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on Labour Economics |
| By: | Petrongolo, Barbara |
| Abstract: | This paper investigates long-term returns from unemployment compensation, exploiting variation from the UK JSA reform of 1996, which implied a major increase in job search requirements for eligibility and in the related administrative hurdle. Search theory predicts that such changes should raise the proportion of non-claimant nonemployed, with consequences on search effort and labor market attachment, and lower the reservation wage of the unemployed, with negative effects on post-unemployment wages. I test these ideas on longitudinal data from Social Security records (LLMDB). Using a difference in differences approach, I find that individuals who start an unemployment spell soon after JSA introduction, as opposed to six months earlier, are 2.5-3% more likely to move from unemployment into Incapacity Benefits spells, and 4-5% less likely to have positive earnings in the following year. This latter employment effect only vanishes four years after the initial unemployment shock. Also, annual earnings for the treated individuals are lower than for the non treated. These results suggest that while tighter search requirements were successful in moving individuals off unemployment benefits, they were not successful in moving them onto long-lasting or better jobs, with fairly long lasting unintended consequences on a number of labor market outcomes. |
| Keywords: | job search; postunemployment earnings; unemployment compensation |
| JEL: | J31 J64 J65 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7067&r=lab |
| By: | Hart, Robert A. (University of Stirling) |
| Abstract: | Between mid-1939 and mid-1943 almost 2.2 million additional women were recruited into Britain's essential war industries. These consisted, predominantly, of young women recruited into metal and chemical industries. Much of the increased labour supply was achieved through government directed labour initiatives. This culminated, in January 1942, with the Control of Engagement Order whereby women between the ages of 18 and 40 who either entered the labour market or who changed employment were compulsorily directed into jobs and industries that were vital to the war effort. There were also many woman volunteers for such work, partly due to the fact that extreme labour scarcity drove up relative female wage rates. At least 42% of the 18-20 age cohorts and 32% of the 21-25 age cohorts in 1943 worked in the essential industries. Two-thirds of those involved owed their jobs to wartime industrial expansion. The majority of such women entered a world of work that had been previously dominated by men. They obtained considerable training, job experience and pay advantages compared to subsequent age cohorts who were not eligible for war work. This bestowed on them subsequent labour market advantages that would otherwise not have occurred. Using a regression discontinuity design the empirical work shows that the long term earnings benefits of those age cohorts eligible for conscription, measured 30 years after the war, were in the order of between 2% and 9% higher than the age cohorts that followed them. |
| Keywords: | WWII female employment, essential war industries, long-term real wages, regression discontinuity design |
| JEL: | J16 J24 J31 N44 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4006&r=lab |
| By: | Frijters, Paul (Queensland University of Technology); Lindeboom, Maarten (Free University Amsterdam); van den Berg, Gerard J. (Free University Amsterdam) |
| Abstract: | Using longitudinal income-tax registers, we study how past labour market outcomes affect current labour market transition rates. We focus on hysteresis effects of the durations and incidence of previous spells out of work. We estimate flexible multi-state Mixed Proportional Hazard specifications for transition rates between employment, unemployment, and welfare/non-participation. Our main finding is that after longer periods of employment with high income, individuals' transition rates from unemployment to employment increase. Longer periods of non-employment generally decrease future transition rates to work, and sometimes also from work. The quantitative magnitude of persistency and hysteresis effects on inequality is modest. |
| Keywords: | duration analysis, hysteresis, inequality, wages, unemployment, hazard rates, employment, income, work |
| JEL: | J64 J22 C41 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4025&r=lab |
| By: | Michael R. Ransom (Brigham Young University and IZA); Ronald L. Oaxaca (University of Arizona and IZA) |
| Abstract: | In the context of certain general equilibrium search models, it is possible to infer the elasticity of labor supply to the firm from the elasticity of the quit rate with respect to the wage. We use this framework to estimate the elasticity of labor supply for men and women workers at a chain of grocery stores operating in the southwestern United States, identifying separation elasticities from differences in wages and separation rates across different job titles within the firm. We estimate elasticities of labor supply to the firm of about 2.7 for men and about 1.5 for women, suggesting significant wage-setting power for the firm. Since women have lower elasticities of labor supply to the firm, a Robinson-style monopsony model might explain lower relative pay of women in the grocery industry. The wage gaps we observe among workers in US retail grocery stores are close to what the monopsony model predicts for the elasticities we have estimated. |
| Keywords: | monopsony papers |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1110&r=lab |
| By: | Lofstrom, Magnus (Public Policy Institute of California); Bates, Timothy (Wayne State University, Detroit) |
| Abstract: | We utilize individual panel data from the 1996 and 2001 Survey of Income and Program Participation (SIPP) to analyze the relative success of self-employed female Hispanics. To allow for a meaningful comparison of earnings between self-employed and wage/salary employed women, we generate different earnings measures addressing the role of business equity. We compare earnings of Hispanic female entrepreneurs to both Latina wage/salary workers and to self-employed female non-Hispanic whites. Latina entrepreneurs are observed to have lower mean earnings than both white female entrepreneurs and Latina employees. However, our findings indicate that Latina entrepreneurs often do well, once differences in mean observable characteristics, such as education, are taken into account. Self-employed Latinas are estimated to earn more than observationally similar nonminority white female entrepreneurs and slightly less than observationally similar Latinas in wage/salary work. |
| Keywords: | Hispanic, self-employment, entrepreneurship, female, minority, Latina |
| JEL: | J15 J16 J31 L26 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3997&r=lab |
| By: | Castagnetti, Carolina; Rosti, Luisa |
| Abstract: | This paper tests whether the academic achievement is a significant determinant of the employment status in the Italian labor market: are the new entrepreneurs selected from the top or bottom end of the graduates ability distribution? Is the cream of the graduate crop pulled into self-employment by the higher expected earnings or are the individuals with lower degree score pushed into entrepreneurship by poor alternatives? Our data show a strong negative relation between academic achievement and self-employment status, i.e. we assess the skimming of the best graduates into wage and salary work. |
| Keywords: | Self-employment; Italy; Selection |
| JEL: | J31 J24 |
| Date: | 2008–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13504&r=lab |
| By: | Gregory de Walque (National Bank of Belgium, Research Department; University of Namur); Olivier Pierrard (Central Bank of Luxembourg; Catholic University of Louvain); Henri Sneessens (Catholic University of Louvain); Raf Wouters (National Bank of Belgium, Research Department; University of Louvain) |
| Abstract: | We consider a model with frictional unemployment and staggered wage bargaining where hours worked are negotiated for each period. The workers' bargaining power in the working time negotiations affects both unemployment volatility and inflation persistence. The closer to zero this parameter, (i) the more firms tend to adjust on the intensive margin, reducing employment volatility, (ii) the lower the effective workers' bargaining power for wages and (iii) the more important the hourly wage in determining the marginal cost. This set-up produces realistic labour market figures together with inflation persistence. Distinguishing the probability to bargain the wage rate for existing and new jobs, we show that the intensive margin helps reduce the new entrants' wage rigidity required to match observed unemployment volatility. |
| Keywords: | DSGE, Search and Matching, Nominal Wage Rigidity, Monetary Policy |
| JEL: | E31 E32 E52 J64 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:200902-19&r=lab |
| By: | Philip Du Caju (National Bank of Belgium, Research Department); Catherine Fuss (National Bank of Belgium, Research Department; Université Libre de Bruxelles); Ladislav Wintr (Central Bank of Luxembourg, Economics and Research Department) |
| Abstract: | This paper examines whether differences in wage rigidity across sectors can be explained by differences in workforce composition, competition, technology and wage-bargaining institutions. We adopt the measure of downward real wage rigidity (DRWR) developed by Dickens and Goette (2006) and rely on a large administrative matched employer-employee dataset for Belgium over the period 1990-2002. Firstly, our results indicate that DRWR is significantly higher for white-collar workers and lower for older workers and for workers with higher earnings and bonuses. Secondly, beyond labour force composition effects, sectoral differences in DRWR are related to competition, firm size, technology and wage-bargaining institutions. We find that wages are more rigid in more competitive sectors, in labour-intensive sectors, and in sectors with predominant centralised wagesetting at the sector level as opposed to firm-level wage agreements. |
| Keywords: | wage rigidity, matched employer-employee data, wage-bargaining institutions |
| JEL: | J31 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:200902-18&r=lab |
| By: | David S. Lee (Princeton University and NBER); Emmanuel Saez (UC Berkeley and NBER) |
| Abstract: | This paper provides a theoretical analysis of optimal minimum wage policy in a perfectly competitive labor market. We show that a binding minimum wage – while leading to unemployment – is nevertheless desirable if the government values redistribution toward low wage workers and if unemployment induced by the minimum wage hits the lowest surplus workers first. This result remains true in the presence of optimal nonlinear taxes and transfers. In that context, a minimum wage effectively rations the low skilled labor that is subsidized by the optimal tax/transfer system, and improves upon the second-best tax/transfer optimum. When labor supply responses are along the extensive margin, a minimum wage and low skill work subsidies are complementary policies; therefore, the co-existence of a minimum wage with a positive tax rate for low skill work is always (second-best) Pareto inefficient. We derive formulas for the optimal minimum wage (with and without optimal taxes) as a function of labor supply and demand elasticities and the redistributive tastes of the government. We also present some illustrative numerical simulations. |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1105&r=lab |
| By: | Menzio, Guido; Moen, Espen R |
| Abstract: | We consider a frictional labor market in which firms want to insure their senior employees against income fluctuations and, at the same time, want to recruit new employees to fill their vacant positions. Firms can commit to a wage schedule, i.e. a schedule that specifies the wage paid by the firm to its employees as function of their tenure and other observables. However, firms cannot commit to the employment relationship with any of their workers, i.e. firms can dismiss workers at will. We find that, because of the firm's limited commitment, the optimal schedule prescribes not only a rigid wage for senior employees, but also a downward rigid wage for new hires. Moreover, we find that, while the rigidity of the wage of senior workers does not affect the allocation of labor, the rigidity of the wage of new hires magnifies the response of unemployment and vacancies to negative shocks to the aggregate productivity of labor. |
| Keywords: | Business Cycles; Competitive Search; Risk Sharing; Unemployment |
| JEL: | E24 E32 J64 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7075&r=lab |
| By: | David Lee (Princeton University and NBER); Emmanuel Saez (University of California, Berkeley and NBER) |
| Abstract: | This paper provides a theoretical analysis of optimal minimum wage policy in a perfectly competitive labor market. We show that a binding minimum wage—while leading to unemployment—is nevertheless desirable if the government values redistribution toward low wage workers and if unemployment induced by the minimum wage hits the lowest surplus workers first. This result remains true in the presence of optimal nonlinear taxes and transfers. In that context, a minimum wage effectively rations the low skilled labor that is subsidized by the optimal tax/transfer system, and improves upon the second-best tax/transfer optimum. When labor supply responses are along the extensive margin, a minimum wage and low skill work subsidies are complementary policies; therefore, the coexistence of a minimum wage with a positive tax rate for low skill work is always (secondbest) Pareto inefficient. We derive formulas for the optimal minimum wage (with and without optimal taxes) as a function of labor supply and demand elasticities and the redistributive tastes of the government. We also present some illustrative numerical simulations. |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:pri:cepsud:1099&r=lab |
