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on Labour Economics |
| By: | Hall, Robert (Stanford University); Krueger, Alan B. (Princeton University) |
| Abstract: | Some workers bargain with prospective employers before accepting a job. Others could bargain, but find it undesirable, because their right to bargain has induced a sufficiently favorable offer, which they accept. Yet others perceive that they cannot bargain over pay; they regard the posted wage as a take-it-or-leave-it opportunity. Theories of wage formation point to substantial differences in labor-market equilibrium between bargained and posted wages. The fraction of workers hired away from existing jobs is another key determinant of equilibrium, because a worker with an existing job has a better outside option in bargaining than does an unemployed worker. Our survey measures the incidences of wage posting, bargaining, and on-the-job search. We find that about a third of workers had precise information about pay when they first met with their employers, a sign of wage posting. We find that another third bargained over pay before accepting their current jobs. And about 40 percent of workers could have remained on their earlier jobs at the time they accepted their current jobs. |
| Keywords: | jobs, wages, bargaining, equilibrium |
| JEL: | E24 J3 J64 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3775&r=lab |
| By: | Bernhard, Sarah (IAB, Nürnberg); Gartner, Hermann (IAB, Nürnberg); Stephan, Gesine (IAB, Nürnberg) |
| Abstract: | Our paper estimates the average effect of wage subsidies – paid to employers for a limited period of time – on the labour market prospects of needy job-seekers without access to insurance-paid 'unemployment benefit I'. The results show that wage subsidies had large and significant favourable effects: 20 months after taking up a subsidised job, the share of persons in regular employment is nearly 40 percentage points higher across participants. On the whole, groups with particular placement difficulties benefit comparatively more from subsidisation. |
| Keywords: | wage subsidies, unemployment benefits II for needy job-seekers, evaluation of active labour market programmes, propensity score matching |
| JEL: | J68 J64 J65 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3772&r=lab |
| By: | Saqib Jafarey (Department of Economics, City University, London) |
| Abstract: | This paper studies the combined effect of marriage and gender wage discrimination on female education and labour market participation. Given wage discrimination, marriage increases the proportion of time women spend in housework, biasing their education downwards. The bias is not just relative to men, but also relative to single women and is discontinuous in the gender wage gap. Furthermore, consensual marriages might restrict female labour force participation and education more than non-consensual ones and a proportionate increase in male and female wages could further restrict them. The latter prediction is consistent with the U-shaped relationship found in the empirical literature between female labour force participation and economic growth. |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:cty:dpaper:0812&r=lab |
| By: | Schwager, Robert |
| Abstract: | A model is presented where workers of differing abilities and from different social backgrounds are assigned to jobs based on grades received at school. It is examined how this matching is affected if good grades are granted to some low ability students. Such grade inflation is shown to reduce the aggregate wage of the lower class workers because employers use social origin as a signal for productivity if grades are less than fully informative. Moreover, the high-ability students from the higher class may benefit from grade inflation since this shields them from the competition on the part of able students from the lower classes. |
| Keywords: | education, grading, standards, assignment, social mobility, grading, standards, assignment, social mobility |
| JEL: | C78 I21 J24 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7393&r=lab |
| By: | Holzer, Harry J. (Georgetown University) |
| Abstract: | In this paper I review what we have learned about living wage laws and their impacts on the wages, employment and poverty rates of low-wage workers. I review the characteristics of these laws and where they have been implemented to date, and what economic theory tells us about their likely effects in more and less competitive labor markets. I then review two bodies of empirical evidence: 1) Studies across cities or metropolitan areas that have and have not implemented these laws, using data from the Current Population Survey pooled over many years; and 2) Studies within particular cities, based on comparisons of covered and uncovered workers before and after the laws are passed. I conclude that living wage laws have modestly raised wage levels of low wage workers and have reduced their employment at covered firms, but that the magnitudes of both effects are likely quite small, given how few workers are usually covered by these ordinances. |
| Keywords: | living wages |
| JEL: | J38 J88 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3781&r=lab |
| By: | Pinoli, Sara |
| Abstract: | This paper studies how employers collect information about the quality of workers. Two are the strategies: screening ex-ante, through the recruitment process, and monitoring new hires at work, or screening on-the-job. Using two datasets representative of workers in Great Britain, we provide empirical evidence that the optimal choice is related to the type of employment contract offered by the .rm. Our estimates show that temporary workers are associated with lower recruitment effort - in terms of lower cost and higher speed - and closer monitoring than permanent employees. But this relation depends crucially on the type of jobs. Differences in screening effort are substantial for low-level occupations, while the gap is marginal or not significant for high-skilled jobs. |
| Keywords: | Fixed-term contracts; Recruitment; Monitoring |
| JEL: | D21 J41 J63 |
| Date: | 2008–01–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:11429&r=lab |
| By: | Matthias Weiss (Mannheim Research Institute for the Economics of Aging (MEA)) |
| Abstract: | In this paper, I analyse the relation between workers’ sick leave and the composition of their work teams with respect to age, job tenure, education, and nationality. The probability of sick leave of workers in work teams is shown to be lower if their teammates are older, have shorter job tenure, are less educated, female and of same nationality. In particular, the difference between a worker’s age and the average age of her teammates explains a large part of the well-known positive correlation between age and sick days. In fact, for workers older than 44 years, individual age does not have any significant effect on sick days if the difference between individual age and average team age is held constant. This age difference can be controlled by the management. If older workers have more sick days only if they work in teams with younger workers, it might optimal to form age-homogeneous work teams. |
| JEL: | J14 I10 M54 |
| Date: | 2008–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:mea:meawpa:07149&r=lab |
| By: | Shawn Fremstad; Rebecca Ray; Liz Chimienti; John Schmitt |
| Abstract: | This research brief summarizes recent findings by the Center for Economic and Policy Research on job quality and workers' economic security. Using a rigorous methodology that improves on other more standard measures of economic security, we find that one in five Americans in working families have income below a minimum middle-class budget standard for the area in which they live. The authors argue this is the result of a frayed social contract that must be updated so that more workers can move into the middle class. The report concludes with proposals that would strengthen labor market institutions, expand work supports for families in the middle and working classes, and provide workers, particularly those in low- and moderate-wage jobs, with more opportunities to improve their skills and education throughout their lifetimes. |
| Keywords: | economic security, workers |
| JEL: | J J24 J08 J31 J88 J83 J68 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2008-05&r=lab |
| By: | Till von Wachter (Columbia University - Department of Economics); Jae Song (Social Security Administration); Joyce Manchester (Social Security Administration) |
| Abstract: | We present new estimates of the long-run earnings consequences of job separations that occurred during the 1982 recession based on a representative sample of workers drawn from Social Security administrative earnings data ranging from 1974 to 2005. Workers permanently leaving their long-term employer in the period from 1980 to 1985 experienced large and persistent earnings reductions lasting 15 to 20 years compared to workers of similar age and earnings potential who did not leave their employer. Earnings losses last up to 15 years even for workers displaced in better economic times or after shorter job tenure. These losses arise both due to reductions in employment as well as to reductions in annual earnings for those working. These preliminary estimates appear to confirm results from single U.S. states or limited time periods suggesting that job loss can be very costly for affected workers. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:clu:wpaper:0708-16&r=lab |
| By: | Leila Maron (DULBEA, Université libre de Bruxelles, Brussels); Danièle Meulders (DULBEA, Université libre de Bruxelles, Brussels) |
| Abstract: | In this paper, we study the impact of the presence of young children on parents' labour market participation and employment patterns and their implication in terms of working hours and employment continuity in 24 European countries. The results show that motherhood has an important and negative impact on female labour market participation both in terms of part-time and inactivity in some countries. The fatherhood effect is not clear and very different through countries. In general, paternity increases the employment's probability but has no significant effect on the number of working hours. |
