|
on Labour Economics |
| By: | HANNU PIEKKOLA |
| Abstract: | We analyse taxes and employment in a system of firm-level labour demand and industry-level regional labour supply, using linked employer-employee data from Finland in 1990- 2003. We show that virtually all of the wage tax burden is borne by employers since wages fully adjust. Labour demand also responds with short lags within a year or two to cuts in taxes and labour costs. A unit decrease in wage tax rate (2.2% lower taxes) leads to an average long-run employment improvement of 0.8%, while an equivalent cut in social security payments has effects that are nearly twice as low. Tax cuts thus explain a substantial part of the recent improvement in employment since the deep recession of the early 1990s (besides the release of firms’ liquidity constraints). Nearly half of the tax revenue loss due to wage tax cuts is paid back in the form of higher employment and lower unemployment costs. Tax cuts with emphasis on low-wage, low-productivity firms may appear undesirable, as tax cuts cure employment of low- skilled workers especially in skill-intensive firms. |
| Keywords: | taxation on labour, labour demand, regional labour supply, wage bargaining, wage elasticity |
| JEL: | J31 J59 C24 |
| Date: | 2006–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1041&r=lab |
| By: | Matteo, PICCHIO (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics) |
| Abstract: | The focus of this paper is to analyse the wage effects of temporary jobs using the 2000 and 2002 waves of the Survey of Italian Households’ Income and Wealth (SHIW). Exploiting the short longitudinal dimension of the survey and taking into account of individual-and job-specific unobservable components result in an estimated wage penalty for temporary workers of around 12-13%. Furthermore, there is evidence of higher wage returns to seniority for temporary workers, generating a reduction in the wage gap by about 2.3 percentage points after one year of tenure. |
| Keywords: | Temporary employment, fixed-term, contracts, wage differential, returns to seniority, individual effects, firm effects |
| JEL: | C23 J31 M51 |
| Date: | 2006–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2006033&r=lab |
| By: | Cornelissen, Thomas; Huebler, Oloaf |
| Abstract: | Using data from the German Socio-Economic Panel (GSOEP) we study whether being individually affected by downward wage rigidity has an effect on layoffs, quits and intra-firm mobility. Within a structural empirical model we estimate the individual extent of wage rigidity. This is expressed by the wage sweep-up, which measures by how much individual wage growth increases through the effect of downward wage rigidity when compared to a counterfactual labour market with flexible wage setting. We find robust negative effects of wage sweep-up on quits and layoffs and some evidence for a positive association of wage sweep-up and promotion opportunities. This is consistent with a core-periphery view of the labour force, where a core work force is protected from layoffs and wage cuts and at the same time enjoys good promotion opportunities. On the other side a peripheral work force provides a buffer for adjustment and suffers from both flexible wages, more insecure jobs and less internal promotion opportunities. |
| Keywords: | wage rigidity, wage sweep-up, quits, layoffs, promotions |
| JEL: | J31 J63 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-349&r=lab |
| By: | Jurajda, Stepan; Paligorova, Teodora |
| Abstract: | This paper examines the gender gaps in employment and wages among top- and lower-level managerial employees in a recent sample of Czech firms. Unlike the existing analyses of managerial gender pay gaps, we acknowledge the adverse consequences of the low and uneven representation of women for the Oaxaca-Blinder decomposition and offer an alternative set of results based on a matching procedure. Only 7% of top-level Czech managers are women and their wages are about 20 percent lower even when compared only to their comparable male colleagues. |
| Keywords: | gender pay gap; managers |
| JEL: | J31 J71 P31 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5871&r=lab |
| By: | John D. Burger (Department of Economics, Loyola College in Maryland); Stephen J.K. Walters (Department of Economics, Loyola College in Maryland) |
| Abstract: | Fairness considerations often are invoked to explain wage differences that appear unrelated to worker characteristics or job conditions, but non-experimental tests of fair wage models are rare and weak because of the limits of available market-generated data. In particular, such data rarely permit researchers to (a) identify suitable reference points that employees and employers might use in determining what is fair and (b) control for employees’ marginal output and its value. This study utilizes a unique dataset from the baseball labor market that solves both problems. We find no support for fair wage theory in this market. We also find that fairness premia can be illusory: Wages appear to be adjusted upward for reasons of fairness in regressions that control for variation in individuals’ physical output, but such premia evaporate when the value of that output (which can be market- or firm-specific) is held constant. This suggests that avoiding proxy measures of workers’ marginal revenue products in wage studies might reduce the number of labor market "anomalies" economists must resolve. |
