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on Labour Economics |
| By: | Bernd Fitzenberger (Goethe University Frankfurt, ZEW, IFS and IZA Bonn); Astrid Kunze (Norwegian School of Economics and Business Administration and IZA Bonn) |
| Abstract: | This paper investigates the relationship between the gender wage gap, the choice of training occupation, and occupational mobility. We use longitudinal data for young workers with apprenticeship training in West Germany. Workers make occupational career choices early during their careers and women and men pursue very different occupational careers. We reconsider whether through occupational segregation women are locked in low wage careers (Kunze, 2005) or whether they can move up to higher wage paths through mobility. We furthermore investigate whether patterns have changed across cohorts during the period 1975 and 2001 and whether effects vary across the distribution. The main results are: First, while there exists a persistent gender wage gap over experience, the gap has decreased over time. Second, in the lower part of the wage distribution, the gap is highest and it increases with experience. Third, occupational mobility is lower for women than for men and the wage gains due to occupational mobility are higher for men than for women, especially in the lower part of the wage distribution. We conclude that occupational mobility has reduced the gender wage gap, but lock-in effects are still stronger for women compared to men. |
| Keywords: | gender wage gap, actual experience, occupational mobility, apprenticeship |
| JEL: | C21 J16 J24 J31 J62 J7 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1766&r=lab |
| By: | José M. Arranz (Universidad de Alcalá); Maria A. Davia (Institute for Social and Economic Research); Carlos Garcia-Serrano (Universidad de Alcalá) |
| Abstract: | Using longitudinal data on individual workers from six European countries for the period 1995-2001, the authors analyse empirically the relationship between labour market transitions and wage growth; in particular, whether transitions across states in the labour market have any significant influence on wage dynamics and the size of this influence. In addition to the incidence of unemployment and inactivity spells on wages, the effects of the duration of job interruption, the time elapsed since job ending and the reasons for job interruption are analysed as well. |
| Keywords: | job mobility, wage mobility |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2005-17&r=lab |
| By: | Hartmut Lehmann (University of Bologna, CERT, Heriot-Watt University, EROC, Kiev School of Economics and IZA Bonn); Norberto Pignatti (University of Bologna and IZA Bonn); Jonathan Wadsworth (Royal Holloway College, University of London, CEP, London School of Economics and IZA Bonn) |
| 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:iza:izadps:dp1770&r=lab |
| By: | John C. Ham (Department of Economics and CHRR, Ohio State University, the Federal Reserve Bank of New York, and IZA); Xianghong Li (Department of Economics, York University); Patricia B. Reagan (Department of Economics and CHRR, Ohio State University) |
| Abstract: | Our analysis of migration differs from previous research in three important aspects. First, we exploit the confidential geocoding in the 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 ¨C12 percent. If we use either a measure of migration based on moving across county lines or state lines, the significant effects of migration for college graduates and dropouts disappear. |
| Keywords: | Propensity score matching, distance-based migration, wage growth |
| JEL: | J6 J3 C4 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:yca:wpaper:2004_04&r=lab |
| By: | Nathaniel John Porter |
| Abstract: | Governments often intervene in labor markets with the aim of reducing inequality and promoting employment. Such intervention often results in wage compression and restrictions on how firms use their workers. This paper investigates the impact of such interventions on the labor market conditions faced by low-skill workers in Mauritius. It finds that even relatively minor intervention can dramatically increase the fragility of jobs, the length of unemployment spells, as well as the extent of unemployment and labor market churning. With institutions of the type studied here common across many different types of countries, these results have relatively general implications. |
| Keywords: | Unemployment , Mauritius , Labor markets , Wage restraint , |
| Date: | 2004–11–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:04/205&r=lab |
| By: | Lourens Broersma; F. A. G. den Butter; Udo Kock |
| Abstract: | In flow models of the labor market, wages are determined by negotiations between workers and employers on the surplus value of a realized match. From this perspective, this paper presents an econometric analysis of the influence of labor market flows on wage formation as an alternative to the traditional specification of wage equations in which unemployment represents Phillipscurve or wage-curve effects. The paper estimates a dynamic wage equation for the Netherlands using a cointegration approach. It finds that labor flows, and notably flows from outside the labor market, are important determinants of both short-run and long-run wage setting. |
