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on Labour Economics |
| By: | Olivier Bargain (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM), IZA - Institute for the Study of Labor); Kristian Orsini (CES - Center for Economic Studies - Université Catholique de Louvain (UCL) - Belgique); Andreas Peichl (IZA - Institute for the Study of Labor, University of Cologne - University of Cologne, CESifo - CESifo, ISER - University of Essex) |
| 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, with measurement differences 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 considered. Nonetheless, such differences do exist, and are found not to arise from different tax-benefit systems, wage/hour level or demographic compositions across countries, suggesting genuine differences in work preferences across countries. Furthermore, three other important results for welfare analysis are consistent across countries: the extensive (participation) margin dominates the intensive (hours) margin; for singles, this leads to larger labor supply responses in low-income groups; and 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 their household production in Europe. |
| Keywords: | household labor supply; elasticity; taxation; Europe; US |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00805736&r=lab |
| By: | Cattaneo, Cristina (Fondazione Eni Enrico Mattei (FEEM)); Fiorio, Carlo V. (University of Milan); Peri, Giovanni (University of California, Davis) |
| Abstract: | In this paper we use a dataset that follows a representative sample of native Europeans, resident of 11 countries, over the period 1995-2001, in order to identify the effect of inflows of immigrants on their career, employment, location and wage. We use the 1991 distribution of immigrants by nationality across European labor markets to construct an imputed inflow of the foreign-born population that is exogenous to local demand shocks. We also control for a series of fixed effects that absorb individual, country-year and sector-year effects. We find that native Europeans are more likely to upgrade their occupation to one associated with higher skills and better pay, when a larger number of immigrants enter their labor market. They are also more likely to start a self-employment activity. As a consequence of this upward mobility their income increases or stays the same in response to immigration. We find no evidence of an increased likelihood to leave employment or to leave their region of residence. These effects take place within 2 years and some persist over 4 years. Hence it appears that immigrants push native European workers on a faster career track rather than reducing their employment opportunities. |
| Keywords: | immigrants, job upgrading, mobility, self-employment, Europe |
| JEL: | J61 O15 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7282&r=lab |
| By: | Gerald Carlino; Robert P. Inman |
| Abstract: | Using a sample of the 48 mainland U.S. states for the period 1973-2009, we study the ability of U.S. states to expand own state employment through the use of state deficit policies. The analysis allows for the facts that U.S. states are part of a wider monetary and economic union with free factor mobility across all states and that state residents and firms may purchase goods from “neighboring” states. Those purchases may generate economic spillovers across neighbors. Estimates suggest that states can increase own state employment by increasing their own deficits. There is evidence of spillovers to employment in neighboring states defined by common cyclical patterns among state economies. For large states, aggregate spillovers to its economic neighbors are approximately two-thirds of own state job growth. Because of significant spillovers and possible incentives to free-ride, there is a potential case to actively coordinate (i.e., centralize) the management of stabilization policies. Finally, job effects of a temporary increase in state own deficits persist for at most one to two years and there is evidence of negative job effects when these deficits are scheduled for repayment. |
| JEL: | E62 H74 H77 R23 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18930&r=lab |
| By: | David Neumark; Diego Grijalva |
| Abstract: | State and federal policymakers grappling with the aftermath of the Great Recession have sought ways to spur job creation, in many cases adopting hiring credits to encourage employers to create new jobs. However, there is virtually no evidence on the effects of these kinds of counter-recessionary hiring credits – the only evidence coming from much earlier studies of the New Jobs Tax Credit from the 1970s. This paper provides evidence on the effect on job growth of hiring credits adopted during the Great Recession. For many of the types of hiring credits we examine we do not find positive effects on job growth. However, some specific types of hiring credits – including those targeting the unemployed and those that allow states to recapture credits when job creation goals are not met – appear to have succeeded in boosting job growth. At the same time, some credits appear to generate hiring without increasing employment or to generate much more hiring than net employment growth, consistent with these credits leading to churning of employees that raises the costs of producing jobs via hiring credits. |
| JEL: | J23 J38 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18928&r=lab |
| By: | Ahlin, Lina (CIRCLE, Lund University); Andersson, Martin (CIRCLE, Lund University); Thulin, Per (Royal Institute of Technology and Swedish Entrepreneurship Forum) |
