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on Labour Economics |
| By: | Sullivan, Paul |
| Abstract: | This paper examines career choices using a dynamic structural model that nests a job search model within a human capital model of occupational and educational choices. Individuals in the model decide when to attend school and when to move between firms and occupations over the course of their career. Workers search for suitable wage and non-pecuniary match values at firms across occupations given their heterogeneous skill endowments and preferences for employment in each occupation. Over the course of their careers workers endogenously accumulate firm and occupation specific human capital that affects wages differently across occupations. The parameters of the model are estimated with simulated maximum likelihood using data from the 1979 cohort of the National Longitudinal Survey of Youth. The structural parameter estimates reveal that both self-selection in occupational choices and mobility between firms account for a much larger share of total earnings and utility than the combined effects of firm and occupation specific human capital. Eliminating the gains from matching between workers and occupations would reduce total wages by 30%, eliminating the gains from job search would reduce wages by 19%, and eliminating the effects of firm and occupation specific human capital on wages would reduce wages by only 2.7%. |
| Keywords: | occupational choice; job search; human capital; dynamic programming models |
| JEL: | I21 J62 J24 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:861&r=lab |
| By: | Kyoji Fukao; Ryo Kambayashi; Daiji Kawaguchi; Hyeog Ug Kwon; Young Gak Kim; Izumi Yokoyama |
| Abstract: | Wage increases, along with job tenure, are one of the most robust empirical regularities found in labor economics. Several theories explain these empirical regularities, and such theories offer sharp empirical predictions for the relation between productivity-tenure and wage-tenure profiles. The human capital model, with cost and benefit sharing between workers and employers, predicts a steeper productivity-tenure profile than wage-tenure profile. The matching quality model predicts that the two profiles will overlap. Theories that involve the information asymmetry between employers and employees predict a steeper wage-tenure profile than productivity-tenure profile to induce workers' effort and enhance efficiency. This paper estimates the productivity-tenure profile and the wage-tenure profile by estimating the plant-level production function and the wage equation using employer-employee matched data from Japan. These estimations offer a comprehensive test for the relative applicability of the two theories on the wage-tenure profile. Estimation results indicate a steeper wage-tenure profile than productivity-tenure profile and point to the relative importance of the deferred wage payment contract. |
| Keywords: | Wage, Productivity, Employer-Employee Matched Data, Japan |
| JEL: | J24 J31 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:hst:hstdps:d06-187&r=lab |
| By: | Sullivan, Paul |
| Abstract: | This paper presents instrumental variables estimates of the effects of firm tenure, occupation specific work experience, industry specific work experience, and general work experience on wages using data from the 1979 Cohort of the National Longitudinal Survey of Youth. A key feature of the empirical work presented in this paper is that the returns to human capital are allowed to vary across occupations, in contrast to existing research which has constrained the parameters of the wage equation to be the same across occupations. The estimates indicate that both occupation and industry specific human capital are key determinants of wages, and the importance of various types of human capital varies widely across one-digit occupations. Human capital is primarily occupation specific in occupations such as craftsmen, where workers realize a 14% increase in wages after five years of occupation specific experience but do not realize wage gains from industry specific experience. In contrast, human capital is primarily industry specific in other occupations such as managerial employment where workers realize a 23% wage increase after five years of industry specific work experience. In other occupations, such as professional employment, both occupation and industry specific human capital are key determinants of wages. |
| Keywords: | occupation specific human capital; industry specific human capital; specificity of human capital; wage growth |
| JEL: | J31 J24 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:863&r=lab |
| By: | Alison Booth; Mark L. Bryan |
