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on Labour Economics |
| By: | Fabián Slonimczyk (Higher School of Economics, Moscow); Peter Skott (University of Massachusetts Amherst) |
| Abstract: | This paper analyzes the effects of the minimum wage on wage inequality, relative employment and over-education. We show that over-education can be generated endogenously and that an increase in the minimum wage can raise both total and low-skill employment, and produce a fall in inequality. Evidence from the US suggests that these theoretical results are empirically relevant. The over-education rate has been increasing and our regression analysis suggests that the decrease in the minimum wage may have led to a deterioration of the employment and relative wage of low-skill workers. JEL Categories: J31, J41, J42 |
| Keywords: | Minimum wage, earnings inequality,monopsony, effeciency wage, over-education |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2012-5&r=lab |
| By: | Lia Pacelli; Silvia Pasqua; Claudia Villosio |
| Abstract: | A key issue in increasing women’s participation in productive activities is the possibility of achieving a high work-life balance, both in terms of personal wellbeing and in terms of fair career prospects. The crucial event that challenges any level of work-life balance working women achieve is motherhood. We analyse how motherhood affects women's working career, both in terms of participation and in terms of wages, compared to “non-mothers”. The country chosen for the analysis is Italy, a paradigmatic example of low participation rate, scant childcare, high wage inequality and a cultural environment that considers childcare a predominantly “female affair”. While most of the literature focuses either on wages or on participation, we consider both dimensions in a country where female participation is low, thus contributing to filling the gap in the literature of studies of this kind referred to southern European countries. We confirm that the probability of leaving employment significantly increases for new mothers (career-break job penalty); however, this is mitigated by higher job quality and human capital endowment, and by childcare accessibility. Crucially, the availability of part-time jobs reduces the probability of mothers moving out of the labour force. Furthermore, women not leaving employment after becoming mothers face a decrease in wage levels and growth compared to non-mothers, and there are no signs of this gap closing five years after childbirth (family wage gap). Again, part-time employment plays a crucial role, as the family wage gap penalty emerges only among women working full-time both before and after childbirth; a part-time job over the whole period or even only after childbirth prevents any wage gap from opening up between such working mothers and non-mothers. A decisive fact in this context is that in Italy part-time jobs are (scant but) well paid and protected, unlike most other countries. |
| Keywords: | motherhood, part-time jobs, wage penalty, working career, reconciliation policies |
| JEL: | J13 J31 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wplabo:121&r=lab |
| By: | John Schmitt; Janelle Jones |
| Abstract: | In this paper, we attempt to paint a demographic portrait of long-term hardship in the labor market. We display various measures of long-term hardship by race and gender, education, and age. In addition to the conventional long-term unemployment rate, we also show a broader measure that captures further dimensions of long-term hardship. This additional measure is the Bureau of Labor Statistic’s “U-6” alternative unemployment rate, which adds “discouraged” workers, the “marginally attached,” and workers who are “part-time for economic reasons” to the official unemployment rate. |
| Keywords: | unemployment, long-term unemployment, discouraged workers, marginally attached workers, part time for economic reasons |
| JEL: | J J0 J01 J6 J64 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2012-09&r=lab |
| By: | Buchner Charlotte; Smits Wendy; Velden Rolf van der (METEOR) |
| Abstract: | This paper analyzes the relationship between cognitive skills, measured at age 12, and earnings ofmales and females at the age of 35, conditional on their attained educational level. Employing alarge data set that combines a longitudinal school cohort survey with income data from Dutchnational tax files, our findings show that cognitive skills and specifically math skills arerewarded on the labor market, but more for females than for males. The main factor driving thisresult is that cognitive skills appear to be better predictors of schooling outcomes for malesthan for females. Once males have achieved the higher levels of education, they more often chooseprograms with high earning perspectives like economics and engineering, even if their level ofmath skills is relatively low. |
| Keywords: | labour economics ; |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2012010&r=lab |
| By: | Garrouste, Christelle; Loi, Massimo |
