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on Labour Economics |
| By: | Sarah Brown; Karl Taylor (Department of Economics, The University of Sheffield) |
| Abstract: | Using individual level panel data, we analyse the divergence between an unemployed individual´s reservation wage, as well as their expected wage, and their predicted market wage, focusing upon how job search activities influence the potential divergences. In addition, using propensity score matching techniques, we explore the implications of such divergences for future employment and wages. Our findings, which are consistent with job search theory, suggest that reservation wages (and expected wages) that are high relative to the predicted market wage influence both future employment and future wages. |
| Keywords: | Employment; Job Search; Reservation Wages |
| JEL: | J13 J24 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2008008&r=lab |
| By: | Strobl, Eric (Ecole Polytechnique, Paris); Walsh, Frank (University College Dublin) |
| Abstract: | We model a competitive labour market where firms choose combinations of workers and hours per worker to produce output. If one assumes that the scale of production has no impact on hours per worker, then the change in the number of workers and hours per worker resulting from a minimum wage are inversely related. We demonstrate that total hours worked at the firm may rise for plausible parameter values if there are small fixed costs to hiring workers. Thus, in contrast to the conventional view, we show that the effect of minimum wages on employment is ambiguous. |
| Keywords: | minimum wages, hours, employment |
| JEL: | J22 J38 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3643&r=lab |
| By: | Mehtabul Azam (Southern Methodist University) |
| Abstract: | This paper examines changes in the wage structure in urban India during the past two decades (1983-2004) across the entire wage distribution using the Machado and Mata (2005) decomposition approach. Real wages increased throughout the wage distribution during 1983-1993; however, it increased only in the upper half of the wage distribution during 1993-2004. Quantile regression analysis reveals that the effects of many covariates are not constant across the wage distribution. Moreover, increases in returns to covariates across the entire distribution are the driving forces behind the wage changes in both decades. Change in composition of the work force contributed positively to wage growth during 1983-1993, but negatively during 1993-2004. Finally, while workers with all education levels experienced an increase in returns of roughly the same magnitude during 1983-1993, the increase in returns is much higher for workers with tertiary and secondary education during 1993-2004. The inequality increasing effects of tertiary education suggests that wage inequality in urban India may increase further in the near future as more workers get tertiary education. |
| Keywords: | earning functions, India, quantile regression decomposition, wage. |
| JEL: | J30 J31 C15 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:smu:ecowpa:0807&r=lab |
| By: | Amuedo-Dorantes, Catalina (San Diego State University, California); Kimmel, Jean (Western Michigan University) |
| Abstract: | Using data from the 1979 National Longitudinal Survey of Youth, we assess the role of employment-based health insurance offers in explaining the motherhood wage gap. Researchers have been aware of the existence of a motherhood gap for many years; yet, the literature has failed to address the role of non-wage compensation in explaining the motherhood wage gap despite the increasing importance of non-wage benefits in total compensation packages. As hedonic wage theory suggests, mothers might view health benefits as desirable and trade-off wages for health insurance. Thus, lower wages for mothers might reflect their relative preferences for jobs offering health insurance. We estimate an endogenous switching wage equation model to account for the self-selection and, thus, endogeneity of having an employment-based health insurance offer. We find that, once the endogeneity of having an employment-based health insurance offer is accounted for, the motherhood wage gap disappears. |
| Keywords: | motherhood wage gap, non-wage compensation, health insurance |
| JEL: | J01 J31 J33 J16 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3662&r=lab |
| By: | Coneus, Katja; Gernandt, Johannes; Saam, Marianne |
| Abstract: | Using data from the German Socio-Economic Panel for the years 2000 to 2006 we analyze the determinants and labor market effects of educational dropout. In addition to classical variables like family background and occupation, we examine noncognitive skills and Internet use. Noncognitive skills and Internet availability at home are negatively associated with the probability of becoming an educational dropout. The wage gap between dropouts and those with completed school and professional education vanishes for males once we control for additional characteristics such as occupations, professional Internet use and noncognitive skills. For females it is reduced to four percent. |
| Keywords: | education, unemployment, wages, noncognitive skills, computer use |
| JEL: | I21 J31 O30 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7354&r=lab |
| By: | Constant, Amelie F. (DIW DC, Georgetown University and IZA) |
| Abstract: | In this paper I assert that the entrepreneurial spirit can also exist in salaried jobs. I study the determinants of wages and the labor market success of two kinds of entrepreneurial women in Germany – self-employed and salaried businesswomen – and investigate whether ethnicity is important in these challenging jobs. Employing data from the German Socioeconomic Panel I estimate selection adjusted wage regressions for both types of businesswomen by country of origin. I find that self-employment offers businesswomen a lucrative avenue with higher monetary rewards, albeit for a shorter spell. If salaried businesswomen went into self-employment, they would receive considerably higher wages and for at least 30 years. However, if self-employed businesswomen went into salaried jobs, their wages would decline, suggesting that it is the self-employment sector that offers better opportunities and monetary success. Self-employed women in Germany fare well and most importantly, success does not depend on their ethnicity. |
| Keywords: | businesswomen, entrepreneurship, self-employment, economics of minorities, immigrants wage differentials |
| JEL: | M13 J23 J15 J61 J31 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3644&r=lab |
| By: | Jesper Bagger and Morten Henningsen (Statistics Norway) |
| Abstract: | This paper assesses whether a parsimonious partial equilibrium job search model with on-the-job search can reproduce observed job durations and transitions to other jobs and to nonemployment. We allow for unobserved heterogeneity across individuals in key structural parameters. Observed heterogeneity and life cycle effects are accounted for by estimating separate models for flow samples of labor market entrants and stock samples of “mature” workers with 10-11 years of experience, by stratifying on education length and by allowing for non-search related wage growth due to accumulation of labor market experience. We use comparable register based panel data for two countries, Denmark and Norway. All workers are followed for 6 years. The model fits observed job-to-job and job-to-nonemployment hazard functions well for most samples with a better fit for entrants than for mature workers, especially for the job-to-job hazard function. We find important differences in structural parameters between entrants and mature workers and we find that the Norwegian labor market is more frictional than the Danish labor market. |
| Keywords: | Job Mobility; Job Durations |
| JEL: | J31 J63 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:553&r=lab |
| By: | Sarah Brown; Jenny Roberts; Karl Taylor (Department of Economics, The University of Sheffield) |
| Abstract: | The concept of the reservation wage has played an important role in labour market theory; particularly in models of job search, labour supply and labour market participation. Despite this core theoretical role, there is a scarcity of empirical research which explores the setting of reservation wages at the individual level. In this paper, we focus on the determinants of reservation wages, with a particular focus on health, which has attracted very little attention despite its importance from a policy perspective. We use data for males from 14 waves of the British Household Panel Survey and estimate an endogenous switching model which predicts reservation wages for the unemployed and market wages for the employed. We employ methods to deal with the endogeneity of health, measurement errors in our self reported health variable and selection into economic activity. Our results suggest that health is an important determinant of selection, both into economic activity and into employment (versus unemployment) but that, once these participation effects are accounted for, health is not a significant determinant of either the reservation wage or the market wage. This casts doubt on the results of a number of previous studies that have failed to appropriately account for selection in models of male wages. Our results have important policy implications since they suggest that poor health is a major cause of economic inactivity. |
| Keywords: | Endogenous switching models, Health status, Labour market participation, Reservation wages |
| JEL: | J13 J24 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2008002&r=lab |
| By: | Jahn, Elke J. (Aarhus School of Business) |
| Abstract: | As a consequence of the rapid growth of temporary agency employment in Germany, the debate on the poor working conditions of temps, specifically their remuneration, has intensified recently. Using administrative data, the paper shows that the wage gap for German temp workers is rather large and varies between occupation and region. But temps already suffer from a marked wage decline before entering the temporary help sector. Nevertheless, temporary agency employment does not leave a long lasting scar. Two years after leaving the sector, temps no longer suffer from a wage penalty. A recent change in the law set a high incentive for temporary help agencies to pay their workers according to a sectoral collective agreement. Surprisingly, the unionization of the sector could not bring the widening wage gap to a halt. |
| Keywords: | temporary agency employment, wage differential, earnings, Germany, reform |
| JEL: | J30 J31 J42 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3663&r=lab |
| By: | Zwick, Thomas |