| By: | Fougère, Denis; Pradel, Jacqueline; Roger, Muriel |
| Abstract: | In this paper, we examine the disincentive effects of the public employment service on the search effort of unemployed workers and on their exit rate from unemployment. For that purpose, we specify a structural search model with fixed and variable costs of search in which unemployed workers select their optimal search intensity given the exogenous arrival rate of job contacts coming from the public employment agency. Because the theoretical effect of an increase in this exogenous job contact arrival rate on the structural exit rate from unemployment is ambiguous, we estimate this model using individual unemployment duration data. Our results show that the exit rate from unemployment increases with the arrival rate of job contacts obtained by the public employment service, especially for low-educated and ow-skilled workers. They also show that the search effort is more costly for low-educated women and low-skilled adult unemployed workers. This last result suggests that a public employment agency that matches searchers and employers is beneficial, in the sense that it saves searchers in terms of search costs they would otherwise bear. |
| Keywords: | job search; public employment agency; search intensity; simulated maximum likelihood |
| JEL: | C41 J64 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7095&r=lab |
| By: | Boris Hirsch (University of Erlangen-Nurnberg); Thorsten Schank (University of Erlangen-Nurnberg); Claus Schnabel (University of Erlangen-Nurnberg and IZA) |
| Abstract: | This paper investigates women's and men's labor supply to the firm within a structural approach based on a dynamic model of new monopsony. Using methods of survival analysis and a large linked employer-employee dataset for Germany, we find that labor supply elasticites are small (1.9-3.7) and the women's labor supply to the firm is less elastic than men's (which is the reverse of gender differences in labor supply usually found at the level of the market). Our results imply that about one third of the gender pay gap might be wage discrimination by profit-maximizing monopsonistic employers. |
| Keywords: | labor supply, monopsony, gender, gender pay gap, discrimination, monopsony papers |
| JEL: | J42 J60 J71 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1111&r=lab |
| By: | Randall S. Jones; Masahiko Tsutsumi |
| Abstract: | A well-functioning labour market is essential to sustain rapid economic growth in the face of population ageing. Priorities are to reverse the rising share of non-regular workers, which has negative implications for both growth and equity, and encourage greater employment of women and youth, who are under-represented in the labour force. Attracting more women to employment requires increasing the availability of childcare, strengthening maternity leave and creating more family-friendly workplaces. Youth employment rates should be boosted by upgrading tertiary education through stronger competition and closer links to enterprises to reduce mismatches. Educational reform should be extended to elementary and secondary schools to enhance efficiency and decrease the burden of private tutoring. The age of retirement of employees should be raised by eliminating mandatory retirement and phasing out the retirement allowance. Active labour market policies should focus on policies to expand human capital rather than wage subsidies.<P>Soutenir la croissance en Corée en réformant le marché du travail et en améliorant le système d'éducation<BR>Un marché du travail performant est indispensable au maintien d’une croissance économique rapide face au vieillissement de la population. Les objectifs prioritaires consistent à inverser l’augmentation de la part des travailleurs non réguliers, qui a des conséquences négatives à la fois pour la croissance et pour l’équité, et d’encourager une progression de l’emploi des femmes et des jeunes, qui sont sous-représentés dans la population active. Pour attirer davantage de femmes dans l’emploi, il faut accroître l’offre de services d’accueil des enfants, améliorer la situation en matière de congés de maternité et faire en sorte qu’il y ait davantage de lieux de travail où les obligations familiales sont prises en compte. Les taux d’emploi des jeunes devraient être favorisés en améliorant l’enseignement tertiaire grâce à un renforcement de la concurrence et à un resserrement des liens avec les entreprises afin de réduire les inadéquations. La réforme de l’éducation devrait être étendue aux établissements élémentaires et secondaires de façon à améliorer l’efficience et à diminuer la charge représentée par les cours de soutien privés. L’âge de départ à la retraite des salariés devrait être relevé en éliminant la retraite obligatoire et en supprimant progressivement l’indemnité de retraite. Dans le cadre des politiques actives du marché du travail, il faudrait privilégier le renforcement du capital humain plutôt que le versement de subventions salariales. |
| Keywords: | Korea, Corée, marché du travail, participation rates, travailleurs âgés, dualism, dualisme, employment protection, protection de l'emploi, travailleurs non réguliers, taux d'activité, female employment, non-regular workers, older workers, activité des femmes, taux de fécondité, labour market, company pensions, retraites allouées par l'entreprise, seniority-based wages, rémunération basée sur l'ancienneté, fertility rate, allocation de retraite, education reform, réforme de l'éducation, retirement allowance, emploi des jeunes |
| JEL: | J11 J3 J5 J7 |
| Date: | 2009–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:672-en&r=lab |
| By: | Vincenzo Carrieri; Edoardo Di Porto; Leandro Elia |
| Abstract: | Starting from Adam Smith's intuition, compensating wage differentials are one of the most widespread explanation to describe why agents should bear occupational risk of injury and death. For nearly thirty years, economists have attempted to and empirical evidence on such wage differentials mostly relying on estimation of a simple wage equation. This paper claims to put one step forward. Using the Survey of Household Income and Wealth (SHIW) 2004 we estimate for Italy the wage premium held by workers in risky occupations by means of the matching estimator. Such technique is desirable because it attempts to remove all the differences in wage coming from heterogeneity across individuals and not directly imputable to risk. Estimates suggest that net hourly wage premium is about 3% to manual workers and nearly null to non-manual workers. When we split the sample along the employer size, our findings show a heterogeneous treatment with respect to occupational status. Small firms tend to flatten out any risk premium to manual workers, while they recognize roughly 6% to non-manual workers; the opposite occurs when we look at medium-large firms wherein manual workers gain 1.5% to 5% more with respect their counterparts. Therefore, it seems that wage-risk trade off does not always emerge as hedonic wage theory would predict. |
| Keywords: | wage differentials; risky jobs; value of a statistical life; propensity score matching. |
| JEL: | C14 J31 J28 I19 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wplabo:89&r=lab |
| By: | Cingano, Federico; Rosolia, Alfonso |
| Abstract: | We assess the information spillovers generated by the exchange of job-related information within networks of fellow workers exploiting administrative records covering all employment relationships established in a specific local labor market over 20 years. We recover individual-specific networks of former colleagues for a sample of workers exogenously displaced by firm closures and relate their subsequent unemployment duration to the share of employed contacts at displacement date. Individual-specific networks and the longitudinal dimension of the data allow to account for most plausible sources of omitted variable bias. In particular, identification rests on within-closure within-neighborhood and within-skill comparisons conditional of a wide range of predictors for the displaced and his contacts' employment status, such as lagged wages and labor market attachment. We find that contacts' current employment rate has statistically significant effects on unemployment duration: a one standard deviation increase in the network employment rate reduces unemployment duration by about 8 percent; as a benchmark, a one standard deviation increase in own wage at displacement is associated with a 10 percent lower unemployment duration. These effects are magnified if contacts recently searched for a job and if their current employer is closer, both in space and in skills requirements, to the displaced. We find that stronger ties and lower competition for the available information also speed up re-employment. A number of specification checks and indirect tests suggests the estimated spillover effect of contacts' current employment status is driven by information exchange rather than by other interaction mechanisms. |
| Keywords: | job search; social networks; spillover effects |
| JEL: | D0 J0 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6818&r=lab |
| By: | Sologon, Denisa Maria (Maastricht University); O'Donoghue, Cathal (Teagasc Rural Economy Research Centre) |
| Abstract: | This paper analyses the dynamic structure of individual earnings across 14 EU countries over the period 1994-2001 using ECHP. Understanding wage mobility and its link with the evolution of cross-sectional earnings inequality is important from a welfare perspective, particularly given the large variety in national cross-sectional wage inequality. This is highly relevant in the context of the changes that took place in the EU labour market policy framework after 1995 under the incidence of the 1994 OECD Jobs Strategy, which recommend policies to increase wage flexibility, lower non-wage labour costs and allow relative wages to better reflect individual differences in productivity and local labour market conditions. What is the source of earnings variation? Did the increase in cross-sectional wage inequality observed in some countries result from greater transitory fluctuations in earnings and individuals facing a higher degree of earnings mobility? Or is this rise reflecting increasing permanent differences between individuals with mobility remaining constant or even falling? Are there common trends in earnings inequality and mobility across countries? Equally weighted minimum distance methods are used to estimate the covariance structure of earnings, decompose earnings into a permanent and a transitory component and conclude about their evolution. As expected, a notable change was an increased country heterogeneity, which translated itself in the level and evolution of the cross-sectional earnings inequality components. The decrease in cross-sectional inequality was accompanied by an increase in mobility, and therefore a decrease in the importance of the permanent component relative to the transitory component in Denmark, Belgium and Spain, and by a decrease in earnings mobility in Germany, France, UK, Ireland and Austria. In Luxembourg, Italy, Greece, Portugal, and Finland, the increase in cross-sectional inequality was accompanied by a decrease in mobility, whereas in Netherlands by an increase. |
| Keywords: | panel data, wage distribution, inequality, mobility |
| JEL: | C23 D31 J31 J60 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4012&r=lab |
| By: | López Bóo, Florencia (Inter-American Development Bank); Madrigal, Lucia (Inter-American Development Bank); Pagés, Carmen (Inter-American Development Bank) |
| Abstract: | This paper investigates the relationship between part-time work and job satisfaction using a recent household survey from Honduras. In contrast to previous work for developed countries, this paper does not find a preference for part-time work among women. Instead, both women and men tend to prefer full- time work, although the preference for working longer hours is stronger for men. Consistent with an interpretation of working part-time as luxury consumption, the paper finds that partnered women with children, poor women or women working in the informal sector are more likely to prefer full-time work than single women, partnered women without children, non-poor women or women working in the formal sector. These results have important implications for the design of family and child care policies in low-income countries. |
| Keywords: | job satisfaction, gender, part-time work, job flexibility |
| JEL: | C13 J16 J28 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3994&r=lab |
| By: | Kahn, Lawrence M. (Cornell University) |
| Abstract: | Using longitudinal data on individuals from the European Community Household Panel (ECHP) for eight countries during 1995-2001, I investigate temporary job contract duration and job search effort. The countries are Belgium, Denmark, Finland, France, Italy, the Netherlands, Portugal and Spain. I construct a search model for workers in temporary jobs which predicts that shorter duration raises search intensity. Calibration of the model to the ECHP data implies that at least 59% of the increase in search intensity over the life a long term temporary job occurs in the last period. I then estimate regression models for search effort that control for human capital, pay, local unemployment, gender, and time and country fixed effects, I find that workers on temporary jobs indeed search harder than those on permanent jobs. Moreover, search intensity increases as temporary job duration falls, and at least 80% of this increase occurs on average in the shortest duration jobs. These results are robust to disaggregation by gender and country and to individual fixed effects. These empirical results are noteworthy, since it is not necessary to assume myopia or hyperbolic discounting in order to explain them, although the data clearly also do not rule out such explanations. |
