Labour Rationing: A New Approach to Measuring Labour Market Slack

In peak months, wages increase instantaneously and local aggregate employment declines. In lean months, consistent with severe labor rationing, wages and aggregate employment are unchanged, with positive employment spillovers on remaining workers, indicating that over a quarter of labor supply is rationed. At least 24 percent of lean self-employment among casual workers occurs because they cannot find jobs. Consequently, traditional survey approaches mismeasure labor market slack. Rationing has broad implications for labor market analysis.


Presenter: Supreet Kaur, Professor, Department of Economics at UC BerkeleyLink to relevant publication: https://bit.ly/3f7p8St

Bio: Supreet Kaur is an Assistant Professor in the Department of Economics at the University of California, Berkeley. Her research is in development economics and behavioral economics, with a focus on labor markets. Her recent work examines how labor market failures affect employment, production, and other outcomes in developing countries. Her research also applies insights from behavioral economics to understand why wages, unemployment, and organizational structures look the way they do.

Supreet holds a B.S. in Operations Research from Columbia University, an MPA/ID from Harvard University, and a Ph.D. from Harvard University. She has been awarded the David A. Wells Prize by the Harvard Economics Department (2012) and the Distinguished CESifo Afilliate Award in Behavioural Economics (2015). Her work has received financial support from the National Science Foundation, IGC, IZA, USAID, and the Spencer Foundation.