| Abstract: | In a context of intensive and global economic competition, European countries are growingly concerned with the consequences of increasing numbers of young people temporarily or permanently prevented from entering the job market and the difficulties faced by college and university graduates to find adequate employment. This study is concerned with analyzing the speed of transition of students to permanent employment as a proxy of professional stability, and by identifying possible discriminatory effects in selected countries. The research questions are addressed with a Cox survival model and a continuous-time Markov chain model where each individual can transit non-sequentially between the following Markov states: (1) education; (2) inactivity; (3)unemployment; (4) fixed-term/temporary employment; and (5) permanent employment (the 5th state being a non-absorbing steady state). The model is tested using the longitudinal ECHP data in thirteen EU member countries, over the period 1994-2001, controlling for individual and household characteristics and labour market characteristics (e.g., youth employment rate and share of temporary contracts). Overall, we find that the Mediterranean countries are the ones where the transition is the most hazardous both in terms of length and number of steps, but that in other countries, the speed of convergence is not necessarily correlated to the number of spells at intermediate states. Moreover, we find that the gender discrimination that affected most of the countries at the beginning of the 1990s, faded away by the end of the decade, replaced by a positive discrimination in favour of the graduates from vocationally oriented programmes. |
| Keywords: | School-to-work transitions; Permanent occupation; Continuous-time Markov Chains |
| JEL: | J60 J21 J71 J24 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:37167&r=lab |
| By: | Coen Teulings |
| Abstract: | <p>The authors analyze a general search model with on-the-job search and sorting of heterogeneous workers into heterogeneous jobs.</p><p>This model yields a simple relationship between (i) the unemployment rate, (ii) the value of non-market time, and (iii) the max-mean wage differential. The latter measure of wage dispersion is more robust than measures based on the reservation wage, due to the long left tail of the wage distribution. We estimate this wage differential using data on match quality and allow for measurement error. The estimated wage dispersion and mismatch for the US is consistent with an unemployment rate of 5%. Finally, we find that without search frictions, output would be 6.6% higher.</p> |
| JEL: | E24 J62 J63 J64 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:206&r=lab |
| By: | Olivier Bargain (Aix-Marseille School of Economics); Eliane El Badaoui (EconomiX - University Paris 10); Prudence Kwenda (University College Dublin); Eric Strobl (Ecole Polytechnique Paris); Frank Walsh (University College Dublin) |
| Abstract: | We develop a model where workers may enter self-employment or search for jobs as employees and where there is heterogeneity across workers’ managerial ability. Workers with higher skills will manage larger firms while workers with low managerial ability will run smaller firms and will be in self-employment only when they cannot find a salaried job. For these workers self-employment is a secondary/informal form of employment. The Burdett and Mortensen (1998) equilibrium search model is used for illustration as a special case of our more general framework. Empirical evidence from Mexico is provided and demonstrates that firm size wage effects for employees and selfemployed workers are broadly consistent with the model. |
| Keywords: | Self-employment, Managerial ability, Informal sector |
| Date: | 2012–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:wpaper:201207&r=lab |
| By: | Hammitt, James; Liu, Jin-Tan; Tsou, Meng-Wen |
| Abstract: | This paper examines the causal effect of parental schooling on children’s schooling using a large sample of adoptees from Taiwan. Using birth-parents’ education to help control for selective placement of children with adoptive parents, we find that adoptees raised with more highly educated parents have higher educational attainment, measured by years of schooling and probability of university graduation. We also find evidence that adoptive father’s schooling is more important for sons’ and adoptive mother’s schooling is more important for daughters’ educational attainment. These results support the notion that family environment (nurture) is important in determining children’s educational outcomes, independent of genetic endowment. |
| Keywords: | intergenerational transmission, education, schooling, adoption |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:25462&r=lab |
| By: | Pandelis Mitsis |
| Abstract: | Empirical labour market studies on the effects of minimum wages are typically confined to the sector or the worker group directly affected. Also, they often address the cases where the legislative coverage of the minimum wage is universal or almost universal. This study examines the relationship of the total employment with the minimum wage in the special case where only a number of occupations are covered by the relative legislation. A theoretical background is provided by a recently developed search and matching model and empirical evidence is provided by analysing time series data from Cyprus, one of the few countries in the world, and the only country in the European Union, where the minimum wage coverage is limited to only a small number of occupations. The analysis is done by carefully addressing the issues of stationarity, dynamic specification and endogeneity that most of the existing literature ignores. In order to ensure the estimated results are valid, the stability of the series is examined, using unit root tests under exogenous and endogenous structural breaks. Evidence is found of a significant and negative relationship between the minimum wage and total employment, despite the limited coverage of the minimum wage legislation. This suggests the existence of significant spillover effects to the occupations that are not covered by the minimum wage legislation. |
| Keywords: | minimum wages, matching models, time series models. |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:ucy:cypeua:05-2012&r=lab |
| By: | Djavad Salehi-Isfahani; Nadia Belhaj Hassine |
