|
on Labour Economics |
| By: | René Böheim (Johannes Kepler University Linz, WIFO and IZA); Ana Rute Cardoso (IZA) |
| Abstract: | There is widespread belief that workers in temporary agency work (TAW) are subject to poorer working conditions, in particular pay, than comparable workers in the rest of the economy. The first aim of this analysis is to quantify the wage penalty, if any, for workers in TAW. Secondly, we analyze the wage profile of workers before and after spells of TAW. Linked employer-employee data for Portugal enable us to account for observable as well as unobservable worker quality. Our results show that workers in TAW earn lower wages than their peers and that this difference is mostly due to the workers' characteristics. We estimate that workers in TAW earn on average 9% less than comparable workers in the rest of the economy if we control for the workers' observable attributes only; this difference is reduced to 1% when we control for unobservable characteristics as well. However, interesting differences emerge across groups. Younger workers, both men and women, earn higher wages in TAW than their peers in other firms, as opposed to prime-age and older workers. Moreover, for young workers TAW is not associated with a stigma effect that slows wage progression after working for TAW, contrary to prime-age and older workers, in particular males. The wage trends are also different before entering TAW. Prime-age and older workers see their wages deteriorate relative to their peers before entering TAW, suggesting that adverse labor market conditions may motivate them to search for a TAW job. We do not detect any pre-TAW wage trend for young workers. |
| Keywords: | temporary work agencies, temporary help service, matched employer-employee data, Portuguese labor market |
| JEL: | D21 J31 J40 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3144&r=lab |
| By: | Montizaan Raymond; Coervers Frank; Grip Andries de (ROA rm) |
| Abstract: | In this paper we analyze how retirement behavior is affected by a worker’s firm-specific or general training history. Using US data from the National Longitudinal Survey of Older Men and controlling for the effects of technological change and workers’ retirement preferences, we find that workers with a firm-specific training history retire earlier than workers with a general training background. This indicates that shared investments in firm-specific training are embedded in upward sloping earning profiles that create productivity-wage differentials for older workers. |
| Keywords: | education, training and the labour market; |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umaror:2007002&r=lab |
| By: | Leif Danziger (Ben-Gurion University, Central European University and IZA) |
| Abstract: | We show that, contrary to widespread belief, low-pay workers do not generally prefer that the minimum wage rate be increased until the labor demand is unitary elastic. Rather, there exists a critical value of elasticity of labor demand so that increases in the minimum wage rate make low-pay workers better off for higher elasticities, but worse off for lower elasticities. This critical value decreases with unemployment benefits and increases with workers’ risk aversion. We also show that in some countries the benefits for long-term unemployed are so low that workers would probably prefer that the minimum wage rate be decreased. |
| Keywords: | elasticity of labor demand, minimum wage |
| JEL: | J38 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3150&r=lab |
| By: | Pia M. Orrenius; Madeline Zavodny |
| Abstract: | Because Latinos comprise a large and growing share of the low-skilled labor force in the U.S., Latinos may be disproportionately affected by minimum wage laws. We compare the effects of minimum wage laws on employment and earnings among Hispanic immigrants and natives compared with non-Hispanic whites and blacks. We focus on adults who have not finished high school and on teenagers, groups likely to earn low wages. Conventional economic theory predicts that higher minimum wages lead to higher hourly earnings among people who are employed but lower employment rates. Data from the Current Population Survey during the period 1994?2005 indicate that there is a significant disemployment effect of higher minimum wages on Latino teenagers, although it is smaller for foreign- than native-born Latinos. Adult Latino immigrants are less affected by minimum wage laws than other low-education natives. We investigate whether skill levels and undocumented status help explain these findings. |
| Keywords: | Minimum wage ; Immigrants ; Hispanic Americans |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddwp:0708&r=lab |
| By: | Daniela Andrén (Göteborg University); Thomas Andrén (Göteborg University and IZA) |
| Abstract: | In Romania, the communist regime promoted an official policy of gender equality for more than 40 years, providing equal access to education and employment, and restricting pay differentiation based on gender. After its fall in December 1989, the promotion of equal opportunities and treatment for women and men did not constitute a priority for any of the governments of the 1990s. Given that both the economic mechanisms and the institutional settings changed radically, the question is if this affected gender equality. This paper analyzes both gender and occupational wage gaps in Romania before and during the first years of transition from a planned to a market economy. The results suggest that the communist institutions did succeed in eliminating the gender wage differences in female- and male-dominated occupations, but not in gender-integrated occupations, for which the gender wage gap was about 32%. During the transitions years, this gap decreased to 20-24%, while the gender wag gap in male and female-dominated occupations increased to 15%. |
| Keywords: | occupational segregation, gender wage gap, occupational wage gap |
| JEL: | J24 J31 J71 J78 P26 P27 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3152&r=lab |
| By: | Arnaud Dupuy (ROA, Maastricht University and IZA) |
| Abstract: | This paper presents a general equilibrium assignment model of workers to tasks with endogenous human capital formation and multidimensionality of skills. The model has 2 key features. First, skills are endogenous and multidimensional. Second, two types of assignment occur, workers self-select their education and firms assign workers to tasks/machines. This assignment model yields two functions mapping skills of each type to tasks. Equilibrium is characterized by different wage functions for each type of skills, so that the wage distributions generally overlap. This model offers a unique framework to analyze changes in the wage structure within and between skills groups of workers and distinguishes between technological change that is related to machines (the technical factor) or related to workers (the human factor). I show both theoretically and through simulations that the model can reproduce simultaneously i) the overlap in the wage distributions of college and high-school graduates, ii) the rise in the college-premium, iii) the rise in within wage inequality iv) the differential behavior of the between and within wage inequality in the 60s and 70s and, v) the decline of the wage at the first decile of the overall wage distribution. A family of closed form solutions for the wage functions is proposed. In this family, the output of worker-task pairs is Cobb-Douglas, tasks are distributed according to a Beta distribution and the mapping functions have a logistic form. |
| Keywords: | endogenous human capital formation, tasks assignment, substitution, technical change and wage distribution |
| JEL: | D3 J21 J23 J31 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3154&r=lab |
| By: | Allen Jim; Grip Andries de (ROA rm) |
| Abstract: | We analyze whether technological change induces skill obsolescence and early labor market exit, and to what extent lifelong learning reduces these risks. Using panel data on older workers, we find that workers report skill obsolescence more often in jobs in which learning is a structural characteristic. However, perceived skill obsolescence has no significant effect on the probability of losing employment. Instead, workers who experience skill obsolescence participate more often in training, which decreases the risk of losing employment. The results are consistent with the dynamic model of skill obsolescence and employment loss developed in this paper. Moreover, we find that when workers with long job tenures decrease their training participation, this is an early indicator of future job loss. |
| Keywords: | education, training and the labour market; |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umaror:2007006&r=lab |
| By: | Laszlo Goerke (University of Tübingen, CESifo and IZA) |
