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on Labour Economics |
| By: | Federico Cingano (Bank of Italy - Economic Research Department); Alfonso Rosolia (Bank of Italy - Economic Research Department) |
| Abstract: | We examine the role of information networks in job-search outcomes of displaced individuals. We draw on longitudinal Social Security records covering the universe of worker-firm matches in a tight labor market in Northern Italy. Unlike previous research, we focus on workplace networks whose labor market attributes we are able to describe extensively. A workplace network is defined as all coworkers a displaced individual worked with prior to displacement. Estimates of network effects are thus affected by omitted variable bias if the labor market sorts workers across firms along relevant determinants of search outcomes and network characteristics or if past coworkers are exposed to the same shocks. The empirical strategy accounts for these possibilities by comparing subsequent outcomes of workers displaced by the same firm; in addition, we exploit the longitudinal dimension to develop controls for potential residual within-firm heterogeneity. In particular, we control for pre-displacement wages and employment status as well as descriptions of pre-displacement firms and their workforce. Contacts’ labor market attributes have a significant effect on a variety of job search outcomes. Employed contacts significantly increase the probability of re-employment. They are more effective if they experienced a recent job change and when geographically and technologically closer to the displaced. Stronger ties and lower competition for the available information also speed up re-employment. While largely irrelevant for unemployment duration, contacts’ quality is a significant determinant of entry wages and subsequent job stability. |
| Keywords: | Unemployment, Wages, Job Stability, Social Networks |
| JEL: | J23 J64 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_600_06&r=lab |
| By: | Rafael LALIVE |
| 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: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:lau:crdeep:06.06&r=lab |
| By: | Dagsvik, John K. (Statistics Norway, Research Department.); Locatelli, Marilena (Department of Economics, University of Turin); Strøm, Steinar (Dept. of Economics, University of Oslo) |
| Abstract: | This paper analyzes the properties of a particular sectoral labor supply model developed and estimated in Dagsvik and Strøm (2006). In this model, agents have preferences over sectors and latent job attributes. Moreover, the model allows for a representation of the individual choice sets of feasible jobs in the economy. The properties of the model are explored by calculating elasticities and through simulations of the effects of particular tax reforms. The overall wage elasticities are rather small, but these small elasticities shadow for much stronger sectoral responses. An overall wage increase and, of course, a wage increase in the private sector only, gives women an incentive to shift their labor supply from the public to the private sector. Marginal tax rates were cut considerably in the 1992 tax reform. We find that the impact on overall labor supply is rather modest, but again these modest changes shadow for stronger sectoral changes. The tax reform stimulated the women to shift their labor from the public to the private sector and to work longer hours. A calculation of mean compensated variation shows that the richest households benefited far more from the 1992 tax reform than did the poorest households. |
| Keywords: | Labor supply; married females; structural model; sectoral choice; wage elasticities; evaluation of tax reforms |
| JEL: | C51 J22 |
| Date: | 2006–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2006_020&r=lab |
| By: | Juurikkala, Tuuli (BOFIT); Lazareva, Olga (Centre for Economic and Financial Research, Moscow) |
| Abstract: | Just as in established market economies, many Russian firms provide non-wage benefits such as housing, medical care or day care to their employees. Interpreting this as a strategic choice of firms in an imperfect labor market, this paper examines unique survey data for 404 large and medium-size industrial establishments from 40 Russian regions. We find strong evidence that Russian industrial firms use social services to reduce the costs of labor turnover in the face of tight labor markets. The strongest effect is observed for blue-collar workers. We also find that the share of non-monetary compensation decreases with improved access to local social services. |
| Keywords: | non-wage benefits; labor turnover; labor attachment; Russia |
| JEL: | J32 J33 J42 J63 M52 P31 |
| Date: | 2006–04–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2006_004&r=lab |
| By: | Beat Hintermann (University of Maryland); Anna Alberini (University of Maryland); Anil Markandya (University of Bath and Fondazione Eni Enrico Mattei) |
