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on Labour Economics |
| By: | Koskela, Erkki (University of Helsinki); Poutvaara, Panu (University of Helsinki) |
| Abstract: | In European Welfare States, unskilled workers are typically unionized, while the wage formation of skilled workers is more competitive. To focus on this aspect, we analyze how flexible international outsourcing and labour taxation affect wage formation, employment and welfare in dual domestic labour markets. Higher productivity of outsourcing, lower cost of outsourcing and lower factor price of outsourcing increase wage dispersion between the skilled and unskilled workers. Increasing wage tax progression of unskilled workers decreases the wage rate and increases the labour demand of unskilled workers. It decreases the welfare of unskilled workers and increases both the welfare of skilled workers and the profit of firms. |
| Keywords: | flexible outsourcing, dual labour market, impacts of labour taxation, welfare state |
| JEL: | E24 H22 J21 J31 J51 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3699&r=lab |
| By: | Bo Hansson |
| Abstract: | This paper reviews the literature on job-related training and the effects of these investments for different groups of individuals. The paper also elaborates on the theories, empirical explanations, and policy implications that can be drawn from these findings. Employer-provided training is by far the most important source of further education and training after an individual enters the labour market. A substantial portion of these human capital investments are financed by firms and it appears that the contribution by individuals are in most circumstances relatively modest. At the same time, substantial gains for individuals participating in training are documented in a large number of studies. The benefits are not only confined to wage returns as research has also shown that training leads to increased internal employability and job-security; and external labour market effects such as higher labour participation rates, lower unemployment, and shorter unemployment periods. Training is not equally distributed among employees. Older, low skilled workers, and to some extent female workers typically receive less training than other groups of employees. However, we do not find any clear-cut evidence that returns to training varies with gender, educational or skills levels, which suggests that inequalities do not arise because of differences in returns to training, but are more a consequence of inequalities of the distribution of training investments. The findings of this review further suggest that the returns to training are higher in the case that it is financed by the employer and that the returns to training are substantially higher for those leaving for a new employer. Employer-financed training appears, however, to lower the probability of an individual leaving for a new job elsewhere. The analysis of the distribution of returns to training reveals that although individuals benefit from these investments, the employer reaps most of the returns to training which suggests that the productivity effects are substantially larger than wage effects. |
| Date: | 2008–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:oec:eduaab:19-en&r=lab |
| By: | Wahlberg, Roger (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | This study examines differences in wage distributions between natives, non-refugees, and refugees in Sweden. We find that the wage differentials between natives and non-refugee immigrants decrease across the distribution, while those between natives and refugee immigrants increase. There is evidence of a glass ceiling effect for refugee males in Sweden, and we also find evidence of a glass ceiling effect for native-born women and non-refugee women in the Swedish labor market in comparison with native-born and non-refugee men, respectively. In addition, there is evidence of a double disadvantage effect for refugee women in the Swedish labor market.<p> |
| Keywords: | Wage distribution; quantile regression; counterfactual distribution; natives; non-refugees; refugees |
| JEL: | J15 J31 |
| Date: | 2008–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0316&r=lab |
| By: | Wahlberg, Roger (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | This study examines gender wage differentials across the wage distribution in the Swedish private and public sectors using quantile regression. Women have lower wages than men across the entire wage distribution. The gender gap increases throughout the distribution and there is a speeding-up effect in the gender gap starting around the 75th percentile, especially in the public sector. Hence, there is evidence of a glass ceiling effect in both the private and public sectors in the Swedish labor market. Using OLS leads to an overestimation of the wage gap at the bottom of the wage distribution, and an underestimation at the top. By focusing only on the mean gender wage gaps, considerable variations in the gender wage gap pass unnoticed. |
| Keywords: | Quantile regression; counterfactual distribution; gender wage gap; sector |
| JEL: | J16 J31 |
| Date: | 2008–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0317&r=lab |
| By: | Gregory de Walque; Olivier Pierrard; Henri Sneessens; Raf Wouters |
| Abstract: | We build a model with frictional unemployment and staggered wage bargaining and we assume that hours worked are negotiated every period. We analyze the role of workers? bargaining power in the hours negotiation on unemployment volatility and inflation persistence. The closer to zero is this parameter, (i ) the more firms adjust on the intensive margin, reducing employment volatility, (ii ) the lower the effective workers? bargaining power for wages and (iii ) the more important is the hourly wage in the marginal cost determination. Combining staggered wage bargaining with some degree of workers? bargaining power in the hours negotiation, we produce realistic labor market statistics together with inflation persistence. |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:bcl:bclwop:cahier_etude_33&r=lab |
| By: | Wahlberg, Roger (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | This study analyzes the part-time penalty in Sweden using quantile regression. We find that the estimated part-time wage differential is negative across the whole wage distribution. OLS overestimates the part-time penalty at the bottom of the distribution, and underestimates it at the top. The estimated part-time wage gap rises across the distribution, and there is a sharp acceleration in the increase starting around the 75th percentile, especially for men. Consequently, we find evidence of a glass ceiling in part-time employment for both men and women in the Swedish labor market.<p> |
| Keywords: | Part-time penalty; quantile regression; counterfactual distribution; glass ceiling |
| JEL: | J16 J31 |
| Date: | 2008–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0315&r=lab |
| By: | Merkl, Christian (Kiel Institute for the World Economy); Snower, Dennis J. (Kiel Institute for the World Economy) |
| Abstract: | This paper addresses the question of why high unemployment rates tend to persist even after their proximate causes have been reversed (e.g., after wages relative to productivity have fallen). We suggest that the longer people are unemployed, the greater is their cumulative likelihood of falling into a low-productivity "trap," through the attrition of skills and work habits. We develop a model along these lines, which allows us to bridge the gap between high macroeconomic employment persistence versus relatively high microeconomic labor market flow numbers. We calibrate the model for East Germany and examine the effectiveness of three employment policies in this context: (i) a weakening of workers’ position in wage negotiations due to a drop in the replacement rate or firing costs, leading to a fall in wages, (ii) hiring subsidies, and (iii) training subsidies. We show that the employment effects of these policies depend crucially on whether low-productivity traps are present. |
| Keywords: | labor market, labor market trap, East Germany |
| JEL: | E24 J30 J31 J64 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3681&r=lab |
| By: | Pedro S. Martins |
| Abstract: | We present evidence about the effects of dismissals-for-cause requirements, a specific component of employment protection legislation that has received little attention. We study a quasi-natural experiment generated by a law introduced in Portugal: out of the 12 paragraphs in the law that dictated the costly procedure required for dismissals for cause, eight did not apply to small firms. Using matched employer-employee longitudinal data and difference-in-differences methods, we examine the impact of that differentiated change in firing costs upon several variables over a long period of time. In our results, we do not find robust evidence of effects on job or worker flows, although some estimates suggest a slight increase in hirings. On the other hand, firms that gain flexibility in their dismissals exhibit consistently slower wage growth and sizeable increases in their relative performance. Our findings suggest that reducing firing costs of the type studied here increase workers' effort and reduce their bargaining power. |
| Keywords: | Employment protection legislation, worker flows, wages, firm performance |
| JEL: | J53 J63 J31 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:cgs:wpaper:24&r=lab |
| By: | Laura Bucila (Department of Economics, College of the Holy Cross) |
| Abstract: | This paper provides new estimates of the effects of increased federal and state minimum wages on the employment-based health insurance coverage of low-wage workers. I use March Current Population Surveys collected from IPUMS, for 1988 to 2005. Previous studies have found no significant evidence that increased minimum wages reduce fringe benefit receipt (Beeson Royalty 2000; Simon and Kaestner 2003). In contrast to these studies, I use a difference-in-difference approach and I define treatment groups as being individuals in the lowest 1 and 2 deciles of the hourly wage distribution. Little evidence was found for the federal minimum wage increase of 1990-91, but estimates of the effect of the 1996-97 increase suggest a small negative impact for younger workers and workers in smaller firms. At the state level, I find more suggestive results of a negative impact of the minimum wage increases. New Jersey (1992) and Massachusetts (2000-2001) exhibit negative effects of being in the treatment group on the probability of having employment-based health insurance for most of the specifications, while the results in Oregon (1991) and Connecticut (2000-2001) are more sensitive to the specification. The results suggest that being in the treatment group makes individuals 3 to 4 percentage points less likely to be policyholders of employment-based health insurance compared to the control group. |
