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on Labour Economics |
| By: | Luis Diaz-Serrano (National University of Ireland Maynooth, IZA and CREB); Jose A. Cabral Vieira (University of the Azores and CEEAplA) |
| Abstract: | We examine differences in job satisfaction between low- and higher-paid workers within the European Union (EU). To do so The European Community Household Panel Data covering the period 1994-2001 is used. Then we test for differences in reported job satisfaction between low- and higher-paid workers. We also explain the existence of differences in the determinants of job satisfaction between these two types of workers and across countries. Our results indicate that low paid workers report a lower level of job satisfaction when compared with their higher paid counterparts in most countries, except in the UK. This supports the idea that low-wage employment in these countries mainly comprises low quality. The results also indicate that gap in average job satisfaction between low- and higher-paid workers is markedly wider in the Southern European countries than in the rest of EU. Finally, there are significant differences in the determinants of job satisfaction across countries. It seems then that a homogeneous policy may be inappropriate to increase satisfaction, and hence labour productivity, in the EU as a whole. Hence, an improvement of the quality of the jobs in the EU may require different policies. In particular, in some countries such as the United Kingdom removing low employment, namely through regulation, may worsen the workers’ well-being, although in other cases such a policy may lead to a totally different outcome. |
| Keywords: | Job satisfaction,job quality,low-wage employment |
| JEL: | J28 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:may:mayecw:n1560405&r=lab |
| By: | Danthine, Jean-Pierre; Kurmann, Andre |
| Abstract: | We develop and analyse a structural model of efficiency wages founded on reciprocity. Workers are assumed to face an explicit trade-off between the disutility of providing effort and the psychological benefit of reciprocating the gift of a wage offer above some reference level. The model provides a rationale for rent sharing -- a feature that is very much present in the data but absent from previous formulations of the efficiency wage hypothesis. This firm-internal perspective on efficiency wages has important macroeconomic consequences: rent-sharing considerations promote wage rigidity, internal amplification and asymmetric responses to technology and demand shocks. |
| Keywords: | efficiency wages; reciprocity; rent-sharing; wage rigidity |
| JEL: | E24 E32 J50 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5174&r=lab |
| By: | Algan, Yann; Cahuc, Pierre |
| Abstract: | OECD countries faced largely divergent employment rates during the last decades. But the whole bulk of the cross-national and cross-temporal heterogeneity relies on specific demographic groups: prime-age women and younger and older individuals. This paper argues that family labour supply interactions and cross-country heterogeneity in family culture are key for explaining these stylized facts. First we provide a simple labour supply model in which heterogeneity in family preferences can account for cross-country variations in both the level and the dynamics of employment rates of demographic groups. Second, we provide evidence based on international individual surveys that family attitudes do differ across countries and are largely shaped by national features. We also document that cross-country differences in family culture cause cross-national differences in family attitudes. Studying the correlation between employment rates and family attitudes, we then show that the stronger preferences for family activities in European countries may explain both their lower female employment rate and the fall in the employment rates of young and older people. |
| Keywords: | culture; employment rate; family attitudes |
| JEL: | J21 J22 Z13 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5169&r=lab |
| By: | Evangelos M. Falaris (Department of Economics,University of Delaware) |
| Abstract: | I investigate differences in the effects of worker characteristics on wages in Panama at different points of the conditional wage distribution. Public sector employment increases wages of men and of women relatively more at lower quantiles. Public sector employment increases wages of the median worker in that sector and reduces wage inequality within the sector. The existence of a labor union at a worker’s workplace increases relatively more wages of men at lower quantiles. Labor unions reduce male wage inequality within the union sector and increase average wages of union members. Unions do not increase women’s wages but reduce wage inequality within the union sector. Working for a large firm increases wages relatively more at lower quantiles. Rates of return to higher education and to experience are larger for men at higher quantiles. Experience and higher education increase men’s wage inequality. There are no differences across quantiles in rates of return to schooling and experience for women. |