| Abstract: | Unemployment Insurance Savings Accounts (UISAs) entitle workers to unemployment benefits at the expense of future pension payments. Therefore, such accounts make unemployment less attractive, intensify job search, and raise employment. In the present paper the wage and employment consequences of UISAs are investigated in a model of collective wage determination. In the basic set-up, UISAs induce a trade union to lower wages. This effect can also arise if (1) balanced-budget repercussions are taken into account, (2) individual job search is incorporated, and (3) wage-dependent pensions are allowed for. However, the requirements for negative wage effects to arise become stricter than in the base model. Thus, collective bargaining creates additional impediments for the positive employment consequences of UISAs. |
| Keywords: | employment, trade union, unemployment accounts, unemployment benefits, wages |
| JEL: | J38 J51 J65 J68 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3141&r=lab |
| By: | Fredrik Andersson (U.S. Bureau of the Census); Harry J. Holzer (Georgetown University and IZA); Julia Lane (University of Chicago, NORC and IZA) |
| 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. |
| Keywords: | temp, employment, advancement, intermediaries |
| JEL: | J31 J6 J62 J68 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3113&r=lab |
| By: | Francesc Dilme (Universitat de Barcelona) |
| Abstract: | Most of the large firms organization schemes consist in hierarchical structures of tiers with different wage levels. Traditionally the existence of this kind of organizations has been associated to the separation of productive and managerial or supervision tasks and to differences in the skills of the workers. However, many firms now employ workers with similar skills, and then the hierarchical structure can be related to an incentive scheme to ensure that workers supply effort. The model we present investigates how firm owners should determine the optimal wage distribution in order to maximize profits. |
| Keywords: | optimal hierarchies, efficiency wages, firm structure, incentives scheme, moral hazard |
| JEL: | M11 L23 M51 J31 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:bar:bedcje:2007185&r=lab |
| By: | Ronny Freier (Stockholm School of Economics and DIW Berlin); Viktor Steiner (Free University Berlin, DIW Berlin and IZA) |
| Abstract: | 'Marginal employment', i.e. employment at low working hours and earnings not covered by social security, has been gaining importance in the German economy over the past decade. Using a large newly available panel data set and statistical matching techniques, we analyse the effects of marginal employment on future individual outcome variables such as unemployment, regular employment and earnings. In addition to average treatment effects, we calculate dynamic and cumulative treatment effects accounting for total time spent in various labor market states and related earnings over a period of three years. We find that marginal employment (i) does not affect time spent in regular employment within a threeyears' observation period, (ii) reduces future unemployment, (iii) slightly increases cumulated future earnings, on average, and (iv) is associated with a small negative cumulative earnings effect for older workers in west Germany. |
| Keywords: | marginal employment, social security contributions, wage subsidies, labour market policy, evaluation of treatment effect |
| JEL: | J23 J64 H43 C35 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3175&r=lab |
| By: | John S. Earle (Upjohn Institute for Employment Research, Central European University and IZA); Álmos Telegdy (Central European University and Hungarian Academy of Sciences) |
| Abstract: | Studies of public-private and foreign-domestic wage differentials face difficulties distinguishing ownership effects from correlated characteristics of workers and firms. This paper estimates these ownership differentials using linked employer-employee data (LEED) from Hungary containing 1.35mln worker-year observations for 21,238 firms from 1986 to 2003. We find that ownership type is highly correlated with characteristics of both workers (education, experience, gender, and occupation) and firms (size, industry, and productivity), suggesting ownership type is systematically selected along these dimensions. The large unconditional wage gaps in the data, 0.24 for public-private and 0.40 for foreign-domestic, are little affected by conditioning on worker characteristics, but controlling for industry reduces the public and foreign premia to 0.16 and 0.34, respectively, and controlling for employment size further reduces them to 0.07 and 0.28. We also exploit the presence of 3,700 switches of ownership type in the data to estimate firm fixed-effects and random trend models, accounting for unobserved firm characteristics affecting the average level and trend growth of wages. These controls have little effect on the conditional public-private gap, but they reduce the estimated foreign premium to 0.07. The results imply that the substantial unconditional wage differentials are mostly, but not entirely, a function of differences in worker and firm characteristics, and they illustrate the value of analyzing LEED to take such correlated factors into account. |
| Keywords: | wages, linked employer-employee data, public sector labor markets, foreign direct investment |
| JEL: | D21 G34 J23 J31 L33 P31 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3125&r=lab |
| By: | T. Dohmen; H. Lehmann; M. E. Schaffer |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:606&r=lab |
| By: | Carmen Pagés (Inter-American Development Bank and IZA); Marco Stampini (Sant’ Anna School of Advanced Studies) |
| Abstract: | This paper assesses labor market segmentation across formal and informal salaried jobs and self-employment in three Latin American and three transition countries. It looks separately at the markets for skilled and unskilled labor, inquiring if segmentation is an exclusive feature of the latter. Longitudinal data are used to assess wage differentials and mobility patterns across jobs. To study mobility, the paper compares observed transitions with a new benchmark measure of mobility under the assumption of no segmentation. It finds evidence of a formal wage premium relative to informal salaried jobs in the three Latin American countries, but not in transition economies. It also finds evidence of extensive mobility across these two types of jobs in all countries, particularly from informal salaried to formal jobs. These patterns are suggestive of a preference for formal over informal salaried jobs in all countries. In contrast, there is little mobility between self-employment and formal salaried jobs, suggesting the existence of barriers to this type of mobility or a strong assortative matching according to workers’ individual preferences. Lastly, for both wage differentials and mobility, there is no statistical difference across skill levels, indicating that the markets for skilled and unskilled labor are similarly affected by segmentation. |
| Keywords: | labor mobility, segmentation, barriers to entry, skills, informality, Latin America, transition economies |
| JEL: | J21 J24 J31 J63 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3187&r=lab |
| By: | Christian Keuschnigg; Evelyn Ribi |
| Abstract: | Outsourcing of labor intensive activities challenges the welfare state and undermines the protection of low-skilled workers. The stylized facts are that profits are concentrated among the high-skilled, involuntary unemployment is mostly among the low-skilled, and private unemployment insurance is missing. This paper analyzes the effectiveness of redistribution and insurance policies when heterogeneous firms can outsource labor intensive components to low-wage economies. The main results are: (i) Social insurance props up wages, leading to more outsourcing and unskilled unemployment. (ii) Redistribution from the skilled to the working poor acts as a wage subsidy to unskilled workers, thereby reducing gross wages, outsourcing and unemployment. (iii) A trend to outsourcing, induced by lower transport costs of imported components, depresses low-skilled wages, raises unemployment, and boosts profits. The resulting polarization of society and the increased income risk of unskilled workers emphasize the social gains from redistribution and insurance and thus call for a more active role of the welfare state in more open economies. |
| Keywords: | Outsourcing, unemployment, social insurance, redistribution |
| JEL: | F23 H21 J64 J65 L23 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:usg:dp2007:2007-41&r=lab |
| By: | Sami Napari |
