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on Labour Economics |
| By: | Granqvist, Lena (Swedish Confederation of Professional Associations (SACO)); Regnér, Håkan (Swedish Confederation of Professional Associations (SACO)) |
| Abstract: | We analyze unique data that identify whether individuals have participated in decentralized wage setting and whether they have negotiated their own wages. Wages are significantly higher for those who have been part of a formalized wage-setting process compared with non-participants, but only in the public sector. Employees who negotiate their own wages have higher wages than non-negotiators. Wages are also significantly higher for those who negotiate with a manager who has the power to set wages, compared with those who negotiate with a manager who has no power over wages. This concerns employees in the public and the private sectors. Quantile regression results reveal that the outcome of individual bargaining increases over the wage distribution. Percentile wage differences are significant only among workers who negotiate with a manager who has the power to set wages. Estimated wage differences between negotiators and non-negotiators are 4.6% on average, 5.6% in the 90th percentile, and 2.3% at the 10th percentile. |
| Keywords: | wage bargaining; earnings equations; decentralized wage setting; quantile regression |
| JEL: | J31 J33 J41 J44 |
| Date: | 2006–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2006_003&r=lab |
| By: | Solenne Tanguy (Centre d'Economie de la Sorbonne) |
| Abstract: | This article analyses the effectiveness of a system of job search monitoring system. Such a system leads the unemployed workers to reduce their wage requirements what results in a fall of the wages and in consequence of the unemployment rate. This article shows that a rise of the unemployment benefit can reduce the unemployment rate if the penalty imposed in the event of job refusal corresponds to a suppression of the allowances. However a stronger wage moderation can be problematic. This system encourages the workers indeed to accept quickly jobs that are not very productive. Because the composition of jobs also changes, total output and welfare would decrease as well. Finally, what is gained on the quantitative level is lost on the qualitative level. |
| Keywords: | Unemployment insurance, monitoring, productivity, quality of jobs. |
| JEL: | J64 J65 J68 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:v06028&r=lab |
| By: | D. Tondani |
| Abstract: | In this paper we attempt to estimate labour supply elasticities for four categories of Italian workers: married men, married women, unmarried men, unmarried women. We use microdata provided by the Bank of Italy 2002 survey adopting a piecewise linear labour supply functional form. Sample selection and tobit technique have been used. Wage elasticities are calculated from the results of the labour supply estimation. Hours of work are found to be positively related to after tax labour income and negatively related to virtual income. Female labour supply is more sensitive than that of males to an increase in net wage. |
| Keywords: | Labour supply, Personal income taxation, Italy |
| JEL: | C24 J22 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:par:dipeco:2006-ep03&r=lab |
| By: | Kliebenstein, James; Hurley, Terence; Orazem, Peter; Miller, D; May, S. |
| Keywords: | Work, Job, Employees |
| Date: | 2006–05–16 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:12614&r=lab |
| By: | Etienne Campens (Centre d'Economie de la Sorbonne et CEPREMAP); Solenne Tanguy (Centre d'Economie de la Sorbonne) |
| Abstract: | This paper deals with the consequences of the existence of private employment agencies on the labor market. Using a matching framework, we study the conditions of existence of private employment agencies and the consequences of competition on the market for job placement. We show that the private employment agencies enter in the labour market only if they are much more efficient than the private agency. Moreover, the level of the unemployment benefits is a disincentive to manage workers for the private agency. Because of a high fallback position for the worker, it is costly for the private employment agency to manage a worker having some low probabilities to exit from unemployment. If these conditions are satisfied, the existence of private employment agencies improve the labor market through shorter unemployment spells and a lower unemployment rate. Moreover, an improvement in the matching process is an incentive for the firms to post vacancies at the private agencies. Nevertheless, the workers managed by the private agencies receive some lower wages than the other workers because of the payment by the firm for recruiting a worker. Finally, we show that private employment agencies have a natural disincentive to manage unskilled workers. But, the introduction of a subsidy to match an unskilled worker with a vacancy seems to be a sufficient incentive to make the private employment agencies managing unskilled workers. |
| Keywords: | Unemployment, matching model, public employment agencies, private employment agencies. |
| JEL: | J60 J63 J64 J68 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:v06027&r=lab |
| By: | Ådne Cappelen (Statistics Norway) |
