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on Labour Economics |
| By: | Antonio Menezes (University of the Azores and CEEAplA); Dario Sciulli (University of the Azores and CEEAplA); José Cabral Vieira (University of the Azores, CEEAplA and IZA) |
| Abstract: | This paper investigates the effects of labour market institutions on wage persistence among young European workers at the beginning of their careers. We use ECHP data from 1995 to 2001 for 13 EU countries and estimate a three-level random intercept probit model that allows for unobserved heterogeneity both at the individual and country level. Overall, we find that labour market institutions explain wage persistence. In particular, we find that a high level of employment protection legislation and a high level of bargaining centralization increase wage persistence. |
| Keywords: | wage persistence, labour market institutions, unobserved heterogeneity |
| JEL: | J31 C23 J5 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2627&r=lab |
| By: | Alexander Muravyev |
| Abstract: | The paper examines the labour quality explanation of the employer size-wage gap: larger firms pay higher wages because they employ more skilled workers. Most previous studies control for unobserved skills of workers using longitudinal data and the fixed effects estimator thus relying on a questionable assumption of time-invariant unobserved individual heterogeneity. This paper releases this assumption by using a sample of workers who simultaneously hold two jobs; hence, identification is achieved by differencing across two jobs held at the same time rather than in different periods. A caveat of this approach is possible heterogeneity of the two jobs; this issue is discussed in details in the paper. Based on data from the UK Quarterly Labour Force Survey, this study finds little support for the labour quality explanation: controlling for unobserved skills in the sample of moonlighters does not reduce the estimate of the wage gap. |
| Keywords: | firm size, wages, dual job holdings |
| JEL: | J24 J31 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp681&r=lab |
| By: | Andrew Newell (University of Sussex and IZA); Mieczyslaw W. Socha (University of Warsaw) |
| Abstract: | This paper presents and analyses the sharp increase in hourly wage inequality after 1998 in Poland. The increase was similar in magnitude to the much-studied increase in British wage inequality during the 1980s. Using data from the Polish Labour Force Survey, we find this increase to be associated with rising wage differentials and within-group variances at both the upper and lower ends of the wage distribution. These increases are associated with differences in wage-setting patterns between the public and private sector as well in the rapid increase in the demand for educated labour. One important difference between the sectors is the lack of an impact of local labour market conditions, or wage curve, clearly evident in private sector wages, on public sector wages. |
| Keywords: | Poland, wage inequality |
| JEL: | J31 P23 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2644&r=lab |
| By: | David Metcalf |
| Abstract: | A century has passed since the first call for a British national minimum wage (NMW).That remarkable Fabian tract discussed wage setting, coverage, monopsony,international labour standards, inspection and compliance and the interaction betweenthe NMW and the social security system. The NMW was finally introduced in 1999.It has raised the real and relative pay of low wage workers, narrowed the gender paygap and now covers around 1-worker-in-10. The consequences for employment havebeen extensively analysed using information on individuals, areas and firms. There islittle or no evidence of any employment effects. The reasons for this include: animpact on hours rather than workers; employer wage setting and labour marketfrictions; offsets via the tax credit system; incomplete compliance; improvements inproductivity; an increase in the relative price of minimum wage-produced consumerservices; and a reduction in the relative profits of firms employing low paid workers. |
| Keywords: | national minimum wage, employment, compliance |
| JEL: | J31 J38 J42 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0781&r=lab |
| By: | Henning Bach (Danish National Institute of Social Research); Nabanita Datta Gupta (Danish National Institute of Social Research, NBER and IZA); Jan Høgelund (Danish National Institute of Social Research) |
| Abstract: | Vocational rehabilitation in the form of education is the cornerstone of governmental rehabilitation programs for the work-disabled in many countries. Merging a 2004 Danish survey to register information from the Danish National Board of Industrial Injuries, we assess the employment effects of educational measures for the work-injured, by simultaneously estimating the hazard rate to education and the return to work, controlling for unobserved heterogeneity and the endogeneity of education. In addition, we allow for any enhanced employment effects of a unique wage subsidy program in Denmark, giving employers a partial wage subsidy for disabled workers’ wages, by distinguishing between education effects of a return to wage-subsidized work versus a return to ordinary work. Unlike previous studies, we find a positive impact of educational measures on the probability of returning to work for the work injured and a stronger effect for a return to wage-subsidized employment compared to a return to ordinary employment. |
| Keywords: | work injury, return to work, education |
| JEL: | C41 J24 J28 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2657&r=lab |
| By: | Anna, BATYRA; Henri R., SNEESSENS (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics) |
| Abstract: | Significant differences in unemployment in Europe have been observed across skill groups, with the least skilled suffering the highest and most persistent unemployment rates. To identify policies alleviating this problem, we study the impact of reductions in employer social security contributions. We construct a general equilibrium model with three types of workers and firms, matching frictions, wage bargaining and a rigid minimum wage. We find evidence in favour of narrow tax cuts targeted at the minimum wage, but we argue that it is most important to account for the effects of such reductions on both job creation and job destruction. The failure to do so may explain the gap between macro- and microeconometric evaluations of such policies in France and Belgium. Policy impact on welfare and inefficiencies induced by job competition, ladder effects and on-th-job search are quantified and discussed. |
| Keywords: | Minimum Wage, Job Creation, Job Destruction, Job Competition, Search Unemployment, Taxation, Computable General Equilibrium Models |
| JEL: | C68 E24 J64 |
| Date: | 2007–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2007001&r=lab |
| By: | Arngrim Hunnes; Jarle Møen; Kjell G. Salvanes |
| Abstract: | To what extent do different firms follow different wage policies? How do such policies affect worker mobility between firms, and what are the effects of different wage bargaining regimes? The empirical branch of personnel economics has long been hampered by a lack of representative data sets. Norway is one of a handful of countries that has produced rich linked employer/employee data suitable for such analysis. This paper has three parts. First, we describe the wage setting and employment protection institutions in Norway. Next, we describe the Norwegian datasets. Finally, we document a large number of stylized facts regarding wage structure and labor mobility within and between Norwegian firms. Our main dataset covers white-collar workers in the manufacturing and private sectors for the period 1980-1997. We also have blue-collar data for the 1986-1997 period covering the core of the manufacturing sector. Information about occupations, monthly wages, hours worked and bonuses is available, as well as various worker and firm characteristics. |