| Abstract: | ABSTRACT : Using data from the Finnish private sector, this paper shows that giving birth to a child has negative effects on the mother’s wage. Analysis of the reasons for the wage penalty associated with motherhood suggests that the loss of human capital during the child-related career break is an important factor behind the motherhood wage penalty. The paper also finds some evidence that mothers’ selection into different types of firms than childless women may contribute to the wage penalty. Instead differences in unobserved time-invariant individual characteristics between mothers and childless women seem to be unimportant in explaining the motherhood wage penalty. Finally, there seems to be variation in the child-penalty across worker and firm characteristics. For example, the penalties are lower in the female-dominated industries than in the male-dominated industries. There is also variation in the motherhood wage penalty across the conditional wage distribution. Most notably, the large average wage penalties for mothers who spend longer periods at home taking care of their children appear to be driven by heavy penalties at the upper tail of the conditional wage distribution. |
| Keywords: | wages, mothers, human capital |
| JEL: | J13 J24 |
| Date: | 2007–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1107&r=lab |
| By: | Stepán Jurajda (CERGE-EI, CEPR and IZA); Katherine Terrell (University of Michigan, CEPR and IZA) |
| Abstract: | Differences in regional unemployment in post-communist economies are large and persistent. We show that inherited variation in human-capital endowment across the regions of four such economies explains the bulk of regional unemployment variation there and we explore potential explanations for this outcome through related capital and labor mobility patterns. The evidence suggests that regions with high inherited skill endowments attract skilled workers as well as FDI. This mobility pattern, which helps explain the lack of convergence in regional unemployment rates, is consistent with the presence of complementarities in skill and capital. Nevertheless, we find no supporting evidence of human capital wage spillovers implied by the complementarities story. Unemployment of the least-skilled workers appears lower in areas with a higher share of college-educated labor and future research is needed to see if this finding as well as the observed migration pattern arise from different adjustments to regional shocks by education level brought about in part by Central European labor-market institutions, such as guaranteed welfare income raising effective minimum wages. |
| Keywords: | unemployment, human capital, regional labor markets, transition economies, labor mobility, complementarities, spillovers, Czech Republic, Hungary, Romania, Ukraine |
| JEL: | E24 J0 J61 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3176&r=lab |
| By: | Eliane Badaoui (THEMA, Université de Cergy-Pontoise); Eric Strobl (Ecole Polytechnique Paris and IZA); Frank Walsh (University College Dublin) |
| Abstract: | We estimate the wage penalty associated with working in the South African informal sector. To this end we use a rich data set on non-self employed males that allows one to accurately distinguish workers employed in the informal sector from those employed in the formal sector and link individuals over time. Implementing various econometric approaches we find that there is a gross wage penalty of a little over 18 per cent for working in the informal sector. However, once we reduce our sample to a group for which we can reasonably calculate earnings net of taxes and control for time invariant unobservables the wage penalty disappears. |
| Keywords: | informal sector, wage penalty, South Africa |
| JEL: | J31 O17 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3151&r=lab |
| By: | Flavio Cunha (University of Pennsylvania); James J. Heckman (University of Chicago and IZA) |
| Abstract: | A large empirical literature documents a rise in wage inequality in the American economy. It is silent on whether the increase in inequality is due to greater heterogeneity in the components of earnings that are predictable by agents or whether it is due to greater uncertainty faced by agents. Applying the methodology of Cunha, Heckman, and Navarro (2005) to data on agents making schooling decisions in different economic environments, we join choice data with earnings data to estimate the fraction of future earnings that is forecastable and how this fraction has changed over time. We find that both predictable and unpredictable components of earnings have increased in recent years. The increase in uncertainty is substantially greater for unskilled workers. For less skilled workers, roughly 60% of the increase in wage variability is due to uncertainty. For more skilled workers, only 8% of the increase in wage variability is due to uncertainty. Roughly 26% of the increase in the variance of returns to schooling is due to increased uncertainty. Using conventional measures of income inequality masks the contribution of rising uncertainty to the rise in the inequality of earnings for less educated groups. |
| Keywords: | wage inequality, uncertainty, sorting, inequality accounting |
| JEL: | D3 J8 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3115&r=lab |
| By: | Reagan Baughman; Kristin Smith |
| Abstract: | As the baby boom cohort nears retirement age, the question of how to provide necessary health care and personal services to a growing elderly population has become a looming policy problem. Beginning in 2020, the number of Americans over the age of 65 will surpass the number of primary providers of formal and informal long-term care (women between the ages of 20 and 44). Perceptions of shortage and very high turnover in today’s direct care labor market are compounding the potential problem. ; This paper provides an overview of the labor market for direct care workers in the United States, including comprehensive empirical analyses of wage determination and labor supply, using panel data from the 1996 and 2001 Surveys of Income and Program Participation (SIPP). The paper describes the ways in which public policy is expected to affect the direct care labor market and empirically analyzes the wages, health insurance coverage, and employment duration of direct care workers. The authors find both that wages of direct care workers are quite low, with median starting wage of $7.96, and that spells of employment with a given employer are short, averaging just under 10 months. |
| Keywords: | Medical care ; Labor market ; Baby boom generation |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbcw:07-4&r=lab |
| By: | Pedro S. Martins (Queen Mary, University of London, CEG-IST Lisbon and IZA) |
| Abstract: | This paper provides evidence about the effects of dismissals-for-cause requirements, a specific component of employment protection legislation that has received little attention despite its potential relevance. We study a quasi-natural experiment generated by a law introduced in Portugal in 1989: out of the 12 paragraphs in the law that dictated the costly procedure required for dismissals for cause, eight did not apply to firms employing 20 or fewer workers. Using detailed matched employer-employee longitudinal data and differencein- differences matching methods, we examine the impact of that differentiated change in firing costs upon several variables, measured from 1991 to 1999. Unlike predicted by theory, we do not find robust evidence of effects on worker flows. However, firm performance improves considerably while wages fall. Overall, the results suggest that firing costs of the type studied here decrease workers’ effort and increase their bargaining power. |
| Keywords: | employment protection legislation, worker flows, wages, firm performance |
| JEL: | E24 J64 J65 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3112&r=lab |
| By: | Eliane Badaoui (THEMA, Université de Cergy-Pontoise); Eric Strobl (Ecole Polytechnique Paris and IZA); Frank Walsh (University College Dublin) |
| Abstract: | We show theoretically that when larger firms pay higher wages and are more likely to be caught defaulting on labour taxes, then large high-wage firms will be in the formal sector and small low-wage firms will be in the informal sector. The formal sector wage premium is thus just a firm size wage differential. Using data from the South African labour force survey we illustrate that firm size is indeed the key variable determining whether a formal sector premium exists. |
| Keywords: | informal sector, wage premium, firm size |
| JEL: | J42 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3145&r=lab |
| By: | Uschi Backes-Gellner (Institute for Strategy and Business Economics, University of Zurich); Simone Tuor (Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | Avoiding labor shortages for skilled employees is one of the major challenges for highly competitive firms acting in tight labor markets. The ability to avoid labor shortages on the company level, for example measured by the share of vacant jobs, is distributed very unevenly and cannot in general be explained by differences in wages and compensation packages as standard economic theory would suggest. In our paper we present a theoretical explanation for large and persisting inter-firm differences in job vacancy rates. Many psychological studies show that unobservable job and company characteristics such as work atmosphere or individual self determination are crucial for employees’ job choices. However, since these characteristics are not reliably observable to an outsider, we argue that potential employees use other, on the surface nonessential company characteristics as signals for their preferred characteristics in their job decision. To derive empirically testable hypotheses we reverse Spence’s labor market signaling model and study how employers can reliably signal the quality of their work climate and labor relations to potential employees. We use a rich data set from approximately 700 firms to test our hypotheses and do find in fact that formal features of labor relations which on the surface may not seem relevant for recruitment success of skilled workers nevertheless exert significant effects on recruitment success and job vacancies. |
