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on Labour Economics |
| By: | Brunner, Beatrice (University of Zurich); Kuhn, Andreas (University of Zurich) |
| Abstract: | We study the long-run effects of initial labor market conditions on wages for a large sample of male individuals entering the Austrian labor market between 1978 and 2000. We find a robust negative effect of unfavorable entry conditions on starting wages. This initial effect turns out to be quite persistent and even though wages do catch up later on, large effects on lifetime earnings result. We also show that initial labor market conditions have smaller and less persistent effects for blue-collar workers than for white-collar workers. We further show that some of the long-run adjustment takes place through changes in job-mobility and employment patterns as well as in job tenure. Finally, we find that adjustments at the aggregate level are key to explain wages' adjustment process in the longer run. |
| Keywords: | labor market cohorts, initial labor market conditions, long-run wage profiles, persistence of labor market shocks, unemployment, business cycle |
| JEL: | E3 J2 J3 J6 M5 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4601&r=lab |
| By: | Mosthaf, Alexander (IAB, Nürnberg); Schank, Thorsten (University of Erlangen-Nuremberg); Schnabel, Claus (University of Erlangen-Nuremberg) |
| Abstract: | This study analyzes state dependence in low-wage employment of western German women using GSOEP data, 2000-2006. We estimate dynamic multinomial logit models with random effects and find that having a low-wage job increases the probability of being low-paid and decreases the chances of being high-paid in the future, in particular for low-paid women working part-time. However, concerning future wage prospects low-paid women are clearly better off than unemployed or inactive women. We argue that for women low-wage jobs can serve as stepping stones out of unemployment and are to be preferred to staying unemployed and waiting for a better job. |
| Keywords: | low-pay dynamics, state dependence, dynamic multinomial logit model |
| JEL: | J30 J60 C33 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4611&r=lab |
| By: | Giannelli, Gianna Claudia (University of Florence); Jaenichen, Ursula (IAB, Nürnberg); Villosio, Claudia (Collegio Carlo Alberto) |
| Abstract: | According to the aims of the labour market reforms of the 90s implemented in many European countries, workers may stay at their first job for a shorter time, but should be able to switch jobs easily. This would generate a trade-off between job opportunities and job stability. This paper addresses this issue using administrative longitudinal data for Germany and Italy, taken as representative examples of continuous and isolated reforms, respectively. The estimated piecewise constant job and employment duration models show that changes in the durations of the first job and employment – measured as the sum of multiple consecutive jobs – are observed in periods of labour market reforms. However, the existence of a trade-off is not confirmed by the results. In Germany, men have experienced an increase in employment stability over time, mated with somewhat longer job durations, while women have not benefitted from an increase in employment durations as a compensation for the marked decrease in their first job durations. In Italy, employment stability of the new entrants of both sexes has not improved after the reforms. The reduction in the duration of the first job has not been counterbalanced by an increase in the opportunity to find rapidly another job. These results suggest that the objective of increasing job opportunities by means of labour market deregulation has not been fully achieved. |
| Keywords: | labour market reforms, precarious jobs, tenure, work career, employment duration, mixed proportional hazard |
| JEL: | J62 J64 J68 K31 C41 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4591&r=lab |
| By: | Christian Pfeifer (Institute of Economics, Leuphana University of Lüneburg, Germany) |
| Abstract: | This paper compares contractual with effective working hours and wages, respectively. Effective working hours are defined as contractual working hours minus absent working hours. This approach takes into account workers' downward adjustment of working time via paid absenteeism if working time constraints are present, which induce workers to accept contracts with larger than their optimal choice of working hours. A German personnel data set, which contains precise information on wages as well as working and absence hours, is used to assess the impact of such downward adjustment on wage inequality and wage differentials (gender, schooling, age). |
| Keywords: | absenteeism, earnings, inequality, wage differentials, working hours |
| JEL: | J22 J31 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:152&r=lab |
| By: | Miguel Casares (Departamento de Economía-UPNA) |
| Abstract: | This paper describes a model with sticky prices, search frictions and hours-clearing wages that provides firm differentiation across several dimensions: price, output, wage, employment and hours per worker. The connection between pricing and hiring decisions results in firm-level employment fluctuations that depend upon sticky prices, search costs, demand elasticity and labor supply elasticity. The calibrated model is able to match average US industrial employment volatility when assuming a small industrial size, providing one possible answer to Shimer (2005a)´s puzzle. |
| Keywords: | search frictions, sticky prices, industrial employment |
| JEL: | E3 J2 J3 J4 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:nav:ecupna:0903&r=lab |
| By: | Eichhorst, Werner (IZA); Marx, Paul (IZA); Tobsch, Verena (E-x-AKT WIRTSCHAFTSFORSCHUNG) |
| Abstract: | The observation of highly regulated, but successful economies has given rise to the hypothesis of various viable models of labor market adaptability. The paper presents a quantitative indicator that tries to avoid a simplified flexibility-rigidity dichotomy and provides a detailed picture of the varying institutional configurations by which flexibility is achieved. In order to capture different patterns of flexibility, we differentiate between five types of flexibility which can be combined (external-numerical, internal-numerical, external-functional, Internal-functional, and wage flexibility). Following the dominant analytical perspective in comparative labor market research the indicator is limited to the institutional level (de jure variables). Besides institutional variables influencing external numerical flexibility (employment protection, unemployment benefit system and active labor market policies, taxation and wage setting) we include further institutions which can be assumed to influence adaptability (education, working-time arrangements and firm-specific vocational training). |
| Keywords: | labor market institutions, flexibility, indicators |
| JEL: | J38 J58 J28 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4595&r=lab |
| By: | Jan Babecky (Czech National Bank); Philip Du Caju (National Bank of Belgium, Research Department); Theodora Kosma (Bank of Greece); Martina Lawless (Central Bank and Financial Services Authority of Ireland); Julian Messina (World Bank); Tairi Room (Bank of Estonia) |
