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on Labour Economics |
| By: | Del Carpio, Ximena; Nguyen, Ha; Wang, Liang Choon |
| Abstract: | Using survey data from the Indonesian manufacturing industry, this paper investigates the impact of minimum wage on employment and wages offered by Indonesian manufacturing firms from 1993 to 2006. It shows that the estimated effects of minimum wage on employment are positive within a province (i.e., with province fixed effects), but negative within a firm (i.e., with firm fixed effects), indicating the importance of using firm panel data to reduce the endogeneity bias in estimates. It finds significant heterogeneous effects of minimum-wage changes on employment. The employment effects of minimum wages are significant and negative among small firms and less educated workers, but not among large firms and workers with high school education and above. The negative employment impact is more severe for non-production workers than for production workers. The analysis also shows that the minimum wage disproportionally affects women: most of the non-production job losses are experienced by female workers. Lastly, the paper finds that the minimum wage is more correlated with the average wage of small firms than that of large firms, suggesting that minimum wages are more binding in small firms. |
| Keywords: | Labor Markets,Labor Policies,Microfinance,Corporate Social Responsibility,Tertiary Education |
| Date: | 2012–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6147&r=lab |
| By: | Groh, Matthew; Krishnan, Nandini; McKenzie, David; Vishwanath, Tara |
| Abstract: | Throughout the Middle East, unemployment rates of educated youth have been persistently high and female labor force participation, low. This paper studies the impact of a randomized experiment in Jordan designed to assist female community college graduates find employment. One randomly chosen group of graduates was given a voucher that would pay an employer a subsidy equivalent to the minimum wage for up to 6 months if they hired the graduate; a second group was invited to attend 45 hours of employability skills training designed to provide them with the soft skills employers say graduates often lack; a third group was offered both interventions; and the fourth group forms the control group. The analysis finds that the job voucher led to a 40 percentage point increase in employment in the short-run, but that most of this employment is not formal, and that the average effect is much smaller and no longer statistically significant 4 months after the voucher period has ended. The voucher does appear to have persistent impacts outside the capital, where it almost doubles the employment rate of graduates, but this appears likely to largely reflect displacement effects. Soft-skills training has no average impact on employment, although again there is a weakly significant impact outside the capital. The authors elicit the expectations of academics and development professionals to demonstrate that these findings are novel and unexpected. The results suggest that wage subsidies can help increase employment in the short term, but are not a panacea for the problems of high urban female youth unemployment. |
| Keywords: | Tertiary Education,Labor Markets,Labor Policies,Primary Education,Access to Finance |
| Date: | 2012–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6141&r=lab |
| By: | Fredrik Carlsen; Kare Johansen; Lasse Sigbjorn Stambol |
| Abstract: | European labour markets display large variations in unemployment rates across regions as well as between education groups. Insufficient labour force mobility is widely considered the main culprit behind regional unemployment disparities, but few studies have examined the link between interregional mobility and variation in unemployment rates across education groups. This paper employs administrative registers covering the entire Norwegian population to compute annual time series from 1994 to 2004 of migration flows and regional labour market conditions by educational level for 90 travel-to-work areas. We find that geographical disparities in unemployment rates are decreasing in education level, whereas the response of migration to fluctuations in regional unemployment rates is increasing in education level. Our results suggest that low regional mobility of low educated workers contributes to high unemployment disparities across regions and education groups as well as high overall unemployment. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa10p693&r=lab |
| By: | Christian Siegel |
| Abstract: | Increases in female employment and falling fertility rates have often been linked to rising female wages. However, over the last 30 years the US total fertility rate has been fairly stable while female wages have continued to grow. Over the same period, we observe that women's hours spent on housework have declined, but men's have increased. I propose a model with a shrinking gender wage gap that can capture these trends. While rising relative wages tend to increase women's labor supply and, due to higher opportunity cost, lower fertility, they also lead to a partial reallocation of home production from women to men, and a higher use of labor-saving inputs into home production. I find that both these trends are important in understanding why fertility did not decline to even lower levels. As the gender wage gap declines, a father's time at home becomes more important for raising children. When the disutilities from working in the market and at home are imperfect substitutes, fertility can stabilize, after an initial decline, in times of increasing female market labor. That parents can acquire more market inputs into child care is what I find important in matching the timing of fertility. In a mode l extension, I show that the results are robust to intrahousehold bargaining. |
| Keywords: | Fertility, female labor supply, household production, intrahousehold allocations |
| JEL: | D13 E24 J13 J22 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1156&r=lab |
| By: | Petri Böckerman; Mika Haapanen |
| Abstract: | In the 1990s polytechnic education reform took place in Finland, which gradually expanded higher education to all Finnish regions; the polytechnics constituted a new non-university sector in higher education. This reform is used to study the causal effect of education on the inter-regional migration. First we consider the impact of the reform on the migration of graduating high school students, followed by an investigation of school-to-work migration. Instrumental variables estimators are implemented that exploit the exogenous variation in the local supply of polytechnic education. Large panel micro-data are used. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa10p994&r=lab |
| By: | Winters, John V. (University of Cincinnati) |
| Abstract: | Areas surrounding colleges and universities are often able to build their local stock of human capital by retaining recent graduates in the area after they finish their education. This paper classifies 41 U.S. metropolitan areas as "college towns" and investigates differences in employment outcomes between college graduates who stay in the college town where they obtained their degree and college graduates who leave after completing their degree. We find that college town stayers experience less favorable employment outcomes along multiple dimensions. On average, stayers earn lower annual and hourly wages and work in less educated occupations. |