| Keywords: | job search, temporary jobs |
| JEL: | J21 J23 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4020&r=lab |
| By: | Böckerman, Petri (Labour Institute for Economic Research); Hämäläinen, Ulla (The Social Insurance Institution of Finland); Uusitalo, Roope (VATT, Helsinki) |
| Abstract: | This paper evaluates the labour market effects of the introduction of the polytechnic education system in Finland. The polytechnic reform gradually transformed former vocational colleges into polytechnics. Since the timing of the reform differed across schools, we can compare the performance of polytechnic graduates to the performance of vocational college graduates controlling for both the year and the school effects. The results are somewhat sensitive to how the selectivity issues are treated but generally suggest that both the earnings and the employment levels of post-reform graduates are higher in the field of business and administration. The effects are much smaller and usually insignificant in other fields. |
| Keywords: | I21, I23 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4013&r=lab |
| By: | Suresh Naidu (Harvard University) |
| Abstract: | This paper estimates the impacts of labor-mobility restrictions on job-transitions and wages in the postbellum U.S. south. In particuliar, I estimate the effects of changes in criminal fines, collected from BLS commission labor reports, charged for "enticement" (offers made to workers already under contract) on sharecropper mobility, tenancy choice, and agricultural wages. I present three different pieces of evidence. The first is a retrospective work history panel of farmers from Jefferson County, Arkansas. The second is a state-year panel, using USDA agricultural wages as a dependent variable. The third is a cohort-state regresssion using the 1940 IPUMS census micro sample, estimating the effects of anti-enticement laws on the returns to experience in agricultural labor. I find that a 10% increase in the fine ($13) charged for enticement a.) lowered the probably of a move by black sharecroppers by 6 percentage points, a 12% decline, and b.) lowered agricultural wages, by reducing the exit probability to sharecropping, by 0.11 % (1 cent of daily wages), and c.) lowered the returns to experience in agriculture for blacks by 0.6% per year. These results are consistent with the on-the-job search model, where the enticement fine raises the cost of offering a job to employed workers. |
| Keywords: | monopsony papers |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1114&r=lab |
| By: | Antigone Lyberaki |
| Abstract: | This paper is about women’s work in the context of fast socioeconomic change. Drawing from feminist analyses on women’s work and the care sector, it highlights the link between women’s paid employment and the supply of low-paid immigrant (female) labour in Greece in the sphere of care provision. It examines three issues: First, the acceleration of women’s involvement in the paid labour force after 1990. Second, the parallel influx of immigrants in Greece –half of whom are female (of which, half are involved in service provision for households). And third, the “big picture” of the demand for care (both paid and unpaid, childcare as well as care for the elderly) in the context of ageing and rising female participation in paid work. The analysis highlights the key contribution of migrant women acting as catalysts for social change, the ‘deae ex machina’ of the story. |
| Keywords: | female migrants, care services provision, elderly, family structure, female employment participation. |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:hel:greese:20&r=lab |
| By: | Ryouichi Ikeda (Graduate School of Economics, Osaka University) |
| Abstract: | This paper examines pension premiums and a consumption tax as ways to finance basic pensions. The union wage model suggests that labor wage taxation increases the rate of unemployment. Using the right-to-manage model, it becomes clear that an increase in premiums for labor wages actually leads to increased unemployment rates. Furthermore, I argue that by decreasing premiums and introducing consumption tax for basic pension, the rate of unemployment will decrease. However, the study revealed that this basic pension reform would decrease benefits to individuals because of the additional charges. |
| Keywords: | Pension; Unemployment; Union; Right-to-manage model |
| JEL: | H55 J64 J51 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:0908&r=lab |
| By: | TORBERG FALCH (Norwegian University of Science and Technology) |
| Abstract: | Monopsonistic wage-setting power requires that the supply of labor directed toward individual establishments is upward sloping. This paper utilizes institutional features to identify the supply curve. The elasticity of labor supply is estimated using data for the Norwegian teacher labor market in a period where the only variation in the wage level was determined centrally, and with information on whether there is excess demand or not at the school level. In fixed effects models, the supply elasticity faced by individual schools is estimated to about 1.5, and is in the range 1.0–1.9 in different model specification. |
| Keywords: | Labor supply elasticity; teacher supply; monopsony, monopsony papers |
| JEL: | C23 C24 I29 J22 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1106&r=lab |
| By: | Gautier, Pieter A; Zenou, Yves |
| Abstract: | We show how small initial wealth differences between low skilled black and white workers can generate large differences in their labour-market outcomes. This even occurs in the absence of a taste for discrimination against blacks or exogenous differences in the distance to jobs. Because of the initial wealth difference, blacks cannot afford cars while whites can. Car ownership allows whites to reach more jobs per unit of time and this gives them a better bargaining position. As a result, in equilibrium, blacks end up with both higher unemployment rates and lower wages than whites. Furthermore, it takes more time for blacks to reach their jobs even though they travel less miles. Those predictions are consistent with the data. Better access to capital markets or better public transportation will reduce the differences in labour market outcomes. |
| Keywords: | ethnic minorities; job search; multiple job centres; spatial labour markets; Transportation mismatch |
| JEL: | D83 J15 J64 R1 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7061&r=lab |
| By: | Colin Davies; Alireza Naghavi |
| Abstract: | We examine the relationship between o¤shoring and the labour market in an occupational choice model of trade and endogenous growth where workers are employed on the basis of their individual skill levels. Trade liberalization leads to o¤shoring and reduces employment in the manufacturing sector. Displaced workers move into the traditional and innovation sectors ac- cording to their skill levels, shaping real wages and aggregate productivity in the manufacturing sector. The paper aims to show how inter-sectoral labour market adjustments, highlighted by skill heterogeneity, could be a possible explanation for the simultaneous rise in productivity and reduction in real wages that have coincided with the sharp escalation of o¤shoring activities in the US manufacturing sector since 2004. |
| Keywords: | o¤shoring, trade liberalization, real wages, growth, productivity, inter-sectoral labour reallocation, skill heterogeneity. |
| JEL: | F16 F23 J24 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:mod:recent:027&r=lab |
| By: | Engström, Per (Uppsala University); Hesselius, Patrik (IFAU); Holmlund, Bertil (Uppsala University) |
| Abstract: | One goal of the public employment service is to facilitate matching between unemployed job seekers and job vacancies; another goal is to monitor job search so as to bring search efforts among the unemployed in line with search requirements. The referral of job seekers to vacancies is one instrument used for these purposes. We report results from a randomized Swedish experiment where the outcome of referrals is examined. To what extent do unemployed individuals actually apply for the jobs they are referred to? Does information to job seekers about increased monitoring affect the probability of applying and the probability of leaving unemployment? The experiment indicates that a relatively large fraction (one third) of the referrals do not result in job applications. Information about intensified monitoring causes an increase in the probability of job application, especially among young people. However, we find no significant impact on the duration of unemployment. |
| Keywords: | vacancy referral, job matching, job search, randomized experiment |
| JEL: | C99 J64 J68 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3991&r=lab |
| By: | Sharon Kukla-Acevedo (Deparment of Political Science, Central Michigan University); Eugenia F. Toma (Martin School of Public Policy and Administration, University of Kentucky) |
| Abstract: | Federal legislation currently holds institutions of higher education accountable for the quality of teachers that they produce. However research has yet to demonstrate that teacher preparation programs (TPPs) have differential effects on the quality of teachers they produce in terms of student achievement. This study uses data from a sample of 2,582 5th grade math students in an urban school district in Kentucky and a school fixed effects design to explore the variation in average TPP effects. The authors find that TPPs are differentially effective in training teachers, which in turn impacts student performance on 5th grade math scores. There is also some indication that these differential effects converge around teachers’ fifth year of teaching. |
| Keywords: | Student achievement; teacher preparation, teacher effects |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:ifr:wpaper:2009-06&r=lab |
| By: | Moretti, Enrico |
| 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. Therefore, the increase in the college premium in real terms may be smaller than the increase in the nominal terms. 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. To understand the implications of this finding for changes in well-being inequality I use a simple general equilibrium model. 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, 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. |
| Keywords: | cost of living; general equilibrium; return to education |
| JEL: | J01 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6997&r=lab |
| By: | Cavaco, Sandra; Fougère, Denis; Pouget, Julien |
| Abstract: | In this paper we estimate by matching techniques the effects of a French retraining program on the reemployment rate of laid-off workers. This program, called “Conventions de conversion”, was intended to improve reemployment prospects of displaced workers by proposing them retraining and job seeking assistance for a period of six months beginning just after the dismissal. Our empirical analysis is based upon non-experimental data collected by the French Ministry of Labour. Matching estimates show that this program succeeded in increasing the employment rate of trainees by approximately 6 points of percentage in the medium-term, namely in the second and third years after the date of entry into the program. This improvement is essentially due to an increase of their reemployment rate in regular jobs, namely jobs under long-term labour contracts. |
| Keywords: | displaced workers; evaluation; matching estimates; retraining program |
| JEL: | C41 J24 J64 J68 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7094&r=lab |
| By: | Bandiera, Oriana; Barankay, Iwan; Rasul, Imran |
| Abstract: | We present evidence on the effect of social connections between workers and managers on productivity in the workplace. To evaluate whether the existence of social connections is beneficial to the firm's overall performance, we explore how the effects of social connections vary with the strength of managerial incentives and worker's ability. To do so, we combine panel data on individual worker's productivity from personnel records with a natural field experiment in which we engineered an exogenous change in managerial incentives, from fixed wages, to bonuses based on the average productivity of the workers managed. We find that when managers are paid fixed wages, they favor workers to whom they are socially connected irrespective of the worker's ability, but when they are paid performance bonuses, they target their effort towards high ability workers irrespective of whether they are socially connected to them or not. Although social connections increase the performance of connected workers, we find that favoring connected workers is detrimental for the firm's overall performance. |
| Keywords: | favoritism; managerial incentives; natural field experiments |
| JEL: | J33 M52 M55 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7114&r=lab |
| By: | Zimmermann, Klaus F. (IZA, DIW Berlin and Bonn University) |
