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on Labour Economics |
| By: | Steinar Holden (University of Oslo and Norges Bank) |
| Abstract: | This paper reviews the literature on the effects of low steady-state inflation on wage formation, focusing on four different effects. First, under low inflation, downward nominal wage rigidity (DNWR) may prevent real wage cuts that would have happened had inflation been higher. Second, wages (and prices) are given in nominal contracts, and inflation affects both how often wages are adjusted, and to what extent wages are set in a forward-looking manner. Third, incomplete labour contracts may provide workers with scope for inflicting costs on the firm without violating the contract, thus forcing the firm to accept a rise in nominal wages. Fourth, if effort depends on wages relative to a reference level, and workers and firms underweight inflation when updating the reference level, positive but moderate inflation may reduce wage pressure. The paper ends by a brief survey of empirical evidence, and a discussion of whether labour markets may adapt to a low inflation environment. |
| Keywords: | wage formation, nominal contracts, downward nominal wage rigidity, inflation |
| JEL: | J5 J3 E31 |
| Date: | 2004–11–10 |
| URL: | http://d.repec.org/n?u=RePEc:bno:worpap:2004_14&r=lab |
| By: | Randolph Sloof (Faculty of Economics and Econometrics, Universiteit van Amsterdam); Mirjam van Praag (Faculty of Economics and Econometrics, Universiteit van Amsterdam) |
| Abstract: | Theoretical analyses of (optimal) performance measures are typically performed within the realm of the linear agency model. An important implication of this model is that, for a given compensation scheme, the agent's optimal effort choice is unrelated to the amount of noise in the performance measure. In contrast, expectancy theory as developed by psychologists predicts that effort levels are increasing in the signal-to-noise ratio. We conduct a real effort laboratory experiment to assess the relevance of this prediction in a setting where all key assumptions of the linear agency model are met. Moreover, our experimental design allows us to control expectancy exactly as in Vroom's (1964) original expectancy model. In this setting, we find that effort levels are invariant to changes in the distribution of the noise term, i.e. to expectancy. Our results thus confirm standard agency theory and reject this particular aspect of expectancy theory. |
| Keywords: | Expectancy theory; agency theory; performance measurement; experiments |
| JEL: | J33 C91 D81 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20050026&r=lab |
| By: | Yolanda Chica (Universidad del País Vasco); María Paz Espinosa (Universidad del País Vasco) |
| Keywords: | Union Formation, Sequential Bargaining, Nash Bargaining, Monopoly Union |
| JEL: | C72 J51 |
| Date: | 2005–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:ehu:dfaeii:200507&r=lab |
| By: | David B. Audretsch; Roy Thurik; Andre van Stel; M.A. Carree |
| Abstract: | This paper investigates the dynamic interrelationship between self-employment and unemployment rates. On the one hand, unemployment rates may stimulate start-up activity of self-employed. On the other hand, higher rates of self-employment may indicate increased entrepreneurial activity reducing unemployment in subsequent periods. These two effects have resulted in considerable ambiguities about the interrelationship between unemployment and entrepreneurial activity. This paper introduces a two-equation vector autoregression model capable of reconciling these ambiguities and tests it for data of 23 OECD countries over the period 1974-2002. The empirical results confirm the two distinct relationships between unemploy-ment and self-employment, i.e. "refugee" and "entrepreneurial" effects. We also find that the "entrepreneu-rial" effects are considerably stronger than the "refugee" effects. |
| Keywords: | entrepreneurship, Gibrat's Law, self-employment, unemployment |
| JEL: | L11 M13 |
| URL: | http://d.repec.org/n?u=RePEc:esi:egpdis:2005-07&r=lab |
| By: | Stephen L. DesJardins; Dennis A. Ahlburg; Brian P. McCall |
| Abstract: | We present a multiple spells-competing risks model of stopout, dropout, reenrollment, and graduation behavior. We find that students who experience an initial stopout are more likely to experience subsequent stopouts (occurrence dependence) and be less likely to graduate. We also find evidence of the impact of the length of an initial spell on the probability of subsequent events (lagged duration dependence). We simulate the impacts of race, family income, and high school performance on student behavior and show that there are often very large differences between unadjusted rates of student outcomes and adjusted rates. Differences in student performance often ascribed to race are shown to be the result of income, age at entry, and high school performance. |
| URL: | http://d.repec.org/n?u=RePEc:hrr:papers:0505&r=lab |
| By: | Mandana Hajj; Ugo Panizza (Research Department, Inter-American Development Bank) |
