|
on Labour Economics |
| By: | Olivetti, Claudia; Petrongolo, Barbara |
| Abstract: | Gender wage and employment gaps are negatively correlated across countries. We argue that non-random selection of women into work explains an important part of such correlation and thus of the observed variation in wage gaps. The idea is that, if women who are employed tend to have relatively high-wage characteristics, low female employment rates may become consistent with low gender wage gaps simply because low-wage women would not feature in the observed wage distribution. We explore this idea across the US and EU countries estimating gender gaps in potential wages. We recover information on wages for those not in work in a given year using alternative imputation techniques. Imputation is based on (i) wage observations from other waves in the sample, (ii) observable characteristics of the nonemployed and (iii) a statistical repeated-sampling model. We then estimate median wage gaps on the resulting imputed wage distributions, thus simply requiring assumptions on the position of the imputed wage observations with respect to the median, but not on their level. We obtain higher median wage gaps on imputed rather than actual wage distributions for most countries in the sample. However, this difference is small in the US, the UK and most central and northern EU countries, and becomes sizeable in Ireland, France and southern EU, all countries in which gender employment gaps are high. In particular, correction for employment selection explains more than a half of the observed correlation between wage and employment gaps. |
| Keywords: | median gender gaps; sample selection; wage imputation |
| JEL: | E24 J16 J31 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5506&r=lab |
| By: | Y. Hossein Farzin (University of California); Ken-Ichi Akao (Waseda University) |
| Abstract: | Recognizing that people value employment not only to earn income to satisfy their consumption needs, but also as a means to gain socio-psychological (nonpecuniary) benefits, we show that once nonpecuniary work incentives are incorporated into standard labor supply theory, (i) the wage rate under-estimates (over-estimates) the true value of nonwork/leisure time when work has nonpecuniary benefits (costs), (ii) nonpecuniary benefits can be a substitute for monetary wages as work incentives, (iii) at very low wage rates, work can become a net source of utility, and (iii) the shape of labor supply curve differs from standard theory. We also identify conditions under which a greater nonpecuniary work incentive generates a larger individual labor supply, and examine the effects of non-wage income on labor supply both for paid and voluntary work. |
| Keywords: | Nonpecuniary incentives, Labor supply, Non-wage income, Voluntary work |
| JEL: | D62 J22 I31 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.21&r=lab |
| By: | Schwerdt, Guido; Turunen, Jarkko |
| Abstract: | Composition of the euro area workforce evolves over time and in response to changing labour market conditions. We construct an estimate of growth in euro area labour quality over the period 1983-2004 and show that labour quality has grown on average by 0.6% year-on-year over this time period. Labour quality growth was significantly higher in the early 1990s than in the 1980s. This strong increase was driven by an increase in the share of those with tertiary education and workers in prime age. Growth in labour quality moderated again towards the end of the 1990s, possibly reflecting the impact of robust employment growth resulting in the entry of workers with lower human capital. Labour quality growth has on average accounted for nearly one third of euro area labour productivity growth. The results point to a significant decline in the contribution of total factor productivity to euro area growth. |
| Keywords: | growth accounting; human capital; labour quality; total factor productivity |
| JEL: | E24 J24 O47 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5509&r=lab |
| By: | Rafael E. De Hoyos |
| Abstract: | The objective of this paper is to estimate the parameters defining female labour participation and occupation decisions. Departing from a theoretical framework, we use micro data to estimate the wage-participation elasticity in Mexico. Consistency between the selectivity-adjusted wages and the multinomial participation equations is achieved via a two-step estimation procedure following Lee (1984). We use the results of our model to test and quantify three hypotheses explaining recent increases in female labour participation in Mexico. Our results show that the observed 12 per cent increase in female labour participation in Mexico between 1994 and 2000 is explained by the combination of a negative income shock caused by the 1994-95 Peso crisis, the increase in expected wages taking place in the manufacturing sector during the post-NAFTA period and a reduction in the female reservation wage. |
| Keywords: | Participation, wage differentials, microsimulation, Mexico |
| JEL: | C34 J23 J24 J31 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0611&r=lab |
