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on Labour Economics |
| By: | Böckerman, Petri; Laaksonen, Seppo; Vainiomäki, Jari |
| Abstract: | This paper analyses the flexibility of the Finnish labour markets from the microeconomic perspective by focusing on individual-level wage changes for job stayers. The study covers the private sector workers by using three separate data sets obtained from payroll records of employers’ associations. Two main conclusions from wage formation emerge. First, there has been macroeconomic flexibility in the labour market. Real wage rigidity declined during the early 1990’s recession and a large proportion of workers experienced real wage cuts. We also find that average wage changes respond negatively to an increase in unemployment. Second, the evidence based on individual-level wage change distributions show that especially real wages are definitely rigid in Finland in international comparison. In addition, the evidence points out that individual-level wage changes have regained the high levels of real rigidity during the late 1990s that prevailed in the 1980s, despite the continued high (but declining) level of unemployment. |
| Keywords: | Wage flexibility; wage rigidity; wage formation; wage cuts |
| JEL: | J30 |
| Date: | 2006–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:1811&r=lab |
| By: | Síle O’Dorchai (Université Libre de Bruxelles, DULBEA); Robert Plasman (Université Libre de Bruxelles, DULBEA); François Rycx (Université Libre de Bruxelles, DULBEA and IZA) |
| Abstract: | Economic theory advances a number of reasons for the existence of a wage gap between part-time and full-time workers. Empirical work has concentrated on the wage effects of parttime work for women. For men, much less empirical evidence exists, mainly because of lacking data. In this paper, we take advantage of access to unique harmonised matched employer-employee data (i.e. the 1995 European Structure of Earnings Survey) to investigate the magnitude and sources of the part-time wage penalty for male workers in six European countries (i.e. Belgium, Denmark, Ireland, Italy, Spain, and the UK). Findings show that the raw gap in hourly gross pay amounts to 16 per cent of male part-timer’s wage in Spain, to 24 per cent in Belgium, to 28 per cent in Denmark and Italy, to 67 per cent in the UK and to 149 per cent in Ireland. Human capital differences explain between 31 per cent of the observed wage gap in the UK and 71 per cent in Denmark. When a larger set of control variables is taken into account (including occupation, industry, firm size, and level of wage bargaining), a much smaller part of the gap remains unexplained by differences in observed characteristics (except in Italy). Overall, results suggest that policy initiatives to promote lifelong learning and training are of great importance to help part-timers catch up. Moreover, except for Italy, they point to a persisting problem of occupational and sectoral segregation between men working part-time and full-time which requires renewed policy attention. |
| Keywords: | work status, part-time employment, wage gap, decomposition, human capital, segregation |
| JEL: | C13 C31 J24 J31 J71 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2591&r=lab |
| By: | Annette Bergemann; Gerard van den Berg |
| Abstract: | We survey the recent literature on the effects of active labor market policies on individual labor market outcomes like employment and income, for adult female individuals without work in European countries. We consider skilltraining programs, monitoring and sanctions, job search assistance, and employment subsidies. The results are remarkably uniform across studies. We relate the results to the relevant level of female labor force participation. |
| Keywords: | Job search, female labor supply, wages, unemployment, schooling, training, |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:06/26&r=lab |
| By: | Christopher J. O'Leary (W.E. Upjohn Institute for Employment Research); Randall W. Eberts (W.E. Upjohn Institute for Employment Research) |
| Abstract: | The rate of involuntary job loss among older workers has increased in recent years. Previous research has found that after job separation older workers take longer to get back in jobs, and experience bigger earnings declines than younger prime age workers. These studies were based on surveys targeted at older and dislocated workers, which rely on retrospective interviews of strategic samples from the general labor force. Previous studies have not explicitly accounted for the availability of unemployment insurance (UI) benefits between jobs. This paper compares the adjustment to involuntary unemployment of older and younger prime age UI claimants, using a census of UI claimants constructed from records maintained for program administration in a large industrialized mid-western state. We compare subsequent labor market success of older UI claimants aged 50 years and over with younger prime working age claimants aged 30 to 49 following a claim for UI benefits during the major labor market contraction in 2001. We find that relative to their younger prime working age counterparts, older UI claimants return to work at lower rates, are less successful at returning to prior earnings