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on Labour Economics |
| By: | Michelacci, Claudio; Pijoan-Mas, Josep |
| Abstract: | We consider a labor market search model where, by working longer hours, individuals acquire greater skills and thereby obtain better jobs. We show that job inequality, which leads to within-skill wage differences, gives incentives to work longer hours. By contrast, a higher probability of losing jobs, a longer duration of unemployment, and in general a less tight labor market discourage working time. We show that the different evolution of labor market conditions in the US and in Continental Europe over the last three decades can quantitatively explain the diverging evolution of the number of hours worked per employee across the two sides of the Atlantic. It can also explain why the fraction of prime age male workers working very long hours has increased substantially in the US, after reverting a trend of secular decline. |
| Keywords: | human capital; search; unemployment; wage inequality; working hours |
| JEL: | E24 G31 J31 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6314&r=lab |
| By: | Thomas Lemieux; W. Bentley MacLeod; Daniel Parent |
| Abstract: | We document that an increasing fraction of jobs in the U.S. labor market explicitly pay workers for their performance using bonuses, commissions, or piece-rates. We find that compensation in performance-pay jobs is more closely tied to both observed (by the econometrician) and unobserved productive characteristics of workers. Moreover, the growing incidence of performance-pay can explain 24 percent of the growth in the variance of male wages between the late 1970s and the early 1990s, and accounts for nearly all of the top-end growth in wage dispersion(above the 80th percentile). |
| JEL: | J31 J33 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13128&r=lab |
| By: | Sebastian Braun; Juliane Scheffel |
| Abstract: | In this paper, we provide first empirical evidence on the effect of outsourcing on union wages using linked employer-employee data for Germany. We find that low skilled workers experience a decline in the union wage premium when working in industries with high outsourcing intensities. The finding applies to both firm- and sector-level agreements. Hence, outsourcing appears to deteriorate the bargaining position of unions. Outsourcing is not found to have a negative effect on the wages of low skilled employees not covered by collective bargaining agreements. While wages of medium skilled workers are largely unaffected by outsourcing, high skilled workers see their wages rise in industries with a high level of outsourcing. There is no interaction between coverage and outsourcing for these skill groups. |
| Keywords: | Collective Bargaining; International Outsourcing; Union Wages |
| JEL: | F16 J51 L24 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2007-033&r=lab |
| By: | Sandra E. Black; Alexandra Spitz-Oener |
| Abstract: | The closing of the gender wage gap is an ongoing phenomenon in industrialized countries. However, research has been limited in its ability to understand the causes of these changes, due in part to an inability to directly compare the work of women to that of men. In this study, we use a new approach for analyzing changes in the gender pay gap that uses direct measures of job tasks and gives a comprehensive characterization of how work for men and women has changed in recent decades. Using data from West Germany, we find that women have witnessed relative increases in non-routine analytic tasks and non-routine interactive tasks, which are associated with higher skill levels. The most notable difference between the genders is, however, the pronounced relative decline in routine task inputs among women with little change for men. These relative task changes explain a substantial fraction of the closing of the gender wage gap. Our evidence suggests that these task changes are driven, at least in part, by technological change. We also show that these task changes are related to the recent polarization of employment between low and high skilled occupations that we observed in the 1990s. |
| JEL: | J01 J16 J2 J31 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13116&r=lab |
| By: | Sebastian Braun (School of Business and Economics, Humboldt University of Berlin) |
| Abstract: | The paper studies the effects of a one-sided minimum wage in a two-country model of intra-industry trade, in which multinational firms arise endogenously. With positive levels of intra-industry trade the adverse employment and welfare effects of an asymmetric minimum wage are significantly larger than in a non-trading economy. Multinational firms generally mitigate the effect somewhat. Even though factor prices are not equalised across countries, a (binding) wage floor in one country will prop up wages in the other. The flexible wage country is insulated from shocks caused by factor accumulation in the rigid wage country, while an increase in the labour supply of the latter economy may have profound impacts on labour market outcomes in both countries. |
| Keywords: | Intra-Industry trade, wage rigidity, multinational firms, unemployment |
| JEL: | F12 F16 F23 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:jep:wpaper:07003&r=lab |
| By: | Daniel S. Hamermesh; Stephen Donald |
