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Informal Work in the United States: Evidence from Survey Responses

April 13, 2015 Comments off

Informal Work in the United States: Evidence from Survey Responses
Source: Federal Reserve Bank of Boston

Key Findings

  • The authors calculate the following informal work participation rates among four employment-status groups: 42.8 percent of full-time workers, 59.4 percent of part-time workers, 39.6 percent of those who report wanting a job, and 26.5 percent of those classified as “other not working.” Overall, about 44 percent of the survey respondents reported participating in some informal paid work during 2011–2013—earning money was the most widely cited reason for doing so.
  • Translating their four employment categories into the three official classifications used by the Bureau of Labor Statistics (BLS), the authors find that 26 percent of those people who the BLS define as “not in the labor force” (NILF) are engaging in informal work.
  • In respect to offsetting the negative effects from the Great Recession, 8 percent of those participating in the informal labor market said that this work helped “very much” to mitigate these shocks, while 27 percent indicated that informal work helped “somewhat” to insulate them from the recession. Part-timers engaging in informal work appear to have benefitted the most—19 percent indicated that informal work helped “very much” to offset the recession’s negative consequences.
  • Over half of those reporting engaging in informal work indicated that they were performing Internet-based tasks, or making use of the Internet when doing such tasks.

Minutes of the Federal Open Market Committee, March 17-18, 2015

April 13, 2015 Comments off

Minutes of the Federal Open Market Committee, March 17-18, 2015
Source: Federal Reserve Board

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on March 17-18, 2015. A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the meeting is also included as an addendum to these minutes.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board’s Annual Report. The descriptions of economic and financial conditions contained in these minutes and in the Summary of Economic Projections are based solely on the information that was available to the Committee at the time of the meeting.

Saving for a Rainy Day: Estimating the Appropriate Size of U.S. State Budget Stabilization Funds

April 9, 2015 Comments off

Saving for a Rainy Day: Estimating the Appropriate Size of U.S. State Budget Stabilization Funds
Source: Federal Reserve Bank of Boston

Rainy day funds (RDFs) are potentially an important countercyclical tool for states to stabilize their budgets and the overall economy during economic downturns. However, U.S. states have often found themselves exhausting their RDFs and having to raise tax rates or reduce expenditures while still experiencing a downturn. Therefore, how much each state should save in its RDF has become an increasingly important policy question. To address this issue, this paper applies several new methodologies to develop target RDF levels for each U.S. state, based on the estimated short-term revenue component associated with business cycles and also on policymakers’ preferences for stable tax rates and expenditures.

How Do Speed and Security Influence Consumers’ Payment Behavior?

April 8, 2015 Comments off

How Do Speed and Security Influence Consumers’ Payment Behavior?
Source: Federal Reserve Bank of Boston

The Federal Reserve Financial Services (FRFS) strategic plan for 2012-2016 named improvements in the end-to-end speed and security of the payment system as two of its policy initiatives. End-to-end in this context means that for the first time end-users are explicitly included. Earlier versions of the strategy plan were circulated for public comment, and the feedback received by FRFS specifically identified a need for further research.

This brief draws upon new data from the 2013 Survey of Consumer Payment Choice and employs econometric modeling and simulation to complement FRFS-commissioned market research on end users’ preferences. The authors’ approach relies on revealed preference to incorporate insight into consumers’ actual behavior, not just their attitudes, and their models employ a two-stage technique, estimating, first, the influence of the simulated improvements in speed and in security on the adoption of the payment instruments considered, and, second, the influence on the choice of which of the adopted payment instruments to use. The final version of the strategic plan is currently under discussion by Federal Reserve policymakers, so all the policies and strategies discussed in this brief are preliminary.

Consumers and Mobile Financial Services 2015

April 2, 2015 Comments off

Consumers and Mobile Financial Services 2015 (PDF)
Source: Federal Reserve Board

Mobile phones have increasingly become tools that consumers use for banking, payments, budgeting, and shopping. Given the rapid pace of developments in the area of mobile finance, the Federal Reserve Board began conducting annual surveys of consumers’ use of mobile financial services in 2011. The survey examines trends in the adoption and use of mobile banking, payments, and shopping behavior and how the emergence of mobile financial services affects consumers’ interaction with financial institutions.

This report presents findings from the 2014 survey, fielded in December, which focused on consumers’ use of mobile technology to access financial services and make financial decisions. Where applicable, the findings from the current survey are also compared with the findings from the 2011, 2012, and 2013 surveys. Topics include consumer access to bank services using mobile phones (“mobile banking”), consumer payment for goods and services using mobile phones (“mobile payments”), and consumer shopping decisions facilitated by use of mobile phones. Details about the survey, its methodology, and limitations can be found in the body of the report and in a methodological appendix.

House Price Growth When Children are Teenagers: A Path to Higher Earnings?

April 1, 2015 Comments off

House Price Growth When Children are Teenagers: A Path to Higher Earnings?
Source: Federal Reserve Bank of Boston

This paper examines whether a rise in house prices that occurs immediately prior to children entering college has an impact on their earnings as adults. Higher house prices provide homeowners with additional funds to invest in their children’s human capital. The results show that a 1 percentage point increase in house prices, when children are 17 years-old, results in roughly 0.9 percent higher annual income for the children of homeowners, and a 1.5 percent lower annual income for the children of renters. House price appreciation at age 17 also leads to higher college enrollment rates at age 19 and an increased likelihood of attendance at higherranked post-secondary institutions for the children of homeowners, as well as lower college enrollment rates for the children of renters.

Federal Reserve Bank of Atlanta Annual Report 2014 — Jobs. More Work to Be Done?

March 31, 2015 Comments off

Jobs. More Work to Be Done?
Source: Federal Reserve Bank of Atlanta

In 2014, the Federal Reserve Bank of Atlanta continued to focus its research on the labor market and what had to happen before the economy could achieve full employment. Price stability and maximum employment are the two objectives of the Fed’s dual mandate from Congress. By the end of the year, the U.S. economy had made significant progress toward full employment. Two closely watched measures of labor market health, job creation and the unemployment rate, had improved considerably (see the Total Nonfarm Employment and the Unemployment Rate charts).

Employers added an average of 260,000 jobs per month during 2014, ahead of the 194,000-a-month pace of the previous two years. Meanwhile, the jobless rate fell from 6.6 percent at the beginning of 2014 to 5.6 percent in December. The unemployment rate is fast approaching the 5.2 percent to 5.5 percent range the Federal Open Market Committee (FOMC) judges to be consistent with full employment. The FOMC is the Fed’s policy-setting body.

Without question, the labor market made real progress last year. But the official unemployment rate and monthly job creation numbers can tell only part of the story. Broader labor market measures continued to indicate that a significant body of available resources—people and their capacity to work productively—were not being used. This “slack” meant that the labor market, and thus the broader economy, was not operating at full capacity.

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