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on Labour Economics |
| By: | Baron, Juan (Australian National University); Cobb-Clark, Deborah (Australian National University) |
| Abstract: | We use HILDA data from 2001 - 2006 to analyse the source of the gender wage gap across public- and private-sector wage distributions in Australia. We are particularly interested in the role of gender segregation within sector-specific occupations in explaining relative wages. We find that, irrespective of labour market sector, the gender wage gap among low-paid, Australian workers is more than explained by differences in wage-related characteristics. The gender wage gap among high-wage workers, however, is largely unexplained in both sectors suggesting that glass ceilings (rather than sticky floors) may be prevalent. Gender differences in employment across occupations advantage (rather than disadvantage) all women except those in high-paid, private-sector jobs, while disparity in labour market experience plays a much more important role in explaining relative private-sector wages. Finally, disparity in educational qualifications and demographic characteristics are generally unimportant in explaining the gender wage gap. |
| Keywords: | private and public sector employment, occupational segregation, gender wage gap |
| JEL: | J31 J70 J24 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3562&r=lab |
| By: | Pfeifer, Christian (University of Hannover) |
| Abstract: | Using the large-scale German Socio-Economic Panel, this note reports direct empirical evidence for significant correlations between risk aversion and labour market outcomes (full-time employment, temporary agency work, fixed-term contracts, employer change, quits, training, wages, and job satisfaction). |
| Keywords: | employment, job search, human capital, risk aversion, wages |
| JEL: | J01 J24 J64 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3523&r=lab |
| By: | Koskela, Erkki (University of Helsinki); Poutvaara, Panu (University of Helsinki) |
| Abstract: | We evaluate the effects of international outsourcing and labor taxation on wage formation and equilibrium unemployment in dual labor markets. Outsourcing promotes wage dispersion between the high-skilled and low-skilled workers. Higher domestic low-skilled wage tax, higher payroll tax and lower wage tax exemption increase optimal outsourcing. Outsourcing will reduce equilibrium unemployment of low-skilled workers both in the presence and absence of labor taxation. In the presence of outsourcing, wage tax, tax exemption and payroll tax have an ambiguous effect on equilibrium unemployment. Increasing the degree of tax progression decreases the wage rate and increases the demand of low-skilled workers. |
| Keywords: | outsourcing, dual labor markets, labor taxation, equilibrium unemployment |
| JEL: | E24 J21 J31 J51 J82 H22 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3522&r=lab |
| By: | Orrenius, Pia M. (Federal Reserve Bank of Dallas); Zavodny, Madeline (Agnes Scott College) |
| Abstract: | This study examines how minimum wage laws affect the employment and earnings of low-skilled immigrants and natives in the U.S. Minimum wage increases might have larger effects among low-skilled immigrants than among natives because, on average, immigrants earn less than natives due to lower levels of education, limited English skills, and less social capital. Results based on data from the Current Population Survey for the years 1994-2005 do not indicate that minimum wages have adverse employment effects among adult immigrants or natives who did not complete high school. However, low-skilled immigrants may have been discouraged from settling in states that set wage floors substantially above the federal minimum. |
| Keywords: | immigrants, minimum wage, low-skilled |
| JEL: | J23 J38 J15 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3499&r=lab |
| By: | Oreopoulos, Philip (University of Toronto); Wachter, Till von (Columbia University); Heisz, Andrew (Statistics Canada) |
| Abstract: | This paper analyzes the long-term effects of graduating in a recession on earnings, job mobility, and employer characteristics for a large sample of Canadian college graduates using matched university-employer-employee data from 1982 to 1999. The results are used to assess the role of job mobility and firm quality in the propagation of shocks for different groups in the labor market. We find that young graduates entering the labor market in a recession suffer significant initial earnings losses that, on average, eventually fade after 8 to 10 years. Labor market conditions at graduation affect firm quality and job mobility, which can account for 40-50% of losses and catch-up in our sample. We also document that higher skilled graduates suffer less from entry in a recession because they switch to better firms quickly. Lower skilled graduates are permanently affected by being down ranked to low-wage firms. These adjustment patterns are consistent with differential choices of intensity of search for better employers arising from comparative advantage and time-increasing search costs. All results are robust to an extensive sensitivity analysis including controls for correlated business cycle shocks after labor market entry, endogenous timing of graduation, permanent cohort differences, and selective labor force participation. |
| Keywords: | job search, hysteresis, college graduates, cost of recessions |
| JEL: | J62 J64 J31 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3578&r=lab |
| By: | Betcherman, Gordon (World Bank); Daysal, N. Meltem (University of Maryland); Pagés, Carmen (Inter-American Development Bank) |
| Abstract: | This paper studies the effects on registered employment, earnings, and number of registered establishments of two employment subsidy schemes in Turkey. We implement a difference-in-differences methodology to construct appropriate counterfactuals for the covered provinces. Our findings suggest that both subsidy programs did lead to significant net increases in registered jobs in eligible provinces (5%-13% for the first program and 11%-15% for the second). However, the cost of the actual job creation was high because of substantial deadweight losses, particularly for the first program (47% and 78%). Because of better design features, the second subsidy program had lower, though still significant, deadweight losses (23%-44%). Although constrained by data availability, the evidence suggests that the dominant effect of subsidies was to increase social security registration of firms and workers rather than boosting total employment and economic activity. This supports the hypothesis that in countries with weak enforcement institutions, high labor taxes on low-wage workers may lead to substantial incentives for firms and workers to operate informally. |
| Keywords: | employment subsidies, deadweight loss, formalization, social security contribution |
| JEL: | H32 J23 J32 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3508&r=lab |
| By: | Pfeifer, Christian (University of Hannover); Sohr, Tatjana (University of Hannover) |
| Abstract: | We use monthly personnel records of a large German company to analyse the gender wage gap (GWG). Main findings are: (1) the unconditional GWG is 15 percent for blue-collar and 26 percent for white-collar workers; (2) conditional on tenure, entry age, schooling, and working hours, the GWG is 13 percent for blue-collar as well as for white-collar workers; (3) after additionally controlling for hierarchical levels, the GWG is less than 4 percent for blue-collar and 8 percent for white-collar workers; (4) Oaxaca decompositions reveal that the unexplained part of the GWG is 87 percent for blue-collar workers and 46 percent for white-collar workers; (5) males have larger absolute wage growths than females; (6) the relative GWG gets larger with tenure for blue-collar but smaller for white-collar workers; (7) individual absenteeism has no significant impact on the GWG; (8) the gender gap in absenteeism is between 26 and 46 percent. Overall, the results are consistent with statistical discrimination explanations of the gender wage gap, though we cannot rule out other forms of discrimination. A simple model within the context of absenteeism and statistical discrimination is offered. |
| Keywords: | absenteeism, gender, personnel data, statistical discrimination, wage differentials |
| JEL: | J16 J3 J71 M5 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3533&r=lab |
| By: | Andersson Joona, Pernilla (SOFI, Stockholm University); Wadensjö, Eskil (Stockholm University) |
| Abstract: | Research on self-employment has increased during recent years and particular attention has been paid to self-employment dynamics and the factors influencing entry and exit rates from self-employment. Using a large panel data set for Sweden, this paper investigates variations in recruitment to self-employment and in self-employment performance by gender and by employment status prior to entering self-employment. As performance measures we use income from self-employment, number of employees, exit rates and destination after self-employment. We find that the probability of becoming self-employed is highest among men who are economically inactive and lowest among women who are wage-earners. Analysing self-employment performance, we find that men have higher incomes than women. Self-employed women more often than self-employed men have employees. For both men and women those who enter from unemployment or inactivity are less successful in terms of income and the probability of having employees than those who enter from paid employment. When exits are divided into paid employment and other employment status, we find that those who entered from unemployment or inactivity face a higher risk of returning to one of these states. |
| Keywords: | self-employment, unemployment, income, occupational mobility, gender differences |
| JEL: | J23 J24 J64 J16 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3581&r=lab |
| By: | Martins, Pedro S. (Queen Mary, University of London); Esteves, Luiz A. (Universidade Federal do Paraná) |
| Abstract: | How much do developing countries benefit from foreign investment? We contribute to this question by comparing the employment and wage practices of foreign and domestic firms in Brazil, using detailed matched firm-worker panel data. In order to control for unobserved worker differences, we examine both foreign acquisitions and divestments and worker mobility, including the joint estimation of firm and worker fixed effects. We find that changes in ownership do not tend to affect wages significantly, a result that holds both at the worker- and firm-levels. However, divestments are related to large job cuts, unlike acquisitions. On the other hand, movers from foreign to domestic firms take larger wage cuts than movers from domestic to foreign firms. Moreover, on average, the fixed effects of foreign firms are considerably larger than those of domestic firms, while worker selection effects are relatively small. |
| Keywords: | ownership changes, foreign direct investment, worker mobility |
| JEL: | J31 J63 F23 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3542&r=lab |
| By: | Koskela, Erkki (University of Helsinki) |
| Abstract: | This paper studies in the presence of flexible outsourcing the effects of outsourcing costs, productivity of outsourcing, wage tax and tax exemption in an imperfectly competitive labour markets when labour unions and firms negotiate wages and the impacts of labour tax progression on domestic wage setting and employment. The wage elasticity of domestic labour demand is higher than in the case of strategic outsourcing and a decreasing function of the outsourcing cost, an increasing function both of the productivity of outsourcing and of the wage rate. With sufficiently strong (weak) labour market imperfections a lower outsourcing cost has a wage-moderating (wage-increasing) effect. Finally, increasing the degree of tax progression, to keep the relative tax burden per worker constant, has a wage-moderating effect and a positive effect on domestic employment and a negative effect on outsourcing. |
| Keywords: | outsourcing, wage negotiation, labour tax progression, employment |
| JEL: | H22 J41 J51 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3501&r=lab |
| By: | Massimiliano Serati (Cattaneo University (LIUC)); Michela Martinoia (Cattaneo University (LIUC)) |
| Abstract: | In this paper we address two relevant issues among those characterising the macroeconomic literature on migration. (a) We evaluate which impact is produced by the immigration flows coming from the enlargement countries on the EU-15 labour market. (b) We draw clues on the migrant characteristics as for their skill levels. We adopt an insider/outsider model inspired by that of Amisano and Serati (2003), but enlarged in order to model the migration flows and fit to wage, participation and employment differentials between skilled and unskilled workers. We identify the structural shocks of the reduced VAR form of the model through sign restrictions imposed to the Impulse Response Functions, leaving unconstrained only the impact multipliers of relative (skilled to unskilled) wage, employment and labour force with respect to a migration shock. This is equivalent to adopt an agnostic approach, letting emerge freely the signals coming from the data: combining them with theoretical suggestions we derive at least weak indications on the fact that the skill mix of migrants is either biased towards high or low qualified labour. It does emerge that migration from Eastern European countries towards the EU-15 is mainly constituted by skilled workers and generates effects of reduction of the employment gap; on the other side, it enlarges the skilled to unskilled relative wage gap. The whole picture suggests the adoption of policies aimed at attract skilled migration through economic but also social and environmental incentives. |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:liu:liucec:208&r=lab |
