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on Labour Economics |
| By: | Ken Hori (School of Economics, Mathematics & Statistics, Birkbeck) |
| Abstract: | This paper develops a model of directed-search where workers’ preference for a higher wage is explicitly modelled into their application strategy. In a general setting where jobs offer non-uniform wages and different probabilities of a job offer, the optimal strategy for selecting the set of applied jobs is established. In applying this to a homogeneous-workers job-matching market, the equilibrium outcome is then shown to entail wage dispersion when firms have non-uniform labour demand. Finally a matching function is derived that captures both urnball and multiple-applications frictions, that nests many of the existing functions. |
| JEL: | J31 J64 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:bbk:bbkefp:0711&r=lab |
| By: | Fredrik Andersson; Harry J. Holzer; Julia Lane |
| Abstract: | In this paper we use a very large matched database on firms and employees to analyze the use of temporary agencies by low earners, and to estimate the impact of temp employment on subsequent employment outcomes for these workers. Our results show that, while temp workers have lower earnings than others while working at these agencies, their subsequent earnings are often higher - but only if they manage to gain stable work with other employers. Furthermore, the positive effects seem mostly to occur because those working for temp agencies subsequently gain access to higher-wage firms than do comparable low earners who do not work for temps. The positive effects we find seem to persist for up to six years beyond the period during which the temp employment occurred. |
| JEL: | J31 J6 J62 J68 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13434&r=lab |
| By: | Krause, Michael; Lubik, Thomas A. |
| Abstract: | We show how on-the-job search and the propagation of shocks to the economy are intricately linked. Rising search by employed workers in a boom amplifies the incentives of firms to post vacancies. In turn, more vacancies induce more on-the-job search. By keeping job creation costs low for firms, on-the-job search greatly amplifies shocks. In our baseline calibration, this allows the model to generate fluctuations of unemployment, vacancies, and labor productivity whose magnitudes are close to the data, and leads output to be highly autocorrelated. |
| Keywords: | Search and matching, job-to-job mobility, worker flows, Beveridge curve, business cycle, propagation |
| JEL: | E24 E32 J64 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:6136&r=lab |
| By: | Andrew E. Clark; Nicolai Kristensen; Niels Westergård-Nielsen |
| Abstract: | This paper uses matched employer-employee panel data to show that individual job satisfaction is higher when other workers in the same establishment are better-paid. This runs contrary to a large literature which has found evidence of income comparisons in subjective well-being. We argue that the difference hinges on the nature of the reference group. We here use co-workers. Their wages not only induce jealousy, but also provide a signal about the worker's own future earnings. Our positive estimated coefficient on others' wages shows that this positive future earnings signal outweighs any negative status effect. This phenomenon is stronger for men, and in the private sector. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2007-23&r=lab |
| By: | Geishecker, Ingo; Görg, Holger |
| Abstract: | Our paper investigates the link between international outsourcing and wages utilizing a large household panel and combining it with industry level information on industries' outsourcing activities from input-output tables. This approach avoids problems such as aggregation bias, potential endogeneity bias and poor skill definitions that commonly hamper industry-level studies. We find that outsourcing has had a marked impact on wages. Applying two alternative skill classifications we find evidence that a one percentage point increase in outsourcing reduced the wage for workers in the lowest skill categories by up to 1.5% while it increased wages for high-skilled workers by up to 2.6%. This result is robust to a number of different specifications. |
| Keywords: | international outsourcing; offshoring; skills; wages |
| JEL: | F16 J31 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6484&r=lab |
| By: | Krause, Michael; Lubik, Thomas A. |
| Abstract: | We analyse the implications of intra-firm bargaining for business cycle dynamics in models with large firms and search frictions. Intra-firm bargaining implies a feedback effect from the marginal revenue product to wage setting which leads firms to over-hire in order to reduce workers’ bargaining position within the firm. The key to this effect are decreasing returns and/or downward-sloping demand. We show that equilibrium wages and employment are higher in steady state compared to a bargaining framework in which firms neglect this feedback. However, the effects of intra-firm bargaining on adjustment dynamics, volatility and comovement are negligible. |
| Keywords: | Strategic wage setting, search and matching frictions, business cycle propagation |
| JEL: | E24 E32 J64 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:6138&r=lab |
| By: | Daniel Mejía; Marc St-Pierre |
| Abstract: | This paper develops a model where heterogeneous agents compete for the best available jobs. Firms, operating with different technologies, rank job candidates in the human capital dimension and hire the best available candidate due to complementarities between the worker’s human capital and technologies used in the production process. As a result, individuals care about their relative ranking in the distribution of human capital because this determines the firm they will be matched with and therefore the wage they will receive in equilibrium. The paper rationalizes a different channel through which peer effects and human capital externalities might work: competition between individuals for the best available jobs (or prizes associated with the relative position of individuals). We show that more inequality in the distribution of endowments negatively affects aggregate efficiency in human capital formation as it weakens competition for jobs between individuals. However, we find that the opposite is true for wage inequality, namely, more wage inequality encourages competition and, as a result, agents exert more effort and accumulate more human capital in equilibrium. |
