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on Labour Economics |
| By: | Rune M. Vejlin (School of Economics and Management, Aarhus University, Denmark) |
| Abstract: | I develop a stylized partial on-the-job equilibrium search model which incorporate a spatial dimension. Workers reside on a circle and can move at a cost. Each point on the circle has a wage distribution. Implications about wages and job mobility are drawn from the model and tested on Danish matched employer-employee data. The model predictions hold true. I find that workers working farther away from their residence earn higher wages. When a worker is making a job-to-job transition where he changes workplace location he experiences a higher wage change than a worker making a job-to-job transition without changing workplace location. However, workers making a job-to-job transition which makes the workplace location closer to the residence experiences a wage drop. Furthermore, low wage workers and workers with high transportation costs are more likely to make job-to-job transitions, but also residential moves. |
| Keywords: | ob mobility, residential mobility, wage dynamics, search |
| JEL: | J6 J3 R3 |
| Date: | 2010–08–27 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2010-14&r=lab |
| By: | Aparicio Fenoll, Ainhoa (Universitat Pompeu Fabra) |
| Abstract: | This paper addresses the implications of transitory changes in labor market conditions for low versus high educated workers on the decision to acquire education. To identify this effect, I use the improvement in the labor market prospects of low educated workers motivated by the increases in employment and wages in the construction sector during the recent housing boom. The estimation strategy is based on the fact that changes in the labor market driven by the construction sector affect only men. Increases in construction activity are found to increase men's propensity to drop out of high-school, relative to women. According to this finding, policies promoting education should strengthen when in the presence of transitory shocks in the labor market that make dropping out more attractive. |
| Keywords: | high-school dropout, housing boom, Spain |
| JEL: | J24 J22 I20 L74 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5139&r=lab |
| By: | Tu, Jiong (Human Resources and Skills Development Canada - Labour Program) |
| Abstract: | This paper examines the effectiveness of Canadian immigration policy by analyzing the differences in the returns to education between first, second and third generation immigrant men. Regression results indicate that the second generation with high school education and lower do not earn significantly less than the equally educated third generation. However, the second generation with at least postsecondary education experience a wage deficit to the third generation. I explain the well-educated second generation’s difficulty in translating their intellectual ability into productivity by their ethnic and linguistic distance from the Canadian mainstream, and by a negative city-specific effect. Regression results using sub-samples categorized by subsequently interacting educational attainments with ethnicity, mother tongue and city of residence support these explanations. I then suggest that assimilation policies targeting the well-educated first and second generation immigrants be designed to promote the acceptance of their human capital by the Canadian labour market. |
| Keywords: | immigrant, second generation, wages, education, ethnicity, Canada |
| JEL: | F22 J15 J31 J62 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5128&r=lab |
| By: | Thisse, Jacques-François (CORE, Université catholique de Louvain); Toulemonde, Eric (University of Namur) |
| Abstract: | Recent empirical contributions in labor economics suggest that individual firms face upward sloping labor supplies. We rationalize this by assuming that idiosyncratic non-pecuniary conditions interact with money wages in workers’ decisions to work for specific firms. Likewise, firms supply differentiated goods in response to differences in consumer tastes. Hence, firms are price-makers and wage-setters. By combining monopolistic and monopsonistic competition, our setting encapsulates general equilibrium. The equilibrium involves double exploitation of labor. Compared to the competitive outcome, the high-productive workers are overpaid under free entry, whereas the low-productive workers are underpaid. In the same vein, capital-owners receive a premium, whereas workers are exploited. |
| Keywords: | labor exploitation, monopolistic competition, monopsonistic competition, worker heterogeneity, wage dispersion |
| JEL: | D33 J31 J42 J71 L13 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5136&r=lab |
| By: | Kai Sebastian Meinke |
| Abstract: | This paper is based on my thesis from the year 2008. It uses the German Microcensus (MC) to study the effects of continuing vocational training (CVT) on employment, the risk of unemployment, and wages. To control for education, profession and heterogeneity in the sectors and industrial branches in Germany individuals are separated into sub-groups. The results of my estimations indicate high returns to continuous vocational training in terms of lower risk to be unemployed, higher chances to be reemployed and higher chances to stay into an existing employment. The results also indicate that repeated short activities in CVT are more beneficial then long activities typically carried out by the German employment agency during the period of the Microcensus 2003 |
| Keywords: | Microcensus, Mikrozensus, Employment, Continuous Vocational Training, Employment, Agency, Job Center, Mincer, Human Capital Theory |
| JEL: | J31 J10 J14 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1643&r=lab |
| By: | Trzcinski, Eileen (Wayne State University, Detroit); Holst, Elke (DIW Berlin) |
