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on Labour Economics |
| By: | Nathaniel Baum-Snow (Brown University); Ronni Pavan (University of Rochester) |
| Abstract: | In 2000, wages of full time full year workers were more than 30 percent higher in metropolitan areas of over 1.5 million people than rural areas. The monotonic relationship between wages and city size is robust to controls for age, schooling and labor market experience. In this paper, we decompose the city size wage gap into various components. We propose an on-the-job search model that incorporates latent ability, search frictions, firm-worker match quality, human capital accumulation and endogenous migration between large, medium and small cities. Counterfactual simulations of the model indicate that variation in returns to experience and differences in wage intercepts across location type are the most important mechanisms contributing to the overall city size wage premium. Steeper returns to experience in larger cities is more important for college graduates while differences in wage intercepts is more important for high school graduates. Sorting on unobserved ability within education group and differences in labor market search frictions and distributions of firm-worker match quality contribute little or slightly negatively to observed city size wage premia in both samples. |
| Keywords: | Agglomeration, wage growth, urban wage premium |
| JEL: | J24 J31 R12 R23 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2010/9/doc2010-27&r=lab |
| By: | Chae, ChangKyun; Chung, Jaeho |
| Abstract: | The Korean vocational education and training (VET) system is heralded as one of the key factors contributing to the countries past economic growth. VET has played an important role in developing a skilled labor force during Korea's economic development. However, with the increasing importance of higher education and general education, the status of VET in the country is declining. This paper explores recent Korean data to analyze the labor market outcomes of pre-employment VET institutions. The findings show that current vocational high school education is not associated with better labor market outcomes, in terms of employment rate, wage levels, prospect of permanent employment, and transition to the first job, when compared to general high school education. Among VET programs, the authors find that graduates of higher level, more comprehensive VET programs experience greater labor market achievements than graduates of less competitive, shorter programs. The authors also find that the VET institutes play an important role in supplying technical labor to small and medium enterprises (SMEs). |
| Keywords: | Tertiary Education,Secondary Education,Labor Markets,Education For All,Teaching and Learning |
| Date: | 2009–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:52186&r=lab |
| By: | Wamuthenya, W.R. |
| Abstract: | Kenya has experienced a sharp decline in formal sector employment and a corresponding increase in informal sector employment. This paper examines the role played by various factors in influencing the sorting of individuals into different sectors of employment in urban Kenya. It examines whether factors influencing the location of individuals in different sectors change over time and differ across gender and thus contributes to an understanding of gender differences in job attainment. The paper complements the issues addressed in two other studies by the author on the remarkable rise in female Labour Force Participation Rate (LFPR) and on the gender gap in the incidence of unemployment. As may be expected, in both periods, experience and education are highly valued in the formal sector. Over time, the importance of education in securing labour market access increases by about 5 and 16 percentage points for primary and secondary education levels respectively. However, there are sharp gender differences. For men, the importance of education increases while for women it declines suggesting the presence of labour market segregation. Over time, the negative effect of marital status on female formal sector participation declines reflecting the increasing insertion of married women in the labour market. Underscoring the use of the informal sector as a last resort option, I find that declines in husbands’ real earnings are associated with a sharp increase in women’s participation in the informal sector. The increasing participation of women in the vulnerable informal sector is consistent with the feminist version of the structuralist characterisation of the informal sector. |
| Keywords: | formal sector;informal sector;education;gender;labour market segregation;feminist dualist and structuralist views |
| Date: | 2010–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:euriss:507&r=lab |
| By: | Eric Strobl (École Polytechnique Paris); Frank Walsh (University College Dublin) |
| Abstract: | In a competitive model we ease the assumption that efficiency units of labour are the product of hours and workers. We show that a minimum wage may either increase or decrease hours per worker and the change will have the opposite sign to the slope of the equilibrium hours hourly wage locus. Similarly, total hours worked may rise or fall. We illustrate the results throughout with a Cobb-Douglas example. |
| Keywords: | Minimum wages, hours, employment |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:wpaper:201028&r=lab |
| By: | Wamuthenya, W.R. |
| Abstract: | In recent years, there have been sharp changes in the Kenyan labour market. Most notably, Kenya has experienced a remarkable increase in female labour force participation in its urban areas over the period 1986 to 1998. The sharp increase in female LFPR has not been matched by an increase in their employment rate and consequently unemployment amongst women remains a pressing problem. In contrast, male unemployment rates are substantially lower and have not increased significantly over time. This paper uses data from two time periods, 1986 and 1998, to identify the factors that influence the likelihood of being unemployed and to examine why women are more vulnerable to unemployment than men are. Using a decomposition framework, the paper establishes whether the gender gap in unemployment is driven by differences in observable characteristics between women and men (a composition effect) or differences in the returns to these characteristics in the labour market (structural effect/discrimination). The analysis shows that the overall likelihood of being unemployed is heavily influenced by sex, marital status, household-headship and human capital characteristics such as experience and level of education. The decomposition estimates display that for both periods, gender gaps in unemployment are overwhelmingly, about 81 to 84 per cent, attributed to the composition effect. |
| Keywords: | unemployment;gender;decomposition;composition & structural effects;discrimination;household-headship |
| Date: | 2010–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:euriss:502&r=lab |
| By: | Charlot Olivier; Malherbet Franck (Universite de Cergy-Pontoise, THEMA, F-95000 Cergy-Pontoise.; Universite de Cergy-Pontoise, THEMA, F-95000 Cergy-Pontoise, IZA and fRDB.) |
| Abstract: | In this paper, we generalize the study of the return to education undertaken in e.g. Laing, Palivos and Wang (1995) or Burdett and Smith (2002) to an environment where the link between education and employment stability is taken into account. This enables us to study how an European-like and Employment Protection Legislation (EPL) with heavily regulated long-term contracts and more flexible short-term contracts affects the return to schooling, equilibrium unemployment and welfare. In this context, we show that ¯ring costs and temporary employment have opposite effects on the rate of use of human capital and thus, on educational investments. We furthermore demonstrate that a laissez faire economy with no regulation is inefficient as it is characterized by insufficient educational investments leading to excess job destruction and inadequate job creation. By stabilizing employment relationships, firing costs may spur educational investments and therefore lead to welfare and productivity gains, though a first-best policy would be to subsidize education. However, there is little chance for a dual (European-like) EPL to raise the incentives to schooling and aggregate welfare. |
| Keywords: | human capital; job destruction; matching frictions; efficiency |
| JEL: | I20 J20 J60 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2010-04&r=lab |
| By: | Wamuthenya, W.R. |
| Abstract: | Focusing on urban Kenya, this paper attempts to identify the sources of the temporal increase in women’s employment rate between 1986 and 1998. The paper relies on labour survey data, household responses to coping strategies and case studies. The analysis presented in the paper shows that the bulk of the increase in women’s insertion into the labour market comes from an increase in the work participation of married women. While women’s higher educational endowments, particularly the increase in secondary education, account for an improvement in their employment prospects, the period also witnesses a sharp decline in the importance given to education in determining employment and by 1998, university graduates were just as likely to be employed as individuals with no education. The period between 1986 and 1998 witnessed civil service reforms, restructuring of the private sector, firm closures and increasing job insecurity. Notwithstanding the role of education, declining opportunities for males, who in 1986 were the primary breadwinners and the accompanying income and employment insecurities within households seem to be the key factors prompting the sharp increase in the labour supply of (married) women. The analysis presented in this paper focused mainly on the period 1986 and 1998 and while more recent data would have provided an updated picture of the issues discussed in this paper, there is little evidence to suggest that the situation of women in Kenya’s labour market has changed substantially in recent years. |