| By: | Cervini, María (Universitat Autònoma de Barcelona); Ramos, Xavi (Universitat Autònoma de Barcelona) |
| Abstract: | This paper provides a longitudinal perspective on changes in Spanish male earnings inequality for the period 1993-2000, by decomposing the earnings covariance structure into its permanent and transitory parts. According to the Spanish sample of the European Community Household Panel, cross-sectional earnings inequality of male full-time employees falls over the second half of the Nineties. The longitudinal analysis shows that such decline was determined by a decrease in earnings instability and an increase of the permanent earnings component. Given the marked decline in temporary employment over the sample period, we also examine the effect of the type of contract on earnings variance components, and we find that workers with fixed-term contract have on average more instability than workers with permanent contract. This evidence suggests that the decline in temporary employment is responsible for the decreasing earnings instability. |
| Keywords: | earnings dynamics, permanent and transitory differences, earnings instability, covariance structure, minimum distance, temporary employment, Spain |
| JEL: | C23 D31 J31 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3538&r=lab |
| By: | KAWAGUCHI Daiji; MORI Yuko |
| Abstract: | Wage distribution has been nearly stable in Japan for the last two decades, contrary to findings in the US, Canada, and the UK. The change in wage distribution during this period was almost completely caused by a distributional change in worker attributes. This implies that skill prices were very stable between 1982 and 2002. Both demand and supply for skilled workers have increased because of skill-biased technological change (SBTC), a rise in the number of college-educated workers induced by educational policy changes, and the aging of the population. In the balance of shifts in demand and supply, the skill price has been stable. Industries that experienced rapid computerization also experienced workers' skill upgrading. We find evidence consistent with SBTC. |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:08020&r=lab |
| By: | Schneck, Stefan |
| Abstract: | This paper examines employer-to-employer mobility by describing the individual wage trajectories along the working career. The model, which is designed to introduce optimal between-firm mobility, is based on the search, the matching, and the human capital theory. It is emphasized that hopping from one wage trajectory to another by mobility may be accompanied with wage losses. An empirical review of the model extracts information on whether the between-firm mobility wage trajectory exceeds the within-firm wage path. The results are in line with the optimal employer-to-employer mobility model derived in this paper. Furthermore, it is shown that downward mobility as well as upward mobility is very common in reality, and that both types of mobility are shown to cause wage losses. |
| Keywords: | Employer-to-employer mobility, wage trajectories, wage loss |
| JEL: | J30 J31 J62 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-403&r=lab |
| By: | Asadullah, Niaz (University of Reading); Fernández, Rosa M. (University of Oxford) |
| Abstract: | This paper examines the role of work-life balance practices (WLB) in explaining the “paradox of the contented female worker”. After establishing that females report higher levels of job satisfaction than men in the UK, we test whether firm characteristics such as WLB and gender segregation boost the satisfaction of women proportionately more than that of men, thereby explaining why the former are reportedly happier. The results prove that WLB practices increase the likelihood of reporting higher satisfaction but similarly for both demographic groups thereby reducing the gender gap in job satisfaction only slightly. Still, the results indicate that WLB practices at the forefront of worker welfare policy improve the wellbeing of the workforce. Experiments with firm-fixed effects allowed by the matched dimension of the data reveal that firm effects are relevant but they only explain a half of the gender gap in job satisfaction, suggesting that the other half may be due to individual heterogeneity. |
| Keywords: | job satisfaction, work-life balance practices, gender segregation, matched employer-employee data |
| JEL: | C13 J16 J28 J71 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3582&r=lab |
| By: | Hans Bloemen (Free University Amsterdam); Elena Stancanelli (Observatoire Français des Conjonctures Économiques) |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:0801&r=lab |
| By: | de la Rica, Sara (University of the Basque Country); Dolado, Juan José (Universidad Carlos III, Madrid); García-Peñalosa, Cecilia (CNRS) |
| Abstract: | This paper considers a simple model of self-fulfilling expectations that leads to a multiple equilibrium of gender gaps in wages and participation rates. Rather than resorting to moral hazard problems related to unobservable effort, like in most of the related literature, our model fully relies on statistical discrimination. If firms believe that women will quit their jobs more often than equally productive men when shocks affecting household chores take place, our model predicts that this belief will increase the wage gap in favour of men which, in turn, will exacerbate lower female participation in the labour market. Hence, both effects lead to a gendered equilibrium with large gaps, even though an ungendered equilibrium with no gaps is feasible. We examine the effects of gender-based and gender-neutral subsidies and find that the latter are more effective in removing the gendered equilibrium. Empirical analysis based on a time use survey for Spain is provided to test some implications of the model. |
| Keywords: | gender gaps, self-fulfilling expectations, gender policies, time-use surveys |
| JEL: | J16 J18 J12 J22 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3553&r=lab |
| By: | Sara de la Rica; Juan José Dolado; Cecilia García-Peñalosa |
| Abstract: | This paper considers a simple model of self-fulfilling expectations that leads to a multiple equilibrium of gender gaps in wages and participation rates. Rather than resorting to moral hazard problems related to unobservable effort, like in most of the related literature, our model fully relies on statistical discrimination. If firms believe that women will quit their jobs more often than equally productive men when shocks affecting household chores take place, our model predicts that this belief will increase the wage gap in favour of men which, in turn, will increase the female share of housework and exacerbate lower female participation in the labour market. Hence, both effects lead to a gendered equilibrium with large gaps, even though an ungendered equilibrium with no gaps is feasible. We examine the effects of gender-based and gender-neutral subsidies and find that the latter are more effective in removing the gendered equilibrium. Empirical analysis based on a time use survey for Spain is provided to test most of the implications of the model. |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2008-24&r=lab |
| By: | Ekkehard Ernst |
| Abstract: | The Dutch labour market is functioning well, with employment and labour participation rates above OECD averages. Nevertheless, there are sizable pockets of under-activity, including social benefit recipients representing 17% of the working-age population, which could be mobilised in order to address short-run labour shortages and the long-run ageing-related reductions in the labour supply. Reintegrating these benefit recipients would also help to reduce spending on labour market programmes, which is among the highest in the OECD. The paper argues that policies should continue to tackle the high inactivity of these groups. For people on social assistance and older workers, job search requirements should be strengthened and the authorities should continue making the tax-benefit system more work-friendly. For women with low-earning capacities, existing work disincentives should be eliminated. For (partially) disabled people, it is important to envisage labour market re-integration at an early stage. For the long-term unemployed, policies should be further strengthened by adjusting the unemployment benefit and the employment protection systems, as well as further improving current profiling and training measures. This Working Paper relates to the 2008 Economic Survey of the Netherlands (www.oecd.org/eco/surveys/netherlands) <P>Remédier aux pénuries de main-d'oeuvre : comment réintégrer les travailleurs exclus <BR>Le marché du travail fonctionne de façon satisfaisante aux Pays-Bas, où les taux d'emploi et d'activité sont supérieurs aux moyennes de l'OCDE. Néanmoins, il existe d'importantes poches de sous-activité, notamment parmi les bénéficiaires de prestations sociales, qui représentent 17 % de la population d'âge actif ; ce groupe pourrait être mobilisé pour remédier aux pénuries de main-d'oeuvre à court terme et à la contraction à long terme de l'offre de travail liée au vieillissement démographique. Réinsérer ces titulaires de prestations contribuerait aussi à réduire les dépenses au titre des programmes du marché du travail, qui figurent parmi les plus élevées de la zone OCDE. Nous faisons valoir dans le présent document que les pouvoirs publics devraient poursuivre les efforts déployés pour réduire la forte inactivité de ces groupes. Pour les bénéficiaires de l'aide sociale et les travailleurs âgés, les obligations de recherche d'emploi devraient être renforcées, et les autorités devraient continuer à rendre le système de prélèvements et de prestations plus propice à l'activité. S'agissant des femmes à faible capacité de gain, les désincitations au travail qui influent actuellement sur leurs choix devraient être éliminées. En ce qui concerne les personnes (partiellement) handicapées, il importe d'envisager leur réinsertion rapide sur le marché du travail. Pour les chômeurs de longue durée, il convient de renforcer les politiques en place, en ajustant les systèmes d'indemnisation du chômage et de protection de l'emploi, ainsi qu'en améliorant encore les dispositifs actuels de profilage et de formation. Ce document de travail est lié à l'Étude économique de 2008 consacrée aux Pays-Bas (www.oecd.org/eco/etudes/paysbas) |
| Keywords: | employment protection legislation, législation sur la protection de l'emploi, Netherlands, Pays-Bas, social assistance, aide sociale, unemployment benefits, allocations chômages, labour shortages, inactivity, disability benefit reforms, activation policies, tax-benefit reforms, poverty traps, pénuries de main-d'oeuvre , inactivité, réformes des prestations d'invalidité, politiques d'activation, réformes des systèmes de prélèvements et de prestations, pièges de la pauvreté |
| JEL: | E24 J21 J26 J65 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:619-en&r=lab |
| By: | Rovelli, Riccardo (University of Bologna); Bruno, Randolph Luca (University of Bologna) |
| Abstract: | We compare labor market policies, institutions 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 for countries with a high pro-work attitude; (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: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3502&r=lab |
| By: | Damiaan Persyn |
| Abstract: | We estimate the relationship between wages, labour productivity and foreign wages using long sector-level time series for a selection of EU member states. Our aim is to determine how trade liberalisation has affected the scope for union wage demands. It is shown that as trade costs decline, wages become more responsive to labour productivity but -maybe counterintuitively- less responsive to foreign wages. We show this observations are as expected when wages are set by a monopoly union with a preference for wages relative to employment. Trade liberalisation then leads to more wage discipline, forcing unions to moderate wage demands and setting wages more in line with labour productivity. Foreign wages simultaneously become less relevant to the optimal union wage demand. |
| Keywords: | Unions, globalisation, economic geography, factor price equalisation |
| JEL: | J50 J31 F16 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:21008&r=lab |
| By: | Montizaan, Raymond (ROA, Maastricht University); Cörvers, Frank (ROA, Maastricht University); de Grip, Andries (ROA, Maastricht University) |
