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on Microeconomic European Issues |
| By: | Lucifora, Claudio (Università Cattolica del Sacro Cuore); Origo, Federica (University of Bergamo) |
| Abstract: | We investigate how firms adjust to demand shocks when wages and employment determination are regulated. Using firm-level data for the Italian metal engineering industry from 2009 to 2021, we estimate the elasticity of the wage bill to changes in firm's real sales. We disentangle the effect on wage components (base wage and wage cushion) and labour inputs (permanent or temporary employment and working hours). Results show that the elasticity of the wage bill to demand shocks mainly works through adjustment of working hours (especially via short-time work) and partly employment, while wages are less sensitive. Unions at the workplace reduce employment adjustment through a more intensive use of short-time work schemes. The lower employment adjustment to changes in sales in unionized firms does not depend on past investments or innovation, and it is associated to higher responsiveness of profits to declining sales only in weakly unionized firms. |
| Keywords: | labour adjustment, product demand shock, short-time work, unions, collective bargaining |
| JEL: | J30 J58 C81 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17670 |
| By: | Bertheau, Antoine (Norwegian School of Economics); Kudlyak, Marianna (Federal Reserve Bank of San Francisco); Larsen, Birthe (Copenhagen Business School); Bennedsen, Morten (University of Copenhagen) |
| Abstract: | We use a novel large-scale survey of firms, implemented in Denmark in 2021 and linked to administrative data, to study why firms lay off workers instead of cutting wages. Our questions on layoffs, wage cuts, and the link between them provide new insights into firms' strategies for adjusting labor in response to adverse shocks. We find that layoffs are more prevalent than wage cuts, but wage cuts are not rare in firms experiencing revenue reduction and were used by 15% of such firms. Employers are hesitant to cut wages in many instances because they see wage cuts as a poor substitute for layoffs. First, firms report that lowering wages triggers costs through the impact on morale and quits. Comparing these costs with potential savings from wage cuts, most employers in the survey agree that a wage reduction would not have saved jobs. Second, firms report that a crisis is an opportune time for layoffs because of lower opportunity costs of restructuring and because layoffs during a crisis are perceived by workers as more fair. We find that firms that report such opportunistic layoffs are less likely to implement wage cuts. |
| Keywords: | wage rigidity, layoffs |
| JEL: | D22 J30 J63 J23 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17704 |
| By: | Angelini, Viola (University of Groningen); Costa-Font, Joan (London School of Economics); Ozcan, Berkay (London School of Economics) |
| Abstract: | We study whether receiving a monetary gift from parents increases the intensity of parent-child social contact. We use unique longitudinal data that follows adult children and their older parents for more than a decade (between 2004 and 2015) across various European countries. We first document that bequests, being more visible and subject to legal restrictions on their division, tend to be equalized among children, whereas gifts are less conspicuous and often unevenly distributed. Leveraging the exogenous variation induced by fiscal incentives resulting from inheritance tax legislation reforms, we use an instrumental variable (IV) and an endogenous treatment strategy to investigate the effect of gift-giving on parent-child social contact. Our findings suggest that financial transfers from parents to children lead to an increase in the intensity of parent-child interactions. We estimate that the receipt of a gift gives rise to a 12% increase in social contact. |
| Keywords: | gift giving, inter-vivos transfers, upstream social contact, inheritance tax-reforms, inheritance tax, gifts, bequests Europe |
| JEL: | J14 H29 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17706 |
| By: | Prodromidis, Nikolaos (University of Duisburg-Essen); Karlsson, Martin (University of Duisburg-Essen); Kühnle, Daniel (University of Duisburg-Essen) |
