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on Labour Economics |
| By: | Cho, Yoonyoung; Newhouse, David |
| Abstract: | This paper examines how different types of workers in 17 middle-income countries were affected by labor market retrenchment during the great recession. Impacts on different types of workers varied by country and were only weakly related to the severity of the shock. Among active workers, youth experienced by far the largest adverse impacts on employment, unemployment, and wage employment, particularly relative to older adults. The percentage employment reductions, for example, were greatest for youth in each sector of the economy, as firms reacted to the shock by substituting away from inexperienced workers. Employment rates, as a share of the population, also plummeted for men. Larger drops in male employment were primarily attributable to men's higher initial rate of employment, although men's concentration in the hard-hit industrial sector also played an important role. Within each sector, percentage employment declines were similar for men and women. Added worker effects among women were mild, even among less-educated workers. Differences in labor market outcomes across education groups and urban or rural residence tended to be smaller. These findings bolster the case for targeted support to displaced youth and wage employees. Programs targeted to female and unskilled workers should be undertaken with appropriate caution or empirical support from timely data, as they may not benefit the majority of affected workers. |
| Keywords: | Labor Markets,Labor Policies,Labor Standards,Work&Working Conditions,Population Policies |
| Date: | 2011–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5636&r=lab |
| By: | P. CHARNOZ (Insee-Crest); É. COUDIN (Ensae); M. GAINI (Insee) |
| Abstract: | This paper studies changes in wage differentials accross education groups for full-time male workers in the French private sector, from 1976 to 2004. We apply quantile regressions to Mincer-type equations to disentangle between- and within-education group wage inequalities, and we describe separately their evolutions. We use a matched dataset of administrative data and Census information, which contains yearly data. Our main results are: (1) the overall wage inequality was stable from 1976 to 1992 and slightly decreased from 1995 to 2004. (2) Within-education group wage inequalities increase with education and are higher across non-vocational degrees than vocational ones. (3) Between-education group wage inequalities increase with experience. (4) The within-education group wage inequalities were rather stable from 1976 to 1992 and decreased between 1995 and 2004, strongly for low levels of experience. (5) The between-education group wage inequalities decreased all over the period, due to decreasing education premiums, particularly for low levels of experience. These results are related to the dramatic evolutions of the French labor market during this period: older cohorts gradually replaced by more educated ones, unemployment and minimum wage rises. |
| Keywords: | wage differentials by skills, wage inequality, within-group wage inequality, between-group wage inequality, return heterogeneity, quantile regressions |
| JEL: | J24 J31 C21 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:crs:wpdeee:g2011-06&r=lab |
| By: | Chevalier, Arnaud (Royal Holloway, University of London) |
| Abstract: | Using a survey of a cohort of UK graduates, linked to administrative data on higher education participation, this paper investigates the labour market attainment of recent graduates by subject of study. We document a large heterogeneity in the mean wages of graduates from different subjects and a considerably larger one within subject with individuals with the most favourable unobserved characteristics obtaining wages almost twice as large as those with the worst. Moreover, gender differences in wages within subjects are also large. We then simulate a graduate tax to calculate a willingness to pay – in form of tuition fees – to capture these subject wage premia. |
| Keywords: | graduate earnings, tuition fees |
| JEL: | I22 J31 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5652&r=lab |
| By: | Chéron, Arnaud; Hairault, Jean-Olivier; Langot, François |
| Abstract: | This paper extends the job creation-job destruction approach to the labor market to take into account a deterministic finite horizon. As hirings and separations depend on the time over which to recoup investment costs, the life-cycle setting implies age-differentiated labor market flows. Whereas the search effort of unemployed workers presents an age-decreasing profile, the age-dynamics of the separation rate can be either decreasing or increasing. Worker heterogeneity in the context of the undirected search implies an intergenerational externality, which is not eliminated by the Hosios condition. We show that age-specific policies are necessary to reach the first best allocation. |
| Keywords: | search; matching; retirement; life cycle |
| JEL: | J22 J26 H55 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpm:docweb:1103&r=lab |
| By: | Alessandra Casarico; Paola Profeta; Chiara Pronzato |
| Abstract: | We empirically investigate the determinants of the female decision of investing in post-secondary education, focusing on the role played by the context where young women take their education decision. We first develop a stylized two-period model to analyze the female decision of investing in education and highlight two main determinants: the time to be devoted to child care and the probability of working in a skilled job. We then use data on educational decisions of women in the 17-21 age group drawn from EU-Silc, available for the years 2004-2008. From the same survey we construct context indicators at the regional level, and exploit regional variability to identify how women’s educational investment reacts to changes in the surrounding context. We find that the share of working women with children below 5 and the share of women with managerial positions or self-employed positively affect the probability that women enrol in post-secondary education. The same does not hold for men. |
| Keywords: | post-secondary education, women, university, child care time requirement, managerial positions, self-employment, context, EU-Silc, repeated cross section |
| JEL: | J16 J24 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:don:donwpa:044&r=lab |
| By: | Picchio, M.; Ours, J.C. van (Tilburg University, Center for Economic Research) |
| Abstract: | This paper investigates whether on-the-job training has an effect on the employability of workers. Using data from the Netherlands we disentangle the true effect of training incidence from the spurious one determined by unobserved individual heterogeneity. We also take into account that there might be feedback from shocks in the employment status to future propensity of receiving firm-provided training. We find that firm-provided training significantly increases future employment prospects. This finding is robust to a number of robustness checks. It also holds for older workers, suggesting that firm-provided training may be an important instrument to retain older workers at work. |
| Keywords: | training;employment;human capital;older workers. |
| JEL: | C33 C35 J21 J24 M53 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2011040&r=lab |
| By: | Lisi, Domenico (University of Catania, Department of Economics and Quantitative Methods) |
