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on Labour Economics |
| By: | Dominique Meurs; Ariane Pailhé; Sophie Ponthieux |
| Abstract: | In this paper, we investigate the extent of the effects of children and child-related time out of the labor market on the gender wage gap in France, with special attention to its impact on the accumulation and composition of human capital. Measuring this impact requires detailed information on the individuals‟ activity history that is rarely available. The French survey "Families and Employers" (Ined, 2005) provides this information. We first look at men's and women's wage determinants, including the penalties associated with unemployment and time out of the labor market. We find that having controlled for the jobs' characteristics and selection into employment, there is a penalty attached to child-related time out of the labor market, which affects only women. We do not find any direct negative impact of children on women's current hourly wage at the mean. Then for a sub-sample of men and women aged from 39 to 49, we use a decomposition of the gender wage gap into an "interruption" wage gap between women and a gender wage gap between women who have never taken child-related time out and men; we find that the wage gap between men and women who have never interrupted their participation in the labor force is essentially "unexplained", while the wage gap between women who have had child-related interruptions and women who have not is essentially "explained". |
| Keywords: | Wages, Human capital, Children, Family pay gap, Statistical discrimination, Wage gap decomposition |
| JEL: | J13 J16 J24 J31 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2011-3&r=lab |
| By: | Barry P. Bosworth; Gary Burtless |
| Abstract: | Recessions affect the timing of retirement through two channels, a weaker job market and losses in household wealth. The two phenomena have opposite effects. A weaker economy causes employers to increase permanent job separations and reduce new hires, accelerating retirements that would otherwise have occurred later. Falling household wealth reduces the resources available to pay for retirement, discouraging older workers from leaving the workforce. We use aggregate and micro-census data on old-age labor supply as well as time series data on unemployment, stock and bond returns, and house appreciation to estimate business cycle effects on Social Security benefit acceptance and labor force exit. Trailing real stock and bond returns and house price appreciation have statistically significant but very small effects on old-age labor force participation. High prime-age unemployment has only a small impact on benefit acceptance and labor force participation among older women, but the effects on older men are greater. We estimate that the 4.6 percentage-point increase in prime-age unemployment between 2007 and 2009 reduced the participation rate of 60-74 year-old men by between 0.8 and 1.7 percentage points. This effect has offset the impact of declining household wealth on old-age labor force participation. |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2010-21&r=lab |
| By: | Krueger, Alan B. (Princeton University); Mueller, Andreas (IIES, Stockholm University) |
| Abstract: | This paper presents findings from a survey of 6,025 unemployed workers who were interviewed every week for up to 24 weeks in the fall of 2009 and spring of 2010. Our main findings are: (1) the amount of time devoted to job search declines sharply over the spell of unemployment; (2) the self-reported reservation wage predicts whether a job offer is accepted or rejected; (3) the reservation wage is remarkably stable over the course of unemployment for most workers, with the notable exception of workers who are over age 50 and those who had nontrivial savings at the start of the study; (4) many workers who seek full-time work will accept a part-time job that offers a wage below their reservation wage; and (5) the amount of time devoted to job search and the reservation wage help predict early exits from Unemployment Insurance (UI). |
| Keywords: | unemployment insurance, job search, reservation wage |
| JEL: | J64 J65 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5450&r=lab |
| By: | Anne Busch; Elke Holst |
| Abstract: | The study analyses the gender pay gap in private-sector management positions in Germany based on data from the German Socio-Economic Panel Study (SOEP) for the years 2001-2008. It focuses in particular on gender segregation in the labor market, that is, on the unequal distribution of women and men across different occupations and on the effects of this inequality on earnings levels and gender wage differentials in management positions. Our paper is, to our knowledge, the first in Germany to use time-constant unobserved heterogeneity and gender-specific promotion probabilities to estimate wages and wage differentials for persons in managerial positions. The results of the fixed effects model show that working in a more "female" job, as opposed to a more "male" job, affects only women's wages negatively. This result remains stable after controlling for human capital endowments and other effects. Mechanisms of the devaluation of jobs not primarily held by men also negatively affect pay in management positions (evaluative discrimination) and are even more severe for women (allocative discrimination). However, the effect is not linear; the wage penalties for women occur only in "integrated" (more equally male/female) jobs as opposed to typically male jobs, and not in typically female jobs. The devaluation of occupations that are not primarily held by men becomes even more evident when promotion probabilities are taken into account. An Oaxaca/Blinder decomposition of the wage differential between men and women in management positions shows that the full model explains 65 percent of the gender pay gap. In other words: Thirty-five percent remain unexplained; this portion reflects, for example, time-varying social and cultural conditions, such as discriminatory policies and practices in the labor market. |
| Keywords: | Gender pay gap, managerial positions, gender segregation, glass-ceiling effects, Oaxaca/Blinder decomposition, fixed effects, selection bias |
| JEL: | J31 J16 J24 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1101&r=lab |
| By: | Busch, Anne (DIW Berlin); Holst, Elke (DIW Berlin) |
| Abstract: | The study analyses the gender pay gap in private-sector management positions based on the German Socio-Economic Panel Study (SOEP) for the years 2001-2008. It focuses on occupational gender segregation, and on the effects of this inequality on earnings levels and gender wage differentials in management positions. Our paper is, to our knowledge, the first in Germany to use time-constant unobserved heterogeneity and gender-specific promotion probabilities to estimate wages and wage differentials for persons in managerial positions. The results of the fixed-effects model show that working in a more "female" job, as opposed to a more "male" job, affects only women's wages negatively. This result remains stable after controlling for human capital endowments and other effects. Mechanisms of the devaluation of jobs not primarily held by men also negatively affect pay in management positions (evaluative discrimination) and are even more severe for women (allocative discrimination). However, the effect is non-linear; the wage penalties for women occur only in "integrated" (more equally male/female) jobs as opposed to typically male jobs, and not in typically female jobs. The devaluation of occupations that are not primarily held by men becomes even more evident when promotion probabilities are taken into account. An Oaxaca/Blinder decomposition of the wage differential between men and women in management positions shows that the full model explains 65 percent of the gender pay gap. In other words: Thirty-five percent remain unexplained; this portion reflects, for example, time-varying social and cultural conditions, such as discriminatory policies and practices in the labor market. |
| Keywords: | gender pay gap, managerial positions, gender segregation, glass-ceiling effects, Oaxaca/Blinder decomposition, fixed effects, selection bias |
| JEL: | J31 J16 J24 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5448&r=lab |
| By: | Courtney Harold Van Houtven; Norma B. Coe; Meghan Skira |
| Abstract: | Cross-sectional evidence in the United States finds that informal caregivers have less attachment to the labor force, measured both by the number of hours worked and labor force participation. The causal mechanism is unclear: do children who work less become informal caregivers, or are children who become caregivers working less? Using longitudinal data from the Health and Retirement Study (HRS), this project identifies the relationship between informal care and labor force participation in the United States, both on the intensive and extensive margins, and whether there are wage penalties from informal care. We use our results to examine retirement wealth effects, in particular, changes in Social Security benefits. In our approach we carefully test for endogeneity; control for time invariant individual heterogeneity; and, lastly, explore the effects across key domains of behavior for men and women – stage and duration of care. We find that there are modest decreases – around 2 percentage points – in the likelihood of being in the labor force for caregivers. We find that female caregivers who have longer spells face significant but modest risks of not working, that the negative effect on work for male caregivers occurs right away, and that both male and female caregivers who have ended caregiving are not significantly more likely to work. In addition, wage penalties exist for female caregivers and wage premiums exist for male caregivers. There are minimal expected changes to caregivers’ future Social Security benefits. Finally, despite strong instruments, there is no evidence of endogeneity between informal care and work, suggesting that controlling for individual heterogeneity with fixed effects is a sufficient approach in longitudinal inquiries of informal care’s effect on work and wealth. |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2010-22&r=lab |
