|
on Labour Economics |
| By: | Ek, Susanne (Uppsala University); Holmlund, Bertil (Uppsala University) |
| Abstract: | The paper develops an equilibrium search and matching model where two-person families as well as singles participate in the labor market. We show that equilibrium entails wage dispersion among equally productive risk-averse workers. Marital status as well as spousal labor market status matter for wage outcomes. In general, employed members of two-person families receive higher wages than employed singles. The model is applied to a welfare analysis of alternative unemployment insurance systems, recognizing the role of spousal employment as a partial substitute for public insurance. The optimal system involves benefit differentiation based on marital status as well as spousal labor market status. Optimal differentiation yields small welfare gains but gives rise to large wage differentials. |
| Keywords: | job search, wage bargaining, wage differentials, unemployment, unemployment insurance |
| JEL: | J31 J64 J65 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4701&r=lab |
| By: | and Bertil Holmlund, Susanne Ek (Department of Economics) |
| Abstract: | The paper develops an equilibrium search and matching model where two-person families as well as singles participate in the labor market. We show that equilibrium entails wage dispersion among equally productive risk-averse workers. Marital status as well as spousal labor market status matter for wage outcomes. In general, employed members of two-person families receive higher wages than employed singles. The model is applied to a welfare analysis of alternative unemployment insurance systems, recognizing the role of spousal employment as partial substitute for public insurance. The optimal system involves benefit differentiation based on marital status as wellas spousal labor market status. Optimal differentiation yields small welfare gains but gives rise to large wage differentials. |
| Keywords: | Job search; wage bargaining; wage differentials; unemployment; unemployment insurance |
| JEL: | J31 J64 J65 |
| Date: | 2010–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2010_002&r=lab |
| By: | Regula Geel (Institute for Strategy and Business Economics, University of Zurich); Uschi Backes-Gellner (Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | We examine how different student employment statuses during tertiary education affect short-term and medium-term labor market returns. We focus on differences between students studying full-time and students studying and working part-time, i.e., ‘earning while learning’. In addition, we distinguish between student employment with and without relation to the study. Using a representative survey of Swiss graduates of tertiary education, we find significant positive labor market returns of ’earning while learning‘, but only for related student employment and not for unrelated student employment. The returns come in the form of lower unemployment risk, shorter job search duration, higher wage effects and greater responsibility. Therefore, student employment with a relation to the study is a complement to formal education and augments skills and knowledge. |
| Keywords: | Student Employment, Part-time Studies, Tertiary Education |
| JEL: | I21 J31 J64 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:iso:educat:0049&r=lab |
| By: | Kolml, Ann-Sofie (Dept. of Economics, Stockholm University); Larsen, Birthe (Insead, CEBR and Copenhagen Business School) |
| Abstract: | This paper develops and equilibrium search and matching model with informal sector employment opportunities and educational choice. We show that informal sector job opportunities distort educational attainment inducing a too low stock of educated workers. As informal job opportunities to a larger extent face low skilled workers, combating the informal sector improves welfare as it increases the incentives for education. However, too aggressive combating of the informal sector is not optimal as that induces inefficiently high unemployment rates. |
| Keywords: | Tax evasion; underground economy; education; matching; unemployment |
| JEL: | H26 I21 J64 |
| Date: | 2010–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sunrpe:2010_0003&r=lab |
| By: | López Bóo, Florencia (Inter-American Development Bank) |
| Abstract: | This paper examines the effect of labor market opportunities on schooling-employment decisions in 12 urban areas in Argentina over 12 years, emphasizing the recession/crisis years 1998-2002. The effects of macroeconomic swings on schooling decisions are examined with a focus on whether the income or substitution effect dominates as macroeconomic conditions change. I demonstrate that over "typical" years deteriorating job rates (or wages) increase the probability of attending school and decrease the probability of combining work and school, particularly for boys. After controlling for household and individual characteristics I find that the probability of being in school for secondary school youth was about 6 percentage points higher in 2002 than in 1998 (before the recession started). In fact, a 10 percent decrease in the job rate alone has been responsible for a 5.4 percentage point rise in the probability of school attendance since 2000. This effect is attenuated during the 2002 crisis when household expectations change in response to shocks. These estimates allow for the fact that a new Federal Education Law (FEL) in 1996 extended mandatory education to 10 years and might have affected schooling outcomes. |
| Keywords: | schooling decision, macroeconomic shocks, local labor market opportunities |
| JEL: | I21 J31 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4692&r=lab |
| By: | Koskela, Erkki (University of Helsinki); König, Jan (Free University of Berlin) |
| Abstract: | We combine profit sharing and outsourcing, if the wage for worker is decided by a labor union to analyze how does the implementation of profit sharing affect individual effort and the bargained wage and thus outsourcing? We find that profit sharing and the wage level have an individual effort-augmenting effect and therefore increase productivity. We also find that the wage effect of profit sharing is ambiguous. There is a wage decreasing substitution effect, but on the other hand, there is a wage increasing effect via labor demand elasticity so that outsourcing and employment effects are also ambiguous. |
| Keywords: | employee effort, profit sharing, flexible outsourcing, labor market imperfection |
| JEL: | E23 E24 J23 J33 J82 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4707&r=lab |
| By: | Contini, Bruno (LABORatorio R. Revelli); Grand, Elisa (LABORatorio R. Revelli) |
| Abstract: | This paper explores the "disposable" patterns of workforce utilization in Italy, well under way before the cyclical downturn of the early 90's and before the main reforms of the Italian labor market. The term "disposable" reflects the fact that many young people enter the labor market, their services are "used" as a disposable commodity for a few years, after which they leave the labor market altogether and are no longer observable in the official (administrative) data. Workforce disposal is evident and dramatic: out of 100 new young entries, about 70 are still in the labor market 10 years after entry if their first job spell was at least one year long. For those – three times as many – who have started their career with a short employment spell (< 3 months), 10-year survival does not reach 50%. We show that the order of magnitude of workforce disposal is consistent with the official LFS youth unemployment rate increased by a reasonable estimate of the number of workers who end up in irregular, undetectable activities. |
| Keywords: | youth employment, unemployment, unemployment duration |
| JEL: | J0 J1 J6 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4724&r=lab |
| By: | Pfeifer, Christian; Schneck, Stefan |
| Abstract: | We use a large linked employer-employee data set to analyze the importance of relative wage positions in the context of individual quit decisions as an inverse measure of job satisfaction. Our main findings are: (1) Workers with higher relative wage positions within their firms are on average more likely to quit their jobs than workers with lower relative wage positions; and (2) workers, who experience a loss in their relative wage positions, are also more likely to have a wage cut associated with their job-to-job transition. The overall results therefore suggest that the status effect is dominated by an opposing signal effect. |