| Abstract: | Several studies show that employees with firm-specific skills are more likely to be covered by employer-sponsored pension schemes than workers with general skills. Therefore it can be expected that workers with firm-specific skills retire earlier. This paper tests this prediction using US data from the National Longitudinal Survey of Older Men. We find that workers who participated in firm-specific training in their early careers retire earlier than workers with a general training background. This indicates that shared investments in firm-specific training are embedded in implicit contracts that induce early retirement. The results remain robust when controlling for technological change and work commitment. |
| Keywords: | retirement, training, deferred compensation |
| JEL: | J14 J26 J31 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3504&r=lab |
| By: | Furtado, Delia (University of Connecticut); Hock, Heinrich (Florida State University) |
| Abstract: | The negative correlation between female employment and fertility in industrialized nations has weakened since the 1960s, particularly in the United States. We suggest that the continuing influx of low-skilled immigrants has led to a substantial reduction in the trade-off between work and childrearing facing American women. The evidence we present indicates that low-skilled immigration has driven down wages in the US child-care sector. More affordable child-care has, in turn, increased the fertility of college graduate native females. Although childbearing is generally associated with temporary exit from the labor force, immigrant-led declines in the price of child-care has reduced the extent of role incompatibility between fertility and work. |
| Keywords: | fertility, labor supply, immigration |
| JEL: | D10 F22 J13 J22 R23 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3506&r=lab |
| By: | Molina, José Alberto (University of Zaragoza); Montuenga, Víctor M. (University of Zaragoza) |
| Abstract: | We present evidence for the motherhood wage penalty in Spain as a representative Southern European Mediterranean country. We use the European Community Household Panel (ECHP, 1994-2001) to estimate, from both pool and fixed-effects methods, a wage equation in terms of observed variables and other non-observed individual characteristics. The empirical results confirm that there is clear evidence of a wage penalty for Spanish working women with children. Specifically, the fact that there is a birth in the family during the current year means that the woman loses 9% of her wage. We also find that having one child living in the household means a significant loss in wages of 6%, having two children, almost 14%, and having three or more, more than 15%. |
| Keywords: | motherhood wage penalty, fixed-effects estimation, Spain |
| JEL: | J30 D10 C23 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3574&r=lab |
| By: | Fitzenberger, Bernd (University of Freiburg); Orlyanskaya, Olga (University of Freiburg); Osikominu, Aderonke (University of Freiburg); Waller, Marie (University of Freiburg) |
| Abstract: | Short-term training has recently become the largest active labor market program in Germany regarding the number of participants. Little is known on the effectiveness of different types of short-term training and on their long-run effects. This paper estimates the effects of short-term training programs in West Germany starting in the time period 1980 to 1992 and 2000 to 2003 regarding the two outcomes employment and participation in longer training programs. We find that short-term training shows mostly persistently positive and often significant employment effects. Short-term training focusing on testing and monitoring search effort shows slightly smaller effects compared to the pure training variant. The lock-in periods lasted longer in the 1980s and 1990s compared to the early 2000s. Short-term training results in higher future participation in longer training programs and this effect was much stronger for the earlier time period. |
| Keywords: | administrative data, future training participation, employment effects, short-term training, active labor market programs |
| JEL: | C14 J68 H43 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3540&r=lab |
| By: | Francavilla, Francesca (University of Florence); Giannelli, Gianna Claudia (University of Florence); Grilli, Leonardo (University of Florence) |
| Abstract: | This paper investigates the determinants of school attendance of children and their mother’s working status when the mother decides how to allocate her time and that of her children. A multilevel random effects model is applied to study the mother’s participation and the schooling status of her children in a joint framework. Using the second National Family Health Survey (NFHS-2) for India, we find that, controlling for many covariates among which wealth is the most powerful predictor, children of working mothers have a lower probability of attending school. This, together with the result that only illiterate and poor mothers with unskilled or unemployed partners have a high probability of working, points to the need for decent labour market opportunities for females. An implication of our findings is that any policy aiming both at enhancing women’s empowerment through labour and increasing children’s welfare should also target improvements in women’s conditions in the labour market. |
| Keywords: | household allocation of time, women's work, children's schooling, random effects, India |
| JEL: | J13 J22 O15 O18 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3531&r=lab |
| By: | Ofer Malamud; Cristian Pop-Eleches |
| Abstract: | This paper examines the relative benefits of general education and vocational training in Romania, a country which experienced major technological and institutional change during its transition from Communism to a market economy. To avoid the bias caused by non-random selection, we exploit a 1973 educational reform that shifted a large proportion of students from vocational training to general education while keeping average years of schooling unchanged. Using data from the 1992 and 2002 Romanian Censuses and household surveys from 1995-2000, we analyze the effect of this policy with a regression discontinuity design. We find that men in cohorts affected by the policy were significantly less likely to work in manual or craft-related occupations than their counterparts who were unaffected by the policy. However, in contrast to cross-sectional findings, we find no difference in labor market participation or earnings between cohorts affected and unaffected by the policy. We therefore conclude that differences in labor market returns between graduates of vocational and general schools are largely driven by selection. |
| JEL: | I21 J24 P20 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14155&r=lab |
| By: | Zorlu, Aslan (University of Amsterdam); Hartog, Joop (University of Amsterdam) |
| Abstract: | Using two Dutch labour force surveys, employment assimilation of immigrants is examined. We observe marked differences between immigrants by source country. Non-western immigrants never reach parity with native Dutch. Even second generation immigrants never fully catch up. Caribbean immigrants, who share a colonial history with the Dutch, assimilate relatively quick compared to other non-western immigrants but they still suffer from high unemployment. The study also documents that the quality of jobs is significantly lower for immigrants, especially for those who are at larger cultural distance to Dutch society. Job quality of immigrants increases with the duration of stay but again, does not reach parity with natives. The western immigrants seem to face no considerable difficulties in the Dutch labour market. The most remarkable conclusion is the irrelevance of education for socio-economic position of immigrants once the country of origin has been controlled for. |
| Keywords: | immigrants, employment, unemployment, job quality |
| JEL: | J15 J21 J24 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3534&r=lab |
| By: | Booth, Alison L. (Australian National University); Frank, Jeff (University of London) |
| Abstract: | Using a unique data source on marital status, partnership and sexual orientation of academics and administrators at British universities, we estimate the impact of personal relationships upon earnings for men and women. While university data cover a relatively homogeneous group of workers, the two sides of the university are very different, with administrative jobs being more like the general job market in the economy. We find a large and significant married male premium, but only on the administrative side of the university. There is no female marriage premium, and no partnership return to gay men or to either heterosexual or homosexual women. |
| Keywords: | partnership, marriage, sexual orientation, academic labour markets |
| JEL: | J12 J16 J30 J45 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3510&r=lab |
| By: | Koskela, Erkki (University of Helsinki); Schöb, Ronnie (Free University of Berlin) |
| Abstract: | This paper shows that outsourcing of parts of workforce in unionized firms leads to wage moderation both in the case of strategic and flexible outsourcing and as long as the share of the outsourced workforce is not too large, this wage-moderation effect on domestic employment outweighs the direct substitution effect so that domestic employment increases in unionized firms as outsourcing costs fall. With respect the impact of labor tax reforms that are well-established in the literature: changes in the wage tax rate, the tax exemption and the unemployment benefit payments affect domestic wage setting in the same way as in the absence of outsourcing. Furthermore, increasing the degree of tax progression by keeping the relative tax burden per worker constant continues to be good for employment. However, except for low outsourcing activities, the impact of these policy measures will become smaller as outsourcing costs fall. |
| Keywords: | outsourcing, union wage-setting, employment, labor tax reform |
| JEL: | J41 J51 H22 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3566&r=lab |
| By: | Bosch, Mariano (University of Alicante); Maloney, William F. (World Bank) |
| Abstract: | This paper analyzes the cyclical properties of worker flows in Brazil and Mexico, two important developing countries with large unregulated or “informal” sectors. It generates three stylized facts that are critical to the accurate modeling of the sector and which suggest the need to rethink the approaches to date. First, the unemployment rate is countercyclical essentially because job separations of informal workers increase dramatically in recessions. Second, the share of formal employment is countercyclical because of the difficulty of finding formal jobs from inactivity, unemployment and other informal jobs during recessions rather than because of increased separation from formal jobs. Third, flows from formality into informality are not countercyclical, but, if anything, pro-cyclical. Together, these challenge the conventional wisdom that has guided the modeling the sector that informal workers are primarily those rationed out of the formal labor market. They also offer a new synthesis of the mechanics of the cyclical adjustment process. Finally, the paper offers estimates of the moments of worker flows series that are needed for calibration. |
| Keywords: | gross worker flows, labor market dynamics, informality, developing countries |
| JEL: | J41 J42 J6 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3514&r=lab |
| By: | Hu, Ting (Tulane University); Yun, Myeong-Su (Tulane University) |
| Abstract: | It has been reported that there is dramatic increase of female workers into manager level jobs during last few decades in the US labor market. Using Standard & Poor’s Compustat ExecuComp database over 14 years (1992 - 2005), this paper examines whether the glass ceiling in the executive market has been substantially weakened measured by relative compensation by gender and female representation in the top rung of the executive market. Though the status of females in the executive market seems to have been improved, we cannot reject null hypothesis of no change when we test hypotheses whether the glass ceiling has significantly weakened. The results of the hypothesis tests suggest that there is still a long way ahead before gender equality is achieved and the glass ceiling is removed in the executive market. |
| Keywords: | gender gap, executive compensation, glass ceiling, top rank, hypothesis test |
| JEL: | J15 J70 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3518&r=lab |
| By: | Roberto Alvarez (Central Bank of Chile); Ricardo Lopez (Indiana University Bloomington) |
| Abstract: | This paper examines the effect of changes in the real exchange rate on skill upgrading in the case of Chile. Using plant-level data from the manufacturing sector we find that a real depreciation increases the share of skilled workers in the total wage bill in exporters but not in non-exporters. This result suggests that depreciations or, more generally, increases in export profitability, may induce exporters to adopt more skilled-intensive technologies. This finding gives support to recent models of trade that highlight the possible effect of the real exchange rate on skill upgrading and wage inequality. This paper also finds that real depreciations increase the probability of exporting and the export intensity of plants that export, suggesting that these two channels may explain why changes in the real exchange rate may affect wages. |
