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on Labour Economics |
| By: | Bachmann, Ronald (RWI Essen); Bauer, Thomas (RWI Essen); David, Peggy (RWI Essen) |
| Abstract: | Economic conditions at the time of labour market entry can induce wage differentials between workers entering the labour market at different points in time. While the existence and persistence of these entry wage differentials are well documented, little is known about their interaction with employees' mobility behaviour. This paper contributes to this research area by analyzing the interaction between job mobility and entry wage differentials using German administrative data. The results suggest that labour market entrants earning less than the average starting wage are more likely to change jobs, directly from employer to employer as well as indirectly via an unemployment spell. In addition they are more likely to change occupation. Moreover, job mobility tends to reduce the effects of labour market entry conditions, implying that job mobility operates as an adjustment mechanism that mitigates entry wage differentials. These results hold not only for high-skilled, but also for medium-skilled and unskilled workers. |
| Keywords: | mobility, job-to-job, wages, labour market entry, initial conditions |
| JEL: | E24 J31 J62 J64 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4965&r=lab |
| By: | Jahn, Elke J. (IAB, Nürnberg); Rosholm, Michael (Aarhus School of Business) |
| Abstract: | We perform a comprehensive analysis of the stepping-stone effect of temporary agency employment on unemployed workers. Using the timing-of-events approach, we not only investigate whether agency employment is a bridge into regular employment but also analyze its effect on post-unemployment wages and job stability for unemployed Danish workers. We find evidence of large positive treatment effects, particularly for immigrants. There is also some indication that higher treatment intensity increases the likelihood of leaving unemployment for regular jobs. Our results show that agency employment is even more effective in tight labor markets, where firms use agency employment primarily to screen potential candidates for permanent posts. Finally, our results suggest that agency employment may improve subsequent match quality in terms of wages and job duration. |
| Keywords: | temporary agency employment, stepping stone, employment stability, wages |
| JEL: | C41 J64 J30 J40 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4973&r=lab |
| By: | Kamil Dybczak; Kamil Galuscak |
| Abstract: | Using the Albrecht et al. (2003) version of the Machado and Mata (2005) decomposition technique along the wage distribution, we find that immigrant workers do not affect changes in the Czech wage structure between 2002 and 2006 despite their substantial inflows. Instead, changes in the wage structure are explained solely by increasing returns of native workers, while changes in the observed characteristics of native workers, particularly a rising level of education, are responsible for increasing wage dispersion. The sizeable inflows of foreign workers in the sample years are concentrated among young workers with primary and tertiary education and are primarily due to rising labour demand. The negative immigrant-native wage gaps are persistent along the wage distribution and are explained mainly by differences in observed characteristics. We provide evidence on increasing returns to education of native workers along the wage distribution. The returns are higher in 2006 than in 2002, in line with the evidence in the previous literature. |
| Keywords: | Immigration, matched employer-employee data, quantile regression, wage gap decomposition, wage structure. |
| JEL: | J31 C21 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2009/11&r=lab |
| By: | Hani Mansour |
| Abstract: | Since September 2000, as a result of mobility restrictions, the supply of Palestinian workers competing for local jobs in the West Bank has increased by about fifty percent. This paper takes advantage of this unique natural experiment to study the effects of labor supply shocks on labor market outcomes. Using quarterly information on wages and employment in each city in the West Bank, the paper analyzes the short-run adjustment of labor markets to a large inflow of workers separately from the effects of political instability. The results suggest that low-skilled wages are adversely affected by an increase in the supply of low- and high-skilled workers, while high- skilled wages are only weakly negatively related to an increase in their own supply. This is consistent with a scenario in which high skilled workers compete for low skilled jobs, pushing the low skilled into unemployment. This latter hypothesis is confirmed by analyzing the effects of changes in labor supply on unemployment. |
| Keywords: | Immigration, Labor Supply Shocks, Border Controls |
| JEL: | J61 J21 D74 C21 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1014&r=lab |
| By: | Alejandro Hoyos; Hugo Ñopo; Ximena Peña |
| Abstract: | This paper surveys gender wage gaps in Colombia from 1994 to 2006, using matching comparisons to examine the extent to which individuals with similar human capital characteristics earn different wages. Three sub-periods are considered: 1994-1998; 2000-2001; and 2002- 2006. The gaps dropped from the first to the second period but remained almost unchanged between the second and the third. The gender wage gap remains largely unexplained after controlling for different combinations of socio-demographics and job-related characteristics, reaching between 13 and 23 percent of average female wages. That gap is lower at the middle of the wage distributions than the extremes, possibly due to a gender-equalizing effect of the minimum wage. Moreover, the gap is more pronounced for low-productivity workers and those who need flexibility to participate in labor markets. This suggests that policy interventions in the form of labor market regulations may have little impact on reducing gender wage gaps. |
| Date: | 2010–05–23 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:007094&r=lab |
| By: | Lamo, Ana (European Central Bank); Messina, Julián (World Bank) |
| Abstract: | This paper studies the incidence and consequences of the mismatch between formal education and the educational requirements of jobs in Estonia during the years 1997-2003. We find large wage penalties associated with the phenomenon of educational mismatch. Moreover, the incidence and wage penalty of mismatches increase with age. This suggests that structural educational mismatches can occur after fast transition periods. Our results are robust for various methodologies, and more importantly regarding departures from the exogeneity assumptions inherent in the matching estimators used in our analysis. |
| Keywords: | education mismatch, wage determination, matching estimators |
| JEL: | J0 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4982&r=lab |
| By: | Leigh, Andrew (Australian National University) |