| Keywords: | Further training; Investing in human capital; Costs-benefit ratio |
| JEL: | M5 M12 M53 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:iso:educat:0010&r=lab |
| By: | Monojit Chatterji (University of Dundee); Karen Mumford (University of York and IZA); Peter N. Smith (University of York) |
| Abstract: | Using new linked employee-workplace data for Britain in 2004, we find that the nature of the public private pay gap differs between genders and that of the gender pay gap differs between sectors. The analysis shows that little none of the gender earnings gap in both the public and private sector can be explained by differences in observable characteristics. Decomposition analysis further reveals that the contribution of differences in workplace characteristics to the public private earnings gap is sizeable and significant. Whilst the presence of performance related pay and company pension schemes is associated with higher relative earnings for those in the private sector, an important workplace characteristic for the public private pay gap is the presence of family-friendly employment practices. Increased provision is especially associated with higher relative earnings in the public sector for women. |
| Keywords: | public sector earnings, gender, gap, family friendly, decomposition |
| JEL: | J3 J7 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3158&r=lab |
| By: | GAYLE ALLARD (Instituto de Empresa); CRISTINA SIMON (Instituto de Empresa) |
| Abstract: | This study explores the challenge of capturing talent from both the political and the management level in Western Europe. It begins by identifying the special characteristics of Generation Y: those born since 1980 and recently joining national labor forces. It then evaluates the rigidity of labor markets in the European countries, dividing them into most and least regulated and exploring some of the labor-market characteristics that accompany those extremes. Finally, it identifies the employment aspirations of Generation Y, and contrasts them with the realities of young workers on national job markets. |
| Keywords: | Human Resources, Human talent |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:emp:wpaper:wp07-15&r=lab |
| By: | Stefanie Behncke (SIAW, University of St. Gallen); Markus Frölich (SIAW, University of St. Gallen, IFAU and IZA); Michael Lechner (SIAW, University of St. Gallen, CEPR, ZEW, PSI and IZA) |
| Abstract: | In many countries, caseworkers in a public employment office have the dual roles of counselling and monitoring unemployed persons. These roles often conflict with each other leading to important caseworker heterogeneity: Some consider providing services to their clients and satisfying their demands as their primary task. Others may however pursue their strategies even against the will of the unemployed person. They may assign job assignments and labour market programmes without consent of the unemployed person. Based on a very detailed linked jobseeker-caseworker dataset, we investigate the effects of caseworkers' cooperativeness on the employment probabilities of their clients. Modified statistical matching methods reveal that caseworkers who place less emphasis on a cooperative and harmonic relationship with their clients increase their employment chances in the short and medium term. |
| Keywords: | public employment services, unemployment, statistical matching methods |
| JEL: | J68 C31 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3149&r=lab |
| By: | David G. Blanchflower (Dartmouth College, NBER, Bank of England and IZA) |
| Abstract: | In this paper I examine changes in self-employment that have occurred since the early 1980s in the United States. It is a companion paper to a recent equivalent paper relating to the UK. Data on random samples of twenty million US workers are examined taken from the Basic Monthly files of the CPS (BMCPS), the 2000 Census and the 2005 American Community Survey (ACS). In contrast to the official definition of self-employment which simply counts the numbers of unincorporated self-employed, we also include the incorporated self-employed who are paid wages and salaries. The paper presents evidence on trends in self-employment for the US as a whole as well as in construction. Construction is particularly important given that it accounts for a fifth of all self-employment and self-employment rates are roughly double the national rates. It is also important given the existence of public sector procurement programs that primarily exist in construction that have the intended purpose of assisting firms owned by women and minorities. I document the fact that self-employment rates of white women and minorities in comparison to those of white males have increased in construction and elsewhere as have self-employment earnings. Despite this substantial disparities remain. I also find evidence of discrimination in the small business credit market. Firms owned by minorities in general and blacks in particular are much more likely to have their loans denied and pay higher interest than is the case for white males. |
| Keywords: | entrepreneurship, self-employment, discrimination |
| JEL: | J15 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3130&r=lab |
| By: | Joanne Lindley (Department of Economics, The University of Sheffield) |
| Keywords: | Education; over-education, earnings, immigrants, ethnic minorities |
| JEL: | J24 J7 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2007013&r=lab |
| By: | Kostas Mavromaras (University of Melbourne and IZA); Seamus McGuinness (ESRI, Dublin); Nigel O’Leary (University of Swansea); Peter Sloane (University of Swansea and IZA); Yi King Fok (University of Melbourne) |
| Abstract: | This paper examines the parallel trends in education and labour market developments in Australia and Britain. It uses unique information in the WERS and HILDA surveys on reported overskilling in the workplace. To a degree, the overskilling information overcomes the problem of unobserved ability differences and focuses on the actual job-employee mismatch more than the conventional overeducation variables can. The paper finds that the prevalence of overskilling decreases with education at least for Australia, but the wage penalty associated with overskilling increases with education. Although the general patterns of overskilling (prevalence and penalties) are fairly similar between Australia and Britain, the problem appears to be greater in Britain. |
| Keywords: | overskilling, overeducation, Australia, Britain |
| JEL: | J24 J31 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3136&r=lab |
| By: | René Fahr (University of Cologne and IZA); Bernd Frick (University of Paderborn and IAAEG) |
| Abstract: | Although an inverse relationship between sickness absence and unemployment has been documented in a number of studies using either quarterly or annual data from different countries with varying institutional frameworks, it is not yet clear whether this empirical regularity is due to changes in the individual costs of absence when unemployment increases (incentive effect) or, alternatively, to changes in the composition of the workforce over the business cycle (selection effect). In order to provide evidence to evaluate the relative importance of both effects we first investigate the effects of changes in the unemployment benefit entitlement system with monthly absence data for East and West Germany for the years 1991-2004. Second, we analyze the impact of differences in the costs of unemployment on the annual absence rates of workers in different sickness insurance funds using state-level annual absence rates for the years 1993-2004. We find clear evidence in favor of an incentive effect. |
| Keywords: | absenteeism, unemployment, selection effect, incentive effect, natural experiment |
| JEL: | J63 K31 M51 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3171&r=lab |
| By: | Stephen Tapp (Queen's University) |