| Abstract: | In this paper we highlight the relevance of work-related training to the minimum wage debate. We initially situate training incidence within the broader picture of the earnings distribution in Britain and demonstrate that lower-paid workers are less likely than workers towards the top of the hourly wage distribution to receive work-related training. We then show that work-related training is potentially important from a distributional standpoint, since it significantly increases individuals’ longer-term earning prospects. Next we report empirical results indicating that the introduction in 1999 of a national minimum wage in Britain had a small but statistically significant positive effect on subsequent training incidence for affected workers. In conclusion, we note that the available empirical evidence for Britain shows that minimum wages (i) are associated with a small increase in work-related training for the low paid and (ii) have not adversely affected the employment of British workers. We therefore suggest that the minimum wage has the potential to reduce wages inequality in the longer-term provided that it continues to be set at a level that does not threaten employment. This potential arises not just because of the direct and obvious effect of a minimum wage in increasing wages at the bottom of the distribution, but also through its more indirect effect on work-related training. |
| Keywords: | work-related training, national minimum wage, earnings distribution |
| JEL: | J24 J31 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:auu:dpaper:537&r=lab |
| By: | Robert Plasman (Free University of Brussels, DULBEA); François Rycx (Free University of Brussels, DULBEA and IZA Bonn); Ilan Tojerow (Free University of Brussels, DULBEA and IZA Bonn) |
| Abstract: | This paper investigates inter-industry wage differentials in Belgium, taking advantage of access to a unique matched employer-employee data set covering the period 1995-2002. Findings show the existence of large and persistent wage differentials among workers with the same observed characteristics and working conditions, employed in different sectors. The hypothesis that workers with better unmeasured abilities are over-represented in high-wage sectors may not be rejected on the basis of Martins’ (2004) methodology. However, the contribution of this explanation to the observed industry wage differentials appears to be limited. Further results show that ceteris paribus, workers earn significantly higher wages when employed in more profitable firms. Our instrumented wage-profit elasticity stands at 0.063 and Lester’s range of pay is about 41 per cent of the mean wage. This rent-sharing phenomenon accounts for a large fraction of the industry wage differentials. We find indeed that the magnitude, dispersion and significance of industry wage differentials decreases sharply when controlling for profits. |
| Keywords: | industry wage differentials, unobserved heterogeneity, rent-sharing, matched employer-employee data, quantile regressions |
| JEL: | D31 J31 J41 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2387&r=lab |
| By: | James Albrecht (Georgetown University, IFAU Uppsala, CESifo and IZA Bonn); Gerard J. van den Berg (Free University Amsterdam, IFAU Uppsala, CEPR, IFS and IZA Bonn); Susan Vroman (Georgetown University, IFAU Uppsala, CESifo and IZA Bonn) |
| Abstract: | The Swedish adult education program known as the Knowledge Lift (1997-2002) was unprecedented in its size and scope, aiming to raise the skill level of large numbers of lowskill workers. This paper evaluates the potential effects of this program on aggregate labor market outcomes. This is done by calibrating an equilibrium search model with heterogeneous worker skills using pre-program data and then forecasting the program impacts. We compare the forecasts to observed aggregate labor market outcomes after termination of the program. |
| Keywords: | job search, returns to education, program evaluation, wages, unemployment, Swedish labor market, calibration |
| JEL: | J21 J64 J31 J24 I21 C31 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2385&r=lab |
| By: | Benoit Dostie (IEA, HEC Montréal); Rajshri Jayaramanz; Mathieu Trépanier |
| Abstract: | Using North American data, we revisit the question first broached by Krueger (1993) and re-examined by DiNardo and Pischke (1997) of whether there exists a real wage differential associated with computer use. Employing a mixed effects model to correct for both worker and workplace unobserved heterogeneity using matched employer-employee panel data, we find that computer users enjoy an almost 4 per cent wage premium over non-users. Failure to correct for the worker selection effect leads to a more than twofold overestimate of this premium, as does failure to correct for workplace unobserved heterogeneity. |
| Keywords: | Wage determination; computers; mixed models; linked employer-employee data |
| JEL: | J30 J31 O30 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:iea:carech:0603&r=lab |
| By: | Jeannette Wicks-Lim |
| Abstract: | Minimum wage laws have become a key political issue, following on the heels of over 130 successful living wage campaigns around the country. In the debates surrounding these mandated wage floors, one recurring issue has been whether the legislation has wider-ranging impacts on wages than the legally-required raises alone. Advocates on both sides of the debate dispute the potential magnitude of 'ripple effects'- the non-mandated raises given by employers to maintain a similar wage hierarchy before and after a change in the wage floor. These ripple effects have the potential to greatly expand the overall impact of mandated wage floors. This study uses data from twenty years of the Current Population Survey to assess the magnitude of ripple effects in the context of variations in minimum wage laws, and looks specifically at the retail trade sector to model the potential magnitude of ripple effects under living wage ordinances, where the 'bite' of the legislation would encompass a larger share of the workforce. |
