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on Labour Economics |
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Issue of 2013‒05‒11
twenty-one papers chosen by Erik Jonasson National Institute of Economic Research |
| By: | Farber, Henry (Princeton University); Valletta, Robert G. (Federal Reserve Bank of San Francisco) |
| Abstract: | In response to the Great Recession and sustained labor market downturn, the availability of unemployment insurance (UI) benefits was extended to historical highs in the United States. We exploit variation in the timing and size of UI benefit extensions across states to estimate the overall impact of these extensions on unemployment duration, comparing the experience with the prior extension of benefits during the much milder downturn in the early 2000s. Using monthly matched individual data from the U.S. Current Population Survey (CPS) for the periods 2000-2005 and 2007-2012, we estimate the effects of UI extensions on unemployment transitions and duration. We rely on individual variation in benefit availability based on the duration of unemployment spells and the length of UI benefits available in the state and month, conditional on state economic conditions and individual characteristics. We find a small but statistically significant reduction in the unemployment exit rate and a small increase in the expected duration of unemployment arising from both sets of UI extensions. The effect on exits and duration is primarily due to a reduction in exits from the labor force rather than a decrease in exits to employment (the job finding rate). The magnitude of the overall effect on exits and duration is similar across the two episodes of benefit extensions. Although the overall effect of UI extensions on exits from unemployment is small, it implies a substantial effect of extended benefits on the steady-state share of unemployment in the cross-section that is long-term. |
| Keywords: | unemployment, unemployment insurance, unemployment duration |
| JEL: | J64 J65 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7347&r=lab |
| By: | Poggi, Ambra |
| Abstract: | The aim of this paper is to provide fresh empirical evidence of the mechanisms through which wage inequality affects worker satisfaction. Theoretically, wages of others may affect workers' utility for two main reasons: Workers may derive well-being from their social status (comparison hypothesis) and/or they may use others wages to help predict their own future wage (information hypothesis). Both hypotheses are tested. To achieve her aims, the author models individual utility from pay as a function of a worker's own wage and the earnings of all other workers within the same establishment, and she estimates the model using British employer-employee data. Incomplete information about others wages is assumed. The author finds that the comparison effects matter. Of most interest, she provides some first evidence about a positive relation between well-being and inequality. Her results are robust within the different specifications and different definitions of the reference group. -- |
| Keywords: | satisfaction,comparison income,co-workers,inequality,incomplete information |
| JEL: | J28 J31 J33 C25 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201328&r=lab |
| By: | Rafael Lopes de Melo (University of Chicago) |
| Abstract: | In this paper, we show that firm heterogeneity and labor market sorting can help us understand a number of empirical facts, and aspects related to the political economy of minimum wages. We study a competitive economy with non-transferable utility, and preferences which depend on worker and firm types. Sorting in this environment can be induced by complementarities in productions or forces related to preferences. With firm heterogeneity, minimum wage increases affect workers above the minimum wage threshold, reducing wage inequality, increasing dispersion in firm profits and reducing the size of employment effects. It can also explain why such policies have political support, as workers above the threshold benefit from the policy. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed012:611&r=lab |
| By: | Ana P. Fernandes (University of Exeter); Priscila Ferreira (NIMA, Universidade do Minho); L. Alan Winters (University of Sussex, CEPR, CEP and IZA) |
| Abstract: | This paper studies the effect of firm entry deregulation on the returns to skill and education. We use matched employer-employee data for the universe of workers and firms in Portugal and exploit a comprehensive episode of entry deregulation, unique in the industrialized world, as a quasi-natural experiment to investigate how increased competition affects wages. We find that after the reform the returns to a university degree increased by around 5 percent and the returns to skills increased by around 3 percent. We include match (worker-firm) fixed effects and thus identify the effect from individuals who stay in the same firm after the reform. Results are therefore not driven by changes in employment composition, and are supportive of education and skill becoming more valuable after the reform. |
| Keywords: | Entry, Deregulation, Product Market Competition, Wage Structure, Returns to Education |
| JEL: | J3 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:nim:nimawp:48/2013&r=lab |
