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on Labour Economics |
| By: | Datta Gupta, Nabanita (Department of Economics, Aarhus School of Business); Tor, Eriksson (Department of Economics, Aarhus School of Business) |
| Abstract: | We explore the effect of introducing new workplace practices on the gender gap using a unique 1999 survey on work and compensation practices of Danish private sector firms merged to a large matched employer-employee database. Self-managed teams, project organisation and job rotation schemes are the most widely implemented work practices. Wage gains from adopting new workplace practices accrue mainly to hourly paid males and salaried females but do not generate large changes in the gender gap in pay at the level of the firm. Considering practices individually, however, the gender wage gap among salaried workers is significantly reduced in firms which offer job rotation and project organisation, while among hourly paid workers the use of quality control circles significantly widens the gap in pay between male and female workers. |
| Keywords: | new work practices; employer-employee data; wage differentials; gender |
| JEL: | J16 J31 M54 |
| Date: | 2005–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:aareco:2004_018&r=lab |
| By: | José Ignacio García Pérez (Centro de Estudios Andaluces); Yolanda Rebollo Sanz (Universidad Pablo de Olavide) |
| Abstract: | We develop a partial equilibrium job search model to analyse wage mobility and its relation to job mobility. The basic job search model is generalized by introducing wage renegotiation at the firm level, on-the-job search and heterogeneity of individuals through the value of time while unemployed. Transitions into and out of unemployment, movement from one job to another without passing through unemployment, and wage growth on the job are all outcomes of this model. We estimate the model structurally in order to identify the sources of wage mobility in four European countries: Spain, Germany, France and Portugal. We find that German and Spanish workers tend to suffer larger wage penalties after unemployment than their French and Portuguese counterparts. Wage losses in Germany are larger and mainly related to better wage opportunities when employed, while in Spain wage losses are lower but tend to remain longer since wage growth while employed is lower than in Germany. We also use the model's structural parameters to evaluate the effect that different changes in the Unemployment Benefit system may have on wage changes after unemployment. We determine that a sole level for unemployment benefits (dependent on the national average wage level) reduces wage penalties for all workers with the exception of the highly educated. |
| Keywords: | Structural estimation, wage mobility, job mobility |
| JEL: | J60 J64 J31 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:cea:doctra:e2005_15&r=lab |
| By: | Amy Y.C. Liu (National Centre for Development Studies, Australian National University) |
| Abstract: | This paper examines the changes in relative earnings of workers with different education levels during Vietnam’s transition. It is found that females enjoy a higher return to education than males do in 1998, reversing the situation observed five years ago. A large fall in the returns to vocational training for males, amid the rapid growth in the representation of better-educated females in the private sector where education is valued higher could be responsible for what have occurred. A direct assessment of the role of demand using a simple demand and supply framework developed by Katz-Murphy (1992) is undertaken. The result suggests an increase in the relative demand for better-educated workers appears to play an important role in explaining the earnings differentials between workers of different education groups. Education reform to better suit the needs of the post-reform emerging market, on-the-job training for workers, as well as equal access to education are some policy options that hold the key to reduce wage inequality between different education groups. |
| Keywords: | returns to education, Vietnam, wage structure |
| JEL: | I21 J31 P2 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:eab:develo:596&r=lab |
| By: | Piil Damm, Anna (Department of Economics, Aarhus School of Business); Rosholm, Michael (Department of Economics, University of Aarhus) |
| Abstract: | Do dispersal policies on refugee immigrants promote their labour <p> market outcomes? To investigate this we estimate the effects of location <p> characteristics and the average effect of geographical mobility <p> on the hazard rate into first job of refugee immigrants subjected to <p> the Danish Dispersal Policy 1986-1998. We correct for selection into <p> relocation to another municipality by joint estimation of the duration <p> of the first non-employment spell and time until relocation. <p> We find, first, that the hazard rate into first job is decreasing in the <p> local population size and the local share of immigrants. These findings <p> support dispersal policies. Second, on average geographical mobility <p> had large, positive effects on the hazard rate into first job, suggesting <p> that restrictions on placed refugees’ subsequent out-migration would <p> hamper labour market integration of ref |