| JEL: | J31 J50 J62 J63 M52 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12974&r=lab |
| By: | Burda, Michael C; Hamermesh, Daniel S; Weil, Philippe |
| Abstract: | Using time-diary data from 25 countries, we demonstrate that there is a negative relationship between real GDP per capita and the female-male difference in total work time per day—the sum of work for pay and work at home. In rich northern countries on four continents there is no difference—men and women do the same amount of total work. This latter fact has been presented before by several sociologists for a few rich countries; but our survey results show that labour economists, macroeconomists, the general public and sociologists are unaware of it and instead believe that women perform more total work. The facts do not arise from gender differences in the price of time (as measured by market wages), as women’s total work is further below men’s where their relative wages are lower. Additional tests using U.S. and German data show that they do not arise from differences in marital bargaining, as gender equality is not associated with marital status; nor do they stem from family norms, since most of the variance in the gender total work difference is due to within-couple differences. We offer a theory of social norms to explain the facts. The social-norm explanation is better able to account for within-education group and within-region gender differences in total work being smaller than inter-group differences. It is consistent with evidence using the World Values Surveys that female total work is relatively greater than men’s where both men and women believe that scarce jobs should be offered to men first. |
| Keywords: | gender differences; household production; paid work; time use |
| JEL: | D13 J16 J22 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6232&r=lab |
| By: | Andreas Ammermueller (ZEW Mannheim); Claudio Lucifora (Catholic University of Milan and IZA); Federica Origo (University of Bergamo); Thomas Zwick (ZEW Mannheim) |
| Abstract: | This paper investigates the functioning of regional labour markets in Italy and Germany for different employee groups. In the light of high and persistent differences in unemployment and wage rates between the North and South of Italy and the West and East of Germany, we first derive theoretical hypotheses on group specific correlations between regional unemployment and individual wages. Using micro data on hourly wages properly matched to local unemployment rates, we specify and empirically test different wage equations. On the basis of our results, we find no evidence for the existence of a "wage curve" in Italy. In the case of Germany, results are quite sensitive to the model specification and the employee group considered. In both countries, the reaction of wages to local unemployment varies significantly along the wage distribution, being more sensitive around the median quantiles. We conclude that there is no uniform wage curve and call for a differentiated analysis for various groups, taking into account the respective institutional setting. |
| Keywords: | wage curve, local labour markets, quantile regressions |
| JEL: | J3 J6 R1 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2674&r=lab |
| By: | Alison L. Booth |
| Abstract: | Average gender pay gaps have absorbed the interest of economists for many years. More recently studies have begun to explore the degree to which observed gender wage gaps might differ across the wages distribution. The stylised facts from these studies, summarised in the first part of the paper, are that the gender pay gap in Europe is typically increasing across the wages distribution. This finding - more pronounced in the private than the public sector - has been interpreted as a glass ceiling effect. The existence of this glass ceiling suggests that the average gender pay gap in Europe is mainly due to the gender gap towards the top of the wages distribution. What explains these stylised facts? We briefly outline some relevant hypotheses in the second part of the paper. A fundamental challenge for labour economists is to identify the extent to which these stylised facts are due to policies and institutions, discrimination, to other unobservable factors, or to fundamental differences between men and women. Finally, we briefly summarise the policy initiatives that might be introduced to deal with gender wage gaps. |
| Keywords: | gender, discrimination, glass ceilings, sticky floors, quantile regression decompositions |
| JEL: | J31 J70 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:auu:dpaper:542&r=lab |
| By: | Claudia Goldin; Lawrence F. Katz |
| Abstract: | U.S. educational and occupational wage differentials were exceptionally high at the dawn of the twentieth century and then decreased in several stages over the next eight decades. But starting in the early 1980s the labor market premium to skill rose sharply and by 2005 the college wage premium was back at its 1915 level. The twentieth century contains two inequality tales: one declining and one rising. We use a supply-demand-institutions framework to understand the factors that produced these changes from 1890 to 2005. We find that strong secular growth in the relative demand for more educated workers combined with fluctuations in the growth of relative skill supplies go far to explain the long-run evolution of U.S. educational wage differentials. An increase in the rate of growth of the relative supply of skills associated with the high school movement starting around 1910 played a key role in narrowing educational wage differentials from 1915 to 1980. The slowdown in the growth of the relative supply of college workers starting around 1980 was a major reason for the surge in the college wage premium from 1980 to 2005. Institutional factors were important at various junctures, especially during the 1940s and the late 1970s. |
| JEL: | I2 J2 J3 N3 O3 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12984&r=lab |
| By: | Lane, Julia I. (The National Opinion Research Center (NORC) and IZA); Salmon, Laurie A. (U.S. Bureau of Labor Statistics); Spletzer, James R. (U.S. Bureau of Labor Statistics) |
| Abstract: | Economists have long known that individual wages depend on a combination of employee and employer characteristics, as well as the interaction of the two. Although it is important to understand how employee and employer characteristics are related to wages, little is known about the magnitude and relation of these wage effects. This is primarily due to the lack of microdata which links individuals to the establishments where they work, but also due to technical difficulties associated with separating out employee and employer effects. This paper uses data from the Occupational Employment Statistics program at the Bureau of Labor Statistics that permit both of these issues to be addressed. Our results show that employer effects contribute substantially to earnings differences across individuals. We also find that establishments that pay well for one occupation also pay well for others. This paper contributes to the growing literature that analyzes firms’ compensation policies, and specifically the topic of employer effects on wages. |