| By: | Brown, Sarah (University of Sheffield); Roberts, Jennifer (University of Sheffield); Taylor, Karl (University of Sheffield) |
| Abstract: | Our findings suggest the existence of a gender reservation wage gap. The presence of children, particularly pre-school age children, plays an important role in determining the proportion of this gap that can be explained by individual characteristics. For individuals without children, the unexplained component of the differential is 99% compared to only 22% for those with pre-school age children, which might indicate that perceived discrimination in the labour market influences the reservation wage setting of females. |
| Keywords: | reservation wages, wage decomposition |
| JEL: | J13 J24 J64 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5457&r=lab |
| By: | McDonald, James Ted; Worswick, Christopher |
| Abstract: | Immigrant men and women in Canada from recent arrival cohorts have especially low rates of having an apprenticeship credential when compared to either their counterparts from earlier arrival cohorts or the Canadian born. Among the native born, a second generation man is more likely to have completed an apprenticeship if his father’s generation of immigrant men in Canada (from the same source country) have a high probability of apprenticeship completion. The same effect is present for first generation men who arrived in Canada as children. However, this effect is not found for either first generation or second generation women. An analysis of earnings indicates a strong wage return from the completion of an apprenticeship in Canada is found for men. However, women who have completed an apprenticeship in Canada actually have lower weekly earnings than women with only a high school diploma. The empirical results suggest that the increased emphasis on university education in the selection of economic immigrants is creating an imbalance between the supply of both first and second generation immigrants with an apprenticeship, and the demand for workers with these credentials. |
| Keywords: | Apprenticeships, Education, Immigration, and Second Generation |
| JEL: | J1 I2 |
| Date: | 2011–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:clssrn:clsrn_admin-2011-3&r=lab |
| By: | Kaas, Leo (University of Konstanz); Kircher, Philipp (London School of Economics) |
| Abstract: | The introduction of firm size into labor search models raises the question how wages are set when average and marginal product differ. We develop and analyze an alternative to the existing bargaining framework: Firms compete for labor by publicly posting long- term contracts. In such a competitive search setting, firms achieve faster growth not only by posting more vacancies, but also by offering higher lifetime wages that attract more workers which allows to fill vacancies with higher probability, consistent with empirical regularities. The model also captures several other observations about firm size, job flows, and pay. In contrast to bargaining models, efficiency obtains on all margins of job creation and destruction, both with idiosyncratic and aggregate shocks. The planner solution allows a tractable characterization which is useful for computational applications. |
| Keywords: | labor market search, multi-worker firms, job creation and job destruction |
| JEL: | E24 J64 L11 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5452&r=lab |
| By: | Knabe, Andreas; Plum, Alexander |
| Abstract: | We examine whether low-paid jobs have an effect on the occupational advancement probability of unemployed persons to obtain better-paid jobs in the future (stepping-stone effect). We make use of data from the German Socio-Economic Panel (SOEP) and apply a dynamic random-effects probit model. Our results suggest that low-wage jobs can acts stepping stones to better-paid work. The improvement of the chance to obtain a high-wage job by accepting low-paid work is particularly large for less-skilled persons and for individuals with longer unemployment experiences. Low-paid work is less beneficial if the job is also associated with a low social status. -- |
| Keywords: | low pay dynamics,unemployment dynamics,dynamic random effects models,state dependence |
| JEL: | J64 J62 J31 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:201028&r=lab |
| By: | Patacchini, Eleonora (La Sapienza University of Rome, EIEF, IZA and CEPR.); Rainone, Edoardo (La Sapienza University of Rome); Zenou, Yves (Stockholm University, Research Institute of Industrial Economics (IFN), GAINS, IZA and CEPR. Email:) |
| Abstract: | We study peer effects in education. We first develop a network model that predicts a relationship between own education and peers’ education as measured by direct links in the social network. We then test this relationship using the four waves of the AddHealth data, looking at the impact of school friends nominated in the first wave in 1994-1995 on own educational outcome reported in the fourth wave in 2007-2008. We find that there are strong and persistent peer effects in education since a standard deviation increase in peers’ education attainment translates into roughly a 10 percent increase of a standard deviation in the individual’s education attainment (roughly 3.5 more months of education). We also find that peer effects are in fact significant only for adolescents who were friends in grades 10-12 but not for those who were friends in grades 7-9. This might indicate that social norms are important in educational choice since the individual’s choice of college seems to be influenced by that of friends in the two last years of high school. |
| Keywords: | Social networks; education; peer effects; identification strategy |
| JEL: | C21 I21 Z13 |
| Date: | 2011–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sunrpe:2011_0004&r=lab |
| By: | Karpestam, Peter (Department of Economics, Lund University) |
| Abstract: | Theoretical and empirical research points to potentially different patterns of labor recruitment and importance of social networks in the formal and informal sector. The paper touches upon this topic and investigates the conjecture that employment chances and expected earnings depend differently on individuals’ allocation of time and mobility patterns in the informal and formal sector. This is investigated in a LDC context using a household survey from Guatemala (Encovi 2000). The results suggest that the probability to obtain employment in agriculture (informal sector) increases with the amount of time spent at the current residence. The results are reversed for (informal) uncovered wage workers. For the (informal) self-employed and the formal sector (covered wage workers) the results does not display any evident patterns. Merging all segments of the informal sector, the results show that expected earnings in the informal sector are slightly reduced by time not spent at the current residence. |
| Keywords: | The Informal Sector; Labor; Migration; Time; Central America; Guatemala. |
| JEL: | D13 J60 J70 O17 R23 |
| Date: | 2011–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2011_003&r=lab |
| By: | Luciano Canova (Enrico Mattei School); Alessandro Vaglio (University of Bergamo) |
| Abstract: | This paper investigates the role performed by mothers in affecting their childrens’ performance at school. The article develops firstly a theoretical model in which household (parent - child pair) is treated as an individual, whose utility depends both on the performance at school of the student and on consumption. The model focuses on the different possibilities through which help of mothers may affect pupil’s performance both in terms of time devoted to supervision and spillover effects. Empirical evidence then, using PISA 2006 and focusing on Italian case, shows that education of mothers is an issue when interacted with her occupational status. Highly educated mothers have a positive impact on students’ score only when they are highly qualifed in the job market. |
| Keywords: | Education, PISA, quantile regressions, parental help |
| JEL: | J12 J24 I21 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2011/1/doc2011-3&r=lab |
| By: | Niepel, Verena |
| Abstract: | This paper studies how cognitive and social skills in childhood are related to the duration of unemployment in adolescence and early adulthood. I estimate a flexible proportional hazard rate model for the probability of making a transition from unemployment to employment during an individual's first unemployment spell. The analysis is based on British cohort data from the National Child Development Study. Results show that higher cognitive and social skills at the age of 7 are associated with an increased probability of finding employment, even when controlling for educational attainment. For men, these effects are mostly driven by individuals with low social skills. The results are robust to controlling for family background, parenting activities and school characteristics. -- |
