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on Labour Economics |
| By: | Filipe Almeida-Santos; Karen Mumford |
| Abstract: | We use British household panel data to explore the wage returns to training incidence and intensity (duration) for 6924 employees. We find these returns differ greatly depending on the nature of the training (general or specific); who funds the training (employee or employer); and the skill levels of the recipient (white or blue collar). Using decomposition analysis, we further conclude that training is positively associated with wage dispersion in Britain and a virtuous circle of wage gains but only for white-collar employees. |
| Keywords: | Training, wage compression, performance |
| JEL: | J24 J31 J41 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:06/14&r=lab |
| By: | Nordström Skans, Oskar (Institute for Labour Market Policy Evaluation (IFAU)); Edin, Per-Anders (Department of Economics); Holmlund, Bertil (Department of Economics) |
| Abstract: | The paper describes the Swedish wage distribution and how it correlates with worker mobility and plant-specific factors. It is well known that wage inequality has increased in Sweden since the mid-1980s. However, little evidence has so far been available as to whether this development reflects increased dispersion between plants, between individuals in the same plant, or both. We use a new linked employer-employee data set and discover that a trend rise in between-plant wage inequality account for the entire increase in wage dispersion. This pattern, which remains when we control for observable individual human capital characteristics, may reflect increased sorting of workers by skill levels and/or increased scope for rent sharing in local wage negotiations. Our discussion suggests that both factors may have become more important. |
| Keywords: | Wage inequality; labor turnover |
| JEL: | J31 J63 |
| Date: | 2006–08–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2006_018&r=lab |
| By: | Marigee Bacolod (Department of Economics, University of California-Irvine); V. Joseph Hotz (Department of Economics, University of California, Los Angeles) |
| Abstract: | This study examines the changes in the school-to-work transition in the United States over the latter part of the twentieth century and their consequences for the wages of young adults. In particular, we document the various types of work and schooling experiences acquired by youth who came to adulthood in the U.S. during the late 1960s, 1970s, and through the 1980s. We pay particular attention to how the differences across cohorts in these transitions vary by gender and race/ethnicity and how these differences affected their subsequent wage attainment. Evidence is evaluated using data from National Longitudinal Surveys of Young Women, Young Men, and Youth 1979. In general, we find that indicators of educational attainment, working while in school and non-school related work increased across cohorts for almost all racial/ethnic and gender groups. This was especially true for young women. Furthermore, various indicators of personal and family backgrounds changed in ways consistent with an improvement across cohorts in the preparation of young men and women for their attainment of schooling and work experience and their success in the labor market. The one exception to this general picture of improvement across cohorts was Hispanic men, who experienced a notable decline in educational attainment, the acquisition of full time work early in their adult lives and in a variety of personal and family background characteristics. With respect to hourly wage rates, we find that wages over the ages 16 through 27 declined across cohorts. However, the rate of growth of wages with age, particularly over adult ages, increased across cohorts for all racial/ethnic and gender groups, except black and Hispanic men. To assess the relative importance that changes in the school, work, military and other experiences had on wages across generations, we employ the decomposition proposed by Juhn, Murphy and Pierce (1993) to decompose the across-cohort wage changes in observable determinants, in their associated prices and in unobservable determinants, using a standard regression specification for the determinants of life cycle wages. We find that the dominant factor explaining the declines in wages across cohorts is attributable to changes in the prices of observable characteristics and to changes in unobservable determinants. At constant skill prices, changes in the skill composition across youth cohorts would have increased their wages, most especially for Hispanic women, followed by black women, white women, black men, and then white men. In striking contrast, Hispanic males’ wages would still have declined across cohorts purely accounting for compositional changes. We interpret this result as coming from the changing skill composition of immigrants. Our results also highlight the need for accounting for the endogeneity and selectivity of early skill acquisition. |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:050618&r=lab |
| By: | Marigee Bacolod (University of California-Irvine); Bernardo S. Blum (University of Toronto) |
| Abstract: | In this paper we show that the two major developments experienced by the US labor market - rising inequality and narrowing of the male-female wage gap - can be explained by a common source: the increase in price of cognitive skills and the decrease in price of motor skills. We obtain the price of a multidimensional vector of skills by combining a hedonic price framework with data on the skill requirements of jobs from the Dictionary of Occupational Titles (DOT) and workers’ wages from the CPS. We find that in the 1968-1990 period the returns to cognitive skills increased 4-fold and the returns to motor skills declined by 30%. Given that the top of the wage distribution of college and high school graduates is relatively well endowed with cognitive skills, these changes in skill prices explain up to 40% of the rise in inequality among college graduates and about 20% among high school graduates. In a similar way, because women were in occupations intensive in cognitive skills while men were in motor-intensive occupations, these skill price changes explain over 80% of the observed narrowing of the male-female wage gap. |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:050617&r=lab |