| Keywords: | migration, human capital, education, college towns, wages |
| JEL: | I20 J24 R23 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6723&r=lab |
| By: | Christian N. Brinch, Erik Hernæs and Zhiyang Jia (Statistics Norway) |
| Abstract: | We study two recent changes in incentives to work facing 67-69 year old workers in Norway: an earnings test reform which increases current earnings from work, and a pension system maturation which removes pension accrual from work. Within a difference-in-differences framework, we exploit these changes to investigate the effects of economic incentives. We find the earnings test reform has large effects, while the pension system maturation has no significant effects. The findings confirm that 67-69 year olds can adjust their work efforts to economic incentives, but do so only to thoses related to current income and not to future pensions. |
| Keywords: | labor supply; retirement earnings test; social security wealth; difference-indifferences |
| JEL: | J14 H55 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:698&r=lab |
| By: | Jacob Wong (School of Economics, University of Adelaide) |
| Abstract: | This paper presents a dynamic model of structural unemployment and occupational choice in which an economy is subjected to aggregate reallocation shocks. Reallocation shocks, which change the relative labour productivity across occupations, drive variation in the distribution of workers across occupations. The wage paid to workers in a given occupation depends on its labour productivity and the number of workers employed in that occupation. Workers who wish to switch occupations in order to obtain higher wages face a fixed cost to retrain and, in addition, it is more costly to switch to occupations requiring vastly different skills relative to those of the worker's current occupation. Thus workers may prefer to remain unemployed in occupations suering through relatively low productivity states. Between the late-1970s and the mid-2000s the U.S. economy featured an episode during which occupational mobility rose along with an increase in wage inequality both in the top and bottom halves of the wage distribution. This was followed by an episode during which occupational mobility fell, while a rise in inequality in the top half of the wage distribution was accompanied by a fall in inequality in the bottom half. The model can produce episodes with properties similar to that of the U.S. experience and thus offers a theory of why these episodes occur. |
| Keywords: | Occupational Mobility, Wage Inequality |
| JEL: | E24 E32 J24 J31 J62 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:adl:wpaper:2012-04&r=lab |
| By: | Tiago Freire |
| Abstract: | Over the 40 years the pattern of migration has changed significantly with an increase in the share of female migrants, and especially low skill female migrants. These low skilled women migrants often work in the domestic service sector, a close substitute for household work. This paper analyzes how low skill rural-urban migration in Brazil from 1986 to 2000 lead to an increase in the labor supply of high skill women living in urban areas. In our model we show how large inflows of low skill women migrants decrease the relative price of domestic services. The largest beneficiaries of this trend are high skill women, who respond to the decrease in the cost of domestic services by joining the labor force and working more hours. We use Census data from Brazil from 1991 and 2000 to test this hypothesis. Using weather shocks in rural areas, and historical patterns of migrations, we are able to build an exogenous migration shock by skill to cities. Using this as an instrument for the price of domestic services and local wages we find that a 10% decrease in the wage of domestic workers increases the labor participation of high skill women by 3%. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa10p160&r=lab |
| By: | Frédéric Gavrel (UFR de sciences économiques et de gestion, Université de Caen Basse-Normandie, CREM-CNRS, UMR 6211); Jean-Pascal Guironnet (UFR de sciences économiques et de gestion, Université de Caen Basse-Normandie, CREM-CNRS, UMR 6211); Isabelle Lebon (UFR de sciences économiques et de gestion, Université de Caen Basse-Normandie, CREM-CNRS, UMR 6211) |
| Abstract: | In this paper, training, which is seen as a way to reduce the mismatch between workers and jobs, takes place on the job. We show that a general rise in unemployment lowers the probability of on-the-job training by reducing the mismatch. We then close the model by assuming free-entry and study its social efficiency properties. Private educational choices are socially optimal, but job creation is too high under the Hosios condition. Using French data on regional unemployment, we estimate a probit model of the training decision and find that on-the-job training is significantly less probable in regions with high unemployment. |
| Keywords: | On-the-job training; Mismatch, Equilibrium unemployment, Market efficiency |
| JEL: | H21 J24 J64 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cremwp:201224&r=lab |
| By: | Alice Tescari (University of Verona); Andrea Vaona (Department of Economics (University of Verona)) |
| Abstract: | This paper explores aggregate profitability in Italy from 1994 to 2005 in its connection with structural change and gender employment disparities. The aggregate profit rate declined, but the profit share did not so. Male variables tend to have more weight than female ones in explaining aggregate outcomes. Structural change had a major role too, as the economy specialized in sectors with falling real wages and wage shares, the financial sector especially. Further falls in the wage share and widening wage gaps may not guarantee a rise in profitability. |
| Keywords: | decomposition, earnings differentials, economics of gender, feminization of the labor force, gender wage gap |
| JEL: | B50 E25 J16 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:ver:wpaper:22/2012&r=lab |
| By: | Bartling, Björn; Fehr, Ernst; Schmidt, Klaus M. |
| Abstract: | In Bartling, Fehr and Schmidt (2012) we show theoretically and experimentally that it is optimal to grant discretion to workers if (i) discretion increases productivity, (ii) workers can be screened by past performance, (iii) some workers reciprocate high wages with high effort and (iv) employers pay high wages leaving rents to their workers. In this paper we show experimentally that the productivity increase due to discretion is not only sufficient but also necessary for the optimality of granting discretion to workers. Furthermore, we report representative survey evidence on the impact of discretion on workers’ welfare, confirming that workers earn rents. |
| Keywords: | high-performance work systems; wages; discretion; gift exchange; job satisfaction |
| JEL: | M5 J3 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:383&r=lab |
| By: | Stefan Groot |