| Abstract: | The standard analysis of the impact of EPL on labour market outcomes concentrates mainly on unemployment, disregarding the possible effect on productivity. In this paper we make (a component of) labour productivity endogenous and analyze how the presence of a stringent protection legislation affects labour market in an equilibrium matching model with endogenous job destruction. Indeed, considering labour productivity an endogenous could be important not only in the case of EPL, but also for all kind of personnel policy evaluation. In this framework high labour productivity on one hand is costly in terms of effort, on the other hand is beneficial in terms of lower job destruction. We find that high firing costs partially substitute high labour productivity in reducing job destruction and this, consequently, brings down the optimal level of productivity. Moreover, the impact of EPL on unemployment is ambiguous but numerical exercises show unambiguously how higher firing restrictions reduce different measures of aggregate welfare. To some extent, the clear emergence of these results is full of policy implication and, indeed, rationalizes the recent empirical evidence on the impact of EPL. |
| Keywords: | Employment protection; Endogenous labour productivity; Job destruction |
| JEL: | J24 J38 J63 J64 |
| Date: | 2010–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:demqwp:2010_008&r=lab |
| By: | Robert Rudolf (Georg-August-University Göttingen); Seo-Young Cho (Georg-August-University Göttingen) |
| Abstract: | This paper uses detailed longitudinal data from the Korean Labor and Income Panel Study (KLIPS) stretching from 1998 to 2008 to analyze the relationship between working hours and family happiness in Korea. The Korean labor market is characterized by high levels of gender inequality which is partly due to long working hours, a significant gender gap in earnings, yet also to traditional gender roles maintained until today. Therefore, post-marriage labor force participation rates for men are still double as high as for women. However, significant changes took place over the period of our study. Working hours have been steadily reduced and female labor force participation slightly increased, partly due to the introduction of the 5-day working week in 2004. Hours, job, and life satisfaction have all increased hence. Running fixed-effects ordered logit models on married couples with children, we analyze hours, job, and life satisfaction separately for women and men. Our findings indicate that past working hours reductions increased family happiness in Korea. However, there are still strong gender-specific effects how working hours affect family happiness. Controlling for household income, wives report highest satisfaction when either not-working or working 31 to 40 hours per week. Both part-time and overtime work reduce women’s happiness. Korean husbands, in comparison, are best off when being full-time employed with weekly working hours between 31 and 50. Staying at home or being only part-time employed (1-30 hours) is strongly detrimental to their happiness. For both sexes, cross-partner effects are strongly significant. These findings are particularly interesting in comparison to other countries like Great Britain or Australia where similar studies were carried out (Booth and van Ours, 2008; 2009). Results confirm strong traditional gender roles in Korea until today. In order to further increase female labor force participation and family happiness, further reductions in working hours should be flanked by policies promoting equal chances at the work place, a rethinking of gender identities, and flexible job and child-care solutions. |
| Keywords: | Working hours; Happiness; Gender identity; Female labor force participation |
| JEL: | I31 J22 J16 J28 |
| Date: | 2011–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:got:gotcrc:077&r=lab |
| By: | Dang, Hai-Anh (World Bank); Sarr, Leopold (World Bank); Asadullah, Niaz (University of Reading) |
| Abstract: | This study reports evidence from an unusual policy intervention – The Reaching Out of School Children (ROSC) project – in Bangladesh where school grants and education allowances are offered to attract hard-to-reach children to schools comprised of a single teacher and a classroom. The operating unit cost of these schools is a fraction of that of formal primary schools. We use panel data to investigate whether ROSC schools are effective in raising enrolment and learning outcomes. Our findings suggest that there is a modest impact on school participation: ROSC schools increase enrolment probability between 9 and 18% for children in the two age cohorts 6-8 and 6-10. They perform as well as non-ROSC schools in terms of raising test scores, and even have positive impacts on academically stronger students. There is also strong evidence of positive externalities on non-ROSC schools in program areas. These results point to the effectiveness of a new model of non-formal primary schools that can be replicated in similar settings. |
| Keywords: | non-formal school, impact evaluation, multiple treatments, learning outcomes |
| JEL: | I21 O10 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5659&r=lab |
| By: | Daniel M. Hungerman |
| Abstract: | For over a century, social scientists have debated how educational attainment impacts religious belief. In this paper, I use Canadian compulsory schooling laws to identify the relationship between completed schooling and later religiosity. I find that higher levels of education lead to lower levels of religious participation later in life. An additional year of education leads to a 4-percentage-point decline in the likelihood that an individual identifies with any religious tradition; the estimates suggest that increases in schooling can explain most of the large rise in non-affiliation in Canada in recent decades. |
| JEL: | I20 I28 Z12 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16973&r=lab |
| By: | Julen ESTEBAN-PRETEL; NAKAJIMA Ryo; TANAKA Ryuichi |
| Abstract: | We construct worker flows for the Japanese labor market in an internationally comparable manner, and study the consequences of the deep and lasting recession of the 1990s in the Japanese labor market. We analyze the changes in employment, unemployment and inactivity, as well as the worker flows between this states by using detailed Labor Force Survey micro-data from 1983 to 2008. In order to understand what type of worker was most affected by the long recession, we disaggregate the data according to several worker and employer's characteristics. We find that the so-called Lost Decade of the 1990s changed the state of the labor market from all the previous points of view, although some types of workers were more affected than others. |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:11039&r=lab |
| By: | Fitzenberger, Bernd; Muehler, Grit |
| Abstract: | Using personnel records from a single large German firm in the financial industry, this paper provides detailed evidence on the effect of age and the supervisor's gender on gender differences in workplace training, holding constant various workplace characteristics. We implement an age-specific decomposition of the incidence and the duration of training into three terms: an age-specific coefficients effect, an age-specific characteristics effect, and an age composition effect. Our results show that the gender training gap changes with age. Females obtain less training during the early career, and their training occurs at higher age. The timing of the gender training gap seems to be driven by diverging career paths associated with employment interruptions. However, we find no evidence for catching-up effects after parental leave. A decomposition of the training gap including supervisor fixed effects reveals that supervisors do not treat male and female employees differently. Supervisors assign more training to all employees if they themselves participate more in training. -- |