| Keywords: | Wages , Labor markets , Economic models , |
| Date: | 2004–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:04/92&r=lab |
| By: | Daniele Checchi (University of Milan); Cecilia García Peñalosa (CNRS and GREQAM) |
| Abstract: | We examine what determines differences across countries and over time in the distribution of personal incomes in the OECD. We first model the wage determination process and show that unemployment, the labour share, and the wage differential are all functions of labour market institutions. Next we show that in a model economy with only four types of agents - capitalists, skilled and unskilled workers, and unemployed - the Gini coefficient of personal incomes can be expressed as a function of the above three variables. Labour market institutions hence affect income inequality, though the sign of their impact is ambiguous. Stronger unions and/or a more generous unemployment benefit tend to reduce inequality through reduced wage differentials, a higher labour share, and also higher unemployment. We then use a panel of OECD countries for the period 1970-96 to examine these effects. We find, first, that the labour share remains an important aspect of overall inequality patterns, and, second, that stronger unions and a more generous unemployment benefit tend to reduce income inequality. High capital-labour ratios also emerge as a strong equalising factor, which has in part offset the impact of increasing wage inequality on the US distribution of personal incomes. |
| Keywords: | income inequality, labour share, trade unions, |
| Date: | 2005–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:bep:unimip:1009&r=lab |
| By: | François Fontaine (GREMARS, Université Lille 3 and IZA Bonn) |
| Abstract: | We provide a matching model where identical workers are embedded in ex-ante identical social networks. Job arrival rate is endogenous and wages are bargained. We study the evolution of networks over time and characterize the equilibrium distribution of unemployment rates across networks. We emphasize that wage dispersion arises endogenously as the consequence of the dynamics of networks, firms’ strategies and wage bargaining. Moreover, contrary to a generally accepted idea, social networks do not necessary induce stickiness in unemployment dynamics. Our endogenous matching technology shows that the effects of networks on the dynamics mostly hinge on search externalities. Our endogenous framework allows us to quantify these effects. |
| Keywords: | social networks, matching, wage dispersion |
| JEL: | E24 J64 J68 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1786&r=lab |
| By: | Luca Flabbi (Georgetown University and IZA Bonn) |
| Abstract: | Gender wage differentials, conditional on observed productivity characteristics, have been considered a possible indication of prejudice against women in the labor market. However, there is no conclusive evidence on whether these differentials are due to labor market discrimination or to unobserved productivity differences. The objective of this paper is to propose a solution for this identification problem by developing and estimating a search model of the labor market with matching, bargaining and employers’ taste discrimination. In equilibrium all types of employers wage discriminate women: prejudiced employers because of preference and unprejudiced employers because of spillover effects that worsen the bargaining position of women. Estimation is performed by maximum likelihood on Current Population Survey data for the year 1995. Results indicate that the productivity of women is 6.5% lower than the productivity of men and that about half of the employers are prejudiced against women. Three policy experiments are implemented using the estimated parameters: an equal pay policy, an affirmative action policy and a wage differential decomposition that takes into account equilibrium effects. |
| Keywords: | gender differentials, discrimination, search models, maximum likelihood estimation, structural estimation, affirmative action |
| JEL: | C51 J7 J64 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1764&r=lab |
| By: | Joseph G. Altonji; Emiko Usui |
| Abstract: | Using the Panel Study of Income Dynamics and the Health and Retirement Study, we provide a set of facts about vacation leave and its relationship to hours worked, hours constraints, wage rates, worker characteristics, spouse's vacation leave, labor market experience, job tenure, occupation, industry, and labor market conditions. We show that on average vacation time taken rises 1 to 1 with paid vacation but varies around it, that annual hours worked fall by about 1 full time week with every week of paid vacation, that the gap between time taken and time paid for is higher for women, union members, and government workers, that hourly wage rates have a strong positive relationship with paid vacation weeks both in the cross section and across jobs, and that nonwage compensation is positively related to vacation weeks. We provide evidence that vacation leave is determined by broad employer policy rather than by negotiation between the worker and firm. In particular, it is strongly related to job seniority but depends very little on labor market experience, and for job changers it is only weakly related to the amount of vacation on the previous job. |
