those workers moving directly to new jobs, the new jobs are generally better jobs; however, this pattern is highly procyclical. There are rich patterns in terms of origin and destination of industries. We find somewhat surprisingly that more than half of the workers making employer-to-employer transitions switch even broadly-defined industries (NAICS super-sectors).

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2010 Labor in the New Economy, Studies in Income and Wealth Volume 71, National Bureau of Economic Research Bruce Fallick; Charles A Fleishman; Jonathan Pingle; Article in Book

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2007 In Labor Supply in the New Century, Federal Reserve Bank of Boston Conference Series 52, pp.31-80. Bruce Fallick; Jonathan Pingle; Article in Book
Abstract: Output growth is determined by growth in labor productivity and growth in labor input. Over the past two decades, technological developments have changed how many economists think about growth in labor productivity. However, in the coming decades, the aging of the population will change how economists think about the growth in labor input in the United States. As the oldest baby boomers born in 1946 turned 50, then 55, and then 60, an important economic change has slowly surfaced: these people have become less likely to participate in the labor force. While this shift was obscured by a labor market slump in 2002, the aging of the American population began to put downward pressure on aggregate labor supply, marking the start of what is likely to be a sharp deceleration in labor input that will last another half-century.

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2007 The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 313-323 Bruce Fallick; Keunkwan Ryu; Journal Article
Abstract: Workers who lose their jobs can become re-employed either by being recalled to their previous employers or by finding new jobs. Workers' chances for recall should influence their job search strategies, so the rates of exit from unemployment by these two routes should be directly related. We solve a job search model to establish, in theory, a negative relationship between the recall and new job hazard rates. We look for evidence in the PSID by estimating a semi-parametric competing risks model with explicitly related hazards. We find only a small negative behavioral relationship between recall and new job hazard rates.

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2006 Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System, no. 2007-09 Bruce Fallick; Jonathan Pingle; Working Paper, Other
Abstract: The probability that an individual participates in the labor force declines precipitously beyond age 50. This feature of labor supply suggests that ongoing shifts in the age distribution of the population will put substantial downward pressure on the aggregate labor force participation rate. However, the aggregate rate is also influenced by trends within age groups. Neglecting to model both within-group influences and shifting population shares will doom any estimate of aggregate labor supply. We develop a model that identifies birth cohorts' propensities to participate, uses these propensities to derive age-specific trends in participation rates, and explicitly incorporates the influence of shifting population shares in estimating aggregate labor force participation.

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2006 Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 37(1), pages 69-154 Bruce Fallick; Stephanie Aaronson; Andrew Figura; Jonathan Pingle; William Wascher; Journal Article
Abstract: The U.S. labor force participation rate rose rapidly during the 1960s, 1970s, and 1980s. It then flattened out in the 1990s, and since 2000 it has fallen, without much sign of an imminent rebound. We attempt to distinguish between cyclical and structural influences on the participation rate by estimating the roles of demographic factors, the business cycle, and other factors. We conclude that the drop in labor force participation between 2000 and 2003 was due largely to cyclical factors, but that this decline and subsequent movements occurred against the backdrop of a longer-run downtrend. We estimate that the actual participation rate at the end of 2005 was close to the estimated trend level. However, barring major changes in policy or behavioral trends, the participation rate will likely continue to trend downward in coming years.

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2005 The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 472-481 Bruce Fallick; Charles A Fleishman; James B Rebitzer; Working Papers
Abstract: In Silicon Valley's computer cluster, skilled employees are reported to move rapidly between competing firms. If true, this job-hopping facilitates the reallocation of resources towards firms with superior innovations, but it also creates human capital externalities that reduce incentives to invest in new knowledge. Outside of California, employers can use noncompete agreements to reduce mobility costs, but these agreements are unenforceable under California law. Until now, the claim of "hypermobility" of workers in Silicon has not been rigorously investigated. Using new data on labor mobility we find higher rates of job-hopping for college-educated men in Silicon Valley's computer industry than in computer clusters located out of the state. Mobility rates in other California computer clusters are similar to Silicon Valley's, suggesting some role for state laws restricting noncompete agreements. Outside of the computer industry, California's mobility rates are no higher than elsewhere.

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2004 Finance and Economics Discussion Series, Board of Governors of the Federal Reserve, no. 2004-34 Bruce Fallick; Charles A Fleishman; Working Paper, Other
Abstract: Despite the importance of employer-to-employer (EE) flows to our understanding of labor market and business cycle dynamics, the literature has lacked a comprehensive and representative measure of the size and character of these flows. To construct the first reliable measures of EE flows for the United States, this paper exploits the "dependent interviewing" techniques introduced in the Current Population Survey in 1994. The paper concludes that EE flows are large: On average 2.6 percent of employed persons change employers each month, a flow more than twice as large as that from employment to unemployment. Indeed, on-the-job search appears to be an important element in hiring, as nearly two-fifths of new jobs started between 1994 and 2003 represented employer changes. EE flows are also markedly procyclical, although the cyclicality is concentrated around the recession: EE flows did not increase as the labor market tightened between 1994 and 2000, but they did drop sharply as the labor market loosened during the period 2001 through 2003. We view the uneven cyclical pattern of EE flows as a pattern to be incorporated into future models.

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Macroeconomic Policy and the Theory of Job Search

 

2003 In Woodbury, Stephen A. and Carl Davidson (eds.), Search Theory and Unemployment: Theory, Empiricism, and Policy, Boston: Kluwer Academic Publishers Bruce Fallick; William Wascher; Article in Book

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Do Some Workers Have Minimum Wage Careers?