| Keywords: | comparison income, mobility, signaling, status, wages |
| JEL: | J31 J62 J63 M52 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-438&r=lab |
| By: | Christian Pfeifer (Institute of Economics, Leuphana University of Lüneburg, Germany); Stefan Schneck (Institute of Empirical Economic Research, Leibniz Universität Hannover) |
| Abstract: | We use a large linked employer-employee data set to analyze the importance of relative wage positions in the context of individual quit decisions as an inverse measure of job satisfaction. Our main findings are: (1) Workers with higher relative wage positions within their firms are on average more likely to quit their jobs than workers with lower relative wage positions; and (2) workers, who experience a loss in their relative wage positions, are also more likely to have a wage cut associated with their job-to-job transition. The overall results therefore suggest that the status effect is dominated by an opposing signal effect. |
| Keywords: | comparison income, mobility, signaling, status, wages |
| JEL: | J31 J62 J63 M52 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:163&r=lab |
| By: | Mosthaf, Alexander (IAB, Nürnberg); Schnabel, Claus (University of Erlangen-Nuremberg); Stephani, Jens (IAB, Nürnberg) |
| Abstract: | Using representative linked employer-employee data of the German Federal Employment Agency, this paper shows that just one out of seven full-time employees who earned low wages (i.e. less than two-thirds of the median wage) in 1998/99 was able to earn wages above the low-wage threshold in 2003. Bivariate probit estimations with endogenous selection indicate that upward wage mobility is higher for younger and better qualified low-wage earners, whereas women are substantially less successful. We show that the characteristics of the employing firm also matter for low-wage earners' probability of escaping low-paid work. In particular small plants and plants with a high share of low-wage earners often seem to be dead ends for low-wage earners. The likelihood of leaving the low-wage sector is also low when staying in unskilled and skilled service occupations and in unskilled commercial and administrational occupations. Consequently, leaving these dead-end plants and occupations appears to be an important instrument for achieving wages above the low-wage threshold. |
| Keywords: | low-wage employment, wage mobility, Germany |
| JEL: | J30 J60 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4696&r=lab |
| By: | Hernæs, Erik (Ragnar Frisch Centre for Economic Research); Jia, Zhiyang (Ragnar Frisch Centre for Economic Research) |
| Abstract: | Norwegian administrative data are used to evaluate the impact of a doubling of the threshold in the earnings test on the labour force activity. We find no impact on labour market participation, but positive effects on earnings. The effect increases with exposure to the reform and is stronger for individuals with earnings around the threshold and with high education. Individuals who remain active until retirement age respond more to the reform than those who left labour force earlier. The results indicate both substantial labour supply responsiveness among elderly, and heterogeneity with respect to preferences, labour market options or both. |
| Keywords: | Retirement earnings test; Benefit entitlement; Labour supply behaviour; Heterogeneity |
| JEL: | H55 J14 |
| Date: | 2009–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2009_025&r=lab |
| By: | Diaz-Serrano, Luis (Universitat Rovira i Virgili) |
| Abstract: | The precondition for labour-market competition between immigrants and natives is that both are willing to accept jobs that do not differ in quality. To test this hypothesis, in this paper we compare the working conditions between immigrants and natives in Catalonia. Comparing immigrants' working conditions in relation to their native counterparts is not only a useful analysis for studying the extent to which immigrants and low-skilled native workers are direct competitors in the labour market, but also allows us to contribute to the literature on this issue by moving away from the conventional approach used in previous studies. Our results indicate that: i) natives and immigrants display a different taste for job (dis)amenities; ii) Catalan-born workers might be in direct competition with EU15 immigrants, while non-Catalan Spanish workers might be competing with Latin American immigrants, and; iii) African-born immigrants are the group in the Catalan workforce that by far face the worst working conditions. |
| Keywords: | job quality, working conditions, immigration, job satisfaction |
| JEL: | J28 J61 J81 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4693&r=lab |
| By: | Markussen, Simen (Ragnar Frisch Centre for Economic Research) |
| Abstract: | This paper assesses the causal effect of sick-leaves on subsequent earnings using an administrative dataset for Norway linking individual earnings, sick-leave records and primary care physicians. The leniency of a worker's physician - certifying sickness absence - is used as instrument for sick-leaves. Sick-leaves have a substantial impact on future earnings, reducing earnings by .3 percent per day of absence. When conditioning on full-time employment also two years after sickness the effect is .06 percent per day of absence. These effects are persistent over time and work mainly through wages not hours. |
| Keywords: | sickness absence; wage formation; IV estimation; wage regression |
| JEL: | C31 J22 J24 J31 J33 J71 |
| Date: | 2009–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2009_020&r=lab |
| By: | Boudarbat, Brahim; Lemieux, Thomas; Riddell, W. Craig |
| Abstract: | We examine the evolution of the returns to human capital in Canada over the period 1980-2005. Our main finding is that returns to education increased substantially for Canadian men, contrary to conclusions reached previously. Most of this rise took place in the early 1980s and since 1995. Returns to education also rose, albeit more modestly, for Canadian women. Another important development is that after years of expansion, the wage gap between younger and older workers stabilized after 1995. Controlling for work experience and using Canadian Census data appear to account for the main differences between our results and earlier findings. |
| Keywords: | Human Capital, Wage Differentials, Canada |
| JEL: | J24 J31 |
| Date: | 2010–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:clssrn:clsrn_admin-2010-2&r=lab |
| By: | Bell, David N.F. (University of Stirling); Hart, Robert A. (University of Stirling) |
| Abstract: | We compare two policies of increasing British state pension provision: (a) increase the pensionable age of men and women, (b) maintain the existing retirement age but require older workers to work longer per-period hours. There are reasons for policy makers to give serious consideration to the under-researched alternative (b). First, from wage - hours contract theory we know that there are potential gains to both workers and firms of allowing hours to rise in work experience. Second, there is strong evidence that job satisfaction rises in age. Third, there has in any case been a significant overall increase in the hours supplied by older workers in the last two decades. We review the relevant theory, model the trade-off between later retirement versus increased work intensity, produce relevant background facts, and provide estimates of the policy trade-offs. |
| Keywords: | older workers, statutory retirement age, hours of work |
| JEL: | H55 J11 J14 J18 J22 J26 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4720&r=lab |
| By: | Céline Azémar; Rodolphe Desbordes |
| Abstract: | We investigate the effect of a rise in non-wage labour costs (NWLC) on real manufacturing labour costs in OECD countries, taking into account the degree of coordination in the wage bargaining process. We find that, in countries in which wage bargaining is not highly coordinated, 55% of an increase in NWLC appears to be shifted to workers in the long run, whereas in countries operating under a highly coordinated bargaining regime, full shifting occurs. Overall, our results suggest that high NWLC can be associated with a high equilibrium unemployment rate, but only in those OECD countries that do not have highly coordinated wage bargaining. |
