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on Labour Economics |
| By: | David Neumark (Department of Economics, University of California-Irvine); Olena Nizalova (Kyiv Economics Institute) |
| Abstract: | Exposure to minimum wages at young ages may lead to longer-run effects. Among the possible adverse longer-run effects are decreased labor market experience and accumulation of tenure, diminished education and training, and lower current labor supply because of lower wages. Beneficial longer-run effects could arise if minimum wages increase skill acquisition, or if initial wage increases are long-lasting. We estimate the longer-run effects of minimum wages by using information on the minimum wage history that workers have faced since potentially entering the labor market. The evidence indicates that even as individuals reach their late 20's, they earn less and perhaps work less the longer they were exposed to a higher minimum wage at younger ages. The adverse longer-run effects of facing high minimum wages at young ages are stronger for blacks. From a policy perspective, these longer-run effects of minimum wages are likely more significant than the contemporaneous effects of minimum wages on youths that are the focus of most research and policy debate. |
| JEL: | J22 J23 J38 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:050626&r=lab |
| By: | Scott M. Fuess, Jr. (University of Nebraska-Lincoln and IZA Bonn) |
| Abstract: | In the U.S. the relationship between hours worked and employee earnings has been reversed. Whereas the highest earners used to work the shortest hours, now they work the longest hours. This study examines whether such a reversal has occurred elsewhere, namely, Japan. Since the early 1990s the Japanese government has sought to transform the country into a "lifestyle superpower" by trying to encourage more daily time for leisure and less time on the job. Analyzing data for 1976-2003, it is clear that scheduled and actual working hours did indeed fall after 1990. During the early years of the sample, 1976-89, the highest earners also worked the shortest hours, that is, high income workers were timeprivileged. As working hours fell in the 1990s, the time privileges of the highest earners changed too. Specifically, the highest earners gained time advantages relative to the lowest earners but lost some advantages relative to the median. |
| Keywords: | time allocation and labor supply, wage level and structure, country studies: Japan |
| JEL: | J22 J31 J40 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2195&r=lab |
| By: | Rafael Lalive (University of Zurich, CEPR, CESifo, IEW, IFAU and IZA Bonn) |
| Abstract: | This paper studies a program that extends the maximum duration of unemployment benefits from 30 weeks to 209 weeks. Interestingly, this program is targeted to individuals aged 50 years or older, living in certain eligible regions in Austria. In the evaluation, I use sharp discontinuities in treatment assignment at age 50 and at the border between eligible regions and control regions to identify the effect of extended benefits on unemployment duration. Results indicate that the duration of job search is prolonged by at least .09 weeks per additional week of benefits among men, whereas unemployment duration increases by at least .32 weeks per additional week of benefits among women. The salient differences between men and women are consistent with the lower minimum age for early retirement applying to women. |
| Keywords: | benefit duration, unemployment duration, early retirement, regression discontinuity |
| JEL: | C41 J64 J65 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2200&r=lab |
| By: | Andrea Ichino (University of Bologna, EUI, CEPR, CESifo and IZA Bonn); Enrico Moretti (University of California, Berkeley and IZA Bonn) |
| Abstract: | In most Western countries illness-related absenteeism is higher among female workers than among male workers. Using the personnel dataset of a large Italian bank, we show that the probability of an absence due to illness increases for females, relative to males, approximately 28 days after a previous illness. This difference disappears for workers age 45 or older. We interpret this as evidence that the menstrual cycle raises female absenteeism. Absences with a 28-day cycle explain a significant fraction of the male-female absenteeism gap. To investigate the effect of absenteeism on earnings, we use a simple signaling model in which employers cannot directly observe workers' productivity, and therefore use observable characteristics - including absenteeism - to set wages. Since men are absent from work because of health and shirking reasons, while women face an additional exogenous source of health shocks due to menstruation, the signal extraction based on absenteeism is more informative about shirking for males than for females. Consistent with the predictions of the model, we find that the relationship between earnings and absenteeism is more negative for males than for females. Furthermore, this difference declines with seniority, as employers learn more about their workers' true productivity. Finally, we calculate the earnings cost for women associated with menstruation. We find that higher absenteeism induced by the 28-day cycle explains 11.8 percent of the earnings gender differential. |
