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on Labour Economics |
| By: | Dustmann, Christian (University College London); Glitz, Albrecht (Universitat Pompeu Fabra); Vogel, Thorsten (Humboldt University, Berlin) |
| Abstract: | In this paper, we analyse differences in the cyclical pattern of employment and wages of immigrants and natives for two large immigrant receiving countries, Germany and the UK. We show that, despite large differences in their immigrant populations, there are similar and significant differences in cyclical responses between immigrants and natives in both countries, even conditional on education, age, and location. We decompose changes in outcomes into a secular trend and a business cycle component. We find significantly larger unemployment responses to economic shocks for low-skilled workers relative to high-skilled workers and for immigrants relative to natives within the same skill group. There is little evidence for differential wage responses to economic shocks. We offer three explanations for these findings: an equilibrium search model, where immigrants experience higher job separation rates, a model of dual labour markets, and differences in the complementarity of immigrants and natives to capital. |
| Keywords: | immigration, unemployment, business cycle |
| JEL: | E32 F22 J31 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4432&r=lab |
| By: | Saint-Paul, Gilles (University of Toulouse I) |
| Abstract: | This paper discusses the specificities of the labor market for older workers. It discusses the implications of those specificities for the effect of labor market institutions on the employability of those workers. It shows that while unemployment benefits indexed backwards and hiring costs are likely to harm these workers more than the average worker, the converse is true for employment protection, provided it is uniform across workers and not specifically higher for older workers. It provides some evidence on the impact of labor market institutions on older workers by comparing their outcome in the United States and France. It discusses how the welfare state can be reformed in order to improve outcomes for older workers. |
| Keywords: | older workers, labor market institutions, employment, employment protection, welfare state, pensions, retirement |
| JEL: | J23 J24 J26 J31 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4440&r=lab |
| By: | Jones, Melanie K. (University of Wales, Swansea); Sloane, Peter J. (University of Wales, Swansea) |
| Abstract: | This paper integrates two strands of literature on overskilling and disability using the 2004 British Workplace Employment Relations Survey (WERS). It finds that the disabled are significantly more likely to be mismatched in the labour market, to suffer from a pay penalty and to have lower job satisfaction, the effects being stronger for the work-limited disabled. Giving workers more discretion over how they perform their work would significantly reduce these negative effects. |
| Keywords: | skills, disability, job matching, earnings, job satisfaction |
| JEL: | I0 J2 J3 J7 J24 J31 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4430&r=lab |
| By: | Danziger, Leif (Ben Gurion University) |
| Abstract: | This paper shows that increases in the minimum wage rate can have ambiguous effects on the working hours and welfare of employed workers in competitive labor markets. The reason is that employers may not comply with the minimum wage legislation and instead pay a lower subminimum wage rate. If workers are risk neutral, we prove that working hours and welfare are invariant to the minimum wage rate. If workers are risk averse and imprudent (which is the empirically likely case), then working hours decrease with the minimum wage rate, while their welfare may increase. |
| Keywords: | working hours, minimum wage, noncompliance, competitive labor markets, welfare |
| JEL: | J38 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4408&r=lab |
| By: | Troske, Kenneth (University of Kentucky); Voicu, Alexandru (CUNY - College of Staten Island) |
| Abstract: | We use panel data from NLSY79 to analyze the effects of the timing and spacing of births on the labor supply of married women in a framework that accounts for the endogeneity of labor market and fertility decisions, the heterogeneity of the effects of children and their correlation with the fertility decisions, and the correlation of sequential labor market decisions. Our results show that timing and spacing of births are important determinants of the effect of children on women's labor supply. Delaying the first birth leads to higher levels of labor market involvement before the birth of the first child and reduces the negative effect of the first child on the level of labor market involvement. Having the second birth after a longer interval reduces the effect of the second child on participation but increases its effect on the probability of working full time, as more women, having returned to work, respond to the second birth by moving from full time to part time jobs. Individual heterogeneity plays an important role in the relationship between labor market and fertility decisions. Women who have fewer children have the first birth later in life and space subsequent births more closely together, work more before the birth of the first child, but face larger effects of children on their labor supply. |
| Keywords: | timing and spacing of births, female labor supply, endogenous fertility decisions, heterogeneous children effects, multinomial probit model, Gibbs sampler |
| JEL: | C11 C15 J13 J22 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4417&r=lab |
| By: | Duval Hernández, Robert (CIDE, Mexico City); Orraca Romano, Pedro (affiliation not available) |
| Abstract: | This paper conducts a cohort analysis of labor participation in urban Mexico in recent decades. The rates analyzed are the labor force participation, the unemployment rate, and the employment shares of the formal and informal salaried sectors, as well as of self-employment. These rates are decomposed into age, cohort, and time effects. The life cycle patterns of labor force participation and formal employment follow a standard inverted U-shape. Younger workers are more likely to participate in the informal salaried sector, while self-employment increases monotonically with age. However, significant informal salaried employment is also observed among older unskilled workers and women of different ages. Strong countercyclical variations are observed for the informal salaried sector, while the opposite occurs for the formal sector. Self-employment fluctuations are for the most part acyclical. These facts support a mixed view of the labor markets whereby some informal sector workers are rationed out of the formal sector, while others go into this sector voluntarily. The analysis also indicates that the female labor force is countercyclical, suggesting the existence of an "added worker" effect. Long-run generational effects show a steadily rising participation in the informal sector with a corresponding decline in formality among newer generations of salaried workers. Some preliminary explanations for this fact are discussed. |
| Keywords: | Latin America, labor force composition, informal sector |
| JEL: | J21 O17 O54 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4371&r=lab |
| By: | Alcobendas, Miguel Angel (Universitat Autònoma de Barcelona); Rodriguez-Planas, Nuria (Universitat Autònoma de Barcelona) |
| Abstract: | While much of the literature on immigrants' assimilation has focused on countries with a large tradition of receiving immigrants and with flexible labor markets, very little is known on how immigrants adjust to other types of host economies. With its severe dual labor market, and an unprecedented immigration boom, Spain presents a perfect natural experiment to analyze immigrations' assimilation process. Using data from the 2000 to 2008 Spanish Labor Force Survey, we find that immigrants are more occupationally mobile than natives, and that much of this greater flexibility is explained by immigrants' assimilation process soon after arrival. However, we find little evidence of convergence, especially among women and high skilled immigrants. This suggests that instead of integrating, immigrants are occupationally segregating, implying that there is both imperfect substitutability and underutilization of immigrants' human capital. |
| Keywords: | immigrants' assimilation effects, cohort effects, occupational distributions and mobility, segmented labor markets |
| JEL: | J15 J24 J61 J62 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4394&r=lab |
| By: | Prakash, Nishith (Dartmouth College) |
| Abstract: | The world's biggest and arguably most aggressive form of employment based affirmative action policy for minorities exists in India. This paper exploits the institutional features of federally mandated employment quota policy to examine its effect on labor market outcomes of two distinct minority groups. My main finding is that employment quota significantly in- creases the probability of acquiring a salaried job for one minority group and not the other. Their improved employment outcome is also reflected in their higher household consumption expenditure. Overall, the effects vary within each minority group by education, gender, and geographical location. |
| Keywords: | caste, employment, wage differentials, public sector, India |
| JEL: | H40 J21 J31 J45 O10 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4386&r=lab |
| By: | Livanos, Ilias (University of Warwick); Pouliakas, Konstantinos (University of Aberdeen) |
| Abstract: | This paper examines the wage returns to qualifications and academic disciplines in the Greek labour market. Exploring wage responsiveness across various degree subjects in Greece is interesting, as it is characterised by high levels of graduate unemployment, which vary considerably by field of study, and relatively low levels of wage flexibility. Using micro-data from recently available waves (2002-2003) of the Greek Labour Force Survey (LFS), the returns to academic disciplines are estimated by gender and public/private sector. Quantile regressions and cohort interactions are also used to capture the heterogeneity in wage returns across the various disciplines. The results show considerable variation in wage premiums across the fields of study, with lower returns for those that have a marginal role to play in an economy with a rising services/shrinking public sector. Educational reforms that pay closer attention to the future prospects of university disciplines are advocated. |
| Keywords: | academic disciplines, wage returns, higher education, Greece |
| JEL: | J24 J31 J38 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4442&r=lab |
| By: | Brücker, Herbert (IAB, Nürnberg); Fachin, Stefano (University of Rome La Sapienza); Venturini, Alessandra (University of Turin) |
| Abstract: | This paper examines the impact of the immigration of foreigners on domestic labour mobility. Since David Card's seminal study on the regional labour market impact of the Mariel Boatlift it is controversial whether domestic labour mobility equilibrates economic conditions across cities and regions. However, there is little or no evidence that natives leave destinations where migrants tend to cluster. In this paper we reconcile the existing evidence by taking another route. We analyze whether the immigration of foreigners replaces domestic mobility from poor to rich regions. We focus on Italy, which is characterized by market differences in earnings between the North and the South. Based on a panel cointegration approach we exploit the variance of international and internal migration over time for identifying potential displacement effects. The main finding is that, conditional on unemployment and wage differentials, the share of foreign workers in the labour force of the destination regions discourages internal labour mobility significantly. As a consequence, spatial correlation studies which use the variance of the foreigner share across region for identifying the wage and employment effects of immigration, tend to understate the actual immigration impact. |
| Keywords: | international migration, domestic migration, labour markets, panel cointegration, Italy |
| JEL: | F22 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4438&r=lab |
| By: | Matthias Cinyabuguma (UMBC); Bill Lord (UMBC); Christelle Viauroux (UMBC) |