| Abstract: | This paper shows that earnings losses after unemployment increase with age. First, older employees start out with relatively high earnings in comparison to employees without employment interruptions several years before the non-employment spell. This earnings advantage turns into a strong earnings disadvantage shortly before the non-employment spell. Younger unemployed have a relatively stable and small earnings disadvantage before non-employment. Second, while the younger employees quickly enjoy earnings higher than those without employment interruptions after the non-employment spell, earnings for older employees are lower even six years after the unemployment spell. If those with non-employment spells re-enter the labour market at the same employer, the earnings impact is the more positive the younger the employee. This paper uses representative administrative spell data for 1993-2001 that allow us to take into account the precise length of all non-employment spells and calculate the exact dates before and after the spells. |
| Keywords: | Earnings losses, non-employment, age |
| JEL: | C23 J31 J40 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7351&r=lab |
| By: | Gächter, Simon (University of Nottingham); Nosenzo, Daniele (University of Nottingham); Sefton, Martin (University of Nottingham) |
| Abstract: | We investigate the effects of pay comparison information (i.e. information about what co-workers earn) and effort comparison information (information about how co-workers perform) in experimental firms composed of one employer and two employees. Exposure to pay comparison information in isolation from effort comparison information does not appear to affect reciprocity toward employers: in this case own wage is a powerful determinant of own effort, but co-worker wages have no effect. By contrast, we find that exposure to both pieces of social information systematically influences employees’ reciprocity. A generous wage offer is virtually ineffective if an employee is matched with a lazy co-worker who is also paid generously: in such circumstances the employee tends to expend low effort irrespective of her own wage. Reciprocity is more pronounced when the co-worker is hard-working, as effort is strongly and positively related to own wage in this case. Reciprocity is also pronounced when the employer pays unequal wages to the employees: in this case the co-worker’s effort decision is disregarded and effort decisions are again strongly and positively related to own wage. On average exposure to social information weakens reciprocity, though we find substantial heterogeneity in responses across individuals, and find that sometimes social information has beneficial effects. We suggest that group composition may be an important tool for harnessing the positive effects of social comparison processes. |
| Keywords: | reciprocity, gift-exchange, social information, social comparisons, pay comparisons, peer effects |
| JEL: | A13 C92 J31 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3639&r=lab |
| By: | Ofer Malamud |
| Abstract: | This paper examines the tradeoff between early and late specialization in the context of higher education. While some educational systems require students to specialize early by choosing a major field of study prior to entering university, others allow students to postpone this choice. I develop a model in which individuals, by taking courses in different fields of study, accumulate field-specific skills and receive noisy signals of match quality in these fields. With later specialization, students have more time to learn about match quality in each field but less time to acquire specific skills once a field is chosen. I derive comparative static predictions between educational regimes with early and late specialization, and examine these predictions across British systems of higher education. Using survey data on 1980 university graduates, I find strong evidence in support of the prediction that individuals who switch to unrelated occupations initially earn lower wages but less evidence that the cost of switching differs between England and Scotland. Although more switching occurs in England where students specialize early, higher wage growth among those who switch eliminates the wage difference after several years. Together, these findings suggest that later specialization in Scotland is beneficial during the initial years in the labor market but that differences between early and late specialization do not persist over time. |
| Keywords: | specialization, higher education, England, Scotland |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:har:wpaper:0808&r=lab |
| By: | Gurleen Popli (Department of Economics, The University of Sheffield) |
| Abstract: | This paper examines the observed wage differentials by gender in Mexico over the last two decades (1984 to 2002). To estimate and understand the wage gap the paper uses a nonparametric-distributional approach, and compares the results with the other parametric approaches. The paper finds evidence of labour market discrimination against women. The average discrimination in the first decade fell considerably, but then started to increase again. The distribution of discrimination also changed over time. The average fall in discrimination over time has resulted largely from a fall in the estimated discrimination at the lower tail of the wage distribution, with little to no change at the upper tail. |
| Keywords: | gender wage gap, nonparametric-distributions, Mexico |
| JEL: | J16 C14 O15 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2008006&r=lab |
| By: | François Rycx (DULBEA, Université libre de Bruxelles, Brussels, and IZA, Bonn); Ilan Tojerow (DULBEA, Université libre de Bruxelles, Brussels.); Daphné Valsamis (DULBEA, Université libre de Bruxelles, Brussels) |
| Abstract: | This study compares the structure and determinants of inter-industry wage differentials in Eastern and Western European countries on the basis of the 2002 European Structure of Earnings Survey. Findings show substantial differences in earnings across sectors in all countries, even when controlling for a wide range of employee, job and employer characteristics. The hierarchy of sectors in terms of wages appears to be quite similar in Eastern and Western European countries. In contrast, the dispersion of inter-industry wage differentials is found to fluctuate considerably across countries and to be strongly correlated with collective bargaining characteristics. |
| Keywords: | Inter-industry wage differentials, Collective bargaining, Europe, Matched employer-employee data. |
| JEL: | J31 J51 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:dul:wpaper:08-17rs&r=lab |
| By: | Sarah Brown; Karl Taylor (Department of Economics, The University of Sheffield) |
| Abstract: | In this paper, we explore the relationship between expectations and reservation wages for a sample of unemployed individuals using panel data drawn from the British Household Panel Survey, 1996 to 2005. To be specific, we initially investigate the determinants of expectations relating to the individual´s financial situation and employment prospects over the next 12 months. Our findings suggest that job search and education are positively associated with financial optimism and confidence regarding future employment prospects. Conversely, the length of time out of employment and age are associated with pessimistic expectations. Propensity score matching techniques enable us to adopt a quasi experimental approach to ascertain how an individual´s expectations regarding their future financial situation as well as expectations regarding securing future employment influence the setting of reservation wages at the individual level. Optimism over future finances and future job prospects are associated with a higher reservation wage in both the matched and unmatched estimates. Furthermore, confidence over securing future employment is associated with a higher probability of actually gaining employment in the next period. |
| Keywords: | Employment, Financial Expectations, Reservation Wages |
| JEL: | J13 J24 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2008007&r=lab |
| By: | Cronqvist, Henrik (Ohio State U); Heyman, Fredrik (Research Institute of Industrial Economics); Nilsson, Mattias (U of Colorado, Boulder); Svaleryd, Helena (Research Institute of Industrial Economics); Vlachos, Jonas (Stockholm U) |
| Abstract: | Analyzing a large panel that matches public firms with worker-level data, we find that managerial entrenchment affects workers’ pay. CEOs with more control pay their workers more, but financial incentives through ownership of cash flow rights mitigate such behavior. These findings do not seem to be driven by productivity differences, and are not affected by a series of robustness tests. Moreover, we find that entrenched CEOs pay more to (i) workers associated with aggressive unions; (ii) workers closer to the CEO in the corporate hierarchy, such as CFOs, division vice-presidents and other top-executives; and (iii) workers geographically closer to the corporate headquarters. This evidence is consistent with entrenched CEOs paying higher wages to enjoy non-pecuniary private benefits such as lower effort wage bargaining and improved social relations with certain workers. More generally, our results show that managerial ownership and corporate governance can play an important role for labor market outcomes. |
| JEL: | G32 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2007-7&r=lab |
| By: | Flanagan, Robert J. (Stanford U) |
| Abstract: | This paper investigates the extent to which the economic challenges faced by symphony orchestras in the United States reflect collectively bargained wage increases and work rules. Since the late 1960s, collective bargaining agreements have transformed the artistic expenses of orchestras from variable to fixed costs by providing both wage and employment guarantees. The resulting agreements limit the ability of orchestras to adjust labor costs in the face of financial challenges, and the paper presents econometric evidence indicating that musicians’ wages are not significantly correlated with measures of their orchestra’s financial balance. The paper discusses features of the nonprofit governance of symphony orchestras which reduces the bargaining resistance of orchestras to wage and employment security proposals. |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:1989&r=lab |
| By: | Richard Freeman |
| Abstract: | This paper summarizes new evidence from the "Shared Capitalism" Project on the extent towhich workers' earnings depend on the performance of their firm or work group in the USand advanced European countries and on the impact of sharing arrangements on economicbehavior. The evidence shows that: 1) a large and growing proportion of workers are coveredby shared capitalism through worker profit-sharing, bonuses, or worker ownership of shares;2) outcomes for workers and firms are higher under shared capitalism than under other workand pay arrangements; and 3) that worker co-monitoring helps overcome the free riderproblem that arises when part of workers pay depends on the productivity and effort of allworkers. |
| Keywords: | Profit sharing, efficiency wages |
| JEL: | J41 J24 J33 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0882&r=lab |