| JEL: | J2 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11693&r=lab |
| By: | Thierry Lallemand (Université Libre de Bruxelles, DULBEA and Centre de Comptabilité, Planning et Contrôle); François Rycx (Université Libre de Bruxelles, DULBEA and IZA Bonn) |
| Abstract: | We investigate how the wage distribution differs among small and large establishments in four European countries. Findings show that within-establishment wage dispersion rises with size because large employers have a more diverse workforce. They also suggest that screening and monitoring costs imply a lower sensitivity of wages to ability in larger establishments. Smaller establishments are found to rely more on incentive-based pay mechanisms, particularly in countries with a low trade union coverage rate. Further results indicate that between-establishment wage dispersion decreases with employer size because smaller establishments are technologically more diversified and hence exhibit greater diversity in average workforce skills. |
| Keywords: | wage structure, establishment size, decomposition of wages, Europe |
| JEL: | J21 J31 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1778&r=lab |
| By: | David Autor (MIT and NBER); Susan Houseman (W.E. Upjohn Institute for Employment Research) |
| Abstract: | A disproportionate share of low-skilled U.S. workers is employed by temporary help firms. These firms offer rapid entry into paid employment, but temporary help jobs are typically brief and it is unknown whether they foster longer-term employment. We draw upon an unusual, large-scale policy experiment in the state of Michigan to evaluate whether holding temporary help jobs facilitates labor market advancement for low-skilled workers. To identify these effects, we exploit the random assignment of welfare-to-work clients across numerous welfare service providers in a major metropolitan area. These providers feature substantially different placement rates at temporary help jobs but offer otherwise similar services. We find that moving welfare participants into temporary help jobs boosts their short-term earnings. But these gains are offset by lower earnings, less frequent employment, and potentially higher welfare recidivism over the next one to two years. In contrast, placements in direct-hire jobs raise participants' earnings substantially and reduce recidivism both one and two years following placement. We conclude that encouraging low-skilled workers to take temporary help agency jobs is no more effective - and possibly less effective - than providing no job placements at all. |
| Keywords: | temporary agency, poverty, welfare, welfare-to-work, autor, houseman |
| JEL: | I38 J20 J30 J40 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:05-12&r=lab |
| By: | William Brown |
| Abstract: | The Low Pay Commission is the institution created in 1997 to introduce Britain’s first National Minimum Wage. The paper places the Commission in historical perspective and provides a summary assessment of the initial impact of the Minimum Wage. It describes and analyses the development of the Commission and its concerns, conduct and advice. Central to its performance has been its independent, ‘social partnership’ constitution. The conclusion emphasises the centrality of the Commission’s use of widespread consultation and academic research, and the unique asset of firm enforcement of the National Minimum Wage by HM Revenue and Customs. |
| Keywords: | minimum wage; social partnership; labour market regulation |
| JEL: | I3 J3 J8 K3 L5 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0544&r=lab |
| By: | Ina Ganguli (Harvard University); Katherine Terrell (University of Michigan, Ann Arbor and IZA Bonn) |
| Abstract: | This paper uses new micro data from the Ukrainian Longitudinal Monitoring Survey (ULMS) to examine the gender gaps across the distribution of wages in Ukraine during communism (1986), the start of transition (1991), and after Ukraine started to be considered a market economy (2003). We find that the gender pay gap is higher in the top half of the distribution than at the bottom half and that this ‘glass ceiling’ is persistent across the three points in time, while the wage floor rose for women in 2003. Closer inspection of two sectors - the private and the public - reveals the striking finding that the glass ceiling is lower in the public than in the private sector but the floor is the same. We use the Machado and Mata (2004) method to create counterfactuals that advance our knowledge of which factors are driving these differences; we find that the differences in men’s and women’s rewards (ßs) rather than differences in their productive characteristics (Xs) explain most of the wage gap throughout the distribution. The different ceilings in the public and private sectors are largely due to differences in men’s and women’s productive characteristics, which favor men in the public and women in the private sector. The fall in the gender gap in the lower part of the distribution from 1986 to 2003 is explained partially by the improvement in women’s productive characteristics and partially by the worsening in men’s rewards in the bottom half of the distribution over time. However, probably the most important reason for the reduction in the gap at the bottom of the distribution over time is that the value of the minimum wage was set relatively high in 2003 and it raised the wage floor for more women than men. |
