Publications

Working Paper
Freeman RB, Liu X, Liu Z, Song R, Xiong R. Minimum Wages and the Rise of Firms’ Robot Adoption in China. Working Paper.Abstract

In this study, we analyze the impacts of minimum wages on firms’ robot adoption using novel panel data related to robots imported by firms in China from 2001 to 2012, a period when most of China’s robots are imported. We find that minimum wages raise firms robot adoption significantly. The effects of minimum wages on robot adoption are larger for firms in routine-intensive industries, for firms in labor-intensive industries, and for large firms. Employing robots significantly increases firms’ value added, labor employment, labor productivity, total factor productivity, and average wages. The firm-level production function estimations show that on average, one robot replaces about 15 workers in China.

Kunst DM, Freeman RB, Oostendorp R. Occupational Skill Premia around the World: New Data, Patterns and Drivers, NBER Working Paper 26863. [Internet]. Working Paper. Publisher's VersionAbstract
Firms hire workers to undertake tasks and activities associated with particular occupations, which makes occupations a fundamental unit in economic analyses of the labor market. Using a unique dataset on pay in identically dened occupations in developing and advanced countries, we nd that in most countries occupational skill premia narrowed substantially from the 1950s to the 1980s, then widened through the 2000s, creating a U-shaped pattern of change. The narrowing was due in part to the huge worldwide increase in the supply of educated workers. The subsequent widening was due in part to the weakening of trade unions and a shift in demand to more skilled workers associated with rising trade. The data indicate that supply, demand, and institutional forces are all drivers of occupational skill premia, ruling out simple single factor explanations of change. The paper concludes with a call for improving the collection of occupational wage data to understand future changes in the world of work.
dash_final-ms-all_occup_skill_premia_world_kunst-freeman-oostendorp_1mar2021.pdf
Submitted
Xie Q, Freeman RB. "The Contribution of Chinese Diaspora Researchers to China's Catching Up in Global Science and High-Tech Industries,”. [Internet]. Submitted. Publisher's VersionAbstract

This study examines the contribution of Chinese diaspora researchers – those born in China but working outside the country – to China's catching up in global science to become a world leader in research publications and citations. Using a novel name-based way to identify Chinese diaspora authors of scientific papers, we show that these researchers produce a large proportion of global scientific papers of high quality, gaining about twice as many citations as other papers of the same vintage. Our analysis also shows that diaspora researchers are a critical node in the co-authorship and citation networks that connect scientific discovery in China with the rest of the world. In co-authorship, diaspora researchers are over-represented on international collaborations with China-addressed authors. In citations, a paper with a diaspora author is more likely to cite China-addressed papers than a non-China addressed paper without a diaspora author; and, commensurately, China-addressed papers are more likely to cite a non-China addressed paper with a diaspora author than a non-China paper without a diaspora author. Through those pathways, diaspora research contributed to China’s 2000-2015 catch-up in science and to global science writ large, consistent with ethnic network models of knowledge transfer, and contrary to brain drain fears that the emigration of researchers harms the source country.

 

dash_24feb21_ms_contrib_of_china_diaspora_res_to_glob_sci_catchup_xie-rbf.pdf
Forthcoming
Meng X, Booth A, Freeman RB, Zhang J. "Trade Unions and the Welfare of Rural-Urban Migrant Workers in China". Industrial and Labor Relations Review. . Forthcoming.Abstract

Using a panel survey, we investigate how the welfare of rural-urban migrant workers in China is affected by trade union presence at the workplace. Controlling for individual fixed-effects, we find the following. Relative to workers from workplaces without union presence or with inactive unions, both union-covered non-members and union members in workplaces with active unions earn higher monthly income, are more likely to have a written contract, be covered by social insurances, receive fringe benefits, express work-related grievances through official channels, feel more satisfied with their lives, and are less likely to have mental health problems.

dash-dec20_tu_welfare_rural-urban_migrant_workers_china_meng_et_al.pdf
Freeman RB. "How Will Technology Affect Work and Retirement in a Pandemic-Economy?". In: Overtime: America’s Aging Workforce and the Future of "Working Longer". New York : Oxford University Press ; Forthcoming.
2021
Freeman RB. "Ownership Cures for Inequality", Chapter 21 in Olivier Blanchard and Dani Rodrik (editors). In: Combating Inequality: Rethinking Policies to Reduce Inequality in Advanced Economies. Cambridge : MIT Press ; 2021. Publisher's VersionAbstract

What, if anything, can the United States do to reverse the upward trend in inequality and the danger that it will lead to populist despotism or a corrupt oligarchy with laws made for the few, not for the many?