| Abstract: | This study used data from the German Socio-economic Panel to examine gender differences in the extent to which self-reported subjective well-being was associated with occupying a high-level managerial position in the labour market, compared with employment in non-leadership, non-high-level managerial positions, unemployment, and non-labour market participation. Our results indicated that a clear hierarchy exists for men in term of how status within the labour market was associated with subjective life satisfaction. Unemployed men were the least satisfied, followed by men who were not in the labour market, while men in leadership positions reported the highest level of subjective life satisfaction. For women, no statistically significant differences were observed among women in high-level managerial positions, women who worked in non-high-level positions, and women who specialized in household production, with no market work. Only women who were unemployed reported lower levels of life satisfaction, compared with women in other labour-market statuses. Our results lend evidence to the contention that men can "have it all", but women must still choose between career and family in Germany. We argue that interventions need to address how the non-pecuniary rewards associated with high-level managerial and leadership positions can be increased for women. Such policies would also likely serve to mitigate the "pipeline" problem concerning the number of women who are available to move into high positions in the private sector. |
| Keywords: | well-being, gender, management, non-management, unemployment, non-labor-market participation |
| JEL: | J16 J29 J69 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5116&r=lab |
| By: | Hensvik, Lena (IFAU - Institute for Labour Market Policy Evaluation); Nilsson, Peter (Uppsala University) |
| Abstract: | We examine the influence that co-workers’ have on each other’s fertility decisions. Using linked employer employee panel data for Sweden we show that female individual fertility increases if a co-worker recently had a child. The timing of births among co-workers of the same sex, educational level and co workers who are close in age is even more influential. Consistent with models of social learning we find that the peer effect for first time mothers is similar irrespective of the birth order of the co-worker’s child, while for higher order births within-parity peer effects are strong but cross-parity peer effects are entirely absent. A causal interpretation of our estimates is strengthened by several falsification tests showing that neither unobserved common shocks at the workplace level, nor sorting of workers between workplaces are likely to explain the observed peer effect. We also provide evidence suggesting that peers not only affect timing of births but potentially also completed fertility, and that fertility peer influences spills over across multiple networks. Our results forward the understandings of how individual fertility timing decisions are made and suggest that social interactions could be an important factor behind the strong inter-temporal fluctuations in total fertility rates observed in many countries. |
| Keywords: | Peer effects; social preferences; co-workers |
| JEL: | J13 |
| Date: | 2010–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2010_009&r=lab |
| By: | Cardoso, Ana Rute (IAE Barcelona (CSIC)); Guimaraes, Paulo (University of South Carolina); Varejão, José (University of Porto) |
| Abstract: | Using longitudinal employer-employee data spanning over a 22-year period, we compare age-wage and age-productivity profiles and find that productivity increases until the age range of 50-54, whereas wages peak around the age 40-44. At younger ages, wages increase in line with productivity gains but as prime-age approaches, wage increases lag behind productivity gains. As a result, older workers are, in fact, worthy of their pay, in the sense that their contribution to firm-level productivity exceeds their contribution to the wage bill. On the methodological side, we note that failure to account for the endogenous nature of the regressors in the estimation of the wage and productivity equations biases the results towards a pattern consistent with underpayment followed by overpayment type of policies. |
| Keywords: | aging, productivity, wages |
| JEL: | J14 J24 J31 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5121&r=lab |
| By: | Bredemeier, Christian (University of Dortmund); Juessen, Falko (University of Dortmund) |
| Abstract: | This paper investigates the pattern of wives' hours disaggregated by the husband's wage decile. In the US, this pattern has changed from downward-sloping to hump-shaped. We show that this development can be explained within a standard household model of labor supply when taking into account trends in assortative mating. We develop a model in which assortative mating determines the wage ratios within individual couples and thus the efficient time allocation of spouses. The economy-wide pattern of wives’ hours by the husband's wage is downward-sloping for low degrees, hump-shaped for medium degrees, and upward-sloping for high degrees of assortative mating. A quantitative analysis of our model suggests that changes in the gender wage gap are responsible for the overall increase in hours worked by wives. By contrast, the fact that wives married to high-wage men experienced the most pronounced increase is a result of trends in assortative mating. |
| Keywords: | female labor supply, assortative mating, gender wage gap |
| JEL: | E24 J22 J16 D13 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5118&r=lab |
| By: | Kenneth L. Sørensen; Rune M. Vejlin (School of Economics and Management, Aarhus University, Denmark) |