| Keywords: | unemployment duration,social skills,noncognitive skills,cognitive skills,early skills |
| JEL: | C41 J24 J64 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:10104&r=lab |
| By: | Steven A. Sass; Anthony Webb |
| Abstract: | Using data from the Health and Retirement Study (HRS), we analyze trends in voluntary, pressured, and forced quits and risk factors associated with each type of quit. We show that leaving one's age-50 job between ages 50 and 56 in any of the above circumstances more than doubles the likelihood that an individual will be working part-time at age 60, relative to a base case of working full-time. Pressured and forced quits also substantially increase the likelihood that the individual will not be working for pay at that age. Statistical tests confirm that pressured quits represent a separate and distinct category with its own risk factors and that they cannot be regarded as a subset of either voluntary or forced quits. We further show that job loss between ages 50 and 56, regardless of the circumstances, is associated with "messy" post-displacement employment histories that are not fully captured by analyses that focus solely on the first post-displacement job. The effects of job displacement are long-lasting. Displaced workers are more likely to job-hop, to suffer further involuntary job losses, and to experience subsequent unemployment than those who were still working for their age-50 employer at age 56. Accumulating sufficient resources to provide an adequate income in retirement requires most individuals to work well into their 60s, preferably in well-paid, pensioned employment. Individuals who separate from their age-50 employer for whatever reason are at risk of missing out on their peak savings years and failing to prepare adequately for retirement. |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2010-19&r=lab |
| By: | Eileen Trzcinski; Elke Holst |
| 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. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp356&r=lab |
| By: | Daniel Tortorice (Department of Economics, Brandeis University) |
| Abstract: | This paper shows that the Mortensen-Pissarides (MP) model requires endogenous separation to explain the volatility of unemployment. I estimate a version of the MP model with wage rigidity and permanent shocks to match productivity. The model generates sufficient volatility in unemployment, vacancies, job-finding and job-separation despite relatively low worker outside options. I then re-estimate the model while restricting the separation rate to be constant and show that, even though the estimation procedure finds the best fitting model, the model predicts too little variance in unemployment and too much variance in the job-finding rate. Based on this result I conclude that models of unemployment fluctuations need endogenous separation rates to explain unemployment fluctuations. |
| Keywords: | Unemployment, Search Models, Business Cycles |
| JEL: | J64 E24 E32 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:brd:wpaper:07&r=lab |
| By: | Torberg Falch (Department of Economics, Norwegian University of Science and Technology) |
| Abstract: | This paper utilizes a Norwegian experiment with exogenous wage changes to study teacher’s turnover decisions. Within a completely centralized wage setting system, teachers in schools with a high degree of teacher vacancies in the past got a wage premium of about 10 percent during the period 1993-94 to 2002-03. The empirical strategy exploits that several schools switched status during the empirical period. In a fixed effects framework, the wage premium reduces the probability to quit by 6-7 percentage points and increases recruitment by 4-7 percentage points. |
| Date: | 2010–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:nst:samfok:10910&r=lab |
| By: | Paul Carrillo; Mercedes Onofa; Juan Ponce |
| Abstract: | This paper studies the effects of information and communication technologies (ICT) in the school environment on educational achievement. To quantify these effects, the impact is evaluated of a project run by the municipality of Guayaquil, Ecuador, which provides computer-aided instruction in mathematics and language to students in primary schools. Using an experimental design, it is found that the program had a positive impact on mathematics test scores (about 0.30 of a standard deviation) and a negative but statistically insignificant effect on language test scores. The impact is heterogeneous and is much larger for those students at the top of the achievement distribution. |
| Keywords: | Information and communications technology, Education, Experimental design, Ecuador |
| JEL: | C93 I21 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:4698&r=lab |
| By: | A. Tampieri |
| Abstract: | This paper argues that assortative matching may explain over-education. Education determines individuals' income and, due to the presence of assortative matching, the quality of the partner, who can be a colleague or a spouse. Thus an individual acquires some education to improve the expected partner's quality. But since everybody does that, the partner's quality does not increase and over-education emerges. Tax progression to correct over-education has ambiguous effects on the educational incentives according to the individuals' ability. We test the model using the British Household Panel Survey. The empirical results support our theoretical findings. |
| JEL: | I21 J12 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp726&r=lab |
| By: | Rozana Himaz; Harsha Aturupane |
| Abstract: | This paper looks at the impact of education on household economic welfare in Sri Lanka over twenty years from 1985 to 2006 using five cross section household survey datasets. Applying quantile regression techniques the analysis finds that the incremental value to household welfare shows a distinct jump for an extra year of education at levels where important national examinations are completed. Moreover, higher quantiles systematically enjoy greater incremental welfare to education levels between Grade 8 to completed Advanced level examinations. Both these effects happen partly via the labour market, as labour market returns to employment display similar trends. The first finding suggests that credentials are important in the labour market. The second finding suggests that individuals in the upper quantiles probably have better quality education as well as social and analytical skills that complement formal education, enabling them to earn higher returns for their education. |
| Keywords: | Sri Lanka, education, welfare, quantile regression, returns |
| JEL: | I00 I20 I21 O53 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:527&r=lab |
| By: | Brown, Sarah (University of Sheffield); McHardy, Jolian (University of Sheffield); McNabb, Robert (Cardiff University); Taylor, Karl (University of Sheffield) |
| Abstract: | Using matched employer-employee level data drawn from the 2004 UK Workplace and Employee Relations Survey, we explore the determinants of a measure of worker commitment and loyalty (CLI) and whether CLI influences workplace performance. Factors influencing employee commitment and loyalty include age and gender, whilst workplace level characteristics of importance include human resource practices. With respect to the effects of employee commitment and loyalty upon the workplace, higher CLI is associated with enhanced workplace performance. Our findings that workplace human resources influence CLI suggest that employers may be able to exert some influence over the commitment and loyalty of its workforce, which, in turn, may affect workplace performance. |
| Keywords: | commitment, financial performance, labor productivity, loyalty |
| JEL: | J20 J50 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5447&r=lab |
| By: | Shinichi Nishiyama (Georgia State University) |
| Abstract: | The current U.S. Social Security program redistributes resources from high wage workers to low wage workers and from two-earner couples to one-earner couples. The present paper extends a standard general-equilibrium overlapping-generations model with uninsurable wage shocks to analyze the effect of spousal and survivors benefits on the labor supply of married couples. The heterogeneous-agent model calibrated to the 2009 U.S. economy predicts that removing spousal and survivors benefits would increase female market work hours by 4.3-4.9% and total output by 1.1-1.5% in the long run, depending on the government financing assumption. If the increased tax revenue due to higher economic activity after the policy change was redistributed in a lumpsum manner, a phased-in cohort-by-cohort removal of these benefits would make all current and future age cohorts on average better off. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp229&r=lab |
| By: | Charles Brown (University of Michigan) |
| Abstract: | Few private defined benefit pension plans commit to indexing benefits after a worker begins receiving them. Previous (now dated) research found that most plans did, nonetheless, make "voluntary" adjustments, which compensated for roughly 40 percent of the price increases experienced since retirement. In analyzing changes in pension benefits reported by HRS respondents between 1994 and 2008, I find annual increases that are about one third of the increase in the CPI. The increases are concentrated among respondents who report that their benefits are adjusted for inflation. They are larger for workers in public administration than in other industries; perhaps surprisingly, they are not larger in jobs covered by union contracts than those in the non-union sector. The HRS data also show that benefits paid out of defined contribution plans increased, again by roughly one third of the increase in consumer prices. |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp242&r=lab |