I propose two sets of policies. The first requires reforms in labor laws and regulations to better enable workers to organize and bargain collectively with employers. The second requires tax and procurement policies to encourage firms to develop employment ownership programs so that workers own some of the capital that employs them and additional policies that increase worker investments in capital more broadly. By operating on ownership of both labor and capital, the policies can modernize American economic institutions to fit the coming world of artificial intelligence (AI) robotics and avoid Madison’s Scylla and Charybdis choice between anarchy and corruption.

ownership_cures_for_inequality_freeman_ms-for-dash_24mar2020.docx
2020
Dosi G, Freeman RB, Pereira MC, Roventini A, maria Virgillito E. The impact of deunionization on the growth and dispersion of productivity and pay", NBER WP 26634 (January). [Internet]. 2020. Publisher's VersionAbstract
This paper presents an Agent-Based Model (ABM) that seeks to explain the concordance of sluggish growth of productivity and of real wages found in macro-economic statistics, and the increased dispersion of firm productivity and worker earnings found in micro level statistics in advanced economies at the turn of the 21st century. It shows that a single market process unleashed by the decline of unionization can account for both the macro and micro economic phenomena, and that deunionization can be modeled as an endogenous outcome of competition between high wage firms seeking to raise productive capacity and low productivity firms seeking to cut wages. The model highlights the antipodal competitive dynamics between a “winner-takes-all economy” in which corporate strategies focused on cost reductions lead to divergence in productivity and wages and a “social market economy” in which competition rewards the accumulation of firm-level capabilities and worker skills with a more egalitarian wage structure.
Booth A, Freeman RB, Meng X, Zhang J. "Trade Unions and the Welfare of Rural-Urban Migrant Workers in China", Booth, Alison L., Richard B. Freeman, Xin Meng and James Zhang. CEPR Discussion paper No. DP15350 . [Internet]. 2020. Publisher's VersionAbstract
Using a panel survey, we investigate how the welfare of rural-urban migrant workers in China is affected by trade union presence at the workplace. Controlling for individual fixed- effects, we find the following. Relative to workers from workplaces without union presence or with inactive unions, both union-covered non-members and union members in workplaces with active unions earn higher monthly income, are more likely to have a written contract, be covered by social insurances, receive fringe benefits, express work-related grievances through official channels, feel more satisfied with their lives, and are less likely to have mental health problems.
Freeman RB, Blanchflower DG, Bryson A. “Unions Raise Worker Wellbeing” . VoxEU / CEPR [Internet]. 2020. Publisher's Version post_unions_raise_worker_wellbeing_vox_freeman-blanchflower-bryson_nov20.pdf
Barth E, Davis JC, Freeman RB, McElheran K. Twisting the Demand Curve: Digitalization and the Older Workforce. NBER WP # 28094. 2020.Abstract

This paper uses U.S. Census Bureau panel data that link firm software investment to worker earnings.  We regress the log of earnings of workers by age group on the software investment by their employing firm.  To unpack the potential causal factors for differential software effects by age group we extend the AKM framework by including job-spell fixed effects that allow for a correlation between the worker-firm match and age and by including time-varying firm effects that allow for a correlation between wage-enhancing productivity shocks and software investments. Within job-spell, software capital raises earnings at a rate that declines post age 50 to about zero after age 65. By contrast, the effects of non-IT equipment investment on earnings increase for workers post age 50.  The difference between the software and non-IT equipment effects suggests that our results are attributable to the technology rather than to age-related bargaining power. Our data further show that software capital increases the earnings of high-wage workers relative to low-wage workers and the earnings in high-wage firms relative to low-wage firms, and may thus widen earnings inequality within and across firms.