| Keywords: | deteriorating economic conditions;urban households;coping strategies;women;employment rate;decomposition: composition and structural effects |
| Date: | 2010–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:euriss:500&r=lab |
| By: | Melissa Bjelland; Bruce Fallick; John Haltiwanger; Erika McEntarfer |
| Abstract: | We use administrative data linking workers and firms to study employer-to-employer flows. After discussing how to identify such flows in quarterly data, we investigate their basic empirical patterns. We find that the pace of employer-to-employer flows is high, representing about 4 percent of employment and 30 percent of separations each quarter. The pace of employer-to-employer flows is highly procyclical, and varies systematically across worker, job and employer characteristics. Our findings regarding job tenure and earnings dynamics suggest that for those workers moving directly to new jobs, the new jobs are generally better jobs; however, this pattern is highly procyclical. There are rich patterns in terms of origin and destination of industries. We find somewhat surprisingly that more than half of the workers making employer-to-employer transitions switch even broadly-defined industries (NAICS supersectors). |
| JEL: | E24 J62 J63 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:10-26&r=lab |
| By: | Fares, Jean; Puerto, Olga Susana |
| Abstract: | Training programs are the most common active labor market interventions around the world. Whether designed to develop skills of young job seekers or upgrading skills of adult workers, training programs are aimed at counteracting employability barriers that hinder the integration of people into the labor markets. Training approaches vary greatly across countries and regions. Some have a focus on classroom lectures while others emphasize training in the workplace. Based on a dataset of studies of training programs from 90 countries around the world, this paper examines the incidence of different training types over time and their impact on labor market outcomes of trainees. The authors find a general pattern of transition from in-classroom training to comprehensive measures that combine classroom and workplace training with supplementary services. Moreover, this transition has paid off. Comprehensive training interventions tend to increase the probability of having positive labor market outcomes for trainees, as compared to in-classroom training only. |
| Keywords: | Primary Education,Labor Markets,Education For All,Poverty Impact Evaluation,Labor Policies |
| Date: | 2009–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:52188&r=lab |
| By: | Hui He (University of Hawaii at Manoa, Department of Economics) |
| Abstract: | This paper documents a dramatic increase in the college enrollment rate of women from 1955 to 1980 and asks a quantitative question: to what extent can such increase be accounted for by the change in the female cohort-specific college wage premium? I develop and calibrate an overlapping generations model with discrete schooling choice. I find that changes in the life-cycle earnings differential can explain the increase in the female college enrollment rate very well. Young women's changing expectations of future earnings may also play an important role in driving their college attendance decision. |
| Keywords: | Female College Enrollment rate, College Wage Premium, Life-cycle |
| JEL: | E24 J24 J31 I21 |
| Date: | 2010–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:201014&r=lab |
| By: | Regis Barnichon; Andrew Figura |
| Abstract: | This paper presents a framework to interpret movements in the Beveridge curve and analyze unemployment fluctuations. We decompose the unemployment rate into three main components: (1) a component driven by changes in labor demand--movements along the Beveridge curve and shifts in the Beveridge curve due to layoffs--(2) a component driven by changes in labor supply--shifts in the Beveridge curve due to quits, movements in-and-out of the labor force and demographics--and (3) a component driven by changes in the efficiency of matching unemployed workers to jobs. We find that cyclical movements in unemployment are dominated by changes in labor demand, but that changes in labor supply due to movements in-and-out of the labor force also play an important role. Further, cyclical changes in labor demand lead cyclical changes in labor supply. Changes in matching efficiency generally play a small role but can decline substantially in recessions. At low-frequencies, labor demand displays no trend, and changes in labor supply explain virtually all of the secular trend in unemployment since 1976. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2010-48&r=lab |
| By: | Almeida, Rita K.; Aterido, Reyes |
| 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, the findings do not support the view that this difference is mostly driven by market imperfections disproportionally affecting small and medium enterprise sector (SMEs). Rather, our evidence is supportive of SMEs having a smaller expected return from the investment in job training than larger firms. Therefore, the findings call for caution when designing pro-SME policies fostering the investment in on the job training. |
| Keywords: | Education For All,Labor Policies,Primary Education,Microfinance,Labor Markets |
| Date: | 2010–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:54967&r=lab |
| By: | Luis Santos-Pinto |
| Abstract: | I extend Spence's (1974) labor market signaling model by assuming some workers are overconfident and some underconfident. Overconfident (underconfident) workers underestimate (overestimate) their marginal cost of acquiring education. Firms cannot observe workers' productive abilities and cannot observe workers' beliefs. However, firms know the fraction of overconfident, underconfident, and high-ability workers in the economy. I find that the presence of overconfident and/or underconfident workers in the labor market compresses wages. I show that workers' biased beliefs reduce welfare when workers are sufficiently different in terms of productivity and cost of education. Finally, I show that if the fraction of overconfident workers is relatively low and workers are sufficiently similar in terms of productivity and cost of education, then biased beliefs improve welfare. |
| Keywords: | signaling; labor market; behavioral biases; wages; education |
| JEL: | D82 J24 J31 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:lau:crdeep:10.07&r=lab |
| By: | Aysen Isaoglu |
| Abstract: | This paper analyzes the determinants of annual worker reallocation across disaggregated occupations in western Germany for the period 1985-2003. Employing data from the German Socio-Economic Panel, the pattern of average occupational mobility is documented. Worker reallocation is found to be strongly procyclical. Its determinants at the individual level are then investigated while controlling for unobserved worker heterogeneity. A dynamic probit fixed effects model is estimated to obtain coefficients and marginal effects. The incidental parameter bias is reduced by the method proposed in Hahn and Kuersteiner (2004). An interesting finding is that workers changing occupation are about 8 to 9 percent less inclined to experience occupational mobility in the subsequent year than workers who do not change. Except for workers with only compulsory education, the impact of age on the probability of occupational change is declining in the level of education. The unemployment rate has a negative effect on the probability of occupational changes, especially for female foreigners. |
| Keywords: | Dynamic binary choice models, fixed effects, incidental parameter bias, occupational mobility, Panel data |
| JEL: | J24 J44 J62 C23 C25 C81 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp319&r=lab |
| By: | Fredrik Andersson; Elizabeth E. Davis; Matthew L. Freedman; Julia I. Lane; Brian P. McCall; L. Kristin Sandusky |
| Abstract: | This paper uses matched employer-employee data from the U.S. Census Bureau to investigate the contribution of worker and firm reallocation to changes in wage inequality within and across industries between 1992 and 2003. We find that the entry and exit of firms and the sorting of workers and firms based on underlying worker skills are important sources of changes in earnings distributions over time. Our results suggest that the underlying dynamics driving changes in earnings inequality are complex and are due to factors that cannot be measured in standard cross-sectional data. |
| Keywords: | Inequality, Decomposition, Human Capital, Reallocation |
| JEL: | C23 J24 J31 J48 J63 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:10-32&r=lab |
| By: | Peter Skott (University of Massachusetts Amherst) |
| Abstract: | US earnings inequality has increased dramatically since the 1970s, and the prospect of a reversal depends on what caused the trend. The standard explanation emphasizes skill-biased technical change. This paper briefly considers some aggregation issues and then proceeds to outline two alternative perspectives .power biased technical change and the effects of induced mismatch in the labor market .and their implications. JEL Categories: J31, J41, O33 |