| Date: | 2007–09–19 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:004105&r=lab |
| By: | Yashiv, Eran |
| Abstract: | The picture of U.S. labour market dynamics is opaque. Empirical studies have yielded contradictory findings and debates have emerged regarding their implications. This paper aims at clarifying the picture, which is important for the understanding of the operation of the labour market, for the study of business cycles, for the explanation of wage behaviour, and for the formulation of policy. The paper determines what facts can be established, what are their implications, and what remains to be further investigated. The main contributions made here are: (i) Listing of data facts that can be agreed upon. These indicate that there is considerable cyclicality and volatility of both accessions to employment and separations from it. Hence, both are important for the understanding of the business cycle. (ii) Presenting the business cycle facts of key series. (iii) Pointing to specific gaps in the data picture: disparities in the measurement of the sizeable flows between employment and the pool of workers out of the labour force, disagreements about the relative volatility of job finding and separation rates across data sets, and the fact that the fit of the gross flows data with net employment growth data differs across studies and is not high. The definite characterization of labour market dynamics depends upon the closing of these data gaps. |
| Keywords: | business cycles; gross worker flows; hiring; job finding; labour market dynamics; separation |
| JEL: | E24 J63 J64 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6481&r=lab |
| By: | Buch, Claudia M.; Lipponer, Alexander |
| Abstract: | Does more FDI make the world a riskier place for workers? We analyze whether an increase in multinational firms’ activities is associated with an increase in firm-level employment volatility. We use a firm-level dataset for Germany which allows us to distinguish between purely domestic firms, domestic multinationals, their foreign affiliates, and foreign firms that are active in Germany. We decompose the volatility of firms into their reaction and their exposure to aggregate developments. Generally, we find no above-average wage and output elasticities for multinational firms. |
| Keywords: | Employment volatility, labor demand, multinational firms |
| JEL: | F23 J23 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:6143&r=lab |
| By: | Nicole Maestas |
| Abstract: | This paper analyzes a puzzling aspect of retirement behavior known as Òunretirement,Ó in which retirees appear to reverse their retirement decisions and return to work. Using panel data from the Health and Retirement Study, the author shows that nearly 50 percent of retirees follow a nontraditional retirement path that involves partial retirement or unretirement, and that 26 percent of retirees later unretire. She explores two possible explanations: 1) unretirement transitions are unexpected, resulting from failures in planning or financial shocks; and 2) unretirement transitions are anticipated prior to retirement, reflecting a more complex retirement process. She presents a theoretical model that illustrates how both unplanned and planned unretirement might arise in a life-cycle framework-the former via uncertainty in asset returns and medical expenses, and the latter through a phenomenon she calls Òburnout and recovery,Ó in which individuals systematically burn out on their career jobs, retire, then return to the labor force after a period of recovery. Using data on expectations and realizations of work during retirement, she shows that unretirement was anticipated for the vast majority (82 percent) of those returning to work, and is not a result of financial shocks, poor planning or low wealth accumulation. For the small minority who unexpectedly returned to work, the evidence points to preference shocks-that is, discovering retirement leisure less satisfying than expected. If anything, expectations err on the side of excessive pessimism about retirement rather than unwarranted optimism; this finding complements a growing literature on consumption behavior at retirement which has suggested that realized retirement turns out better than expected for most people. |
| Keywords: | retirement, aging, expectations, employment |
| JEL: | J14 J2 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:ran:wpaper:196.2&r=lab |
| By: | Frenette, Marc; Zeman, Klarka |
| Abstract: | In this study, we use new Canadian data containing detailed information on standardized test scores, school marks, parental and peer influences, and other socio-economic background characteristics of boys and girls to try to account for the large gender gap in university attendance. Among 19-year-old youth in 2003, 38.8% of girls had attended university, compared with only 25.7% of boys. However, young men and women were about equally likely to attend college. We find that differences in observable characteristics between boys and girls account for more than three quarters (76.8%) of the gap in university participation. In order of importance, the main factors are differences in school marks at age 15, standardized test scores in reading at age 15, study habits, parental expectations and the university earnings premium relative to high school. Altogether, the four measures of academic abilities used in the study "overall marks, performance on standardized reading tests, study habits and repeating grade" collectively account for 58.9% of the gender gap in university participation. These results suggest that understanding why girls outperform boys in the classroom may be a key to understanding the gender divide in university participation. |