| Keywords: | labour costs, tax wedge, wage determination, bargaining coordination. |
| JEL: | H22 H30 H55 J32 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2010_02&r=lab |
| By: | Booth, Alison L. (Australian National University); van Ours, Jan C. (Tilburg University) |
| Abstract: | Part-time jobs are popular among partnered women in many countries. In the Netherlands the majority of partnered working women have a part-time job. Our paper investigates, from a supply-side perspective, if the current situation of abundant part-time work in the Netherlands is likely to be a transitional phase that will culminate in many women working full-time. We analyze the relationship between part-time work and life satisfaction, and between job satisfaction and preferred working hours using panel data on life and job satisfaction for a sample of partnered women and men. We also utilize time-use data to consider the distribution within the household of market work and housework, and discuss the work specialization hypothesis in this context. Our main results indicate that partnered women in part-time work have high levels of job satisfaction, a low desire to change their working hours, and live in partnerships in which household production is highly gendered. Taken together, our results suggest that part-time jobs are what most Dutch women want. |
| Keywords: | part-time work, happiness, satisfaction, working hours, gender |
| JEL: | J22 I31 J16 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4686&r=lab |
| By: | Basilio, Leilanie (Ruhr Graduate School in Economics); Bauer, Thomas (RWI Essen) |
| Abstract: | This paper investigates the transferability of human capital across countries and the contribution of imperfect human capital portability to the explanation of the immigrant-native wage gap. Using data for West Germany, our results reveal that, overall, education and labor market experience accumulated in the home countries of the immigrants receive significantly lower returns than human capital obtained in Germany. We further find evidence for heterogeneity in the returns to human capital of immigrants across origin countries. Finally, imperfect human capital transferability appears to be a major factor in explaining the wage differential between natives and immigrants. |
| Keywords: | assimilation, immigration, rate of return, human capital |
| JEL: | J61 J31 J24 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4716&r=lab |
| By: | Gemus, Jonathan (Department of Economics) |
| Abstract: | I study the size and sources of the monetary return to college achievement as measured by cumulative Grade Point Average (GPA). I first present evidence that the return to achievement is large and statistically significant. I find, however, that this masks variation in the return across different groups of people. In particular, there is no relationship between GPA and earnings for graduate degree holders but a large and positive relationship for people without a graduate degree. To reconcile these results, I develop a model where students of differing and initially uncertain ability levels choose effort level in college and whether to earn a graduate degree. College achievement and graduate attainment are allowed to increase human capital and be used by employers to screen workers. In the separating equilibrium studied, workers who earn a graduate degree can effectively signal high productivity to employers. As a result, employers use undergraduate GPA-a noisy signal of productivity-to screen only the workers who do not hold a graduate degree. Viewing the empirical results through the lens of this equilibrium, the zero GPA-earnings relationship for graduate degree holders and the positive and large relationship for people without a graduate degree suggests that most of the reutrn to achievement net of graduate educational attainment is driven by sorting. |
| Keywords: | Returns to Education; Academic Achievement; Signaling; Human Capital |
| JEL: | D82 I20 I21 J24 |
| Date: | 2010–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2010_001&r=lab |
| By: | Contini, Bruno (LABORatorio R. Revelli) |
| Abstract: | Why did employment growth – high in the last decade – take place at the expense of young workers in the countries of Central and Southern Europe? This is the question addressed in this paper. Youth unemployment has approached or exceeded 20% despite a variety of factors, common to most EU countries. According to neo-classical economics all would be expected to exert a positive impact on its evolution: population ageing and the demographic decline, low labor cost of young workers, flexibility of working arrangements, higher educational attainment, low unionization of young workers, early retirement practices of workers 50+. But neither seems to provide a convincing explanation. Historically based institutions and political tradition, cultural values, social capital – factors that go beyond the standard explanation of economic theory – provide a more satisfying interpretation. |
| Keywords: | youth employment, unemployment, social capital, institutions |
| JEL: | J0 J1 J6 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4718&r=lab |
| By: | Bargain, Olivier (University College Dublin); Kwenda, Prudence (University College Dublin) |
| Abstract: | The informal sector plays an important role in the functioning of labor markets in emerging economies. To characterize better this highly heterogeneous sector, we conduct a distributional analysis of the earnings gap between informal and formal employment in Brazil, Mexico and South Africa, distinguishing between dependent and independent workers. For each country, we use rich panel data to estimate fixed effects quantile regressions to control for (time-invariant) unobserved heterogeneity. The dual nature of the informal sector emerges from our results. In the high-tier segment, self-employed workers receive a significant earnings premium that may compensate the benefits obtained in formal jobs. In the lower end of the earnings distribution, both informal wage earners and independent (own account) workers face significant earnings penalties vis-à-vis the formal sector. Yet the dual structure is not balanced in the same way in all three countries. Most of the self-employment carries a premium in Mexico. In contrast, the upper-tier segment is marginal in South Africa, and informal workers, both dependent and independent, form a largely penalized group. More consistent with the competitive view, earnings differentials are small at all levels in Brazil. |
| Keywords: | quantile regression, earnings differential, informal sector, salary work, self-employed, fixed effects model |
| JEL: | J21 J23 J24 J31 O17 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4711&r=lab |
| By: | Salvatori, Andrea (ISER, University of Essex) |
| Abstract: | All industrialized countries have Employment Protection Legislation (EPL) for permanent workers and Restrictions on the use of Temporary Employment (RTE). The (ambiguous) effects of these on the levels of employment and unemployment have been extensively studied, but nothing is known empirically about their well-being implications. Using longitudinal data from the European Community Household Panel, the author conducts the first study of the link between both EPL and RTE and workers' wellbeing. The results provide evidence that both permanent and temporary employees gain from reforms that ease restrictions on temporary employment but leave firing costs for permanent workers unchanged. This finding contrasts with common claims found in the political economy literature. |
| Keywords: | temporary employment, employment protection legislation, job satisfaction |
| JEL: | J28 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4685&r=lab |
| By: | Pouliakas, Konstantinos (University of Aberdeen) |
| Abstract: | Using ten waves (1998-2007) of the British Household Panel Survey (BHPS), this paper investigates the ceteris paribus association between the intensity of incentive pay, the dynamic change in bonus status and the utility derived from work. After controlling for individual heterogeneity biases, it is shown that job utility rises only in response to 'generous' bonus payments, primarily in skilled, non-unionized, private sector jobs. Revoking a bonus from one year to the next is found to have a detrimental impact on employee utility, while job satisfaction tends to diminish over time as employees potentially adapt to bonuses. The findings are therefore consistent with previous experimental evidence, suggesting that employers wishing to motivate their staff should indeed "pay enough or don't pay at all". |