| Keywords: | gender gap, quantile regression, glass ceilings, glass floors, transition, Ukraine |
| JEL: | C14 I2 J16 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1776&r=lab |
| By: | Thomas K. Bauer (RWI Essen, University of Bochum, CEPR London and IZA Bonn); Mathias Sinning (RWI Essen) |
| Abstract: | In this paper, a decomposition method for Tobit-models is derived, which allows the differences in a censored outcome variable between two groups to be decomposed into a part that is explained by differences in observed characteristics and a part attributable to differences in the estimated coefficients. The method is applied to a decomposition of the gender wage gap using German data. |
| Keywords: | Blinder-Oaxaca decomposition, Tobit model, wage gap |
| JEL: | C24 J31 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1795&r=lab |
| By: | Shintaro Yamaguchi |
| Abstract: | This paper reviews several methods to measure wage flexibility, and their suitability for evaluating the extent of such flexibility during times of structural change, when wage distributions and wage curves can be particularly volatile. The paper uses nonparametric estimation to capture possible nonlinearities in the wage curve and relaxes the assumption of a stable wage distribution over time by linking the shape of the wage change distribution to macroeconomic variables. The proposed methodology is applied to Polish micro data. The estimates confirm that wages are less elastic in a high-unemployment/low-wage environment. Based on a comparison of actual and counterfactual wage distributions, the effects of nominal wage rigidities on real wages, and thus, on the labor market and the real economy, were limited until 1998, but have been quite significant thereafter. |
| Keywords: | Wages , Poland , Europe , Labor markets , Wage adjustments , |
| Date: | 2005–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:05/134&r=lab |
| By: | Elisabetta Croci Angelini; Francesco Farina |
| Abstract: | This paper aims at a deeper understanding of the determinants of wage inequality, the most important component of income inequality, in the European countries. We investigate on how wage inequality is affected by government regulation in the labour market and by the redistribution operated by the social protection system, also controlling for the impact of the effect of skillpremium related to technical change. To explain the continuously rising wage inequality in Europe, two regression models of wage inequality are employed each one using a different databases. In the last period, the overall degree of governance of the labour markets does not substantially change, but a different balance between decreasing labour market regulation and increasing redistribution manifest across Europe. While job and wage protection has been eased, income redistribution was strengthened, though its size differs across four clusters of European countries, depending on the majority voting preference for “risk insurance”. Overall, institutional substitution between labour market regulation and income redistribution seems to back the upward trend in wage inequality |
| JEL: | D33 D63 D72 I38 J31 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:463&r=lab |
| By: | Lusine Lusinyan; Leo Bonato |
| Abstract: | Work absence is an important part of the individual decision on actual working hours. This paper focuses on sickness absence in Europe and develops a stylized model where absence is part of the labor-leisure decision made by workers and the production decision made by profit-maximizing firms, with insurance provisions and labor market institutions affecting the costs of absence. The results from a panel of 18 European countries indicate that absence is increased by generous insurance schemes where employers bear little responsibility for their costs. Shorter working hours reduce absence, but flexible working arrangements are preferable if labor supply erosion is a concern. |
| Keywords: | Sick leave , Europe , Insurance , Labor supply , Data analysis , Data collection , Economic models , |
| Date: | 2004–10–21 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:04/193&r=lab |
| By: | Felix FitzRoy (University of St. Andrews and IZA Bonn); Michael Nolan (Hull University Business School) |
| Abstract: | Job-satisfaction as a component of workers' utility has been strangely neglected, with work usually regarded as reducing utility and the benefits of leisure. This is contradicted by many empirical studies showing that unemployment is a major cause of unhappiness, even when income is controlled for. Here we develop a simple model where job-satisfaction is noncontractible but can be included in extended collective bargaining when workers participate in management, but employment is still chosen to maximise profit. Including taxation to fund unemployment benefits and public goods, we show that switching from traditional bargaining over wages to extended (but still second-best) bargaining can generate a Pareto welfare improvement. |