| Abstract: | This paper estimates a wage growth equation containing human capital variables known from the traditional Mincerian wage equation with year, worker and firm fixed effects included as well. The paper thus contributes further to the large empirical literature on unobserved heterogeneity following the work of Abowd, Kramarz, and Margolis (1999). Our main contribution is to extend the analysis from wage levels to wage growth. The specification enables us to estimate the individual specific and firm specific fixed effects and their degree of explanation on wage growth. The analysis is conducted using Danish longitudinal matched employer-employee data from 1980 to 2006. We find that the worker fixed effect dominates both the firm fixed effect and the effect of the observed covariates. Worker effects are estimated to explain seven to twelve per cent of the variance in wage growth while firm effects are estimated to explain four to ten per cent. We furthermore find a negative correlation between the worker and firm effects, as do nearly all authors examining wage level equations. |
| Keywords: | MEE data, fixed effects, wage growth |
| JEL: | J21 J31 |
| Date: | 2010–08–27 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2010-13&r=lab |
| By: | Fietze, Simon (University of the Federal Armed Forces Hamburg); Holst, Elke (DIW Berlin); Tobsch, Verena (University of the Federal Armed Forces Hamburg) |
| Abstract: | The higher the hierarchical level, the fewer women are represented in management positions. Many studies have focused on the influence of human capital and other "objective" factors on career opportunities to explain this phenomenon. We are now looking at the impact of self-reported personality traits on gender differences in career chances and compare women and men in management positions and other white-collar employees in Germany's private sector 2007. While bivariate results based on data from the German Socio-Economic Panel (SOEP) show that there are significant gender differences in personality traits, multivariate estimations and the decomposition of the gender career gap clearly indicate that these differences cannot account for gender differences in career opportunities. The decomposition shows that only 8.6 percent of the inequality of career chances between women and can be explained by differences in personality. Nevertheless, personality traits might indeed play a role, albeit more indirectly: Some of the stronger career effects, such as long working hours, and labour market segregation, can also reflect differences in personality traits. These might have been influenced at an early stage by a gender-biased environment. Our results strongly stress the need for a gender-neutral environment outside and inside companies in order to enforce equal career opportunities for women and men. |
| Keywords: | personality, gender, career, leadership |
| JEL: | J16 J44 J71 M12 M14 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5110&r=lab |
| By: | Akee, Randall K. Q. (Tufts University); Yuksel, Mutlu (Dalhousie University) |
| Abstract: | We investigate the effect of skin tone on employment probabilities in a longitudinal data set. Using an objective measure of skin tone from a light-spectrometer and a self-reported measure of race we find that over time the effect of skin tone on employment has diminished. These results hold both across the white and African-American samples as well as within the African-American sample itself with regard to skin tone. Further investigation indicates that all of the gains can be attributed to African-American women; there are no changes in the employment probabilities for African-American men in the 15 year panel data. We find that the expansion of employment for women is concentrated in the services occupations. |
| Keywords: | race, gender, employment discrimination, skin tone, panel data |
| JEL: | J15 J16 J71 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5120&r=lab |
| By: | Bing Ma (UMBC) |
| Abstract: | An extensive literature in labor economics recognizes that the life-cycle labor force participation of a woman is highly associated with her family choices. There is, however, virtually no study going further to incorporate female occupational choices. This paper attempts to fill this gap in labor supply literature by examining the interrelatedness of occupation, marital status and fertility choices of women over the life cycle. A discrete choice dynamic utility maximization model is constructed to investigate how relevant determinants influence a woman’s career and family path and how these decisions interplay with each other. Using longitudinal data on women from the 1979 youth cohort of the National Longitudinal Survey of Youth, I estimate my model through the maximum likelihood estimation method in a dynamic programming fashion which takes into account the uncertainties from random arrivals of job opportunities, unexpected failure of birth control and temporary shocks to family earnings. The estimation results of structural parameters indicate that women’s lifecycle patterns of occupation, marriage and contraceptive behaviors vary significantly with their observable characteristics such as age, education, ability, race, and the presence of young children. |
| Keywords: | Human Capital; Occupational Choice; Life Cycle Model; Marriage; Fertility. |
| JEL: | J24 D91 J12 J13 |
| Date: | 2010–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:umb:econwp:10123&r=lab |
| By: | A Chevalier; C Harmon; Ian Walker; V O'Sullivan |