| By: | Stefanie Schurer (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | This study comprehensively portrays the labour market outcomes of second generation immigrants in Germany. Special attention is attributed to observable heterogeneity in terms of country of origin and unobservable heterogeneity in terms of parental human capital, neighbourhood effects, and mixed marriage background. Pooled, static and dynamic panel data models, and a decomposition analysis are used to estimate and explain the average differences in hourly wages and unemployment probabilities separately for men and women. The results suggest that the second generation cannot be considered as one homogeneous group: some groups perform better, equally or worse than comparable German natives. Also, relative outcomes in wages depend mainly on observable characteristics, whereas relative unemployment risks are mainly driven by unobservable factors. |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2008n14&r=lab |
| By: | Jeffrey Grogger |
| Abstract: | Speech patterns differ substantially between whites and African Americans. I collect and analyze data on speech patterns to understand the role they may play in explaining racial wage differences. Among blacks, speech patterns are highly correlated with measures of skill such as schooling and ASVAB scores. They are also highly correlated with the wages of young workers. Black speakers whose voices were distinctly identified as black by anonymous listeners earn about 10 percent less than whites with similar observable skills. Indistinctly identified blacks earn about 2 percent less than comparable whites. I discuss a number of models that may be consistent with these results and describe the data that one would need to distinguish among them. |
| Keywords: | speech patterns, wage, inequality, race |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:har:wpaper:0813&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 which 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 found 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 found 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. |
| Keywords: | Romania, vocational training, general education |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:har:wpaper:0807&r=lab |
| By: | Pencavel, John (Stanford University) |
| Abstract: | Can conventional economic analysis help in defining and measuring the success of labor unions? In this paper, a general indicator of union welfare is proposed and particular expressions for the wage and employment objectives of unions are rearranged to derive measures of union success or welfare. These indicators combine two measures: union density and the relative union-nonunion wage gap. The indicators are applied to describe the movement of union welfare in the United States over the past eighty years, the differences in union success among groups of U.S. workers, and the variation in union well-being across countries. |
| Keywords: | trade unions, union density, relative wage effect of unionism, union objectives |
| JEL: | J51 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3660&r=lab |
| By: | Monique Ebell |
| Abstract: | This paper considers a real business cycle model with search frictions in the labor market andlabor supply which is elastic along the extensive (participation) margin. Previous authorshave found that such models generate counterfactually procyclical unemployment and apositively-sloped Beveridge curve. This paper presents a calibrated model which does indeedgenerate countercyclical unemployment and a negatively-sloped Beveridge curve despite thepresence of a participation margin. |
| Keywords: | Unemployment, Business Cycles, Labor Force Participation |
| JEL: | E24 E32 J21 J64 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0873&r=lab |
| By: | Hartog, Joop (University of Amsterdam); van Praag, Mirjam (University of Amsterdam); van der Sluis, Justin (University of Amsterdam) |
| Abstract: | How valuable are cognitive and social abilities for entrepreneurs’ incomes as compared to employees? We answer three questions: (1) To what extent does a composite measure of ability affect an entrepreneur's earnings relative to employees? (2) Do different cognitive abilities (e.g. math ability, language ability) and social ability affect earnings of entrepreneurs and employees differently?, and (3) Does the balance in these measured ability levels affect an individual's earnings? Our individual fixed-effects estimates of the differential returns to ability for spells in entrepreneurship versus wage employment account for selectivity into entrepreneurial positions as determined by fixed individual characteristics. General ability has a stronger impact on entrepreneurial incomes than on wages. Entrepreneurs and employees benefit from different sets of specific abilities: Language and clerical abilities have a stronger impact on wages, whereas mathematical, social and technical ability affect entrepreneurial incomes more strongly. The balance in the various kinds of ability also generates a higher income, but only for entrepreneurs: This finding supports Lazear's Jack-of-all-Trades theory. |
| Keywords: | (non-)cognitive abilities, intelligence, earnings, entrepreneur(ship), wage employment, income differentials |
| JEL: | J23 J24 J31 J44 M13 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3648&r=lab |
| By: | Mariano Bosch; Marco Manacorda |
| Abstract: | This paper explores the contribution of the minimum wage to the well documented rise inearnings inequality in Mexico between the late 1980 and the late 1990s. In contrast to theview that sees minimum wages as an ineffective redistributive tool in developing countries,we find that the deterioration in the real bite of the minimum wage is responsible for theentire rise in inequality at the bottom of the distribution. Our result challenges the widespreadperception that trade induced shocks are the single most important factor behind the recentrise in earnings inequality in several less developed economies. |
| Keywords: | Minimum Wage, Inequality, Informality, Mexico |
| JEL: | O15 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0880&r=lab |
| By: | Topias Leino |
| Keywords: | education, job market signalling, sorting, screening, Finnish comprehensive school reform, human capital |
| JEL: | I21 J31 |
| Date: | 2008–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1147&r=lab |
| By: | Ozturk, Orgul; Chyi, hau |
| Abstract: | This research examines the effects of mothers' welfare and work decisions on their children's attainments using a random effect instrumental variables (REIV) estimator. The estimator employs sibling comparisons in a random effect framework and an instrumental variables approach to address the unobserved heterogeneity that may influence mothers' work and welfare decisions. The identification comes from the variation in mothers' different economic incentives that arises from the AFDC benefit structures across U.S. states. We focus on children who were born to single mothers with twelve or fewer years of schooling. The short-run child attainments under consideration are the Peabody Individual Achievement Test math and reading recognition scores from the Children of the National Longitudinal Survey of Youth 1979 cohort. Long-run attainments are a child's number of years of schooling by age 25 and his or her early adulthood labor income, drawn from the Panel Study of Income Dynamics. The REIV estimates imply that, relative to no welfare participation, participating in welfare for one to three years provides up to a 5 percentage point gain in a child's Picture Individual Achievement Test (PIAT) scores. The negative effect of childhood welfare participation on adult earnings found by others is not significant if one accounts for mothers' work decisions. At the estimated values of the model parameters, a mother's number of years of work contributes between $3,000 and $7,000 1996 dollars to her child's labor income, but has no significant effect on the child's PIAT test scores. Finally, children's number of years of schooling are relatively unresponsive to mothers' work and welfare participation choices. |
| Keywords: | Welfare reform; childhood cognitive ability; female work; random effects instrumental variables |
| JEL: | J13 I30 J22 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10110&r=lab |
| By: | Sanromá, Esteve (University of Barcelona); Ramos, Raul (University of Barcelona); Simón, Hipólito (University of Alicante) |
| Abstract: | The existing literature on immigrant assimilation has highlighted the imperfect portability of human capital acquired by immigrants in their country of origin (Chiswick, 1978; Friedberg, 2000). This would explain the low levels of assimilation upon arrival in the new country, as well as the wide initial earnings gap. Recent studies (Chiswick and Miller, 2007 or Green, Kler and Leeves, 2007, among others) have dealt with this issue from the perspective of over-education. This study analyses the portability of immigrants’ human capital into the Spanish job market according to their geographic origin. It also aims to compare the most notable empirical regularities found in the aforementioned studies with the situation in Spain. The results obtained indicate differing degrees of the transferability of human capital depending on geographic origin, as transferability is greater for countries that are highly developed or have a similar culture or language and lower for developing countries and those with more distant cultures. The evidence is relatively disparate for the two components of human capital as although it is particularly clear for schooling, it is less so for experience. The results also confirm that in Spain immigrants suffer from over-education, in both incidence and intensity, implying a higher relative wage penalty and a greater negative impact on immigrants from the second group of countries. As an immigrant’s stay in Spain advances, a process of assimilation does exist, except for Asians and, in some circumstances, those from Sub-Saharan Africa, though the pace is very slow. |
| Keywords: | immigration, over-education, wages, assimilation |
| JEL: | J61 J31 J24 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3649&r=lab |
| By: | Monique Ebell; Christian Haefke |
| Abstract: | We consider the dynamic relationship between product market entry regulation andequilibrium unemployment. The main theoretical contribution is combining a job matchingmodel with monopolistic competition in the goods market and individual bargaining. Wecalibrate the model to US data and perform a policy experiment to assess whether thedecrease in trend unemployment during the 1980's and 1990's could be attributed to productmarket deregulation. Under a traditional calibration, our results suggest that a decrease of lessthan two-tenths of a percentage point of unemployment rates can be attributed to productmarket deregulation, a surprisingly small amount. Under a small surplus calibration,however, product market deregulation can account for the entire decline in US trendunemployment over the 1980's and 1990's. |
| Keywords: | Product market competition, barriers to entry, wage bargaining |
| JEL: | E24 J63 L16 O00 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0874&r=lab |
| By: | Martin Salm (Mannheim Research Institute for the Economics of Aging (MEA)) |
