|
on Labour Economics |
| By: | David Autor (MIT and NBER); Susan Houseman (W.E. Upjohn Institute for Employment Research) |
| Abstract: | Temporary-help jobs offer rapid entry into paid employment, but they are typically brief and it is unknown whether they foster longer-term employment. We utilize the unique structure of Detroit's welfare-to-work program to identify the effect of temporary-help jobs on labor market advancement. Exploiting the rotational assignment of welfare clients to numerous nonprofit contractors with differing job placement rates, we find that temporary-help job placements do not improve and may diminish subsequent earnings and employment outcomes among participants. In contrast, job placements with direct-hire employers substantially raise earnings and employment over a seven quarter follow-up period. |
| Keywords: | Temporary-help, welfare to work, job placement, low-skill workers, causal effects |
| JEL: | J24 J48 J62 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:05-124&r=lab |
| By: | Felipe Balmaceda |
| Abstract: | This paper studies firm-provided training in the presence of the following labor market institutions: minimum wages, assistance unemployment benefits, firing costs, unions and severance payments. It shows that minimum wages, severance payments and unemployment benefits may either increase or decrease firm-provided training relative to a competitive labor market benchmark where firm-provided training takes place. In contrast, training incidence should be greater when firing costs are higher and there is more unionization.The paper argues that the large observed cross-country heterogeneity in labor market institutions is a plausible candidate to explain the large observed variation in training incidence across different countries, workers and industries. The reason is that the effect of any institution on firm-provided training depends crucially on the other institutions in placed. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:edj:ceauch:266&r=lab |
| By: | Marta Rohana Lopez |
| Abstract: | Using a specific data set drawn from the Spanish Module Education to Labour Market Transitions (2000), this paper analyses the labour market entrance of Spanish school leavers and the match between education and work at the early stages of working life. Moreover, special attention is paid to graduates, because Spain experienced a strong growth in the demand for higher education during the last decades of 20th century. The empirical evidence shows that, besides other personal and family individual's characteristics, human capital exerts a strong influence on the finding of an employment. With regard to the match between education and work, the results indicate that over-education is a common phenomenon in the Spanish youth labour market. However, unlike what one could expect, being a graduate seems to be associated to a lower likelihood of over-education in the first employment. |
| Keywords: | university education, school to work transition, mismatch in the labour market, Spain |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:don:donwpa:018&r=lab |
| By: | Kolm, Ann-Sofie; Tonin, Mirco |
| Abstract: | In-work benefits are becoming an increasingly relevant labour market policy, gradually expanding in scope and geographical coverage. This paper investigates the equilibrium impact of in-work benefits and contrasts it with the traditional partial equilibrium analysis. We find under which conditions accounting for equilibrium wage adjustments amplifies the impact of in-work benefits on search intensity, participation, employment, and unemployment, compared to a framework in which wages are fixed. We also account for the financing of these benefits and determine the level of benefits necessary to achieve efficiency in a labour market characterized by search externalities. <br><br> Keynames; In-work benefits, search, labour force participation, wage adjustment <br><br> JEL Classification: J21, J38, H24 |
| Date: | 2010–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:stn:sotoec:1004&r=lab |
| By: | Charlot, Olivier (Université des Antilles et de la Guyane); Malherbet, Franck (University of Cergy-Pontoise) |
| Abstract: | This paper studies the impact of an European-like labor market regulation on the return to schooling, equilibrium unemployment and welfare. We show that firing costs and temporary employment have opposite effects on educational choices. We furthermore demonstrate that a laissez faire economy with no regulation is inefficient as it is characterized by insufficient educational investments leading to excess job destruction and inadequate job creation. By stabilizing employment relationships, firing costs may spur educational investments and therefore lead to welfare and productivity gains, though a first-best policy would be to subsidize education. However, there is little chance for a dual labor market, as is common in many European countries, with heavily regulated long-term contracts and more flexible short-term contracts to raise the incentives to schooling and aggregate welfare. |
| Keywords: | human capital, job destruction, matching frictions, efficiency |
| JEL: | I20 J20 J60 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4799&r=lab |
| By: | Pereira, Pedro T. (University of Madeira) |
| Abstract: | The lack of formal education and competences of the Portuguese workers is one of the biggest problems of the country. This lack is disappearing as quickly as desired and the young generations still lag far behind those in other OECD countries. This paper studies the intergenerational transmission of education achievement, in particular higher education completion, seeking to determine the influence on future attainment of parents’ education and labor market conditions while the child was growing up. We conclude that the education of the parents is very important, even if it is only one of them that has it. This influence seems not to be independent of the gender of the parent who has it. The fact that the parents face unemployment has a negative effect on the educational achievement of the child. Females generally perform better than males, but there are exceptions. For instance, it is significantly lower if the father has low education and the mother has secondary or higher education. |
| Keywords: | demand for schooling, human capital, parent’s education |
| JEL: | I21 I28 J11 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4813&r=lab |
| By: | Folta, Timothy B. (Krannert School of Management); Delmar, Frédéric (Research Institute of Industrial Economics (IFN)); Wennberg, Karl (Imperial College Business School) |
| Abstract: | In contrast to previous efforts to model the individual’s movement from wage work into entrepreneurship, we consider that individuals might transition incrementally by retaining their wage job while entering into self-employment. We show that these hybrid entrepreneurs represent a significant share of all entrepreneurial activity. Theoretical arguments are proposed to suggest why hybrid entrants are distinct from self-employment entrants, and why hybrid entry may facilitate subsequent entry into full self-employment. We demonstrate that there are significant theoretical and empirical consequences for this group and our understanding of self-employment entry and labor market dynamics. Using matched employee-employer data over eight years, we test the model on a population of Swedish wage earners in the knowledge-intensive sector. |
| Keywords: | Hybrid entrepreneurship; Self-employment; Labour market dynamics; Transition determinants; Employee-employer data |
| JEL: | H39 J24 L26 |
| Date: | 2010–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0825&r=lab |
| By: | Sara Flisi |
| Abstract: | This paper analyses the performance of foreign born male individuals on the British labour market. Using data from the Quarterly Labour Force Survey over the period 1992-2009, we find consistent evidence of positive economic assimilation of immigrants, with their labour market outcomes improving with duration of stay in the country. We also find that the performance of individuals who came to the UK to complete their education is significantly higher than that experienced by labour market entrants. |
| Keywords: | Immigrants, Earnings, Employment |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:mod:depeco:0621&r=lab |
| By: | Boudarbat, Brahim (University of Montreal); Lemieux, Thomas (University of British Columbia, Vancouver); Riddell, Craig (University of British Columbia, Vancouver) |
| 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: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4809&r=lab |