| Keywords: | absenteeism, gender differentials |
| JEL: | J7 M5 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2207&r=lab |
| By: | Prem Jung Thapa; Tue Gørgens |
| Abstract: | This paper extends the traditional static focus of research on the labour market assimilation of migrants in Australia by analyzing the dynamics of job search and actual time taken to find the first job after arrival in Australia. The Longitudinal Survey of Immigrants to Australia (LSIA) covers two cohorts of recent migrants to Australia that differ considerably in immigration selection criteria and other policy settings, as well as in the macroeconomic employment conditions at their time of arrival in Australia. This gives rise to very different early labour market outcomes for the migrants in these two cohorts; and this paper looks at one specific aspect of this differing outcome – the time taken to find the first job after arrival in Australia. We analyze the inter-cohort differences in migrant characteristics and job search behaviour, and explicitly model the duration of the time taken to find the first job in Australia for the sub-sample of migrants who were the Principal Applicants in their visa applications. Using a conventional proportional hazards model framework, estimation results are presented for a Cox model specification and for a parameterized version of the baseline hazard which permits a formal test of equivalent hazards faced by the migrants in the two cohorts of LSIA. We find that the hazard rates of time to first job are determined by pre-immigrant characteristics, such as education and qualifications, recent work history in source country, the Australian visa categories, English language proficiency, and whether the migrants had previously visited Australia. The parametric model results show that both the underlying baseline hazards and the proportional hazard coefficients on most variables of interest differ significantly between Cohort 1 (arrived in Australia in 1993 through 1995) and Cohort 2 (arrived in Australia in 1999-2000). We then use the parametric model results to simulate the full distribution of the time taken to find the first job for these two migrant cohorts. We present alternative decompositions of the inter-cohort gap into effects due to differences in the observable characteristics of the migrants, and residual effects which can be attributed to different selection criteria and other policy settings and macro economic conditions that are applicable for the two time periods. The decomposition results suggest that the more favourable outcomes for Cohort 2 migrants are predominantly due to the setting of the Cohort 2 time period. This effect is most pronounced for the sample of female Principal Applicants. Cohort 1 migrants would also have experienced much quicker exits to a first job had they arrived under the macroeconomic and immigration policy setting of Cohort 2. Although the advantage derived from the Cohort 2 setting is not itself further decomposed, our analyses does indicated an important role for changes in migrating selection criteria to affect initial labour market outcomes of migrants after arrival in Australia. |
| Keywords: | immigration, employment, visa categories, proportional hazards, simulation |
| JEL: | J23 J61 J64 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:auu:dpaper:527&r=lab |
| By: | Cristina Fernández, Ana Carolina Ortega Masagué; Ana Carolina Ortega Masagué |
| Abstract: | Spain has traditionally been known as a country of emigrants. However, in the last decade, Spain has experienced an unprecedented boom of immigration from three localized areas: Latin America, Africa and East Europe. In this paper, we study the behaviour of recent immigrants in the Spanish labour market identifying the major differences with the native population and tracking whether these differences fade away as their years of residence in Spain increase. With this objective, we focus on four labour market outcomes: labour supply, unemployment, incidence of overeducation and incidence of temporary contracts. Results show that, compared to natives, immigrants face initially higher participation rates, higher unemployment rates, higher incidence of overeducation and higher incidence of temporary contracts. However, five years after their arrival we could broadly say that participation rates start to converge to native rates, unemployment rates decrease to levels even lower than those of natives, and the incidence of temporary contracts and overeducation remains constant: no reduction of the gap with Spanish workers is observed. Therefore, we conclude that the Spanish labour market is managing to absorb the immigration boom but at the expense of allocating immigrants in bad job-matches. |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2006-21&r=lab |