| Abstract: | Between the latter nineteenth century and the 1930s there was a dramatic revolution in American families. Family size continued its long-term decline, the schooling of older children expanded and the proportion of married females' adulthood devoted to market-oriented activities increased. Over this same period there were significant reductions in mortality, especially among the young, and impressive reductions in morbidity. This paper considers all these trends jointly, modeling the changes in fertility, child schooling and lifetime married female labor supply as a consequence of exogenous changes in health. These interactions are then quantified using calibration techniques. The simulations suggest that reductions in child mortality alone cannot explain the transformation of the American family. Indeed, in our preferred calibration, reductions in child mortality lead to a modest decline in human capital and increase in fertility, with little effect on married female labor force involvement. In sharp contrast, reductions in morbidity are found to lower fertility and increase education. The time savings from lower fertility more than offset the increased time mothers invest in their childrens' quality, freeing some time for market work. Nevertheless, to quantitatively account for the increase in mother's time spent at work it proves necessary to generate further reductions in mother's household production time. In our framework this is driven by a narrowing of the gender wage gap. More generally, viewing the implications of health improvements deepens our understanding of the American family transformation, complementing explanations based on narrowing of the gender wage gap, skill biased technical change and changes in household technology. |
| Keywords: | Schooling, Fertility, Health, Human Capital Accumulation, Labor Supply |
| JEL: | D1 J13 I21 I10 J24 J22 N3 |
| Date: | 2009–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:umb:econwp:09108&r=lab |
| By: | Portugal, Pedro (Universidade Nova de Lisboa); Varejão, José (University of Porto) |
| Abstract: | Temporary forms of employment account for a variable but never trivial share of total employment in both the U.S. and in Europe. In this article we look at how one specific form of temporary employment − employment with fixed-term contracts − fits into employers' hiring policies. We find that human capital variables (schooling, skills and employer-provided training) as measured at the levels of the worker and the workplace are important determinants of the employers’ decisions to hire with fixed-term contracts and to promote temporary workers to permanent positions. Those employers that hire more with fixed-term contracts are also those that are more likely to offer a permanent position to their newly-hired temporary employees. Our results indicate that fixed-term contracts are used as mechanisms for screening workers for permanent positions. |
| Keywords: | fixed-term contracts, adjustment costs, labor demand |
| JEL: | J23 J41 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4380&r=lab |
| By: | Christophe J. Nordman (DIAL - Développement, institutions et analyses de long terme - IRD : UR047); François-Charles Wolff (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272) |
| Abstract: | Using matched employer-employee data collected in seven African countries, we present comparative evidence on the magnitude of the gender wage gap in African manufacturing sectors. Using OLS regressions, differences in male and female earnings are found both in Mauritius and Morocco, while the gender wage gap turns out to be insignificant in Benin, Kenya, Madagascar, Senegal and Uganda. Results from quantile regressions indicate that the wage gap remains not constant across the wage distribution. Finally, we study the role of firm characteristics and job segregation across firms as potential factors explaining the gender wage gaps. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00421227_v1&r=lab |
| By: | Rutherford, Alasdair |
| Abstract: | The "Warm Glow" theory of worker motivation in nonprofit organisations predicts that wages will be lower in the voluntary sector than for equivalent workers in the private and public sectors. Empirical findings, however, are mixed. Focussing on the Health & Social Work industries, we examine differences in levels of unpaid overtime between the sectors to test for the existence of a warm-glow effect. Although levels of unpaid overtime are significantly higher in voluntary sector, we find that this is insufficient to explain the wage premiums earned in this sector. |
| Keywords: | Nonprofit; Warm Glow; Wage differentials; Working Hours; Unpaid Overti me |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:stl:stledp:2009-20&r=lab |
| By: | Kuhn, Andreas (University of Zurich); Ruf, Oliver (Suva) |
| Abstract: | We study the monetary compensation for non-fatal accident risk in Switzerland using the number of accidents within cells defined over industry x skill-level of the job and capitalizing on the partial panel structure of our data which allows us to empirically isolate the wage component specific to the employer. Our results show that using accident risk at a lower level of aggregation, using narrower samples of workers, and using the wage component that is specific to the firm all yield higher estimates of risk compensation. Our preferred estimate gives an estimate of about 36,000 Swiss francs per prevented injury per year. |
| Keywords: | compensating wage differentials, value of a statistical injury, risk measurement |
| JEL: | J17 J28 J31 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4409&r=lab |
| By: | Chiswick, Barry R. (University of Illinois at Chicago); Miller, Paul W. (University of Western Australia) |
| Abstract: | This paper examines the difference between the payoffs to schooling for immigrants and the native born in Canada, using 2001 Census data. Analyses are presented for males and females. Comparisons are offered with findings for the US. The paper uses the Overeducation/Required education/Undereducation framework (Hartog, 2000) and a decomposition developed by Chiswick and Miller (2008). This decomposition links overeducation to the less-than-perfect international transferability of immigrants' human capital, and under-education to favourable selection in immigration. The results show that immigrants have a lower payoff to schooling because of the different effects under-education and over-education have on their earnings. The effects of under-education, or selection in immigration, are, however, twice as large as the effects of over-education, or limited international transferability of human capital. Favourable selection in immigration appears to be less important in Canada than in the US, where it predominates among the least educated. |
| Keywords: | immigrants, skill, schooling, earnings, rates of return, Canada |
| JEL: | I21 J24 J31 J61 F22 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4448&r=lab |
| By: | Zhao Chen; Ming Lu; Hiroshi Sato |
| Abstract: | An entry barrier in the labor market can be an important source of wage inequality. This paper finds that social networks, father's education and political status, and urban household registration status (hukou identity), as well as their own education, experience, age, and gender, help people enter high-wage industries. When contrasting coastal and inland samples, after instrumenting social networks by household political identity (based on classifications during the land reform in the 1950s), we find that social networks are more helpful for entering high-wage industries. The implication of this paper is: breaking industrial entry barriers in the urban labor market is an essential policy in order to control inter-industrial wage inequality in urban China. |
| Keywords: | inter-industrial wage differentials, industry monopoly, entry barrier, labor market, social networks, CHIPS data |
| JEL: | J31 J42 Z1 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd09-084&r=lab |
| By: | Panos, Georgios A. (University of Aberdeen); Pouliakas, Konstantinos (University of Aberdeen); Zangelidis, Alexandros (University of Aberdeen) |
| Abstract: | The inter-related dynamics of dual job-holding, human capital and occupational choice between primary and secondary jobs are investigated, using a panel sample (1991-2005) of UK employees from the British Household Panel Survey (BHPS). A sequential profile of the working lives of employees is examined, investigating, first, the determinants of multiple job-holding, second, the factors affecting the occupational choice of a secondary job, third, the relationship between multiple-job holding and job mobility and, lastly, the spillover effects of multiple job-holding on occupational mobility between primary jobs. The evidence indicates that dual job-holding may facilitate job transition, as it may act as a stepping-stone towards new primary jobs, particularly self-employment. |
| Keywords: | moonlighting, occupational choice, human capital, mobility |
| JEL: | J22 J24 J62 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4437&r=lab |
| By: | Courtney Coile; Phillip B. Levine |
| Abstract: | Recent dramatic declines in U.S. stock and housing markets have led to widespread speculation that shrinking retirement accounts and falling home equity will lead workers to delay retirement. Yet the weakness in the labor market and its impact on retirement is often overlooked. If older job seekers have difficulty finding work, they may retire earlier than expected. The net effect of the current economic crisis on retirement is thus far from clear. In this paper, we use 30 years of data from the March Current Population Survey to estimate models relating retirement decisions to fluctuations in equity, housing, and labor markets. We find that workers age 62 to 69 are responsive to the unemployment rate and to long-run fluctuations in stock market returns. Less-educated workers are more sensitive to labor market conditions and more-educated workers are more sensitive to stock market conditions. We find no evidence that workers age 55 to 61 respond to these fluctuations or that workers at any age respond to fluctuating housing markets. On net, we predict that the increase in retirement attributable to the rising unemployment rate will be almost 50 percent larger than the decrease in retirement brought about by the stock market crash. |
| JEL: | J26 J64 R23 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15395&r=lab |
| By: | Gartner, Hermann (IAB, Nürnberg); Merkl, Christian (Kiel Institute for the World Economy); Rothe, Thomas (IAB, Nürnberg) |
| Abstract: | This paper shows that the German labor market is more volatile than the US labor market. Specifically, the volatility of the cyclical component of several labor market variables (e.g., the job-finding rate, labor market tightness, and job vacancies) divided by the volatility of labor productivity is roughly twice as large as in the United States. We derive and simulate a simple dynamic labor market model with heterogeneous worker productivity. This model is able to explain the higher German labor market volatilities by a longer expected job duration. |
| Keywords: | labor market volatilities, unemployment, worker flows, vacancies, job-finding rate, market tightness |
| JEL: | J6 E24 E32 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4403&r=lab |
| By: | Russo, Giovanni (VU University Amsterdam); van Hooft, Edwin (Erasmus University Rotterdam) |
| Abstract: | The paper empirically expounds the richness of the identity approach to labor market behavior by allowing individuals to experience identity conflict. Specifically, it investigates the relationship between the importance individuals attach to labor-market activities – which is influenced by the identity to which they adhere – and their preferences for job attributes. The analysis shows that individuals who consider labor-market success as instrumental for achieving their life goals tend to attach importance to job characteristics such as pay level and career and training opportunities. Individuals for whom non-labor market activities are important and in conflict with labor market activities are found to attach importance to the possibility of working on a convenient time schedule. Moreover, consistently with the identity approach to labor-market behavior, men appear to resolve the conflict between career and non-work activities in favor of the former. Finally, unobserved factors that increase the desire to work part-time have a negative impact on the likelihood of attaching importance to training and career opportunities offered by the job. |
| Keywords: | job attributes, social identity, role conflict, part-time |