| By: | Hansen, Jorgen (Concordia University, CIREQ, CIRANO and IZA); Wahlberg, Roger (Department of Economics, School of Business, Economics and Law, Göteborg University); Faisal, Sharif (Concordia University) |
| Abstract: | This paper examines the relationship between immigrant occupational composition and wages in Sweden. Effects of changes in proportion of immigrant workers in different occupations on the wage levels of both natives and immigrants are estimated. Our results suggest that increases in immigrant density have only small effects on wages and that the negative relationship between wages and the proportion of immigrant workers in an occupation, observed in data, is almost entirely accounted for by measured and unmeasured worker skills. These results suggest that wage differences across occupations with different densities of immigrants are mainly due to quality sorting and to a lesser extent due to the existence of discrimination.<p> |
| Keywords: | Immigrants; Refugees; Occupational Segregation; Composition of Jobs; Quality Sorting; Wages |
| JEL: | J31 J71 |
| Date: | 2010–03–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0435&r=lab |
| By: | Ashenfelter, Orley (Princeton University); Doran, Kirk (University of Notre Dame); Schaller, Bruce (New York City Department of Transportation) |
| Abstract: | Virtually all public policies regarding taxation and the redistribution of income rely on explicit or implicit assumptions about the long run effect of wage rates on labor supply. The available estimates of the wage elasticity of male labor supply in the literature have varied between -0.2 and 0.2, implying that permanent wage increases have relatively small, poorly determined effects on labor supplied. The variation in existing estimates calls for a simple, natural experiment in which men can change their hours of work, and in which wages have been exogenously and permanently changed. We introduce a panel data set of taxi drivers who choose their own hours, and who experienced two exogenous permanent fare increases instituted by the New York City Taxi and Limousine Commission, and we use these data to fit a simple structural labor supply function. Our estimates suggest that the elasticity of labor supply is about -0.2, implying that income effects dominate substitution effects in the long run labor supply of males. |
| Keywords: | labor supply |
| JEL: | J22 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4810&r=lab |
| By: | Marco Caliendo; Steffen Künn |
| Abstract: | Turning unemployment into self-employment has become an increasingly important part of active labor market policies (ALMP) in many OECD countries. Germany is a good example where the spending on start-up subsidies for the unemployed accounted for nearly 17% of the total spending on ALMP in 2004. In contrast to other programs-like vocational training, job creation schemes, or wage subsidies-the empirical evidence on the effectiveness of such schemes is still scarce; especially regarding long-term effects and effect heterogeneity. This paper aims to close this gap. We use administrative and survey data from a large sample of participants in two distinct start-up programs and a control group of unemployed individuals. We find that over 80% of participants are integrated in the labor market and have relatively high labor income five years after start-up. Additionally, participants are much more satisfied with their current occupational situation compared to previous jobs. Based on conditional propensity score matching methods we estimate the long-term effects of the programs against non-participation. Our results show that both programs are effective with respect to income and employment outcomes in the long-run. Moreover, we consider effect heterogeneity with respect to several dimensions and show that start-up subsidies for the unemployed tend to be most effective for disadvantaged groups in the labor market. |
| Keywords: | Start-up subsidies, self-employment, evaluation, long-term effects, effect heterogeneity |
| JEL: | J68 C14 H43 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp985&r=lab |
| By: | Marin, Dalia |
| Abstract: | Many people in the European Union fear that Eastern Enlargement leads to major job losses. More recently, these fears about job losses have extended to high skill labor and IT jobs. The paper examines with unique firm level data whether these fears are justified for the two neighboring countries of Eastern Enlargement Austria and Germany. We find that Eastern Enlargement leads to surprising small job losses of less than 0.5 percent of total employment in Germany and of 1.5 percent in Austria, because jobs in Eastern Europe do not compete with jobs in Austria and Germany. Low cost jobs of affiliates in Eastern Europe help Austrian and German firms to stay competitive in an increasingly competitive environment. However, we also find that multinational firms in Austria and Germany are outsourcing skill intensive activities to Eastern Europe taking advantage of cheap abundant skilled labor there. We find that the firms’ outsourcing activities to Eastern Europe are a response to a human capital scarcity in Austria and Germany which has become particularly severe in the 1990s. We indeed find a reverse pattern of ‘Maquiladoras’ emerging with Eastern Enlargement in Austria and Germany compared to what economists have found for the North American Free Trade Agreement. Skilled workers in Austria and Germany are losing from outsourcing. In both countries outsourcing contributes 35 percent and 41 percent, respectively, to changes in relative wages for skilled workers in Austria and Germany. To address the skill exodus to Eastern Europe we suggest liberalizing the movement of high skill labor. |
| Keywords: | human capital; intra-firm trade; multinationals and jobs; outsourcing to Eastern Europe; R&D policy |
| JEL: | F21 F23 J24 J31 L24 O3 P33 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:11435&r=lab |
| By: | Shihe Fu; Stephen L. Ross |
| Abstract: | This paper tests whether the correlation between wages and the spatial concentration of employment can be explained by unobserved worker productivity differences. Residential location is used as a proxy for a worker’s unobserved productivity, and average workplace commute time is used to test whether location based productivity differences are compensated away by longer commutes. Analyses using confidential data from the 2000 Decennial Census Long Form find that the agglomeration estimates are robust to comparisons within residential location and that the estimates do not persist after controlling for commutes suggesting that the productivity differences across locations are due to agglomeration, rather than productivity differences across individuals. |
| Keywords: | Agglomeration, Wages, Sorting, Locational Equilibrium, Human Capital Externalities |
| JEL: | R13 R30 J24 J31 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:10-04&r=lab |
| By: | Geyer, Johannes (DIW Berlin); Steiner, Viktor (DIW Berlin) |
| Abstract: | We analyze the impact of changing employment patterns and pension reforms on the future level of public pensions across birth cohorts in Germany. The analysis is based on a rich dataset that combines household survey data from the German Socio-Economic Panel Study (SOEP) and process-produced microdata from the German pension insurance. A microsimulation model is developed which accounts for cohort effects in individual employment and unemployment and earnings over the lifecycle as well as the differential impact of recent pension reforms. Cohort effects for individuals born between 1937 and 1971 vary greatly by region, gender and education and strongly affect lifecycle wage profiles. The largest effects can be observed for younger cohorts in East Germany and for the low educated. Using simulated life cycle employment and income profiles, we project gross future pensions across cohorts taking into account changing demographics and recent pension reforms. Simulations show that pension levels for East German men and women will fall dramatically among younger birth cohorts, not only because of policy reforms but due to higher cumulated unemployment. For West German men, the small reduction of average pension levels among younger birth cohorts is mainly driven by the impact of pension reforms, while future pension levels of West German women are increasing or stable due to rising labor market participation of younger birth cohorts. |
| Keywords: | public pensions, cohort effects, microsimulation |
| JEL: | H55 J26 J11 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4815&r=lab |
| By: | Johannes Geyer; Viktor Steiner |
