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on Labour Economics |
| By: | René Böheim (Johannes Kepler University Linz and IZA Bonn); Andrea Weber (University of California, Berkeley, Institute for Advanced Studies, Vienna and IZA Bonn); |
| Abstract: | We analyse the consequences of starting a wage subsidised job, “marginal employment”, for unemployed workers. Marginal employment is a type of wage subsidy paid to unemployed workers and they do not lose their unemployment benefits if the wage is below a certain threshold. We ask if the unemployed who start marginal jobs face better labour market outcomes than those who do not work. A priori it is not clear if those who work in marginal employment improve their labour market status, e.g. by signalling effort, or worsen it by reduced job search effort. We select unemployed workers and investigate the effect of marginal employment on their labour market outcomes, by means of propensity score matching. Our results suggest that selection into marginal employment is “negative”, i.e. workers with characteristics we usually associate with low-productivity are more likely to select into such jobs. The unemployed who start to work in marginal employment during their unemployment spell suffer a (causal) penalty for doing so, relative to their peers who do not. The penalty, in terms of less employment, more unemployment, lower wages, lessens over time but is still present after three years. |
| Keywords: | marginal employment, atypical employment, labour supply, propensity score matching |
| JEL: | J22 J64 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2221&r=lab |
| By: | Emilia Del Bono (ISER, University of Essex and IZA Bonn); Andrea Weber (University of California, Berkeley, Institute for Advanced Studies, Vienna and IZA Bonn) |
| Abstract: | In this paper we investigate the existence of compensating wage differentials across seasonal and non seasonal jobs, which arise due to anticipated working time restrictions. We build on a theoretical model by Abowd and Ashenfelter (1981), which links the compensating wage differential to variation in individual unemployment through the effect of the unemployment insurance and the compensated labor supply elasticity. Since the Austrian labor market is characterized by an unusually high share of seasonal employment, our data provides the ideal setting in which to empirically test this model. We use the very rich information contained in the Austrian administrative records to derive a flexible definition of seasonal employment based on observed regularities in employment patterns. We find that employers pay on average a positive wage differential of about 11% for seasonal jobs and that the unemployment insurance system contributes a similar amount. |
| Keywords: | seasonal employment, wage differentials, labor supply elasticity, fixed effects panel estimation |
| JEL: | J22 J3 C23 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2242&r=lab |
| By: | Ryo Kambayashi; Yuko Ueno |
| Abstract: | Behind rising natural rate of unemployment, they often point out the decline in matching efficiency of the labor market. We empirically examine the cause of matching friction based on the theory of directed search model such as Burdett, Shi and Wright (2001). From rich micro data on vacancy size and wage variation of job changers in Japanese labor market, we observe the negative relationship between vacancy size and offered wage, which show the existence of search friction, not in the whole labor market but in some particular unskilled markets, especially those of clerks and production workers. |
| Keywords: | Search friction, matching, directed search, vacancy, wage offer, Japan |
| JEL: | J63 J31 J42 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:hst:hstdps:d06-179&r=lab |
| By: | Sourafel Girma; Holger Görg |
| Abstract: | This paper seeks to identify the causal effect of foreign acquisitions on wages of skilled and unskilled workers, using difference-in-differences propensity score matching estimators. Our results suggest that there is substantial heterogeneity in the post-acquisition wage effect depending on the nationality of the foreign acquirer and the skill group of workers. We find sizable post acquisition wage effects on skilled and unskilled wages following an acquisition by a US firm. No such impacts result from acquisitions by EU multinationals. Also we discern some positive wage effects for unskilled workers resulting from acquisitions by multinationals from the rest of the world. |
| Keywords: | multinationals, acquisitions, wages, difference-in-differences, matching estimator |
| Date: | 2006–08–02 |
| URL: | http://d.repec.org/n?u=RePEc:iis:dispap:iiisdp165&r=lab |
| By: | Christopher S. Ruebeck; Joseph E. Harrington, Jr.; Robert Moffitt |