| Abstract: | We analyze the influence of market thickness for skills on initial wages and subsequent wage development of university graduates. Using Swedish micro-level panel data on a cohort of graduates, we show that two out of three graduates move to large cities upon graduation. Large cities yield higher rewards to human capital and a stronger early job market career. The premium on initial wages for urban graduates is in the interval of 6-12 percent, and we estimate a wage-growth premium of about 3 percent. Thicker markets for skills appear as a key reason for the concentration of university graduates to larger cities. |
| Keywords: | human capital; university graduates; urban wage premium; market thickness; matching; agglomeration economies; migration; job switching |
| JEL: | J31 J61 R10 R12 |
| Date: | 2013–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2013_002&r=lab |
| By: | Seungjin Han; Shintaro Yamaguchi |
| Abstract: | This paper studies implicit pricing of non-wage job characteristics in the labour market using a two-sided matching model. It departs from the previous literature by allowing worker heterogeneity in productivity, which gives rise to a double transaction problem in a hedonic model. Deriving sufficient conditions under which assortative matching is the unique stable job-worker matching, we show that observed wage differentials between jobs reflect not only compensating wage differentials, but also worker productivity gaps between the jobs. We find that the job-worker matching pattern determines the extent to which compensating wage differentials are confounded with the worker productivity gap effect. |
| Keywords: | hedonic model, heterogeneity, two-sided matching, matching pattern, wage differential, equalizing difference, worker productivity |
| JEL: | C78 J31 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd12-285&r=lab |
| By: | Michael W.L. Elsby; Bart Hobijn; Aysegül Sahin |
| Abstract: | Conventional analyses of cyclical fluctuations in the labor market ascribe a minor role to the labor force participation margin. In contrast, a flows-based decomposition of the variation in labor market stocks reveals that transitions at the participation margin account for around one-third of the cyclical variation in the unemployment rate. This result is robust to adjustments of data for spurious transitions, and for time aggregation. Inferences from conventional, stocks-based analyses of labor force participation are shown to be subject to a stock-flow fallacy, neglecting the offsetting forces of worker flows that underlie the modest cyclicality of the participation rate. A novel analysis of history dependence in worker flows demonstrates that a large part of the contribution of the participation margin can be traced to cyclical fluctuations in the composition of the unemployed by labor market attachment. |
| Keywords: | Labor market ; Unemployment |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2013-05&r=lab |
| By: | Cervellati, Matteo (University of Bologna); Sunde, Uwe (University of Munich) |
| Abstract: | This paper presents a theoretical and empirical analysis of the role of life expectancy for optimal schooling and lifetime labor supply. The results of a simple prototype Ben-Porath model with age-specific survival rates show that an increase in lifetime labor supply is not a necessary, nor a sufficient, condition for greater life expectancy to increase optimal schooling. The observed increase in survival rates during working ages that follows from the "rectangularization" of the survival function is crucial for schooling and labor supply. The empirical results suggest that the relative benefits of schooling have been increasing across cohorts of US men born 1840-1930. A simple quantitative analysis shows that a realistic shift in the survival function can lead to an increase in schooling and a reduction in lifetime labor hours. |
| Keywords: | longevity, life expectancy, schooling, lifetime labor supply, rectangularization of the survival function |
| JEL: | E20 J22 J24 J26 O11 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7286&r=lab |
| By: | Eliasson, Tove (Department of Economics, Uppsala University) |
| Abstract: | This article uses a matched employer-employee panel data of the Swedish labor market to study immigrant wage assimilation, decomposing the wage catch-up into parts which can be attributed to relative wage growth within and between workplaces and occupations. This study shows that failing to control for selection into employment when studying wage assimilation of immigrants is very likely to under-estimate wage catch-up. The results further show that both poorly and highly educated immigrants catch up through relative wage growth within workplaces and occupations, suggesting that employer-specic learning plays an important role for the wage catch-up. The highly educated suffers from not benefiting from occupational mobility as much as the natives do. This could be interpreted as a lack of access to the full range of occupations, possibly explained by difficulties in signaling specific skills. |
| Keywords: | Firm sorting; occupational mobility; wage assimilation; host country specific human capital; employer learning |
| JEL: | D22 D31 J01 J31 J71 |
| Date: | 2013–03–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2013_007&r=lab |
| By: | Boudarbat, Brahim (University of Montreal); Grenon, Lee (Statistics Canada) |