| Keywords: | training participation,age,gender,company data |
| JEL: | M53 M12 J14 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:11023&r=lab |
| By: | Julen ESTEBAN-PRETEL; FUJIMOTO Junichi |
| Abstract: | The Japanese labor market displays U-shaped unemployment and separation rates, and declining job-finding rates as workers age. Traditional infinite horizon search models of the labor market cannot account for such patterns. We develop a life-cycle search and matching model that features random match quality and incorporates elements capturing several main characteristics of the Japanese labor market. We show that the model, calibrated for Japan, replicates the life-cycle properties of the data. Our model, following an empirically plausible productivity drop, produces changes in the steady state levels of the unemployment and finding rates similar in magnitude to those observed in Japan since the 1980s. |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:11041&r=lab |
| By: | Christine Valente (Department of Economics, The University of Sheffield) |
| Abstract: | Between 1996 and 2006, Nepal experienced violent civil conflict as a consequence of a Maoist insurgency, which many argue also brought about an increase in female empowerment. In this paper, I exploit within- and between- district variation in the intensity of violence to estimate the impact of conflict intensity on two key areas of the life of women in Nepal, namely education and marriage. Overall conflict intensity had a small, positive effect on female educational attainment, whereas abductions by Maoists had the reverse effect. Male schooling was not significantly affected by either conflict measure. Conflict intensity and Maoist abductions during school age both increased the probability of early female marriage, but exposure to conflict during marriageable age does not appear to have affected women’s long-term marriage probability. |
| Keywords: | Civil conflict, Education, Marriage, Gender, Nepal |
| JEL: | I20 J12 O12 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2011009&r=lab |
| By: | Aleksander Aristovnik; Alka Obadic |
| Abstract: | The paper applies a non-parametric approach, i.e. data envelopment analysis (DEA), to assess the relative technical efficiency of higher education across countries, with a particular focus on Croatia and Slovenia. When estimating the efficiency frontier we focus on measures of quantities outputs/outcomes. The results show that the relatively high public expenditure per student in Croatia should have resulted in a better performance regarding the outputs/outcomes, i.e. a higher rate of higher education school enrolment, a greater rate of labor force with a higher education and a lower rate of the unemployed who have a tertiary education. On the other hand, regardless of the input-output/outcome mix, the higher education system in Slovenia is shown to have a much higher level of efficiency compared to both Croatia and many other comparable EU and OECD countries. |
| Keywords: | higher education, funding, efficiency, DEA, Croatia, Slovenia, EU, OECD |
| JEL: | I21 J24 H52 |
| Date: | 2011–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2010-1007&r=lab |
| By: | Henderson, Daniel J. (Binghamton University, New York); Polachek, Solomon (Binghamton University, New York); Wang, Le (University of New Hampshire) |
| Abstract: | This paper relaxes the assumption of homogeneous rates of return to schooling by employing nonparametric kernel regression. This approach allows us to examine the differences in rates of return to education both across and within groups. Similar to previous studies we find that on average blacks have higher returns to education than whites, natives have higher returns than immigrants and younger workers have higher returns than older workers. Contrary to previous studies we find that the average gap of the rate of return between white and black workers is larger than previously thought and the gap is smaller between immigrants and natives. We also uncover significant heterogeneity, the extent of which differs both across and within groups. The estimated densities of returns vary across groups and time periods and are often skewed. For example, during the period 1950-1990, at least 5% of whites have negative returns. Finally, we uncover the characteristics common amongst those with the smallest and largest returns to education. For example, we find that immigrants, aged 50-59, are most likely to have rates of return in the bottom 5% of the population. |
| Keywords: | Mincer regressions, nonparametric, rate of return to education |
| JEL: | C14 J24 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5662&r=lab |
| By: | Araujo, Ricardo Azevedo; Loureiro, Paulo Roberto; Souza, Nathalia Almeida |
| Abstract: | In this paper we intend to perform an empirical evaluation of the evolutionary game theory model of the labor market developed by Araujo and Souza (2010). In order to accomplish this task we focus on the Brazilian labor market by using data from the National Household Sampling Survey – PNAD/IBGE, from 1995 to 2008. We used four different methodologies: the OLS, Pseudo-panel with fixed effects, Instrumental Variables and the Heckman Selection Model. Results indicate that the main difference between the 1995-2002 and 2003-2008 period is the impact of education over wages. According to these findings, investments in education were more profitable for the 2003-2008 period. However, all wage gaps between formal and informal markets reduced considerably. |
| Keywords: | formal and informal and labor market; evolutionary game theory. |
| JEL: | C73 J23 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30408&r=lab |
| By: | Cigno, Alessandro (University of Florence) |
| Abstract: | As credit and insurance markets are imperfect, and given that intra-family transfers, and the way a child uses her time outside school hours, are private information, the second-best policy makes school enrollment compulsory, forces overt child labour below its efficient level (if positive), and uses a combination of need and merit based grants, financed by earmarked taxes, to relax credit constraints, redistribute and insure. Existing conditional cash transfer schemes can be made to approximate the second-best policy by incorporating these principles in some measure. |
| Keywords: | child labour, education, uncertainty, moral hazard, optimal taxation |
| JEL: | D82 H21 H31 I28 J24 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5663&r=lab |
| By: | Danzer, Alexander M. (University of Munich); Dolton, Peter (Royal Holloway, University of London) |
| Abstract: | Recent controversy has surrounded the relative value of public and private sector remuneration. We define a comprehensive measure of Total Reward (TR) which includes not just pay, but pensions and other 'benefits in kind', evaluate it as the present value of the sum of all these payments over the lifetime and compare it in the UK public and private sectors. Our results suggest that TR is equalized over the lifecycle for men while women have a clear TR advantage in the public sector by the end of their career. We suggest that the current controversy over public-private sector pension differentials and the perennial issues of public/private sector pay gaps requires a life time perspective and that the concept of TR is appropriate. |