| JEL: | F14 F16 O30 O54 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:inu:caeprp:2008-020&r=lab |
| By: | Kelly Haverstick; Margarita Sapozhnikov; Robert K. Triest; Natalia Zhivan |
| Abstract: | While Social Security’s Normal Retirement Age (NRA) is increasing to 67, the Earliest Eligibility Age (EEA) remains at 62. Similar plans to increase the EEA raise concerns that they would create excessive hardship on workers who are worn-out or in bad health. One simple rule to increase the EEA is to tie an increase to the number of quarters of covered earnings. Such a provision would allow those with long work lives—presumably the less educated and lower paid—to quit earlier. We provide evidence that this simple rule would not satisfy the goal of preventing undue hardship on certain workers. Therefore, this paper considers an alternative policy that ties an increase in the EEA to individuals’ Average Indexed Monthly Earnings (AIME). We show that allowing workers with low AIME to continue to be eligible to receive benefits at age 62 has promise as a policy to protect workers who have low earnings and are in poor health from hardship associated with an increase in the EEA. |
| Keywords: | Social security ; Retirement income |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbpp:08-4&r=lab |
| By: | Fredriksson, Peter (IFAU); Söderström, Martin (National Institute of Economic Research) |
| Abstract: | We examine the relationship between unemployment benefits and unemployment using Swedish regional data. To estimate the effect of an increase in unemployment insurance (UI) on unemployment we exploit the ceiling on UI benefits. The benefit ceiling, coupled with the fact that there are regional wage differentials, implies that the generosity of UI varies regionally. More importantly, the actual generosity of UI varies within region over time due to variations in the benefit ceiling. We find fairly robust evidence suggesting that the actual generosity of UI does matter for regional unemployment. Increases in the actual replacement rate contribute to higher unemployment as suggested by theory. We also show that removing the wage cap in UI benefit receipt would reduce the dispersion of regional unemployment. This result is due to the fact that low unemployment regions tend to be high wage regions where the benefit ceiling has a greater bite. Removing the benefit ceiling thus implies that the actual generosity of UI increases more in low unemployment regions. |
| Keywords: | unemployment, unemployment insurance, unemployment dispersion |
| JEL: | J64 J65 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3570&r=lab |
| By: | Dimova, Ralitza (Brunel University); Nordman, Christophe Jalil (DIAL, Paris); Roubaud, François (DIAL, Paris) |
| Abstract: | With the use of comparable data from seven West African capitals, we attempt to assess the rationale behind development policies targeting high rates of school enrolment through the prism of allocation of labour and returns to skills across the formal and informal sectors. We find that people with high levels of education allocate to the small formal sector and receive high compensation for their education and experience. Less educated workers allocate to the informal sector. While self-employment reveals some characteristics of a sector of dynamic entrepreneurship, the characteristics of the informal salaried sector are closer to those of a sector of hidden unemployment, or a stepping stone for better jobs in the future. |
| Keywords: | returns to skills, allocation of labour, self-selection, informal sector, Sub-Saharan West Africa |
| JEL: | J24 J31 O12 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3558&r=lab |
| By: | Chiuri, Maria Concetta (University of Bari); Del Boca, Daniela (University of Turin) |
| Abstract: | While several social, economic and financial indicators point to a growing convergence among European countries, striking differences still emerge in the timing of leaving home for adult children. In Southern countries (as Spain, Italy or Portugal) in 2001 more than 70 percent of young adults between 18 and 34 years of age live with their parents, whereas the corresponding number for Northern countries (like Denmark or the UK) is well below 40 percent. Existing literature highlights several factors explaining the different patterns in Europe: preferences and culture, labor market conditions, housing market as well as differences across the welfare states. In our work, we consider living arrangements of people 18-34 years old from 14 European countries (ECHP). We augment the informational content with indicators of labor, housing and marriage markets characteristics as well as proxy for the welfare states and culture. We investigate how they are intertwined with gender differences |
| Keywords: | living arrangements, duration analysis, government expenditures |
| JEL: | J13 C41 H53 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3546&r=lab |
| By: | Kahanec, Martin; Zimmermann, Klaus F |
| Abstract: | Mobility of workers involves flows of labour, human capital and other production factors and thus contributes to a more efficient allocation of resources. Besides these effects on allocative efficiency, migrant flows affect relative wages and also change the international and national distribution of skills and thereby equality in the receiving society. This paper suggests that skilled immigration promotes economic equality in advanced economies under standard conditions. The context is theoretically explained in a core model and empirically documented using unique data from the WIID database and OECD. |
| Keywords: | ethnicity; Gini-coefficient; human capital; income distribution; Inequality; migration; minority; skill allocation |
| JEL: | D33 E25 F22 J15 J61 O15 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6899&r=lab |
| By: | Lechner, Michael (University of St. Gallen) |
| Abstract: | This microeconometric study analyzes the effects of individual leisure sports participation on long-term labour market variables, on socio-demographic as well as on health and subjective well-being indicators for West Germany based on individual data from the German Socio-Economic Panel study (GSOEP) 1984 to 2006. Econometric problems due to individuals choosing their own level of sports activities are tackled by combining informative data and flexible semiparametric estimation methods with a specific way to use the panel dimension of the data. The paper shows that sports activities have sizeable positive long-term labour market effects in terms of earnings and wages, as well as positive effects on health and subjective well-being. |
| Keywords: | leisure sports, health, labour market, matching estimation, panel data |
| JEL: | I12 I18 J24 L83 C21 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3559&r=lab |
| By: | Kahanec, Martin (IZA); Zimmermann, Klaus F. (IZA, DIW Berlin and Bonn University) |
| Abstract: | Mobility of workers involves flows of labour, human capital and other production factors and thus contributes to a more efficient allocation of resources. Besides these effects on allocative efficiency, migrant flows affect relative wages and also change the international and national distribution of skills and thereby equality in the receiving society. This paper suggests that skilled immigration promotes economic equality in advanced economies under standard conditions. The context is theoretically explained in a core model and empirically documented using unique data from the WIID database and OECD. |
| Keywords: | inequality, income distribution, human capital, skill allocation, migration, ethnicity, minority, Gini-coefficient |
| JEL: | D33 E25 F22 J15 J61 O15 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3560&r=lab |
| By: | Michael Lechner |
| Abstract: | This microeconometric study analyzes the effects of individual leisure sports participation on long-term labour market variables, on socio-demographic as well as on health and subjective well-being indicators for West Germany based on individual data from the German Socio-Economic Panel study (GSOEP) 1984 to 2006. Econometric problems due to individuals choosing their own level of sports activities are tackled by combining informative data and flexible semiparametric estimation methods with a specific way to use the panel dimension of the data. The paper shows that sports activities have sizeable positive long-term labour market effects in terms of earnings and wages, as well as positive effects on health and subjective well-being. |
| Keywords: | Leisure sports, health, labour market, matching estimation, panel data |
| JEL: | I12 I18 J24 L83 C21 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp114&r=lab |
| By: | Martin Kahanec; Klaus F. Zimmermann |
| Abstract: | Mobility of workers involves flows of labour, human capital and other production factors and thus contributes to a more efficient allocation of resources. Besides these effects on allocative efficiency, migrant flows affect relative wages and also change the international and national distribution of skills and thereby equality in the receiving society. This paper suggests that skilled immigration promotes economic equality in advanced economies under standard conditions. The context is theoretically explained in a core model and empirically documented using unique data from the WIID database and OECD. |
| Keywords: | Inequality, income distribution, human capital, skill allocation, migration, ethnicity, minority, Gini-coefficient |
| JEL: | D33 E25 F22 J15 J61 O15 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp781&r=lab |
| By: | Pfeifer, Christian (University of Hannover) |
| Abstract: | This research note uses two German data sets – the large-scale German Socio-Economic Panel and unique data from own student questionnaires – to analyse the relationship between risk aversion and the choice for public sector employment. Main results are: (1) more risk averse individuals sort into public sector employment, (2) the impact of career specific and unemployment risk attitudes is larger than the impact of general risk attitudes, and (3) risk taking is rewarded with higher wages in the private but not in the public sector. |
| Keywords: | public sector, risk aversion, sorting, wage differentials |
| JEL: | J24 J31 J45 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3503&r=lab |
| By: | de Mel, Suresh (University of Peradeniya); McKenzie, David (World Bank); Woodruff, Christopher (University of California, San Diego) |
| Abstract: | Is the vast army of the self-employed in low income countries a source of employment generation? We use data from surveys in Sri Lanka to compare the characteristics of own account workers (non-employers) with wage workers and with owners of larger firms. We use a rich set of measures of background, ability, and attitudes, including lottery experiments measuring risk attitudes. Consistent with the ILO’s views of the self employed (represented by Tokman), we find that 2/3rds to 3/4ths of the own account workers have characteristics which are more like wage workers than larger firm owners. This suggests the majority of the own account workers are unlikely to become employers. Using a two and a half year panel of enterprises, we show that the minority of own account workers who are more like larger firm owners are more likely to expand by adding paid employees. The analysis suggests that finance is not the sole constraint to growth of microenterprises, and provides an explanation for the low rates of growth of enterprises supported by microlending. |
| Keywords: | entrepreneurship, self-employment, De Soto |
| JEL: | O17 L26 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3511&r=lab |
| By: | LE BRETON, Michel; MICHELANGELI, Alessandra; PELUSO, Eugenio |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:9289&r=lab |
| By: | Iturriza, Ana (University of Palermo); Bedi, Arjun S. (Institute of Social Studies); Sparrow, Robert (Institute of Social Studies) |
| Abstract: | In 2001-02, Argentina experienced a wrenching economic crisis. Plan Jefes, implemented in May 2002, was Argentina’s institutional response to the increase in unemployment and poverty triggered by the crisis. The program provided a social safety net and appears to have successfully protected some families against indigence. Despite this success, the continued existence of the program, which provides benefits to eligible unemployed individuals for an unlimited duration, may have unappealing long-term consequences. Reliance on the plan may reduce the incentive to search for work and in the long-run may damage individual employability and perpetuate poverty. Motivated by these concerns, this paper examines the effect of participating in Plan Jefes on the probability of exiting from unemployment. Regardless of the data set, the specification and the empirical approach, the evidence assembled in this paper shows that for the period under analysis individuals enrolled in the Plan are between 12 to 19 percentage points less likely to transit to employment as compared to individuals who applied but did not join the Plan. The negative effect of the program tends to be larger for females and as a consequence, over time, the program becomes increasingly feminized. Prima facie, the estimates suggest that programs such as Plan Jefes need to re-consider the balance between providing a social safety net and dulling job-search incentives. |