| Abstract: | We analyze the impact of changing employment patterns and pension reforms on the future level of public pensions across birth cohorts in Germany. The analysis is based on a rich dataset that combines household survey data from the German Socio-Economic Panel Study (SOEP) and process-produced microdata from the German pension insurance. A microsimulation model is developed which accounts for cohort effects in individual employment and unemployment and earnings over the lifecycle as well as the differential impact of recent pension reforms. Cohort effects for individuals born between 1937 and 1971 vary greatly by region, gender and education and strongly affect lifecycle wage profiles. The largest effects can be observed for younger cohorts in East Germany and for the low educated. Using simulated life cycle employment and income profiles, we project gross future pensions across cohorts taking into account changing demographics and recent pension reforms. Simulations show that pension levels for East German men and women will fall dramatically among younger birth cohorts, not only because of policy reforms but due to higher cumulated unemployment. For West German men, the small reduction of average pension levels among younger birth cohorts is mainly driven by the impact of pension reforms, while future pension levels of West German women are increasing or stable due to rising labor market participation of younger birth cohorts. |
| Keywords: | Public pensions, cohort effects, microsimulation |
| JEL: | H55 J26 J11 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp276&r=lab |
| By: | Mattia Makovec; Alejandra Mizala; Andrés Barrera |
| Abstract: | We study parental choice focusing on the transition between primary and secondary school, taking advantage of the fact that most Chilean students have to switch school at the end of the 8th grade, the last year of primary school. Using a recursive probit model we estimate jointly the probability of attending private voucher versus public school, taking explicitly into account the endogeneity of the school choice at primary level. We find that parents caring more about school academic performance are more likely to have their children enrolled in public schools at the secondary school level, while parents taking into account peers’ socioeconomic background and school values are more likely to select voucher schools. We also show that while private voucher schools “cream skim” the best students from the socioeconomic standpoint, this does not necessarily hold for high ability students. JEL classification: I2. Key words: parental choice, primary-secondary school transition, cream skimming, Chile. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:edj:ceauch:269&r=lab |
| By: | Juha Tuomala |
| Abstract: | This study focuses on the threat effect of the activation reform of the Finnish labour market support system in 2006. In practice, participation in the labour market programmes became mandatory for the long-term recipients of the labour market support. Mandatory programme participation may provide incentive for some individuals to look for work in order to avoid the training programmes. The study examines whether the activation reform of 2006 encouraged individuals in the target group to look for employment. According to the results mandatory programme participation has no effect on the probability to find a job or to leave labour market support for some other reason. Conversely, the long-term recipients? participation in the labour market programmes has increased considerably due to the activation reform. |
| Keywords: | Labour market support, activation, unobserved heterogeneity |
| JEL: | J64 |
| Date: | 2010–02–03 |
| URL: | http://d.repec.org/n?u=RePEc:fer:wpaper:12&r=lab |
| By: | Berliant, Marcus; Kung, Fan-chin |
| Abstract: | The empirical literature has found evidence of locational sorting of workers by wage or skill. We show that such sorting can be driven by asymmetric information in the labor market, specifically when firms do not know if a particular worker is of high or low skill. In a model with two types and two regions, workers of different skill levels are offered separating contracts in equilibrium. When mobile low skill worker population rises or there is technological change that favors high skilled workers, integration of both types of workers in the same region at equilibrium becomes unstable, whereas sorting of worker types into different regions in equilibrium remains stable. The instability of integrated equilibria results from firms, in the region to which workers are perturbed, offering attractive contracts to low skill workers when there is a mixture of workers in the region of origin. |
| Keywords: | Adverse Selection; Stratification |
| JEL: | R13 D82 R12 |
| Date: | 2010–03–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21395&r=lab |
| By: | Koning, Pierre (CPB Netherlands Bureau for Economic Policy Analysis); Heinrich, Carolyn J. (University of Wisconsin-Madison) |
| Abstract: | In a growing number of countries, the delivery of social welfare services is contracted out to private providers, and increasingly, using performance-based contracts. Critics of performance-based incentive contracts stress their potential unintended effects, including cream-skimming and other gaming activities intended to raise measured performance outcomes. We analyze the incentive effects of performance-based contracts, as well as their impacts on provider job placement rates, using unique data on Dutch cohorts of unemployed and disabled workers that were assigned to private social welfare providers in 2002-2005. We take advantage of variation in contract design over this period, where procured contracts gradually moved from partial performance-contingent pay to contracts with 100%-performance contingent reward schemes, and analyze the impact of these changes using panel data that allow us to control for cohort types and to develop explicit measures of selection into the programs. We find evidence of cream-skimming and other gaming activities on the part of providers but little impact of these activities on job placement rates. Overall, moving to a system with contract payments fully contingent on performance appears to increase job placements for more readily employable workers, although it does not affect the duration of their jobs. |
| Keywords: | social welfare, performance contracting |
| JEL: | I38 H11 H53 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4801&r=lab |
| By: | Aguilar, Renato (Department of Economics, School of Business, Economics and Law, Göteborg University); Tansini, Ruben (Department of Economics Faculty of Social Sciences University of Uruguay) |
| Abstract: | In this paper we try to explain the academic performance of a sample of children starting their first year at public schools in 1999 in Montevideo, Uruguay. We are mainly interested in the effect of pre-school education on the children’s academic results. We found fairly strong empirical evidence to suggest that having pre-school education has a short term positive effect on these children’s results in the first year at school, and the long-term effect, after six years, seems to be somewhat weaker but is still positive. We also estimated several other factors connected with schools and with households that might lie behind children’s short-term and long-term performance. It is important to note that the results for boys are clearly differentiated from those for girls.<p> |
| Keywords: | pre-school education; school performance; Uruguay |
| JEL: | I21 |
| Date: | 2010–03–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0434&r=lab |
| By: | Peter Haan; Victoria Prowse |
| Abstract: | In this paper we use a dynamic structural life-cycle model to analyze the employment, fiscal and welfare effects induced by unemployment insurance. The model features a detailed specification of the tax and transfer system, including unemployment insurance benefits which depend on an individual's employment and earnings history. The model also captures the endogenous accumulation of experience which impacts on future wages, job arrivals and job separations. For better identification of the structural parameters we exploit a quasi-natural experiment, namely reductions over time in the entitlement period for unemployment insurance benefits which varied by age and experience. The results show that a policy cut in the generosity of unemployment insurance operationalized as a reduction in the entitlement period generates a larger increase in employment and yields a bigger fiscal saving than a cut operationalized as a reduction in the replacement ratio. Welfare analysis of revenue neutral tax and transfer reforms also favors a reduction in the entitlement period. |
| Keywords: | Unemployment insurance, Replacement ratio, Entitlement period, Life-cycle labor supply, Tax reform, Method of Simulated Moments |