| Keywords: | Establishment Wage Differentials; Occupational Employment Statistics |
| JEL: | J31 L20 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec070020&r=lab |
| By: | Corrado Andini (University of Madeira and CEEAplA); Pedro Telhado Pereira (University of Madeira, CEEAplA, CEPR and IZA) |
| Abstract: | The standard wage equation proposed by Mincer (1974) assumes that individuals start working after leaving school, which is not the actual case for many people. Using longitudinal data on Portuguese male workers, former working students, we estimate the total impact of an additional year of full-time schooling on both the mean and the shape of the conditional wage distribution. The same exercise is also performed for part-time schooling. We find that the conditional average earnings return to one year of part-time schooling is much lower than the analogous return to one year of full-time schooling. However, the conditional wage risk implied by one year of part-time schooling is much lower than the analogous risk implied by one year of full-time schooling, thus complicating policy considerations. Nevertheless, we find evidence that the full-time schooling strategy dominates, in conditional wage distribution, the part-time schooling strategy, meaning that the choice of working while enrolled in school does not ultimately pay. |
| Keywords: | working students, return to schooling, wage level, panel data |
| JEL: | I21 J31 C23 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2651&r=lab |
| By: | Brahima Coulibaly |
| Abstract: | Many economic models featuring labor supply decision, especially in macroeconomic analysis, assume away heterogeneity in the nature of work, or assume that the nature of work is irrelevant to the labor/leisure choice. This paper studies the macroeconomic implications of relaxing this assumption. Estimation from micro data using labor hours, wages, consumption, and nonpecuniary job characteristics suggests that labor supply responds to differences and to changes in the nature of work. Ceteris paribus, some job characteristics induce more labor hours than others do. Labeling the jobs that embed the labor-inducing characteristics as better quality jobs, the study estimates a Job Quality index for the aggregate U.S. economy from 1850 to 2000. The results suggest that over the same period, improvements in Job Quality accounted for at least 20.4 percent of growth in labor hours. |
| Keywords: | Labor supply ; Labor economics ; Hours of labor |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:882&r=lab |
| By: | Thierry Lallemand; Robert Plasman; Francois Rycx |
| Abstract: | The objective of this paper is twofold. First, we analyse the structure of wages within and between Belgian firms. Next, we examine how the productivity of these firms is influenced by their internal wage dispersion. To do so, we use a large matched employer-employee data set (i.e., a combination of the 1995 'Structure of Earnings' and 'Structure of Business' Surveys). On the basis of the methodology developed by Winter-Ebmer and Zweimuller (1999), we find that within-firm wage dispersion has a positive and significant effect on firm productivity. This result is robust to controls for individual and firm characteristics as well as to instrumenting the wage inequality variable. Findings also suggest that the intensity of this effect is stronger within firms with: i) a majority of blue-collar workers, and ii) a high degree of monitoring. These results are more in line with the 'tournament' models than with the 'fairness, morale and cohesiveness' models. |
| JEL: | J24 J31 J41 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12978&r=lab |
| By: | Arnaud Chéron (GAINS, University of Le Mans and EDHEC); Francois Langot (GAINS, University of Le Mans, CEPREMAP, PSE and IZA); Eva Moreno-Galbis (GAINS, University of Le Mans and CEPREMAP) |
| Abstract: | Our paper seeks to gain insights on the effect of labor market institutions on the evolution of overeducation (job competition), unemployment inequalities and job instability during the polarization process of the labor market fostered by the diffusion of novel technologies. Based on micro data, we first present some stylized facts characterizing the occidental countries' labor markets. We then develop an endogenous job destruction framework á la Mortensen and Pissarides (1994) where each individual is endowed with a given ability level. The process of contact between the set of heterogeneous workers and firms is represented by a traditional matching function. The segmentation of the labor market between workers having the required ability to occupy cognitive jobs (where novel technologies are used) and the rest of the workers occupying simple jobs is endogenously determined. Firms offering a cognitive job support a set up cost but ICT are assumed to improve their productivity. When simulated the model manages to reproduce the U-shaped path followed by the ability requirements needed in cognitive positions as ICT got increasingly diffused. Furthermore, we also draw conclusions concerning the evolution of job stability, the size of each labor market segment and the unemployment rates. |
| Keywords: | technological change, overeducation, job turnover, heterogeneous agents |
| JEL: | J23 J24 J63 L23 O33 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2671&r=lab |
| By: | Robert Breunig; Sandrine Rospabe |
| Abstract: | We use a semi-parametric method to decompose the difference in male and female wage densities into two parts-one explained by characteristics and one which is attributable to differences in returns to characteristics. We demonstrate that one learns substantially more about the gender wage gap in France through this analysis than through standard parametric techniques. In particular, we find that there are no unexplained differences in male and female earning distributions in the bottom fifth of the data. Occupation and part-time status are the most important determinants of the wage gap for all workers. In the semi-parametric estimates we find that education plays no role in the wage gap once we account for occupation and part-time status. |
| Keywords: | Gender pay gap, sticky floors, glass ceilings, semi-parametric estimation |
| JEL: | J16 J31 J7 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:auu:dpaper:548&r=lab |
| By: | Zenou, Yves |
| Abstract: | We develop different spatial search models in which a land market is embedded into a standard search matching framework. The link between the land and the labour market is realized through the average search intensity of unemployed workers. We first develop a simple model where search intensity is exogenous. Because of this assumption, only one urban pattern emerges in which the employed reside close to jobs and the unemployed at the periphery of the city. We then extend this benchmark model by assuming that workers' search intensity negatively depends on their residential distance to jobs. This leads to two urban-land use patterns where the unemployed workers either reside close to or far away from jobs. Finally, we consider the case where the unemployed workers endogenously choose their search intensity and we show that they search less, the further away they reside from jobs. Apart from the two previous urban patterns, there is a third equilibrium that emerges, which has a core-periphery structure. In each model, we explore the labour market outcomes (job creation, unemployment and wages) of the different urban land use patterns. |
