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on Labour Economics |
| By: | Mark Coppejans; Holger Sieg |
| Abstract: | In this paper, we derive nonparametric average difference estimators. We show that this estimator is consistent and root-$N$ asymptotically normally distributed. Furthermore, the average difference estimator converges to the well-known average derivative estimator as the increment used to compute the difference converges to zero. We apply this estimator to test for differences between average and marginal compensation of workers. We estimate different versions of the model using repeated cross-sectional data from the CPS for a number of narrowly defined occupations. The average difference estimator yields plausible estimates for the average marginal compensation in all subsamples of the CPS considered in this paper. Our results highlight the importance of choosing bandwidth parameters in nonparametric estimation. If important covariates are measured discretely, standard approaches for choosing optimal bandwidth parameters do not necessarily apply. Our main empirical findings suggest that, at least for the preferred range of bandwidth parameters, marginal compensation exceeds average compensation, which suggests that average compensation is at best a noisy measure for the unobserved productivity of workers. |
| URL: | http://d.repec.org/n?u=RePEc:cmu:gsiawp:1909861039&r=lab |
| By: | Archishman Chakraborty; Alessandro Citanna |
| Abstract: | We consider a model of endogenous occupational choice in economies with a continuum of individuals who differ in their wealth endowments. Individuals have a choice of remaining self-employed or engaging in productive matches with other individuals, i.e., forming ``firms''. Such matches are subject to a hidden-action moral hazard problem with a limited liability constraint. This leads to wealth effects and the payoff-relvance of wealth differences across individuals. We suppose that the division of the gains from such matches is endogenous and determined by competitive market forces but that contracts are chosen optimally within matches subject to the market determined division of the gains from matching. We show, in contrast to previous results in the literature, that even when financial markets are perfect, the equilibrium distributions of occupations, utilities and surplus depend on the distribution of wealth in the economy. When financial markets are imperfect however, the equilibrium might involve the economy ``segregating'' into a high-surplus rich sector and a low-surplus poor sector, independent of the distribution of wealth in the economy. We also characterize the nature of the equilibrium as a function of financial market imperfections and also as a function of the nature (symmetry) of the underlying agency problem within a firm. |
| URL: | http://d.repec.org/n?u=RePEc:cmu:gsiawp:225&r=lab |
| By: | Dinand Webbink |
| Abstract: | In 1982, the duration of university education in the Netherlands decreased from five to four years. This institutional reform is exploited for estimating the causal effect of one year of university education on wages in 1997. Wages of employees who enrolled just before or after the reform are compared using data from the Dutch Wage Structure Survey of 1997. <P> We find that the fifth year of university education increased wages with 7 to 9 percent. This wage differential is found for employees enrolling four years before or after the reform. Confounding factors like time-effects, typical age-effects or ability-bias do not seem to bias the main results. <P> The findings suggest that there is scope for increasing private contributions of students. Moreover, the reform may have harmed total welfare. Alternative policies of sticking to five-year duration and increasing private contributions for higher education could have given a more favourable outcome. |
| Keywords: | learning; education; university education; private returns to university education, natural experiment |
| JEL: | I2 J24 J31 |
| Date: | 2004–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:34&r=lab |
| By: | Raquel Carrasco; Juan F. Jimeno; Ana Carolina Ortega |
| Abstract: | Spain is one of the European countries where immigration flows during the last decade have increased noticeably. The Spanish labor market institutions and the Spanish immigration policy exhibit some peculiarities which may be relevant when analyzing the impact of immigration. This paper provides a first approximation to the labor market effects of immigrants in Spain during the second half of the 1990s, the period in which immigration flows to Spain have accelerated. By using alternative datasets, we estimate both the impact of legal and total immigration flows on the employment rates of native workers, accounting for the possible occupationa l and geographical mobility of immigrants and native-born workers. Using different samples and estimation procedures, we have not found a significant negative effect of immigration on the employment rates of native workers. The corresponding estimated elasticity is low, around -0.1, when considering only legal immigrants, and is not significant when considering both legal and illegal immigrants. |
| Date: | 2004–10 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we046122&r=lab |
| By: | Sara Lemos |
| Abstract: | There is very limited evidence on the e.ects of the minimum wage in developing countries, and none whatsoever on the e.ects of the minimum wage on the public sector. Most of the evidence available uses (US) private sector data. However, evidence regarding the private sector need not carry over to the public sector. This paper estimates minimum wage e.ects across sectors using an under-explored monthly Brazilian household survey from 1982 to 2000. The minimum wage was found to compress the wage distribution of both sectors. However, consistent with a stronger compression e.ect, more adverse long run employment e.ects are observed in the private sector. |
| JEL: | J38 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2004:155&r=lab |
| By: | Calcagno,R.; Renneboog,L. (TILEC (Tilburg Law and Economics Center)) |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubtil:2004015&r=lab |
| By: | Pedro Martins; Andy Snell; Jonathan Thomas |
| Abstract: | This paper re-examines a problem first studied by Beaudry and DiNardo (1991), who derived testable implications of three models of wage formation and found support for an implicit contract model in which workers are perfectly mobile. We analyse a model in which firms cannot pay discriminate based on year of entry to the firm, and argue that the wage dynamics are similar to the Beaudry and DiNardo model. Since in the latter model worker (under a hiring condition) mobility/commitment does not affect the optimal contract, it is argued that existing empirical research does not discriminate between different models of worker commitment. |
| JEL: | E32 J41 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:130&r=lab |