| Abstract: | Many OECD countries have experienced growing wage inequality since the 1980s. This trend is generally explained by increasing relative demand for skilled labor due to skill biased technological progress and, to some extent, globalization. By using micro data from Statistics Netherlands, this paper examines trends in Dutch (real pre-tax) wage inequality between 2000 and 2005, thus extending the previous literature by covering recent years. We find that inequality, after correcting for observed worker characteristics, decreased somewhat at the lower half of the wage distribution, while increasing slightly at most of the upper half, and relatively strong at the highest few percentiles. Wage growth was also higher for occupation categories with a higher initial wage level, and for workers in the Randstad agglomerations. It is shown that changes in the wage structure are to a large extent explained by prices and quantities of worker characteristics, while changes in the residual wage distribution play a role at the highest percentiles. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa10p1526&r=lab |
| By: | Patricia Suárez; Matías Mayor |
| Abstract: | The paper uses the theoretical framework of the Spatial Economics to analyze (1) the regional unemployment disparities in Spain for males and females in three different age categories and for economic sector. We use administrative regional aggregate data to explore the distribution of the unemployed in 8109 Spanish districts (using monthly 2005-2009 data). Furthermore (2), we connect this distribution with the efficient (or inefficient) location of Employment Offices in Spain. Due to existence of asymmetric information between job seekers and firms we think that an Employment Offices increase the employment opportunities therefore reduce local unemployment. We estimate a spatial panel model in order to explain the unemployment disparities including regional fixed effect and the distance to the closest Employment Office. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa10p958&r=lab |
| By: | Arabsheibani, Reza (Swansea University); Staneva, Anita V. (Swansea University) |
| Abstract: | Finding an instrument that is orthogonal to the disturbance term in the wage equation has been a topic of great deal of debate. Recently, Chesson et al. (2006) proposed that higher discount rates are significantly associated with a range of sexual behaviours, including having sex before age of 16 years. Following their paper, we use unprotected sexual behaviour and earlier age of sexual intercourse as alternative instrumental variables to account for endogeneity in schooling. The Bound et al. (1995) F-test indicates that our instruments are strongly correlated with schooling. We fail to reject the test of over-identifying restrictions, which demonstrates that the proposed instruments are valid and not correlated with the current earnings. In line with previous studies, our results suggest that the IV estimates of the returns to schooling are higher than the OLS estimates. In addition to the conditional mean, the proposed instruments are applied over the wage distribution using Chernozhukov and Hansen (2008) instrumental variable quantile approach. |
| Keywords: | return to education, risky sexual behaviour, instrumental variables |
| JEL: | I20 I22 J30 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6726&r=lab |
| By: | Diaz-Serrano, Luis (Universitat Rovira i Virgili); Meix-Llop, Enric (Universitat Rovira i Virgili) |
| Abstract: | The low quality of education is a persistent problem in many developed countries. Parallel to in the last decades exists a tendency towards decentralization in many developed and developing countries. Using micro data from the Programme for International Student Assessment (PISA) referred to 22 countries, we test whether there exists an impact of fiscal and political decentralization on student performance in the areas of mathematics, reading skills and science. We observe that fiscal decentralization exerts an unequivocal positive effect on students' outcomes in all areas, while the effect of political decentralization is more ambiguous. On the one hand, the capacity of the subnational governments to rule on its region has a positive effect on students' performance in mathematics. On the other hand, the capacity to influence the country as a whole has a negative impact on mathematics achievement. As a general result, we observe that students' performance in Mathematics is more sensible to these exogenous variations than in Sciences and reading skills. |
| Keywords: | school outcomes, PISA, fiscal decentralization, political decentralization |
| JEL: | H11 H77 I21 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6722&r=lab |
| By: | Mattoo, Aaditya; Neagu, Ileana Cristina; Ozden, Caglar |
| Abstract: | The initial occupational placements of male immigrants in the United States labor market vary significantly by country of origin even when education and other individual factors are taken into account. Does the heterogeneity persist over time? Using data from the 1980, 1990, and 2000 Censuses, this paper finds that the performance of migrants from countries with lower initial occupational placement levels improves at a higher rate compared with that of migrants originating from countries with higher initial performance levels. Nevertheless, the magnitude of convergence suggests that full catch-up is unlikely. The impact of country specific attributes on the immigrants'occupational placement occurs mainly through their effect on initial performance and they lose significance when initial occupational levels are controlled for in the estimation. |
| Keywords: | Population Policies,International Migration,Voluntary and Involuntary Resettlement,Human Migrations&Resettlements,Labor Markets |
| Date: | 2012–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6140&r=lab |
| By: | Vincent VANDENBERGHE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES), Economics School of Louvain (ESL),) |
| Abstract: | Are employers willing to employ more older individuals, in particular older women? Higher employment among the older segments of the population will only materialise if firms are willing to employ them. Although several economists have started considering the demand side of the labour market for older individuals, few have considered its gender dimension properly; despite evidence that lifting the overall senior employment rate in the EU requires significantly raising that of women older than 50. In this paper, we posit that labour demand and employability depend to a large extent on how the age/gender composition of the workforce affects firm’s profits. Using unique firm-level panel data we produce robust evidence on the causal effect of age/gender on productivity (value added per worker), total labour costs and gross profits. We take advantage of the panel structure of data and resort to first differences to deal with a potential time-invariant heterogeneity bias. Moreover, inspired by recent developments in the production function estimation literature, we also address the risk of simultaneity bias (endogeneity of firm’s age-gender mix choices in the short run) by combining first differences with i) the structural approach suggested by Ackerberg, Caves & Frazer (2006), ii) alongside more traditional IV-GMM methods (Blundell & Bond, 1998) where lagged values of labour inputs are used as instruments. Results suggest no negative impact of rising shares of older men on firm’s gross profits, but a large negative effect of larger shares of older women. Another interesting result is that the vast and highly feminized services industry does not seem to offer working conditions that mitigate older women’s productivity and employability disadvantage, on the contrary. This is not good news for older women’s employability and calls for policy interventions in the Belgian private economy aimed at combating women’s decline of productivity with age and/or better adapting labour costs to age-gender productivity profiles. |