| Abstract: | This paper outlines the importance of labor mobility for the improvement in allocating and distributing economic resources. We are faced with an increasing lack of skilled workers and a growing tendency of unemployment amongst the low-skilled. A central political objective for the future will not only be education policy but also the recruitment of high-skilled workers from international and European labor markets. Additional skilled labor increases well-being and reduces inequality. However, internal European barriers to mobility are difficult to break through. An improved transparency of the European labor market, a greater command of languages and a standardization of the social security system can strengthen mobility. The key to mobility is in promoting the integration of international workers in the European migration process, which can be strengthened through circular migration. The European “blue card” initiative and the opening of labor markets to foreign graduates who have been trained in Europe could set a new course. |
| Keywords: | migration, migration effects, EU Eastern enlargement, free movement of workers |
| JEL: | F22 J15 J61 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3999&r=lab |
| By: | Burda, Michael C; Hamermesh, Daniel S |
| Abstract: | Using time-diary data from four countries we show that the unemployed spend most of the time not working for pay in additional leisure and personal maintenance, not in increased household production. There is no relation between unemployment duration and the split of time between household production and leisure. U.S. data for 2003-2006 show that almost none of the lower amount of market work in areas of long-term high unemployment is offset by additional household production. In contrast, in those areas where unemployment has risen cyclically reduced market work is made up almost entirely by additional time spent in household production. |
| Keywords: | household production; paid work; time use; unemployment |
| JEL: | D13 E24 J22 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7166&r=lab |
| By: | Horii, Ryo; Sasaki, Masaru |
| Abstract: | This paper constructs an overlapping generations model with a frictional labor market to explain persistent low education in developing countries. When parents are uneducated, their children often face difficulties in finishing school and therefore are likely to remain uneducated. Moreover, if children expect that other children of the same generation will not receive an education, they expect that firms will not create enough jobs for educated workers, and thus are further discouraged from schooling. These intergenerational and intragenerational mechanisms reinforce each other, creating a serious poverty trap. Escape from the trap requires the well-organized and combined implementation of a subsidy for schooling, the provision of free education, support for disadvantaged children, and public awareness programs. |
| Keywords: | overlapping generations model; education; poverty trap; job search; coordination failure. |
| JEL: | O11 J62 J23 |
| Date: | 2008–11–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13484&r=lab |
| By: | Buhai, Ioan Sebastian; Portela, Miguel; Teulings, Coen N; van Vuuren, Aico |
| Abstract: | This study documents two empirical regularities, using data for Denmark and Portugal. First, workers who are hired last, are the first to leave the firm (Last In, First Out; LIFO). Second, workers’ wages rise with seniority (= a worker’s tenure relative to the tenure of her colleagues). We seek to explain these regularities by developing a dynamic model of the firm with stochastic product demand and hiring cost (= irreversible specific investments). There is wage bargaining between a worker and its firm. Separations (quits or layoffs) obey the LIFO rule and bargaining is efficient (a zero surplus at the moment of separation). The LIFO rule provides a stronger bargaining position for senior workers, leading to a return to seniority in wages. Efficiency in hiring requires the workers’ bargaining power to be in line with their share in the cost of specific investment, Then, the LIFO rule is a way to protect their property right on the specific investment. We consider the effects of Employment Protection Legislation and risk aversion. |
| Keywords: | efficient bargaining; EPL; irreversible investment; LIFO; matched employer-employee data; seniority |
| JEL: | J31 J41 J63 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6933&r=lab |
| By: | Jeremy T. Fox (University of Chicago and NBER) |
| Abstract: | I estimate the relative magnitudes of worker switching costs and whether the employer switching of experienced engineers responds to outside wage offers. Institutional features imply that voluntary turnover dominates switching in the market for Swedish engineers from 1970–1990. I use data on the allocation of engineers across a large fraction of Swedish private sector firms to estimate the relative importance of employer wage policies and switching costs in a dynamic programming, discrete choice model of voluntary employer choice. The differentiated firms are modeled in employer characteristic space and each firm has its own age wage profile. I find that a majority of engineers have moderately high switching costs and that a minority of experienced workers are responsive to outside wage offers. Younger workers are more sensitive to outside wage offers than older workers. |
| Keywords: | monopsony papers |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1113&r=lab |
| By: | João Miguel Ejarque |
| Abstract: | In a standard search model the expected duration of unemployment is independent of the duration of previous employment, as well as of the current length of the unemployment spell. This paper offers a network mechanism to generate these correlations. Here, employed workers invest in social contacts with other employed workers, which will help them find jobs in the event of unemployment. These social contacts "depreciate" because they can also become unemployed and unemployed contacts are assumed to be useless. In this model the longer you have been working, the more contacts you are likely to have, and the more contacts you have the shorter your expected unemployment duration will be. The model is a simple and tractable way of introducing network ideas in one of the workhorses of labour and macroeconomics. The model also suggests that networks are less productive during periods of high unemployment, mainly because high unemployment destroys part of the network. In addition, the model provides guidance for indirect inference of network effects from the data. |
| Date: | 2009–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:esx:essedp:665&r=lab |
| By: | Ansgar, Rannenberg |
| Abstract: | Unemployment in the big continental European economies like France and Germany has been substantially increasing since the mid 1970s. So far it has been difficult to empirically explain the increase in unemployment in these countries via changes in supposedly employment unfriendly institutions like the generosity and duration of unemployment benefits. At the same time, there is some evidence produced by Ball (1996, 1999) saying that tight monetary policy during the disinflations of the 1980s caused a subsequent increase in the NAIRU, and that there is a relationship between the increase in the NAIRU and the size of the disinflation during that period across advanced OECD economies. There is also mounting evidence suggesting a role of the slowdown in productivity growth, e.g. Nickell et al. (2005), IMF (2003), Blanchard and Wolfers (2000). This paper introduces endogenous growth via a capital stock externality into an otherwise standard New Keynesian model with capital accumulation and unemployment. We subject the model to a cost push shock lasting for 1 quarter, in order to mimic a scenario akin to the one faced by central banks at the end of the 1970s. Monetary policy implements a disinflation by following a standard interest feedback rule calibrated to an estimate of a Bundesbank reaction function. About 40 quarters after the shock has vanished, unemployment is still about 1.7 percentage points above its steady state, while annual productivity growth has decreased. Over the same horizon, a higher weight on the output gap increases employment (i.e. reduces the fall in employment below its steady state). Thus the model generates an increase in unemployment following a disinflation without relying on a change to labour market structure. We are also able to coarsely reproduce cross country differences in unemployment. A higher disinflation generated by a larger cost push shock causes a stronger persistent increase in unemployment, the correlation noted by Ball. For a given cost push shock, a policy rule estimated by Clarida, Gali and Gertler (1998) for the Bundesbank and the Federal Reserve Bank produces a stronger persistent increase in the case of the Bundesbank than of the Federal Reserve. Testable differences in real wage rigidity between continental Europe and the United States, namely, as pointed out by Blanchard and Katz (1999), the presence of the labour share in the wage setting function for Europe with a negative coefficient but it's absence in the U.S. also imply different unemployment outcomes following a cost push shock. If real wage growth does not depend on the labour share, the persistent increase in unemployment is about one percentage point smaller than when it does. To the extent that the wage setting structure is determined by labour market rigidities, "Shocks and Institutions" jointly determine the unemployment outcome, as suggested by Blanchard and Wolfers (2000). The calibration of unobservable model parameters is guided by a comparison of second moments of key variables of the model with Western German data. The endogenous growth model matches the moments better than a model without endogenous growth but otherwise identical features. This is particularly true for the persistence in employment as measured by first and higher order autocorrelation coefficients. |
| Keywords: | NAIRU; Endogenous Growth; Monetary Policy; European Unemployment |
| JEL: | O42 J64 E50 |
| Date: | 2009–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13610&r=lab |
| By: | Daniel F. Heuermann (Institute for Labour Law and Industrial Relations in the EC, University of Trier) |
| Abstract: | Bridging the gap between the literatures on industrial change and human capital externalities we investigate the joint importance of aggregate regional education and job turnover for productivity effects to arise within firms and regional industries. On the level of regional industries we find strong evidence for the mutual dependence of skills and change inasmuch as regional human capital is a crucial ingredient for industrial change to be productivity enhancing, while human capital externalities arise first and foremost in dynamic labor markets. On the firm level, we find human capital externalities to accrue predominantly to growing firms which benefit from sharing, matching, and learning externalities arising from a large supply of human capital in skilled, dynamic labor markets. Despite the joint impact of human capital and industrial change on productivity we find only weak evidence that inter-industry differences in labor market dynamics of highly qualified workers shape the geography of industry location across German regions. |
| Keywords: | Human Capital Externalities, Job Turnover, Industrial Change |
| JEL: | D62 J24 R11 R12 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iaa:wpaper:200902&r=lab |
| By: | Cockx, Bart (Ghent University); Picchio, Matteo (Catholic University of Louvain) |
| Abstract: | This paper assesses whether short-lived jobs (lasting one quarter or less and involuntarily ending in unemployment) are stepping stones to long-lasting jobs (enduring one year or more) for Belgian long-term unemployed school-leavers. We proceed in two steps. First, we estimate labour market trajectories in a multi-spell duration model that incorporates lagged duration and lagged occurrence dependence. Second, in a simulation we find that (fe)male school-leavers accepting a short-lived job are, within two years, 13.4 (9.5) percentage points more likely to find a long-lasting job than in the counterfactual in which they reject short-lived jobs. |
| Keywords: | event history model, transition data, state dependence, short-lived jobs, stepping stone effect, long-lasting jobs |
| JEL: | C15 C41 J62 J64 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4007&r=lab |
| By: | Haile, Getinet Astatike (Policy Studies Institute) |
| Abstract: | This paper attempts to establish empirically whether there is a link between workplace disability and employee job-related well-being. Using nationally representative linked employer-employee data for Britain, I employ alternative econometric techniques to account for unobserved workplace heterogeneity. I find that workplace disability diversity is associated with lower employee well-being among people with no reported disability. Tests conducted also indicate that workplace equality policies do not ameliorate this effect. |
| Keywords: | disability diversity, job-related well-being, linked employer-employee data, Britain |
| JEL: | J14 J82 J7 I31 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3993&r=lab |
| By: | Djankov, Simeon; Ramalho, Rita |
| Abstract: | We survey the research on the effect of employment laws in developing countries, using papers published since 2004. The survey is further supported by cross-country correlation analyses. Both exercises show that developing countries with rigid employment laws tend to have larger informal sectors and higher unemployment, especially among young workers. A number of countries, especially in Eastern Europe and West Africa, have recently undergone significant reforms to make employment laws more flexible. Conversely, several countries in Latin America have made employment laws more rigid. These reforms are larger in magnitude than any reforms in developed countries and their study can produce new insights on the benefits of labor regulation. |