| Keywords: | Minimum Wage, Fringe Benefits |
| JEL: | J32 J33 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:hcx:wpaper:0812&r=lab |
| By: | Enrico Moretti |
| Abstract: | A large literature has documented a significant increase in the return to college over the past 30 years. This increase is typically measured using nominal wages. I show that from 1980 to 2000, college graduates have increasingly concentrated in metropolitan areas that are characterized by a high cost of housing. This implies that college graduates are increasingly exposed to a high cost of living and that the relative increase in their real wage may be smaller than the relative increase in their nominal wage. To measure the college premium in real terms, I deflate nominal wages using a new CPI that allows for changes in the cost of housing to vary across metropolitan areas and education groups. I find that half of the documented increase in the return to college between 1980 and 2000 disappears when I use real wages. This finding does not appear to be driven by differences in housing quality and is robust to a number of alternative specifications. The implications of this finding for changes in well-being inequality depend on why college graduates sort into expensive cities. Using a simple general equilibrium model, I consider two alternative explanations. First, it is possible that the relative supply of college graduates increases in expensive cities because college graduates are increasingly attracted by amenities located in those cities. In this case, higher cost of housing reflects consumption of desirable local amenities, and there may still be a significant increase in well-being inequality even if the increase in real wage inequality is limited. Alternatively, it is possible that the relative demand of college graduates increases in expensive cities due to shifts in the relative productivity of skilled labor. In this case, the relative increase in skilled workers' standard of living is offset by higher cost of living. The empirical evidence indicates that relative demand shifts are more important than relative supply shifts, suggesting that the increase in well-being inequality between 1980 and 2000 is smaller than the increase in nominal wage inequality. |
| JEL: | J01 J2 J31 R00 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14370&r=lab |
| By: | Wahlberg, Roger (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | This study examines the part-time penalty for natives and immigrants in Sweden. We estimate an endogenous switching regression model, and the results indicate that there is evidence of self-selection into part-time and full-time jobs based on unobservable factors. Hence, individuals with full-time (part-time) jobs have unobserved characteristics that allow them to earn more (less) than average workers with full-time (part-time) jobs. We find that the adjusted part-time wage penalties are 20.9 percent for native males, 25.1 percent for immigrant men, 13.8 percent for native women, and 15.4 percent for immigrant women.<p> |
| Keywords: | Part-time penalty; selection bias; natives; immigrants |
| JEL: | J15 J31 |
| Date: | 2008–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0314&r=lab |
| By: | Günseli Berik; Cihan Bilginsoy; Larry S. Williams |
| Abstract: | This paper uses microdata from Oregon to measure the gender and minority training gaps in apprenticeship training. Its methodological innovation is the use of on-the-job training credit hours of exiting workers as the measure of the quantity of training. The trainees who started training between 1991 and 2002 are followed through 2007. Controlling for individual and program attributes, women and minorities on average receive less training than men and Whites, respectively. Union programs deliver more training than nonunion programs, regardless of gender and race. Prior education level has a strong impact on training, especially for women and minorities. The evidence does not support the hypothesis that apprentices who quit acquire sufficient level of training can reasonably be expected to get high-skill jobs. |
| Keywords: | Training, Gender, Race, Unions |
| JEL: | J15 J24 J51 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:uta:papers:2008_15&r=lab |
| By: | Cahuc, Pierre (Ecole Polytechnique, Paris); Le Barbanchon, Thomas (CREST-INSEE) |
| Abstract: | We analyze the consequences of counseling provided to job seekers in a standard job search and matching model. It turns out that neglecting equilibrium effects induced by counseling can lead to wrong conclusions. In particular, counseling can increase steady state unemployment although counseled job seekers exit unemployment at a higher rate than the non-counseled. Dynamic analysis shows that permanent and transitory policies can have effects of opposite sign on unemployment. |
| Keywords: | evaluation, equilibrium effect, labor market policy |
| JEL: | J64 J68 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3687&r=lab |
| By: | Moon, Weh-Sol |
| Abstract: | This paper argues that existing matching models with unemployment as an active search and nonparticipation as an inactive search predict counterfactual results: the unemployment rate is at most two times as volatile as the employmentpopulation ratio; only 20 percent of the actual volatility of the unemployment rate is accounted for; and the labor market variables are perfectly correlated with each other. This paper proposes a modified matching model in which workers are classified after matches take place. The modified model generates the direct transition from nonparticipation to employment with no assumption that nonparticipation is an inactive search and without adjusting the time period of the model. The model also explains the important cyclical features of the U.S. labor market. |
| Keywords: | Search and Matching; Business Cycles; Unemployment; Labor Force Participation |
| JEL: | E32 E24 J64 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10583&r=lab |
| By: | Kräkel, Matthias (University of Bonn); Schöttner, Anja (University of Bonn) |
| Abstract: | Several empirical studies have challenged tournament theory by pointing out that (1) there is considerable pay variation within hierarchy levels, (2) promotion premiums only in part explain hierarchical wage differences and (3) external recruitment is observable on nearly any hierarchy level. We explain these empirical puzzles by combining job-promotion tournaments with higher-level bonus payments in a two-tier hierarchy. Moreover, we show that under certain conditions the firm implements first-best effort on tier 2 although workers earn strictly positive rents. The reason is that the firm can use second-tier rents for creating incentives on tier 1. If workers are heterogeneous, the firm strictly improves the selection quality of a job-promotion tournament by employing a hybrid incentive scheme that includes bonus payments. |
| Keywords: | bonuses, external recruitment, job promotion, limited liability, tournaments |
| JEL: | D82 D86 J33 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3702&r=lab |
| By: | Brown, J. David (Heriot-Watt University, Edinburgh); Earle, John S. (Upjohn Institute for Employment Research); Telegdy, Álmos (Hungarian Academy of Sciences) |
| Abstract: | We use longitudinal methods and universal panel data on 30,000 initially state-owned manufacturing firms in four transition economies to estimate the impacts of privatization on employment and wages. The results in all four countries consistently reject job losses and they never imply large wage cuts from privatization to either foreign or domestic owners. The domestic privatization estimates are close to zero for employment, while for wages they are negative but small in magnitude; estimated foreign privatization effects are nearly always positive and sometimes large for both outcome variables. We find that the negligible consequences of domestic privatization result from effects on scale, productivity, and costs that are large but offsetting in Hungary and Romania, and from small effects of all types in Russia and Ukraine. The positive employment outcome of foreign ownership results from a substantial scale-expansion effect that dominates the productivity-improvement effect, and the positive wage outcome from productivity improvement dominating the cost-reduction effect. |
| Keywords: | privatization, employment, wages, foreign ownership, Hungary, Romania, Russia, Ukraine |
| JEL: | D21 G34 J23 J31 L33 P31 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3688&r=lab |
| By: | Kaas, Leo (University of Konstanz) |
| Abstract: | This paper analyzes an urn-ball matching model in which workers decide how intensively they sample job openings and apply at a stochastic number of suitable vacancies. Equilibrium is not constrained efficient; entry is excessive and search intensity can be too high or too low. Moreover, an inefficient discouraged-worker effect among homogenous workers emerges under adverse labor market conditions. Unlike existing coordination-friction economies with fixed search intensity, the model can account for the empirical relation between the job-finding rate and the vacancy-unemployment ratio, provided that search costs are small and that search intensity is sufficiently procyclical. |
| Keywords: | matching function, coordination frictions, unemployment |
| JEL: | E24 J63 J64 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3697&r=lab |
| By: | Zhongmin Wu; Mark Baimbridge; Yu Zhu |
| Abstract: | This paper examines the determinants of multiple job holding in the United Kingdom. We address these issues using data from the first eleven waves of the British Household Panel Survey, which covered the period from 1991 to 2001. Evidence from the BHPS does not support the hypotheses of main job hours constrained and main job insecurity. We argue that the incentive for moonlighting in the United Kingdom is due to financial pressures and the desire for heterogeneous jobs. The empirical work is carried out separately for men and women. |