| Abstract: | I use longitudinal data from the Health and Retirement Study to estimate the effect of job loss on health for near elderly employees. Job loss is a major cause of economic insecurity for working age individuals, and can cause reduction in income, and loss of health insurance. To control for possible reverse causality, this study focuses on people who were laid off for an exogenous reason - the closure of their previous employers’ business. I find that the unemployed are in worse health than employees, and that health reasons are a common cause of job termination. In contrast, I find no causal effect of exogenous job loss on various measures of health. This suggests that the inferior health of the unemployed compared to the employed could be explained by reverse causality. I also use instrumental variable regression to estimate the effect of loss of health insurance, loss of income, and re-employment on health, and again find no statistically significant effects. |
| Date: | 2008–08–19 |
| URL: | http://d.repec.org/n?u=RePEc:mea:meawpa:08163&r=lab |
| By: | Ofer Malamud; Abigail Wozniak |
| Abstract: | College-educated workers are twice as likely as high school graduates to make lasting long-distance moves, but little is known about the role of college itself in determining geographic mobility. Unobservable characteristics related to selection into college might also drive the relationship between college education and geographic mobility. We explore this question using a number of methods to analyze both the 1980 Census and longitudinal sources. We conclude that the causal impact of college completion on subsequent mobility is large. We introduce new instrumental variables that allow us to identify educational attainment and veteran status separately in a sample of men whose college decisions were exogenously influenced by their draft risk during the Vietnam War. Our preferred IV estimates imply that graduation increases the probability that a man resides outside his birth state by approximately 35 percentage points, a magnitude nearly twice as large as the OLS migration differential between college and high school graduates. IV estimates of graduation’s impact on total distance moved are even larger, with IV estimates that exceed OLS considerably. We provide evidence from the National Longitudinal Survey of Youth (NLSY) 1979 that our large IV estimates are plausible and likely explained by heterogeneous treatment effects. Finally, we provide some suggestive evidence on the mechanisms driving the relationship between college completion and mobility. |
| Keywords: | geographic mobility, college, higher education, vietnam |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:har:wpaper:0811&r=lab |
| By: | Henry, Peter B. (Stanford U); Sasson, Diego |
| Abstract: | For three years after the typical developing country opens its stock market to inflows of foreign capital, the average annual growth rate of the real wage in the manufacturing sector increases by a factor of seven. No such increase occurs in a control group of developing countries. The temporary increase in the growth rate of the real wage permanently drives up the level of average annual compensation for each worker in the sample by 752 US dollars—an increase equal to more than a quarter of their annual pre-liberalization salary. The increase in the growth rate of labor productivity in the aftermath of liberalization exceeds the increase in the growth rate of the real wage so that the increase in workers’ incomes actually coincides with a rise in manufacturing sector profitability. |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:1988&r=lab |
| By: | Nadia Steiber |
| Abstract: | This paper sets out to provide an understanding of how individuals form their preferences over the extent of their paid work involvement ¿ their working time preferences ¿ in different work environments and societal contexts. The main objective of the empirical analysis is to investigate how preferences of this kind are constructed at the individual level and adapted over time following changes in work- and familyrelated circumstances. The consideration of the Old and New Länder of Germany as cases for comparative analysis allows for a test of common factors in different contexts of economic conditions and gender relations. The empirical findings from a longitudinal analysis of the German Socio-Economic Panel (1993-2003) run counter to the predictions of neoclassical labour supply theory. This owes to a fundamental difference in terms of theoretical approach. While (most) economists tend to view paid work in instrumental terms ¿ as something that people perform only for its monetary rewards, this study takes account of intrinsic work rewards as central determinants of work motivation. We find the qualitative experience of work to exert an independent influence on individuals¿ preferences over work hours, and therefore argue for the inclusion of work quality as a central factor in labour supply decisions. |
| Keywords: | Labour, labour supply, working hours, preferences, panel data analysis |
| JEL: | J01 J22 J17 C23 D01 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp121&r=lab |
| By: | David McKenzie (World Bank, BREAD and IZA); John Gibson (University of Waikato); Halahingano Rohorua (University of Waikato) |
| Abstract: | Temporary migration programs for unskilled workers are increasingly being proposed as a way to both relieve labour shortages in developed countries and aid development in sending countries without entailing many of the costs associated with permanent migration. New Zealand’s new Recognised Seasonal Employer (RSE) program is designed with both these goals in mind, enabling unskilled workers from the Pacific Islands to work in horticulture and viticulture in New Zealand for a period of up to seven months. However, the development impact on a sending country will depend not only on how many workers participate, but also on who participates. This paper uses new survey data from Tonga to examine the process of selecting Tongans to work in the RSE, and to analyze how pro-poor the recruitment process has been to date. We find that the workers recruited come from largely agricultural backgrounds, and have lower average incomes and schooling levels than Tongans not participating in the program. We also compare the characteristics of RSE workers to those of Tongans applying to permanently migrate to New Zealand through the Pacific Access Category, and find the RSE workers to be more rural and less educated. The RSE therefore does seem to have succeeded in creating new opportunities for relatively poor and unskilled Tongans to work in New Zealand. |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:0807&r=lab |
| By: | Arindrajit Dube; Richard Freeman |
| Abstract: | This paper examines the relationship between shared capitalist modes of pay and shared modes of decision-making via employee involvement and related committees and between them and measures of productivity and worker well-being in two data sets: the employee based Worker Participation and Representation Survey and the California Establishment Survey. It finds in both data sets that the forms of shared compensation are complementary in the sense that they are more likely to be found together than if firms chose them separately; that shared compensation systems are positively associated with shared decision-making; and that combining shared compensation systems and employee involvement has greater impacts on outcomes than each system by itself. |
| JEL: | J33 J54 L23 L25 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14272&r=lab |
| By: | James E. Alt (Department of Government, Harvard University); David Dreyer Lassen (Department of Economics, University of Copenhagen) |
| Abstract: | High-quality data on state-level inequality and incomes, panel data on corruption convictions, and careful attention to the consequences of including or excluding fixed effects in the panel specification allow us to estimate the impact of income considerations on the decision to undertake corrupt acts. Following efficiency wage arguments, for a given institutional environment the corruptible employee’s or official’s decision to engage in corruption is affected by relative wages and expected tenure in the public sector, the probability of detection, the cost of fines and jail terms, and the degree of inequality, which indicate diminished prospects facing those convicted of corruption. In US states over 25 years we show that inequality and higher government relative wages significantly and robustly produce less corruption. This reverses other findings of a positive association between inequality and corruption, which we show arises from long-run joint causation by unobserved factors. |
| Keywords: | corruption; rent seeking; inequality; Gini coefficient; efficiency wage; public sector wages |
| JEL: | D72 D73 P48 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:kud:epruwp:08-02&r=lab |
| By: | Boeters, Stefan; Feil, Michael |
| Abstract: | Labour market reforms that are designed to stimulate labour supply at the lower end of the wage distribution can never be precisely restricted to affect only the target group. Spillovers to and feedback from other segments of the labour market are unavoidable and may counteract the direct effects of the reform. An adequate representation of heterogeneous labour markets becomes therefore an important issue for the assessment of reforms. We analyse the possible interactions between labour market segments in a combined, consistent microsimulation-AGE model with a flexible representation of substitution possibilities and different wage-forming regimes. We look at a stylised reform and find labour-demand cross-price elasticities between the low and medium skilled to be the main drivers of the results. Interaction with the high-skilled segment is less pronounced. |
| Keywords: | Applied general equilibrium model, microsimulation, discrete working time choice, heterogeneous labour markets, labour market reform |
| JEL: | D58 J22 J51 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7353&r=lab |
| By: | Bowles, Hannah Riley (Harvard U); Flynn, Francis J. (Stanford U) |
| Abstract: | Gender stereotypes suggest that men will persist more in negotiation than women, particularly in mixed-gender pairs. In contrast, a gender-in-context perspective suggests that women will vary their persistence behavior more than men and become more rather than less persistent in mixed-gender pairs in order to resist male dominance in negotiation. Results of three studies support the gender-in-context perspective, showing that women vary the degree and quality of their persistence behavior more than men depending on their counterpart’s gender. Women became more persistent with male than female negotiating counterparts (Studies 1-3). Consistent with the proposition that women persist more with men than women out of resistance to stereotypical male dominance in negotiation, women relied on characteristically low-status forms of influence (more indirect than direct) when persisting with men but not women (Study 3) and women’s extra persistence with male counterparts helped them reduce the gender gap in negotiation performance (Study 3). |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp07-063&r=lab |