| Keywords: | job search; search intensity; spatial mismatch; urban land use |
| JEL: | D83 J15 J41 R14 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6197&r=lab |
| By: | Levenson, Alec (University of Southern California); Zoghi, Cindy (U.S. Bureau of Labor Statistics) |
| Abstract: | Labor economists have long used occupation indicators as a proxy for unobserved skills that a worker possesses. In this paper, we consider whether inter-occupational wage differentials that are unexplained by measured human capital are indeed due to differences in often-unmeasured skill. Using the National Compensation Survey, a large, nationally- representative dataset on jobs and ten different components of requisite skill, we compare the effects on residual wage variation of including occupation indicators and including additional skills measures. We find that although skills do vary across 3-digit occupations, occupation indicators decrease wage residuals by far more than can be explained by skill differentials. This indicates that “controlling for occupation” does not equate to controlling for skill alone, but also for some other factors to a great extent. Additionally, we find that there is considerable within occupation variation in skills, and that the amount of variation is not constant across skill levels. As a result, including occupation indicators in a wage model introduces heteroskedasticity that must be accounted for. We suggest that greater caution be applied when using and interpreting occupation indicators as controls in wage regressions. |
| Keywords: | human capital measurement; job skills; occupation indicator variables |
| JEL: | J24 J31 C81 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec070030&r=lab |
| By: | Kai-Joseph Fleischhauer |
| Abstract: | The demographic transition in industrialized countries poses challenges to the pension system which is essentially organized according to the pay-as-you-go principle in most countries. This paper aims at analyzing two proposals for pension reform in a theoretical model that endogenously explains the retirement and training decision of workers who are heterogeneous in ability. Because the economic benefits of motivating late retirement strongly depend on the employment prospects of workers near retirement age, the model includes the firms' employment decision at the extensive margin. The first reform proposal, the implementation of individual retirement accounts, increases the workers' incentives to acquire skills and to postpone retirement. However, if the capital funded pillar of the pension system becomes strong, low-ability workers may not attain their optimal retirement age because firms refuse to employ them any longer. In a similar manner, the second reform proposal to increase the minimum retirement age may not work for lowability workers if their separation date is determined by the firms before the minimum retirement age is achieved. Length: 47 pages |
| Keywords: | Pension Reform, Endogenous Retirement, Human Capital Formation, Tax-Benefit Link, Individual Retirement Accounts, Minimum Retirement Age |
| JEL: | D91 H55 J24 J26 J31 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:usg:dp2007:2007-03&r=lab |
| By: | Bruno Contini (University of Torino, LABORatorio R. Revelli and IZA); Matteo Morini (University of Torino and LABORatorio R. Revelli) |
| Abstract: | In this paper we question the hypothesis of full rationality in the context of job changing behavior, via simple econometric explorations on microdata drawn from WHIP (Worker Histories Italian Panel). A rational outcome of the job matching process implies a positive tradeoff between future wages and risk-on-the-job. The main result of this paper is that no "rational" tradeoff is observable after controlling for a variety of possible shifters. However, if we control for individual characteristics and replace wage growth by its predictor net of individual effects, the picture changes with the emergence of a significantly positive tradeoff between wage growth and risk-on-the-job. The interpretation is suggestive: while market forces (net of individual effects) drive towards a rational outcome, individual characteristics, instead of reinforcing the "rationality" of a positive tradeoff, lead towards the opposite direction of confounding good and bad options. Our explanation for these findings is that people act on the basis of bounded rationality à la Simon. If our assessment is correct, the implications are powerful: are there reasons to believe that such patterns are found only in the context of job search and worker mobility and not in other instances of economic behavior? Recent literature on bounded rationality strongly suggests the contrary. Why, then, should economists leave unchallenged and unchallengeable the hypothesis of full rationality? Had our investigation aimed at estimating the elasticities of wage growth and job safety of the workers’ utilities, we would have miserably failed. Is this a consequence of a misspecified model or of the wrong behavioral assumptions? Our support unquestionably goes to the latter. |
| Keywords: | job mobility, bounded rationality, risk on the job |
| JEL: | D8 J63 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2631&r=lab |
| By: | Chung, Heejung |
| Abstract: | There are numerous debates on the need to increase flexibility through deregulation of employment protection. Many believe it is essential in generating employment but it is also believed to generate socially unacceptable flexible jobs. However, recent studies point to strict regulations on firing permanent workers as the cause of increase in the shares of temporary employment. In other words, stringent protective regulations are not only a source of rigidity, but also force employers to increase flexibility in the labour market through other means. This study explores this hypothesis by examining various aspects of employment protection legislation in concomitance with other competing factors, including structural changes and labour market institutional factors, to explain the cross-national variance of temporary employment across 19 OECD countries using quantitative data. The results show that high cost of firing workers on permanent contracts is the most important factor that explains the high shares of temporary employment. This implies that there are two different ways in which flexibility has been introduced. Either introducing flexibility throughout the labour market using relaxed regulations on firing regular workers, or securing the core workers with high firing cost for regular workers while allowing for flexibility through the use of temporary employment. |
| Keywords: | labour market flexibility; temporary employment; EPL (employment protection legislation); OECD countries; cross-national comparative studies; employment regimes |
| JEL: | J08 J00 P5 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2396&r=lab |
| By: | Deborah A. Cobb-Clark; Steve Stillman |
| Abstract: | We use the first three waves of the Household Income and Labour Dynamics in Australia (HILDA) Survey to examine the retirement plans of middle-aged workers (aged 45-55). Our results indicate that approximately two-thirds of men and more then half of women appear to be making standard retirement plans. At the same time, more than one in five individuals seem to have delayed their retirement planning and approximately one in ten either do not know when they expect to retire or expect to never retire. Retirement plans are closely related to current labor market position. Specifically, forming expectations about the age at which one will leave the labor market appears to be easier for workers in jobs with well defined pension benefits and standard retirement ages. Moreover, those who report that they do not know when they expect to retire do in fact appear to face greater uncertainty in their retirement planning. Those who anticipate working forever seem to do so out of concerns about the adequacy of their retirement incomes rather than out of increased job satisfaction or a heightened desire to remain employed. Finally, men alter their retirement plans in response to labor market shocks, while women are more sensitive to their own and their partners’ health changes. |