| Keywords: | Dispersal Policies on Refugees; Employment Effects; Migration |
| JEL: | J15 J61 J64 |
| Date: | 2005–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:aareco:2004_020&r=lab |
| By: | Gielen,Anne C.; Ours,Jan C. van (Tilburg University, Center for Economic Research) |
| Abstract: | We present an empirical analysis of job reallocation and labor mobility using matched worker-firm data for the Netherlands to investigate how firms adjust their workforce over the cycle. Our data cover the period 1993-2002. We find that cyclical adjustments of the workforce occur mainly through fluctuations in job creation for young and prime-age workers while for old workers they occur mainly through fluctuations in job destruction. Moreover, we find that business cycle fluctuations are used to rejuvenate the workforce. Workforce reductions are most harmful for old workers; for them the flow out of employment is a one-way street. |
| Keywords: | accessions;separations;matched worker-firm data; job creation;job destruction |
| JEL: | J23 J62 J63 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200586&r=lab |
| By: | David Card |
| Abstract: | This paper reviews the recent evidence on U.S. immigration, focusing on two key questions: (1) Does immigration reduce the labor market opportunities of less-skilled natives? (2) Have immigrants who arrived after the 1965 Immigration Reform Act successfully assimilated? Looking across major cities, differential immigrant inflows are strongly correlated with the relative supply of high school dropouts. Nevertheless, data from the 2000 Census shows that relative wages of native dropouts are uncorrelated with the relative supply of less-educated workers, as they were in earlier years. At the aggregate level, the wage gap between dropouts and high school graduates has remained nearly constant since 1980, despite supply pressure from immigration and the rise of other education-related wage gaps. Overall, evidence that immigrants have harmed the opportunities of less educated natives is scant. On the question of assimilation, the success of the U.S.-born children of immigrants is a key yardstick. By this metric, post-1965 immigrants are doing reasonably well: second generation sons and daughters have higher education and wages than the children of natives. Even children of the least- educated immigrant origin groups have closed most of the education gap with the children of natives. |
| JEL: | J61 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11547&r=lab |
| By: | Amelie Constant (IZA Bonn); Klaus F. Zimmermann (University of Bonn, IZA Bonn and DIW Berlin) |
| Abstract: | The European Union aims at a stronger participation by its population in work to foster growth and welfare. There are concerns about the attachment of immigrants to the labour force, and discussions about the necessary policy responses. Integrated labour and migration policies are needed. The employment chances of the low-skilled are limited. Whereas Europe could benefit from a substantive immigration policy that imposes selection criteria that are more in line with economic needs, the substantial immigration into the European Union follows largely non-economic motives. This paper discusses the economic rationale of a selective immigration policy and provides empirical evidence about the adverse effects of current selection mechanisms. |
| Keywords: | migration policy, ethnicity, migrant workers, asylum seekers, family reunification |
| JEL: | F22 J15 J31 J61 J68 J82 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1715&r=lab |
| By: | Kelly Bird; Chris Manning |
| Abstract: | This study focuses on the efficiency of minimum wage policy for poverty reduction, taking Indonesia as a case study. A simulation approach assesses who benefits and who pays for minimum wage increases. On the benefits side, the rise in minimum wages boosts incomes in households with low wage workers. However, increases in wage costs are passed on through higher consumer prices. As a result, three out of four poor households lose in net terms, even when we assume no job losses. The findings suggest that minimum wages are unlikely to be an effective antipoverty instrument, at least for Indonesia. |
| Keywords: | Minimum Wages, Poverty, Income distribution, Indonesia |
| JEL: | I31 J33 J38 O15 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2005-09&r=lab |
| By: | José Ignacio García Pérez (Centro de Estudios Andaluces); Yolanda Rebollo Sanz (Universidad Pablo de Olavide) |
| Abstract: | We study the use of permanent and temporary contracts across Spanish regions during the period 1995-2001. First we show that there are significant differences among the regional rates of permanent employment and that these differences tend to persist over time. To understand the underlying factors behind these observed differences we estimate a binary choice model for the individual probability of having a permanent contract, taking advantage of the panel data dimension of the Spanish Labour Force Survey. Our main results are that unit labour cost differentials, and thus labour productivity and total labour cost differentials, partially explain the divergence of regional permanent employment rates. Moreover, compared to the influence of regional fixed effects and other possible explanations such as sector specialisation or the presence of small firms in the region, unit labour costs explain more than two thirds of the observed variance in the permanent employment rate across Spanish regions, once all the relevant heterogeneity is taken into account . |