levels, and have lower employment rates in the near term after reemployment. However, older workers who do gain reemployment after a UI claim maintain closer attachment to their new employers. The relative advantage for younger prime working age UI claimants in reemployment, earnings recovery, and subsequent employment is greatest in the first year after the claim for benefits. There is also evidence that both older and younger prime working age claimants who get back to work in the very first quarter after a UI claim have higher near term employment rates than those returning to work only one quarter later. Getting back to work quickly was also estimated to benefit older UI claimants by significantly raising the mean earnings recovery. No comparable earnings recovery was estimated for younger prime working age claimants who quickly returned to work. |
| Keywords: | unemployment insurance, older workers, claimants, reemployment, o'leary |
| JEL: | J65 J68 H43 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:07-133&r=lab |
| By: | Thorsten Vogel |
| Abstract: | Trade unions are consistently found to compress the wage distribution. Moreover, unemployment affects in particular low-skilled workers. The present paper argues that an extended Right-to-Manage model can account for both of these findings. In this model unions compress the wage distribution by raising wages of workers in low productivity industries (or low-skilled workers) above market clearing levels. Our analysis suggests that the most direct way to test this model would be via a test for stochastic dominance. We also allow for capital adjustments and compare union and non-union wage distributions in a general equilibrium framework. |
| Keywords: | Trade unions, wage compression. |
| JEL: | J51 J31 J41 J21 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2007-009&r=lab |
| By: | Henry Farber; Daniel Saks |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:112&r=lab |
| By: | David Card; Lawrence F. Katz; Alan B. Krueger |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:316&r=lab |
| By: | Alan B. Krueger |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:225&r=lab |
| By: | David Neumark; William Wascher |
| Abstract: | We study the effects of minimum wages and the EITC in the post-welfare reform era. For the minimum wage, the evidence points to disemployment effects that are concentrated among young minority men. For young women, there is little evidence that minimum wages reduce employment, with the exception of high school dropouts. In contrast, evidence strongly suggests that the EITC boosts employment of young women (although not teenagers). We also explore how minimum wages and the EITC interact, and the evidence reveals policy effects that vary substantially across different groups. For example, higher minimum wages appear to reduce earnings of minority men, and more so when the EITC is high. In contrast, our results indicate that the EITC boosts employment and earnings for minority women, and coupling the EITC with a higher minimum wage appears to enhance this positive effect. Thus, whether or not the policy combination of a high EITC and a high minimum wage is viewed as favorable or unfavorable depends in part on whose incomes policymakers are trying to increase. |
| JEL: | H24 I38 J2 J38 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12915&r=lab |
| By: | James Costain (Banco de España); Marcel Jansen (Universidad Carlos III de Madrid) |
| Abstract: | This paper considers a dynamic matching model with imperfectly observable worker effort. In equilibrium, the wage distribution is truncated from below by a no-shirking condition. This downward wage rigidity induces the same type of inefficient churning and "contractual fragility" as in Ramey and Watson (1997). Nonetheless, the surprising lesson of our analysis is that workers' shirking motive reduces the cyclical fluctuations in job destruction, because firms are forced to terminate some marginal jobs in booms which they cannot commit to maintain in recessions. This time-inconsistency problem casts doubt upon the importance of inefficient churning as an explanation of observed employment fluctuations. On the other hand, the no-shirking condition implies that firms' share of surplus is procyclical, which can amplify fluctuations in job creation. Thus, our model is consistent with recent evidence that job creation is more important than job destruction in driving labor market fluctuations. Furthermore, unlike most models with endogenous job destruction, we obtain a robust Beveridge curve. |
| Keywords: | job matching, wage rigidity, efficiency wages, contractual fragility |
| JEL: | C78 E24 E32 J64 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0632&r=lab |
| By: | Adda, Jerome; Dustmann, Christian; Meghir, Costas; Robin, Jean-Marc |