| Abstract: | We examine whether handedness is related to performance in the labor market and, in particular, earnings. We find a significant wage effect for left-handed men with high levels of education. This positive wage effect is strongest among those who have lower than average earnings relative to those of similar high education. This effect is not found among women. |
| JEL: | J2 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12387&r=lab |
| By: | John Pencavel (Stanford University and IZA Bonn) |
| Abstract: | Constructing pseudo-panel data from successive Current Population Surveys, this paper analyzes earnings inequality in husband and wife families over the life cycle and over time. Particular attention is devoted to the role of labor supply in influencing measures of earnings inequality. Compact and accurate descriptions of earnings inequality are derived that facilitate the analysis of the effect of the changing market employment of wives on earnings inequality. The growing propensity of married women to work for pay has mitigated the increase in family earnings inequality. Alternative measures of earnings inequality covering people with different degrees of attachment to the labor market are constructed. Inferences about the extent and changes in earnings inequality are sensitive to alternative labor supply definitions especially in the case of wives. |
| Keywords: | earnings inequality, married women's employment-population ratios, hours of work |
| JEL: | J31 J22 D63 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2235&r=lab |
| By: | Dominik Hübler (University of Oxford); Olaf Hübler (University of Hannover, IAB Nürnberg and IZA Bonn) |
| Abstract: | This paper looks at the wage effects of perceived and objective insecurity in Germany and the UK using the GSOEP and BHPS panels. The distinction between perceived worry about job loss and economic indicators such as regional unemployment rates and the share of temporary contracts is established. The bargaining hypothesis that job security and wages are complements because of union bargaining power and preference is derived from a variant of the right to manage model. This hypothesis is contrasted with Rosen’s theory of equalising differences where security and wages are substitutes. The empirical literature surveyed finds evidence for both sides. When addressing a number of econometric issues in earlier studies of the bargaining hypothesis this paper finds strong evidence in favour of the former. Accounting for simultaneous determination of job insecurity and wages significantly negative level effects are found for Germany with some evidence for those in the UK. There is also some evidence for growth rate effects (especially for perceived insecurity), but it does not appear robust. Job insecurity, both perceived and objective is found to have influenced wage development in both countries. |
| Keywords: | job security, wages, Germany, UK |
| JEL: | J28 J31 J63 J81 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2241&r=lab |
| By: | Ken Clark (University of Manchester and IZA Bonn); Joanne Lindley (University of Sheffield) |
| Abstract: | We estimate models of earnings and employment outcomes for a sample of white and nonwhite male immigrants drawn from the Labour Force Survey between 1993 and 2002. Immigrants who arrived to enter the labour market are distinguished from those who arrived to complete their education. Diverse patterns of labour market assimilation are found depending on ethnicity and immigrant type. Whites tend to do better than non-whites and labour market entrants do worse than education entrants. There is some evidence of unemployment rates at time of entry to the labour market being associated with permanently lower earnings for non-white immigrants. |
| Keywords: | immigrants, assimilation, earnings, employment |
| JEL: | J23 J7 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2228&r=lab |
| By: | Laszlo Goerke (University of Tübingen, CESifo and IZA Bonn) |
| Abstract: | In an efficiency wage economy, lump-sum severance pay from which shirkers can be excluded raises employment. However, severance payments are usually related to wages. It is shown that earnings-related, mandated severance pay will have ambiguous employment effects if effort can be varied continuously. A substitution of the earnings-related for the lumpsum component reduces employment. Thus, the prevalent form of severance payments in OECD countries might have less advantageous employment effects than previously conjectured. |
| Keywords: | earnings relationship, efficiency wages, employment, severance pay |
| JEL: | J32 J41 J65 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2232&r=lab |
| By: | James Marton (University of Kentucky); Stephen A. Woodbury (Michigan State University and W.E. Upjohn Institute for Employment Research) |