| By: | Ortega, Javier (City University London); Verdugo, Gregory (Bank of France) |
| Abstract: | This paper evaluates the impact of immigration on the labor market outcomes of natives in France over the period 1962-1999. Combining large (up to 25%) extracts from six censuses and data from Labor Force Surveys, we exploit the variation in the immigrant share across education/experience cells and over time to identify the impact of immigration. In the Borjas (2003) specification, we find that a 10% increase in immigration increases native wages by 3%. However, as the number of immigrants and the number of natives are positively and strongly correlated across cells, the immigrant share may not be a good measure of the immigration shock. When the log of natives and the log of immigrants are used as regressors instead, the impact of immigration on natives' wages is still positive but much smaller, and natives’ wages are negatively related to the number of natives. To understand this asymmetry and the positive impact of immigration on wages, we explore the link between immigration and the occupational distribution of natives within education/experience cells. Our results suggest that immigration leads to the reallocation of natives to better-paid occupations within education/experience cells. |
| Keywords: | immigration, occupations |
| JEL: | J15 J31 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5451&r=lab |
| By: | John Haltiwanger (University of Maryland, NBER, IZA); Stefano Scarpetta (OECD, IZA); Helena Schweiger (EBRD) |
| Abstract: | Somewhat surprisingly, cross-country empirical evidence (at least in the cross section) does not seem to support the predictions of standard models that economies with stricter regulations on hiring and firing should have a lower pace of job reallocation. One problem in exploring these issues empirically has been the difficulty of comparing countries on the basis of harmonised measures of job reallocation. A related problem is that there may be unobserved measurement or other factors accounting for differences in job reallocation across countries. This paper overcomes these challenges by using harmonised measures of job creation and destruction in a sample of 16 developed and emerging economies (including four transition economies), exploiting the country, industry and firm size dimensions. The analysis of variance in the paper shows that firm size effects are a dominant factor in accounting for the variation in the pace of job reallocation across country, industry and size cells. However, even after controlling for industry and size effects there remain significant differences in job flows across countries that could reflect differences in labour market regulations. We use the harmonised data to explore this hypothesis with a difference-in-difference approach. We find strong and robust evidence that stringent hiring and firing regulations tend to reduce the pace of job reallocation. |
| JEL: | O1 P2 P5 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:ebd:wpaper:116&r=lab |
| By: | Karpestam, Peter (Department of Economics, Lund University) |
| Abstract: | Residents in rural China doubt the benefits from education, yet there is empirical evidence supporting positive effects in urban and rural areas. This paper investigates whether education affects a variety of income attainment indicators for households in rural China, using a household survey from the provinces of Hebei and Liaoning. The analysis estimates education effects for household residents, but also for temporary migrants (rural-urban migrants) and children who have moved permanently (rural-rural migrants). This can help to answer a set of three related questions: 1) Does household welfare in rural China depend on education? 2) Is the effect of education contingent on the decision to migrate? and 3) Does education have dissimilar effect for rural-urban and rural-rural migrants? The results support that education has positive income effects and that migration yields no additional payoffs. However, there is no evidence that households benefit from higher education if migration is only temporary. Altogether, this signals positive payoffs of educational expenses to rural households but households which consider sending a migrant into the urban labor force are better off if the more educated stay at home. |
| Keywords: | East Asia; China; Education; Migration; Remittances; Non-Farm Incomes; |
| JEL: | D13 F24 I20 J60 R23 |
| Date: | 2011–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2011_002&r=lab |
| By: | Vizer, David |
| Abstract: | The paper applies modified Oaxaca-type analyses on the eighteen available waves of the British Household Panel Survey to decompose the wage gap among full time employees from either side of the North-South divide and identify its components that can be attributed to measurable worker- and labour market characteristics, and the part due to differences in the returns to these endowments. Further, by applying Juhn, Murphy and Pierce’s (1991) methodology, it is analysed, how changes in these underlying factors could explain the one quarter decline in the wage gap over the 1991 – 2009 period. The paper confirms the existence of a differential treatment effect by showing that only one fifth of the wage gap can be explained by observable differences. The magnitude of the unexplainable coefficient effect is so large, that the remarkable improvements in Northern occupational structure and human capital levels over the period could only translate into an actual decline in the wage gap, because it coincided with a period of increasing inequality among Northern occupational wage premia, which – as a by-product – increased the average Northern wage and this way counterbalanced the effects of the increasing Southern returns to experience, that alone could have increased the initial pay gap by half. |
| Keywords: | England's North-South divide; regional wage gap; Oaxaca decomposition; Juhn; Murphy and Pierce decomposition; Yun's method |
| JEL: | J31 J21 J24 |
| Date: | 2011–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:28364&r=lab |
| By: | Gunnar Bårdsen, Stan Hurn, Zoë McHugh (Department of Economics, Norwegian University of Science and Technology) |
| Abstract: | The unemployment rate in Australia is modelled as an assymmetric and non-linear function of aggregate demand, productivity, real wages and unemployment benefits. Negative changes in aggregate demand cause the unemployment rate to rise rapidly, while real wage rigidity contributes its to slow adjustment back towards a lower level of unemployment. The model is developed by exploiting recent developments in automated model-selection procedures. |
| Date: | 2010–07–09 |
| URL: | http://d.repec.org/n?u=RePEc:nst:samfok:10810&r=lab |
| By: | Norma B. Coe; Kelly Haverstick |
| Abstract: | Many workers nearing retirement experienced a dramatic decrease in their retirement assets due to the stock market downturn. In order to maintain their expected standard of living in retirement, workers will need to work longer, save more, or do both. To measure the response of older workers to this downturn, the Center for Retirement Research at Boston College (CRR) fielded the CRR 2009 Retirement Survey on a nationally representative sample of 45-59-year-old labor force participants with relatively high pre-downturn assets.1 This brief is the third of four based on the CRR 2009 Retirement Survey. The first brief described the Survey and highlighted its unique financial, employment, and behavioral factors.2 The second brief explored the relationship between these factors and worker responses to the downturn.3 This brief examines how providing simple information about the trade-offs involved in responding to the downturn impacts the responses. This brief is organized as follows. The first section provides a brief overview of the initial responses – work more, save more, both, or neither. The second section describes how these responses changed once the trade-off between working longer, saving more, and consuming less in retirement was made explicit. The third section then explains the relationship between the initial responses and the more informed responses. The fourth section identifies the characteristics associated with respondents who changed their response. The final section concludes that providing simple information on trade-offs appears to have a surprisingly large impact on changing responses. |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2010-20&r=lab |
| By: | Luc Behaghel; Eve Caroli; Emmanuelle Walkowiak |
| Abstract: | Following the adoption of information and communication technologies (ICT), firms are likely to face increasing skill requirements. They may react either by training or hiring the new skills, or by a combination of both. We first show that ICT are indeed skill biased and we then assess the relative importance of external and internal labour market strategies. We show that skill upgrading following ICT adoption takes place mostly through internal labour markets adjustments. The introduction of ICT is associated with an upward shift in firms' occupational structure, of which one third is due to hiring and firing workers from and to the external labour market, whereas two-thirds are due to promotions. Moreover, we find no compelling evidence of external labour market strategies based on "excess turnover". In contrast, French firms heavily rely on training in order to upgrade the skill level of their workforce, even if this varies across industries. |