| By: | Vladimir Matveenko; Peter Saveliev |
| Abstract: | Recent RLMS data show that about 70 per cent of Russian citizens still have their principal employment in the so-called “old” sector of the economy, i.e. at State-owned enterprises or ones that have been privatized, but not really restructured. Typically, many Russians engage in homework and take second jobs: people spend about 30 per cent of their total working hours in the “new” sector, where hourly pay rates are 3 to 5 times higher than in their principal jobs. So why is it that there is no “exodus” of labor from the “old” sector? What are the factors maintaining a supply of labor for that sector? The study will analyze data of RLMS and a special survey planned to be conducted in St. Petersburg using an original questionnaire. The main factors maintaining labor supply in the old sector, as identified by the authors, include stable, if low, pay, social benefits, and relatively guaranteed employment. A very significant factor is the deep-rooted practice of “formal” employment, whereby people get their tiny salaries regardless of performance. So in fact, working in the “old” sector is being replaced by leisure time, work in the new sector, and homework. The situation can be described as follows: while management pretends to pay, employees pretend to work. |
| JEL: | J00 |
| URL: | http://d.repec.org/n?u=RePEc:eer:wpalle:00-215e&r=lab |
| By: | Barrrio,T.; García-Quevedo,J. (Universitat de Barcelona) |
| Abstract: | Applied studies on the relationship between geography and technological innovation for United States, Germany, France and Italy have shown the positive effects that academic research exerts on the innovate output of firms at spatial level. The purpose of this paper is to look for new evidence on the possible effects of the university research for the case of Spain. To do so, within the framework of a Griliches-Jaffe knowledge production function, and using panel data and count models, the relationship between innovate inputs and patents, in the case of the Spanish regions is explored. |
| Keywords: | Hysteresys, panel unit root tests, structural break |
| JEL: | O30 O18 R30 R58 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:bar:bedcje:2004120&r=lab |
| By: | Pons,J.; Silvestre,J.; Tirado,D.; Paluzie,E. (Universitat de Barcelona) |
| Abstract: | In this paper we examine whether access to markets had a significant influence on migration choices of Spanish internal migrants in the inter-war years. We perform a structural contrast of a New Economic Geography model that focus on the forward linkage that links workers location choice with the geography of industrial production, one of the centripetal forces that drive agglomeration in the NEG models. The results highlight the presence of this forward linkage in the Spanish economy of the inter-war period. That is, we prove the existence of a direct relation between worker's localization decision and the market potential of the host regions. In addition, the direct estimation of the values associated with key parameters in the NEG model allow us to simulate the migratory flows derived from different scenarios of the relative size of regions and the distances between them. We show that in Spain the power of attraction of the agglomerations grew as they increased in size, but the high elasticity es timated for the migration costs reduce the intensity of internal migrations flow. This could help to explain the apparently low intensity of inernal migrations in Spainin Spain until its upsurge during thye 1920s. This also explains the geography of migrations in Spain during this perios, which hardly affected such as Andalusia, Estremadura and Castile-La Mancha) but had an intense effect on the provinces nearest to the principal centres of industrial development |
| Keywords: | Hysteresys, panel unit root tests, structural break |
| JEL: | N63 N64 N93 F14 F15 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:bar:bedcje:2004121&r=lab |
| By: | Arantza Gorostiage (Unversidad del País Vasco); Juan F. Rubio-Ramírez (Federal Reserve Bank of Atlanta) |
| Keywords: | redistribution policy, minimum wage, Ramsey Problem |
| JEL: | E62 H21 |
| Date: | 2004–12–02 |
| URL: | http://d.repec.org/n?u=RePEc:ehu:dfaeii:200407&r=lab |
| By: | Kruse, Agneta (Department of Economics, Lund University); Nyberg, Kristian (National Board of Social Insurance) |
| Abstract: | Ageing gives rise to concern about the sustainability of pay-as-you-go pension systems. One reform option suggested is to make the system actuarial by a tight connection between contributions and benefits. The incentives for the individual will then coincide with the interest of the pension collective. However, the individual actions – fertility decisions, working hours, timing of retirement – also contain a collective part not taken into consideration in the individual’s utility maximisation, a 1/N problem. As pay-as you-go systems are indexed by growth, the index (rate of return) is influenced by these actions even if the system is ‘actuarially fair’. We trace the effects of changes in fertility and early exit/changes in working hours on different generations in an overlapping generation model. The economic model (a stylised model of the economy in aggregate and the pension system) is fitted into a simulation model. We show that the collective effect /external effects are far from negligible. Different measures to cope with these effects are discussed. |
| Keywords: | pensions; demographics; external effects; OLG-model |
| JEL: | D62 H55 J26 |
| Date: | 2004–12–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2004_027&r=lab |
| By: | Farm, Ante (Swedish Institute for Social Research, Stockholm University) |
| Abstract: | Firms create ‘vacancies’ in one sense (recruitment processes) in order to avoid ‘vacancies’ in another sense (unmet demand). The paper clarifies the different roles of these two concepts in labour market analysis, not only when interpreting Beveridge curves and matching functions, but also when analysing the effect of recruitment problems on employment at the firm level. |
| Keywords: | Vacancies; unemployment; Beveridge curve; matching function; search effectiveness |
| JEL: | J63 J64 |
| Date: | 2000–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2000_008&r=lab |
| By: | Rosén, Åsa (Swedish Institute for Social Research, Stockholm University); Wasmer, Etienne (ECARES) |
| Abstract: | We analyze the consequences of an increase in the supply of highly educated workers on relative and real wages in a search model where wages are set by Nash-bargaining. The key insight is that an increase in the supply of highly educated workers improves the firms' outside option. As a consequence, the real wage of all workers decreases in the short-run. Since this decline is more pronounced for less educated workers, wage inequality increases. In the long-run a better educated work force induces firms to invest more in physical capital. Wage inequality and real wages of highly educated workers increase while real wages of less educated workers may decrease. These results are consistent with the U.S. experience in the 70s and 80s. Based upon differences in legal employment protection we also provide an explanation for the diverging evolution of real and relative wages in Continental Europe. |