| Keywords: | total reward, compensation, public sector, pensions, wage differentials |
| JEL: | J33 J45 H55 J31 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5656&r=lab |
| By: | M. ROGER (Insee); M. WASMER (University of Fribourg and Université Lumière Lyon 2) |
| Abstract: | This study aims at evaluating the actual profile of marginal productivity across age groups within the workforce. As age-productivity profiles might differ between occupations, we differentiate the workforce simultaneously by skills (low-skilled, high-skilled) and by age (young, middle-aged, old). Estimating a production function with a nested constant-elasticity-of-substitution (CES) specification in labour allows imperfect substitution between different categories of workers. We use French datasets for manufacturing, services and trade sectors. Labour productivity is found to be the lowest for the low-skilled older workers while high-skilled senior employees in manufacturing and trade are the most productive group. Throughout the sectors, wage rates vary considerably less than productivity and wage profiles are steeper for high-skilled workers. The relative productivity/wage ratio is found to be sector-specific. It is the highest for young workers in manufacturing while in services and trade it is the highest for the middle-age employees. |
| Keywords: | ageing, older workers, labour productivity, CES production function, endogeneity |
| JEL: | J24 J31 J41 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:crs:wpdeee:g2011-04&r=lab |
| By: | Mikl¢s Koren (Institute of Economics - Hungarian Academy of Sciences, Department of Economics of Central European University); M rton Csillag (TIER - University of Maastricht) |
| Abstract: | We estimate the effect of imported machines on the wages of machine operators utilizing Hungarian linked employer-employee data. We infer exposure to imported machines from detailed trade statistics of the firm and the occupation description of the worker. We find that workers exposed to imported machines earn about 8 percent higher wages than other machine operators at the same firm. When we proxy for unobserved worker characteristics, we find a significant 3 percent wage premium, suggesting that the relationship is causal. The return to schooling is also higher on imported machines. We build a simple matching model consistent with these findings. Our findings suggest that machine imports can be an important channel through which skill-biased technical change reaches less developed and emerging economies. |
| Keywords: | imported machinery, capital-skill complementarity, wages |
| JEL: | F16 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:1114&r=lab |
| By: | Shah Danyal; Bichaka Fayissa; Jung-Sung Lee |
| Abstract: | This essay investigates the effect of education on different lifestyle variables using NLSY79 panels for 1992, 1994, and 1998. The lifestyle variables are smoking, drinking, marijuana use, and cocaine use. The analysis addresses the joint determination of lifestyle variables within the framework of the Seemingly Unrelated Regression (SUR) model. Unobserved heterogeneity is controlled by the robust fixed-effects model extended to SUR model. It is found that educational attainment has no significant effect on the lifestyle choices of individuals. |
| Keywords: | Education, Smoking, Drinking, Marijuana and Cocaine Use, Fixed-Effects Model, SUR Model |
| JEL: | I1 I2 I10 I12 C30 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:mts:wpaper:201102&r=lab |
| By: | Ichino, Andrea (University of Bologna); Lindström, Elly-Ann (IFAU); Viviano, Eliana (Bank of Italy) |
| Abstract: | We show that in the US, the UK, Italy and Sweden women whose first child is a boy are less likely to work in a typical week and work fewer hours than women with first-born girls. The puzzle is why women in these countries react in this way to the sex of their first child, which is chosen randomly by nature. We consider two explanations. As Dahl and Moretti (2008) we show that first-born boys positively affect the probability that a marriage survives, but differently from them and from the literature on developing countries, we show that after a first-born boy the probability that women have more children increases. In these advanced economies the negative impact on fertility deriving from the fact that fewer pregnancies are needed to get a boy is more than compensated by the positive effect on fertility deriving from the greater stability of marriages, which is neglected by studies that focus on married women only. |
| Keywords: | preference for sons, female labour supply, mothers’ behaviour |
| JEL: | E24 J13 J22 J23 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5649&r=lab |
| By: | Lisi, Gaetano |
| Abstract: | This book aims to provide an overview of the labour market's benchmark macroeconomic models. The matching models of equilibrium unemployment are, in fact, the primary and most popular theoretical tools used by economists to evaluate various labour market policies and to study one of the key macroeconomic variables: the unemployment rate. It has been recognised that unemployment has also a structural nature which persists over the business cycle. The matching models, i.e. the models à la Mortensen-Pissarides, explain the co-existence in equilibrium of unemployment and vacancies through frictions in matching workers and firms. Furthermore, these models generate predictions that have the right direction: unemployment goes up in recession and down in boom, while job vacancies shift in the opposite direction. The central role of these models in imperfect labour markets has recently been confirmed by the 2010 Nobel Prize for economy awarded to the founders of this approach: Peter Diamond, Dale Mortensen and Christopher Pissarides. |
| Keywords: | Matching and Job Search Theory; Vacancies; Labour Markets with frictions |
| JEL: | J6 |
| Date: | 2011–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30191&r=lab |
| By: | Hoddinott, John; Maluccio, John; Behrman, Jere R.; Martorell, Reynaldo; Melgar, Paul; Quisumbing, Agnes R.; Ramirez-Zea, Manuel; Stein, Aryeh D.; Yount, Kathryn M. |
| Abstract: | This paper examines the impact over the life course of early childhood growth failure as measured by achieved height at 36 months. It uses data collected on individuals who participated in a nutritional supplementation trial between 1969 and 1977 in rural Guatemala and who were subsequently reinterviewed between 2002 and 2004. It finds that individuals who did not suffer growth failure in the first three years of life complete more schooling, score higher on tests of cognitive skill in adulthood, have better outcomes in the marriage market, earn higher wages and are more likely to be employed in higher-paying skilled labor and white-collar jobs, are less likely to live in poor households, and, for women, fewer pregnancies and smaller risk of miscarriages and stillbirths. Growth failure has adverse impacts on body size and several dimensions of physical fitness in adulthood but does not have marked effects on risk indicators of cardiovascular and related chronic diseases. These results provide a powerful rationale for investments that reduce early-life growth failure. |