| Keywords: | Moonlighting, Labour supply, Tobit model, Job satisfaction, the BHPS |
| JEL: | J22 J23 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbs:wpaper:2008/1&r=lab |
| By: | Chiara Binelli (Oxford University, UK; Institute for Fiscal Studies, UK and The Rimini Centre for Economic Analysis, Italy) |
| Abstract: | This paper studies a central feature that characterized the changes in wage inequality in Latin America in the 1990s: log wages became a convex function of the level of education. The wage gap between Higher and Intermediate Education increased and the one between Intermediate and Basic Education declined. The double change in the wage di¤erentials was driven by a signicant drop in the mean wage at Intermediate. I develop and simulate a dynamic general equilibrium model of savings and educational choices under credit constraints and uninsurable earningsrisk in which ability is an important component of individual wages. I estimate the parameters of the model using micro data from Mexico. The results show that the convexication was the result of changes in the prices of education due to changes in its supply. Absent the general equilibrium price e¤ects, the changes in ability composition by education needed to produce the convexication would have been unrealistically high. |
| Keywords: | Latin America, Wage Inequality, Education Choices, General Equilibrium filtering |
| JEL: | J23 J24 J31 C68 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:30-08&r=lab |
| By: | Buscha, Franz (University of Westminster); Maurel, Arnaud (ENSAE-CREST); Page, Lionel (University of Westminster); Speckesser, Stefan (University of Westminster) |
| Abstract: | Using American panel data from the National Educational Longitudinal Study of 1988 (NELS:88) this paper investigates the effect of working during grade 12 on attainment. We exploit the longitudinal nature of the NELS by employing, for the first time in the related literature, a semiparametric propensity score matching approach combined with difference-in- differences. This identification strategy allows us to address in a flexible way selection on both observables and unobservables associated with part-time work decisions. Once such factors are controlled for, insignificant effects on reading and math scores are found. We show that these results are robust to a matching approach combined with difference-in-difference-in-differences which allows differential time trends in attainment according to the working status in grade 12. |
| Keywords: | education, evaluation, propensity score matching |
| JEL: | J24 J22 I21 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3696&r=lab |
| By: | Karlson, Nils (Ratio); Box, Marcus (Ratio); Heshmati, Almas (Ratio) |
| Abstract: | According to Buchanan and Congleton (1998), the generality principle in politics blocks special interests. Consequently, the generality principle should thereby promote economic efficiency. This study tests this hypothesis on wage formation and labor markets, by investigating whether generality defined as state neutrality could explain employment performance among OECD countries during 1970-2003. We identify three types of non-neutrality as concerns unemployment: the level or degree of government interference in the wage bargaining process over and above legislation which facilitate mutually beneficial wage agreements, the constrained bargaining range (meaning the extent to which the state favors or blocks certain outcomes of the bargaining process), and the cost shifting (which relates to state interference shifting the direct or indirect burden of costs facing the parties on the labor market). Our overall hypothesis is that nonneutrality or non-generality increases unemployment rates. The empirical results from the general conditional model suggest that government intervention and a constrained bargaining range clearly increase unemployment, while a few of the cost shifting variables have unexpected effects. The findings thus give some, but not unqualified, support for the generality principle as a method to promote economic efficiency. |
| Keywords: | generality; state neutrality; efficiency; unemployment; wage bargaining; cost shifting; OECD |
| JEL: | J01 J08 J64 |
| Date: | 2008–09–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0124&r=lab |
| By: | Nykvist, Jenny (Research Institute of Industrial Economics (IFN)) |
| Abstract: | A large literature has studied the effect of displacement on labor market outcomes in general, but none has evaluated how the displaced manage as self-employed. This paper studies how the survival of the business is affected by displacement in connection to entry, using a discrete-time proportional hazard model on a matched sample of displaced and non-displaced individuals. The main result of the paper is that, as a consequence of previous displacement, the probability of switching from self-employment to paid employment decreases and the probability of switching to unemployment is unaffected. |
| Keywords: | Self-employment; Survival; Displacement |
| JEL: | J24 J63 J65 M13 |
| Date: | 2008–09–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0764&r=lab |
| By: | David H. Autor |
| Abstract: | Labor Market Intermediaries (LMIs) are entities or institutions that interpose themselves between workers and firms to facilitate, inform, or regulate how workers are matched to firms, how work is accomplished, and how conflicts are resolved. This paper offers a conceptual foundation for analyzing the market role played by these understudied institutions, and to develop a qualitative and, in some cases, quantitative sense of their significance to market operation and welfare. Though heterogeneous, I argue that LMIs share a common function, which is to redress -- and in some cases exploit -- a set of endemic departures of labor market operation from the efficient neoclassical benchmark. At a rudimentary level, LMIs such as online job boards reduce search frictions by aggregating and reselling disparate information at a cost below which workers and firms could obtain themselves. Beyond passively supplying information, a set of LMIs forcibly redress adverse selection problems in labor markets by compelling workers and firms to reveal normally hidden credentials, such as criminal background, academic standing, or financial integrity. At their most forceful, LMIs such as labor unions and centralized job matching clearinghouses, resolve coordination and collective action failures in markets by tightly controlling -- even monopolizing -- the process by which workers and firms meet, match and negotiate. A unifying observation of the analytic framework is that participation in the activities of a given LMI are typically voluntary for one side of the market and compulsory for the other; workers cannot, for example, elect to suppress their criminal records and firms cannot opt out of collective bargaining. I argue that the nature of participation in an LMI's activities -- voluntary or compulsory, and for which parties -- is dictated by the market imperfection that it addresses and thus tells us much about its economic function. |
| JEL: | J4 J5 J6 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14348&r=lab |
| By: | Low, Hamish (University of Cambridge); Meghir, Costas (University College London); Pistaferri, Luigi (Stanford University) |
| Abstract: | We specify a structural life-cycle model of consumption, labour supply and job mobility in an economy with search frictions that allows us to distinguish between different sources of risk and to estimate their effects. The sources of risk are shocks to productivity, job destruction, the process of job arrival when employed and unemployed and match level heterogeneity. Our model allows for four main social insurance programmes. In contrast to simpler models that attribute all income fluctuations to shocks, our framework allows us to disentangle the effects of the shocks from the responses to these shocks. Estimates of productivity risk, once we control for employment risk and for individual labour supply choices, are substantially lower than estimates that attribute all wage variation to productivity risk. Increases in productivity risk impose a considerable welfare loss on individuals and induce substantial precautionary saving. Increases in employment risk have large effects on output and, primarily through this channel, affect welfare. The welfare value of government programs such as food stamps which partially insure productivity risk is greater than the value of unemployment insurance which provides (partial) insurance against employment risk and no insurance against persistent shocks. |
| Keywords: | uncertainty, life-cycle models, unemployment, precautionary savings |
| JEL: | D91 H31 J64 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3700&r=lab |
| By: | Gindling, T.H.; Terrell, Katherine |
| Abstract: | To be competitive in the global economy, some argue that Latin American countries need to reduce or eliminate labour market regulations such as minimum wage legislation because they constrain job creation and hence increase poverty. On the other hand, minimum wage increases can have a direct positive impact on family income and may therefore help to reduce poverty. We take advantage of a complex minimum wage system in a poor country that has been exposed to the forces of globalization to test whether minimum wages are an effective poverty reduction tool in this environment. We find the net effect of minimum wage increases in Honduras is the reduction of extreme poverty, with an elasticity of -0.18, and all poverty, with an elasticity of -0.10 (using the national poverty lines). These results are driven entirely by the effect on workers in large private sector firms, where minimum wage legislation is enforced. Increases in the minimum do not affect the incidence of poverty among workers in sectors where minimum wages are not enforced (small firms) or do not apply (self-employed and public sector). Hence, we show that minimum wages can be used as a poverty reduction tool in the formal sector. However, we do not endorse minimum wages as the best tool as we have not carried out a complete cost-benefit analysis of this policy vis-.-vis others. |
| Keywords: | minimum wage, poverty, Central America, Honduras |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-23&r=lab |
| By: | John S Heywood; Colin Green |