| Abstract: | It has been well established that the wages of individual workers react little, especially downwards, to shocks that hit their employer. This paper presents new evidence from a unique survey of firms across Europe on the prevalence of downward wage rigidity in both real and nominal terms. We analyse which firm-level and institutional factors are associated with wage rigidity. Our results indicate that it is related to workforce composition at the establishment level in a manner that is consistent with related theoretical models (e.g. efficiency wage theory, insider-outsider theory). We also find that wage rigidity depends on the labour market institutional environment. Collective bargaining coverage is positively related with downward real wage rigidity, measured on the basis of wage indexation. Downward nominal wage rigidity is positively associated with the extent of permanent contracts and this effect is stronger in countries with stricter employment protection regulations |
| Keywords: | downward nominal wage rigidity, downward real wage rigidity, wage indexation, survey data, European Union |
| JEL: | J30 J31 J32 C81 P5 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:200911-23&r=lab |
| By: | Jan Babecky (Czech National Bank); Philip Du Caju (National Bank of Belgium, Research Department); Theodora Kosma (Bank of Greece); Martina Lawless (Central Bank and Financial Services Authority of Ireland); Julian Messina (World Bank); Tairi Room (Bank of Estonia) |
| Abstract: | Firms have multiple options at the time of adjusting their wage bills. However, previous literature has mainly focused on base wages. We broaden the analysis beyond downward rigidity in base wages by investigating the use of other margins of labour cost adjustment at the firm level. Using data from a unique survey, we find that firms make frequent use of other, more flexible, components of compensation to adjust the cost of labour. Changes in bonuses and non-pay benefits are some of the potential margins firms use to reduce costs. We also show how the margins of adjustment chosen are affected by firm and worker characteristics |
| Keywords: | labour costs, wage rigidity, firm survey, European Union |
| JEL: | J30 C81 P5 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:200911-24&r=lab |
| By: | Jan Babecky; Philip Du Caju; Theodora Kosma; Martina Lawless; Julian Messina; Tairi Rõõm |
| Abstract: | Firms have multiple options at the time of adjusting their wage bills. However, previous literature has mainly focused on base wages. We broaden the analysis beyond downward rigidity in base wages by investigating the use of other margins of labour cost adjustment at the firm level. Using data from a unique survey, we find that firms make frequent use of other, more flexible, components of compensation to adjust the cost of labour. Changes in bonuses and non-pay benefits are some of the potential margins firms use to reduce costs. We also show how the margins of adjustment chosen are affected by firm and worker characteristics |
| Keywords: | labour costs, wage rigidity, firm survey, European Union |
| JEL: | J30 C81 P5 |
| Date: | 2009–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:eea:boewps:wp2009-03&r=lab |
| By: | Christian Pfeifer (Institute of Economics, Leuphana University of Lüneburg, Germany) |
| Abstract: | Hutchens (1986, Journal of Labor Economics 4(4), pp. 439-457) argues that deferred compensation schemes impose fixed-costs to firms and, therefore, they employ older workers but prefer to hire younger workers. This paper shows that deferred compensation can be a recruitment barrier even without these fixed-costs, because adjustments of wage-tenure profiles for older new entrants can lead to adverse incentive effects from a fairness perspective. A personnel data set and a linked employeremployee data set reveal that wage-tenure profiles of white-collar workers are indeed adjusted according to entry age but that firms still hire few older workers. |
| Keywords: | deferred compensation, entry age, fairness, internal labor markets, wages |
| JEL: | J14 J31 J33 M51 M52 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:151&r=lab |
| By: | Christine Binzel; Ragui Assaad |
| Abstract: | We analyze in this paper the impact of male-dominated migration and remittance income on the participation and hours worked decisions of adults left behind, including the hours spent by women in subsistence and domestic work. We differentiate between a 'pure' migration ("M") effect and the joint effect of migration and remittance income ("MR") and evaluate these effects for men and women separately. Additionally, we examine the labor supply behavior of wives whose husband migrated. We draw on the 2006 cross section using an instrumental variable approach as well as on the 1998/2006 panel of the Egypt Labor Market Panel Survey (ELMPS06). In line with the literature, women in MR households (albeit not in M households) tend to reduce their wage and salary work. We find evidence for both intra-household specialization and an increase in women's (and wives') total work load. Men are generally less affected. Our results suggest that it is important to differentiate between these two effects and between the different forms of market and non-market work as well as to consider the relationship between remitter and recipient. |
| Keywords: | migration, remittances, labor supply, time allocation, gender |
| JEL: | J22 F22 R23 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp954&r=lab |
| By: | Farm, Ante (Swedish Institute for Social Research, Stockholm University) |
| Abstract: | How can vacancy statistics be used to measure friction in job matching and the effects of friction on unemployment? First, measure deviations from instantaneous hirings by the average duration of recruitment as measured by the number of job vacancies divided by the number of hirings per month. Second, measure direct effects of recruitment times on employment by measuring unfilled jobs, defined as unoccupied job vacancies which are available immediately. Third, measure indirect effects of recruitment times on employment by estimating first the effect of recruitment times on product prices and then the effect of a price change on sales, production and employment. Fourth, measure ‘search ineffectiveness’ with potential effects on the NAIRU by the rate of unfilled jobs. |
| Keywords: | Unemployment; vacancies; matching function; labour demand; friction |
| JEL: | J63 J64 |
| Date: | 2009–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2009_008&r=lab |
| By: | Hanushek, Eric A. (Stanford University); Woessmann, Ludger (Ifo Institute for Economic Research) |
| Abstract: | We investigate whether a causal interpretation of the robust association between cognitive skills and economic growth is appropriate and whether cross-country evidence supports a case for the economic benefits of effective school policy. We develop a new common metric that allows tracking student achievement across countries, over time, and along the within-country distribution. Extensive sensitivity analyses of cross-country growth regressions generate remarkably stable results across specifications, time periods, and country samples. In addressing causality, we find, first, significant growth effects of cognitive skills when instrumented by institutional features of school systems. Second, home-country cognitive-skill levels strongly affect the earnings of immigrants on the U.S. labor market in a difference-in-differences model that compares home-educated to U.S.-educated immigrants from the same country of origin. Third, countries that improved their cognitive skills over time experienced relative increases in their growth paths. From a policy perspective, the shares of basic literates and high performers have independent significant effects on growth, and the estimates suggest that the high-performer effect is larger in poorer countries. |
