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on Labour Economics |
| By: | Angel de la Fuente; Juan Francisco Jimeno |
| Abstract: | This paper develops a comprehensive framework for the quantitative analysis of the private and fiscal returns to schooling and of the effect of public policies on private incentives to invest in education. This framework is applied to 14 member states of the European Union. For each of these countries, we construct estimates of the private return to an additional year of schooling for an individual of average attainment, taking into account the effects of education on wages and employment probabilities after allowing for academic failure rates, the direct and opportunity costs of schooling, and the impact of personal taxes, social security contributions and unemployment and pension benefits on net incomes. We also construct a set of effective tax and subsidy rates that measure the effects of different public policies on the private returns to education, and measures of the fiscal returns to schooling that capture the long-term effects of a marginal increase in attainment on public finances under c |
| Keywords: | returns to schooling |
| Date: | 2004–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:aub:autbar:635.04&r=lab |
| By: | Danilo Coelho; Helena Veiga; Róbert Veszteg |
| Abstract: | This comment corrects the errors in the estimation process that appear in Martins (2001). The first error is in the parametric probit estimation, as the previously presented results do not maximize the log-likelihood function. In the global maximum more variables become significant. As for the semiparametric estimation method, the kernel function used in Martins (2001) can take on both positive and negative values, which implies that the participation probability estimates may be outside the interval [0,1]. We have solved the problem by applying local smoothing in the kernel estimation, as suggested by Klein and Spady (1993). |
| Keywords: | parametric estimation, semiparametric estimation, sample selection model |
| URL: | http://d.repec.org/n?u=RePEc:aub:autbar:636.05&r=lab |
| By: | Panu Poutvaara |
| Abstract: | An increasing international applicability of a given type of education encourages students to invest more effort when studying. Governments, on the other hand, face an incentive to divert the provision of public education away from internationally applicable education toward country-specific skills. This would mean educating too few engineers, economists and doctors, and too many lawyers. If the total tax rate is kept constant, then replacing part of existing wage taxes with graduate taxes, collected also from migrants, would improve efficiency. It could even allow for a Pareto-improvement. |
| Keywords: | graduate taxes, public education, European Union, migration, brain drain and brain gain |
| JEL: | F22 H24 H52 I28 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1369&r=lab |
| By: | Antonis Adam |
| Abstract: | This paper analyses the effects of a pension system privatization in a unionized economy. Using an overlapping-generations framework we show that in an environment characterized by unemployment, a reform towards a private pension system in the steady state may result in lower levels of employment and capital stock. In this case even if the privatization increases the welfare of all future generations, the reduction in the welfare of the elderly due to reduced pension benefits may be greater and a Pareto improving transition to a private system may not be feasible. On the other hand if the reform leads to higher employment then a Pareto-improving pension privatization scheme can be constructed. |
| Keywords: | public pensions, social security privatization, labour union, unemployment |
| JEL: | H55 J32 J51 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1371&r=lab |
| By: | Sascha Becker; Karolina Ekholm; Robert Jaeckle; Marc Andreas Muendler |
| Abstract: | Using data for German and Swedish multinational enterprises (MNEs), this paper assesses international employment patterns. It analyzes determinants of location choice and the degree of substitutability of labor across locations. Countries with highly skilled labor forces attract German MNEs, but we find no such evidence for Swedish MNEs. This is consistent with the hypothesis that German MNEs locate production stages intensive in high-skilled labor abroad. In MNEs from either country, affiliate employment tends to substitute for employment at the parent firm. On the margin, substitutability is the strongest with respect to affiliate employment in Western Europe. A one percent larger wage gap between Germany and locations in Central and Eastern Europe (CEE) is estimated to be associated with 900 fewer jobs in German parents and 5,000 more jobs in affiliates located in CEE. A one percent larger wage gap between Sweden and CEE is estimated to be associated with 140 fewer jobs in Swedish parents and 260 more jobs in affiliates located in CEE. |
| Keywords: | multinational enterprises, location choice, multinomial choice, labor demand, translog cost function |
| JEL: | F21 F23 J21 J23 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1374&r=lab |
| By: | Frederik Huizinga; Peter Broer |
| Abstract: | In the Dutch economic policy debate, wage moderation is widely considered as a key factor for achieving economic growth and low unemployment. However, some economists criticise the policy emphasis on wage moderation, claiming that high wages are needed to maintain structural labour productivity growth. This paper analyses the effects of a wage push on labour productivity within the framework of endogenous technological progress, endogenous technology adoption and insufficient competition. <P> The conclusion is that a wage push raises labour productivity in the short run. However, this rise in labour productivity is temporary and inefficient. In the long run, a wage push may well harm labour productivity. <P> The main message of the paper is that it is probably best not to use wage policy at all as a tool to influence productivity. As a tool against unemployment, however, it is very effective. These insights are applied in a review of the Dutch post-war productivity growth. |