| JEL: | J22 J24 Z13 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4412&r=lab |
| By: | Holmlund, Linda (Department of Economics, Umeå University); Regnér, Håkan (Saco) |
| Abstract: | Using data on three cohorts of Swedish university entrants, this study examines whether earnings vary between students who change universities and students who do not change. The results show that earnings, during the first years after leaving the university, are significantly lower for students who change universities compared to students who do not change. Earnings differences decrease significantly over time and over the earnings distribution. The pattern in the estimates seems consistent with non-transfer students, who have higher earnings because of their relatively earlier labor market entry, and transfer students catching up because of their additional human-capital investments. |
| Keywords: | College education; University choice; Earnings distribution |
| JEL: | J24 J31 |
| Date: | 2009–10–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0782&r=lab |
| By: | Boyd, Monica |
| Abstract: | This paper studies the role played by linguistic enclaves on the economic integration of immigrants to Canada. Linguistic enclaves are defined as groups of people who are similar with respect to languages used on their jobs. A five category classification of major types of linguistic enclaves is produced, using responses to two questions on the Canadian 2006 census of population: language most often used on the job and language(s) regularly used at work. Two core questions are asked: 1) What factors influence the likelihood of employment in linguistic enclaves; and 2) What are the impacts of working in linguistic enclaves on earnings? These questions are answered by examining the economic integration of immigrant allophone women and men age 26-64 who were employed in 2005 or 2006 and who were enumerated in the 2006 Canadian census of population. The investigation shows that levels of language proficiency are important factors determining the type of language enclave where individuals are employed. Further language at work mediates much of the observed impacts of language proficiency on earnings. Wage determination models also confirm that employment in linguistic enclaves conditions weekly earnings; allophone immigrants who use non-official languages at work have lower wages than those who use only English at work. |
| Keywords: | Immigrant Workers, Wages, Enclaves, Linguistic Proficiency, Work Language |
| JEL: | J31 J24 |
| Date: | 2009–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:clssrn:clsrn_admin-2009-50&r=lab |
| By: | Shintaro Yamaguchi |
| Abstract: | This paper examines how primitive skills associated with occupations are formed and rewarded in the labor market over the careers of men. The objective task complexity measurement from the Dictionary of Occupational Titles enables a more direct look into the primitive skills of workers. I show that the optimal choice of task complexity is a linear function of unobserved skills, worker characteristics, and preference shocks, which implies that the observed task complexity is a noisy signal of underlying skills. Using career histories from the NLSY79, the growth of cognitive and motor skills as well as structural parameters are estimated by the Kalman filter. The results indicate that both cognitive and motor skills account for a considerable amount of cross-sectional wage variation. I also find that cognitive skills grow over careers and are the main source of wage growth; this pattern is particularly pronounced for the highly educated. In contrast, motor skills grow and contribute to wage growth substantially only for high school dropouts. |
| Keywords: | Human Capital; Occupational Choice; Occupational Tasks; Kalman Filter; Structural Estimation |
| JEL: | J24 J32 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:deptwp:2009-13&r=lab |
| By: | Barrett, Alan (ESRI, Dublin); McGuinness, Seamus (Economic and Social Research Institute, Dublin); O'Brien, Martin (University of Wollongong); O'Connell, Philip J. (ESRI, Dublin) |
| Abstract: | Much has been written about the labour market outcomes for immigrants in their host countries, particularly with regard to earnings, employment and occupational attainment. However, much less attention has been paid to the question of whether immigrants are as likely to receive employer-provided training relative to comparable natives. As such training should be crucial in determining the labour market success of immigrants in the long run it is a critically important question. Using data from a large scale survey of employees in Ireland, we find that immigrants are less likely to receive training from employers, with immigrants from the New Member States of the EU experiencing a particular disadvantage. The immigrant training disadvantage arises in part from a failure on the part of immigrants to get employed by training-oriented firms. However, they also experience a training disadvantage relative to natives within firms where less training is provided. |
| Keywords: | immigrants, employer-provided training, Ireland |
| JEL: | J24 J61 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4425&r=lab |
| By: | Booth, Alison L. (Australian National University); Tamura, Yuji (Australian National University) |
| Abstract: | Using the first two waves of the Vietnam Living Standards Survey, we investigate how a father's temporary absence affects children left behind in terms of their school attendance, household expenditures on education, and nonhousework labor supply in the 1990s. The estimating subsample is children aged 7-18 in households in which both parents usually coreside and the mother has not been absent. Our results indicate that paternal temporary absence increases nonhousework labor supply by his son. The longer the absence of the father, the larger the impact. One additional month of paternal temporary absence increases a son's nonhousework labor supply by approximately one week. However, a daughter's nonhousework labor supply is not affected. We find no evidence that paternal temporary absence influences his children in terms of school attendance or education-related household expenditures. |
| Keywords: | parental absence, temporary migration, schooling, human capital investment, child labor, Vietnam, VLSS |
| JEL: | I22 O15 P36 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4381&r=lab |
| By: | Mok, Wallace (Chinese University of Hong Kong); Siddique, Zahra (IZA) |
| Abstract: | This paper examines differences in two important components of non-wage compensation, employer provided health insurance and pensions, across African Americans and the whites in the United States. Using data from the Current Population Survey (CPS) and the National Longitudinal Survey of Youth (NLSY), we study the recent trends in the recipiency of this non-wage compensation across race groups. Our results show that African American men on average are significantly less likely to receive employer provided health insurance and pension than whites in the last decade. We also find that the inclusion of racial differences in ability as measured by the Armed Forces Qualification Test (AFQT) score reduces the unexplained racial gap in fringe benefit offers, highlighting the importance of human capital variables in fringe benefit recipiency. Finally, we re-examine racial inequality in the labor market by examining within-group inequality in compensation over the last decade and also the role of ability in between-group inequality in compensation. |
| Keywords: | economics of minorities and races, non-wage labor costs and benefits |
| JEL: | I11 J15 J32 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4435&r=lab |
| By: | Rabby, Faisal (Missouri State University); Rodgers III, William M. (Rutgers University) |
| Abstract: | Using a difference-in-differences framework and micro data from the Current Population Survey-Merged Outgoing Rotation Group Files (1999 to 2004), this paper estimates the impact that the 9-11 terrorists attacks had on the U.S. labor market outcomes of individuals with nativity profiles similar to the terrorists. We find that shortly after the attacks, the employment-population ratios and hours worked of very young (ages 16 to 25) Muslim men fell. By 2004, most losses had begun to dissipate. The employment-population ratios and hours worked of older Muslim men experienced little deterioration. |
| Keywords: | muslim, 9/11, labor market outcomes, immigrant workers |
| JEL: | J15 J61 J71 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4411&r=lab |
| By: | De Giorgi, Giacomo (Stanford University); Pellizzari, Michele (Bocconi University); Woolston, William Gui (Stanford University) |
| Abstract: | We study how class size and composition affect the academic and labor market performances of college students, two crucial policy questions given the secular increase in college enrollment. We rely on the random assignment of students to teaching classes. Our results suggest that a one standard deviation increase in the class-size would result in a 0.1 standard deviation deterioration of the average grade. Further, the effect is heterogenous as female and higher income students seem almost immune to the size of the class. Also, the effects on performance of class composition in terms of gender and ability appears to be inverse U-shaped. Finally, a reduction of 20 students (one standard deviation) in one's class size has a positive effect on monthly wages of about 80 Euros (115 USD) or 6% over the average. |
| Keywords: | class size, heterogeneity, experimental evidence, academic performance, wages |
| JEL: | A22 I23 J30 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4443&r=lab |
| By: | Holmlund, Linda (Department of Economics, Umeå University) |
| Abstract: | This paper examines the effect of college quality on earnings using administrative data on Swedish college students. To consider possible heterogeneity, the effects for men and women are estimated separately and quantile regression is used to determine whether the effect of college quality differs over the income distribution. The overall results suggest that the link between college quality and earnings is weak in Sweden. A small positive effect is found for individuals that are likely to work full time as well as for individuals in the upper part of the income distribution, while negative effects are found for individuals located in the middle and lower parts of the income distribution. Furthermore, controlling for region of work affects the estimated effects, indicating a correlation between choice of college quality and choice of labor market region. |
| Keywords: | College quality; Earnings; Selection on observables |
| JEL: | I21 J31 |
| Date: | 2009–10–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0781&r=lab |
| By: | Mauro Roca |
| Abstract: | This paper develops a general equilibrium model with unemployment and noncooperative wage determination to analyze the importance of incomplete markets when risk-averse agents are subject to idiosyncratic employment shocks. A version of the model calibrated to the U.S. shows that market incompleteness affects individual behavior and aggregate conditions: it reduces wages and unemployment but increases vacancies. Additionally, the model explains the average level of unemployment insurance observed in the U.S. A key mechanism is the joint influence of imperfect insurance and risk aversion in the wage bargaining. The paper also proposes a novel solution to solve this heterogeneous-agent model. |
| Keywords: | Consumption , Economic models , Employment , Financial risk , Income , Income distribution , Insurance , Labor markets , Private savings , Private sector , Unemployment , Wage bargaining , Wages , |
| Date: | 2009–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:09/188&r=lab |
| By: | Jozef Konings; Stijn Vanormelingen |
| Abstract: | This paper uses ?rm level panel data of ?rm provided training to estimate its impact on productivity and wages. To this end the strategy proposed by Ackerberg, Caves and Frazer (2006) for estimating production functions to control for the endogeneity of input factors and training is applied. The productivity premium for a trained worker is estimated at 23%, while the wage premium of training is estimated at 12%. Our results give support to recent theories that explain work related training by imperfect competition in the labor market. |
| Keywords: | Training, production functions, human capital |
| JEL: | J24 J31 L22 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:24409&r=lab |