| Keywords: | parenthood, mothers'employment, labour market participation, part-time work,dual-earner couple |
| JEL: | J13 J21 J22 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:dul:wpaper:08-21rs&r=lab |
| By: | Strawinski, Pawel |
| Abstract: | This paper studies flows on the labour market in Poland in 1995-2008. We show that the main driving force behind the unemployment rate is the behaviour of outflow to employment. Moreover, the flows that involve the state of inactivity constitute for a large share of total flows. They seem to be an idiosyncratic phenomenon of Polish labour market. In addition the inflow to employment is found to be procyclical, while the separation rate is acyclical. |
| Keywords: | unemployment; job finding; worker flows. |
| JEL: | J63 J64 |
| Date: | 2008–11–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:11372&r=lab |
| By: | Vandenberg, Paul (International Management Institute, New Delhi) |
| Abstract: | The survey analyzes policies that provide flexibility for employers and security for workers in Asia. The cases exhibit distinct sub-regional patterns. India and Sri Lanka, in South Asia, provide (employer-based) ‘employment security’ and have not transitioned to broader systems of ‘labour market security’ as envisioned by the flexicurity model. China and Korea, in Northeast Asia, have made that transition over the past decade by reducing restrictions on retrenchment while introducing unemployment insurance and active measures. In Southeast Asia, Singapore and Malaysia offer flexible systems with strong active policies but low security in terms of employment protection and passive measures. The above characterizations apply to the formal economy. In China, India and Sri Lanka, where the informal and rural economies are large, governments have used public works, self-employment programs and skills training to support labour market outcomes. |
| Keywords: | Labour flexibility / employment security / employment policy / labour policy / China / Korea R / India / Malaysia / Singapore / Sri Lanka |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:empelm:2008-04&r=lab |
| By: | Kazutoshi Chatani (International Labour Office, Economic and Labour Market Analysis Department) |
| Abstract: | During the time of post-war high economic growth and in the aftermath of the first oil crisis, Japan developed its current employment system based on the practice of long-term employment. Security in the labour market was thus designed on the premise of (male breadwinners’) stable employment. Corresponding labour market institutions emerged in order to reinforce this model. The market liberalization and corporate governance reforms of the 1990s, however, affected corporate behaviour and challenged the traditionally stable employment system and led to a remarkable rise of non-regular employment that has put the traditional security provisions in the labour market under strain. The current pattern of labour market segmentation weakens the foundations for economic growth and decent work. The Japanese labour market is required to identify new types of security that correspond to the needs of businesses for workforce adjustment and the new risks that workers face in a more flexible labour market. As in many developed countries, readjusting the balance between flexibility and security in the labour market appears to be the main challenge in labour market policy-making. The present paper provides insights into the capacity of the “flexicurity” model to provide for a balanced alternative to the model presently in practice. |
| Keywords: | Employment security / conditions of employment / labour flexibility / Japan |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:emwpap:2008-17&r=lab |
| By: | Lokshin, Michael; Glinskaya, Elena |
| Abstract: | This paper assesses the impact of work-related migration by males on the labor market behavior of females in Nepal. Using data from the 2004 Nepal household survey, the authors apply the Instrumental Variable Full Information Maximum Likelihood method to account for unobserved factors that could simultaneously affect males'decision to migrate and females'decision to participate in the labor market. The results indicate that male migration for work has a negative impact on the level of market work participation by the women left behind. The authors find evidence of substantial heterogeneity (based both on observable and unobservable characteristics) in the impact of male migration. The findings highlight the important gender dimension of the impact of predominantly male worker migration on the wellbeing of sending households. The authors argue that strategies for economic development in Nepal should take into account such gender aspects of the migration dynamics. |
| Keywords: | Population Policies,Anthropology,Gender and Development,Housing&Human Habitats,Gender and Law |
| Date: | 2008–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4757&r=lab |
| By: | Mark Bils (University of Rochester and NBER); Yongsung Chang (University of Rochester and Yonsei University); Sun-Bin Kim (Department of Economics, Korea University) |
| Abstract: | We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides model of matching and unemployment. We show that heterogeneity, reflecting differences in match quality and worker assets, reduces the extent of fluctuations in separations and unemployment. We find that the model faces a trade-off--it cannot produce both realistic dispersion in wages across workers and realistic cyclical fluctuations in unemployment. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:iek:wpaper:0805&r=lab |
| By: | Borghans, Lex (Maastricht University); ter Weel, Bas (CPB Netherlands Bureau for Economic Policy Analysis) |
| Abstract: | We review the empirical literature about the implications of the computerization of the labor market to see whether it can explain observed computer adoption patterns and (long-term) changes in the wage structure. Evidence from empirical micro studies turns out to be inconsistent with macro studies that are based on CES production functions. We propose a micro foundation for the CES production function that allows for changes in the underlying structure. We adapt the macro model by incorporating computer skills, complementary skills and fixed costs for computer technology usage suggested by the micro literature. It turns out that fixed costs for computer technology usage explain different patterns of computer adoption and diffusion between several types of workers and countries; it also provides very plausible patterns of the timing of wage inequality and developments over time. |
| Keywords: | wage level of structure, computer technology, technology diffusion |
| JEL: | J31 O15 O33 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3792&r=lab |
| By: | Joop Hartog (University of Amsterdam, Tinbergen Institute, IZA); Mirjam van Praag (Amsterdam Center for Entrepreneurship, University of Amsterdam, Tinbergen Institute, IZA, Max Planck Institute of Economics); Justin van der Sluis (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: | 2008–11–04 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2008-084&r=lab |
| By: | Matti Sarvimäki |
| Abstract: | Abstract: I study the assimilation of immigrants to the Finnish labor market and welfare system. The initial immigrant-native earnings gaps are large. While longterm immigrants experience a rapid earnings growth, only men from OECD countries converge to natives' earnings. Among all immigrant groups earnings grow predominantly due to improving employment rates rather than wage growth. Earnings profiles for temporary immigrants are flat. Furthermore, direct study of the use of social benefits suggests that immigrants learn to use the welfare system gradually. In particular, non-OECD households substantially increase their use of social assistance during their first five years in the country despite simultaneously doubling their earnings. JEL classification: J61, J31, F22 |
| Keywords: | Immigrants, assimilation, welfare state, social benefits |
| Date: | 2008–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:fer:dpaper:454&r=lab |
| By: | Isik U. Zeytinoglu; Margaret Denton; Sharon Davies; M. Bianca Seaton; Jennifer Millen |
| Abstract: | The home health care sector in Canada experienced major restructuring in the mid-1990s creating a variety of flexibilities for organizations and insecurities for workers. This paper examines the emotional and physical health consequences of employer flexibilities and worker insecurities on home health care workers. For emotional health the focus is on stress and for physical health the focus is on selfreported musculoskeletal disorders. Data come from our survey of home health care workers in a mid-sized city in Ontario, Canada. Data are analyzed separately for 990 visiting and 300 office workers. For visiting workers, results showed that none of the ‘objective’ flexibility/insecurity measures are associated with stress or musculoskeletal disorders controlling for other factors. However, ‘subjective’ flexibility/insecurity factors, i.e. feelings of job insecurity and labour market insecurity, are significantly and positively associated with stress. When stress is included in the analysis, for visiting workers stress mediates the effects of ‘subjective’ flexibility/insecurity with musculoskeletal disorders. For office workers, none of the objective flexibility/insecurity factors are associated with stress but subjective flexibility/insecurity factor of feelings of job insecurity is positively and significantly associated with stress. For office home care workers, work on call is negatively and significantly associated with musculoskeletal disorders. Feeling job insecurity is mediated through stress in affecting musculoskeletal disorders. Feeling labour market insecurity is significantly and positively associated with musculoskeletal disorders for office home care workers. Decision-makers in home care field are recommended to pay attention to insecurities felt by workers to reduce occupational health problems of stress and musculoskeletal disorders. |
| Keywords: | home health care workers, stress, worker insecurity |
| JEL: | I11 J28 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:sedapp:234&r=lab |
| By: | Kang, Byung-Goo (Inha University); Yun, Myeong-Su (Tulane University) |