| Keywords: | Wage Inequality; Matching; Creation Costs; Firing Costs. |
| JEL: | J31 |
| Date: | 2001–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2001_001&r=lab |
| By: | Moen, Espen R. (Norwegian School of Management (BI)); Rosén, Åsa (Swedish Institute for Social Research, Stockholm University) |
| Abstract: | We study equilibrium wage contracts in a labour market with adverse selection and moral hazard. Firms offer incentive contracts to their employees to motivate them to exert effort. Providing incentives comes, however, at a cost, as it leads to misallocation of effort across tasks. With ex ante identical workers, the optimal wage contract is linear, and the equilibrium resource allocation optimal. With ex ante heterogenous workers, firms may increase the incentive power of the wage contract to attract the better workers. The resulting equilibrium is separating, in the sense that workers self-select on contracts. Furthermore, the contracts offered to the good workers are too high powered compared to the contracts that maximise welfare. |
| Keywords: | - |
| Date: | 2001–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2001_002&r=lab |
| By: | Selén, Jan (Trade Union Institute for Economic Research (FIEF)); Ståhlberg, Ann-Charlotte (Swedish Institute for Social Research, Stockholm University) |
| Abstract: | In a total wage concept we include fringe benefits and earnings-related insurance rights, in addition to money wage. Sickness benefit rights are an important part of insurance rights in many industrial countries. In this paper we analyse sickness benefit insurance rights and estimate their importance compared to money wage, as well as for wage differentials and wage dispersion for Sweden. The estimation of money value for the sickness benefit rights requires data on absences due to sickness, data not readily available since the first part of a sickness period is handled by the employer. Data from registers and interview data from different surveys are combined in order to describe sickness behaviour and sickness remuneration of different occupational groups. |
| Keywords: | Absenteeism; Non-wage benefits; Occupational insurance; Social insurance; Sickness benefit insurance. |
| JEL: | J22 J32 J33 J38 |
| Date: | 2001–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2002_001&r=lab |
| By: | Røed, Knut (The Ragnar Frisch Centre for Economic Research, Oslo, Norway); Jensen, Peter (Department of Economics, The Aarhus School of Business, Denmark); Thoursie, Anna (Swedish Trade Union Confederation, Stockholm, Sweden) |
| Abstract: | Based on a combined register database for Norwegian and Swedish unemployment spells, we use the ‘between-countries-variation’ in the unemployment insurance systems to identify causal effects. The elasticity of the job hazard rate with respect to the benefit replacement ratio is around -1.0 in Norway and -0.5 in Sweden. The limited benefit duration period in Sweden has a large positive impact on the hazard rate, despite generous renewal options through participation in labour market programs. Compulsory program participation seems to operate as a ‘stick’, rather than a ‘carrot’, and is therefore an efficient tool for counteracting moral hazard problems in the benefit system. |
| Keywords: | Unemployment spells; unemployment compensation; non-parametric duration analysis. |
| JEL: | C41 J64 |
| Date: | 2002–05–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2002_003&r=lab |
| By: | Moen, Espen R. (Norwegian School of Management); Rosén, Åsa (Swedish Institute for Social Research, Stockholm University) |
| Abstract: | We analyse the efficiency of the labour market outcome in a competitive search equilibrium model with endogenous turnover and endogenous general human capital formation. We show that search frictions do not distort training decisions if firms and their employees are able to coordinate efficiently, for instance, by using long-term contracts. In the absence of efficient coordination devices there is too much turnover and too little investments in general training. Nonetheless, the number of training firms and the amount of training provided are constrained optimal, and training subsidies therefore reduce welfare. |
| Keywords: | Matching; Training; Poaching; Efficiency |
| JEL: | J24 J41 J63 J64 |
| Date: | 2002–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2002_004&r=lab |
| By: | Henz, Ursula (Institute for Gerontology, King’s College London); Sundström, Marianne (Swedish Institute for Social Research, Stockholm University) |
| Abstract: | Recent observations of higher labour -market activity among women with a high-earning spouse and widened household inequality have spurred research interest in earnings homogamy and in effects of own and spouse’s earnings on female labour supply. This article studies trends in earnings homogamy among married and cohabiting parents and in effects of own and spouse’s earnings on mothers’ time in employment and non-employment in Sweden. We analyse, first, correlations between spouses’ earnings and, second, effects of time -varying own and spouse’s earnings on mothers’ transitions between part-time and full-time work, on their exits from and re-entries into employment and on their exits from parental leave over the years 1968-92. We use individual life histories from the 1992 Swedish Family Survey combined with longitudinal information on earnings from the national taxation register. A unique aspect of this data set is that it has very accurate longitudinal earnings information for both married and cohabiting spouses, including former spouses. We find that mothers’ own earnings have a larger and more significant impact on their labour -market transitions than spouse’s earnings and that the impact of the latter has even declined over time. |
| Keywords: | - |
| Date: | 2001–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2000_001&r=lab |
| By: | Farm, Ante (Swedish Institute for Social Research, Stockholm University) |
| Abstract: | This paper first clarifies the distinction between vacancies as ‘job openings’ (recruitment processes), which are measured in traditional vacancy statistics, and vacancies as ‘unfilled jobs’ (unmet labour demand). It then presents a method of measuring unmet demand in enterprise surveys and illustrates this method with statistics from a new vacancy survey in Sweden. |
| Keywords: | Job vacancies; unmet labour demand |
| JEL: | J63 |
| Date: | 2003–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2003_001&r=lab |
| By: | Lindahl, Lena (Swedish Institute for Social Research, Stockholm University); Regnér, Håkan (The Swedish Confederation of Professional Associations (SACO)) |