| By: | Juanita González Uribe |
| Abstract: | This article measures gross creation, destruction, and reallocation of jobs inside the Colombian Manufacturing Industry between 1982 and 1998. We characterize job reallocation as a source of adjustment both in productivity dynamics and on workers welfare. Consistent with previous research, we find evidence of productivity enhancing factor reallocation. However, we also find evidence of significant welfare losses for displaced workers. Our most novel results are the negative effect of displacement, sector change and unemployment duration on post-job-change wages. The event of sector change seems to spur considerable sector specific skills losses which offset any potential positive effects of sector change, such as the purge of the displacement stigma. In brief, our results show that on balance depreciation and stigma effects dominate productive search outcomes in the determination of post-unemployment wages. We conclude that at least a fraction of job reallocation is socially inefficient. |
| Date: | 2006–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:col:001051:002530&r=lab |
| By: | Robert W. Fairlie (University of California, Santa Cruz and IZA Bonn); Harry A. Krashinsky (University of Toronto) |
| Abstract: | Hurst and Lusardi (2004) recently challenged the long-standing belief that liquidity constraints are important causal determinants of entry into self-employment. They demonstrate that the oft-cited positive relationship between entry rates and assets is actually unchanging as assets increase from the 1st to the 95th percentile of the asset distribution, but rise drastically after this point. They also apply a new instrument, changes in house prices, for wealth in the entry equation, and show that instrumented wealth is not a significant determinant of entry. We reinterpret these findings: first, we demonstrate that bifurcating the sample into workers who enter self-employment after job loss and those who do not reveals steadily increasing entry rates as assets increase in both subsamples. We argue that these two groups merit a separate analysis, because a careful examination of the entrepreneurial choice model of Evans and Jovanovic (1989) reveals that the two groups face different incentives, and thus have different solutions to the entrepreneurial decision. Second, we use microdata from matched Current Population Surveys (1993-2004) to demonstrate that housing appreciation measured at the MSA-level is a significantly positive determinant of entry into selfemployment. Our estimates indicate that a 10 percent annual increase in housing equity increases the mean probability of entrepreneurship by roughly 20 percent and that the effect is not concentrated at the upper tail of the distribution. |
| Keywords: | entrepreneurship, liquidity constraints, self-employment |
| JEL: | J23 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2201&r=lab |
| By: | Bårdsen, Gunnar (The Norwegian University of Science and Technology (NTNU)); Nymoen, Ragnar (Dept. of Economics, University of Oslo) |
| Abstract: | Several features of the U.S. natural rate of unemployment are reconsidered through specification and testing of econometric models. Traditionally, the choice has been between a wage Phillips curve model, PCM, or an equilibrium correction wage curve model, WECM. The models proposed in this paper feature extended equilibrium correction which reduces the consequences for natural rate dynamics of choosing between wage models. In order for the difference between PCM and WECM to become important, the extended equilibrium correction mechanism must be ‘switched off’ by restrictions. These restrictions are rejected when tested. The analysis supports the original view that natural rates depend on the macroeconomic system, rather than just the wage Phillips curve. The analysis indicates a reduction of the natural rate in the course of the 1990s, due to low worker bargaining power and other structural changes. The estimated reduction is approximately 0.5 0.8 percentage points, which is less than existing results based on Phillips curve estimation. |
| Keywords: | US unemployment; natural rate; NAIRU; equilibrium correction; Phillips curve |
| JEL: | C52 E24 E31 E37 J31 |
| Date: | 2006–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2006_013&r=lab |
| By: | Thomas Dohmen (IZA Bonn); Armin Falk (IZA Bonn and University of Bonn); David Huffman (IZA Bonn); Uwe Sunde (IZA Bonn and University of Bonn) |