| Keywords: | human capital, economic growth, cognitive skills |
| JEL: | H4 I2 J3 J61 O1 O4 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4575&r=lab |
| By: | Khamis, Melanie (IZA) |
| Abstract: | Limited availability of workfare programs and unemployment insurance and a large informal sector are features of the Argentine labor market at the outset of the 2001 economic crisis. This paper tests the hypothesis whether informal work is an alternative to workfare participation before a large-scale program expansion took place. Results from the propensity score matching indicate that observable characteristics of informal low-income workers and current workfare participants are significantly different. However, within these groups, it is possible to identify subgroups that exhibit similar observable characteristics. This indicates that only a subset of the individuals sees workfare and informal sector work as substitutable alternatives. |
| Keywords: | South America, Argentina, informal labor market, workfare program, propensity score matching |
| JEL: | J42 J48 O17 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4614&r=lab |
| By: | Cottini, Elena (University of Milan); Kato, Takao (Colgate University); Nielsen, Niels Westergaard (Aarhus School of Business) |
| Abstract: | This paper contributes to the emerging strand of the empirical literature that takes advantage of new data on workplace-specific job attributes and voluntary employee turnover to shed fresh insights on the relationship between employee turnover, adverse workplace conditions and HRM environments. We find evidence that workers in hazardous workplace conditions are indeed more likely to separate from their current employers voluntarily while High-Involvement Work Practices (HIWPs) reduces employee turnover. Specifically, exposing a worker to physical hazards such as loud noise, vibration or poor lighting will lead to a 3 percentage point increase in the probability of turnover from the average turnover rate of 18 percent; working in a fixed night shift will result in an 11 percentage point jump in the turnover probability, and having an unsupportive boss will lead to a 5 percentage point increase. The effect of HIWPs is modest yet hardly negligible with a 4 percentage point reduction in the turnover probability from having voice in the workplace. Furthermore the turnover-increasing effect of physical hazards is found to be significantly reduced by the presence of strong information sharing whereas the adverse effect on turnover of the use of fixed night shift is also found to be significantly mitigated by the authority delegation to workers by management. As such, our evidence lends support to those who advocate the use of HIWPs for those firms with employee turnover problems due to hazardous workplace conditions. Finally, our logit analysis of the 5-year odds of improving workplace conditions suggests that the worker exposed to adverse workplace conditions can improve her long-term odds of rectifying such workplace adversities significantly by separating from the firm voluntarily. Voluntary turnover appears to be a rational worker response to adverse workplace conditions, and unless the firm alleviates its adverse workplace conditions directly or mitigates their effects on voluntary turnover through HIWPs, workers exposed to adverse workplace conditions will likely continue to take the exit option. |
| Keywords: | employee turnover, workplace conditions, human resource management, high-involvement work system, high-performance work system |
| JEL: | M5 J63 J81 J28 J5 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4587&r=lab |
| By: | John Bound; Michael Lovenheim; Sarah Turner |
| Abstract: | Partly as a consequence of the substantial increase in the college wage premium since 1980, a much higher fraction of high school graduates enter college today than they did a quarter century ago. However, the rise in the fraction of high school graduates attending college has not been met by a proportional increase in the fraction who finish. Comparing two cohorts from the high school classes of 1972 and 1992, we show eight-year college completion rates declined nationally, and this decline is most pronounced amongst men beginning college at less-selective public 4-year schools and amongst students starting at community colleges. We decompose the observed changes in completion rates into the component due to changes in the preparedness of entering students and the component due to collegiate characteristics, including type of institution and resources per student. We find that, while both factors play a role, it is the collegiate characteristics that are more important. A central contribution of this analysis is to show the importance of the supply-side of the higher education in explaining changes in college completion. |
| JEL: | I2 I23 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15566&r=lab |
| By: | Enrique López-Bazo (Faculty of Economics, University of Barcelona); Elisabet Motellón (Faculty of Economics, University of Barcelona) |
| Abstract: | This paper uses micro-level data to analyse the effect of human capital on regional wage differentials. The results for the set of Spanish regions confirm that they differ in the endowment of human capital, but also that the return that individuals obtain from it varies sharply across regions. Regional heterogeneity in returns is especially intense in the case of education, particularly when considering its effect on the employability of individuals. These differences in endowment and, especially, in returns to human capital, account for a significant proportion of regional wage gaps. |
| Keywords: | Education, Experience, Regional disparities, Returns to human capital, Wage gap decomposition. |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:200924&r=lab |
| By: | Andini, Corrado (University of Madeira) |
| Abstract: | The standard human-capital model is based on the assumption that the observed wage of an individual is equal to the monetary value of the individual net human-capital productivity, the so-called net potential wage. We argue that this assumption is rejected by the ECHP data for Belgium, Denmark and Finland. The empirical evidence supports a dynamic approach to the Mincer equation where no equality is imposed but an adjustment between observed and potential earnings is allowed to take place over time. Controlling for regressors' endogeneity, individual heterogeneity and time effects, we estimate a dynamic panel-data wage equation and provide measures of the speed of adjustment in Belgium, Denmark and Finland. Further, we elaborate on the implications of a dynamic approach to the Mincer equation for the computation of the return to schooling, including the implication that this return is not independent of labor-market experience, as suggested by Heckman et al. (2005) and Belzil (2007). Finally, we show that a dynamic wage equation can be seen as the solution of a simple wage-bargaining model and argue that a micro-founded model can fit the data better than a simple adjustment model but requires more theoretical assumptions. |
| Keywords: | Mincer equation, wages, human capital |
| JEL: | I21 J31 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4583&r=lab |
| By: | Centeno, Mário (Banco de Portugal); Novo, Álvaro A. (Banco de Portugal) |