| By: | DeVoretz, Don J. (Simon Fraser University); Battisti, Michele (Simon Fraser University) |
| Abstract: | This paper investigates the economic performance of immigrants from the Former Soviet Union (FSU) countries in Canada. The contribution of this paper lies in its use of a natural experiment to detect possible differential labour market performances of Soviet immigrants prior to and after the collapse of the Soviet Union. In short, the collapse of the former Soviet Union allows an exogenous supply change in the number and type of FSU immigrants potentially destined to enter Canada. For this purpose, Census microlevel data from the 1986, 1991, 1996 and 2001 Canadian Census are utilized to estimate earnings and employment outcomes for pre- and post-FSU immigrants. |
| Keywords: | immigration, integration |
| JEL: | J61 F22 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4410&r=lab |
| By: | Frenette, Marc; Morissette, René; Zhang, Xuelin |
| Abstract: | Using Statistics Canada’s Longitudinal Worker File, we document short-term and long-term earnings losses for a large (10%) sample of Canadian workers who lost their job through firm closures or mass layoffs during the late 1980s and the 1990s. Our use of a nationally representative sample allows us to examine how earnings losses vary across age groups, gender, industries and firms of different sizes. Furthermore, we conduct separate analyses for workers displaced only through firm closures and for a broader sample displaced either through firm closures or mass layoffs. Our main finding is that while the long-term earnings losses experienced on average by workers who are displaced through firm closures or mass layoffs are important, those experienced by displaced workers with considerable seniority appear to be even more substantial. Consistent with findings from the United States by Jacobson, Lalonde and Sullivan (1993), high-seniority displaced men experience long-term earnings losses that represent between 18% and 35% of their pre-displacement earnings. For their female counterparts, the corresponding estimates vary between 24% and 35%. |
| Keywords: | Layoffs; Job Losses; Employment; Worker Displacement; Earnings Losses |
| JEL: | J61 J31 |
| Date: | 2009–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:clssrn:clsrn_admin-2009-51&r=lab |
| By: | Silva , José Ignacio; Toledo, Manuel |
| Abstract: | Recently, Pissarides (2008) has argued that the standard search model with sunk fixed matching costs increases unemployment volatility without introducing an unrealistic wage response in new matches. We revise the role of matching costs and show that when these costs are not sunk and, therefore, can be partially passed on to new hired workers in the form of lower wages, the amplication mechanism of fixed matching costs is considerably reduced and wages in new hired positions become more sensitive to productivity shocks. |
| Keywords: | unemployment volatility puzzle; search and matching; matching costs |
| JEL: | E32 J32 J64 |
| Date: | 2009–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17719&r=lab |
| By: | Chiswick, Barry R. (University of Illinois at Chicago); Miller, Paul W. (University of Western Australia) |
| Abstract: | This paper examines whether the results of the earnings equation developed in the overeducation/required eduation/under-education (ORU) literature are sensitive to whether the usual or reference levels of education are measured using the Realized Matches or Worker Self-Assessment methods. The analyses are conducted for all male native-born and immigrant workers in the US, by level of skill, and by occupation. While point estimates differ, particularly when earnings equations are estimated for the smaller samples of sub-groups of the workforce, the general findings are robust to this measurement issue. Thus, the answers provided to the typical research questions in the ORU literature on the utilization of schooling are independent of the measure of the usual or reference level of education used in the analyses. |
| Keywords: | immigrants, skill, schooling, occupations, earnings, rates of return |
| JEL: | I21 J24 J31 J61 F22 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4382&r=lab |
| By: | Holmlund, Linda (Department of Economics, Umeå University) |
| Abstract: | This thesis consists of a summary and four self-contained papers. Paper [I] examines whether fathers influence the time their children spend in subsidized child care. Two non-nested models of family child care demand are estimated. The parameter estimates indicate that several characteristics of the father are associated with the time his child spends in child care. J-tests and bootstrapped J-tests also show that a model where the father’s characteristics are excluded can be rejected in favour of a model where his characteristics are included. Paper [II] considers the effects of the Swedish child care fee reform on public expenditures and taxation in the municipalities. A difference-indifference approach is employed where outcomes are compared with respect to the municipalities’ pre-reform fee systems. The results show that pre-reform characteristics determine taxes and child care expenditures in the post-reform period. It is also found that changes in child care quality were not connected to the pre-reform systems characteristics. Paper [III] provides evidence of the effect of college quality on earnings in Sweden. The results suggest that the link between college quality and earnings is weak. A small positive effect is found for individuals that are likely to work full time. Controlling for region of work affects the estimated effects, indicating a correlation between choice of college quality and choice of labour market region. In Paper [IV], earnings differences between transfer and non-transfer students are analysed. The results show that earnings, during the first years after leaving the university, are significantly lower for students who change universities compared to students who do not change. The earnings differences decrease significantly over time and over the earnings distribution. |
| Keywords: | Child care demand; subsidized child care; dual care provider model; local public expenditures; income taxation; college quality; earnings; selection on observables; university choice; earnings distribution |
| JEL: | H71 H72 I21 J13 J24 J31 |
| Date: | 2009–10–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0783&r=lab |
| By: | Tomasz Jeruzalski (Faculty of Economic Sciences, University of Warsaw); Joanna Tyrowicz (Faculty of Economic Sciences, University of Warsaw) |
| Abstract: | This paper approaches the question of efficiency in job placement using regional data for Polish regions (policy-relevant NUTS 4 level) over the time span of 2000-2008. Using a unique data set we estimate the matching function using stochastic frontier as well as difference-in-difference estimators. We have also combined this unique data set with another unique source of data on the ALMPs coverage, unemployment structure across time and regions as well as the individual capacity of local labour offices. We use these data to explain the exceptional variation in estimated efficiency scores. Our findings suggest that matching abilities are highly driven by demand fluctuations, while unemployment structure, ALMPs and individual labour office capacities have little explanatory power. Although without individual data it is fairly impossible to provide a reliable counterfactual, we raise some arguments to support the claim of job placement inefficiency by public employment services in Poland. |
| Keywords: | matching function, stochastic frontier, Poland |
| JEL: | P3 J64 J69 C33 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2009-10&r=lab |
| By: | Hartog, Joop (University of Amsterdam) |
| Abstract: | We survey the literature on the Risk Augmented Mincer equation that seeks to estimate the compensation for uncertainty in the future wage to be earned after completing an education. There is wide empirical support for the predicted positive effect of wage variance and the negative effect of wage skew. We discuss robustness of the findings across specifications, potential bias from unobserved heterogeneity and selectivity and consider the core issue of students’ information on benefits from education. |
| Keywords: | human capital, earnings function, risk |
| JEL: | J31 D8 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4439&r=lab |
| By: | Keller, Katarina (Susquehanna University); Poutvaara, Panu (University of Helsinki); Wagener, Andreas (University of Hannover) |
| Abstract: | Using data from 1960-2000 for OECD countries, we analyze the impact of compulsory military service on the demand for higher education, measured by students enrolled in tertiary education as a share of the working-age population. Based on a theoretical model, we hypothesize that military draft has a negative effect on education. Empirically, we confirm this for the existence of conscription, albeit usually at low statistical significance. However, the intensity of its enforcement, measured by the share of the labor force conscripted by the military and the duration of service, significantly reduces enrollment in higher education. |
| Keywords: | human capital, conscription |
| JEL: | H56 I20 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4399&r=lab |
| By: | Simon Janssen (Institute for Strategy and Business Economics, University of Zurich); Uschi Backes-Gellner (Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | This paper investigates how women and men value their work climate if performing jobs with stereotypical male or female tasks. Using a special variable from a big data set we are able to address whether tasks or jobs are considered as more appropriate for males or females by society. We find that women report lower satisfaction with their work climate if performing jobs with stereotypical male tasks and vice versa. We argue that our results are in line with a recent study of Akerlof and Kranton (2000) considering identity based utility outcomes. The results indicate that the work climate might lead to gender specific utility outcomes and trade-off decisions. Thus, the results might help to enlarge the understanding of occupational segregation by gender. We apply a simultaneous equation model to model the selection into the job alongside our ordered probit model for work climate to cope with the endogeneity of the job choice. |
| Keywords: | Identity, Discrimination, IV O-Probit |
| JEL: | J7 J2 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0107&r=lab |
| By: | Dany Jaimovich (IUHEID, The Graduate Institute of International and Development Studies, Geneva) |
| Abstract: | The present study aims to contribute to the debate concerning the effects on economic performance and the structure of the labor market of regulations that combine high Employment Protection Legislations (EPL) with consent for the use of fixed-term contracts (FTC). Using a Rajan and Zingales (1998) difference-in-difference empirical technique in a panel of 45 countries, we explore the response of industries that differ in their "intrinsic need" of worker turnover when they face different levels of EPL and how the possibility of using FTC might change the outcome. Our approach suggests an original demand side explanation of the claiming of FTC. |
| Keywords: | Employment protection legislation, labor turnover, fixed term contracts |
| JEL: | J21 J33 J63 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heiwp07-2009&r=lab |
| By: | Addison, John T. (University of South Carolina); Cotti, Chad (University of Wisconsin, Oshkosh); Surfield, Christopher J. (Saginaw Valley State University) |
| Abstract: | Atypical work arrangements have long been criticized as offering more precarious and lower paid work than regular open-ended employment. In an important paper, Booth et al. (2002) were among the first to recognize that notwithstanding their potential deficiencies, such jobs also functioned as a stepping stone to permanent work. This conclusion proved prescient and has received increasing support in Europe. In the present note, we provide a parallel analysis to Booth et al. for the United States – somewhat of a missing link in the evolving empirical literature – and obtain not dissimilar similar findings for the category of temporary workers as do they for fixed-term contract workers. |
| Keywords: | atypical work, temporary jobs, contracting/consulting work, regular open-ended employment, earnings development |
| JEL: | J30 J40 J63 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4444&r=lab |