| Abstract: | This paper is an empirical investigation of inequality of education opportunities in the Middle East and North Africa (MENA). We use student scores from tests administered by the international consortium Trends in Mathematics and Science Study (TIMSS) for a number of MENA countries and over time since 1999 to estimate the effect of circumstances children are born into on their academic achievement in science and mathematics. From the variation in inequality of education opportunities across countries and over time we draw lessons on the influence of different education systems or changes in policy on equality of opportunity. We ï¬nd that inequality of opportunities explains a signiï¬cant part of the inequality in educational achievements in most MENA countries, but in a few cases, notably Algeria, its role is small. Family background variables are the most important determinants of inequality in achievement, followed by community characteristics. Inequality of education opportunities are high in several MENA countries, and have either stayed the same or worsened in recent years. The results show that, despite great efforts in past decades to invest in free public education, in most MENA countries are less opportunity equal in educational achievement that European countries, and several are less equal than Latin America countries and the United States. There is plenty of room for policy to further level the playing ï¬eld in education. We discuss how our results shed light on policy choices in education that can contribute to greater equality of education and income in the region. |
| Keywords: | Equality of opportunity; Education; Middle East and North Africa |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:vpi:wpaper:e07-33&r=lab |
| By: | Diego Restuccia; Guillaume Vandenbroucke |
| Abstract: | Between 1940 and 2000 there has been a substantial increase of educational attainment in the United States. What caused this trend? We develop a model of human capital accumulation that features a non-degenerate distribution of educational attainment in the population. We use this framework to assess the quantitative contribution of technological progress and changes in life expectancy in explaining the evolution of educational attainment. The model implies an increase in average years of schooling of 24 percent which is the increase observed in the data. We find that technological variables and in particular skill-biased technical change represent the most important factors in accounting for the increase in educational attainment. The strong response of schooling to changes in income is informative about the potential role of educational policy and the impact of other trends affecting lifetime income. |
| Keywords: | educational attainment, schooling, skill-biased technical progress, human capital |
| JEL: | E1 O3 O4 |
| Date: | 2012–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-446&r=lab |
| By: | Karlan, Dean (Yale University) |
| Abstract: | We use randomized program offers and multiple follow-up survey waves to examine the effects of entrepreneurship training on a broad set of outcomes. Training increases short-run business ownership and employment, but there is no evidence of broader or longer-run effects. We also test whether training mitigates market frictions by estimating heterogeneous treatment effects. Training does not have strong effects (in either relative or absolute terms) on those most likely to face credit or human capital constraints, or labor market discrimination. Training does have a relatively strong short-run effect on business ownership for those unemployed at baseline, but not at other horizons or for other outcomes. |
| JEL: | D04 D14 D22 H32 H43 I38 J21 J24 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:yaleco:95&r=lab |
| By: | Pagel, Beatrice; Wey, Christian |
| Abstract: | We examine how competition in international markets affects a union's choice of wage regime which can be either uniform or discriminatory. Firms are heterogenous with regard to international competition. When unions choose their wage regimes sequentially, a discriminatory outcome becomes more likely when international competition increases. However, for intermediate levels a union may stick with a uniform wage regime even if the rival union adopts a discriminatory regime. When competition is sufficiently intense, both unions revert to the discriminatory regime. Paradoxically only in those latter instances all parties (consumers, workers and firms) may be better off (each in aggregate) if all unions adopt a uniform wage regime. We conclude that union incentives to coordinate their wage regimes should then also become largest. -- |
| Keywords: | Unionization,International Oligopoly,Uniform Wages |
| JEL: | D43 J51 L13 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:44&r=lab |
| By: | Pia Rattenhuber |
| Abstract: | Empirical evidence so far found ambiguous results for the direction of effect of marginal income tax rates on employee remuneration. Based on the GSOEP data from 2002 through 2008 this study analyzes the impact of the marginal tax load on the employee side on the wage rate also allowing average tax rates and employer payroll taxes to play a role. Instrumental variable estimation based on counterfactual tax rates simulated in a highly detailed microsimulation model (STSM) heals the endogeneity problem of the tax variables with regard to wages. Estimations in first differences show that marginal taxes overall have a negative impact on wages. But this effect is not uniform along the wage distribution; while the negative effect of marginal tax rates prevails in the lower part of the distribution, observations beyond the median benefit from higher tax rates at the margin. |
| Keywords: | Marginal tax rates, tax structure, simulated instrumental variables |
| JEL: | H22 H24 C26 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1193&r=lab |
| By: | Sebastián Galiani (Department of Economics, Washington University in St Louis); Guido Porto (Development Research Group, The World Bank) |