| Abstract: | We use data on 19 000 siblings to investigate whether earnings vary among students who graduated from different colleges in Sweden. We run separate within-family regressions for whole siblings, sisters and brothers. The results show that earnings vary significantly among students who have graduated from different colleges. The cross-sectional estimates are up to twice the within-family estimates, showing that a regression estimator of college effects that does not adjust properly for family characteristics will overestimate the earnings premium of college type as well as the differences in earnings after graduation from different colleges. There is a significant relationship between college type and earnings, even when we control for area of residence after college education. The paper also examines the extent to which differences among colleges, in the proportion of teachers with doctoral degrees, explain the differences in earnings premium. We find that the earnings premium of college type becomes insignificant when adding the proportion of teachers with doctoral degrees to the analysis. |
| Keywords: | - |
| Date: | 2003–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2003_004&r=lab |
| By: | Takashi Kurosaki; Humayun Khan |
| Abstract: | This paper investigates the effects of human capital on productivity using micro panel data of rural households in the NorthWest Frontier Province, Pakistan, where a substantial job stratification is observed in terms of income and education. To clarify the mechanism underlying this stratification, the human capital effects are estimated for wages(individual level) and for self-employed activities(household level), and for farm and non-farm sectors. Estimation results show a clear contrast between farm and non-farm sectors - wages and productivity in non-farm activities rise with education at an increasing rate, whereas those in agriculture respond only to the primary education. |
| Keywords: | human capital, returns to education, non-farm employment, self-employment |
| JEL: | O12 J24 Q12 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:hst:hstdps:d04-46&r=lab |
| By: | Commander, Simon (London Business School, EBRD and IZA Bonn); Chanda, Rupa (IIM Bangalore); Kangasniemi, Mari (London School of Economics); Winters, L. Alan (World Bank) |
| Abstract: | We provide a first empirical attempt at understanding the scale and type of skilled migration from the Indian software sector and the consequences for firms experiencing loss of skilled workers. The paper draws on some unique survey evidence of software firms in India. The results are not generally consistent with an adverse or brain drain story but provide a more nuanced interpretation. Not only has skilled migration taken a variety of firms - including significant temporary migration - but the evidence suggests that the impact of mobility on performance in the sending firms has not been unambiguously adverse. There is some evidence of associated wage pressure at the height of the software boom in the late 1990s. But there is also evidence of a strong supply side response as workers acquired training and entered the sector. |
| Keywords: | skilled migration, software, brain drain |
| JEL: | J31 J61 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1422&r=lab |
| By: | Sliwka, Dirk (University of Cologne and IZA Bonn) |
| Abstract: | We derive a natural definition of responsibility in a formal model where employees care for their career prospects: A superior holds a subordinate responsible for a task, when she announces her beliefs that this subordinate contributes most to this task. We show, that those announced beliefs lead to a self fulfilling prophecy as the reputation of the responsible subordinate then is affected by the outcome of the task and he therefore has strong incentives to contribute to its success. There are equilibria where either a single agent or no agent is responsible for a task but joint responsibility never arises. Several extensions are discussed. |
| Keywords: | responsibility, career concern, reputation, delegation, incentives |
| JEL: | D23 M12 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1423&r=lab |
| By: | Pierre, Gaëlle (World Bank); Scarpetta, Stefano (World Bank and IZA Bonn) |
| Abstract: | In this paper, we present evidence on how employers perceive labor regulations and react when these are perceived to constrain the operation of their firm. The paper draws from harmonized surveys of (up to) 17,000 firms around the world, and compares employers’ responses with actual labor legislation. We find that employers’ concerns about labor regulations are closely matched by the relative stringency of de jure labor laws. Countries that have, from an international perspective, tight labor regulations tend to have higher proportions of employers reporting these regulations as severe constraints. But not all firms are affected in the same way by onerous labor regulations. Medium sized firms are those whose business and prospect for growth are most negatively affected. Similarly, innovating firms are disproportionally affected by tight labor regulations. There is also clear evidence in the data that firms facing tight regulations invest more in training and make greater use of temporary employment. Small firms mainly rely on temporary employment, while medium and large firms, as well as innovating firms, tend to rely more on on-the-job training if labor regulations make hiring and firing very costly. |
| Keywords: | employment protection indices, firms surveys, training, temporary employment |
| JEL: | J23 J65 K31 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1424&r=lab |
| By: | Konstantopoulos, Spyros (Northwestern University and IZA Bonn); Constant, Amelie (IZA Bonn) |
| Abstract: | This study examines gender differences in the earnings of young adults in the 1980s and 1990s. We determine changes in the gender gap over time in the middle, the tails, and the variability of the earnings distribution. We employ data from two longitudinal, nationally probability samples of high school seniors: the National Longitudinal Study of high school seniors in 1972, and the High School and Beyond Study in 1980 (and the 5th and 4th followup studies respectively). We compute the average differences using effect size estimates expressed in standard deviation units. Differences in the tails and the variability are computed using number and variance ratios respectively. Adjusting for employment selection our findings reveal that once education, occupation, and marital status are taken into account gender differences in earnings (in the middle, the tails, and the variance of the earnings distribution) are eliminated. We observe similar results in gender differences for Whites, Blacks, and Hispanics. |
| Keywords: | gender differences in earnings, general statistical methods |
| JEL: | J16 J31 C10 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1425&r=lab |
| By: | Dunne, Timothy (University of Oklahoma); Troske, Kenneth (University of Missouri-Columbia and IZA Bonn) |