| Abstract: | Rapid growth in productivity combined with increasing wage dispersion in some countries, notably Anglo-Saxon, has been the subject of numerous studies. The main hypothesis in the literature is that an increased skill premium provides a link between productivity growth and inequality. If this view is correct it poses some challenges for policies that focus on promoting a learning economy. However, data for many OECD-countries show that increased wage dispersion is not a common feature. Many countries have enjoyed a fairly stable or even declining dispersion of wages. Also in countries where the production and use of ITC-goods are significant, there are hardly any changes in wage dispersion. Thus one must look at a broader set of factors other than skilled biased technical change in order to explain the diverse picture of changes in inequality. This paper points to changes in educational attainment and institutions relating to wage bargaining as possible explanations for the varying experience wrt. wage inequality between OECD-countries in recent decades. |
| Keywords: | Inequality; skill premium; bargaining |
| JEL: | D31 D33 J31 J50 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:457&r=lab |
| By: | Céline Choulet (Centre d'Economie de la Sorbonne) |
| Abstract: | This paper raises the question of the dynamic effects of public spending in jobs on labor market performance. We use a dynamic matching model and study how public jobs creation affects endogenous workers' decisions to move on the labor market and private-sector firms' job creation and destruction decisions. We obtain that it exerts an attracting effect and a fiscal effect on the labor market that make the unemployment rate and job flows overshoot. As an empirical illustration, we estimate a SVAR model that focuses on the consequences of public job creations on unemployment, wages and job flows dynamics. We confirm our intuition : public employment has a significant ambiguous effect on private wages. |
| Keywords: | Public sector labor market, unemployment dynamics. |
| JEL: | J45 J21 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:v06026&r=lab |
| By: | Carlos Gradín (Universidade de Vigo (Spain)); Olga Cantó (Universidade de Vigo (Spain)); Coral del Río (Universidade de Vigo (Spain)) |
| Abstract: | The functioning of the labor market often has been stressed as a clear determinant in explaining poverty trends in developed countries. In this paper, we analyze the role of gender wage discrimination on household poverty rates in several EU countries, linking two related phenomena that rarely are analyzed together. In order to quantify the impact of discrimination on poverty, we propose the construction of a counterfactual distribution of wages where discrimination against women has been removed. Using this new wage distribution, we compute total household income and compare poverty rates in the absence of discrimination to those actually observed. Our results show that, in general, it is true that discrimination against women plays a determinant role in the current levels of poverty, even if we discover that results for each country present a different pattern and intensity. Further, we find that the effect of discrimination on poverty risk dramatically increases for individuals in households who largely depend on working female earnings, especially in the case of single mothers. |
| Keywords: | poverty, inequality, income distribution, gender, wage discrimination, labor participation. |
| JEL: | J16 J31 J71 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2006-40&r=lab |
| By: | John K. Dagsvik, Tom Kornstad and Terje Skjerpen (Statistics Norway) |
| Abstract: | In this paper we analyze labor force participation with particular reference to the discouraged worker effect. The theoretical point of departure is a simple model where the worker evaluates the expected utility of searching for work, and decides to participate in the labor market if the expected utility of the search exceeds the utility of not working. With suitable assumptions about unobserved and observed heterogeneity we derive an empirical model for the probability that the worker will be unemployed or employed as a function of the probability of getting a job, given that the worker searches for work. The model is estimated on Norwegian micro-data consisting of independent cross sections over 15 years. The results indicate that there is a substantial discouraged worker effect. |
| Keywords: | Discouraged workers; Labor force participation; Random utility modelling |
| JEL: | J21 J22 J64 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:453&r=lab |
| By: | Etienne Lehmann (ERMES, University Paris 2 Panthéon Assas and IZA Bonn) |
| Abstract: | Because of Time Inconsistency considerations, policymakers underestimate the drawbacks of wage rigidity as a redistributive tool. Consequently, they redistribute inefficiently income from high to low skilled workers. They typically implement too much wage rigidity whereas other means (in particular fiscal transfers) could achieve the same redistributive goal with less perverse effect on unemployment. Time inconsistency is more likely due to lack of credibility than to the short-term horizon of policymakers. Hence, policymaking processes should be reformed towards more transparent and binding agreements between government and social partners. |