| Keywords: | retirement, expectations, middle-aged workers |
| JEL: | J26 J01 J08 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:auu:dpaper:540&r=lab |
| By: | Johannes Geyer; Viktor Steiner |
| Abstract: | The employment behavior of mothers is strongly influenced by labor market regulations and certain institutional arrangements, which both vary greatly across European countries. Using the European Community Household Panel (ECHP) 1994-2001 for Denmark, Germany, Italy and the United Kingdom, which represent four distinct 'institutional regimes', we estimate the short-run and long-term effects of childbirth on married women's employment and working hours. Estimation results show that these effects vary across the four countries in accordance with prevailing institutional regulations. |
| Keywords: | employment and working hours, labor supply, childbirth, European Community Household Panel, panel data models |
| JEL: | J22 J13 D12 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp682&r=lab |
| By: | Gersbach, Hans; Schmutzler, Armin |
| Abstract: | To examine the impact of globalization on managerial compensation, we consider a matching model where a number of firms compete both in the product market and in the managerial market. We show that globalization, that is, the simultaneous integration of product markets and managerial pools, leads to an increase in the heterogeneity of managerial salaries. Typically, while the most able managers obtain a wage increase, less able managers are faced with a reduction in wages. Hence our model can explain the increasing heterogeneity of CEO compensation that has been observed in the last few decades. |
| Keywords: | Globalization; Manager Remuneration; Superstars |
| JEL: | D43 F15 J31 L13 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6222&r=lab |
| By: | Sara Lemos |
| Abstract: | The available empirical minimum wage literature, which is mostly based on US evidence, is not very useful for analyzing developing countries, where the minimum wage affects many more workers and labour institutions and law enforcement differ in important ways. The main contribution of this paper is to survey the existing minimum wage literature for Latin America. [This paper is a reproduction of Chapter 1 of Lemos' doctorate thesis, available at the library collection of the University College London. This paper contains a survey of studies available until 2003.] |
| Keywords: | minimum wage; wage effect; employment effect; price effect; informal sector; cost shock |
| JEL: | J38 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:07/4&r=lab |
| By: | Rob Euwals (CPB, The Hague, Netspar and IZA); Jaco Dagevos (SCP, The Hague); Mérove Gijsberts (SCP, The Hague); Hans Roodenburg (CPB, The Hague) |
| Abstract: | On the basis of three micro datasets, the German Socio-Economic Panel 2002, the Dutch Social Position and Use of Provision Survey 2002 and the Dutch Labour Force Survey 2002, we investigate the labour market position of Turkish immigrants in Germany and the Netherlands. We compare labour market outcomes of Turkish immigrants, including both the first and second generation, and natives in both countries by using the Blinder-Oaxaca decomposition method. We find that Turkish immigrants have lower employment rates, lower tenured job rates and lower job prestige scores than natives. In both countries, the lower level of education and the age composition of the Turkish immigrants partly explains the unfavourable labour market position. The standardized gap - the gap that remains after correction for the observed individual characteristics - in the employment and tenured job rate remains large for the Netherlands, while the standardized gap in the job prestige score remains large for Germany. Differences in past immigration policies between Germany and the Netherlands are likely to be important for explaining the labour market position of Turkish men in both countries. |
| Keywords: | immigration, integration, labour market |
| JEL: | C25 F22 J15 J61 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2677&r=lab |
| By: | Heather Antecol (Claremont McKenna College and IZA); Vanessa E. Barcus (Mighty Karma, Denver); Deborah A. Cobb-Clark (SPEAR, RSSS, Australian National University and IZA) |
| Abstract: | This paper examines the links between survey-based reports of sexual harassment and gender discrimination. In particular, we are interested in assessing whether these concepts measure similar forms of gender-biased behavior and whether they have the same effect on workers’ job satisfaction and intentions to leave their jobs. Our results provide little support for the notion that survey-based measures of sexual harassment and gender discrimination capture the same underlying behavior. Respondents do appear to differentiate between incidents of sexual harassment and incidents of gender discrimination in the workplace. Both gender discrimination and sexual harassment are associated with a substantially higher degree of job dissatisfaction, particularly amongst men. While women who experience gender discrimination are somewhat more likely to intend to change jobs, amongst men it is sexual harassment that leads to an increased propensity to quit. We find no significant interactions between our two measures of gender bias, perhaps implying that the intensity of gender bias is relatively unimportant for understanding job dissatisfaction and the intention to quit. At the same time, this may reflect the lack of precision with which we estimate this interaction, especially for men. |
| Keywords: | sexual harassment, gender discrimination, job satisfaction, intentions to quit |
| JEL: | J16 J28 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2647&r=lab |
| By: | Florence Kondylis |
| Abstract: | This study uses a longitudinal data source to investigate the effects of conflict-induceddisplacement on labour market outcomes for men and women aged 18-64 in post-war Bosniaand Herzegovina.We argue that the informal nature of the labour market makes it harder for thedisplaced to participate in the labour force, as refugees are not part of an informal network.We offer a measure of the impact of displacement on labour market outcome, and test forassimilation of the displaced into the labour-market over-time. Our findings suggest that thedisplaced are, upon return, and on average at time of data collection, faring worse than theirstayer counterparts. Although the evidence suggests that assimilation of the displaced in thelabour market occurs over-time, some groups still struggle to find work, and only transit frominactivity into unemployment. |
| Keywords: | civil conflict, labour market, migration, panel data |
| JEL: | C33 C81 J60 O15 R23 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0777&r=lab |
| By: | Enchuan Shao; Pedro Silos |