| Keywords: | employment regulation; India; Latin America |
| JEL: | J53 J54 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7097&r=lab |
| By: | Julio Cáceres-Delpiano |
| Abstract: | By using the Demographic and Health Survey (DHS) data for 42 developing countries this paper studies the impact of fertility on mothers’ employment. In order to solve the problem of omitted variable bias multiple births are used as source of variation in family size. Similarly to previous evidence for developed countries, the findings reveal that family size has a negative impact on female employment. Nevertheless, two types of heterogeneity are exposed. First, the size and sign of the impact depends on the birth at which we study the increase in family size; specifically, a negative impact of fertility is observed at the time of the first birth or in a third and higher births; nevertheless, for some samples (and definitions of mother’s employment) a shift in a second birth might have a positive impact on employment. Second, the types of jobs affected by a change of fertility differ depending on at which margin the shift in fertility takes place. Thus, while for a first birth, more informal jobs, such as unpaid jobs, or jobs that are harder to combine with childbearing (working away from home or seasonal jobs) are the ones impacted by an increase in family size; at higher parities, all type of jobs are affected by the shift in fertility. |
| Keywords: | Fertility, Female labor force participation, Developing countries |
| JEL: | J13 J22 J24 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we086832&r=lab |
| By: | Julián Messina; Chiara Strozzi; Jarkko Turunen |
| Abstract: | We study differences in the adjustment of aggregate real wages in the manufacturing sector over the business cycle across OECD countries, combining results from different data and dynamic methods. Summary measures of cyclicality show genuine cross-country heterogeneity even after controlling for the impact of data and methods. We find that more open economies and countries with stronger unions tend to have less pro-cyclical (or more counter-cyclical) wages. We also find a positive correlation between the cyclicality of real wages and employment, suggesting that policy complementarities may influence the adjustment of both quantities and prices in the labour market. |
| Keywords: | Real Wages, Business Cycle, Dynamic Correlation, Labour Market Institutions |
| JEL: | E32 J30 C10 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:mod:recent:028&r=lab |
| By: | Gould, Eric D; Moav, Omer |
| Abstract: | This paper examines the effect of inequality on the incentives to emigrate according to a person’s observable and unobservable skills. Borjas (1987) shows that higher skilled individuals are more likely to emigrate than lower skilled individuals when the returns to skill are higher in a potential foreign destination. Building on this framework, we develop a model which shows that this prediction holds for observable skills like education which are "general" in the sense of being easily transferable to another country. However, we show that the relationship between unobservable skills and the probability of emigrating is an inverse U-shape - since unobservable skills are a mixture of "general skills" and "country-specific skills" which are not easily transferable. We examine the predictions of our model with a unique data set containing information on who emigrates from Israel between 1995 and 2004, combined with a full set of demographic and labor market variables for both movers and stayers in 1995. By exploiting differences between Israel and the United States in the returns to observable (education) and unobservable skills across different sectors (industries and occupations), we find strong evidence that a lower return to unobservable skills in Israel versus the US entices higher ability Israelis to leave the country. Also, we find that virtually the entire positive relationship between education and the rate of emigration would be eliminated if the returns to education were increased in Israel to US levels within each industry. Overall, the results strongly support our model and the importance of differentiating between general and "country-specific" skills in the analysis of immigrant selection. |
| Keywords: | country-specific skills; emigration; general skills; income inequality; return to education |
| JEL: | J61 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6955&r=lab |
| By: | Douglas Staiger (Dartmouth College and NBER); Joanne Spetz (Public Policy Institute of California); Ciaran Phibbs (Stanford University School of Medicine) |
| Abstract: | A variety of recent theoretical and empirical advances have renewed interest in monopsonistic models of the labor market. However, there is little direct empirical support for these models, even in labor markets that are textbook examples of monopsony. We use an exogenous change in wages at Veterans Affairs hospitals as a natural experiment to investigate the extent of monopsony in the nurse labor market. In contrast to much of the prior literature, we estimate that labor supply to individual hospitals is quite inelastic, with short-run elasticity around 0.1. We also find that non-VA hospitals responded to the VA wage change by changing their own wages. |
| Keywords: | monopsony papers |
| JEL: | J42 I11 L13 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1115&r=lab |
| By: | Christine Percheski (Princeton University) |
| Abstract: | Employment rates for married and unmarried mothers in the United States crossed over in the early 1990s, leading to questions about how marital status and family structure aect contemporary maternal employment. A mother's family structure { whether she is married, cohabiting or living without a partner { may aect her employment through her family's income needs, the instrumental and social support she receives, and her perceived security to pursue her preferred level of employment. Additionally, if a woman has a husband or cohabiting partner, she may take his preference for her employment level into account. Alternatively, selection may explain the association between family structure and maternal employment. In this analysis, I describe how the employment of mothers varies by family structure in the ve years after giving birth. Before taking demographic or human capital characteristics into account, married, cohabiting and lone mothers have similar levels of employment. Using covariate adjustments to account for dierences in selection, I nd that married mothers work less on average than unmarried mothers, and that cohabiting and lone unmarried mothers have very similar employment levels. Family income, family wealth, partner characteristics, and sex role attitudes do not explain this marriage eect. I argue that married mothers work less because they have greater perceived economic security, enabling them to pursue their preferred level of employment when their children are very young. Black married mothers are exceptional; on average, they work more than married white or Hispanic mothers and have similar employment levels as black unmarried mothers. This unique pattern may re ect lower economic security among black married women or a unique set of cultural values regarding the combination of childrearing and employment. |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:pri:crcwel:1130&r=lab |
| By: | Cardoso, Ana Rute; Guimaraes, Paulo; Zimmermann, Klaus F |
| Abstract: | This paper analyzes the early research performance of PhD graduates in labor economics, addressing the following questions: Are there major productivity differences between graduates from American and European institutions? If so, how relevant is the quality of the training received (i.e. ranking of institution and supervisor) and the research environment in the subsequent job placement institution? The population under study consists of labor economics PhD graduates who received their degree in the years 2000 to 2005 in Europe or the USA. Research productivity is evaluated alternatively as the number of publications or the quality-adjusted number of publications of an individual. When restricting the analysis to the number of publications, results suggest a higher productivity by graduates from European universities than from USA universities, but this difference vanishes when accounting for the quality of the publication. The results also indicate that graduates placed at American institutions, in particular top ones, are likely to publish more quality-adjusted articles than their European counterparts. This may be because, when hired, they already have several good acceptances or because of more focused research efforts and clearer career incentives. |
| Keywords: | graduate programs; research productivity |
| JEL: | A10 A11 A14 A23 J44 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7129&r=lab |
| By: | Pascal Courty; Do Han Kim; Gerald Marschke1 |
| Abstract: | Using data from a large, U.S. federal job training program, we investigate whether enrolment incentives that exogenously vary the ‘shadow prices’ for serving different demographic subgroups of clients influence case workers’ intake decisions. We show that case workers enroll more clients from subgroups whose shadow prices increase but select at the margin weaker-performing members from those subgroups. We conclude that enrolment incentives curb cream-skimming across subgroups leaving a residual potential for cream-skimming within a subgroup. |
| Keywords: | Performance measurement, cream-skimming, enrolment incentives, bureaucrat behavior, public organizations |
| JEL: | H72 J33 L14 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:eui:euiwps:eco2009/03&r=lab |
| By: | Mitnik, Oscar A. (University of Miami) |
| Abstract: | A great deal of attention has been paid in the literature to estimating the impacts of training programs. Much less attention has been devoted to how training agencies assign participants to training programs, and to how these allocation decisions vary with agency resources, the initial skill levels of participants and the prevailing labor market conditions. This paper models the training assignment problem faced by welfare agencies, deriving empirical implications regarding aggregate training policies and testing these implications using data from Welfare-to-Work training programs run by California counties during the 1990s. I find that county welfare agencies do not seem to follow a simple returns-maximization model in their training assignment decisions. The results show that, as suggested by political economy models, the local political environment has a strong effect on training policies. In particular, I find that going from a Republican to a Democratic majority in a county’s Board of Supervisors has a strong effect on training policies, significantly increasing the proportion of welfare recipients receiving human capital development training. |
| Keywords: | assignment to training rules, welfare to work programs, local political environment |
| JEL: | C44 D73 I38 J24 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4024&r=lab |
| By: | Card, David (University of California, Berkeley); Kluve, Jochen (RWI Essen); Weber, Andrea (University of California, Berkeley) |
| Abstract: | This paper presents a meta-analysis of recent microeconometric evaluations of active labor market policies. Our sample consists of 199 program estimates drawn from 97 studies conducted between 1995 and 2007. In about one-half of these cases we have both a short-term impact estimate (for a one-year post-program horizon) and a medium-term estimate (two-year horizon). We characterize the program estimates according to the type and duration of the program, the characteristics of the participants, and the evaluation methodology. Heterogeneity in all three dimensions affects the likelihood that an impact estimate is significantly positive, significantly negative, or statistically insignificant. Comparing program types, subsidized public sector employment programs have the least favorable impact estimates. Job search assistance programs have relatively favorable short-run impacts, whereas classroom and on-the-job training programs tend to show better outcomes in the medium-run than the short-run. Programs for youths are less likely to yield positive impacts than untargeted programs, but there are no large or systematic differences by gender. Methodologically, we find that the outcome variable used to measure program effectiveness matters. Evaluations based on registered unemployment durations are more likely to show favorable short-term impacts. Controlling for the outcome measure, and the type of program and participants, we find that experimental and non-experimental studies have similar fractions of significant negative and significant positive impact estimates, suggesting that the research designs used in recent non-experimental evaluations are unbiased. |
| Keywords: | active labor market policy, program evaluation, meta-analysis |
| JEL: | J00 J68 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4002&r=lab |
| By: | Duflo, Esther; Dupas, Pascaline; Kremer, Michael |