| Abstract: | This paper demonstrates that factors which impede labour market adjustments can have first-order impacts on aggregate output and social welfare. While several studies find that individual workers can face large and persistent sectoral reallocation costs, this paper shows that these costs are important at the aggregate level. I use a search and matching model to isolate and quantify two factors that contribute to the costly and time-consuming adjustment process: search frictions and an inability to transfer match-specific skills to new jobs. I apply the model to examine Canada's sectoral labour adjustment after a global increase in commodity prices and associated exchange rate appreciation. These developments reorganized production to the resource sector and away from manufacturing. The model quantitatively captures both the sectoral employment and wage effects and the response of unemployment to changes in unemployment benefits. The model estimates that the costs of adjustment are economically important, accounting for up to three percent of output during the transition. These costs arise mainly in the first three years after the shock and are due largely to non-transferable skills. Finally, the analysis reveals important policy implications. Because changes to unemployment benefits affect sectors differently, these changes impact the economy's sectoral composition and aggregate productivity. |
| Keywords: | Sectoral Labour Reallocation, Adjustment Costs, Search and Matching, Skills and Training, Unemployment |
| JEL: | E2 J6 J08 J21 J24 Q43 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1142&r=lab |
| By: | Leonid Borodkin,; Brigitte Granville; Carol Scott Leonard |
| Abstract: | This paper presents econometric evidence of integration in rural and urban wages in Russia’s Northwest in the late tsarist era. Using the Autoregressive Distributed Lag (ARDL) approach to co-integration and error correction modelling, we show the flexibility of the rural wage in response to the lagged rural/urban wage ratio. Applying the model developed by Boyer and Hatton (1994) and Hatton and Williamson (1991a, 1991b, 1992), we show the similarity of the wage gap in northwest Russia in the late tsarist era to that during industrialization in the US, England and Western Europe. Although our evidence does not necessarily describe country-wide trends, it does support for an industrializing region the more positive view of the degree and nature of late tsarist economic growth. Growth was not slowing down, and there is little evidence of constraints on migration by traditional agrarian institutions. |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:cgs:wpaper:1&r=lab |
| By: | Harry J. Holzer (Georgetown University, Urban Institute and IZA) |
| Abstract: | In this paper I review the empirical evidence on the effects of incarceration on the subsequent employment and earnings of less-educated young prisoners. In this discussion I include evidence from: 1) Employer surveys and audit studies of hiring; 2) Survey data (mostly from the NLSY79) and administrative data; and 3) state-level incarceration data linked to micro employment data for young black men. The strengths and weaknesses of each type of analysis are discussed as well. The preponderance of the evidence considered suggests that, all else equal, spells of incarceration do tend to reduce subsequent employment and earnings for those with criminal records. |
| Keywords: | incarceration, employment, earnings |
| JEL: | J15 J2 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3118&r=lab |
| By: | Pernilla Andersson (SOFI, Stockholm University, SULCIS); Eskil Wadensjö (SOFI, Stockholm University, SULCIS and IZA) |
| Abstract: | Using unique register data for Sweden we can match self-employed persons to their employees. We analyze the national composition of the employees and ask if self-employed immigrants mainly employ workers from their home region and if self-employed natives mainly employ native workers. We find that both natives and immigrants are more likely to employ co-nationals than to employ workers with a different national background. We also analyze which factors influence the propensity to hire co-nationals. For immigrants we find that living in a municipality with a high share of co-nationals decreases the probability of employing natives, while the probability that natives employ immigrants increases with the immigrant share in the municipality. We find that the probability for immigrants to hire native workers increases with time spent in Sweden. This result points to that the proximity to people from the same region and possibly also one’s network plays an important role for the employment decisions for both self-employed natives and immigrants. |
| Keywords: | self-employment, immigrants, networks |
| JEL: | J15 J61 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3147&r=lab |
| By: | Stephen Tapp (Queen's University) |
| Abstract: | This paper develops an equilibrium search and matching model to jointly study the aggregate, sectoral, and distributional impacts of labour adjustment. The model extends Pissarides (2000) to include multisector production and search and "innovation" from investments that can potentially improve a match's productivity. These extensions deliver two mechanisms for inter-sectoral and intra-sectoral labour reallocation after shocks. First, because workers search simultaneously in multiple sectors, changes in labour market conditions in one sector propagate to impact wages and hiring in the rest of the economy through a reservation wage effect. Second, a positive productivity shock causes firms to invest more resources in innovation. This innovation effect shifts production towards high-skill jobs and amplifies the impact of productivity shocks relative to the baseline model. I show that the model is useful for analyzing labour adjustments caused by a diverse set of factors including: technological change; persistent energy price and exchange rate shocks; and trade liberalization. Finally, because the transition dynamics between steady-states are tractable, the model can be readily applied to the data to study particular labour adjustment episodes. |
| Keywords: | Sectoral Labour Reallocation, Search and Matching, Wage Spillovers, Transition Dynamics |
| JEL: | E2 J6 J21 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1141&r=lab |
| By: | Philippe Aghion (Harvard University); Philippe Askenazy (Paris School of Economics and IZA); Renaud Bourlès (Université de la Méditerranée (GREQAM)); Gilbert Cette (Banque de France (DAMEP) and Université de la Méditerranée (CEDERS)); Nicolas Dromel (CREST-INSEE and Université Cergy-Pontoise (THEMA)) |
| Abstract: | This note investigates the effects of the education level, product market rigidities and employment protection legislation on growth. It exploits macro-panel data for OECD countries. For countries close to the technological frontier, education and rigidities are significantly related to TFP growth. The contribution of the interaction between product market regulation and labour market rigidity seems particularly substantial. |
| Keywords: | productivity, growth, regulations, market rigidities, education |
| JEL: | O47 J24 J68 L40 O57 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3166&r=lab |
| By: | David G. Blanchflower (Dartmouth College, NBER, Bank of England and IZA); Andrew J. Oswald (University of Warwick and IZA) |
| Abstract: | This paper documents some of the patterns in modern microeconomic data on young people’s employment, attitudes and entrepreneurial behaviour. Among other sources, the paper uses the Eurobarometer Surveys; the Labour Force Surveys from Canada and the Current Population Survey in the United States. The first conclusion is that self-employed individuals - a special but well-defined entrepreneurial group - report markedly greater wellbeing than equivalent employees. Their job satisfaction and life-satisfaction are all higher than workers of identical personal characteristics. The second conclusion is that individuals say they would like to be self-employed. There is, according to the survey data, a large pool of potentially entrepreneurial people. Across the West, many millions of employees would apparently prefer to be self-employed. Third, we showed that another important determinant of being self-employed is having a self-employed parent. This appears to help young people to set up in business themselves. It is unclear whether this is done by inheriting the business, or working in the family firm or actually setting up a new business entirely. |
| Keywords: | youth entrepreneurship, self-employment |
| JEL: | J21 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3139&r=lab |
| By: | Dan Black; Natalia Kolesnikova; Lowell J. Taylor |
| Abstract: | Using Census Public Use Micro Sample (PUMS) data for 1980, 1990 and 2000, this paper documents a little-noticed feature of U.S. labor markets that there is wide variation in the labor market participation rates and annual work hours of white married women across urban areas. This variation is also large among sub-groups, including women with children and those with different levels of education. Among the explanations for this variation one emerges as particularly important: married women's labor force participation decisions appear to be very responsive to commuting times. There is a strong empirical evidence demonstrating that labor force participation rates of married women are negatively correlated with commuting time. What is more, the analysis shows that metropolitan areas which experienced relatively large increases in average commuting time between 1980 and 2000 also had slower growth of labor force participation of married women. This feature of local labor markets may have important implications for policy and for further research. |