| Abstract: | This paper uses individual-level data from Lebanon to test whether there is a difference between the education gender gap of Muslims and Christians. The paper starts by observing that, in Lebanon, the education gender gap completely disappears for cohorts born after the mid 1960s. Next, the paper uses data for young Lebanese and shows that, other things equal, girls (both Muslim and Christian) tend to receive more education than boys and that there is no difference between the education gender gap of Muslims and Christians. Therefore, the paper finds no support for the hypothesis that Muslims discriminate against female education. |
| Keywords: | Religion, Islam, Education, Gender Gap |
| JEL: | Z12 I20 O53 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:1001&r=lab |
| By: | ; David A. Green; ; Christopher Worswick |
| Abstract: | Considering immigrant earnings in the context of post-arrival human capital investment implies: cohort quality should be defined in terms of the present value of the whole earnings profile; and, an appropriate definition of “macro” effects is obtained using the earnings profile of the native born cohort entering the labour market at the same time as an immigrant cohort. We illustrate this using Canadian immigrant earnings, where there were large cross-cohort earnings declines in the 1980s and 1990s. We find that changes affecting all new entrants play an important role in understanding immigrant earnings. In contrast, earlier approaches imply that “macro” events explain little of immigrant earnings patterns. |
| JEL: | J61 J31 |
| Date: | 2004–01 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:04/13&r=lab |
| By: | ; Michael B. Coelli; ; David A. Green; ; William P. Warburton |
| Abstract: | We examine the impact of high school graduation on the probability individuals from welfare backgrounds use welfare themselves. Our data consists of administrative educational records for grade 12 students in a Canadian province linked with their own and their parents’ welfare records. We address potential endogeneity problems by: 1) controlling for ability using past test scores; 2) using an instrument for graduation based on school principal fixed effects; and 3) using a Heckman- Singer type unobserved heterogeneity estimator. Graduation would reduce welfare receipt of dropoutsby ½ to 3/4. Effects are larger for individuals from troubled family backgrounds and low income neighbourhoods. |
| JEL: | I38 I21 |
| Date: | 2004–06 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:04/14&r=lab |
| By: | Michal Myck (Institute for Fiscal Studies); Gillian Paull (Institute for Fiscal Studies) |
| Abstract: | The wage gap between male and female workers has narrowed in both the US and the UK over the past twenty five years. At the same time, employment rates for men and women have converged. This paper examines the relationship between these two facts by analysing the role played by labour market experience in explaining the narrowing gender wage gap. We analyse the relationships between male and female levels of experience and relative wages in the US and the UK over the period 1978 to 2000. The estimation procedure is based on pseudo panels created from cross-sectional data (Current Population Survey (CPS) for the US and Family Expenditure Survey (FES) for the UK). Possible biases from unobserved heterogeneity and the endogeneity of experience are addressed by using an ‘imputed’ measure of experience based on grouped data and by estimating the wage regressions in first differences. Differences in levels of experience are found to explain 39 percent of the gender wage gap in the US and 37 percent in the UK, and failure to control for unobserved heterogeneity is found to understate the role played by total experience in explaining the gap. The gender wage gap has diminished over recent successive cohorts of workers. However, the evidence suggests that the improvements in relative female wages can’t be attributed to changes in relative levels of experience. For each of the successive cohorts we examine, total experience increases the gender wage ratio by a constant 8 to 9 percentage points in the US and the UK. We find that the average experience for female workers relative to male workers has increased over successive cohorts. However, this has either been insufficient to lead to a noticeable effect on relative wages, or changes in the returns to experience have altered affecting female relative earnings unfavourably. |
| Keywords: | gender wage gap, returns to experience, artificial panel data |
| JEL: | J16 J41 C23 |
| Date: | 2004–07 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:04/16&r=lab |
| By: | Kevin Denny (Institute for Fiscal Studies and University College Dublin); ; Vincent O'Sullivan |
| Abstract: | This paper uses cross section data to investigate whether the returns to education vary with the level of ability. Using a measure of cognitive ability based on tests taken at ages 7 and 11 we find, unlike most of the existing literature, clear evidence that the return to schooling is lower for those with higher ability indicating that education can act as a substitute for observed ability. We also estimate quantile regression functions to examine how the return to schooling varies across the conditional distribution of earnings. The results show that the return is lower for higher quantiles, suggesting that education is also a substitute for unobserved ability. |
| Keywords: | Earnings, education, ability |
| JEL: | J31 |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:04/19&r=lab |