| Abstract: | This paper addresses the intergenerational transmission of education and investigates the extent to which early school leaving (at age 16) may be due to variations in parental background. An important contribution of the paper is to distinguish between the causal effects of parental income and parental education levels. Least squares estimation reveals conventional results - weak effects of income (when the child is 16), stronger effects of maternal education than paternal, and stronger effects on sons than daughters. We find that the education effects remain significant even when household income is included. However, when we use instrumental variable methods to simultaneously account for the endogeneity of parental education and paternal income, only maternal education remains significant (for daughters only) and becomes stronger. These estimates are consistent to various set of instruments. The impact of paternal income varies between specifications but become insignificant in our preferred specification. Our results provide limited evidence that policies alleviating income constraints at age 16 can alter schooling decisions but that policies increasing permanent income would lead to increased participation (especially for daughters). There is also evidence of intergenerational transmissions of education choice from mothers to daughters. |
| Keywords: | Early school leaving, intergenerational transmission |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:006814&r=lab |
| By: | Ciriaci, Daria; Muscio, Alessandro |
| Abstract: | Universities have come under increasing pressure to become key drivers of economic development in the age of the knowledge economy. Yet we know very little about the impact of university quality and scientific excellence on the probability of graduates finding jobs. This paper investigates the determinants of Italian graduates’ employability 1-year and 3-years after graduation, with special reference to university quality measured in terms of research performance. Our results confirm that the ‘better’ the university, the higher the likelihood that graduates will be employed. We also observe strong effects associated with field of study, and wide regional differences. |
| Keywords: | University quality; returns to education; labour market outcomes, employment |
| JEL: | I23 J24 |
| Date: | 2010–05–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22845&r=lab |
| By: | Benoît Mahy; Mélanie Volral |
| Abstract: | This paper models and estimates the impact of quantitative and qualitative training financed by the firm on labour demand in Belgium. It assumes profit maximising firms producing under a short run monopolistic competition regime, where training can increase labour demand through its positive net effect on labour productivity or decrease it through higher direct labour costs and wages. The estimation of our model on a panel of 17,812 firms over the period 1999-2007 allowing to control for the potential simultaneity between training and labour demand and for unobserved workplace characteristics reveals a small positive impact of training variables on labour demand. This suggests that productivity effects dominate cost effects. |
| Keywords: | Training; Labour Demand; Labour Productivity; Wage Determination |
| JEL: | M53 J23 J24 J30 C23 |
| Date: | 2010–06–22 |
| URL: | http://d.repec.org/n?u=RePEc:dul:wpaper:2013/59297&r=lab |
| By: | Azam, Mehtabul (World Bank); Prakash, Nishith (Cornell University) |
| Abstract: | We investigate the public-private wage differential in India using nationally representative micro data. While the existing literature focuses on average wage differential, we study the differences in the wage distributions. The raw wage differential between public and private sector is positive across the entire distribution for both genders irrespective of area of residence. A quantile regression based decomposition analysis reveals that the differences in observed characteristics (covariate effect) account for only a small part of the wage differential at lower quantiles, but a larger part at higher quantiles. At the very top of the distribution, covariate effect account for a majority of the observed wage differential. |
| Keywords: | quantile regression, public-private wage differential, India |
| JEL: | J3 J45 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5132&r=lab |
| By: | Stüber, Heiko (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Beissinger, Thomas |
| Abstract: | "Focusing on the compression of wage cuts, many empirical studies find a high degree of downward nominal wage rigidity (DNWR). However, the resulting macroeconomic effects seem to be surprisingly weak. This contradiction can be explained within an intertemporal framework in which DNWR not only prevents nominal wage cuts but also induces firms to compress wage increases. We analyze whether a compression of wage increases occurs when DNWR is binding by applying Unconditional Quantile Regression and Seemingly Unrelated Regression to a data set comprising more than 169 million wage changes. We find evidence for a compression of wage increases and only very small effects of DNWR on average real wage growth. The results indicate that DNWR does not provide a strong argument against low inflation targets." (author's abstract, IAB-Doku) ((en)) |
| JEL: | E24 E31 J31 |
| Date: | 2010–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:201016&r=lab |
| By: | Alexander Haupt (University of Plymouth); Tim Krieger (University of Mainz); Thomas Lange (University of Konstanz) |
| Abstract: | In this note, we present a novel channel for a brain gain. Students from a developing country study in a developed host country. A higher permanent migration probability of these students appears to be a brain drain for the developing country in the first place. However, it induces the host country to improve its education quality, as a larger share of the generated bene ts accrue in this host country. A higher education quality raises in turn the human capital of the returning students. As long as the permanent migration probability is not too large, this positive effect causes both aggregate and per-capita human capital to increase in the developing country. Thus, a brain gain occurs. |
| Keywords: | Brain gain, education policy, human capital, return migration |
