In recent decades, many industrialized economies have witnessed a pattern of job polarization. While shifts in labor demand, namely routinization or offshoring, constitute conventional explanations for job polarization, there is little research on whether shifts in labor supply along the labor demand curve may equally result in job polarization. In this study, we assess the impact of labor supply shifts on job polarization. To this end, we determine unconditional wage elasticities of labor demand from a unique estimation of a profit-maximization model on linked employer-employee data from Germany. Unlike standard practice, we explicitly allow for variations in output and find that negative scale effects matter. Both for a skill- and a novel task-based division of the workforce, our elasticity estimates show that supply shifts from immigration and a decline in collective bargaining successfully explain occupational employment patterns during the 1990s.

This study investigates the effects of sector-specific wage floors established through collective

bargaining on job reallocation and wage mobility in Uruguay, using data from three bargaining

rounds in 2005, 2008, and 2014. By analyzing sectors categorized based on the percentage of

workers earning below these wage floors, we provide a nuanced examination of how wage policy

impacts employment distribution across hundreds of sectors and the mobility of low-wage workers. Our findings reveal significant job reallocation, particularly for low-wage workers who are more likely to move to better-paying positions due to the policy, a trend that persists across all examined rounds but diminishes in magnitude over time.

This paper contributes to the ongoing discourse on the taxation of top-income earners by empirically investigating the impact of tax policy changes on pay without performance. Using data on executive compensation in the United States I find that the effect of taxes on pay without performance depends on the type of taxes levied. Specifically, state tax hikes increase the sensitivity of executive compensation to performance shocks exogenous to executive effort. Conversely, changes in federal tax rates do not lead to changes in pay without performance. Pay without performance changes most in response to changes in state tax rates for executives who are more mobile. Based on a theoretical model I outline that these heterogeneous findings can be explained by the importance of outside options for the pass-through of performance-shocks to executive earnings.

We investigate (i) sources of inequality and business cycle fluctuations in the US and Japan and (ii) the effects of reducing inequality on business cycles. Developing a heterogeneous-agent business cycle model with unconstrained and hand-to-mouth households and various wedges to represent economic distortions, we estimate the model by the Bayesian methods. We find that, in the US, the labor market distortion specific to unconstrained households is the common factor that significantly impacts business cycles and consumption inequality, whereas there are no common factors in Japan. In both countries, the primary source of business cycles is distortions in aggregate productivity, and that of consumption inequality is household-specific labor market distortions. We assess labor market reforms and redistribution policy as means to reduce consumption inequality. Our findings imply that the effects of lowering inequality on business cycle volatility depend on the country and how it is done.