| Keywords: | wages, Panama, quantile regression |
| JEL: | J31 O15 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dlw:wpaper:04-01&r=lab |
| By: | John C. Ham; Xianghong Li; Patricia B. Reagan |
| Abstract: | This paper estimates the effect of U.S. internal migration on real wage growth between the movers' first and second jobs. Our analysis of migration differs from previous research in three important aspects. First, we exploit the confidential geocoding in the National Longitudinal Surveys of Youth 1979 (NLSY79) to obtain a distance-based measure. Second, we let the effect of migration on wage growth differ by schooling level. Third, we use propensity score matching to measure the effect of migration on the wages of those who move. ; We develop an economic model and use it to (i) assess the appropriateness of matching as an econometric method for studying migration and (ii) choose the conditioning variables used in the matching procedure. Our data set provides a rich array of variables on which to match. We find a significant effect of migration on the wage growth of college graduates of 10 percent and a marginally significant effect for high school dropouts of -12 percent. If we use a measure of migration based on moving across either county lines or state lines, the significant effects of migration for college graduates and dropouts disappear. |
| Keywords: | Wages ; Labor mobility |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:212&r=lab |
| By: | Hartmut Lehmann (University of Bologna); Norberto Pignatti (University of Bologna); Jonathan Wadsworth (University of London) |
| Abstract: | We examine the effects of economic transition on the pattern and costs of worker displacement in Ukraine, using the Ukrainian Longitudinal Monitoring Survey (ULMS) for the years 1992 to 2002. Displacement rates in the Ukrainian labor market average between 3.4 and 4.8 percent of employment, roughly in line with levels typically observed in several Western economies, but considerably larger than in Russia. The characteristics of displaced workers are similar to those displaced in the West, in so far as displacement is concentrated on the less skilled. Around one third of displaced workers find re-employment immediately while the majority continues into long-term non- employment. The wage costs of displacement for the sub-sample of displaced workers do not seem to be large. The main cost for displaced workers in Ukraine consists in the extremely long non- employment spell that the average worker experiences after layoff. |
| Keywords: | displaced workers, labor markets in transition, Ukraine |
| JEL: | J64 J65 P50 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:05-122&r=lab |
| By: | Maria Jepsen (DULBEA, Université libre de Bruxelles, Brussels,and European Trade Union Institute (ETUI).); Sile O'Dorchai (DULBEA, Université libre de Bruxelles, Brussels.); Robert Plasman (DULBEA, Université libre de Bruxelles, Brussels.); François Rycx (DULBEA, Université libre de Bruxelles, Brussels, and Institute for the Study of Labor (IZA, Bonn).) |
| Abstract: | Substantial research has been devoted to the estimation and explanation of the gender wage gap. The effects of work status on wages have been studied somewhat less. This article draws on existing work to generate new estimates of the wage penalty associated with part-time employment in Belgium. Given the fact that women remain the primary caregivers, almost solely in charge of housework, part-time employment has often been presented as an ideal solution for those wanting to combine family and professional responsibilities. However, parttime employment has many flaws, not the least of which is the wage penalty it induces. On the basis of the 1995 Structure of Earnings Survey (SES), we estimate the wage gap between part-time and full-time work for a sample of women only. Based on our results, we advance explanations related to human capital and productivity differences, types of job and industry branches, personal characteristics of part-timers, etc. We also compare the results with earlier results for Belgium based on the European Community Household Panel (ECHP). The unexplained part of the part-time wage gap allows us to assess the degree to which labour markets discriminate against part-timers. The existence of such discrimination suggests that equal opportunities policies should focus not only on labour market conditions but also on a more equal sharing of domestic work between men and women. |
| Keywords: | female labour supply, work status, part-time employment, wage gap, decomposition |