| By: | Tomas Kögel (Dept of Economics, Loughborough University) |
| Abstract: | The German conservative party (consisting of two sister parties) planned in case of victory in the national election on 18 September 2005 to reduce the unemployment insurance contributions by 2 percent and to finance this with an increase in the consumption tax by 2 percent. The present paper shows in a Layard-Nickell-Jackman type wage bargaining model that this tax reform does not reduce unemployment; neither in the short to medium run, nor in the long run. When there is short-to-medium-run real wage resistance, then in the short to medium run unemployment depends on the overall tax burden, but not on the composition of the tax burden. In the long run the wage setting curve is vertical and hence in the long run unemployment is even invariant of the overall tax burden. |
| Keywords: | Consumption taxes, unemployment insurance contributions, payroll taxes. wage bargaining, unemployment. |
| JEL: | H20 J51 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2005_11&r=lab |
| By: | Seema Jayachandran |
| Date: | 2005–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:cla:uclaol:370&r=lab |
| By: | Algan, Yann; Cahuc, Pierre |
| Abstract: | We argue that the efficiency of the Danish flexicurity Model, which combines high unemployment benefits with low job protection and high participation rate, relies on strong public-spiritedness. We also argue that Continental and Mediterranean European countries are unlikely to be able to implement the Danish Model because the lack of public-spiritedness of their citizens raises moral hazard issues which hinder the implementation of efficient public unemployment insurance. |
| Keywords: | civic attitudes; job protection; unemployment benefits |
| JEL: | J23 J65 J68 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5489&r=lab |
| By: | Robert Plasman (DULBEA, Université libre de Bruxelles, Brussels); Michael Rusinek (DULBEA, Université libre de Bruxelles, Brussels); François Rycx (DULBEA, Université libre de Bruxelles, Brussels, and IZA, Bonn) |
| Abstract: | Using a unique harmonized matched employer-employee dataset (European Structure of Earnings Survey, 1995), we study the impact of the regime of collective bargaining on wages in the manufacturing sector of three countries that are characterized by a multilevel system of bargaining: Belgium, Denmark and Spain. Our findings show that, compared to multi-employer bargaining, single-employer bargaining has a positive effect both on wage levels and on wage dispersion in Belgium and in Denmark. In Spain, single-employer bargaining also increases wage levels but reduces wage dispersion. Our interpretation is that in Belgium and Denmark, single-employer bargaining is used to adapt pay to the specific needs of the firm while, in Spain, it is mainly used by trade unions in order to compress the wage distribution. |
| Keywords: | Collective bargaining, wage structure. |
| JEL: | J31 J51 J52 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:dul:wpaper:06-01rs&r=lab |
| By: | Boeri, Tito; Garibaldi, Pietro |
| Abstract: | This paper investigates the border between formal employment, shadow employment, and unemployment in an equilibrium model of the labour market with market frictions. From the labour demand side, firms optimally create legal or shadow employment through a mechanism that is akin to tax evasion. From the labour supply side, heterogeneous workers sort across the two sectors, with high productivity workers entering the legal sector. Such worker sorting appears fully consistent with most empirical evidence on shadow employment. The model sheds also light on the 'shadow puzzle', the increasing size of the shadow economy in OECD countries in spite of improvements in technologies detecting tax and social security evasion. Shadow employment is correlated with unemployment, and it is tolerated because the repression of shadow activity increases unemployment. The model implies that shadow wage gaps should be lower in depressed labour markets and that deregulation of labour markets is accompanied by a decline in the average skills of the workforce in both legal and shadow sectors. Based on micro data on two countries with a sizeable shadow economy, Italy and Brazil, we find empirical support to these implications of the model. The paper suggests also that policies aimed at reducing the shadow economy are likely to increase unemployment. |
| Keywords: | matching; shadow activity; unemployment |
| JEL: | J30 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5487&r=lab |
| By: | Paul Latreille (University of Wales Swansea); David H. Blackaby (University of Wales Swansea); Philip D. Murphy (University of Wales Swansea); Nigel O'Leary (University of Wales Swansea); Peter J. Sloane (University of Wales Swansea and IZA Bonn) |