| Abstract: | Employer-provided health benefit coverage for workers who retire before age 65 has fallen over the last decade. We examine a cohort of male workers from the Health and Retirement Survey to examine questions about the dynamics of retiree health benefits and the relationship between retiree health benefits and retirement behavior, which is important for the debate over increasing health coverage for older Americans without reducing work incentives. On dynamics, we find that between 1992 and 1996, 24 percent of full-time workers who had retiree health benefits lost their coverage, while 15 percent of full-time workers who lacked coverage gained it. Also, of the full-time employed men who were covered by retiree health benefits in 1992 and had retired by 1996, 3 percent were uninsured, and 15 percent were covered by health insurance other than employer-provided insurance. On the relationship between retiree health benefits and retirement, we find that workers with retiree benefits were 29 to 55 percent more likely to retire than those without. We also find that workers who are eligible for retiree health benefits tend to take advantage of them when they are relatively young. |
| Keywords: | Marton, Woodbury, health insurance, employee benefits, retirement, elderly, employment, retiree health benefits |
| JEL: | J26 J32 J33 I18 M52 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:06-128&r=lab |
| By: | Shuaizhang Feng (Shanghai University of Finance and Economics); Donald O. Parsons (George Washington University and IZA Bonn) |
| Abstract: | Displaced workers, especially long tenured workers, face large human capital losses. Private firms frequently offer insurance against this threat in the form of severance pay – scheduled benefits linked in expectation to the worker’s human capital loss. We explore this linkage, first reviewing common severance benefit algorithms and then comparing them with simple models of capitalized job displacement losses on data from the Displaced Worker Surveys of 2000 and of 2004. The standard benefit formula of one week’s pay per year of service offers payments roughly in proportion to expected capital losses, but with a proportionality factor of only one quarter of capitalized losses (at 9 percent). Despite the systematic relationship between tenure/age and displacement losses, these factors explain little of the total variation in displacement losses, raising obvious insurance efficiency concerns. Cross-sectional estimates from more complete models, however, uncover no admissible factors currently neglected in standard severance contracts, although the jump in earnings losses between displacements in the robust market of 1997-1999 and the difficult labor market of 2000-2003 does suggest conditioning benefits on market conditions. |
| Keywords: | job displacement, severance pay, unemployment insurance |
| JEL: | J65 J41 J33 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2238&r=lab |
| By: | Alfredo M. Pereira (Department of Economics, College of William and Mary); Rui Manuel Pereira (Faculdade de Ciencias e Tecnologia, Universidade Nova de Lisboa) |
| Abstract: | Public sector wages are a large and growing share of the public budget in Portugal. This means that current efforts to achieve budgetary consolidation have necessarily to include controlling the public wage bill, which has been typically attempted through hiring freezes. The evolution of the wage bill, however, is conditioned by a system of career progressions and promotions, which are expected to lead to an increasing wage bill even in the presence of constant public employment. This is what we refer to as the wage drift. In this paper we estimate the wage drift in the case of university professors. We use a logit analysis using 1999 census data to find that individuals who have been in their career for a relatively long time are statistically more likely to progress as opposed to being promoted while those who are promoted tend to do so at an earlier stage of their career and to spend less time in each position. With this information we infer the employment distribution in 1996 and 1993 under the assumption of a fixed employment population and determine the corresponding wage bill. We estimate that without entries into or exits out of the system, public spending on university professor wages would grow at an average yearly rate of 2.6%, well above the GDP growth rate. The overall message of the paper is to sound the alarm that simply freezing recruiting and discretionary wage increases may be insufficient to stem the tide of growth in the public wage bill. |
| Keywords: | Wage drift, public sector wages, employment promotion, budgetary restraint |
| JEL: | H60 J30 J45 J62 |
| Date: | 2006–07–25 |
| URL: | http://d.repec.org/n?u=RePEc:cwm:wpaper:36&r=lab |
| By: | José Ramón García (Universitat de València); Hector Sala (Universitat Autònoma de Barcelona and IZA Bonn) |