| Keywords: | unemployment assistance programs, unemployment transitions, Argentina |
| JEL: | J64 J65 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3579&r=lab |
| By: | Drago, Francesco (University of Naples, Parthenope) |
| Abstract: | Recent research in economics suggests a positive association between self-esteem and earnings. A major problem in this literature is that from simple cross-sectional wage regressions it is not possible to conclude that self-esteem has a causal impact on earnings. While classical measurement error leads to an attenuation bias, reverse causality and omitted variable are likely to drive the OLS coefficient on self-esteem upward. Using the National Longitudinal Survey of Youth (NLSY) that administered the Rosenberg Self-Esteem Scale during the 1980 and 1987 interviews, I provide further evidence for the existence of a self-esteem premium by exploiting variation in these measures in the two years. I show that the estimated impact of self-esteem in 1987 on earnings is about two times greater than previous OLS estimates would imply. The main explanation for this result is the large extent of measurement error in the reported self-esteem measure. |
| Keywords: | self-esteem, wages, NLSY |
| JEL: | J13 J30 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3577&r=lab |
| By: | Díaz-Giménez, Javier (Universidad Carlos III, Madrid); Giolito, Eugenio P. (Universidad Carlos III, Madrid) |
| Abstract: | We study the steady state of an overlapping generations economy where singles search for spouses. In our model economy men and women live for many years and they differ in their fecundity, in their earnings, and in their survival probabilities. These three features are age-dependent and deterministic. Singles meet at random. They propose when the expected value of their current match exceeds that of remaining single. If both partners propose, the meeting ends up in a marriage. Marriages last until death does them apart, widows and widowers never remarry, and people make no other economic decisions whatsoever. In our model economy people marry because they value companionship, bearing children, and sharing their income with their spouses. The matching function depends on the single sex-ratios which are endogenous. Our model economy has only two free parameters: the search friction and the utility share of bearing children. We choose their values to match the median ages of first-time brides and grooms. We show that modeling the marriage decision in this simple way is sufficient to account for the age distributions of ever and never married men and women, for the probabilities of marrying a younger bride and a younger groom, and for the age distributions of first births observed in the United States in the year 2000. The previous literature on this topic claims that marriage is a waiting game in which women are choosier than men, and old and rich pretenders outbid the young and poor ones in their competition for fecund women. In this article we tell a different story. We show that their shorter biological clocks make women uniformly less choosy than men of the same age. This turns marriage into a rushing game in which women are willing to marry older men because delaying marriage is too costly for women. Our theory predicts that most of the gender age difference at first marriage will persist even if the gender wage-gap disappears. It also predicts that the advances in the reproductive technologies will play a large role in reducing the age difference at first marriage. |
| Keywords: | marriage, search, sex ratio |
| JEL: | J12 D83 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3539&r=lab |
| By: | Strobl, Eric (Ecole Polytechnique, Paris); Walsh, Frank (University College Dublin) |
| Abstract: | We examine the impact of hurricane strikes on the construction industry in US counties. To this end we use a measure of hurricane destruction derived from a wind field model and historical hurricane track data and employ this within a dynamic labour demand framework. Our results show that destruction due to hurricanes causes on average an increase in country level employment in construction of a little over 25 per cent. |
| Keywords: | hurricanes, labour demand, construction industry |
| JEL: | J23 Q54 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3544&r=lab |
| By: | Lekha S. Chakraborty |
| Abstract: | This paper presents new evidence on the links between public-infrastructure provisioning and time allocation related to the water sector in India. An analysis of time-use data reveals that worsening public infrastructure affects market work, with evident gender differentials. The results also suggest that access to public infrastructure can lead to substitution effects in time allocation between unpaid work and market work. The broad conclusion of the paper is that public-investment policy can redress intrahousehold inequalities, in terms of labor-supply decisions, by supporting initiatives that reduce the allocation of time in nonmarket work. |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_536&r=lab |
| By: | Lechthaler, Wolfgang (Kiel Institute for the World Economy); Merkl, Christian (Kiel Institute for the World Economy); Snower, Dennis J. (Kiel Institute for the World Economy) |
| Abstract: | It is common knowledge that the standard New Keynesian model is not able to generate a persistent response in output to temporary monetary shocks. We show that this shortcoming can be remedied in a simple and intuitively appealing way through the introduction of labor turnover costs (such as hiring and firing costs). Assuming that it is costly to hire and fire workers implies that the employment rate is slow to converge to its steady state value after a monetary shock. The after-effects of a shock continue to exert an effect on the labor market even long after the shock is over. The sluggishness of the labor market translates to the product market and thus the output effects of the monetary shock become more persistent. Under reasonable calibrations our model generates hump-shaped output responses. In addition, it is able to replicate the Beveridge curve relationship and a negative correlation between job creation and job destruction. |
| Keywords: | monetary persistence, labor market, hiring and firing costs |
| JEL: | E24 E32 E52 J23 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3513&r=lab |
| By: | David Deming; Susan Dynarski |
| Abstract: | Forty years ago, 96% of six-year-old children were enrolled in first grade or above. As of 2005, the figure was just 84%. The school attendance rate of six-year-olds has not decreased; rather, they are increasingly likely to be enrolled in kindergarten rather than first grade. This paper documents this historical shift. We show that only about a quarter of the change can be proximately explained by changes in school entry laws; the rest reflects "academic redshirting," the practice of enrolling a child in a grade lower than the one for which he is eligible. We show that the decreased grade attainment of six-year-olds reverberates well beyond the kindergarten classroom. Recent stagnation in the high school and college completion rates of young people is partly explained by their later start in primary school. The relatively late start of boys in primary school explains a small but significant portion of the rising gender gaps in high school graduation and college completion. Increases in the age of legal school entry intensify socioeconomic differences in educational attainment, since lower-income children are at greater risk of dropping out of school when they reach the legal age of school exit. |
| JEL: | I2 I21 I28 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14124&r=lab |
| By: | Sookram, Sandra (University of the West Indies, SALISES); Strobl, Eric (Ecole Polytechnique, Paris) |
| Abstract: | We analyse the role of educational choice on the degree of occupational segregation in Trinidad and Tobago during a period in which educational policies intent on equating gender opportunities in education were implemented. To this end we utilise waves of the Trinidad and Tobago labour force survey over the period 1991-2004. Our results show that while educational segregation has fallen substantially over our sample period, this has not translated into less occupational segregation. This suggests that the educational policy has not been sufficient to combat occupational segregation. However, results at a more disaggregated level show that experiences have been heterogeneous across educational and occupational groups. |
| Keywords: | educational choice, occupational segregation, gender |
| JEL: | I21 J16 J24 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3549&r=lab |
| By: | Fernando Munoz-Bullon; Maria Jose Sanchez-Bueno |
| Abstract: | In the present study we explore the relationship between downsizing decisions and corporate financial performance after top management has decided to downsize. Our focus is on the financial consequences arising from the amount of downsizing and the use of disengagement incentives. For this purpose, we use a sample of downsizing announcements in the Spanish press from 1995 up to 2001. Although the results show that the amount of downsizing is not significantly related to post-downsizing profitability, the evidence provided supports the finding that the use of disengagement incentives (which motivate workers to leave the organization) is negatively related to firm performance. Our analysis helps to understand the role that strategic downsizing decisions play in explaining observed variance in the performance of downsized firms. Thus, it advances scholarly organizational research by reinforcing the concept that corporate performance is not only contingent on strategies, but also influenced by the means through which these strategies are implemented. |
| Keywords: | Downsizing, Disengagement incentives, Corporate performance, Spanish labour market |
| JEL: | J21 J65 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:cte:wbrepe:wb082906&r=lab |
| By: | Bassanini, Andrea (OECD); Nunziata, Luca (University of Padova); Venn, Danielle (OECD) |
| Abstract: | This paper examines the impact of employment protection legislation on productivity in the OECD, using annual cross-country aggregate data on the degree of regulations and industry-level data on productivity from 1982 to 2003. We adopt a "difference-in-differences" framework, which exploits likely differences in the productivity effect of dismissal regulations in different industries. Our identifying assumption is that stricter employment protection influences worker or firm behaviour, and thereby productivity, more in industries where the policy is likely to be binding than in other industries. The advantage of this approach is that, in contrast with standard cross-country analysis, we can control for unobserved factors that, on average, are likely to have the same effect on productivity in all industries. Our empirical results suggest that mandatory dismissal regulations have a depressing impact on productivity growth in industries where layoff restrictions are more likely to be binding. We present a large battery of robustness checks, including dealing with endogeneity issues, that suggest that our finding is robust. |
| Keywords: | labour market institutions, EPL, productivity, difference-in-differences |
| JEL: | J08 J23 J24 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3555&r=lab |
| By: | Frijters, Paul (Queensland University of Technology); Johnston, David W. (University of Melbourne); Shah, Manisha (University of Melbourne); Shields, Michael A. (University of Melbourne) |
| Abstract: | We estimate the effect of early child development on maternal labor force participation using data from teacher assessments. Mothers might react to having a poorly developing child by dropping out of the formal labor force in order to spend more time with their child, or they could potentially increase their labor supply to be able to provide the funds for better education and health resources. Which action dominates is therefore the empirical question we seek to answer in this paper. Importantly, we control for the potential endogeneity of child development by using an instrumental variables approach, uniquely exploiting exogenous variation in child development associated with child handedness. We find that having a poorly developing young child reduces the probability that a mother will participate in the labor market by about 25 percentage points. |
| Keywords: | maternal labor force participation, child development, handedness |
| JEL: | J22 J13 C31 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3537&r=lab |
| By: | Laroque, Guy (CREST-INSEE); Salanié, Bernard (Columbia University) |