| JEL: | F22 I28 J61 O15 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:wpaper:27&r=lab |
| By: | Grömling, Michael |
| Abstract: | -- |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wuewwb:107&r=lab |
| By: | Yu Sheng; Xinpeng Xu |
| Abstract: | We revisit the Heckscher-Ohlin-Samuelson model in the presence of labor market frictions à la Mortensen-Pissarides. Relaxing the assumption of the oneworker-one-firm matching rule, we show that the Stolper-Samuelson theorem and the Rybczynski theorem may not hold in specific circumstances. We also demonstrate that the Factor Price Equalization theorem is only valid for capital and unemployed labor across countries, but not for employed labor. In equilibrium, trade patterns are determined by countries’ factor endowments and relative factor intensities in sectors (independent of factor intensities in production). Finally, our results suggest an additional explanation for the “missing trade” phenomenon. |
| JEL: | F16 J64 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:acb:cbeeco:2010-525&r=lab |
| By: | Merkl, Christian (University of Erlangen-Nuremberg); Wesselbaum, Dennis (Kiel Institute for the World Economy) |
| Abstract: | This paper analyzes the role of the extensive vis-à-vis the intensive margin of labor adjustment in Germany and in the United States. The contribution is twofold. First, we provide an update of older U.S. studies and confirm the view that the extensive margin (i.e., the adjustment in the number of workers) explains the largest part in the overall variability in aggregate hours. Second, although the German labor market structure is very different from its U.S. counterpart, the quantitative importance of the extensive margin is of similar magnitude. |
| Keywords: | business cycle, extensive and intensive margin, variance decomposition |
| JEL: | C10 E32 J21 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5117&r=lab |
| By: | Michael Clemens |
| Abstract: | This study uses a unique natural experiment to test a simple model of international differences in workers’ wages and productivity. Large differences in wages across countries could arise from several sources. These include barriers to trade in outputs, differences in technology, differences in workers, or differences in the other factors of production accessible in different countries. To measure the relative importance of these sources in one setting, this study exploits the randomized processing of U.S. visas for a group of Indian workers who produce software within a single multinational firm. In this setting, international barriers to trade in outputs, barriers to technology transfer, and all observable or unobservable differences between workers are extremely low. The results indicate that location outside of India causes a sixfold increase in the wages of the same worker using the same technology to produce a highly tradable good. Under plausible assumptions about competition in the industry, this suggests that country-of-work by itself is responsible—in this industry—for roughly three-quarters of the gap in productivity between workers in India and workers in the richest countries. These findings have implications for open questions in labor, growth, international, and development economics. |
| Keywords: | growth, economic development, wealth of nations, productivity, migration, lottery, information technology, wage differences, poverty, income distribution, human capital, spatial differences, agglomeration, price equivalent, tariff equivalent, labor mobility, location, high tech, software, technology |
| JEL: | O15 F22 J61 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:212&r=lab |
| By: | Kim, Anna Myunghee (IZA) |
| Abstract: | This paper provides an evaluation of the status of migrant workers in Germany amidst the global financial crisis. Findings of the study are drawn from the latest available data on the labour market performance of native-German and non-German migrant workers as well as other socioeconomic integration measures of the receiving state. Compared to the experience of migrants in most of the major receiving states of the EU, the status of the predominantly low-skilled sector-employed migrant workers in Germany, where primarily the skilled-workforce concentrated industries of high-value products is affected, has remained unchanged during the crisis. On the other hand, marginalisation of the ethnic and national minority population appears to be a persistent phenomenon marked by long-standing labour market exclusion. This is manifested in over two decades of double-digit unemployment rates of the foreign migrant population in the former ‘guest-worker’ importing country. This implies for the economy the need to settle long-term problems and implement strategies towards a better labour market integration of the minority migrant population beyond the recent recession. |
| Keywords: | global financial crisis, low-skilled sector, migrant workers, guest-workers, labour market integration, minority migrant population |
| JEL: | F22 J61 O15 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5134&r=lab |
| By: | Papps, Kerry L. (University of Oxford) |
| Abstract: | The establishment of the free agency system in the 1970s resulted in large salary increases among professional baseball players. Historical data show that players have tended to perform better at early stages of their careers since free agency was introduced. Under the current salary bargaining system, players only become eligible for salary arbitration and free agency at predetermined points in their careers, resulting in sudden changes in salary growth rates at these points. Using data on official days of major league service, it is found that players with high expected salary growth perform better, consistent with efficiency wage theory. |
| Keywords: | efficiency wages, productivity, baseball |
