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on Labour Economics |
| By: | Jordi Brandts; David J. Cooper |
| Abstract: | We study manager-employee interactions in experiments set in a corporate environment where payoffs depend on employees coordinating at high effort levels; the underlying game being played repeatedly by employees is a weak-link game. In the absence of managerial intervention subjects invariably slip into coordination failure. To overcome a history of coordination failure, managers have two instruments at their disposal, increasing employees' financial incentives to coordinate and communication with employees. We find that communication is a more effective tool than incentive changes for leading organizations out of performance traps. Examining the content of managers' communication, the most effective messages specifically request a high effort, point out the mutual benefits of high effort, and imply that employees are being paid well. |
| Keywords: | Change, Incentives, Coordination, Communication, Experiments, Organizations |
| JEL: | C92 D23 J31 L23 M52 |
| Date: | 2005–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:aub:autbar:643.05&r=lab |
| By: | Shihe Fu (Boston College) |
| Abstract: | Existing studies have explored either only one or two of the mechanisms that human capital externalities percolate at only macrogeographic levels. This paper, by using the 1990 Massachusetts census data, tests four mechanisms at the microgeographic levels in the Boston metropolitan area labor market. We propose that individual workers can learn from their occupational and industrial peers in the same local labor market through four channels: depth of human capital stock, Marshallian labor market externalities, Jacobs labor market externalities, and thickness of the local labor market. We find that all types of human capital externalities are significant across census tracts and blocks. Marshallian labor market externalities and the effect of labor market thickness in terms of industry employment density are significant at the block level. The mechanisms of knowledge spillovers vary across industries and occupations. Different types of externalities attenuate at different speeds over geographic distances. The effect of labor market thickness -- in terms of industry employment density -- decays rapidly beyond 1.5 miles away from block centroid; the effect of human capital depth decays rapidly beyond three miles; while Jacobs externalities decay very slowly, indicating a certain degree of urbanization economies. We conclude that knowledge spillovers are very localized within microgeographic scope in cities that we call, "Smart Cafe Cities." |
| Keywords: | human capital, externalities, labor markets |
| JEL: | C21 R23 J24 |
| Date: | 2005–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:609&r=lab |
| By: | Brown, Gordon D. A. (University of Warwick); Gardner, Jonathan (Watson Wyatt LLP); Oswald, Andrew (University of Warwick and IZA Bonn); Qian, Jing (University of Warwick) |
| Abstract: | What makes workers happy? Here we argue that pure ‘rank’ matters. It is currently believed that wellbeing is determined partly by an individual’s absolute wage (say, 30,000 dollars a year) and partly by the individual’s relative wage (say, 30,000 dollars compared to an average in the company or neighborhood of 25,000 dollars). Our evidence shows that this is inadequate. The paper demonstrates that range-frequency theory – a model developed independently within psychology and unknown to most economists – predicts that wellbeing is gained partly from the individual’s ranked position of a wage within a comparison set (say, whether the individual is number 4 or 14 in the wage hierarchy of the company). We report an experimental study and an analysis of a survey of 16,000 employees’ wage satisfaction ratings. We find evidence of rank-dependence in workers’ pay satisfaction. |
| Keywords: | job satisfaction, wages, rank, wellbeing |
| JEL: | J28 J30 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1505&r=lab |
| By: | Donni, Olivier (University of Cergy-Pontoise, THEMA, CIRPEE and IZA Bonn) |
| Abstract: | In this paper, we deal with female labour supply in the collective framework. We study married couples and start from the empirical observation that the husband’s labour supply is generally fixed at full-time. We then show that, in this case, structural elements of the decision process, such as individual preferences or the rule that determines the intrahousehold distribution of welfare, can be identified if household demand for at least one commodity, together with the wife’s labour supply, is observed. These theoretical considerations are followed by an empirical application using French data. |
| Keywords: | collective decisions, female labour supply, commodity demands |
| JEL: | D12 J22 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1506&r=lab |
| By: | Fertig, Michael (RWI Essen and IZA Bonn); Kluve, Jochen (RWI Essen and IZA Bonn) |
| Abstract: | Determining the optimal age at which a child should enter school is a controversial topic in education policy. In particular, German policy makers, pedagogues, parents, and teachers have since long discussed whether the traditional, established age of school entry at 6 years remains appropriate. Policies of encouraging early school entry or increased consideration of a particular child's competency for school ("Schulfähigkeit") have been suggested. Using a dataset capturing children who entered school in the late 1960s through the late 1970s, a time when delaying enrolment was common, we investigate the effect of age at school entry on educational attainment for West and East Germany. Empirical results from linear probability models and matching suggest a qualitatively negative relation between the age at school entry and educational outcomes both in terms of schooling degree and probability of having to repeat a grade. These findings are likely driven by unobserved ability differences between early and late entrants. We therefore use a cut-off date rule and the corresponding age at school entry according to the regulation to instrument the actual age at school entry. The IV estimates suggest there is no effect of age at school entry on educational performance. |
| Keywords: | schooling, matching, instrumental variables |
| JEL: | I21 J13 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1507&r=lab |
| By: | Kamionka, Thierry (CRNS and CREST); Lacroix, Guy (Université Laval, CIRPEE, CIRANO and IZA Bonn) |
| Abstract: | In Canada, a policy aiming at helping single parents on social assistance become self-reliant was implemented on an experimental basis. The Self-Sufficiency Entry Effects Demonstration randomly selected a sample of 4,134 single parents who had applied for welfare between January 1994 and March 1995. It turned out only 3,315 took part in the experiment despite a 50% chance of receiving a generous, time-limited, earnings supplement conditional on finding a full-time job and leaving income assistance within a year. The purpose of this paper is to determine whether a non-response rate of 20% is likely to harm the external validity of the experiment. We compare the estimated impact of the program using experimental data only to that obtained using additional data on individuals not taking part in the experiment. We find strong evidence of non-response bias in the data. When we correct for the bias, we find that estimates that rely on experimental data only significantly underestimate the true impact of the program. |
