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on Labour Economics |
| By: | Pinka Chatterji; Jeffrey DeSimone |
| Abstract: | We estimate the relationship between 10th grade binge drinking in 1990 and labor market outcomes in 2000 among National Educational Longitudinal Survey respondents. For females, adolescent drinking and adult wages are unrelated, and negative employment effects disappear once academic achievement is held constant. For males, negative employment effects and, more strikingly, positive wage effects persist after controlling for achievement as well as background characteristics, educational attainment, and adult binge drinking and family and job characteristics. Accounting for illegal drug use and other problem behaviors in 10th grade eliminates the unemployment effect, but strengthens the wage effect. As the latter is not explicable by the health, income or social capital justifications that are often used for frequently observed positive correlations between adult alcohol use and earnings, we conjecture that binge drinking conveys unobserved social skills that are rewarded by employers. |
| JEL: | I1 J2 J3 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12529&r=lab |
| By: | Wolfgang Lechthaler; Dennis J. Snower |
| Abstract: | The paper analyzes the influence of minimum wages on firms’ incentive to train their employees. We show that this influence rests on two countervailing effects: minimum wages (i) augment wage compression and thereby raise firms’ incentives to train and (ii) reduce the profitability of employees, raise the firing rate and thereby reduce training. Our analysis shows that the relative strength of these two effects depends on the employees’ ability levels. Our striking result is that minimum wages give rise to skills inequality: a rise in the minimum wage leads to less training for low-ability workers and more training for those of higher ability. In short, minimum wages create a "low-skill trap." |
| Keywords: | Minimum Wage, Firm Training, Skills Inequality |
| JEL: | J24 J31 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1298&r=lab |
| By: | Pedro S. Martins (Queen Mary, University of London, CEG-IST Lisbon and IZA Bonn); Luiz A. Esteves (Universidade Federal do Paraná and Università di Siena) |
| Abstract: | We provide evidence about the determinants of the wage structures of developing countries by examining the case of Brazil. Our specific question is whether Brazil’s dramatic income and wage differentials can be explained by the division of rents between firms and their employees, unlike in competitive labour markets. Using detailed individual-level matched panel data, covering a large share of manufacturing firms and more than 30 million workers between 1997 and 2002, we consider the endogeneity of profits, by adopting different measures of profits and different instruments and by controlling for spell fixed effects. Our results, robust to different specifications and tests, indicate no evidence of rent sharing. This conclusion contrasts with findings for most developed countries, even those with flexible labour markets. Possible explanations for the lack of rent sharing include the weakness of labour-market institutions, the high levels of worker turnover and the macroeconomic instability faced by the country. |
| Keywords: | wage bargaining, instrumental variables, matched employer-employee data, developing countries |
| JEL: | J31 J51 C31 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2317&r=lab |
| By: | John T. Addison (University of South Carolina, Queen’s University Belfast, Universidade de Coimbra/GEMF and IZA Bonn); Christopher J. Surfield (Saginaw Valley State University) |
| Abstract: | Atypical employment, such as temporary, on-call, and contract work, has been found disproportionately to attract the jobless. But there is no consensus in the literature as to the labour market consequences of such job choice by unemployed individuals. Using data from the Current Population Survey, we investigate the implications of the initial job-finding strategies pursued by the jobless for their short- and medium-term employment stability. At first sight, it appears that taking an offer of regular employment provides the greatest degree of employment continuity for the jobless. However, closer inspection indicates that the jobless who take up atypical employment are not only more likely to be employed one month and one year later than those who continue to search, but also to enjoy employment continuity that is no less favorable than that offered by regular, open-ended employment. |
| Keywords: | atypical/contingent work, open-ended employment, employment continuity, unemployment, inactivity |
| JEL: | J40 J64 J20 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2325&r=lab |
| By: | Mirco, Tonin (Institute for International Economic Studies, Stockholm University) |