| Abstract: | There has been little empirical work evaluating the sensitivity of fertility to financial incentives at the household level. We put forward an identification strategy that relies on the fact that variation of wages induces variation in benefits and tax credits among "comparable households. We implement this approach by estimating a discrete choice model of female participation and fertility, using individual data from the French Labor Force Survey and a fairly detailed representation of the French tax-benefit system. Our results suggest that financial incentives play a notable role in determining fertility decisions in France, both for the first and for the third child. As an example, an unconditional child benefit with a direct cost of 0.3% of GDP might raise total fertility by about 0.3 point. |
| Keywords: | population, fertility, incentives, benefits |
| JEL: | J13 J22 H5 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3575&r=lab |
| By: | Cai, Lixin (Melbourne Institute of Applied Economic and Social Research); Mavromaras, Kostas G. (University of Melbourne); Oguzoglu, Umut (Melbourne Institute of Applied Economic and Social Research) |
| Abstract: | We investigate the impact of health on working hours in recognition of the fact that leaving the labour market due to persistently low levels of health stock or due to new health shocks, is only one of the possibilities open to employees. We use the first six waves of the HILDA survey to estimate the joint effect of health status and health shocks on working hours using a dynamic random effects Tobit model of working hours to account for zero working hours. We follow Heckman (1981) and approximate the unknown initial conditions with a static equation that utilizes information from the first wave of the data. Predicted individual health stocks are used to ameliorate the possible effects of measurement error and endogeneity. We conclude that overall lower health status results in lower working hours and that health shocks lead to further reductions in working hours when they occur. Estimation results show that the model performs well in separating the time-persistent effect of health stock (health status) and the potentially more transient health shocks on working hours. |
| Keywords: | health shocks, health, working hours, Tobit estimation |
| JEL: | J22 I10 C33 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3496&r=lab |
| By: | Jasso, Guillermina (New York University); Rosenzweig, Mark R. (Yale University) |
| Abstract: | This paper uses survey data on employment immigrants in Australia and the United States to identify the main determinants of the size and skill composition of employment immigrants to developed countries. Our approach emphasizes the key roles of world prices of skills and country proximity. Our empirical results are consistent with the view that these factors, rather than the nuances of selection systems, dominate. There are five main findings: (1) Higher skill prices in sending countries decrease the number of immigrants but increase their average schooling. (2) More-distant countries send fewer but more skilled immigrants. (3) Given skill prices and proximity, countries with higher income send more immigrants, of lower skill. (4) Within a sending country, Australia attracts less total but higher-skill migrants than does the United States. This can be attributed, however, to the fact that the skill price in Australia is lower than the U.S. skill price, so that immigration gains are greater from immigrating to United States. (5) The estimated coefficients determining migration flows to Australia and the United States are the same for both countries. We conclude that geography thus matters in the sense that who a country’s neighbors are, in terms of their level and type of development, has a significant effect on the size and skill composition of employment migrants. There is no evidence that the differences in the selection mechanism used to screen employment migrants in the two countries play a significant role in affecting the characteristics of skill migration. |
| Keywords: | highly skilled immigration, immigration policy, immigrant selection criteria, skill prices, country proximity, globalization, employment immigration |
| JEL: | F22 J31 J61 J68 O15 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3564&r=lab |
| By: | Dan Black; Natalia Kolesnikova; Lowell J. Taylor |
| Abstract: | In standard economic theory, labor supply decisions depend on the complete set of prices: the wage and the prices of relevant consumption goods. Nonetheless, most of theoretical and empirical work ignores prices other than wages when studying labor supply. The question we address in this paper is whether the common practice of ignoring local price variation in labor supply studies is as innocuous as has generally been assumed. We describe a simple model to demonstrate that the effects of wage and non-labor income on labor supply will typically differ by location. We show, in particular, the derivative of the labor supply with respect to non-labor income will be independent of price only when labor supply takes a form based on an implausible separability condition. Empirical evidence demonstrates that the effect of price on labor supply is not a simple "up-or down shift" that would be required to meet the separability condition in our key proposition. |
| Keywords: | Labor supply ; Price levels |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2008-016&r=lab |
| By: | Paserman, Marco Daniele |
| Abstract: | During the second part of the 1990s, the Israeli economy experienced a surge in labour productivity and total factor productivity, which was driven primarily by the manufacturing sector. This surge in productivity coincided with the full absorption and integration into the workforce of highly skilled immigrants from the former Soviet Union. The Soviet immigrants were disproportionately employed in manufacturing and, after an initial adjustment period, progressively moved into higher responsibility occupations where their skills could be put to use more efficiently. This has led some observers to comment that the high-skilled immigration wave was one of the main determinants for the fast growth of the Israeli economy in the 1990s. In this paper, I use a unique data set on Israeli manufacturing firms and investigate directly whether firms and industries with a higher concentration of immigrants experienced increases in productivity. The analysis shows that there is no correlation between immigrant concentration and productivity at the firm level in cross-sectional and pooled OLS regressions. First-differences estimates, which control for fixed unobserved differences between firms, reveal, if anything, a negative correlation between the change in output per worker and the change in the immigrant share. A more in-depth analysis reveals that the immigrant share was strongly negatively correlated with output and productivity in low-tech industries. In high-technology industries, the results tend to point to a positive relationship, hinting at complementarities between technology and the skilled immigrant workforce. |
| Keywords: | Immigration; Productivity |
| JEL: | D24 F22 J61 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6896&r=lab |
| By: | Bert Minne; Marc van der Steeg; Dinand Webbink |
| Abstract: | Skill gaps are widely seen as a problem that lowers aggregate productivity growth. A question for the European Commission is whether and how governments should take action with education and training policies to reduce skill gaps and make Europe the best performing region in the world. European citizens can best decide for themselves on the type of education. Distribution of information on occupation prospects is effective to influence their choice of education. Moreover, it is important that the education system is sufficiently flexible to absorb unexpected shocks in skill needs of employees. Policies stimulating education targeted at government-assigned sectors are risky policies. Intensification of general education at the cost of specific education, and intensification of training of employees find little support. |
| Keywords: | Skill gaps; education and training policy; market failures |
| JEL: | I28 J24 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:docmnt:162&r=lab |
| By: | Vindigni, Andrea (Princeton University) |
| Abstract: | This paper investigates the role that idiosyncratic uncertainty plays in shaping social preferences over the degree of labor market flexibility, in a general equilibrium model of dynamic labor demand where the productivity of firms evolves over time as a Geometric Brownian motion. A key result demonstrated is that how the economy responds to shocks, i.e. unexpected changes in the drift and standard deviation of the stochastic process describing the dynamics of productivity, depends on the power of labor to extract rents and on the status quo level of firing costs. In particular, we show that when firing costs are relatively low to begin with, a transition to a rigid labor market is favored by all and only the employed workers with idiosyncratic productivity below some threshold value. A more volatile environment, and a lower rate of productivity growth, i.e. “bad times,” increase the political support for more labor market rigidity only where labor appropriates of relatively large rents. Moreover, we demonstrate that when the status quo level of firing costs is relatively high, the preservation of a rigid labor market is favored by the employed with intermediate productivity, whereas all other workers favor more flexibility. The coming of better economic conditions need not favor the demise of high firing costs in rigid high-rents economies, because “good times” cut down the support for flexibility among the least productive employed workers. The model described provides some new insights on the comparative dynamics of labor market institutions in the U.S. and in Europe over the last few decades, shedding some new light both on the reasons for the original build-up of “Eurosclerosis,” and for its the persistence up to the present day. |
| Keywords: | employment protection, firing costs, productivity, political economy, rents, volatility, growth, institutional divergence |
| JEL: | D71 D72 E24 J41 J63 J65 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3509&r=lab |
| By: | Fiess, Norbert M. (University of Glasgow); Fugazza, Marco (UNCTAD); Maloney, William F. (World Bank) |
| Abstract: | This paper examines the adjustment of developing country labor markets to macroeconomic shocks. It models as having two sectors: a formal salaried (tradable) sector that may or may not be affected by union or legislation induced wage rigidities, and an informal (nontradable) self-employment sector facing liquidity constraints to entry. This is embedded in a standard small economy macro model that permits the derivation of patterns of comovement among relative salaried/self-employed incomes, salaried/self-employed sector sizes and the real exchange rate with respect to different types of shocks in contexts with and without wage rigidities. The paper then explores time series data from Argentina, Brazil, Colombia and Mexico to test for cointegrating relationships corresponding to the patterns predicted by theory. We confirm episodes of expansion of informal self-employment consistent with the traditional segmentation views. However, we also identify episodes consistent with the sectoral expansion being driven by relative demand or productivity shocks to the nontradables sector that lead to “procyclical” behavior of the informal self-employed sector. |
| Keywords: | informality, labor market dynamics, self-employment, real exchange rates |
| JEL: | F41 J21 J24 J31 O17 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3519&r=lab |
| By: | Denzler, Stefan (Swiss Co-ordination Center for Research in Education); Wolter, Stefan (Swiss Co-ordination Center for Research in Education) |
| Abstract: | Good teachers are critical for a high-quality educational system. This in turns leads to the question of who is interested in going into the teaching profession. Although research has been done on the professional careers of teachers, the issue of self-selection into teacher education has been mostly overlooked until now. The analyses contained in our study are based on a representative sampling of over 1500 high-school students in Switzerland shortly before graduation. The findings indicate that there is a self-selection process with regard to courses of study at teaching training institutions, which is reinforced by institutional and structural characteristics of the types of higher education institutions and the courses of study they offer. This can clearly be seen in comparison with high-school students preparing to study at another type of higher educational institution (university). Accordingly, the findings of this paper tend to indicate that the choices made by future teachers depend to a large extent also on where and how teachers are trained. |
| Keywords: | teacher education, teacher training, teacher education colleges, self-selection, v |
| JEL: | I2 I28 J24 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3505&r=lab |
| By: | Haegeland, Torbjørn (Statistics Norway); Raaum, Oddbjørn (Ragnar Frisch Centre for Economic Research); Salvanes, Kjell G. (Norwegian School of Economics and Business Administration) |