| Abstract: | Korea is known not only for rapid economic growth but also relatively low wage inequality. It is one of the few countries in which wage inequality decreased during the 1980s, though in recent years wage inequality has increased. This paper studies what factors contributed to the changes in wage inequality during the last two decades. This paper implements a recently developed Oaxaca-type inequality decomposition method to decompose "U" shaped changes in inequality into characteristics (quantity), coefficients (price) and residuals effects at both overall and detailed levels. The results of decomposition analysis show that changes in the wage structure significantly contribute to the changes in wage inequality in Korea. The coefficients effect of human capital factors has played a major role not only in increasing wage inequality from mid-1990s, but also decreasing wage inequality in 1980s and early 1990s. |
| Keywords: | decomposition analysis of inequality, earnings equation, coefficients (price) effect, characteristics (quantity) effect, residuals effect |
| JEL: | D30 J30 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3780&r=lab |
| By: | Michal Myck; Richard Ochmann; Salmai Qari |
| Abstract: | There is by now a vast number of studies which document a sharp increase in crosssectional wage inequality during the 2000s. It is often assumed that this inequality is of a ¿permanent nature¿ which in turn is used as an argument calling for government intervention. We examine these claims using a fully balanced panel of full-time employed individuals in Germany from the German Socio-Economic Panel for the years 1994-2006. In line with previous studies, our sample shows sharply rising inequality during the 2000s. Applying covariance structure models, we calculate the fraction of permanent and transitory wage and earnings inequality. From 1994 on, permanent inequality increases continuously, peaks in 2001 and then declines in subsequent years. Interestingly the decline in the permanent fraction of inequality occurs at the time of most rapid increases in cross-sectional inequality. It seems therefore that it is primarily the temporary and not the permanent component which has driven the strong expansion of cross-sectional inequality during the 2000s in Germany. |
| Keywords: | Variance decomposition, covariance structure models, earnings inequality, wage dynamics |
| JEL: | C23 D31 J31 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp139&r=lab |
| By: | T.Huw Edwards (Dept of Economics, Loughborough University) |
| Abstract: | I outline the potential implications of sectoral factor immobility for the debate on the effects of low-wage competition on wage inequality in advanced countries. In theory, the presence of sector-specific factors serves to damp the magnification effect of World traded prices upon relative wages, by reducing the shift of output from unskilled-intensive to skilled-intensive sectors, and Edwards and Whalley (2007) have shown that only modest amounts of fixed factors are required to alter results qualitatively. There is evidence among OECD countries of a negative relationship between the structural decline of manufacturing since 1970 and increasing wage inequality: it is argued that the less flexible labour market institutions in Continental Europe may have mitigated the downward pressure on unskilled wages by this route, particularly if factor depreciation is of an ongoing maintenance cost variety. |
| Keywords: | trade, inequality, globalisation, factor immobility. |
| JEL: | F16 F11 D51 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2008_10&r=lab |
| By: | de Luna, Xavier (Dept. of Statistics, Umeå University); Stenberg, Anders (Swedish Institute for Social Research, Stockholm University); Westerlund, Olle (Dept. of Economics, Umeå University) |
| Abstract: | Several studies have suggested that education is associated with later retirement from the labour market. In this paper, we examine whether adult education, involving enrolees aged 42 or above, delays retirement to potentially increase labour force participation among the elderly. With Swedish register data of transcripts from adult education and annual earnings, which encompasses 1979-2004 and 1982-2004 respectively, we exploit the fact that adult education is a large-scale phenomenon in Sweden and construct a measure of the timing of the transition from being self-supported by productive work to being supported by pension transfers. We match samples of treated and controls on the propensity score and use non-parametric estimation of survival rates. The results indicate that adult education has no effect on the timing of the retirement from the labour force. This can be contrasted with the fact that adult education is one of the cornerstones of the OECD strategy for “active ageing” and the European Union’s “Lisbon strategy” for growth and jobs. |
| Keywords: | Human capital; Pensions; Elderly; Adult schooling |
| JEL: | H52 H55 H75 I28 J14 J26 |
| Date: | 2008–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2008_006&r=lab |
| By: | Dhaval M. Dave; Nancy E. Reichman; Hope Corman |
| Abstract: | Education beyond traditional ages for schooling is an important source of human capital accumulation among adult women. Welfare reform, which began in the early 1990s and culminated in the passage of the Personal Responsibility and Work Opportunity Reconciliation Act in 1996, has promoted work rather than educational acquisition for this group. Exploiting variation in welfare reform across states and over time and using relevant comparison groups, we undertake a comprehensive study of the effects of welfare reform on adult women's human capital acquisition. We first estimate effects of welfare reform on high school dropout of teenage girls, both to improve on past research on this issue and to explore compositional changes that may be relevant for our primary analyses of the effects of welfare reform on the educational acquisition of adult women. We conduct numerous specification checks and explore the mediating role of work. We find robust and convincing evidence that welfare reform has significantly decreased the probability of both high school and college attendance among young adult women—by 20-25 percent. This result indicates that the gains from welfare reform in terms of increases in employment and reductions in caseloads have come at a cost in terms of lower educational attainment among adult women at risk for relying on welfare. |
| JEL: | H52 H53 I21 I28 I38 J18 J24 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14466&r=lab |
| By: | Maria Demertzis; Andrew Hughes Hallett; Nicolien Schermer |
| Abstract: | This paper investigates the impact of increasing globalization on labor markets, in terms of wage inflation and the distribution of activity across regions. Specifically, we study the effects of aggregation in the labor markets on the distribution of employment and inflationary pressures, where there are differences in market structures and transmission mechanisms underpinned by relatively immobile labor. To demonstrate these ideas, we take the European experience as a “laboratory to show what can be expected from globalization in the labor markets in practice. Using models of wage leadership vs. locational competition, we examine the extent and strength of aggregation effects on labor market costs using a sample of data from 1983 to 2007 which covers the period of the creation of the Euro. We find that the aggregation effect has decreased significantly since the start of EMU, thereby improving the tradeoff between inflation and unemployment. At the same time, while Germany played an important role in the run-up to EMU in terms of wage leader, its role has now decreased and been replaced by globalization forces. This has led to increased locational competition in terms of wage formation. We demonstrate this with the emerging role of the US as the benchmark for wage setting in Europe. |
| Keywords: | Phillips Curves; aggregation; locational competition; wage leadership. |
| JEL: | F15 F42 J60 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:186&r=lab |
| By: | Li, Yao |
| Abstract: | This paper estimates nonlinear structural wage equations derived from NEG model with data on 327 cities in China. The estimation results show that the variation of wage level across cities in China is associated with proximity to large markets. The estimated elasticity of substitution of China is smaller than those of the other countries studied in previous research. It indicates that with the same increase of sub-regional market size, China may suffer more serious regional inequality problems. My estimation shows that although increased agglomeration can increase each city’s wage level, it may also increase the wage gap between large and small cities. |
| Keywords: | New Economic Geography; Wage Inequality; Elasticity of Substitution |
| JEL: | O24 F12 R12 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:11426&r=lab |
| By: | THARAKAN, Jo (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); TROPEANO, Jean-Philippe |
| Abstract: | We propose a model where imperfect matching between firms and workers on local labor markets leads to incentives for spatial agglomeration. We show that the occurrence of spatial agglomeration depends on initial size differences in terms of both number of workers and firms. Allowing for dynamics of workers' and firms' location choices, we show that the spatial outcome depends crucially on different dimensions of agents' mobility. The effect of a higher level of human capital on regional disparities depends on whether it makes workers more mobile or more specialized on the labor market. |
| Keywords: | economic geography, local labor market, regional disparities, human capital. |
| JEL: | J61 J42 R12 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvco:2008046&r=lab |
| By: | Santos Monteiro, Paulo (University of Warwick) |
| Abstract: | I study the impact of idiosyncratic risk on savings and employment in a small open economy populated by two-member families. Families incur a fixed cost of participation when both members are employed. Because of market incompleteness and information asymmetries, this cost coupled with labor market frictions can generate multiple equilibria. In particular, there might be one equilibrium with high employment and low saving and another one with low employment and high saving. The model predicts that aggregate saving and employment rates are negatively correlated across countries. I present empirical evidence that supports the general equilibrium prediction of the model |