| Abstract: | We use a panel dataset of UK workers to look for evidence of compensating wage differentials for workplace risk. Risk data are available at the four-digit industry level or at the three-digit occupation level. We discuss various econometric problems associated with the hedonic wage approach, namely measurement error, instability of the estimates to specification changes, and endogeneity. We find that if we assume a classical measurement error, the true risk signal would be completely drowned out in our data, which would imply a severe downward bias of the OLS coefficient on risk. But this prediction is at odds with our OLS estimates of the VSL, which are large, especially for blue collar workers. Further, the coefficient on risk changes varies dramatically with the inclusion or exclusion of industry and/or occupation dummies, as well as with the addition of nonfatal risk. When we instrument for risk, which we treat as endogenous with wage, and apply 2SLS or a procedure suggested by Garen (1988), we find negative associations between risk and wages for all workers, which is against the notion of compensating wage differentials, or, for blue-collar workers, extremely large VSL figures. Finally, we exploit the panel nature of our data to apply various estimation procedures (the “within” estimator, GLS and the Hausman-Taylor procedure) that correct for unobserved heterogeneity and endogeneity. The coefficient on risk is usually negative and insignificant for the sample of all workers, which once again questions the notion of compensating wage differentials. For blue-collar workers we obtain reasonable VSLs, but the association between risk and wages is not statistically significant. We conclude that if compensating differentials for risk exist, measurement error, other econometric problems, and the changing nature of labor markets prevent us from observing them. We also conclude that models and techniques for panel data that account for unobserved heterogeneity and endogeneity seem more reliable than the techniques typically employed with cross-sectional data. |
| Keywords: | Value of Life, Labor Market, Wage Hedonics |
| JEL: | H43 J17 J28 J31 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.119&r=lab |
| By: | Adam Posen; Daniel Popov Gould |
| Abstract: | We find in cross-sectional investigations that wage restraint is either unchanged or increased following EMU in the vast majority of countries. This contradicts the predictions of a widely-cited family of models of labor market bargaining. In those, Germany would have been expected to display the greatest decline in wage restraint post-EMU, and we find no indication of such a decline. The time-series evidence on Italy shows a significant increase in wage restraint after eurozone entry. This pattern is consistent with the models that emphasise the gains from monetary credibility. The eurozone increase in wage restraint is matched by the increase seen in the UK and Sweden after adopting inflation targeting, another means to credibility. |
| Keywords: | EMU, wage bargaining, monetary credibility, productivity |
| JEL: | E25 E58 J58 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1783&r=lab |
| By: | Bertil Holmlund; Qian Liu; Oskar Nordström Skans |
| Abstract: | This paper estimates the effects on earnings of “gap years” between high school and university enrollment. The effect is estimated by means of standard earnings functions augmented to account for gap years and a rich set of control variables using administrative Swedish data. We find that postponement of higher education is associated with a persistent and non-trivial earnings penalty. The main source of the persistent penalty appears to be the loss of work experience after studies. The reduction of lifetime earnings associated with two years postponement of higher education amounts to 40-50 percent of annual earnings at age 40. |
| Keywords: | timing of education, schooling interruptions, returns to work experience |
| JEL: | I23 J24 J31 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1792&r=lab |
| By: | Dominique M. Gross; Nicolas Schmitt |
| Abstract: | With a focus on the role of cultural clustering and income distribution, this paper investigates whether standard determinants influence international migration of workers to France with the same intensity across different skill levels and with or without free mobility. We find that low-skill migrants respond to most push and pull migration factors. High-skill migrants however respond only to financial incentives and cultural clustering does not matter. Migration policy is effective at controlling flows of low-skill migrants but free mobility has no impact on high-skill flows. Hence, France must rely on growing earnings and skill-premium to attract high-skill workers from high income countries. |
| JEL: | F22 J24 O24 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1797&r=lab |
| By: | Alan de Brauw (International Food Policy Research Institute); John Giles (Michigan State University and IZA Bonn) |