| Keywords: | wage moderation; productivity; technological progress; creative destruction |
| JEL: | J23 J24 O33 |
| Date: | 2004–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:28&r=lab |
| By: | Galindev Ragchaasuren |
| Abstract: | This paper presents a stochastic overlapping-generations model in which human capital accumulation is a result of deliberate schooling. The model is used to show how the opportunity cost of schooling measured by foregone wage can propagate shocks within a period and overtime. |
| Date: | 2005–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:esx:essedp:590&r=lab |
| By: | Eliason, Marcus (Department of Economics, School of Economics and Commercial Law, Göteborg University); Storrie, Donald (Department of Economics, School of Economics and Commercial Law, Göteborg University) |
| Abstract: | We examine whether there is a causal relationship from job displacement to mortality. The study is based on employees who lost their job from all establishment closures in 1987 and 1988 in Sweden and, as a control group, a large random sample of employees not experiencing displacement at that time. The registers follow all these individuals, between 1983 and 2000 with minimal attrition. They also provide much relevant information on individual, family and establishment characteristics, and predisplacement health and labor market history. Using propensity score matching, we find higher mortality among the displaced up to the eighth follow-up year, mainly due to suicide and heart diseases. Estimates of all-cause mortality risk show significant effects for displaced men, but not for women, up to nine years after displacement. An important methodological conclusion is that research that focuses only on those who leave late in the closure process may over-state the impact of displacement on mortality. <p> |
| Keywords: | Plant closure; displaced workers; mortality; propensity score matching |
| JEL: | I12 J63 J65 |
| Date: | 2004–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0153&r=lab |
| By: | Patrick Bayer; Stephen Ross; Giorgio Topa |
| Abstract: | We use a novel dataset and research design to empirically detect the effect of social interactions among neighbors on labor market outcomes. Specifically, using Census data that characterize residential and employment locations down to the city block, we examine whether individuals residing in the same block are more likely to work together than those in nearby but not identical blocks. We find significant evidence of social interactions: residing on the same versus nearby blocks increases the probability of working together by over 50 percent. We also provide evidence as to which types of matches between individuals result in greater levels of referrals. These findings are robust across various specifications intended to address concerns related to sorting and reverse causation. Further, our estimated match effects have a significant impact on a wide range of labor market outcomes more generally including employment and wages. |
| JEL: | J41 R14 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11019&r=lab |
| By: | Lalith Munasinghe; Nachum Sicherman |
| Abstract: | A large portion of the variation in wages and wage growth rates among individuals is due to "unobserved" heterogeneity, and the source of individual heterogeneity is typically attributed to data limitations and/or the unobservability of certain productivity related factors. In this paper we develop a test that discriminates between two inherently unobservable sources of heterogeneity (both of which can clearly account for the variation in wages and wage growth rates): learning ability and workers' inter-temporal preferences (discounting). We apply this test to the large observed differences in wages and wage growth rates between smokers and non-smokers. The evidence supports the discounting hypothesis. |
| JEL: | J22 J24 J31 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11031&r=lab |
| By: | Sven Wilson; Joseph Burton; Benjamin Howell |
| Abstract: | Using data from Union Army pensioners and from the National Health Interview Surveys, we estimate that work-disability among white males aged 45-64 was 3.5 times as high in the late 19th century than at the end of the 20th century, including a decline and flattening of the age-profile since 1970. We present a descriptive model of disability that can account for a) the secular decline in prevalence; b) changes in slope of the age-profile; and c) periods of increasing prevalence. The high level and relatively flat slope of the historical disability age-profile is consistent with the early onset of chronic conditions and with high mortality associated with a subset of those conditions. We show that many common conditions in the 19th century have been either eliminated, delayed to later ages, or rendered less disabling by treatment innovations and the transformation of the workplace. These improvements have swamped the effect of declining mortality, which put upward pressure on disability prevalence. Given the low rate of mortality prior to age 65, technological changes will likely induce further reductions in work-disability, though recent increases in the prevalence of asthma and obesity may eventually work against this trend. |
| JEL: | I12 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11036&r=lab |
| By: | Andrew Sharpe |