| Abstract: | With the American Time Use Survey of 2003 and 2004 we first examine whether additional market work has neutral impacts on the mix of non-market activities. The estimates indicate that fixed time costs of market work alter patterns of non-market activities, reducing leisure time and mostly increasing time devoted to household production. Similar results are found using time-diary data for Australia, Germany and the Netherlands. Direct estimates of the utility derived from goods consumption and two types of non-market time in the presence of these fixed costs indicate that they generate a utility-equivalent of as much as 8 percent of income that must be overcome before market work becomes an optimizing choice. Market work also alters the timing of a fixed amount of non-market activities during the day, away from the schedule chosen when market work imposes no timing constraints. All of these effects are mitigated by higher family income. The results provide a new supply-side explanation for the frequently observed discrete drop from full-time work to complete retirement. |
| JEL: | D13 J22 J26 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13127&r=lab |
| By: | Nielsen, Chantal Pohl |
| Abstract: | Anecdotes abound in the Danish public debate about well-educated immigrants that are in jobs they are formally overqualified for. Using a 1995-2002 panel data set based on Danish registers, this study attempts to find out how large a problem immigrant overeducation is in the context of the Danish labor market. More specifically, three questions are posed: First, to what extent are immigrants overeducated and are they more likely to be so than native Danes? Second, why are some immigrants more likely to become overeducated than others? And finally, what are the consequences of overeducation for individual wages? The authors find that among wage earners with at least a vocational education or higher, 25 percen t of male non-Western immigrants are overeducated. The same applies for 15 percent of native Danes. Particularly immigrants with a foreign-acquired education risk becoming overeducated - here the share is 30 percent among those with a vocational education or higher. The authors find that Danish labor market experience is extremely important in reducing the likelihood of becoming overeducated. Years spent in the country without accumulating labor market experience do not improve an individual ' s chances of an appropriate job-to-education match. In terms of earnings consequences, the study concludes that years of overeducation do increase wages for immigrants, but much less so than years of adequate education. This is also true for native Danes, but the relative penalty for overeducation is much larger for immigrants than for Danes. |
| Keywords: | Labor Markets,Population Policies,Access & Equity in Basic Education,Education For All,Teaching and Learning |
| Date: | 2007–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4234&r=lab |
| By: | Christopher Carpenter |
| Abstract: | There are very large literatures in public health and economics on the effects of workplace smoking bans, with most studies relying on cross-sectional variation. We provide new quasi-experimental evidence on the effects of workplace bans by using the differential timing of adoption of over 100 very strong local smoking by-laws in Ontario, Canada over the period 1997-2004. We employ restricted-use repeated cross section geocoded outcome data to estimate reduced form models that control for demographic characteristics, year fixed effects, and county fixed effects. We first show that the effects of the local laws on actual worksite smoking policy (i.e. the "first stage") were not uniform; specifically, local laws were only effective at increasing ban presence among blue collar workers. Among blue collar workers, adoption of a local by-law significantly reduced the fraction of worksites without any smoking restrictions (i.e. where smoking is allowed anywhere at work) by over half. The differential effect of local policies also improved health outcomes: we find that adoption of a local by-law significantly reduced SHS exposure among blue collar workers by 25-30 percent, and we confirm that workplace smoking laws reduce smoking. We find plausibly smaller and insignificant estimates for white collar and sales/service workers -- the vast majority of whom worked in workplaces with privately initiated smoking bans well before local by-laws were adopted. Overall our findings advance the literature by confirming that workplace smoking bans reduce smoking, documenting the underlying mechanisms through which local smoking by-laws improve health outcomes, and showing that the effects of these laws are strongly heterogeneous with respect to occupation. |
| JEL: | I1 J08 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13133&r=lab |
| By: | Russell Cooper; John Haltiwanger; Jonathan L. Willis |
| Abstract: | This paper studies hours, employment, vacancies and unemployment at micro and macro levels. It is built around a set of facts concerning the variability of unemployment and vacancies in the aggregate and, at the establishment level, the distribution of net employment growth and the comovement of hours and employment growth. A search model with frictions in hiring and firing is used as a framework to understand these observations. Notable features of this search model include non-convex costs of posting vacancies, establishment level profitability shocks and a contracting framework that determines the response of hours and wages to shocks. The search friction creates an endogenous, cyclical adjustment cost. We specify and estimate the parameters of the search model using simulated method of moments to match establishment-level and aggregate observations. The estimated search model is able to capture both the aggregate and establishment-level facts. |
| JEL: | E24 J6 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13115&r=lab |
| By: | Nekby, Lena (Stockholm University Linnaeus Center for Integration Studies - SULCIS); Özcan, Gülay (Stockholm University Linnaeus Center for Integration Studies - SULCIS) |