| Keywords: | ageing workforce, gender, productivity, profitability, linked employer-employee data, endogeneity and simultaneity bias |
| JEL: | J11 J14 J21 |
| Date: | 2012–07–18 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2012016&r=lab |
| By: | Rock Lefebvre (Certified General Accountants Association of Canada); Elena Simonova (Certified General Accountants Association of Canada); Liang Wang (Certified General Accountants Association of Canada) |
| Abstract: | The aging population which is expected to change Canada’s demographic and a shift in modern educational preferences that often leaves skilled trades as an overlooked career option may increase the likelihood of labour shortages in skilled trades in Canada. The certainty of the existence of labour shortages is of a particular importance as an incorrect assessment may lead to a sub-optimal distribution of human capital and other resources. This paper aims to critically examine the presence of labour shortages in five prevailing skilled trades in five Canadian provinces over the past decade. The results of the analysis show that labour shortages are difficult to observe and measure directly, whereas the analysis is seriously limited by the availability of information on unemployment at the occupational level. Where sufficient data exists, labour shortages occurred rather sporadically and did not persist for more than one year at a time over the past decade. The age structure of skilled trades and labour mobility barriers are not likely to seriously influence labour shortages in trades. In turn, educational barriers may exist in skilled trades where growth in completion rates of apprenticeship training lags the growth in the number of registered apprentices. |
| Keywords: | skilled trades, labour shortages, carpenters, automotive service technicians, truck and bus mechanics, welders, machine operators, electricians, apprenticeship, telecommunications |
| JEL: | J44 J11 L60 M53 R10 C23 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:cga:wpaper:120702&r=lab |
| By: | Melchor Fernandez; Yolanda Pena-Boquete |
| Abstract: | Although the degree of gender wage discrimination has been estimated many times, its effects on the economy have not been too much studied, neither theoretically nor empirically. Consequently, in this paper we attempt to cover the existent void in this topic. First, we establish a theoretically framework of the macroeconomic consequences of gender discrimination and second, we attempt to check these results empirically. The existence of a degree of discrimination means that there is a wage differential in which employer prefer to hire less productive workers instead of discriminated workers. Thus, on one hand, the employment level of discriminated workers would be lower than the neoclassic equilibrium. On the other hand, the cost of producing a unit of product would be higher than the cost of producing without discrimination. As a result, both the product by worker (productivity) and the female employment rate (discriminated group) would be lower. If we aggregate these microeconomic effects we should obtain macroeconomic effects in both productivity and employment. In order to check these effects of discrimination we analyse the correlation in the growth of discrimination and the variables possibly affected: productivity and employment. Using data of gender discrimination for Spanish regions we found a negative and significant relationship between discrimination and productivity. Effects on employment are more difficult to see since the growth of the degree of gender wage discrimination causes a change in the allocation of resources. Thus, we find the effect in the female employment rate relative to men and we do not find it in the female employment rate. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa10p1066&r=lab |
| By: | Alfred Garloff; Carsten Pohl; Norbert Schanne |
| Abstract: | In this paper we analyze the consequences of small labour-market entry cohorts on (un)employment in Western Germany. From a theoretical point of view, small entry cohorts may on the one hand reduce unemployment due to “inverse cohort crowding” or on the other hand increase unemployment if companies reduce jobs disproportionately. Empirically, several studies on cohort crowding for the USA also provide ambiguous evidence regarding the direction of the effect: labour markets may become tighter or less tight with the size of the entering cohort. The European labour market reaction on demographic changes is even less clear and the German case is especially interesting: Given the sharp decline in birth rates since the beginning of the 1970s and the relatively rigid labour market constitution, the German reaction is likely to differ from the US experience. In order to study the effect of cohort size on (un)employment, we use regional population data from the Federal Statistical Office of Germany and social security and unemployment data from the Federal Employment Agency and the IAB for the years 1978 to 2008. We account for the likely endogeneity of cohort size due to migration of the (young) workforce, using lagged birth rates as instruments. In addition, we allow for spatial autocorrelation across western German regions. Our results are good news for the (Western) German labour market: small entry cohorts are indeed likely to decrease the overall unemployment rate and thus to improve the situation of job-seekers, given the stability of the historical effect. Accordingly, the employment rate will, according to our results, increase. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa10p658&r=lab |
| By: | Bargain, Olivier (University of Aix-Marseille II); Orsini, Kristian (K.U.Leuven); Peichl, Andreas (IZA) |
| Abstract: | We suggest the first large-scale international comparison of labor supply elasticities for 17 European countries and the US, separately by gender and marital status. Measurement differences are netted out by using a harmonized empirical approach and comparable data sources. We find that own-wage elasticities are relatively small and much more uniform across countries than previously thought. Differences exist nonetheless and are found not to arise from different tax-benefit systems or demographic compositions across countries. Thus, we cannot reject that countries have genuinely different preferences. Three other results, important for welfare analysis, are consistent over all countries: the extensive (participation) margin dominates the intensive (hours) margin; for singles, this leads to larger labor supply responses in low-income groups; income elasticities are extremely small everywhere. Finally, the results for cross-wage elasticities in couples are opposed between regions, consistent with complementarity in spouses' leisure in the US versus substitution in spouses' household production in Europe. |
| Keywords: | household labor supply, elasticity, taxation, Europe, US |
| JEL: | C25 C52 H31 J22 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6735&r=lab |
| By: | Belzil, Christian (Ecole Polytechnique, Paris); Hansen, Jörgen (Concordia University) |