| Keywords: | Chronic disease, early life growth failure, fertility, Human capital, Poverty, Undernutrition, Wages, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1073&r=lab |
| By: | Tonin, Mirco (University of Southampton) |
| Abstract: | This paper examines the interaction between minimum wage legislation and tax evasion by employed labor. I develop a model in which firms and workers may agree to report less than the true amount of earnings to the fiscal authorities. I show that introducing a minimum wage creates a spike in the distribution of declared earnings and induces higher compliance by some agents, thus reducing their disposable income. The comparison of food consumption and of the consumption-income gap before and after the massive minimum wage hike that took place in Hungary in 2001 reveals that households who appeared to benefit from the hike actually experienced a drop compared to similar but unaffected households, thus supporting the prediction of the theory. |
| Keywords: | minimum wage, tax evasion, spike, Hungary |
| JEL: | J38 H24 H26 H32 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5660&r=lab |
| By: | Bodewig, Christian; Hirshleifer, Sarojini |
| Abstract: | This report presents available evidence on adult education and training in Europe and Central Asia (ECA), differentiating two separate types: continuing vocational education and training (CVET) for the employed, sought either by employers or individuals, and retraining and second chance education for the non?employed. This paper presents available evidence on the extent and patterns of lifelong learning in ECA. It argues that advancing adult education and training in ECA is important not only to meet the new skills demands but also to respond to a rapidly worsening demographic outlook across most of the region. While it is not equally important for all ECA countries, adult education and training should be high on the agenda of those ECA economies that are closest to the technological frontier and facing a demographic decline, such as the new European Union (EU) member States and Russia. The paper lays out a framework for government action to advance adult learning in ECA through a mix consisting of policy coordination between government and the enterprise sector, a sound regulatory regime and appropriate financial incentives. |
| Keywords: | Access&Equity in Basic Education,Education For All,Primary Education,Teaching and Learning,Gender and Education |
| Date: | 2011–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:61290&r=lab |
| By: | Fevang, Elisabeth (Ragnar Frisch Centre for Economic Research); Markussen, Simen (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research) |
| Abstract: | In most countries, employers are financially responsible for sick pay during an initial period of a worker's absence spell, after which the public insurance system covers the bill. Based on a quasi-natural experiment in Norway, where pay liability was removed for pregnancy-related absences, we show that firms' absence costs significantly affect employees' absence behavior. However, by restricting pay liability to the initial period of the absence spell, firms are discouraged from letting long-term sick workers back into work, since they then face the financial risk associated with subsequent relapses. We show that this disincentive effect is statistically and economically significant. |
| Keywords: | absenteeism, social insurance, experience rating, multivariate hazard rate models |
| JEL: | C14 C41 H55 I18 J23 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5655&r=lab |
| By: | Julen ESTEBAN-PRETEL; NAKAJIMA Ryo; TANAKA Ryuichi |
| Abstract: | The search and matching model has recently come under criticism for its inability to account for some of the cyclical properties of the U.S. labor market. Shimer (2005) has shown that the basic version of the model is incapable of reproducing the volatility of the market tightness for reasonable movements in productivity. This paper considers whether the so-called "Shimer Puzzle" also holds for the Japanese economy. We present empirical evidence on the cyclical properties of the labor market variables in Japan and compare these to their U.S. counterparts. We then build, parametrize, and simulate three different versions of the search and matching model (with exogenous job destruction, with endogenous job destruction, and embedded in a Real Business Cycle model) and compare the simulated statistics to the data. We find that the "Shimer Puzzle" does hold for Japan, since the model is unable to generate as much volatility on the market tightness as in the data. |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:11040&r=lab |
| By: | Marco Pagano (Università di Napoli Federico II, CSEF, EIEF and CEPR); Giovanni Pica (Università di Salerno and CSEF) |
| Abstract: | How does finance affect employment and inter-industry job reallocation? We present a model that predicts that financial development (i) increases employment and/or labor productivity and wages, with a smaller impact at high levels of the equilibrium wage and financial development; (ii) may induce either more or less reallocation of jobs depending on whether shocks to profit opportunities or to cash flow predominate; (iii) amplifies the output and employment losses in crises, firms that rely most on banks for liquidity being hit the hardest. Testing these predictions on international industry-level data for 1970-2003, we find that standard measures of financial development are indeed associated with greater employment growth, although only in non-OECD countries, and are not correlated with labor productivity or real wage growth. Moreover, they correlate negatively with inter-industry dispersion of employment growth. Finally, there is some evidence of a “dark side” of financial development, in that during banking crises employment grows less in the industries that are more dependent on external finance and those located in the more financially developed countries. |
| Keywords: | financial development, employment, investment, access to finance |
| JEL: | E24 J20 O16 O40 |
| Date: | 2011–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:283&r=lab |
| By: | Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Constantine Yannelis (Stanford University - Department of Economics - Department of Economics) |
| Abstract: | The extent of racial discrimination in the labor market is now clearly identified, but its nature largely remains an open question. This paper reports results from an experiment in which fabricated resumes are sent to help-wanted advertisements in Chicago newpapers. We use three groups of identical resumes : one with Anglo-Saxon names, one with African-American names and one with fictitious foreign names whose ethnic origin is unidentifiable to most Americans. We find that resumes with Anglo-Saxon names generate nearly one half more call-backs than identical resumes with African-American or Foreign names. Resumes with non-Anglo-Saxon names, whether African-American or Foreign, show no statistically significant difference in the number of callbacks they elicit. We also find that discrimination is significantly higher in the Chicago suburbs - where ethnic homogenity is high - as opposed to the city proper. We take this as evidence that discriminatory behavior is part of a larger pattern of unequal treatment of any member of non-majority groups - ethnic homophily. |
| Keywords: | Correspondence testing, racial discrimination. |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00587674&r=lab |
