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on Labour Economics |
| By: | Zvi Eckstein (Tel Aviv University, University of Minnesota, Federal Reserve Bank of Minneapolis and IZA Bonn); Suqin Ge (University of Minnesota); Barbara Petrongolo (London School of Economics and IZA Bonn) |
| Abstract: | How well does a simple search on-the-job model fit the eighteen years of job and wage mobility of high school graduates? To answer this question we are confronted from the data with a prevalent non-compliance and exemptions from the minimum wage. We incorporate this observation in a job search model with three main ingredients: (i) search on-the-job; (ii) minimum wages, with potentially imperfect compliance or exemptions; and, (iii) exogenous wage growth on-the-job. We use panel data drawn from the NLSY79, US youth panel starting in 1979, to estimate the parameters of our simple job search model and, in particular, the extent of non-compliance/exemptions to the minimum wage. The model is solved numerically and we use simulated moments to estimate the parameters. The estimated parameters are consistent with the model and they provide a good fit for the observed levels and trends of the main job and wage mobility data. Furthermore, the estimated model indicates that the non-compliance and exemption rate with the federal minimum wage translates into a roughly 10% of jobs paying less than the minimum wage. Counterfactual experiment of increase of the compliance/non-exemption rate or the minimum wage shows a small effect on mean accepted wages but a significant negative effect on the non-employment rate. |
| Keywords: | minimum wages, compliance, exemptions, job search, wage growth |
| JEL: | J42 J63 J64 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2076&r=lab |
| By: | Winfried Koeniger (IZA Bonn and University of Bonn); Marco Leonardi (University of Milan and IZA Bonn) |
| Abstract: | Capital deepening may affect the evolution of the wage differential between skilled and unskilled workers differently in countries with different labor market institutions. If labor market institutions raise the relative wage of unskilled workers in Germany, firms have incentives to invest relatively more into capital equipment complementary to unskilled workers. Instead in the US, where wage-compressing institutions are weaker, firms invest more in high-skilled workers. We provide evidence consistent with this view based on an industry panel for West Germany and the US between the 1970s and 1990s. We show that capital equipment per worker is less positively associated with the wage differential in West Germany than in the US. This descriptive evidence is robust to many alternative measures for capital and skills. Our estimates imply that capital deepening in Germany in the 1980s is associated with a reduction in the wage differential of about 10-20% in most industries. In the US instead, capital deepening is associated with an increase of the wage differential between 5 and 15% in most industries. |
| Keywords: | capital deepening, skill premium, wage floors, institutions |
| JEL: | E22 E24 J31 J64 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2065&r=lab |
| By: | Gadi Barlevy (Federal Reserve Bank of Chicago and IZA Bonn); H. N. Nagaraja (Ohio State University) |
| Abstract: | This paper extends previous work on the identification of search models in which observed worker productivity is imperfectly observed. In particular, it establishes that these models remain identified even when employment histories are left-censored (i.e. we do not get to follow workers from their initial job out of unemployment), as well as when workers set different reservation wages from one another. We further show that allowing for heterogeneity in reservation can affect the empirical estimates we obtain, specifically estimates of the rate at which workers receive job offers. |
| Keywords: | record statistics, on-the-job search, job mobility, reservation wages |
| JEL: | J64 C14 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2061&r=lab |
| By: | Richard Blundell (Institute for Fiscal Studies and University College London); Mike Brewer (Institute for Fiscal Studies); Marco Francesconi (Institute for Fiscal Studies and ISER, Essex University) |
| Abstract: | This paper uses the first twelve waves of the British Household Panel Survey covering the period 1991-2002 to investigate single women’s labour supply changes in response to three tax and benefit policy reforms that occurred in the 1990s. We find evidence of small labour supply effects for two of such reforms. A third reform in 1999 instead led to a significant increase in single mothers’ hours of work. This increase was primarily driven by women who changed job, suggesting that labour supply adjustments within a job are harder than across jobs. The presence of hours inflexibility within jobs and labour supply adjustments through job mobility are strongly confirmed when we look at hours changes by stated labour supply preferences. Finally, we find little overall effect on wages. |
| Keywords: | Job mobility; Hours flexibility; Labour supply preferences; Hours-wage trade-off; Monopsony |
| JEL: | C23 H31 I38 J12 J13 J22 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:05/21&r=lab |
| By: | Saïd Hanchane (LEST - Laboratoire d'économie et de sociologie du travail - http://www.univ-aix.fr/lest - [CNRS : UMR6123] - [Université de Provence - Aix-Marseille I][Université de la Méditerranée - Aix-Marseille II] - []); Jacques Silber (Department of Economics - [Bar-Ilan University] - [] - []) |