| By: | Dickson, Matt (University of Bristol) |
| Abstract: | This paper estimates the return to education using two alternative instrumental variable estimators: one exploits variation in schooling associated with early smoking behaviour, the other uses the raising of the minimum school leaving age. Each instrument estimates a 'local average treatment effect' and my motivation is to analyse the extent to which these differ and which is more appropriate for drawing conclusions about the return to education in Britain. I implement each instrument on the same data from the British Household Panel Survey, and use the over-identification to test the validity of my instruments. I find that the instrument constructed using early smoking behaviour is valid as well as being strong, and argue that it provides a better estimate of the average effect of additional education, akin to ordinary least squares but corrected for endogeneity. I also exploit the dual sources of exogenous variation in schooling to derive a further IV estimate of the return to schooling. I find the OLS estimate to be considerably downward biased (around 4.6%) compared with the IV estimates of 12.9% (early smoking), 10.2% (RoSLA) and 12.5% (both instruments). |
| Keywords: | human capital, endogeneity, local average treatment effect |
| JEL: | I20 J30 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4419&r=lab |
| By: | Stefan Bauernschuster (University of Jena); Jörg Oechssler (Department of Economics, University of Heidelberg, Germany); Peter Duersch (University of Heidelberg); Radovan Vadovic (ITAM, Mexico City) |
| Abstract: | The question whether a minimum rate of sick pay should be mandated is much debated. We study the effects of this kind of intervention in an experimental labor market that is rich enough to allow for moral hazard, adverse selection, and crowding out of good intentions to occur. We find that higher sick pay is reciprocated by workers through higher effort but only if sick pay is not mandated. We also study adverse selection effects when workers have different probabilities of getting sick and can reject the hypothesis that this leads to market breakdown. Overall, we find that mandating sick pay actually leads to a higher voluntary provision of sick pay by ?rms. |
| Keywords: | sick pay, sick leave, experiment, gift exchange |
| JEL: | J3 C7 C9 |
| Date: | 2009–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-076&r=lab |
| By: | Bell, David N.F. (University of Stirling); Blanchflower, David G. (Dartmouth College) |
| Abstract: | There is a growing belief that the recession has run its course and that the goods market has started a period of slow, but sustainable, recovery. Improvement in the labor market may take some time, but many believe that unemployment will return to its 2007 level in the medium term. In this paper, we argue that recovery is by no means guaranteed and that the consequences for unemployment may be worse than anticipated. |
| Keywords: | unemployment, youth |
| JEL: | J64 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4455&r=lab |
| By: | Vendrik, Maarten (Maastricht University); Cörvers, Frank (ROA, Maastricht University) |
| Abstract: | This study investigates the extent and speed of dynamic adjustment of labour supply to changes in labour demand, government policies and autonomous trends. We estimate error-correction models (ECMs) for male and female participation rates in the Netherlands between 1969 and 2004. The results show significant short and long-run effects of labour demand as well as a negative autonomous trend for male participation. In contrast, we find no significant long-run labour-demand effects and a very strong positive autonomous trend for female participation. Including female and male participation as additional explanatory variables in the male and female ECMs, respectively, reveals significant substitution effects between female and male participation. For male participation the substitution effects from female participation account for the negative trend in the basic ECM, while for female participation the substitution effects from male participation counterbalance labour demand effects that are now significant. In addition, we find very significant breakpoints in male and female participation at 1994, which indicate the effects of exogenous participation-promoting policies by the Dutch governments after 1994. The adjustments of the participation rates to changes in labour demand, government policies and autonomous trends are moderately fast. |
| Keywords: | labour force participation, discouraged worker effect, business cycle effects, persistence, substitution effect, error-correction model |
| JEL: | J21 J20 E32 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4397&r=lab |
| By: | Morissette, René; Ostrovsky, Yuri |
| Abstract: | Using data from a large Canadian longitudinal dataset, we examine whether earnings of wives and teenagers increase in response to layoffs experienced by husbands. We find virtually no evidence of an “added worker effect†for the earnings of teenagers. However, we find that among families with no children of working age, wives’ earnings offset about one-fifth of the earnings losses experienced by husbands five years after the layoff. We also contrast the long-term earnings losses experienced by husbands and unattached males. Even though the former group might be less mobile geographically than the latter, we find that both groups experience roughly the same earnings losses in the long run. Furthermore, the income losses (before tax and after tax) of both groups are also very similar. However, because unattached males have much lower pre-layoff income, they experience much greater relative income shocks than (families of) laid-off husbands. |
| Keywords: | Job Loss; Layoffs; Income instability; Labour supply; Earnings disruption; Employment Insurance benefits; Tax system |
| JEL: | J31 J63 |
| Date: | 2009–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:clssrn:clsrn_admin-2009-49&r=lab |
| By: | Gaurav Nayyar |
| Abstract: | For some observers, the dramatic growth of the services sector in India reflects rapid strides made by educated professionals. Some others see it as the expansion of an employer of last resort. Given this heterogeneity, the object of the paper is to analyze the nature of employment being created in the different sub-sectors of services, relative to the industrial sector. The nature of employment is defined to include educational requirements and quality, where the latter comprises wages, job security and social protection. Using different econometric models to analyse household survey data from India in 1993-94 and 2004-05, we find the following. First, sub-sectors of services are generally either ‘good’ or ‘bad’ employers. Second, service sub-sectors with low educational requirements have low overall quality of employment, and vice-versa. Moreover, employment expansion appears to be more in sub-sectors where educational requirements and quality of employment is low. |
| Keywords: | Services, India, Employment, Educational requirements, Wages, Contracts |
| JEL: | C21 C25 L80 O12 J30 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:452&r=lab |
| By: | Andersson, Fredrik (U.S. Department of the Treasury); Burgess, Simon (University of Bristol); Lane, Julia (National Science Foundation) |
| Abstract: | Substantial immigrant segregation in the United States, combined with the increase in the share of the U.S. foreign-born population, have led to great interest in the causes and consequences of immigrant concentration, including those related to the functioning of labor markets. This paper provides robust evidence that both the size and the quality of an immigrant enclave affects the labor market outcomes of new immigrants. We develop new measures of the quality, or information value, of immigrant networks by exploiting data based on worker earnings records matched to firm and Census information. We demonstrate the importance of immigrant employment links: network members are much more likely than other immigrants to be employed in the same firm as their geographic neighbors. Immigrants living with large numbers of employed neighbors are more likely to have jobs than immigrants in areas with fewer employed neighbors. The effects are quantitatively important and robust under alternative specifications. For example, in a high value network – one with an average employment rate in the 90th percentile – a one standard deviation increase in the log of the number of contacts in the network is associated with almost a 5% increase in the employment rate. Earnings, conditional on employment, increase by about 0.7%. |
| Keywords: | social networks, immigrant enclaves, labor market intermediaries |
| JEL: | J61 J20 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4423&r=lab |
| By: | Wadsworth, Jonathan (Royal Holloway, University of London) |
| Abstract: | One potential channel through which the effects of the minimum wage could be directed is that firms who employ minimum wage workers could pass on any resulting higher labour costs in the form of higher prices. This study looks at the effects of the introduction and subsequent uprating of the minimum wage on the prices of UK goods and services, comparing the prices of goods produced by industries in which UK minimum wage workers make up a substantial share of total costs with the prices of goods and services that make less use of minimum wage labour. Using sectoral-level price data matched to survey data on the share of minimum wage workers in each sector, it is hard to find much evidence of significant price changes in the months that correspond to the uprating of the NMW. However over the longer term, prices in several minimum wage sectors – notably take-away foods, canteen meals, hotel services and domestic services – do appear to have risen significantly faster than prices of non-minimum wage sectors. These effects were particularly significant in the four years immediately after the introduction of the minimum wage. |
| Keywords: | minimum wage, prices |
| JEL: | J6 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4433&r=lab |
| By: | Cörvers, Frank (ROA, Maastricht University); Dupuy, Arnaud (ROA, Maastricht University) |
| Abstract: | In this paper, we estimate the demand for workers by sector and occupation using system dynamic OLS techniques to account for the employment dynamics dependence across occupations and sectors of industry. The short run dynamics are decomposed into intra and intersectoral dynamics. We find that employment by occupation and sector is significantly affected by the short run intersectoral dynamics, using Dutch data for the period 1988-2003. On average, these intersectoral dynamics account for 20% of the predicted occupational employment. |
| Keywords: | labour demand, occupational structure, intra and intersectoral dynamics, system dynamic OLS |
| JEL: | J21 J23 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4428&r=lab |
| By: | M. Niaz Asadullah; Uma Kambhampati; Florencia Lopez Boo |
| Abstract: | This study documents the size and nature of “boy-girl” and “Hindu-Muslim” gaps in children’s school participation and attainments in India. Individual-level data from two successive rounds of the National Sample Survey suggest that considerable progress has been made in decreasing the Hindu-Muslim gap. Nonetheless, the gap remains sizable even after controlling for numerous socioeconomic and parental covariates, and the Muslim educational disadvantage in India today is greater than that experienced by girls and Scheduled Caste Hindu children. A gender gap still appears within as well as between communities, though it is smaller within Muslim communities. While differences in gender and other demographic and socio-economic covariates have recently become more important in explaining the Hindu-Muslim gap, those differences altogether explain only 25 percent to 45 percent of the observed schooling gap. |
| Keywords: | gender inequality, India, religion, social disparity |
| JEL: | I21 J16 Z12 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:4637&r=lab |
| By: | Mohamad Fahmi (Department of Economics, Padjadjaran University) |