| Abstract: | How are hourly wages affected by the Earned Income Tax Credit? Using variation in state EITC supplements, I find that a 10 percent increase in the generosity of the EITC is associated with a 5 percent fall in the wages of high school dropouts and a 2 percent fall in the wages of those with only a high school diploma, while having no effect on the wages of college graduates. Given the large increase in labor supply induced by the EITC, this is consistent with most reasonable estimates of the elasticity of labor demand. Although workers with children receive a much larger EITC than childless workers, and the effect of the credit on labor force participation is larger for those with children, the hourly wages of both groups are similarly affected by an EITC increase. As a check on this strategy, I also use federal variation in the EITC across gender-age-education groups, and find that those demographic groups that received the largest EITC increases also experienced a drop in their hourly wages, relative to other groups. |
| Keywords: | taxation incidence, labor supply, simulated instrument |
| JEL: | H22 H23 J22 J30 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4960&r=lab |
| By: | Hani Mansour |
| Abstract: | Models in which employers learn about the productivity of young workers, such as Altonji and Pierret (2001), have two principal implications: First, the distribution of wages becomes more dispersed as a cohort of workers gains experience; second, the coefficient on a variable that employers initially do not observe, such as the Armed Forces Qualification Test (AFQT) score, grows with experience. If employers' learning varies significantly across occupations, both of these indicators of learning should covary positively across groups defined by a worker's occupational assignment at labor market entry. This paper tests this implication of the employer learning model using data from the NLSY and CPS. I find that occupations with high growth in the variance of residual wages over the first ten years of the worker's career are also the occupations with high growth in the AFQT coefficient, confirming the learning perspective. Interestingly, occupations that my analysis characterizes as having a low level of employer learning are not occupations where employers know little about the worker after ten years of experience; instead they appear to be occupations where employers have already learned about the worker's AFQT score at the time of hire. I provide several pieces of evidence that occupational assignment affects the learning process independently from education and that the results are not driven by workers' occupational mobility. |
| Keywords: | Wage Dynamics, Occupational Choice, Earnings Inequality |
| JEL: | J24 J31 J71 J62 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1015&r=lab |
| By: | Heckman, James J. (University of Chicago); Humphries, John Eric (University of Chicago); Mader, Nicholas S. (University of Chicago) |
| Abstract: | The General Educational Development (GED) credential is issued on the basis of an eight hour subject-based test. The test claims to establish equivalence between dropouts and traditional high school graduates, opening the door to college and positions in the labor market. In 2008 alone, almost 500,000 dropouts passed the test, amounting to 12% of all high school credentials issued in that year. This chapter reviews the academic literature on the GED, which finds minimal value of the certificate in terms of labor market outcomes and that only a few individuals successfully use it as a path to obtain post-secondary credentials. Although the GED establishes cognitive equivalence on one measure of scholastic aptitude, recipients still face limited opportunity due to deficits in noncognitive skills such as persistence, motivation and reliability. The literature finds that the GED testing program distorts social statistics on high school completion rates, minority graduation gaps, and sources of wage growth. Recent work demonstrates that, through its availability and low cost, the GED also induces some students to drop out of school. The GED program is unique to the United States and Canada, but provides policy insight relevant to any nation's educational context. |
| Keywords: | returns to education, GED, dropouts, graduation rate, noncognitive skills |
| JEL: | I21 J24 J31 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4975&r=lab |
| By: | Joanne Lindley (University of Surrey); Steven McIntosh (University of Sheffield) |
| Abstract: | Much has been written about the impact of over-education on wages using cross-sectional data, although there have been few studies that analyse the returns to over-education in a dynamic setting. This paper adds to the existing literature by using panel data to investigate the impact and permanence of over-education wage penalties, whilst controlling for unobserved individual heterogeneity. Our fixed effects estimates suggest that the over-education wage penalty cannot solely be explained by unobserved heterogeneity. Over-education is permanent for many workers since around 50 percent of workers over-educated in 1991 are still over-educated in 2005. However, we also show that these workers are of lower quality compared to around 25 percent who find a match within five years of being over-educated. Finally, there is a significant scarring effect for workers over-educated in 1991 since they never fully reach parity compared to those who were matched in 1991, although this is not the case for graduates who manage to find a match within 5 years. |
| Keywords: | structured uncertainty, DSGE models, robustness, Bayesian estimation, interest-rate rules |
| JEL: | E52 E37 E58 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:sur:surrec:0110&r=lab |
| By: | Hart, Robert A. (University of Stirling); Roberts, J. Elizabeth (University of Stirling) |
| Abstract: | Based largely on industry-level aggregate statistics, the prevailing view, and one that has strongly influenced macroeconomic thought, is that real wages during the cycle containing the Great Depression are either acyclical or countercyclical. Does this finding hold-up when more micro data are employed? We examine this question based on detailed blue-collar workers’ company payroll data for a large section of the British engineering and metal working industries. We distinguish between pieceworkers and timeworkers, with pieceworkers accounting for over half the workforce. For the period 1927 to 1937, the two pay groups are broken down into 14 occupations, and 48 travel-to-work geographical districts. We estimate wage and hours cyclicality in respect of the national unemployment rate as well as the district rates. Weekly hours and real weekly earnings are found to be strongly procyclical. Real hourly earnings of pieceworkers are also significantly procyclical. The roles of standard and overtime hours are crucial to these findings. |
| Keywords: | timework, piecework, working time, real wage cyclicality, the Great Depression |
| JEL: | E32 J31 J33 N64 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4977&r=lab |
| By: | Pfeifer, Christian; Janssen, Simon; Yang, Philip; Backes-Gellner, Uschi |