| Keywords: | Education, training and learning, Society and community, Educational attainment, Literacy, Women and gender |
| Date: | 2007–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:stc:stcp3e:2007303e&r=lab |
| By: | Frederick Guy (Birkbeck College); Peter Skott (University of Massachusetts Amherst) |
| Abstract: | We consider the links between information and communications technologies (ICTs) and the distribution of income, as mediated by problems of coordination and control within organizations. In the large corporations of the mid-twentieth century, a highly developed division of labor was coordinated and controlled with the aid of relatively underdeveloped ICTs. This created a situation in which the options of top manage- ment were constrained while the individual and collective power of lower paid workers was enhanced. Only in the late twentieth century, when the microprocessor and re- lated technologies transformed the information systems of organizations, did improve- ments in the tools of coordination and control race ahead of the growing demands of coordination and control. These technological changes have reduced the power of lower-paid employees, increased that for higher-paid employees, and led to an increase in income inequality. Thus, the more important aspects of new technology relate to the "power-bias", rather than the "skill-bias", of technological change. JEL Categories: J31, O33 |
| Keywords: | communications technology, power-biased technical change, inequality, work intensity, efficiency wage. |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2007-11&r=lab |
| By: | Sergi Jimenez-Martin; Jose M. Labeaga; Cristina Vilaplana Prieto |
| Abstract: | In this paper we estimate equations for deserving or "true disability indicator" and receiv- ing disability benefits to evaluate the award error as the difference between both probabilities using survey data from Spain. As expected award errors are not randomly distributed across the population. We find that individuals aged between 55 and 59, self-employed, working in an agricultural sector or living in a depressed region, have a significantly higher probability of receiving a benefit without deserving than the rest of individuals. We also find evidence of gender discrimination since males have a significantly higher probability of receiving a benefit without deserving it. Finally we show that the probability of getting a benefit being healthy is not distributed at random across the population. We have estimated the cost of wrongful benefit concession at a minimum of 1500 million euros or 0,2 percent of the Spanish GDP for year 2000. All these findings confirm that disability benefits are being used as an instrument for exiting the labor market for individuals approaching the early retirement age. Since the awarding process depends on Social Security Regional offices, this implies that some regional offices are applying loosely the requirements for granting disability benefits. |
| Keywords: | Disability benefits, award error, early retirement, social security. |
| JEL: | H55 J26 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:07/04&r=lab |
| By: | Thomas Philippon; Ariell Reshef |
| Abstract: | Over the past 60 years, the U.S. financial sector has grown from 2.3% to 7.7% of GDP. While the growth in the share of value added has been fairly linear, it hides a dramatic change in the composition of skills and occupations. In the early 1980s, the financial sector started paying higher wages and hiring more skilled individuals than the rest of economy. These trends reflect a shift away from low-skill jobs and towards market-oriented activities within the sector. Our evidence suggests that technological and financial innovations both played a role in this transformation. We also document an increase in relative wages, controlling for education, which partly reflects an increase in unemployment risk: Finance jobs used to be safer than other jobs in the private sector, but this is not longer the case. |
| JEL: | G2 J21 J24 J3 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13437&r=lab |
| By: | Jonathan Guryan; Kory Kroft; Matt Notowidigdo |
| Abstract: | This paper uses the random assignment of playing partners in professional golf tournaments to test for peer effects in the workplace. We find no evidence that the ability of playing partners affects the performance of professional golfers, contrary to recent evidence on peer effects in the workplace from laboratory experiments, grocery scanners, and soft-fruit pickers. In our preferred specification, we can rule out peer effects larger than 0.045 strokes for a one stroke increase in playing partners' ability, and the point estimates are small and actually negative. We offer several explanations for our contrasting findings: that workers seek to avoid responding to social incentives when financial incentives are strong; that there is heterogeneity in how susceptible individuals are to social effects and that those who are able to avoid them are more likely to advance to elite professional labor markets; and that workers learn with professional experience not to be affected by social forces. We view our results as complementary to the existing studies of peer effects in the workplace and as a first step towards explaining how these social effects vary across labor markets, across individuals and with changes in the form of incentives faced. In addition to the empirical results on peer effects in the workplace, we also point out that many typical peer effects regressions are biased because individuals cannot be their own peers, and suggest a simple correction. |
| JEL: | J01 J24 J3 J44 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13422&r=lab |