| Abstract: | This paper provides an analysis of the effects of attrition and non-response on employment and wages using the Canadian Survey of Labour and Income Dynamics. We consider a structural model composed of three freely correlated equations for non-attrition/response, employment and wages. The model is estimated using microdata from 22,990 individuals who provided sufficient information in the first wave of the 1996-2001 panel. The main findings of the paper are that attrition is not random. Attritors and non-respondents likely are less attached to employment and come from low-income population. The correlation between non-attrition and employment is positive and statistically significant, though small. Also, wage estimates are biased upwards. Observed wages are on average higher than wages that would be observed if all the individuals initially selected in the panel remained in the sample. |
| Keywords: | panel data, attrition, selection, SLID, Canada |
| JEL: | J21 J31 C33 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7295&r=lab |
| By: | Richter, Wolfram F. (TU Dortmund) |
| Abstract: | The basis for the empirical research on earnings determination is the Mincer equation. Individuals are assumed to make schooling decisions by maximizing earnings. Leisure costs of schooling and labour supply are neglected which has some empirically implausible implications. This paper shows a way of deriving a Mincer-type earnings function from the more standard assumption of utility maximization. The implications are less questionable. The approach allows one to analyse the efficiency of education policy in Ramsey's tradition. Distortive wage taxation is shown to provide reason for subsidizing education in effective terms. Second-best policy is confronted with empirical evidence on OECD countries. |
| Keywords: | Mincer equation, earnings determination, maximizing utility vs. earnings, power law of learning, second-best taxation in Ramsey's tradition, education elasticity rule |
| JEL: | J24 H21 I28 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7280&r=lab |
| By: | Kim, Jungho (Ajou University) |
| Abstract: | This study examines the impact of inflows of foreign workers on Korean natives' economic performance – namely, employment – through the Employment Permit System, the basis of Korea's system by which to introduce low-skilled immigrants. Using National Employment Insurance data, analyses reveal that the adjustment cost related to the introduction of foreign workers was not substantial over the 2004-2005 period. However, a substitution effect exists between the employment of foreign and native workers in the service industry and among less-educated natives. The results suggest that policy assistance is needed to lessen the impacts caused by inflows of foreign workers and to enhance adjustments within the labor market on a sector-by-sector basis. |
| Keywords: | employment permit system, low-skilled immigrants, employment of natives, adjustment costs |
| JEL: | F22 J61 J63 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7287&r=lab |
| By: | DUPUY Arnaud |
| Abstract: | This paper presents a general equilibrium assignment model of workers to tasks with endogenous supply of skills. The model has 2 key features. First, skills are endogenous and multidimensional. Second, two types of assignment occur; workers self-select the type of skills to supply and firms assign workers to tasks/machines. Equilibrium is characterized by two functions mapping skills of each type to tasks and two wage functions, one for each type of skills, so that the wage distributions generally overlap. The model shows that the impact of any given skill-biased technical change on wage inequality is tightly related to the distribution of skills in the population. Productivity effects can be over or under estimated by wage data when the supply of skills is endogenous. The model also shows that Johnson?s (1997) distinction between intensive and extensive technical change is impossible when supply is endogenous. |
| Keywords: | tasks assignment; endogenous supply of skills; multidimensional skills; human capital; technical change and usage distribution |
| JEL: | D30 J21 J23 J31 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2013-04&r=lab |
| By: | SHIMIZUTANI Satoshi; OSHIO Takashi |
| Abstract: | We explore the labor supply effect of the social security earnings test in Japan on those aged 65-69 years through a combined examination of the elimination of the earnings test in 1985 and its reinstatement in 2002. We present evidence showing that the effects of changes in the earnings test on the labor supply of the elderly are not symmetric, controlling for changes in the attributes of workers and firms. The repeal of the earnings test in 1985 did affect the earnings distribution of the elderly (especially for men), while its reinstatement in 2002 did not alter the earnings distribution. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:13016&r=lab |
| By: | Forslund, Anders (IFAU - Institute for Evaluation of Labour Market and Education Policy); Liljeberg, Linus (IFAU - Institute for Evaluation of Labour Market and Education Policy); von Trott zu Solz, Leah |