| Keywords: | Saving ; Employment ; Family labor supply ; Multiple equilibria |
| JEL: | D52 D90 E13 E21 J21 J22 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:875&r=lab |
| By: | John Schmitt |
| Abstract: | This report finds that unionized black workers earn more than their non-union peers. In addition, the data show that black workers in unions are more likely to have health-insurance benefits and a pension plan than their non-union counterparts. |
| Keywords: | unions, African-Americans, wages, benefits, pension |
| JEL: | J J1 J3 J5 J6 J41 J68 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2008-11&r=lab |
| By: | Gabriele, CARDULLO (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)) |
| Abstract: | Two papers have recently questioned the quantitative consistency of the search and matching models. Shimer (2005) has argued that a text-book matching model is unable to explain the cyclical variation of unemployment and vacancies in the U.S. economy. Costain and Reiter (2007) have found the existence of a trade-off in the modelÕs performance : any attempt to change the calibrated values in order to amend such business cycle inability would jeopardize the modelÕs predictions about the impact of unemployment benefits on the hazard rate. In surveying the literature originated in these findings, I distinguish three different avenues that have been followed to corret the model : change in wage formation, change in the calibration, changes in the model specification. The last approach seems to reach the best results both from a business cycle and from a microeconomic viewpoint. |
| Keywords: | Search-matching equilibrium, Business Cycles, Labour markets |
| JEL: | E24 E32 J63 J64 |
| Date: | 2008–04–28 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2008009&r=lab |
| By: | Hart, Robert A. (University of Stirling); Ma, Yue (Lingnan University) |
| Abstract: | This paper offers a contract-based theory to explain the determination of standard hours, overtime hours and overtime premium pay. We expand on the wage contract literature that emphasises the role of firm-specific human capital and that explores problems of contract efficiency in the face of information asymmetries between the firm and the worker. We first explore a simple wage-hours contract without overtime and show that incorporating hours into the contract may itself produce efficiency gains. We then show how the introduction of overtime hours, remunerated at premium rates, can further improve contract efficiency. Our modelling outcomes in respect of the relationship between the overtime premium and the standard wage rate relate closely to earlier developments in hedonic wage theory. Throughout, we emphasise the intuitive reasoning behind the theory and we also supply relevant empirical evidence. Mathematical derivations are provided in an appendix. |
| Keywords: | wage-hours contracts, overtime, premium pay, specific human capital, asymmetric information |
| JEL: | J41 J33 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3797&r=lab |
| By: | Sauro Mocetti (Bank of Italy, Regional Economic Research Staff, Bologna Branch) |
| Abstract: | The aim of this paper is to analyze the selection process at work before and after compulsory schooling by assessing the determinants of school failures, dropouts and upper secondary school decisions of young Italians. The dataset is built combining individual data by the Labor Force Survey and aggregate data on local labor markets and school supply by the Italian National Statistic Institute and the Minister of Public Education, respectively. Our results show that school failure (i.e., repetition of a year) is highly correlated with the family background, and it strongly affects later choices. Early school leaving and the upper secondary school choice are mainly a reflection of the parents’ socioeconomic status. The effectiveness of the educational system when narrowing the failure risk and the scholastic outflow relies on the widespread adoption of full-time attendance in compulsory school, the quality of the school infrastructures and the fewer teachers with temporary contracts. |
| Keywords: | School failures, early dropout, school choice, social mobility, Italian education system |
| JEL: | I20 C35 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_691_08&r=lab |
| By: | Davide, DOTTORI (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics); I. Ling, SHEN (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics) |
| Abstract: | This paper studies the impact of low-skilled immigration on the host countryÕs education policy, which is formulated by the natives via voting and refers to both school funding sources and resources in the public funded schools. When the size of low-skilled immigrants is large, it is found that wealthier natives are likely to opt out from public into private school. Four main effects of immigration are taken into account : (1) greater congestion in public school; (2) lower average tax base for education funding; (3) reduced low-skilled wage and so more low-skilled nativesÕ dependence on public education; (4) higher skill premium, which induces high-skilled natives to privately invest in their childrenÕ s education and hence weakens their support to finance public school. The theoretical predictions are not at odds with cross-country stylized facts revealed in both micro and macro data. Moreover, with endogenous fertility, the opting-out decision taken by some native parents results in the empirically observed fertility differential between natives and immigrants |
| Keywords: | voting, taxes and subsidies, education; fertitlity, migration |
| JEL: | H42 H52 I21 D72 O15 |
| Date: | 2008–06–19 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2008022&r=lab |
| By: | Gonzalez, Libertad (Universitat Pompeu Fabra); Viitanen, Tarja (University of Sheffield) |
| Abstract: | We estimate the effect of divorce legalization on the long-term well-being of children. Our identification strategy relies on exploiting the different timing of divorce legalization across European countries. Using European Community Household Panel data, we compare the adult outcomes of cohorts who were raised in an environment where divorce was banned with cohorts raised after divorce was legalized in the same country. We also have "control" countries where all cohorts were exposed (or not exposed) to divorce as children, thus leading to a difference-in-differences approach. We find that women who grew up under legal divorce have lower earnings and income as well as worse health as adults compared with women who grew up under illegal divorce. These effects are not found for men. We find no effects of divorce legalization on children's family formation or dissolution patterns. |
| Keywords: | divorce, legislation, intergenerational effects, child outcomes |
| JEL: | J12 J13 K36 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3789&r=lab |
| By: | Leman Yonca Gurbuzer (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Ozge Nihan Koseleci (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I) |
| Abstract: | This paper provides the first empirical analysis on youth unemployment duration in Bosnia-Herzegovina. The study is based on micro data from the Household Survey Panel Series (2001-04). We formulate the problem within a duration model framework. Semi-parametric methods are used and compared to alternative approaches. The analyses are carried out separately for young men and women to take into account the traditional pattern of the domestic division of labour between genders. Our results indicate that the speed with which an unemployed young person finds employment is partly a function of his/her particular characteristics. We also find significant gender differences in factors affecting the prospects of access to employment. We further observe that for young men as well as young women there is strong evidence for non-monotonic duration dependence. These results turn out to remain robust to different specifications and to the introduction of unobserved heterogeneity. |
| Date: | 2008–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-00308629_v2&r=lab |
| By: | Persyn, Damiaan (Catholic University of Leuven) |
| Abstract: | We estimate how trade openness affects the relationship between wages, labour productivity and foreign wages using sector-level time series for several EU member states. In some countries wages became less responsive to foreign wages as trade costs declined. We show this counter-intuitive result is as expected when wages are set by a monopoly union with a preference for wages relative to employment. Trade liberalisation then leads to more wage discipline by forcing unions to set wages more in line with labour productivity. Foreign wages simultaneously become less relevant. Our results call to rethink how trade liberalisation is affecting unionized labour markets, and offer a possible explanation for the mixed evidence found by some tests for international factor price convergence. |
| Keywords: | unions, globalisation, economic geography, factor price equalisation |
| JEL: | J50 J31 F16 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3786&r=lab |
| By: | Guy Laroque (Columbia University - Department of Economics); Bernard Salanie (Columbia University - Department of Economics) |
| Abstract: | There has been little empirical work evaluating the sensitivity of fertility to financial incentives at the household level. We put forward an identification strategy that relies on the fact that variation of wages induces variation in benefits and tax credits among "comparable" households. We implement this approach by estimating a discrete choice model of female participation and fertility, using individual data from the French Labor Force Survey and a fairly detailed representation of the French tax-benefit system. Our results suggest that financial incentives play a notable role in determining fertility decisions in France, both for the first and for the third child. As an example, an unconditional child benefit with a direct cost of 0:3% of GDP might raise total fertility by about 0:3 point. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:clu:wpaper:0708-15&r=lab |