| JEL: | C23 C25 J22 J64 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp986&r=lab |
| By: | Alejandra Mizala; Pilar Romaguera; Sebastian Gallegos |
| Abstract: | Using matching methods, we estimate the public-private wage gap in seven Latin American countries—Argentina, Bolivia, Brazil, Chile, Costa Rica, Paraguay and Uruguay—for the years 1999 and 2007. These methods do not require any estimation of earnings equations and hence no validity-out-of-the-support assumptions; furthermore, this approach allows us to estimate not only the average wage gap but also its distribution. Our main findings indicate that the average public sector worker earns more than his/her private counterpart. This differential has increased over the 1999-2007 period. Our results also show that there are important differences along the wage distribution. In particular, we find that the public sector wage premium declines as it moves up the conditional wage distribution, becoming a public sector wage penalty for the higher percentiles. Over the 1999-2007 period, the public-private wage gap changes from positive to negative at higher percentiles of the distribution, but still the most qualified public sector workers do face a wage penalty. Therefore, the profitability of public sector employment seems to be at its greatest at the lower end of the wage distribution. JEL Classification: J31, D31. Key words: Public-private Wage Gap, Matching, Public Sector, Latin America. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:edj:ceauch:268&r=lab |
| By: | ireggio@eco.uc3m.es |
| Abstract: | In order to understand what motivates parents to send their children to work, I apply a collective household model introducing child labor explicitly. Using data from Mexico, I estimate the mothers' bargaining power separately from the other parameters of the model. This parameter is then used in a second stage equation of children labor supply. I find that an increase in a mother's bargaining power is associated with fewer hours of work for her daughters but not for her sons. This implies that policies that target the mother as the recipient of welfare benefits, if they manage to affect the distribution of power within the household, may affect her children's work with different impacts for boys and girls. This result also suggests that the distribution of bargaining power within the household is a relevant factor that should be considered when analyzing household's decisions. |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we101305&r=lab |
| By: | Mark R. Rosenzweig (Economic Growth Center, Yale University) |
| Abstract: | I illustrate the variety of approaches to development issues microeconomists employ, focusing on studies that illuminate and quantify the major mechanisms posited by growth theorists who highlight the role of education in fostering growth. I begin with a basic issue: what are the returns to schooling? I discuss microeconomic studies that estimate schooling returns using alternative approaches to estimating wage equations, which require assumptions that are unlikely to be met in low-income countries, looking at inferences based on how education interacts with policy and technological changes in the labor and marriage markets. I then review research addressing whether schooling facilitates learning, or merely imparts knowledge, and whether there is social learning that gives rise to educational externalities. I next examine studies quantifying the responsiveness of educational investments to changes in schooling returns and assess whether and where there exist important barriers to such investments when returns justify their increase. |
| Keywords: | schooling, development, growth |
| JEL: | O11 O15 O33 J24 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:egc:wpaper:985&r=lab |
| By: | R Nakamura; L Siciliani |
| Abstract: | We study the association between education and body mass index across ten European countries (Denmark, Belgium, Greece, Spain, Ireland, Italy, Austria, Portugal, Finland and Sweden) using the European Community Household Panel. OLS and Probit estimation suggest that on average education is associated with lower BMI and a lower probability of being obese. For women, the difference of BMI between the lowest education group and the highest one ranges between -7.15% (Austria) and -2.43% (Finland). The reduction in the probability of being obese ranges between -7.18% (Spain) and -3% (Italy). For men, the reduction of BMI ranges between -4.29%(Denmark) and zero (Greece). The reduction in the probability of being obese ranges between -7.84% (Austria) and zero (Greece). Quantile regression suggests that the effect of education is larger at the upper quantiles than at the lower ones. Higher education also reduces the dispersion of the BMI distribution. |
| Keywords: | Obesity, Body Mass Index, Education |
| JEL: | I12 I20 C21 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:10/04&r=lab |
| By: | Koning, Pierre (CPB Netherlands Bureau for Economic Policy Analysis); Webbink, Dinand (CPB Netherlands Bureau for Economic Policy Analysis); Martin, Nicholas G. (Queensland Institute of Medical Research) |
| Abstract: | This paper analyses the effect of education on starting and quitting smoking, using longitudinal data of Australian twins. The endogeneity of education, censoring of smoking durations and the timing of starting smoking versus that of completion of education are taken into account by the flexible Mixed Proportional Hazard specification. Unobserved effects are assumed to be twin specific and possibly correlated with completed education years. We find that one additional year of education reduces the duration of smoking with 9 months but has no effect on the decision to start smoking. |
| Keywords: | education, duration models, smoking |
| JEL: | C41 I21 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4796&r=lab |
| By: | Bannier, Christina E.; Feess, Eberhard |
| Abstract: | Empirical and experimental papers find that high-powered incentives may reduce performance rather than improve it; a phenomenon referred to as choking under pressure. We show that competition for high ability workers nevertheless leads firms to offer high bonus payments, thereby deliberately accepting pressure-induced performance reductions. Bonus payments allow for a separating equilibrium in which only high ability workers choose high-powered incentive contracts. Low ability workers receive fixed payments and produce their maximum output which, however, is still below the reduced output of high ability workers. Bonus payments lead to a social loss which is increasing in the degree of competition. Our paper helps to explain why steep incentive schemes are persistent in highly-competitive industries such as investment banking, and why the observed performance sensitivity of CEO compensation is largely heterogeneous. -- |
| Keywords: | Performance-related pay,screening,choking under pressure,competition |
| JEL: | D86 J31 J33 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fsfmwp:135&r=lab |
| By: | Daniel Baumgarten; Ingo Geishecker; Holger Görg |
| Abstract: | The paper investigates the relationship between offshoring, wages, and the ease with which individuals\' tasks can be offshored. Our analysis relates to recent theoretical contributions arguing that there is only a loose relationship between the suitability of a task for offshoring and the associated skill level. Accordingly, wage effects of offshoring can be very heterogeneous within skill groups. We test this hypothesis by combining micro-level information on wages and demographic and workplace characteristics as well as occupational infor- mation relating to the degree of offshorability with industry-level data on off- shoring. Our main results suggest that in partial equilibrium, wage effects of offshoring are fairly modest but far from homogeneous and depend signifcantly on the extent to which the respective task requires personal interaction or can be described as non-routine. When allowing for cross-industry movement of workers, i.e., looking at a situation closer to general equilibrium, the magnitude of the wage effects of offshoring becomes substantial. Low- and medium-skilled workers experience signi¯cant wage cuts due to offshoring which, however, again strongly depend on the degree of personal interaction and non-routine content. |
| Keywords: | Tasks, O®shoring, Outsourcing, Skills, Wages |
| JEL: | F1 F2 J3 |
| Date: | 2010–03–17 |
| URL: | http://d.repec.org/n?u=RePEc:got:cegedp:98&r=lab |
| By: | Bonsang Eric; Adam Stéphane; Perelman Sergio (METEOR) |