| Abstract: | Despite the importance of regulating working hours for workers' health and maintaining labour productivity, the literature lacks credible causal estimates on the impact of reduced working hours. We provide new evidence for the causal effect of shorter workweeks on mortality using full population register data, exploiting a nationwide policy in Sweden that reduced the weekly working hours from 55 to 48 hours for certain occupations only in 1920. Using difference-in-differences and event-study models, we show that lower working hours decreased mortality by around 15% over the first six years. We identify several mechanisms behind this effect: the policy led to fewer workplace accidents, a decline in work-related disability, and a reduction in sick days taken by employees. Causal forest estimators indicate particularly strong effects for older workers. Our results imply that many lives could be saved worldwide by reducing long working hours for labour-intensive occupations. |
| Keywords: | working hours, employment legislation, mortality, Sweden |
| JEL: | I18 I18 J10 J81 N14 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17707 |
| By: | Eibich, Peter (PSL Université Paris Dauphine); Kanabar, Ricky (University of Bath); Plum, Alexander T. (Auckland University of Technology) |
| Abstract: | We study how population variation in testosterone levels impacts male labour market earnings using data from the UK Household Longitudinal Study between 2011 and 2013. We exploit genetic variation between individuals as instrumental variables following a Mendelian Randomization approach to address the endogeneity of testosterone levels. Our findings show that higher testosterone levels have a strong positive impact on earnings. Importantly, these findings are limited to men belonging to the lower quartile of the testosterone distribution and working in higher-paid jobs. We show that differences within rather than between occupations drive these findings, whereas we find limited support for selection into occupation or mechanisms involving individual characteristics, including personality traits and education. |
| Keywords: | earnings, IV, testosterone, Mendelian Randomisation |
| JEL: | J31 C26 I10 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17699 |
| By: | Schüller, Simone (German Youth Institute (DJI)) |
| Abstract: | This study investigates whether (and how) working from home (WFH) affects the gender division of parental unpaid labor. I use the recent COVID-19 pandemic that brought an unanticipated yet lasting shift to WFH combined with a measure of occupational WFH feasibility (Alipour et al. 2023) as a quasi-experiment to employ an instrumental variable (IV) approach and estimate causal effects. I use unique longitudinal data from the "Growing up in Germany" ( AID:A) panel study, which administered a prepandemic wave in 2019, and a post-pandemic wave in 2023. AID:A contains rich information on mothers' and fathers' time use for work, commuting, childcare, and housework. I find that the most robust effects emerge for paternal WFH intensity (at least weekly WFH) on parental division of housework: families in which fathers start weekly WFH in the period 2019 to 2023—due to their occupational WFH capacity in combination with the pandemic WFH-boost—experience a significant decrease in the maternal share of parental housework. Interestingly, this shift appears to be mainly driven by a reduction of maternal time use for housework (combined with an increase of her work hours) and less by an increase in paternal time use for housework suggesting crossparent effects of WFH. |
| Keywords: | COVID-19, gender equality, time use, housework, childcare, working from home, AID:A panel survey |
| JEL: | D13 I31 J13 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17694 |
| By: | Forth, John (City St George's, University of London); Jones, Melanie K. (Cardiff University) |
| Abstract: | We assess the extent to which the UK disability pay gap is a consequence of the distribution of workers across firms and within-firm disability pay gaps. We do so by applying decomposition methods to newly-linked data which matches high quality information from employer payroll records to Census data on disability. Our findings indicate that the distribution of disabled and non-disabled employees across firms acts to reinforce within-firm disability-related pay inequality in England and Wales. However, both the disability pay gap and unexplained disability pay gap predominately exist within rather than between firms, supporting the introduction of employer disability pay gap reporting in the UK. |
| Keywords: | disability pay gap, wage discrimination, linked employer-employee data |
| JEL: | J31 J71 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17679 |
| By: | Portugal, Pedro (Banco de Portugal); Reis, Hugo (Banco de Portugal); Guimaraes, Paulo (Banco de Portugal); Cardoso, Ana Rute (IAE Barcelona (CSIC)) |