| Keywords: | Temporary Employment, Unit Labour Costs, Random Effects, Spanish Regions. |
| JEL: | C23 J23 J31 J41 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:cea:doctra:e2005_16&r=lab |
| By: | Julia Fath; Clemens Fuest |
| Abstract: | The introduction of unemployment insurance is usually thought to increase welfare if workers are sufficiently risk averse. We analyse the effects of introducing mandatory unemployment insurance in the shirking model. Surprisingly, we find that introducing unemployment insurance reduces welfare irrespective of the degree of risk aversion. |
| Keywords: | Efficiency Wages, Shirking, Unemployment Insurance |
| JEL: | J0 J3 H1 |
| Date: | 2005–08–09 |
| URL: | http://d.repec.org/n?u=RePEc:kls:series:0019&r=lab |
| By: | Diego Puga; Daniel Trefler |
| Abstract: | Increasingly, a small number of low-wage countries such as China and India are involved in innovation -- not `big ideas' innovation, but the constant incremental innovations needed to stay ahead in business. We provide some evidence of this new phenomenon and develop a model in which there is a transition from old-style product-cycle trade to trade involving incremental innovation in low-wage countries. We explain why levels of involvement in innovation vary across low-wage countries and even across firms within each low-wage country. We then draw out implications for the location of production, trade, capital flows, earnings and living standards. |
| JEL: | F1 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11571&r=lab |
| By: | Eriksson, Tor (Department of Economics, Aarhus School of Business); Werwatz, Axel (Humboldt University, Berlin) |
| Abstract: | In recent years, a small but growing literature concerned with the empirical analysis of the workings of internal labour markets has emerged. These studies, which have almost exclusively been based on personnel records data from single firms, notably Lazear (1992) and Baker, Gibbs and Holmström (1994), have begun to provide some empirical evidence on many of the issues raised by the primarily theoretical field of personnel economics. <p> Instead of one further single firm study, this paper uses an employer-employee linked data set based on 222 Danish private sector, medium-sized or large firms during the period 1980 to 1995. The principal aim of the study is to look for evidence of internal labour markets by focussing on whether there are stable careers, whether being an incumbent has advantages for one’s subsequent career, and on to what extent and how wages are set within the firm. We also examine the influence of the external labour market on wage setting within firms. <p> The data set allows us to examine whether firms differ, and if so, if there are industry-specific differences or differences between growing, stable, and declining firms. Moreover, our study provides insights different from those of earlier work by comparing the internal labour markets of managerial employees with those of the much less studied non-managerial workers |
| Keywords: | Internal labour markets; Careers; Promotions; Firms’ wage structures |
| JEL: | J31 J40 J41 |
| Date: | 2005–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:aareco:2004_019&r=lab |
| By: | Irena Dushi (International Longevity Center-USA); Marjorie Honig (Hunter College, Department of Economics) |
| Abstract: | There is considerable evidence that minorities are less likely than whites to be covered under employment-based health insurance. In 2001, rates of Hispanic full-time workers were 21 and 15 percentage points lower than those of non-Hispanic white men and women. For policy purposes, understanding whether these disparities are generated by differences in the likelihood of being in a job offering coverage or in decisions regarding take-up of offered coverage is critical. We find significant effects of race and ethnicity on offers but not on take-up, controlling for job and demographic characteristics including nativity. Magnitudes of these effects differ by gender and household composition. |
| JEL: | I10 J15 J32 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:htr:hcecon:412&r=lab |
| By: | Robert Drago (Department of Labor Studies and Industrial Relations, Pennsylvania State University); David Black (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Mark Wooden (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | Previous research hypothesizes that long working hours are related to consumerism, the ideal worker norm, high levels of human capital, and a high cost-of-job-loss. The authors test these hypotheses using panel data on working hours for an Australian sample of full-time employed workers. Analyses include a static cross-sectional model and a persistence model for long hours over time. The results suggest that long hours (50 or more hours in a usual week) are often persistent, and provide strongest support for the consumerism hypothesis, with some support for the ideal worker norm and human capital hypotheses, and no support for the cost-of-job-loss hypothesis. Other results are consistent with a backward-bending supply of long hours, and with multiple job holders and the self-employed working long hours. |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2005n12&r=lab |