| Keywords: | Technical change, labour turnover, skill bias, training, internal labour markets |
| JEL: | J23 J24 J41 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2011-4&r=lab |
| By: | Luc Behaghel (Paris School of Economics-INRA); David M. Blau (Ohio State University) |
| Abstract: | We use a US Social Security reform as a quasi-experiment to provide evidence on framing effects in retirement behavior. The reform increased the full retirement age (FRA) from 65 to 66 in two month increments per year of birth for cohorts born from 1938 to 1943. We find strong evidence that the spike in the benefit claiming hazard at 65 moved in lockstep along with the FRA. Results on self-reported retirement and exit from employment are less clear-cut, but go in the same direction. The responsiveness to the new FRA is stronger for people with higher cognitive skills. We interpret the findings as evidence of reference dependence with loss aversion. We develop a simple labor supply model with reference dependence that can explain the results. The model has potentially important implications for framing of future Social Security reforms. JEL: J26 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp243&r=lab |
| By: | Perry Singleton |
| Abstract: | The onset of a work-limiting disability coincides with an immediate decline in earnings with little recovery. This study examines whether this relationship is attributable to the labor disincentives of disability insurance. The data come from the Survey of Income and Program Participation linked to administrative data from the Social Security Administration. The analysis suggests that disability insurance accounts for little of the initial drop in earnings at the time of disability onset, but its effect may increase as time since disability onset elapses. The results highlight the advantages of immediate, though temporary disability benefits. |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2010-18&r=lab |
| By: | Yukichi Mano (Foundation for Advanced Studies on International Development; National Graduate Institute for Policy Studies); Takashi Yamano (Foundation for Advanced Studies on International Development; National Graduate Institute for Policy Studies); Aya Suzuki (Foundation for Advanced Studies on International Development; National Graduate Institute for Policy Studies); Tomoya Matsumoto (National Graduate Institute for Policy Studies) |
| Abstract: | We examine the roles of local and personal networks in the employment process and the emergence and development of the labor market in Ethiopia’s growing cut flower industry. Using primary survey data of 320 workers randomly sampled from all 64 farms, we find that workers who were recruited informally using the social ties were paid less than the formally-recruited workers at hiring. However, these workers quickly increased their productivity, and the effect of social ties on wages disappeared over time. Further, we find that the development of labor market for this newly-emerged industry took place particularly within the industrial clusters (100 words). |
| Keywords: | Labor, Market, Cluster, Cut Flower, Ethiopia, Africa |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:ngi:dpaper:10-29&r=lab |
| By: | Coe, Patrick J. |
| Abstract: | Over the past two decades there has been considerable growth in the number of new apprenticeship registrations in Canada. However, this has not been matched by a corresponding increase in the number of apprenticeship completions. As a result Canadian apprenticeship programs have seen declining completion rates over this period. Across provinces, trades and time there is considerable variation in apprenticeship completion rates. In Canada apprenticeship programs are provincially regulated and there are differences in requirements across trades and provinces and, to a lesser extent, over time. Therefore, this paper asks to what extent the differences in completion rates are related to differences in the structure of apprenticeship programs, as well as differences in demographic variables and unemployment rates. Results suggest that apprenticeship programs for which certication is mandatory have completion rates that are about ten percentage points higher than those without mandatory certification. There is little evidence to support the view that either the length of the work experience term or the technical training requirement act as a barrier to completion. However, there is some evidence to suggest that the format in which technical training is delivered is related to completion rates. While the decline in completion rates during the 1990s coincided with the raising of education requirements, accounting for the trend in completion rates implies a positive relationship between these two variables across trades and provinces. On average, trades with a higher fraction of female apprentices and apprentices with a younger average age tend to have higher completion rates. Finally, in general the results are consistent with high unemployment rates acting as a barrier to completion. |
| Keywords: | Apprenticeship Completions, Program Requirements |
| JEL: | J24 |
| Date: | 2011–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:clssrn:clsrn_admin-2011-2&r=lab |
| By: | Nicole Maestas (RAND); Kathleen Mullen (RAND); Alexander Strand (Social Security Administration) |
| Abstract: | We present the first estimates of the causal effect of SSDI receipt on the labor supply generalizable to the entire population of program entrants in the present day system. We take advantage of a unique workload management database to match Social Security Disability Insurance (SSDI) applicants to disability examiners, and use natural variation in examiners’ allowance rates to estimate the labor supply effects of SSDI. Because applicants are randomly assigned to examiners (conditional on observable characteristics), examiner-specific allowance rates can be used to instrument for the allowance decision in a labor supply equation contrasting denied vs. allowed applicants. We find that the labor force participation rate of the marginal entrant would be on average 21 percentage points greater in the absence of SSDI benefit receipt. His or her likelihood of engaging in substantial gainful activity as defined by the SSDI program would be on average 13 percentage points higher, and he or she would earn $1,600 to $2,600 more per year on average in the absence of SSDI benefit receipt. The marginal entrant is likely to have a mental impairment, be young, and have low pre-onset earnings. Importantly, the disincentive effect varies across individuals with impairments of different degrees of unobservable severity, ranging from a low of 10 percentage points for those with more severe impairments to a high of 60 percentage points for entrants with relatively less severe impairments. |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp241&r=lab |
| By: | Christian Ferreda; Matías Tapia |
| Abstract: | This paper contributes to the literature on redistributive taxation and human capital dynamics by explicitly analyzing the role of incentives in the education market where human capital is produced. We introduce an explicit education market with heterogeneous private schools in a dynamic stochastic general equilibrium model with overlapping generations and human capital accumulation. We use the model to simulate the effects of taxation on growth, intergenerational mobility, inequality, and welfare. Equalization in education expenditures reduces incentives for differentiation in the education market, with the distribution of education investments shifting towards the least productive schools. This has significant consequences on equilibrium outcomes, and highlights the importance of incorporating the role of intermediation when analyzing redistribution policies. |
| Keywords: | Human capital, school market, redistributive taxation, inequality, efficiency. |
| JEL: | E24 H21 I21 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ioe:doctra:390&r=lab |
| By: | Samson Alva; Norma B. Coe; Anthony Webb |
| Abstract: | This paper investigates the impact of a Deferred Retirement Option Plan (DROP) on the age of retirement of employees covered by defined benefit pension plans provided by the City of Philadelphia. We show that the program results in significant and substantial increases in the age of retirement: 1.25 years on average for municipal employees. Employees make use of the program in ways that maximize the expected present value of their pension benefits, with municipal employees entering the program an average 2.1 years before the age at which they would otherwise have retired. Consequently, the program results in a substantial increase in pension cost. We estimate that the program has cost the city around $258 million over the period to 31 December 2009. We construct an indicator of employee quality and find that some classes of high-quality employees are disproportionately likely to delay retirement as a result of the program. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2010-10&r=lab |
| By: | Norma B. Coe; Kelly Haverstick |