| Abstract: | A model of the labor market is built where imperfect detection in case of auditing induces underreporting of earnings. The introduction of the minimum wage makes some workers increase compliance, boosting fiscal revenues. A spike at the minimum wage level appears in the distribution of earnings. The model predicts a positive correlation between the size of the spike at the minimum wage level and the size of the informal economy. Empirical evidence supporting this prediction is presented. |
| Keywords: | minimum wage; tax evasion |
| JEL: | H26 H32 J38 |
| Date: | 2006–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iiessp:0747&r=lab |
| By: | Tito Boeri; Pietro Garibaldi |
| Abstract: | This paper investigates the border between formal employment, shadow employment, and unemployment in an equilibrium model of the labor market with market frictions. From the labor demand side, firms optimally create legal or shadow employment through a mechanism that is akin to tax evasion. From the labor supply side, heterogeneous workers sort across the two sectors, with high productivity workers entering the legal sector. Such worker sorting appears fully consistent with most empirical evidence on shadow employment. The model sheds also light on the "shadow puzzle", the increasing size of the shadow economy in OECD countries in spite of improvements in technologies detecting tax and social security evasion. Shadow employment is correlated with unemployment, and it is tolerated because the repression of shadow activity increases unemployment. The model implies that shadow wage gaps should be lower in depressed labor markets and that deregulation of labor markets is accompanied by a decline in the average skills of the workforce in both legal and shadow sectors. Based on micro data on two countries with a sizeable shadow economy, Italy and Braziil, we find empirical support to these implications of the model. The paper suggests also that policies aimed at reducing the shadow economy are likely to increase unemployment. |
| Keywords: | Unemployment, Matching, Shadow Activity. |
| JEL: | J30 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:10&r=lab |
| By: | Andreas P. Georgiadis |
| Abstract: | Efficiency Wages cannot be ruled out on a priori theoretical grounds and evidence is needed. Direct evidence on the effects of wages on productivity and indirect evidence from the wage structure does not seem persuasive. In this paper we offer an indirect test of the efficiency wage theory, by testing the prediction of the ‘shirking’ and ‘gift-exchange’ models of efficiency wages of a wage-supervision trade-off, using data from the 1990 British Workplace Industrial Relations Survey. We highlight the main empirical problems that hinder the estimation of the wage-supervision relationship, and we offer a novel theoretical explanation of the wagesupervision trade-off in terms of union bargaining power. We find evidence that wages and supervision are substitutes in eliciting effort for unskilled manual workers. This evidence supports principal-agent models, many of which do not have the efficiency wage property. Finally, after we test whether wages are set optimally above the market clearing level we fail to find any evidence that can rule out efficiency wages in favour of incentive contracts. |
| Keywords: | Efficiency Wages, Wage-supervision trade-off, Endogeneity bias, private and Non-Unionised establishments |
| JEL: | J33 J41 J53 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:bri:cmpowp:06/152&r=lab |
| By: | Kristiina Huttunen (Uppsala University); Jarle Møen (Norwegian School of Economics and Statistics Norway); Kjell G. Salvanes (Norwegian School of Economics, Statistics Norway and IZA Bonn) |
| Abstract: | We analyze short and long-term effects of worker displacement. Our focus is on prime-age male workers displaced from Norwegian manufacturing plants. We find that displacement increases the probability of exiting the labor force by about 5 percentage points. This indicates that studies using data that do not incorporate workers leaving the labor force, may strongly underestimate the costs of displacement. The most productive workers are recalled, transferred to a different plant within the firm, or they move to the private sector. The least productive re-employed workers move to the public sector. Generally, the earnings effects are weak. When controlling for worker fixed effects, we find that all workers suffer some short-term losses, even those re-employed within the same firm, but the only workers that seem to suffer a permanent earnings loss are the few who move to the public sector. |
| Keywords: | displaced workers, permanent job-loss, reemployment, matched employeremployee data, Norway |
| JEL: | J63 J65 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2316&r=lab |