| Abstract: | We develop a dynamic discrete choice model of training choice, employment and wage growth, allowing for job mobility, in a world where wages depend on firm-worker matches, as well as experience and tenure and jobs take time to locate. We estimate this model on a large administrative panel data set which traces labour market transitions, mobility across firms and wages from the end of statutory schooling. We use the model to evaluate the life-cycle return to apprenticeship training and find that on average the costs outweigh the benefits; however for those who choose to train the returns are positive. We then use our model to consider the long-term lifecycle effects of two reforms: One is the introduction of an Earned Income Tax Credit in Germany, and the other is a reform to Unemployment Insurance. In both reforms we find very significant impacts of the policy on training choices and on the value of realised matches, demonstrating the importance of considering such longer term implications. |
| Keywords: | administrative data; apprenticeship; dynamic discrete choice; education; job mobility; job search; labour supply; matching; tax credits |
| JEL: | I2 J6 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6087&r=lab |
| By: | Daniel Hamermesh |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:25&r=lab |
| By: | Ronald Oaxaca |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:23&r=lab |
| By: | Albert Rees |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:41&r=lab |
| By: | Zenou, Yves |
| Abstract: | We develop a model where information about jobs is essentially obtained through friends and relatives, i.e. strong and weak ties. Workers commute to a business centre to work and to interact with other people. We find that housing prices increase with the level of social interactions in the city because information about jobs is transmitted more rapidly and, as a result, individuals are more likely to be employed and to be able to pay higher land rents. We extend this framework to incorporate black and white workers. Because whites obtain a higher wage than blacks, they reside closer to jobs to save on commuting time costs. As a result, black workers experience a higher unemployment rate than white workers because they have little contact with weak ties (especially whites) and thus have limited access to job information, relying mainly on their strong ties, who are themselves likely to be unemployed. The lack of ties that act as diverse sources of information is therefore the main cause of blacks' unemployment. |
| Keywords: | labour market; land rent; social networks; spatial mismatch; weak ties |
| JEL: | A14 J15 R14 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6129&r=lab |
| By: | Engström, Per (Department of Economics) |
| Abstract: | The paper extends the basic Stiglitz (1982) model of optimal nonlinear income taxation into a model featuring endogenous unemployment and wages. This means that the government needs to consider the effects on wages and unemployment when designing the optimal tax function. The tax systems’ effects on the wage formation and the unemployment rates result in new intricate redistribution channels. A key result of the paper is that the government may, in order to redistribute, use the marginal tax rates to raise the unemployment rate for the high-skilled and lower it for the low-skilled workers. |
| Keywords: | Optimal Non-Linear Income Taxation; Wage Formation; Tax Progressivity; Unemployment |
| JEL: | H21 J22 J41 J64 |
| Date: | 2007–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2007_012&r=lab |
| By: | Daniel Hamermesh |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:22&r=lab |
| By: | Ross, Stephen; Zenou, Yves |
| Abstract: | Recent theoretical work has examined the spatial distribution of unemployment using the efficiency wage model as the mechanism by which unemployment arises in the urban economy. This paper extends the standard efficiency wage model in order to allow for behavioural substitution between leisure time at home and effort at work. In equilibrium, residing at a location with a long commute affects the time available for leisure at home and therefore affects the trade-off between effort at work and risk of unemployment. This model implies an empirical relationship between expected commutes and labour market outcomes, which is tested using the Public Use Microdata sample of the 2000 U.S. Decennial Census. The empirical results suggest that efficiency wages operate primarily for blue collar workers, i.e. workers who tend to be in occupations that face higher levels of supervision. For this subset of workers, longer commutes imply higher levels of unemployment and higher wages, which are both consistent with shirking and leisure being substitutable. |
| Keywords: | efficiency wage; leisure; urban unemployment |
| JEL: | J41 R14 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6128&r=lab |
| By: | Cowling, Keith (University of Warwick); Poolsombat, Rattanasuda (University of Warwick) |
| Abstract: | Americans are working much longer hours in the paid labour market than workers in Western Europe. Much of the debate focuses on whether this is the result of voluntary worker choice or whether this is a decision imposed on workers by their employers. This paper shows that American hours of work have become more or less stabilised as a result of the rising intensity of advertising in the U.S. : advertising may raise the desired amount of marketed goods and services for which workers find it necessary to work long hours. |
| Keywords: | Advertising ; Time Allocation and Labour Supply |
| JEL: | M37 J22 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:789&r=lab |