| Abstract: | This paper analyzes the effect of retirement on cognitive functioning using two large scale surveys. On the one hand the HRS, a longitudinal survey among individuals aged 50+ living in the United States, allows us to control for individual heterogeneity and endogeneity of the retirement decision by using the eligibility age for Social Security as an instrument. On the other hand, a comparable international European survey, SHARE, allows us to identify the causal effect of retirement on cognitive functioning by using the cross-country differences in the age-pattern of retirement. The results highlight in both cases a significant negative, and quantitatively comparable, effect of retirement on cognitive functioning. Our results suggest that promoting labor force participation of older workers is not only desirable to insure the viability of retirement schemes, but it could also delay cognitive decline, and thus the occurrence of associated impairments at older age. |
| Keywords: | labour economics ; |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2010005&r=lab |
| By: | Fischer, Justina AV |
| Abstract: | Early retirement of workers is used by firms as means to rejuvenate their workforces. In principle, workers can either simply be laid off or can be offered an early retirement option combined with a financial bonus. However, dismissing masses of older workers may be detrimental to social peace and stability and damage the firm’s reputation, while entry into early retirement with a severance pay at least maintains the semblance of a worker’s voluntary decision. Cross-national analyses of this topic using micro data are, however, widely missing. Using the SHARE (Survey of Health, Aging and Retirement in Europe) data set, this paper fills this gap by investigating to what extent institutional factors such as the generosity of the pension system and strong unions influence firms’ rejuvenation policies. Stronger unions appear to lead to a higher likelihood of receiving a severance pay, as does a more generous pension system. In contrast, a higher decrease in wealth accrual leads to a higher probability of simple lay-off. It is concluded that the current reforms which aim at lowering the replacement rate and employment protection will most probably lead to more dismissals of older workers without severance pay. |
| Keywords: | early retirement; involuntary early retirement; severance pay; social security; pensions; employment protection; unions |
| JEL: | J14 J21 J22 J26 |
| Date: | 2010–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:20343&r=lab |
| By: | DUJARDIN, Claire (UniversitŽ catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium); GOFFETTE-NAGOT, Florence (UniversitŽ de Lyon, F-69003 Lyon, France; CNRS, GATE, UMR 5824, Ecully, F-69130, France) |
| 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 householdÕs children and the spouseÕs 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 |
| JEL: | R2 I32 |
| Date: | 2009–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2009084&r=lab |
| By: | van Ham, Maarten (University of St. Andrews); Findlay, Allan (University of Dundee); Manley, David (University of St. Andrews); Feijten, Peteke (University of St. Andrews) |
| Abstract: | This paper seeks to unpick the complex effects of migration, country of birth, and place of residence in Scotland on individual success in the labour market. We pay specific attention to the labour force experience of English-born residents in Scotland, whom the cross sectional literature suggests are more likely to achieve high occupational status than the Scottish born residents. Using data from the Scottish Longitudinal Study – linking individual records from the 1991 and 2001 Censuses – and logistic regressions we show that those living in, or moving to Edinburgh, and those born in England and Wales are the most likely to experience upward occupational mobility. |
| Keywords: | escalator region, social class, social mobility, longitudinal data, Scotland |
| JEL: | J24 J61 J62 R23 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4797&r=lab |
| By: | Powdthavee, Nattavudh (University of York) |
| Abstract: | This paper documents evidence that rejects the paradox of dissatisfied union members. Using eleven waves of the BHPS, it studies the past, contemporaneous, and future effects of union membership on job satisfaction. By separating union "free-riders" from other nonmembers in the fixed effects equations, I find significant anticipation effects to unionism for prospective members and covered nonmembers of both genders. Workers go on to report, on average, a significant net increase in overall job satisfaction at the year unionization occurs. Nonetheless, adaptation to unionism is complete within the first few years of joining a unionized firm. One hypothesis for this is that workers adapt their reported satisfaction over time to support their union bargaining efforts, which would be consistent with the explanation given by Freeman and Medoff (1984) of union’s role in fanning the flame of discontent to the management during contract negotiations. |
| Keywords: | union coverage, union membership, job satisfaction, anticipation, adaptation, free-rider, longitudinal |
| JEL: | J28 J5 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4806&r=lab |
| By: | Brahim Boudarbat; Victor Chernoff |
| Abstract: | This study uses data from the Follow-up of Graduates Survey – Class of 2000, to look at the determinants of education-job match among Canadian university graduates. From a public policy perspective, the question of education-job match is relevant given the substantial investment society puts into its postsecondary institutions, and the role devoted to human capital in economic development. Our results indicate that one graduate out of three (35.1%) is in a job that is not closely related to his or her education. The most important result is that demographic and socioeconomic characteristics (gender and family background) do not significantly affect the match. On the other hand, education characteristics strongly influence match, with field specific programs (such as “Health sciences” and “Education”) having the highest likelihood of obtaining an education-job match. In addition, the level of education (i.e. graduates with a postgraduate degree vs. a bachelor degree), as well as good grades, strongly affect the match. Employment characteristics also affect the match, but to a mixed extent, with certain characteristics, such as industry, as well as working full-time (vs. part time) affecting the match to a strong extent, while others, such as the permanence of employment, as well as the method used to obtain employment, not having a significant effect on match. <P>Cette étude utilise les données de l’Enquête de suivi auprès des diplômés de la promotion de 2000, réalisée en 2005. L’objectif est d’examiner les déterminants de la correspondance entre le programme d’études complété et l’emploi obtenu par les diplômés universitaires canadiens. D’une perspective de politiques publiques, la question de la correspondance entre les études et l’emploi est pertinente compte tenu de l'importante des moyens investis par la société canadienne dans ses institutions d'enseignement postsecondaire, ainsi que le rôle dévoué au capital humain dans le développement économique. Nos résultats indiquent qu’un diplômé sur trois (35,1 %) est dans un emploi qui n'est pas étroitement lié à ses études. Toutefois, le résultat le plus important est que les caractéristiques démographiques et socio-économiques des diplômés (sexe et background familial) n'affectent pas de manière significative la probabilité d’obtenir un emploi correspondant à ses études. Ce sont les caractéristiques du programme d’études (niveau et domaine) qui influencent fortement cette probabilité. Les diplômés des domaines d’études à caractère spécifique comme la santé et l’éducation sont les plus susceptibles d'obtenir un emploi qui correspond à leurs études. En outre, un niveau de scolarité élevé (deuxième ou troisième cycles), ainsi que de bonnes notes, ont un grand effet positif sur la probabilité d’accéder à un emploi en adéquation avec les études. Les caractéristiques de l'emploi affectent également cette adéquation, mais dans une mesure contrastée, avec certaines caractéristiques, comme l'industrie et le travail à temps plein, qui ont un effet significatif, tandis que d'autres, telles que la permanence de l'emploi et la méthode utilisée pour obtenir un emploi, qui n’ont pas d’effet significatif. |
| Keywords: | education-job match, university graduates, Canada, Follow-up of Graduates Survey, correspondance études-emploi, diplômés universitaires, Canada, Enquête de suivi auprès des diplômés. |
| Date: | 2010–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2010s-14&r=lab |
| By: | Emily Pas Isenberg |