| Keywords: | unemployment, inequality, wage rigidity, time inconsistency |
| JEL: | D78 H2 J68 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2116&r=lab |
| By: | Richard Blundell (Department of Economics, University College London and IFS); Amanda Gosling (Department of Economics, Essex Univeristy, IFS and CEPR); Hidehiko Ichimura (Faculty of Economics, University of Tokyo and RIETI); Costas Meghir (Department of Economics, University College London, IFS and CEPR) |
| Abstract: | This paper examines changes in the distribution of wages using bounds to allow for the impact of non-random selection into work. We show that worst case bounds can be informative. However, since employment rates in the UK are often low they are not informative about changes in educational or gender wage differentials. Thus we explore ways to tighten these bounds using restrictions motivated from economic theory. With these assumptions we find convincing evidence of an increase in inequality within education groups, changes in educational differentials and increases in the relative wages of women. |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2006cf420&r=lab |
| By: | Stefania Albanesi; Claudia Olivetti |
| Abstract: | The purpose of this paper is to study the joint determination of gender differentials in labor market outcomes and in the household division of labor. Specifically, we explore the hypothesis that incentive problems in the labor market amplify differences in earnings due to gender differentials in home hours. In turn, earnings differentials across genders reinforce the division of labor within the household. This gives rise to a potentially self-fulfilling feedback mechanism. As a consequence, gender differentials in earnings will be larger than any initial difference in relative productivity across genders. Even if productivity in home and market work is the same for female and male workers, both gendered and ungendered equilibria are possible and equally likely. If womens' comparative advantage in home production is large enough, there exists a unique equilibrium in which they have higher home hours and lower earnings than men. Our model delivers predictions on the relation between earnings ratios, incentive pay and home hours. First, gender earnings differentials should be higher for married workers in occupations in which the incentive problem is more severe. This effect should be stronger when the gender difference in home hours is greater. Moreover, the difference in the fraction of incentive pay across genders should be smaller for higher values of the female/male earnings ratio. Second, the husband/wife ratio of home hours should be negatively related with both the husband/wife earnings ratio and the difference in the fraction of incentive pay. We use the Census and the PSID to study these predictions and find that they are amply supported by the data. |
| JEL: | J2 J3 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12212&r=lab |
| By: | Takahiro Ito; Takashi Kurosaki |
| Abstract: | This paper investigates the effects of weather risk on the offfarm labor supply of agricultural households in India. Faced with the uninsurable risk of output fluctuations, poor farmers in less developed countries have various options to smooth income. One of these options is to diversify labor allocation across activities, which this paper focuses on. A key feature of this paper is that it pays particular attention to differences in the covariance between weather risk and agricultural wages on the one hand and between weather risk and nonagricultural wages on the other. We develop a theoretical model of household optimization, which predicts that the impact of weather risk on the offfarm labor supply is larger in the case of nonagricultural wage work than in the case of agricultural wage work when agricultural wages off the farm are positively correlated with own farm income. To test this prediction, we estimate a multivariate tobit model of labor allocation using household data from rural areas of Bihar and Uttar Pradesh, India. The regression results show that the share of the offfarm labor supply increases with the weather risk, and the increase is much larger in the case of nonagricultural wage work than in the case of agricultural wage work. Simulation results based on the regression estimates show that the sectoral difference is substantial, implying that empirical and theoretical studies on farmers' labor supply response to risk should distinguish between the types of offfarm work involved. |
| Keywords: | corvariate risk, non-farm employment, self-employment, food security, India |
| JEL: | Q12 O15 J22 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:hst:hstdps:d06-161&r=lab |
| By: | Robert Shimer; Iván Werning |
| Abstract: | This paper studies the optimal timing of unemployment insurance subsidies in a McCall search model. Risk-averse workers sequentially sample random job opportunities. Our model distinguishes unemployment subsidies from consumption during unemployment by allowing workers to save and borrow freely. When the insurance agency faces a group of homogeneous workers solving stationary search problems, the optimal subsidies are independent of unemployment duration. In contrast, when workers are heterogeneous or when human capital depreciates during the spell, the optimal subsidy is no longer constant. We explore the main determinants of the shape of the optimal subsidy schedule, isolating forces for subsidies to optimally rise or fall with duration. |