| By: | Michael Coelli (Department of Economics, The University of Melbourne); Roger Wilkins (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | We find that post-school education earnings premia have remained strikingly stable over the 1981 to 2003-04 period in Australia. This stability is in sharp contrast to the rising college premium observed in the US. The observed stability in Australia may in part be due to changes in the credentials earned by individuals entering certain professional occupations during the 1980s and early 1990s, particularly for females. We provide an estimate of the potential effect of within-occupation credential changes on estimates of education earnings premia in Australia over time. Our focus is on credential changes within the nursing and teaching professions, which have moved from predominately certificate and diploma qualifications to university bachelor's degree or higher as the standard qualification. |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2008n11&r=lab |
| By: | Moniz, António; Paulos, Margarida Ramires |
| Abstract: | The clothing sector in Portugal is still seen, in many aspects as a traditional sector with some average characteristics, such as: low level of qualifications, less flexible labour legislation and stronger unionisation, very low salaries and low capability of investment in innovation and new technology. Is, nevertheless, a very important sector in terms of labour market, with increased weight in the exporting structure. Globalisation and delocalisation are having a strong impact in the organisation of work and in occupational careers in the sector. With the pressure of global competitiveness in what concerns time and prices, very few companies are able to keep a position in the market without changes in organisation of work and workers. And those that can perform good responses to such challenges are achieving a better economical stability. The companies have found different ways to face this reality according to size, capital and position. We could find two main paths: one where companies outsource a part or the entire production to another territory (for example, several manufacturing tasks), close and/or dismissal the workers. Other path, where companies up skilled their capacities investing, for example, in design, workers training, conception and introduction of new or original products. This paper will present some results from the European project WORKS – Work organisation and restructuring in the knowledge society (6th Framework Programme), focusing the Portuguese case studies in several clothing companies in what concern implications of global context for the companies in general and for the workers in particular, in a comparative analysis with some other European countries. |
| Keywords: | Clothing Industry; Restructuring; Work; Knowledge Society |
| JEL: | L67 F23 J61 F01 L22 A14 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10165&r=lab |
| By: | Günseli Berik; Yana van der Meulen Rodgers |
| Abstract: | This study examines labor standards enforcement and compliance in two Asian economies (Bangladesh and Cambodia) that have amongst the lowest labor costs in the world but are experiencing strong pressures to improve the price competitiveness of their textile and garment exports. Analysis of survey, focus group, and inspection data indicate differing trajectories in compliance with basic labor standards. While extremely low wages and poor working conditions have persisted in Bangladesh, compliance has begun to improve in Cambodia following a trade agreement with the United States that linked positive trade incentives with labor standards enforcement. These contrasting experiences suggest that in less developed countries governments consider trade-linked schemes to achieve improvements in working conditions without hindering export growth or job growth. |
| Keywords: | Working conditions, enforcement, labor laws, female workers, gender and trade |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:uta:papers:2008_14&r=lab |
| By: | Vindigni, Andrea (Princeton U) |
| 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 mo- tion. 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 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-rent economies, because "good times" cut down the support for flexibility among the least productive employed workers. The model 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. |
| JEL: | D71 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:prirpe:05-27-2008&r=lab |
| By: | Monique Ebell; Albrecht Ritschl |
| Abstract: | We attempt to explain the severe 1920-21 recession, the roaring 1920s boom, and the slide into theGreat Depression after 1929 in a unified framework. The model combines monopolistic productmarket competition with search frictions in the labor market, allowing for both individual andcollective wage bargaining. We attribute the extraordinary macroeconomic and financial volatility ofthis period to two factors: Shifts in the wage bargaining regime and in the degree of monopoly powerin the economy. A shift from individual to collective bargaining presents as a recession, involvingdeclines in output and asset values, and increases in unemployment and real wages. The pro-unionprovisions of the Clayton Act of 1914 facilitated the rise of collective bargaining after World War I,leading to the asset price crash and recession of 1920-21. A series of tough anti-union Supreme Courtdecisions in late 1921 induced a shift back to individual bargaining, leading the economy out of therecession. This, coupled with the lax anti-trust enforcement of the Coolidge and Hooveradministrations enabled a major rise in corporate profits and stock market valuations throughout the1920s. Landmark pro-union court decisions in the late 1920s, as well as political pressure on firms toadopt the welfare capitalism model of high wages, led to collapsing profit expectations, contributingsubstantially to the stock market crash. We model the onset of the Great Depression as an equilibriumswitch from individual wage bargaining to (actual or mimicked) collective wage bargaining. Thegeneral equilibrium effects of this regime change are consistent with large decreases in output,employment, and stock prices and moderate increases in real wages. |
| Keywords: | Trade unions, collective bargaining, Great Depression |
| JEL: | E24 E27 J51 J64 N12 N22 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0876&r=lab |
| By: | Giovanni Olivei; Silvana Tenreyro |
| Abstract: | Systematic differences in the timing of wage setting decisions among industrialized countriesprovide an ideal framework to study the importance of wage rigidity in the transmission ofmonetary policy. The Japanese Shunto presents the most well-known case of bunching inwage setting decisions: From February to May, most firms set wages that remain in placeuntil the following year; wage rigidity, thus, is relatively higher immediately after the Shunto.Similarly, in the United States, a large fraction of firms adjust wages in the last quarter of thecalendar year. In contrast, wage agreements in Germany are well-spread within the year,implying a relatively uniform degree of rigidity. We exploit variation in the timing of wagesettingdecisions within the year in Japan, the United States, Germany, the United Kingdom,and France to investigate the effects of monetary policy under different degrees of effectivewage rigidity. Our findings lend support to the long-held, though scarcely tested, view thatwage-rigidity plays a key role in the transmission of monetary policy. |
| Keywords: | monetary policy, wage rigidity, seasonality |
| JEL: | E1 E52 E58 E32 E31 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0872&r=lab |
| By: | Alex Bryson; Rafael Gomez; P Willman |
| Abstract: | Using nationally representative workplace data for Britain we show that over the last quartercentury union voice - especially union-only voice - has been associated with poorer climate,more industrial action, poorer financial performance and poorer labour productivity than nonunionvoice and, in particular, direct voice. On the other hand, union-based voice regimeshave experienced lower quit rates than non-union and "no voice" regimes, as theory predicts.Over that time, while the workplace incidence of voice has remained constant, with roughly 8workplaces out of 10 providing some form of voice, there has been a big shift from union tonon-union voice, particularly direct employer-made voice. Thus employers are preparedgenerally to bear the costs of voice provision and manifest a reluctance to engage with theirworkforce without voice mechanisms in place. The associations between non-union voicemechanisms and desirable workplace outcomes suggest that these costs may be lower thanthe benefits voice generates. |
| Keywords: | worker voice, trade unions, quits, employment relations, labour productivity,financial performance, industrial action |
| JEL: | J5 J51 J52 J53 L25 M54 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0884&r=lab |
| By: | Alex Bryson; Michael White |
| Abstract: | Using nationally-representative linked employer-employee data for Britain this paper considerswhether employers are able to influence the organizational commitment (OC) of their employeesthrough the practices they deploy. We examine the association between OC and two broad groups ofHRM practices emphasised in two different strands of the literature, namely "High-PerformanceWorkplace Practices" (HPWPs) and practices associated with "Perceived Organizational Support"(POS). We consider their associations with mean workplace-level OC and individual employees' OC.Although employers may be able to engender greater OC on the part of their employees, the practicesthat do so are not those emphasized in the HPWP literature, with the exception of consultation and theinvolvement of employees in decision-taking. POS practices fare a little better but, again, the findingsare far from unequivocal. Furthermore, those practices that are 'effective' in engendering higher OCsuch as tolerance of absence, recruiting on 'values' and allowing employees to make decisions, tendto have a fairly low incidence in British workplaces. There is, however, one finding which chimeswith the ideas underpinning the HPWP literature, namely that there are returns to the use of practicesin combination. Analyses of both mean workplace-level OC and individual employee OC find anindependent positive association between OC and the deployment of multiple practices incombination. This evidence is consistent with practices having synergies, as emphasised in some ofthe HPWP literature. |
| Keywords: | high performance, organizational commitment, perceived organizational support |
| JEL: | J28 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0881&r=lab |
| By: | James W. Boudreau (University of Connecticut); Vicki Knoblauch (University of Connecticut) |
| Abstract: | Men's and women's preferences are intercorrelated to the extent that men rank highly those women who rank them highly. Intercorrelation plays an important but overlooked role in determining outcomes of matching mechanisms. We study via simulation the effect of intercorrelated preferences on men's and women's aggregate satisfaction with the outcome of the Gale-Shapley matching mechanism. We conclude with an application of our results to the student admission matching problem. |