| Abstract: | We show that within a life-cycle skill accumulation model, IV identification of the return to schooling parameter is either achieved at any point in the life-cycle where the level of skills accumulated beyond school completion for compliers is exactly equal to the post-schooling skill level of non-compliers (the Skill-Equality condition), or when the skill-ratio is equal to the relative population proportions of non-compliers over compliers (the Weighted-Skill-Ratio condition). As a consequence, it is generally impossible to tie IV identification to any specific phase of the life-cycle and there cannot exist a generally acceptable "optimal" age to sample earnings for IV estimation. The practical example developed in the paper shows precisely how an instrument may fulfill identification at a multiplicity of ages, and how different instruments may achieve identification with specific sampling designs and fail to do so with others. Within a life-cycle skill accumulation data generating process, identification of the return to schooling requires not only implicit assumptions about the underlying model, but also assumptions about the validity of the specific age sampling distribution implied by the data. |
| Keywords: | returns to schooling, instrumental variable methods, dynamic discrete choice, dynamic programming |
| JEL: | B4 C1 C3 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6724&r=lab |
| By: | Eriksen, Tine Louise Mundbjerg (Aarhus University); Nielsen, Helena Skyt (Aarhus University); Simonsen, Marianne (Aarhus University) |
| Abstract: | Bullying is a widespread social phenomenon. We show that both children who are being bullied and children who bully suffer in terms of long-term outcomes. We rely on rich survey and register-based data for children born in a region of Denmark during 1990-1992, which allows us to carefully consider possible confounders. Evidence from a number of identification strategies suggests that the relationship is causal. Besides the direct effect bullying may have on the child in the longer run, we show that an additional mechanism can arise through teacher perceptions of short-run abilities and behavior. |
| Keywords: | victimization, perpetrator, crime, education, health, mental health |
| JEL: | L14 I21 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6718&r=lab |
| By: | Nordman, Christophe Jalil (IRD, DIAL, Paris); Wolff, François-Charles (University of Nantes) |
| Abstract: | In this paper, we consider a model of on-the-job learning where workers learn informally by watching and imitating colleagues. We estimate the rate of knowledge diffusion inside the firm using two matched worker-firm data sets from Morocco and Senegal. We rely on non-linear least squares to estimate the structural parameters of the informal learning model and account for firm heterogeneity using firm factors derived from a principal component analysis. We find that the rate of knowledge diffusion is around 7 percent in Morocco and Senegal, but part of the learning-by-watching returns stems from firm heterogeneity. Informal training significantly affects the shape of returns to tenure in these two countries. Finally, we estimate an extended model with both learning-by-watching and learning-by-doing and find significant benefits from imitating colleagues in Morocco. |
| Keywords: | earnings functions, informal training, learning-by-watching, learning-by-doing, returns to tenure, Morocco, Senegal |
| JEL: | J24 J31 O12 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6728&r=lab |
| By: | Cheti Nicoletti and Birgitta Rabe |
| Abstract: | We analyze the effect of school expenditure on children's test scores at age 16 by means of an education production model. By using unique register data of English pupils, we exploit the availability of test scores across time, subjects and siblings to control for various sources of input omission and measurement error bias. We overcome one of the main criticisms against the value-added model by proposing a novel method to control for the endogeneity of the lagged test. We find evidence of a positive but small effect of per pupil expenditure on test scores. |
| Keywords: | Education production function, cognitive achievements, child development |
| JEL: | I22 I24 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:12/19&r=lab |
| By: | Norbert Schanne |
| Abstract: | The development of employment and unemployment in regional labour markets is known to spatially interdependent. Global Vector-Autoregressive (GVAR) models generate a link between the local and the surrounding labour markets and thus might be useful when analysing and forecasting employment and unemployment even if they are non-stationary or co-trending. Furthermore, GVARs have the advantage to allow for both strong cross-sectional dependence on ``leader regions' and weak cross-sectional, spatial dependence. For the recent and further development of labour markets the economic situation (described e.g. by business-cycle indicators), politics and environmental impacts (e.g. climate) may be relevant. Information on these impacts can be integrated in addition to the joint development of employment and unemployment and the spatial link in a way that allows on the one hand to carry out economic plausibility checks easily and on the other hand to directly receive measures regarding the statistical properties and the precision of the forecasts. Then, the forecasting accuracy is demonstrated for German regional labour-market data in simulated forecasts at different horizons and for several periods. Business-cycle indicators seem to have no information regarding labour-market prediction, climate indicators little. In contrast, including information about labour-market policies and vacancies, and accounting for the lagged and contemporaneous spatial dependence can improve the forecasts relative to a simple bivariate model. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa10p1044&r=lab |
| By: | Nicoletti, Cheti; Rabe, Birgitta |
| Abstract: | We analyze the effect of school expenditure on childrens test scores at age 16 by means of an education production model. By using unique register data of English pupils, we exploit the availability of test scores across time, subjects and siblings to control for various sources of input omission and measurement error bias. We overcome one of the main criticisms against the value-added model by proposing a novel method to control for the endogeneity of the lagged test. We find evidence of a positive but small effect of per pupil expenditure on test scores. |
| Date: | 2012–07–23 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2012-13&r=lab |
| By: | Charpe, Matthieu; Kühn, Stefan |
| Abstract: | This paper depicts the negative impact of a falling labour share caused by reduced bargaining power of workers on aggregate demand and employment. Contrary to standard New Keynesian models, the presence of consumers not participating in financial markets (rule of thumb consumers) causes an immediate negative response of output and employment, which is amplified when the economy faces a lower bound on the nominal interest rate. Additionally, the paper shows that by supporting consumption demand, minimum wages might enhance output and employment. |
| Keywords: | Labour share; search and matching; aggregate demand; household heterogeneity |
| JEL: | E32 E24 E21 |
| Date: | 2012–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:40189&r=lab |
| By: | Giovanni Russo; Peter Nijkamp; Aura Reggiani; Federico Tedeschi |