| Abstract: | The U.K. government has recently committed itself to an ambitious 80 per cent employment rate target. Recognising that achieving this aspiration will require significant numbers of the economically inactive to (re-)engage with the labour market, the government has enacted various policy reforms seeking to encourage those on the fringes of the labour market to do so. The present paper uses unique survey data to examine three factors relevant to these issues, namely the desire to work, minimum acceptable wages and the distance the inactive are prepared to travel to work for a given minimum acceptable wage offer. |
| Keywords: | economic inactivity, reservation wages, travel-to-work distances |
| JEL: | J21 J22 J31 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1976&r=lab |
| By: | Christophe Muller (Universidad de Alicante); Christophe Nordman (DIAL, París) |
| Abstract: | In this paper, we study the return to human capital variables for wages of workers observed in Tunisian matched worker-firm data in 1999. We develop a new method based on multivariate analysis of firm characteristics, which allows us most of the benefits obtained by introducing firm dummies in wage equations. It also provides a human capital interpretation of the effect of these dummy variables. Moreover, in the studied data, using three firm characteristics easily collectable yields results close to those obtained by using the matched structure of the data. |
| Keywords: | wage, returns to human capital, matched worker-firm data, quantile regressions, factor analysis, Tunisia |
| JEL: | J24 J31 O12 |
| Date: | 2004–07 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasad:2004-28&r=lab |
| By: | Lamo, Ana; Messina, Julian; Wasmer, Etienne |
| Abstract: | Countries react differently to large labour reallocation shocks. Some minimize the costs by adapting rapidly, while others suffer long periods of costly adjustment, typically high and persistent unemployment and temporary output losses. We argue that the existence of large amounts of specific human capital slows down the transitions and makes them costly. We illustrate this point by building a theoretical framework in which young agents' careers are heavily determined by the type of initial education, and analyze the transition to a new steady-state after a sectoral demand shift. In the absence of mobility, it can take as much as a generation for the economy to absorb the shock. An interesting case study is the European Union enlargement, which led to a modernization of many sectors in Eastern countries and to a fast decline of traditional industries and agriculture. Using labour force data from a large economy with rigid labour markets, Poland, and a small open economy with increased flexibility, Estonia, we document our main claim, namely that specialized education reduces workers' mobility and hence their ability to cope with economic changes. We find that holding a vocational degree is associated with much longer unemployment duration spells, relatively large wage penalties when changing jobs and higher likelihood of leaving activity for elder workers. Quantitative exercises suggest that the over-specialization of the labour force in Poland led to much higher and persistent unemployment compared to Estonia during the period of EU enlargement. Traditional labour market institutions (wage rigidity and employment protection) increased, but to a much lesser extent, the unemployment gap. |
| Keywords: | enlargement; labour reallocation; matching; specific skills; unemployment; vocational education |
| JEL: | J30 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5503&r=lab |
| By: | Pablo F. Beker (Universidad de Alicante) |
| Abstract: | In the early stages of the process of industry evolution, firms are financially constrained and pay different wages because workers have heterogeneous expectations about the prospects for advancement offered by each firm's job ladder. This paper argues that, nevertheless, if the output market is competitive, the positive predictions of the perfectly competitive model are still a good description of the long run outcome. If firms maximize the discounted sum of constrained profits, financing expenditure out of retained earnings, profits are driven down to zero as the perfectly competitive model predicts. Ex ante identical firms may follow different growth paths in which workers work for a lower entry-wage in firms expected to grow more. In the steady state, however, workers performing the same job, in ex-ante identical firms, receive the same wage. I explain when the long run outcome is efficient, when it is not, and why firms that produce inefficiently might drive the efficient ones out of the market even when the steady state has the positive properties of a Walrasian equilibrium. To some extent, it is not technological efficiency but workers' self-fulfilling expectations about their prospects for advancement within the firm what explains which firms have lower unit costs, grow more and dominate the market. |
| Keywords: | Industry Evolution - Market Selection Hypothesis - Production under Incomplete Markets - Retained Earnings Dynamic - Self-Fulfilling Expectations - Internal Labor Markets |
| JEL: | D21 D52 D61 D84 D92 J41 |
| Date: | 2004–03 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasad:2004-14&r=lab |