| By: | Harley Frazis (U.S. Bureau of Labor Statistics); Mark A Loewenstein (U.S. Bureau of Labor Statistics) |
| Abstract: | This paper analyzes the relationship between wages and productivity during the early years of an employment relationship. Data from the Employment Opportunity Pilot Project show that worker productivity grows substantially during the first two years on the job, with most of the growth in productivity occurring at the very start of the job. Correcting for measurement error and the fact that expected productivity beyond the start of the job may be folded into the starting wage if wage revisions are not instantaneous, one finds that variation in productivity is only partially reflected in wages. Not only is productivity growth stemming from human capital accumulation while on the job only partially reflected in wage growth, but starting productivity differences for workers in the same job – in large part driven by differences in relevant experience - are only partially reflected in starting wage differences. Our empirical findings can be explained by a simple model of employer – worker cost sharing in which (a) the cost to a worker of locating and moving to a new job increases with the worker's stock of human capital and (b) equity norms prevent employers from paying senior workers lower wages than junior workers who are no more productive. |
| Keywords: | Wages, Productivity, Compression |
| JEL: | J31 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec060100&r=lab |
| By: | Ryo Kambayashi; Daiji Kawaguchi; Izumi Yokoyama |
| Abstract: | Diverging economic inequality has become a common focus of economic debate in developed countries. In particular, the recent experience of Japan has started attracting international attention. We take advantage of a rich micro-level data set from the Basic Survey on Wage Structure (1989-2003) to perform an in-depth analysis of the change in the inequality and distribution of the hourly wage. We observe that lower returns to education and years of tenure contribute to diminishing income disparity between groups for both sexes. A larger variance within a group contributes to the wage disparity for males, while an increased heterogeneity of workers' attributes contributes to the wage disparity for females. The Dinardo, Fortin, and Lemieux decomposition also confirms the basic findings from a parametric variance decomposition. |
| Keywords: | Wage Distribution, Wage Equation, Variance Decomposition |
| JEL: | J31 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:hst:hstdps:d06-183&r=lab |
| By: | Satoshi Shimizutani; Izumi Yokoyama |
| Abstract: | What happened to the traditional, long-term employment practices in Japan after the 1990s has remained unexplored. We take advantage of a micro data set from the Basic Survey on Wage Structure to provide new evidence regarding the years of tenure for Japanese male workers after a decade-long recession. While the practice of long-term employment is still alive among the workers who are already in the system, the proportion of workers who are not covered by the system has increased. These ongoing phenomena contribute to the bipolarization in the Japanese labor market. |
| Keywords: | long-term employment practice, Japan, Oaxaca-Blinder decomposition, DiNardo-Fortin-Lemieux decomposition |
| JEL: | J41 J82 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:hst:hstdps:d06-182&r=lab |
| By: | Lalive, Rafael (University of Zurich) |
| 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: | 2006–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2006_008&r=lab |
| By: | Sara Lemos |
| Abstract: | It is well established in the literature that minimum wage increases compress the wage distribution. Firms respond to these higher labour costs by reducing employment, reducing profits, or raising prices. While there are hundreds of studies on the employment effect of the minimum wage, there are merely a handful of studies on its profit effects, and only a couple of dozen studies on its price effects. Furthermore, a comprehensive survey on minimum wage price effects is not available in the literature. Given the policy relevance of this neglected issue, in this paper we summarise and critically compare the available evidence on the effects of minimum wages on prices. |
| Keywords: | minimum wage; employment; labour costs; cost shock; pass-through |
| JEL: | J38 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:06/9&r=lab |
| By: | Jere R. Behrman; Nancy Birdsall; Miguel Székely |
| Abstract: | This paper applies a new approach to the estimation of the impact of policy, both the levels and the changes, on wage differentials using a new high-quality data set on wage differentials by schooling level for 18 Latin American countries for the period 1977-1998. The results indicate that liberalizing policy changes overall have had a short-run disequalizing effect of expanding wage differentials, although this effect tends to fade away over time. This disequalizing effect is due to the strong impact of domestic financial market reform, capital account liberalization and tax reform. On the other hand, privatization contributed to narrowing wage differentials and trade openness had no significant effect on wage differentials. Technological progress, rather than trade flows, appears to be a channel through which policy changes are affecting inequality. |
| Keywords: | Latin America, wages, market reform, tax reform, technological change |
| JEL: | O33 J31 O57 H20 G10 L33 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:29&r=lab |
| By: | Granberg, Malin (Department of Economics, Umeå University); Löfgren, Karl-Gustaf (Department of Economics, Umeå University) |