| Keywords: | job-satisfaction, bargaining, unemployment |
| JEL: | J28 J52 J65 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1760&r=lab |
| By: | Bruno Crépon (CREST-INSEE, CEPR and IZA Bonn); Muriel Dejemeppe (Catholic University of Louvain); Marc Gurgand (Paris-Jourdan Sciences Economiques, CREST-INSEE and Catholic University of Louvain) |
| Abstract: | This article evaluates the effects of intensive counseling schemes that are provided to about 20% of the unemployed since the 2001 French unemployment policy reform (PARE). Several of the schemes are dedicated at improving the quality of assignment of workers to jobs. As a result, it is necessary to assess their impact on unemployment recurrence as well as unemployment duration. Using duration models and a very rich data set, we can identify heterogenous and time-dependent causal effects of the schemes. We find significant favorable effects on both outcomes, but the impact on unemployment recurrence is stronger than on unemployment duration. In particular, the program shifts the incidence of recurrence, one year after employment, from 33 to 26%. This illustrates that labor market policies evaluations that consider unemployment duration alone can be misleading. |
| Keywords: | unemployment duration, employment duration, active labor market policy, counseling |
| JEL: | J64 J68 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1796&r=lab |
| By: | Joop Hartog (AIAS, University of Amsterdam and IZA Bonn); Aslan Zorlu (AIAS, University of Amsterdam) |
| Abstract: | We use data on refugees admitted to the Netherlands that include registration of education in their homeland by immigration officers. Such data are seldom available. We investigate the quality and reliability of the registrations and then use them to assess effects on refugees’ economic position during the first five years after arrival. The most remarkable finding is the absence of returns to higher education. |
| Keywords: | immigrants, refugees, education, earnings, employment |
| JEL: | I21 J31 J61 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1753&r=lab |
| By: | Prachi Mishra; Utsav Kumar |
| Abstract: | We evaluate empirically the impact of the dramatic 1991 trade liberalization in India on the industry wage structure. The empirical strategy uses variation in industry wage premiums and trade policy across industries and over time. In contrast to earlier studies on developing countries, we find a strong, negative, and robust relationship between changes in trade policy and changes in industry wage premiums over time. The results are consistent with liberalization-induced productivity increases at the firm level, which get passed on to industry wages. Since tariff reductions were proportionately larger in sectors that employ a larger share of unskilled workers, the increase in wage premiums in these sectors implies that unskilled workers experienced an increase in their relative incomes. Thus, our findings suggest that trade liberalization has led to decreased wage inequality in India. |
| Keywords: | Trade liberalization , India , Wages , Economic models , |
| Date: | 2005–02–04 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:05/20&r=lab |
| By: | Roger, Bandick (FIEF and Örebro University); Hansson, Pär (FIEF and Örebro University) |
| Abstract: | We observe a substantial increase of foreign ownership in Sweden in the 1990s. Did that have any effect on relative demand for skilled labor? Has technology transfers often associated with inward FDI led to increased demand for skills due to skilled-biased technical change? Are there any grounds for the worries in the public Swedish debate that more skilled activities have been moved abroad to countries where the headquarters are located? We obtain support for that the share of skilled labor tends to rise in non-multinationals but not in multinationals that become foreign owned. Yet it does not seem to be any relationship between increased foreign ownership and the relative demand for skilled labor in Swedish manufacturing between 1986 and 2000. Interestingly, increased competition from low-wage countries, rather than inward FDI, has had significant impact on skill upgrading, and appears to have played a larger role in the 1990s than before. |
| Keywords: | Foreign ownership; skill upgrading; wage differentials |
| JEL: | F23 J23 J31 |
| Date: | 2005–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:fiefwp:0208&r=lab |
| By: | Santiago Budría (University of Madeira and CEEAplA); Pedro Telhado Pereira (University of Madeira, CEEAplA, CEPR and IZA Bonn) |