| Abstract: | Experimental evidence has convincingly shown the existence of reciprocal inclinations, i.e., a tendency for people to respond in-kind to hostile or kind actions. Little is known, however, about: (i) the prevalence of reciprocity in the population, (ii) individual determinants of reciprocity, (iii) the correlation between positive and negative inclinations within person, and (iv) consequences of reciprocal inclinations for wages, subjective well-being, friendships and other economic and social outcomes. Answering these questions requires moving out of the lab and using a large and representative subject pool, which combines information about subjects’ reciprocal inclinations with extensive socioeconomic background information. In this paper we measure the reciprocal inclinations of 21,000 individuals. We show that most people state reciprocal inclinations, in particular in terms of positive reciprocity. However, there is substantial heterogeneity in the degree of reciprocity, and quite surprisingly, only a weak correlation between positive and negative reciprocity for an individual. In terms of determinants, being female, and increasing age, lead to greater positive and less negatively reciprocal tendencies. Taller people are more positively reciprocal, but height has no impact on negative reciprocity. The asymmetric impact of these determinants provides further indication that positive and negative reciprocity are fundamentally different traits, rather than the outcome of a single underlying tendency. In terms of economic implications, we provide the first evidence using a large representative survey that corroborates an important hypothesis arising from laboratory experiments: Positively reciprocal workers are in fact paid more, and exert greater effort, on the job. Moreover, positively reciprocal people are more likely to be employed, report having more close friends, and have a higher overall level of life satisfaction. In this sense, Homo Reciprocans - in the positive domain - is in fact more successful than his or her non-reciprocal fellows. |
| Keywords: | reciprocity, trust, SOEP, wage regression, unemployment, happiness |
| JEL: | D63 J3 J6 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2205&r=lab |
| By: | Tuomas Pekkarinen (Uppsala University and IZA Bonn); Roope Uusitalo (Labour Institute for Economic Research, Helsinki); Sari Pekkala (Government Institute for Economic Research, Helsinki) |
| Abstract: | Many authors have recently suggested that the heterogeneity in the quality of early education may be one of the key mechanisms underlying the intergenerational persistence of earnings. This paper estimates the effect of a major educational reform on the intergenerational income mobility in Finland. The Finnish comprehensive school reform of 1972-1977 significantly reduced the degree of heterogeneity in the Finnish primary and secondary education. The reform shifted the tracking age in secondary education from age 10 to 16 and imposed a uniform academic curriculum on entire cohorts until the end of lower secondary school. We estimate the effect of the reform on the correlation between son’s earnings in 2000 and father’s average earnings during 1970-1990 using a representative sample of males born during 1960-1966. The identification strategy relies on a difference-in-differences approach and exploits the fact that the reform was implemented gradually across municipalities during a six-year period. The results indicate that the reform reduced the intergenerational income correlation by seven percentage points. |
| Keywords: | generational mobility, education, comprehensive school reform |
| JEL: | D31 J62 I20 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2204&r=lab |
| By: | Spyros Konstantopoulos (Northwestern University and IZA Bonn) |
| Abstract: | The last three decades the accumulation of quantitative research evidence has led to the development of systematic methods for combining information across samples of related studies. Although a few methods have been described for accumulating research evidence over time, meta-analysis is widely considered as the most appropriate statistical method for combining evidence across studies. This study reviews fixed and mixed effects models for univariate and multivariate meta-analysis. In addition, the study discusses specialized software that facilitates the statistical analysis of meta-analytic data. |
| Keywords: | meta-analysis, mixed models, multivariate analysis |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2198&r=lab |
| By: | Hærnes, Erik (The Ragnar Frisch Centre for Economic Research); Jia, Zhiyang (Dept. of Economics, University of Oslo); Strøm, Steinar (Dept. of Economics, University of Oslo) |
| Abstract: | Models for non-cooperative as well as cooperative behavior of families are estimated on data from Norway from 1994 to 1998. The models aim at explaining labor supply behavior of married couples the first five months after the husband becomes eligible for early retirement, while the wife is not eligible. Estimates and predictions derived from the different models are compared. Econometric tests find that the Stackelberg model with the male as the leader is the best. Simulations with the estimated models show that taxing pension income the same way as labor income would reduce the propensity to retire early considerably. |
| Keywords: | family labor supply; retirement; econometric models; policy simulations |