| JEL: | J24 J31 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5133&r=lab |
| By: | Petrosky-Nadeau, Nicolas (Carnegie Mellon University); Wasmer, Etienne (Sciences Po, Paris) |
| Abstract: | Financial frictions are known to raise the volatility of economies to shocks (e.g. Bernanke and Gertler 1989). We follow this line of research to the labor literature concerned by the volatility of labor market outcomes to productivity shocks initiated by Shimer (2005): in an economy with search on credit and labor markets, a financial multiplier raises the elasticity of labor market tightness to productivity shocks. This multiplier increases with total financial costs and is minimized under a credit market Hosios-Pissarides rule. Using a flexible calibration method based on small perturbations, we find the parameter values to match the US share of the financial sector. Those values are far away from Hosios and lead to a financial accelerator of about 3.6 (exogenous wages) to 4.5 (endogenous wages). Both match Shimer (2005)'s elasticity of labor market tightness to productivity shocks. Financial frictions are thus an alternative to the "small labor surplus" assumption in Hagedorn and Manovskii (2008): we keep the value of wages over productivity below 0.78. We conclude that financial frictions are a good candidate to solve the volatility puzzle and rejoin Pissarides (2009) in arguing that hiring costs must be partly non-proportional to congestion in the labor market, which is the case of financial costs. |
| Keywords: | search, financial imperfections, Shimer puzzle, macroeconomic volatility |
| JEL: | E44 J60 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5131&r=lab |
| By: | de Carvalho Filho, Irineu; Colistete, Renato P. |
| Abstract: | This paper deals with institutional persistence in long-term economic development. We investigate the historical record of education in one of the fastest growing and most unequal societies in the twentieth century – the state of São Paulo, Brazil. Based on historical data from an agricultural census and education statistics, we assess the role played by factors such as land concentration, immigration and type of economic activity in determining supply and demand of education during the early twentieth century, and to what degree these factors help explain current educational performance and income levels. We find a positive and enduring effect of the presence of foreign-born immigrants on the supply of public instruction, as well as a negative effect of land concentration. Immigrant farm-laborers established their own community schools, and pressured for public funding for those schools or for public schools. The effects of early adoption of public instruction can be detected more than one hundred years later in the form of better test scores and higher income per capita. These results are suggestive of an additional mechanism generating inequality across regions: the places that received immigration from countries with an established public education system benefited from an earlier adoption of the revolutionary idea of public education. |
| Keywords: | Public education; Brazil; Economic History; Economic Development; Coffee; Immigration; Land Inequality; Toryism |
| JEL: | N16 H75 O4 |
| Date: | 2010–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:24494&r=lab |
| By: | Sarah Brockhoff (University of Freiburg); Tim Krieger (University of Mainz); Daniel Meierrieks (University of Paderborn) |
| Abstract: | This contribution offers a comprehensive empirical analysis of the effects of education on terrorism for 118 countries for the period 1984 to 2007. We find that education and terrorism are not directly linked, so that education neither fosters nor retards terrorism on its own. Rather, our results suggest that education may fuel terrorist activity in the presence of poor political and socio-economic conditions, whereas bet- ter education in combination with favorable conditions decreases terrorism. Thus, the precise effect of education on terrorism depends on country-specific conditions. A successful anti-terrorism strategy should therefore focus on a country's political and socio-economic development, in addition to educational attainment. |
| Keywords: | education, terrorism, counter-terrorism, development strategies, condi- tional effects |
| JEL: | H56 D74 O15 H52 I2 N40 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:wpaper:26&r=lab |
| By: | Parys, Juliane (University of Bonn); Schwerhoff, Gregor (University of Bonn) |
| Abstract: | We propose a model of how parents resolve conflicts about sharing the negative short and long-term consequences from parenthood-related career interruptions on earnings. We introduce childcare sharing in a collective model of household behavior with public consumption as in Blundell, Chiappori, and Meghier (2005). Conceptually, the solution to the household problem can be thought of as a two-stage process: Parents first agree on public expenditures on professional childcare; then, conditional on the level of public consumption and the budget constraint stemming from stage one, parents determine their individual job absence durations and private consumption shares. Using relative income measures from German parental benefit data as distribution factors, we find evidence for Pareto efficiency in childcare sharing. More precisely, households with higher total incomes purchase more professional childcare, and changes in distribution factors shift the conditional parental leave allocation in favor of the partner whose relative income increased. |
| Keywords: | childcare, collective model, conditional sharing rule, intra-household allocation |
| JEL: | D13 J12 J13 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5113&r=lab |
| By: | John Haltiwanger; Ron S. Jarmin; Javier Miranda |