| Abstract: | We use a long panel data set for four entry cohorts into an internal labor market to analyze the effect of age on the probability to participate in different training measures. We find that training participation probabilities are inverted u-shaped with age and that longer training measures are undertaken earlier in life and working career, respectively. These findings are consistent with predictions from a human capital model which incorporates amortization period and screening effects. Our results point to a market failure in the context of human capital investments to increase employability of older workers. |
| Keywords: | Human capital, Internal labor markets, Training |
| JEL: | J14 J24 M53 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-447&r=lab |
| By: | Launov, Andrey (University of Mainz); Wälde, Klaus (University of Mainz) |
| Abstract: | The distribution of unemployment duration in our equilibrium matching model with spell-dependent unemployment benefits displays a time-varying exit rate. Building on Semi-Markov processes, we translate these exit rates into an expression for the aggregate unemployment rate. Structural estimation using a German micro-data set (SOEP) allows us to discuss the effects of a recent unemployment benefit reform (Hartz IV). The reform reduced unemployment by only 0.3%. Contrary to general beliefs, we find that both employed and unemployed workers gain (the latter from an intertemporal perspective). The reason is the rise in the net wage caused by more vacancies per unemployed worker. |
| Keywords: | non-stationary unemployment benefits, endogenous effort, matching model, structural estimation, semi-Markov process |
| JEL: | E24 J64 J68 C13 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4958&r=lab |
| By: | Colin Green; Maria Navarro Paniagua |
| Abstract: | This paper examines the impact of an increase in the school leaving age on high school teachers’ absence behaviour. We estimate differ- ence in difference models of absenteeism using count data approaches. Employing data from the Spanish Labour Force Survey, our findings suggest that high school teachers reduced their effort due to the re- form that raised the age of compulsory education commencing in the academic year 1998-1999 in Spain. In particular, they take 15% more sickness absence in the posttreatment period. This result should be of interest to both policy makers and researchers who rely upon com- pulsory school law changes as a source of exogenous variation in edu- cational attainment. |
| Keywords: | Absenteeism, Compulsory Schooling Laws, Count data, Teachers |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:006717&r=lab |
| By: | Sjögren, Anna (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Swedish elementary school children stopped receiving written end of year report cards following a grading reform in 1982. Gradual implementation of the reform creates an opportunity to investigate the effects of being graded on adult educational attainments and earnings for children in the cohorts born 1954–1974, using a difference-in-differences strategy. Accounting for municipal time trends and tracing out reform dynamics, there is some evidence that being graded increases girls’ years of schooling, but has no significant average effect on boys. Analysis of effects by family background suggests that receiving grades increases the probability of high school graduation for boys and girls with compulsory school educated parents. Sons of university graduates, however, earn less and are less likely to get a university degree if they were graded in elementary school. |
| Keywords: | School policy; Grades; Educational attainment; Adult earnings; Family background; Difference-in-differences |
| JEL: | I21 I28 J13 J24 |
| Date: | 2010–06–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0839&r=lab |
| By: | Christopher Woock (The Conference Board) |
| Abstract: | This paper outlines the changes in the demographics and business environment in the U.S. that are increasing the demand for more skilled, higher educated workers. The literature around the returns to education is then reviewed, looking specifically for evidence of returns to businesses from investing in sub-baccalaureate post-secondary credentials. Four benefits to businesses from investing are explored: (1) increased labor productivity, (2) improved selection and retention, (3) expanding markets, and (4) improved communities. For each of the four arguments, there is substantial evidence that increasing educational attainment or training produces positive outcomes. However, much of the evidence pertains to baccalaureate degrees relative to high school diplomas; there is scant evidence focusing specifically on sub-baccalaureate post-secondary credentials. |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:cnf:wpaper:1001&r=lab |
| By: | Li, Shi (Beijing Normal University); Xing, Chunbing (Beijing Normal University) |
| Abstract: | Using a 1/5 random draw of the 1% census of 2005, we investigate how China’s higher education expansion commenced in 1999 affects the education opportunities of various population groups and how this policy affects the labor market. Treating the expansion as an experiment and using a LATE framework, we find that higher education expansion increased the probability of go to college tremendously. Different populations “benefit” from this policy differently however. Minority female, those from central-western region and from rural areas are less likely to benefit from it. One-child families are more responsive to this policy. Using higher education resources at the provincial level as another dimension of variation, and using a difference-in-difference strategy, we find that the education expansion decreased the within sector inequality of population with above high school (inclusive) education. This is primarily due to the increase of the income level for high school graduate. That of the college graduate deceased, but only slightly and not significantly. |
| Keywords: | China, higher education expansion, LATE, difference in difference, income level |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4974&r=lab |
| By: | Joanne Lindley; Jennifer Roberts (Department of Economics, The University of Sheffield Author-Person=pro228); Steven McIntosh (Department of Economics, The University of Sheffield); Carolyn Czoski Murray; Richard Edlin |
| Abstract: | The 'Want2Work' programme was designed to help individuals back into work. This article uses propensity score matching to evaluate the success of a policy that cannot otherwise be evaluated using standard parametric techniques. Using a range of estimation methods, sub-samples and types of job, the scheme was successful. Our most conservative estimates indicate that participants were 4-7 percentage points more likely to find employment than a control group of non-treated job-seekers. Effects were even stronger for Incapacity Benefit recipients. Moreover, there is little evidence that participants were placed in low quality or temporary jobs. |
| Keywords: | Active labour market policy, re-employment likelihood, propensity score matching |
| JEL: | J08 J68 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2010013&r=lab |