| Keywords: | inequality, power-biased technological change, minimum wages, overeducation, mismatch, efficiency wage, aggregation. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2010-09&r=lab |
| By: | Sara LaLumia (Williams College) |
| Abstract: | The federal government delivers substantial college aid through the tax code, after introducing education tax credits in 1998 and a tuition deduction in 2002. The design of the Lifetime Learning tax credit and the tuition deduction may make them particularly useful to older students. This paper investigates how these provisions have affected college attendance of individuals in their 30s and 40s. For most adults, there is no effect on college attendance. Among men whose 1998 educational attainment falls short of earlylife educational expectations, eligibility for an education tax preference is associated with a 2.5 to 3.4 percentage point increase in the probability of college attendance. |
| Keywords: | college finance, education tax credits, and college enrollment |
| JEL: | H31 I22 I28 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:wil:wileco:2010-11&r=lab |
| By: | Smith, Jennifer (Department of Economics, University of Warwick); Elsby, Michael (University of Michigan and NBER) |
| Abstract: | The increase in unemployment in the United Kingdom that accompanied the Great Recession has been conspicuous by its moderation. The rise in joblessness is dwarfed by the recent experience of the United States, by past recessionary episodes in the U.K. and by the contraction in GDP in the U.K. Increased rates of job loss have played a dominant role in shaping the rise in British unemployment. Unemployment duration has not increased to the levels seen in previous recessions, in contrast to the U.S. where duration substantially exceeds previous peaks. Looking forward, the U.K. labour market appears to have adjusted fully to the shocks that prompted the recession. Signs of reductions in match efficiency witnessed recently in the U.S. are not mirrored in the U.K. In contrast, while long-term unemployment currently remains well below historical levels, recent estimates of job finding rates suggest that it has the potential to rise much further. Thus, a timely recovery in aggregate demand will play an important role in averting persistently high unemployment in the future. |
| Keywords: | Labour market ; business cycle ; unemployment ; worker flows JEL Classification: E24 ; J6 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:945&r=lab |
| By: | Uschi Backes-Gellner (Institute for Strategy and Business Economics, University of Zurich); Simone Tuor (Institute for Strategy and Business Economics, University of Zurich); Daniela Wettstein (Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | This paper examines whether individuals who become either entrepreneurs or employees follow sys-tematically different educational paths to a given educational level. Following Lazear’s jack-of-all-trades theory, we expect that entrepreneurs aim at a balanced set of different skills (academic or voca-tional), while employees specialize in one skill. This means that entrepreneurs follow educational paths that combine different types of education, while employees follow same-type paths while climb-ing up the educational ladder. We use the Swiss Labor Force Survey to test our hypothesis. Our em-pirical findings are in line with Lazear’s theory. Individuals who change between different types of education are more likely to become entrepreneurs. Thus, the permeability of a national educational system is one crucial determinant for entrepreneurship. |
| Keywords: | Entrepreneurship, Jack-of-all-trades, Educational paths |
| JEL: | I21 J24 M50 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:iso:educat:0050&r=lab |
| By: | Debebe, Z.Y. |
| Abstract: | The author studies the effect of an agricultural shock and a labor sharing arrangement (informal social network) on child labor. Albeit bad parental preference to child labor (as the strand of literature claims), poor households face compelling situations to send their child to work. This is, especially, true when they are hit by an income shock and face a binding adult labor constraint. The author used panel data from the ERHS and employed a fixed effects model to pin down causal relation between shocks, membership in a labor sharing arrangement and child labor. It was found that child labor is, indeed, a buffer stock. Though a labor sharing arrangement doesnÂ’t affect child labor at normal times, it helps households to lessen the pressure to rely on it when hit by idiosyncratic shocks. While almost the whole effect of these shocks is offset by participation in a labor sharing arrangement, the covariate shock is not. Even if this may well affect a childÂ’s academic performance, school attendance doesnÂ’t decrease. This differential effect of shocks on child labor in participant households might be because of the extra adult labor made available or due to mutual support that comes with these social networks. This paper is indicative of the importance of considering social networks in smoothing out consumption. Further, it highlights the difficulty to cope up with covariate shocks and hence, calls for development interventions that are particularly meant to address their impact. |
| Keywords: | child labor;shocks;labor sharing;social networks;Ethiopia |
| Date: | 2010–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:euriss:491&r=lab |
| By: | Sanchez Puerta, Maria Laura |
| Abstract: | This paper documents recent advances of research on labor market institutions, behavior, and policies in developing countries and makes suggestions for future research. The four areas of research analyzed are: i) theoretical and empirical implications of employment protection legislation on labor outcomes; ii) the issue of shifting from job to worker protection, namely, the different alternatives to severance pay: unemployment insurance and unemployment insurance savings accounts and their application to developing countries; iii) the effect of active labor market programs, particularly of training, on labor market outcomes; and iv) the causes and consequences of informality in the labor market, with special emphasis on the efforts to model the informal sector. The focus of the four sections is on theoretical and empirical work on published in the last five to seven years, and each one concludes with new directions for future research. |
| Keywords: | Labor Markets,Labor Policies,Labor Standards,Population Policies,Political Economy |
| Date: | 2010–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:52999&r=lab |
| By: | Michael Gerfin; Boris Kaiser |
| Abstract: | This paper investigates how recent immigration inflows from 2002 to 2008 have affected wages in Switzerland. This period is of particular interest as it marks the time during which the bilateral agreement with the EU on the free cross-border movement of workers has been effective. Since different types of workers are likely to be unevenly affected by recent immigration inflows, we follow the "structural skill-cell approach". This paper provides two main contributions. First, we estimate empirically the elasticities of substitution between different types of workers in Switzerland. Our results suggest that natives and immigrants are imperfect substitutes. Regarding different skill levels, the estimates indicate that workers are imperfect substitutes across broad education groups and across different experience groups. Second, the estimated elasticities of substitution are used to simulate the impact on domestic wages using the actual immigration inflows from 2002 to 2008. For the long run, the simulations produce some notable distributional consequences across different types of workers: While previous immigrants incur wage losses (-1.6%), native workers are not negatively affected on average (+0.4%). In the short run, immigration has a negative macroeconomic effect on the average wage, which, however, gradually dies out in the process of capital adjustment. |
| Keywords: | Immigration; Wages; Labour Demand; Labour Supply; Skill Groups |
| JEL: | E24 F22 J61 J31 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:ube:dpvwib:dp1012&r=lab |
| By: | Huang, Jikun; Zhi, Huayong; Huang, Zhurong; Rozelle, Scott; Giles, John |
| Abstract: | This paper examines the effect of the financial crisis on off-farm employment of China's rural labor force. Using a national representative data set collected from across China, the paper finds that there was a substantial impact. By April 2009 off-farm employment reached 6.8 percent of the rural labor force. Monthly earnings also declined. However, while it is estimated that 49 million were laid-off between October 2008 and April 2009, half of them were re-hired in off-farm work by April 2009. By August 2009, less than 2 percent of the rural labor force was unemployed due to the crisis. The robust recovery appears to have helped avoid instability. |
| Keywords: | Labor Markets,Labor Policies,Work&Working Conditions,Tertiary Education,Crops&Crop Management Systems |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5439&r=lab |
| By: | Peter R. Mueser (Department of Economics, University of Missouri-Columbia); Carolyn J. Heinrich; Kenneth R. Troske; Kyung-Seong Jeon (Department of Economics, University of Missouri-Columbia); Daver C. Kahvecioglu |