| Abstract: | Profit sharing generates conflicting changes in the relationship between supervisors and workers. It may increase cooperation and helping effort. At the same time it can increase direct monitoring and pressure by the supervisor, and mutual monitoring and peer pressure from other workers that is transmitted through the supervisor. Using data on satisfaction with the boss, we initially show that workers under profit sharing tend to have lower satisfaction with their supervisor. Additional estimates show this is largely generated by groups of workers who would be least likely to respond to increased supervisory pressure with increase effort: women, those with dependents and those with health limitations. Despite this finding, profit sharing seems to have little or no influence on overall job satisfaction as the reduction in satisfaction with the boss is offset with increased satisfaction with earnings, a finding consistent with profit sharing enhancing productivity and earnings. |
| Keywords: | Mutual Monitoring, Job Satisfaction, Supervision JEL CODES: J28, J33, J53. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:005698&r=lab |
| By: | Betsey Stevenson |
| Abstract: | Divorce law changes made in the 1970s affected marital formation, dissolution, and bargaining within marriage. By altering the terms of the marital contract these legal changes impacted the incentives for women to enter and remain in the labor force. Whereas earlier work had suggested that the impact of unilateral divorce on female employment depended critically on laws governing property division, I show that these results are not robust to alternative specifications and controls. I find instead that unilateral divorce led to an increase in both married and unmarried female labor force participation, regardless of the pre-existing laws regarding property division. |
| JEL: | D1 J1 J2 K36 N3 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14346&r=lab |
| By: | Muhammad Purnagunawan (Department of Economics, Padjadjaran University) |
| Abstract: | People have different motivation for having a paid job, and this might came from different expectation, value and also gender roles. Nevertheless, most analysis of earning determinant has neglected this possibility. Using data from Household, Income and Labour Dynamics (HILDA) in Australia in 2001 and 2004, this paper investigates the structure of human capital earning equation and its stability after controlling for earning motivation. The results suggest that some measure of earning motivation have effects. However, even after controlling for earning motivation, the returns to schooling and experience do not change significantly. This suggests that the conventional earning function is stable and robust with respect to the influences of earning motivation. |
| Keywords: | return to education, earning motivation, wage |
| JEL: | I2 J24 O15 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:unp:wpaper:200805&r=lab |
| By: | Blanchflower, David G. (Dartmouth College); Lawton, Helen (Bank of England) |
| Abstract: | We examine the impact on the UK of the influx of workers from Eastern Europe. We look at the characteristics of the workers who have come to the UK since 2004. We also use data from a number of Eurobarometers 2004-2007 as well as the 2005 Work Orientation module International Social Survey Programme to look at the attitudes of residents of these countries. East Europeans report that they are unhappy with their lives and the country they live in, are dissatisfied with their jobs and would find difficulties in finding a new job or keeping their existing job. Relatively high proportions express a desire to move abroad. Expectations for the future for both their economy and their personal situations remain low but have improved since 2004. There has been some deterioration in the availability of jobs in the UK economy as the economy moves into recession. The UK is an attractive place to live and work for these workers. We argue that rather than dissipate, flows to the UK could remain strong well into the future. |
| Keywords: | EU expansion, migration, attitudes |
| JEL: | J61 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3695&r=lab |
| By: | Joost de Laat; William Jack |
| Abstract: | This paper uses a newly collected dataset on Ethiopian physicians to shed light on the allocative efficiency of the physician labor market. We use a lottery mechanism by which medical school graduates are assigned to their first jobs to identify the long-term impact of being posted to a rural area instead of the capital, Addis Ababa. We find that physicians who are assigned to Addis are more satisfied with their initial and their current jobs. However, being assigned to the capital through the lottery does not appear to have significant long-run career benefits. This appears to be partly because relatively high ability physicians opt out of the lottery and find jobs in Addis, where they successfully compete with those assigned by the lottery for specialized training. We also find evidence of adverse selection in the market for physicians who initially participated in the lottery, compared with the market for physicians who did not. We rationalize these findings by suggesting that the lottery, by explicitly randomly assigning new graduates, obfuscates information about them that future employers would otherwise find valuable. High ability workers from the lottery do relatively worse later in their careers than their counterparts who did not take part in the lottery, and are more likely to exit the physician labor market in Ethiopia. Our results suggest that using a lottery to assign new physicians to jobs could compromise the future allocative efficiency of the labor market, and even contribute to the medical brain drain. This is not because the long-term impacts of getting a "bad" are negative, but because the lottery makes it difficult for good physicians to signal their quality. |
| Keywords: | Wage Level and Structure, Labor Contracts, Public Sector Labor Markets, Analysis of Health Care Markets |
| JEL: | I11 J45 O20 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:0828&r=lab |
| By: | Guido Schwerdt; Andrea Ichino; Oliver Ruf (University of Zurich, Switzerland); Rudolf Winter-Ebmer; Josef Zweimüller |
| Abstract: | We investigate whether the costs of job displacement differ between blue collar and white collar workers. In the short run earnings and employment losses are substantial for both groups but stronger for white collar workes. In the long run, there are only weak effects for blue collar workers but strong and persistent effects for white collars. This is consistent with the idea that firm-specific human capital and internal labor markets are more important in white-collar than in blue collar jobs. |
| Keywords: | Firm Specific Human Capital, Plant Closures, Matching |
| JEL: | J14 J65 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:jku:nrnwps:2008_01&r=lab |
| By: | Thomas DeLeire; Christopher Timmins |
| Abstract: | Wage-hedonics is used to recover the value of a statistical life by exploiting the fact that workers choosing riskier occupations will be compensated with a higher wage. However, Roy (1951) suggests that observed wage distributions will be distorted if individuals select into jobs according to idiosyncratic returns. We illustrate how this type of sorting may bias wage-hedonic VSL estimates and describe two estimators that correct for it. Using data from the CPS, we recover VSL estimates that are three to four times larger than those based on the traditional techniques, statistically significant, and robust to a wide array of specifications. |
| JEL: | J17 J31 Q5 Q51 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14364&r=lab |
| By: | Natalya Y. Shelkova (University of Connecticut) |
| Abstract: | Low-wage labor markets are traditionally viewed as competitive, and the possibility of strategic behavior by employers is dismissed. However, such behavior is not impossible. This paper investigates the possibility of tacit collusion by low-wage employers while setting wages. A game-theoretic explanation along the lines of the Folk theorem is of- fered, suggesting that a non-binding minimum wage may serve as a focal point for tacit collusion, proposing a symmetric solution to an infinitely played game of wage-setting. Several empirical techniques were employed in testing the hypothesis, including hurdle models of collusion. CPS monthly data is used for the years 1990-2005, a period that covers the last four federal minimum wage increases (in the US). The likelihood of collusion at minimum wage is evaluated, as well as its dynamics during this period. The results generally support the col- lusion hypothesis and suggest that employers respond strategically to changes in minimum wage legislation while using the statutory mini- mum wage as a coordination tool in tacit collusion. |
| Keywords: | minimum wage, low-wage markets, collusion, tacit collusion, focal points |
| JEL: | J31 J38 J42 L10 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2008-33&r=lab |
| By: | Fox, Louise; Oviedo, Ana Maria |
| Abstract: | The authors use firm-level survey data from the manufacturing sector in 20 Sub-Saharan African countries to explore the links between labor market regulations and net job creation. A first look at firm characteristics, perceptions, and the dynamics of employment at the firm level suggests that labor regulations are not the main"binding constraint"on job creation. Other issues seem more important at this level of development. The analysis estimates the determinants of net job creation incorporating the legal origin of the country as a proxy for regulation. The findings show that, after controlling for other firm-level characteristics, legal origin is uncorrelated with net job creation in the short run. |
| Keywords: | Labor Markets,Labor Policies,Microfinance,Banks&Banking Reform,Labor Management and Relations |
| Date: | 2008–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4721&r=lab |
| By: | Carlos Thomas (Banco de España); Francesco Zanetti (Bank of England) |
| Abstract: | This paper studies the effect of labor market reform, in the form of reductions in firing costs and unemployment benefits, on inflation volatility. With this purpose, we build a New Keynesian model with search and matching frictions in the labor market, and estimate it using Euro Area data. Qualitatively, changes in labor market policies alter the volatility of inflation in response to shocks, by affecting the volatility of the three components of real marginal costs (hiring costs, firing costs and wage costs). Quantitatively, we find however that neither policy is likely to have an important effect on inflation volatility, due to the small impact of changes in the volatility of the labor market on inflation dynamics. |