| Abstract: | This paper explores the connection between education and wage inequality in nine European countries. We exploit the quantile regression technique to calculate returns to lower secondary, upper secondary and tertiary education at different points of the wage distribution. We find that returns to tertiary education are highly increasing when moving from the lower to the upper quantiles. This finding suggests that an educational expansion towards tertiary education is expected, ceteris paribus, to increase overall wage inequality through the withindimension. Returns to secondary education are more homogeneous across quantiles, thus suggesting that an educational expansion towards secondary education is expected to have a more limited impact on within-groups dispersion. Using data from the last decades, we assess how the impact of education on wage inequality has evolved over time. We detect different trends across countries. A common feature is that the inequality increasing effect of tertiary education became more acute over the last years. |
| Keywords: | returns to education, quantile regression, wage inequality |
| JEL: | C29 D31 I21 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1763&r=lab |
| By: | Damien Gaumont; Randall Wright; Martin Schindler |
| Abstract: | We analyze labor market models where the law of one price does not hold-that is, models with equilibrium wage dispersion. We begin by assuming workers are ex ante heterogeneous, and highlight a flaw with this approach: if search is costly, the market shuts down. We then assume workers are homogeneous, but matches are ex post heterogeneous. This model is robust to search costs, and it delivers equilibrium wage dispersion. However, we prove the law of two prices holds: generically, we cannot get more than two wages. We explore several other models, including one combining ex ante and ex post heterogeneity, which is robust and can deliver more than two-point wage distributions. |
| Keywords: | Prices , Wages , Wage adjustments , Labor markets , Economic models , |
| Date: | 2005–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:05/64&r=lab |
| By: | Shigemi Yabuuchi (Nagoya City University, Japan); Sarbajit Chaudhuri (Calcutta University, India) |
| Abstract: | The present note develops a three sector general equilibrium structure with diverse trade pattern and imperfection in the unskilled labour market to analyze the consequences of international mobility of skilled and unskilled labour on the skilled-unskilled wage inequality in the developing economies. The analysis finds that an emigration (immigration) of either type of labour is likely to produce a favourable (an unfavourable) effect on the wage inequality. In particular, the result of emigration (immigration) of skilled labour on the relative wage inequality is counterintuitive. These results have important policy implications for an overpopulated developing country like India. |
| Keywords: | Skilled labour, unskilled labour, wage inequality, emigration (immigration) of labour, labour market imperfection, diverse trade pattern |
| JEL: | F13 J31 |
| Date: | 2005–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpit:0510007&r=lab |
| By: | Robert Breunig (Australian National University); Deborah A. Cobb-Clark (Australian National University and IZA Bonn); Xiaodong Gong (Australian National University and IZA Bonn) |
| Abstract: | We study the work hours of Australian couples, using a neoclassical labour-supply model in which couples choose from a small, realistic set of possible wife-husband working hour combinations We introduce three improvements to this standard model. First, we allow partners' preferences about non-market time to be correlated. We also correct the estimates to account for the fact that we estimate the non-observable wage rates of individuals who do not work. Lastly, we allow each individual's preferences for non-market time to be correlated with her or his wage rate. These changes, which substantially enhance the realism of the standard, discretized labour-supply model, also have an important impact on the results. We estimate the model using HILDA data and find wage elasticities of labour supply - 0.26 for men and 0.50 for women - that are twice as large as those found without these three innovations. Using simulation methods, we then analyze the expected impact of the 2005/06 Australian tax reform. As a result of the tax cuts, we expect working hours to increase by 1.7 per cent for both men and women and household after-tax incomes to increase by approximately $60 per week on average. For families with two wage earners, each earning between $25,000 and $55,000 per year, our model predicts an after-tax increase in income of $38 after accounting for these labour supply effects - much larger than the Australian Government's own prediction of $12, which does not allow for labour supply effects. |
| Keywords: | family labour supply, Australia, simulated maximum likelihood, discretized structural model |
| JEL: | C51 D10 J22 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1773&r=lab |
| By: | Dale T. Mortensen (Northwestern University, NBER and IZA Bonn); Éva Nagypál (Northwestern University) |
| Abstract: | Shimer (2005a) argues that the Mortensen-Pissarides equilibrium search model of unemployment explains only about 10% of the response in the job-finding rate to an aggregate productivity shock. Some of the recent papers inspired by his critique are reviewed and commented on here. Specifically, we suggest that the sole problem is neither the procyclicality of the wage nor the failure to account fully for the opportunity cost of employment. Although an amended version of the model, one that accounts for capital costs and counter cyclic involuntary separations, does much better, it still explains only 40% of the observed volatility of the job-finding rate. Finally, allowing for on-the-job search does not improve the amended model’s implications for the amplification of productivity shocks. |