| Abstract: | This paper provides a detailed analysis on the incidence of the tax structure on the labor market. To do so it goes beyond the traditional examination of the ‘level’ effect of the fiscal wedge and considers a ‘composition’ effect defined as a payroll tax bias (PTB): the proportion of payroll taxes paid by employees with respect to the one paid by firms. We develop a right-to-manage model encompassing different wage bargaining systems and the incidence of different type of taxes. Controlling for demand-side and supply-side determinants of unemployment, we show that the PTB plays a significant role in explaining unemployment in the continental European countries, but not in the Nordic nor the Anglo- Saxon ones. We also show that there is no relationship between the incidence of the PTB and unemployment persistence, even though there is a positive one with respect to the level of the fiscal wedge. |
| Keywords: | unemployment, unemployment persistence, fiscal wedge, payroll tax bias |
| JEL: | E24 E62 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2226&r=lab |
| By: | John S. Earle (W.E. Upjohn Institute for Employment Research and Central European University); Klara Sabirinova Peter (Georgia State University, CEPR, and IZA) |
| Abstract: | We analyze a model of wage delay in which strategic complementarity arises because each employer's costs of violating its contracts decrease with the arrears in its labor market. The model is estimated on panel data for workers and firms in Russia, facilitating identification through fixed effects for employees, employers, and local labor markets, and instrumental variables based on policy interventions. The estimated reaction function displays strongly positive neighborhood effects, and the estimated feedback loops – worker quits, effort, strikes, and legal penalties – imply that costs of wage delays are attenuated by neighborhood arrears. We also study a nonlinear case with two stable equilibria: a punctual payment and a late payment equilibrium. The estimates imply that the theoretical conditions for multiple equilibria under symmetric labor market competition are satisfied in our data. |
| Keywords: | Earle, Sabirinova, contract violation, wage arrears, social custom, strategic complementarity, neighborhood effect, social interactions, multiple equilibria, network externality, transition, Russia" |
| JEL: | D21 G34 J23 J31 L33 P23 B52 J30 K42 L14 O17 P31 P37 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:06-129&r=lab |
| By: | Peter B. Dixon; Maureen T. Rimmer |
| Abstract: | A key question concerning labour-market programs is the extent to which they generate jobs for their target group at the expense of others. This effect is measured by displacement percentages. We describe a version of the MONASH model designed to quantify the effects of labour-market programs. Our simulation results suggests that: (1) labour-market programs can generate significant long-run increases in employment; (2) displacement percentages depend on how a labour-market program affects the income trade-off faced by target and non-target groups between work and non-work; and (3) displacement percentages are larger in the short run than in the long run. |
| Keywords: | labour-market programs, displacement percentage, CGE modelling |
| JEL: | C68 J23 J63 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:cop:wpaper:g-154&r=lab |
| By: | Wouter Vermeulen; Jos van Ommeren |
| Abstract: | Housing markets may significantly affect the relationship between regional population and employment, if housing supply is not fully accommodative to demand. We analyse the relationships between housing supply, regional population and employment empirically in a three-equation dynamic model. Annual regional panel data are used for the Netherlands, where a strong tradition of spatial planning exists. We find that net internal migration is strongly determined by housing supply, whereas employment growth has no statistically significant impact. Growth of the housing stock is only moderately affected by population and employment, possibly as a result of restrictive spatial policies. Employment adjusts substantially towards a long-run relationship with the regional population. The analysis further indicates that labour markets drive this long-run adjustment more than local consumer demand. Hence, people follow houses rather than jobs, and jobs follow people in the long run. |
| Keywords: | housing supply; population-employment interaction; regional panel data |
| JEL: | R11 R23 J23 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:65&r=lab |
| By: | Monique Ebell (Humboldt University of Berlin); Christian Haefke (Institute for Advanced Studies, Vienna, Instituto de Análisis Económico, CSIC and IZA Bonn) |