| Abstract: | This paper offers an exploratory investigation of the effects of inbound commuter flows on employment in regional labour markets in Germany. For this purpose, we distinguish three channels that could transmit the effects concerned: a crowding-out mechanism, and two labour demand effects (the first is an aggregate demand effect, while the second is a positive externality on vacancy creation). To this end, we develop a stepwise commuting impact model. Our results bring to light that, on the whole, commuter flows have a positive and robust effect on both employment and the number of jobs in the receiving labour market districts, but a distinctly negative effect on the share of jobs filled by resident workers. We then interpret the implications of our results, and, finally, we suggest ways in which the analysis could be improved and expanded. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa10p1376&r=lab |
| By: | Torben Dall Schmidt; Peter Sandholt Jensen |
| Abstract: | In recent years, foreign labour has become an essential issue in Western Europe. Recent research suggests that foreign labour has implications for regional growth patterns and employment opportunities of native workers. Yet, few studies go into the dimension of the regional determinants of recruitment of foreign labour underlying these regional growth effects. Therefore, this paper considers determinants of the regional location of foreign labour. Specifically, we investigate the role of social networks for the spatial distribution of work permits in the context of the Danish regions. We first investigate motives for recruiting foreign labour by analysing the particular case of Southern Denmark relying on recently collected employer survey data with roughly 2,000 records. We also analyse on regional differences in work permits across all Danish regions. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa10p350&r=lab |
| By: | Gill, David (Oxford University); Prowse, Victoria L. (Cornell University); Vlassopoulos, Michael (University of Southampton) |
| Abstract: | We use an online real-effort experiment to investigate how bonus-based pay and worker productivity interact with workplace cheating. Firms often use bonus-based compensation plans, such as group bonuses and firm-wide profit sharing, that induce considerable uncertainty in how much workers are paid. Exposing workers to a compensation scheme based on random bonuses makes them cheat more but has no effect on their productivity. We also find that more productive workers behave more dishonestly. We explain how these results suggest that workers' cheating behavior responds to the perceived fairness of their employer's compensation scheme. |
| Keywords: | bonus, compensation, cheating, dishonesty, lying, employee crime, productivity, slider task, real effort, experiment |
| JEL: | C91 J33 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6725&r=lab |
| By: | Angus Holford |
| Abstract: | Almost 300,000 entitled children do not participate in the UKs Free School Meals (FSM) programme, worth up to 400 per year. Welfare take-up can be stigma and lack of information. This paper uses a school-level dataset and fixed-effect instrumental variables strategy to show that peer-group participation has a substantial role in overcoming these barriers. Identification of endogenous peer effects is achieved by exploiting a scheme which extended FSM entitlement to all children in some school cohorts. Results show that in a typical school a 10 percentage point rise in peer-group take-up would reduce non-participation by almost a quarter. |
| Date: | 2012–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2012-12&r=lab |
| By: | Heike Delfmann; Sierdjan Koster |
| Abstract: | Knowledge transfer has been widely recognized as a key element of innovation that drives competitive advantage and regional development in knowledge-driven economies. In this respect the role of institutes of higher education is essential, as they generate knowledge. The vast majority of research on the topic of transferring knowledge focuses on universities. In the case of the Netherlands however, because of their binary system, colleges of higher education make up a great deal of the complete higher education system. We argue that these colleges of higher education are better suited to address the needs of small businesses than universities. Colleges have a more practical educational approach, they are closer related to the industry, which enhances their accessibility and approachability for small firms. This paper explains the difference in knowledge transfer between the two types of higher education institutes. The main goal of this research is to provide a classification of SMEs who take part in the knowledge transfer process of specifically colleges of higher education compared to universities. This paper presents the results of a recent study using a survey among small organisations in the area of Groningen, the Netherlands. Using Groningen as a case study we were able to collect data from a region with one university and one college of higher education of similar size. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa10p553&r=lab |
| By: | Tim Hatton |
| Abstract: | A country's most important asset is its people. This paper outlines the development of Britain's human resources since the middle of the 19th century. It focuses on four key elements. The first is the demographic transition - the processes through which birth rates and death rates fell, leading to a slowdown in population growth. The second is the geographical reallocation of population through migration. This includes emigration and immigration as well as migration within Britain. The third issue is labour supply: the proportion of the population participating in the labour market and the amount and type of labour supplied. Related to this, the last part of the chapter charts the growth in education and skills of the population and the labour force. |
| JEL: | J11 J12 J21 J24 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:auu:hpaper:004&r=lab |
| By: | Rofman, Rafael; Oliveri, Maria Laura |
| Abstract: | This document presents an analysis of pension coverage trends in Latin America for the past decades. Its preparation involved the collection, revision, and processing of household surveys in over 18 countries in the region, spanning a period of almost 40 years in some cases. The main goal of this document is to offer comparable data on pension coverage among the economically active population and the elderly, considering the relevance of several demographic, social, and economic variables on these coverage levels. By producing this large and comparable regional dataset, the document supports the discussion of several stylized facts on pension coverage in Latin America. The results show that coverage among active workers is low in most countries, although there has been a relative improvement since the early 1990s. The situation is still distressing among workers in the primary sector or employed by small enterprises as well as for women, primarily because of their persistent lower rates of labor market participation. In recent years coverage of some of the most vulnerable groups has increased, but it still presents very low rates. Among the elderly, regional averages have been very stable since the early 1990s, although this average hides important differences among countries. |