| Keywords: | incentives, intensity, bonus, performance pay, job satisfaction |
| JEL: | C23 J28 J33 M52 M54 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4713&r=lab |
| By: | Dennis Görlich; Dennis Snower |
| Abstract: | This paper sheds light on how changes in the organization of work lead to wage inequality. We present a theoretical model in which workers with a wider span of competence (higher level of multitasking) earn a wage premium. Since abilities and opportunities to expand the span of competence are distributed unequally among workers across and within education groups, our theory explains (1) rising wage inequality between groups, (2) rising wage inequality within groups, and (3) the polarization of work and the decoupling of the income distribution. Using a rich German data set covering a 20-year period from 1986 to 2006, we provide empirical support for our model |
| Keywords: | wage inequality, multitasking, tasks, organizational change |
| JEL: | J31 J24 L23 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1588&r=lab |
| By: | Morin, Louis-Philippe |
| Abstract: | Studies based on instrumental variable techniques suggest that the value of a high school education is large for potential dropouts, yet we know much less about the size of the benefi…t for students who will go on to post-secondary education. To help …fill this gap, I measure the value-added of a year of high-school mathematics for university-bound students using a recent Ontario secondary school reform. The subject speci…ficity of this reform makes it possible to identify the benefi…t of an extra year of mathematics despite the presence of self-selection: one can use subjects unaffected by the reform to control for potential ability differences between control and treatment groups. Further, the richness of the data allows me to generalize the standard difference-in-differences estimator, correcting for heterogeneity in ability measurement across subjects. The estimated value- added to an extra year of mathematics is small for these students –of the order of 17 percent of a standard deviation in university grades. This evidence helps to explain why the literature fi…nds only modest effects of taking more mathematics in high school on wages, the small monetary gain being due to a lack of subject-speci…c human capital accumulation. Within- and between-sample comparisons also suggest that the extra year of mathematics benefi…ts lower-ability students more than higher-ability students. |
| Keywords: | Human Capital, High School Curriculum, Education Reform, Mathematics, Factor Model |
| JEL: | I20 I21 I28 |
| Date: | 2010–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:clssrn:clsrn_admin-2010-3&r=lab |
| By: | van Ours, Jan C. (Tilburg University); Tuit, Sander (Tilburg University) |
| Abstract: | We study how changes in the maximum benefit duration affect the inflow into unemployment in the Netherlands. Until August 2003, workers who became unemployed after age 57.5 were entitled to unemployment benefits until the age of 65, after which they would receive old age pensions. This characteristic made it attractive for workers to enter unemployment shortly after age 57.5 rather than shortly before. Indeed, we find a peak in the inflow into unemployment for workers after age 57.5. From August 2003 onwards the maximum benefit durations were reduced. We find that shortly after 2003 the peak in the inflow disappeared. |
| Keywords: | unemployment insurance, potential benefit duration, unemployment inflow |
| JEL: | H55 J64 J65 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4691&r=lab |
| By: | Rokkanen, Miikka (MIT); Uusitalo, Roope (VATT, Helsinki) |
| Abstract: | We use lifetime job histories from the pension records to evaluate changes in job stability in Finland between 1963 and 2004. We specify a duration model and estimate the effects of elapsed duration, age, and calendar time on the hazard of job ending using individual-level panel data spanning over four decades. We find that this hazard increased during the recession years in the early 1990s but has now returned to the level that prevailed in the 1970s. We also demonstrate that the fluctuations in the hazard rate together with the changes in labor market entry rates have complicated dynamic effects on the tenure distribution, and that analysing the changes in job stability based on the elapsed duration of ongoing jobs may be quite misleading. |
| Keywords: | job stability, duration model |
| JEL: | J63 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4721&r=lab |
| By: | Rooth, Dan-Olof (Linneaus University) |
| Abstract: | This study is the first to present evidence of the return to leisure sports in the job hiring process by sending fictitious applications to real job openings in the Swedish labor market. In the field experiment job applicants were randomly given different information about their type and level of leisure sport being engaged in. Applications which signal sport skills have a significantly higher callback rate of about two percentage points for men, and this effect is about twice as large in physically demanding occupations. This indicates a health-productivity interpretation of the results. However, the result is mainly driven by the return to sports as soccer and golf, and not at all by more fitness related sports as running and swimming, which is indicative of alternative explanations for the labor market sports premium. One possible explanation emerges when analyzing register data on adult earnings and physical fitness when enlisting at age 18. The fitness premium, net of unobservable family variables, is in the order of 4-5 percent, but diminishes to 1 percent when controlling for non-cognitive skills. Hence, these results indicate that being engaged in leisure sports signals having important social skills. |
| Keywords: | leisure sports, physical fitness, cardiovascular fitness, correspondence testing, earnings |
| JEL: | J21 J64 J71 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4684&r=lab |
| By: | Reyes Hartley, Gonzalo (Superintendence of Pension Fund Administrators, Chile); van Ours, Jan C. (Tilburg University); Vodopivec, Milan (World Bank) |
| Abstract: | This study examines the determinants of job-finding rates of unemployment benefit recipients under the Chilean program. This is a unique, innovative program that combines social insurance through a solidarity fund (SF) with self-insurance in the form of unemployment insurance savings accounts (UISAs) – so as to mitigate the moral hazard problem of traditional unemployment insurance programs. Our study is the first one to empirically investigate whether UISAs improve work incentives. We find that for beneficiaries using the SF, the pattern of job finding rates over the duration of unemployment is consistent with moral hazard effects, while for beneficiaries relying on UISAs, the pattern is free of such effects. We also find that for benefit recipient not entitled to use the SF, the amount of accumulation on the UISA does not affect the exit rate from unemployment, suggesting that such individuals internalize the costs of unemployment benefits. Our results provide strong support to the idea that UISAs can improve work incentives. |
| Keywords: | unemployment insurance, unemployment duration, savings accounts |
| JEL: | C41 H55 J64 J65 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4681&r=lab |
| By: | Falch, Torberg; Fischer, Justina AV |
| Abstract: | Using a panel of international student test scores 1980 – 2000 (PISA and TIMSS), panel fixed effects estimates suggest that government spending decentralization is conducive to student performance. The effect does not appear to be mediated through levels of educational spending. |
| Keywords: | Fiscal decentralization; Student achievement; federalism; PISA; TIMSS; education; school quality |
| JEL: | H40 I20 H20 C33 |
| Date: | 2010–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:20331&r=lab |
| By: | Bell, David N.F. (University of Stirling); Blanchflower, David G. (Dartmouth College) |