| By: | Davide, DOTTORI; I-Ling, SHEN |
| Abstract: | This paper studies the impact of low-skilled immigration on the host countryÕs education system, which is characterized by sources of school funding, expenditres per pupil, and types of parents who are more likely to send children to publicly (privately) funded schools. When the size of low-skilled immigrants is large, it is found that wealthier natives are likely to opt out from public into private schools. Four main effects of immigration are taken into account : (1) greater congestion in public school; (2) lower average tax base for education funding; (3) reduced low-skilled wage and so more low-skilled natives to privately invest in their childrenÕs education and hence weakens their support to finance public school. The theoretical predictions are not at odds with cross-country stylized facts revealed in both micro and macro data. Moreover, with endogenous fertility, the opting-out decision taken by some native parents results in the empirically observed fertility differential between natives and immigrants |
| Keywords: | Voting, Taxes and Subsidies, Education, Fertility, Migration |
| JEL: | H42 H52 I21 D72 O15 |
| Date: | 2008–07–09 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2008023&r=lab |
| By: | Ronald Caldwell Jr. (Department of Economics, The University of Kansas) |
| Abstract: | Research shows that minority children enter the labor market with lower levels of acquired skill than do white children. This paper attempts to analyze one possible cause: the impact of a perceived lack of future opportunities on the human capital development of minority children. I take advantage of changes in affirmative action laws in California and Texas as a natural experiment and employ both difference-in-difference-in-difference and fixed effects methodologies to test for changes in achievement test scores among minority children. The results show a significant negative impact among black children of all ages in the affected states. |
| Keywords: | skill gaps, race, discrimination, affirmative action |
| JEL: | J01 J15 J24 J7 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:kan:wpaper:200812&r=lab |
| By: | Pinoli, Sara |
| Abstract: | This paper argues that expectations are an important element that need to be included into the analysis of the effects of the minimum wage on employment. We show in a standard matching model that these effects are higher the lower is the likelihood associated to the minimum wage variation. This property also helps explaining the controversial results found in the empirical literature. When the policy is anticipated, the observed effect at the time of the actual variation is small and hard to identify. The model is tested on Spanish data, taking advantage of the unexpected change in the minimum wage following the election of Zapatero in 2004. |
| Keywords: | Minimum wage; Expectations; Heterogeneous matches |
| JEL: | J38 J23 |
| Date: | 2008–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:11405&r=lab |
| By: | Christophe Hachon (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I) |
| Abstract: | Using a capital-skill complementarity technology, we analytically show that an increase in the direct redistributivity of Pay-As-You-Go (PAYG) pension systems has a positive impact on wages and on wage inequalities. We also show that life expectancyinequalities play an important role in the achievement of these results. Then, we calibrate our model and we and that, if life expectancy inequalities are suffciently high, a more redistributive pension system increases the wealth and the welfare of every agent of the economy. Moreover, such a policy decreases the tax rate of the pension system. |
| Keywords: | Inequality, Pension System, Redistribution, Capital-Skill Complementarity |
| Date: | 2008–06–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00285040_v1&r=lab |
| By: | Giuseppe Russo |
| Abstract: | The claim that "skilled immigration is welcome" is often associated to the increasing adoption of selective immigration policies. I study the voting over differentiated immigration policies in a two-country, three-factor one-period model where there exist skilled and unskilled workers, migration decisions are endogenous, enforcing immigration restriction is costly, and natives dislike unskilled immigration. According to my findings, decisions over border closure are made to protect the median voter when her capital endowment is sufficiently small. Therefore I argue that the professed favour for skilled immigration veils the protection for the insiders. This result is confirmed by the observation that entry is rationed for both skilled and unskilled workers. Moreover, immigration aversion helps to explain the existence of entry barriers for unskilled workers in countries where the majority of voters is skilled. |
| Keywords: | Selective immigration policies, multidimensional voting, Condorcet winner. |
| JEL: | D72 F22 J18 |
| Date: | 2008–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2008_14&r=lab |
| By: | Traci L. Mach; John A. Holmes |
| Abstract: | According to the CPS, employees in alternative work arrangements make up over 10 percent of U.S. workers. Because of the pervasiveness of these types of arrangements, it is important to understand why firms are choosing to use them. Using data from the 2003 Survey of Small Business Finances, we model the firm's decision to use alternative employment arrangements using a large representative sample of small businesses in the U.S. In general, our results are similar to previous establishment-level studies that have examined the use of these types of employment arrangements. However, many of these previous studies have been narrow in scope because of data limitations. We find evidence to support each of the following hypotheses: 1) firms may be using alternative employment arrangements (AEA) in an attempt to generate cost savings by substituting standard employees with AEA employees when internal wages and benefit costs are high; 2) firms may be using AEA to meet irregular product demand constraints; and 3) firms may be using AEA to take advantage of economies of scale for certain tasks or services. Additionally, we present some additional findings that add to the relatively limited establishment level literature on alternative employment arrangements. |
| Keywords: | Employment |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2008-45&r=lab |
| By: | Karsten Staehr |
| Abstract: | This paper presents estimates of the employment and welfare effects of personal labour income taxation in Estonia. The labour supply decision of individuals is estimated based on data from the 2005 Estonian Labour Force Survey. Economic incentives are found to affect the participation decisions of individuals, but not the number of hours worked by individuals already working. The participation elasticities are higher for individuals in the middle income groups than for individuals in the low and high income groups. Increasing the proportional tax rate by 1 percentage point is found to reduce total employment by 0.35 percentage points. The baseline estimate of the marginal cost of public funds is 1.6 if the proportional tax rate is increased and 1.8 if the basic exemption is lowered. The marginal cost of public funds varies across different income groups, which may suggest possible gains in efficiency from reallocating the taxation burden of the existing system of proportional taxation. The employment and welfare estimates are subject to substantial |
| Keywords: | taxation, labour supply, welfare, excess burden |
| JEL: | H21 H24 J21 J22 |
| Date: | 2008–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:eea:boewps:wp2008-03&r=lab |
| By: | David, DE LA CROIX (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Marie, VANDER DONCKT |
| Abstract: | We examine the pathways by which gender inequality affects fertility and hampers growth. We introduce several dimensions of gender inequality into a 2-sex OLG model with a non-unitary representation of household decision-making. We characterize a Malthusian corner regime which is characterized by strong gender inequality in education and high fertility. We find both in theory and in the data that reducing the social and institutional gender gap does not help to escape from this regime while reducing the wage gender gap lowers fertility only in countries which have already escapted from it. The key policies to ease out the countries in the Malthusian regime are to promote motherÕs longevity and to curb infant mortality. In the interior regime, parents consider the imapct of their children education on the expected intra-household bargaining position in their future couple. Education could thus compensate against the institutional and social gender gap that skills exists in developed countries. |
| Keywords: | gender gap, fertility, education, household bargaining. |
| JEL: | J13 O11 O40 |
| Date: | 2008–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2008026&r=lab |
| By: | Ulrich Kaiser (University of Zurich); Hans Christian Kongsted (Department of Economics, University of Copenhagen); Thomas Rønde (Department of Economics, University of Copenhagen) |
| Abstract: | We measure the quantitative importance of labor mobility as a vehicle for the transmission of knowledge and skills across firms. For this purpose we create a unique data set that matches all applications of Danish firms at the European Patent Office to linked employer-employee register data for the years 1999-2002. The Danish workforce is split into "R&D workers", who hold a bachelor's or a master's degree in a technical field, and "non{R&D workers". We find that mobile R&D workers ("R&D joiners"') contribute more to patenting activity than immobile R&D workers. Furthermore, R&D workers who have previously been employed by a patenting firm ("patent exposed workers") have a larger effect on patenting activity than R&D workers without this experience. Patent exposed R&D joiners constitute the most productive group of workers: for firms that patented prior to 1999, one additional worker of this type relates to an increase in the number of patent applications of the new employer by 0.0646. This corresponds to a 14 percent increase in the mean number of yearly patent applications. We also find that mobility of R&D workers increases the joint patenting activity of the donor and recipient firms, confirming the importance of labor mobility for innovation in the economy. |