| Abstract: | Public schools in Indonesia are widely perceived have better inputs and to be superior to private schools. Public schools also benefit advantages of high-scoring peer effect as entry to some junior secondary public schools in urban area is based on national score test in elementary school. In this paper, I attempt to confirm the perception of superiority of public school in Indonesia by comparing the yearly earnings of four types of schools group; Public, Private Secular, Private Islam, and Private Christian. I use a large-scale longitudinal observation of individual and household level on socioeconomic and health survey, Indonesia Family Life Survey (IFLS) 2000 to estimate the effectiveness junior secondary education in Indonesia. To correct for sample selection bias, I use the two-step method proposed by Bourguignon et al. As a result of insignificant all selectivity bias coefficients, I use the OLS estimation to calculate the earnings decompositions. The insignificant selection bias coefficients suggest that the OLS estimation is unbiased. I use the Blinder-Oaxaca decomposition with Reimers’ decomposition technique to estimate earning differential between public and three types of private school graduates. The results of earnings decomposition from OLS estimation, suggest that earning of people who graduate from public school are 25 per cent and 35.2 per cent higher than their counterparts from private nonreligious and private Islam. On the other hand, student who schooled at private Christian school enjoys 0.28 per cents higher earnings that public. |
| Keywords: | Parent choice, Education, School effectiveness, earnings, Indonesia |
| JEL: | J31 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:unp:wpaper:200914&r=lab |
| By: | Judith K. Hellerstein; Melissa McInerney; David Neumark |
| Abstract: | We study the relationship between Hispanic employment and location-specific measures of the distribution of jobs. We find that it is only the local density of jobs held by Hispanics that matters for Hispanic employment, that measures of local job density defined for Hispanic poor English speakers or immigrants are more important, and that the density of jobs held by Hispanic poor English speakers are most important for the employment of these less-skilled Hispanics than for other Hispanics. This evidence is consistent with labor market networks being an important influence on the employment of less-skilled Hispanics, as is evidence from other sources. We also find that in MSAs where the growth rates of the Hispanic immigrant population have been highest, which are also MSAs with historically low Hispanic populations, localized job density for low-skilled jobs is even more important for Hispanic employment than in the full sample. We interpret this evidence as consistent with the importance of labor market networks, as strong labor market networks are likely to have been especially important in inducing Hispanics to migrate, and because of these networks employment in these “new immigrant†cities is especially strongly tied to the local availability of jobs. |
| JEL: | J1 J61 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15398&r=lab |
| By: | Bassanini, Andrea (OECD); Marianna, Pascal (OECD) |
| Abstract: | There is an increasing interest in the process of job creation and destruction as well of hirings and separations. Many studies suggest that idiosyncratic firm-level characteristics shape both job and worker flows in a similar way in all countries. Others argue that cross-country differences in terms of gross job flows are minor. However, these statements are usually based on the comparison of national estimates, typically collected on the basis of different definitions and collection protocols. By contrast, in this paper, we use cross-country comparable data on both job and worker flows to examine key determinants of these flows and of their cross-country differences. We find that idiosyncratic firm (industry, firm age and size) and worker (age, gender, education) characteristics play an important role for both gross job and worker flows in all countries. Nevertheless, in contrast with part of the literature, we find that, even controlling for these factors, cross-country differences concerning both gross job and worker flows appear large and of a similar magnitude. Both job and worker flows in countries such as the United States and the United Kingdom exceed those in certain continental European countries by a factor of two. Moreover, the variation of worker flows across different dimensions is well explained by the variation of job flows, suggesting that, to a certain extent, the two flows can be used as substitutes in cross-country analysis. Consistently, churning flows, that is flows originating by firms churning workers and employees quitting and being replaced, display much less cross-country variation. |
| Keywords: | job creation, job destruction, hirings, separations, churning flows, cross-country differences |
| JEL: | J23 J24 J63 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4452&r=lab |
| By: | Katherine Cuff; Nicolas Marceau; Steeve Mongrain; Joanne Roberts |
| Abstract: | This paper characterizes optimal policies in the presence of tax evasion and undocumented workers. Equilibrium can be characterized as segmented or non-segmented, depending on whether domestic workers work exclusively in the formal sector (segmented) or also in the informal sector (non-segmented). Surprisingly, in equilibrium, wages are always equalized between domestic and undocumented workers, even if they do not work in the same sectors of the economy. This is driven by the interaction of firm level decisions with optimal government policy. We also find that enforcement may not always be decreasing in its cost, and that governments will optimally enforce segmentation if enforcement costs are not too high. |
| Keywords: | Informal Labour Market; Enforcement; Undocumented Workers; Public Good Provision |
| JEL: | H32 H26 K42 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:deptwp:2009-14&r=lab |
| By: | Dwenger, Nadja (DIW Berlin); Storck, Johanna (DIW Berlin); Wrohlich, Katharina (DIW Berlin) |
| Abstract: | Several German states recently introduced tuition fees for university education. We investigate whether these tuition fees influence the mobility of university applicants. Based on administrative data of applicants for medical schools in Germany, we estimate the effect of tuition fees on the probability of applying for a university in the home state. We find a small but significant reaction: The probability of applying for a university in the home state falls by 2 percentage points (baseline: 69%) for high-school graduates who come from a state with tuition fees. Moreover, we find that students with lower high-school grades react more strongly to tuition fees. This might have important effects on the composition of students across states. |
| Keywords: | mobility of high-school graduates, tuition fees, natural experiment |
| JEL: | I22 I28 H75 R23 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4421&r=lab |
| By: | Parrotta, Pierpaolo (Department of Economics, Aarhus School of Business); Pozzoli, Daio (Department of Economics, Aarhus School of Business) |
| Abstract: | This work studies the phenomenon of inter- rm labor mobility as potential channel of knowledge transfer. Using data from the Danish employer-employee register, covering the period 1995-2005, it investigates how the knowledge embed- ded into recruited workers, coming from other rms, contributes to the process of knowledge diusion and boosts rms productivity. Speci cally, estimating both parametric (Cobb-Douglas) and semi-parametric production functions (Olley and Pakes, 1996; Levinsohn and Petrin, 2003), the impact of recruited technicians and highly educated workers on total factor productivity at the rm level is found to be signi cantly positive. A matching analysis, which allows for contin- uous treatment eect evaluation (Hirano and Imbens, 2004), corroborates this nding. |
| Keywords: | Labour mobility; Total factor productivity; Generalized propensity score |
| JEL: | C23 J33 J38 J51 |
| Date: | 2009–07–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:aareco:2009_011&r=lab |
| By: | Gradstein, Mark (Ben Gurion University); Justman, Moshe (Ben Gurion University) |
| Abstract: | We construct a simple model of compulsory schooling in which legislation and compliance are endogenously determined by individuals disciplined by social norms, optimizing their voting decisions and the school attendance of their children. The model provides a formal framework for interpreting empirical results on the effect of compulsory-schooling legislation (CSL) on enrollment. This sheds light on the use of CSL as an instrumental variable to identify the benefits of schooling, suggesting how the estimates it produces may be biased. |
| Keywords: | compliance norms, compulsory schooling, education |
| JEL: | I21 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4420&r=lab |
| By: | Kis-Katos, Krisztina (University of Freiburg); Sparrow, Robert (Institute of Social Studies) |
| Abstract: | We examine the effects of trade liberalization on child work in Indonesia. Our estimation strategy identifies geographical differences in the effects of trade policy through district level exposure to reduction in import tariff barriers. We use a balanced panel of 261 districts, based on four rounds (1993 to 2002) of the Indonesian annual national household survey (Susenas), and relate workforce participation of children aged 10-15 to geographic variation in relative tariff exposure. Our main findings show that increased exposure to trade liberalization is associated with a decrease in child work among the 10 to 15 year olds. The effects of tariff reductions are strongest for children from low skill backgrounds and in rural areas. Favorable income effects for the poor, induced by trade liberalization, are likely to be the dominating effects underlying these results. |
| Keywords: | poverty, trade liberalization, child labor, Indonesia |
| JEL: | J13 O24 O15 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4376&r=lab |
| By: | Azmat, Ghazala (Universitat Pompeu Fabra); Gonzalez, Libertad (Universitat Pompeu Fabra) |
| Abstract: | We evaluate the effect of a 2003 reform in the Spanish income tax on fertility and the employment of mothers with small children. The reform introduced a tax credit for working mothers with children under the age of three, while also increasing child deductions for all households with children. Theoretically, given the interplay of these two components, the expected effect of the reform is ambiguous on both outcomes. We find that the combined reforms significantly increased both fertility (by almost five percent) and the employment rate of mothers with children under three (by two percent). These effects were more pronounced among less-educated women. In addition, to disentangle the impact of the two reform components, we use an earlier reform that increased child deductions in 1999. We find that the child deductions affect mothers' employment negatively, which implies that the 2003 tax credit would have increased employment even more (up to five percent) in the absence of the change in child deductions. |
| Keywords: | child subsidy, tax credit, female labor force participation, fertility, family policy |
| JEL: | J22 J13 H31 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4405&r=lab |
| By: | Gagliarducci, Stefano (University of Rome Tor Vergata); Nannicini, Tommaso (Bocconi University) |
| Abstract: | The wage paid to politicians affects both the choice of citizens to run for an elective office and the performance of those who are appointed. First, if skilled individuals shy away from politics because of higher opportunities in the private sector, an increase in politicians' pay may change their mind. Second, if the reelection prospects of incumbents depend on their in-office deeds, a higher wage may foster performance. We use data on all Italian municipal governments from 1993 to 2001 and test these hypotheses in a quasi-experimental framework. In Italy, the wage of the mayor depends on population size and sharply rises at different thresholds. We apply a regression discontinuity design to the only threshold that uniquely identifies a wage increase – 5,000 inhabitants – to control for unobservable town characteristics. Exploiting the existence of a two-term limit, we further disentangle the composition from the incentive component of the effect of the wage on performance. Our results show that a higher wage attracts more educated candidates, and that better paid politicians size down the government machinery by improving internal efficiency. Importantly, most of this performance effect is driven by the selection of competent politicians, rather than by the incentive to be reelected. |
| Keywords: | political selection, efficiency wage, term limit, local finance, regression discontinuity design |