| Keywords: | labor market search, unemployment and vacancies volatility, job-finding rate, productivity shocks |
| JEL: | E24 E32 J41 J63 J64 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1765&r=lab |
| By: | Sarbajit Chaudhuri (Dept. of Economics, University of Calcutta, India); Shigemi Yabuuchi (Dept. of Economics, Nagoya City University, Japan) |
| Abstract: | Removal of tariff restrictions from the relatively low-skill sectors; growth in foreign direct investment; and, decline of trade union strength of the unskilled workers are cited in the empirical literature as the prime factors responsible for the growing incidence of wage inequality in many of the developing countries in the liberalized trade and investment regime. This paper has made an attempt to provide a theoretical foundation of those empirical findings in terms of a three sector general equilibrium model reasonable for at least a few developing economies. The analysis of the paper has found that the wage inequality rises unambiguously due to policies like an increase in the relative price of the high-skill commodity and a reduction of import tariff from the low-skill manufacturing sector. However, an inflow of foreign capital produces a favourable effect on the wage inequality under a reasonable factor intensity condition. Interestingly, contrary to the common wisdom, a policy of labour market reform may raise the competitive unskilled wage and improve wage inequality under reasonable condition. |
| Keywords: | Skilled labour, unskilled labour, wage inequality, Latin American countries, trade liberalization, labour market imperfection |
| JEL: | F13 J31 |
| Date: | 2005–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpit:0510008&r=lab |
| By: | Jackline Wahba (University of Southampton and IZA Bonn) |
| Abstract: | This paper examines the influence of adult market wages and having parents who were child labourers on child labour, when this decision is jointly determined with child schooling, using data from Egypt. The empirical results suggest that low adult market wages are key determinants of child labour; a 10 percent increase in the illiterate male market wage decreases the probability of child labour by 22 percent for boys and 13 percent for girls. The findings also indicate the importance of social norms in the inter-generational persistence of child labour: parents who were child labourers themselves are on average 10 percent more likely to send their children to work. In addition, higher local regional income inequality increases the likelihood of child labour. |
| Keywords: | child labour, child schooling, wages |
| JEL: | J13 J20 O15 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1771&r=lab |
| By: | Radosveta Ivanova-Stenzel (Humboldt University Berlin); Dorothea Kübler (Technical University Berlin and IZA Bonn) |
| Abstract: | Does gender play a role in the context of team work? Our results based on a real-effort experiment suggest that performance depends on the composition of the team. We find that female and male performance differ most in mixed teams with revenue sharing between the team members, as men put in significantly more effort than women. The data also indicate that women perform best when competing in pure female teams against male teams whereas men perform best when women are present or in a competitive environment. |
| Keywords: | team incentives, gender, tournaments |
| JEL: | C72 C73 C91 D82 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1768&r=lab |
| By: | Francesco Pastore (Seconda Università di Napoli and IZA Bonn) |
| Abstract: | This paper proposes Heckprobit estimates of the determinants of labour market participation of a sample of young (15-30) Poles, controlling for the sample selection bias caused by excluding those in education. There is evidence of sample selection bias in the case of young men, suggesting that they obey more than women to economic factors in making their educational choices. Education is an important determinant of the success in the labour market. The instrumental variables used in the selection equation - the local unemployment rate, expected lifetime earnings and the opportunity cost of education - have a statistically significant impact on the probability to be in education. In contrast with several previous studies relative to mature market economies, in high unemployment voivodships young people prefer to seek a job, rather than studying. In turn, this contributes to make regional unemployment persistent. |
| Keywords: | youth unemployment, education, heckprobit, Lisbon strategy, Poland |
| JEL: | C35 I2 J24 P3 P52 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1793&r=lab |
| By: | John T. Addison (University of South Carolina, Universidade de Coimbra/GEMF and IZA Bonn); Lutz Bellmann (Institute for Employment Research (IAB), University of Hannover and IZA Bonn); Thorsten Schank (University of Erlangen-Nuremberg); Paulino Teixeira (Universidade de Coimbra) |
