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on Labour Economics |
| By: | Alison Booth (University of Essex, Australian National University, CEPR and IZA Bonn); Margi Wood (Australian National University) |
| Abstract: | In 2003, part-time employment in Australia accounted for over 42% of the Australian female workforce, nearly 17% of the male workforce, and represented 28% of total employment. Of the OECD countries, only the Netherlands has a higher proportion of working women employed part-time and Australia tops the OECD league in terms of its proportion of working men who are part-time. In this paper we investigate part-time full-time hourly wage gaps using important new panel data from the first four waves of the new Household, Income and Labour Dynamics in Australia Survey. We find that, once unobserved individual heterogeneity has been taken into account, part-time men and women typically earn an hourly pay premium. This premium varies with casual employment status, but is always positive, a result that survives our robustness checks. We advance some hypotheses as to why there is a part-time pay advantage in Australia. |
| Keywords: | part-time, full-time, efficiency hours, gender |
| JEL: | J16 J22 J31 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2268&r=lab |
| By: | Thomas Lemieux; W. Bentley Macleod; Daniel Parent |
| Abstract: | An increasing fraction of jobs in the U.S. labor market explicitly pay workers for their performance using a bonus, a commission, or a piece rate. In this paper, we look at the effect of the growing incidence of performance pay on wage inequality. The basic premise of the paper is that performance pay jobs have a more "competitive" pay structure that rewards productivity differences more than other jobs. Consistent with this view, we show that compensation in performance pay jobs is more closely tied to both measured (by the econometrician) and unmeasured productive characteristics of workers. We conclude that the growing incidence of performance pay accounts for 25 percent of the growth in male wage inequality between the late 1970s and the early 1990s. |
| JEL: | D3 J31 J33 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:mcl:mclwop:2006-08&r=lab |
| By: | David L. Dickinson |
| Abstract: | This paper considers an extension of the classical static labor-leisure choice model to allow for an on-the-job leisure choice. The key result is that an income-compensated wage increase, while theoretically increasing hours worked, will likely increase on-the-job leisure. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:06-13&r=lab |
| By: | Andersen, Torben M. (Department of Economics, Copenhagen Business School); Skaksen , Jan Rose (Department of Economics, Copenhagen Business School) |
| Abstract: | In this paper, we set up a two-country general equilibrium model where trade unions have wage bargaining power. We show that a decrease in trade distortions inducing further product market integration gives rise to specialization gains as well as a labour market reform effect. The implications of the specialization gains are similar to an increase in labour productivity, whereas the labour market reform effect is similar to an increase in the degree of competition in the labour market. Wages, employment and welfare increase as a result of further product market integration. It is interesting to note that the labour market reform effect of product market integration is achieved despite an increase in the wage level. |
| Keywords: | Trade frictions; wage formation; employment; welfare |
| JEL: | F15 J30 J50 |
| Date: | 2006–09–07 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2004_008&r=lab |
| By: | Jérôme Adda (University College London and IFS); Christian Dustmann (University College London, IFS and IZA Bonn); Costas Meghir (University College London, IFS and IZA Bonn); Jean-Marc Robin (University of Paris 1, University College London, IFS and IZA Bonn) |
| Abstract: | We develop a dynamic discrete choice model of training choice, employment and wage growth, allowing for job mobility, in a world where wages depend on firm-worker matches, as well as experience and tenure and jobs take time to locate. We estimate this model on a large administrative panel data set which traces labour market transitions, mobility across firms and wages from the end of statutory schooling. We use the model to evaluate the lifecycle return to apprenticeship training and find that on average the costs outweigh the benefits; however for those who choose to train the returns are positive. We then use our model to consider the long-term lifecycle effects of two reforms: One is the introduction of an Earned Income Tax Credit in Germany, and the other is a reform to Unemployment Insurance. In both reforms we find very significant impacts of the policy on training choices and on the value of realised matches, demonstrating the importance of considering such longer term implications. |
| Keywords: | educational decision, apprenticeship, dynamic choice, evaluation |
| JEL: | I2 J6 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2260&r=lab |
| By: | Hui He; Zheng Liu |
| Abstract: | Wage inequality between education groups in the United States has increased substantially since the early 1980s. The relative quantity of college-educated workers has also increased dramatically in the postwar period. This paper presents a unified framework where the dynamics of both skill accumulation and wage inequality arise as an equilibrium outcome driven by measured investment-specific technological change. Working through capital-skill complementarity and endogenous skill accumulation, the model is able to account for much of the observed changes in the relative quantity of skilled workers. The model also does well in replicating the observed rise in wage inequality since the early 1980s. Based on the calibrated model, we examine the quantitative effects of some hypothetical tax-policy reforms on skill formation, inequality, and welfare. |
| Keywords: | Wages |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmwp:644&r=lab |
| By: | Mark Gertler; Antonella Trigari |
