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The study's authors "get a considerably larger employment response from high-income tax cuts than other standard models or, more importantly, historical experience," Jared Bernstein, a former adviser to Vice President Joseph Biden, told The Agenda.
In a prototypical single sector model of this kind, the employment response is straightforward.
Naturally, the answers depend strongly on the assumptions – most importantly, but not exclusively, on the assumed employment response to the higher wage mandated by the living wage law.
Mobility is thus the third adjustment mechanism, and is computed as the difference between the overall employment response to the shock and the unemployment and participation rates responses.
The first noticeable result is the similarity in the dynamic response of the participation rates and employment levels in both groups of regions to a regional employment shock (the employment response being slightly larger than for the high unemployment regions).
We did not observe large reductions in income or employment rates for the sample over the time period, for example, although high unemployment rates may certainly affect individuals' employment response to the program.
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The wage and employment responses of natives under fixed-term contracts to immigration are the opposite.
If mobility responses differ between health and skill groups, some of our results could potentially be driven by differential mobility rather than by differential employment responses.
Thus, the wage and employment responses to immigration can be obtained by multiplying β by approximately 0.84 (see Borjas (2003) for details).
The remainder of this paper tests the robustness of these correlations and studies the role played by wage rigidities on the wage and employment responses to immigration by disaggregating the sample of native workers by job contract.
In this setting, wage and employment responses are expected to increase with the elasticity of labour demand and (by the "Hicks-Marshall" rules of derived demand) with the price elasticity of demand in the product market.
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