| JEL: | D10 H55 J26 |
| Date: | 2005–12–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2006_015&r=lab |
| By: | Hernæs, Erik (The Ragnar Frisch Centre for Economic Research); Iskhakov, Fedor (The Ragnar Frisch Centre for Economic Research); Strøm, Steinar (Dept. of Economics, University of Oslo) |
| Abstract: | Early retirement decisions derived from a structural model with economic incentives and firm workforce changes, are estimated on Norwegian linked household and firm data. For households in which the wife is the first to become eligible for early retirement, the impact on early retirement of a reduction in the firm workforce is stronger relative to economic incentives than is the case for men, in particular in the private sector. Both for men and women, also an expansion of the firm workforce implies a higher retirement probability.The eligibility age in the early retirement programme has gradually been reduced from 66 in 1989 to 62 in 1998. We find that the economic incentives relative to the push factor have become more important, both for men and women, the lower the eligibility age is. |
| Keywords: | Early retirement; demand side and supply side factors; microeconometric models; heterogeneity |
| JEL: | C35 J26 |
| Date: | 2006–06–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2006_016&r=lab |
| By: | Della Giusta, Marina (University of Reading Business School); Di Tommaso, Maria Laura (University of Turin, Department of Economics "S. Cognetti de Martiis"); Shima, Isilda (University of Turin, Department of Economics "S. Cognetti de Martiis"); Strøm, Steinar (Dept. of Economics, University of Oslo) |
| Abstract: | An econometric model that explores the effect of personal characteristics and attitudes of clients on their demand for prostitution is estimated on data from a survey of clients of street sex workers in the US. The results reveal that clients of street sex workers in our sample have two diametrically opposite profiles: one for clients who declared never to have been with a sex worker or to have been only once, whom we label “experimenters”, and one for the more experienced ones that we name “regulars”. The experimenters correspond to a more machist type, with negative views of women, and of sex workers (who are believed to be different from other women but condemned at the same time), and viewing prostitution as a complement to stable relationships. The regulars have more liberal view of women, and of sex workers, the more they dislike control the more they demand, they like variety. Their demand also increases with age and with having a permanent job, which may indicate a positive income effect. These appear to be men who are happy to satisfy their sexual wants through sex workers, which they prefer to relationships. The users of condoms seem to fit the profile of the regulars, whereas the non-users fit that of the experimenters. |
| Keywords: | Demand for sex; ordered logit; factor analysis; US data. |
| JEL: | C35 D12 |
| Date: | 2006–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2006_010&r=lab |
| By: | David Neumark (Department of Economics, University of California-Irvine); Elizabeth T. Powers (Institute of Government and Public Affairs and Department of Economics, University of Illinois) |
| Abstract: | The Supplemental Security Income (SSI) program in the United States creates incentives for potential aged recipients to reduce labor supply prior to becoming eligible, and past research finds evidence of such behavior for older men. There may be a migration response to across-state variation in SSI benefits, which is of interest in its own right and can bias estimates of the effects of SSI benefits on labor supply. We fail to find evidence that older individuals migrate in response to SSI benefits, or that the labor supply disincentive effects of SSI are spurious and instead reflect migration behavior. |
| Keywords: | Supplemental Security Income; Migration; Labor supply |
| JEL: | H72 I38 J38 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:050628&r=lab |
| By: | Michèle Belot (University of Essex and ISER); John Ermisch (ISER, University of Essex and IZA Bonn) |
| Abstract: | A common finding in analyses of geographic mobility is a strong association between past movement and current mobility, a phenomenon that has given rise to the so called ‘moverstayer model’. We argue in this paper that one of the driving forces behind this heterogeneity is the strength of local social ties. We use data from the BHPS on the location of the three closest friends and the frequency of contacts. We estimate the processes of friendship formation and residential mobility jointly, allowing for correlation between the two processes. Our results show that the location of the closest friends matters substantially in the mobility decision, and matters more than the frequency of contacts. |
| Keywords: | geographical mobility, social ties, friendship formation |
| JEL: | J61 Z13 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2209&r=lab |