| Abstract: | This paper is concerned with the business cycle dynamics in search-and-matching models of the labor market when agents are ex post heterogeneous. We focus on wealth heterogeneity that comes as a result of imperfect opportunities to insure against idiosyncratic risk. We show that this heterogeneity implies wage rigidity relative to a complete insurance economy. The fraction of wealth-poor agents prevents real wages from falling too much in recessions since small decreases in income imply large losses in utility. Analogously, wages rise less in expansions compared with the standard model because small increases are enough for poor workers to accept job offers. This mechanism reduces the volatility of wages and increases the volatility of vacancies and unemployment. This channel can be relevant if the lack of insurance is large enough so that the fraction of agents close to the borrowing constraint is significant. However, discipline in the parameterization implies an earnings variance and persistence in the unemployment state that result in a large degree of self-insurance. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2007-05&r=lab |
| By: | Janine Leschke (European Trade Union Institute ,ETUI-REHS) |
| Abstract: | This paper addresses the question to what extent social protection systems in different European countries do succeed in coping with the risks arising from non-standard forms of employment. Focusing on the examples of part-time and temporary employment, the paper will examine ex-clusionary transitions and the access to unemployment insurance benefits of workers concerned by these forms of employment. The European Community Household Panel Data (ECHP) will be used. The general hypothesis is that the adaptability of unemployment insurance systems varies between welfare regimes. Therefore, four countries will be compared: Denmark, Ger-many, Spain and the United Kingdom. |
| Keywords: | part-time employment, temporary employment, unemployment insurance, comparative analysis |
| JEL: | C23 C41 I38 J16 J65 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:dul:wpaper:07-05rs&r=lab |
| By: | Erkki Koskela (University of Helsinki and IZA); Rune Stenbacka (Göteborg University and Swedish School of Economics, Helsinki) |
| Abstract: | We study both the various consequences and the incentives of outsourcing. We argue that the wage elasticity of labour demand is increasing as a function of the share of outsourcing, which is importantly a result consistent with existing empirical research. Furthermore, we show that a production mode with a higher proportion of outsourcing activity reduces the negotiated wage in the high-wage country with an imperfectly competitive labour market so that outsourcing reduces equilibrium unemployment. Finally, we characterize the optimal production mode and show that stronger labour market imperfections lead to a production mode with a higher share of outsourcing. |
| Keywords: | outsourcing, labour market imperfections, equilibrium unemployment |
| JEL: | E23 E24 J51 J64 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2628&r=lab |
| By: | Nauro F. Campos (Brunel University, CEPR, WDI and IZA); Dean Jolliffe (Economic Research Service, USDA, NPC, WDI and IZA) |
| Abstract: | How does the relationship between earnings and schooling change with the introduction of comprehensive economic reform? This paper sheds light on this question using a unique data set and procedure to reduce sample selection bias. Our evidence is from consistently coded, non-retrospective data for about 4 million Hungarian wage earners. We find that returns to skill increased by 75 percent from 1986 to 2004 (that is, during the period stretching from communism to full membership in the European Union). Moreover, our results identify winners and losers from reform. Winners were the college and university educated and those employed in the services sector (which excludes those in public services). Our results show that reform losers were those in construction and agriculture, those who attained only primary or vocational education (who actually experience a decrease in the returns to their education) as well as those younger workers which acquired most of their education after the collapse of communism (that is, after the main reforms were in place). |
| Keywords: | human capital, transition economies, economic reform |
| JEL: | I20 J20 J24 J31 O15 O52 P20 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2678&r=lab |
| By: | Cardoso, Ana Rute; Verner, Dorte |
| Abstract: | This paper aims to identify the major drop-out and push-out factors that lead to school abandonment in an urban surrounding-the shantytowns of Fortaleza, Northeast Brazil. The authors use an extensive survey addressing risk factors faced by the population in these neighborhoods, which cover both in-school and out-of-school youth of both genders. They focus on the role of early parenthood, child labor, and poverty in pushing teenagers out of school. The potential endogeneity of some of the determinants is dealt with in the empirical analysis. The authors take advantage of the rich set of variables available and apply an instrumental variables approach. Early parenthood is instrumented with the age declared by the youngsters as the ideal age to start having sexual relationships. Work is instrumented using the declared reservation wage (minimum salary acceptable to work). Results indicate that early parenthood has a strong impact of driving teenagers out of school. Extreme poverty is another factor lowering school attendance, as children who have suffered hunger at some point in their lives are less likely to attend school. In this particular urban context, working does not necessarily have a detrimental effect on school attendance, which could be linked to the fact that dropping out of school leads most often to inactivity and not to work. |
| Keywords: | Education For All,Youth and Governance,Population Policies,Tertiary Education,Street Children |
| Date: | 2007–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4178&r=lab |
| By: | Alison L. Booth; Melvyn Coles |
| Abstract: | This paper considers educational investment, wages and hours of market work in an imperfectly competitive labour market with heterogeneous workers and home production. It investigates the degree to which there might be both underemployment in the labour market and underinvestment in education. A central insight is that the ex-post participation decision of workers endogeneously generates increasing marginal returns to education. Although equilibrium implies underinvestment in education, optimal policy is not to subsidise education. Instead it is to subsidise labour market participation which we argue might be efficiently targeted as state provided childcare support. |
| Keywords: | Education, home production, hours of work, imperfect competition. |
| JEL: | H24 J13 J24 J31 J42 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:auu:dpaper:543&r=lab |
| By: | Ioannis Cholezas (University of Peloponnese); Panos Tsakloglou (Athens University of Economics and Business and IZA) |
| Abstract: | The paper provides an analysis of the level, the structure and the patterns of inter-temporal change in hourly earnings inequality in Europe. For the purposes of static inequality decomposition analysis, the data of the ECHP are employed. Considerable cross-country differences are observed across the EU regarding both the level and the structure of earnings inequality. In most countries, of the four factors examined (education, age, sex and sector of employment), education and, to a lesser extent, age are found to be most closely associated with inequality. For the purposes of inequality trend decomposition analysis national data sets for eight European countries are utilised. The results show that in most countries the main factor behind the observed changes in earnings inequality was changes in inequality -within groups- irrespective of the partitioning criterion used, while the effect of changes in group mean earnings was negligible. Finally, changes in the composition of wage and salary earners regarding the four aforementioned factors (education, age, sex and sector of employment) had a relatively large, but not uniform across countries, effect only in a few countries and mainly when the partitioning factor is education. |