| Abstract: | This paper examines the relationship between technology adoption and workforce skill in US manufacturing plants. Using information on the use and adoption of seven different information technologies, we find that the relationship between technology adoption and workforce skill varies across the technologies. Technologies more closely related to engineering and design tasks are associated with more skilled workforces. Technologies more closely related to production activities are not. When we examine the relationship between technology adoption and skill upgrading of workforces, we find little correlation between the use and/or adoption of technologies and changes in workforce skill at the plant level. However, we do find that plants adopting technologies related to engineering and design tasks do grow faster over the period 1987-1997. |
| Keywords: | technology adoption, workforce skill |
| JEL: | J2 O3 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1427&r=lab |
| By: | Neumark, David (Public Policy Institute of California, NBER, University of California, Berkeley and IZA Bonn); Nizalova, Olena (Michigan State University) |
| Abstract: | Exposure to minimum wages at young ages may lead to longer-run effects. Among the possible adverse longer-run effects are decreased labor market experience and accumulation of tenure, lower current labor supply because of lower wages, and diminished training and skill acquisition. Beneficial longer-run effects could arise if minimum wages increase skill acquisition, or if short-term wage increases are long-lasting. We estimate the longer-run effects of minimum wages by using information on the minimum wage history that workers have faced since potentially entering the labor market. The evidence indicates that even as individuals reach their late 20’s, they earn less and perhaps work less the longer they were exposed to a higher minimum wage, especially as a teenager. The adverse longerrun effects of facing high minimum wages as a teenager are stronger for blacks. From a policy perspective, these longer-run effects of minimum wages are likely more significant than the contemporaneous effects of minimum wages on youths that are the focus of most research and policy debate. |
| Keywords: | minimum wage, employment, hours, earnings |
| JEL: | J22 J23 J38 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1428&r=lab |
| By: | Budría, Santiago (University of Madeira and CEEAplA); Pereira, Pedro Telhado (University of Madeira, CEPR, CEEAplA and IZA Bonn) |
| Abstract: | This paper investigates the earnings effects of training in the Portuguese labour market. We use the Portuguese Labour Force Survey to classify training according to multiple criteria, including providing institution, purpose, duration, and content of the training activity. First, we establish some stylised facts about the extent and determinants of different types of training. We find that there are major differences in training participation across groups, with elder, low educated workers participating substantially less. Second, we measure the wage effects of training. We find that in Portugal returns to training are large and significant. The estimated coefficients are about 12% in the case of men and 37% in the case of women. We show that discriminating between gender, education level, experience, the public and the private sector, and industrial activity reveals important differences across categories of workers. Workers with low qualifications and long professional experience earn larger returns. On average, women receive larger returns than men, though they are subject to greater variation across education and experience groups. The average effect of training is similar in the private sector and in the public sector. Experience in the private sector and education in the public sector are key determinants of the returns to training. Further, training to improve current skills and training in a firm attract largest returns. Third, the paper investigates whether and to what extent training participation affects the probability of entering and leaving unemployment. We find that being trained does not affect significantly the transition probabilities. |
| Keywords: | returns to training, selection bias, logistic regression |
| JEL: | J7 J24 J31 I2 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1429&r=lab |
| By: | Susanne Pech (Department of Economics, Johannes Kepler University Linz, Austria) |
| Abstract: | This paper includes couples on the demand side and analyses their implications on the problem of adverse selection in the annuity market. First, we examine the pooling equilibrium for individual-life annuities and show that in the presence of couples the rate of return on individuallife annuities is lower in case that couples do not have the advantage of joint consumption of "family public goods" as well as in case of a logarithmic utility function. Second, we examine the market for joint-life annuities. Due to their higher chance that only one partner survives to the retirement, couples with short-lived partners put more weight on the survivor benefit than couples with at least one longer-lived partner. This fact is used by annuity companies to separate couples according to their partners' life-expectancies. Hence, we find that only a separating equilibrium may exist. These results are obtained in a framework where couples are mandated to buy joint-life annuities and only single persons buy individual-life annuities. When relaxing this assumption by allowing couples to choose between individual- and joint-life annuities, we find that in equilibrium couples with long-lived partners buy individual-life annuities, while couples with short-lived partners buy joint-life annuities. However, couples with one long-lived and one short-lived partner may decide for either type of annuities, depending on the exogenous parameters. Accordingly, we identify two different types of equilibria. |
| Keywords: | annuity market; uncertain lifetime; adverse selection; equilibrium |
| JEL: | D13 D82 D91 G22 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2004_12&r=lab |
| By: | Xenia Matschke (University of Connecticut); Shane M. Sherlund (Federal Reserve Board) |
| Abstract: | Some recent empirical studies, motivated by Grossman and Helpman's (1994) "protection for sale" model, suggest that very few factors (none of them labor-related) determine trade protection. This paper reexamines the roles that labor issues play in the determination of trade policy. We introduce collective bargaining, differences in labor mobility across industries, and trade union lobbying into the protection-for-sale model and show that the equilibrium protection rate in our model depends upon these labor market variables. In particular, our model predicts that trade protection is structurally higher than in the original protection-for-sale model if the trade union of a sector lobbies but capital owners do not, because union workers collect part of the protection rents; equilibrium protection is lower if capital owners lobby but the trade union does not, because part of the protection rents is dissipated to workers. Using data from U.S. manufacturing, we find that collective bargaining, differences in labor mobility across industries, and trade union lobbying indeed play important roles in the determination of U.S. trade policy. |