| By: | Kambayashi, Ryo (Hitotsubashi University); Kawaguchi, Daiji (Hitotsubashi University); Yamada, Ken (Singapore Management University) |
| Abstract: | The statutory minimum wage has steadily increased for decades in Japan, while the median wage has fallen nominally since 1999 because of a severe recession. We use large micro-data sets from two government surveys to investigate how the minimum wage has affected the wage distribution under unusual circumstances of deflation. The compression of the lower tail of the female wage distribution is largely explained by an increased real value of the minimum wage. Steady increases in the effective minimum wage reduced employment among low-skilled, middle-aged female workers, but the mechanical effect associated with disemployment on wage compression was minimal. |
| Keywords: | minimum wage, wage distribution, wage inequality, employment, deflation |
| JEL: | J23 J31 J38 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4949&r=lab |
| By: | Andrey LAUNOV (University of Mainz, Mainz School of Management and Economics, UniversitŽ catholique de Louvain and CESifo); Klaus WALDE (University of Mainz, Mainz School of Management and Economics, UniversitŽ catholique de Louvain and CESifo) |
| Abstract: | The distribution of unemployment duration in our equilibrium matching model with spell-dependent unemployment benefits displays a time-varying exit rate. Building on Semi-Markov processes, we translate these exit rates into an expression for the aggregate unemployment rate. Structural estimation using a German micro-data set (SOEP) allows us to discuss the effects of a recent unemployment benefit reform (Hartz IV). The reform reduced unemployment by only 0.3%. Contrary to general beliefs, we find that both employed and unemployed workers gain (the latter from an intertemporal perspective). The reason is the rise in the net wage caused by more vacancies per unemployed worker. |
| Keywords: | Non-stationary unemployment benefits, endogenous effort, matching model,structural estimation, Semi-Markov process |
| JEL: | E24 J64 J68 C13 |
| Date: | 2010–05–21 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2010020&r=lab |
| By: | Black, Sandra E. (University of Texas at Austin); Devereux, Paul (University College Dublin); Salvanes, Kjell G. (Norwegian School of Economics and Business Administration) |
| Abstract: | A variety of public campaigns, including the "Just Say No" campaign of the 1980s and 1990s that encouraged teenagers to "Just Say No to Drugs", are based on the premise that teenagers are very susceptible to peer influences. Despite this, very little is known about the effect of school peers on the long-run outcomes of teenagers. This is primarily due to two factors: the absence of information on peers merged with long-run outcomes of individuals and, equally important, the difficulty of separately identifying the role of peers. This paper uses data on the population of Norway and idiosyncratic variation in cohort composition within schools to examine the role of peer composition in 9th grade on longer-run outcomes such as IQ scores at age 18, teenage childbearing, post-compulsory schooling educational track, adult labor market status, and earnings. We find that outcomes are influenced by the proportion of females in the grade, and these effects differ for men and women. Other peer variables (average age, average mother's education) have little impact on the outcomes of teenagers. |
| Keywords: | education, peer effects |
| JEL: | I2 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4946&r=lab |
| By: | Kato, Takao (Colgate University); Sparber, Chad (Colgate University) |
| Abstract: | In deliberating whether to pursue an undergraduate education in the US, a foreign student takes into consideration the expected probability of securing US employment after graduation. The H-1B visa provides a primary means of legal employment for college-educated foreign-nationals. In October 2003, the government drastically reduced the number of available H-1B visas, hence lowering the probability of a college-educated foreign-national finding employment, and possibly discouraging highly qualified international students from attending US colleges and universities. However, citizens from five countries are de facto exempt from the 2003 H-1B visa restrictions. Using international students from these five exempt nations as the control and other international students as the treatment group, we study the effects of the 2003 H-1B policy change on the pool of international applicants to US schools. We use two datasets: (i) College Board SAT score data on prospective international applicants; and (ii) SAT and high-school GPA data on international applicants to a single highly selective university. Our fixed effect estimates show that the restrictive immigration policy has had an adverse impact on the quality of prospective international applicants, reducing their SAT scores by about 1.5%. This effect is driven mostly by a decline in the number of SAT score reports sent by international students at the top-quintile of the SAT score distribution, suggesting that the restrictive immigration policy disproportionately discourages high-ability international students from attending US schools. Our results are robust to alternative specifications, including the use of high-school GPA as a measure of applicant ability. |
| Keywords: | skilled immigration, H-1B visa, college education, SAT scores |
| JEL: | F22 I20 O15 I28 J61 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4951&r=lab |
| By: | Min Zhang |
| Abstract: | This paper shows that the Mortensen-Pissarides search and matching model can be successfully parameterized to generate observed large cyclical fluctuations in unemployment and modest responses of unemployment to changes in unemployment insurance (UI) benefits. The key features behind this success are the consideration of the eligibility for UI benefits and the heterogeneity of workers. With the linear utilities commonly assumed in the Mortensen-Pissarides model, a fully rated UI system designed to prevent moral hazard has no effect on unemployment. However, the UI system in the United States is neither fully rated nor able to prevent workers with low productivity from quitting their jobs or rejecting employment offers to collect benefits. As a result, an increase in UI generosity has a positive, but realistically small, effect on unemployment. This paper answers the Costain and Reiter (2008) criticism to the Hagedorn and Manovskii (2008) strategy of adopting a high value of non-market activities to generate realistic business cycles with the Mortensen-Pissarides model. |
| Keywords: | Search, Matching, Moral Hazard, UI Entitlement, Equilibrium Unemployment, Labor Markets |
| JEL: | E24 E32 J64 |
| Date: | 2010–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-405&r=lab |
| By: | Lofstrom, Magnus (Public Policy Institute of California); Hill, Laura E. (Public Policy Institute of California); Hayes, Joseph (Public Policy Institute of California) |