| Abstract: | This paper provides new evidence on the impacts of trade reforms on wages. We first introduce a model of trade that combines a non-competitive wage setting mechanism due to unions with a factor abundance hypothesis. The predictions of the model are then econometrically investigated using Argentine data. Instead of achieving identification by comparing industrial wages before and after one episode of trade liberalization, our strategy exploits the recent historical record of policy changes adopted by Argentina: from significant protection in the early 1970s, to the first episode of liberalization during the late 1970s, then back to a slowdown of reforms during the 1980s, and finally to the second episode of liberalization in the 1990s. These swings in trade policy represent broken trends in trade reforms that we can compare with observed trends in wages and wage inequality. We use unusual historical data sets of trends in tariffs, wages, and wage inequality to examine the structure of wages in Argentina and to explore how it is affected by tariff reforms. We find that i) trade liberalization, ceteris paribus, reduces wages; ii) industry tariffs reduce the industry skill premium; iii) conditional on the structure of tariffs at the industry level, the average tariff in the economy is positively associated with the aggregate skill premium. These findings suggest that the observed trends in wage inequality in Latin America can be reconciled with the Stolper-Samuelson predictions in a model with unions. |
| Keywords: | Trade liberalization, Stolper-Samuelson, Wage inequality, non-competitive wages and unions. |
| JEL: | F14 F16 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:dls:wpaper:0124&r=lab |
| By: | Michela Braga (Facolta' di Scienze Politiche (DEAS), Universita' degli Studi di Milano); Daniele Checchi (Universita'degli Studi di Milano, Facolta'di Scienze); Elena Meschi (Institute of Education ,Room 405, University of London) |
| Abstract: | In this paper we analyse the effects of changes in the institutional design of the educational system on school attainment. In particular, we test whether alternative reforms have increased the average educational attainment of the population and whether various deciles of the education distribution have been differentially affected. We constructed a dataset of relevant reforms occurred at the national level over the last century, and match individual information to the most likely set-up faced when individual educational choices were undertaken. Thus our identification strategy relies on temporal and geographical variations in the institutional arrangements, controlling for time/country fixed effects, as well as for confounding factors. We also explore who are the individual most likely affected by the reforms. We also group different reforms in order to ascertain the prevailing attitudes of policy makers, showing that reforms can belong to either “inclusive” or “selective” in their nature. Finally we correlate these attitudes to political coalitions prevailing in parliament, finding support to the idea that left wing parties support reforms that are inclusive in nature, while right wing parties prefer selective ones. |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:aia:ginidp:dp22&r=lab |
| By: | Bauchmüller, Robert (UNU-MERIT/MGSoG, University of Maastricht) |
| Abstract: | Early Childhood Education (ECE) programmes are presumed to have positive effects in particular for children who are at risk of failing during their school careers. However, there is disagreement on whether such programmes should be more teacher and curriculum based or rather centred on the individual child. In this paper I study child-centred ECE programmes that are used at preschools in the Dutch province of Limburg, which is in fact mainly a study of 'Speelplezier', a new child-centred programme which has recently been certified as being 'in theory' effective in raising children's school readiness, but which has not yet been evaluated. I use a rich dataset covering the first three grades at elementary schools in the Southern part of Limburg for the year 2008/09 to evaluate the impact of child-centred ECE versus alternative preschool options. I estimate ordinary least squares effects of attending a preschool applying child-centred ECE onto test scores from the beginning of elementary schooling, under the control of alternative childcare experiences and various child and family related characteristics and re-weighing observations of the studied sample to represent population averages. I argue that access to a preschool kindergarten applying child-centred ECE is to some degree exogenously determined. In a further effort to identify causal effects, I also use propensity score matching and instrumental variable estimation techniques. I find no evidence of the expected short-term effects on language or on cognitive development who attended a child-centred ECE preschool as compared to preschools applying other or no early education programmes. In order to reach measurable benefits, the child-centred methods and their applications need to be intensified and extended to all disadvantaged groups of children. Yet I find some evidence that children of low educated parents who have been placed in a child-centred ECE preschool tend to have higher language and cognitive outcomes. |
| Keywords: | early childhood education (ECE), child-centred programme, cognitive and language development, school readiness, distance to preschool |
| JEL: | I21 J13 J24 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2012016&r=lab |
| By: | Shiyuan Pan (School of Economics and Center for Research of Private Economy, Zhejiang University); Tailong Li (School of Economics & Management, Zhejiang Sci-Tech University); Heng-fu Zou (Central University of Finance and Economics, CEMA; Wuhan University IAS; Peking University; China Development Bank) |