| Abstract: | In this paper, we investigate how reductions of barriers to migration affect the decision of middle school graduates to attend high school in rural China. Change in the cost of migration is identified using exogenous variation across counties in the timing of national identity card distribution, which made it easier for rural migrants to register as temporary residents in urban destinations. We show that timing of ID card distribution is unrelated to local rainfall shocks affecting demand for migration, and not related to proxies reflecting time-varying changes in village policy or administrative capacity. We find a robust negative relationship between migrant opportunity and high school enrollment. The mechanisms behind the negative relationship are suggested by observed increases in subsequent local and migrant non-agricultural employment of high school age young adults as the size of the current village migrant network increases. |
| Keywords: | migration, educational attainment, rural China |
| JEL: | O12 O15 J22 J24 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2326&r=lab |
| By: | Damm, Anna Piil (Department of Economics, Aarhus School of Business) |
| Abstract: | This study investigates empirically how residence in ethnic enclaves affects labour market <p> outcomes of refugees. Self-selection into ethnic enclaves in terms of unobservable characteristics <p> is taken into account by exploitation of a Danish spatial dispersal policy which randomly <p> disperses new refugees across locations conditional on six individual-specific characteristics. <p> The results show that refugees with unfavourable unobserved characteristics are found to <p> self-select into ethnic enclaves. Furthermore, taking account of negative self-selection, a relative <p> standard deviation increase in ethnic group size on average increases the employment probability <p> of refugees by 4 percentage points and earnings by 21 percent. I argue that in case of <p> heterogeneous treatment effects, the estimated effects are local average treatment effects |
| Keywords: | Ethnic Enclaves; Employment; Earnings; LATE |
| JEL: | C35 J15 J64 Z13 |
| Date: | 2006–09–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:aareco:2006_004&r=lab |
| By: | Alessandro Cigno |
| Abstract: | A Beveridgean pension scheme invariably reduces the marginal return to labour, and will thus discourage labour. A Bismarckian scheme can do so only if it is not actuarially fair, or in the presence of credit rationing. In any case, the same pension contribution will discourage labour less if the scheme is Bismarckian than if it is Beveridgean. A Bismarckian scheme may even encourage labour. |
| Keywords: | tax wedge, labour, public pensions, Bismarck, Beveridge, implicit pension tax |
| JEL: | H31 H55 J38 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1772&r=lab |
| By: | Men-Andri Benz; Leif Brandes; Egon Franck (Institute for Strategy and Business Economics, University of Zurich; Institute for Strategy and Business Economics, University of Zurich; Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | Football matches are by no means homogenous goods. Rather, there are big differences in single match quality, which is ex-ante unobservable to consumers. We argue that quality uncertainty leads consumers to search for quality proxies which are observable in advance. Aggregate demand functions are shown to depend merely on prices, ex-ante quality perception and stochastic influence factors. Following the work by Kahneman, Tversky and Slovic, we suggest that consumer behaviour is to some extent driven by mental anchoring. Therefore, the usual approach to rely on absolute measures only, seems doubtful. The main focus of our empirical analysis is to introduce relative quality measures, which are based on different anchor levels. Besides seasonal-dynamic and seasonal-static anchors, this specification allows us to include absolute quality proxies as a special case. Applying median regression on a sample from over 2000 individual matches in the German Bundesliga, we find evidence for mental anchoring in the demand for sport. Our results indicate that consumers tend to compare current values for quality proxies to last season’s indicator values instead of last match’s indicator values. |
| Keywords: | mental anchor, censored median regression, fan demand |
| JEL: | C14 C24 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0047&r=lab |
| By: | Thomas F. Crossley, Jeremiah Hurley, and Sung-Hee Jeon |
| Abstract: | This paper employs cohort analysis to examine the relative importance of different factors in explaining changes in the number of hours spent in direct patient care by Canadian general/ family practitioners (GP/FPs) over the period 1982 to 2002. Cohorts are defined by year of graduation from medical school. The results for male GP/FPs indicate that: there is little age effect on hours of direct patient care, especially among physicians aged 35 to 55; there is no strong cohort effect on hours of direct patient care; but there is a secular decline in hours of direct patient care over the period. The results for female GP/FPs indicate that: female physicians on average work fewer hours than male physicians; there is a clear age effect on hours of direct patient care; there is no strong cohort effect; there has been little secular change in average hours of direct patient care. The changing behaviour of male GP/FPs accounted for a greater proportion of the overall decline in hours of direct patient care from the 80’s through the mid 90’s than did the growing proportion of female GP/FPs in the physician stock |