| Keywords: | earnings inequality, Europe |
| JEL: | J31 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2636&r=lab |
| By: | Stenberg, Anders (Stockholm University, SOFI) |
| Abstract: | Adult education at upper secondary level (AE) is an integral part of the Swedish educational system. Of the cohort born in 1970, about one third has at some point been registered in AE. This evaluation of AE is the first to use register data on the course credits actually attained. The results indicate that credits equal to one year of AE yield point estimates that range from 5 per cent for individuals with prior two-year upper secondary school to 15 per cent for those with prior compulsory school. The positive effects are mainly driven by courses in health related subjects and computer science. Of the participants in AE, more than 40 per cent continue to university. The returns to years in higher education are not found to be different between individuals with and without a prior AE registration except for those with one year or less at university. |
| Keywords: | Adult education; wage earnings |
| JEL: | H52 J68 |
| Date: | 2007–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2007_009&r=lab |
| By: | Dean Baker |
| Abstract: | Much has been written in this business cycle regarding the rapid increases in productivity and the stagnant growth in wages. From the peak of the last business cycle in the first quarter of 2001 to the second quarter of 2006, productivity increased by 17.9 percent, an average growth rate of 3.2 percent per year. But real wages have barely moved, with the average hourly wage for production and nonsupervisory workers increasing by just 1.2 percent, an average annual growth rate of just over 0.2 percent. This report explores the forces behind this difference. It looks at cyclical trends in labor and capital income, and the difference between gross and net productivity. |
| JEL: | E32 E24 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2007-5&r=lab |
| By: | Juan J. Dolado (Universidad Carlos III de Madrid, CEPR and IZA); Marcel Jansen (Universidad Carlos III de Madrid and IZA); Juan F. Jimeno (Banco de España, CEPR and IZA) |
| Abstract: | In many countries, Employment Protection Legislation (EPL) establishes less strict dismissal procedures for specific groups of workers. This paper builds a simple matching model with heterogeneous workers in order to analyze this feature of EPL. We use the model to analyze the effects of reforms targeted at lowering the firing costs of a particular group of workers, and compare the results with those stemming from a comprehensive reform that reduces firing costs for all workers. The model is calibrated for the Spanish economy, where an important reform of this kind took place in 1997. Overall, our results point out that EPL reforms achieve the largest reduction in unemployment when they are targeted to workers with lower and more volatile productivity. |
| Keywords: | firing costs, unemployment, matching |
| JEL: | J64 J63 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2679&r=lab |
| By: | Milton H. Marquis; Bharat Trehan |
| Abstract: | We construct a vintage capital model in which worker skills lie along a continuum and workers can be paired with different vintages (as technology evolves) under a matching rule of "best worker with the best machine." Labor reallocation in response to technology shocks has two key implications for the wage premium. First, it limits both the magnitude and duration of change in the wage premium following a (permanent) embodied technology shock, so empirically plausible shocks do not lead to the kind of increases in the wage premium observed in the U.S. during the 1980s and early 1990s (though an increase in labor force heterogeneity does). Second, positive disembodied technology shocks tend to push up the wage premium as well, and while this effect is small, it does mean that a higher premium does not provide unambiguous information about the underlying shock. Labor reallocation also means that if embodied technology comes to play a larger role in long-run growth, investment and savings tend to fall in steady state, with little effect on output and employment, enabling the household to increase consumption without sacrificing leisure. The short run effects are more conventional: permanent shocks to disembodied technology induce a strong wealth effect that reduces savings and induces a consumption boom while permanent shocks to embodied technology induce dominant substitution effects and an expansion characterized by an investment boom. |
| Keywords: | Productivity |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2007-06&r=lab |
| By: | Das, Maitreyi Bordia; O ' Keefe, Philip |
| Abstract: | Like many low-income countries, Timor-Leste faces challenges in providing employment for and increasing the skills of its labor force-challenges made more acute by high fertility rates, a very young population, and the capacity constraints of a new nation. However, there is limited information for policymakers to formulate appropriate policies. The paper presents findings of the first urban enterprise survey in independent Timor-Leste. It explores several aspects of the Timorese urban labor market, including the profile of formal and informal enterprises, their behavior in terms of employment and wage-setting practices, and constraints on firm growth. It also presents findings on the skills and training needs of urban employers, and constraints faced in overcoming skills shortages. It finds a highly informal urban enterprise scene, where even " formal " enterprises are largely micro-enterprises. While there has been considerable action in terms of new firm creation since independence, there is already surprisingly low job creation or destruction. This is driven by a number of constraints inside and outside the labor market. With respect to wages, the impacts of the informal minimum wage policy inherited from the interim international administration suggest the need for caution in future wage policy development. While employers identify many skills gaps, basic literacy, numeracy, and language skill needs dominate, and employers appear to value short courses and less formal modes of skills training to address their needs. The paper concludes with suggestions for addressing the key constraints identified. |
| Keywords: | Labor Markets,Population Policies,Small and Medium Size Enterprises,Microfinance,Small Scale Enterprise |
| Date: | 2007–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4177&r=lab |
| By: | Martín López, Sonia |