| Abstract: | We contribute to the growing literature which aims to link product market regulation and competition to labor market outcomes, in an attempt to explain the divergent US and continental European labor market performance over the past two decades. The main contributions of this paper are threefold. First, we show that the choice of bargaining regime is crucial for the effect of product market competition on unemployment rates, being substantial under collective bargaining and considerably more modest under individual bargaining. Since the choice of bargaining institution is so important, we endogenize it. We find that the bargaining regime which emerges endogenously depends crucially on the degree of product market competition. When product market competition is low, collective bargaining is stable, while individual bargaining emerges as the stable institution under high degrees of product market competition. This also allows us to link product market competition and collective bargaining coverage rates. Our results suggest that the strong decline in collective bargaining coverage and unionization in the US and UK over the last two decades might have been a direct consequence of the Reagan/Thatcher product market reforms of the early 80’s. Finally, we calibrate the model to assess the quantitative magnitude of our results. We find that moving from the US low regulation-individual bargaining economy to the EU high regulation-collective bargaining economy leads to a substantial increase in equilibrium unemployment rates from 5.5% to 8.9 % in the model economy. |
| Keywords: | product market competition, European Unemployment Puzzle, overhiring, wage bargaining |
| JEL: | E24 J63 L16 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2222&r=lab |
| By: | John C. Ham; Kevin T. Reilly |
| Abstract: | Economists have devoted substantial resources to estimating the intertemporal substitution elasticity for labor supply because this elasticity plays a crucial role in the real business cycle literature. Generally, the estimates of the elasticity have been too low to explain business cycles. Economists have responded by trying to modify real business cycle models to allow for smaller elasticities, but they have experienced mixed success at best. However, the standard intertemporal substitution model has not done well when tested, and if this model is incorrect, so will be the estimated labor supply elasticities based upon it. An equilibrium alternative to the standard intertemporal labor supply model is the implicit contract model. In this latter model firms and workers bargain over state-contingent contracts denominated in terms of consumption and hours of work. Further, the price of leisure is the marginal product of labor or the shadow wage, which differs from the observed wage. A number of studies have found that the data are compatible with an implicit contract model; in particular in Ham and Reilly (2002) we found that we could reject a separable (within period) implicit contract model but not a non-separable one. If an implicit contract model is appropriate, this is the context in which we should try to estimate the intertemporal labor supply elasticity. However this estimation is potentially quite difficult with micro data since the shadow wage (marginal product of labor) is unobserved. In this paper we first develop a procedure that allows one to estimate the intertemporal substitution elasticity in an implicit contract model from micro data. We then implement this procedure using the Panel Study of Income Dynamics (PSID) and the Consumer Expenditure Survey (CES). We obtain statistically significant elasticities of 0.9 with the PSID and 1.0 with the CES. The consistency of the estimate across the data sets is impressive given that we use different estimation approaches (micro data versus synthetic cohorts) and different consumption measures (food consumption versus total nondurable consumption) in the two data sets. These results are three times larger than existing estimates based on the standard intertemporal supply elasticity from this data set and thus offer more hope that equilibrium perspectives on the labor market are capable of tracking the data. Given that the implicit contract model is less likely to be rejected than the standard model in our work and other research, we believe that our approach should prove to be quite useful. |
| JEL: | E30 J22 J60 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:scp:wpaper:06-54&r=lab |
| By: | Jagadeesh Gokhale |