| Abstract: | This paper uses matched employee-employer LIAB data to provide panel estimates of the structure of labor demand in Germany, 1993-2002, distinguishing between highly skilled, skilled, and unskilled labor and between the manufacturing and service sectors. Reflecting current preoccupations, our demand analysis seeks also to accommodate the impact of technology and trade in addition to wages. The bottom-line interests are to provide elasticities of the demand for unskilled (and other) labor that should assist in short-run policy design and to identify the extent of skill biases or otherwise in trade and technology. |
| Keywords: | labor demand, own-wage/cross-wage elasticities, trade, technology, organizational change, linked employee-employer data, panel estimates |
| JEL: | F15 J23 J31 O33 F15 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1780&r=lab |
| By: | Massimiliano Bratti (University of Milan); Robin Naylor (University of Warwick); Jeremy Smith (University of Warwick) |
| Abstract: | As in many other countries, government policy in the UK has the objective of raising the participation rate of young people in higher education, while increasing the share of the costs of higher education paid by students themselves. A rationale for the latter element comes from evidence of a high private return to university undergraduate degrees. However, much of this evidence pre-dates the rapid expansion in the graduate population. In the current paper, we use evidence from a cohort of young people born in Britain in 1970 to update influential evidence on returns to a first degree based on a previous 1958 birth cohort. We also analyse variations in returns by degree subject and by class of degree. Our analysis incorporates proxying and matching, control function and propensity score matching methods. Among other results, we find (i) that the returns to a first degree for men changed very little across the two cohorts while the return for women declined substantially and (ii) evidence of differences in returns to a first degree according to subject area of study and class of degree awarded. |
| Keywords: | degree, return, subject, UK, university, |
| Date: | 2005–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:bep:unimip:1005&r=lab |
| By: | Hyung-Jai Choi (University of Washington); Jutta M. Joesch (Battelle Centers for Public Health Research and Evaluation); Shelly Lundberg (University of Washington and IZA Bonn) |
| Abstract: | We find a strong association between family status and labor market outcomes for recent cohorts of West German men in the German Socio-Economic Panel. Living with a partner and living with a child both have substantial positive effects on earnings and work hours. These effects persist in fixed effects models that control for correlation in time-invariant unobservables that affect both family and work outcomes. Child gender also matters - a first son increases fathers' work hours by 100 hours per year more than a first daughter. There is evidence of son "preference" in the probability that a German man is observed to be coresiding with a son or a daughter. Men are more likely to remain in the same household with a male child than a female child and girls are underrepresented in the raw data. Controlling for selective attrition in our labor supply model reveals that men who remain with female children are strongly positively selected (in terms of their work hours) relative to men who remain with male children. |
| Keywords: | child gender, fatherhood, labor supply, family |
| JEL: | J22 J12 J13 J16 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1761&r=lab |
| By: | Shelly Lundberg (University of Washington and IZA Bonn) |
| Abstract: | This paper documents some distinct and surprising patterns of specialization among new parents in the NLSY79. Child gender has significant effects on the labor supply of both mothers and father, and these effects are opposite at the two ends of the education spectrum - boys reduce specialization among the college-educated and increase specialization among parents with less than a high school education. Estimates from the recent American Time Use Survey are generally consistent with the NLSY79 findings, and indicate that highlyeducated parents devote more childcare time to young sons. The labor supply results are inconsistent with previous research that found boys substantially increase the work hours of their fathers relative to girls but have no effect on mother’s work hours. Possible explanations for the heterogeneous responses to sons and daughters across education groups include a bias towards same-sex parental inputs as desired child quality increases and child gender effects on the relative bargaining power of the mother and father. No evidence of improved maternal bargaining power can be found in the leisure consumption of mothers of young sons in the ATUS, but patterns in parental childcare time suggest gender differences in child production functions. |
| Keywords: | child gender, parenthood, labor supply, time allocation, specialization |
| JEL: | J22 J12 J13 J16 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1787&r=lab |