| Keywords: | Labor market policies, Search and matching frictions, New Keynesian model |
| JEL: | E31 E32 J64 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0818&r=lab |
| By: | Grout, Paul (University of Bristol); Schnedler, Wendelin (University of Heidelberg) |
| Abstract: | How does the environment of an organization influence whether workers voluntarily provide effort? We study the power relationship between a non-profit unit (e.g. university department, NGO, health trust), where workers care about the result of their work, and a bureaucrat, who supplies some input to the non-profit unit, but has opportunity costs in doing so (e.g. Dean of faculty, corrupt representative, government agency). We find that marginal changes in the balance of power eventually have dramatic effects on donated labor. We also identify when strengthening the non-profit unit decreases and when it increases donated labor. |
| Keywords: | donated labor, intrinsic motivation, non-profit organizations, power within organizations |
| JEL: | L30 M50 H10 H40 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3685&r=lab |
| By: | Bennmarker, Helge (IFAU - Institute for Labour Market Policy Evaluation); Mellander, Erik (IFAU - Institute for Labour Market Policy Evaluation); Öckert, Björn (IFAU - Institute for Labour Market Policy Evaluation) |
| Abstract: | Using a Difference-in-Differences approach we evaluate the effects of a 10 percentage points reduction in the payroll tax introduced in 2002 for firms in the northern part of Sweden. We find no employment effects for existing firms and can rule out that a 1 percentage point payroll tax reduction would increase employment with more than 0.2 percent. We do, however, find that tax reductions have significantly positive effects on the average wage bill per employee. These are likely to be driven by higher average wages, but might also be due to more hours worked. As a sensitivity check we investigate if reduced payroll taxes affect the likelihood of firm entry and exit, and find some support for a net firm inflow. Our attempts to assess concomitant effects on employment indicate that payroll tax reductions might yield increases in employment through the start-up of new firms. |
| Keywords: | Payroll tax; Labour demand; Incidence; Firm entry/exit; Difference-in-Differences |
| JEL: | H22 J23 J38 J58 J68 |
| Date: | 2008–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2008_019&r=lab |
| By: | Hall, Caroline (IFAU - Institute for Labour Market Policy Evaluation) |
| Abstract: | Previous research suggests that there are substantial interactions between the unemployment insurance (UI) and the sickness insurance (SI) in Sweden. Moral hazard arises in the interplay between these two social insurance systems, since by reporting sick an unemployed person can postpone the UI expiration date and sometimes also receive considerably higher benefits. This paper examines whether these interactions affect the transition rate from unemployment to employment. To study this question I utilize a reform which greatly reduced the incentives for unemployed persons to transfer to the SI. While there is evidence that this reform substantially lowered the incidence of sick reports among the unemployed, I find no evidence suggesting that the reduced sick report rate in turn affected the transition rate to employment |
| Keywords: | Unemployment insurance; sickness insurance; unemployment duration; health; duration analysis |
| JEL: | C41 H55 I18 J64 J65 |
| Date: | 2008–09–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2008_018&r=lab |
| By: | Abada, Teresa; Hou, Feng; Ram, Bali |
| Abstract: | Using the 2002 Ethnic Diversity Survey, this article examines the group differences by national origin in university educational attainment among the children of immigrants in Canada. We found that children of immigrant parents in most source region groups achieve higher university completion rates than children of Canadian-born parents, partly due to higher education levels of their parents. Children of Chinese and Indian immigrants particularly attain higher academic achievements than children of Canadian-born parents. Parental education was also important in explaining the relatively low university completion rates among the second-generation Portuguese. |
| Keywords: | Education, training and learning, Ethnic diversity and immigration, Educational attainment, Education, training and skills, Ethnic groups and generations in Canada, Outcomes of education |
| Date: | 2008–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:stc:stcp3e:2008308e&r=lab |
| By: | Zeynep Ton (Harvard Business School, Technology and Operations Management Unit) |
| Abstract: | Determining staffing levels is an important decision in retail operations. While the costs of increasing labor are obvious and easy to measure, the benefits are often indirect and not immediately felt. One benefit of increased labor is improved quality. The objective of this paper is to examine the effect of labor on profitability through its impact on quality. Since employees at retail stores perform both production-related activities and customer-service activities, I examine both conformance quality and service quality. Using longitudinal data from stores of a large retailer, I find that increasing the amount of labor at a store is associated with an increase in profitability through its impact on conformance quality but not its impact on service quality. While increasing labor is associated with an increase in service quality, in this setting there is no significant relationship between service quality and profitability. My findings highlight the importance of attending to process discipline in certain service settings. They also show that too much corporate emphasis on payroll management may motivate managers to operate with insufficient labor levels, which, in turn, degrades profitability. |
| Keywords: | Labor Capacity Management, Quality, Retail Operations |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:09-040&r=lab |
| By: | Barrett, Alan (ESRI, Dublin); Kelly, Elish (Economic and Social Research Institute, Dublin) |
| Abstract: | Much research has been conducted on immigration into Ireland in recent years using data from the Quarterly National Household Survey (QNHS), the official source for labour market data in Ireland. As it is known that the QNHS undercounts immigrants in Ireland, a concern exists over whether the profile of immigrants being provided is accurate. For example, QNHS-based research has shown that immigrants in Ireland are a highly educated group. However, if it is the case that those who are missed by the QNHS are more heavily drawn from among low-skilled immigrants, then the profile being reported and used in other research may be inaccurate. In this paper, we use the Irish Census of 2006 to assess the reliability of the profile of immigrants provided by the QNHS by comparing the characteristics of immigrants in both datasets. In general, we find that the QNHS does indeed provide a reliable picture and that earlier findings on the education levels of immigrants in Ireland hold. |
| Keywords: | migration research, census, household survey, Ireland |
| JEL: | J61 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3689&r=lab |
| By: | King, Elizabeth M.; Orazem, Peter F.; Paterno, Elizabeth M. |
| Abstract: | Many educators and policymakers have argued for lenient grade promotion policy - even automatic promotion - in developing country settings where grade retention rates are high. The argument assumes that grade retention discourages persistence or continuation in school and that the promotion of children with lower achievement does not hamper their ability or their peers'ability to perform at the next level. Alternatively, promoting students into grades for which they are not prepared may lead to early dropout behavior. This study shows that in a sample of schools from the Northwest Frontier Province of Pakistan, students are promoted primarily on the basis of merit. An econometric decomposition of promotion decisions into a component that is based on merit indicators (attendance and achievement in mathematics and language) and another that is uncorrelated with those indicators allows a test of whether parental decisions to keep their child in school is influenced by merit-based or non-merit-based promotions. Results suggest that the enrollment decision is significantly influenced by whether learning has taken place, and that grade promotion that is uncorrelated with merit has a negligible impact on school continuation. |
| Keywords: | Tertiary Education,Education For All,Secondary Education,Primary Education,Teaching and Learning |
| Date: | 2008–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4722&r=lab |
| By: | Böhlmark, Anders (SOFI, Stockholm University); Lindahl, Mikael (Uppsala University) |
| Abstract: | This paper evaluates general achievement effects of choice and competition between private and public schools at the nine-year school level by assessing a radical voucher reform that was implemented in Sweden in 1992. Starting from a situation where the public schools essentially were monopolists on all local school markets, the degree of privatization has developed very differently across municipalities over time as a result of this reform. We estimate the impact of an increase in private enrolment on short, medium and long-term educational outcomes of all pupils using within-municipality variation over time, and control for differential pre-reform and concurrent municipality trends. We find that an increase in the private school share moderately improves short-term educational outcomes such as 9th-grade GPA and the fraction of students who choose an academic high school track. However, we do not find any impact on medium or long-term educational outcomes such as high school GPA, university attainment or years of schooling. We conclude that the first-order short-term effect is too small to yield lasting positive effects. |
| Keywords: | private schooling, choice, competition, educational achievement |
| JEL: | I22 I28 H40 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3691&r=lab |