| Abstract: | This paper provides experimental evidence on the impact of tracking primary school students by initial achievement. In the presence of positive spillover effects from academically proficient peers, tracking may be beneficial for strong students but hurt weaker ones. However, tracking may help everybody if heterogeneous classes make it difficult to teach at a level appropriate to most students. We test these competing claims using a randomized evaluation in Kenya. One hundred and twenty one primary schools which all had a single grade one class received funds to hire an extra teacher to split that class into two sections. In 60 randomly selected schools, students were randomly assigned to sections. In the remaining 61 schools, students were ranked by prior achievement (measured by their first term grades), and the top and bottom halves of the class were assigned to different sections. After 18 months, students in tracking schools scored 0.14 standard deviations higher than students in non-tracking schools, and this effect persisted one year after the program ended. Furthermore, students at all levels of the distribution benefited from tracking. A regression discontinuity analysis shows that in tracking schools scores of students near the median of the pre-test distribution score are independent of whether they were assigned to the top or bottom section. In contrast, in non-tracking schools we find that on average, students benefit from having academically stronger peers. This suggests that tracking was beneficial because it helped teachers focus their teaching to a level appropriate to most students in the class. |
| Keywords: | Development Economics; Education Economics; Primary School Tracking |
| JEL: | I21 O12 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7043&r=lab |
| By: | Fitzsimons, Emla; Mesnard, Alice |
| Abstract: | This paper investigates how the permanent departure of the head from the household, mainly due to death or divorce, affects children’s school enrolment and work participation in rural Colombia. In our empirical specification we use household-level fixed effects to deal with the fact that households that experience the departure of the head are likely to differ in unobserved ways from those that do not, and we also address the issue of non-random attrition from the panel. We find remarkably different effects for boys and girls. For boys, the adverse event reduces school participation and increases participation in paid work, whereas for girls we find evidence of the adverse event having a beneficial impact on schooling. To explain these differences, we provide evidence for boys consistent with the head’s departure having an important effect through the income reduction associated with it, whereas for girls, changes in the household decision-maker appear to play an important role. |
| Keywords: | Adverse even; Bargaining; Child labour; Credit and insurance market failures; Income loss; Schooling |
| JEL: | I20 J12 J22 O16 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7040&r=lab |
| By: | Beth Asch (RAND); Paul Heaton (RAND) |
| Abstract: | Because it is differentiated from other employers, the U.S. military enjoys some monopsony power. After reviewing existing estimates of the elasticity of labor supplied to the military, we obtain new estimates for the Army and Navy covering the period from 1998-2007. We employ a control function approach to account for the potential endogeneity of enlistment incentives. Our elasticity estimates of 2.4 for the Army and .4 for the Navy suggest that the services have substantial wage-setting ability. However, the Army faces higher supply elasticity since the invasion of Iraq and higher elasticity in states with weak support for obligatory military service. |
| Keywords: | military, labor supply, monopsony papers |
| JEL: | J42 J45 H56 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1107&r=lab |
| By: | Grönqvist, Erik; Vlachos, Jonas |
| Abstract: | Teachers are increasingly being drawn from the lower parts of the general ability distribution, but it is not clear how this affects student achievement. We track the position of entering teachers in population-wide cognitive and non-cognitive ability distributions using school grades and draft records from Swedish registers. The impact on student achievement caused by the position of teachers in these ability distributions is estimated using matched student-teacher data. On average, teachers' cognitive and non-cognitive social interactive abilities do not have a positive effect on student performance. However, social interactive ability turns out to be important for low aptitude students, whilst the reverse holds for cognitive abilities. In fact, while high performing students benefit from high cognitive teachers, being matched to such a teacher can even be detrimental to their lower performing peers. Hence, the lower abilities among teachers may hurt some students, whereas others may even benefit. High cognitive and non-cognitive abilities thus need not necessarily translate into teacher quality. Instead, these heterogeneities highlight the importance of the student-teacher matching process. |
| Keywords: | Cognitive and non-cognitive ability; Student achievement; Teacher quality |
| JEL: | H4 I21 J4 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7086&r=lab |
| By: | Natalya Y. Shelkova (University of Connecticut) |
| Abstract: | Low-wage 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 theorm is offered, suggesting that a non-binding minimum wage may serve as a focal point of 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, covering the last four federal minimum wage increases. The likelihood of collusion at minimum wage is evaluated, as well as its dynamics during this period. The results generally support the collusion hypothesis and suggest that employers respond strategically to changes in minimum wage legislation while using the statutory minimum wage as a coordination tool in tacit collusion. |
| Keywords: | minimum wage, low-wage markets, collusion, tacit collusion, focal points, monopsony papers |
| JEL: | J31 J38 J42 L10 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1112&r=lab |
| By: | Courty, Pascal; Kim, Do Han; Marschke, Gerald |
| Abstract: | Using data from a large, U.S. federal job training program, we investigate whether enrolment incentives that exogenously vary the ‘shadow prices’ for serving different demographic subgroups of clients influence case workers’ intake decisions. We show that case workers enroll more clients from subgroups whose shadow prices increase but select at the margin weaker-performing members from those subgroups. We conclude that enrolment incentives curb cream-skimming across subgroups leaving a residual potential for cream-skimming within a subgroup. |
| Keywords: | bureaucrat behavior; cream-skimming; enrolment incentives; Performance measurement; public organizations |
| JEL: | H72 J33 L14 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7121&r=lab |
| By: | Michael R. Ransom (Brigham Young University); David P. Sims (Brigham Young University) |
| Abstract: | In the context of certain dynamic models of monopsony, it is possible to infer the elasticity of labor supply to the firm from the elasticity of the quit rate with respect to the wage. Using this property, we estimate the average labor supply elasticity to public school districts in Missouri. We take advantage of the plausibly exogenous variation in pre-negotiated district salary schedules to instrument for actual salary. Instrumental variables estimates lead to a labor supply elasticity estimate of about 3.65, suggesting the presence of significant market power for school districts, especially over more experienced teachers. This is partially explained by institutional features of the teacher labor market. |
| Keywords: | monopsony papers |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1108&r=lab |
| By: | Prakash, Nishith; Howard, Larry |
| Abstract: | This paper examines the effect of a federally-mandated public sector employment quota policy for minorities on their occupational choice. We utilize multiple logit models to estimate the effect of the policy on the choice between a high, middle, or low-skill public sector occupation during the 1980s and 1990s. The main findings are, first, the policy has a significant effect on the choice of occupation for both groups. The policy increases the probability of the scheduled caste group choosing high-skill occupations and decreases the probability of choosing middle-skill occupations. In contrast, the policy decreases the probability of the scheduled tribe group choosing high-skill occupations and increases their probability of choosing low-skill occupations. Second, the influence of the policy is interrelated with an individual's years of schooling. Third, we find evidence of employment quota externalities in that a policy targeted at one group affects the occupational choice of the other group. Overall, the results suggest that federally-mandated employment quotas do change occupational choice for the target disadvantaged groups and contribute to their improved socio-economic standing. |
| Keywords: | Occupational choice; Skill; Caste; India |
| JEL: | J62 O10 O2 J61 J24 |
| Date: | 2008–11–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13573&r=lab |
| By: | Irwin Garfinkel (Columbia University); Sara S. McLanahan (Princeton University); Sarah O. Meadows (RAND Corporation); Ronald B. Mincy (Columbia University) |
| Abstract: | Married men earn more than unmarried men. Previous research suggests that marriage itself “causes” some of the difference, but includes few men who fathered children out of wedlock. This paper asks whether increasing marriage (and possibly cohabitation) following a non-marital birth is likely to increase fathers’ earnings and labor supply. The analyses are based on a new birth cohort study – the Fragile Families and Child Wellbeing Study – which follows unmarried parents for the first five years after their child’s birth. Results provide some support for the idea that increasing marriage will lead to increased fathers’ earnings. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:pri:crcwel:1133&r=lab |
| By: | Sarvimäki, Matti (London School of Economics); Uusitalo, Roope (VATT, Helsinki); Jäntti, Markus (Abo Academy of Finland) |
| Abstract: | We study the long-term effects of human displacement using individual-level panel data on forced migrants and comparable non-migrants. After World War II, Finland ceded a tenth of its territory to the Soviet Union and resettled the entire population living in these areas in the remaining parts of the country. We find that displacement increased geographical and occupational mobility. Furthermore, displacement increased the long-term income of men, but had no effect on that of women. We attribute a large part of the effect to faster transition from traditional (rural) to modern (urban) occupations among the displaced. |
| Keywords: | migration, displaced persons, regional labor markets |
| JEL: | J60 O15 R23 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4003&r=lab |
| By: | Steinbacher, Matej; Steinbacher, Matjaz; Steinbacher, Mitja |
| Abstract: | The model of social network is used to analyze the impact of the power of labor unions in the labor relations. We find that labor union capable to affect a pecuniary compensation of shirking employees lessens the motivation of employees to work and improve to the unionization rate. As a result, the performance of the firm is significantly deteriorated and its existence endangered. On the other hand, the inspection proved to be a successful method for “motivating” employees to work. By using non-omniscient agents, we also estimated the cost of that non-omniscience, which proved to be significant in all cases. |
| Keywords: | social networks; inspection game; evolutionary games |
| JEL: | D21 J51 Z13 C73 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13565&r=lab |
| By: | Horny, Guillaume (BETA-CNRS); Mendes, Rute (University of Turin); van den Berg, Gerard J. (Free University Amsterdam) |
| Abstract: | We study job durations using a multivariate hazard model allowing for worker-specific and firm-specific unobserved determinants. The latter are captured by unobserved heterogeneity terms or random effects, one at the firm level and another at the worker level. This enables us to decompose the variation in job durations into the relative contribution of the worker and the firm. We also allow the unobserved terms to be correlated. For the empirical analysis we use a Portuguese longitudinal matched employer-employee data set. The model is estimated with a Bayesian Markov Chain Monte Carlo (MCMC) estimation method. The results imply that firm characteristics explain around 30% of the variation in log job durations. In addition, we find a positive correlation between unobserved worker and firm characteristics. |
| Keywords: | job transitions, assortative matching, Gibbs sampling, frailties, dynamic models, matched employer-employee data |
| JEL: | C11 C15 C41 J20 J41 J62 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3992&r=lab |
| By: | Eeckhout, Jan (University of Pennsylvania); Kircher, Philipp (University of Pennsylvania) |
| Abstract: | We argue that using wage data alone, it is virtually impossible to identify whether Assortative Matching between worker and firm types is positive or negative. In standard competitive matching models the wages are determined by the marginal contribution of a worker, and the marginal contribution might be higher or lower for low productivity firms depending on the production function. For every production function that induces positive sorting we can find a production function that induces negative sorting but generates identical wages. This arises even when we allow for non-competitive mismatch, for example due to search frictions. Even though we cannot identify the sign of the sorting, we can identify the strength, i.e., the magnitude of the cross-partial, and the associated welfare loss. While we show analytically that standard fixed effects regressions are not suitable to recover the strength of sorting, we propose an alternative procedure that measures the strength of sorting in the presence of search frictions independent of the sign of the sorting. |
| Keywords: | sorting, assortative matching, identification, linked employer-employee data, interpretation of fixed-effects |