| Keywords: | fairness, efficiency wages, wage differentials |
| JEL: | J31 J41 D63 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0623&r=lab |
| By: | Michael W. Elsby |
| Abstract: | This paper formalizes and assesses empirically the implications of widely observed evidence for downward nominal wage rigidity (DNWR). It shows how a model of DNWR informed by diverse evidence for worker resistance to nominal wage cuts is nevertheless consistent with weak macroeconomic effects. This occurs because firms have an incentive to compress wage increases as well as wage cuts when DNWR binds. By neglecting potential compression of wage increases, the previous literature may have overstated the costs of DNWR to firms. Using a broad range of micro--data from the US and Great Britain I find that firms do indeed compress wage increases as well as wage cuts at times when DNWR binds. Accounting for this reduces the estimated increase in aggregate wage growth due to DNWR to be much closer to zero, consistent with the predictions of the model. These results suggest that DNWR may not provide a strong argument against the targeting of low inflation rates, as practiced by many monetary authorities. Importantly, though, this result is nevertheless consistent with evidence that suggests workers are averse to nominal wage cuts. |
| JEL: | E24 E31 J30 J41 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12611&r=lab |
| By: | Alfonso Alba-Ramirez; Jose Maria Arranz Muñoz; Fernando Muñoz-Bullon |
| Abstract: | We use administrative micro-data to investigate exits from unemployment of benefit recipients in Spain. Because the data allow us to distinguish between transitions to a new job and recall to the same employer, we apply a competing risks model with observed and unobserved heterogeneity. We are also able to control for the type of benefit received by the worker: insurance benefit or assistance benefit. We find significant differences between the new job hazard and the recall hazard. Both hazard rates increase around the time that insurance benefit elapses. We also find that when larger firms recall unemployed workers they tend to do so faster than smaller firms. In general, our results are consistent with predictions derived from search and implicit contract models. They highlight the importance of taking into account the possibility of recall in the analysis of unemployment duration among unemployment benefit recipients. |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:cte:wbrepe:wb066218&r=lab |
| By: | Uhlendorff, Arne; Zimmermann, Klaus F |
| 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 labour market. |
| Keywords: | bivariate hazard rate models; employment stability; ethnicity; migration; unemployment duration |
| JEL: | C41 J61 J64 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5872&r=lab |
| By: | Richardson, Katarina; van den Berg, Gerard J |
| 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 its 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 process leading to enrollment. We also develop a model allowing for duration dependence and unobserved heterogeneity (leading to spurious duration dependence) in the treatment effect itself, 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: | duration analysis; duration dependence; hazard rate; identification; program evaluation; selectivity bias; transition to work; treatment effect; vocational training |
| JEL: | C14 C41 J64 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5895&r=lab |
| By: | David Dickinson; Ronald Oaxaca |
| Abstract: | Statistical discrimination occurs when distinctions between demographic groups are made on the basis of real or imagined statistical distinctions between the groups. While such discrimination is legal in some cases (e.g., insurance markets), it is illegal and/or controversial in others (e.g., racial profiling and gender-based labor market discrimination). “First moment” statistical discrimination occurs when, for example, female workers are offered lower wages because females are perceived to be less productive, on average, than male workers. “Second moment” discrimination occurs when risk averse employers offer female workers lower wages based not on lower average productivity but on a higher variance in their productivity. Empirical work on statistical discrimination is hampered by the difficulty of obtaining suitable data from naturally-occurring labor markets. This paper reports results from controlled laboratory experiments designed to study second moment statistical discrimination in a labor market setting. Since decision-makers may not view risk in the same way as economists or statisticians (i.e., risk = variance of distribution), we also examine two possible alternative measures of risk: the support of the distribution, and the probability of earning less than the expected (maximum) profits for the employer. Our results indicate that individuals do respond to these alternative measures of risk, and employers made statistically discriminatory wage offers consistent with loss-aversion in our full sample (though differences between male and female employers can be noted). If one can transfer these results outside of the laboratory, they indicate that labor market discrimination based only on first moment discrimination is biased downward. The public policy implication is that efforts and legislation aimed at reducing discrimination of various sorts face an additional challenge in trying to identify and limit relatively hidden, but significant, forms of statistical discrimination. |