| Abstract: | Starting in 1999, New York State implemented class size reduction policies targeted at early elementary grades, but due to funding limitations, most schools reduced class size in some grades and not others. I use class size variation within a school induced by the policies to construct instrumental variable estimates of the effect of class size on teacher attrition. Teachers with smaller classes were not significantly less likely to leave schools in the full sample of districts but were less likely to leave a school in districts that targeted the same grade across schools. District-wide class size reduction policies were more likely to persist in the same grade in the next year, suggesting that teacher expectations of continued smaller classes played a role in their decision whether or not to leave a school. A decrease in class size from 23 to 20 students (a decrease of one standard deviation) under a district-wide policy decreases the probability that a teacher leaves a school by 4.2 percentage points. |
| Keywords: | class size, teachers, teacher attrition |
| JEL: | I29 J45 J62 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:10-05&r=lab |
| By: | Maria Bas; Juan Carluccio |
| Abstract: | Do variations in labor market institutions across countries affect the cross-border organization of the firm? Using firm-level data on multinationals located in France, we show that multinational firms are more likely to import intermediate inputs from external independent suppliers instead of importing from their own subsidiaries when importing from countries with empowered unions. Moreover, this effect is stronger for firms operating in capital-intensive industries. We propose a theoretical mechanism that rationalizes these findings. The fragmentation of the value chain weakens the union’s bargaining position, by limiting the amount of revenues that are subject to union extraction. The outsourcing strategy reduces the share of surplus that is appropriated by the union, which enhances the firm’s incentives to invest. Since investment creates relatively more value in capital-intensive industries, increases in union power are more likely to be conducive to outsourcing in those industries. Overall, our findings suggest that multinational firms use their organizational structure strategically when sourcing intermediate inputs from unionized markets. |
| Keywords: | Wage bargaining; trade unions; sourcing; multinational firms |
| JEL: | F10 J52 L22 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2010-03&r=lab |
| By: | CREMER, Helmuth; DE DONDER, Philippe; PESTIEAU, Pierre (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)) |
| Keywords: | elitism, egalitarianism, private education |
| Date: | 2009–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2009023&r=lab |
| By: | Arnstein Aassve; Cristina Ruggeri; Zsolt Spéder |
| Abstract: | Increasing life expectancy coupled with declining birth rates is prompting European countries to revise their current pension schemes. The key elements of pension reforms are 1) introducing funded schemes as a means to supplement the current pay-as-you-go system, and 2) a lengthening of the working careers of European citizens. The policy reforms needed constitutes perhaps the biggest challenge facing European policy makers since the introduction of the welfare state after the Second World War. The urgency of the policy reforms are reflected by the European Council Summits of Stockholm (2001) and Barcelona (2002), where the attending policy makers agreed to both increase the labour force participation among older workers and to delay the retirement period. Notwithstanding the efforts, recent changes in the employment rates and the retirement age indicate that the great majority of countries are way off the targets set for 2010. On the backdrop of the policy challenges lying ahead, we consider in this paper individuals' preferences for work and retirement in 23 European countries. A deeper understanding of these preferences helps policy makers, not only informing them about the potential success of the planned pension reforms, but also to make adjustments to its design that may lead to efficiency gains in welfare provision. We find that on average individuals prefer to retire at a younger age than the current mean retirement age. However, there is huge variation in these preferences both at the individual and country levels. We find rather robust evidence to suggest that individuals are willing to work longer as the average life expectancy is increasing. |
| Keywords: | life expectancy, GDP, retirement preferences, pension reforms, European Social Survey, multilevel models |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:don:donwpa:022&r=lab |
| By: | Jolanda Hessels; U. Brixy |
| Abstract: | We explore the role of human capital aspects in explaining whether nascents succeed in the start-up of a new venture. The data used are based on a survey among nascent entrepreneurs in Germany and the Netherlands supplemented by follow-up interviews one year after the first contact. Applying multinomial probit estimations we find that several human capital aspects are related to the probability of getting the business started. For example, a high general degree of human capital (i.e. holding a university degree) lowers the likelihood to succeed in the start-up of the venture, whereas recent employment experience (as opposed to being unemployed or out of the labor force) increases start-up success. Furthermore, we find that specialists are more likely to succeed in getting their business started than generalists. |
| Date: | 2010–03–18 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h201013&r=lab |
| By: | Gutiérrez-i-Puigarnau, Eva (VU University Amsterdam); van Ommeren, Jos (VU University Amsterdam) |
| Abstract: | A new paradigm for transport economists has been established: revenues of a welfare-maximising road tax should be employed to reduce the level of a distortionary income tax. An essential modelling assumption to reach this conclusion is that the number of workdays is optimally chosen, whereas daily workhours are fixed, implying that given a road tax, workers may only reduce their commuting costs by reducing total labour supply. However, a labour supply model which also allows for optimally chosen daily hours implies that commuting costs increase daily hours, whereas the effect on total labour supply is ambiguous. This paper addresses this issue empirically by analysing the relationship between labour supply patterns and commuting distance using the socio-economic panel data for Germany between 1997 and 2007. Endogeneity of commuting distance is accounted for by using employer-induced changes in commuting distance. In line with the theoretical model developed, we find that commuting distance has a positive effect on daily hours. Our analysis does not find a negative effect of commuting distance on total labour supply, suggesting that a reduction in the income tax, as advocated in the literature, may not be necessary. |
| Keywords: | commuting cost, congestion tax, labour supply |
| JEL: | J22 R41 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4798&r=lab |
| By: | Anna Agliari (DISCE, Università Cattolica); George Vachadze (CUNY, New York (USA)) |
| Abstract: | We investigate Matsuyama's (Econometrica, 72, pp. 853-84, 2004) model modi- fied only to include endogenous and forward looking labor supply decision. Young agents supply one unit of labor endowment elastically to a competitive labor market. While, old agents of ex-ante identical individuals are divided in equi- librium into depositors and entrepreneurs. Depositors lend funds in the form of interest bearing loans, while entrepreneurs borrow funds in the competitive credit market. We emphasize the interaction between credit and labor markets and show the possibility of occurrence of multiple steady states, local and global indeterminacy, and endogenous fluctuations. When young agents become optimistic about the future deposit rate then they decide to work harder and invest more. Countercyclical borrowing constraint will help agents to fulfill their initial optimistic expectations, because the next period credit volume and deposit rate can increase simultaneously. By conducting global bifurcation analysis, we show that credit cycles can occur through a self- fulfilling expectation mechanism. History-versus-expectations considerations can exist and escape from underdevelopment as well as fall into poverty can to be a self-fulfilling prophecy. |
| Keywords: | Borrowing constraint; Credit cycles; Elastic labor supply; Endogenous fluctuations; Self-fulfilling expectations. |
| JEL: | C62 E32 E44 J22 O11 O16 O41 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie2:dises1059&r=lab |