| Abstract: | This paper presents nonexperimental net impact estimates for the Adult and Dislocated Worker programs under the Workforce Investment Act (WIA), the primary federal job training program in the U.S, based on administrative data from 12 states, covering approximately 160,000 WIA participants and nearly 3 million comparison group members. The key measure of interest is the increment in average quarterly earnings or employment attributable to WIA program participation for those who participate, estimated for up to four years following entry into the program using propensity score matching methods. The results for participants in the WIA Adult program show that participating is associated with a several-hundred-dollar increase in average quarterly earnings. Adult program participants who obtain training have lower earnings in the months during training and the year after exit than those who don’t receive training, but they catch up within 10 quarters, ultimately registering large gains. The marginal benefits of training exceed, on average, $400 in earnings each quarter three years after program entry. Participants in the Dislocated Worker program experience several quarters for which earnings are depressed relative to comparison group workers after entering WIA, and, although their earnings ultimately match or overtake the comparison group, the benefits they obtain are smaller than for those in the Adult program. |
| Keywords: | Job Training, Program Evaluation, Workforce Investment Act, Matching |
| JEL: | I38 J08 J24 |
| Date: | 2010–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:1003&r=lab |
| By: | Satyajit Chatterjee; Felicia Ionescu |
| Abstract: | Participants in student loan programs must repay loans in full regardless of whether they complete college. But many students who take out a loan do not earn a degree (the dropout rate among college students is between 33 to 50 percent). The authors examine whether insurance against college-failure risk can be offered, taking into account moral hazard and adverse selection. To do so, they develop a model that accounts for college enrollment, dropout, and completion rates among new high school graduates in the US and use that model to study the feasibility and optimality of offering insurance against college failure risk. The authors find that optimal insurance raises the enrollment rate by 3.5 percent, the fraction acquiring a degree by 3.8 percent and welfare by 2.7 percent. These effects are more pronounced for students with low scholastic ability (the ones with high failure probability). |
| Keywords: | Student loans ; Risk management ; Education, Higher - Economic aspects ; Insurance |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:10-31&r=lab |
| By: | Heiwai Tang |
| Abstract: | This paper studies how cross-country differences in labor market institutions shape the pattern of international trade, focusing on workers' skill acquisition. I develop a model in which workers undertake non-contractible activities to acquire firm-specific skills on the job. In the model, workers have more incentive to acquire firm-specific skills relative to general skills in a more protective labor market. When sectors are different in the dependence on these two types of skills, workers' skill acquisition turns labor laws into a source of comparative advantage. By embedding the model in an open-economy framework with heterogeneous firms, sectors with different levels of dependece on firm-specific skills, and countries with varying degrees of labor protection, I show that countries with more protective labor laws export relatively more in firm-specific, skill-intensive sectors through both the intensive and extensive margins of trade. I then estimate returns to firm tenure for different U.S. manufacturing sectors over the period of 1974-1993, and use the estimates as sector proxies for firm-specific skill intensity to test the theoretical predictions. By implementing the Helpman-Melitz-Rubeinstein (2008) framework to estimate sector-level gravity equations for 84 countries in 1995, I find supporting evidence for the predicted effects of labor market institutions on both margins of trade. |
| Keywords: | Labor market institutions, heterogeneous firms, margins of trade, trade patterns, firm-specific skills |
| JEL: | F10 F12 F14 F16 L22 J24 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0755&r=lab |
| By: | Jens Hagen; Toman Omar Mahmoud; Natalia Trofimenko |
| Abstract: | Losing a parent is a trauma that has consequences for human capital formation. Does it matter at what age this trauma occurs? Using longitudinal data from the Kagera region in Tanzania that span thirteen years from 1991-2004, we find considerable impact heterogeneity across age at bereavement, but less so for the death of opposite-sex parents. In terms of long-term health status as measured by body height, children who lose their same-sex parent before teenage years are hit hardest. Regarding years of formal education attained in young adulthood, boys whose fathers die before adolescence suffer the most. Maternal bereavement does not fit into this pattern as it affects educational attainment of younger and older children in a similar way. The generally strong interaction between age at parental death and sex of the late parent suggests that the preferences of the surviving parent partly protect same-sex children from orphanhood’s detrimental effects on human capital accumulation |
| Keywords: | orphans, health, education, timing of parental death, child development, Tanzania |
| JEL: | I10 I21 J19 C23 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1649&r=lab |
| By: | Forteza, Alvaro; Ourens, Guzman |
| Abstract: | The authors present a new database of social security indicators for eleven Latin American countries designed to assess pension schemes in terms of the payments they promise in return to contributions. Based on this data, authors analyze inequality, insurance and incentives to work, using the replacement rates and the internal rates of return implicit in the flows of contributions and pensions. Results indicate that most programs analyzed are progressive in the sense that, other things equal, they yield higher returns to low than to high income workers. Poor workers, notwithstanding, often have flat age-earnings profiles and lower life expectancy, both of which reduce the rates of return received from social security. The Argentinean and (the pre-2008) Uruguayan programs severely punish short contribution careers, providing strong incentives for workers in the programs to continue contributing until they reach minimums that vary between 30 and 35 years of contributions. The counterpart is that these programs do not hedge workers against the risk of having short working careers; quite the opposite, they raise the uncertainty workers face. The very low rates of return that the Argentinean and Uruguayan main pension programs pay to workers with short working careers are likely to impact strongly on low income workers, as the probability they experience interruptions is higher. The Brazilian, Chilean and Mexican programs show a better balance between insurance against the risk of short working careers and incentives to work. The defined benefit programs of Argentina, Ecuador and Uruguay strongly discourage early retirement; the Chilean and Mexican programs are more neutral. Argentina, Chile and Uruguay passed reforms to their main pension programs in 2008. Unlike the Argentinean reform, the Chilean and Uruguayan 2008 reforms strengthened the social protection that programs provide, shifting the balance towards more insurance and less incentives to work. |
| Keywords: | Pensions&Retirement Systems,Emerging Markets,Debt Markets,Gender and Law,Labor Markets |
| Date: | 2009–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:52447&r=lab |
| By: | Peter R. Mueser (Department of Economics, University of Missouri-Columbia); Marios Michaelides |
| Abstract: | We examine how gender, racial, and ethnic variation in unemployment and Unemployment Insurance (UI) receipt changed over time in the U.S. economy and how these changes are influenced by shifts in the occupational and industrial composition of employment. Using Current Population Survey (CPS) data, we confirm that, in the past 50 years, the unemployment rates for women, nonwhites, and Hispanics have been converging to those of the rest of the population. By 1992, women had the same unemployment rates as men; whereas nonwhite and Hispanic rates remained above those for the full population. Yet, once we adjust for industry and occupation differences in employment, women have higher unemployment rates than men, while Hispanics have similar unemployment rates to non-Hispanics. Nonwhites still have appreciably higher unemployment rates than whites. For women, the patterns of UI receipt correspond with unemployment differentials. Nonwhites and Hispanics are less likely to receive UI benefits than their unemployment experience would imply. The analysis also considers how differences in volatility of unemployment are explained by industrial and occupational distributions. |
| Keywords: | Unemployment, Unemployment Insurance, Gender, Race, Ethnicity |
| JEL: | J11 J15 J16 J65 |
| Date: | 2010–09–08 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:1010&r=lab |
| By: | Andreassen Leif (University of Turin) |
| Abstract: | The paper presents a model where both income and hours of work are allowed to have a positive effect on individual utility. Increasing returns to specialization and the concavity of the utility function leads some workers to choose lower wages in return for a more interesting job. Such interest in ones'work means that not all possible gains from specialization are achieved and that the correlation between income and talent (opportunities) is weakened. If letting workers do many tasks is costly for the firms, there may be few jobs where the workers can choose to be a generalist. |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:uto:dipeco:201009&r=lab |