| Abstract: | We develop a directed-technological-change model to address the issue of the optimal patent system and investigate how the optimal patent system influences the direction of technological change and the inequality of wage, where patents are categorized as skill- and labor-complementary. The major results are: (i) Finite patent breadth maximizes the social welfare level; (ii) Optimal patent breadth increases with the amount of skilled (unskilled) workers; (iii) Optimal patent protection is skill-biased, because an increase in the amount of skilled workers increases the dynamic benefits of the protection for skill-complementary patents via the economy of scale of skill-complementary technology; (iv) Skill-biased patent protection skews inventions towards skills, thus increasing wage inequality. |
| Keywords: | Patent Breadth, Skill-Biased Patent Protection, Skill-Biased Technological Change, Wage Inequality, Economic Growth |
| JEL: | O31 O34 J31 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:cuf:wpaper:537&r=lab |
| By: | Shiyuan Pan (School of Economics and Center for Research of Private Economy, Zhejiang University); Tailong Li (School of Economics & Management, Zhejiang Sci-Tech University); Ying Zhou (School of Economics, Zhejiang University); Heng-fu Zou (Central University of Finance and Economics, CEMA; Wuhan University IAS; Peking University; China Development Bank) |
| Abstract: | We develop a directed-technological-change model to address the issue of the optimal patent system and investigate how the optimal patent system influences the direction of technological change and the inequality of wage, where patents are categorized as skill- and labor-complementary. The major results are: (i) Finite patent breadth maximizes the social welfare level; (ii) Optimal patent breadth increases with the amount of skilled (unskilled) workers; (iii) Optimal patent protection is skill-biased, because an increase in the amount of skilled workers increases the dynamic benefits of the protection for skill-complementary patents via the economy of scale of skill-complementary technology; (iv) Skill-biased patent protection skews inventions towards skills, thus increasing wage inequality; And, (v) international trade leads to strong protection for skill-complementary patents, hence increasing skill premia. |
| Keywords: | Patent Breadth, Skill-Biased Patent Protection, Skill-Biased Technological Change, Wage Inequality, Growth |
| JEL: | O31 O34 J31 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:cuf:wpaper:538&r=lab |
| By: | Garrouste, Christelle |
| Abstract: | The present report presents the methodological framework applied to define the benchmark on education for employability to be proposed to European Council in 2012. While the three first sections present the proposed indicator, the fourth section discusses the sensitivity of that indicator to a change in data source and its correlation with counterfactuals. Moreover, section 5 presents the forecasting approach applied to define the target level at the horizon 2020. Section 6 presents the results of the deterministic and stochastic forecasting models and section 7 concludes. |
| Keywords: | European Benchmark; Employability; Graduates; Forecasting; Simulations |
| JEL: | A22 A23 E27 I20 J21 C15 A21 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:37153&r=lab |
| By: | Grip Andries de; Dupuy Arnaud; Jolles Jelle; Boxtel Martin van (METEOR) |
| Abstract: | This paper uses longitudinal test data to analyze the relation between retirement and cognitivedevelopment. Controlling for individual fixed effects, we find that retirees face greater declinesin information processing speed than those who remain employed. However, remarkably, theircognitive flexibility declines less, an effect that appears to be persistent 6 years afterretirement. Both effects of retirement on cognitive development are comparable to those of a fiveto six-year age difference. They cannot be explained by (1) a relief effect after being employedin low-skilled jobs, (2) mood swings or (3) changes in lifestyle. Controlling for changes in bloodpressure, which are negatively related to cognitive flexibility, we still find lower declines incognitive flexibility for retirees. Since the decline in information processing speed afterretirement holds particularly for the low educated, activating these persons after retirementcould lower the social costs of an aging society. |
| Keywords: | labour economics ; |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2012009&r=lab |
| By: | Javier Lindenboim; Damián Kennedy; Juan M. Graña |
| Abstract: | Economic growth strategies of developing countries have focused in the last decades on expanding their exports. In that scheme, wage compression seems necessary in order to compensate the observed slow productivity pace achieving, therefore, “competitiveness”. The core of this discussion is, undoubtedly, how the national product is appropriated through wages and surplus, i.e. the factorial income distribution. From that viewpoint, this paper discusses the long-term impoverishment of Argentinean workers through two key aspects of the economic process: on one hand, the way in which labour force is allocated, by analysing the relationship between real wage and productivity. On the other, how income is used in the acquisition of consumer goods and capital formation. In order to fully comprehend those trends, this paper recourses to an international comparison with two types of countries: the developed ones (United States of America, France and Japan) and the largest Latin American economies (Brazil and Mexico). As these processes take place in the long run, this paper’s analysis period will start from the 1950s. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:unc:dispap:203&r=lab |