dash_twisting_demand_curve_barth-davis-freeman-mcelheran_12nov20.pdf
Dosi G, Freeman RB, Pereira MC, Roventini A, Virgilllito ME. Impact of Deunionization on Growth and Dispersion of Productivity and Pay. Industrial and Corporate Change [Internet]. 2020;30 December :1–32. Publisher's VersionAbstract
This article presents an Agent-Based Model (ABM) that seeks to explain the concordance of sluggish growth of productivity and of real wages found in macroeconomic statistics, and the increased dispersion of firm productivity and worker earnings found in micro level statistics in advanced economies at the turn of the 21st century. It shows that a single market process unleashed by the decline of unionization can account for both the macro- and micro-economic phenomena, and that deunionization can be modeled as an endogenous outcome of competition between high wage firms seeking to raise productive capacity and low productivity firms seeking to cut wages. The model highlights the antipodal competitive dynamics between a “winner-takes-all economy” in which corporate strategies focused on cost reductions lead to divergence in productivity and wages and a “social market economy” in which competition rewards the accumulation of firm-level capabilities and worker skills with a more egalitarian wage structure. 
impact_deunionization_on_growth_and_dispersion_of_productivity_and_pay_dosi-freeman-pereira-roventini-virgillito_icc_journal_dtaa025-revised_proof_1nov20.pdf
Zhuge L, Freeman RB, Higgins MT. “Regulation and Innovation: Examining Outcomes in Chinese Pollution Control Policy Areas,”. Economic Modelling [Internet]. 2020;89 :19-31. Publisher's VersionAbstract
In this paper, we examine how two regionally implemented environmental initiatives in China have impacted the innovation ability of Chinese-listed firms. The regional implementation of these policies, with non-policy regions serving as controls, offers researchers the perfect conditions for a natural experiment. Using research and development (R&D) expenditures and patents as a proxy for innovativeness, we compare the record of innovation of firms inside the policy zones with firms outside the policy zones. We use a Difference-In-Difference-In-Differences (DIDID) method to eliminate endogeneity and take the quality of the patents into account by incorporating sub-items. Results show only one of the regulations had a positive effect and that low quality patents account for most of the innovation. We conclude that reasonably designed environmental regulations, when implemented regionally in competitive industries, do improve Chinese firms' innovation ability in line with the Porter Hypothesis. The results help us derive some useful policy implications regarding innovation.
Xie Q, Freeman RB. "The Contribution of Chinese Diaspora Researchers to Scientific Publications and China's “Great Leap Forward” in Global Science". [Internet]. 2020. Publisher's VersionAbstract
China-born scientists and engineers who conduct their research outside China, the diaspora researchers of our title, contributed to global science through the exceptional quantity and quality of their scientific work and through distinctive connections to China-based researchers and research. Analysis of the Scopus database of English language scientific journal articles shows that Chinese diaspora research publications are a substantial and growing proportion of global scientific publications, receive an above average number of citations per article, and are published at above average rates in high Scopus CiteScore journals. In addition, diaspora researchers helped China advance to the forefront of science through collaboration on papers with China-based researchers and through the citation network linking China-based research to research outside the country.
5_dash_xie-freeman_contributions_of_diaspora_research_to_sci_pubs_18may20.pdf
Freeman RB, Ganguli I, Handel MJ. Within Occupation Changes Dominate Changes in What Workers Do:A Shift-Share Decomposition, 2005-2015. AEA Papers and Proceedings [Internet]. 2020;110 :1-7. Publisher's VersionAbstract

Recent analyses of the potential effects of advanced technology on jobs has tended to focus on possible reductions in routine cognitive white-collar jobs due to computer algorithms and in blue-collar jobs due to robots and factory automation. This paper provides a different perspective on the possible future of work by: (1) measuring changes in job attributes/tasks from 2005 to 2015, straddling the boundary between the pre-AI and AI eras; and (2) decomposing those changes via a shift-share analysis into the changes that occurred within occupations and changes in the shares of employment between occupations with different characteristics.  Our primary source of information on job characteristics over time is the Occupational Information Network (O*NET) database developed by U.S. Department of Labor's Employment and Training Administration.  While prior research has used O*NET data cross-sectionally, we create a new panel dataset that allows us to analyze changes over time for 170 job characteristics from four O*NET questionnaires completed consistently by workers (job incumbents) since 2003. Per our title, we find that within-occupation changes dominate, raising doubts about the ability of projections based on expected changes in the occupational composition of employment to capture the likely future of work. Indeed, our data show only weak relationships between automatability, repetitiveness, and other job attributes and changes in occupational employment. The results suggest that analysts give greater attention to within-occupation impacts of technology in assessing the future of work.