| By: | Johanson, Richard |
| Abstract: | This review identifies over sixty countries that have or had pre-employment and enterprise training funds. The characteristics, advantages, and limitations of each are presented as well as key design questions and examples of good practice. National training funds are an increasingly common vehicle for financing training. The review presents a typology of three main types of training funds by purpose: pre-employment training funds, enterprise training funds, and equity training funds. The review points to a lack of rigorous evaluation of the impact of training funds on the skills and employability of the workforce in developing countries. |
| Keywords: | Primary Education,Education For All,Access&Equity in Basic Education,Vocational&Technical Education,Labor Policies |
| Date: | 2009–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:52187&r=lab |
| By: | Kuddo, Arvo |
| Abstract: | This study focuses on internationally accepted labor standards and norms governing the individual employment contract, including International Labor Organization (ILO) conventions and recommendations, European Union (EU) labor standards, and the European community social charter. The study also analyzes relevant provisions in the main labor law of each Eastern European and Central Asian (ECA) country associated with commencing or terminating employment and during the period of employment. References are made to relevant practices from EU15 countries. Overall, despite similar origin of country labor laws, the current set of labor regulations in the region provides a wide array of legal solutions. The minimum content of the employment contract in most ECA countries coincides, and goes beyond, the requirements of the labor standards even in the countries that are non-signatories of relevant treaties. Some of these entitlements, however, have the potential to adversely affect labor market participation. |
| Keywords: | Labor Markets,Labor Policies,Work&Working Conditions,Labor Standards,Labor Management and Relations |
| Date: | 2009–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:51698&r=lab |
| By: | Amparo Castelló-Climent; Ana Hidalgo-Cabrillana |
| Abstract: | We develop a theory of human capital investment to study through which channels students react to school quality when deciding about their investment in higher education (secondary and above) and how educational quality affects the growth process of an economy. In a dynamic general equilibrium closed economy. higher education requires an extra investment of private resources. whereas primary education is mandatory. The theory states that human capital accumulation raises with quality through two main effects: larger quality increases the number ofpeople with higher education (extensive channel). and it increases the volume of investment in higher schooling per individual (intensive channel). That is. even with perfect capital markets. relatively low quality could discourage opportunities to pursue education beyond primary school. since low quality decreases the returns from higher education. As a result, agents could get stuck at primary levels. The intensive channel establishes that once individuals decide to participate in higher schooling. the larger the quality of educational system. the larger the investment made by each agent. Educational quality may allow for different steps of development and that depending on quality the economy may follow different paths, Using cross-country data, empirical evidence shows that the proposed channels seem to be quantitatively important and that the effect of quality and quantity of education on growth depends on the stage of development. |
| Keywords: | Quality of education, Human capital composition, Economic growth |
| JEL: | I21 O11 O15 O4 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we1020&r=lab |
| By: | Van Puyenbroeck, Tom; De Bruyne, Karolien; Sels, Luc |
| Abstract: | We build on the Information Theory foundations of the Mutual Information Index of Segregation [Mora and Ruiz-Castillo, 2003; Frankel and Volij, 2007] to analyze two horizontal dimensions of gender segregation on the labour market. We provide a novel, three-way additive decomposition of their effects on overall segregation. Using survey data from 41,712 Flemish employees, we .find that choice of study field has a larger effect on overall segregation than sectoral choice. Their mutual interaction is negative, indicating that sectoral segregation, although low, is still partly explained by educational choices. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/277091&r=lab |
| By: | Robert S. Chirinko; Daniel J. Wilson |
| Abstract: | This paper studies the effects of Job Creation Tax Credits (JCTCs) enacted by U.S. states over the past 20 years. First, we investigate whether JCTCs stimulate within-state job growth. Second, we assess from where any increased employment comes from – in-state or out-of-state? Third, we evaluate when JCTCs' effects occur. In particular, we test for negative anticipation effects between JCTC enactment and when legislation goes into effect. We investigate these questions using a difference-in-differences estimator applied to monthly panel data on employment, the JCTC value, the JCTC effective and legislative dates, and various controls. |
| Keywords: | Tax credits ; Tax incentives ; Public policy |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2010-25&r=lab |
| By: | Angel-Urdinola, Diego F.; Kuddo, Arvo |
| Abstract: | This note provides a general background of the main features of labor regulation in the Middle East and North Africa (MENA) and benchmarks them against international best practices. The note compiles information on available labor laws and other legal acts concerning employment protection regulation. Within the broader scope of labor regulation, and in order to assure regional comparability, information collected focuses on key issues in the labor law associated with commencing or terminating employment and during the period of employment (including maternity benefits). The main sources the data are the World Bank doing business 2010 and International Labour Organisation (ILO) databank. This note is a tool to provide policymakers and international organizations with a regional diagnose of how labor regulation affects labor market outcomes in MENA and inform client governments about strategic approaches to employment creation through labor policy and reform. This activity comes as a response to regional priorities in the context of the Arab World Initiative (AWI). One of the six strategic themes of the AWI focuses explicitly on employment creation as a top priority. Part of the World Bank's mandate under the AWI is to inform client governments about strategic approaches to employment creation through labor policy and reform. |
| Keywords: | Labor Markets,Labor Policies,Labor Standards,Work&Working Conditions,Labor Management and Relations |
| Date: | 2010–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:55674&r=lab |
| By: | Angel-Urdinola, Diego F.; Semlali, Amina; Brodmann, Stefanie |
| Abstract: | This note presents and analyzes the main design features of an inventory of non-publicly provided Active Labor Market Programs (ALMPs) in Arab-Mediterranean Countries (AMCs), with a specific focus on programs targeted at youth. Despite considerable international evidence, there is little systematic analysis on the effectiveness of ALMPs in AMCs as most programs and investments remain largely un-assessed. Since most AMCs lack unemployment insurance systems or other safety nets for the unemployed, ALMPs constitute a relevant instrument to address the consequences of labor market frictions, such as high unemployment and slow school-to-work transition. Programs from nine countries are included in the inventory: Morocco, Algeria, Tunisia, Egypt, Lebanon, Syria, Jordan, West Bank and Gaza, and Yemen. Benchmarked against international best practices, assessment of the programs covered in the inventory reveals that the majority lack the necessary mix of design features that make programs effective. These findings call for urgent reforms in program design and delivery, especially given the sizeable financial investments in programs and the urgency to improve labor market outcomes among youth. This policy note constitutes a first step towards understanding and assessing provision of ALMPs in the Middle East and North Africa (MENA) region and intends to provide policy makers and financiers with options for reform to enhance efficiency of existing programs and improve the design of future interventions. In addition to specific aspects of program design and implementation, stakeholder coordination needs to be strengthened and put at the forefront of ALMP reform. |
| Keywords: | Labor Markets,Labor Policies,Primary Education,Poverty Impact Evaluation,Education For All |
| Date: | 2010–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:55673&r=lab |
| By: | Uma Radhakrishnan |
