In the years since the Covid-19 pandemic, the debate around how to curb inflation has been increasingly focused on how different policies might impact different groups of workers. If, for example, the Federal Reserve were to raise interest rates too high or too quickly, which workers would be most negatively affected? 

For Ayșegül Şahin, a macroeconomist who is joining the faculty at Princeton this year from the University of Texas at Austin, questions like this have always been front of mind.

“As I always say, not everyone owns stocks or houses but we all own labor. That makes labor market research very interesting and relevant for me.” 

Şahin’s research has long focused on how economic slowdowns and times of rapid economic growth affect different groups of people and how the U.S. labor market has evolved over time with demographic and social change. 

“A student of the Great Recession”

Before her stint at the University of Texas at Austin, Şahin spent fourteen years at the Federal Reserve Bank of New York, where she founded and led a team focused on analysis of the U.S. labor market during the Great Recession.

“In many ways I’m a student of the Great Recession,” she said. “That is when I was in charge of analyzing the U.S. labor market at the New York Fed and it shaped my research as an economist.”

Şahin said that experience showed her how important it is that policymakers have access to current, high-quality research.

“It was a great experience which taught me the value of evidence-based policy,” she said. “Policymakers are under great pressure to make decisions that affect the well-being of people every day, and it is important for them to hear timely and research-based policy advice.”

Today, Şahin continues to consult for several banks in the Federal Reserve system–including those in Cleveland, Chicago, Kansas City, and Minneapolis–and serves on the Advisory Boards of the San Francisco Fed and the Dallas Fed. She is also a member of the Panel of Economic Advisers of the Congressional Budget Office, as well as a member of the Bureau of Labor Statistics’ Technical Advisory Committee.

“I care a great deal about informing policy with the latest research, and I see it as my responsibility as an academic to help provide that. That’s why I’m still involved with so many policy institutions where I try to contribute to policy discussions.”

What drives the “duality” of the U.S. labor market?

Among her work aiming to inform policy is a recent project about the “duality” of the U.S. labor market with her long-time collaborator Bart Hobijn.

“We tend to focus on aggregate statistics such as the unemployment rate or the labor market participation rate, but if we look under the hood, labor market experiences are very different for different people,” Şahin said.

Her work shows that two thirds of unemployment  in the U.S. economy is accounted for by only 15% of workers. 

“On the one side of the labor market, there are stable and high paying jobs with steep career ladders. On the other side, there are short-term jobs with very little career progression,” she said.

Şahin says she’s interested in what drives this duality and what its consequences are, and that this question is motivating much of her work moving forward.

Sharing her expertise with Princeton students

This year, undergraduate students will have an opportunity to learn about the labor market and how research can influence policy directly from Professor Şahin when she leads an advising workshop for Junior Independent Work. She’ll also be teaching graduate classes in the Economics Department and with Princeton’s School of Public and International Affairs (Princeton SPIA). 

“I am very excited to be a part of this amazing group,” Şahin said of the upcoming semester. “I am looking forward to working with both the undergraduate and graduate students in the years ahead.”