| JEL: | J6 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12230&r=lab |
| By: | Marcela Perticara (ILADES-Georgetown University, Universidad Alberto Hurtado) |
| Abstract: | This paper explores the dynamics of female employment decisions around childbearing using longitudinal data from the 2002 Chilean Social Protection Survey (Encuesta de Protección Social, EPS). The study evaluates how the birth of a child can affect the woman’s decision to work, in particular among women with strong attachment to the labor market. The results indicate that the hazard of leaving employment is high for women during the first year of their newborn child. The mother of a newborn child is twice as likely to leave employment. The effect of newborns on employment transitions is even greater among older generations and among voluntary quitters. Even one year after the birth of a child, women still face a high risk of leaving employment. A woman who is still working when her son reaches the age of one, still faces a 50% higher risk of leaving employment. Something is making these mothers reconsider whether they should remain at work, provided that they have been working during the child’s first year of age. This could be related to the existence of maternal benefits in Chile, where women have a 20-week (paid) maternity and they are allowed up to a year of paid parental leave if the child is sick. A woman might not have any incentives (or have the need) to leave work while she is using these benefits but might be tempted (or have) to do it once she has exhausted them. The introduction of individual effects and employment history variables reveal the persistence of two contrasting labor force patterns among women. As the actual labor experience increases, the probability of entering an inactivity period decreases. Additionally, the greater the number of years a woman remained inactive in the past, the greater is the probability of re-entering an inactivity period. In the voluntary transitions model, past inactivity periods have a smaller effect on the probability of leaving employment. This can be seen as a possible indication of an important penalization by the labor market, in terms of employment opportunities after prolonged periods of inactivity. |
| Keywords: | Fertility; Childcare; Motherhood; Mothers; Participation; Women. |
| JEL: | J13 J62 J63 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:ila:ilades:inv172&r=lab |
| By: | Bernd Fitzenberger (Goethe University of Frankfurt, ZEW, IFS and IZA Bonn); Aderonke Osikominu (Goethe University of Frankfurt); Robert Völter (Goethe University of Frankfurt and CDSEM, University of Mannheim) |
| Abstract: | Long-term public sector sponsored training programs often show little or negative short-run employment effects and often it is not possible to assess whether positive long-run effects exist. Based on unique administrative data, this paper estimates the long-run differential employment effects of three different types of training programs in West Germany. We use inflows into unemployment for the years 1986/87 and 1993/94 and apply local linear matching based on the estimated propensity score to estimate the effects of training programs starting during 1 to 2, 3 to 4, and 5 to 8 quarters of unemployment. The results show a negative lock-in effect for the period right after the beginning of the program and significantly positive treatment effects on employment rates in the medium- and long-run. The differential effects of the three programs compared to one another are mainly driven by differences in the length of the lock-in periods. |
| Keywords: | multiple treatments, training programs, employment effects, local linear matching, administrative data, active labor market programs |
| JEL: | C14 J68 H43 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2121&r=lab |
| By: | Kliebenstein, James; Hurley, Terence; Orazem, Peter; Miller, D.; May, S. |
| Keywords: | Job, Employee |
| Date: | 2006–05–16 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:12617&r=lab |
| By: | Jeffrey Zabel (Tufts University); Saul Schwartz (Carleton University and IZA Bonn); Stephen Donald (University of Texas at Austin) |
| Abstract: | The Self-Sufficiency Project (SSP) was a Canadian research and demonstration project that attempted to "make work pay" for long-term income assistance (IA) recipients by supplementing their earnings. The long-term goal of SSP was to get lone parents permanently off IA and into the paid labour force. The purpose of this study is to evaluate the impact of SSP on employment and non-employment durations and its overall effect on employment rates. We focus on generating estimates of the "effect of the treatment on the treated" (TOT) where the "treated" are those in the program group who qualified for the earnings supplement by finding a full-time job during the qualifying period (a group we call the "take-up" group). To obtain a consistent estimate of TOT we follow the work of Ham and LaLonde (1996) and Eberwein, Ham and Lalonde (1997) in estimating a joint model of nonemployment and employment durations that controls for unobserved heterogeneity and nonrandom selection into work and into the take-up group. We find evidence of significant impacts of SSP on non-employment and employment durations. Simulation results show a TOT on the employment rate at 52 months after baseline of approximately 4 percentage points; a 10 percent increase compared to the control group. Further, this estimate of TOT using the results from our econometric model is 5 percentage points higher than the estimate from the raw data. |