| Keywords: | labor mobility; dynamic count data; patents |
| JEL: | O33 O34 C23 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuieca:2008_07&r=lab |
| By: | Blomeyer, Dorothea; Coneus, Katja; Laucht, Manfred; Pfeiffer, Friedhelm |
| Abstract: | This paper investigates the role of self-productivity and home resources in capability 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, Intelligence, Persistence, Home Resources, Social Competencies, School Achievement |
| JEL: | D87 I12 I21 J13 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7390&r=lab |
| By: | Joshua Goodman (Columbia University - Department of Economics) |
| Abstract: | Low college enrollment rates among low income students may stem from credit constraints, low academic skill, low quality schools, or some combination of these. Recent Massachusetts data allow the first use of school district fixed effects in the analysis of credit constraints, leading to four primary findings. First, Massachusetts' low income students have lower intended college enrollment rates than higher income students but also have dramatically lower skills and attend lower quality school districts. Second, inclusion of skill controls greatly reduces but does not eliminate the intended enrollment gap, with low income students seven percentage points less likely to intend enrollment than similarly skilled higher income students. Third, in districts where higher income students are plausibly unconstrained, inclusion of school district fixed effects does little to reduce intended enrollment gaps, with low income students nine percentage points less likely to intend enrollment than similarly skilled higher income students from the same school district. Fourth, low income students in the middle and upper parts of the skill distribution appear the most constrained, particularly with respect to four-year public colleges. State governments could use the methods employed here to identify credit constrained student populations in order to target financial aid more efficiently. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:clu:wpaper:0809-03&r=lab |
| By: | Hazel Parcon (Department of Economics, University of Hawaii at Manoa) |
| Abstract: | This paper shows that labor market flexibility, measured by labor market standards and regulations, has two opposing effects on FDI inflows. Labor market regulations and standards decrease FDI inflows through the cost channel, but they increase FDI inflows through the productivity channel. Allowing for a non-linear relationship between different indicators of labor market flexibility and FDI inflows revealed that some degree of labor market standards and regulations may be attractive for foreign investors. Results strongly suggest that foreign investments to and from different countries and in different sectors are affected differently by different aspects of labor market standards and regulations. |
| Keywords: | foreign direct investment, labor market flexibility |
| JEL: | F16 F21 |
| Date: | 2008–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:200807&r=lab |
| By: | Hui Shan |
| Abstract: | The recent housing market boom in the U.S. has caused sharp increases in residential property taxes. Anecdotal evidence suggests that rising property taxes have induced elderly homeowners to increase their labor supply. This paper uses 1992-2004 panel data from the Health and Retirement Study (HRS) as well as a newly collected dataset on state-provided property tax relief programs to investigate the effect of property taxes on the labor supply of elderly homeowners. It is the first rigorous study on the link between property taxes and elderly labor supply. I examine both the extensive margin - whether elderly homeowners delay retirement or reenter the labor market in the face of rising property taxes, and the intensive margin - whether elderly homeowners work longer hours when property taxes increase. A simulated IV approach is used to address the potential endogeneity problem associated with property taxes. I find little evidence that property taxes have a significant impact on elderly homeowners' decisions to retire, to re-enter the labor force, or to increase working hours. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2008-51&r=lab |
| By: | Björklund, Anders (Stockholm University); Roine, Jesper (Stockholm School of Economics); Waldenström, Daniel (Research Institute of Industrial Economics (IFN)) |
| Abstract: | This paper presents new evidence on intergenerational income and earnings mobility in the top of the distributions. Using a large dataset of matched father-son pairs in Sweden we are able to obtain results for fractions as small as 0.1 percent of the population. Overall, mobility is lower for incomes than for earnings and it appears to decrease the higher up in the distribution one goes. In the case of incomes, however, we find that mobility decreases dramatically within the top percentile of the population. Our results suggest that Sweden, well-known for its egalitarian achievements, is a society where equality of opportunity for a large majority of wage earners coexists with capitalistic dynasties. |
| Keywords: | Intergenerational income mobility; Top incomes; Earnings inequality; Income inequality; Welfare state; Non-linear regression; Quantile regression |
| JEL: | D31 J62 |
| Date: | 2008–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0775&r=lab |
| By: | Andrews, Martyn J. (University of Manchester); Clark, Ken (University of Manchester); Whittaker, William (University of Manchester) |
| Abstract: | Using data from the first fourteen waves of the British Household Panel Survey, we estimate a discrete duration model of interregional migration in Great Britain. By exploiting retrospective information on residency we control for late entry as well as unobserved heterogeneity. We find considerable duration dependence in region of residence in the raw data, most but not all of which disappears when controlling for observable and unobservable differences between individuals. Older workers are less likely to switch region while the better educated are more mobile. There are also some differences between males and females in their likelihood to migrate. |
| Keywords: | regional labour markets, panel data, hazard, duration, migration |
| JEL: | C14 C23 C41 J24 J61 R23 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3783&r=lab |
| By: | Regis Barnichon |
| Abstract: | This paper presents new empirical evidence on the cyclical behavior of US unemployment that poses a challenge to standard search and matching models. The correlation between cyclical unemployment and the cyclical component of labor productivity switched sign in the mid 80s: from negative it became positive, while standard search models imply a negative correlation. I argue that the inconsistency arises because search models do not allow output to be demand determined in the short run, and I present a search model with nominal rigidities that can rationalize the empirical findings. In addition, I show that the interaction of hiring frictions and nominal frictions can generate a new propagation mechanism absent in standard New-Keynesian models. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2008-47&r=lab |
| By: | Robert L. Moore (Department of Economics, Occidental College) |
| Abstract: | The major advocates of collaborative learning in the college classroom generally suggest that team members should be chosen to complement each other in skills. Similar advice comes from the literature in personnel economics relating to worker productivity in teams Some advocates also suggest that there are advantages in this regard in forming heterogeneous teams in terms of gender, ethnicity and class year, although there are also some drawbacks noted as well from such heterogeneous teams. However, little empirical work has been done on how best to select the most effective student teams (groups) for individual student learning. This paper hopes to begin to fill this gap. It combines information from students’ admission files with individual student performance data on exams in two sections of an introductory economics course at a selective liberal arts college as well as with information about the team the student was assigned to. The empirical results in this paper provide little support for the above suggestions. The results also differ from the results in the only other empirical work on this issue. In particular, heterogeneous teams in terms of gender or ethnicity or class year result in no more individual student learning (and knowledge) transfer than more homogeneous teams, holding other significant variables affecting student learning constant. And there is at least some support for the reverse in terms of class year --- that is, the higher percentage of frosh students on a three or four student team, the more student learning. While it is advantageous to have at least one student on the team with AP Calculus or AP Econ credit, which is consistent with the general advice above, a team with a larger standard deviation of SAT scores (or higher average SAT scores) does not improve individual student learning. There is also some evidence in this study that another characteristic of teams results in positive individual learning, namely if the team had a woman on it who participated in intercollegiate athletics. Finally, while advocates of collaborative learning sometimes recommend avoiding the isolation of a woman or a student of color on a team, there is no evidence in this study that such isolation disadvantages those students in terms of their exam performance. |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:occ:wpaper:12&r=lab |
| By: | Otero, Rafael (University of Texas at Brownsville); Hazarika, Gautam (University of Texas at Brownsville) |