| By: | René Fahr (University of Cologne and IZA Bonn) |
| Abstract: | We investigate wage effects of deviations from peer group body mass index (BMI) to evaluate the influence of social norms on wages. Our approach allows for disentangling the influence of the social norm from any (anticipated) productivity effects associated with deviations from a clinically recommended BMI. Estimates of between effects models for 9 European countries for the years 1998-2001 suggest that the influence of the social norm varies considerably between countries and wage penalties are rather found for upward deviations from the norm and for men. |
| Keywords: | social norms, discrimination, body-mass-index, cross-country evidence, wage effects |
| JEL: | I10 J30 J70 M51 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2323&r=lab |
| By: | Philippe Askenazy (Paris Sciences Economiques and IZA Bonn); Eve Caroli (University Paris X, EconomiX and Paris Sciences Economiques) |
| Abstract: | We investigate the impact of new work practices and information and communication technologies (ICT) on working conditions in France. We use a unique French dataset providing information on individual workers for the year 1998. New work practices include the use of quality norms, job rotation, collective discussions on work organization and working time flexibility. Working conditions are captured by occupational injuries as well as indicators of mental strain. We find that workers involved in the new practices face working conditions that are significantly worse than those of workers in non innovative work practices. But, the picture is mixed for ICT that seem to make the workplace safer and less risky. |
| Keywords: | new work practices, technology, working conditions, occupational injuries |
| JEL: | J28 L23 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2321&r=lab |
| By: | Dittrich, Marcus |
| Abstract: | The paper analyses the welfare effects of union bargaining centralisation in a simple general equilibrium model. A two-sector model is developed where the wage rate in the first sector is either set decentralised by a small union at the firm level or centralised by a large union covering all workers. Worker's outside option is employment in the second sector with wages adjusting to clear the market. The paper shows that social welfare depends on (i) whether the union considers the connection between wages in both sectors, (ii) the structure of the union's objective function, and (iii) the elasticities of labour demand. The welfare maximising employment allocation can be obtained under a high degree of centralisation if the union maximises the total wage-bill. Otherwise, if the union is rent maximising, neither centralised nor decentralised wage setting yield the social optimum. A second best optimum can then be obtained under decentralised bargaining. |
| Keywords: | Unions; Bargaining centralisation; Two-sector economy; Social welfare |
| JEL: | J61 J51 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:11&r=lab |
| By: | James Albrecht; Lucas Navarro; Susan Vroman (Department of Economics, Georgetown University) |
| Abstract: | In many economies, there is substantial economic activity in the informal labor market, beyond the reach of government policy. Labor market policies, which by definition apply only to the formal-sector can have important spillover effects on the informal sector. The relative sizes of the informal and formal sectors adjust, the skill composition of the workforce in the two sectors changes, etc. In this paper, we build an equilibrium search and matching model to analyze the effects of labor market policies in an economy with an informal sector. Our model extends Mortensen and Pissarides (1994) by allowing for ex ante worker heterogeneity with respect to formal-sector productivity. We analyze the effects of labor market policy on informal- and formal-sector output, on the division of the workforce into unemployment, informal-sector employment and formal-sector employment, and on wages. Finally, our model allows us to examine the distributional implications of labor market policy; specifically, we analyze how labor market policy affects the distributions of wages and productivities across formal-sector matches. Classification-JEL Codes: E26, J64, J65, O17 |
| Keywords: | search, matching, informal sector |
| URL: | http://d.repec.org/n?u=RePEc:geo:guwopa:gueconwpa~06-06-06&r=lab |
| By: | Imerman, Mark D.; Orazem, Peter; Sikdar, Shiva; Russell, Gina |