| By: | Stefanie Schurer (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | Empirical evidence from the psychology literature suggests that reactions towards health shocks depend strongly on the personality trait of locus of control, which is usually unobservable to the analyst. In this paper, the role of this discrete heterogeneity in shaping the effects of health shocks on labour supply are theoretically modelled by adopting the Grossman (1972) model. Using German longitudinal data, the predictions of the theoretical model are tested with a latent class binary choice model and an alternative identification strategy. A robust result across both specifications for various definitions of locus of control, health shocks and labour market outcomes is that internals have a smaller probability of leaving the labour market after experiencing a health shock than externals. |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2008n19&r=lab |
| By: | Fang Yao |
| Abstract: | I explore the aggregate effects of micro lumpy labor adjustment in a prototypical RBC model, which embeds a stochastic labor duration mechanism in the spirit of Calvo(1983), and it extends this approach by introducing a Weibull-distributed labor adjustment process to capture the increasing hazard function corroborated by the micro data. My principal findings are: The aggregate labor demand equation derived from the baseline Calvostyle model corresponds to the same reduced form as the quadratic-adjustment-cost model and deep parameters have a one-to-one mapping. However, this result does not hold in general. When introducing the Weibull labor adjustment, the aggregate dynamics vary with the extent of increasing hazard function, e.g., the volatility of aggregate labor is increasing, but the persistence is decreasing in degree of the increasing hazard of the labor adjustment. |
| Keywords: | business cycles; heterogeneous labor rigidity; increasing hazard function; Weibull distribution |
| JEL: | E32 E24 C68 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2008-056&r=lab |
| By: | Biewen, Martin; Steffes, Susanne |
| Abstract: | We present evidence for a highly significant interaction between state dependence in individual unemployment risk and the business cycle. The disadvantage from having been unemployed in the previous period is smaller in times of relatively high unemployment and larger in times of low unemployment. This is consistent with the existence of stigma effects in the sense that unemployed individuals face difficulties finding a new job because employers interpret unemployment as a negative signal and do so especially when it is easier to find jobs, i.e. when unemployment is low. |
| Keywords: | Unemployment persistence, state dependence, human capital depreciation, stigma effects, scarring |
| JEL: | C23 J64 J65 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7380&r=lab |
| By: | McArthur, David (Stord/Haugesund University College); Thorsen, Inge (Stord/Haugesund University College); Ubøe, Jan (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration) |
| Abstract: | This paper explores possible reasons for persistent spatial unemployment disparities using agent-based computational methods. The method relies on observing the actions of thousands of individuals within an artificial society. The paper models the effect of unemployment insurance, wage disparities, region specific amenities and innate residential preferences on regional labour market interactions, accounting for both migration and commuting. An empirical example of Rogaland county in south-west Norway is given, where unemployment disparities have proved remarkably persistent for decades. The model provides non-trivial insight into the nature of spatial unemployment disparities as well as making a valuable contribution to the policy debate. |
| Keywords: | Unemployment insurance; wage disparities; region specific amenities; innate residential preferences; regional labour market interactions |
| JEL: | R10 R12 R15 |
| Date: | 2008–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2008_017&r=lab |
| By: | Contreras, Juan; Sinclair, Sven |
| Abstract: | We evaluate the labor supply response in a stochastic overlapping generations model with incomplete markets and a non separable utility function in labor and consumption. Using a simulated panel from the model, we calculate the labor supply response to anticipated changes in wages (holding the marginal utility of wealth constant-that is, the Frisch elasticity) and to unanticipated change in wages (which describes the effect of uncertainty in labor supply responses). The model's Frisch elasticity estimate is 0.33, which is slightly higher than the empirical estimates in the earlier literature but somewhat lower than more recent estimates. The paper also shows that the borrowing constraints in the model reduce substantially the estimates of the Frisch elasticity. The labor supply response to an unanticipated change in wages is small because of large wealth effects. Having all the variables required and no measurement error, we calculate the omitted variable bias of not controlling for the level and variance (risk) of the unexpected changes in wages. Omitting both variables biases the estimates of the Frisch elasticity downward by a factor of 8; omitting measures of wage risk alone biases it by a factor of 1.4 |
| Keywords: | labor supply; intertemporal substitution; Frisch elasticity; stochastic GE models |
| JEL: | D91 J22 D58 |
| Date: | 2008–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10533&r=lab |
| By: | Martin Chalkley; J. S. Rennie; Colin Tilley |
| Abstract: | This paper uses a unique individual level administrative data set to analyse the participation of health professionals in the NHS after training. The data set contains information on over 1,000 dentists who received Dental Vocational Training in Scotland between 1995 and 2006. Using a dynamic nonlinear panel data model, we estimate the determinants of post-training participation. We ?nd there is signi?cant persistence in these data and are able to show that the persistence arises from state dependence and individual heterogeneity. This ?nding has implications for the structure of policies designed to increase participation rates. We apply this empirical framework to assess the accuracy of predictions for workforce forecasting, and to provide a preliminary estimate of the impact of one of the recruitment and retention policies available to dentists in Scotland. |
| Keywords: | administrative data, labour markets, participation |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:dun:dpaper:218&r=lab |
| By: | Behrens, Kristian (University of Québec at Montréal); Mion, Giordano (CORE, Catholic University of Louvain); Murata, Yasusada (Nihon University); Suedekum, Jens (University of Duisburg-Essen) |
| Abstract: | We develop a new general equilibrium model of trade with heterogeneous firms, variable demand elasticities and endogenously determined wages. Trade integration favors wage convergence, intensifies competition, and forces the least efficient firms to leave the market, thereby affecting aggregate productivity. Since wage and productivity responses are endogenous, our model is well suited to study the impacts of trade integration on aggregate productivity and factor prices. Using Canada-U.S. interregional trade data, we first estimate a system of theory-based gravity equations under the general equilibrium constraints generated by the model. Doing so allows us to measure 'border effects' and to decompose them into a 'pure' border effect, relative and absolute wage effects, and a selection effect. Using the estimated parameter values, we then quantify the impacts of removing the Canada-U.S. border on wages, productivity, markups, the share of exporters, the mass of varieties produced and consumed, and welfare. We finally provide a similar quantification with respect to regional population changes. |
| Keywords: | monopolistic competition, general equilibrium, gravity equations, heterogeneous firms, variable demand elasticities |
| JEL: | F12 F15 F17 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3682&r=lab |
| By: | Antonio Merlo (Department of Economics, University of Pennsylvania); Kenneth I. Wolpin (Department of Economics, University of Pennsylvania) |
| Abstract: | In this paper, we propose a new approach to the empirical study of the relationships among schooling, youth employment and youth crime which provides a comprehensive analysis of the dynamic interactions among these choices and exposure to the criminal justice system. The empirical framework takes the form of a multinomial discrete choice vector autoregression of a youth’s schooling, work and crime decisions as well as arrest and incarceration outcomes. We allow for observable initial conditions, unobserved heterogeneity, the possibility of measurement error and for missing data. We use data from the NLSY97 on black male youths starting from age 14. The estimates indicate an important role for heterogeneity in initial conditions. We also find that stochastic events that arise during one’s youth can be important in determining outcomes as young adults. |
| Keywords: | crime, schooling, work, VAR |
| JEL: | K42 J24 J15 |
| Date: | 2008–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:08-033&r=lab |
| By: | Grodner, Andrew (East Carolina University); Kniesner, Thomas J. (Syracuse University) |
| Abstract: | We examine the socially optimal wealth distribution in a two-person two-good model with heterogeneous workers and asymmetric social interactions where only one (social) individual derives positive or negative utility from the leisure of the other (non-social) individual. We show that the interdependence can effectively counter-act the need to transfer wealth to low-wage individuals and may require them to be poorer by all objective measures. We demonstrate that in the presence of social interactions it can be socially desirable to keep substantial wealth inequality. |
| Keywords: | wealth inequality, earnings inequality, social welfare, social interactions |
| JEL: | D31 D63 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3684&r=lab |
| By: | Dan Wheatley; Irene Hardill; Bruce Philp |