| Abstract: | A number of authors have recently emphasized that the conventional model of unemployment dynamics due to Mortensen and Pissarides has difficulty accounting for the relatively volatile behavior of labor market activity over the business cycle. We address this issue by modifying the MP framework to allow for staggered multiperiod wage contracting. What emerges is a tractable relation for wage dynamics that is a natural generalization of the period-by-period Nash bargaining outcome in the conventional formulation. An interesting side-product is the emergence of spillover effects of average wages on the bargaining process. We then show that a reasonable calibration of the model can account well for the cyclical behavior of wages and labor market activity observed in the data. The spillover effects turn out to be important in this respect. |
| JEL: | E24 E32 J23 J3 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12498&r=lab |
| By: | Konstantinos Tatsiramos (IZA Bonn) |
| Abstract: | The empirical literature on unemployment insurance has focused on its direct effect on unemployment duration, while the potential indirect effect on employment stability through a more efficient matching process, as the unemployed can search for a longer period, has attracted much less attention. In the European context this is surprising as reform proposals of the unemployment insurance system aiming at reducing high European unemployment rates should consider both effects. This paper provides evidence on the effect of unemployment benefits on unemployment and employment duration in Europe, using individual data from the European Community Household Panel for eight countries. Country specific estimates based on a multivariate discrete proportional hazard model, controlling for observed and unobserved individual heterogeneity, suggest that even if receiving benefits has a direct negative effect increasing the duration of unemployment spells, there is also a positive indirect effect of benefits on subsequent employment duration. This indirect effect is pronounced in countries with relatively generous benefit systems, and for recipients who have remained unemployed for at least six months. In terms of the magnitude of the effect, recipients remain employed on average two to four months longer than non-recipients. This represents a ten to twenty per cent increase relative to the average employment duration, compensating for the additional time spent in unemployment. These findings are in line with theories suggesting a matching effect of unemployment insurance. |
| Keywords: | unemployment insurance, unemployment duration, employment stability |
| JEL: | J64 J65 C41 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2280&r=lab |
| By: | Arne Uhlendorff; Klaus F. Zimmermann |
| Abstract: | Unemployment rates are often higher for migrants than for natives. This could result from longer periods of unemployment as well as from shorter periods of employment. This paper jointly examines male native-migrant differences in the duration of unemployment and subsequent employment using German panel data and bivariate discrete time hazard rate models. Compared to natives with the same observable and unobservable characteristics, unemployed migrants do not find less stable positions but they need more time to find these jobs. The probability of leaving unemployment also varies strongly between ethnicities, while first and second generation Turks are identified as the major problem group. Therefore, policy should concentrate on the job finding process of Turkish migrants to fight their disadvantages on the labor market. |
| Keywords: | Unemployment duration, employment stability, bivariate hazard rate models, migration, ethnicity |
| JEL: | C41 J61 J64 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp617&r=lab |
| By: | Gianmarco I.P. Ottaviano; Giovanni Peri; |
| Abstract: | This paper asks the following important question: what was the effect of surging immigration on average and individual wages of U.S.-born workers during the period 1990-2004? Building on section VII of Borjas (2003) we emphasize the need for a general equilibrium approach to analyze this problem. The impact of immigrants on wages of US born workers can be evaluated only by accounting carefully for labor market and capital market interactions in production. Using such a general equilibrium approach we estimate that immigrants are imperfect substitutes for U.S.-born workers within the same education and experience group (because they choose different occupations and have different skills). Moreover, accounting for reasonable speed of adjustment of physical capital we show that most of the wage effects of immigration accrue to native workers already within a decade. These two facts, overlooked by the previous literature, imply a positive and significant effect of the 1990-2004 immigration on the average wage of U.S.-born workers overall, both in the short and in the long run. This positive average effect resulted from a positive effect on wages of all US-born workers with at least a high school degree and a small negative effect on wages of U.S. born workers with no high school degree. |
| JEL: | F22 J31 J61 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12497&r=lab |
| By: | Eskil Wadensjö (SOFI, Stockholm University and IZA Bonn) |
| Abstract: | Sweden had a special partial pension scheme between 1976 and 2001. It was one of three part-time pension schemes in the social security system. The other two were a partial early old-age pension, and a partial disability pension. The special partial pension scheme became very popular with a high take-up rate and was criticized for being too expensive. As a part of the decision on the old age pension scheme in 1994, the partial pension scheme was made less generous, and the scheme was totally abolished from year 2001. The other two options for combining work and receiving a pension continue. In this paper the effect on the total number of hours worked of the subsidized part-time pension system is analysed. The analysis indicates that the effect that people continue to work part-time instead of taking an early exit route is larger than the effect that people who would have continued to work fulltime until ordinary retirement age instead work part-time. |