| Abstract: | This research investigates the impact of the Indonesian family planning program on the labor force participation decisions and contraceptive choices of women. I develop a discrete choice dynamic structural model, where each married woman in every period makes joint choices regarding the method of contraceptive used and the sector of employment in which to work in order to maximize her expected discounted lifetime utility function. Each woman obtains utility from pecuniary sources, nonpecuniary sources, and choice-specific time shocks. In addition to the random shocks, there is uncertainty in the model as a woman can only imperfectly control her fertility. Dynamics in the model are captured by several forms of state and duration dependence. Women in this model make different choices due to different preferences, differences in observable characteristics, and realization of uncertainty. The choices made by a woman depend on the compatibility between raising children and the sector of employment (including wages). While making decisions regarding contraceptive use, a woman considers the trade-off between costs (monetary and nonmonetary) of having a child and the benefits from having one. The primary source of data for this study is the first wave of the Indonesia Family Life Survey (IFLS 1), a retrospective panel. In my research, I use the geographic expansion and the changing nature of the Indonesian family planning program as sources of exogenous variation to identify the parameters of the structural model. I estimate the model using maximum likelihood techniques with data from IFLS 1 for the periods 1979-1993. Structural model estimates indicate that informal sector jobs offer greater compatibility between work and childcare. Parameter estimates indicate that choices of contraception method and employment sector vary by exogenous characteristics. |
| Keywords: | Family planning, female labor force participation, contraception, formal sector, Indonesia |
| JEL: | J13 J22 O17 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:10-28&r=lab |
| By: | Laszlo Goerke; Markus Pannenberg |
| Abstract: | In Germany, there is no trade union membership wage premium, while the membership fee amounts to 1% of the gross wage. Therefore, prima facie, there are strong incentives to freeride on the benefits of trade unionism. We establish empirical evidence for a private gain from trade union membership which has hitherto not been documented: in West Germany, union members are less likely to lose their jobs than non-members. In particular, using data from the German Socio-Economic Panel we can show that roughly 50% of the observed raw differential in individual dismissal rates can be explained by the estimated average partial effect of union membership. |
| Keywords: | free-riding, trade union membership, survey data |
| JEL: | C H J J |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp324&r=lab |
| By: | Dionissi Aliprantis |
| Abstract: | A wide literature uses date of birth as an instrument to study the causal effects of educational attainment. This paper shows how parents delaying their children’s initial enrollment in kindergarten, a practice known as redshirting, can make estimates obtained through this identification framework all but impossible to interpret. A latent index model is used to illustrate how the monotonicity assumption in this framework is violated if redshirting decisions are made in a setting of essential heterogeneity. Empirical evidence is presented from the ECLS-K data set that favors this scenario; redshirting is common and heterogeneity in the treatment effect of educational attainment is likely a factor in parents’ redshirting decisions. |
| Keywords: | Education |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1012&r=lab |
| By: | Francisco Gallego (Instituto de Economía. Pontificia Universidad Católica de Chile.); José Tessada |
| Abstract: | Sudden stops and international financial crises have been a main feature of developing countries in the last three decades. While their aggregate effects are well known, the disaggregated channels through which they work are not well explored yet. In this paper, we study the sectoral responses that take place over episodes of sudden stops. Using job flows from a sectoral panel dataset for four Latin American countries, we find that sudden stops are characterized as periods of lower job creation and increased job destruction. Moreover, these effects are heterogeneous across sectors: we find that when a sudden stop occurs, sectors with higher dependence on external financing experience lower job creation. In turn, sectors with higher liquidity needs experience significantly larger job destruction. This evidence is consistent with the idea that dependence on external financing affects mainly the creation margin and that exposure to liquidity conditions affects mainly the destruction margin. Overall, our results confirm the large labor market effects of sudden stops, and provide evidence of financial conditions being an important transmission channel of sudden stops within a country, highlighting the role of financial frictions in the restructuring process in general. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ioe:clabwp:10&r=lab |
| By: | Nina Drange and Kjetil Telle (Statistics Norway) |
| Abstract: | Two districts of Oslo started to offer five-year-old children free preschool four hours a day. We analyze the effect of this intervention on the school performance of the children from immigrant families 10 years later (age 16). Our difference-in-difference approach takes advantage of the variation caused by the intervention being implemented in two districts in Oslo, leaving other similar districts unaffected. The grade point average of girls increases substantially more in the intervention districts than in the comparison districts; resulting in an effect estimate of more than a quarter of a standard deviation. There is no significant change in boys’ performance, and no support for disadvantageous effects on non-cognitive outcomes. |
| Keywords: | preschool; immigrants; early intervention; school performance |
| JEL: | J13 J15 H52 I28 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:631&r=lab |
| By: | Kuddo, Arvo |
| Abstract: | The objective of this paper is to look at employment services and labor market policies in the transition countries of Eastern Europe and Central Asia, and identify key benefits and constraints of active labor market programs, as well as the main characteristics and features of successful policy interventions. Various policy options are discussed on how to enhance public employment services but also private employment agencies which might be relevant to and suitable for the countries in the region given their macroeconomic and labor market situation. Overall, this report recommends that greater resources will be needed for active labor market programs (ALMPs) in the future. However, the emphasis should be put on improving the design and effectiveness of ALMPs, rather than on increasing spending levels only. |
| Keywords: | Labor Markets,Labor Policies,Markets and Market Access,Labor Management and Relations,Population Policies |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:51253&r=lab |
| By: | Aysen Isaoglu |
| Abstract: | This paper shows that there are severe measurement errors regarding the occupational affiliations in the German Socio-Economic Panel. These errors are traced back to the survey structure: in years where occupational information is gathered from the entire employed population instead of only from those declaring job or labor market status changes, average occupational mobility is around five times higher. In order to construct reliable occupational affiliation data, a correction method based on related job or labor market status changes is proposed. The corrected occupational mobility patterns are then analyzed for different samples. |
| Keywords: | Measurement errors, occupational mobility, Panel data |
| JEL: | C41 C81 J62 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp318&r=lab |
| By: | Andreassen Leif; Kornstad Tom (University of Turin) |
| Abstract: | The paper discusses some of the possible determinants of sick leave. The underlying medical health of workers is of course important, but other factors also determine if they manage to function at work. For example the degree to which workers are willing to endure discomfort at work and the demands for efficiency at work can be important. Also of importance is the ease with which workers can change jobs and whether increases in employment bring in marginal, less healthy, workers. Finally, one must take into consideration the ability of firms to accommodate workers with health problems, the age of the work force and the situation workers face at home. As an illustration, we discuss how these factors have influenced married women in ages 35 to 44 using a multinomial model. The main finding is that changes in wages has had a very strong effect on transitions to sick leave in the 90’s. In our estimation they explain almost all the change in the group. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:uto:dipeco:201012&r=lab |
| By: | Arbex, Marcelo; Galvao, Antonio F.; Gomes, Fábio Augusto Reis |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:ibm:ibmecp:wpe_213&r=lab |
| By: | Amitava Krishna Dutt and Roberto Veneziani (Universty of Notre Dame, Queen Mary University of London) |
| Abstract: | This paper develops a classical-Marxian macroeconomic model to examine the growth and distributional consequences of education. First, the role of education in skill formation is considered and it is shown that an expansion in education will promote growth and have beneficial distributional effects within the working class, but it will redistribute income from workers to capitalists. Second, the model is extended analyze the broader political economic consequences of education on class relations and class conflict. The model suggests the importance of a progressive type of education rather than one which weakens the power workers, for it allows for equitable growth outcomes which improve the position of workers as a whole and reduces inequality within workers. Finally, the model shows that education leads to multiple equilibria and it stresses the importance of providing suitable incentives to workers for taking advantage of greater education access, without which the economy can be caught in a low-skill trap. JEL Categories: E2, E11, O41, J31. |
