In the past two years, the labor market landscape has shifted dramatically. What can policy makers and practitioners learn from the latest data 24 months into this pandemic? We've summarized three working papers from Harvard economists published in the National Bureau of Economic Research (NBER).
By Liyanni Vazquez
NBER WORKING PAPER 29748
Are Black-owned restaurants less likely to receive bank PPP loans in counties with more racial bias? Does this apply more broadly across industries?
David S. Scharfstein of Harvard Business School, and Sergey Chernenko of Purdue University study the differences in PPP borrowing across race and ethnicity for nearly 10,000 restaurants in Florida.
Black-owned restaurants were 25% less likely to receive PPP loans than white-owned restaurants.
Considering that proximity to bank branches, age, size, and borrowing history made up 60% of the disparity, making loans more accessible for small businesses would have lessened this gap drastically.
The remaining 40% of the disparity was exacerbated by racial bias, with online, less personalized loan applications potentially mitigating this bias.
NBER WORKING PAPER 29148
Mentorship in the workplace matters, especially when it comes to new hires. But who gains the most from formal mentorship programs?
Christopher Stanton of Harvard Business School ran a randomized control trial studying assigned versus opt-in mentorship programs and their relationship to productivity and retention.
Assigned mentorship programs had a statistically significant impact on productivity (19% increase), while opt-in programs had a negligible effect. Formal mentorship program treatment effects are largest for workers who would otherwise opt out of these programs.
The average worker in an assigned mentorship program experienced over a $2,400–$3,100 increase in revenue per month. This equated to the overall net present value of the mentorship program being approximately $850,000.
Both assigned and opt-in programs increased retention rates within the first month (11 percentage points and 12 percentage points, respectively).
NBER WORKING PAPER 29653
The COVID-19 pandemic has been a wake-up call to the danger that shocks from the natural world pose to world of work. In light of this, how should we plan for the future of work and retirement?
Herbert Ascherman of Harvard University and Richard B. Freeman, discuss the pandemic’s effects on career longevity and social security financing. They focus on how job losses impact 'work longer' and 'retire later' policies.
In February 2020 through April 2020, workers aged 65 and older lost their jobs more rapidly than workers aged 25-54, likely due to early retirement.
The U.S. Treasury predicts that if the economy does not recover significantly, the Social Security Trust Fund will run out of money by 2033—two years earlier than expected—due to early retirement, a smaller labor force, and a 1% decrease in productivity.
They argue that the $16.9 trillion loss in GDP and damages to health warrants sizable increases in R&D spending to study how unexpected shocks like the pandemic would affect the economy and human behavior.