| Keywords: | ripple effect, wage spillover, wage norms, minimum wage, living wage, wage distribution, retail trade, low wage |
| JEL: | I3 J31 J38 J48 J88 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:uma:periwp:wp116&r=lab |
| By: | Robert G. Valletta |
| Abstract: | Given past estimates of wage increases associated with workplace computer use and higher usage rates among more skilled workers, the diffusion of computers has been interpreted as a mechanism for skill-biased technological change and consequent widening of the earnings distribution. I investigate this link by testing for direct effects of rising computer use on the distribution of wages in the United States. Analysis of data from the periodic CPS computer use supplements over the years 1984-2003 reveals that the positive association between workplace computer use and wages declines at higher skill levels, with the notable exception of a higher return to computer use for highly educated workers that emerged after 1997. Over my complete sample frame, however, the net association between rising computer use and the distribution of wages was quite limited. For broad groups defined by educational attainment, rising computer use was associated with rising between-group inequality that was offset by falling within-group inequality, suggesting that computers have exerted a "leveling" rather than a "polarizing" effect on wages. |
| Keywords: | Computers ; Wages |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2006-34&r=lab |
| By: | Stephen A. Woodbury; James Marton |
| Abstract: | Employer-provided health benefits for workers who retire before age 65 has fallen over the last decade. We examine a cohort of male workers from the Health and Retirement Survey to explore the dynamics of retiree health benefits and the relationship between retiree health benefits and retirement behavior. A better understanding of this relationship is important to the policy debate over the best way to increase health coverage for older Americans without reducing work incentives. Concerning the dynamics at work, we find that, between 1992 and 1996, 24 percent of full-time workers who had retiree health benefits lost their coverage, while 15 percent of full-time workers who lacked coverage gained it. Also, of the full-time employed men who were covered by retiree health benefits in 1992 and had retired by 1996, 3 percent were uninsured, and 15 percent were covered by health insurance other than employer-provided insurance. On the relationship between retiree health benefits and retirement, we find that workers with retiree benefits were 29 to 55 percent more likely to retire than those without. We also find that workers who are eligible for retiree health benefits tend to take advantage of them when they are relatively young. |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_470&r=lab |
| By: | Alexander Spermann (ZEW Mannheim, University of Freiburg and IZA Bonn) |
| Abstract: | This paper advocates the cautious and constitutional evolution of existing basic income schemes ("unemployment benefit II") and Targeted Negative Income Tax (TNIT = "Einstiegsgeld") into a means-tested combi-wage model for the future long-term unemployed (gradualism strategy). The paper argues that, with regard to existing unemployment benefit II claimants, stronger financial incentives should be offered on a time restricted basis by largely disregarding (up to the relative poverty line) earnings from "mini", "midi" and part-time jobs – with the aim of providing current unemployment II claimants with a powerful incentive to work at least 15 hours a week and thus to relinquish their unemployed status. Bearing in mind the uncertain employment impact and the related fiscal risks, the paper advises against additional financial incentives by reducing support levels from one day to the next (cold turkey strategy). |
| Keywords: | labor market reform, employee subsidy, workfare, long-term unemployment |
| JEL: | I38 J22 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2398&r=lab |
| By: | Anna Iara (The Vienna Institute of International Economic Studies (wiiw)) |
| Abstract: | Temporary migration is of growing significance in Europe. Upon migration to a country with higher technological development that typically coincides with positive wage differentials, temporary migrants may upgrade their skills by learning on the job and subsequently import the newly acquired human capital to their source country, thus adding to international know-how diffusion and the catching up of the respective economy. This paper is the first to provide supportive evidence of this hypothesis in a cross-country East to West European perspective, using the 2003 Youth Eurobarometer dataset. |