| Abstract: | Wage inequality in Portugal increased over the last quarter of century. The period from 1982 to 1995 witnessed strong increases in both upper- and lower-tail inequality. A shortage of skills combined with skill-biased technological changes are at the core of this evolution. Since 1995, lower-tail inequality decreased, while upper-tail inequality increased at a slower rate. The supply of high-skilled workers more than doubled during this period, contributing significantly to the slowdown. Polarization of employment demand is the more credible explanation for the more recent evolution. As in other developed economies, for instance Germany and the United States, we show that institutions played a minor role in shaping changes in inequality. |
| Keywords: | inequality, polarization, supply, demand, institutions |
| JEL: | J3 D3 O3 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4592&r=lab |
| By: | Stephan Thomsen (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Mick Wittich |
| Abstract: | This paper provides new evidence on the choice and success of six different job search channels comprising the public employment agency, advertisements in newspapers and journals, internet job search, recruitment agencies, direct applications, and the social network. In addition, job search intensity and its effects are regarded. Relying on panel data for Germany, we are able to consider observed and unobserved heterogeneity in the estimation. In line with findings for other countries, the results show that consideration of various channels in individual job search increases the employment chances. With regard to the determinants, the estimates exhibit clear differences between the job search channels and with respect to search intensity. The results for success of the job search channels reveal that the public employment agency is ineffective and even harms the employment chances of the unemployed job seekers. In contrast, direct application for jobs and internet job search provide successful channels and increase the employment chances. |
| Keywords: | job search, unemployment, job placement, Germany, SOEP |
| JEL: | J64 J62 J20 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:mag:wpaper:09022&r=lab |
| By: | George Chouliarakis; Mónica Correa-López |
| Abstract: | Theories of psychology and empirical evidence suggest that the reference transactions against which workers judge fairness exhibit inertia. This paper shows that a fair-wage model with inertia in fairness perceptions provides a plausible explanation for the observed negative correlation between changes in productivity growth and equilibrium unemployment over the medium run, a stylized fact that remains elusive to most other classes of models. It also shows that skillbiased productivity shocks and shocks to workers’ taste for equal pay have permanent effects on unemployment and the skill premium. Our quantitative results suggest that the effect of these shocks can be sizeable. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:man:cgbcrp:130&r=lab |
| By: | Giles, Margaret (Edith Cowan University); Le, Anh Tram (University of Western Australia) |
| Abstract: | The costs of incarceration and recidivism to the community are substantial. These costs not only include the direct costs of imprisonment but also the opportunity costs arising from depletion of human capital and loss of output. Policy makers have emphasised the importance of rehabilitating prisoners as a way of reducing recidivism. Consequently, the management of prisoners has changed, with more prisoners being encouraged to undertake some form of education, training and/or work during their incarceration in conjunction with any behavioural management programmes. This paper examines, using the 2003 Survey of Prisoners in Western Australia, the decision of prisoners to invest in education/training during their prison term and the potential labour market outcomes of this investment. The results suggest that prisoners use education/training to improve their skills in preparation for release from prison. From this perspective it can be argued that these prisoners see education/training as an investment in human capital rather than consumption. In addition, the decision to participate in either education or training is non-random and varies across the time remaining on the prison sentence, thus suggesting prisoners view education and training as different activities. However, the results show the expected benefit prisoners place on education and training is similar. |
| Keywords: | prisoners, education, training, employment |
| JEL: | I20 J01 J21 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4582&r=lab |
| By: | Åström, Johanna (Department of Economics, Umeå University); Westerlund, Olle (Department of Economics, Umeå University) |
| Abstract: | We study the effects of interregional migration on two-earner household gross earnings as well as on the relative income between married and cohabiting couples. In particular, we examine the link between education level and income gains. The empirical analysis is based on longitudinal data from Sweden as well as on functional regional labour markets that operate as regional entities. Using difference-in-differences propensity score matching, we find that migration increases total gross household earnings and has no significant impact on the male/female earnings gap. We find that pre-migration education level is a key determinant of migration and economic outcomes and is also a determinant of the effect of migration on income distribution within the household. The positive average effect on household earnings is largely explained by income gains among highly-educated males. Females generally experience no significant income gain from migration in absolute terms. Females gain significantly in relative income only if they are highly educated and married or cohabitating with a lower-educated male. |
| Keywords: | Regional migration; labor mobility; two earner households |
| JEL: | D10 J61 |
| Date: | 2009–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0787&r=lab |
| By: | Weber, Andrea (RWI Essen); Zulehner, Christine (University of Vienna) |
| Abstract: | In this paper we investigate the relationship between females among the first hires of start-up companies and business success. Our results show that firms with female first hires have a higher share of female workers at the end of the first year after entry. Further, we find that firms with female first hires are more successful and stay longer in the market. We conclude that our results support the hypothesis that gender-diversity in leading positions is an advantage for start-up firms. |
| Keywords: | firm survival, profitability, female employment, discrimination, market test, matched employer-employee data |
| JEL: | J16 J71 L25 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4568&r=lab |
| By: | Szilvia Hamori (Institute of Economics Hungarian Academy of Sciences) |
| Abstract: | In light of the importance of immigrants' labour market integration in the host countries, this study examines the employment convergence between foreign-born and native-born in the European Union (EU), by gender and broad region of origin - distinguishing between immigrants born within and outside the EU - based on data drawn from the European Labour Force Survey. The estimation results point to numerous differences across immigrant groups, genders and receiving EU regions - especially between the Southern EU member states and the rest of the EU15 and between the Eastern European countries admitted in 2004 and the 15 pre-enlargement member states. |
| Keywords: | Immigrants, Employment, European Union |