| Abstract: | Among the various factors mentioned to explain the increased wage dispersion in several Western countries in the 1980s and 1990s3 the most popular reason seems to be the demand shift in favor of highly skilled workers (see, Bound and Johnson, 1992, or Katz and Murphy, 1992). This shift could explain the growing wage gap between groups of workers with different levels of education and experience. But it could also be a determinant of the increase in within groups (such as those defined on the basis of age and education) inequality (see, Juhn, Murphy and Pierce, 1993). |
| Keywords: | Transition from school to work |
| Date: | 2006–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00010143_v1&r=lab |
| By: | Paul Frijters (Queensland University of Technology); Robert Gregory (RSSS, Australian National University and IZA Bonn) |
| Abstract: | The twenty-five years after WW 2 witnessed strong labour market institutions and beneficial labour market outcomes - high wage growth and integration of low-skilled immigrants. Then came the macro shocks of the mid 1970s. Labour market outcomes deteriorated as full-time employment population ratios fell, particularly among males; unemployment and welfare use increased; and real wages grew slowly. The golden age passed. In response, successive governments have increasingly begun to dismantle the institutional framework. We address this transition within a simple long run graphical framework to help us marshal facts and arguments and to discuss the likely impact of institutional reform. |
| Keywords: | unemployment, wage growth, welfare use, institutional reform, Australia |
| JEL: | J0 D6 E6 L5 O3 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2068&r=lab |
| By: | Gabriele Cardullo (Catholic University of Louvain); Bruno Van der Linden (FNRS, Catholic University of Louvain and IZA Bonn) |
| Abstract: | The search-matching model is well suited for an equilibrium evaluation of labor market policies. When those policies are targeted on some groups, the usual juxtaposition of labor markets is however a shortcoming. There is a need for a setting where workers’ productivity depends on employment levels in all markets. This paper provides such a theoretical setting. We first develop a streamlined model and then show that it can be extended to deal with interactions among various labor market and fiscal policies. Simulation results focus on the effects of employment subsidies and in-work benefits and on their interactions with the profile of unemployment benefits and with active labor market programs. |
| Keywords: | unemployment, search-matching equilibrium, wage bargaining, reductions of social security contributions, unemployment insurance, labor market programs |
| JEL: | E24 J3 J41 J64 J65 J68 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2073&r=lab |
| By: | Borghans Lex; Golsteyn Bart (ROA rm) |
| Abstract: | After graduation many students start working in sectors not related to their field of study or participate in training targeted at work in other sectors. In this paper, we look at mobility immediately after graduation from the perspective that educational choices have been made when these pupils had little experience of the actual working life in these professions. We develop a model where students accumulate partially transferable human capital but also learn about their professional preferences at the university and during the first years in the labor market. As a consequence of this newly acquired insight, these young workers might realize that working in another occupational field would better fit their preferences, although they are better equipped to work in their own field. The empirical analysis reveals that if wages are 1% lower due to lower skill transferability, the probability that a graduate who regrets his choice actually switches decreases by 2.2 percentage points, while those who switch on average take 0.3 months additional education. |
| Keywords: | education, training and the labour market; |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umaror:2006003&r=lab |
| By: | Rachel Griffith (Institute for Fiscal Studies); Rupert Harrison (Institute for Fiscal Studies and University College London); Gareth Macartney (Institute for Fiscal Studies and University College London) |
| Abstract: | We analyze the impact of product market competition on unemployment and wages, and how this depends on labour market institutions. We use differential changes in regulations across OECD countries over the 1980s and 1990s to identify the effects of competition. We find that increased product market competition reduces unemployment, and that it does so more in countries with labour market institutions that increase worker bargaining power. The theoretical intuition is that both firms with market power and unions with bargaining power are constrained in their behaviour by the elasticity of demand in the product market. We also find that the effect of increased competition on real wages is beneficial to workers, but less so when they have high bargaining power. Intuitively, real wages increase through a drop in the general price level, but workers with bargaining power lose out somewhat from a reduction in the rents that they had previously captured. |
| Keywords: | Product market regulation; competition; wage bargaining; unemployment. |
| JEL: | E24 J50 L50 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:06/06&r=lab |
| By: | Benoit Dostie (HEC Montréal, CIRANO, CIRPÉE, CREF and IZA Bonn); Rajshri Jayaraman (University of Munich and CESifo); Mathieu Trépanier (Kellogg School of Management, Northwestern University) |