| Keywords: | Two-Sided Matching, intercorrelated preferences, Gale-Shapley algorithm |
| JEL: | C78 D63 C15 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2008-27&r=lab |
| By: | Kredler, Matthias |
| Abstract: | I combine an infinite-horizon version of Ben-Porath’s (1967) model of human-capital accumulation with a vintage structure as in Chari & Hopenhayn (1991). Different skill levelsinside a vintage are complementary in production. Vintage-specific human capital is accumulated based on workers’ optimal strategies and is lost when the technology is phased out by an endogenous firm decision. I establish equivalence between competitive equilibrium and a planner’s problem. It is shown that returns to skill are highest in young vintages. Accelerated technological change shortens the life cycle of a technology and speeds up obsolescence; the premium on tenure rises because more workers are concentrated in young technologies with high skill premia. A calibration exercise comparing two steady states shows that the model quantitatively accounts for the changes in the experience premium, earnings dispersion and earnings turbulence in German data. |
| Keywords: | Vintage human capital; age-earnings profiles; partial differential equations |
| JEL: | E24 C63 J01 |
| Date: | 2008–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10200&r=lab |
| By: | D Mayston; J Yang |
| Abstract: | Against the background of the recent rate of expansion of China's higher education system that has outstripped even China's own high rate of economic growth, the paper examines evidence of the emerging problem of graduate overeducation within China. Based upon a pecking-order model of employment offers and associated ordered probit model, it analyses the empirical factors which determine the incidence of graduate overeducation across China. The extent to which individual students have an incentive to become overeducated compared to a socially optimal level of their education is also examined in the context of a supporting economic model that compares individual and socially optimal levels of investment in education, in the face of labour market demands. The extent of the divergence between individual and socially optimal levels of investment in education, and of the associated levels of graduate overeducation, is found to depend upon how recent major increases in the supply of graduates within China will interact with the future growth rates in job specifications, in demand variables and in resultant graduate wages within China. |
| Keywords: | Graduate overeducation. higher education policy. Optimal education investment. Economic growth in China |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:08/25&r=lab |
| By: | Ross Levine; Alexey Levkov; Yona Rubinstein |
| Abstract: | This paper assesses the impact of competition on racial discrimination. The dismantling of inter- and intrastate bank restrictions by U.S. states from the mid-1970s to the mid-1990s reduced financial market imperfections and lowered entry barriers facing nonfinancial firms. We use bank deregulation to identify an exogenous intensification of competition in the nonfinancial sector, and evaluate its impact on the racial wage gap, which is that component of the black-white wage differential unexplained by Mincerian characteristics. We find that bank deregulation reduced the racial wage gap by spurring the entry of nonfinancial firms. Consistent with theory, the impact of competition on the wage gap is particularly large in states with a comparatively high degree of racial bias, where competition-enhancing bank deregulation eliminated between 20 and 30 percent of the racial wage gap. |
| JEL: | D3 D43 G21 G28 J31 J7 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14273&r=lab |
| By: | Ofer Malamud; Cristian Pop-Eleches |
| Abstract: | When students are tracked into vocational and academic secondary schools, access to higher education is usually restricted to those who were selected into the academic track. Postponing such tracking may increase the relative educational attainment of disadvantaged students if they have additional time in school to catch up with their more privileged counterparts. On the other hand, if ability and expectations are fairly well set by an early age, postponing tracking during adolescence may not have much effect. This paper exploits an educational reform in Romania to examine the impact of postponing tracking on the proportion of disadvantaged students graduating from university using a regression discontinuity (RD) design. We show that, although students from poor, rural areas and with less educated parents were significantly more likely to finish an academic track and become eligible to apply for university after the reform, this did not translate into an increase in university completion. Our findings indicate that simply postponing tracking, without increasing the slots available in university, is not sufficient to improve access to higher education for disadvantaged groups. |
| Keywords: | tracking, higher education, access, disadvantaged students |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:har:wpaper:0810&r=lab |
| By: | Bowles, Hannah Riley (Harvard U); McGinn, Kathleen |
| Abstract: | We propose a two-level-game (Putnam, 1988) perspective on gender in job negotiations. At Level 1, candidates negotiate with the employers. At Level 2, candidates negotiate with domestic partners. In order to illuminate the interplay between these two levels, we review literature from two separate bodies of literature. Research in psychology and organizational behavior on candidate-employer negotiations sheds light on the effects of gender on Level 1 negotiations. Research from economics and sociology on intra-household bargaining elucidates how negotiations over the allocation of domestic labor at Level 2 influence labor force participation at Level 1. In conclusion, we integrate practical implications from these two bodies of literature to propose a set of prescriptive suggestions for candidates to approach job negotiations as a two-level game and to minimize disadvantageous effects of gender on job negotiation outcomes. |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp08-027&r=lab |
| By: | Monika Sander |
| Abstract: | This paper investigates how immigrants’ Body Mass Index (BMI) changes with increasing years since migration in Germany. The data are drawn from three waves (2002, 2004, and 2006) of the German Socio-Economic Panel Study (SOEP). The results indicate a clear increase of the BMI with additional years in Germany for men and women. |
| Keywords: | Body Mass Index, immigrants, SOEP |
| JEL: | C23 I12 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp122&r=lab |
| By: | Anne-Marie Brook |
| Abstract: | Globalisation, together with skill-biased technical change, is changing the composition of jobs in advanced economies and raising the level of skills required to do them. This has increased the importance of educating a large proportion of the population to much higher standards than in the past. The government in the United Kingdom has responded to this challenge by raising education spending and expanding the capacity of the education system in key areas such as pre-primary education and increasing participation in education beyond the age of 16. Nevertheless, performance on international tests of cognitive ability remains significantly below the standards of the best performing OECD countries and the education system seems to be particularly poor at ensuring good performance of pupils in the middle to bottom half of the education performance distribution. A renewed sense of urgency, together with some new approaches, is required to address the United Kingdom’s relative underperformance in literacy and numeracy. This paper proposes a number of avenues for encouraging a higher level of educational attainment, without significant further increases in expenditure. <P>Élever le niveau de formation et rompre le cycle de l’inégalité au Royaume-Uni <BR>La mondialisation, conjuguée à l’évolution technologique qui privilégie la main-d’oeuvre qualifiée, modifie la composition des emplois dans les économies avancées et entraîne un relèvement du niveau des qualifications requises pour les occuper. Aussi est-il aujourd’hui plus important d’amener une grande proportion de la population à un niveau de formation infiniment plus élevé que dans le passé. Pour relever ce défi, les pouvoirs publics au Royaume-Uni ont augmenté les dépenses d’éducation, renforcé les moyens dont dispose le système éducatif dans des secteurs clés tels que l’éducation pré-primaire, et prolongé la scolarisation au-delà de l’âge de 16 ans. Malgré cela, les résultats de ce pays aux tests internationaux d’aptitudes intellectuelles restent sensiblement inférieurs au niveau atteint par les pays de l’OCDE les plus performants et le système éducatif britannique semble avoir beaucoup de mal à faire en sorte que les élèves situés dans la moitié inférieure de la distribution des performances en éducation obtiennent de bons résultats. Une conscience redoublée de l’urgence et quelques nouvelles approches s’imposent pour remédier aux sous-performances relatives du Royaume-Uni dans la maîtrise de l’écrit et des chiffres. Cet ouvrage propose un certain nombre de pistes pour favoriser un relèvement du niveau d’instruction sans pour autant accroître encore notablement les dépenses. |
| Keywords: | United Kingdom, Royaume-Uni, education, éducation, financement, funding |
| JEL: | H52 H75 I20 I22 I28 |
| Date: | 2008–08–28 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:633-en&r=lab |
| By: | Marco Manacorda |
| Abstract: | This paper uses administrative longitudinal micro data on the universe of Junior High schoolstudents in Uruguay to measure the effect of grade failure on students' subsequent schooloutcomes. Exploiting the discontinuity induced by a rule establishing automatic grade failurefor pupils missing more than 25 days, I show that grade failure leads to substantial drop-outand lower educational attainment even after 4 to 5 years since the time when failure firstoccurred. Complementary evidence based on a change in the regime of grade promotion leadsto very similar conclusions, suggesting that non-random sorting around the discontinuitypoint is unlikely to drive my results. |
| Keywords: | grade retention, school drop-out, regression discontinuity, sorting |
| JEL: | I21 I22 J20 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0878&r=lab |
| By: | Thomas Bolli (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Mathias Zurlinden (Swiss National Bank, Economic Analysis, Zurich) |
| Abstract: | The standard economy-wide indices of labor quality (or human capital) largely ignore the role of unobservable worker characteristics. In this paper, we develop a methodology for identifying the contri- butions of both observable and unobservable worker characteristics in the presence of the incidental parameter problem. Based on data for Switzerland over the period 1991-2006, we find that a large part of growth in labor quality is caused by shifts in the distribution of un- observable characteristics. The contributions to growth attributed to education and age are corrected downwards, if unobservable worker characteristics are taken into account. Yet the standard indices of la- bor quality appear to be robust to this extension. |