| Abstract: | The importance of investing in host country-specific human capital such as domestic language proficiency and domestic education is often cited as a determining factor for the labor market success of immigrants. This suggests that entirely domestic educations should even out the playing field providing equal labor market opportunities for natives and immigrants with similar (domestic) educations. This study follows a cohort of students from Swedish compulsory school graduation in 1988 until 2002 in order to document ethnic differences in education, including grades and field of education, and subsequent labor market outcomes. Results indicate both initial differences in youth labor market status and long term differences in employment rates, most notably for those with Non-European backgrounds. Differences in level or field of domestic education cannot explain persistent employment gaps. However, employment gaps are driven by differences among those with secondary school only. No employment or income gaps are found for the university educated. |
| Keywords: | Ethnic minorities; Education; Employment; Income; Discrimination |
| JEL: | I21 J15 J71 Z13 |
| Date: | 2007–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sulcis:2007_003&r=lab |
| By: | Harald Uhlig |
| Abstract: | In this paper, I investigate the scope of a model with exogenous habit formation - or `catching up with the Joneses`, see Abel (1990) - to generate the observed equity premium as well as other key macroeconomic facts. Along the way, I derive restrictions for four out of eight parameters for a rather general preference specification of habit formation by imposing consistency with long-run growth, the leisure share, the aggregate Frisch elasticity of labor supply, the observed risk-free rate, and the observed Sharpe ratio. I show that a DSGE model with (exogenous and lagged) habits in both leisure and consumption, but not necessarily with additional persistence, is well capable of matching the observed asset market facts as well as macro facts, provided one allows for moderate real wage stickiness and provided one allows for sufficient curvature on preferences, as dictated by the asset market observations. Without wage stickiness, delivery on both the asset pricing implications as well as the macroeconomic implications seems to be much harder. |
| Keywords: | asset pricing, wage rigidity, habit formation, Frisch elasticity, Sharpe ratio, log-linear approximation |
| JEL: | E24 E30 G12 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2007-003a&r=lab |
| By: | Stenberg, Anders (Swedish Institute for Social Research, Stockholm University) |
| Abstract: | This study is the first to explore the earnings effects of credits attained in adult education at upper secondary level (AE) in Sweden. It is also investigated whether individuals with and without AE prior to enrolment in higher studies differ in their achievements at university and/or in their subsequent earnings. The analyses are based on register data of the cohort born in 1970 of which more than one third at some point has been registered in AE. In the preferred specification, credits equal to one year of AE are found to increase annual wage earnings by 4.1 per cent for males and 3.6 per cent for females. The results are mainly driven by course credits with an element of specific knowledge such as health related subjects and computer science, while more general subjects such as Mathematics, Swedish or English are linked with zero returns. Concerning higher education, the results indicate a lower payoff for AE individuals if higher studies are limited to less than two years. There is also evidence of a lower probability of completing four years of higher studies, in particular among females. |
| Keywords: | Adult education; wage earnings |
| JEL: | H52 J68 |
| Date: | 2007–05–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2007_006&r=lab |
| By: | Nekby, Lena (Dept. of Economics, Stockholm University); Rödin, Magnus (Dept. of Economics, Stockholm University) |
| Abstract: | This paper explores the identity formation of a cohort of students with immigrant backgrounds in Sweden and the consequences of identity for subsequent labor market outcomes. Unique for this study is that identity is defined according to a two-dimensional acculturation framework based on both strength of identity to the (ethnic) minority and to the (Swedish) majority culture. Results indicate that what matters for labor market outcomes is strength of identification with the majority culture regardless of strength of (ethnic) minority identity. Labor market outcomes vary little between the assimilated and the integrated who have in common a strong majority identity but varying minority identity. Correlations between identity and labor market outcomes are however, an entirely male phenomenon. |
| Keywords: | Ethnic Identity; Acculturation; Ethnic minorities; Employment; Income |
| JEL: | J15 J16 J21 Z13 |
| Date: | 2007–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sunrpe:2007_0007&r=lab |
| By: | Nadeem Ul Haque (Pakistan Institute of Development Economics, Islamabad.) |