| By: | O'Brien, Martin (University of Wollongong) |
| Abstract: | Extending the working life of older workers has been identified as an important policy goal in the context of an ageing society. However, existing research has highlighted the role of job separation and labour force discouragement for older worker labour force outcomes. In contrast, research of older worker job mobility is scant except that it has been established that older workers have lower job mobility rates than younger workers. This paper addresses this void through an analysis of ABS Labour Mobility Survey data. Findings have important implications for the Federal government's predominantly supply sided policy reforms aimed at older workers. |
| Keywords: | Older male workers, job mobility, Australia |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:uow:depec1:wp05-04&r=lab |
| By: | Asgeir Danielsson |
| Abstract: | It is assumed that exit and entry of fishermen, as well as vessels, is not instantaneous. The wage rate varies with the fortunes of the fishing firms and affects the endogenous labour supply creating a second transmission mechanism from profits to effort. There are realistic cases where this mechanism has important effects on the stability of the dynamic system and on the effects of taxes (subsisdies) on the size of the fish stock. If labour supply depends negatively on the wage rate, the immediate effect of an increase in the tax rate is to increase effort and harvest. In some cases the increase in the tax rate increases overexploitation also in the long term. This outcome is highly probable if the dynamic system is unstable. |
| Date: | 2004–01 |
| URL: | http://d.repec.org/n?u=RePEc:ice:wpaper:wp22_asgeir&r=lab |
| By: | Jakob Roland Munch (Department of Economics, University of Copenhagen) |
| Abstract: | This paper studies the effects of international outsourcing on individual transitions out of jobs in the Danish manufacturing sector for the period 1992-2001. Estimation of a single risk duration model, where no distinction is made between different types of transitions out of the job, shows that outsourcing has a clear significant positive effect on the job separation rate, but the effect corresponds to a limited number of lost jobs. A competing risks duration model that distinguishes between job-to-job and job-to-unemployment transitions is also estimated. Outsourcing is found to increase the unemployment risk of workers and in particular low-skilled workers, but again the quantitative impact is not dramatic. Outsourcing also increases the job change hazard rate and mostly so for high-skilled workers. |
| Keywords: | international outsourcing; job separations; competing risks duration model |
| JEL: | F16 J68 C23 C41 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:0511&r=lab |
| By: | Lex Borghans (ROA, Maastricht University and IZA Bonn); Bas ter Weel (MERIT, Maastricht University and IZA Bonn) |
| Abstract: | The model developed in this paper explains differences in the division of labour across firms as a result of computer technology adoption. We find that changes in the division of labour can result both from reduced production time and from improved communication possibilities. The first shifts the division of labour towards a more generic structure, while the latter enhances specialisation. Although there exists heterogeneity, our estimates for a representative sample of Dutch establishments in the period 1990-1996 suggest that productivity gains have been the main determinant for shifts in the division of labour within most firms. These productivity gains have induced skill upgrading, while in firms gaining mainly from improved communication possibilities specialisation increased and skill requirements have fallen. |
| Keywords: | division of labour, wage level and structure, technological change, computerisation of the labour market |
| JEL: | J31 O15 O33 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1709&r=lab |
| By: | Marjorie Honig (Hunter College, Department of Economics); Irena Dushi (International Longevity Center-USA) |
| Abstract: | Demand for employment-based insurance is typically treated as an individual rather than a household decision. Dual-earner households are now the modal U.S. married household, however, and most firms offer family coverage as an option available to employees. Findings from a model estimating married workers' take-up of their own insurance with their own and their spouses' offers indicate that both own price and potential coverage under spouses' plans are important determinants of take-up. We find evidence of selection into jobs offering insurance among wives but not husbands. Findings also suggest that dual-earners are not aware of the potential wage/benefit trade-off. Data are from the 1996 panel of SIPP. |