| By: | Richard Blundell (Institute for Fiscal Studies and University College London); Amanda Gosling (Institute for Fiscal Studies and Univeristy of Essex); Hide Ichimura (Institute for Fiscal Studies and University College London); Costas Meghir (Institute for Fiscal Studies and University College London) |
| Abstract: | This paper examines changes in the distribution of wages using bounds to allow for the impact of non-random selection into work. We show that bounds constructed without any economic or statistical assumptions can be informative. However, since employment rates in the UK are often low they are not informative about changes in educational or gender wage differentials. Thus we explore ways to tighten these bounds using restrictions motivated from economic theory. With these assumptions we find convincing evidence of an increase in inequality within education groups, changes in the "return" to education and increases in the relative wages of women. |
| Date: | 2004–09 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:04/25&r=lab |
| By: | Donni, Olivier (University of Cergy-Pontoise, THEMA and IZA Bonn) |
| Abstract: | We consider the collective model of labor supply with marketable domestic production. We first show that, if domestic production is mistakenly ignored, the “collective” indirect utilities that are retrieved from observed behavior will be unbiased if and only if the profit function is additive. Otherwise, in the non-additive case, the direction and the size of the bias will depend on the complementarity/substitutability of spouses’ time inputs in the production process. We then show that, even if domestic labor supplies are not observed, valid welfare comparisons are possible. This identification result generalizes that in Chiappori (1992). |
| Keywords: | household, collective model, labor supply, home production, welfare analysis, identification |
| JEL: | D13 J22 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1511&r=lab |
| By: | Caliendo, Marco (DIW Berlin and IZA Bonn); Hujer, Reinhard (University of Frankfurt, ZEW Mannheim and IZA Bonn); Thomsen, Stephan L. (University of Frankfurt) |
| Abstract: | In this paper we evaluate the employment effects of job creation schemes on the participating individuals in Germany. Job creation schemes are a major element of active labour market policy in Germany and are targeted at long-term unemployed and other hard-to-place individuals. Access to very informative administrative data of the Federal Employment Agency justifies the application of a matching estimator and allows to account for individual (group-specific) and regional effect heterogeneity. We extend previous studies in four directions. First, we are able to evaluate the effects on regular (unsubsidised) employment. Second, we observe the outcome of participants and non-participants for nearly three years after programme start and can therefore analyse mid- and long-term effects. Third, we test the sensitivity of the results with respect to various decisions which have to be made during implementation of the matching estimator, e.g. choosing the matching algorithm or estimating the propensity score. Finally, we check if a possible occurrence of 'unobserved heterogeneity' distorts our interpretation. The overall results are rather discouraging, since the employment effects are negative or insignificant for most of the analysed groups. One notable exception are long-term unemployed individuals who benefit from participation. Hence, one policy implication is to address programmes to this problem group more tightly. |
| Keywords: | evaluation, matching, sensitivity analysis, job creation schemes, long-term unemployed |
| JEL: | J68 H43 C13 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1512&r=lab |
| By: | Pascale Petit (EUREQua) |
| Abstract: | Using correspondence testing, we investigate whether gender access gap in job interviews is due to different effects of present or future family responsibilities on expected productivity of male and female job applicants or if it is due to a taste for discrimination. We have sent job applications of three pairs of candidates to the same job advertisements in the French financial sector. Using three pairs of applicants, we compare the effect on the gender access gap to job interviews of a high probability of maternity/paternity (1) ; high family responsibilities (2) ; neither risk of maternity or family responsibility (3). Within each pair, the applicants' characteristics are similar except for their gender. We find significant discrimination against women with a high probability of maternity for highly qualified administrative jobs. In the other cases, unequal treatment between genders is not significant. So, controling for female probability of maternity, we find no significant unequal treatment between genders. We conclude that female employment suffers more from their probability of maternity (and their anticipated career interruptions) than family responsibilities alone. So, statistical discrimination due to female probability of maternity exists on the French labor market. An appropriate economic policy may correct it by reducing firms' cost due to maternity leave. |
| Keywords: | Field experiment; hiring discrimination |
| JEL: | J16 J71 J82 |
| Date: | 2004–07 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:v04086&r=lab |