| JEL: | F22 J21 J61 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:has:bworkp:0907&r=lab |
| By: | Koster Fleur; Grip Andries de; Fouarge Didier (ROA rm) |
| Abstract: | Th is paper focuses on the question whether it is benefi cial for fi rms to invest inthe general skills of their workforce or that these training investments merelyencourage personnel turnover. We examine two contrary theoretical perspectives onhow investments in employee development are related to their turnover behaviour.Estimation results derived from a sample of 2,833 Dutch pharmacy assistants showthat participation in general training does not induce the intention of assistantsto quit, as predicted by human capital theory. We fi nd that a fi rm’s investmentsin general training, signifi cantly contribute to the perceived support in employeedevelopment (PSED) among their workforce. Our results also show that PSED isnegatively related to the intention of employees to quit the fi rm. Th is eff ect is to alarge extent mediated by the job satisfaction of pharmacy assistants. Our fi ndingssupport the importance of social exchange theory in explaining turnover behaviour asa consequence of personnel development practices. It should be noted, however, thatPSED only diminishes the intention to quit for other occupations. |
| Keywords: | education, training and the labour market; |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umaror:2009008&r=lab |
| By: | Jain, Tarun; Narayan, Tulika |
| Abstract: | We address the challenge of designing performance-based incentive schemes for schoolteachers. When teachers specialize in different subjects in the presence of social prejudice, performance based pay which depends on the average of student performance can cause teachers to coordinate their effort in high status students and away from low status students. Laboratory experiments conducted in India with future teachers as subjects show that performance-based pay causes teachers to decrease effort in low caste Hindu students compared to upper caste Hindu or Muslim students. We observe greater effort and lower intra-class variation when teachers are penalized if students receive zero scores. |
| Keywords: | Teacher incentives; Laboratory experiments; Coordination games; Discrimination |
| JEL: | I28 J15 C91 I22 |
| Date: | 2009–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:18672&r=lab |
| By: | Paolo Naticchioni; Andrea Ricci (Univ. of Cassino, Univ. of Rome “La Sapienza”, CeLEG (LUISS-Rome) and ISFOL.) |
| Abstract: | In this paper we show that wage inequality decreased in the Italian private sector, both in the upper and in the lower tail of the distribution, in the period 1993-2006. By applying a quantile decomposition procedure we find that the decrease of the 90/50 ratio is almost totally related to a negative coefficients component. As for the reduction of the 50/10 ratio, the quantile decomposition shows that it can be related to both the negative coefficients component and the residual component. We claim that that supply-demand interactions have to be considered as the main explanation for the falling educational wage premia that represent the driving force of the falling 90/50 ratio. The reduction of the 50/10 ratio can be instead associated to the changes in the residual component -related to compositional effects-, to the changes in the occupation distribution and to changes in tax regimes. |
| Keywords: | Inequality, Educational Wage Premia, Quantile Decomposition, supply-demand of education, Italy |
| JEL: | J24 J31 O3 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:des:wpaper:15&r=lab |
| By: | Konstantopoulos, Spyros (Michigan State University) |
| Abstract: | Evidence from Project STAR has suggested that on average small classes increase student achievement. However, thus far researchers have focused on computing mean differences in student achievement between smaller and larger classes. In this study I focus on the distribution of the small class effects at the school level and compute the inconsistency of the treatment effects across schools. I use data from Project STAR and estimated small class effects for each school on mathematics and reading scores from kindergarten through third grade. The results revealed that school-specific small class effects are both positive and negative and that although students benefit considerably from being in small classes in some schools, in other schools being in small classes is a disadvantage. Small class effects were inconsistent and varied significantly across schools. Full time teacher aide effects were also inconsistent across schools and in some schools students benefit considerably from being in regular classes with a full time aide, while in other schools being in these classes is a disadvantage. |
| Keywords: | small classes, treatment variability, meta-analysis |
| JEL: | I20 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4566&r=lab |
| By: | Heinrich, Carolyn J. (University of Wisconsin-Madison); Mueser, Peter R. (University of Missouri-Columbia); Troske, Kenneth (University of Kentucky); Jeon, Kyung-Seong (University of Missouri-Columbia); Kahvecioglu, Daver C. (Impaq International) |
| Abstract: | This paper presents nonexperimental net impact estimates for the Adult and Dislocated Worker programs under the Workforce Investment Act (WIA), the primary federal job training program in the U.S, based on administrative data from 12 states, covering approximately 160,000 WIA participants and nearly 3 million comparison group members. The key measure of interest is the difference in average quarterly earnings or employment attributable to WIA program participation for those who participate, estimated for up to four years following entry into the program using propensity score matching methods. The results for the average participant in the WIA Adult program show that participating is associated with a several-hundred-dollar increase in quarterly earnings. Adult program participants who obtain training have lower earnings in the months during training and the year after exit than those who don’t receive training, but they catch up within 10 quarters, ultimately registering large total gains. The marginal benefits of training exceed, on average, $400 in earnings each quarter three years after program entry. Dislocated Workers experience several quarters for which earnings are depressed relative to comparison group workers after entering WIA, and although their earnings ultimately match or overtake the comparison group, the benefits they obtain are smaller than for those in the Adult program. |
| Keywords: | nonexperimental program evaluation, workforce investment act |
| JEL: | J24 J48 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4569&r=lab |
| By: | Chiappori, Pierre-André (Columbia University); Oreffice, Sonia (University of Alicante); Quintana-Domeque, Climent (University of Alicante) |
| Abstract: | We construct a matching model on the marriage market along more than one characteristic, where individuals have preferences over physical attractiveness (proxied by anthropometric characteristics) and market and household productivity of potential mates (proxied by socioeconomic characteristics), with a certain degree of substitutability between them. Men and women assess each other through an index combining these various attributes, so the matching is one-dimensional. We estimate the trade-offs among these characteristics using data from the PSID and the ECHP, finding evidence of compensation between anthropometric and socioeconomic characteristics. An additional unit of husband's (wife's) BMI can be compensated by a 0.3%-increase (0.15%-increase) in husband's (wife's) average (predicted) wage. Interestingly, these findings suggest that female physical attractiveness plays a larger role in men's assessment of a woman than male physical attractiveness does for women. |