| Abstract: | Taking advantage of the ability to identify immigrants who were unauthorized to work prior to obtaining Legal Permanent Resident status, we use the New Immigrant Survey to examine whether lacking legal status to work in the U.S. constrains employment outcomes of illegal immigrants. With the exception of high-skilled unauthorized immigrants, the data fail to reveal evidence of improved employment outcomes attributable to legal status. In light of evidence that unauthorized immigrants experienced increased wages as a result of receiving amnesty through the 1986 Immigration and Reform Control Act during the 1990s, we interpret the results as evidence of ineffective employer sanctions. |
| Keywords: | unauthorized, illegal, undocumented, immigration, legalization, amnesty |
| JEL: | J8 J15 J18 J31 J61 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4972&r=lab |
| By: | Mark L. Hoekstra; Scott Carrell |
| Abstract: | While much is known about the effects of class size and teacher quality on achievement, there is little evidence on whether non-instructional resources improve academic achievement. We exploit plausibly exogenous within-school variation in counselors and find that one additional counselor reduces student misbehavior and increases reading and math achievement by 1.1 percentile points. Estimates imply the marginal counselor has the same impact on achievement as increasing the quality of every teacher in the school by 0.4 standard deviations, and is 3 times more effective than reducing class size by hiring an additional teacher. Results also indicate the academic benefits are largest for children from higher-income families attending school with economically disadvantaged peers, suggesting that additional support staff may help prevent flight from urban schools. |
| JEL: | I21 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:pit:wpaper:396&r=lab |
| By: | Nadir Altinok (IREDU - Institut de recherche sur l'éducation : Sociologie et Economie de l'Education - CNRS : UMR5225 - Université de Bourgogne, BETA - Bureau d'économie théorique et appliquée - CNRS : UMR7522 - Université de Strasbourg) |
| Abstract: | The aim of this paper is to verify whether school resource factors have an impact on the quality of education. This latter is measured with the help of a unique database on student scores in international skills tests. The general difficulties inherent in this type of study are the possibility of endogeneity bias and measurement errors. After estimation bias correction, we show that improvement in the quality of educational systems does not necessarily require an increase in school resources. When an alternative indicator of the performance of educational systems is used, our results are confirmed. Consequently, one should remain cautious about recommending purely financial measures to improve quality of education. |
| Keywords: | Quality of education ; School performance ; School resources |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00485736_v1&r=lab |
| By: | P Simmons; F Zantomio |
| Abstract: | The UK income support system offers a guaranteed income level to single adults available for full time work so long as both earnings and hours worked are below a threshold level. In this paper we examine the effects of this on labour supply. We show that the restriction on hours worked is irrelevant to the household choices and will never bind. We then look for conditions on preferences under which it is possible to order households by preferences or the wage in such a way that all claimants are lower in the order. If there is a common wage and preferences satisfy a single crossing condition property there is such an ordering in which the most work averse are claimants. If preferences are common but the wage rates are heterogeneous then if preferences are quasilinear in leisure there is also an ordering with low wage households being claimants. With both wage rate and preferences heterogeneity these restrictions need to be combined to monotonically order the population. |
| Keywords: | unemployments bene?fit, shirkers, labour supply |
| JEL: | J38 I38 H31 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:10/09&r=lab |
| By: | Cyriaque EDON (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Thierry KAMIONKA (CNRS and CREST) |
| Abstract: | We jointly model fertility and participation decisions of women who live in couple using a dynamic model. In this paper we analyze the labour supply and the fertility decisions of married or cohabiting women in France, Spain, Germany, UK and Denmark. We estimate, for the period going from 1994 to 2001, a dynamic bivariate probit model with random effects using the ECHP (European Community Household Panel) and using a simulated maximum likelihood estimator. These estimates are made on an annual basis taking into account the initial conditions problem. The decisions of participation and fertility of women who live in couple depend on the individual characteristics (observed or unobserved) and are characterized by a significant state dependence. Our results suggest that the decisions of employment and fertility cannot be modeled separately. The difference of fertility across these countries is explained by individual characteristics and variations of social and fiscal policies across countries. However, the unobserved components of heterogeneity also play a central role in the observed differences across countries. We show the importance of the permanent income component in the participation decision. Random effects are negatively correlated across the equations of the model. Consequently, women who, a priori, prefer to have a higher consumption have weaker preferences for fertility. |
| Keywords: | Participation, Heterogeneity, Simulation based estimation, Panel data |
| JEL: | J21 J22 C33 C35 J13 |
| Date: | 2010–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2010017&r=lab |
| By: | C. Mendolicchio; D. Paolini; T. Pietra |
| Abstract: | We study a two-sector economy with investments in human and physical capital and imperfect labor markets. Human and physical capital are heterogeneous. Workers and firms endogenously select the sector they are active in, and choose the amount of their sector-specific investments in human and physical capital. To enter the high-skill sector, workers must pay a fixed cost that we interpret as direct cost of education. Given the distribution of the agents across sectors, at equilibrium, in each sector there is underinvestment in both human and physical capital, due to non-contractibility of investments. A second source of inefficiency is related to the self-selection of the agents into the two sectors. It typically induces too many workers to invest in education. Under suitable restrictions on the parameters, the joint effect of the two distortions is that equilibria are characterized by too many people investing too little effort in the high skill sector. We also analyze the welfare properties of equilibria and study the effects of several tax-subsidy policies on the total expected surplus. |
| JEL: | J24 H2 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:701&r=lab |
| By: | Nadia Linciano; P Simmons |