| Abstract: | The stock market crash eliminated more than $2 trillion in wealth held in defined contribution retirement accounts, about one-third of the pre-crash total. Unless offset by a later retirement age and/or increased retirement saving, this wealth shock will significantly reduce the retirement incomes of workers now approaching retirement – cohorts who will depend primarily on 401(k) balances once they stop working. To measure the response of older workers to this downturn, the Center for Retirement Research at Boston College (CRR) fielded the 2009 Retirement Survey in July-August 2009. This brief is the second of four based on this nationally-representative survey of workers aged 45-59 who had substantial retirement assets prior to the downturn.1 The first brief described the Survey and highlighted the inclusion of numerous financial, employment, and behavioral factors that are omitted from other surveys.2 This brief explores the relationship between these factors and worker responses to the downturn. The first section provides a brief overview of the responses – work longer, save more, or both – and the remaining sections describe the empirical analysis conducted for each response. |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2010-18&r=lab |
| By: | Jan de Kok; Ingrid Verheul; Mirjam van Praag |
| Abstract: | In theory, for many small and medium-sized enterprises the introduction of performance-related pay might be beneficial: if implemented properly, it could help enterprises in selecting, hiring and motivating the right employees for the right jobs. So far, however, performance-related pay in SMEs has received little academic attention. One of the few studies that examined determinants of performance-related pay amongst SMEs found support for the presence of gender effects; not only regarding the gender of the employees, but also regarding the gender of the entrepreneur. In this paper we have further investigated these gender effects in remuneration policies. The central idea is that female and male entrepreneurs make different choices regarding their human resource management practices, including remuneration policies. Amongst others, these choices are related to the risk aversion of the entrepreneur as well as of the employees. Generally speaking, women are more risk averse than men. This may apply to entrepreneurs as well as to employees. This leads to various hypotheses that are tested empirically. Generally speaking, the results provide only limited support for our hypotheses. Our results are fairly consistent with the standard assumption that employees are risk averse (and female employees more than male employees) while employers (entrepreneurs) are not. At the same time, the support for our hypotheses is so limited that we have conducted a critical re-examination of our basic assumptions. This suggests that gender effects in remuneration policies may (also) be caused by gender differences in labour force attachment rather than in risk aversion. |
| Date: | 2011–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h201105&r=lab |
| By: | Norma B. Coe; Kelly Haverstick |
| Abstract: | The increase in the full retirement age in the Social Security program provides exogenous variation in the generosity in the Social Security Disability Insurance (SSDI) program, based only on birth year. We exploit this variation to estimate how responsive SSDI applications are to the financial incentive to apply. We find that a 1-percentage-point decrease in the retirement-to-disability benefit ratio leads to a 0.25-percentage-point increase in the SSDI application rate for the sample, which represents an 8-percent increase in applications per two years. When weighted to account for sampling design, we estimate that this change in the financial incentive accounted for about 5 percent of the SSDI applications in 2009. However, we do not find a corresponding increase in SSDI receipt based on the financial incentives. In addition, we find little difference in the covariates for individuals who eventually receive SSDI, suggesting that the increase in applications may increase the administrative costs of the SSDI program, but should not have a dramatic impact on the long-term financial solvency of the program. |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2010-20&r=lab |
| By: | Romain Bouis; Romain Duval |
| Abstract: | This paper provides an illustrative assessment of the impacts on potential GDP over a 5 to 10-year horizon of structural reform scenarios in the areas of product and labour markets, relying on existing OECD empirical studies. Results of simulations suggest that a gradual alignment of product market regulations to best practice in a broad range of non-manufacturing sectors could boost aggregate labour productivity levels by several per cent over the next decade in many OECD countries, and by over five per cent across most of continental Europe, as well as for the BRIICS. Relaxation of job protection legislation could also raise productivity growth for a while in many OECD and non-OECD G20 countries, although the effects are estimated to be smaller than those from product market reforms. In a scenario under which they would be phased in relatively quickly, labour market reforms in the areas of unemployment benefit systems, activation policies, labour taxes and pension systems could raise employment rates by several percentage points in a number of OECD countries over a 10-year horizon. Large continental European countries would have the largest benefits to reap from reforms. The overall potential GDP gain for the average OECD country from undertaking the full range of reforms considered here might come close to 10% at a 10-year horizon, indicating the presence of ample room for structural reforms to offset the permanent GDP losses from the recent crisis.<P>Augmenter la croissance potentielle après la crise : une évaluation quantitative des gains potentiels de différentes réformes structurelles au sein de l'OCDE et au-delà<BR>Cet article fourni une évaluation illustrative des impacts sur le PIB potentiel à des horizons de 5 et 10 ans de scénarios de réformes structurelles dans les domaines des marchés des produits et du travail, à partir de travaux empiriques de l’OCDE. Les résultats des simulations suggèrent qu’un alignement graduel des réglementations du marché des produits dans un large ensemble de secteurs non manufacturiers aux meilleurs pratiques pourrait augmenter la productivité agrégée du travail de plusieurs pour cent au cours de la prochaine décennie dans plusieurs pays de l’OCDE, et de plus de cinq pour cent au sein de la plupart des pays d’Europe continentale, ainsi que dans les BRIICS. Un relâchement de la législation sur la protection de l’emploi pourrait augmenter la croissance de la productivité d’un montant non négligeable dans plusieurs pays de l’OCDE et pays non OCDE membres du G20, bien que les effets estimés soient plus faibles que ceux attendus de réformes du marché des produits. Dans un scénario dans lequel elles seraient mises en oeuvre assez rapidement, les réformes du marché du travail dans les domaines des systèmes d’indemnisation chômage, de politiques d’activation, de fiscalité du travail et de systèmes de retraite pourraient augmenter les taux d’emploi de plusieurs points de pourcentage dans plusieurs pays de l’OCDE à un horizon de 10 ans sous un scénario de mise en oeuvre rapide. Le gain en PIB potentiel pour le pays moyen de l’OCDE d’une mise en oeuvre de l’ensemble des réformes considérées ici pourrait approcher 10 % à un horizon de 10 ans, indiquant la présence de gains substantiels liés aux réformes structurelles susceptibles de compenser les pertes définitives en PIB consécutives à la crise récente. |
| Keywords: | growth, productivity, employment, structural reforms, productivité, croissance, réforme structurelle, emploi |
| JEL: | E27 O43 |
| Date: | 2011–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:835-en&r=lab |
| By: | Vincenzo Atella; Mariacristina Rossi |
| Abstract: | The paper develops a simple two-period model relating child labor, child school attendance and child health care access in LDCs showing that child labor is positively correlated to access to health care services. In fact, higher medical expenditure generates better health and, therefore, higher child productivity. Accumulation of human capital, which generates higher future utility, comes at the expense of current productivity and consumption. The optimal choice of child labor is such that the marginal benefit of schooling is equal to the marginal productivity of child labor, which is enhanced by additional medical expenditure. Under this theoretical set-up we expect medical expenditure and child labor to be positively correlated, with parents caring more for their children if they contribute to household income. We explore these relationships using a micro data set from Ghana LSS for the year 1999. Empirical results confirm the model theoretical predictions. |
| Keywords: | Child labor; Health care demand; Human capital; Latent variables; multivariate Probit; Unobserved heterogeneity; LDCs |
| JEL: | I12 J13 J22 J28 J43 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:178&r=lab |
| By: | Pencavel, John (Stanford University) |
| Abstract: | Real wage index numbers have been used to measure movements in the standard of living of the typical worker. This paper describes some of these indicators for the United States and England. A new real wage index is proposed that resembles the sliding scale used to adjust wages in certain industries years ago. This new index is applied to U.S. manufacturing industry and it suggests a fall in real wages by about 40 percent since 1960. Workers’ distributional position in U.S. manufacturing has deteriorated considerably. |