| By: | Dandan Zhang (Asian Development Bank Institute) |
| Abstract: | The employment shock of late 2008 in the People’s Republic of China (PRC) may have been a product of three different events: (i) the contractionary macroeconomic policies introduced by the government and the central bank in 2007 to slow growth, (ii) the introduction of the new Labor Contract Law at the start of 2008, and (iii) the reduction in export orders due to the global financial crisis from the second half of 2008. These three events occurred sequentially, and their impact on employment has been borne most heavily by rural–urban migrants. Using unique data that track 5,000 migrant households in 15 cities from 2008 to 2009, this paper documents the size of the employment impact of the economic downturn, investigates the geographic location and industry distribution of the effect, and examines the types of migrant workers who lost their jobs in 2008 because of the economic downturn. We find that job loss is not confined to export manufacturing industries, nor is it restricted to coastal cities where export industries are located. We interpret this widespread job loss to indicate that the employment shock that took place in the PRC at the end of 2008 and early 2009 was a response to both the global financial crisis and domestic economic policies. |
| Keywords: | employment shocks, China, labour policy, global financial crisis |
| JEL: | J64 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:eab:laborw:2168&r=lab |
| By: | PESTIEAU, Pierre (UniversitŽ de Lige, Belgium); POSSEN, Uri M. (Cornell University, Ithaca, NY, USA) |
| Keywords: | retirement decision, defined benefit defined contribution |
| JEL: | H55 J26 |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2009043&r=lab |
| By: | Arijit Mukherjee (University of Nottingham and The Leverhulme Centre for Research in Globalisation and Economic Policy); Laixun Zhao (Research Institute for Economics and Business Administration, Kobe University) |
| Abstract: | Why do producers often accept parallel trade in some markets such as automobiles, clothing, toys and consumer electronics? This paper identifies two new factors, viz., market stealing and union-wage cutting, which may make parallel trading beneficial to a manufacturer. Specifically, (i) under perfectly competitive labour markets in both the home and foreign countries, parallel trade may help a manufacturer to steal market shares from competitors, if it is more cost efficient or sells in more markets than competitors; and (ii) in a unionized labour market, parallel trade may help by lowering the unionized wage. These benefits of parallel trade disappear when such factors are removed. |
| Keywords: | Firm-asymmetry; Labour Union; Parallel import |
| JEL: | F21 F23 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2010-09&r=lab |
| By: | Heidi Garrett-Peltier; Jeff Thompson |
| Abstract: | The Governors of Massachusetts, Connecticut, and several other states have recently proposed employer tax credits as measures to fight high unemployment in their states. Such policies are also being considered at the federal level. In the Working Paper, <span style="font-style: normal;">Jeff Thompson and Heidi Garrett-Peltier</span> present evidence that such policies, in fact, do little to increase aggregate demand, and instead only modestly reduce the after-tax cost of labor in an economy with high unemployment, falling wages, and weak demand They suggest a more effective approach to creating jobs in the states: increasing spending in labor-intensive sectors and programs that are matched by federal funds, such as Medicaid. These expenditures would be particularly effective if they were financed through temporary high-income tax increases. |
| Keywords: | State and Local Taxation, Subsidies, and Revenue, state and Local Budget and Expenditures, State and Local Government, Health, Education, and Welfare, Business Taxes and Subsidies,Labor Demand, Wages, Compensation, and Labor Costs |
| JEL: | H71 H72 H75 H25 J23 J38 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:uma:periwp:wp219&r=lab |
| By: | Katja Maria Kaufmann |
| Abstract: | Differences in college enrollment rates between poor and rich students are a prevalent phenomenon, but particularly striking in Latin America. The literature suggests explanations such as differences in "college preparedness" on the one hand, in that poor students lack skills that enable them to benefit from college, and "credit constraints" on the other hand. One explanation that has been neglected in this analysis consists of differences in information sets between the poor and the rich - for example about career opportunities-translating into different perceptions of individual returns to college. Data on people's subjective expectations of returns allow to take this factor into account and to directly address the following identification problem: conditional on their information sets poor people might expect low returns and thus decide not to attend. Or they might face high (unobserved) costs that prevent them from attending de-spite high expected returns. Conventional approaches rely on strong assumptions about people's information sets and about how they form expectations to address this identification problem. Data on people's subjective expectations of returns as well as on their schooling decisions allow me to directly estimate and compare cost distributions of poor and rich individuals. I find that poor individuals require significantly higher expected returns to be induced to attend college, implying that they face higher costs than individuals with wealthy parents. I then test predictions of a model of college attendance choice in the presence of credit constraints, using parental income and wealth as a proxy for the household's (unobserved) interest rate. I find that poor individuals with high expected returns are particularly responsive to changes in direct costs, which is consistent with credit constraints playing an important role. Evaluating potential welfare implications by applying the Local Instrumental Variables approach of Heckman and Vytlacil (2005) to my model, I find that a sizeable fraction of poor individuals would change their decision in response to a reduction in direct costs. Individuals at the margin have expected returns that are as high or higher than the individuals already attending college, suggesting that government policies such as fellowship programs could lead to large welfare gains. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:362&r=lab |
| By: | Martin Gustafsson (Department of Economics, University of Stellenbosch) |
| Abstract: | Various data analysis approaches are used to gauge recent pre-primary enrolment trends in South Africa and the level of compliance with official age-grade norms in Grades R and 1. An analysis of the circumstances of Grade R learners finds that large class sizes are a problem. Two separate logit models are used to examine what factors are associated with better pre-school participation and whether participation in pre-school leads to better learning outcomes in primary school. |
| Keywords: | Pre-primary schooling, South Africa, Age-grade norms |
| JEL: | I21 I28 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers104&r=lab |
| By: | María Nieves Valdés |
| Abstract: | In this paper I present a dynamic structural model of girls' schooling choices and estimate it using the Mexican PROGRESA database. This structural approach allows evaluating the efectiveness of several policies to increase school reentry rates for girls in low-income households. To increase school attendance among poor children in developing countries, policy makers have implemented conditional cash transfers programs. Although transfers have been successful in keeping girls at school, they do not increase school attendance among girls who have dropped out of school. Cash transfer programs may fail because most of these poor girls leave school to stay at home helping in housework, rather than working for a salary. Results suggest that effective policies to increase school reentry rates for poor girls are free access to community nurseries and kindergartens, and increasingg the availability of secondary schools. |
| Keywords: | Policy evaluation, Dynamic discrete choice structural models, School choices for girls, School reentry, PROGRESA |
| JEL: | I21 I28 J16 O15 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we101406&r=lab |
| By: | Arne Feddersen (Chair for Economic Policy, University of Hamburg); Wolfgang Maennig (Chair for Economic Policy, University of Hamburg) |