| Abstract: | We formalise the joint choice of labour force participation and mode of travel to work together with the hours of work decision for unitary and collective households. Conditioning on the primary workers decisions, we analyse the decisions of the secondary worker in a simplified setting in which the amount of work travel is independent of hours of work. On a matched sample from the BHPS and the NTS we find that car ownership is important in modal choice but the correlation between modal choice and the participation decision is negligible. We find that households behave somewhere between unitary and collective households in partially pooling groups of individual expenditure or income items. |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:10/10&r=lab |
| By: | Parsons, Donald O. (George Washington University) |
| Abstract: | Economists have concerns about the firing cost implications of mandated severance plans. Analysis reveals that predicted severance plan consequences depend critically on the precise structure of the plan. Whether governments mandate (i) severance insurance plans or (ii) severance savings plans is important; savings plans have no "firing cost" effects on employer layoff decisions. The firing cost implications of insurance plan are sensitive to the types of job separations that qualify a worker for benefits. Plans that pay benefits across all separations are functionally severance savings plans. The variety of plan types is illustrated using U.S. and international examples. |
| Keywords: | job displacement, worker turnover, severance pay, firing costs |
| JEL: | J65 J41 J33 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4967&r=lab |
| By: | Don J. Webber (Department of Economics, Auckland University of Technology and Department of Economics, UWE, Bristol); Gail Pacheco (Department of Economics, Auckland University of Technology, Auckland, New Zealand.) |
| Abstract: | Reducing the unemployment rate is an aim of most governing authorities. This paper presents a socio-economic analysis of area-level employment rate changes across Auckland using Census area-level data for the time period 1996 to 2006. Exploratory spatial data analyses suggest the presence of strong spatial patterns in intra-city employment rates changes. Application of seemingly unrelated regressions highlight forces, such as education, that are associated with increases in part time and full time employment relative to being unemployed. |
| Keywords: | Unemployment; Seemingly unrelated regressions; Queen spatial weights |
| JEL: | R20 E24 J21 C30 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:uwe:wpaper:1008&r=lab |
| By: | Kevin Denny (University College Dublin) |
| Abstract: | University tuition fees for undergraduates were abolished in Ireland in 1996. This paper examines the effect of this reform on the socioeconomic gradient (SES) to determine whether the reform was successful in achieving its objective of promoting educational equality. It finds that the reform clearly did not have that effect. It is also shown that the university/SES gradient can be explained by differential performance at second level which also explains the gap between the sexes. Students from white collar backgrounds do significantly better in their final second level exams than the children of blue-collar workers. The results are very similar to recent findings for the UK. I also find that certain demographic characteristics have large negative effects on school performance i.e. having a disabled or deceased parent. The results show that the effect of SES on school performance is generally stronger for those at the lower end of the conditional distribution of academic attainment. |
| Keywords: | tuition costs, university, fees, socio-economic background, educational attainment |
| Date: | 2010–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:wpaper:201017&r=lab |
| By: | Koning, Pierre (CPB Netherlands Bureau for Economic Policy Analysis); van der Wiel, Karen (CPB Netherlands Bureau for Economic Policy Analysis) |
| Abstract: | This paper analyzes the response of secondary schools to changes in their quality ratings. The current analysis is the first to address the impact of quality scores that have been published by a newspaper (Trouw), rather than public interventions. Our research design exploits the substantial lags in the registration and publication of the Trouw scores and that takes into account all possible outcomes of the ratings, instead of the lowest category only. Overall, we find evidence that school quality performance does respond to Trouw quality scores. Both average grades increase and the number of diplomas go up after receiving a negative score. For schools that receive the most negative ranking, the short-term effects (one year after a change in the ranking of schools) of quality transparency on final exam grades equal 10% to 30% of a standard deviation compared to the average of this variable. The estimated long run impacts are roughly equal to the short-term effects that are measured. |
| Keywords: | school quality, school accountability |
| JEL: | H75 I20 D83 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4969&r=lab |
| By: | Vartiainen, Juhana (National Institute of Economic Research) |
| Abstract: | From the mid-1990s onwards, Swedish wage bargaining has been characterised by informal co-ordination of the wage claims of big unions and bargaining cartels. In particular, it has been understood that the manufacturing sector should lead by first agreeing on a pay increase, whereafter the service sector and public sector unions choose a similar increase. We analyse his setup with two possible theoretical interpretations: (i) the manufacturing sector as a tackelberg leader and (ii) a normative role for the manufacturing sector’s pay increase, upported either by unmodelled social pressure or a modeled loss aversion (envy) of the heltered sector unions. The conclusion of the analysis is that the normative or leading role of one sector – in the Swedish case the manufacturing sector – can potentially bring big benefits for employment and output. Generalising an idea suggested by Lars Calmfors and Anna Larsson, our analysis also generates a rudimentary theory of why the wage increase norm sometimes binds and sometimes not. A comparison of the model predictions and the observed outcomes of the last five wage bargaining rounds in Sweden suggests that the model is generally consistent with the empirical observations: wage moderation and norm observance are stronger when the manufacturing industry’s initial relative wage is low. |
| Keywords: | wage bargaining; bargaining co-ordination |
| JEL: | J31 J52 |
| Date: | 2010–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nierwp:0116&r=lab |
| By: | Rodriguez-Planas, Nuria (Universitat Autònoma de Barcelona) |