| Keywords: | index numbers, real wages, sliding scale |
| JEL: | J31 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5455&r=lab |
| By: | Doan, Tinh |
| Abstract: | This paper employs the Ordinary Least Squares, Instrumental Variables and Treatment Effect models to a new dataset from the Vietnam Household Living Standards Survey (VHLSS) to estimate return to the four-year university education in 2008. Our estimates reveal that the return to university education is about 17% (annualized) and robust to the various estimators. The return to higher education has significantly increased since the economic reform in late 1980s. |
| Keywords: | economic transition; returns to higher education; IV model; Vietnam |
| JEL: | J31 O15 C31 |
| Date: | 2011–01–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:28426&r=lab |
| By: | Andrew G. Biggs; Gayle L. Reznik; Nada O. Eissa |
| Abstract: | It is generally accepted that the Social Security program pays women a higher average ratio of lifetime benefits to lifetime taxes than it does men. Social Security’s progressive benefit structure and annuity payment combine with women’s lower average earnings and longer average life spans to provide women with more favorable treatment on a lifetime basis. This more favorable treatment does not necessarily imply that women are presented with stronger incentives to participate in the labor force and contribute to Social Security than are men. If anything, Social Security does the opposite. The auxiliary benefit provisions, including spousal and widow’s benefits, mean that many women do not receive higher benefits in return for their contributions than they would have received had they never worked or contributed to the program. In this paper, we calculate two measures of treatment by Social Security using the SSA’s Modeling Income in the Near Term (MINT) micro-simulation model: the net tax rate, which reflects the net value of Social Security taxes and benefits as a percentage of lifetime earnings; and the generated net tax rate, which represents the net value of benefits received in return for a participant’s taxes relative to lifetime earnings. While women pay low and even negative average net taxes to Social Security, their generated net tax rates are higher and often equal the full statutory tax rate. Men, by contrast, pay higher net tax rates but lower generated net tax rates, as their earnings may generate additional benefits for their spouse or survivor. The work incentives presented by Social Security may differ significantly from those implied by measures of overall treatment by the program. |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2010-17&r=lab |
| By: | University Grants Commission UGC |
| Abstract: | The UGC has contributed in a number of ways in developing policies and to devise the schemes and to transform them into an action plan for implementation. The UGC also took several new initiatives for reforming higher education, many of the which were of a fundamental nature. |
| Keywords: | higher education, India, education, University Grants Commission, UGC, colleges, universities |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:3492&r=lab |
| By: | Victor A. Matheson (Department of Economics, College of the Holy Cross); Debra J. O’Connor (Department of Economics, College of the Holy Cross); Joseph H. Herberger (Department of Economics, College of the Holy Cross) |
| Abstract: | This paper examines the profitability of Division I athletic programs at colleges and universities in the United States under a variety of accounting definitions of profit. The data identify several broad themes. First, a majority of athletic departments rely heavily on direct and indirect subsidization of their programs by the student body, the institution itself, and state governments in order to balance their books. Without such funding, less than a third of BCS athletic departments and no non-BCS departments are in the black. Second, athletic programs rely heavily on contributions to balance their books. Donations to athletic departments may serve as a substitute for donations to the rest of the university, lowering giving to other programs. Third, football and men’s basketball programs are generally highly profitable at BCS schools, but below this top tier, fewer than 10% of football programs and 15% of men’s basketball programs show a profit by any reasonable accounting measures. |
| Keywords: | Athletics, higher education, sports |
| JEL: | L83 O18 R53 J23 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:hcx:wpaper:1101&r=lab |
| By: | Angela Lee Duckworth (University of Pennsylvania); David R. Weir (University of Michigan) |
| Abstract: | Studies of adolescents and young adults have shown that schooling impacts economic outcomes beyond its impact on cognitive ability. Research has also shown that the personality trait of conscientiousness predicts health outcomes, academic outcomes, and divorce. Using the Big Five taxonomy of personality traits, this study examines whether non-cognitive traits are related to economic success over the life course. Examining Health and Retirement Study survey data linked to Social Security records on over 10,000 adults age 50 and over, we investigate the relationship of personality traits to economic outcomes. Controlling for cognitive ability and background variables, do more conscientious and emotionally stable adults have higher lifetime earnings, and is this due to higher annual earnings, longer work lives, or both? Do more conscientious adults save a higher proportion of their earnings for retirement, and does conscientiousness of each partner in a married couple matter? Do conscientiousness and emotional stability interact such that the effects of conscientiousness are greater among less emotionally stable adults? |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp235&r=lab |
| By: | John Bound (University of Michigan and National Bureau of Economic Research); Stephan Lindner (University of Michigan); Timothy Waidmann (Urban Institute) |
| Abstract: | Over the last 25 years the Social Security Disability Insurance Program (DI) has grown dramatically. During the same period of time employment rates for men with work limitations showed substantial declines in both absolute and relative terms. While the timing of these trends suggests that the expansion of DI was a major contributor to employment decline and raises questions about the targeting of disability benefits, studies using denied applicants suggest a more modest role for DI expansion. In order to reconcile these findings, we decompose total employment changes into population and employment changes for three categories: DI beneficiaries, denied applicants and non-applicants. Our results show that during the early 1990s, the growth in DI can fully explain the employment decline for men only under an extreme assumption about the employment potential of beneficiaries. For the period after the mid-1990s, we find little role for the DI program in explaining the continuing employment decline for men with work limitations. |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp239&r=lab |
| By: | Victor A. Matheson (Department of Economics, College of the Holy Cross); Debra J. O’Connor (Department of Economics, College of the Holy Cross); Joseph H. Herberger (Department of Economics, College of the Holy Cross) |
| Abstract: | This paper examines the profitability of Division I athletic programs at colleges and universities in the United States under a variety of accounting definitions of profit. The data identify several broad themes. First, a majority of athletic departments rely heavily on direct and indirect subsidization of their programs by the student body, the institution itself, and state governments in order to balance their books. Without such funding, less than a third of BCS athletic departments and no non-BCS departments are in the black. Second, athletic programs rely heavily on contributions to balance their books. Donations to athletic departments may serve as a substitute for donations to the rest of the university, lowering giving to other programs. Third, football and men’s basketball programs are generally highly profitable at BCS schools, but below this top tier, fewer than 10% of football programs and 15% of men’s basketball programs show a profit by any reasonable accounting measures. |
| Keywords: | Athletics, higher education, sports |
| JEL: | L83 O18 R53 J23 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:1101&r=lab |
| By: | Ibsen, Rikke (Aarhus School of Business); Westergård-Nielsen, Niels (Aarhus School of Business) |
| Abstract: | In this paper we will look at job creation and destruction in firms. We will answer the question if it is the large companies that create jobs, while the smaller companies are contributing much less. Or is it the young companies that create jobs? And who destroys the most jobs? In the crisis Denmark lost 186,000 jobs in the private sector. The question is where and how could these jobs be recreated. Are these issues specific to industries or are they universal? The data used is register data on workplaces and firms for the period 1980-2007. The base unit of data is the workplace. The company (firm) is the legal entity. A company can have many sites, and one of the ways companies can grow is by expanding with multiple sites. This can happen by mergers and acquisitions but can also happen by creating "daughter workplaces". It is therefore essential to look at workplaces and firms at the same time. A complication here is that firms switch ID over time because of change of ownership, mergers and divisions. Data must be corrected so that these administrative issues will not affect the survival of firms. The data are used in a way where we can cover firm birth and firm death, spin-offs and mergers. The analysis will make it possible to differentiate between net and gross creation of jobs because we can follow each single individual in and out of jobs. We have for Denmark found that size on its own does not have a big impact, but young firms are much more likely to contribute to a positive growth. For the U.S. it has been found that the growth in jobs comes from small businesses. A closer analysis though shows that the main factor here is the firm age. Thus, it is found that young firms net create the most jobs, but they are also responsible for the most job destructions. |