| Abstract: | The demographic change that is lived worldwide, and of particular form in Europe, as consequence of the aging of the population because of the increase of the life expectancy and the drastic reduction of the rates of fertility, has made jump the alarms because of the need to get a suitable management that does not put in danger the financial viability of the social protection systems. The members states have to make the necessary reforms that they lead to the modernization of their social protection systems guaranteeing both suitable and viable pensions and a sanitary assistance and an assistance of long duration of quality, accessible and lasting. To achieve these aims there is a widespread agreement to foment employment policies that stimulate the active aging and the prolongation of the professional life to stop the premature exit of the labour market of the 45-year-old major workers. Among the measurements to adopt for the maintenance of the workers in the companies there are the adjustment of the contents of the working places, the use of the internal knowledge and the permanent training of the workers. In the cases in which already there has been produced the expulsion of the labour market, the participation companies will can represent an exit of the situation of unemployment. But in order that the unemployed ones of major age decide to tackle their own managerial initiative they need formation, advice and helps. |
| Keywords: | Aging population; systems social protection; adjustment of the contents of the working places; workers of major age; cooperative societies; employee-owned companies |
| JEL: | E24 J54 H55 P13 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2400&r=lab |
| By: | BEHAGHEL Luc; GREENAN Nathalie |
| Abstract: | Can an ageing labour force sustain rapid technical and organisational changes? This depends on the ability of older workers to adapt their skills through training. Using a matched employer-employee dataset on the French manufacturing sector in the 1990s, we investigate whether training incidence increases in response to technical and organisational changes, and whether this response varies with age. In low-skill occupations, workers older than 50 suffer from reduced training incidence when firms implement advanced information technologies, in sharp contrast with the increased training incidence among workers younger than 50. But training responses are not systematically unfavourable to older workers; in particular, new organisational practices tend to raise training incidence among all groups of workers, regardless of age and occupation. The results hold when controlling for workers’ selection and when using instrumental variables to take into account the endogenous use of new technologies and new organisational practices. These findings confirm that technical change is biased against older low-skilled workers. But they also suggest that older age and a shorter career horizon do not constitute a systematic barrier to training. The difficulties faced by older low-skill workers born in the 1940s may rather be due to the fact that they lack the basic computer literacy that is a prerequisite for training in advanced IT. |
| Keywords: | technical change, organisational change, training, older workers |
| JEL: | J14 J24 J26 O30 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:lea:leawpi:0705&r=lab |
| By: | AbdelRahmen El Lahga (Institut Supérieur de Gestion de Tunis); Nicolas Moreau (University of Toulouse 1, GREMAQ and IZA) |
| Abstract: | We evaluate the effects of the transition from cohabitation to marriage on household domestic and market work hours using a sample of working couples. For this purpose we use the 21 first waves of the German Socio-Economic Panel (GSEOP). We adapt to system GMM estimation the estimator presented in Semykina and Wooldridge (2005) to account for selection bias in the presence of endogenous regressors. Our results indicate that marriage increases women’s specialization in home-based activities and that marriage decreases women’s leisure. These effects are robust across specifications. |
| Keywords: | marriage, household allocation, domestic production, labor supply, panel data |
| JEL: | J12 J22 C33 D13 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2619&r=lab |
| By: | Peter A. Riach (IZA (Research Fellow)); Judith Rich (University of Portsmouth and IZA) |
| Abstract: | In a field experiment of age discrimination, pairs of men aged twenty-seven and forty-seven, inquired, by email, about employment as waiters in twenty five Spanish towns. Discrimination against the older waiters, corresponded to the highest rates ever recorded anywhere, by written tests, for racial discrimination. |
| Keywords: | age, discrimination, employment, field experiment, hiring |
| JEL: | J71 C93 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2654&r=lab |
| By: | Pedro Albarrán (Universidad Carlos III de Madrid); Raquel Carrasco (Universidad Carlos III de Madrid); Maite Martínez-Granado (Universidad del País Vasco) |
| Abstract: | In this paper we study the evolution of income inequality for employees and self-employed workers. We highlight the importance of separately analyze these different sources of income to gain a broader understanding of inequality. Using Spanish panel data on income and consumption from the ECPF for the period 1987-96, we decompose income shocks into a permanent and a transitory component. We find that there are noticeable differences in the evolution of income inequality, as well as in the relative importance of the permanent and transitory components across these groups. Our results points that the evolution of inequality can be basically explained by movements in the transitory component of income for the self-employed, while for the employees it is mainly driven by the permanent component, specially at the end of the period. Given these disparities, it seems that these two sources of income should be studied separately and that different policies are suitable for each group. |
| Keywords: | Permanent and transitory income inequality, consumption, self-employment |
| JEL: | D12 D31 D91 E21 |
| Date: | 2007–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:ehu:dfaeii:200702&r=lab |
| By: | Robert M. Hunt |
| Abstract: | This paper generalizes and extends the labor market search and matching model of Berliant, Reed, and Wang (2006). In this model, the density of cities is determined endogenously, but the matching process becomes more efficient as density increases. As a result, workers become more selective in their matches, and this raises average productivity (the intensive margin). Despite being more selective, the search process is more rapid so that workers spend more time in productive matches (the extensive margin). The effect of an exogenous increase in land area on productivity depends on the sensitivity of the matching function and congestion costs to changes in density. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:07-7&r=lab |
| By: | Kenn Ariga (Kyoto University); Giorgio Brunello (University of Padova, CESifo and IZA) |
| Abstract: | There is substantial cross-country variation in secondary school design, with some countries tracking students into different ability schools very early, and other countries with little or no tracking at all. Does tracking length affects school performance, as measured by standardized test scores? We use the international data from the International Adult Literacy Survey to estimate the relationship between the experienced tracking length and the performance in standardized cognitive test scores of young adults, aged between 16 and the mid-twenties. Our IV estimates suggest that the contribution of tracking to performance is positive and statistically significant: conditional on total years of schooling, one additional year spent in a track raises average performance by 3.3 to 3.4 percentage points, depending on the estimates. |
| Keywords: | tracking, secondary schools, efficiency |
| JEL: | I21 I28 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2643&r=lab |