| JEL: | J32 J10 J12 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:htr:hcecon:411&r=lab |
| By: | Gustavo Gonzaga (Department of Economics PUC-Rio); Naércio Menezes Filho (IBMEC-SP and USP); Maria Cristina Terra (EPGE/FGV) |
| Abstract: | Skilled labor earnings differentials decreased during the trade liberalization implemented in Brazil from 1988 to 1995. This paper investigates the role of trade liberalization in explaining these relative earnings movements. We perform several independent empirical exercises that check the traditional trade transmission mechanism, using disaggregated data on tariffs, prices, earnings, employment and skill intensity. We find that: i) employment shifted from skilled to unskilled intensive sectors, and each sector increased its relative share of skilled labor; ii) relative prices fell in skill intensive sectors; iii) tari¤ changes across sectors were not related to skill intensities, but the pass-through from tariffs to prices was larger in skill intensive sectors; iv) the decline in skilled earnings differentials mandated by the price variation predicted by trade was even larger than the observed one. The results are compatible with trade liberalization accounting for the observed relative earnings changes in Brazil. They also highlight the importance of considering the effects of differentiated pass-through from tariffs to prices. |
| JEL: | F13 J21 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:rio:texdis:503&r=lab |
| By: | Nina Smith (Aarhus School of Business, CIM and IZA Bonn); Valdemar Smith (Aarhus School of Business and University of Copenhagen); Mette Verner (Aarhus School of Business and CIM) |
| Abstract: | Corporate governance literature argues that board diversity is potentially positively related to firm performance. This study examines the relationship in the case of women in top executive jobs and on boards of directors. We use data for the 2500 largest Danish firms observed during the period 1993-2001 and find that the proportion of women in top management jobs tends to have positive effects on firm performance, even after controlling for numerous characteristics of the firm and direction of causality. The results show that the positive effects of women in top management depend on the qualifications of female top managers. |
| Keywords: | firm performance, female CEOs, board diversity, gender diversity |
| JEL: | G38 J16 M14 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1708&r=lab |
| By: | Dan Ariely; Uri Gneezy; George Loewenstein; Nina Mazar |
| Abstract: | Most upper-management and sales force personnel, as well as workers in many other jobs, are paid based on performance, which is widely perceived as motivating effort and enhancing productivity relative to non-contingent pay schemes. However, psychological research suggests that excessive rewards can in some cases produce supra-optimal motivation, resulting in a decline in performance. To test whether very high monetary rewards can decrease performance, we conducted a set of experiments at MIT, the University of Chicago, and rural India. Subjects in our experiment worked on different tasks and received performance-contingent payments that varied in amount from small to large relative to their typical levels of pay. With some important exceptions, we observed that high reward levels can have detrimental effects on performance. |
| Keywords: | Microeconomics |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:05-11&r=lab |
| By: | Jaan Masso (University of Tartu); Raul Eamets (University of Tartu and IZA Bonn); Kaia Philips (University of Tartu) |
| Abstract: | This article documents and analyses gross job flows and their determinants in Estonia over the years 1995-2001, using a database containing the population of officially registered firms in Estonia (all in all 52,000). Our results show that job creation and job destruction rates have been rather high in Estonia and are comparable to the levels documented for the US. We find that the firm-specific component in job flows excess of employment change had relatively lower importance than in western studies due to the emergence of small and medium-sized enterprises and labour reallocation between the economic sectors. The high inter-sectoral mobility has helped maintain high levels of job flows, while both are high also due to a favourable institutional environment, especially due to low start-up costs and a large share of micro enterprises in Estonia. When investigating job creation and destruction at the firm level by estimating firms’ growth equations, we detected a negative effect of their size and age on the growth of firms, especially of domestic firms. The job flows have not decreased recently, although worker flows have dropped. One explanation is provided by labour market institutional framework, while the other one relates to the concept of churning flows (the difference between worker and job flows). |
| Keywords: | job creation, job destruction, worker flows, churning flows, Estonia |
| JEL: | J6 P2 L11 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1707&r=lab |