| Abstract: | This paper is the first to use a randomized trial in the US to analyze the short- and long-term impacts of an after-school program that offered disadvantaged high-school youth: mentoring, educational services, and financial rewards to attend program activities, complete high-school and enroll in post-secondary education on youths' engagement in risky behaviors, such as substance abuse, criminal activity, and teenage childbearing. Outcomes were measured at three different points in time, when youths were in their late-teens, and when they were in their early- and their late-twenties. Overall the program was unsuccessful at reducing risky behaviors. Heterogeneity matters in that perverse effects are concentrated among certain subgroups, such as males, older youths, and youths from sites where youths received higher amount of stipends. We claim that this evidence is consistent with different models of youths’ behavioral response to economic incentives. In addition, beneficial effects found in those sites in which QOP youths represented a large fraction of the entering class of 9th graders provides hope for these type of programs when operated in small communities and supports the hypothesis of peer effects. |
| Keywords: | after-school program, short-, medium- and long-term effects, behavioral models, peer effects, criminal activity, teen childbearing and substance abuse |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4968&r=lab |
| By: | Rema Hanna; Leigh Linden |
| Abstract: | In this paper, a methodology to measure discrimination in educational contexts is illustrated. In India, exam competition is run through which children compete for a large financial prize and teachers have been recruited to grade the exams.Then there is a random assignment of child “characteristics†(age, gender, and caste) to the cover sheets of the exams to ensure that there is no systematic relationship between the characteristics observed by the teachers and the quality of the exams. It has been found out that teachers give exams that are assigned to be lower caste scores that are about 0.03 to 0.09 standard deviations lower than exams that are assigned to be high caste. The effect is small relative to the real differences in scores between the high and lower caste children. Low-performing, low caste children and top-performing females tend to lose out the most due to discrimination. Interestingly, findings also suggest that the discrimination against low caste students is driven by low caste teachers, while teachers who belong to higher caste groups do not appear to discriminate at all. This result runs counter to the previous literature, which tends to find that individuals discriminate in favor of members of their own groups.[Working Paper no. 230] |
| Keywords: | methodology, discrimination, educational contexts, large financial prize, teachers, characteristicsage, gender, and caste, cover sheets, exams, favor |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2541&r=lab |
| By: | David Rosnick |
| Abstract: | Unlike a century ago, people expect their children to live past the age of retirement. This fact has important implications for how workers save for retirement, but has no specific implications for the retirement portion of Social Security. In addition, the increase in life expectancy is not nearly as important as it might first appear. A significant part of the increase in life is between birth and age 20. Including declines in child and teen mortality exaggerate the increase in retirement length. Furthermore, much of the gains in life expectancy come during working years—between age 20 and retirement. This means that workers are not only experiencing longer retirements, but longer working lives as well. Finally, each succeeding generation has been vastly more productive than prior generations—a trend that will continue. Thus, not only have workers on average more years of work over their lifetime, they are better able to save for their retirements. |
| Keywords: | social security, retirement, retirement age |
| JEL: | H H6 H62 H63 H68 J J1 J14 J18 J3 J32 J38 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2010-13&r=lab |
| By: | John Bailey Jones; Eric French |
| Abstract: | This paper provides an empirical analysis of the effects of employer-provided health insurance, Medicare, and Social Security on retirement behavior. Using data from the Health and Retirement Study, we estimate a dynamic programming model of retirement that accounts for both saving and uncertain medical expenses. Our results suggest that Medicare is important for understanding retirement behavior, and that uncertainty and saving are both important for understanding the labor supply responses to Medicare. Half the value placed by a typical worker on his employer-provided health insurance is the value of reduced medical expense risk. Raising the Medicare eligibility age from 65 to 67 leads individuals to work an additional 0.074 years over ages 60-69. In comparison, eliminating two years worth of Social Security benefits increases years of work by 0.076 years. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:nya:albaec:10-10&r=lab |
| By: | Almeida, Rita K. (World Bank); Aterido, Reyes (World Bank) |
| Abstract: | This paper analyzes the link between firm size and the investment in job training by employers. Using a large firm level data set across 99 developing countries, we show that a strong and positive correlation in the investment in job training and firm size is a robust statistical finding both within and across countries with very different institutions and level of development. However, our findings do not support the view that this difference is mostly driven by market imperfections disproportionally affecting SMEs. Rather, our evidence is supportive of SMEs having a smaller expected return from the investment in job training than larger firms. Therefore, our findings call for caution when designing pro-SME policies fostering the investment in on the job training. |
| Keywords: | on-the-job training, firm size, firm level data, developing countries |
| JEL: | J24 D24 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4981&r=lab |
| By: | Bae, Kiu-Sik (Korea Labor Institute); Chuma, Hiroyuki (Hitotsubashi University); Kato, Takao (Colgate University); Kim, Dong-Bae (University of Incheon); Ohashi, Isao (Hitotsubashi University) |
| Abstract: | Using a unique new cross-national survey of Japanese and Korean workers, we report the first systematic evidence on the effects on employee voice of High Performance Work Practices (HPWPs) from the two economies which are noted for the wide use of HPWPs. We find for both nations that: (i) workers in firms with HPWPs aimed at creating opportunities for employees to get involved (such as shopfloor committees and small group activities) are indeed more likely to have stronger senses of influence and voice on shopfloor decision making than other workers; (ii) workers whose pay is tied to firm performance are more likely to have a stake in firm performance and hence demand such influence and voice; and (iii) consequently workers in firms with HPWPs are more likely to make frequent suggestions for productivity increase and quality improvement. As such, this paper contributes to a small yet growing new empirical literature which tries to understand the actual process and mechanism through which HPWPs lead to better enterprise performance. |
| Keywords: | high performance work practices, employee voice, Japan, Korea |
| JEL: | J53 M54 M52 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4956&r=lab |
| By: | Bargain, Olivier (University College Dublin); Gonzalez, Libertad (Universitat Pompeu Fabra); Keane, Claire (ESRI, Dublin); Özcan, Berkay (Yale University) |