| Abstract: | This paper reviews current issues in youth labour markets in developed countries. It argues that young people aged 16-25 have been particularly hard hit during the current recession. Using the USA and UK as cast studies, it analyses both causes and effects of youth unemployment using micro-data. It argues that there is convincing evidence that the young are particularly susceptible to the negative effects of spells of unemployment well after their initial experience of worklessness. Because the current youth cohort is relatively large, the longer-term outlook for youth unemployment is quite good, but there is a strong case for policy intervention now to address the difficulties that the current cohort is having in finding access to work. |
| Keywords: | youth unemployment, scarring, ethnic crime, health, life satisfaction, wages, ALMP |
| JEL: | J01 J11 J21 J23 J38 J64 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4705&r=lab |
| By: | Bloemen, Hans (VU University Amsterdam) |
| Abstract: | Most empirical studies on the impact of labour income taxation on the labour supply behaviour of households use a unitary modelling approach. In this paper we empirically analyze income taxation and the choice of working hours by combining the collective approach for household behaviour and the discrete hours choice framework with fixed costs of work. We identify the sharing rule parameters with data on working hours of both the husband and the wife within a couple. Parameter estimates are used to evaluate various model outcomes, like the wage elasticities of labour supply and the impacts of wage changes on the income sharing between husband and wife. We also simulate the consequences of a policy change in the tax system. We find that the collective model has different empirical outcomes of income sharing than a restricted model that imposes pooling of men's earnings and the household's non-labour income in the female's budget constraint. These differences in outcomes have consequences for the evaluation of a policy change in the tax system. |
| Keywords: | labour supply, household behaviour, collective model, taxation |
| JEL: | J22 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4697&r=lab |
| By: | Cottini, Elena (University of Milan); Lucifora, Claudio (Università Cattolica del Sacro Cuore) |
| Abstract: | Increased pressure for labour market flexibility and increasing demand over workers' performance have fostered the idea that working conditions, in most European countries, have progressively deteriorated with adverse effects on psychological well being and mental health. This paper investigates the links between contractual arrangements, working conditions and mental health using time-series cross-section data for 15 European countries. We use different waves of the European Working Conditions Survey (1995, 2000, 2005) to document recent patterns in mental health at the workplace and to assess how these are related to various job attributes. We find substantial heterogeneity in mental health incidence at the workplace both across workers, as well as between countries. Given population heterogeneity in responses to mental health questions, we implement a methodology for differential reporting in ordered response models which allows for threshold shifts. We show that a set of workplace attributes, such as: working in shifts, performing complex and intensive tasks and having restricted job autonomy lead to a higher probability of reporting mental health problems. We also provide evidence of a positive causal effect of adverse overall working conditions on mental health distress. We show that labour market institutions, and health and safety regulations can explain a significant part of cross-country differences. |
| Keywords: | working conditions, mental health, health and safety regulation, labour market institutions |
| JEL: | C25 I10 J81 J28 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4717&r=lab |
| By: | Frazis, Harley (U.S. Bureau of Labor Statistics); Stewart, Jay (U.S. Bureau of Labor Statistics) |
| Abstract: | Hours worked is an important economic indicator. In addition to being a measure of labor utilization, average weekly hours are inputs into measures of productivity and hourly wages, which are two key economic indicators. However, the Bureau of Labor Statistics' two hours series tell very different stories. Between 1973 and 2007 average weekly hours estimated from the BLS's household survey (the Current Population Survey or CPS) indicate that average weekly hours of nonagricultural wage and salary workers decreased slightly from 39.5 to 39.3. In contrast, average hours estimated from the establishment survey (the Current Employment Statistics survey or CES) indicate that hours fell from 36.9 to 33.8 hours per week. Thus the discrepancy between the two surveys increased from about two-and-a-half hours per week to about five-and-a-half hours. Our goal in the current study is to reconcile the differences between the CPS and CES estimates of hours worked and to better understand what these surveys are measuring. We examine a number of possible explanations for the divergence of the two series: differences in workers covered, multiple jobholding, differences in the hours concept (hours worked vs. hours paid), possible overreporting of hours in CPS, and changes in the length of CES pay periods. We can explain most of the difference in levels, but cannot explain the divergent trends. |
| Keywords: | hours of work, comparison of household and establishment surveys |
| JEL: | C81 J22 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4704&r=lab |
| By: | Rebecca Allen (Depatment of Quantitative Social Science - Institute of Education, University of London.) |
| Abstract: | Government and researchers use school performance measures such as contextual value-added to claim that giving schools autonomy from local authority control produces superior pupil performance in GCSE examinations. This paper explores the extent to which inferring causality between autonomy and pupil achievement is reasonable given that pupils are not randomly assigned to schools and schools do not randomly acquire autonomous status. Rich administrative data and the Longitudinal Survey of Young People in England are used to evaluate whether CVA-style inferences are confounded by pupil characteristics that explain both the chances of attending an autonomous school and academic achievement. The assignment of grant-maintained (and thus now foundation) status through a vote of parents is used to compare school that just did, and just did not, gain autonomy over a decade ago. These alternative estimation strategies suggest there is little evidence that foundation status casually yields superior school performance. |
| Keywords: | school autonomy, school effectiveness, foundation schools |
| JEL: | I21 I28 |
| Date: | 2010–02–03 |
| URL: | http://d.repec.org/n?u=RePEc:qss:dqsswp:1002&r=lab |
| By: | Ferracci, Marc (CREST-INSEE); Jolivet, Grégory (University of Bristol); van den Berg, Gerard J. (University of Mannheim) |
| Abstract: | We extend the standard evaluation framework to allow for interactions between individuals within segmented markets. An individual's outcome depends not only on the assigned treatment status but also on (features of) the distribution of the assigned treatments in his market. To evaluate how the distribution of treatments within a market causally affects the average effect within the market, averaged over the full population, we develop an identification and estimation method in two steps. The first one focuses on the distribution of the treatment within markets and between individuals and the second step addresses the distribution of the treatment between markets. We apply our method to data on training programs for unemployed workers in France. We use a rich administrative register of unemployment and training spells as well as the information on local labor demand that is used by unemployment agencies to allocate training programs. The results show that the average treatment effect on the employment rate causally decreases with respect to the proportion treated in the market. Our analysis accounts for unobserved heterogeneity between markets (using the longitudinal dimension of the data) and, in a robustness check, between individuals. |
| Keywords: | treatment evaluation, equilibrium effects, matching estimators |
| JEL: | C13 C14 C21 C31 J64 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4700&r=lab |