post-dash-aug2020_within_occupation_changes_dominate_changes_in_what_workers_do_freeman-ganguli-handel_ms_for_aea.pdf
Wilkinson A, Donaghey J, Dundon T, Freeman RB ed. Handbook of Research on Employee Voice. 2nd ed. Glouchestershire, UK: Edward Elgar; 2020.
2019
Chai S, Freeman RB. "Temporary Colocation and Collaborative Discovery: Who Confers at Conferences,". Strategic Management Journal [Internet]. 2019;40 (13) :2138-2164. Publisher's VersionAbstract
The flow of knowledge is closely linked to proximity. While extensive works show that long‐term geographic proximity affects work behavior, little is known about the effect of short‐term colocation, such as conferences. Using participant data at Gordon Research Conferences, we estimate difference‐in‐differences and instrumental variable models, which show that attendees who have no prior within‐conference collaborations are more likely to collaborate with other attendees, and that the researchers who have worked previously with other attendees are more likely to continue their collaborations. We also find that researchers who are junior, are located closer to the conference venue, and have established prior ties to the conference draw more collaborative benefits from temporary colocation across organizations. Thus, going to a conference alters the creation of collaborations.
temporary_collocation_and_collaborative_discovery_dash_sen_chai_and_freeman_28may2019.pdf
Bryson A, Freeman R, Gomez R, Willman P. “The Twin Track Model of Employee Voice: An Anglo-American Perspective on Union Decline and the Rise of Alternative Forms of Voice,” . In: Employee Voice at Work, Chapter 2 in Peter Holland, Julian Teicher, and Jimmy Donaghey (eds). Springer ; 2019. pp. 23-50. Publisher's VersionAbstract
Abstract This chapter will review the major studies undertaken in the twenty-first
century to assess the changing nature of employee voice in the Anglo-American
context. These studies are predominantly based on employee perceptions but also
include employer surveys and multilevel analysis.
twin_track_model_of_employee_voice_final-ms_bryson-freeman-gomez-willam_30apr2018.pdf
Freeman RB, Liang W, Song R, Timmins C. “Willingness to Pay for Clean Air in China,”. Journal of Environmental Economics and Management [Internet]. 2019;94 :188-216. Publisher's VersionAbstract
We use a residential sorting model incorporating migration disutility to recover the implicit value of clean air in China. The model is estimated using China Population Census Data along with PM2.5 satellite data. Our study provides new evidence on the willingness to pay for air quality improvements in developing countries and is the first application of an equilibrium sorting model to the valuation of non-market amenities in China. We employ two instrumental variables based on coal-fired electricity generation and wind direction to address the endogeneity of local air pollution. Results suggest important differences between the residential sorting model and a conventional hedonic model, highlighting the role of moving costs and the discreteness of the choice set. Our sorting results indicate that the economic value of air quality improvement associated with a one-unit decline in PM2.5 concentration is up to $8.83 billion for all Chinese households in 2005.
willngess_to_pay_for_clean_air_in_china_final-ms_freeman-liang-song-timmins_dec2018.pdf
Freeman RB, Huang W, Li T. “Non-linear Incentives and Worker Productivity and Earnings: Evidence from a Quasi-experiment,” Richard B. Freeman, Wei Huang, and Teng Li, NBER Working Paper # 25507, January 2019. . 2019.Abstract

Firms often use non-linear incentive systems to motivate workers to achieve specified goals, such as paying bonuses to reach targets in sales, production, or cost reduction. Using administrative data from a major Chinese insurance firm that raised its sales targets and rewards for insurance agents greatly in 2015, we find that increased incentives induced agents to increase sales of the increasingly incentivized life insurance products, bunched around the new targets, albeit in part with some low quality sales that led to canceled contracts, while reducing sales of products outside the new incentive system. The greater non-linear incentives raised agent incomes and lowered turnover and substantially increased firm revenues net of the increase in payments to agents. The stock market reacted to the new system with a jump in the firms’ share price relative to its main competitor by 15-20% in the days surrounding introduction of the new system.

Borjas GJ, Freeman RB. “From Immigrants to Robots: The Changing Locus of Substitutes for Workers,”. RSF: The Russell Sage Foundation Journal of the Social Sciences, Issue on​ Improving Employment and Earnings in Twenty-First Century Labor Markets, edited by Erica L. Groshen and Harry J. Holzer (eds) [Internet]. 2019;(Fall/Winter). Publisher's VersionAbstract

Increased use of robots has roused concern about how robots and other new technologies change the world of work. Using numbers of robots shipped to primarily manufacturing industries as a supply shock to an industry labor market, we estimate that an additional robot reduces employment and wages in an industry by roughly as much as an additional 2 to 3 workers and by 3 to 4 workers in particular groups, which far exceed estimated effects of an additional immigrant on employment and wages. While the growth of robots in the 1996-2016 period of our data was too modest to be a major determinant of wages and employment, the estimated coefficients suggest that continued exponential growth of robots could disrupt job markets in the foreseeable future and thus merit attention from labor analysts.

Pages