| Abstract: | This paper is predicated on the view that reductions in work-time are generally desirable. We analyse historical trends in working-hours, the organisation of production, and theories of power and authority in firms and other organisations. Then we consider this in relation to patterns of work in the UK, demonstrating empirically that managers are more wedded to a ‘long-hours’ culture than are other employees. We theorise that this is because managers’ roles align their attitudes with those desired by the firm or organisation and conclude that, as a consequence, the “voluntary” nature of work-time regulation should be revisited. |
| Keywords: | Working hours, Hierarchy, Power, Preferences |
| JEL: | J08 J22 J53 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbs:wpaper:2008/5&r=lab |
| By: | Richard Deitz; Jaison R. Abel |
| Abstract: | We analyze patterns of compensating differentials to determine whether a region's bundle of site characteristics has a greater net effect on household location decisions relative to firm location decisions in U.S. metropolitan areas over time. We estimate skill-adjusted wages and attribute-adjusted rents using hedonic regressions for 238 metropolitan areas in 1990 and 2000. Within the framework of the standard Roback model, we classify each metropolitan area based on whether amenities or firm productivity advantages dominate and analyze the extent to which these classifications change between 1990 and 2000. We then decompose compensating differentials into amenity and firm productivity advantage components and examine how these components change. Empirical results suggest that while the relative importance of amenities appears to have increased slightly between 1990 and 2000, firm productivity advantages continued to dominate amenities in the vast majority of metropolitan areas during this decade. |
| Keywords: | Metropolitan areas - Statistics ; Industrial location ; Households ; Industrial productivity |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:344&r=lab |
| By: | Ivaschenko, Oleksiy; Mete, Cem |
| Abstract: | Tajikistan?s rural sector has witnessed substantial development since the country began to emerge from civil conflict in 1999. Gross agricultural output increased 64 per cent from 1999 to 2003, and there were significant developments in the agricultural reform agenda. This paper uses the panel component of two surveys conducted in Tajikistan at a one-year interval (2003 and 2004) to explore the major determinants of the transition out of/into poverty of rural households. Poverty status is measured in the asset space, thus indicating structural rather than transitory poverty movements. The empirical analysis reveals several interesting findings that are also important from a policy perspective: first, cotton farming seems to have no positive impact on poverty levels, nor on mobility out of poverty. Second, the rate of increase in the share of private farming at the district level had little impact on poverty levels and poverty mobility. Third, there is strong evidence of geographic poverty mobility traps in Tajikistan. Higher levels of poverty in a district appear to reduce significantly the chance of a household shedding poverty. Living in a region with overall slow economic growth is also found to undermine the odds of exiting poverty and to increase the risk of falling into poverty. Finally, several key household-level factors, such as the share of adults, education level, health status and participation in wage employment, also emerge as significant predictors of poverty mobility. |
| Keywords: | welfare, poverty, Tajikistan |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-26&r=lab |
| By: | Bocean, Claudiu George; Sitnikov, Cataliana Soriana; Meghisan, Madalina Georgeta |
| Abstract: | This paper clarifies the links between employment, productivity and output growth and traces prospects for the Romanian economy. Because it always remains true, the “fundamental identity” which relates employment to output and labor productivity is the starting point for this paper. We checked the indirect correlation between employment and GDP growth in Romania. Using the historical trends we extrapolated data to 2015. We think that a low unemployment rate and rapid productivity growth are the hallmarks of a successful emerging economy and thus top priorities of economic policy. |
| Keywords: | Employment; productivity; output growth |
| JEL: | O47 E27 E24 |
| Date: | 2008–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10694&r=lab |
| By: | Bhargava, Alok |
| Abstract: | This paper estimated models for GDP growth rates, poverty levels, and inequality measures for the period 1990?2000 using data on 54 developing countries at five-yearly intervals. Issues of globalization were investigated by analysing the differential effects of the countries? exports and imports and by postulating trans-logarithmic models that allow for non-linear effects of literacy levels and measures of openness. The main findings were that literacy rates affected growth rates in a quadratic manner and countries with higher literacy were more likely to benefit from globalization. Second, the model for growth rates showed non-linear and differential effects of the export/GDP and import/GDP ratios. Third, the models indicated that population health indicators such as life expectancy were important predictors of GDP growth rates. Fourth, models for poverty measures showed that poverty was not directly affected by globalization indicators. Finally, the model for Gini coefficients indicated significant effects of ?medium? and ?high? skilled labour work force, with higher proportions of high-skilled labour implying greater inequality. |
| Keywords: | globalization, economic development, education, endogeneity, inequality, poverty, non-linearities, trade |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-04&r=lab |
| By: | Anna Aizer |
| Abstract: | Although recent work has shown that peers affect human capital accumulation, the mechanisms are not well understood. Knowing why high achieving peers matter, because of their innate ability, disciplined behavior or some other factor, has important implications for our understanding of the education production function and for how we organize schools and classrooms. In this paper I provide evidence that peer behavior is an important mechanism. To identify the impact of peer behavior on achievement separate from ability or other characteristics, I exploit exogenous improvements in classmates' inattention/impulsivity that result from a diagnosis of ADD. After children with ADD are diagnosed, I show that their behavior improves, but that no other characteristics, including achievement, change. I find that peer behavior significantly affects cognitive achievement and that resources such as class size can overcome the negative peer effects observed, consistent with the model of education production proposed by Lazear (2001). These findings have important implications for our understanding not only of peer effects but also of the relationship between health, productivity and growth. |
| JEL: | I1 I18 I2 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14354&r=lab |
| By: | Popli, Gurleen K. |
| Abstract: | In this paper I examine the trend in income inequality and poverty among the self-employed workers in Mexico over the last two decades (1984?2002). This is the period over which Mexico opened its economy to the global market through trade and investment liberalization. For the first decade following the liberalization, inequality and poverty among the self-employed increased; as the economy stabilized and the country saw economic growth inequality started to go down, but poverty kept increasing. To understand the changes in inequality and poverty I decompose the inequality and poverty indices into within and between group components. Rising returns to skilled labour, regional differences in impact of liberalization and sectoral shifts in employment are important factors in explaining the trends in both inequality and poverty. |
| Keywords: | income inequality, poverty, Shapley?Shorrocks decomposition, self-employed, Mexico |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-05&r=lab |
| By: | Bridget Terry Long; Michal Kurlaender |
| Abstract: | Community colleges have become an important entryway for students intending to complete a baccalaureate degree. However, many question the viability of the transfer function and wonder whether students suffer a penalty for starting at a two-year institution. This paper examines how the outcomes of community college entrants compare to similar students who initially entered four-year institutions within the Ohio public higher education system. Using a detailed dataset, we track outcomes for nine years and employ multiple strategies to deal with selection issues: propensity score matching and instrumental variables. The results suggest that straightforward estimates are significantly biased, but even after accounting for selection, students who initially begin at a community college were 14.5 percent less likely to complete a bachelor's degree within nine years. |
| JEL: | C1 I2 J24 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14367&r=lab |
| By: | Blomeyer, Dorothea (ZI Mannheim); Coneus, Katja (ZEW Mannheim); Laucht, Manfred (ZI Mannheim); Pfeiffer, Friedhelm (ZEW Mannheim) |
| Abstract: | This paper investigates the role of self-productivity and home resources in ability formation from infancy to adolescence. In addition, we study the complementarities between basic cognitive, motor and noncognitive abilities and social as well as academic achievement. Our data are taken from the Mannheim Study of Children at Risk (MARS), an epidemiological cohort study following the long-term outcome of early risk factors. Results indicate that initial risk conditions cumulate and that differences in basic abilities increase during development. Self-productivity rises in the developmental process and complementarities are evident. Noncognitive abilities promote cognitive abilities and social achievement. There is remarkable stability in the distribution of the economic and socio-emotional home resources during the early life cycle. This is presumably a major reason for the evolution of inequality in human development. |
| Keywords: | initial conditions, home resources, intelligence, persistence, social competencies, school achievement |
| JEL: | D87 I12 I21 J13 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3692&r=lab |
| By: | Bolhaar, Jonneke (Free University of Amsterdam); Lindeboom, Maarten (Free University of Amsterdam); van der Klaauw, Bas (Free University of Amsterdam) |