| Keywords: | job creation, job destruction, firm age, firm size, education, employer-employee data |
| JEL: | E24 L25 L26 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5458&r=lab |
| By: | Gary V. Engelhardt |
| Abstract: | State wage-payment laws, which forbid deductions from wages and salaries without the written permission of the employee, constituted a binding constraint on firms’ choices to adopt automatic enrollment in 401(k) plans prior to 2006. Since the passage of the Pension Protection Act of 2006, which clarified the legality of auto-enroll plans and superseded these state laws, 401(k) participation has been higher in states that previously required written permission. |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2010-13&r=lab |
| By: | Daniel Tortorice (Department of Economics, Brandeis University) |
| Abstract: | I compare unemployment expectations from the Michigan Survey of Consumers to VAR forecastable movements in unemployment. I document three key facts. First, one- half to one-third of the population expects unemployment to rise when it is falling at the end of a recession even though the VAR is able to predict the fall in unemployment. Second, more people expect unemployment to rise when it is falling at the end of a recession than expect it to rise when it is rising at the beginning of a recession even though these movements are predictable with the VAR. Finally, the lag change in unemployment is as important as the VAR prediction of the future unemployment change in predicting the fraction of the population that expects unemployment to rise. Least squares learning or real time expectations do little to help explain these facts. However, delayed updating of expectations can addresses some of these puzzles and extrapolative expectations addresses these puzzles the best. Individuals with higher income or education are only slightly less likely to make these expectational errors and those who makes these errors are 8-10 percent less likely to believe it is a good time to make a major purchase. |
| Keywords: | Consumer Sentiment, Rational Expectations, Business Fluctuations, Cycles |
| JEL: | E32 E37 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:brd:wpaper:05&r=lab |
| By: | Alan L. Gustman (Dartmouth College and NBER); Thomas L. Steinmeier (Texas Tech University); Nahid Tabatabai (Dartmouth College) |
| Abstract: | This paper investigates how increases in the level of maximum earnings subject to the Social Security payroll tax have affected Social Security benefits and taxes. The analysis uses data from the Health and Retirement Study to ask how different the present value of own benefits and taxes would be for the cohort born from 1948 to 1953 (ages 51 to 56 in 2004) if they faced the lower cap on the payroll tax that faced those born 12 and 24 years earlier, but otherwise had the same earnings stream and faced the same benefit formula. We find that for those in the Early Boomer cohort of the Health and Retirement Study, ages 51 to 56 in 2004, that after adjusting for nominal wage growth, benefits were increased by 1.5 percent by the increase in the payroll tax ceiling compared to the cohort 12 years older, and by 3.7 percent over the benefits under the payroll tax ceiling for the cohort 24 years older. Tax receipts were increased by 5.3 and 10.6 percent over tax receipts that would have been collected under the tax ceilings that applied to the cohorts 12 and 24 years older respectively. About 22 percent of the additional tax revenues created by the increase in the payroll tax cap between the Early Boomer cohort and those 12 years older led to increased benefits. Similarly, about 27 percent of the additional tax revenues created by the increase in the payroll tax cap between the Early Boomer cohort and those 24 years older led to increase benefits. Results are also presented separately for men and women, for those in the top quartile of earners, and for those at the tax ceiling throughout their work lives. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp227&r=lab |
| By: | Krause, Michael; Lubik, Thomas |
| Abstract: | We demonstrate the possibility of indeterminacy and non-existence of equilibrium dynamics in a standard business cycle model with search and matching frictions in the labor market. Our results arise for empirically plausible parametrizations and do not rely upon a mechanism such as increasing returns. -- |
| Keywords: | search and matching,indeterminacy,match elasticity |
| JEL: | E24 E32 J64 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:201025&r=lab |
| By: | Jody Schimmel (Mathematica); David C. Stapleton (Mathematica) |
| Abstract: | Many proposals designed to reduce federal budget deficits include retirement policy reforms that would delay workers’ access to retirement benefits or reduce the value of benefits to those who retire early. Such reforms would have adverse consequences for the economic well-being of older workers with health-related work limitations. In this paper, we explore a set of policy options that take a "work-support" approach-an earned income tax credit (EITC), an employment services allowance, and a health insurance subsidydesigned to encourage and help workers continue to work if they can. To arrive at a population that might be eligible for such benefits, we first develop a straightforward model to predict the likelihood that a worker reporting a health-related work limitation would experience economic hardship as a result. The model bounds the target population by excluding those who are not expected to experience financial hardship from earnings loss due to a health-related work limitation. It also demonstrates an approach to eligibility determination that would discourage gaming and support rapid eligibility determination-critical for a program designed to extend employment and prevent financial hardship. Using conservative assumptions about program costs, our most expensive program would have a per capita cost of $14,600, or $11,300 if the health insurance subsidy is viewed as an ACA cost. This can be compared to estimated mean annual benefits of $14,855 in 2009 for Social Security Disability Insurance (SSDI) beneficiaries age 50 and older, plus $11,000 per year for Medicare after the 24-month waiting period. Because of its more favorable work incentives, a work-support program is likely to reduce hardship more than a program that preserves existing benefits for the same workers at comparable cost and is likely to be no more difficult to administer. |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp244&r=lab |
| By: | Michael D. Hurd (RAND and NBER); Susann Rohwedder (RAND) |
| Abstract: | After retirement, the primary sources of uncertainty with respect to an individual’s economic status are longevity, investment outcomes and out-of-pocket spending on health care. In previous work, we estimated economic preparation for retirement, taking into account the risk of living to an advanced old age and the concomitant risk of running out of resources. But while we accounted for the average level out-of-pocket spending for health care, we did not account for the risk of out-of-pocket spending. In this paper we augment our model for this omission. We find that the risk of out-of-pocket health care spending reduces economic preparation for retirement from about 72% of persons in the age range 65-69 to about 63%. However, this relatively modest reduction is quite unequally distributed: about 57% of single persons are adequately prepared when health care spending is not stochastic, but just 44% when it is. Among single women who are not high school graduates the percentage adequately prepared declines from 33% to 15%. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp232&r=lab |
| By: | John Bound (University of Michigan and National Bureau of Economic Research); Timothy Waidmann (The Urban Institute) |
| Abstract: | In this paper we used the Health and Retirement Study to examine the health and economic status of those who collect Social Security retirement benefits prior to the full retirement age. We used a propensity score reweighting method to estimate the fraction of early retirees who use early retirement benefits as a safety net against deteriorating health and who might be induced to apply for disability benefits (SSDI) or retire without income replacement if the generosity or availability of early retirement benefits were reduced. We find that while the majority of early retirees would likely not qualify for disability benefits, approximately one in five have health characteristics similar to SSDI beneficiaries, and thus might not be able to replace losses in benefit income with labor income. |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp240&r=lab |