| Abstract: | The Iowa Board of Nursing licensing database for Registered Nurses (RNs) contains information on Registered Nurses who have renewed their licenses including age, race, gender, education, and location of employment. It also contains comparable information on nurses who opted not to renew at the time of their last renewal. This report contains an analysis of the nurses’ characteristics that increase the likelihood of license renewal based on all useable information contained in the licensing database. In addition, we randomly sampled subpopulations of nurses who had current licenses and nurses who had allowed their licenses to expire. A survey of these nurses was analyzed to provide insights into the effects of individual wages, benefits, family income, family responsibilities, hours worked, and commuting time on the decision to work, work in nursing, and maintain a nursing license. |
| Keywords: | wages, benefits, labor force, workforce, nurses, health care, |
| JEL: | J0 J3 J4 |
| Date: | 2006–09–18 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:12681&r=lab |
| By: | Roger Bjørnstad and Kjartan Øren Kalstad (Statistics Norway) |
| Abstract: | Existing literature have focused on the influence of institutional factors on wage determination when explaining the prolonged cross-country differences in unemployment. Although coordination of wage bargaining probably affects entry barriers and competition in product markets as well, research on price determination has typically not considered such factors. In this paper, an imperfect competition model - where the price markup depends on coordination of wage bargaining (and relative prices) - is set up and estimated on a panel of 15 OECD-countries. We derive a hypothesis that coordination has two separate effects on prices, i.e. an indirect effect through its effect on wages and a direct effect on the price markup. The estimates show that when we correct for the effect of coordination on wages, consumer prices may be as much as 21 percent higher in countries like Italy, the Netherlands, Ireland, Austria and Norway as compared to Canada, the US and the UK, due to the effect of coordination on the price markup. Since coordination probably has a dampening effect on wages, this may explain why many researchers have been unable to find any clear effect of coordination on unemployment in reduced form analysis. |
| Keywords: | Imperfect competition model; price markup; labor market institutions; unemployment; panel data model. |
| JEL: | C23 E31 J51 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:470&r=lab |
| By: | Armin Falk (IZA Bonn and University of Bonn); David Huffman (IZA Bonn) |
| Abstract: | A central concern in economics is to understand the interplay between institutions and labor markets. In this paper we argue that laboratory experiments are a powerful tool for studying labor market institutions. One of the most important advantages is the ability to implement truly exogenous institutional change, in order to make clear causal inferences. We exemplify the usefulness of lab experiments by surveying evidence from three studies, each of which investigates a different, crucial labor market institution: minimum wage laws, employment protection legislation and workfare. |
| Keywords: | laboratory experiments, minimum wages, employment protection legislation, workfare |
| JEL: | I38 K31 J3 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2310&r=lab |
| By: | Katarina Richardson (IFAU Uppsala); Gerard J. van den Berg (Free University Amsterdam, Princeton University, IFAU Uppsala, IFS, CEPR and IZA Bonn) |
| Abstract: | The vocational employment training program is the most ambitious and expensive training program in Sweden and a cornerstone of labor market policy. We analyze causal effects on the individual transition rate from unemployment to employment by exploiting variation in the timing of treatment and outcome, dealing with selectivity on unobservables. We demonstrate the appropriateness of this approach in our context by studying the assignment. We also develop a model allowing for duration dependence and unobserved heterogeneity (leading to spurious duration dependence) in the treatment effect, and we prove non-parametric identification. The data cover the population and include multiple unemployment spells for many individuals. The results indicate a large significantly positive effect on exit to work shortly after exiting the program. The effect at the individual level diminishes after some weeks. When taking account of the time spent in the program, the effect on the mean unemployment duration is often close to zero. |
| Keywords: | vocational training, program evaluation, duration analysis, selectivity bias, treatment effect, duration dependence, identification |
| JEL: | J64 C14 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2314&r=lab |
| By: | Hoon Hian Teck (School of Economics and Social Sciences, Singapore Management University) |