| JEL: | J21 J22 J24 J31 J71 C31 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:dul:wpaper:05-17rs&r=lab |
| By: | Gerry Boyle (National University of Ireland, Maynooth); Rory McElligott (National University of Ireland, Maynooth); Jim O'Leary (National University of Ireland, Maynooth) |
| Abstract: | Are public sector workers in Ireland paid more than private sector employees, when such differences in productivity-related personal attributes and job characteristics are controlled for? We estimate that in 2001 the premium enjoyed by public servants was about 13 per cent. We find that the premium, is significantly bigger for those near the bottom of the earnings distribution than for those near the top, was significantly bigger for women than men in the mid-1990s but not at the end of the 1990s, and does not vary significantly across different levels of educational attainment. We estimate the premium for 2001 to be not significantly different from that estimated for 1994 despite this period a period of exceptionally rapid output and employment growth, and correspondingly sharp tightening of labour market conditions in the Irish economy. The most remarkable difference between our results and those of other researchers for other countries relates to the absolute size of the premium. A number of possible explanations for this difference are discussed. |
| Keywords: | public, private, wage,differentials, Ireland, |
| JEL: | J31 J45 |
| Date: | 2004–10 |
| URL: | http://d.repec.org/n?u=RePEc:may:mayecw:n1421004&r=lab |
| By: | David H. Autor; Lawrence F. Katz; Melissa S. Kearney |
| Abstract: | A large literature documents a substantial rise in U.S. wage inequality and educational wage differentials over the past several decades and finds that these trends can be primarily accounted for by shifts in the supply of and demand for skills reinforced by the erosion of labor market institutions affecting the wages of low- and middle-wage workers. Drawing on an additional decade of data, a number of recent contributions reject this consensus to conclude that (1) the rise in wage inequality was an “episodic” event of the first-half of the 1980s rather than a “secular” phenomenon, (2) this rise was largely caused by a falling minimum wage rather than by supply and demand factors; and (3) rising residual wage inequality since the mid-1980s is explained by confounding effects of labor force composition rather than true increases in inequality within detailed demographic groups. We reexamine these claims using detailed data from the Current Population Survey and find only limited support. Although the growth of overall inequality in the U.S. slowed in the 1990s, upper tail inequality rose almost as rapidly during the 1990s as during the 1980s. A decomposition applied to the CPS data reveals large and persistent rise in within-group earnings inequality over the past several decades, controlling for changes in labor force composition. While changes in the minimum wage can potentially account for much of the movement in lower tail earnings inequality, strong time series correlations of the evolution of the real minimum wage and upper tail wage inequality raise questions concerning the causal interpretation of such relationships. We also find that changes in the college/high school wage premium appear to be well captured by standard models emphasizing rapid secular growth in the relative demand for skills and fluctuations in the rate of growth of the relative supply of college workers – though these models do not accurately predict the slowdown in the growth of the college/high-school gap during the 1990s. We conclude that these patterns are not adequately explained by either a ‘unicausal’ skill-biased technical change explanation or a revisionist hypothesis focused primarily on minimum wages and mechanical labor force compositional effects. We speculate that these puzzles can be partially reconciled by a modified version of the skill-biased technical change hypothesis that generates a polarization of skill demands. |
| JEL: | J3 D3 O3 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11627&r=lab |
| By: | Jeffrey Grogger |
| Abstract: | Work was one of the central motivations for welfare reform during the 1990s. One important rationale for work was based on human capital theory: work today should raise experience tomorrow, which in turn should raise future wage offers and reduce dependency on aid. Despite the importance of the this notion, few studies have estimated the effect of welfare reform on wages. Furthermore, several recent analyses suggest that low-skill workers, such as welfare recipients, enjoy only meager returns to experience, undermining the link between welfare reform and wages. An important analytical obstacle is the sample selection problem. Since non-employment levels are high and workers are unlikely to represent a random sample from the population of former recipients, estimates that fail to