| Keywords: | social experiment, earnings subsidies, in-work benefit, Canada |
| JEL: | I38 J64 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2122&r=lab |
| By: | Tomas Kögel (Dept of Economics univ. of Loughborough) |
| Abstract: | Recent literature shows the puzzling result of a positive and significant cross-country correlation between the total fertility rate and the female labour force participation rate across Western European countries. The present paper shows that this cross-country correlation becomes negative and significant, once one corrects the total fertility rate for a distortion, caused by an increasing age of childbearing, and controls in cross-country regressions for purchased child care use and female long-term unemployment. This result survives an empirical analysis in which the female labour force participation rate is treated as an endogenous variable. |
| Keywords: | Total fertility rate; female labour force participation rate; purchased child care; female unemployment. |
| JEL: | J10 J11 J13 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2006_11&r=lab |
| By: | Dagsvik, John K. (Research Department, Statistics Norway and the Ragnar Frisch Centre for) |
| Abstract: | This paper proposes a particular axiomatic approach to motivate the choice of functional forms and distribution of unobservables in continuous time models for discrete panel data analysis. We discuss in particular applications with data on transitions between employment and unemployment. This framework yields a characterization of transition probabilities and duration distributions in terms of structural parameters of the utility function and choice constraints. Moreover, it is discussed how the modeling framework can be extended to allow for involuntary transitions, structural state dependence and random effects. |
| Keywords: | Discrete choice in continuous time; Duration of unemployment/employment; Random utility models; Functional form; Invariance principles |
| JEL: | C23 C25 C41 |
| Date: | 2006–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2006_006&r=lab |
| By: | Patrick Bayer; Stephen L. Ross |
| Abstract: | Researchers have long recognized that the non-random sorting of individuals into groups generates correlation between individual and group attributes that is likely to bias naïve estimates of both individual and group effects. This paper proposes a non-parametric strategy for identifying these effects in a model that allows for both individual and group unobservables, applying this strategy to the estimation of neighborhood effects on labor market outcomes. The first part of this strategy is guided by a robust feature of the equilibrium in the canonical vertical sorting model of Epple and Platt (1998), that there is a monotonic relationship between neighborhood housing prices and neighborhood quality. This implies that under certain conditions a non-parametric function of neighborhood housing prices serves as a suitable control function for the neighborhood unobservable in the labor market outcome regression. The second part of the proposed strategy uses aggregation to develop suitable instruments for both exogenous and endogenous group attributes. Instrumenting for each individual’s observed neighborhood attributes with the average neighborhood attributes of a set of observationally identical individuals eliminates the portion of the variation in neighborhood attributes due to sorting on unobserved individual attributes. The neighborhood effects application is based on confidential microdata from the 1990 Decennial Census for the Boston MSA. The results imply that the direct effects of geographic proximity to jobs, neighborhood poverty rates, and average neighborhood education are substantially larger than the conditional correlations identified using OLS, although the net effect of neighborhood quality on labor market outcomes remains small. These findings are robust across a wide variety of specifications and robustness checks. |
| JEL: | J41 R14 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12211&r=lab |
| By: | Linda Loury |
| Abstract: | Previous work on social interactions has analyzed the effects of nuclear family, peer, school, and neighborhood characteristics. This paper complements this research by first showing that individuals from similar nuclear families often differ in extended family member characteristics. It then demonstrates that older extended family members - aunts, uncles, and grandparents – independently affect college attendance probabilities and test score results of their younger relatives. In some cases, the sizes of the estimated effects are large enough to substantially narrow the achievement gap between disadvantaged and other youth. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0610&r=lab |