| Abstract: | What forces have shaped our nation’s employment and remuneration record so far? Where is Singapore’s unemployment rate headed? What should policy-makers do about it? These are the questions tackled in this paper. It is shown that based on our historical experience, it would be necessary to achieve an annual real GDP growth rate of 7.1 percent in order to keep the unemployment rate unchanged. Moreover, a one-percentage point shortfall of the real GDP growth rate below 7.1 percent in any given year results in a rise in the unemployment rate of 0.12 percentage points over the previous year. Consequently, if the economy is able to generate at most 5 percent real GDP annual growth rate (the high end of the range of official medium-term projections of our economy’s growth rate, which is 3 to 5 percent), it would seem that the unemployment rate is set to rise from its current level based upon the historical relationship. Is there any reason, however, to believe that the Okun’s Law relationship for a fast-developing country like ours might be expected to change once we have reached the status of a mature economy as we now have become? After all, in a mature economy like the US, the critical real GDP growth rate required to keep the unemployment rate steady is only 3 percent. It is likely that the Okun’s Law relationship would indeed shift as the economy matures. As workers adjust their expectations to the reality that the economy has reached a new lower growth regime and they incorporate their revised growth expectations in their wage bargaining, the unemployment rate can remain steady despite slower growth. This steady structural rate of unemployment is, however, likely to be higher than in the past. In response to the worsened medium to long term outlook for the labor market, one is tempted to ask: Can anything be done by policy-makers to reduce the equilibrium rate of unemployment? I believe that reaching out for a weaker Singapore dollar in order to boost international competitiveness, and so to boost aggregate demand and hence employment, or reaching out for budgetary deficits as a direct means to boost aggregate demand is unlikely to have a lasting effect on the structural rate of unemployment. Instead that it would be better to consider policies aimed directly at influencing equilibrium unemployment. One proposal is to introduce an employment subsidy scheme aimed particularly at low-skilled workers, which has the effect of increasing job creation directly. Increased effort to create a business-friendly environment to encourage new start-ups by ensuring minimal red tape and enabling relatively easy financing for them will also work to increase the pace of job creation. Finally, the work of the Workforce Development Agency aimed at retraining low-skilled and older workers to meet the skills demand of new jobs and then matching them to firms offering the job vacancies should help somewhat in bringing down the structural rate of unemployment as our small geographical area works to our advantage when it comes to job-matching. |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:siu:wpaper:01-2005&r=lab |
| By: | Elisabeth Hermann Frederiksen (Department of Economics, University of Copenhagen) |
| Abstract: | This paper develops a theory of the gender wage gap. In a general equilibrium model, spouses devide their labor between a formal sector and a home sector. Due to indivisibility effects, productivity of labor in the formal sector is negatively related to labor used in the home; at the same time labor inputs are complementary in home production. We show that initial beliefs about the gender wage gap are self-fulfilling, and a central result is multiplicity of equilibria. Spouses allocate their labor equally, if they expect to earn the same wage rates, which ex post reinforces equal wage rates; whereas they allocate their labor differently, if they expect to earn different wage rates. The latter situation manifests itself in a gender wage gap. By use of numerical examples, we show that welfare is highest when spouses allocate labor equally. We relate this finding to policy recommendations. |
| Keywords: | gender wage gap; household models; household production; labor markets |
| JEL: | D13 J16 J22 J30 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:kud:epruwp:06-08&r=lab |
| By: | Jonas Dovern; Carsten-Patrick Meier |
| Abstract: | Using a newly constructed macroeconometric model for Germany and the rest of the Euro area, we investigate the macroeconomic effects of structural labor market reforms in Germany. We find that neither the fact that Germany can no longer pursue an independent monetary policy nor the possibility that other countries in the Euro area might react to reforms in Germany by implementing labor market reforms themselves constitute impediments to successful reforms. Reforms would relative quickly bring down unemployment and increase GDP significantly. Even former labor market “insiders” would gain as net wages increase due to falling unemployment insurance contributions. |
| Keywords: | labor market reforms, macroeconometric model, Germany, Euro area |