| By: | Havnes, Tarjei (Dept. of Economics, University of Oslo); Mogstad, Magne (Statistics Norway) |
| Abstract: | The strong correlation between child care and maternal employment rates has led previous research to conclude that a ordable and readily available child care is a driving force both of cross-country di erences in maternal employment and of its rapid growth over the last decades. We analyze the introduction of subsidized, universally accessible child care in Norway. Our precise and robust di erence-in-di erences estimates reveal that there is little, if any, causal e ect of child care on maternal employment, despite a strong correlation. Instead of increasing mothers' labor supply, the new subsidized child care mostly crowds out informal child care arrangements, suggesting a signi cant net cost of the child care subsidies. |
| Keywords: | universal child care; female labor force participation |
| JEL: | H40 J13 J21 |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2009_024&r=lab |
| By: | Engelbert Theurl (Department of Economics and Statistics, University of Innsbruck, Austria); Hannes Winner |
| Abstract: | Empirical evidence from U.S. studies suggests that, on average, female physicians earn less than their male counterparts. This gap in earnings does not disappear when individual and market characteristics are con- trolled for. This paper investigates whether a gender earnings difference can also be observed in a health care system predominantly financed by public insurance companies. Using a unique data set of physicians' earn- ings recorded by a public social security agency in an Austrian province between 2000 and 2004, we find a gender gap in average earnings of about 32 percent. A substantial share of this gap (20 to 47 percent) cannot be explained by individual and market characteristics, leaving labor market discrimination as one possible explanation for the observed gender earn- ings difference of physicians. |
| Keywords: | Health care financing; physician earnings; wage composition |
| JEL: | I11 I18 J31 J71 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:jku:nrnwps:2010_01&r=lab |
| By: | Holden, Steinar (Dept. of Economics, University of Oslo); Rosén, Åsa (Stockholm University (SOFI)) |
| Abstract: | We study a search model with employment protection legislation. We show that if the output from the match is uncertain ex ante, there may exist a discriminatory equilibrium where workers with the same productive characteristics are subject to different hiring standards. If a bad match takes place, discriminated workers will use longer time to find another job, prolonging the costly period for the firm. This makes it less profitable for the firms to hire the discriminated workers, thus sustaining discrimination. In contrast to standard models, the existence of employers with a taste for discrimination may make it more profitable to discriminate also for firms without discriminatory preferences. |
| Keywords: | Discrimination; Employment Protection; Hiring Standards |
| JEL: | J60 J70 |
| Date: | 2009–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2009_022&r=lab |
| By: | Eva Dettmann; Jutta Günther |
| Abstract: | The aim of this paper is to analyze whether the formally equal qualifications acquired during a subsidized vocational education induce equal employment opportunities compared to regular vocational training. Using replacement matching on the basis of a statistical distance function, we are able to control for selection effects resulting from different personal and profession-related characteristics, and thus, to identify an unbiased effect of the public support. Besides the ‘total effect’ of support, it is of special interest if the effect is stronger for subsidized youths in external training compared to persons in workplace-related training. The analysis is based on unique and very detailed data, the Youth Panel of the Halle Centre for Social Research (zsh). The results show that young people who successfully completed a subsidized vocational education are disadvantaged regarding their employment opportunities even when controlling for personal and profession-related influences on the employment prospects. Besides a quantitative effect, the analysis shows that the graduates of subsidized training work in slightly worse (underqualified) and worse paid jobs than the adolescents in the reference group. The comparison of both types of subsidized vocational training, however, does not confirm the expected stronger effect for youths in external vocational education compared to workplace-related training. |
| Keywords: | microeconometric evaluation, matching, vocational education, East Germany |
| JEL: | C14 I21 J24 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iwh:dispap:21-09&r=lab |
| By: | Bartling, Björn (University of Zurich); Fehr, Ernst (University of Zurich); Schmidt, Klaus M. (University of Munich) |
| Abstract: | In recent decades, many firms offered more discretion to their employees, often increasing the productivity of effort but also leaving more opportunities for shirking. These "high-performance work systems" are difficult to understand in terms of standard moral hazard models. We show experimentally that complementarities between high effort discretion, rent-sharing, screening opportunities, and competition are important driving forces behind these new forms of work organization. We document in particular the endogenous emergence of two fundamentally distinct types of employment strategies. Employers either implement a control strategy, which consists of low effort discretion and little or no rent-sharing, or they implement a trust strategy, which stipulates high effort discretion and substantial rent-sharing. If employers cannot screen employees, the control strategy prevails, while the possibility of screening renders the trust strategy profitable. The introduction of competition substantially fosters the trust strategy, reduces market segmentation, and leads to large welfare gains for both employers and employees. |
| Keywords: | job design, high-performance work systems, screening, reputation, competition, trust, control, social preferences, complementarities |
| JEL: | C91 D86 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4710&r=lab |
| By: | Driffield, Nigel (Aston University); Girma, Sourafel (University of Nottingham); Henry, Michael (Aston University); Taylor, Karl (University of Sheffield) |
| Abstract: | This paper extends the existing literature on FDI and wage inequality. We do this in two ways. Firstly, we incorporate more precise measures of inward investment into the model, by allowing for differences in the effects between horizontal and vertical FDI. Secondly, after establishing the effects that inward investment has on wage inequality, we then analyse the reasons for this in terms of the wages paid to skilled and unskilled workers, and the effect that inward investment has on this. We illustrate the important differences that horizontal and vertical FDI have on both wages and wage inequality, and the importance of allowing for regional differences in the results. FDI nationally tends to increase wage inequality, while the local, effects are opposite. FDI into assisted areas tends to increase wage inequality nationally, when the MNEs purchase inputs in the local region. |
| Keywords: | wage inequality, FDI spillovers, backwards and forwards linkages |
| JEL: | F21 F23 J31 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4722&r=lab |
| By: | Havnes, Tarjei (Dept. of Economics, University of Oslo); Mogstad, Magne (Statistics Norway) |
| Abstract: | There is a heated debate in the US, Canada and many European countries about introducing universally accessible child care. However, studies on universal child care and child development are scarce and only consider short-run outcomes. We analyze the introduction of universal child care in Norway, addressing the impact on children’s long-run outcomes. Our precise and robust difference-in-difference estimates show that child care had strong positive effects on children’s educational attainment and labor market participation, and also reduced welfare dependency. Subsample analysis indicates that children with low educated mothers and girls benefit the most from child care. |
| Keywords: | universal child care; child development; long-run outcomes |
| JEL: | H40 I28 J13 |
| Date: | 2009–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2009_023&r=lab |
| By: | John Schmitt |