| Abstract: | We investigate the presence of moral hazard and advantageous or adverse selection in a market for supplementary health insurance. For this we specify and estimate dynamic models for health insurance decisions and health care utilization. Estimates of the health care utilization models indicate that moral hazard is not important. Furthermore, we find strong evidence for advantageous selection, largely driven by heterogeneity in education, income and health preferences. Finally, we show that ignoring dynamics and unobserved fixed effects changes the results dramatically. |
| Keywords: | supplementary private health insurance, health care utilization, advantageous selection, moral hazard, panel data |
| JEL: | I11 D82 G22 C33 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3698&r=lab |
| By: | Joao Ricardo Faria; Juan Carlos Cuestas; Luis Gil-Alana |
| Abstract: | This paper presents a cyclical model for unemployment and entrepreneurship. The estimated periodicity of the cycles for the US, the UK, Spain and Ireland is between 5 and 10 years, and the orders of integration are smaller (greater) than 1 if the underlying disturbances are autocorrelated (white noise), corresponding to dampen cycles (limit cycle). |
| Keywords: | New firms, Employment creation, cycles. |
| JEL: | J69 L26 M13 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbs:wpaper:2008/2&r=lab |
| By: | Joao Ricardo Faria; Juan Carlos Cuestas; Estefania Mourelle |
| Abstract: | This paper tests the view that the relation between unemployment and entrepreneurship is dynamic and possibly nonlinear. It performs Granger-causality tests and STAR-EXT estimation to assess the causality direction and the nonlinear nature of the relation for a set of OECD countries. The results reveal a bidirectional and nonlinear relation between business creation and changes in unemployment. |
| Keywords: | New firms, employment creation, causality, nonlinearities, STAR-EXT |
| JEL: | J69 L26 M13 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbs:wpaper:2008/6&r=lab |
| By: | Banerjee Tathagata |
| Abstract: | This study explores the role of incentives—monetary or non-monetary compensation offered to children so that an educational need is fulfilled or perceived cost is brought down—in attaining certain expected educational enrolment and retention outcomes. It draws on a survey conducted in six villages in Gujarat. Incentives themselves may not be that critical in improving access and retention performance; other socio-economic and school-related factors may be more significant in ensuring access and retention. However, incentives may have help in keeping the poorer performers in school. |
| Date: | 2008–09–16 |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:2008-09-01&r=lab |
| By: | Jean-François Giret (IREDU - Institut de recherche sur l'éducation : Sociologie et Economie de l'Education - CNRS : UMR5225 - Université de Bourgogne); Christine Guégnard (IREDU - Institut de recherche sur l'éducation : Sociologie et Economie de l'Education - CNRS : UMR5225 - Université de Bourgogne); Jean-Jacques Paul (IREDU - Institut de recherche sur l'éducation : Sociologie et Economie de l'Education - CNRS : UMR5225 - Université de Bourgogne) |
| Abstract: | Étudier le début de carrière des jeunes diplômés, femmes et hommes, sur les différents marchés du travail européens peut permettre de mieux saisir les évolutions récentes dans chaque pays et des tendances communes au niveau européen. Notre démarche repose sur l’enquête REFLEX (Research into Employment and Professional Flexibility) réalisée auprès de 40 000 jeunes cinq ans après la fin de leurs études, dont 60 % de femmes, diplômé-e-s en 2000 de l’enseignement supérieur, dans 15 pays européens : Allemagne, Autriche, Belgique (Flandres), Espagne, Estonie, Finlande, France, Italie, Norvège, Pays-Bas, Portugal, Royaume-Uni, République tchèque, Suède, Suisse. L’intérêt de cette communication est de comparer l’accès aux emplois des femmes et des hommes dans divers pays d’Europe, au regard des compétences acquises lors de leurs études ou de leurs premières années de vie active. Centrer l’analyse sur leurs situations professionnelles, observées cinq ans après la fin des études, ainsi que leurs perceptions quant à leurs expériences professionnelles, leurs compétences est d’autant plus intéressant qu’une différenciation sexuée des modalités d’accès au marché du travail se développe, plus ou moins accentuée selon le pays. Notre communication se divisera en deux parties. La première synthétisera les principales différences entre les débuts des trajectoires féminines et masculines sur les marchés du travail européens. La seconde partie se focalisera sur une analyse économétrique des disparités de rémunération selon le genre, à partir de méthodes de décomposition des écarts salariaux. |
| Keywords: | Genre ; Valorisation ; Compétence ; Marché du travail ; Europe ; Différenciation sexuelle ; Diplômé de l'enseignement supérieur ; Emploi des diplômés |
| Date: | 2008–06–19 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00324236_v1&r=lab |
| By: | George Atsalakis (Data Analysis and Forecasting Laboratory, Technical University of Crete, GREECE); Camelia Ioana Ucenic (University of Crete - Technical University Cluj Napoca); Christos Skiadas (Data Analysis and Forecasting Laboratory, Technical University of Crete, GREECE) |
| Abstract: | Greece is a low-productivity economy with an ineffective welfare state, relying almost exclusively on low wages and social transfers. Failure to come to terms with this reality hampers both the appropriateness of EU recommendations and the Greek government's capacity to deal with unemployment. Rather than finding a job in a family business or through relationship contacts, young people stay unemployed. Nor can people move back to their village of origin so easily. The underground economy, and the mass of small companies which characterize the Greek economy are booming, on paper. One in three members of the workforce are "self-employed", compared to one in seven in the EU as a whole. (International Viewpoint) An unemployed person in Greece is 2,15 times more likely to suffer poverty than a person in employment. Yet in Greece there are perhaps even more influential factors in determining increased risk of poverty. Thus while unemployment is a crucial factor in the risk of poverty, it is neither the only nor the most significant factor. The paper presents a new technique in the field of unemployment modeling in order to forecast unemployment index. Techniques from the Artificial Neural Networks and from fuzzy logic have been combined to generate a neuro-fuzzy model. The input is a time series. Classical statistics measures are calculated in order to asses the model performance. Further the results are compared with an ARMA and an AR model. |
| Keywords: | forecasting, neural network, unemployment |
| Date: | 2008–09–24 |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:0823&r=lab |
| By: | Fields, Gary S.; Sanchez Puerta, Maria Laura |
| Abstract: | In recent years, the economy of Argentina has experienced both rapid economic growth and severe economic decline. In this paper, we use a series of one-year long panels to study who gained the most in pesos when the economy grew and who lost the most in pesos when the economy contracted. To answer these questions, we test two hypotheses both unconditionally and conditionally. The ?divergence of earnings? hypothesis holds that in any given year, the highest earning individuals are those who experienced the largest earnings gains or the smallest earnings losses in pesos. The ?symmetry of gains and losses? hypothesis holds that those groups that gained the most in pesos when the economy grew are those that lost the most in pesos when the economy contracted. Both hypotheses are decisively rejected in the data. Rather, we find that it is the lowest income individuals and groups who gain the most in pesos, whether in good times or in bad. Thus, the panel data analysis performed in this paper presents a picture of economic growth that is much more pro-poor than one gets from cross sectional inequality comparisons. |
| Keywords: | finance, growth, inequality, Argentina, survey, gains, losses |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-06&r=lab |
| By: | Lisa Barrow; Cecilia Elena Rouse |
| Abstract: | In this article, we review the empirical evidence on the impact of education vouchers on student achievement, and briefly discuss the evidence from other forms of school choice. The best research to date finds relatively small achievement gains for students offered education vouchers, most of which are not statistically different from zero. Further, what little evidence exists regarding the potential for public schools to respond to increased competitive pressure generated by vouchers suggests that one should remain wary that large improvements would result from a more comprehensive voucher system. The evidence from other forms of school choice is also consistent with this conclusion. Many questions remain unanswered, however, including whether vouchers have longer-run impacts on outcomes such as graduation rates, college enrollment, or even future wages, and whether vouchers might nevertheless provide a cost-neutral alternative to our current system of public education provision at the elementary and secondary school level. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-08-08&r=lab |
| By: | Abada, Teresa; Hou, Feng; Ram, Bali |
| Abstract: | À partir de l'Enquête sur la diversité ethnique de 2002, le présent article examine les différences de groupe selon l'origine nationale en ce qui a trait au niveau de scolarité universitaire chez les enfants d'immigrants au Canada. Nous avons déterminé que les enfants de parents immigrants de la plupart des groupes de régions d'origine affichent des taux de diplômation universitaire plus élevés que les enfants de parents nés au Canada, partiellement en raison du niveau de scolarité plus élevé de leurs parents. Les enfants des immigrants de la Chine et de l'Inde atteignent notamment des niveaux de scolarité plus élevés que les enfants de parents nés au Canada. Le niveau de scolarité des parents est également important pour expliquer les taux relativement faibles de diplômation universitaire chez les Portugais. |
| Keywords: | Éducation, formation et apprentissage, Diversité ethnique et immigration, Niveau de scolarité, Éducation, formation et compétences, Groupes ethniques et générations au Canada, Résultats éducationnels |
| Date: | 2008–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:stc:stcp3f:2008308f&r=lab |