| JEL: | E24 J64 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1295&r=lab |
| By: | Sergio Destefanis (University of Salerno, CELPE and CSEF); Raquel Fonseca (RAND Corporation) |
| Abstract: | A matching theory approach is utilised to assess the impact on the Italian labour market of the 1997 legge Treu, which considerably eased the regulation of temporary work and favoured its growth in Italy. We re-parameterise the matching function as a Beveridge Curve and estimate it as a production frontier, finding huge differences in matching efficiency between the South and the rest of the country. The legge Treu appears to have improved matching efficiency in the North of the country, particularly for skilled workers, but also to have strengthened competition among skilled and unskilled workers, especially in the South. |
| Keywords: | temporary contracts, matching efficiency, regional disparities |
| JEL: | J64 J69 C24 |
| Date: | 2006–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:168&r=lab |
| By: | Paul Beaudry; Mark Doms; Ethan Lewis |
| Abstract: | This paper focuses on the bi-directional interaction between technology adoption and labor market conditions. We examine cross-city differences in PC-adoption, relative wages, and changes in relative wages over the period 1980-2000 to evaluate whether the patterns conform to the predictions of a neoclassical model of endogenous technology adoption. Our approach melds the literature on the effect of the relative supply of skilled labor on technology adoption to the often distinct literature on how technological change influences the relative demand for skilled labor. Our results support the idea that differences in technology use across cities and its effects on wages reflect an equilibrium response to local factor supply conditions. The model and data suggest that cities initially endowed with relatively abundant and cheap skilled labor adopted PCs more aggressively than cities with relatively expensive skilled labor, causing returns to skill to increase most in cities that adopted PCs most intensively. Our findings indicate that neo-classical models of endogenous technology adoption can be very useful for understanding where technological change arises and how it affects markets. |
| JEL: | E13 J31 O33 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12521&r=lab |
| By: | Myoung-Jae Lee (School of Economics and Social Sciences, Singapore Management University); Yip Chun Seng (School of Economics and Social Sciences, Singapore Management University) |
| Abstract: | There has been much recent interest in the effects of pre and non-market skills on future labor market outcomes. This paper examines one such effect: the effect on future wages of military leadership experience among "Vietnam generation" American men. We study rank, not just veteran status. We argue that rank is a good measure of pre-market leadership skills because of the clear military hierarchy and the primarily youth experience of Vietnam service. Two sources of selection bias are accounted for: non-random military entry and eventual rank attained. We apply a modified 2-stage parametric sample selection method. The rank premia on future wages are estimated using the parametric selection corrections and a propensity score matching with two indices. We find evidence of a leadership premium, but not a veterans'premium. It is the rank that matters. If one joins the military believing that military service commands a future wage premium, he had better become an NCO or an officer. |
| JEL: | J24 J10 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:siu:wpaper:12-2005&r=lab |
| By: | Pietro Garibaldi |
| 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 potentially 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 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:7&r=lab |
| By: | Michal Myck (Institute for Fiscal Studies); Howard Reed (Institute for Fiscal Studies) |
| Abstract: | This paper aims to review the techniques and methods which have been developed by researchers to study labour supply and employment, unemployment and inactivity in the labour market. Progress in labour supply modelling in the last thirty years or so has been considerable. Firstly, the theory of labour supply has become much more sophisiticated; simple static-period models of the budget constraint and the hours decision have been augmented with new developments such as intertemporal optimisation, explicit treatment of the participation decision as distinct from the hours decision, and search theory. Secondly, the econometric techniques available to estimate these more advanced models on the data have expanded massively, along with increases in the amount and quality of data available and huge improvements in computing power. In this report we aim to provide a comprehensive survey of the state of the art in the field of labour supply estimation. |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:06/15&r=lab |