| Keywords: | education, growth, distribution. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2010-10&r=lab |
| By: | Robalino, David A.; Zylberstajn, Eduardo; Zylberstajn, Helio; Afonso, Luis Eduardo |
| Abstract: | This paper solves and estimates a stochastic model of optimal inter-temporal behavior to assess how changes in the design of the unemployment benefits and pension systems in Brazil could affect savings rates, the share of time that individuals spend outside of the formal sector, and retirement decisions. Dynamics depend on five main parameters: preferences regarding consumption and leisure, preferences regarding formal versus informal work, attitudes towards risks, the rate of time preference, and the distribution of an exogenous shock that affects movements in and out of the social insurance system (given individual decisions). The yearly household survey is used to create a pseudo panel by age-cohorts and estimate the joint distribution of model parameters based on a generalized version of the Gibbs sampler. The model does a good job in replicating the distribution of the members of a given cohort across states (in or out of the social insurance / active or retired). Because the parameters are related to individual preferences or exogenous shocks, the joint distribution is unlikely to change when the social insurance system changes. Thus, the model is used to explore how alternative policy interventions could affect behaviors and through this channel, benefit levels and fiscal costs. The results from various simulations provide three main insights: (i) the Brazilian social insurance system today might generate unnecessary distortions (lower savings rates and less formal employment) that increase the costs of the system and can induce regressive redistribution; (ii) there are important interactions between the unemployment benefits and pension systems, which calls for joint policy analysis when considering reforms; and (iii) current distortions could be reduced by creating an actuarial link between contributions and benefits and then combining matching contributions and anti-poverty targeted transfers to cover individuals with limited or no savings capacity. |
| Keywords: | Pensions&Retirement Systems,Emerging Markets,Labor Policies,Labor Markets,Debt Markets |
| Date: | 2009–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:52448&r=lab |
| By: | Daniel Toro Gonzalez |
| Abstract: | The present exercise is oriented to analyze the interaction and equilibrium in the higher education market and firms behavior under non-profit constraint for public and private institutions. The model suggest three different equilibrium in which differences in size and quality are explained based on institutions non-pecuniary valuations of each of these attributes. |
| Date: | 2010–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:col:000162:007533&r=lab |
| By: | Robert Baumann (Department of Economics, College of the Holy Cross); Bryan Engelhardt (Department of Economics, College of the Holy Cross); Victor Matheson (Department of Economics, College of the Holy Cross) |
| Keywords: | Olympics, impact analysis, mega-event, tourism |
| JEL: | L83 O18 R53 J21 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:hcx:wpaper:1002&r=lab |
| By: | Francisco Gallego (Instituto de Economía. Pontificia Universidad Católica de Chile.) |
| Abstract: | The evolution of the skill premium (i.e., the wage differential between skilled and unskilled workers) has interest from at least two perspectives: it is a rough measure of inequality among workers of different qualifications and provides information on the characteristics of the development process of the economy. In this paper, I investigate empirically the evolution of the skill premium in Chile over the last 40 years. After some fluctuations in the 1960s and 1970s, the skill premium increased in the 1980s and has remained roughly constant since then. The data suggest that this evolution is an outcome of a significant increase in relative demand for skilled workers in the 1980s and 1990s and a sizeable increase in the relative supply in the 1990s. Sectoral evidence shows that, after controlling for sector and time effects, (i) the relative demand increased faster in the same industries in Chile than in the US and (ii) the correlation is stronger for tradable industries and non-tradable industries that are intensive in imported capital, as expected. This result is consistent with a number of theories that link skill up- grading in developed and developing countries. To try to disentangle among these theories, I present time series evidence suggesting that, after controlling for other determinants of skill premium, not only there is a positive correlation between skill premium in Chile and in the US but also the size of the correlation is consistent with the Acemoglu (2003a) model of endogenous technological choice in which new technologies are produced in developed countries (like the US) and adopted in developing economies (like Chile). |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ioe:clabwp:9&r=lab |
| By: | Grenet, Julien; Hart, Robert A.; Roberts, J. Elizabeth |
| Abstract: | We add to the literature on the long-term economic effects of male military service. We concentrate on post-war British conscription into the armed services from 1949 to 1960. It was called National Service and applied to males aged 18 to 26. Based on a regression discontinuity design we estimate the effect of military service on the earnings of those required to serve through conscription. We argue that, in general, we should not expect to find large long-term real earnings among conscripts compared to later birth cohorts of males who were not eligible for call-up. Our empirical evidence firmly rejects the view that conscription entails relative long-term real earnings differences. |
| Keywords: | regression discontinuity design; long-term real earnings; WWII conscription; National Service |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:stl:stledp:2010-08&r=lab |
| By: | Peter Flaschel, Reiner Franke and Roberto Veneziani (Bielefeld University, Kiel University, Queen Mary University of London) |
| Abstract: | This paper analyzes labor productivity and the law of decreasing labor content (LDLC) originally formulated by Farjoun and Machover (1983). First, it is shown that the standard measures of labor productivity may be rather misleading, owing to their emphasis on monetary aggregates. Instead, the conventional classical-Marxian labor values provide the theoretically and empirically sound measures of labor productivity. The notion of labor content and the LDLC are therefore central in order to understand the dynamics of capitalist economies. Second, some rigorous theoretical relations between different forms of profit-driven technical change and productivity are derived in a general input-output framework with fixed capital, which provide deterministic foundations to the LDLC. Third, the main theoretical propositions are analyzed empirically based on a new dataset of the German economy. JEL Categories: B51, D57, O33, C67 |
| Keywords: | labor productivity, law of falling labor content, technical change, labor values, Input-Output analysis. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2010-11&r=lab |
| By: | Kajuth, Florian |
| Abstract: | The paper estimates the NAIRU from a Phillips curve relationship in the state-space framework. To identify the inflation-unemployment trade-off we account for a time-varying inflation trend to control for the part of inflation that is not affected by the cyclical component of unemployment. In addition we use shifts in the relative volatility of shocks to unemployment and inflation to address the simultaneity problem in Phillips curve estimations. Applying the method of Rigobon and Sack (2003) allows for a data driven identification of the contemporaneous coefficients on the unemployment gap in the Phillips curve and yields more precise estimates of the structural coefficients in the Phillips curve. This tightens the economic relation on the basis of which the NAIRU is derived. -- |
| Keywords: | non-accelerating inflation rate of unemployment,state-space estimation,identification through heteroskedasticity,trend inflation |
| JEL: | E24 E31 E32 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:201019&r=lab |
| By: | Woo, Kye Lee |
| Abstract: | This paper is about the evolution of an innovative in-service training program and its effects in Korea. In many developing countries, small and medium enterprises (SMEs) play important roles in outputs, exports, and employment. Therefore, governments have used various policy instruments to promote productivity of SMEs through in-service training of their workers. However, those policy tools have not been effective to date. An exception to this general trend was found in Korea. The Government of Korea tested a pilot in-service training project and achieved significant results.The government encouraged SMEs to organize themselves into training consortiums (TCs) and provided them with institutional and technical assistance by financing employment of training specialists who manages human resources development of TC-member SMEs. Since mainstreaming, nevertheless, the progress of the TC program has been less than magnificent. Some factors responsible for the lukewarm achievements are analyzed and policy measures for reinvigorating the program have been suggested, together with some lessons learned. |