| Abstract: | Government spending on the elderly is projected to increase rapidly as the U.S. population becomes older, and many policymakers and budget analysts are concerned about the continued viability of entitlement programs such as Social Security. The Social Security trustees’ economic growth projections receive considerable attention because many people believe that higher growth would significantly improve the program’s actuarial balance (that is, reduce its actuarial deficit). This belief is validated by Social Security trustees’ calculations that show larger 75-year actuarial balances under faster assumed real wage growth rates. Since 2003 the trustees have reported the program’s actuarial balance measured in perpetuity. But they do not provide sensitivity analysis that examines the impact of various assumptions on the infinite-term actuarial balance. This paper shows analytically that faster wage growth may reduce Social Security’s infinite-term actuarial balance if the ratio of workers to retirees continues to decline rapidly beyond the 75th year. This result holds even if the decline in that ratio ceases after just two decades beyond the 75th year. The paper reports stylized calculations of the impact of real wage growth and demographic change–including time-varying rates of change based on official projections for the U.S. economy–on Social Security’s actuarial balance in a multi-period setting. Finally, the Social Security and Accounts Simulator (SSASIM) actuarial model of Social Security financing is used to estimate the degree to which increased wage growth could negatively affect the system’s infinite-term actuarial balance. These results raise questions about the conventional wisdom that holds that improved wage growth would affect Social Security’s financing, and how a widely used measure of Social Security’s financing captures those effects. |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_461&r=lab |
| By: | Barbara A. Butrica; Karen E. Smith; C. Eugene Steuerle |
| Abstract: | The choice of retirement age is the most important portfolio choice most workers will make. Drawing on the Urban Institute's Dynamic Simulation of Income model (DYNASIM3), this report examines how delaying retirement for nondisabled workers would affect individual retiree benefits, the solvency of the Social Security trust fund, and general revenues. The results suggest that delaying retirement by itself does not generate enough additional revenue to make Social Security solvent by 2045. Benefit cuts or supplementary funding sources will be necessary to achieve solvency. However, the size of the benefit cuts or tax increases could be minimized if individuals worked longer. This additional work also substantially increases worker's retirement well-being. Lower-income workers, to the extent they can work longer, have the most to gain from their additional labor. Policy changes that encourage work at older ages will substantially improve both economic and personal well-being in the future. |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_463&r=lab |
| By: | Brian Krogh Graversen (Danish National Institute of Social Research); Peter Jensen (Aarhus School of Business and IZA Bonn) |
| Abstract: | In this paper, we evaluate the employment effects of Danish active labour market programmes aimed at welfare benefit recipients. We estimate an econometric model with treatment effects and discrete outcomes and we allow the responses to treatment to vary among observationally identical persons. The empirical analysis is based on a register-based dataset that gives information on participation in labour market programmes and subsequent employment. Using a latent variable model, we estimate commonly defined treatment effects, and in particular, the distribution of treatment effects. We do not find any significant mean effects of participation in private sector employment programmes compared to participation in other programmes, but we find evidence of heterogeneity in the treatment effects. |
| Keywords: | heterogeneous treatment effects, active labour market programmes, welfare dependence, employment |
| JEL: | I38 J64 J68 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2230&r=lab |
| By: | John C. Bluedorn (Dept of Economcis, University of Oxford); Elizabeth U. Cascio (University of California, Davis and NBER) |
| Abstract: | The existence of intergenerational spillovers to public investments in schooling is often assumed in policy discussions regarding economic development. However, few studies to date have forwarded convincing evidence that externalities exist for developing countries. In this paper, we address this issue using the arguably exogenous schooling consequences of a major hurricane strike on Puerto Rico in the 1950s. Using data from the US. Census of Population for Puerto Rico, we first find that individuals on to margin of school entry at the time of the storm and residing in the most exposed regions of the island had significantly lower levels of education as adults than their counterparts in less exposed regions. Using the interaction of wind speed and age at the time of the storm as an instrument, we then find that maternal education is related to the probability that a child speaks English. Our estimates imply an additional year of education raise the probability that a child speaks English by between 4.3 and 4.5 percentage points, c approximately 24 to 28 percent. We find no conclusive evidence that parental education increases the probability that a child is enrolled, literate, or in an age-appropriate grad, On balance, these findings suggest that education is responsible at least in part for the persistence of human capital across generations. |