| Keywords: | Population Policies,Insurance&Risk Mitigation,Pensions&Retirement Systems,Debt Markets,Insurance Law |
| Date: | 2012–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:70926&r=lab |
| By: | Raj Chetty; John N. Friedman; Emmanuel Saez |
| Abstract: | We develop a new method of estimating the impacts of tax policies that uses areas with little knowledge about the policy's marginal incentives as counterfactuals for behavior in the absence of the policy. We apply this method to characterize the impacts of the Earned Income Tax Credit (EITC) on earnings using administrative tax records covering all EITC-eligible filers from 1996-2009. We begin by developing a proxy for local knowledge about the EITC schedule – the degree of "sharp bunching" at the exact income level that maximizes EITC refunds by individuals who report self-employment income. The degree of self-employed sharp bunching varies significantly across geographical areas in a manner consistent with differences in knowledge. For instance, individuals who move to higher-bunching areas start to report incomes closer to the refund-maximizing level themselves, while those who move to lower-bunching areas do not. Using this proxy for knowledge, we compare W-2 wage earnings distributions across neighborhoods to uncover the impact of the EITC on real earnings. Areas with high self-employed sharp bunching (i.e., high knowledge) exhibit more mass in their W-2 wage earnings distributions around the EITC plateau. Using a quasi-experimental design that accounts for unobservable differences across neighborhoods, we find that changes in EITC incentives triggered by the birth of a child lead to larger wage earnings responses in higher bunching neighborhoods. The increase in EITC refunds comes primarily from intensive-margin increases in earnings in the phase-in region rather than reductions in earnings in the phase-out region. The increase in EITC refunds is commensurate to a phase-in earnings elasticity of 0.14 on average across the U.S. and 0.58 in high-knowledge neighborhoods. |
| JEL: | H26 H31 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18232&r=lab |
| By: | Gautier, Pieter A; Muller, Paul; Rosholm, Michael; Svarer, Michael; van der Klaauw, Bas |
| Abstract: | Randomized experiments provide policy relevant treatment effects if there are no spillovers between participants and nonparticipants. We show that this assumption is violated for a Danish activation program for unemployed workers. Using a difference-in-difference model we show that the nonparticipants in the experiment regions find jobs slower after the introduction of the activation program (relative to workers in other regions). We then estimate an equilibrium search model. This model shows that a large scale role out of the activation program decreases welfare, while a standard partial microeconometric cost-benefit analysis would conclude the opposite. |
| Keywords: | externalities; indirect inference; job search; policy-relevant treatment effects; randomized experiment |
| JEL: | C21 E24 J64 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9066&r=lab |
| By: | Gicheva, Dora (University of North Carolina, Greensboro); Ionescu, Felicia (Colgate University); Simpson, Nicole B. (Colgate University) |
| Abstract: | College students now use various forms of unsecured credit such as private student loans and credit cards to finance college. Access to these credit lines and the interest rates charged on these loans can vary significantly across credit scores. In this paper, we analyze if credit status, as measured by self-reported characteristics of an individual's credit standing, affects college investment. Using data from the Survey of Consumer Finances, we study a sample of young high school graduates to estimate how three different measures of credit status affect college attainment and completion rates. After correcting for selection and endogeneity issues, we find that credit status is more important the longer the student stays in college. For example, having bad credit significantly lowers the probability of completing a four-year college degree, but has a smaller (but significant) impact on attaining some college. We find robust evidence that credit status affects the intensive margin of college investment, but is less important for the extensive margin. Our results suggest that bad credit status, which lowers the availability of unsecured credit to finance college and thereby makes college investment more expensive, significantly reduces college completion rates. |
| Keywords: | college investment, credit scores, financial markets |
| JEL: | I20 G10 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6719&r=lab |
| By: | Christian Dreger; Georg Erber; Daniela Glocker |
| Abstract: | The accumulation of the human capital stock plays a key role to explain the economic performance across regions. However, empirical evidence for this claim has been not very convincing, probably due to low quality of the data. This paper provides a robustness analysis of alternative human capital measures available for EU regions. Examining the spatial dimension can offer new insights. Most strikingly, the amount of information is tremendously enlarged. Studies based on country level data are based on heterogeneous economies to obtain a high number of observations. The heterogeneity is not fully captured by fixed effects. As the EU or at least the old and the new member states are more homogeneous geographical areas, the quality of the results should be enhanced. In addition to univariate measures of human capital, composite indicators are discussed. To examine the robustness of the results, different aggregation methods are considered. The reliability of alternative indicators is explored by the Krueger and Lindahl (2001) approach. Indicators based on wage regressions are also presented, see Mulligan and Sala-i-Martin (1997) and Gershuny and Kun (2002). Due to data availability, the latter analysis is carried out for only for German regions. The analysis shows a significant impact of construction techniques on the quality of indicators. While composite indicators and labour income measures point to the same direction, their correlation is not very high. Moreover, popular indicators should be applied with caution. Schooling and human ressources in science and technology can only explain some part, but not the bulk of the experience. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa10p337&r=lab |
| By: | Lorenzo Caliendo (School of Management, Yale University); Ferdinando Monte (Johns Hopkins University); Esteban Rossi-Hansberg (Princeton University) |
| Abstract: | We use a comprehensive dataset of French manufacturing firms to study their internal organization. We first divide the employees of each firm into 'layers' using occupational categories. Layers are hierarchical in that the typical worker in a higher layer earns more, and the typical firm occupies less of them. In addition, the probability of adding (dropping) a layer is very positively (negatively) correlated with value added. We then explore the changes in the wages and number of employees that accompany expansions in layers, output, or markets (by becoming exporters). The empirical results indicate that reorganization, through changes in layers, is key to understand how firms expand and contract. For example, we find that firms that expand substantially add layers and pay lower average wages in all pre-existing layers. In contrast, firms that expand little and do not reorganize pay higher average wages in all pre-existing layers. |