| Abstract: | This paper contributes to the analysis of large sporting events using highly disaggregated data. We use the 1996 Olympic Games in Atlanta, which are also outstanding as one of the very few large sporting events where ex post academic analysis found significant positive effects. This paper extends earlier studies in several ways. First, monthly rather than quarterly data will be employed. Second, the impact of the 1996 Olympics will be analyzed for 16 different sectors or subsectors. Third, in addition to standard DD models, we use a non-parametric approach to flexibly isolate employment effects. Regarding the Olympic effect, hardly any evidence for a persistent shift in the aftermath of or the preparation for the Olympic Games is supported. We find a significant positive employment effect in the monthly employment statistics exclusively during the staging of the Olympic Games (July 1996). These short-term effects are concentrated in the sectors of “retail trade”, “accommodation and food services”, and “arts, entertainment, and recreation”, while other sectors showed no such effects. |
| Keywords: | Olympic Games, Economic Impact, Ex-post Analysis, Employment, Sectoral Data |
| JEL: | H54 R12 L83 |
| Date: | 2010–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:hce:wpaper:035&r=lab |
| By: | Christian Belzil (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, ENSAE - École Nationale de la Statistique et de l'Administration Économique - ENSAE, IZA - Institute for the Study of Labor); J. Hansen (IZA - Institute for the Study of Labor, CIREQ - Centre Interuniversitaire de Recherche en Economie Quantitative, CIRANO - Montréal, Department of Economics, Concordia University - Concordia University) |
| Abstract: | We investigate if, and under which conditions, the distinction between dictatorial and incentive-based policy interventions, affects the capacity of Instrument Variable (IV) methods to estimate the relevant treatment effect parameter of an outcome equation. The analysis is set in a non-trivial framework, in which the right-hand side variable of interest is affected by selectivity, and the error term is driven by a sequence of unobserved life-cycle endogenous choices. We show that, for a wide class of outcome equations, incentive-based policies may be designed so to generate a sufficient degree of post-intervention randomization (a lesser degree of selection on individual endowments among the sub-population affected). This helps the instrument to fulfill the orthogonality condition. However, for a same class of outcome equation, dictatorial policies that enforce minimum consumption cannot meet this condition. We illustrate these concepts within a calibrated dynamic life cycle model of human capital accumulation, and focus on the estimation of the returns to schooling using instruments generated from mandatory schooling reforms and education subsidies. We show how the nature of the skill accumulation process (substitutability vs complementarity) may play a fundamental role in interpreting IV estimates of the returns to schooling. |
| Keywords: | Returns to schooling, Instrumental Variable methods, Dynamic Discrete Choice, Dynamic Programming, Local Average Treatment Effects . |
| Date: | 2010–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00463877_v1&r=lab |
| By: | Seth Carnahan; Rajshree Agarwal; Benjamin Campbell; April Franco |
| Abstract: | Previous studies of employee entrepreneurship have not considered the rewards available to potential entrepreneurs inside of their current organizations. This study hopes to fill this gap by investigating how the firm’s compensation structure, an important strategic decision closely scrutinized by human resource management, affects the mobility and entrepreneurship decisions of its employees, particularly those employees at the extreme ends of the performance distribution. Using a comprehensive U.S. Census data set covering all employees in the legal services industry across ten states for fifteen years, we find that high performing employees are less likely to leave firms with highly dispersed compensation structures. However, if high performers do leave employers that offer highly disperse compensation structures, they are more likely to join new firms. Less talented employees, on the other hand, are more likely to leave firms with greater pay dispersion. Unlike high performers, we find that low performers are less likely to move to new ventures when departing firms with highly disperse compensation structures. |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:10-06&r=lab |
| By: | OOGHE, Erwin (Department of Economics, KULeuven, B-3000 Leuven, Belgium); SCHOKKAERT, Erik (UniversitŽ catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium and Department of Economics, KULeuven, B-3000 Leuven, Belgium) |
| Abstract: | Introducing school accountability may create incentives for efficiency. However, if the performance measure used does not correct for pupil characteristics, it will lead to an inequitable treatment of schools and create perverse incentives for cream-skimming. We apply the theory of fair allocation to show how to integrate empirical information about the educational production function in a coherent theoretical framework. The requirements of rewarding performance and correcting for pupil characteristics are incompatible if we want the funding scheme to be applicable for all educational production functions. However, we characterize an attractive subsidy scheme under specific restrictions on the educational production function. This subsidy scheme uses only information which can be controlled easily by the regulator. We show with Flemish data how the proposed funding scheme can be implemented. Correcting for pupil characteristics has a strong impact on the subsidies (and on the underlying performance ranking) of schools |
| Date: | 2009–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2009085&r=lab |
| By: | Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); Martin G. Kocher (University of Munich, Department of Economics); Vera Popova (Max Planck Institute of Economics, Strategic Interaction Group) |
| Abstract: | One-shot interaction and repeated interaction often co-exist in the real world. We study possible behavioral effects of this co-existence in a principal-agent setting, in which a principal simultaneously employs a permanent and a temporary agent. Our experimental results indicate that there is "discrimination" between the two agents and that the available information for agents determines the extent of this discrimination, even though the theoretical solution of the game implies equal treatment of agents. Discrimination is, thus, a consequence of reciprocity. Agents that are discriminated against react negatively by withholding effort. |
| Keywords: | principal-agent problem, permanent and temporary employment, fairness, wage discrimination |
| JEL: | C72 C91 D21 J31 |
| Date: | 2010–03–16 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2010-016&r=lab |
| By: | Bram Timmermans |
| Abstract: | The aim of the paper is to investigate the effect of previous co-worker experience on the survival of new established firms. For the empirical analysis I use the Danish Integrated Database of Labor Market Research (IDA). This longitudinal employer-employee database allows me to identify co-worker experience among all members of the firm. In addition, I will make a distinction between ordinary start-ups and entrepreneurial spin-offs. The results show that previous co-worker experience has a positive effect on new firm survival. This effect appears to be valid predominantly for ordinary start-ups then for spin-offs. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:aal:abbswp:10-17&r=lab |
| By: | Gong, Cathy Honge (University of Canberra); Leigh, Andrew (Australian National University); Meng, Xin (Australian National University) |
| Abstract: | This paper estimates the intergenerational income elasticity for urban China, paying careful attention to the potential biases induced by income fluctuations and life cycle effects. Our preferred estimates are that the intergenerational income elasticities are 0.74 for father-son, 0.84 for father-daughter, 0.33 for mother-son, and 0.47 for mother-daughter. This suggests that while China has experienced rapid growth of absolute incomes, the relative position of children in the distribution is largely determined by their parents’ incomes. Investigating possible causal channels, we find that parental education, occupation, and Communist Party membership all play important roles in transmitting economic status from parents to children. |
| Keywords: | intergenerational mobility, transgenerational persistence, political party membership |
| JEL: | D10 D31 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4811&r=lab |