| Keywords: | Women - Employment ; Labor market |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2007-043&r=lab |
| By: | Tsuyoshi Tsuru |
| Abstract: | This paper analyzes the economic consequences of performance-oriented human resource (HR) system reform at Auto Japan (pseudonym), one of the largest Japanese auto sales firms, using personnel and employee output data. The author overviews the three major components of the HR reform: base wages, performance-based pay, and performance rating systems. Then the author examines the productivity effect of the reform. The performance-based pay was changed from combining a base wage with a simple performance pay system to instead a scheme kinked around a draw line (representing aggregate base pay) to intensify incentives. The introduction of the draw formula performance-based pay system raised the productivity of the new car sales staff, but generally failed to raise the productivity of the used car sales staff. The evidence suggests that while Auto Japanfs performance-oriented HR system reform, which was typical of reforms instituted among major Japanese firms in the late 1990s, changed the wage structure and grading pattern of employees, it brought only slight improvement in individual productivity. Incentives have been the essence of economics and firm organization. Pay for performance has drawn great interest from both personnel economists and HR practitioners. Yet, it has been difficult to capture the relationship between pay and productivity in most industries and occupations. In path-breaking works, Lazear (2000) and Paarsh and Shearer (1999, 2000) show that the introduction of performance-based pay has the effect of stimulating employee effort. However, the jobs analyzed in those studies are too simple to hold much meaning for professional occupations. The purpose of this paper is to examine the economic consequences of performance-oriented human resource (HR) system reform at Auto Japan (pseudonym), one of the largest Japanese auto sales firms, using personnel and employee output data. |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hituec:a496&r=lab |
| By: | Xiao-Yuan Dong (University of Winnipeg); Derek C. Jones (Hamilton College, Mondragon University and University of Michigan); Takao Kato (Colgate University, Columbia Business School, University of Tokyo, Aarhus School of Business and IZA) |
| Abstract: | By using a large new panel of individual data, including objective measures of worker performance, we provide some of the most rigorous evidence to date on several related dimensions of enduring debates surrounding upward-sloping earnings-tenure profiles. Most importantly we provide the first direct test of the relative validity of human capital and agency explanations in accounting for upward-sloping earnings-tenure profiles; our findings strongly support the agency view. Our second area of interest concerns employee ownership (many workers at our case are employee owners). Consistent with agency theory we find that earnings-tenure profiles for employee owners are not upward-sloping but horizontal. In addition we find that pay-performance sensitivities are substantially weaker for employee owners than for other workers. Finally we investigate the impact of residential policies in China. We find that again consistent with the agency view, earnings-tenure profiles are considerably steeper for urban workers than for migrant workers with far more limited alternative employment opportunities. |
| Keywords: | earnings, tenure, seniority, performance, human capital, agency, employee ownership |
| JEL: | J3 M5 L6 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3122&r=lab |
| By: | Nabanita Datta Gupta (Danish National Centre for Social Research and IZA); Marianne Simonsen (University of Aarhus) |
| Abstract: | Exploiting a rich panel data child survey merged with administrative records along with a pseudo-experiment generating variation in the take-up of pre-school across municipalities, we provide evidence of the effects on non-cognitive child outcomes of participating in large scale publicly provided universal pre-school programs and family day care vis-à-vis home care. We find that, compared to home care, being enrolled in pre-school at age three does not lead to significant differences in child outcomes at age seven no matter the gender or mother’s level of education. Family day care, on the other hand, seems to significantly deteriorate outcomes for boys whose mothers have a lower level of education. Finally, increasing hours in family day care from 30-40 hours per week to 40-50 hours per week and hours in pre-school from 20-30 hours per week to 30-40 hours per week leads to significantly poorer child outcomes. |
| Keywords: | non-cognitive outcomes, publicly provided universal child care, pseudo-experiment |
| JEL: | J13 J18 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3188&r=lab |
| By: | Eskil Wadensjö (SOFI, Stockholm University, SULCIS and IZA) |
| Abstract: | Sweden did not apply any transitional rules for migrants coming from the ten new European Union member states in May 2004. The migration to Sweden from these countries also increased, especially from Poland and the Baltic states, even if not to the same extent as the immigration to Ireland and the UK (two countries with transitory rules of minor importance). The composition of the migrants changed. While earlier many more women than men arrived, now the gender composition is much more even. In this paper the labour market situation is studied for people living in Sweden at the end of 2005 who were either born in one of new member states or born in Sweden. The immigrants are represented in all sectors of the economy but overrepresented in some sectors. Their wages controlling for education are somewhat lower than those for natives. The labour market situation is rather good for the new immigrants and they are not overrepresented in different income transfer programs. The knowledge of these conditions may explain that Sweden abstained from introducing transitional rules also when Bulgaria and Romania became members of the European Union in January 2007. |
| Keywords: | international migration, migration policy, common labour market |
| JEL: | J61 F22 O15 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3190&r=lab |
| By: | Jonas Staghøj (University of Aarhus); Michael Svarer (University of Aarhus, CAM and IZA); Michael Rosholm (University of Aarhus, AKF and IZA) |
| Abstract: | When treatment effects of active labour market programmes are heterogeneous in an observable way across the population, the allocation of the unemployed into different programmes becomes a particularly important issue. In this paper, we present a statistical model designed to improve the present assignment mechanism, which is based on the discretionary choice of case workers. This is done in a duration model context, using the timing-of-events framework to identify causal effects. We compare different assignment mechanisms, and the results suggest that a significant reduction in the average duration of unemployment spells may result if a statistical programme assignment model is introduced. We discuss several issues regarding the implementation of such a system, especially the interplay between the statistical model and case workers. |
| Keywords: | profiling, targeting, statistical treatment rules, heterogeneous effects |
| JEL: | J64 J68 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3165&r=lab |
| By: | Guido Friebel (Toulouse School of Economics, CEPR and IZA); Wendelin Schnedler (University of Heidelberg and IZA) |
| Abstract: | We investigate a team setting in which workers have different degrees of commitment to the outcome of their work. We show that if there are complementarities in production and if the team manager has some information about team members, interventions that the manager undertakes in order to assure certain efforts may have destructive effects: they can distort the way workers perceive their fellow workers and they may also lead to a reduction of effort by those workers that care most about output. Moreover, interventions may hinder the development of a cooperative organizational culture in which workers trust each other. Thus, our framework provides some first insights into the costs and benefits of interventions in teams. It identifies that team governance is driven by the importance of tasks that cannot be monitored. The more important these tasks, the more likely it is that teams are empowered. |
| Keywords: | team work, incentives, informed principal, intrinsic motivation |
| JEL: | M54 D86 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3143&r=lab |
| By: | Joshua Angrist (MIT, NBER and IZA); Daniel Lang (University of Toronto); Philip Oreopoulos (University of Toronto and NBER) |