account for sample selection could be seriously biased. In this paper, I propose a method to solve the selection problem based on the use of reservation wage data. Reservation wage data allow one to solve the problem using censored regression methods. Furthermore, the use of reservation wage data obviates the need for the controversial exclusion restrictions sometimes used to identify familiar two-step sample selection estimators. Correcting for sample selection bias matters a great deal empirically. Estimates from models that lack such corrections suggest that welfare recipients gain little from work experience. Estimates based on the reservation wage approach suggest that they enjoy returns similar to those estimated from other samples of workers. They also suggest that the particular reform program that I analyze may have raised wages modestly. |
| JEL: | I3 J3 C3 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11621&r=lab |
| By: | Lundborg, Per (Trade Union Institute for Economic Research) |
| Abstract: | This paper reviews the empirical literature on tests of different wage theories of relevance in particular to the Swedish labour market. The empirical results are confronted with the institutional changes in the Sweden during the last twenty years. Not much empirical support can be found for the competitive model, the shirking model or the insider-outsider model. The fair wage version of efficiency wage setting receives support, however. Efficiency wage setting appears to have become more important also for Sweden as a consequence of decentralisation of wage bargaining giving scope for firms to differentiate wages. Due to the obvious institutional importance, bargaining models of wage formation continues to play an important role for Swedish wage setting. Bargaining models combined with fair wage setting appear to capture much of present day wage setting in Sweden. |
| Keywords: | Efficiency wages; trade union models |
| JEL: | J31 J51 J53 |
| Date: | 2005–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:fiefwp:0207&r=lab |
| By: | Battu, Harminder; Seaman, Paul T; Zenou, Yves |
| Abstract: | This paper examines the job finding methods of different ethnic groups in the UK. The theoretical framework shows that less-assimilated ethnic unemployed workers are more likely to use their friends and family as their main method of search but they have less chance of finding a job using this method compared to whites and more assimilated ethnic unemployed workers that use formal job search methods (adverts, employment agencies, etc.). Using data from the UK Quarterly Labour Force Survey (QLFS), we test these hypotheses. Our empirical findings are consistent with the theory since they suggest that, though networks are a popular method of finding a job for the ethnic minorities, they are not necessarily the most effective either in terms of gaining employment or in terms of the level of job achieved. However, there are important differences across ethnic groups with the Pakistani and Bangladeshi groups and those born outside the UK (the least assimilated), losing out disproportionately from using personal networks. |
| Keywords: | ethnic disadvantage; job search; networks; social capital |
| JEL: | J15 J64 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5225&r=lab |
| By: | Barry R. Chiswick (University of Illinois at Chicago and IZA Bonn) |
| Abstract: | This paper compares the occupational distributions in 1990 and 2000 of adult white men and women for American Jews and non-Jews, after adjusting for the changes in occupational classifications. The data are from the microdata files from the National Jewish Population Surveys (1990, 2000/01) and the 1990 and 2000 Censuses of Population. Among both men and women, American Jews had a greater proportion in the high level occupations (managerial and professional) in 1990, and the difference increased over the next decade. Among Jews and among non-Jews, there were only small gender differences in the proportions in the high level occupations. Thus, religion was more important than gender in explaining occupational patterns. American Jews of both genders experienced a continued decline in self-employment over the decade, and a continued shift among those in managerial and professional jobs away from self employment and toward being salaried workers. |
| Keywords: | occupational attainment, Jews, religion, gender, National Jewish Population Survey |
| JEL: | J15 J16 J22 Z1 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1736&r=lab |
| By: | Solomon W. Polachek (State University of New York at Binghamton and IZA Bonn); Jun (Jeff) Xiang (State University of New York at Binghamton) |