| JEL: | M52 D72 J45 H70 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4400&r=lab |
| By: | Chiswick, Barry R. (University of Illinois at Chicago); Miller, Paul W. (University of Western Australia) |
| Abstract: | This paper examines the way immigrant earnings are determined in Australia. It uses the overeducation/required education/undereducation (ORU) framework (Hartog, 2000) and a decomposition of the native-born/foreign-born differential in the payoff to schooling developed by Chiswick and Miller (2008). This decomposition links overeducation to the less-than- perfect international transferability of immigrants' human capital, and undereducation to favorable selection in immigration. Comparisons are offered with findings from analyses for the US and Canada to enable assessment of the relative impacts of favorable selection and the limited international transferability of human capital to the lower payoff to schooling for the foreign born. The sensitivity of the results of the decomposition to several measurement issues is assessed. |
| Keywords: | immigrants, schooling, occupations, earnings, rates of return, selectivity, skill transferability, ORU analysis |
| JEL: | F22 I21 J24 J31 J61 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4422&r=lab |
| By: | John T. Addison (Moore School of Business, University of South Carolina and GEMF); Chad Cotti (College of Business, University of Wisconsin Oshkosh); Christopher J. Surfieldy (College of Business and Management, Saginaw Valley State University) |
| Abstract: | Atypical work arrangements have long been criticized as offering more precarious and lower paid work than regular open-ended employment. In an important paper published in this journal, Booth et al. (2002) were among the first to recognize that notwithstanding their potential deficiencies, such jobs also functioned as a stepping stone to permanent work. This conclusion proved prescient and has received increasing support in Europe. In the present note, we provide a parallel analysis to Booth et al. for the United States – somewhat of a missing link in the evolving empirical literature – and obtain not dissimilar similar findings for the category of temporary workers as do they for fixed-term contract workers. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:gmf:wpaper:2009-12&r=lab |
| By: | Nikolaos Theodoropoulos; John G. Sessions |
| Abstract: | Efficiency wage theory predicts that firms can induce worker effort by the carrot of high wages and or the stick of monitoring worker performance. Another option available to firms is to tilt the remuneration package over time such that the lure of high future earnings acts as a deterrent to current shirking. I n this paper we undertake the first empirical investigation of this relationship between the slope of the wage-tenure profile and the level of monitoring. On the assumption that firms strive for the optimal trade-off between these various instruments, we hypothesise that increased monitoring leads to a decline in the slope of the wage-tenure profile. Our empirical analysis, using two cross sections of matched employer-employee British data, provides robust support for this prediction. |
| Keywords: | Monitoring, Tenure, Efficiency, Wages. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:ucy:cypeua:5-2009&r=lab |
| By: | Kato, Takao (Department of Economics, Aarhus School of Business); Shu, Pian (Department of Economics, Aarhus School of Business) |
| Abstract: | Using weekly data for defect rates (proportion of defective output) for all weavers in a Chinese textile firm during a 12 months (April 2003 - March 2004) period, we provide some of the first rigorous evidence on the presence and nature of peer effects in the manufacturing workplace. First, a worker is found to put in more effort and improve her performance when she is working with more able teammates. Second, by exploiting the well-documented fact that an exogenouslyformed strong divide between urban resident workers and rural migrant workers exists in firms in Chinese cities, we provide novel evidence on the interplay between social networks (urban resident group and rural migrant group) and peer effects. Specifically, we find that a worker puts in more effort when she is working with more able outgroup teammates but not when working with more able ingroup teammates, pointing to intergroup competition as a powerful source of the peer effects. Such peer effects across the social network, combined with the presence of incentive to outperform teammates at this firm, are largely consistent with recent experimental evidence on the important role that group identities play in facilitating altruistic behaviors. |
| Keywords: | peer effects in the workplace; social networks; intergroup competition |
| JEL: | J24 |
| Date: | 2009–08–07 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:aareco:2009_012&r=lab |
| By: | Muravyev, Alexander (IZA); Talavera, Oleksandr (University of East Anglia); Bilyk, Olga (Kyiv School of Economics); Grechaniuk, Bogdana (Kyiv School of Economics) |
| Abstract: | The paper studies whether and how CEO turnover in Ukrainian firms is related to their performance. Based on a novel dataset covering Ukrainian joint stock companies in 2002-2006, the paper finds statistically significant negative association between the past performance of firms measured by return on sales and return on assets, and the likelihood of managerial turnover. While the strength of the turnover-performance relationship does not seem to depend on factors such as managerial ownership and supervisory board size, we do find significant entrenchments effects associated with ownership by managers. Overall, our analysis suggests that corporate governance in Ukraine operates with a certain degree of efficiency, despite the well-known lacunas in the country's institutional environment. |
| Keywords: | corporate governance, transition, managerial labor market, Ukraine |
| JEL: | G34 J40 L29 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4372&r=lab |
| By: | Akbulut-Yuksel, Mevlude (Dalhousie University) |
| Abstract: | During World War II, more than one-half million tons of bombs were dropped in aerial raids on German cities, destroying about one-third of the total housing stock nationwide. This paper provides causal evidence on long-term consequences of large-scale physical destruction on the educational attainment, health status and labor market outcomes of German children. I combine a unique dataset on city-level destruction in Germany caused by Allied Air Forces bombing during WWII with individual survey data from the German Socio-Economic Panel (GSOEP). My identification strategy exploits the plausibly exogenous city-by-cohort variation in the intensity of WWII destruction as a unique quasi-experiment. My findings suggest significant, long-lasting detrimental effects on the human capital formation, health and labor market outcomes of Germans who were at school-age during WWII. First, these children had 0.4 fewer years of schooling on average in adulthood, with those in the most hard-hit cities completing 1.2 fewer years. Second, these children were about half inches (one centimeter) shorter and had lower self-reported health satisfaction in adulthood. Third, their future labor market earnings decreased by 6% on average due to exposure to wartime physical destruction. These results survive using alternative samples and specifications, including controlling for migration. Moreover, a control experiment using older cohorts who were not school-aged during WWII reveals no significant city-specific cohort trends. An important channel for the effect of destruction on educational attainment appears to be the destruction of schools and the absence of teachers, whereas malnutrition and destruction of health facilities during WWII seem to be important for the estimated impact on health. |
| Keywords: | human capital formation, physical destruction, children, wars |
| JEL: | I21 I12 J24 N34 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4407&r=lab |
| By: | Brandt, Loren (University of Toronto); Siow, Aloysius (University of Toronto); Wang, Hui (University of Toronto) |
| Abstract: | The paper estimates how parents adjust bride-prices and land divisions to compensate their sons for differences in their schooling investments in rural China. The main estimate implies that when a son receives one yuan less in schooling investment than his brother, he will obtain 0.7 yuan more in observable marital and post-marital transfers as partial compensation. Controlling for unobserved household heterogeneity, planned consumption differences across sons, and a fuller accounting of lifetime transfers are quantitatively important. The empirical findings strongly support the unitary model as a model of resource allocation for sons in traditional agricultural families. |
| Keywords: | household model, parental investment, marriage market, transfers |
| JEL: | D13 J12 J13 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4431&r=lab |
| By: | Takahiro Ito |
| Abstract: | This paper investigates the determinants of living standards (measured by per capita consumption expenditure) at the household level, addressing heterogeneity in returns to education and endogeneity of educational status. The estimation results obtained through an instrumental variables quantile regression suggest that the endogeneity of education matters in determining the causal effect of education on living standards, while no evidence of the heterogeneity in the rate of returns to education is found. However, the results also provide evidence that impacts of other determinants vary significantly over the outcome (expenditure) distribution, and consequently a simulation based on the results shows that poverty alleviation impacts of education differs substantially between the instrumental variables quantile regression and standard instrumental variables regression results. The comparison of the two indicates the possibility that the impact on poverty reduction is likely to be overestimated in the standard instrumental variable regression. |
| Keywords: | poverty, heterogeneous returns to education, instrumental variables quantile regression |
| JEL: | D12 I21 I32 O15 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd09-080&r=lab |
| By: | Ralitza Dimova (Brunel University - Brunel University); François-Charles Wolff (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272) |
| Abstract: | Using data on 2317 mother-daughter pairs from 10 European countries, we investigate the impact of downward time and monetary transfers on the career choices of transfer-receiving young mothers. For Europe as a whole, we find a strong positive effect of grandchild care on the labor force participation and the degree of labor market involvement of the young mother, but no impact of monetary transfers on either of these decisions. Both recipients and donors with better endowments are more likely to participate in a monetary transaction, while mothers with lower level of human capital are more likely to provide time transfers to their better endowed daughters. |
| Date: | 2009–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00418766_v1&r=lab |
| By: | Jere R. Behrman; John Hoddinott; John A. Maluccio; Reynaldo Martorell |
| Abstract: | Previous studies report that adult height has significant associations with wages even controlling for schooling. But schooling and height are imperfect measures of adult cognitive skills (“brains”) and strength (“brawn”); further they are not exogenous. Analysis of rich Guatemalan longitudinal data over 35 years finds that proximate determinants—adult reading comprehension skills and fat-free body mass—have significantly positive associations with wages, but only brains, and not brawn, is significant when both human capital measures are treated as endogenous. Even in a poor developing economy in which strength plausibly has rewards, labor market returns are increased by brains, not brawn. |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:mdl:mdlpap:0907&r=lab |
| By: | Barlevy, Gadi (Federal Reserve Bank of Chicago); Neal, Derek (University of Chicago) |