| Abstract: | There’s been a long, sometimes heated, debate on the role of firm size in employment growth. Despite skepticism in the academic community, the notion that growth is negatively related to firm size remains appealing to policymakers and small business advocates. The widespread and repeated claim from this community is that most new jobs are created by small businesses. Using data from the Census Bureau Business Dynamics Statistics and Longitudinal Business Database, we explore the many issues regarding the role of firm size and growth that have been at the core of this ongoing debate (such as the role of regression to the mean). We find that the relationship between firm size and employment growth is sensitive to these issues. However, our main finding is that once we control for firm age there is no systematic relationship between firm size and growth. Our findings highlight the important role of business startups and young businesses in U.S. job creation. Business startups contribute substantially to both gross and net job creation. In addition, we find an “up or out” dynamic of young firms. These findings imply that it is critical to control for and understand the role of firm age in explaining U.S. job creation. |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:10-17&r=lab |
| By: | Gong, Xiaodong (Australian National University); Breunig, Robert (Australian National University); King, Anthony (Australian Treasury) |
| Abstract: | The degree of responsiveness of Australian women's labour supply to child care cost has been a matter of some debate. There is a view that the level of responsiveness is very low or negligible, running counter to international and anecdotal evidence. In this paper we review the Australian and international literature on labour supply and child care, and provide improved Australian estimates of labour supply elasticities and child care demand elasticities with respect to gross child care price. We find that the limited literature in Australia has suffered from measurement error problems stemming in large part from shortcomings with data on child care price and child care usage. We use detailed child care data from three recent waves of the Household, Income and Labour Dynamics in Australia (HILDA) Survey (covering the period 2005 to 2007) to address these problems. We extend the standard labour supply and child care model to allow for separate effects of different child care prices for children in different age ranges and we calculate regional child care prices based upon child-level information. The salient finding is that child care prices do have statistically significant effects on mothers’ labour supply and child care demand. The new estimates are in line with international findings, and their robustness is supported by a validation exercise involving an alternative technique and an earlier time period. |
| Keywords: | labour supply, child care price, child care demand, elasticity |
| JEL: | J22 J13 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5119&r=lab |
| By: | Zhong Zhao |
| Abstract: | This paper investigates the evolution of earnings inequality in urban China from 1989 to 2006. After decomposing the variance of log of earnings into transitory and permanent two parts, we find that both components are important contributors to the total variance of earnings. We also find that the share of the transitory part has been decreasing from early 1990 to 2004; however, this decreasing trend is reversed from 2004 to 2006. Compared female to male, though these two populations share similar trends in the changes of transitory and permanent components, changes are more pronounced for female than for male. Our results suggest that the time-invariant part and time related part in permanent earnings are negatively correlated. This implies converge of earnings profile in long run and also implies that there is more mobility within the distribution of long-term earnings. [IZA Discussion Paper No. 3270] |
| Keywords: | earnings inequality, covariance structure of earnings, China |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2783&r=lab |
| By: | Kato, Takao (Colgate University); Lee, Ju Ho (KDI School of Public Policy and Management); Ryu, Jang-Soo (Pukyong National University) |
| Abstract: | We report the first results for Korean firms on the incidence, diffusion, scope and effects of diverse employee financial participation schemes, such as Profit Sharing Plans (PSPs), Employee Stock Ownership Plans (ESOPs), Stock Option Plans (SOPs) and Team Incentive Plans (TIPs). In do doing, we assemble important new panel data by merging data from a survey of all Korean firms listed on Korean Stock Exchange which enjoys an unusually high response rate of 60 percent with accounting data from their corporate proxy statements. Our estimated fixed effect models of production functions reveal consistently that the introduction of a PSP or a TIP will lead to a significant increase in productivity (about 10 percent) whereas no such evidence found for ESOPs or SOPs. We also find that the productivity payoff appears to be more long-lasting for PSPs than for TIPs. Finally, our fixed-effect estimates suggest that PSPs and TIPs tend to be substitutes rather than complements in their productivity effects. |
| Keywords: | profit sharing, employee stock ownership, team incentive, stock option, productivity, Korea |
| JEL: | M52 J33 J24 J53 O53 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5111&r=lab |
| By: | Catherine Eckel; Cathleen Johnson; Claude Montmarquette |