| Abstract: | Public sector reform (PSR) efforts in developing countries have been less than successful in the past. Motivated by budgetary considerations, they have focused on downsizing and procedural changes without radically altering the outmoded incentive system, which, in many countries, is now characterised by declining real wages, wage compression, and a non-merit promotion and reward system. Using results from the incentives literature, this paper argues that, for a reform effort to succeed, public sector human resource management (HRM) will have to be reformed at an early stage to establish productivity incentives in the public sector. These will include introducing substantial autonomy to organisations in their work, incentive schemes, and HRM along the lines of the now well-accepted concept of central bank independence. Past PSR efforts have also attempted to conduct a unified reform effort led centrally by the ministry of finance. A continuous process like PSR—spread out over a considerable period and involving many different people and organisations—might need to build in decentralisation, local leadership and local incentives, and HRM. PSR must be based on the recognition that people are at the heart of public service. As a result, managing human resources must be at the centre of any effort. The people who are at the center of this change can either be its architects and beneficiaries or its losers and therefore opponents of change. Design and implementation of reforms must, therefore, be sensitive to this important fact. It is essential that the reform is led by individuals at the organisation level who understand the vision as well as process of change. Governments must empower such leadership to guide, initiate, innovate, and manage change. |
| Keywords: | Civil Services, Reforms |
| JEL: | J21 J31 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2007:24&r=lab |
| By: | Eléna Stancanelli (CNRS) |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:0710&r=lab |
| By: | Reich, S. |
| Abstract: | In this paper we consider a moral hazard problem, in which the agent after receiving his wage contract but before undertaking the costly effort can borrow on his future wage earnings. The game between the agent and potential lenders is modelled as an in.nite stochastic game with an exogenous stopping probability. We show that the principal cannot design a wage scheme that is robust to hedging by the agent. In particular, we show that, if the exogenous stopping probability is non zero, the principal's wage offer will be followed by several rounds of borrowing by the agent. This is compared to the recontracting-proofness equilibria which most of the literature has concentrated on, assuming that this stopping probability is zero. Furthermore, we show that the equilibrium of the model with a strictly positive stopping probability does not converge to the equilibrium of the model in which it is zero. We also .nd that the principal.s profit is lower, the maximum wage payment can be higher and effort is lower. |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0729&r=lab |
| By: | Gerda R. Neyer (Max Planck Institute for Demographic Research, Rostock, Germany); Gunnar Andersson (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | This paper argues that theoretical and methodological aspects account for the ambiguous results of investigations into the effects of family policies on fertility. Theoretically we employ approaches of comparative welfare-state research, of the sociology of “constructed categories”, and of the “new institutionalism” to demonstrate that investigations into the effects of policies on fertility need to contextualize policies and reduce their complexities by focusing on “critical junctures”, “space”, and “usage”. As regards methods we argue that the policy effects can only be assessed properly if we study the impact of policies on individual behavior, event-history models applied to individual-level data being the state-of-theart of such an approach. We present studies on the impact of family policies on Swedish childbearing behavior to demonstrate that an analytical and methodological approach as we advocate prevents us from drawing misleading conclusions about the effects of family policies on childbearing and fertility. |
| Keywords: | Europe, family, fertility |
| JEL: | J1 Z0 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2007-021&r=lab |
| By: | Philippe Mahler (Socioeconomic Institute, University of Zurich) |
| Abstract: | Obesity is increasing worldwide for both adults and children. Genetic disposition is responsible for some variation in body weight but cannot explain the dramatic increase in the last two decades. The increase must be due to structural and behavioral changes. One such behavioral change is the increase in working females in the last decades. The absence from the mother reduces potential child care time in the family. Reduced child care time may have adverse effects on the prevalence of obesity in children and adults. This paper analyzes the effect of mother’s labor supply in childhood on young adults probability of being obese in Germany. Using a sample drawn from the German Socio-Economic Panel the results show that a higher labor supply of the mother increases the probability for her child to be obese as young adult. This result underlines the importance of childhood environment on children’s later life outcome and the importance of behavioral changes in explaining the increase in obesity. |
| Keywords: | GSOEP, obesity, female labor supply, child care, sibling estimation |
| JEL: | I12 J22 D10 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:soz:wpaper:0707&r=lab |