| Keywords: | part-time work, part-time pension, older workers, labour supply |
| JEL: | H55 J22 J26 J14 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2273&r=lab |
| By: | Carsten Ochsen (University of Rostock); Heinz Welsch (University of Oldenburg) |
| Abstract: | Previous literature has identified considerable non-pecuniary costs to macroeconomic fluctuation and uncertainty. The present paper investigates whether and to what extent labor market institutions can mitigate those costs. We study how life satisfaction of European citizens is affected by employment protection and the level and duration of unemployment benefit payments. We differentiate between direct effects (at given macroeconomic conditions) and total effects (including the feedback through the institutions? effect on macroeconomic outcomes). We find that the total effect of employment protection is positive, whereas the total effect of benefit duration is negative. The direct and indirect effects of a higher benefit level nearly neutralize each other. |
| Keywords: | unemployment benefit; employment protection; macroeconomic uncertainty; cost-benefit analysis; life satisfaction; happiness |
| JEL: | J30 E24 E60 D71 I31 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ros:wpaper:62&r=lab |
| By: | Michael C. Burda (Humboldt University of Berlin, CEPR and IZA Bonn); Daniel S. Hamermesh (University of Texas at Austin, NBER and IZA Bonn); Philippe Weil (Université Libre de Bruxelles (ECARES), Institut d’Études Politiques de Paris, CEPR and NBER) |
| Abstract: | Using two time-diary data sets each for Germany, Italy the Netherlands and the U.S. from 1985-2003, we demonstrate that Americans work more than Europeans: 1) in the market; 2) in total (market and home production)-- there is no one-for-one tradeoff across countries in total work; 3) at unusual times of the day and on weekends. In addition, gender differences in total work within a given country are significantly smaller than variation across countries and time. We conclude that some of the transatlantic differences could reflect inferior equilibria that are generated by social norms and externalities. While an important outlet for total work, home production by females appears very sensitive to tax rates in the G-7 countries. We adapt the theory of home production to account for fixed costs of market work and adduce evidence that they, in contrast to other relative costs, vary significantly across countries. |
| Keywords: | time use, gender inequality, household production, hours of work |
| JEL: | J22 E24 D13 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2270&r=lab |
| By: | Daniela Del Boca; Robert M. Sauer |
| Abstract: | In this paper, we formulate a dynamic utility maximization model of female labor force participation and fertility choices and estimate approximate decision rules using data on married women in Italy, Spain and France. The pattern of estimated state dependence effects across countries is consistent with aggregate patterns in part-time employment and child care availability, suggesting that labor market rigidities and lack of child care options are important sources of state dependence. Simulations of the model reveal that Italian and Spanish women would substantially increase their partic- ipation rates were they to face the French institutional environment. |
| Keywords: | Female Employment, Fertility, Child Care, Institutions, Decision Rules |
| JEL: | J2 C3 D1 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:20&r=lab |
| By: | Pietro Garibaldi (University of Turin, Collegio Carlo Alberto, IGIER, CEPR and IZA Bonn) |
| Abstract: | This paper proposes a matching model that distinguishes between job creation by existing firms and job creation by firm entrants. The paper argues that vacancy posting and job destruction on the extensive margin, i.e. from firms that enter and exit the labour market, represents a viable mechanism for understanding the cyclical properties of vacancies and unemployment. The model features both hiring freeze and bankruptcies, where the former represents a sudden shut down of vacancy posting at the firm level with labour downsizing governed by natural turnover. A bankrupt firm, conversely, shut down its vacancies and lay offs its stock of workers. Recent research in macroeconomics has shown that a calibration of the Mortensen and Pissarides matching model account for 10 percent of the cyclical variability of the vacancy unemployment ratio displayed by U.S. data. A calibration of the model that explicitly considers hiring freeze and bankruptcy can account for 20 to 35 percent of the variability displayed by the data. |
| Keywords: | unemployment dynamics, matching models |
| JEL: | J30 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2263&r=lab |
| By: | Andrew E. Clark |
| Abstract: | Although it is now widely-accepted that unemployment is associated with sharply lower levels of individual well-being, relatively little is known about how this effect depends on unemployment duration. Data from three large-scale European panels is used to shed light on this issue; these data allow us to distinguish habituation to unemployment from sample selection. The panel results show little evidence of habituation to unemployment in Europe in the 1990's. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2006-23&r=lab |
| By: | Ermanno Tortia |
| Abstract: | Exploiting a unique data set concerning a sample of 228 social service organizations, and on 2066 workers, the paper seeks to demonstrate that workers’ satisfaction with the job and loyalty to the organization are crucially influenced by fairness concerns. Worker well-being is increased by a higher degree of perceived fairness, and the effect is highest for procedural fairness. By sorting the organizations into public and nonprofits, the former are found to be at a disadvantage in regard to both satisfaction and perceived fairness. Nonprofits show the highest scores on most items and the gap is highest in the realm of procedural fairness. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpde:0604&r=lab |