| By: | Matthieu Crozet (TEAM - Théories et Applications en Microéconomie et Macroéconomie - [CNRS : UMR8059] - [Université Panthéon-Sorbonne - Paris I]) |
| Abstract: | New Economic Geography models describe a cumulative process of spatial agglomeration: Firms tend to cluster in locations with good access to demand, and similarly, workers are drawn to regions where market potential is high because the price index is lower there. This paper provides an empirical assessment of this forward linkage that relates labour migrations to the geography of production through real wage differentials. In the spirit of Hanson (1998), we use bilateral migration data for five European countries over the 1980s and 1990s to perform quasi-structural estimations of a new economic geography model derived from Krugman (1991). The results show strong evidence in favor of this model. As expected, migrants do follow market potential. Moreover, we provide estimates for all key parameters of the model. These estimates suggest that a sudden emergence of a core-periphery pattern is unlikely within European countries: centripetal forces are too limited in geographical scope, and mobility costs are too high. |
| Keywords: | Agglomeration, economic geography, European regions, migration. |
| Date: | 2006–09–19 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00096277_v1&r=lab |
| By: | Berggren, Niclas (The Ratio Institute); Jordahl, Henrik (Research Institute of Industrial Economics); Poutvaara, Panu (University of Helsinki) |
| Abstract: | We study the role of beauty in politics. For the first time, focus is put on differences in how women and men evaluate female and male candidates and how different candidate traits relate to success in real and hypothetical elections. We have collected 16,218 assessments by 2,772 respondents of photos of 1,929 Finnish political candidates. Evaluations of beauty explain success in real elections better than evaluations of competence, intelli-gence, likability, or trustworthiness. The beauty premium is larger for female candidates, in contrast to findings in previous labor-market studies. |
| Keywords: | Beauty; gender; elections; political candidates; beauty premium |
| JEL: | D72 J45 J70 |
| Date: | 2006–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0104&r=lab |
| By: | W. Stanley Siebert (University of Birmingham Business School and IZA Bonn); Nikolay Zubanov (University of Birmingham Business School); Arnaud Chevalier (Royal Holloway, University of London and IZA Bonn); Tarja Viitanen (University of Sheffield and IZA Bonn) |
| Abstract: | We study the impact of labour turnover on labour productivity using a panel dataset of 347 shops belonging to a large UK clothing retailer over1995-1999. For the within-shop link – holding constant the shop’s permanent characteristics – we observe an inverted U-shape effect of labour turnover on productivity. The productivity-maximizing rates of FTE-adjusted quits and hires are each about 20% per year, improving productivity by 2.5% compared to the zero turnover level. We explain the difference between this optimal level of labour turnover and its observed average (quits and hires each around 10%) through the costs of hiring estimated at about £600 per hire. By contrast, between shops, there is a positive link between average rates of turnover and average productivity, suggesting that an unobservable management quality factor generates both high turnover and productivity, which we discuss. |
| Keywords: | labour productivity, labour turnover, matched employee-firm panel data, retailing |
| JEL: | J63 J24 L81 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2322&r=lab |
| By: | Luis Diaz-Serrano (Universitat Rovira i Virgili and IZA Bonn) |
| Abstract: | We investigate the determinants of housing satisfaction in twelve EU countries. To do so, we use panel data covering the period 1994-2001, which allows us to control for individual heterogeneity. We carry out separate estimates on the determinants of housing satisfaction for homeowners and for renters and observe that: i) the tenure status is critical in determining the level of housing satisfaction; ii) housing satisfaction acts as trigger event of housing mobility, and; iii) dissatisfied renters are more likely to move than their homeowners counterparts. Our results also allow us to conclude that self-reported housing satisfaction is a meaningful variable able to explain individual’s objective economic behavior, since it is able to anticipate movements in the households’ demand for housing. |
| Keywords: | housing satisfaction, random-effects, fixed-effects, housing mobility, homeownership |
| JEL: | D1 R0 J0 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2318&r=lab |