| Abstract: | Despite important policy implications associated with the allocation of education resources, evidence on the effectiveness of school inputs remains inconclusive. In part, this is due to endogenous allocation; families sort themselves non-randomly into school districts and school districts allocate money based in order to compensate (or reinforce) differences in child abilities, which leaves estimates of school input effects likely to be biased. Using variation in education expenditures induced by the location of natural resources in Norway we examine the effect of school resources on pupil outcomes. We find that higher school expenditures, triggered by higher revenues from local taxes on hydropower plants, have a significantly positive effect on pupil performance at age 16. The positive IV estimates contrast with the standard cross-sectional estimates that reveal no effects of extra resources. |
| Keywords: | pupil achievement, school resources |
| JEL: | I21 I28 J00 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3561&r=lab |
| By: | Price V. Fishback; Rebecca Holmes; Samuel Allen |
| Abstract: | One of the most difficult problems in the social sciences is measuring the policy climate in societies. Prior to the 1930s the vast majority of labor regulations in the U.S. were enacted at the state level. In this paper we develop several summary measures of labor regulation that document the changes in labor regulation across states and over time during the Progressive Era. The measures include an Employer-Share-Weighted Index (ESWI) that weights regulations by the share of workers affected and builds up the overall index from 17 categories of regulation; the number of pages of laws; appropriations for spending on labor issues per worker; and two nonparametric COORDINATES that summarize locations in a policy space. We describe the pluses and minuses of the measures, how strongly they are correlated, and show the stories that they tell about the changes in labor regulation during the progressive era. We then provide preliminary evidence on the extent to which the labor regulation measures are associated with political and economic correlates identified as important in histories of industrial relations and labor markets. |
| JEL: | J18 K31 N31 N32 N41 N42 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14167&r=lab |
| By: | Alexandre, Fernando (University of Minho); Portela, Miguel (University of Minho); Sá, Carla (University of Minho) |
| Abstract: | We evaluate the information content of admission conditions for study programs’ quality by investigating its relationship with graduates’ employability. We find that study programs with larger numeri clausi are associated with a higher probability of finding a job. Additionally, compulsory admission exams seem to be informative about study programs’ quality. Namely, study programs requiring the Math exam appear to be linked with lower unemployment propensity. Cardoso et al. (2008), however, found that those programs face lower demand when compared to other studies. These paradoxical results suggest that students’ choices may be based on insufficient information on returns to higher education investment. That information failure indicates that a Government intervention may be due. |
| Keywords: | fractional models, unemployment propensity, higher education |
| JEL: | C21 I21 J23 J64 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3530&r=lab |
| By: | Shields, Michael P. (Central Michigan University) |
| Abstract: | This paper is a preliminary look at the benefits to states in the US of subsidizing college education. The benefits studies are the external benefits of college education on the earnings of both college graduates and those who have not graduated from college. In completing a college education individuals earn more. In addition, if there are positive external benefits others will also earn more because the average level of college graduates in the state has risen. This study confirms the existence of these positive externalities for the US in 2000 in estimates using the Current Population Survey. Furthermore, these external benefits are large enough that if confirmed in more complete studies would suggest that states invest too little in college education. |
| Keywords: | human capital, externalities, higher education |
| JEL: | J2 J24 H52 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3569&r=lab |
| By: | R. Jason Faberman; Eva Nagypal |
| Abstract: | The authors use establishment data from the Job Openings and Labor Turnover Survey (JOLTS) to study the micro-level behavior of worker quits and their relation to recruitment and establishment growth. They find that quits decline with establishment growth, playing the most important role at slowly contracting firms. They also find a robust, positive relationship between an establishment's reported hires and vacancies and the incidence of a quit. This relationship occurs despite the finding that quits decline, and hires and vacancies increase, with establishment growth. The authors characterize these dynamics within a labor-market search model with on-the-job search, a convex cost of creating new positions, and multi-worker establishments. The model distinguishes between recruiting to replace a quitting worker and recruiting for a new position, and relates this distinction to firm performance. Beyond giving rise to a varying quit propensity, the model generates endogenously determined thresholds for firm contraction (through both layoffs and attrition), worker replacement, and firm expansion. The continuum of decision rules derived from these thresholds produces rich firm-level dynamics and quit behavior that are broadly consistent with the empirical evidence of the JOLTS data. |
| Keywords: | Employment (Economic theory) |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:08-13&r=lab |
| By: | Duncan, Brian (University of Colorado, Denver); Trejo, Stephen (University of Texas at Austin) |
| Abstract: | Using microdata from the 2000 U.S. Census, we analyze the responses of Mexican Americans to questions that independently elicit their “ethnicity” (or Hispanic origin) and their “ancestry.” We investigate whether different patterns of responses to these questions reflect varying degrees of ethnic attachment. For example, those identified as “Mexican” in both the Hispanic origin and the ancestry questions might have stronger ethnic ties than those identified as Mexican only in the ancestry question. How U.S.-born Mexicans report their ethnicity/ancestry is strongly associated with measures of human capital and labor market performance. In particular, educational attainment, English proficiency, and earnings are especially high for men and women who claim a Mexican ancestry but report their ethnicity as “not Hispanic.” Further, intermarriage and the Mexican identification of children are also strongly related to how U.S.-born Mexican adults report their ethnicity/ancestry, revealing a possible link between the intergenerational transmission of Mexican identification and economic status. |
| Keywords: | Mexican, ethnicity, ancestry, intermarriage |
| JEL: | J15 J12 J62 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3552&r=lab |
| By: | Dalen, H.P. van; Henkens, K.; Hershey, D.A. (Tilburg University, Center for Economic Research) |
| Abstract: | Are retirement savings sufficient to finance a good pension income? This highly uncertain and subjective dimension of life cycle decision making is assessed among married working individuals using an identical survey distributed to Dutch and American workers in 2007. Despite marked differences in expected and needed pension replacement rates - where the Dutch replacement rates are systematically higher than the American rates - the perceived savings adequacy is more or less the same across Dutch and American workers. Moreover, individuals? perceived savings adequacy was found to be influenced by the three groups of factors: institutional forces, social forces and psychological dispositions. This study shows that differences in the mind set of American workers plays a far larger role in explaining differences in perceptions of savings adequacy than it does in the Netherlands. |
| Keywords: | retirement;savings;planning;pension funds |
| JEL: | D14 D91 G23 J26 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200858&r=lab |
| By: | Jane K. Dokko |
| Abstract: | In predicting the magnitude of the labor supply response to taxation, the standard lifecycle labor supply model distinguishes between unanticipated and anticipated changes in the after-tax return to working. Exploiting age-eligibility rules for claiming a dependent on a tax return facilitates a comparison of the labor supply outcomes of households who are equivalent but for the tax schedule they face. I find that the quasi-random assignment to a tax schedule without an age-eligible dependent corresponds to a decrease in mothers' labor supply by about 40 hours per year and to no discernible effect for fathers. While having an age-ineligible dependent results in a 0.5 percentage point, or 0.3%, average decrease in a household's net-of-tax rate, further analysis of average tax rates suggests that the variation in marginal tax rates does not fully explain mothers' labor supply responses. This finding militates against interpreting this large response as an intertemporal elasticity and subsequently presents a puzzle for the lifecycle labor supply model. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2008-24&r=lab |
| By: | Chiswick, Barry R. (University of Illinois at Chicago); Miller, Paul W. (University of Western Australia) |
| Abstract: | Research on the economic or labor market assimilation of immigrants has to date focused on the degree of improvement in their economic status with duration in the destination. This pattern has been found for all the immigrant receiving countries, time periods and data sets that have been studied. The theoretical underpinning for this finding is the international transferability of skills. This paper addresses whether positive assimilation will be found if skills are very highly transferable internationally. It outlines the conditions for “negative” assimilation in the context of the traditional immigration assimilation model, and examines the empirical relevance of the hypothesis using data on immigrants from the English-speaking developed countries (i.e., the UK, Ireland, Canada and Australia/New Zealand) to the United States. Comparisons with the native born are also presented to test whether the findings are sensitive to immigrant cohort quality effects. Even after controlling for cohort effects, “negative” assimilation (a decline in earnings with duration) is found for immigrants in the US from the English-speaking developed countries. |
| Keywords: | immigrants, earnings, assimilation |
| JEL: | J61 J31 F22 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3563&r=lab |
| By: | Pinka Chatterji; Sara Markowitz |
| Abstract: | In the United States, almost a third of new mothers who worked during pregnancy return to work within three months of childbirth. Current public policies in the U.S. do not support long periods of family leave after childbirth, although some states are starting to change this. As such, it is vital to understand how length of family leave during the first year after childbirth affects families' health and wellbeing. The purpose of this paper is to examine the association between family leave length, which includes leave taking by mothers and fathers, and behavioral and physical health outcomes among new mothers. Using data from the Early Childhood Longitudinal Study - Birth Cohort, we examine measures of depression, overall health status, and substance use. We use a standard OLS as well as an instrumental variables approach with county-level employment conditions and state-level maternity leave policies as identifying instruments. The results suggest that longer maternity leave from work, both paid and un-paid, is associated with declines in depressive symptoms, a reduction in the likelihood of severe depression, and an improvement in overall maternal health. We also find that having a spouse that did not take any paternal leave after childbirth is associated with higher levels of maternal depressive symptoms. We do not find, however, that length of paternal leave is associated with overall maternal health, and we find only mixed evidence that leave length after childbirth affects maternal alcohol use and smoking. |
| JEL: | I0 J08 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14156&r=lab |
| By: | Ana I. Moro Egido (Department of Economic Theory and Economic History, University of Granada.); Judith Panadés (Unitat de Fonaments de l’Anàlisi Economica and CODE, Universitat Autònoma de Barcelona.) |
| Abstract: | This paper examines how students’ characteristics and experiences affect their level of satisfaction with their academic program. Data for this study are drawn from a graduate student opinion survey conducted at a public university in Spain from 2001 to 2004. The fact that one student worked and studied at the same time emerges as one of the most important determinants of student satisfaction. In particular, our results show that alumni who had a part-time job while they were studying are more likely to report being less satisfied with their college experience. |
| Keywords: | Student Satisfaction, College Graduates, Higher Education, Part-time Student, Employment Status |
| JEL: | E62 H26 |
| Date: | 2008–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:08/03&r=lab |
| By: | Eva M. Sierminska; Joachim R. Frick; Markus M. Grabka |