| JEL: | I11 J24 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:deptwp:2006-02&r=lab |
| By: | Lisa M. Dragoset (U.S. Census Bureau and Cornell University); Gary S. Fields (Cornell University) |
| Abstract: | Earnings mobility has been studied both at the macro level (how much of a certain kind of mobility is there in the economy?) and at the micro level (what are the correlates of change in income or position?). Many empirical mobility studies provide estimates of the amount of mobility in a country over time and the correlates of individual mobility within the income distribution. While measurement error is recognized as potentially important at both these levels, very little is known about the degree to which earnings mobility estimates are affected by measurement error. In this paper, we use a new dataset that contains individually reported total annual labor earnings from the Survey of Income and Program Participation (SIPP) linked to employer-reported total annual labor earnings from the Social Security Administration’s Detailed Earnings Record (DER; these are taken directly from Box 1 on theW-2 form and are not capped by FICA) to compare micro and macro earnings mobility estimates for the U.S. during the 1990s using the two different earnings measures. We ask how much difference it makes to mobility estimates to use administrative-based earnings rather than survey-based earnings, and we obtain two major findings. Qualitatively, we find that the results are similar but not identical when administrative-based earnings are used rather than survey-based earnings. Quantitatively, we find that magnitudes are often very different when administrative-based earnings are used rather than survey-based earnings. The administrative-based results are neither systematically larger nor systematically smaller than the survey-based ones. |
| Keywords: | earnings mobility, measurement error, macro mobility, micro mobility. |
| JEL: | J62 J69 D31 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2006-55&r=lab |
| By: | Badi H. Baltagi (Center for Policy Research, Maxwell School, Syracuse University, Syracuse, NY 13244-1020); Dong Li |
| Abstract: | This paper considers the problem of prediction in a panel data regression model with spatial autocorrelation in the context of a simple demand equation for liquor. This is based on a panel of 43 states over the period 1965-1994. The spatial autocorrelation due to neighboring states and the individual heterogeneity across states is taken explicitly into account. We compare the performance of several predictors of the states demand for liquor for one year and five years ahead. The estimators whose predictions are compared include OLS, fixed effects ignoring spatial correlation, fixed effects with spatial correlation, random effects GLS estimator ignoring spatial correlation and random effects estimator accounting for the spatial correlation. Based on RMSE forecast performance, estimators that take into account spatial correlation and neterogeneity across the states perform the best for one year ahead forecasts. However, for two to five years ahead forecasts, estimators that take into account the heterogeneity across the states yield the best forecasts. |
| Keywords: | prediction, spatial correlation, panel data, liquor demand |
| JEL: | C21 C23 C53 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:max:cprwps:84&r=lab |
| By: | Gema Zamarro (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | This paper presents a method for estimating returns to schooling that takes into account that returns may be heterogeneous among agents and that educational decisions are made sequentially. A sequential decision model is interesting because it explicitly considers that the level of education of each individual is the result of previous schooling choices and so, the variation of supply-side instruments over time will emerge as a source of identification of the desired parameters. A test for heterogeneity in returns from sequential schooling decisions is developed and expressions for Marginal Treatment Effects are obtained in this context. Returns are estimated and tested from cross-sectional data from a Spanish household survey that contains rich family background information and useful instruments. This data is stratified by level of education and so estimators are adapted to take this feature into account. Finally, this methodology is used to analyze possible effects of the 1970 reform of the Spanish education system. |