| Abstract: | In this paper, we define a tractable procedure to measure worker incomplete information in the labor market. The procedure, which makes use of earnings distribution skewness, is based on econometric frontier estimation techniques, and is consistent with search theory. We apply the technique to eleven countries over various years, and find that incomplete information leads workers to receive on average about 30-35% less pay than they otherwise would have earned, had they information on what each firm paid. Generally married men and women suffer less from incomplete information than the widowed or divorced; and singles suffer the most. Women suffer more from incomplete information than men. Schooling and labor market experience reduce these losses, but institutions within a country can reduce them, as well. For example, we find that workers in countries that strongly support unemployment insurance (UI) receive wages closer to their potential, so that doubling UI decreases incomplete information and results in 5% higher wages. A more dense population reduces search costs leading to less incomplete information. A more industrial economy disseminates wage information better, so that workers exhibit less incomplete information and higher wages. Finally, we find that foreign worker inflows increase incomplete information, and at the same time reduce average wage levels, at least in the short-run. |
| Keywords: | incomplete information, earnings distribution, search, cross-country analysis, frontier estimation |
| JEL: | J3 J6 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1735&r=lab |
| By: | Kugler, Adriana D.; Pica, Giovanni |
| Abstract: | This paper uses the Italian Social Security employer-employee panel to study the effects of the Italian reform of 1990 on worker and job flows. We exploit the fact that this reform increased unjust dismissal costs for firms below 15 employees, while leaving dismissal costs unchanged for bigger firms, to set up a natural experiment research design. We find that the increase in dismissal costs decreased accessions and separations for workers in small relative to big firms, especially in sectors with higher employment volatility. Moreover, we find that the reform reduced firms' employment adjustments on the internal margin as well as entry rates while increasing exit rates. |
| Keywords: | employment volatility; European unemployment; firms' entry and exit; unjust dismissal costs |
| JEL: | E24 J63 J65 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5256&r=lab |
| By: | Pieter A. Gautier; Coenraad N. Teulings; Aico van Vuuren |
| Abstract: | We characterize the equilibrium of a search model with a continuum of job and worker types, wage bargaining, free entry of vacancies and on-the-job search. The decentralized economy with monopsonistic wage setting yields too many vacancies and hence too low unemployment compared to first best. This is due to a business-stealing externality. Raising workers’ bargaining power resolves this inefficiency. Unemployment benefits are a second best alternative to this policy. We establish simple relations between the losses in production due to search frictions and wage differentials on the one hand and unemployment on the other hand. Both can be used for empirical testing. |
| JEL: | J30 J60 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1537&r=lab |
| By: | David H. Autor; Lawrence F. Katz; Melissa S. Kearney |
| Abstract: | During the early 1980s, earnings inequality in the U.S. labor market rose relatively uniformly throughout the wage distribution. But this uniformity gave way to a significant divergence starting in 1987, with upper-tail (90/50) inequality rising steadily and lower tail (50/10) inequality either flattening or compressing for the next 16 years (1987 to 2003). This paper applies and extends a quantile decomposition technique proposed by Machado and Mata (2005) to evaluate the role of changing labor force composition (in terms of education and experience) and changing labor market prices to the expansion and subsequent divergence of upper- and lower-tail inequality over the last three decades We show that the extended Machado-Mata quantile decomposition corrects shortcomings of the original Juhn-Murphy-Pierce (1993) full distribution accounting method and nests the kernel reweighting approach proposed by DiNardo, Fortin and Lemieux (1996). Our analysis reveals that shifts in labor force composition have positively impacted earnings inequality during the 1990s. But these compositional shifts have primarily operated on the lower half of the earnings distribution by muting a contemporaneous, countervailing lower-tail price compression. The steady rise of upper tail inequality since the late 1970s appears almost entirely explained by ongoing between-group price changes (particularly increasing wage differentials by education) and residual price changes. |
| JEL: | J3 D3 O3 C1 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11628&r=lab |
| By: | Haoming Liu; Yi Wen; Lijing Zhu |