| Abstract: | The purpose of this paper is to analyze the effects of different sickness insurance regimes on the employee decision reporting sick or not. We can think of the design problem as a representative employer’s decision to determine the optimal relationship between the wage and the sickness pay. The employee bases her decision to work or not on this relative price and her exogenously given health status that varies between individuals. We believe that the incentives present in the model are able to tell as about relevant aspects of the incentives involved in a state managed sickness insurance system. We calculate how the control variables depend on parameters such as the average productivity of the worker, the average productivity of the substitute, the wage of the substitute, and the search cost to find a substitute. Since we assume that the health status of the work force is heterogeneous and represented by a distribution function, we are also able to calculate the change in the work participation rate, as a function of the parameters. |
| Keywords: | Sickness insurance design; wage setting; and labour force participation |
| JEL: | I18 J20 J28 |
| Date: | 2006–08–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0695&r=lab |
| By: | Robert Boyer |
| Abstract: | This paper challenges the conventional wisdom that the dynamism of employment is always contradictory to the enforcement of some forms of security for workers. Contemporary theorizing now recognizes the specificity of the wage-labour nexus. Consequently, minimum security is required for good economic performance by firms and national economies. A comparative analysis of OECD countries shows that the extended security promoted by welfare systems has not been detrimental to innovation, growth and job creation. Developing countries cannot immediately catch up with the emerging standards of flexicurity but the methodology of employment diagnosis might help them in designing security/flexibility configurations tailored according to their domestic economic specialization, social values and political choices. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2006-21&r=lab |
| By: | David Neumark (Department of Economics, University of California-Irvine); Wendy Cunningham (World Bank); Lucas Siga (World Bank) |
| Abstract: | The Brazilian economy has long relied on the minimum wage, having first implemented a minimum in 1940. Shortly after taking office in 2003, Brazil’s President raised the minimum wage by 20 percent and promised to double the value of the minimum wage before his term ends in 2006. The usual rationale for minimum wage increases is to bring about beneficial changes in the income distribution, by raising incomes of poor and low-income families. The goal of this paper is to evaluate the efficacy of the minimum wage in Brazil in bringing about these changes in the income distribution. We examine data drawn from Brazil’s major metropolitan areas, studying the years after Brazil’s hyper-inflation ended. The estimates provide no evidence that minimum wages in Brazil lift family incomes at the lower points of the income distribution; if anything some of the evidence points to adverse effects on lower-income families. |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:050627&r=lab |
| By: | H. Lehmann; N. Pignatti; J. Wadsworth |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:545&r=lab |
| By: | Bhattacharya, Joydeep; Reed, Robert |
| Abstract: | Many countries around the world have large public pension programs with significant cross-cohort redistribution. This paper provides a rationale for such programs in a lifecycle framework with search and matching frictions in the labor market. In the model, public pension programs alter the age composition of the labor force by inducing the jobless elderly to retire. This improves the allocation of workers to jobs, raises firm entry and may also improve welfare. By requiring a long history of labor market attachment as a precondition to receiving benefits, these programs raise the future value of current employment for the young. This redistributes bargaining strength and income from the young to the old. |
| Keywords: | Search, labor market efficiency, unemployment, lifecycle, pensions |
| JEL: | E0 |
| Date: | 2006–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:12661&r=lab |
| By: | Ellen Meara; Richard Frank |
| Abstract: | The Personal Responsibility and Work Opportunity Reconciliation Act imposed work requirements on welfare recipients. Using 1999-2001 data from Boston, Chicago, and San Antonio, we compared the labor market and welfare experience of women with four employment barriers: poor mental health, moderate to heavy drug and alcohol use, a child with a behavior problem, and a child under the age of 3. Women with poor mental health and drug and alcohol users were much less likely to move into work than other groups, and more likely to be sanctioned for noncompliance with welfare requirements in 2000-2001 as federal work participation requirements increased |
| JEL: | I3 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12480&r=lab |
| By: | Cordula Zabel (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | This article examines the effect of employment experience on first birth risks in Great Britain. The data used is from the British Household Panel Survey (BHPS). A positive effect of employment experience on first birth risks is found, in accordance with pre-dictions from economic models of fertility timing. This effect did not differ greatly between educational groups, in contrast to what was expected. Positive effects were found for all educational groups. An especially strong increase in first birth risks was found across the first year of employment spells. |
| Keywords: | United Kingdom, fertility determinants |
| JEL: | J1 Z0 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2006-029&r=lab |
| By: | David Neumark (Department of Economics, University of California-Irvine); Donna Rothstein (Bureau of Labor Statistics, U.S. Department of Labor) |