| Keywords: | human capital, labor quality |
| JEL: | J24 J31 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:kof:wpskof:08-203&r=lab |
| By: | Christian Kingombe |
| Abstract: | More and better data are needed to monitor and evaluate the impact of vocational training on economic growth and poverty reduction. Labour market observatories can help align training systems to labour market needs. Analysis of youth unemployment is essential before investing in expensive training schemes. |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:oec:devaac:61-en&r=lab |
| By: | Jason M. Lindo; Nicholas J. Sanders; Philip Oreopoulos |
| Abstract: | We use a regression discontinuity design to examine students' responses to the negative incentive brought on by being placed on academic probation. Consistent with a model of introducing performance standards in which agents respond differently based on ability, we find that being placed on probation at the end of the first year discourages some students from returning to school while improving the performance of those who return. Contrary to the predictions of the model when ability is known, we find that heterogeneous discouragement effects result in high ability students having a greater overall dropout rate near the cutoff than lower ability students. The result can be explained by extending the model to allow for the performance standard to also affect self confidence (ability expectations). We also consider effects by gender and find that being placed on probation more than doubles the probability that men drop out but has no such discouragement effect for women. |
| JEL: | D80 I20 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14261&r=lab |
| By: | Hilary Ingham; Mike Ingham; Jan Herbst |
| Abstract: | Unemployment continues to bedevil Poland, albeit with striking sub-national differences, which this paper seeks to explain using random effects error component two-stage estimation for the country's NUTS 4 level powiats. Given the economy's peculiar configuration under communism, with its large private agricultural sector, emphasis is placed on rural-urban differences. While less densely populated areas do suffer higher unemployment rates, the effect is moderated by hidden unemployment in farming. On the other hand, powiats that housed the ex-state farms suffer a negative long-term legacy. Other notable results include an evident positive impact of foreign capital on local labour market fortunes. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:005613&r=lab |
| By: | Heather Rolfe |
| Abstract: | Despite the removal of most barriers to movement, the proportion of apprentices and non-graduate trainees undertaking a placement abroad remains small. The paper investigates the reasons for this and explores some Mobility schemes were found to involve graduates and senior employees rather than non-graduate trainees and apprentices. One major barrier was the cost of mobility programmes, combined with scepticism about the benefits to non-graduate trainees. The broader perspective gained through mobility was seen as of limited relevance to non-graduates and it was assumed that they would not be interested. However, where mobility was practiced for apprentices and trainees, this wider experience was found to be a valuable addition to training, resulting in an appreciation of alternative ways of working and different organisational cultures. |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:niesrd:298&r=lab |
| By: | Schnabel, Claus (University of Erlangen-Nuremberg); Wagner, Joachim (University of Lüneburg) |
| Abstract: | Using data from the social survey ALLBUS for West Germany in the period 1980 to 2006, this paper demonstrates that union members are on average older than non-unionized employees. The probability of being unionized shows the inverted U-shaped pattern in age conjectured by Blanchflower (BJIR 2007) only in very few years. It is demonstrated that both intra-cohort change and cohort replacement effects have played a roughly equal role in the substantial fall in union density since 1980. If older cohorts with high densities continue to be replaced by young cohorts with low densities, average union density will fall further. |
| Keywords: | union membership, union density, cohort effects, West Germany |
| JEL: | J51 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3661&r=lab |
| By: | Nobuaki Yamashita |
| Abstract: | This paper examines the hypothesis that industries engaged in international fragmentation of production experience greater skill upgrading using a panel dataset of Japanese manufacturing over the period 1980-2000. The novelty of the study comes from the use of a newly constructed index using trade data on parts and components to measure intraindustry variations in the degree of international vertical specialization (fragmentation intensity of trade). It also employs a methodology designed to embody peculiarities of Japan's fragmentation trade pattern. While the findings of existing studies are inconclusive, it is found that the expansion of fragmentation trade with developing East Asian countries has had a significant impact on the skills composition of Japanese manufacturing employment. At the same time, fragmentation trade with high income countries has had a skill downgrading effect. |
| Keywords: | Production Fragmentation; Skill Upgrading; Japanese Manufacturing |
| JEL: | F14 F16 J31 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2008-06&r=lab |
| By: | Siebert, W. Stanley (University of Birmingham, UK); Zubanov, Nikolay (CPB Netherlands Bureau for Economic Policy Analysis) |
| Abstract: | We study the impact of and reward to middle management ability using data from 245 stores of a nationwide retailer. The company scores six broad areas of management practice, the most important of which turns out to be "commercial awareness", where able managers raise labour productivity by 17% compared to less able. We show that the managers' incentive scheme is implicitly an insurance one, with managers taking a share in deviations of actual sales from expected. At the same time, abler managers do not receive higher pay all else equal, which implies that middle management ability is not fully tradable. |
| Keywords: | management, firm behaviour, business economics, productivity, compensation methods |
| JEL: | D21 J24 M20 J33 M52 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3645&r=lab |
| By: | Black, Sandra E. (University of California, Los Angeles); Devereux, Paul (University College Dublin); Salvanes, Kjell G. (Norwegian School of Economics and Business Administration) |
| Abstract: | More able parents tend to have more able children. While few would question the validity of this statement, there is little large-scale evidence on the intergenerational transmission of IQ scores. Using a larger and more comprehensive dataset than previous work, we are able to estimate the intergenerational correlation in IQ scores, examining not just average correlations but also how this relationship varies for different subpopulations. We find that there is substantial intergenerational transmission of IQ scores; an increase in father’s IQ at age 18 of 10% is associated with a 3.2% increase in son’s IQ at the same age. This relationship holds true no matter how we break the data. This effect is much larger than our estimated elasticity of intergenerational transmission of income of approximately .2. |
| Keywords: | ability, intergenerational mobility |
| JEL: | J0 I0 J1 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3651&r=lab |
| By: | Hagendorf, Klaus |
| Abstract: | The difficulties of the classical and Marxian labour theory of value are overcome when labour is measured in terms of marginal labour value. Marginal labour value is the inverse of the marginal productivity of labour. Relative prices are equal to the ratio of marginal labour values. This article presents the marginal approach to the labour theory of value. |
| Keywords: | Exploitation; Labour Theory of Value; Marginal Analysis; Marxism; |
| JEL: | D0 B51 D46 D24 |
| Date: | 2008–08–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10202&r=lab |
| By: | Jenter, Dirk (Stanford U); Kanaan, Fadi (Massachusetts Institute of Technology) |
| Abstract: | This paper examines whether CEOs are fired after bad firm performance caused by factors beyond their control. Standard economic theory predicts that corporate boards filter out exogenous industry and market shocks from firm performance before deciding on CEO retention. Using a new hand-collected sample of 1,627 CEO turnovers from 1993 to 2001, we document that CEOs are significantly more likely to be dismissed from their jobs after bad industry or bad market performance. A decline in the industry component of firm performance from its 75th to its 25th percentile increases the probability of a forced CEO turnover by approximately 50 percent. This result is at odds with the prior empirical literature, which showed that corporate boards filter exogenous shocks from CEO dismissal decisions in samples from the 1970s and 1980s. Our findings suggest that the standard CEO turnover model is too simple to capture the empirical relation between performance and forced CEO turnovers, and we evaluate several extensions to the standard model. |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:1992&r=lab |
| By: | Stefan Gravemeyer (University of Paderborn); Thomas Gries (University of Paderborn); Jinjun Xue (Nagoya University, Japan) |
| Abstract: | This paper estimates the income effect of non productivity related discriminatory factors, compared to productivity related returns on human capital in Shenzhen. The design of the Shenzhen Household Survey 2005 that was employed enables us to include a large set of discriminating factors in a Mincer Becker type of income model. Further, we are able to take a unique look at the migrant population in this outstanding urban centre. Our results show that the human capital approach holds. We also find strong evidence of a significant influence of social norms and policies, particularly relevant in a developing and transition economy, even in such an exceptional city. |
| Keywords: | Shenzhen, Income distribution, Education, Transition process |
| JEL: | O15 O18 I21 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:wpaper:16&r=lab |
| By: | Sambit Bhattacharyya |
| Abstract: | We investigate the partial effects of institutions and human capital on growth. We find that cross-country regressions of the log-level of per capita GDP on instrumented measures of institutions and schooling are uninformative about the relative importance of institutions and human capital in the long run because of multicollinearity problems. Using dynamic panel regressions we show that both institutions and human capital have significant effects on growth. Using Rodrik's (2005) four-way partition of institutions, we also unbundle institutions. We show that strong market creating institutions and market stabilising institutions are growth enhancing. Market regulating institutions matter up to a certain extent and market legitimising institutions does not seem to matter. |