| Keywords: | Trade protection, protection for sale, labor market |
| JEL: | F13 F16 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2004-36&r=lab |
| By: | Lionel Martellini; Branko Urosevic |
| Abstract: | Executive compensation packages are often valued in an inconsistent manner: while employee stock options (ESOs) are typically valued ex-ante, cash bonuses are valued ex-post. This renders the existing valuation models of employee compensation packages theoretically unsatisfactory and, potentially, empirically distortive. In this paper, we propose an option-based framework for ex-ante valuation of cash bonus contracts. After obtaining closed-form expressions for ex-ante values of several frequently used types of bonus contracts, we utilize them to explore the e¤ects that the shape of a bonus contract has on the executive’s attitude toward risk-taking. We, also, study pay-performance sensitivity of such contracts. We show that the terms of a bonus contract can dramatically impact both risk-taking behavior as well as pay-performance incentives. Several testable predictions are made, and venues of future research outlined. |
| Keywords: | Executive compensation, cash bonus, incentives, risk-taking behavior |
| JEL: | J33 G13 |
| Date: | 2003–12 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:784&r=lab |
| By: | Brian Silverstone (University of Waikato) |
| Abstract: | The ANZ Bank publishes a monthly count of the number of job advertisements appearing in New Zealand newspapers and, more recently, internet sites. It is New Zealand’s de facto vacancy or help-wanted series. Apart from its role in economic commentaries, there is very little published research using this data. This paper is a preliminary attempt to remedy this omission. It covers descriptive aspects of the ANZ job ads series including the vacancy rate, the hiring rate, regional characteristics and proxy vacancy series. This is followed by an outline of the vacancy-unemployment (Beveridge curve) and hiring frameworks and some initial econometric work. Overall, the paper highlights the importance of the vacancy rate and the hiring rate in assessing labour market conditions in New Zealand. |
| Keywords: | help wanted; Beveridge curve; matching function; New Zealand |
| JEL: | J41 J63 J64 |
| Date: | 2004–11–30 |
| URL: | http://d.repec.org/n?u=RePEc:wai:econwp:04/03&r=lab |
| By: | Maria Tannuri-Pianto; Donald Pianto; Omar Arias |
| Abstract: | This paper studies rural-urban migration in Bolivia. Domestic migration usually works as an equalization mechanism, in which regions with fewer economic opportunities send migrants to more dynamic regions. We model the migration decision and take into account the possibility of self-selection for computing the returns to migration. We present selectivity corrected quantile regression models for earnings of both migrants and non-migrants in urban and metropolitan areas. We find that migrants receive a premium at low and median quantiles of the urban/metro conditional earnings distribution. This premium is somewhat diminished by a negative selectivity correction for migrants with lower probabilities of migration. |
| JEL: | R23 C14 J24 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2004:120&r=lab |
| By: | Lutz Hendricks |
| Abstract: | The fraction of persons holding a college degree differs nearly two-fold across U.S. states. This paper documents data related to state educational attainment differences and explores possible explanations. It shows that highly educated states employ skillbiased technologies, specialize in skill-intensive industries, but do not pay lower skill premia than do less educated states. Moreover, measures of urbanization and population density are positively related to educational attainment. Theories based on agglomeration economies offer natural explanations for these observations. |
| Keywords: | education, agglomeration |
| JEL: | J24 R11 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1335&r=lab |
| By: | Rafael Lalive; Jan C. van Ours; Josef Zweimüller |
| Abstract: | This paper studies how changes in the two key parameters of unemployment insurance – the benefit replacement rate (RR) and the potential duration of benefits (PBD) – affect the duration of unemployment. In 1989, the Austrian government made unemployment insurance more generous by changing, simultaneously, the maximum duration of regular unemployment benefits and the earnings replacement ratio. We find that increasing the replacement ratio has much weaker disincentive effects than increasing the maximum duration of benefits. We use these results to split up the total costs to unemployment insurance funds into costs due to changes in the unemployment insurance system and costs due to behavioral responses of unemployed workers. Results indicate that costs due to behavioural responses are substantial. |
| Keywords: | maximum benefit duration, replacement rate, unemployment duration, unemployment insurance, policy change |
| JEL: | C41 J64 J65 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1337&r=lab |
| By: | Heikki Kauppi; Erkki Koskela; Rune Stenbacka |
| Abstract: | We study the implications of product and labor market imperfections for equilibrium unemployment under both exogenous and endogenous capital intensity. With endogenous capital intensity, stronger labor market imperfections always increase equilibrium unemployment. The relationship between the long-run unemployment and the intensity of product market competition is not necessarily monotonic, but there is an elasticity of substitution between capital and labor below one such that the long-run equilibrium unemployment is an increasing function of product market imperfections when the elasticity exceeds this threshold. Higher interest rates increase (decrease) the long-run equilibrium unemployment when the elasticity of substitution is below (above) one. |
| Keywords: | equilibrium unemployment, product market imperfections, capital intensity, wage bargaining |
| JEL: | E22 E24 J51 L11 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1343&r=lab |
| By: | John J. Siegfried (Vanderbilt University and American Economic Association); Wendy A. Stock (Department of Agricultural Economics and Economics, Montana State University) |