| Abstract: | We employ a regression model with spillover effects to show that the impact of peer quality on wages is quite large. We estimate that a 10 percent increase in peer quality implies a 2.1 percent increase in an individual's wage. In addition, we estimate the external returns to education using a novel identification strategy, which is strictly based on the peer effect channel, netting out the role of homophily and labor market sorting. We show that a one-year increase in the co-workers' education leads to a 0.58 percent increase in wages. We also show that both effects fade smoothly over time. |
| Keywords: | wage distribution, human capital spillovers, external returns to education, peer effects, linked employer-employee data, high-dimensional fixed effects, workplace, job and occupation |
| JEL: | J31 J24 I26 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17690 |
| By: | World Bank |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:42338 |
| By: | Muffert, Johanna (FAU Erlangen Nuremberg); Winkler, Erwin (University of Erlangen-Nuremberg) |
| Abstract: | We study how the effects of exports on earnings vary across individual workers, depending on a wide range of worker, firm, and job characteristics. To this end, we combine a generalized random forest with an instrumental variable strategy. Analyzing Germany's exports to China and Eastern Europe, we document sharp disparities: workers in the bottom quartile (ranked by the size of the effect) experience little to no earnings gains due to exports, while those in the top quartile see considerable earnings increases. As expected, the workers who benefit the most on average are employed in larger firms and have higher skill levels. Importantly, however, we also find that workers with the largest earnings gains tend to be male, younger, and more specialized in their industry. These factors have received little attention in the previous literature. Finally, we provide evidence that the contribution to overall earnings inequality is smaller than expected. |
| Keywords: | machine learning, earnings, inequality, exports, skills, labor market |
| JEL: | C52 F14 J23 J24 J32 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17667 |
| By: | du Bois, Kristen; Baert, Stijn; Lippens, Louis (Ghent University); Derous, Eva |
| Abstract: | Background: Compressed schedules, where workers perform longer daily hours to enjoy additional days off, are increasingly promoted as a workplace well-being intervention. Nevertheless, their implications for work-related well-being outcomes, such as recovery from work and burnout risk, are understudied. This gap leaves employers with little evidence on whether and how the arrangement contributes to workplace well-being. Methods: IKEA Belgium offered its employees the option to enter compressed schedules in the aftermath of a national labour reform aimed at improving well-being and reducing burnout. We collected data on psychological detachment from work, work-related exhaustion, and burnout risk in four waves before and after implementation. We used mixed-effects growth models to estimate the within-subjects changes in these three domains, and two-way fixed effects models to compare changes with those from a non-treated comparison group. Results: Workers experienced increased psychological detachment from work in compressed schedules, yet we saw no decrease in work-related exhaustion or burnout risk. While between-subjects analyses confirm that the increase in psychological detachment is related to treatment, they also hint that this association may fade out during summer when all workers take more extended breaks from work. Conclusions: While workers in compressed schedules may mentally switch off from work more effectively, this does not translate into decreased burnout risk scores. Consistent with theoretical expectations, policymakers and employers should be cautious in assuming that the arrangements significantly reduce burnout. |
| Date: | 2025–01–07 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:ch8uk_v1 |
| By: | Pylak, Korneliusz; Mickiewicz, Tomasz; Kitsos, Tasos |
| Abstract: | Our study explores the factors influencing the creation and closure of firms in urban micro-spaces, highlighting the relationship between Knowledge-Intensive Business Services (KIBS) and non-KIBS sectors. Employing 2007-2019 firm-level data from Warsaw, the capital of Poland, we uncover overlooked micro-geographical and sectoral patterns. We reveal spatial and sectoral interdependencies, highlighting the cross-sectoral effects of density and age of incumbent firms on new firm creation and closure. Our findings highlight the potential of policies supporting KIBS to generate positive multiplier effects, cultivating entrepreneurial ecosystems while accounting for micro-geographical contexts. |
| Date: | 2024–12–03 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:emv45_v1 |