| Keywords: | education, intergenerational mobility, natural experiment, hurricane |
| JEL: | J62 |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:nuf:econwp:0521&r=lab |
| By: | D. Dickinson |
| Abstract: | This paper reports on the use of carrot (positive) and stick (negative) incentives as methods of increasing effort among members of work teams. We study teams of four members in a laboratory environment in which giving effort towards the team goal is simulated by eliciting voluntary contributions towards the provision of a public good. We test the efficiency improving properties of four distinct environments: monetary prizes given to high contributors versus monetary fines assessed to low contributors, where high/low contributor is defined first in terms of absolute contributions and then in terms of contributions relative to abilities—which we call handicapping. Our results show that both carrot and stick increase efficiency levels by 11-29%. We find that handicapped incentives promise the highest efficiency levels, and when handicapping is not used certain types of penalties may be more effective than prizes. The implications for work teams and suggestions for practical implementation are discussed. |
| URL: | http://d.repec.org/n?u=RePEc:usu:wpaper:2000-06&r=lab |
| By: | Dennis Coates (Department of Economics, University of Maryland, Baltimore County); Brad R. Humphreys (Department of Recreation, Sport and Tourism, University of Illinois) |
| Abstract: | This paper explores the impact of professional sports teams and stadiums on the wages of individuals employed in several narrowly defined occupational groups in cities in the United States. The occupational groups examined are among those that proponents of public funding of professional sports claim will benefit economically from these stadiums. Our analysis uses data from the March Supplement to the Current Population Survey (CPS) for the period 1983 to 1998. Previous research focused on aggregate measures of income whereas here the focus is on the wages of individual workers. The results of the study conform conclusions of earlier research that the overall sports environment is frequently statistically significant as a determinant of earnings. |
| JEL: | L83 R58 J30 H71 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0612&r=lab |
| By: | Augustin de Coulon (NRDC, Institute of Education, CEP, London School of Economics and IZA Bonn); François-Charles Wolff (LEN, University of Nantes) |
| Abstract: | In this paper, we investigate the location choice of immigrants when retiring. In a context where labour considerations no longer matter, the location decisions are expected to depend not only on a comparison of standard-of-living between the origin and host countries, but should also be affected by the strength of family relationships. Assuming that migrants derive some satisfaction from contact and visits with other family members, we suggest that migrants may choose a third type of migration move beyond the standard stay/return decision called the ‘va-et-vient’, where individuals choose to share their time across the host and the origin country. In the empirical analysis, we investigate the determinants of the location intention when retiring using a recent data set on migrants currently living in France. We find that the migrant’s choice is significantly related to the location of other family members and that those determinants vary with respect to the different preferred choices. |
| Keywords: | return migration, retirement, family interactions |
| JEL: | J26 O15 R23 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2224&r=lab |
| By: | Laura Thissen; Sjef Ederveen |
| Abstract: | Education has always been regarded as a national matter. According to the subsidiarity principle power may only be shifted to a higher level of coordination when solid arguments exist that this will improve welfare. This paper aims at answering the question if these arguments exist. We find no support for economies of scale, i.e. larger countries do not necessarily provide higher quality education; nor do larger schools. Empirical evidence for human capital externalities through student mobility is scarce. Concluding, we find little support for European coordination of higher education. However, there is evidence that student mobility is a precursor for labour migration. Uniformizing the structure of higher education in the EU, and making educational programs more transparent, may therefore be defended from this perspective. Quality does matter for students, and student mobility is increasing. This may be beneficial to labour mobility. |
| Keywords: | Subsidiarity; European coordination; Higher education; Student migration |
| JEL: | F22 H87 I2 J61 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:68&r=lab |