| Abstract: | Using North American data, we revisit the question first broached by Krueger (1993) and reexamined by DiNardo and Pischke (1997) of whether there exists a real wage differential associated with computer use. Employing a mixed effects model to correct for both worker and workplace unobserved heterogeneity using matched employer-employee panel data, we find that computer users enjoy an almost 4 per cent wage premium over non-users. Failure to correct for the worker selection effect leads to a more than twofold overestimate of this premium, as does failure to correct for workplace unobserved heterogeneity. |
| Keywords: | wage determination, computers, mixed models, linked employer-employee data |
| JEL: | J30 J31 O30 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2080&r=lab |
| By: | Oriana Bandiera (London School of Economics and CEPR); Iwan Barankay (University of Essex and IZA Bonn); Imran Rasul (University College London and CEPR) |
| Abstract: | We present evidence from a firm level experiment in which we engineered an exogenous change in managerial compensation from fixed wages to performance pay based on the average productivity of lower-tier workers. Theory suggests that managerial incentives affect both the mean and dispersion of workers’ productivity through two channels. First, managers respond to incentives by targeting their efforts towards more able workers, implying that both the mean and the dispersion increase. Second, managers select out the least able workers, implying that the mean increases but the dispersion may decrease. In our field experiment we find that the introduction of managerial performance pay raises both the mean and dispersion of worker productivity. Analysis of individual level productivity data shows that managers target their effort towards high ability workers, and the least able workers are less likely to be selected into employment. These results highlight the interplay between the provision of managerial incentives and earnings inequality among lower-tier workers. |
| Keywords: | managerial incentives, targeting, selection, earnings inequality |
| JEL: | J33 M52 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2062&r=lab |
| By: | Ono, Hiroshi (European Institute of Japanese Studies) |
| Abstract: | This paper poses three fundamental questions about lifetime employment in Japan: How big is it? How unique is it? And, how is it changing? I examine different concepts and methods for estimating lifetime employment and conclude that it covers roughly 20 percent of the Japanese labor force. Job mobility remains considerably lower in Japan than in other economies (particularly the U.S.). Evidence regarding changes in lifetime employment is mixed. The share of workers in the core, an ex-ante measure of lifetime employment, is declining. But the probability of job separations has remained stable for those who are already in the system. I also find evidence that the incentives among workers, managers and executives are aligned to preserve the lifetime employment system. |
| Keywords: | Lifetime employment; job mobility |
| JEL: | J24 J42 J62 |
| Date: | 2006–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hastef:0624&r=lab |
| By: | Pieter A. Gautier (Free University of Amsterdam, Tinbergen Institute and IZA Bonn); Ronald P. Wolthoff (Free University of Amsterdam and Tinbergen Institute) |
| Abstract: | We study a search model where workers can send multiple applications to high and low productivity firms. Firms that compete for the same candidate can increase their wage offers as often as they like. We show that there is a unique equilibrium where workers mix between sending both applications to the high and both to the low productivity sector. Efficiency requires however that they apply to both sectors because then the coordination frictions are lowest. For many configurations, the equilibrium outcomes are the same under directed and random search. Allowing for free entry creates a second source of inefficiency. |
| Keywords: | directed search, efficiency, coordination frictions |
| JEL: | D83 E24 J23 J24 J64 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2056&r=lab |
| By: | Luis Eduardo Arango; Carlos Esteban Posada |
| Abstract: | The long-run component of the Colombian unemployment rate is estimated for the last twenty years. According to the results, the main determinants of the permanent component of the unemployment rate are the real hourly wage, the non-wage labor costs and the rate of capital accumulation. Given the statistical properties of the variables, a cointegration approach was adopted. |
| Date: | 2006–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:col:001043:002459&r=lab |
| By: | Christophe Muller (Departamento de Fundamentos del Análisis Económico Universidad de Alicante, Campus de San Vicente); Christophe Nordman (DIAL, IRD, Paris) |
| Abstract: | (english) We study the relationship between wages, human capital accumulation and work organisation in Morocco using matched worker-firm data for Metallurgical-electrical and Textile-clothing firms. While wages are found to rise with all human capital characteristics, returns to education and experience are much higher for the upper wages. Participation in on-the-job training is constrained by: a relevant industrial location; a minimal educational background; and an appropriate family situation. Moreover, work organisation and on-the-job training are dependent on the education process. Finally, we find strong interactions of human capital accumulation with involvement in chain gangs, team work and supervision. _________________________________ (français) Nous étudions le lien entre salaires, accumulation du capital humain et organisation du travail au Maroc en utilisant une enquête couplant des informations sur les entreprises et les employés de deux secteurs manufacturiers. Bien que les salaires soient sensibles à toutes les variables de capital humain, les rendements de l’éducation et de l’expérience sont beaucoup plus élevés pour les travailleurs à hauts revenus. La participation à la formation sur le tas du travailleur est favorisée par son secteur d’appartenance, son niveau d’éducation et sa situation familiale lorsqu’elle est favorable. De plus, l’organisation des tâches sur le lieu de travail (à la chaîne, en équipe) découle aussi du niveau de capital humain des salariés. |