| Abstract: | This paper reports results from a survey of the labor market experience of the 2001-02 class of Ph.D. economists. We estimate that 850 economics Ph.D.s were awarded by U.S. universities in 2001-02, down about 100 from five years earlier. Of these, 28 percent were women, and 37 percent U.S. citizens and permanent residents. On average, the graduates took 5.4 years to earn their Ph.D.s. Over 97 percent of the graduates secured a full-time job; 82 percent held permanent jobs; 59 percent were in academe. Ninety-four percent of respondents reported that they like their job. Those who do less research are more likely to be dissatisfied. The median salary of those holding full-time jobs in the U.S. is $74,000, up from $54,000 five years earlier, a compounded annual increase of 6.5 percent. Salaries of starting assistant professors are now significantly larger than the average of incumbent assistant professors at similar category institutions. Salary compression has progressed to salary inversion. A two-tier job market is emerging in academe, as the gap between the median annual nine-month salary of permanent (tenure-track) and temporary (visiting) academics has widened to $21,500. Nevertheless, 86 percent of the doctorates report that had they known at matriculation what they know now, they still would have pursued a Ph.D. in economics. |
| Keywords: | labor markets for Ph.D. economists, economists' salaries, time-to-degree for economics Ph.D. |
| JEL: | A11 |
| Date: | 2004–01 |
| URL: | http://d.repec.org/n?u=RePEc:van:wpaper:0401&r=lab |
| By: | John P. Conley (Department of Economics, Vanderbilt University); Ping Wang (Vanderbilt University and NBER) |
| Abstract: | We consider a simple model in which agents are endowed with heterogeneous abilities and differing degrees of honesty. Agents choose either to become criminals or invest in education and become workers instead. The model is closed in that all criminal proceeds are stolen from agents working in the formal sector and that expenditures on both deterrence and punishment of criminals are paid for through taxes levied on workers. Thus, although we assume that there no direct interactive effects among criminals, criminals crowd each other in two ways: positively in that enforcement and punishment resources become more widely diffused as more agents commit crimes, and negatively in that the presence of more criminals implies that there is less loot to be divided over a larger number of thieves. We establish the possibility of multiple equilibria and characterize the equilibrium properties. We then evaluate the effectiveness of deterrence policies under a balanced government budget. |
| Keywords: | Criminal Behavior, Educational Choice, Punishment |
| JEL: | I2 J62 K42 |
| Date: | 2004–01 |
| URL: | http://d.repec.org/n?u=RePEc:van:wpaper:0402&r=lab |
| By: | William J. Collins (Department of Economics, Vanderbilt University) |
| Abstract: | By the time Congress passed the 1964 Civil Rights Act, 98 percent of non-southern blacks (40 percent of all blacks) were already covered by state-level "fair employment" laws which prohibited labor market discrimination. This paper assesses the impact of fair employment legislation on black workers' income, unemployment, labor force participation, and occupational and industrial distributions relative to whites using a difference-in-difference-in-difference framework. In general, the fair employment laws adopted in the 1940s appear to have had larger effects than those adopted in the 1950s, and the laws had relatively small effects on the labor market outcomes of black men compared to those of black women. |
| Date: | 2001–04 |
| URL: | http://d.repec.org/n?u=RePEc:van:wpaper:0108&r=lab |
| By: | Andrew W. Horowitz (Department of Economics, Sam M. Walton College of Business, University of Arkandas and Fundacao Getulio Vargas, Rio de Janeiro, Brazil); Andre Portela Souza (Department of Economics, Vanderbilt University, Department of Economics and University of Sao Paulo, Brazil) |
| Abstract: | Human capital accumulation has long been recognized as critical to economic growth and development. In recent years focus on the intra-household distribution of human capital has intensified both theoretically and empirically. However, connecting the theoretical and empirical literature has been impeded by the difficulty in measuring human intra-household capital levels ‚ particularly for children in the midst of the accumulation process. In this paper we approach this issue using the intra-household dispersion of the rate of progress through the education system as a proxy for the final dispersion of intra-household human capital. Focusing on intra-household dispersion avoids many of the problematic issues associated with measures of human capital levels. Using Brazilian data we identify a previously unreported relationship between the intra-household dispersion of this observable human capital (OHK) and household income. We explore various explanations and implications of this pattern, and argue that this relationship is consistent with the inefficient distribution of intra-household human capital suggested by recent theoretical work. |
| Keywords: | Human Capital, School Progression, Intra-Household Allocation |
| JEL: | J24 D10 I20 O15 |
| Date: | 2004–04 |
| URL: | http://d.repec.org/n?u=RePEc:van:wpaper:0408&r=lab |
| By: | Jesse A. Schwartz (Department of Economics, Vanderbilt University); Quan Wen (Department of Economics, Vanderbilt University) |
| Abstract: | Sections 8(a)(3) and 8(a)(5) of the National Labor Relations Act prohibit a firm from unilaterally increasing the wage it pays the union during the negotiation of a new wage contract. To understand this regulation, we study a counterfactual model where the firm can unilaterally increase wages during contract negotiations. Comparing this model to the case where the firm must pay the wage from the expired contract, we show that the firm may strategically increase the union's temporary wage to upset the union's incentive to strike and to decrease the union's bargaining power. Consequently, increasing temporary wages may shrink the set of equilibrium contracts in the firm's favor. Indeed, as the union becomes more patient, the set of equilibrium wages converges to the expired wage, the best equilibrium outcome to the firm. We further demonstrate that our counterfactual model is valid since our results maintain even if the union is allowed to block the firm's temporary wage increase. |
| Keywords: | Collective Bargaining, National Labor Relations Act |
| JEL: | C72 C73 C78 |
| Date: | 2004–05 |
| URL: | http://d.repec.org/n?u=RePEc:van:wpaper:0412&r=lab |
| By: | Martha J. Bailey (Graduate Student at Vanderbilt University); William J. Collins (Department of Economics, Vanderbilt University) |
| Abstract: | The weekly wage gap between black and white female workers narrowed by 15 percentage points during the 1940s. We employ a semi-parametric technique to decompose changes in the distribution of wages. We find that changes in worker characteristics (such as education, occupation and industry, and region of residence) can account for a significant portion of wage convergence between black and white women, but that changes in the wage structure, including large black-specific gains within regions, occupations, industries, and educational groups, made the largest contributions. The single most important contributing factor to the observed convergence was a sharp increase in the relative wages of service workers (where black workers were heavily concentrated) even as black women moved out of domestic service jobs. |