| URL: | http://d.repec.org/n?u=RePEc:usu:wpaper:2004-04&r=lab |
| By: | Mas, Alexandre; Moretti, Enrico |
| Abstract: | We investigate how and why the productivity of a worker varies as a function of the productivity of her co-workers in a group production process. In theory, the introduction of a high productivity worker could lower the effort of incumbent workers because of free riding; or it could increase the effort of incumbent workers because of peer effects induced by social norms, social pressure, or learning. Using scanner level data, we measure high frequency, worker-level productivity of checkers for a large grocery chain. Because of the firm's scheduling policy, the timing of within-day changes in personnel is unsystematic, a feature for which we find consistent support in the data. We find strong evidence of positive productivity spillovers from the introduction of highly productive personnel into a shift. A 10% increase in average co-worker permanent productivity is associated with 1.7% increase in a worker's effort. Most of this peer effect arises from low productivity workers benefiting from the presence of high productivity workers. Therefore, the optimal mix of workers in a given shift is the one that maximizes skill diversity. In order to explain the mechanism that generates the peer effect, we examine whether effort depends on workers' ability to monitor one another due to their spatial arrangement, and whether effort is affected by the time workers have previously spent working together. We find that a given worker's effort is positively related to the presence and speed of workers who face him, but not the presence and speed of workers whom he faces (and do not face him). In addition, workers respond more to the presence of co-workers with whom they frequently overlap. These patterns indicate that these individuals are motivated by social pressure and mutual monitoring, and suggest that social preferences can play an important role in inducing effort, even when economic incentives are limited. |
| Keywords: | spillovers |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5870&r=lab |
| By: | Matteo PICCHIO (Universita' Politecnica delle Marche, Dipartimento di Economia) |
| Abstract: | A dynamic unobserved effects probit analysis has been carried out to test the hypothesis of state dependence of temporary jobs and to understand their determinants. The econometric analysis has been conducted using the 2000, 2002, and 2004 waves of the Survey of Italian Households' Income and Wealth. The results show that, firstly, jobless and unstable workers are more likely to end up in temporary contracts. Secondly, there is a significant true state dependence effect of temporary contracts that might be due to the fact that firms are systematically using temporary jobs to face demand uncertainty: loss of motivation and depreciation of human capital due to low firm-specific investments may make temporary workers less likely to jump on stabler job relationships. Moreover, the true state dependence could be related to the presence of a dual labour market, segmented into "bad" and "good" jobs. Thirdly, a significant feedback effect from past temporary jobs to recent unemployment spells has been detected. Therefore, jobless and unstable workers are more likely to end up into temporary relationship generating a loss of human capital, affecting the workers' allocation in the whole economy, and widening the gap between possibly segmented labour markets. The policy maker might be aware of these costs associated to the widespread of temporary jobs and design policies to target those workers suffering most from the trap of temporary positions. |
| Keywords: | dynamic unobserved effects probit model, feedback effects, individual heterogeneity, temporary employment |
| JEL: | C23 C25 J29 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wpaper:272&r=lab |
| By: | Robert Shimer; Ivan Werning |
| Abstract: | This paper argues that a risk-averse worker's after-tax reservation wage encodes all the relevant information about her welfare. This insight leads to a novel test for the optimality of unemployment insurance based on the responsiveness of reservation wages to unemployment benefits. Some existing estimates imply significant gains to raising the current level of unemployment benefits in the United States, but highlight the need for more research on the determinants of reservation wages. Our approach complements those based on Baily's (1978) test. |
| JEL: | J6 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12618&r=lab |