| Abstract: | The purpose of the study is to collect information that can be used to design a policy to induce the poor to invest in human capital. We use laboratory experimental methodology to measure the preferences and choices of the target population of a proposed government policy. We recruited 256 subjects in Montreal, Canada; 72 percent had income below 120 percent of the Canadian poverty level. The combination of survey measures and actual decisions allows us to better understand individual heterogeneity in responses to different subsidy levels. Two behavioral characteristics, patience and attitude towards risk, are key to understanding the determinants of educational investment for the low-income individuals in this experiment. The decision to save for a family member’s education is somewhat different from that of investing in one’s own education. Again, patient participants were more likely to save for a family member’s education, but in contrast to investing in one’s own education, a subject’s attitude towards risk played no role. <P>Le but de cette étude est de recueillir des informations pour concevoir une politique publique afin d’inciter les pauvres à investir en capital humain. Nous utilisons l’approche expérimentale pour mesurer les préférences et les choix de la population ciblée. Nous avons recruté 256 sujets à Montréal. 72 % avaient un revenu inférieur à 120 % pour cent du seuil de faible revenu de Statistique Canada. La combinaison de mesures d'enquête et les décisions réelles nous permettent de mieux comprendre l'hétérogénéité individuelle dans les réponses aux différents niveaux de subvention. Deux caractéristiques comportementales, la patience (désir d’épargne) et l'attitude envers le risque, sont essentielles à la compréhension des déterminants de l'investissement éducatif pour les personnes à faible revenu dans cette expérience. La décision d’investir dans l'éducation d'un membre de la famille est quelque peu différente de celle d'investir dans sa propre éducation. Encore une fois, les participants les plus patients sont les plus susceptibles d'épargner pour l'éducation d'un membre de la famille, mais au contraire, investir dans sa propre éducation, l'attitude d'un sujet vis-à-vis le risque ne joue aucun rôle. |
| Keywords: | Intertemporal choice, field experiments, risk attitudes, working poor, choix intertemporels, expériences sur le terrain, les attitudes vis-à-vis le risque, travailleurs pauvres |
| JEL: | C93 D91 D81 |
| Date: | 2010–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2010s-33&r=lab |
| By: | Dauth, Wolfgang (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]) |
| Abstract: | "Theories in regional science predict that related establishments benefit from their mutual proximity due to forward-backward linkages, labor market pooling and knowledge spillovers (the Marshallian forces). While the existence of these externalities as a whole is well supported by the empirical literature, there are few studies that discriminate between separate explanations. This paper introduces a new approach to assess the importance and magnitude of each of the Marshallian forces separately. Instead of measuring external economies of scale that take place within single industries, it models spillovers that happen between co-located industries. To this end, methods of spatial econometrics are adopted to measure interindustry relationships in employment growth between 55 industries of the manufacturing and service sectors in the labor market regions of the five largest cities in western Germany in the years 1989 to 2006. In this context, the strength of these relations is determined by economic closeness rather than by geography. The results suggest that each of the three Marshallian forces help to explain agglomeration externalities." (author's abstract, IAB-Doku) ((en)) |
| JEL: | O47 R11 R12 |
| Date: | 2010–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:201015&r=lab |
| By: | María José Luengo-Prado (IMDEA Social Sciences); Almudena Sevilla-Sanz (Oxford University) |
| Abstract: | Evidence from several countries reveals a substantial drop in household consumption around retirement age that some researchers believe is difficult to reconcile with standard life-cycle models. Using detailed expenditure data from a Spanish panel survey, we find no evidence of a consumption-retirement puzzle in Spain for the period of 1985–2004. However, we find a drop in food expenditure at home from 1998 to 2004 and evidence on households paying lower prices for the food they purchase after retirement in this latter period. Our findings are consistent with a household model that allows for home production whereby retirees substitute away from market goods to home production, as long as one accounts for the greater participation in housework by men after retirement coinciding with the latter period of the survey. |
| JEL: | E21 |
| Date: | 2010–08–16 |
| URL: | http://d.repec.org/n?u=RePEc:imd:wpaper:wp2010-18&r=lab |
| By: | Raghbendra Jha; Raghav Gaiha; Manoj K. Pandey |
| Abstract: | Using household level data this paper provides systematic evidence on the employment impact of the National Rural Employment Guarantee Scheme in three Indian states: Rajasthan, Andhra Pradesh and Maharashtra. We model this as a two stage Heckman procedure where we model selection for NREGS in the first phase and the determinants of hours worked in the second. A number of significant insights into the employment impact of the National Rural Employment Guarantee Scheme are obtained. |
| Keywords: | National Rural Employment Guarantee Scheme, Heckman Models, Asia: India |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pas:asarcc:2010-17&r=lab |
| By: | Anita Sarkar; Biju Varkkey |
| Abstract: | The paper examines the attitude of white collar unionized employees’ towards their union and management under three key themes – work related dimensions, union related dimensions and staff members’ loyalty towards union and management. The investigation is based on survey and informal interviews of white collar employees of Tata Centre, the corporate head-office of Tata Steel, India. [W.P. No.2008-03-07] |
| Keywords: | white collar, union, loyalty, India |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2780&r=lab |