| Abstract: | This report reviews unionization rates, the size and composition of the unionized workforce, and the wage and benefit advantage for union workers in each of the fifty states and the District of Columbia, using the most recent data available and focusing on the period 2003-2009. Pooling data from the monthly Current Population Survey (CPS) over that period yields a sample size large enough to look at the experience of even the smallest states. |
| Keywords: | unions, states, wages, benefits, pension, health insurance |
| JEL: | J J1 J3 J31 J32 J41 J5 J58 J6 J68 J88 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2010-03&r=lab |
| By: | Machin, Stephen (University College London); Salvanes, Kjell G. (Norwegian School of Economics and Business Administration) |
| Abstract: | Among policymakers, educators and economists there remains a strong, sometimes heated, debate on the extent to which good schools matter. This is seen, for instance, in the strong trend towards establishing accountability systems in education in many countries across the world. In this paper, in line with some recent studies, we value school quality using house prices. We, however, adopt a rather different approach to other work, using a policy experiment regarding pupils' choice to attend high schools to identify the relationship between house prices and school performance. We exploit a change in school choice policy that took place in Oslo county in 1997, where the school authorities opened up the possibility for every pupil to apply to any of the high schools in the county without having to live in the school's catchment area (the rule that applied before 1997). Our estimates show evidence that parents substantially value better performing schools since the sensitivity of housing valuations to school performance falls significantly by over 50% following the school choice reform. |
| Keywords: | house prices, school performance, school reform |
| JEL: | I2 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4719&r=lab |
| By: | Marco Cozzi (Queen’s University) |
| Abstract: | This paper studies the effects of both labor market conditions and asset poverty on the property crimes involvement of American males. Since the mid 60’s the property crimes arrest rate has been four times higher for black males if compared to white ones. Another set of stylised facts show for the first demographic group lower educational levels and worse labor market outcomes, with the African Americans supplying less hours of labor, gaining lower wages, experiencing both higher unemployment duration and rates. At the same time, more than 30% of black households had a negative net worth. A dynamic general equilibrium model is developed, exploiting these facts to quantitatively assess the race crime gap, that is the difference in crime explained by the difference in observables. The model is calibrated relying on US data and solved numerically. The model captures well relevant dimensions of the crime phenomenon, such as the inmates composition by race, employment status and education. Simulation results show that the observed poverty and labor market outcomes account for as much as 90% of the arrest rates ratio. Finally the model is used to compare two alternative policy experiments aimed at reducing the aggregate crime rate: increasing the expenditure on police seems to be cost effective, when compared to an equally expensive lump-sum subsidy targeted to the high school dropouts. |
| Keywords: | Property crimes, Computable General Equilibrium, Incomplete Markets, Race, Wealth Inequality |
| JEL: | K42 D58 D52 D99 J15 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1233&r=lab |
| By: | Alison Booth; Andrew Leigh |
| Abstract: | We test for gender discrimination by sending fake CVs to apply for entry-level jobs. Female candidates are more likely to receive a callback, with the difference being largest in occupations that are more female-dominated. |
| Keywords: | discrimination, field experiments, employment, gender |
| JEL: | J71 C93 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:auu:dpaper:632&r=lab |
| By: | Ivan O. Kitov |
| Abstract: | The evolution of inflation, p(t), and unemployment, UE(t), in Japan has been modeled. Both variables were represented as linear functions of the change rate of labor force, dLF/LF. These models provide an accurate description of disinflation in the 1990s and a deflationary period in the 2000s. In Japan, there exists a statistically reliable (R2=0.68) Phillips curve, which is characterized by a negative relation between inflation and unemployment and their synchronous evolution: UE(t) = -0.94p(t) + 0.045. Effectively, growing unemployment has resulted in decreasing inflation since 1982. A linear and lagged generalized relationship between inflation, unemployment and labor force has been also obtained for Japan: p(t) = 2.8*dLF(t)/LF(t) + 0.9*UE(t) - 0.0392. Labor force projections allow a prediction of inflation and unemployment in Japan: CPI inflation will be negative (between -0.5% and -1% per year) during the next 40 years. Unemployment will increase from ~4.0% in 2010 to 5.3% in 2050. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1002.0277&r=lab |
| By: | Zissimopoulos, Julie (RAND); Smith, James P. (RAND) |
| Abstract: | Money parents give their adult children may be important for the financing of a child's education or a first home, relaxing binding credit constraints or responding to a transitory income shock. Financial transfers however, may extend economic disparities across generations if the wealthy transfer considerable resources to their children while middle class and poor households do not. In this paper, we first examine annual gifts of money from parents to adult children in the United States and ten European countries using the 2004 waves of the Health and Retirement Study (HRS) and Survey of Health, Ageing and Retirement in Europe (SHARE). Second, utilizing the long panel of the HRS, we study the long-run behavior of parental monetary giving to children across families and within a family. We found that in all countries, some parents gave money to children, many did not, the amount was low, about 500 Euros annually per child, and varied by parental socio-economic status and public social expenditures. In the short term, parents in the U.S. gave money to a child to compensate for low earnings or satisfy an immediate need such as schooling. Over sixteen years, parents gave an average of about $38,000 to all their children, five percent gave over $140,000 and gave persistently. With time, the amount of money children in the same family received became more equal and a child's level of education was one of the few remaining sources of differences in money given to children. Overall, the annual amount of money parents gave adult children in any country was not enough to affect the distribution of resources within or between families in the next generation although the timing of transfers for schooling or housing may have a significant impact on an individual child. Annual parental transfers for college age children in school in the U.S. were substantially higher than average transfers to all children. The effect of parental transfers for higher education on intergenerational mobility in the U.S. will depend in part upon whether this financing is essential in the schooling decision. |
| Keywords: | transfers |
| JEL: | J10 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4698&r=lab |
| By: | Boucher, Vincent (University of Montreal); Bramoullé, Yann (Université Laval); Djebbari, Habiba (Université Laval); Fortin, Bernard (Université Laval) |
| Abstract: | We provide the first empirical application of a new approach proposed by Lee (2007) to estimate peer effects in a linear-in-means model. This approach allows to control for group-level unobservables and to solve the reflection problem. We investigate peer effects in student achievement in Mathematics, Science, French and History in Quebec secondary schools. We estimate the model using maximum likelihood and instrumental variables methods. We find evidence of peer effects. The endogenous peer effect is positive, when significant, and some contextual peer effects matter. Using calibrated Monte Carlo simulations, we find that high dispersion in group sizes helps with potential issues of weak identification. |
| Keywords: | reflection problem, student achievement, peer effects |