| Abstract: | If participation in the labor market helps to secure women's outside options in the case of divorce/separation, an increase in the perceived risk of marital dissolution may accelerate the increase in female labor supply. This simple prediction has been tested in the literature using time and/or spatial variation in divorce legislation (e.g., across US states), leading to mixed results. In this paper, we suggest testing this hypothesis by exploiting a more radical policy change, i.e., the legalization of divorce. In Ireland, the right to divorce was introduced in 1996, followed by an acceleration of marriage breakdown rates. We use this fundamental change in the Irish society as a natural experiment. We follow a difference-in-difference approach, using families for whom the dissolution risk is small as a control group. Our results suggest that the legalization of divorce contributed to a significant increase in female labor supply, mostly at the extensive margin. Results are not driven by selection and are robust to several specification checks, including the introduction of household fixed effects and an improved match between control and treatment groups using propensity score reweighting. |
| Keywords: | divorce law, natural experiment, labor supply, fixed effects, propensity score |
| JEL: | J12 J22 D10 D13 K36 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4959&r=lab |
| By: | Natacha Raffin (Paris School of Economics - Centre d'Economie de la Sorbonne) |
| Abstract: | We develop a political economy model that might explain the different environmental performance of countries, through educational choices. Individuals decide whether to invest in additional education according to their expectations regarding future environmental quality. They also vote on a tax that will be exclusively used to finance environmental protection. We show that the model may generate multiple equilibria and agents' expectations may be self-fulfilling when the public policy is endogenous. Then, we analyse the long-term implications of a public policy that would favour education and make it possible to select the higher equilibrium. |
| Keywords: | Environmental quality, human capital, education, self-fulfilling prophecies, public policy. |
| JEL: | I28 H20 O16 O40 Q58 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:10042&r=lab |
| By: | Don J. Webber (Department of Economics, Auckland University of Technology and Department of Economics, UWE, Bristol) |
| Abstract: | This paper argues that an important influence on boys’ decisions to stay on into post-compulsory education is the attainment of maths grades that differ from expected. |
| Keywords: | Bivariate probit; post-compulsory education; choice under uncertainty |
| JEL: | I21 C35 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:uwe:wpaper:1009&r=lab |
| By: | Deng, Binbin |
| Abstract: | Traditional studies of returns-to-schooling have been generally concerned with several issues like the omitted variable bias, error-in-measurement bias and the endogeneity of schooling. While such inquiries are of much empirical importance, this paper tries to ask a different but non-negligible question: what should be interpreted from the individual ability measure per se in the wage equation? With data from well documented national surveys in the U.S., this paper is able to make a simple but fundamental argument: IQ level per se, holding all other personal characteristics constant, has negligible net effect in determining one’s income level and thus should not be used as the proper measure of the ability we want to quantify in the wage-determining process, i.e., the very ability to earn income. |
| Keywords: | return to schooling, ability measure, insignificance of IQ, emotional intelligence |
| JEL: | O15 J24 |
| Date: | 2010–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:23206&r=lab |
| By: | Havnes, Tarjei (University of Oslo); Mogstad, Magne (Statistics Norway) |
| Abstract: | Advocates of a universal child care system offer a two-fold argument: Child care facilitates children's long-run development, and levels the playing field by benefiting in particular disadvantaged children. Therefore, a critical element in evaluating universal child care systems is to measure the impact on child development in a way that allows the effects to vary systematically over the outcome distribution. Using non-linear DD methods, we investigate how the introduction of large-scale, publicly subsidized child care in Norway affected the earnings distribution of exposed children as adults. We find that mean impacts miss a lot: While child care had a small and insignificant mean impact, effects were positive over the bulk of the earnings distribution, and sizable below the median. This is an important observation since previous empirical studies of universal child care have focused on mean impacts. We further demonstrate that the essential features of our empirical findings could not have been revealed using mean impact analysis on typically defined subgroups. This is because the intragroup variation in the child care effects is relatively large compared to the intergroup variation in mean impacts. |
| Keywords: | non-linear difference-in-differences, child development, universal child care, heterogeneity, distributional effects |
| JEL: | J13 H40 I28 D31 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4978&r=lab |
| By: | Mitchell, Matthew; Zhang, Yuzhe |
| Abstract: | This paper studies the design of unemployment insurance when neither the searching effort nor the savings of an unemployed agent can be monitored. If the principal could monitor the savings, the optimal policy would leave the agent savings-constrained. With a constant absolute risk-aversion (CARA) utility function, we obtain a closed form solution of the optimal contract. Under the optimal contract, the agent is neither saving nor borrowing constrained. Counter-intuitively, his consumption declines faster than implied by Hopenhayn and Nicolini [4]. The efficient allocation can be implemented by an increasing benefit during unemployment and a constant tax during employment. |
| Keywords: | hidden savings; hidden wealth; repeated moral hazard; unemployment insurance. |
| JEL: | D86 J65 D82 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:23214&r=lab |
| By: | C. Mendolicchio; D. Paolini; T. Pietra |
| Abstract: | We consider a random matching model where heterogeneous agents choose optimally to invest time and real resources in education. Generically, there is a steady state equilibrium, where some agents, but not all of them, invest. Regular steady state equilibria are constrained inefficient in a strong sense. The Hosios (1990) condition is neither necessary, nor sufficient, for constrained efficiency. We also provide restrictions on the fundamentals sufficient to guarantee that equilibria are characterized by overeducation (or undereducation), present some results on their comparative statics properties, and discuss the nature of welfare improving policies. |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:702&r=lab |