| Abstract: | Welfare-oriented analyses of economic outcome measures such as income and wealth generally rest on the assumption of pooled and equally shared resources among all household members. Yet the lack of individual-level data hampers the distribution of income and wealth within the ousehold context. Based on unique individual-level wealth data from the German Socio-Economic Panel (SOEP), this paper challenges the implicit assumption of internal redistribution by considering an alternative definition of the aggregation unit and by controlling its effect on distribution and inequality analysis. We find empirical evidence for a significant gender wealth gap of about 30,000 euros in Germany, which amounts to almost 50,000 euros for married partners. Decomposition analyses reveal that this gap is mostly driven by differences in characteristics between men and women, the most important factor being the individual’s own income and labor market experience. However, this finding holds only for the upper part of the wealth distribution and can be shown only with non-parametric decomposition methods due to the mean orientation of the parametric Oaxaca-Blinder technique. Differences in the lower part of the wealth distribution appear to be driven mostly by the wealth function, i.e., the way in which women transform their characteristics into wealth. |
| Keywords: | Wealth gap, wealth inequality, gender, SOEP |
| JEL: | D13 D31 D69 I31 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp115&r=lab |
| By: | Sierminska, Eva (CEPS/INSTEAD); Frick, Joachim R. (DIW Berlin); Grabka, Markus M. (DIW Berlin) |
| Abstract: | Welfare-oriented analyses of economic outcome measures such as income and wealth generally rest on the assumption of pooled and equally shared resources among all household members. Yet the lack of individual-level data hampers the distribution of income and wealth within the household context. Based on unique individual-level wealth data from the German Socio-Economic Panel (SOEP), this paper challenges the implicit assumption of internal redistribution by considering an alternative definition of the aggregation unit and by controlling its effect on distribution and inequality analysis. We find empirical evidence for a significant gender wealth gap of about 30,000 euros in Germany, which amounts to almost 50,000 euros for married partners. Decomposition analyses reveal that this gap is mostly driven by differences in characteristics between men and women, the most important factor being the individual’s own income and labor market experience, and particularly so at the bottom and top of the wealth distribution. However, this finding can only be shown with nonparametric decomposition techniques. Differences for those in the middle of the distribution appear to be mostly driven by the wealth function, i.e., the way in which women transform their characteristics into wealth. |
| Keywords: | wealth gap, wealth inequality, gender, SOEP |
| JEL: | D13 D31 D69 I31 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3573&r=lab |
| By: | Ingmar Nyman (Hunter College); Matthew Baker (Hunter College) |
| Abstract: | We study how private information is used in a search market with non-transferable utility. We show that competitive pressure can turn privately informed agents into "yes men" who, against their own better judgement, mimic behavior that prior information suggests is more valuable. This is more likely to happen when prior, public information is strong relative to private information. The result is not enough frictional unemployment and search, and too much employment in activities favored by prior information. Moreover, the "yes-man" incentive grows stronger when private information is more persistent: we are more likely to lie about what we are than about what we know. |
| Keywords: | Search; Non-Transferable Utility; Conformity; Yes Men |
| JEL: | D82 D83 J64 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:htr:hcecon:422&r=lab |
| By: | Joseph F. Francois; Hugo Rojas-Romagosa |
| Abstract: | We reassess the empirical relevance of the Kuznets Curve with a new inequality dataset. Using panel data estimations that account for the heterogeneity of inequality observations, we test for both the unconditional and the conditional hypothesis that includes alternative inequality determinants. We find that inequality and income levels are related in a cubic function or "tilde-pattern". This novel finding does not contradict the traditional Kuznets hypothesis, but extends it. Increasing inequality in OECD countries during recent years suggests that inequality rises at high levels of economic development. This "tilde-pattern" is robust to different inequality indicators, estimation techniques and control variables. |
| Keywords: | D31; O15 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:107&r=lab |
| By: | Chiswick, Barry R. (University of Illinois at Chicago) |
| Abstract: | This paper provides an introduction and overview of my research on the Economics of Language. The approach is that language skills among immigrants and native-born linguistic minorities are a form of human capital. There are costs and benefits associated with this characteristic embodied in the person. The analysis focuses on the economic and demographic determinants of destination language proficiency among immigrants. This is based on Exposure, Efficiency and Economic Incentives (the three E’s) for proficiency. It also focuses on the labor market consequences (earnings) of proficiency for immigrants and native-born bilinguals. The empirical testing for the US, Canada, Australia, Israel and Bolivia is supportive of the theoretical models. |
| Keywords: | immigrants, language, bilingualism, human capital, earnings |
| JEL: | J15 J24 J31 J61 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3568&r=lab |
| By: | Christofides, Louis N. (University of Cyprus); Swidinsky, Robert (University of Guelph) |
| Abstract: | Canada is a country with two official languages, French and English. The need for both languages in Quebec and the Rest-of-Canada (ROC) generates a demand for bilingualism and investment in the acquisition of a second official language. Knowledge of an additional language may be associated with enhanced earnings because it may reflect what might generically be called ‘ability’ bias or because it may actually be useful at the workplace. Until now, available data did not indicate whether bilingualism was actually being used at work. However, the 2001 Census reports, for the first time, whether an individual is bilingual and the extent to which this skill is actually used at work. Conditioning on both knowledge and use allows us to measure the additional earnings which accrue to the use of a second language more cleanly. We find very substantial, statistically significant, rewards to second official language use in Quebec and much smaller, not statistically significant, effects in the ROC. |
| Keywords: | wages, language knowledge, language use |
| JEL: | J01 J24 J31 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3551&r=lab |
| By: | Concetta Mendolicchio; Dimitri Paolini; Tito Pietra |
| Abstract: | The paper studies a two-sector economy with investments in human and physical capital and imperfect labor markets. Workers and firms endogenously select (paying a fixed cost) the sector they are active in, and choose the amount of their investments. The economy is characterized by pecuniary externalities. Given the partition of the agents among the two sectors, at equilibrium there is underinvestment in both human and physical capital, as in Acemoglu (1996). A second externality is induced by the self-selection of the agents in the two sectors. When the difference between total factor productivities (TFP) is sufficiently large, subsidies to investments in education in the low TFP sector and fixed taxes increasing the cost to access the high productivity sector increase expected total surplus, while subsidies to investments in the high TFP sector can actually reduce it. To the contrary, subsidies to the amount of investments in human capital in the high TFP sector may have a positive effect on social welfare when the TFPs are sufficiently close. |
| Keywords: | Human capital; Efficiency; Human capital policies |
| JEL: | J24 H2 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:200807&r=lab |
| By: | Belzil, Christian (Ecole Polytechnique, Paris); Hansen, Jörgen (Concordia University) |
| Abstract: | We consider an artificial population of forward looking heterogeneous agents making decisions between schooling, employment, employment with training and household production, according to a behavioral model calibrated to a large set of stylized facts. Some of these agents are subject to policy interventions (a higher education subsidy) that vary according to their generosity. We evaluate the capacity of Instrumental Variable (IV) methods to recover the population Local Average Treatment Effect (LATE) and analyze the economic implications of using a strong instrument within a dynamic economic model. We also examine the performances of two sampling designs that may be used to improve classical linear IV; a Regression-Discontinuity (RD) design and an age-based sampling design targeting early career wages. Finally, we investigate the capacity of IV to estimate alternative "causal" parameters. The failure of classical linear IV is spectacular. IV fails to recover the true LATE, even in the static version of the model. In some cases, the estimates lie outside the support of the population distribution of returns to schooling and are nearly twice as large as the population LATE. The trade-off between the statistical power of the instrument and dynamic self-selection caused by the policy shock implies that access to a "strong instrument" is not necessarily desirable. There appears to be no obvious realistic sampling design that can guarantee IV accuracy. Finally, IV also fails to estimate the reduced-form marginal effect of schooling on wages of those affected by the experiment. Within a dynamic setting, IV is deprived of any “causal” substance. |
| Keywords: | dynamic discrete choice, dynamic programming, treatment effects, weak instruments, instrumental variable, returns to schooling |
| JEL: | B4 C1 C3 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3528&r=lab |
| By: | Chen, Keith (Yale University); Lange, Fabian (Yale University) |
| Abstract: | While it is well known that education strongly predicts health, less is known as to why. One reason might be that education improves health-care decision making. In this paper we attempt to disentangle improved decision making from other effects of education, and to quantify how large an impact it has on both a patient’s demand for health services, and that demand’s sensitivity to objective risk factors. We do this by estimating a simple structural model of information acquisition and health decisions for data on women’s self-reported breast-cancer risk and screening behavior. This allows us to separately identify differences in the ability to process health information and differences in overall demand for health. Our results suggest that the observed education gradient in screening stems from a higher willingness-to-pay for health among the educated, but that the main reason why the educated respond more to risk factors in their screening decision is because they are much better informed about the risk factors they face. |
| Keywords: | education, allocative efficiency, health |
| JEL: | I10 I12 I20 D83 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3548&r=lab |
| By: | Svarer, Michael (University of Aarhus) |
| Abstract: | This paper tests whether being convicted of a crime affects marriage market outcomes. While it is relatively well documented that crime hurts in terms of reduced future income, there has been little systematic analysis on the association between crime and marriage market outcomes. This paper exploits a detailed Danish register-based data set to fill this gap in the literature. The main findings are that male convicts do not face lower transition rates into partnerships as such, but they face a lower chance of forming partnerships with females from more well-off families. In addition males who are convicted face a significantly higher dissolution risk than their law abiding counterparts. |
| Keywords: | crime, marriage, divorce |
| JEL: | J12 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3543&r=lab |
| By: | Callan, Tim (ESRI, Dublin); Smeeding, Tim (Syracuse University); Tsakloglou, Panos (Athens University of Economics and Business) |
| Abstract: | Direct provision of public services can alter the balance of resources across income groups. We focus on the issues arising when taking account of the impact of publicly provided education services across the income distribution. We combine OECD information on spending per student in particular levels of the education system with micro data from nationwide income surveys to track the allocation of resources. We pay particular attention to the role of third level education, and provide comparable results for seven European countries (Belgium, Germany, Greece, Italy, Ireland, the Netherlands and the UK). |
| Keywords: | inequality, in-kind transfers, tertiary education, Europe |
| JEL: | I28 D31 H42 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3557&r=lab |