| Keywords: | BMI, height, wages, earnings, marriage market |
| JEL: | D1 J1 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4594&r=lab |
| By: | Åström, Johanna (Department of Economics, Umeå University) |
| Abstract: | The thesis consists of a summary and four self-contained papers. Paper [I] examines the effects of interregional migration on gross earnings in married and cohabiting couples. In particular, we examine the link between education level and income gains. We find that pre-migration education level is a key determinant of migration and economic outcomes and is also a determinant of the effect of migration on income distribution within the household. The positive average effect on household earnings is largely explained by income gains among highly-educated males. Females generally experience no significant income gain from migration in absolute terms. Paper [II] analyzes the effect of the spouse’s education on individual earnings. In this study, we control for time-invariant heterogeneity that may be correlated with the spouse’s education level and use a rich data set that includes observations of individuals when they are single and when they are married. The results support the hypothesis of cross-productivity for both males and females. Furthermore, couples with education within the same field experience even larger effects. In Paper [III] we aim to study how the spouse’s productivity in the labor market affects one’s own individual earnings when married. Using longitudinal data on individuals as both single and married allows us to estimate the spouses’ productivity as single persons and thereby avoid problems of endogeneity between the two spouses’ labor market performances. Productivity is approximated with residuals from estimates of pre-marriage earnings equations. Results indicate that there are negative effects of the spouse’s productivity on individual earnings for both males and females, and that this effect appears to be enhanced by the duration of the marriage. Paper [IV] studies spousal matching on earnings for females in secondorder marriages. We aim to follow women who marry, divorce, and subsequently remarry compared with females who marry and stay married over the course of the study interval. Overall, we find significant positive correlations for all three of the marital partitions. The correlation tends to be smaller for the first of a sequence of marriages for women who divorce than for women who marry and stay so. For the second of the successive marriages, however, the correlation of the residuals is larger than that for women who marry but once. |
| Keywords: | Regional migration; two earner households; marriage; education; human capital spillover; specialization; assortative mating; remarriage |
| JEL: | D10 I21 J12 J24 J61 |
| Date: | 2009–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0790&r=lab |
| By: | Åström, Johanna (Department of Economics, Umeå University) |
| Abstract: | A positive association between spousal education and individual earnings is a common empirical finding (e.g., Benham, 1974 and Rossetti and Tanda, 2000). The two most common explanations for this are sample selection and crossproductivity effects. Can spouses really benefit from each other’s human capital in the labour market, or does the entire association stem from assortative mating? In this study, we control for time-invariant heterogeneity that may be correlated with the spouse’s education level and use a rich data set that includes observations of individuals when they are single and when they are married. The results support the cross-productivity hypothesis for both males and females. Furthermore, couples with education within the same field experience even larger effects. |
| Keywords: | Marriage; Education; Human capital spillover |
| JEL: | I21 J12 J24 |
| Date: | 2009–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0788&r=lab |
| By: | Vidya Atal |
| Abstract: | Using a model of O-ring production function, the paper demonstrates how certain communities can get caught in a low-literacy trap in which each individual finds it not worthwhile investing in higher skills because others are not high-skilled. The model sheds light on educational policy. It is shown that policy for promoting human capital has to take the form of a mechanism for solving the coordination failure in people's choice of educational strategy. |
| Keywords: | education, people, O-ring, skill formation, economy, human capital, production function, communities, literacy trap, skills, educational policy, strategy, Literacy, Society |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2324&r=lab |
| By: | Åström, Johanna (Department of Economics, Umeå University) |
| Abstract: | This paper studies how the spouse’s productivity in the labor market affects one’s individual earnings when married. Theoretically, the high productivity of a spouse in a marriage could affect the other spouse’s earnings in two ways: negatively through specialization and division of labor, or positively from human capital spillover. Using longitudinal microdata on individuals as both single and married people allows us to estimate the spouses’ productivity as a single persons and thereby avoid problems of endogeneity between the two spouses’ labor market performances. Productivity is approximated with residuals from estimates of pre-marriage earnings equations. Results indicate that there are negative effects of the spouse’s productivity on individual earnings for both males and females, and that this effect appears to be enhanced by the duration of the marriage. However, closer examination shows that only the youngest groups of males and females experience this negative effect. In addition, there is some evidence for a positive effect of the husband’s productivity on earnings in the case of older groups of females. |
| Keywords: | Marriage; Assortative mating; Earnings; Specialization |
| JEL: | D10 J12 |
| Date: | 2009–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0789&r=lab |
| By: | Claire Dujardin (CORE - Center for Operations Research and Econometrics - Université Catholique de Louvain); Florence Goffette-Nagot (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines) |
| Abstract: | The aim of this paper is to test for the influence of neighborhood deprivation on individual unemployment probability in the case of Lyon (France). We estimate a bivariate probit model of unemployment and location in a deprived neighborhood. Our identification strategy is twofold. First, we instrument neighborhood type by the gender composition of household's children and the spouse's workplace. Second, we use the methodology proposed by Altonji et al. (2005), that in our case consists in making hypotheses as to the correlation between the unobservables that determine unemployment and the unobservables that influence the selection into neighborhood types. Our results show that the effect of neighborhood deprivation is not significantly different from zero in the bivariate probit with exclusion restrictions. We also show that a correlation of the unobservables as low as ten percent of the correlation of observables is sufficient to explain the positive neighborhood effect that is observed when endogeneity is not accounted for. |