| Keywords: | Education For All,Primary Education,Access&Equity in Basic Education,Tertiary Education,Water Education |
| Date: | 2009–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:51251&r=lab |
| By: | Frederic DOCQUIER (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and FNRS); Elisabetta LODIGIANI (CREA, Université du Luxembourg and Centro Studi Luca dAgliano); Hillel RAPOPORT (CID, Harvard University, Bar-Ilan University and EQUIPPE); Maurice SCHIFF (World Bank, Development Economics Research Group) |
| Abstract: | Emigration affects institutions at home in a number of ways. While people may have fewer incentives to voice when they have exit options, emigrants can voice once abroad and contribute to the diffusion of democratic values and norms. We first document these channels and then consider dynamic-panel regressions to investigate the overall impact of emigration on institutions in the home country. We find that both openess to migration and human capital have a positive impact on institutions (as measured by standard democracy and economic freedom indices). This implies that unskilled migration has a positive effect on institutional quality while the effect of skilled migration (or brain drain) is ambiguous. Using the point estimates from our regressions, we simulate the marginal effect of skilled emigration on institutional quality. In general, the simulations confirm that the brain drain has an ambiguous impact on institutions, though a significant institutional gain obtains for a limited set of countries when incentive effects of the brain drain on human capital formation are taken into account. |
| Keywords: | Migration, brain drain, institutions, diaspora effects, democracy |
| JEL: | O1 F22 |
| Date: | 2010–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2010035&r=lab |
| By: | Emma Tominey |
| Abstract: | How do shocks to parental income drive adolescent human capital, including years of schooling, high school dropout, university attendance, IQ and health? A structural model decomposes household shocks into permanent and transitory components, then the effect of shocks at age 1-16 is estimated for 600,000 Norwegian children. The effect of permanent shocks declines - and of transitory shocks is small and constant across child age, suggesting parents optimise similarly to onsumption. However there is a lower effect of transitory shocks for liquidity constrained parents. An interpretation is that these parents use income shocks for essential consumption rather than investment. |
| JEL: | D12 J13 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:10/21&r=lab |
| By: | Michael J. Dueker; Michael T. Owyang; Martin Sola |
| Abstract: | Smooth-transition autoregressive (STAR) models have proven to be worthy competitors of Markov-switching models of regime shifts, but the assumption of a time-invariant threshold level does not seem realistic and it holds back this class of models from reaching their potential usefulness. Indeed, an estimate of a time-varying threshold level of unemployment, for example, might serve as a meaningful estimate of the natural rate of unemployment. More precisely, within a STAR framework, one might call the time-varying threshold the “tipping level” rate of unemployment, at which the mean and dynamics of the unemployment rate shift. In addition, once the threshold level is allowed to be time-varying, one can add an error-correction term—between the lagged level of unemployment and the lagged threshold level—to the autoregressive terms in the STAR model. In this way, the time-varying latent threshold level serves dual roles: as a demarcation between regimes and as part of an error-correction term.free rate puzzles, and the occurrence of trading break-downs. |
| Keywords: | Time-series analysis ; Capital assets pricing model ; Unemployment |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2010-029&r=lab |
| By: | Aronsson, Thomas (Department of Economics, Umeå University); Blomquist, Sören (Department of Economics, Uppsala University) |
| Abstract: | In this paper, we consider how the retirement age as well as a tax financed pension system ought to respond to a change in the standard deviation of the length of life. In a first best framework, where a benevolent government exercises perfect control over the individuals’ labor supply and retirement-decisions, the results show that a decrease in the standard deviation of life-length leads to an increase in the optimal retirement age and vice versa, if the preferences for “the number of years spent in retirement” are characterized by constant or decreasing absolute risk aversion. A similar result follows in a second best setting, where the government raises revenue via a proportional tax (or pension fee) to finance a lump-sum benefit per year spent in retirement. We consider two versions of this model, one with a mandatory retirement age decided upon by the government and the other where the retirement age is a private decision-variable. |
| Keywords: | Uncertain lifetime; retirement; pension system |
| JEL: | D61 D80 H21 H55 |
| Date: | 2010–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0818&r=lab |
| By: | Peter McHenry (Department of Economics, College of William and Mary) |
| Abstract: | This paper investigates how the geographic distribution of human capital evolves over time. With U.S. data, I decompose generation-to-generation changes in local human capital into three factors: the previous generation’s human capital, intergenerational transmission of skills from parents to their children, and migration of the children. I find evidence of regression to the mean of local skills at the state level and divergence at the commuting zone level. Labor market size, climate, local colleges, and taxes affect local skill measures. Skills move from urban to rural labor markets through intergenerational transmission but from rural to urban labor markets through migration. |
| Keywords: | Migration, Intergenerational transmission, Regional labor markets |
| JEL: | R23 J61 J11 |
| Date: | 2010–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:cwm:wpaper:92&r=lab |
| By: | Yuyu Chen; Ginger Zhe Jin |
| Abstract: | Many governments advocate nationwide health insurance coverage but the effects of such a program are less known in developing countries. We use part of the 2006 China Agricultural Census (CAC) to examine whether the recent health insurance coverage in rural China has affected children mortality, pregnancy mortality, and the school enrollment of the 6-16 year old. Our data represent a census of 5.9 million people living in eight low-income rural counties, four of which have adopted the New Cooperative Medical System (NCMS) by 2006 and the other four did not adopt NCMS until 2007. In the counties that offer NCMS, a household may take or not take the insurance. A first look of the data suggests that enrolling in NCMS is associated with better school enrollment and lower mortality of young children and pregnant women. However, using a difference-in-difference propensity score method, we find most of these differences are driven by the endogenous introduction and take up of NCMS, and classical propensity score matching fails to address the selection bias. While NCMS does not show beneficial impacts on the average population, we find some evidence that NCMS helps improve the school enrollment of six-year-olds. |
| JEL: | I18 I21 I38 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16417&r=lab |
| By: | Forteza, Alvaro; Apella, Ignacio; Fajnzylber, Eduardo; Grushka, Carlos; Rossi, Ianina; Sanroman, Graciela |
| Abstract: | The authors propose alternative methods to project pension rights and implement them in Chile and Uruguay and partially in Argentina. The authors use incomplete work histories databases from the social security administrations to project entire lifetime work histories. The authors first fit linear probability and duration models of the contribution status and dynamic linear models of the income level. The authors then run Monte Carlo simulations to project work histories and compute pension rights. According to results, significant swathes of the population would not access to fundamental pension benefits at age 65, if the current eligibility rules were strictly enforced. |
| Keywords: | Pensions&Retirement Systems,Labor Markets,Emerging Markets,Gender and Law,Debt Markets |
| Date: | 2009–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:52446&r=lab |
| By: | Bruno S. Frey |
| Abstract: | Strong forces lead to a withering of academia as it exists today. The major causal forces are the rankings mania, increased division of labor in research, intense publication pressure, academic fraud, dilution of the concept of “university,” and inadequate organizational forms for modern research. Academia, in a broader sense understood as “the locus of seeking truth and learning through methodological inquiry,” will subsist in different forms. The conclusion is therefore pessimistic with respect to the academic system as it presently exists but not to scholarly endeavour as such. However, the transformation predicted is expected to be fundamental. |
| Keywords: | Academia, universities, research, rankings, publications, fraud |
| JEL: | A1 I23 L30 Z0 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:512&r=lab |