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Wage inflation and informal work

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  • Bracha, Anat
  • Burke, Mary A.

Abstract

Despite the low unemployment rate in the United States, wage inflation has remained modest. This paper investigates whether hidden labor market slack in the form of informal “gig” economy work could help explain this puzzle. Using our Survey of Informal Work Participation for 2015–2016 we find that informal labor is negatively associated with wage growth at the census division level, while no such association exists between wage growth and unemployment rates.

Suggested Citation

  • Bracha, Anat & Burke, Mary A., 2018. "Wage inflation and informal work," Economics Letters, Elsevier, vol. 171(C), pages 159-163.
    • Handle: RePEc:eee:ecolet:v:171:y:2018:i:c:p:159-163
    DOI: 10.1016/j.econlet.2018.07.033
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    References listed on IDEAS

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    1. David N.F. Bell & David G. Blanchflower, 2018. "The Lack of Wage Growth and the Falling NAIRU," National Institute Economic Review, National Institute of Economic and Social Research, vol. 245(1), pages 40-55, August.
    2. Lawrence F. Katz & Alan B. Krueger, 2016. "The Rise and Nature of Alternative Work Arrangements in the United States, 1995-2015," Working Papers 603, Princeton University, Department of Economics, Industrial Relations Section..
    3. Paul Castillo B. & Carlos Montoro Ll., 2012. "Inflation Dynamics in the Presence of Informal Labour Markets," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 15(1), pages 4-31, April.
    4. Katharine G. Abraham & John C. Haltiwanger & Kristin Sandusky & James R. Spletzer, 2017. "Measuring the Gig Economy: Current Knowledge and Open Issues," NBER Chapters, in: Measuring and Accounting for Innovation in the Twenty-First Century, pages 257-298, National Bureau of Economic Research, Inc.
    5. Anat Bracha & Mary A. Burke, 2016. "Who counts as employed?: informal work, employment status, and labor market slack," Working Papers 16-29, Federal Reserve Bank of Boston.
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    Cited by:

    1. David N. F. Bell & David G. Blanchflower, 2021. "Underemployment in the United States and Europe," ILR Review, Cornell University, ILR School, vol. 74(1), pages 56-94, January.
    2. John Komlos, 2019. "The Real U.S. Unemployment Rate Is Twice the Official Rate, and the Phillips Curve," CESifo Working Paper Series 7859, CESifo.
    3. Gerald D. Cohen, 2020. "Measuring employment during COVID-19: challenges and opportunities," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 55(4), pages 229-239, October.
    4. Bracha, Anat & Burke, Mary A., 2021. "How Big is the Gig? The Extensive Margin, The Intensive Margin, and The Hidden Margin," Labour Economics, Elsevier, vol. 69(C).
    5. Olena Kostyshyna & Corinne Luu, 2019. "The Size and Characteristics of Informal (“Gig”) Work in Canada," Staff Analytical Notes 2019-6, Bank of Canada.

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    More about this item

    Keywords

    Wage inflation; Gig economy; Labor market slack; Survey;
    All these keywords.

    JEL classification:

    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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