| Abstract: | In this paper, we construct a simple model based on heterogeneity in workers' productivity and homogeneity in their working schedules. This simple model can generate unemployment, even if wages adjust instantaneously, firms are perfectly competitive, and firms can perfectly observe workers' productivity and effort. In our model, it is optimal for low-skilled workers to be unemployed because, on the one hand, firms do not find it optimal to hire low-skilled workers when labor hours must be synchronized across heterogeneous workers, and on the other hand, low-skilled workers do not find it attractive working for the same hours as high-skilled workers at competitive wages based on productivity. Thus our model offers an alternative explanation for why unskilled workers are a primary source of structural unemployment. |
| Keywords: | Unemployment ; Hours of labor |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2005-045&r=lab |
| By: | Wouter J. Den Haan; Christian Haefke; Garey Ramey |
| Abstract: | According to Ljungqvist and Sargent (1998), high European unemployment since the 1980s can be explained by a rise in economic turbulence, leading to greater numbers of unemployed workers with obsolete skills. These workers refuse new jobs due to high unemployment benefits. In this paper we reassess the turbulence-unemployment relationship using a matching model with endogenous job destruction. In our model, higher turbulence reduces the incentives of employed workers to leave their jobs. If turbulence has only a tiny effect on the skills of workers experiencing endogenous separation, then the results of Lungqvist and Sargent (1998, 2004) are reversed, and higher turbulence leads to a reduction in unemployment. Thus, changes in turbulence cannot provide an explanation for European unemployment that reconciles the incentives of both unemployed and employed workers. |
| Keywords: | Skill loss, European unemployment puzzle |
| JEL: | E24 J64 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:792&r=lab |
| By: | Paolo Epifani; Gino Gancia |
| Abstract: | We formulate a dynamic core-periphery model with frictions in the job matching process to study the interplay between trade costs, migration and regional unemploymentin the short- and long-run. We find that the spatial distribution of unemployment mirrors (inversely) the distribution of economic activities. Further, we highlight a contrast between the short-run and the long-run effects of trade-induced migration on regional unemployment. In particular, an inßow of immigrants from the periphery into the core reduces the unemployment gap in the short-run, but exacerbates unemployment disparities in the long-run. |
| Keywords: | Integration, Agglomeration, Search frictions, Labor mobility, Regional disparities |
| JEL: | F12 F15 F16 |
| Date: | 2002–03 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:832&r=lab |
| By: | Nil Demet Güngör; Aysit Tansel (Department of Economics, METU) |
| Abstract: | The study estimates an empirical model of return intentions using a dataset compiled from an internet survey of Turkish professionals and Turkish students residing abroad. In the migration literature, wage differentials are often cited as an important factor explaining skilled migration. The findings of the study suggest, however, that other factors are also important in explaining the non-return of Turkish professionals. Economic instability in Turkey is found to be an important push factor, while work experience in Turkey also increases non-return. In the student sample, higher salaries offered in the host country and lifestyle preferences, including a more organized environment in the host country, increase the probability of not-returning. For both groups, the analysis also points to the importance of prior intentions and the role of the family in the decision to return to Turkey or stay overseas. |
| Keywords: | Skilled migration, brain drain, return intentions, higher education, Turkey |
| JEL: | J24 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:met:wpaper:0501&r=lab |
| By: | Mion, Giordano; Naticchioni, Paolo |
| Abstract: | Using a matched employer-employee dataset on Italy we look at the spatial distribution of wages among provinces. We find evidence of both urbanization and market potential externalities, with the second one being more relevant. However, spatial sorting of skills is at work and explains a great deal of spatial wage variability. We further show that this sorting is only partially due to migrations and it dampens estimates of spatial externalities. The evidence concerning the sorting of firms is instead quite weak. In the paper, we also find support of self-selection of migrants based on skills and a moderate evidence of the wage growth hypothesis. Finally, we show that the well-established correlation between the employer size and workers' skills is not simply the outcome of a co-location phenomenon. |
| Keywords: | firms' heterogeneity; panel data; skills; sorting; spatial externalities |