| Abstract: | We have estimated effects of job practice for participants entering the programme between 1999 and 2006. On average the programme had a moderately sized positive effect for the participants – the expected time to work for the unemployed participants was reduced by around six per cent over a 700 days long follow-up horizon counted from the programme start date. Participation also gave rise to higher future labour income and a reduction in social assistance take-up. When we compare job practice with labour market training, we get the somewhat paradoxical result that job practice participants would have gained more from training, while the training participants would have gained equally much from both programmes. A re-shuffling of participants between the programmes, hence, would have been associated with higher average effects. |
| Keywords: | Labour market policies; evaluation |
| JEL: | D04 J08 J18 J64 |
| Date: | 2013–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2013_006&r=lab |
| By: | Bulent Unel; Elias Dinopoulos |
| Abstract: | We propose a simple theory of personal income distribution, equilibrium unemployment, and interindustry trade, in which product markets are perfectly competitive and labor markets exhibit search related frictions. Individuals, based on their managerial talent, choose to become self-employed entrepreneurs and acquire more managerial capital, or they become workers and face the prospect of unemployment. We analyze the effects of trade on a small-open jobless economy and a two-country global economy. In the case of a small-open economy, improvements in international competitiveness raise the possibility of immiserizing recessions with higher unemployment, lower GDP, and lower aggregate welfare. Reductions in the costs of acquiring managerial capital or appropriate job-vacancy subsidies generally lead to lower unemployment rate, higher aggregate welfare, and higher income inequality. In a two-country global economy, a country exports the good with lower labor-market frictions or lower costs of managerial capital acquisition. Unilateral job-creating policies have asymmetric effects on income inequality and unemployment across countries, and ambiguous effects on welfare in each country. |
| URL: | http://d.repec.org/n?u=RePEc:lsu:lsuwpp:2013-04&r=lab |
| By: | Nicodemo, Catia (University of Oxford) |
| Abstract: | The purpose of this paper of this paper is to explore the immigration and productivity in Spain. We estimate the effect of immigration on labor productivity from 2004 until 2008 for Spain. Using firms (SABI) and individuals data (Social Security Records) we calculate the effect by sector and municipality for the two big Spanish provinces that have received most immigrants in the last decade: Barcelona and Madrid. After controlling for endogeneity of immigration, the results demonstrate that immigration have a negative effect on productivity. Education and occupation are both variables with a positive effect on productivity, while permanent, public or full time contracts do not have any effect. Type of immigration, Europeans 15 (more skill) versus no European, is not relevant in explain the negative productivity. This fact is due that firms are very heterogenous across them and use their employees under their real production potential. |
| Keywords: | immigration, labor productivity, Spain, MCVL, SABI |
| JEL: | F22 J61 R11 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7297&r=lab |
| By: | SHIMIZUTANI Satoshi |
| Abstract: | This study proposes an alternative approach of utilizing direct responses to a survey on the social security earnings test for the elderly to provide new evidence on the sensitivity of the labor supply decision of workers aged between 60 and 64 with respect to the test. Our empirical results show a discouraging effect on working in a large proportion of these workers in Japan, even after correcting for the observed attributes of individuals who reported to be either affected or unaffected. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:13017&r=lab |
| By: | MacLeod, W. Bentley (Columbia University); Parent, Daniel (HEC Montreal) |
| Abstract: | In this paper we adapt the model of MacLeod (2007) to provide one way to formally implement some of Williamson's ideas regarding the effect of transactions costs upon employment relationship. We then explore the empirical implications of this model with a data set that measures job characteristics using the Dictionary of Occupational Titles (DOT), and merge this data set with the Panel Study on Income Dynamics (PSID). We find that viewing the data through the lens of transactions costs economics provide a useful way to organize the data on compensation in the US labor market. |
| Keywords: | compensation, transactions costs, labor markets |
| JEL: | J33 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7306&r=lab |
| By: | Hijzen, Alexander (OECD); Martin, Sébastien (OECD) |
| Abstract: | There has been a strong interest in short-time work (STW) schemes during the global financial crisis. Using data for 23 OECD countries for the period 2004 Q1 to 2010 Q4, this paper analyses the quantitative effects of STW programmes on labour market outcomes. Special attention is given to the dynamic aspects of the relationship between output shocks and labour market outcomes. The results indicate the STW raises hours flexibility by increasing the output elasticity of working time and helps to preserve jobs in the context of a recession by making employment and unemployment less elastic with respect to output. A key finding is that the timing of STW is crucial. While STW helped preserving a significant number of jobs during the crisis, its continued use during the recovery may have slowed the job-content of the recovery. By the end of 2010, the net effect of STW on employment was negligible or may even have become negative. However, the gross impact of STW on the number of jobs saved per quarter remains large and positive in the majority of countries. |