| Keywords: | social experiments, external validity, duration analysis |
| JEL: | I38 C41 C93 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1508&r=lab |
| By: | Alfred Boss; Thomas Elendner |
| Abstract: | Based on a description of the German system of taxes and transfers, the incentives to work are analyzed for several groups of the labor force. The effects of the “Hartz IV” reform (effective from 2005 onwards) on the incentives receive particular attention. It turns out that the marginal (explicit and implicit) tax rates for most groups of the labor force remain high. It is concluded that employment probably will not be affected significantly by that part of the reform which aims at strengthening the incentives to work. Other elements of “Hartz IV” are only touched on. |
| Keywords: | Income tax rates, contributions to social security, unemployment benefits, implicit tax rates, incentives to work |
| JEL: | H24 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1237&r=lab |
| By: | Casey B. Mulligan; Yona Rubinstein |
| Abstract: | In theory, growing wage inequality within gender should cause women to invest more in their market productivity and should differentially pull able women into the workforce, thereby closing the measured gender gap even though women's wages might have grown less than men's had their behavior been held constant. Using the CPS repeated cross-sections between 1975 and 2001, we use control function (Heckit) methods to correct married women's conditional mean wages for selectivity and investment biases. Our estimates suggest that selection of women into the labor market has changed sign, from negative to positive, or at least that positive selectivity bias has come to overwhelm investment bias. The estimates also explain why measured women's relative wage growth coincided with growth of wage inequality within-gender, and attribute the measured gender wage gap closure to changing selectivity and investment biases, rather than relative increases in women's earning potential. Using PSID waves 1975-93 to control for the changing female workforce with person-fixed effects, we also find little growth in women's mean log wages. Finally, we make a first attempt to gauge the relative importance of selection versus investment biases, by examining the family and cognitive backgrounds of members of the female workforce. PSID, NLS, and NLSY data sets show how the cross-section correlation between female employment and family/cognitive background has changed from "negative" to "positive" over the last thirty years, in amounts that might be large enough to attribute most of women's relative wage growth to changing selectivity bias. |
| JEL: | J24 J31 J16 C34 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11159&r=lab |
| By: | Katherine Baicker; Amitabh Chandra |
| Abstract: | Since 2000, premiums for employer-provided health insurance have increased by 59 percent with little corresponding increase in the generosity of coverage. The effect of this increase in costs on wages and employment will depend on workers' valuation of the benefit, the elasticities of labor supply and demand, and institutional constraints on employers' ability to lower wages. Measuring these effects is difficult, however, without a source of exogenous variation in the cost of benefits. We use variation in medical malpractice payments driven by the recent "medical malpractice crisis" to identify the causal effect of rising health insurance premiums on wages, employment, and health insurance coverage. We estimate that a 10 percent increase in health insurance premiums reduces the aggregate probability of being employed by 1.6 percent and hours worked by 1 percent, and increases the likelihood that a worker is employed only part-time by 1.9 percent. For workers covered by employer provided health insurance, this increase in premiums results in an offsetting decrease in wages of 2.3 percent. Thus, rising health insurance premiums may both increase the ranks of the unemployed and place an increasing burden on workers through decreased wages for workers with employer health insurance and decreased hours for workers moved from full time jobs with benefits to part time jobs without. |
| JEL: | I1 J0 J3 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11160&r=lab |
| By: | Peter Skott (University of Massachusetts Amherst); |
| Abstract: | This paper shows that the existence and persistence of ‘overeducation’ can be explained by an extension of the efficiency wage model. When calibrated to fit the amounts of overeducation found in most empirical studies, the model implies that both the relative wage and the relative employment rate of high-skill workers depend inversely on aggregate economic activity. Keeping aggregate employment constant, furthermore, low-skill unemployment rises following an increase in the relative supply of high-skill labor, and relative wages may be insensitive to changes in relative labor supplies. The model may help explain rising wage inequality in some countries since the early 1970s. JEL Categories: J31 |
| Keywords: | Wage inequality, overeducation, efficiency wages. |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2005-06&r=lab |
| By: | Jeffrey A. Groen (U.S. Bureau of Labor Statistics) |
| Abstract: | Most skills acquired through on-the-job training may be specific to an occupation and therefore transferable to some but not all firms. This paper explores the relationship between the size of the local market for an occupation-specific skill and job-training outcomes. The Stevens (1994) model of training predicts that as market size increases, job turnover increases and training becomes more general. I test these predictions using data on blue-collar workers and variation in market size across U.S. metropolitan areas. The empirical results support the theoretical predictions and the impacts are most relevant at low levels of market size. |
| Keywords: | on-the-job training, occupation, human capital, local labor markets, market size |
| JEL: | J24 J63 J61 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec050020&r=lab |
| By: | Sabrina Wulff Pabilonia (U.S. Bureau of Labor Statistics); Cindy Zoghi (U.S. Bureau of Labor Statistics) |
| Abstract: | This paper re-examines the returns to computer use using a new matched workplace-employee data from Canada. We control for potential selection using instrumental variables. Results suggest that it is not merely the employee having a computer on his desk, but rather having complementary computer skills, that causes wages to increase. |
| Keywords: | computers, computer skills, human capital, technology |
| JEL: | J31 O30 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec050030&r=lab |