| JEL: | J31 J61 R23 R30 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5172&r=lab |
| By: | Lundborg, Per (Trade Union Institute for Economic Research) |
| Abstract: | In 1999, only one of three US scientists and engineers was employed to do R&D and, in several countries over the last forty to fifty years, employment of skilled workers for R&D purposes appears not to have kept pace with the overall increase in the supply of skilled workers. Low utilization of R&D personnel implies low growth per human capital endowments. To analyze the low R&D utilization/low growth equilibria, we set up an endogenous growth model in which firms set fair wages and which allows for an analysis of changes in the utilization rate of R&D workers. We find that the rise in under utilization and the fall in growth per human capital to be consistent with the increase in the demand for higher education. This could be interpreted as the “consumption” element in higher education has received an increased importance yielding a low growth effect of higher education. The results also point at problems of correctly measuring actual human capital inputs in firms. |
| Keywords: | Efficiency wages; fairness; growth |
| JEL: | J31 J41 O40 |
| Date: | 2005–09–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:fiefwp:0206&r=lab |
| By: | Heathcote, Jonathan; Storesletten, Kjetil; Violante, Giovanni L |
| Abstract: | This paper analyses the welfare effects of changes in cross-sectional wage dispersion, using a class of tractable heterogeneous-agent economies. We emphasize a trade-off in the welfare calculation that arises when labour supply is endogenous. On the one hand, as wage uncertainty rises, so does the cost associated with missing insurance markets. On the other hand, greater wage inequality presents opportunities to increase aggregate productivity by concentrating market work among more productive workers. We find that the observed rise in wage dispersion in the United States over the past three decades implies a welfare loss roughly equivalent to a 2.5% decline in lifetime consumption. Assuming Cobb-Douglas preferences, this number is the result of a welfare gain of around 5% from the endogenous increase in productivity coupled with a loss of around 7.5% associated with greater volatility in consumption and leisure. |
| Keywords: | insurance; labour supply; productivity; wage dispersion; welfare |
| JEL: | D31 D58 D91 E21 J22 J31 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5200&r=lab |
| By: | Olga Kupets (National University "Kyiv-Mohyla Academy", Kiev and IZA Bonn) |
| Abstract: | In recent years there has been much policy discussion of the impact of unemployment benefits and other factors on unemployment duration in developed and transition countries. This paper presents first evidence on the determinants of unemployment duration in Ukraine. Using individual-level data from the first wave of the Ukrainian Longitudinal Monitoring Survey (ULMS -2003), which cover the period 1997-2003, we find no significant effect of benefit receipt on exits from unemployment. However, our survival analysis confirms the hypothesis that income from casual activities or subsidiary farming has strong disincentive effect on the hazard of re-employment in Ukraine. The results also indicate that individual’s age, marital status and gender, the level of education and place of residence are significantly related to the total time spent out of work. The estimates of the baseline hazard parameters do not suggest any marked negative duration dependence. |
| Keywords: | unemployment duration, casual work, transition countries, semiparametric duration analysis |
| JEL: | J64 J68 P23 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1738&r=lab |
| By: | Libertad González Luna |
| Abstract: | This paper analyzes the effect of the 1998 reform of the French single parents allowance on the labor supply of single mothers with very young children. The reform aimed at encouraging participation by allowing eligible single parents to accumulate benefits and labor earnings for a limited period of time. Using data from the French Employment Survey, the analysis shows that single mothers affected by the reform had experienced a significant increase in their employment rate four years after the reform was implemented. During the same period, the employment rate of married mothers with young children did not experience a significant change, suggesting that at least part of the increase was a consequence of the reform. These results provide some evidence that benefit schedules that provide financial incentives to work can have significant effects in getting single moms back to work, even in the presence of very young children. |
| Keywords: | Single mothers, labor supply, welfare benefits |
| JEL: | I38 J21 H53 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:818&r=lab |