| Abstract: | This paper tests whether school-to-work (STW) programs are particularly beneficial for those less likely to go to college in their absence—often termed the “forgotten half” in the STW literature. The empirical analysis is based on the NLSY97, which allows us to study six types of STW programs, including job shadowing, mentoring, coop, school enterprises, tech prep, and internships / apprenticeships. For men there is quite a bit of evidence that STW program participation is particularly advantageous for those in the forgotten half. For these men, among the strongest evidence is that mentoring and coop programs increase post-secondary education, and coop, school enterprise, and internship / apprenticeship programs boost employment and decrease idleness after leaving high school. There is less evidence that STW programs are particularly beneficial in increasing schooling among women in the forgotten half, although internship / apprenticeship programs do lead to positive earnings effects concentrated among these women. |
| JEL: | I28 J15 J24 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:050625&r=lab |
| By: | R. Antonietti |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:556&r=lab |
| By: | Madonna Harrington Meyer (Center for Policy Research, Maxwell School, and SU Gerontology Center, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244-1020); Douglas A. Wolf (Center for Policy Research, Maxwell School of Syracuse University, 426 Eggers Hall, Syracuse, NY 13244-1020); Christine L. Himes (Center for Policy Research, Maxwell School of Syracuse University, 426 Eggers Hall, Syracuse, NY 13244-1020) |
| Abstract: | For most older people in the United States, Social Security is the major source of income: nine out of ten people age 65 or older receive benefits, which represent an average of 41 percent of their income. Largely as a result of Social Security, poverty rates for the elderly are at an all-time low, just 10 percent. But pockets of poverty persist: older unmarried persons, blacks, and Hispanics experience poverty rates in excess of 20 percent, and over 40 percent of all older single black women live in poverty. People quality for Social Security based either on their work record or their marital status. Most older women receive noncontributory Social Security spouse of widow benefits on the basis of their marital history. For these women, marital status is more important than employment status in shaping old-age financial security. However, the trend to marry and stay married has declined over time in the United States, particularly among black women. This, we hypothesize, means that fewer women will qualify for spouse and widow benefits in coming decades. As a result, Social Security benefits will shrink among the very population that currently reports higher poverty rates, older single women, particularly black women. In this policy brief, we ask: Compared to earlier cohorts, what proportion of white, black, and Hispanic women born in the 1940s, 1950s, and 1960s will enter old age without a marriage that qualifies them for Social Security spouse and widow benefits? We find that the proportion who will reach age 62 without a qualifying marriage, and thus be ineligible for Social Security spouse and widow benefits, is increasing modestly for whites and Hispanics but dramatically for African Americans. Most of these women will be eligible for retired worker benefits under Social Security, but those benefits are not likely to be as large as the benefits they would have received as spouses and widows, had they been eligible. We then discuss a range of policy alternatives, including the possibility of a minimum benefit. |
| Keywords: | Social Security, spousal benefits, widow benefits, poverty, elderly, social welfare, income security. |
| JEL: | I38 J14 J15 J16 J26 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:max:cprpbr:33&r=lab |
| By: | Jiawei Chen (Department of Economics, University of California-Irvine) |
| Abstract: | Empirical work on bank loans typically regresses loan spreads (markups of loan interest rates over a benchmark rate) on observed characteristics of banks, firms, and loans. The estimation is problematic when some of these characteristics are only partially observed and the matching of banks and firms is endogenously determined because they prefer partners that have higher quality. We study the U.S. bank loan market with a two-sided matching model to control for the endogenous matching, and obtain Bayesian inference using a Gibbs sampling algorithm with data augmentation. We find evidence of positive assortative matching of sizes, explained by similar relationships between quality and size on both sides of the market. Banks' risk and firms' risk are important factors in their quality. Controlling for the endogenous matching has a strong impact on estimated coefficients in the loan spread equation. |
| Keywords: | Two-sided matching, Loan spread, Bayesian inference, Gibbs sampling with data augmentation |
| JEL: | C11 C78 G21 L11 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:060702&r=lab |
| By: | Lixin Cai (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne and IZA Bonn); Ha Vu (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne and IZA Bonn); Roger Wilkins (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne and IZA Bonn) |
| Abstract: | We use Centrelink payment records on Disability Support Pension (DSP) recipients over the period 1995 to 2002 to investigate individual transitions off the payment. Our analysis involves two distinct, but complementary, components. The first component, which can be represented as an ‘entry cohort’ analysis, investigates the factors associated with making a transition off DSP. The second component can be interpreted as an ‘exit cohort’ approach, whereby we examine the factors associated with sustaining an exit off all welfare payments, given that an individual has in fact made the transition from DSP to that state. Our findings are consistent with the existence of a close correspondence between disability benefit receipt and labour market outcomes: entry to DSP via unemployment benefits is associated with substantially reduced prospects of exiting DSP, while employment during the DSP spell is associated with not only an increased probability of exiting DSP, but also more success in staying off payments once an exit has been made. A further finding of our analysis is that persons who exit DSP due to take-up of employment have a relatively high rate of return to payments compared with persons who exit for other reasons, and indeed exhibit a high propensity to cycle off and on payments. |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2006n18&r=lab |