| By: | Tham, Siew Yean (Asian Development Bank Institute) |
| Abstract: | Private higher education institutions (PrHEIs) are utilized to complement public provision due to financial constraints faced in public provision. However, increasing private provision has raised interesting questions as to who gets educated in these PrHEIs. Is increasing private supply enlarging the circle of opportunity to reach those who might otherwise have been unable to enter university or college? In other words, has the explosion in private supply translated into greater inclusion or increased exclusion? This paper explores access and equity issues in Malaysia’s private higher education system. Malaysia is an interesting case study due to the significant presence of PrHEIs in the country and their contribution toward student enrolment. The findings show that the Malaysian government has provided considerable financial support for the development of PrHEIs in the country, through the provision of incentives, subsidized loans, and scholarships. Quality assurance efforts further enhance the development of private provision, as student loans and scholarships are only provided for students on accredited programs. Therefore, PrHEIs have widened access and equity in the country with the help of government support. Despite this, Malaysia’s model of providing access and equity through private provision may be unsustainable, due to the poor repayment record of student loans and the economic need to reduce the fiscal deficit of the government. |
| Keywords: | malaysia education; higher education; private higher education |
| JEL: | H44 H52 I23 |
| Date: | 2011–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0280&r=lab |
| By: | Yoshinori Kurokawa; Jiaren Pang; Yao Tang |
| Abstract: | The introduction of exchange rate regimes into the standard Ricardian model of trade implies stronger positive wage comovements between trading countries which fix their bilateral exchange rates. Regression results based on data from OECD countries between 1973 to 2010 suggest that countries in the European Monetary Union experienced stronger positive wage comovements with their main trade partners. In comparison, the positive wage comovements between countries engaged in non-currency-union pegs were weaker. |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:tsu:tewpjp:2011-001&r=lab |
| By: | Kaiser, Ulrich (University of Zurich); Kongsted, Hans Christian (University of Copenhagen); Rønde, Thomas (Copenhagen Business School) |
| Abstract: | We study the mapping between labor mobility and industrial innovative activity for the population of R&D active Danish firms observed between 1999 and 2004. Our study documents a positive relationship between the number of workers who join a firm and the firm's innovative activity. This relationship is stronger if workers join from innovative firms. We also find evidence for positive feedback from workers who leave for an innovative firm, presumably because the worker who left stays in contact with their former colleagues. This implies that the positive feedback ("social network effects") that has been found by other studies not only exists but even outweighs the disruption and loss of knowledge occurring to the previous employer from the worker leaving. Summing up the effects of joining and leaving workers, we find ample evidence for mobility to be associated with an increase in total innovative activity of the new and the old employer. |
| Keywords: | labor mobility, innovation, social network |
| JEL: | O33 O34 C23 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5654&r=lab |
| By: | Sarah Brown (Department of Economics, The University of Sheffield); Aurora Ortiz-Núñez (Department of Economics, The University of Sheffield); Karl Taylor (Department of Economics, The University of Sheffield) |
| Abstract: | We explore the relationship between willingness to take financial risk and the probability of taking out a loan for educational purposes as well as the influence of risk attitudes on the size of the loan using data drawn from the U.S. Survey of Consumer Finances. The findings suggest a positive relationship between individuals’ willingness to take financial risk and the probability of taking out a loan for educational purposes. Similarly, individuals’ willingness to take financial risk appears to be an important determinant of the size of the educational loan. The findings suggest that non-white individuals and individuals from less wealthy backgrounds are less likely to finance education through loans which could potentially increase inequalities in education and income if such individuals are deterred from investing in human capital. |
| Keywords: | Educational loan, Risk aversiob |
| JEL: | I22 I23 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2011010&r=lab |
| By: | Epstein, Gil S. (Bar-Ilan University); Venturini, Alessandra (University of Turin) |
| Abstract: | Temporary and circular migration programs have been devised by many destination countries and supported by the European Commission as a policy to reduce welfare and social costs of immigration in destination countries. In this paper we present an additional reason for proposing temporary migration policies based on the characteristics of the foreign labor-effort supply. The level of effort exerted by migrants, which decreases over their duration in the host country, positively affects production, real wages and capital owners' profits. We show that the acceptance of job offers by migrants result in the displacement in employment of national workers. However it increases the workers' exertion, decreases prices and thus can counter anti-immigrant voter sentiment. Therefore, the favorable sentiment of the capital owners and the local population towards migrants may rise when temporary migration policies are adopted. |
| Keywords: | migration, exertion of effort, contracted temporary migration |
| JEL: | J0 H0 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5658&r=lab |
| By: | Bonsang Eric; Klein Tobias J. (METEOR) |
| Abstract: | We provide an explanation for the common finding that the effect of retirement on life satisfaction is negligible. For this we use subjective well-being measures for life and domains of life satisfaction that are available in the German Socio-Economic Panel (GSOEP) and show that the effect of voluntary retirement on satisfaction with current household income is negative, while the effect on satisfaction with leisure is positive. At the same time, the effect on health satisfaction is positive but small. Following the life domain approach we then argue that these effects offset each other for an average individual and that therefore the overall effect is negligible. Furthermore, we show that it is important to distinguish between voluntary and involuntary retirement. The effect of involuntary retirement is negative because the adverse effect on satisfaction with household income is bigger, the favorable effect on satisfaction with leisure is smaller, and the effect on satisfaction with health is not significantly different from zero. These results turn out to be robust to using different identification strategies such as fixed effects and first differences estimation, as well as instrumental variables estimation using eligibility ages and plant closures as instruments for voluntary and involuntary retirement. |
| Keywords: | labour economics ; |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2011028&r=lab |
| By: | Silvia Balia; Rinaldo Brau |