| Abstract: | Many North American college students have trouble satisfying degree requirements in a timely manner. This paper reports on a randomized field experiment involving two strategies designed to improve academic performance among entering full-time undergraduates at a large Canadian university. One treatment group ("services") was offered peer advising and organized study groups. Another ("incentives") was offered substantial merit-scholarships for solid, but not necessarily top, first year grades. A third treatment group combined both interventions. Service take-up rates were much higher for women than for men and for students offered both services and incentives than for those offered services alone. No program had an effect on men’s grades or other measures of academic performance. However, the Fall and first-year grades of women in the combined group were significantly higher than those of women in the control group, and women in this group earned more course credits and were less likely than controls to be on academic probation. These differentials persisted through the end of the second year, in spite of the fact that incentives were given in the first year only. The results suggest that the study skills acquired in response to a combination of services and incentives can have a lasting effect, and that the combination of services and incentives is more promising than either alone. |
| Keywords: | post-secondary schooling, dropout, randomized trials |
| JEL: | I21 I28 J24 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3134&r=lab |
| By: | Lilla, Marco (Università Politecnica delle Marche) |
| Abstract: | The paper attempts to measure income inequality and its changes over the period 1993-2000 for a set of 13 Countries in ECHP. Focusing on wages and incomes of workers in general, inequality is mainly analyzed with respect to educational levels as proxy of individual abilities. Estimation of education premia is performed by quantile regressions to stress differences in income distribution and questioning the true impact of education. The same estimates are used to decompose income inequality and show the rise in residual inequality. |
| Keywords: | Inequality; Education Premium ; Quantile Regression |
| JEL: | D31 J24 J31 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:irs:iriswp:2007-11&r=lab |
| By: | Dominique Anxo (Vaxjo University); Lennart Flood (Göteborg University and IZA); Letizia Mencarini (University of Florence); Ariane Pailhé (INED, Paris); Anne Solaz (INED, Paris); Maria Letizia Tanturri (University of Pavia) |
| Abstract: | This article analyses the extent to which changes in household composition over the life course affect the gender division of labour. It identifies and analyses cross-country disparities between France, Italy, Sweden and United States, using most recent data available from the Time Use National Surveys. We focus on gender differences in the allocation of time between market work, domestic work and leisure over the life-cycle. In order to map the lifecycle, we distinguish between nine key cross-country comparable life stages according to age and family structure such as exiting parental home, union formation, parenthood, and retiring from work. By using appropriate regression techniques (Tobit with selection, Tobit and OLS), we show large discrepancies in the gender division of labour at the different life stages. This gender gap exists in all countries at any stage of the life course, but is usually smaller at the two ends of the age distribution, and larger with parenthood. Beyond social norms, the impact of parenthood on time allocation varies across countries, being smaller in those where work-family balance policies are more effective and traditionally wellestablished. |
| Keywords: | time use, gender, life-cycle, paid and unpaid work |
| JEL: | D13 J22 O17 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3193&r=lab |
| By: | Solomon W. Polachek (State University of New York at Binghamton and IZA) |
| Abstract: | In 1958 Jacob Mincer pioneered an important approach to understand how earnings are distributed across the population. In the years since Mincer’s seminal work, he as well as his students and colleagues extended the original human capital model, reaching important conclusions about a whole array of observations pertaining to human well-being. This line of research explained why education enhances earnings; why earnings rise at a diminishing rate throughout one’s life; why earnings growth is smaller for those anticipating intermittent labor force participation; why males earn more than females; why whites earn more than blacks; why occupational distributions differ by gender; why geographic and job mobility predominate among the young; and why numerous other labor market phenomena occur. This paper surveys the answers to these and other questions based on research emanating from Mincer’s original earnings function specification. |
| Keywords: | Mincer, earnings, earnings function, gender, discrimination |
| JEL: | J1 J3 J7 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3181&r=lab |
| By: | Bruno Contini (University of Torino, LABORatorio R. Revelli and IZA); Matteo Morini (University of Torino, LABORatorio R. Revelli) |
| Abstract: | In this paper we question the hypothesis of full rationality in the context of job changing behaviour, via simple econometric explorations on microdata drawn from WHIP (Worker Histories Italian Panel). Workers’ performance is compared at the end of a three-year time window that starts when choices are expressed, under the accepted notion that the main driving forces of job change are future real wages and expected job quality. Bounded rationality suggests that individuals will search for new options capable to attain "satisfactory" targets (aspirations levels, standards, norms), based on conditions prevailing in their own local environments. Our empirical strategy consists of appropriately defining such environments (cells) and observing the ex-post individual performance in relation to the degree of dispersion, clustering and mobility within and between cells. Under full rationality the following are to be expected: high inter-cell mobility, large dispersion around the targets, and clustering in the vicinity of the efficiency frontier. None of the above expectations are confirmed in this exploration. Our conclusion is that workers behave according to principles of rationality that seem distant from those of "full rationality" assumed in the vast majority of contemporary empirical (and theoretical) studies. The idea of "bounded rationality" à la Simon provides a better fit to our observations. |
| Keywords: | bounded rationality, job changes, mobility, testing bounded rationality |
| JEL: | J0 J6 J69 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3148&r=lab |
| By: | Miracle Ntuli (University of Cape Town and IZA) |
| Abstract: | A striking feature of labour supply in South Africa is the phenomenal expansion in the labour force participation of women from 38 percent in 1995 to 46 percent in 2004. Even so, their participation has been persistently lower than that of men whose participation rates were 58 percent and 62 percent respectively. Furthermore, analyses of women’s participation rates by race show that the rates for historically disadvantaged groups such as Africans are still lower than those of Whites. For instance, in 1995 African women had a participation rate of 34 percent and it increased to 43 percent in 2004 while the corresponding rates for White women were 52 percent and 59 percent. In light of these disparities, this paper uses survey data to examine the determinants of the low level and also of the changes in African women’s labour force participation, during the first decade of democracy (1995-2004). By focussing on a ten year period, this research substantially differs from earlier studies which were preoccupied with short periods such as one year. A longer period is analytically advantageous because it allows the capturing of the changes and the robustness of the key determinants of female labour force participation in South Africa. Such information is important not only for reviewing existing policies but also for the formulation of new ones to increase female labour force participation which is a prerequisite for economic development. The study utilises a decomposition technique devised by Even and Macpherson (1990). The findings exhibit that female participation responded positively to education which has been the prime factor. Non-labour income, marriage, fertility and geographical variations in economic development persistently stifled participation. It is argued that the perceived change in participation is due to emigration and changes in human capital and financial endowments. Another important discovery is that -9 percent of the observed shifts in the participation rates from 1995-2004 is due to disparities in characteristics while differences in coefficients account for 109 percent of the shifts. |