| JEL: | J31 C78 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4004&r=lab |
| By: | Horny, Guillaume (Bank of France); Mendes, Rute (Tinbergen Institute Amsterdam); van den Berg, Gerard J (IFAU - Insitute for Labour Market Policy Evaluation) |
| Abstract: | We study job durations using a multivariate hazard model allowing for workerspecific and firm-specific unobserved determinants. The latter are captured by unobserved heterogeneity terms or random effects, one at the firm level and another at the worker level. This enables us to decompose the variation in job durations into the relative contribution of the worker and the firm. We also allow the unobserved terms to be correlated. For the empirical analysis we use a Portuguese longitudinal matched employer-employee data set. The model is estimated with a Bayesian Markov Chain Monte Carlo (MCMC) estimation method. The results imply that firm characteristics explain around 30% of the variation in log job durations. In addition, we find a positive correlation between unobserved worker and firm characteristics. |
| Keywords: | Job transitions; assortative matching; Gibbs sampling; frailties; dynamic models; matched employer-employee data |
| JEL: | C11 C15 C41 J20 J41 J62 |
| Date: | 2009–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2009_004&r=lab |
| By: | Mishra, Prachi; Spilimbergo, Antonio |
| Abstract: | We analyze how the pass-through from exchange rate to domestic wages depends on the degree of integration between domestic and foreign labor markets. Using data from 66 countries over the period 1981–2005, we find that the elasticity of domestic wages to real exchange rate is 0.1 after a year for countries with high barriers to external labor mobility, but about 0.4 in countries with low barriers to mobility. The results are robust to the inclusion of various controls, different measures of exchange rates, and concepts of labor market integration. These findings call for including labor mobility in macro models of external adjustment. |
| Keywords: | Exchange rates; Labor market integration; Migration |
| JEL: | F16 F22 J31 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7167&r=lab |
| By: | del Bono, Emilia; Ermisch, John F; Francesconi, Marco |
| Abstract: | This paper estimates a model of dynamic intrahousehold investment behavior which incorporates family fixed effects and child endowment heterogeneity. This framework is applied to large American and British survey data on birth outcomes, with focus on the effects of antenatal parental smoking and maternal labor supply net of other maternal behavior and child characteristics. We find that maternal smoking during pregnancy reduces birth weight and fetal growth, while paternal smoking has virtually no effect. Mothers' work interruptions of up to two months before birth have a positive effect on birth outcomes, especially among British children. Parental behavior appears to respond to permanent family-specific unobservables and to child idiosyncratic endowments in a way that suggests that parents have equal concerns, rather than efficiency motives, in allocating their prenatal inputs across children. Evidence of equal concerns emerges also from the analysis of breastfeeding decisions, although the effects in this case are weaker. |
| Keywords: | Birth outcomes; child health production functions; instrumental variables; mother's work; sibling estimators; smoking |
| JEL: | C33 D13 I12 J13 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6970&r=lab |
| By: | Moscarini, Giuseppe (Yale University); Postel-Vinay, Fabien (University of Bristol) |
| Abstract: | We provide new evidence that large firms or establishments are more sensitive than small ones to business cycle conditions. Larger employers shed proportionally more jobs in recessions and create more of their new jobs late in expansions, both in gross and net terms. The differential growth rate of employment between large and small firms varies by about 5% over the business cycle. Omitting cyclical indicators may lead to conclude that, on average, these cyclical effects wash out and size does not predict subsequent growth (Gibrat’s law). We employ a variety of measures of relative employment growth, employer size and classification by size. We revisit two statistical fallacies, the Regression and Reclassification biases, that can affect our results, and we show empirically that they are quantitatively modest given our focus on relative cyclical behavior. We exploit a variety of (mostly novel) U.S. datasets, both repeated cross-sections and job flows with employer longitudinal information, starting in the mid 1970’s and now spanning four business cycles. The pattern that we uncover is robust to different treatments of entry and exit of firms and establishments, and occurs within, not across broad industries, regions and states. Evidence on worker flows suggests that the pattern is driven at least in part by excess layoffs by large employers in and just after recessions, and by excess poaching by large employers late in expansions. We find the same pattern in similar datasets in four other countries, including full longitudinal censuses of employers from Denmark and Brazil. Finally, we sketch a simple firm-ladder model of turnover that can shed light on these facts, and that we analyze in detail in companion papers. |
| Keywords: | job flows, firm size, business cycle, Gibrat's law |
| JEL: | J21 J63 E24 E32 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4014&r=lab |
| By: | Adsera, Alicia (Princeton University); Menendez, Alicia (University of Chicago) |
| Abstract: | We explore the relation between fertility and the business cycle in Latin American countries taking advantage of the existing cross-country and within-country differences in both fertility and macroeconomic conditions. First, we use a panel of 18 nations for over 45 years to study how different labor market and economic shocks may have affected fertility. Second, we estimate Cox proportional hazard models of transitions to 1st, 2nd, and 3rd births with individual Demographic and Health Survey data from ten countries. We find that periods of relative high unemployment are associated with lower fertility and with relative postponements of maternity (and to some extent second and third births). In general, women seem to postpone and even reduce childbearing in response to downturns. This behavior is mainly associated to increasing unemployment rather than slowdowns in GPD growth, although we find a positive relationship between first births and growth. Despite that periods of unemployment may be good to have children because opportunity costs are lower, maternity is reduced or postponed, in particular, among the most recent cohort and among urban and more educated women. This is consistent with the idea that, in this context, income effects are dominant. |
| Keywords: | Latin America, unemployment, fertility, growth |
| JEL: | J13 J16 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4019&r=lab |
| By: | Gauthier-Loiselle, Marjolaine; Hunt, Jennifer |
| Abstract: | We measure the extent to which skilled immigrants increase innovation in the United States by exploring individual patenting behavior as well as state-level determinants of patenting. The 2003 National Survey of College Graduates shows that immigrants patent at double the native rate, and that this is entirely accounted for by their disproportionately holding degrees in science and engineering. These data imply that a one percentage point rise in the share of immigrant college graduates in the population increases patents per capita by 6%. This could be an overestimate of immigration's benefit if immigrant inventors crowd out native inventors, or an underestimate if immigrants have positive spill-overs on inventors. Using a 1940-2000 state panel, we show that immigrants do have positive spill-overs, resulting in an increase in patents per capita of 9-18% in response to a one percentage point increase in immigrant college graduates. We isolate the causal effect by instrumenting the change in the share of skilled immigrants in a state with the state's predicted increase in the share of skilled immigrants. We base the latter on the 1940 distribution across states of immigrants from various source regions and the subsequent national increase in skilled immigrants from these regions. |
| Keywords: | Immigration; Innovation |
| JEL: | D24 J61 O32 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7116&r=lab |
| By: | Dolado, Juan J.; Stucchi, Rodolfo |
| Abstract: | This paper evaluates the impact of the widespread use of fixed-term contracts in Spain on firms' TFP, via its effect on workers' effort. We propose a simple analytical framework showing that, under plausible conditions, workers' effort depends positively on their perception (for given level of effort) about firms' willingness to convert fixed-term contracts into permanent ones. We test this implication using manufacturing firm level data from 1991 to 2005 by means of nonparametric tests of stochastic dominance and parametric multivariate regression approaches. Our main findings are that high conversion rates increase firm's productivity while high shares of temporary contracts decrease it. Both effects are quantitatively relevant. |
| Keywords: | firms' TFP; temporary workers; workers' effort |
| JEL: | C14 C52 D24 J24 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7055&r=lab |
| By: | Bertola, Giuseppe |
| Abstract: | This paper reviews theoretical and empirical aspects of the interaction between Europe’s Economic and Monetary Union and recent labour market developments. Policies meant to increase and stabilize labour incomes also tend to reduce employment and productivity: theory suggests that the latter effects should be sharper and more relevant within an integrated market area, making it harder for National policy makers to address the consequences of financial and other market imperfections. Empirical patterns of policy and outcome indicators in member and non-member countries of EMU are consistent with that theoretical mechanism. In the data, tighter economic integration is associated with better employment performance, substantial deregulation, sharper disemployment effects of remaining regulatory differences, and somewhat higher inequality and larger private financial market volume. |
| Keywords: | economic integration; labour market policies |
| JEL: | J5 J8 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7049&r=lab |
| By: | Fougère, Denis; Safi, Mirna |
| Abstract: | Our study examines the empirical link between the naturalization of immigrants and their subsequent employment status in France from 1968 to 1999. For that purpose, we use longitudinal data coming from a panel dataset which follows almost 1% of the French population from 1968 to 1999 through information contained in the 1968, 1975, 1982, 1990 and 1999 French censuses. The dataset we use is especially valuable for studying social integration of immigrants since it allows us to deal with significant samples of immigrants, according to their origin country, these groups being generally too small in other surveys. We control for the potential endogeneity of the naturalization process through a bivariate probit model. We find that naturalization has a significant positive relationship with immigrants’ subsequent employability. This is particularly true for groups of immigrants who have a low probability of employment in the host country. |
| Keywords: | citizenship; employment; immigration; naturalization |
| JEL: | F22 J15 J61 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7092&r=lab |
| By: | Jurajda, Stepan; Münich, Daniel |
| Abstract: | Do women perform worse than equally able men in stressful competitive settings? We ask this question for competitions with a high payoff---admissions to tuition-free selective universities. With data on an entire cohort of Czech students graduating from secondary schools and applying to universities, we show that, compared to men of similar general skills and subject-of-study preferences, women do not shy away from applying to more competitive programs and perform similarly well when competition is less intense, but perform substantially worse (are less likely to be admitted) when applying to very selective universities. |
| Keywords: | Admissions; Competition; Gender Gap in Performance; Test Anxiety |
| JEL: | I29 J16 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7059&r=lab |
| By: | Francesconi, Marco; Rainer, Helmut; Van Der Klaauw, Wilbert |
| Abstract: | This paper formulates a model to examine the effects of changes in tax-benefit policy on the behavior of divorced parents and the well-being of children in single-parent households. Noncustodial parents choose the level of a child support payment to transfer to custodians. These, in turn, decide over child good expenditures and the allocation of time between market work and parenting. In general, ex-spouses fail to achieve an efficient allocation of their resources. On the custodial side, there are inefficiently high levels of labor supply and inefficiently low levels of expenditures on child goods, while on the noncustodial side child support payments are suboptimally low. Our results rationalize the adverse effects that welfare reforms might have on divorced parents and their children. Such adverse effects may arise because an increase in the custodian's effective wage, either through lower marginal income tax rates or higher childcare subsidies, reinforces the inefficiencies of divorced parents' decisions: that is, such an increase further depresses child support transfers from noncustodial parents and induces custodial parents to work even more. We explore several extensions of this model, link our findings to the existing empirical literature on the impacts of welfare reform, and discuss the implications of our results for policy and further economic analysis. |