| Keywords: | Institutions; Human Capital; Growth |
| JEL: | O11 O30 O43 O57 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2008-14&r=lab |
| By: | Larry E. Jones; Alice Schoonbroodt; Michèle Tertilt |
| Abstract: | In this chapter we revisit the relationship between income and fertility. There is overwhelming empirical evidence that fertility is negatively related to income in most countries at most times. Several theories have been proposed in the literature to explain this somewhat puzzling fact. The most common one is based on the opportunity cost of time being higher for individuals with higher earnings. Alternatively, people might differ in their desire to procreate and accordingly some people invest more in children and less in market-specific human capital and thus have lower earnings. We revisit these and other possible explanations. We find that these theories are not as robust as is commonly believed. That is, several special assumptions are needed to generate the negative relationship. Not all assumptions are equally plausible. Such findings will be useful to distinguish alternative theories. We conclude that further research along these lines is needed. |
| JEL: | D13 J13 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14266&r=lab |
| By: | Sarah Brown; Steve McIntosh; Karl Taylor (Department of Economics, The University of Sheffield) |
| Abstract: | In this paper, we explore whether an intergenerational relationship exists between the reading and mathematics test scores, taken at ages 7, 11 and 16, of a cohort of individuals born in 1958 and the equivalent test scores of their offspring measured in 1991. Our results suggest that how the parent performs in reading and mathematics during their childhood is positively related to the corresponding reading and mathematics test scores of their offspring as measured at a similar age. Our findings imply that parental ability in numeracy and literacy as a child is positively associated with the ability in numeracy and literacy of their offspring. With respect to gender, a father´s (mother´s) test score generally has a positive influence on the test scores of their daughter (son). |
| Keywords: | Human Capital, Intergenerational Transfers, Literacy, Numeracy |
| JEL: | J13 J24 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2007017&r=lab |
| By: | Melissa Clark; Jesse Rothstein; Diane Whitmore Schanzenbach |
| Abstract: | Data from college admissions tests can provide a valuable measure of student achievement, but the non-representativeness of test-takers is an important concern. We examine selectivity bias in both state-level and school-level SAT and ACT averages. The degree of selectivity may differ importantly across and within schools, and across and within states. To identify within-state selectivity, we use a control function approach that conditions on scores from a representative test. Estimates indicate strong selectivity of test-takers in "ACT states," where most college-bound students take the ACT, and much less selectivity in SAT states. To identify within- and between-school selectivity, we take advantage of a policy reform in Illinois that made taking the ACT a graduation requirement. Estimates based on this policy change indicate substantial positive selection into test participation both across and within schools. Despite this, school-level averages of observed scores are extremely highly correlated with average latent scores, as across-school variation in sample selectivity is small relative to the underlying signal. As a result, in most contexts the use of observed school mean test scores in place of latent means understates the degree of between-school variation in achievement but is otherwise unlikely to lead to misleading conclusions. |
| JEL: | C24 I2 J24 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14265&r=lab |
| By: | Qu, Zhaopeng (Frank) (Beijing Normal University); Zhao, Zhong (IZA) |
| Abstract: | One of the most notable social phenomena in China is the large urban-rural disparity. There are many studies of it, but most of them focus on income or earnings inequality. In this paper, we investigate the consumption disparity between urban and rural households in China from 1988 to 2002. Our results suggest that low quantiles are associated with large consumption disparity. The price effect is the dominant factor for the urban-rural consumption disparity. This disparity increased significantly, both at mean and at every quantile, from 1988 to 2002. However, most of the increase happened from 1988 to 1995, and this increase was mainly from the higher growth rate of urban household consumption. Our results also suggest that rural-urban migration and improvement of the rural educational level are very helpful in reducing urban-rural disparity. |
| Keywords: | inequality, consumption, quantile regression decomposition, China |
| JEL: | O18 O53 C15 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3659&r=lab |
| By: | Phan, Diep (U of Wisconsin); Coxhead, Ian |
| Abstract: | Vietnam’s economic boom during the transition to a market economy has centered on very rapid growth in some sectors and some provinces, yet poverty has diminished across the entire country. With capital investments highly concentrated by province and sector, geographic labor mobility may be critical in spreading the gains from growth. Conversely, rising income inequality may be attributable in part to impediments to migration. We first use census data to investigate migration patterns and determinants. We then examine the role of migration as an influence on cross-province income differentials. The former analysis robustly confirms economic motives for migration but also suggests the existence of poverty-related labor immobility at the provincial level. Examination of income differentials between pairs of provinces reveals that the impact of migration on inequality can be either negative or positive. A robust inequality-reducing impact of migration is found for migration flows into provinces where most of Vietnam’s trade-oriented industrial investments are located. |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:wisagr:507&r=lab |
| By: | Anni Nevalainen |
| Abstract: | ABSTRACT : This paper investigates the connection between firm entry and exit and labour productivity growth. The study has its theoretical foundations in modern Schumpeterian growth theory, distance to frontier model and vintage capital models. The importance of productivity enhancing restructuring has been increasingly acknowledged and all these theories depict the productivity enhancing effects that external restructuring - in particular firm entry and exit – may have. Despite the vast theoretical discussion there is only a little empirical research on the subject. Thus, this study aims at contributing to the existing empirical literature by utilizing panel data that contain information on all manufacturing subsectors from eight EU member states between 1997 and 2004. Empirical analysis is conducted with fixed effects panel regression. It is noted that firm turnover, especially firm entry enhances productivity growth, but the effects appear with a lag. Productivity enhancing effects of firm entry are the strongest three years after the initial entry. The effects of firm exit on labour productivity growth are also positive but more modest than the effects of firm entry. Results of the analysis suggest that the population of firm entrants is extremely heterogeneous. |
| Keywords: | labour productivity, manufacturing, firm entry, firm exit, modern Schumpeterian growth theory |
| JEL: | L6 O4 |
| Date: | 2008–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1152&r=lab |
| By: | Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich); Egon Franci (Institute for Strategy and Business Economics, University of Zurich); Markus Lang (Institute for Strategy and Business Economics, University of Zurich); Alexander Rathke (Institute for Empirical Research in Economics, University of Zurich) |
| Abstract: | This paper studies the welfare effect of a percentage-of-revenue salary cap in a European context with win-maximizing clubs. It shows that a percentage-of-revenue cap increases competitive balance and decreases the overall salary payments in the league, therefore contributing to financial stability. A percentage-of-revenue cap will always increase social welfare if the weight on aggregate club surplus in the welfare function is sufficiently high. Additionally, if fans’ preferences for aggregate talent are sufficiently high then the percentage-of-revenue cap will also increase social welfare; no matter how much weight the league puts on financial stability. |
| Keywords: | Salary Caps, Social Welfare, Competitive Balance, Team Sports League |
| JEL: | L83 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0825&r=lab |
| By: | Beaman, Lori (University of California, Berkeley and Northwestern University); Chattopadhyay, Raghebendra (Indian Institute of Management); Duflo, Esther (Massachusetts Institute of Technology); Pande, Rohini (Harvard U); Topalova, Petia (International Monetary Fund) |
| Abstract: | We exploit random assignment of gender quotas across Indian village councils to investigate whether having a female chief councillor affects public opinion towards female leaders. Villagers who have never been required to have a female leader prefer male leaders and perceive hypothetical female leaders as less effective than their male counterparts, when stated performance is identical. Exposure to a female leader does not alter villagers' taste preference for male leaders. However, it weakens stereotypes about gender roles in the public and domestic spheres and eliminates the negative bias in how female leaders' effectiveness is perceived among male villagers. Female villagers exhibit less prior bias, but are also less likely to know about or participate in local politics; as a result, their attitudes are largely unaffected. Consistent with our experimental findings, villagers rate their women leaders as less effective when exposed to them for the first, but not second, time. These changes in attitude are electorally meaningful: after 10 years of the quota policy, women are more likely to stand for and win free seats in villages that have been continuously required to have a female chief councillor. |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp08-037&r=lab |
| By: | Fumi Kiyotaki |
| Abstract: | This article analyses promotion tournaments where candidates engage in multiple tasks. We consider a promotion rule where the winner of the promotion tournament is randomly selected from the best performers at each task. The promotion tournament can achieve an efficient outcome for any production uncertainty (observability) of tasks and substitutability in the effort cost when employees are risk neutral and homogeneous. The promotion decision should be based much more on the outcome in a more uncertain task. If employees are heterogeneous in their ability to undertake a task, then the outcome of an ability-dependent task should be relied upon more in the promotion decision than the outcome of a simple task. |
| JEL: | D82 M51 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:bbk:bbkefp:0804&r=lab |