| Keywords: | Central and Eastern Europe, return migration, wage premium, skill diffusion |
| JEL: | J61 J31 O15 |
| Date: | 2006–08–30 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:0607&r=lab |
| By: | Reinhold Kosfeld (Department of Economics, University of Kassel) |
| Abstract: | When job search takes place across labour markets, the standard flow approach to labour market analysis fails to uncover the effectiveness at which workers are matched to available jobs. A spatially augmented matching function is backed by a spatial search model with endogenous search intensity. Recent studies deal with the issue of spatial externalities by assuming the process of job matching to be homogenous across space. This study shows that this supposition is not valid for the unified Germany. Particularly differences in labour mobility give reason for the existence of West-East regimes of the matching process. Spatial heterogeneity is additionally found on the level of German macroregions. Though matching efficiency is affected by labour market characteristics, its cyclical pattern is closely related to business cycle fluctuations. Variation of regional mismatch over the business cycle can only explain a relatively small fraction of matching inefficiency. |
| Keywords: | Matching function, regional mismatch, spatial spillovers, spatial heterogeneity |
| JEL: | C21 C23 E24 J23 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:kas:wpaper:2006-89&r=lab |
| By: | Christian Belzil (GATE CNRS) |
| Abstract: | Using panel data taken from the NLSY, I perform the joint estimation of i) a reduced-form dynamic model of the transition from one grade level to the next with observed and unobserved heterogeneity, and ii) a flexible version of the celebrated Mincerian wage equation with skill heterogeneity, non linearity in schooling, non-separability between the effects of schooling and experience and heteroskedasticity (after conditionning on unobserved skills). The model rejects all symplifying assumptions common in the empirical literature. In particular, the log wage regression is highly convex, even after conditionning on unobserved and observed skills. Skill heterogeneity is also found to be over-estimated when non-linearity is ignored. After conditioning on skill heterogeneity, schooling has a positive effect on wage growth. |
| Keywords: | heterogeneity, Mincer regression, random coefficient models, return to experience, returns to education |
| JEL: | J2 J3 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:0608&r=lab |
| By: | Barry T. Hirsch (Trinity University and IZA Bonn) |
| Abstract: | The paper analyzes wages in the U.S. airline industry, focusing on the role of collective bargaining in a changing product market environment. Airline unions have considerable strike threat power, but are constrained by the financial health of carriers. Since airline deregulation, compensation has waxed and waned in response to the industry’s economic environment. Airline workers capture sizable rents following good times and provide concessions following lean times. Compensation at legacy carriers has been restructured; it remains to be seen if compensation will continue its long-run movement toward opportunity costs. Evidence from the CPS for 1995-2006 shows that wage premiums for airline industry workers remain, particularly for pilots, with existing premiums almost entirely a union phenomenon. Much of the gap in wage scales between major and mid-size carriers was erased in the mid-2000s concessionary cycle, but these rates remain much higher than rates at regional carriers. Compensation levels at regional carriers may approximate opportunity cost – the compensation necessary to attract and retain qualified employees throughout the industry. Because unions retain bargaining power at the major carriers, wages are likely to head upward as carriers’ financial health returns. Such wage levels may or may not be sustainable in the inevitable next downturn. |
| Keywords: | airlines, wages, bargaining, unions, comparability, wage cycles, bankruptcy, CPS |
| JEL: | J30 L93 J50 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2384&r=lab |
| By: | Thomas F. Crossley; Jeremiah Hurley; 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. |
| Keywords: | physician, labour supply, hours, cohorts |
| JEL: | I11 J24 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:qseprr:410&r=lab |
| By: | Donna K. Ginther; Shulamit Kahn |
| Abstract: | Many studies have shown that women are under-represented in tenured ranks in the sciences. We evaluate whether gender differences in the likelihood of obtaining a tenure track job, promotion to tenure, and promotion to full professor explain these facts using the 1973-2001 Survey of Doctorate Recipients. We find that women are less likely to take tenure track positions in science, but the gender gap is entirely explained by fertility decisions. We find that in science overall, there is no gender difference in promotion to tenure or full professor after controlling for demographic, family, employer and productivity covariates and that in many cases, there is no gender difference in promotion to tenure or full professor even without controlling for covariates. However, family characteristics have different impacts on women's and men's promotion probabilities. Single women do better at each stage than single men, although this might be due to selection. Children make it less likely that women in science will advance up the academic job ladder beyond their early post-doctorate years, while both marriage and children increase men's likelihood of advancing. |