 

2001 ), Monthly Labor Review 124(5), pp.17-27 Bruce Fallick; William J Carrington; Journal Article

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Racial Minorities, Economic Scale, and the Geography of Self-Employment: Comment

 

2001 Brookings-Wharton Papers on Urban Affairs, pp.283-284 Bruce Fallick; Comment

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Investment and Union Certification

 

1999 Journal of Labor Economics, University of Chicago Press, vol. 17(3), pages 570-82 Bruce Fallick; Kevin A Hassett; Journal Article
Abstract: Using data on union certification elections, the authors estimate the impact of unionization on firms' investment behavior. Employing both a standard q model and an 'investment surprises' technique, they find that union certification significantly reduces investment in the year following the election. The authors find that a winning certification election has, on average, about the same effect on investment in the year following the event as would--given the elasticity measures taken from the public finance literature--a 33 percentage-point increase in the corporate tax. The magnitude of the response in years further away from the election is less certain. Copyright 1999 by University of Chicago Press.

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Part Time Work and Industry Growth

 

1999 Monthly Labor Review 122(3), pp.22 29 Bruce Fallick; Journal Article

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A review of the recent empirical literature on displaced workers

 

1996 Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 50(1), pages 5-1 Bruce Fallick; Journal Article
Abstract: This article reviews the empirical literature on job displacement. Job displacement is widespread and strongly countercyclical (tending to peak during economic downturns), but concentrated in industries and states that are doing poorly, relative either to other industries and states or to their own prior performance. Displaced workers experience more nonemployment than do nondisplaced workers, but the difference fades after about four years. In contrast, earnings losses of displaced workers are large and persistent. Outcomes for all displaced workers are heavily influenced by broader economic conditions, and are affected very little by workers' demographic characteristics. The effects of advance notice are not yet clear. (Abstract courtesy JSTOR.)

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The hiring of new labor by expanding industries

 

1996 Labour Economics, Elsevier, vol. 3(1), pages 25-42 Bruce Fallick; Journal Article

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The Minimum Wage and the Employment of Youth: Evidence from the NLSY

 

1996 Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 404-428 Bruce Fallick; Janet Currie; Journal Article
Abstract: Using panel data on individuals from the National Longitudinal Survey of Youth, we find that employed individuals who were affected by the increases in the federal minimum wage in 1979 and 1980 were about 3 percent less likely to be employed a year later, even after accounting for the fact that workers employed at the minimum wage may differ from their peers in unobserved ways.

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Unionization and Acquisitions

 

1996 The Journal of Business, University of Chicago Press, vol. 69(1), pages 51-73 Bruce Fallick; Kevin A Hassett; Journal Article
Abstract: This article explores the question of whether unionization influences the decision of a firm to merge with another firm. The authors combine merger data, taken from COMPUSTAT, with firm-specific union data obtained from several sources. An econometric matching model allows them to isolate the effects of unionization on the probability that the firms studied will be involved in a merger. The authors find that unionization increases the likelihood that a firm will enter the acquisition market and that firms with similar union statuses tend to merge with one another. Copyright 1996 by University of Chicago Press.

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The Endogeneity of Advance Notice and Fear of Destructive Attrition,

 

1994 The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 378-84 Bruce Fallick; Journal Article
Abstract: This study simultaneously estimates the likelihoods that a worker receives advance notice of a plant closing and that a notified worker quits the job before its scheduled end. The author finds that fear of early attrition is a significant determinant of a firm's decision to provide advance notice. Explicit consideration of employer's concerns may significantly improve prediction of advance notice. Copyright 1994 by MIT Press.

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The Minimum Wage and the Employment of Teenagers: Recent Research

 

1993 Employment Policies Institute Bruce Fallick; Janet Currie; Working Paper, Other

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The Industrial Mobility of Displaced Workers

 

1993 Journal of Labor Economics, University of Chicago Press, vol. 11(2), pages 302-23 Bruce Fallick; Journal Article
Abstract: This article uses a two-industry model of unemployment duration and job search to estimate rates of transition of displaced workers from unemployment to employment, distinguishing between employment in a worker's previous industry and in other industries. The competing-risks model allows inferences about search strategies to be drawn from data concerning employment outcomes and allows tests of some fundamental implications of search theory. There is evidence that improvements in the prospects for employment in their previous industry induce displaced workers to reduce search intensity or increase reservation wages in other industries. Copyright 1993 by University of Chicago Press.

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Job Security and Job Search in More Than One Labor Market,

 

1992 Economic Inquiry, Western Economic Association International, vol. 30(4), pages 742-45 Bruce Fallick; Journal Article
Abstract: The author analyzes job search behavior of unemployed workers who may search for work in several sectors of the economy. Although reservation wages are equal in each sector, workers search more intensively in sectors with lower layoff rates. Thus workers more quickly find and accept jobs with more security. Copyright 1992 by Oxford University Press.

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Unemployment Insurance and the Rate of Re-employment of Displaced Workers

 

1991 The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 228-35 Bruce Fallick; Journal Article
Abstract: The rate of transition from unemployment to re-employment for a sample of displaced workers is estimated using a semiparametric specification which allows the effects of unemployment insurance benefits to vary over time. Three results which would be missed by more restrictive specifications demonstrate the value of this approach: (1) The effects of UI benefits decline and eventually disappear as the date of expiration approaches, (2) Expiration of UI benefits are an inadequate explanation of the spikes commonly observed in nonparametric sample hazard rates for re-employment, (3) UI benefits do not significantly affect the rate at which a displaced worker becomes re-employed in his or her previous industry, but reduce the rate for transitions to other industries. Copyright 1991 by MIT Press.

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