| JEL: | D22 F16 J24 J31 L23 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1867&r=lab |
| By: | Javier Garcia; Marti Parellada; Néstor Duch |
| Abstract: | The challenges posed by globalization have led to a rapid increase in the demand for higher education and, at the same time, many countries are earmarking more resources and efforts to foster their population’s skills level and knowledge. Nowadays higher education is playing a crucial role in countries’ economic development. In fact, higher education is perceived as being sufficient to allow countries to compete in a globalised economy and enhance leadership in knowledge sectors. In the last decades many countries have increased the incentives for and pressures on universities to become more involved in their regions. In response, the universities have developed the so-called Third Mission whereby they collaborate with its milieu in the more direct way. The objective of this paper is to know whether the university presence contributes to encourage the regional economic outcomes. Exploiting the geographic and temporal variation in the foundation of Spanish regional universities after to 1980, we use difference-in-difference approach to estimate its effect on regional economy. The data base includes information for the total Spanish public university system. Our paper contributes to the literature on universities and economic growth, adding more specific data related with university activity. We find little evidence that university presence increases the regional economic growth. We also estimate the effect of the university activity on the creation of knowledge spillover. However, the results vary widely across different regions. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa10p911&r=lab |
| By: | Syeda Umme Jakera Malik (Social Work Department, Asian University of Bangladesh (AUB)) |
| Abstract: | Although highly educated women in Bangladesh expect to achieve gender equality, compared to highly educated men, they experience poverty in disproportionate scales. Various educational and motivational programs have been successfully working in Bangladesh. Subsequently, women have broken out the common social problems like illiteracy, early marriage, etc. For example, Bangladesh has already achieved gender parity in education levels. Many women are getting proper family support, achieve higher education, and gain more respect in family life. However, a huge number of highly educated women are not in positions that would allow them to use their education as a capital to fulfill their basic needs, and subsequently, they are leading a life which is at risk of being poor. Professional identity is not only a source of income but also a way of social interaction and social security. This paper aims to explore women’s potential poverty despite being highly educated. Potential poverty is defined as the risk of being poor. |
| Keywords: | women, highly educated, gender, professional idenity, potential poverty, Dhaka, Bangladesh |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:bnr:wpaper:15&r=lab |
| By: | Hoogendoorn, Sander M. (University of Amsterdam); van Praag, Mirjam (University of Amsterdam) |
| Abstract: | One of the most salient and relevant dimensions of team heterogeneity is ethnicity. We measure the causal impact of ethnic diversity on the performance of business teams using a randomized field experiment. We follow 550 students who set up 45 real companies as part of their curriculum in an international business program in the Netherlands. We exploit the fact that companies are set up in realistic though similar circumstances and that we, as outside researchers, had the unique opportunity to exogenously vary the ethnic composition of otherwise randomly composed teams. The student population consists of 55% students with a non-Dutch ethnicity from 53 different countries of origin. We find that a moderate level of ethnic diversity has no effect on team performance in terms of business outcomes (sales, profits and profits per share). However, if at least the majority of team members is ethnically diverse, then more ethnic diversity has a positive impact on the performance of teams. In line with theoretical predictions, our data suggest that this positive effect could be related to the more diverse pool of relevant knowledge facilitating (mutual) learning within ethnically diverse teams. |
| Keywords: | ethnic diversity, team performance, field experiment, entrepreneurship, (mutual) learning |
| JEL: | J15 L25 C93 L26 M13 D83 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6731&r=lab |
| By: | Johnny Ducking; Peter A. Groothuis; James Richard Hill |
| Abstract: | We use data from the National Basketball Association (NBA) to analyze the impact of minimum salaries on an employee’s career length. The NBA has a salary structure in which the minimum salary a player can receive increases with the player’s years of experience. Salary schedules similar to the NBA’s exist in public education, federal government agencies, the Episcopalian church, and unionized industries. Even though the magnitude of the salaries in the NBA differs from other industries, this study provides insight to the impact of this type of salary structure on career length. Using duration analysis, we find statistically significant evidence that minimum salaries shorten career length. Key Words: |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:12-02&r=lab |
| By: | Michaela Fuchs; Udo Brixy |
| Abstract: | Empirical research on agglomeration and regional economic growth puts high emphasis on the impact of specialization, diversity, and competition on regional employment dynamics (Glaeser et al. 1992, Henderson et al. 1995, Blien et al. 2006, Fuchs 2009). However, Beugelsdijk (2006) and Raspe/van Oort (2008) argue that this relationship should most profoundly hold at the micro or firm level. This paper centres on the labour demand of individual plants and assesses the influence of regional features in direct contrast to plant-specific characteristics as well as conventional labour-demand determinants. Hence, it contributes to the sparse literature on the importance of regional character-istics for firm performance and additionally integrates research from industrial as well as labour economics. The analysis is based on the IAB Establishment Panel, a comprehensive data set on German plants. For the years from 2004 to 2008 it encompasses observations on roughly 8,000 plants. The regional variables are added on the NUTS3-level. First econometric results confirm the basic hypotheses derived from labour-demand theory: wages exert a significantly negative and output a positive influence on the number of employees. Among the plant-specific characteristics, it is mainly plant size, exporting behaviour and R&D / innovation activities that foster employment. There are also distinctive differences regarding the single sectors. Last but not least, the regional environment plays a decisive role for plant-level labour demand. The size of the region the plant is located in, the degree of sectoral concentration as well as of competition within a sector have a positive and highly significant impact. By contrast, accessibility to highways, specialization, and diversity seem to be of minor relevance |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa10p243&r=lab |