| Keywords: | Child care; Child support; In-work benefit reform; Non-intact families; Noncooperation |
| JEL: | D13 H31 J22 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7107&r=lab |
| By: | Crawford, Claire; Dearden, Lorraine; Mesnard, Alice; Shaw, Jonathan; Sianesi, Barbara |
| Abstract: | A significant gap exists in the UK between the employment rate for Ethnic Minorities and that for Whites. From a policy perspective, it is important to know whether this gap is due to differences in the characteristics of White and Ethnic Minority groups (which reduce the employability of Ethnic Minority groups relative to Whites) or whether it results from some form of discriminatory behaviour in the labour market. In this paper, we use administrative data to estimate ethnic differences in employment and benefit receipt amongst individuals who began claiming a Jobcentre Plus benefit in 2003. In contrast to much of the previous UK literature, we use a number of different quantitative techniques to estimate this gap, and show that in a lot of cases the estimates obtained are very sensitive to the techniques used. We argue that for the questions we are interested in and the data we have, propensity score matching methods are the most robust approach to estimating ethnic parity. We compare this preferred approach with estimates derived using alternative approaches commonly used in the literature (generally regression-based techniques) to determine the extent to which more straightforward methods are able to replicate those produced by matching. In many cases, it turns out not to be possible to calculate satisfactory quantitative estimates even with matching techniques: the characteristics of Whites and Ethnic Minorities are simply too different before the Jobcentre Plus intervention to reliably estimate the parameters of interest. Moreover, for a number of the groups, results seem to be very sensitive to the methodology used. This calls into question previous results based on simple regression techniques, which are likely to hide the fact that observationally different ethnic groups are de facto being compared on the basis of parametric extrapolations. Two groups for which it was possible to calculate reasonably reliable results are incapacity benefit (IB) and income support (IS). For these groups we find that large and significant raw penalties almost always disappear once we appropriately control for pre-inflow background and labour market characteristics. There is also a good degree of consistency across methodologies. |
| Keywords: | benefit; discrimination; employment; ethnic; matching |
| JEL: | J08 J15 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7042&r=lab |
| By: | Calvó-Armengol, Antoni; Patacchini, Eleonora; Zenou, Yves |
| Abstract: | This paper studies whether structural properties of friendship networks affect individual outcomes in education. We first develop a model that shows that, at the Nash equilibrium, the outcome of each individual embedded in a network is proportional to her Katz-Bonacich centrality measure. This measure takes into account both direct and indirect friends of each individual but puts less weight to her distant friends. We then bring the model to the data by using a very detailed dataset of adolescent friendship networks. We show that, after controlling for observable individual characteristics and unobservable network specific factors, the individual's position in a network (as measured by her Katz-Bonacich centrality) is a key determinant of her level of activity. A standard deviation increase in the Katz-Bonacich centrality increases the pupil school performance by more than 7 percent of one standard deviation. |
| Keywords: | centrality measure; network structure; peer influence; school performance |
| JEL: | A14 C31 C72 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7060&r=lab |
| By: | Nicolas Couderc; Laurent Weill (Laboratoire de Recherche en Gestion et Economie, Université de Strasbourg) |
| Abstract: | This paper conducts an analysis of the relationship between CEO compensation and managerial performance on a large panel of US public firms, by taking into account the different components of CEO compensation. We estimate a stochastic frontier model in which managerial performance is related to compensation components. We find a positive and significant influence of CEO compensation on managerial performance, with a differentiated impact for components of compensation. We show that increases in salary, bonus, and options grants tend to enhance managerial performance. Our findings tend therefore to support the view that compensation contracts can be designed to increase managerial performance. |
| Keywords: | Executive compensation, corporate governance, stochastic frontier. |
| JEL: | C30 G30 J33 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:lar:wpaper:2009-03&r=lab |
| By: | Casarico, Alessandra; Sommacal, Alessandro |
| Abstract: | This paper studies the effects of labour income taxation on growth in an OLG model where both formal schooling and child care enter the human capital production function as complements. We compare them with the effects obtained in a model where only formal schooling matters for skill formation. Using a numerical analysis we find that the omission of child care from the technology of skills' formation can significantly bias the results related to the effects of labour income taxation on growth. |
| Keywords: | child care; growth; human capital; labour supply; taxation |
| JEL: | H31 J22 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7039&r=lab |
| By: | David S. Lee (Princeton University and NBER); Alexandre Mas (UC Berkeley and NBER) |
| Abstract: | We estimate the effect of new unionization on firms’ equity value over the 1961-1999 period using a newly assembled sample of National Labor Relations Board (NLRB) representation elections matched to stock market data. Event-study estimates show an average union effect on the equity value of the firm eq uivalent to a cost of at least $40,500 per unionized worker. At the same time, point estimates from a regression-discontinuity design – comparing the stock market impact of close union election wins to close losses – are considerably smaller and close to zero. We find a negative relationship between the cumulative abnormal returns and the vote share in support of the union, allowing us to reconcile these seemingly contradictory findings. Using the magnitudes from the analysis, we calibrate a structural “median voter” model of endogenous union determination in order to conduct counterfactual policy simulations of policies that would marginally increase the ease of unionization. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1117&r=lab |
| By: | van Ommeren, Jos (Free University Amsterdam); Russo, Giovanni (Free University Amsterdam) |
| Abstract: | In the extensive job search literature, studies assume either sequential or non-sequential search. Which assumption is more reasonable? This paper introduces a novel method to test the hypothesis that firms search sequentially based on the relationship between the number of (rejected) job applicants and the number of employees hired. We use data compiled from filled vacancies for the Netherlands. Different types of search methods are distinguished. Our results imply that when firms use advertising, private or public employment agencies, which together cover about 45 percent of filled vacancies, sequential search is rejected. For about 55 percent of filled vacancies however, sequential search cannot be rejected. In line with theoretical considerations, when firms use search methods that rely on social networks, sequential search cannot be rejected. |
| Keywords: | sequential search, recruitment |
| JEL: | J63 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4008&r=lab |
| By: | Hunter, Rosalind S. (University of Warwick); Oswald, Andrew J. (University of Warwick); Charlton, Bruce G. (Newcastle University) |
| Abstract: | We collect data on the movement and productivity of elite scientists. Their mobility is remarkable: nearly half of the world's most-cited physicists work outside their country of birth. We show they migrate systematically towards nations with large R&D spending. Our study cannot adjudicate on whether migration improves scientists' productivity, but we find that movers and stayers have identical h-index citations scores. Immigrants in the UK and US now win Nobel Prizes proportionately less often than earlier. US residents' h-indexes are relatively high. We describe a framework where a key role is played by low mobility costs in the modern world. |
| Keywords: | brain drain, science, mobility, citations |
| JEL: | O3 J6 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4005&r=lab |
| By: | Kapteyn, Arie (RAND); Smith, James P. (RAND); van Soest, Arthur (Tilburg University) |
| Abstract: | We analyze the determinants of global life satisfaction in two countries (The Netherlands and the U.S.), by using both self-reports and responses to a battery of vignette questions. We find global life satisfaction of happiness is well-described by four domains: job or daily activities, social contacts and family, health, and income. Among the four domains, social contacts and family have the highest impact on global life satisfaction, followed by job and daily activities and health. Income has the lowest impact. As in other work, we find that American response styles differ from the Dutch in that Americans are more likely to use the extremes of the scale (either very satisfied or very dissatisfied) than the Dutch, who are more inclined to stay in the middle of the scale. Although for both Americans and the Dutch, income is the least important determinant of global life satisfaction, it is more important in the U.S. than in The Netherlands. Indeed life satisfaction varies substantially more with income in the U.S. than in The Netherlands. |
| Keywords: | happiness, life satisfaction, vignettes, reporting bias |
| JEL: | I31 J28 D31 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4015&r=lab |
| By: | Beetsma, Roel; Bovenberg, A Lans; Romp, Ward E |
| Abstract: | We explore intergenerational and international risk sharing in a general equilibrium multiple-country model with two-tier pensions systems. The exact design of the funded tier is key for the way in which risks are shared over the various generations. The laissez-faire market solution fails to provide an optimal allocation because the young cannot share in the risks. However, the existence of wage-indexed bonds combined with a pension system with a fully-funded second tier that pays defined wage-indexed benefits can reproduce the first best. If wage-indexed bonds are not available, mimicking the first best is not possible, except under special circumstances. We also explore whether national pension funds want to deviate from the first best by increasing domestic equity holdings. With wage-indexed bonds this incentive is absent, while there is indeed such an incentive when wage-indexed bonds do not exist. |
| Keywords: | defined wage-indexed benefits; funded pensions; overlapping generations; risk sharing; wage-indexed bonds |
| JEL: | E2 F42 G23 H55 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7106&r=lab |
| By: | William Hoyt (Martin School of Public Policy and Administration and Department of Economics, University of Kentucky); Christopher Jepsen (Department of Economics, University of Kentucky); Kenneth Troske (Department of Economics, University of Kentucky) |
| Abstract: | State governments offer tax and location-based incentives to entice firms to locate or expand operations in their state. We evaluate the effect of these incentives on employment using a panel data of Kentucky counties. These data are unique because they contain information on actual incentives received rather than on incentives offered, an important distinction because the majority of incentives offered are never claimed. Because Kentucky offers incentive plans similar to other states, the results are applicable to other states. Training incentives have a strong, positive effect on economic activity, whereas tax incentives have a more modest positive effect. These effects differ with the location of the county, with almost no impact in interior counties and much larger, positive and significant impacts in counties along state borders. There are few if any spillover effects to adjacent counties. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:ifr:wpaper:2009-02&r=lab |
| By: | Stevenson, Betsey; Wolfers, Justin |
| Abstract: | This paper examines how the level and dispersion of self-reported happiness has evolved over the period 1972-2006. While there has been no increase in aggregate happiness, inequality in happiness has fallen substantially since the 1970s. There have been large changes in the level of happiness across groups: Two-thirds of the black-white happiness gap has been eroded, and the gender happiness gap has disappeared entirely. Paralleling changes in the income distribution, differences in happiness by education have widened substantially. We develop an integrated approach to measuring inequality and decomposing changes in the distribution of happiness, finding a pervasive decline in within-group inequality during the 1970s and 1980s that was experienced by even narrowly-defined demographic groups. Around one-third of this decline has subsequently been unwound. Juxtaposing these changes with large rises in income inequality suggests an important role for non-pecuniary factors in shaping the well-being distribution. |
| Keywords: | happiness; inequality; subjective well-being |
| JEL: | D3 D63 I3 J1 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6929&r=lab |