| Abstract: | This study examines the effect of NAFTA, an instance of North-South trade liberalization, on returns to skill in Mexico. Mexico is abundant in low-skill workers relative to the US and Canada, and so, by the Hecksher-Ohlin-Samuelson trade model, NAFTA ought to have raised the relative earnings of low-skill workers, that is, lowered returns to skill in Mexico. Analysis of Mexican labor micro-data yields the finding that while returns to skill in industries producing tradeables have risen, ceteris paribus, since Mexico embarked upon trade liberalization by joining the GATT in 1986, this rise was less pronounced by 1999 in industries liberalized relatively rapidly by NAFTA, launched in 1994, than in industries liberalized relatively slowly by this phased trade treaty. This is considered evidence of NAFTA holding back rise in returns to skill, since it is plausible such a dampening would have been more marked in industries more rapidly exposed to trade with Mexico's skill abundant northern neighbors. Hence, this study suggests trade with developed nations may lower returns to skill in developing nations. It is speculated this may slow the pace of private human capital accumulation in developing nations, with negative consequences for their economic growth. |
| Keywords: | NAFTA, Heckscher-Ohlin model, human capital |
| JEL: | F11 I21 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3788&r=lab |
| By: | Hazarika, Gautam (University of Texas at Brownsville); Guha-Khasnobis, Basudeb (UNU-WIDER) |
| Abstract: | Using data from the 1995 Malawi Financial Markets and Food Security Survey, this study seeks to discover if women's relative control over household resources or intra-household bargaining power in rural Malawi, gauged by their access to microcredit, plays a role in children's food security, measured by anthropometric nutritional Z-scores. Access to microcredit is assessed in a novel way as self-reported credit limits at microcredit organizations. Since credit limits, that is, the maximum sums that might be borrowed, hinge upon supply-side factors such as the availability of credit programs and the financial resources of lenders, it is plausible they are more exogenous than demand driven loan uptake or participation in microcredit organizations, the common ways of gauging access to microcredit. It is indicated that whereas the access to microcredit of adult female household members improves 0–6 year old girls', though not boys', long-term nutrition as measured by height-for-age, the access to microcredit of male members has no such salutary effect on either girls' or boys' nutritional status. This may be interpreted as evidence of a positive relation between women's relative control over household resources and young girls' food security. That women's access to microcredit improves young girls' long-term nutrition may be explained in part by the subsidiary finding that it raises household expenditure on food. |
| Keywords: | intra-household distribution, bargaining, microcredit, gender, Malawi |
| JEL: | O15 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3793&r=lab |
| By: | Suzanne Scotchmer |
| Abstract: | In a labor market hierarchy, promotions are affected by the noisiness of information about the candidates. I study the hypothesis that males are more risk taking than females, and its implications for rates of promotion and abilities of survivors. I define promotion hierarchies with and without memory, where memory means that promotion depends on the entire history of success. In both types of hierarchies, the surviving risk takers will have lower average ability whenever they have a higher survival rate. Further, even if more risk takers than non risk takers are promoted in the beginning of the hierarchy, that will be reversed over time. The risk takers will eventually have a lower survival rate, but higher ability. As a consequence of these differences, the various requirements of employment law cannot simultaneously be satisfied. Further, if promotion standards are chosen to maximize profit, the standards will reflect gender in ways that are difficult to distinguish from discriminatory intent. |
| JEL: | D63 J08 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14464&r=lab |
| By: | Tord Kjellstrom (Australian National University); R. Sari Kovats (London School of Hygiene and Tropical Medicine); Simon J. Lloyd (London School of Hygiene and Tropical Medicine); Tom Holt (University of East Anglia); Tol, Richard S. J. (Economic and Social Research Institute (ESRI)) |
| Abstract: | Global climate change will increase outdoor and indoor heat loads, and may impair health and productivity for millions of working people. This study applies physiological evidence about effects of heat, climate guidelines for safe work environments, climate modelling and global distributions of working populations, to estimate the impact of two climate scenarios on future labour productivity. In most regions, climate change will decrease labour productivity, under the simple assumption of no specific adaptation. By the 2080s, the greatest absolute losses of population based labour work ability as compared with a situation of no heat impact (11-27%) are seen under the A2 scenario in South-East Asia, Andean and Central America, and the Caribbean. Climate change will significantly impact on labour productivity unless farmers, self-employed and employers invest in adaptive measures. Workers may need to work longer hours to achieve the same output and there will be economic costs of occupational health interventions against heat exposures. |
| Keywords: | Climate change, heat, work, labour productivity |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp260&r=lab |
| By: | Berdugo, Binyamin; Hadad, Sharon |
| Abstract: | This paper analyzes the implication of employment protection legislation on a firm's screening process. We present a model in which human-capital-intensive firms (high-tech) with imperfect information about their workers' type attempt during a trial period to identify those incompetent workers who they will subsequently dismiss. Employment protection measures, however, place a burden on this screening process and thereby motivate innovators to embark on medium-tech projects which are more flexible in their human capital requirements. Employment protection legislation thereby distorts the pattern of specialization in favor of medium-tech firms rather than high-tech firms and consequently slows down the process of economic growth. The results of the paper are consistent with documented data on Europe versus US productivity growth and specialization patterns as well as with employment protection legislation in those economies. |
| Keywords: | Screening; Firing Costs; Employment Protection; Innovation; Growth; Specialization |
| JEL: | J08 O43 D82 D24 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:11410&r=lab |
| By: | Billari, Francesco C. (Bocconi University); Pellizzari, Michele (Bocconi University) |
| Abstract: | In this paper we estimate relative age effects in academic performance using a unique database of students at Bocconi University. The identification exploits school entry cut-off ages that generate up to 11 months difference between the youngest and the oldest students within each cohort. Our data allow to control for potential selection issues as well as for differences in cognitive ability, as measured by an attitudinal entry test. Contrary to most of the existing evidence for primary school children, we document that in university the youngest students perform better compared to their oldest peers, particularly in the most technical subjects. To rationalize this result we produce additional evidence on relative age effects in cognitive ability and in social behavior using a combination of data from Bocconi admission tests and from a survey on the social behavior of Italian first-year university students. We find that the youngest students in the cohort perform slightly better in cognitive tests and also appear to have less active social lives: they are less likely to do sports, go to discos and have love relationships. These results suggest that negative relative age effects in university performance might be generated by two mechanisms: (i) a profile of cognitive development that might be decreasing already around age 20; (ii) psychological relative age effects that lead the youngest in a cohort to develop social skills (self-esteem, leadership) at a slower pace. Younger students, thus, have less active social lives and devote more time to studying, as confirmed by additional evidence from the PISA study. |
| Keywords: | education, relative age |
| JEL: | J13 I21 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3795&r=lab |
| By: | Mette Christensen |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:man:sespap:0809&r=lab |
| By: | Engelbert Stockhammer; Erik Klär |
| Abstract: | According to the mainstream view, labour market institutions (LMI) are the key determinants of unemployment in the medium run. The actual empirical explanatory power of measures for labour market institutions, however, has been called into question recently (Baker et al 2005, Baccaro and Rei 2007). The Keynesian view holds periods of high real interest rates and insufficient capital accumulation responsible for unemployment (Arestis et al 2007). Empirical work in this tradition has paid little attention to role of LMI. This paper contributes to the debate by highlighting the role of autonomous changes in capital accumulation as a macroeconomic shock. In the empirical analysis, medium-term unemployment is explained by capital accumulation, labour market institutions and a number of macroeconomic shocks in a panel analysis covering 20 OECD countries. The economic effects of institutional changes, variations in capital accumulation and other macro shocks are compared. Capital accumulation and the real interest rate are found to have statistically significant effects that are robust to the inclusion of control variables and show larger effects than LMI. |
| Keywords: | Unemployment, NAIRU, capital accumulation, labour market institutions, Keynesian economics |
| JEL: | E12 E20 E24 E60 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp834&r=lab |
| By: | Simone Bertoli (Università degli Studi di Firenze, Dipartimento di Scienze Economiche); Herbert Brücker (Institut für Arbeitsmarkt- und Berufsforschung (IAB)) |