| By: | Ana Lamo (Directorate General Research, European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Javier J. Pérez (Directorate General Economic, European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Ludger Schuknecht (Directorate General Economic, European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | This study examines the business cycle behaviour of public consumption and its main components; the public wage bill (including compensation per employee and public employment)and intermediate consumption in the euro area aggregate, euro area countries and a group of selected non-euro area OECD countries (Denmark, Sweden, the UK, Japan and the US). It looks across a large number of variables and methods, using annual data from 1960 to 2005. It finds robust evidence supporting that public consumption, wages and employment co-move with the business cycle in a pro-cyclical manner with 1-2 year lags, notably for the euro area aggregate and euro area countries. The findings reflect mainly the correlation between cyclical developments (automatic stabilizers), but also point to the important role of pro-cyclical discretionary fiscal policies. JEL Classification: E62, E63, H50. |
| Keywords: | Public consumption, public wages, public employment, stylized facts, filtering, thick modelling. |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20070757&r=lab |
| By: | Antonio Cabrales; Raffaele Miniaci; Marco Piovesan; Giovanni Ponti |
| Abstract: | This paper reports experimental evidence on a stylized labor market. The experiment is designed as a sequence of three treatments. In the last treatment, TR3, four principals, who face four teams of two agents, compete by offering the agents a contract from a fixed menu. In this menu, each contract is the optimal solution of a (complete information) mechanism design problem where principals face agents’ who have social (i.e. interdependent) distributional preferences a’ la Fehr and Schmidt [19] with a specific parametrization. Each agent selects one of the available contracts offered by the principals (i.e. he “chooses to work” for a principal). Production is determined by the outcome of a simple effort game induced by the chosen contract. In the first two treatments, TR1 and TR2, we estimate individual social preference parameters and beliefs in the effort game, respectively. We find that social preferences are significant determinants of the matching process between labor supply and demand in the market stage, as well as principals’ and agents’ contract and effort decisions. In addition, we also see that social preferences explain the matching process in the labor market, as agents display a higher propensity to choose to work for a principal with similar distributional preferences. |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we072010&r=lab |
| By: | Jesse Rothstein; Cecilia Elena Rouse |
| Abstract: | In the early 2000s, a highly selective university introduced a "no-loans" policy under which the loan component of financial aid awards was replaced with grants. We use this natural experiment to identify the causal effect of student debt on employment outcomes. In the standard life-cycle model, young people make optimal educational investment decisions if they are able to finance these investments by borrowing against future earnings; the presence of debt has only income effects on future decisions. We find that debt causes graduates to choose substantially higher-salary jobs and reduces the probability that students choose low-paid "public interest" jobs. We also find some evidence that debt affects students' academic decisions during college. Our estimates suggest that recent college graduates are not life-cycle agents. Two potential explanations are that young workers are credit constrained or that they are averse to holding debt. We find suggestive evidence that debt reduces students' donations to the institution in the years after they graduate and increases the likelihood that a graduate will default on a pledge made during her senior year; we argue this result is more likely consistent with credit constraints than with debt aversion. |
| JEL: | D91 H52 I20 J24 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13117&r=lab |
| By: | Fouquin, Michel; Nayman, Laurence; Wagner, Laurent |
| Abstract: | This paper investigates the determinants of intra-firm trade of multinational firms located in France, using data on French companies. Results on the vertical pattern of production networks differ according to the affiliates’ location. Lower wage and transportation costs in the developing countries increase, as expected, the vertical segmentation of production. In the developed countries, lower trade and unit wage costs, and hence, a strong and positive labour productivity matter a lot in explaining French MNCs’ preferences. Among the other variables of interest, partnership and market potential have been given special attention. The results substantiate a mix of vertical and horizontal FDI, mainly when we separate out capital intensive from labour intensive intermediate products. |
| Keywords: | Multinational Firms, Intra-firm Trade, Intermediate Products, Vertical Production Networks, Horizontal FDI |
| JEL: | F1 F23 L1 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:5565&r=lab |
| By: | Philippe J. Deschamps (Department of Quantitative Economics) |
| Abstract: | Logistic smooth transition and Markov switching autoregressive models of a logistic transform of the monthly US unemployment rate are estimated by Markov chain Monte Carlo methods. The Markov switching model is identified by constraining the first autoregression coefficient to differ across regimes. The transition variable in the LSTAR model is the lagged seasonal difference of the unemployment rate. Out of sample forecasts are obtained from Bayesian predictive densities. Although both models provide very similar descriptions, Bayes factors and predictive efficiency tests (both Bayesian and classical) favor the smooth transition model. |
| Keywords: | Logistic smooth transition autoregressions; Hidden Markov models; Density forecasts; Markov chain Monte Carlo; Bridge sampling; Unemployment rate |
| JEL: | C11 C22 C53 E24 E27 |
| Date: | 2007–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:fri:dqewps:wp0007&r=lab |