| Abstract: | This paper investigates long-term home care utilisation in Europe. We use data from SHARE on formal (nursing care or paid domestic help) and informal care (support provided by relatives) to study the probability and the number of hours of both types of care received. We address endogeneity and unobservable heterogeneity in a common latent factors framework. We find that age, disability and proximity-to- death are important joint predictors of home care utilisation. Unlike some previous studies, we find that increasing the number of hours of informal support does not lead to a reduction in formal care utilisation. |
| Keywords: | long-term care; proximity to death; ageing; latent factors |
| JEL: | C10 C30 I1 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:201104&r=lab |
| By: | Malo, Miguel A.; Sanchez-sanchez, Nuria |
| Abstract: | Using a panel of large firms from Spain, we check the relative time persistence of different types of labour conflicts such as strikes, collective conflicts, lockouts and other conflicts with lost working hours but without the previous stated legal forms for labour conflicts. We present random-effects probit estimations comparing observations with each type of conflicts with the same set of observations without any type of conflict. The results show that no legal form labour conflicts do not have long-term persistence (persistence is only in the short-term, from quarter to quarter), and the other types of conflicts suffer short and long-term persistence of confliction at the firm level, corresponds to strikes the higher size of both types of persistence. As short and long term persistence of strikes have almost the same size these results do not support asymmetric information theories of strike. |
| Keywords: | Strike; labour conflict; time persistence; asymmetric information |
| JEL: | J52 K31 |
| Date: | 2011–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30117&r=lab |
| By: | FUJIWARA Yoshi; AOYAMA Hideaki |
| Abstract: | Labor and productivity play central roles in the aging population problem in all developed countries. The understanding of labor allocation among different productivity levels is required for policy issues, specifically, the dynamics of how workers are allocated and reallocated among sectors. We uncover an empirical fact that firm-level dispersions of output and employment satisfy certain scaling laws in their joint probability distributions, which closely relate to the dispersion of productivity. The empirical finding is widely observed in large databases including small and medium-sized firms in both Japan and European countries. We argue that a stochastic process generates a steady-state allocation of labor across firms of differing output and productivity, which results in the observed distributions of workers, productivity, and output. |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:11044&r=lab |
| By: | Cui, Victor; Ding, Waverly W.; Yanadori, Yoshio |
| Abstract: | Given the importance of exploration in a firm’s overall innovation program, scholarshave sought to understand organizational factors that give rise to exploration-oriented innovations. We propose theory and empirical evidence that relates firms’ use of financial incentives to their exploratory innovation performance. We expect that a larger proportion of long-term incentives in R&D employee compensation should be positively associated with the creation of exploratory innovation in a firm. In addition, we propose that a higher level of horizontal pay dispersion is negatively associated with the creation of exploratory innovation. We examine innovations reflected in the patents of a unique six-year, unbalanced panel dataset of 94 high-technology firms in the U.S. Empirical results confirm that firms with high level of horizontal pay dispersion have less exploratory patent innovations. However, surprisingly, firms that pay their R&D employees a higher proportion of long-term financial incentives in total compensation have lower level of exploratory innovation. This implies the possibility that popular longterm incentive plans in high-technology sectors (e.g., stock option plans) have failed to achieve their intended goals in practice. We discuss factors that might moderate the negative impact of long-term incentives on exploratory innovation. |
| Keywords: | Organizational Behavior and Theory |
| Date: | 2011–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:indrel:1911035&r=lab |
| By: | Giovanni Mastrobuoni |
| Abstract: | Deciding when to retire and claim Social Security benefits is one of the most important financial decisions that workers face. Therefore, ensuring that they have easy access to clear and timely information about their benefit options is a key goal for policymakers. In 1995, the Social Security Administration introduced the “Statement,” a record of past earnings and a summary of estimated benefits at selected claiming ages that is designed to help workers plan for retirement. The Statement is now mailed annually to all workers age 25 and over. While the Statement has the potential to be a very valuable tool, little research has been done on its impact. A Gallup survey revealed that individuals who had received a Statement had a significant increase in their understanding of basic Social Security features. The most recent U.S. Government Accountability Office report on the Statement found that 66 percent of workers remember receiving a Statement and 90 percent of these workers say that they remember the amount of estimated Social Security benefits. These findings suggest that the Statement might improve knowledge, but provide no information about whether it changes behavior. Both topics are the subject of this brief. This brief is organized as follows. The first section explains the data and methodology used in the analysis. The second and third sections present the findings on how the Statement impacts knowledge and behavior, respectively. The final section concludes that the Statement does increase knowledge for individuals who were not inclined to seek the information on their own, but the Statement does not appear to change behavior. |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2011-6&r=lab |
| By: | Zuzana Brixiova; Emerta Asaminew |
| Abstract: | Twenty years after the launch of market reforms, productive entrepreneurship and vibrant small and medium-sized enterprises (SMEs) in Ethiopia remain limited, the recent growth acceleration notwithstanding. This paper develops a model of entrepreneurial start ups in an economy with frictions in the product and labor markets and a large informal sector, which characterize the Ethiopian institutional landscape. It then examines several mitigating policies that could improve the suboptimal outcomes. The main findings are that search subsidies would be more effective in encouraging entrepreneurial start ups than wage subsidies, although fewer entrepreneurs may choose to operate in the formal sector than under the latter. Regarding the reform agenda,priority should be put on removing rigidities and establishing property rights. To be effective,both types of subsidies should have a time limit and be phased out with reforms of the business environment, strengthened property rights, and improved labor markets. |
| Keywords: | Model of skills and start ups, labor markets, frictions, informal sector, Africa |
| JEL: | L26 J24 J48 O17 |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2010-1000&r=lab |