| Abstract: | We propose an incentive pay scheme for educators that links educator compensation to the ranks of their students within appropriately defined comparison sets, and we show that under certain conditions our scheme induces teachers to allocate socially optimal levels of effort to all students. Because this scheme employs only ordinal information, our scheme allows education authorities to employ completely new assessments at each testing date without ever having to equate various assessment forms. Thus, our scheme removes incentives for teachers to teach to a particular assessment form and eliminates any opportunities to influence reward pay by corrupting the equating process or the scales used to report assessment results. Having shown that cardinal measures of achievement growth over time are not a necessary ingredient of incentive systems for educators, we note that education authorities can employ our scheme as a means of providing incentives for educators while employing a separate system for measuring growth in student achievement that involves no stakes for educators. This approach creates no incentives for educators to take actions that contaminate the measurement of student progress. |
| Keywords: | compensation, education, tournaments |
| JEL: | J33 I20 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4383&r=lab |
| By: | Kou, Zonglai; Zhou, Min |
| Abstract: | The paper develops a model of academic tenure based on multi-tasking and screening. A professor has two tasks, researching and teaching. We assume that researching performance is easy to measure but teaching performance is immeasurable. Then Holmtrom and Milgrom's (1991) classical muli-task principal-agent model implies that the only way for the the university to "incentivize" teaching activity is decreasing the incentive power to researching activity. This justifies the low-powered contract to tenured professors. However, with low-powered contract, the university will face serious informational problem in the process of enrollment, either transferring rents to the candidates with low ability if the wage level is high, or suffering from the potential occupational vacancy if the wage level is low. To this dilemma, the up-or-out contract is a possible solution. |
| Keywords: | Multi-tasking, Screening, Academic Tenure, Up-or-Out Contract |
| JEL: | D86 J41 J44 M55 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17670&r=lab |
| By: | David Black (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne and Brotherhood of St Laurence); Yi-Ping Tseng (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne and Brotherhood of St Laurence); Roger Wilkins (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | Using Australian data spanning the period 1981 to 2001, we apply a propensity score reweighting decomposition approach to investigate the extent to which the large decline in the male employment-population rate over this period can be attributed to changes in sociodemographic characteristics. We find that changes in observed characteristics account for little of the aggregate decline. However, changes in characteristics are found to be important for population sub-groups. In particular, changes in partner status and partner employment status have acted to decrease employment rates of younger males, but increase employment rates of older males. A further finding is that, holding observed characteristics constant, there has been a very large decline in the employment rate of 55-64 year olds with bachelor degree qualifications. In the course of applying the decomposition method, we illustrate that validity of inferences depends on ‘appropriate’ specification of the re-weighting function. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2009n24&r=lab |
| By: | Kapteyn, Arie (RAND); Smith, James P. (RAND); van Soest, Arthur (Tilburg University) |
| Abstract: | To analyze the effect of health on work, many studies use a simple self-assessed health measure based upon a question such as "do you have an impairment or health problem limiting the kind or amount of work you can do?" A possible drawback of such a measure is the possibility that different groups of respondents may use different response scales. This is commonly referred to as "differential item functioning" (DIF). A specific form of DIF is justification bias: to justify the fact that they don't work, non-working respondents may classify a given health problem as a more serious work limitation than working respondents. In this paper we use anchoring vignettes to identify justification bias and other forms of DIF across countries and socio-economic groups among older workers in the U.S. and Europe. Generally, we find differences in response scales across countries, partly related to social insurance generosity and employment protection. Furthermore, we find significant evidence of justification bias in the U.S. but not in Europe, suggesting differences in social norms concerning work. |
| Keywords: | work limiting disability, vignettes, reporting bias |
| JEL: | J28 I12 C81 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4388&r=lab |
| By: | Kalenkoski, Charlene M. (Ohio University); Ribar, David C. (University of North Carolina, Greensboro); Stratton, Leslie S. (Virginia Commonwealth University) |
| Abstract: | We investigate how household disadvantage affects the time use of 15-18 year-olds using 2003-2006 data from the American Time Use Survey. Applying competing-risk hazard models, we distinguish between the incidence and duration of activities and incorporate the daily time constraint. We find that teens living in disadvantaged households spend less time in non-classroom schooling activities than other teens. Girls spend some of this time in work activities, suggesting they are taking on adult roles. However we find more evidence of substitution into unsupervised activities, suggesting that it may be less structured environments that reduce educational investment. |
| Keywords: | event history models, adolescence, time use |
| JEL: | J22 J22 J13 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4374&r=lab |
| By: | Christelle Viauroux (UMBC); Barnali Gupta (Miami University) |
| Abstract: | We study the effects of a statutory wage tax sharing rule in a principal - agent framework with moral hazard (à la Holmstrom, 1979) using the approach of Bose, Pal, Sappington (2007) to model the stochastic relationship between the agent’s unobserved effort and his observed performance. The analysis indicates that tax sharing with positive legislated contributions from both the employer and employee does not maximize any of the outcomes - employee effort, wages, profits or welfare. Moreover, a rule which specifies a corner solution, with 100% of the tax statutorily levied on the employer will maximize effort, expected profit and expected welfare while 100% of the tax statutorily levied on the employee will maximize expected wages. |
| Keywords: | moral hazard, taxes, principal-agent model |
| JEL: | D8 H2 |
| Date: | 2009–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:umb:econwp:09105&r=lab |
| By: | Delfgaauw, Josse (Erasmus University Rotterdam); Dur, Robert (Erasmus University Rotterdam); Sol, Joeri (Erasmus University Rotterdam); Verbeke, Willem (Erasmus University Rotterdam) |
| Abstract: | We ran a field experiment in a Dutch retail chain consisting of 128 stores. In a random sample of these stores, we introduced short-term sales competitions among subsets of stores. We find that sales competitions have a large effect on sales growth, but only in stores where the store's manager and a large fraction of the employees have the same gender. Remarkably, results are alike for sales competitions with and without monetary rewards, suggesting a high symbolic value of winning a tournament. Lastly, despite the substantial variation in team size, we find no evidence for free-riding. |
| Keywords: | sales contests, field experiment, gender differences, competition, awards |
| JEL: | C93 J16 M52 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4395&r=lab |
| By: | Mohamad Fahmi (Department of Economics, Padjadjaran University) |
| Abstract: | I reestimate Bedi and Garg estimation of differential earnings of public-private junior secondary school in Indonesia. I replicate Bedi and Garg method by using Bedi and Garg’s sample data and creating a new sample data base on the original updated IFLS1 data (Indonesia Family Life Survey 1 codename IFLS1-RR). I use the same methodology as Bedi and Garg with the latest Stata command to confirm Bedi and Garg’s major conclusion. Using selmlog and decompose Stata techniques, I find the evidence that contradictive with Bedi and Garg’s conclusion as the public schools graduated earn higher than other graduates from private schools. |
| Keywords: | School effectiveness, earnings, Indonesia |
| JEL: | J31 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:unp:wpaper:200913&r=lab |
| By: | Müller, Kathrin |
| Abstract: | Human capital is known to be one of the most important predictors of a person's earnings. With regard to entrepreneurial success, founders' human capital is an important determinant of firm's employment growth as well. This paper investigates if the depreciation of a founder's academic knowledge affects a start-up's employment growth. The depreciation of academic knowledge is investigated by quantifying the effect of the time period which elapses after the founder has left university until the start-up is founded on firm's employment growth. Using quantile regressions, human capital depreciation is found to be of crucial importance for both ordinary academic start-ups and academic spin-offs, the founders of the latter suffering even more from human capital depreciation. |
| Keywords: | Human capital depreciation,employment growth,academic entrepreneurship |
| JEL: | J23 J24 L25 L26 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09050&r=lab |
| By: | Fabian Bornhorst |
| Abstract: | This paper evaluates a microsimulation technique by comparing the simulated outcome of a program with its actual effect. The ex ante evaluation is carried out for a conditional cash transfer program, where poor households were given money if the children attended school. A model of occupational choice is used to simulate the expected impact of the program. The results suggest that the transfer would indeed increase school attendance and do more so among girls than boys. While the simulated effect tends to be larger than the actual effect, the latter lies within bootstrapped confidence intervals of the simulation. |
| Keywords: | Economic models , Education , Human capital , Income , Labor markets , Labor productivity , Labor supply , Mexico , Payment systems , Poverty reduction , Private sector , Social policy , |
| Date: | 2009–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:09/187&r=lab |
| By: | Borghans, Lex (Maastricht University); Cörvers, Frank (ROA, Maastricht University) |
| Abstract: | Over the past two decades there has been a substantial increase in the mobility of students in Europe, while also research has become much more internationally oriented. In this paper we document changes in the structure of research and higher education in Europe and investigate potential explanations for the strong increase in its international orientation. While higher education started to grow substantially around 1960, only a few decades later, research and higher education transformed gradually to the American standard. Decreased communication costs are likely causes for this trend. This transformation is most clearly revealed in the change of language used in research from the national language, Latin, German and French to English. Smaller language areas made this transformation earlier while there are also clear timing differences between research fields. Sciences and medicine tend to switch to English first, followed by economics and social sciences, while for law and arts only the first signs of such a transformation are currently observed. This suggests that returns to scale and the transferability of research results are important influences in the decision to adopt the international standard. |
| Keywords: | higher education, research, Americanization |
| JEL: | O31 I23 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4445&r=lab |
| By: | Österholm, Pär (National Institute of Economic Research) |
| Abstract: | This paper investigates whether forecasts of the Swedish unemployment rate can be improved by using business and household survey data. We conduct an out-of-sample forecast exercise in which the performance of a Bayesian VAR model with only macroeconomic data is compared to that when the model also includes survey data. Results show that the forecasting performance at short horizons can be improved. The im-provement is largest when forward-looking data from the manufacturing industry is employed. |
| Keywords: | Bayesian VAR; Labour market |
| JEL: | E17 E24 E27 |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nierwp:0112&r=lab |