| Abstract: | The recent literature about the so called brain drain assumes that destination countries are characterized not only by higher wages than the source country, but also by a higher or at least not lower relative return to skill. As this assumption has a doubtful empirical validity, we assess whether the main prediction of this literature, namely the possibility of a beneficial brain gain, still holds under the reverse assumption. We show that there is still a case for a beneficial brain drain. Immigration policies that are biased against unskilled workers are not necessary for a beneficial brain drain to occur once one considers that agents face heterogeneous migration costs. |
| Keywords: | migration; brain drain; skill premium; heterogeneous agents; selective immigration policies |
| JEL: | F22 J24 O15 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2008_14.rdf&r=lab |
| By: | Joan Costa-Font; Daniele Fabbri; Joan Gil (Universitat de Barcelona) |
| Abstract: | A key question underpinning health production, and one that remains relatively unexplored, is the influence of socio-economic and environmental factors on weight gain and obesity. Such issues acquire particular relevance when data from two Mediterranean countries (Italy and Spain) are compared. Interestingly, the obesity rate was 5 percentage points higher in Spain in 2003 while in 1990 it had been roughly the same in the two countries. This paper reports a non-linear decomposition of gaps in overweight (body mass index BMI - between 25 and 29.9 kg/m2), class 1 (BMI30 kg/m2) and class 2 obesity (BMI35 kg/m2) between Spain and Italy by both gender and age. We isolate the influence of lifestyles, socioeconomic and environmental effects in explaining cross-country gaps in the prevalence of obesity. Our findings suggest that when the social environment (peer effects) is not controlled for, eating habits and education are the main predictors of total cross-country gaps (36-52%), albeit that these two factors have a different impact depending on gender and age. Somewhat paradoxically, however, when we controlled for the social environment, these previous predictors lost their explanatory power and peer effects were found to explain between 46 and 76% of gaps and to exhibit an increasing age pattern. |
| Keywords: | italy, obesity gaps, obesity, education, non-linear decomposition, spain |
| JEL: | I19 I18 I12 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:bar:bedcje:2008205&r=lab |
| By: | Praveen Jha; Sakti Golder |
| Keywords: | labour flexibility / labour market / labour policy / labour law / India |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:empelm:2008-01&r=lab |
| By: | Chris M. Herbst; Erdal Tekin |
| Abstract: | Child care subsidies are an important part of federal and state efforts to move welfare recipients into employment. One of the criticisms of the current subsidy system, however, is that it overemphasizes work and does little to encourage parents to purchase high-quality child care. Consequently, there are reasons to be concerned about the implications of child care subsidies for child development. In this paper, we provide a systematic assessment of the impact of subsidy receipt on a wide range of child outcomes. Drawing on rich data from the Early Childhood Longitudinal Study, we document a negative relationship between child care subsidies and child development. In particular, our results suggest that subsidy receipt in the year before kindergarten lowers reading and math test scores and increases a variety of behavior problems at kindergarten entry. Some of these negative effects persist to the end of kindergarten. A tentative explanation for the poorer outcomes is that subsidized children are more likely to receive intense exposure to low-quality child care. |
| JEL: | I18 I2 J13 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14474&r=lab |
| By: | Dora L. Costa |
| Abstract: | I examine the effects of an unearned income transfer on the retirement rates and living arrangements of a very poor population by studying the effects of pensions on the decisions of black Union Army veterans. I find that blacks were 2 to 5 times as responsive as whites to income transfers in their retirement decisions and 6 to 8 times as responsive in their choice of independent living arrangements. I argue that blacks' greater poverty explains their responsiveness to pensions. My findings have implications for understanding racial differences in trends in retirement and independent living. I show that the retirement rates of both blacks and whites rose between 1900 and 1930 but that convergence in black and white rates and in living arrangements only occurred between 1930 and 1950. I argue that income effects from the institution of Social Security explain up to half of the convergence in black-white retirement rates and in living arrangements. |
| JEL: | J14 J26 N31 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14462&r=lab |
| By: | Alon Cohen; Assaf Razin |
| Abstract: | The paper analyzes the effect of the generosity of the welfare state on the skill composition of immigrants. We develop a parsimonious model in which the effect of an increase in the generosity (and taxes) of the welfare state on the skill composition of immigrants under free migration is negative. The reason is that welfare state benefits attract unskilled migrants because they contribute to tax revenues less than what they gain from benefits; and this generosity works to deter skilled immigrants, because they contribute in taxes more than in benefits. In sharp contrast, the effect of an increase in the generosity (and taxes) of the welfare state on the skill composition of migrants is positive if migration is controlled by policy. Being net contributors to the welfare state, skilled migrants can help finance a more generous welfare-state system; thus, they are preferred by the policy maker over unskilled migrants. We take the prediction of the model to cross-sectional data on source-host, OECD-EU country pairs in the year 2000. The identification strategy is to use the decomposition the source-host country pairs into two groups: one group, a "free migration" group, source-host country pairs within the EU, and another group, "policy-controlled migration" group, the pairs from non-EU countries into the EU. We find evidence in support of the predictions of the parsimonious model, that the generosity of the welfare state adversely affects the skill-composition of migrants under free migration; but it exerts a more positive effect under controlled migration, relative to the free migration regime. |
| JEL: | F15 F2 F22 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14459&r=lab |
| By: | De Paola, Maria |
| Abstract: | Using microdata on a sample of about 350 workers, employed at an Italian public institute, we explain individual absence rates both considering variables that may be related to health conditions and to variables that may suggest shirking behaviour. Among these variables we especially focus our attention on the influence produced by the behaviour of randomly assigned peers. To handle reflection problems we use the proportion of females in the peer group as instrument of peer absence behaviour. From Two-Stage least square estimates it emerges that social and group interactions play an important role in shaping individual absence behaviour. |
| Keywords: | Absenteeism; Shirking; Peer Effects |
| JEL: | J22 M50 |
| Date: | 2008–10–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:11425&r=lab |
| By: | Alexander K. Koch; Eloïc Peyrache (School of Economics and Management, University of Aarhus, Denmark) |
| Abstract: | Labor turnover creates longer term career concerns incentives that motivate employees in addition to the short term monetary incentives provided by the current employer. We analyze how these incentives interact and derive implications for the design of incentive contracts and organizational choice. The main insights stem from a trade-off between ‘good monetary incentives’ and ‘good reputational incentives’. We show that the principal optimally designs contracts to create ambiguity about agents’ abilities. This may make it optimal to contract on relative performance measures, even though the extant rationales for such schemes are absent. Linking the structure of contracts to organizational design, we show that it can be optimal for the principal to adopt an opaque organization where performance is not verifiable, despite the constraints that this imposes on contracts. |
| Keywords: | Reputation, Asymmetric learning, Relative performance contracts, Transparency |
| JEL: | D82 J33 L14 |
| Date: | 2008–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2008-16&r=lab |
| By: | Paolo Ramazzotti (University of Macerata) |
| JEL: | O1 O11 |
| Date: | 2002–10 |
| URL: | http://d.repec.org/n?u=RePEc:mcr:wpaper:wpaper00011&r=lab |
| By: | Jean-Pierre LACHAUD (Centre d’économie du développement, Université Montesquieu-Bordeaux IV) |
| Abstract: | La présente étude propose d'examiner la fécondité d'une modélisation économétrique des déterminants de la pauvreté au Burkina Faso en 1994-95. Dans cette optique, après avoir examiné les aspects conceptuels et métho¬dologiques relatifs à la modélisation des déterminants de la pauvreté et la dimension sociale du développement burkinabé, ce papier incorpore deux dimensions analytiques nouvelles. Tout d'abord, il suggère une articulation spécifique des causes des faibles niveaux de vie aux modes de participation au marché du travail. Ensuite, plusieurs approches quant à la modélisation des déterminants de la pauvreté sont successivement proposées : modèle lo¬gistique multinomial des déterminants de la distribution du niveau de vie selon les quintiles, la participation au marché du travail étant exogène; modèle où le choix des groupes socio-économiques est endogène, ce qui im¬plique une analyse des déterminants du niveau de vie spécifique à chaque groupe. Cette approche analytique met en évidence l'importance des choix méthodologiques, l'existence de facteurs communs - modulables selon le genre du chef de ménage et le milieu - quant à l'explication de la pauvreté selon les segments du marché du travail, en même temps que la présence despécificités liées aux hypothèses adoptées et aux groupes socio-économiques considérés. |
| Keywords: | Pauvreté, marché du travail, modélisation |
| JEL: | J24 |
| Date: | 2008–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvre:2000003&r=lab |