| Abstract: | The objective of this paper is to document the evolution of the Canada-U.S. labour productivity gap and to offer an explanation of why Americans have been and continue to be, on average, more productive than Canadians. This focus on relative productivity levels is in contrast to the typical focus on the gap between productivity growth rates in Canada and the United States. The paper finds that Canada’s level of output per person employed was 81.0 per cent of the U.S. level in 2002. This was the lowest relative level since the late 1960s. The general conclusions on the size of the output per hour gap are that output per hour has always been below that in the United States, the productivity gap has increased in the 1990s, particularly since 1994, and the current gap is between 11 and 19 percentage points depending on the source of hours data used. Five main reasons are advanced for this, namely: the lower capital intensity of economic activity in Canada; an innovation gap in Canada relative to the United States; Canada’s relatively underdeveloped high-tech sector; less developed human capital in Canada in terms of proportionately fewer university graduates and scientists and engineers in research and development; and more limited economies of scale and scope in Canada. |
| Keywords: | Productivity, Canada, United States, Employment, Hours, Hours of Work, Capital, International Comparisons, Purchasing Power Parity, Labour Productivity Gap, Level Gap, Alternative Data Sources |
| JEL: | O51 J24 O47 C82 |
| Date: | 2003–06 |
| URL: | http://d.repec.org/n?u=RePEc:sls:resrep:0303&r=lab |
| By: | Lars Osberg; Andrew Sharpe |
| Abstract: | This report’s objective is the construction of an index of labour market well-being that is capable of measuring the well-being that individuals in a given society at a given point in time can obtain through the labour market. Besides considering simply the average return from working, workers are also typically concerned with inequality in the distribution of earnings, as well as skills acquisition that affects future returns from working and the uncertainty surrounding these future returns due to, for example, the possibilities of job loss, injury and insufficient income in retirement. The index proposed and constructed here hence attempts to incorporate each of these aspects of labour market well-being. The Centre for the Study of Living Standards has developed an Index of Economic Well-being based on trends in consumption flows, stocks of wealth, inequality, and economic security. This framework is applied here, but the focus is on the well-being of individuals as workers. The proposed Index of Labour Market Well-being (ILMW) therefore covers all persons of working age, both employed and unemployed, and includes 1) the average current return from work; 2) the aggregate accumulation of human capital, which enables future returns from work; 3) inequality in current returns from work; and 4) insecurity in the anticipation of future returns from work. Estimates of the proposed Index are developed for 16 OECD countries for the 1980-2001 period. |
| Keywords: | Well-being, Wellbeing, Well Being, Unemployment, Labour Market Outcomes, Labour Market, Labor Market, Wages, Earnings, Labour Compensation, Labor Compensation, Compensation, Human Capital, Long-term Unemployment, Long Term Unemployment, Earnings Inequality, Low Wage Earners, Living Wage, Retirement, Pensions, Defined Benefit, Defined Contribution, Unemployment Insurance, Workplace Injuries, Workplace Fatalities, Injuries, Fatalities, Workplace Safety, Index of Economic Well-being, IEWB, ILMW |
| JEL: | O57 I31 E25 J30 J60 J81 J24 J26 J28 H55 |
| Date: | 2003–09 |
| URL: | http://d.repec.org/n?u=RePEc:sls:resrep:0305&r=lab |
| By: | Damien de Walque (World Bank) |
| Abstract: | Educated parents tend to have educated children. But is intergenerational transmission of human capital more nature, more nurture, or both? De Walque uses household survey data from Rwanda that contains a large proportion of children living in households without their biological parents. The data allows him to separate genetic from environmental parental influences. The nonrandom placement of children is controlled by including the educational attainment of the absent biological parents and the type of relationship that links the children to their “adoptive” families. The results of the analysis suggest that the nurture component of the intergenerational transmission of human capital is important for both parents, contrary to recent evidence proposed by Behrman and Rosenzweig (2002) and Plug (2004). The author concludes that mothers’ education had no environmental impact on children’s schooling. Interestingly, mothers’ education matters more for girls, while fathers’ education is more important for boys. Finally, an important policy recommendation in the African context emerges from the analysis: the risk for orphans or abandoned children to lose ground in their schooling achievements is minimized if they are placed with relatives. This paper—a product of the Public Services Team, Development Research Group—is part of a larger effort in the group to understand the determinants of education and its intergenerational transmission. |
| Keywords: | Education |
| Date: | 2005–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3483&r=lab |
| By: | Rosangela Bando; Luis F. Lopez-Calva; Harry Anthony Patrinos |
| Abstract: | The authors use panel data for Mexico for 1997 to 1999 to test several assumptions regarding the impact of a conditional cash transfer program on child labor, emphasizing the differential impact on indigenous households. Using data from the conditional cash transfer program in Mexico—PROGRESA (OPORTUNIDADES)—they investigate the interaction between child labor and indigenous households. While indigenous children had a greater probability of working in 1997, this probability is reversed after treatment in the program. Indigenous children also had lower school attainment compared with Spanish-speaking or bilingual children. After the program, school attainment among indigenous children increased, reducing the gap. This paper—a product of the Education Sector Unit, Latin America and the Caribbean Region—is part of a larger effort in the region to evaluate human development programs. |