| By: | Valadkhani, Abbas (University of Wollongong) |
| Abstract: | The objective of this paper is to identify high employment industries in Australia, Japan and the U.S using input-output (IO) analysis. It is found that (1) the high and low employment generating industries in 1980 and/or 1990 are almost the same as those in 1997. Thus on a relative basis, there is no evidence that high employment generating industries have changed since 1980; and (2) the high and low employment generating industries are very similar across these three countries. Four of the consistently high employment generating industries in these countries are Food, Beverage and Tobacco; Chemicals, Petroleum, Coal, Rubber & Non-Metallic Minerals; Basic Metals/Fabricated Products; and Electricity, Gas and Water, with the first three industries being part of manufacturing. |
| Keywords: | input-output analysis, Employment, OECD |
| JEL: | C67 D57 J21 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:uow:depec1:wp05-07&r=lab |
| By: | Ibsen, Rikke (Department of Economics, Aarhus School of Business); Westergaard-Nielsen, Niels (Department of Economics, Aarhus School of Business) |
| Abstract: | Job creation and destruction should be considered as key success or failure criteria of the economic policy. Job creation and destruction are both effects of economic policy, the degree of out- and in-sourcing, and the ability to create new ideas that can be transformed into jobs. Job creation and destruction are results of businesses attempting to maximize their economic outcome. One of the costs of this process is that employees have to move from destroyed jobs to created jobs. The development of this process probably depends on labor protection laws, habits, the educational system, and the whole UI-system. A flexible labor market ensures that scarce labor resources are used where they are most in demand. Thus, labor turnover is an essential factor in a well-functioning economy. <p> This paper uses employer-employee data from the Danish registers of persons and workplaces to show where jobs have been destroyed and where they have been created over the last couple of business cycles. Jobs are in general destroyed and created simultaneously within each industry, but at the same time a major restructuring has taken place, so that jobs have been lost in Textile and Clothing, Manufacturing and the other “old industries”, while jobs have been created in Trade and Service industries. Out-sourcing has been one of the causes. This restructuring has caused a tremendous pressure on workers and their ability to find employment in expanding sectors. The paper shows how this has been accomplished. Especially, the paper shows what has happened to employees involved. Have they become unemployed, employed in the welfare sector or where? |
| Keywords: | job creation and job destruction; turnover of personnel; duration of unemployment; and impact of business cycles |
| JEL: | J63 M51 O51 |
| Date: | 2005–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:aareco:2005_004&r=lab |
| By: | Galina Vereshchagina |
| Abstract: | Empirical studies document differences in firms' response to the introduction of various labor market policies. In particular, large and mature firms tend to participate more actively in targeted employment subsidy programs (under which firms receive subsidies for hiring disadvantaged workers). This paper offers an explanation for this phenomenon and argues that it might have important consequences for policy making. Namely, such behavior of firms may indicate that large and mature firms benefit from the introduction of a new subsidy program, while small and young firms incur indirect costs. In this case, the policy implicitly redistributes profit from young to mature firms and may discourage startups if the entry into the industry is competitive. The resulting decrease in the number of operating firms is likely to have a significant impact on the policy's outcomes. These effects become more pronounced as heterogeneity between young and mature firms increases. |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp268&r=lab |
| By: | Pierre-Carl Michaud (RAND Corporation and IZA Bonn); Konstantinos Tatsiramos (IZA Bonn) |
| Abstract: | We use eight waves from the European Community Household Panel (1994-2001) to analyze the intertemporal labor supply behavior of married women in six European countries (Netherlands, France, Spain, Italy, Germany and United Kingdom) using dynamic binary choice models with different initial condition solutions and non parametric distributions of unobserved heterogeneity. Results are used to relate cross-country differences in the employment rate to the estimated dynamic regimes. We find that cross-country differences in the employment rate and the persistence of employment transitions of married women are mostly due to composition effects related to education and unobserved characteristics rather than state-dependence effects or the dynamic effect of fertility. |
| Keywords: | intertemporal labor supply, female employment, dynamic binary choice models, initial conditions |
| JEL: | C23 C25 D91 J22 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1706&r=lab |