| Keywords: | World War II, domestic servants, migration |
| JEL: | J7 N3 |
| Date: | 2004–06 |
| URL: | http://d.repec.org/n?u=RePEc:van:wpaper:0416&r=lab |
| By: | Olivier Gergaud (OMI et TEAM); Florine Livat (OMI) |
| Abstract: | How do individuals, goods or services (e.g. researchers) through their own reputation give birth to a group's reputation (e.g. a laboratory) and conversely how do they take advantage of this group's reputation. Do they contribute to (derive benefit from) the group's reputation proportionally to their individual reputation or in a different way ? To answer these questions we develop in this paper a theoretical model in which collective reputation both determines and is determined -simultaneously- by individual reputations as suggested first by Tirole (1996). This paper also proposes an empirical strategy to assess both umbrella impacts (the impact of a collective reputation on a given individual reputation) and contributions to the umbrella (the contrary). Then, the theoretical model is applied to the case of Bordeaux wines from a rich dataset on individual opinions. |
| Keywords: | Individual reputation, collective reputation, cultural goods |
| JEL: | L15 L66 Z13 |
| Date: | 2004–02 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:bla04015&r=lab |
| By: | Emmanuel Duguet (EUREQua); Pascale Petit (EUREQua) |
| Abstract: | We study the determinants of hiring gender discrimination in the French financial sector through a controlled experiment. We find that, on the one hand, the access differences to job interviews by women and men are primarily explained by the expectation of a maternity by young women and, on the other hand, we also find that some institutional mechanisms compensate this difference of treatment between genders so that there is no significant discrimination on average. |
| Keywords: | Discrimination, hiring, field experiment, bootstrap |
| JEL: | C15 C81 J16 J71 |
| Date: | 2004–04 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:v04038&r=lab |
| By: | François Fontaine (EUREQua) |
| Abstract: | This paper provides a simple matching model in which unemployed workers and employers in large firms can be matched together through social networks or through more "formal" methods of search. We show that networks do not necessarily add new externalities and that some results previously obtained in the literature are questionable. Nevertheless, social networks can, in some case, substitute for labor market and this crowding-out effect may be socially costly. We show that an increase in the number of workers embedded in the social networks can increase the unemployment rate and decrease workers welfare. Since it is mostly the firms which benefit from larger social networks, transfers from the firms to the workers are necessary to make larger access to the social network efficient. |
| Keywords: | Insider trading, stock prices, correlated signals, Kyle model |
| JEL: | G14 D82 |
| Date: | 2004–09 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:v04085&r=lab |
| By: | Beissinger, Thomas |
| Abstract: | In diesem Beitrag werden die wichtigsten Erkenntnisse zu Ausmaß und Ursachen der strukturellen Arbeitslosigkeit in Europa vor dem Hintergrund eines einheitlichen theoretischen Bezugrahmens zusammengefasst, erklärt und bewertet. Die strukturelle Arbeitslosigkeit wird in der Literatur üblicherweise als diejenige Arbeitslosigkeit interpretiert, die langfristig mit einer konstanten Inflationsrate vereinbar ist. Diese Arbeitslosenquote wird auch als langfristige NAIRU oder natürliche Arbeitslosenquote bezeichnet. Die kritische Würdigung verschiedener Verfahren zur Schätzung der langfristigen NAIRU und ein kurzer Überblick über die Ergebnisvielfalt verschiedener empirischer Studien machen deutlich, dass NAIRU-Schätzungen derzeit keine präzisen Aussagen über das Ausmaß der strukturellen Arbeitslosigkeit zulassen. Empirische Untersuchungen zu den Determinanten der langfristigen NAIRU legen die Vermutung nahe, dass die internationalen Unterschiede in Entwicklung und Niveau der langfristigen NAIRU am besten durch die Interaktion von makroökonomischen Schocks und Institutionen erklärt werden können. Die detaillierte Betrachtung der einzelnen Studien macht allerdings die geringe Robustheit und die teilweise widersprüchlichen Schätzergebnisse deutlich. Die makroökonometrische Evidenz zu Ausmaß und den Ursachen der strukturellen Ar-beitslosigkeit muss bei dem derzeitigen Stand der Forschung daher mit Vorsicht beurteilt werden. |
| Keywords: | NAIRU, natural rate of unemployment, labor market institutions |
| Date: | 2004–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:bay:rdwiwi:373&r=lab |
| By: | Amy Y.C. Liu |
| Abstract: | This paper uses the Vietnam Living Standards Surveys 1992–93 and 1997–98 to examine changes in the gender wage gap. The intertemporal decomposition of Juhn et al. (1991) indicates that changes in observed variables, skill prices and wage inequality have tended to narrow the gap, but the gap effect has tended to widen it, with the net effect being one of little change. This finding is in contrast with that for the EEC but in line with the experience of China. Improving education about equity practices in the workplace to combat discriminatory attitudes, and further decentralisation to facilitate the growth of the private sector, are two of the policy implications drawn. |
| JEL: | J40 J71 P23 O15 |
| Date: | 2003 |
| URL: | http://d.repec.org/n?u=RePEc:idc:wpaper:idec03-5&r=lab |
| By: | Amy Y.C. Liu |
| Abstract: | The impact of sectoral location on the gender earnings gap is important in the context of Vietnam’s transition into a market-oriented economy. More and more women are seeking employment in the private sector either in response to retrenchment in the public sector or in response to increasing economic opportunities in the private sector. We apply the Appleton et al. (1999) decomposition technique to the Vietnam Living Standards Survey data collected in 1992- 93 and 1997-98, to decompose the gender earnings gap into within sector and between-sector differences. It has found that sectoral location has become more important in 1997-98 and that the changes have had an adverse impact on the gender gap. To further examine the results, conventional decomposition methods are used on different sectors. Three main conclusions are drawn. First, the absolute gender earnings gap has risen over time in the private sector. Second, discrimination has increasingly accounted for more of the gender earnings differences in the private sector over time. Third, discrimination accounts for more of the gap in the private sector than in SOEs in 1997-98 than in 1992-93. |
| JEL: | J3 J7 P23 |
| Date: | 2001 |
| URL: | http://d.repec.org/n?u=RePEc:idc:wpaper:idec01-3&r=lab |