| JEL: | J4 J71 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12691&r=lab |
| By: | Brzoza-Brzezina, Michal; Socha, Jacek |
| Abstract: | We use data on enterprise level from a survey of medium sized and big companies to test for downward nominal wage rigidity in Poland. We find relatively weak support for downward nominal wage rigidity when average total compensation in the enterprise is taken into account. However, since this result may be affected by job rotation, we propose a method for eliminating its impact and find that downward wage rigidity becomes higher. Moreover, disaggregating the data reveals strong differences between sectors, with no rigidity in highly competitive branches and significant rigidities in monopolized or state-owned sectors. Still, the amount of downward nominal wage rigidity seems lower than in other countries, although, due to differences in data sets, robust comparisons are not possible. |
| Keywords: | Downward nominal wage rigidity; Poland; inflation |
| JEL: | E31 J30 E24 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:843&r=lab |
| By: | John T. Addison (University of South Carolina, Queen’s University Belfast, Universidade de Coimbra/GEMF and IZA Bonn) |
| Abstract: | This paper offers an eclectic survey of the political economy of labor regulation in the United States at federal and state levels along the dimensions of occupational health and safety, unjust dismissal, right-to-work, workplace safety and workers’ compensation, living wages, and prevailing wages. We discuss rent seeking/predation, coalition formation, judicial review, and interjurisdictional competition as well as the implications of union decline. Our analysis should help dispel any notion that the U.S. labor market is unregulated while also indicating that the political process shows some sensitivity to benefits and costs. |
| Keywords: | labor regulation, regulatory capture, interjurisdictional competition, judicial review, OSHA, unjust dismissals, workplace safety, right-to-work, living wage ordinances, prevailing wages, unionism. |
| JEL: | H70 J28 J38 J41 J48 J58 J65 J80 K31 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2381&r=lab |
| By: | John C. Ham (Department of Economics and CHRR, Ohio State University, the Federal Reserve Bank of New York, and IZA); Xianghong Li (Department of Economics, York University); Patricia B. Reagan (Department of Economics and CHRR, Ohio State University) |
| Abstract: | Our analysis of migration differs from previous research in three important aspects. First, we exploit the confidential geocoding in the NLSY79 to obtain a distance-based measure. Second, we let the effect of migration on wage growth differ by schooling level. Third, we use propensity score matching to measure the effect of migration on the wages of those who move. We develop an economic model and use it to (i) assess the appropriateness of matching as an econometric method for studying migration and (ii) choose the conditioning variables used in the matching procedure. Our data set provides a rich array of variables on which to match. We find a significant effect of migration on the wage growth of college graduates of 10 percent, and a marginally significant effect for high school dropouts of ¨C12 percent. If we use either a measure of migration based on moving across county lines or state lines, the significant effects of migration for college graduates and dropouts disappear. |
| Keywords: | Propensity score matching, distance-based migration, wage growth |
| JEL: | J6 J3 C4 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:yca:wpaper:2004_3&r=lab |
| By: | Georges Dionne (IEA, HEC Montréal); Benoit Dostie (IEA, HEC Montréal) |
| Abstract: | In this paper, we provide new evidence on the determinants of absenteeism using the Workplace Employee Survey (WES) 1999-2002 from Statistics Canada. Our paper extends the typical labour-leisure model used to analyze the decision to skip work to include firm-level policy variables relevant to the absenteeism decision and uncertainty about the cost of absenteeism. It also provides a non-linear econometric model that explicitly takes into account the count nature of absenteeism data and unobserved heterogeneity at both the individual and firm level. Controlling for very detailed demographic, job and firm characteristics (including workplace practices), we find that dissatisfaction with contracted hours is a significant determinant of absence. |
| Keywords: | Absenteeism; Linked Employer-Employee Data; Unobserved Heterogeneity; Count Data Models. |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:iea:carech:0504&r=lab |