| Keywords: | Schooling, selection models, heterogeneity, sequential decisions, policy evaluation. |
| JEL: | I21 I28 C10 J31 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2006_0609&r=lab |
| By: | Daniel Munich |
| Abstract: | Turnovec (2005) represents the first rigorous attempt to quantify and compare research of economists affiliated with Czech institutions as well as total output by these institutions. In this comment, I reconsider some of his results. My key finding is that a research-accounting methodology that closely reflects the widely differing quality of publications in economics leads to notably different results from those presented by Turnovec, who used an accounting scheme favoring quantity of publications over their quality. |
| Keywords: | Impact factor, Publications, Czech Republic, Research |
| JEL: | A10 A11 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp300&r=lab |
| By: | Aditya Bhattacharjea (Delhi School of Economics) |
| Abstract: | This paper offers a critique of recent empirical studies on the impact of labour regulation on industrial performance in India. It begins with a review of earlier studies that tried to infer the effects on manufacturing employment of amendments to the Industrial Disputes Act (IDA) in 1976 and 1982 that required government permission for layoffs, retrenchments and closures, and shows that the results are ambiguous. It then criticizes the widely-used index of state-level labour regulation devised by Besley and Burgess (2004), and the econometric methodology they use to establish that excessively pro-worker regulation led to poor performance in Indian manufacturing. Several recent studies that have used their index are also surveyed. Finally, the paper reviews other evidence, pointing in a very different direction, on the actual enforcement of labour laws, labour flexibility, and industrial employment. Throughout, attention is paid to the crucial role of judicial interpretation of the IDA, which has been neglected in this literature. |
| Keywords: | India, industrial relations, employment protection laws, job security regulations, labor flexibility. |
| JEL: | J53 J68 O53 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:cde:cdewps:141&r=lab |
| By: | Peter Gottschalk (Boston College and IZA Bonn); Minh Huynh (U.S. Social Security Administration) |
| Abstract: | Measures of inequality and mobility based on self-reported earnings reflect attributes of both the joint distribution of earnings across time and the joint distribution of measurement error and earnings. While classical measurement error would increase measures of inequality and mobility there is substantial evidence that measurement error in earnings is not classical. In this paper we present the analytical links between non-classical measurement error and measures of inequality and mobility. The empirical importance of non-classical measurement error is explored using the Survey of Income and Program Participation matched to tax records. We find that the effects of non-classical measurement error are large. However, these non-classical effects are largely offsetting when estimating mobility. As a result SIPP estimates of mobility are similar to estimates based on tax records, though SIPP estimates of inequality are smaller than estimates based on tax records. |
| Keywords: | measurement error, earnings mobility and inequality |
| JEL: | J30 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2327&r=lab |
| By: | Piero Cipollone (Bank of Italy); Alfonso Rosolia (Bank of Italy) |
| Abstract: | We provide new evidence on the impact of peer effects on the schooling decisions of teenagers. In November 1980 a major earthquake hit Southern Italy. In the aftermath, young men from certain towns were exempted from compulsory military service. We show that the exemption raised high school graduation rates of boys by more than 2 percentage points by comparing high school graduation rates of young exempt men and older not exempt men from the least damaged areas and men of the same age groups from nearby towns that were not hit by the quake. Similar comparisons show that graduation rates of young women in the affected areas rose by about 2 percentage points. Since in Italy women are not subject to drafting, we interpret these findings as evidence of social effects of the decision of teenage boys of staying longer in school on that of teenage girls. Our estimates suggest that an increase of 1 percentage point of male graduation rates raises female probability of completing high school by about 0.7-0.8 percentage points. A series of robustness checks, including comparisons across different age groups and with different definitions of the comparison areas, suggest that the rise was due to the earthquake-related exemption, rather than other factors. |
| Keywords: | istruzione, interazione sociale, peer effects, servizio militare obbligatorio |
| JEL: | I21 C23 C90 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_596_06&r=lab |