| JEL: | C31 I20 Z13 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4723&r=lab |
| By: | Ryo Arawatari (Faculty of Economics, Shinshu University); Tetsuo Ono (Graduate School of Economics, Osaka University) |
| Abstract: | Countries with higher implicit taxes on continued work are associated with lower labor force participation rates of the elderly. This paper constructs a politicoeconomic model that accounts for this feature based on multiple, self-fulfilling expectations of agents. In this model, agents are identical at birth and can become skilled (or remain unskilled) through educational investment. When agents hold expectations of higher future taxation (i.e., higher social security benefits), it provides a disincentive to engage in educational investment, thereby resulting in an unskilled majority. In turn, this unskilled majority supports higher taxation, which induces the retirement of the elderly and thus results in a lower labor force participation rate. The opposite applies when agents have expectations of lower taxes in their old age. |
| Keywords: | Political equilibrium; Retirement; Self-fulfilling expectations; Social security |
| JEL: | H55 D72 J26 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1004&r=lab |
| By: | Ivan O. Kitov |
| Abstract: | Labor productivity in Turkey, Spain, Belgium, Austria, Switzerland, and New Zealand has been analyzed and modeled. These counties extend the previously analyzed set of the US, UK, Japan, France, Italy, and Canada. Modelling is based on the link between the rate of labor participation and real GDP per capita. New results validate the link and allow predicting a drop in productivity by 2010 in almost all studied countries. |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1001.4889&r=lab |
| By: | Cunha, Flavio (University of Pennsylvania); Heckman, James J. (University of Chicago); Schennach, Susanne (University of Chicago) |
| Abstract: | This paper formulates and estimates multistage production functions for children's cognitive and noncognitive skills. Skills are determined by parental environments and investments at different stages of childhood. We estimate the elasticity of substitution between investments in one period and stocks of skills in that period to assess the benefits of early investment in children compared to later remediation. We establish nonparametric identification of a general class of production technologies based on nonlinear factor models with endogenous inputs. A by-product of our approach is a framework for evaluating childhood and schooling interventions that does not rely on arbitrarily scaled test scores as outputs and recognizes the differential effects of the same bundle of skills in different tasks. Using the estimated technology, we determine optimal targeting of interventions to children with different parental and personal birth endowments. Substitutability decreases in later stages of the life cycle in the production of cognitive skills. It increases slightly in later stages of the life cycle in the production of noncognitive skills. This finding has important implications for the design of policies that target the disadvantaged. For some configurations of disadvantage and for some outcomes, it is optimal to invest relatively more in the later stages of childhood than in earlier stages. |
| Keywords: | cognitive skills, noncognitive skills, dynamic factor analysis, endogeneity of inputs, anchoring test scores, parental influence |
| JEL: | C31 J13 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4702&r=lab |
| By: | Stephanie von Hinke Kessler Scholder; George Davey Smith; Debbie A. Lawlor; Carol Propper; Frank Windmeijer |
| Abstract: | The use of genetic markers as instrumental variables (IV) is receiving increasing attention from economists. This paper examines the conditions that need to be met for genetic variants to be used as instruments. We combine the IV literature with that from genetic epidemiology, with an application to child adiposity (fat mass, determined by a dual-energy X-ray absorptiometry (DXA) scan) and academic performance. OLS results indicate that leaner children perform slightly better in school tests compared to their more adipose counterparts, but the IV findings show no evidence that fat mass affects academic outcomes. |
| Keywords: | Instrumental variables; Mendelian randomization; Genetic variant; Potential outcomes; Academic performance; Educational attainment; Adiposity; Fat mass; Body Mass Index; ALSPAC |
| JEL: | I1 I2 J24 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:bri:cmpowp:10/229&r=lab |
| By: | Schlotter, Martin (Ifo Institute for Economic Research); Schwerdt, Guido (Ifo Institute for Economic Research); Woessmann, Ludger (Ifo Institute for Economic Research) |
| Abstract: | Education policy-makers and practitioners want to know which policies and practices can best achieve their goals. But research that can inform evidence-based policy often requires complex methods to distinguish causation from accidental association. Avoiding econometric jargon and technical detail, this paper explains the main idea and intuition of leading empirical strategies devised to identify causal impacts and illustrates their use with real-world examples. It covers six evaluation methods: controlled experiments, lotteries of oversubscribed programs, instrumental variables, regression discontinuities, differences-in-differences, and panel-data techniques. Illustrating applications include evaluations of early-childhood interventions, voucher lotteries, funding programs for disadvantaged, and compulsory-school and tracking reforms. |
| Keywords: | causal effects, education, policy evaluation, non-technical guide |
| JEL: | I20 C01 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4725&r=lab |
| By: | Hospido, Laura (Bank of Spain) |
| Abstract: | This paper presents a model for the heterogeneity and dynamics of the conditional mean and the conditional variance of standardized individual wages. In particular, a heteroskedastic autoregressive model with multiple individual fixed effects is proposed. The expression for a modified likelihood function is obtained for estimation and inference in a fixed-T context. Using a bias-corrected likelihood approach makes it possible to reduce the estimation bias to a term of order 1/T². The small sample performance of the bias corrected estimator is investigated in a Monte Carlo simulation study. The simulation results show that the bias of the maximum likelihood estimator is substantially corrected for designs that are broadly calibrated to the data used in the empirical analysis, drawn from the 1968-1993 Panel Study of Income Dynamics. The empirical results show that it is important to account for individual unobserved heterogeneity and dynamics in the variance, and that the latter is driven by job mobility. The model also explains the non-normality observed in logwage data. |
| Keywords: | panel data, dynamic nonlinear models, conditional heteroskedasticity, fixed effects, bias reduction, individual wages |
| JEL: | C23 J31 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4712&r=lab |
| By: | John T. Addison (Moore School of Business, University of South Carolina, Queen’s University School of Management, IZA, and GEMF); Alex Bryson (National Institute of Economic and Social Research and CEP); Paulino Teixeira (Faculdade de Economia/GEMF, University of Coimbra); André Pahnke (Institut für Arbeitsmarkt- und Berufsforschung, Bundesagentur für Arbeit) |
| Abstract: | This paper presents the first comparative analysis of the decline in collective bargaining in two European countries where that decline has been most pronounced. Using workplace-level data and a common model, we present decompositions of changes in collective bargaining and worker representation in the private sector in Germany and Britain over the period 1998-2004. In both countries within-effects dominate compositional changes as the source of the recent decline in unionism. Overall, the decline in collective bargaining is more pronounced in Britain than in Germany, thus continuing a trend apparent since the 1980s. Although workplace characteristics differ markedly across the two countries, assuming counterfactual values of these characteristics makes little difference to unionization levels. Expressed differently, the German dummy looms large. |
| JEL: | J5 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:gmf:wpaper:2010-02&r=lab |