| Keywords: | Africa, Morocco, Wages, On-the-job training, Human capital, Workplace organisation,Matched worker-firm data, Maroc, Salaires, Formation sur le tas, Capital humain, Organisation du travail, Données liées employeurs-employés. |
| JEL: | J24 J31 O12 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:dia:wpaper:dt200606&r=lab |
| By: | Michiel Evers (Erasmus Universiteit Rotterdam); Ruud A. de Mooij (CPB, The Hague, and Erasmus Universiteit Rotterdam); Daniel J. van Vuuren (CPB, The Hague, and Erasmus Universiteit Rotterdam) |
| Abstract: | This paper performs a meta-analysis of empirical estimates of uncompensated labour supply elasticities. We find that much of the variation in elasticities can be explained by the variation in gender, participation rates, and country fixed effects. Country differences appear to be small though. There is no systematic impact of the model specification or marital status on reported elasticities. The decision to participate is more responsive than is the decision regarding hours worked. Even at the intensive margin, we find that the elasticity for women exceeds that for men. For men and women in the Netherlands, we predict an uncompensated labour supply elasticity of 0.1 (or 0.2 if an alternative specification is preferred) and 0.5, respectively. These values are robust for alternative samples and specifications of the meta regression. |
| Keywords: | labour supply; meta analysis; uncompensated elasticity |
| JEL: | J22 H2 |
| Date: | 2006–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20060017&r=lab |
| By: | Stepan Jurajda; Teodora Paligorova |
| Abstract: | This paper examines the gender gaps in employment and wages among top- and lowerlevel managerial employees in a recent sample of Czech firms. Unlike the existing analyses of managerial gender pay gaps, we acknowledge the adverse consequences of the low and uneven representation of women for the Oaxaca-Blinder decomposition and offer an alternative set of results based on a matching procedure. Only 7% of top-level Czech managers are women and their wages are about 20 percent lower even when compared only to their comparable male colleagues. |
| JEL: | J31 J71 P31 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp296&r=lab |
| By: | Stenberg, Anders (SOFI, Stockholms universitet) |
| Abstract: | The Adult Education Initiative (AEI) in Sweden was introduced in the autumn of 1997 and generated a massive expansion of subsidized adult comprehensive education. This paper uses data on a large sample of unemployed persons aged 25 to 55 to evaluate the effects of comprehensive upper secondary education as compared with the vocational part of Labour Market Training (LMT). Register data of annual wage earnings are available from 1991 to 2003. Fixed effects estimates indicate a weaker impact on wage earnings of comprehensive education relative to vocational training. However, for individuals aged 43-55 the parameters are insignificantly different from zero. Coefficient results close to zero are also obtained for females who prior to enrolment had two-year upper secondary school or resided in a municipality associated with a low average educational level. |
| Keywords: | Adult education; wage earnings |
| JEL: | H52 J68 |
| Date: | 2005–10–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0663&r=lab |
| By: | Saïd Hanchane (LEST - Laboratoire d'économie et de sociologie du travail - http://www.univ-aix.fr/lest - [CNRS : UMR6123] - [Université de Provence - Aix-Marseille I][Université de la Méditerranée - Aix-Marseille II] - []); Isabelle Recotillet (LEST - Laboratoire d'économie et de sociologie du travail - http://www.univ-aix.fr/lest - [CNRS : UMR6123] - [Université de Provence - Aix-Marseille I][Université de la Méditerranée - Aix-Marseille II] - []) |
| Abstract: | This paper looks at the professional and family history of young people who definitively left school in 1998 and were surveyed three years later, in 2001. Using original data from a survey called “Generation 98” conducted by the French Ministry of Education and Labor we built a longitudinal database to estimate the probability of getting a job (short term contract or unlimited duration contract) at three points in time, separately for each gender. Our econometric framework relies on the specification of three types of panel data modelling, derived from a Probit model with random effects. Our findings show that the transition to a stable job depends heavily on the decision to leave the parental home, this being true for both men and women. More heterogeneous types of behavior are observed among men as far as getting a short term contract (henceforth called CDD) is concerned. As a result, young women do not seem to have much flexibility when trying to combine the double constraint of family and active life. Moreover, the birth of children has a negative and durable effect on the probability that women get a stable job. |
| Keywords: | Transition from school to work; Family incidence; Panel data; Random effects |
| Date: | 2006–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00010141_v1&r=lab |