| Keywords: | global financial crisis, partial unemployment benefits, work sharing |
| JEL: | J23 J65 J68 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7291&r=lab |
| By: | Toshihiko Mukoyama |
| Abstract: | This paper analyzes the job-to-job transitions of workers in the United States. I propose a new method of correcting the time-aggregation bias. The bias-corrected series from 1996 to 2011 reveals a procyclical pattern of job-to-job transition and a large decline since the beginning of the 2000s. I construct a model of on-the-job search and explore the implications of this phenomenon. The calibrated model shows that the decline in the reallocation of workers through job-to-job transitions has had a substantial effct on total factor productivity (TFP). From 2009 to 2011, the model accounts for about 0.5%-0.7% annual decline in TFP. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1074&r=lab |
| By: | Almut Balleer; Britta Gehrke; Wolfgang Lechthaler; Christian Merkl |
| Abstract: | This paper analyzes the effects of short-time work (i.e., government subsidized working time reductions) on unemployment and output fluctuations. The central question is whether the rule based component (i.e., the existence of the institution short-time work) and the discretionary component (i.e., rule changes) stabilize employment over the business cycle. In our baseline scenario the rule based component stabilizes unemployment fluctuations by 15% and output fluctuations by 7%. Given the small share of short-time work expenses in terms of GDP, the stabilization effects are large compared to other instruments such as the income tax system. By contrast, discretionary short-time work interventions do not have any statistically significant effect on unemployment. These effects are based on a structural VAR estimation which is identified using the output elasticity of short-time work estimated from German establishment paneldata. The model shows that non-effects of discretionary interventions may be due to their low persistence |
| Keywords: | Short-time work, fiscal policy, business cycles, search-and-matching, SVAR |
| JEL: | E24 E32 E62 J08 J63 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1836&r=lab |
| By: | Tansel, Aysit (Middle East Technical University); Gazioglu, Saziye (Middle East Technical University) |
| Abstract: | This paper investigates the job satisfaction in relation to managerial attitudes towards employees and firm size using the linked employer-employee survey results in Britain. We first investigate the management-employee relationships and the firm size using maximum likelihood probit estimation. Next various measures of job satisfaction are related to the management-employee relations via maximum likelihood ordered probit estimates. Four measures of job satisfaction that have not been used often are considered. They are satisfaction with influence over job; satisfaction with amount of pay; satisfaction with sense of achievement and satisfaction with respect from supervisors. Main findings indicate that management-employee relationships are less satisfactory in the large firms than in the small firms. Job satisfaction levels are lower in large firms. Less satisfactory management-employee relationships in the large firms may be a major source of the observed lower level of job satisfaction in them. These results have important policy implications from the point of view of the firm management while achieving the aims of their organizations in particular in the large firms in the area of management-employee relationships. Improving the management-employee relations in large firms will increase employee satisfaction in many respects as well as increase productivity and reduce turnover. The nature of the management-employee relations with firm size and job satisfaction has not been investigated before. |
| Keywords: | job satisfaction, managerial attitudes, firm size, linked employer-employee data, Britain |
| JEL: | J28 J5 J21 D23 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7308&r=lab |
| By: | Bo Honore (Institute for Fiscal Studies and Princeton); Aureo de Paula (Institute for Fiscal Studies and University of Pennsylvania) |
| Abstract: | In this paper we specify and use a new duration model to study joint retirement in married couples using the Health and Retirement Study. Whereas conventionally used models cannot account for joint retirement, our model admits joint retirement with positive probability, allows for simultaneity and nests the traditional proportional hazards model. In contrast to other statistical models for simultaneous durations, it is based on Nash bargaining and it is therefore interpretable in terms of economic behaviour. We provide a discussion of relevant identifying variation and estimate our model using indirect inference. The main empirical finding is that the simultaneity seems economically important. In our prefered specification the indirect utility associated with being retired increases by approximately 10% if one's spouse is already retired. By comparison, a defined benefit pension plan increases indirect utility by 20-30%. The estimated model also predicts that the indirect effect of a change in husbands' pension plan on wives' retirement dates is about 10% of the direct effect on the husbands. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:cemmap:05/13&r=lab |