| Keywords: | Education; Labor & Employment; Poverty |
| Date: | 2005–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3487&r=lab |
| By: | Honggao Cao (Institute for Social Research, University of Michigan) |
| Abstract: | Students in any schools are not a random collection from the population. They become schoolmates because of their parents' selections of school quality that are contingent on their genetic abilities and family background. Even specified correctly, the conventional educational production functions cannot be used to find the effects of school inputs or quality. Therefore, the weak or zero relationship between school inputs and student achievement widely documented in the literature by no means implies that school inputs or quality does not matter. Further, since students enter schools by self-selection, any observed differences in student achievement between public and private schools do not necessarily mean that these schools have any differences in the effectiveness of operation. |
| Keywords: | Self-selection, school quality, educational production function, student achievement |
| JEL: | I |
| Date: | 2005–01–08 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwphe:0501003&r=lab |
| By: | Peter Ilmolelian |
| Abstract: | Using the Africa Educational Trust (AET) as a case study, the primary aim of the research was to investigate whether or not the employment outcomes of those refugees who received financial grants to enable them attend their education/training courses were different from those who did not. 122 individuals who applied to AET for grants in 1993/94 were interviewed and data analysed using the Probit model and McNemar's Chi- squared test of significance. The study found that grant holders were more likely to successfully complete their courses than those who did not receive any grants and that there was a positive relationship between the level of study and the probability of later employment. Although the differences in subject area were not statistically significant, the results suggested that computing and IT studies were less likely to lead to employment than education/ social science and health studies. |
| Keywords: | Asylum seekers, education, employment, refugees, training, UK |
| JEL: | I |
| Date: | 2005–01–09 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwphe:0501004&r=lab |
| By: | Rolf Aaberge (Research Department, Statistics Norway, Oslo, Norway); Ugo Colombino (Department of Economics, University of Turin, Italy); Steinar Strøm (Department of Economics, University of Oslo, Norway); Tom Wennemo (Research Department, Statistics Norway, Oslo, Norway) |
| Abstract: | The paper presents a model of household labour supply that allows for simultaneous decisions of household members, complex and non-convex choice sets induced by tax and benefit rules, and quantity constraints on hours choice. The model is estimated using the 1993 Bank of Italy’s Survey of Household Income and Wealth, and used to simulate three hypothetical tax reforms: namely, a flat tax and two versions of a negative income tax system, under the constraint of equal tax revenue. All the reforms produce a larger household average disposable income, without worsening much the equality of the income distribution, and are supported by a majority of winners in the sample, although the proportion of winners varies considerably across income deciles. We also simulate the impact on labour supply and income of removing the quantity constraints on hours-wage packages available on the market, constraints that in Italy typically make full-time jobs more easily available than other jobs. The results show a considerable increase in participation among women belonging to relatively poor households, and a slight reductions in hours worked – given participation – across all households. |
| Keywords: | Tax reforms, Labour supply, Microeconometric models |
| JEL: | J |
| Date: | 2005–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpla:0501004&r=lab |
| By: | Honggao Cao (Institute for Social Research, University of Michigan) |
| Abstract: | Based on a model of two-stage life cycle, this paper investigates and measures intergerational relationships in lifetime earnings. Using data from PSID, I have found that the lifetime earnings transmission equation is non-linear. The elasticity of a son's lifetime earnings with respect to his father's, which may be loosely regarded as the inverse of intergenerational earnings mobility, is not constant across families. Specifically the relationship between the elasticity and the father's log lifetime earnings is of an inverted U- shape: the elasticity is relatively small at both ends of the spectrum, with the maximum in the middle. |
| Keywords: | Intergenerational mobility, non-linear intergenerational relationship, lifetime earnings, earnings mobility, Ben-Porath Model, human capital investment, regression to the mean, PSID |
| JEL: | J |
| Date: | 2005–01–09 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpla:0501006&r=lab |
| By: | James P. Smith (The Rand Corporation) |
| Abstract: | This Introduction has a threefold purpose: (1)to relate the volume to the existing literature so that the reader is better able to appreciate the motivation for the essays, the problems they are attempting to resolve, and their departure from conventional methods of analysis; (2)to highlight the main theoretical and econometric innovations of the individual essays; and (3)to attempt to synthesize the principal empirical findings with an eye toward identifying the major similarities and differences emerging from the separate papers. |
| JEL: | J |
| Date: | 2005–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpla:0501007&r=lab |