| Keywords: | Neighborhood effects ; unemployment ; simultaneous probit models ; instrumental variables ; selection on unobservables |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00435119_v1&r=lab |
| By: | Centeno, Mário (Banco de Portugal); Machado, Carla (Autoridade Nacional de Comunicações (ANACOM)); Novo, Álvaro A. (Banco de Portugal) |
| Abstract: | Portuguese firms engage in intense reallocation, most employers simultaneously hire and separate from workers, resulting in a large heterogeneity of flows and excess turnover. Large and older firms have lower flows, but high excess turnover rates. In small firms, hires and separations move symmetrically during expansion and contraction periods, on the contrary, large firms adjust their employment levels by reducing entry and not by increasing separations. Most hires and separations are on fixed-term contracts and shrinking firms replace a larger share of their separations under fixed-term contracts, while expanding firms replace most of the separations under open-ended contracts. The comparison with the U.S. shows that while worker and job flows are lower in Portugal, the excess turnover is remarkably close in the two countries. |
| Keywords: | job flows, worker flows, excess turnover, fixed-term contracts, firm size |
| JEL: | J21 J23 J63 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4586&r=lab |
| By: | Dreber, Anna (Institute for Financial Research); von Essen, Emma (Stockholm University); Ranehill, Eva (Stockholm School of Economics) |
| Abstract: | Recent studies find that women are less competitive than men. This gender difference in competitiveness has been suggested as a possible explanation for why men occupy the majority of top positions in many sectors. In this study we explore competitiveness in children. A related field experiment on Israeli children shows that only boys react to competition by running faster when competing in a race and that only girls react to the gender of their opponent. Here we test if these results carry over to 7-10 year old Swedish children. Sweden is typically ranked among the most gender equal countries in the world, thus culture could explain a potential difference in our results to those on Israeli children. We also introduce two more “female” sports: skipping rope and dancing, in order to study if reaction to competition is task dependent. Our results extend previous findings in two ways. First, we find no gender difference in reaction to competition in running. In our study, both boys and girls compete. We also find no gender differences in reaction to competition in skipping rope and dancing. Second, we find no clear effect on competitiveness of the opponent’s gender, neither on girls or boys, in any of the tasks. Our findings suggest that the existence of a gender gap in competitiveness among children may be partly cultural, and that the gap found in previous studies on adults may be caused by factors that emerge later in life. It remains to be explored whether these later factors are biological or cultural. |
| Keywords: | competitiveness; gender differences; field experiment |
| JEL: | C93 J16 |
| Date: | 2009–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sifrwp:0069&r=lab |
| By: | Bennmarker, Helge (IFAU - Institute for Labour Market Policy Evaluation); Grönqvist, Erik (IFAU - Institute for Labour Market Policy Evaluation); Öckert, Björn (IFAU - Institute for Labour Market Policy Evaluation) |
| Abstract: | In many countries welfare services that traditionally have been provided by the public sector are increasingly being contracted out to private providers. But are private contractors better at providing these services? We use a randomized experiment to empirically assess the effectiveness of contacting out employment services to private placement agencies. Our results show that unemployed at private placement agencies have a much closer interaction with their placement worker than unemployed at the Public Employment Service (PES). In particular, unemployed at private agencies receive more assistance in improving their job search technology. We do not find any overall difference in the probability of employment between private placement agencies and the PES), but this hides important heterogeneities across different types of unemployed. We find evidence that private providers are better at providing em¬ployment services to immigrants, and also indications that they may be worse for adolescents. Any effects tend to fade away over time. |
| Keywords: | Job placement; Contracting out |
| JEL: | J68 |
| Date: | 2009–11–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2009_023&r=lab |
| By: | Javier Andrés Domingo (University of Valencia, Spain); José Emilio Boscá (University of Valencia, Spain); Rafael Domenech Vilariño (University of Valencia, Spain); Javier Ferri (University of Valencia, Spain) |
| Abstract: | The benefits implied by changing the growth model are at the heart of the heated political and economic debate in Spain. Increases in productivity and the reallocation of employment towards more innovative sectors are defended as the panacea for most of the ills afflicting the Spanish economy. In this paper we use a DSGE model with price rigidities, and labour market search frictions a la Mortensen-Pissarides, to assess the effects of the change in the growth model on unemployment. In so doing, we assume that the vigorous demand shock which has been mostly responsible for recent economic growth in Spain will be successfully substituted by a productivity shock as the main driver of Spain‘s economic growth in the future. So we assume that we actually succeed in the so called "change in the growth model". We show that whatever the benefits that this change might bring to the Spanish economy, the time span needed to bring the unemployment rate down to the European average actually increases. We then analyze the impact of several reforms in the labour market and evaluate their interaction with the new growth model. We conclude that changes in the economic structure do not make labour reforms any less necessary, but rather the opposite if we want to shorten employment recovery significantly. |
| Keywords: | artistic creation, superstars, private copy, piracy, levies |
| JEL: | L10 L82 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:iei:wpaper:0903&r=lab |
| By: | Puhani, Patrick A. (University of Hannover); Sonderhof, Katja (University of Hannover) |
| Abstract: | We evaluate the effects of a reduction in sick pay from 100 to 80% of the wage. Unlike previous literature, apart from absence from work, we also consider effects on doctor/hospital visits and subjective health indicators. We also add to the literature by estimating both switch-on and switch-off effects, because the reform was repealed two years later. We find a two-day reduction in the number of days of absence. Quantile regression reveals higher point estimates (both in absolute and relative terms) at higher quantiles, meaning that the reform predominantly reduced long durations of absence. In terms of health, the reform reduced the average number of days spent in hospital by almost half a day, but we cannot find robust evidence for negative effects on health outcomes or perceived liquidity constraints. |
| Keywords: | sickness pay, absenteeism, health expenditure, hospitalization, difference-in-differences, switch on, switch off, quantile regression, intrinsic motivation |
| JEL: | I18 J58 J83 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4607&r=lab |
| By: | d'Haultfoeuille, Xavier (CREST-INSEE); Maurel, Arnaud (ENSAE-CREST) |