| Keywords: | feminisation, labour force, decomposition analysis |
| JEL: | J21 J22 J16 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3119&r=lab |
| By: | Shapiro, Bradley |
| Abstract: | Ability tracking and class size have become two of the most hotly debated issues in education policy in the United States in recent years. Most current studies examine the effects of each policy in isolation. In this paper, I review the literature on class size, ability tracking, and school choice, and then make a case for separate classes of different sizes for students with different levels of ability. The proposal is designed as a compromise that could please many on all sides of the class size and ability tracking debates. A game theoretical analysis of the proposal shows that it produces a stable equilibrium when parents can move their children between classes of different sizes. |
| Keywords: | Educational Economics; Efficiency; Resource Allocation; School Choice |
| JEL: | I2 I28 |
| Date: | 2007–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:5841&r=lab |
| By: | Thomas Cornelißen (Leibniz University Hannover); Christian Pfeifer (Leibniz University Hannover and IZA) |
| Abstract: | We analyze the impact of exercising sports during childhood and adolescence on educational attainment. The theoretical framework is based on models of allocation of time and educational productivity. Using the rich information from the German Socio-Economic Panel (GSOEP), we apply generalized ordered probit models to estimate the effect of participation in sport activities on secondary school degrees and professional degrees. Even after controlling for important variables and selection into sport, we find strong evidence that the effect of sport on educational attainment is statistically significant and positive. |
| Keywords: | allocation of time, education, human capital, sport |
| JEL: | I21 J13 J22 J24 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3160&r=lab |
| By: | Sourafel Girma (University of Nottingham); Holger Görg (University of Nottingham and IZA); Eric Strobl (Ecole Polytechnique Paris and IZA); Frank Walsh (University College Dublin) |
| Abstract: | This paper analyses the impact of government grants on labour demand using plant level data for manufacturing industry in Ireland. Our data consists of a large sample of plants and their complete grant history. We provide evidence that additional employment is created over and above the level that would have prevailed in the absence of grant payments. We also find differences in the employment response to subsidies between domestic and foreignowned plants, with the former creating more additional jobs per euro of grant payment. Simple cost-benefit analysis reveals that a large part of the costs of grants appears to be recouped in additional wage streams under reasonable assumptions. |
| Keywords: | grants, labour demand, multinationals |
| JEL: | H25 J23 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3168&r=lab |
| By: | Riccardo Rovelli (University of Bologna, DARRT and IZA); Randolph Bruno (University of Bologna, DARRT and IZA) |
| Abstract: | We conduct a comparative analysis of Labor Market Policies and outcomes for the EU member states, for the period 2000-2005. We document the main differences in Labor Market Policies across EU members, including new member states after 2004. We focus on indicators of policy generosity (expenditures relative to GDP) and relate these and other policy indicators to indicators of labor market outcomes and performance. Our results show that, on a cross-country basis, higher rates of employment are in general associated with: (i) higher expenditures on labor market policies, especially on active policies; (ii) a lower degree of rigidity in labor market institutions and in product market regulation. |
| Keywords: | labor market policies, labor market outcomes, European social models |
| JEL: | J08 J38 J68 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3161&r=lab |
| By: | Martin Kahanec (IZA); Mariapia Mendola (University of Milan Bicocca) |
| Abstract: | The labor market outcomes of ethnic minorities in advanced societies and their dependence on social relationships and membership in social networks are important empirical issues with significant policy consequences. We use detailed micro-data on multiple-origin ethnic minorities in England and Wales and a discrete choice model to investigate these issues. We find that the core family structure and contacts with parents and children away (in Britain) increases the probability of self-employment. On the other hand, engagement in organizational social networks is more likely to channel the same people into paid employment. Finally, disaggregating different types of social networks along their compositional characteristics, we find that having ethnic friends is positively associated with the likelihood to be self-employed while integration in mixed or non-ethnic social networks facilitates paid employment among minority individuals. These findings hint at a positive role of social integration on employment opportunities of ethnic communities in host societies. |
| Keywords: | labor market, self-employment, ethnic minorities, social ties |
| JEL: | J7 J15 J21 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3146&r=lab |
| By: | Tarja Viitanen (Department of Economics, The University of Sheffield) |
| Keywords: | Social experimentation, vouchers, childcare use, labour force participation |
| JEL: | H42 J2 J13 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2007011&r=lab |
| By: | Patricia Apps (University of Sydney and IZA); Ray Rees (University of Munich) |
| Abstract: | We set out a general framework for cooperative household models, based on Samuelson’s idea of a household welfare function, but extending it to incorporate the key insight from Nash bargaining models - the idea that the household’s preference ordering over the utility profiles of its members depends on their wage rates (or prices more generally) and non-wage incomes. Applying reasonable general restrictions on the effects of changes in these variables allows derivation of the general implications of cooperative models. |
| Keywords: | generalisation, household, model |
| JEL: | D10 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3127&r=lab |
| By: | Akita, Takahiro; Miyata, Sachiko |
| Abstract: | "This paper considers urban-rural location and education as the main causes of expenditure inequality and attempts to examine inequality changes associated with urbanization and educational expansion in Indonesia from 1996 to 2002, using Indonesian monthly household consumption expenditure data. It introduces a hierarchical framework of inequality decomposition by population subgroups, which enables researchers to analyze inequality resulting from differences in educational attainment as well as inequality within each educational group, after the effects on inequality of urban–rural differences in the composition of educational attainments are removed. It finds that the urban sector's higher educational group contributes significantly to overall inequality. Inequality within the group increased significantly once Indonesia recovered from the financial crisis of 1998. This, together with educational expansion in urban areas, led to a conspicuous rise in urban inequality. Overall expenditure inequality has increased markedly, due not only to the rise in urban inequality but also a widening urban-rural disparity, accompanied by a population shift from the rural to the urban sector. Since more people will obtain higher education as the economy continues to develop, and more jobs requiring specialized skills become available in urban areas, urban inequality is likely to remain high. In order to mitigate urban inequality and thus overall inequality, the government needs to introduce policies that could reduce inequality among households whose heads have a tertiary education." from Authors' Abstract |
| Keywords: | Expenditure inequality, Urbanization, Educational expansion, Theil index, Two-stage nested inequality decomposition analysis, |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:00728&r=lab |
| By: | Lena Nekby (Stockholm University, SULCIS and IZA); Magnus Rödin (Stockholm University, SULCIS); Gülay Özcan (Stockholm University, SULCIS) |
| Abstract: | This paper explores the identity formation of a cohort of students with immigrant backgrounds in Sweden and the consequences of identity for subsequent educational attainment. 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 integrated men are associated with significantly higher levels of education than assimilated men. No differences in educational attainment are found between the assimilated and the integrated for women. These results put into question the premise of oppositional identities, i.e., a trade-off between ethnic identity and educational achievement, among immigrants in Sweden. |
| Keywords: | ethnic identity, acculturation, ethnic minorities, education |
| JEL: | J15 J16 J21 Z13 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3172&r=lab |