| By: | Andros Kourtellos (Department of Economics, University of Cyprus; The Rimini Centre for Economic Analysis (RCEA)); Ioanna Stylianou (Department of Economics, University of Cyprus); Chih Ming Tan (Department of Economics, Clark University; The Rimini Centre for Economic Analysis (RCEA)) |
| Abstract: | Recent work in the growth literature has provided various explanations for transition delays and the great divergence. This paper provides empirical support for one theory of transition delays: initial land inequality. Our analysis is designed to elucidate the channels via which land inequality can affect long-run economic performance. Using a new historical data set for land inequality (Frankema (2009)) we employ duration analysis to investigate whether higher levels of land inequality lead to longer delays in the extension of primary schooling. We then investigate whether such delays affect long-run economic performance via their effect on contemporaneous schooling. Our findings suggest that land inequality is a key determinant of delays in schooling, and that such delays have a significant negative impact on long-run output. |
| Keywords: | growth takeoffs; schooling; duration analysis; model uncertainty; institutions |
| JEL: | C59 O40 Z12 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:22_11&r=lab |
| By: | Maria Bas (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | This paper develops a trade model with heterogeneous firms introducing a fixed technology cost and different types of skilled labor. The main contribution is to explain the effects of trade integration on the extensive margin of technology adoption and its impact on wage inequalities. The originality of this paper is to combine skilled-biased technological change with international trade theory based on heterogeneous firms in a general equilibrium model. Moreover, it provides empirical evidence supporting the main assumption and predictions of the model using plant level panel data of Chilean's manufacturing sector for the period 1990-1999. The theoretical framework offers a possible explanation of the puzzle concerning the increase in the skill premium in developing countries. The H-O-S model predicts a reduction of inequalities after trade reforms in developing countries, while there is widespread empirical evidence of an increase in the skill premium in these countries. In our model the key mechanism is related to the effects of trade policy on the number of new firms upgrading technology and on the skill intensity. Trade liberalization increases export revenues raising the probability that the most productive exporters will upgrade technology. These firms will increase their relative demand of skilled labor, thereby enhancing the inequalities. |
| Keywords: | firm heterogeneity ; trade reforms ; technology adoption ; skill premium ; plant panel data |
| Date: | 2011–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-00586858&r=lab |
| By: | Swenson, David A. |
| Abstract: | This is an evaluation of the statewide total economic value of state-funded higher education in Iowa. The analysis is based on Fiscal Year 2010 final budgeted values for Iowa’s three Board of Regents universities and their teaching hospital, as well as the state’s 15 community colleges. Final budget year data were obtained from the respective state universities’ web sites, from the Board of Regents, and from the Annual Condition of Iowa’s Community Colleges, 2010, report published by the Iowa Department of Education. Additional information on employment was obtained from the Iowa Board of Regents using October 2009 employment levels as the official employment basis for FY ‘10. The evaluation has three distinct components. It first looks at all Board of Regent’s higher education spending, which includes all university institutes, centers, extension activities, and other services. The University of Iowa Hospitals and Clinics (UIHC) are separately evaluated. While it is a teaching hospital, and an important educational institution to the state of Iowa, it is most properly measured primarily as a public hospital for the purposes of this study, not as an educational facility. Last, Iowa’s 15 community colleges are evaluated as a combined, albeit distributed group of higher education providers. |
| Keywords: | economic impact; input output analysis; university |
| Date: | 2011–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:32778&r=lab |
| By: | Natalia Kuznetsova (Saint-Petersburg State University - Saint-Petersburg State University); Irina Peaucelle (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | This article investigates the relationships between the evolution of Russian social psychology and the transformations of the modes of education in Russia. Social psychology is a science born the last century and also a status of the social conscience of people, forged historically on the basis of proper cultural artifacts. In Russia education is mainly the process of human development and, like wherever, it is the institution of knowledge transmission. We show on the case of Russian history that the scientifically proven educational practice can contribute enriching development of social conscience after ideological and economic shocks. |
| Keywords: | analysis of education ; cultural economics ; Russia |
| Date: | 2011–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-00586750&r=lab |
| By: | Rothstein, Jesse; Wozny, Nathan |
| Abstract: | Analysts often examine the black-white test score gap conditional on family income. Typically only a current income measure is available. We argue that the gap conditional on permanent income is of greater interest, and we describe a method for identifying this gap using an auxiliary data set to estimate the relationship between current and permanent income. Current income explains only about half as much of the black-white test score gap as does permanent income, and the remaining gap in math achievement among families with the same permanent income is only 0.2 to 0.3 standard deviations in the CNLSY and ECLS samples. When we add permanent income to the controls used by Fryer and Levitt (2006), the unexplained gap in 3rd grade shrinks below 0.15 SDs, less than half of what is found with their controls. |
| Keywords: | Labor Economics |
| Date: | 2011–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:indrel:1925649&r=lab |
| By: | Seker, Murat |
| Abstract: | There have been significant improvements in traditional trade policies in the past few decades. However, these improvements can only be fully effective when they are complemented with a favorable investment climate. This study focuses on a particular aspect of investment climate, namely labor regulations, and shows how these regulations can be discouraging from exporting. Using firm level data from 26 countries in Eastern Europe and Central Asia region, the paper empirically shows that firms that cannot create new jobs due to stringent labor regulations are less likely to export. Firms that plan to export expand their sizes before they start to export. However the rigidities in labor markets make this adjustment process costly. Higher costs of employment decrease operating profits and lead to a higher productivity threshold level required for entering export markets. As a result, a smaller fraction of firms can afford to export. |
| Keywords: | Exporting; firm heterogeneity; labor regulations; developing countries; Eastern Europe and Central Asia region |
| JEL: | F16 F12 F14 J23 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:29907&r=lab |