| Abstract: | This paper considers the identification and estimation of an extension of Roy's model (1951) of occupational choice, which includes a non-pecuniary component in the decision equation and allows for uncertainty on the potential outcomes. This framework is well suited to various economic contexts, including educational and sectoral choices, or migration decisions. We focus in particular on the identification of the non-pecuniary component under the condition that at least one variable affects the selection probability only through potential earnings, that is under the opposite of the usual exclusion restrictions used to identify switching regressions models and treatment effects. Point identification is achieved if such variables are continuous, while bounds are obtained otherwise. As a result, the distribution of the ex ante treatment effects can be point or set identified without any usual instruments. We propose a three-stages semiparametric estimation procedure for this model, which yields root-n consistent and asymptotically normal estimators. We apply our results to the educational context, by providing new evidence from French data that non-pecuniary factors are a key determinant of higher education attendance decisions. |
| Keywords: | Roy model, nonparametric identification, exclusion restrictions, schooling choices, ex ante returns to schooling |
| JEL: | C14 C25 J24 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4606&r=lab |
| By: | Leung, Ron (African Development Bank); Stampini, Marco (African Development Bank); Vencatachellum, Désiré (African Development Bank) |
| Abstract: | The financial and economic crisis of 2008 and 2009 has taken its toll on the South African economy. The economy contracted for the first time since 1998, and entered recession during the fourth quarter of 2008. The GDP contraction was soon transmitted to the labor market. Between the second quarters of 2008 and 2009, employment fell by 3.8 percent. However, not all individuals were hit with the same intensity. Using labor force survey data unique in the African context, we find that human capital provided a buffer against the shock. After controlling for observable characteristics, education and experience showed the potential to entirely offset the effect of the recession on the likelihood of employment. This has important policy implications, as it strengthens the case for strategic investments in human capital, and helps identifying the unskilled as those with the highest need for social safety net interventions during the recession. |
| Keywords: | labor markets, South Africa, financial crisis, human capital, business cycle, emerging economies |
| JEL: | J2 E3 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4608&r=lab |
| By: | Cornelissen, Thomas; Himmler, Oliver; Koenig, Tobias |
| Abstract: | CEO compensation that is perceived to be excessive regularly causes agitation in the population. Using German data, we show that perceiving CEO pay to be unjust has economic repercussions in terms of lower work morale. |
| Keywords: | Fairness, Social Comparisons, Work Morale |
| JEL: | A13 D63 J22 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-435&r=lab |
| By: | Alan L. Gustman (Dartmouth College and NBER); Thomas L. Steinmeier (Texas Tech University); Nahid Tabatabai (Dartmouth College) |
| Abstract: | Our findings suggest that although the consequences of the decline in the stock market are serious for those approaching their retirement, the average person approaching retirement age is not likely to suffer a life changing financial loss from the stock market downturn of 2008-2009. Similarly, the likely effects of the stock market downturn on retirements have been greatly exaggerated. If there is any postponement of retirement due to stock market losses, on average it will be a matter of a few months rather than years. Counting layoffs, retirements may be accelerated rather than reduced. We provide background information that corrects misperceptions about pension holdings of the retirement age population. Pension coverage is much more extensive than is usually recognized. Over three quarters of the households with a person ages 51 to 56 in 2004 are currently covered by a pension, or have enjoyed pension coverage in the past. Pension wealth accounts for 23 percent of the total wealth of those on the cusp of retirement. For those nearing retirement age, defined contribution plans remain immature. As a result, almost two thirds of pension wealth held by those 51 to 56 in 2004 is in the form of a defined benefit plan. Lastly, women approaching retirement age are more likely to be covered by a pension than are women from earlier cohorts and they account for a significantly larger share of household pension wealth. |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp206&r=lab |
| By: | Andrade, Eduardo de Carvalho; Rocha, Bruno |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:ibm:ibmecp:wpe_195&r=lab |
| By: | Hamermesh, Daniel S. (University of Texas at Austin); Pfann, Gerard A. (Maastricht University) |
| Abstract: | We develop a theory of the market for individual reputation, an indicator of regard by one’s peers and others. The central questions are: 1) Does the quantity of exposures raise reputation independent of their quality? and 2) Assuming that overall quality matters for reputation, does the quality of an individual’s most important exposure have an extra effect on reputation? Using evidence for academic economists, we find that, conditional on its impact, the quantity of output has no or even a negative effect on each of a number of proxies for reputation, and very little evidence that a scholar's most influential work provides any extra enhancement of reputation. Quality ranking matters more than absolute quality. Data on mobility and salaries show, on the contrary, substantial positive effects of quantity, independent of quality. We test various explanations for the differences between the determinants of reputation and salary. |
| Keywords: | mobility, quality/quantity trade-off, salary determination |
| JEL: | L14 J31 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4610&r=lab |
| By: | Hanushek, Eric A. (Stanford University); Woessmann, Ludger (Ifo Institute for Economic Research) |
| Abstract: | Economic development in Latin America has trailed most other world regions over the past four decades despite its relatively high initial development and school attainment levels. This puzzle can be resolved by considering the actual learning as expressed in tests of cognitive skills, on which Latin American countries consistently perform at the bottom. In growth models estimated across world regions, these low levels of cognitive skills can account for the poor growth performance of Latin America. Given the limitations of worldwide tests in discriminating performance at low levels, we also introduce measures from two regional tests designed to measure performance for all Latin American countries with internationally comparable income data. Our growth analysis using these data confirms the significant effects of cognitive skills on intra-regional variations. Splicing the new regional tests into the worldwide tests, we also confirm this effect in extended worldwide regressions, although it appears somewhat smaller in the regional Latin American data than in the worldwide data. |
| Keywords: | human capital, economic growth, cognitive skills, Latin America |
| JEL: | H4 I2 O4 N16 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4576&r=lab |