| By: | Paula Herrera (Faculty of Economics, University of Barcelona); Enrique López-Bazo (Faculty of Economics, University of Barcelona); Elisabet Motellón (Faculty of Economics, University of Barcelona) |
| Abstract: | This paper examines the returns to education taking into consideration the existence of educational mismatches in the formal and informal employment of a developing country. Results show that the returns of surplus, required and deficit years of schooling are different in the two sectors. Moreover, they suggest that these returns vary along the wage distribution, and that the pattern of variation differs for formal and informal workers. In particular, informal workers face not only lower returns to their education, but suffer a second penalty associated with educational mismatches that puts them at a greater disadvantage compare to their formal counterparts. |
| Keywords: | Educational Mismatch; Formal/Informal Employment; Economic Development; Wage Gap. JEL classification: O17; J21; J24. |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:aqr:wpaper:201304&r=lab |
| By: | Richard Blundell; Monica Costa Dias; Costas Meghir; Jonathan M. Shaw |
| Abstract: | We consider the impact of Tax credits and income support programs on female education choice, employment, hours and human capital accumulation over the life-cycle. We thus analyze both the short run incentive effects and the longer run implications of such programs. By allowing for risk aversion and savings we are also able to quantify the insurance value of alternative programs. We find important incentive effects on education choice, and labor supply, with single mothers having the most elastic labor supply. Returns to labour market experience are found to be substantial but only for full-time employment, and especially for women with more than basic formal education. For those with lower education the welfare programs are shown to have substantial insurance value. Based on the model marginal increases to tax credits are preferred to equally costly increases in income support and to tax cuts, except by those in the highest education group. |
| JEL: | H2 H3 I21 J22 J24 J31 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19007&r=lab |
| By: | Garnero, Andrea (Paris School of Economics); Rycx, Francois (Free University of Brussels) |
| Abstract: | We estimate the impact of workforce diversity on productivity, wages and productivity-wage gaps (i.e. profits) using detailed Belgian linked employer-employee panel data. Findings, robust to a large set of covariates, specifications and econometric issues, show that educational (age) diversity is beneficial (harmful) for firm productivity and wages. The consequences of gender diversity are found to depend on the technological/knowledge environment of firms. While gender diversity generates significant gains in high-tech/ knowledge intensive sectors, the opposite result is obtained in more traditional industries. Overall, findings do not point to sizeable productivity-wage gaps except for age diversity. |
| Keywords: | wages, productivity, labour diversity, linked panel data, GMM |
| JEL: | D24 J24 J31 M12 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7350&r=lab |
| By: | Batyra, Anna (Galatasaray University Economic Research Center); de la Croix, David; Pierrard, Olivier; Sneessens, Henri R. |
| Abstract: | We offer an alternative explanation for the decline in labor force participation of senior workers. Typically, tax and transfer explanations have been proposed. On the contrary, a model with imperfectly competitive labor market allows to consider as well the effects of a drop in bargaining power, which would not be possible in a purely neoclassical framework. We find that a decline in the bargaining power of workers, which has taken place in the last four decades, has largely contributed to the rise in inactivity in Europe. However, we need a combination of these two explanations, along with population aging and a fall in the matching efficiency, in order to correctly reproduce the joint evolutions of other labor market variables such as the employment and unemployment rates. |
| Keywords: | Overlapping Generations; Search Unemployment; Labor Force Participation; Ageing; Labor Market Policy and Institutions |
| JEL: | E24 H55 J26 J64 |
| Date: | 2013–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:ris:giamwp:2013_006&r=lab |
| By: | Rubil, Ivica |
| Abstract: | We study the pay gap between the public and the private sectors in Croatia just before and in the wake of the recent Great Recession. Using the Labor Force Survey data, we decompose the real hourly wage gap of full-time workers in 2008 and 2011 into the contributions of differences in workers’ characteristics and differences in marginal returns to these characteristics. Besides decomposing the gaps in the two years, we analyze the main drivers of changes in the 2008-2011 period. The decompositions are performed at the mean, as well as at a number of quantiles along the distribution. In addition to quantifying the aggregate effects of characteristics and their marginal returns, we further decompose each of the two effects into the contributions of specific characteristics or groups of them. For the decomposition of the mean gap, the standard Oaxaca-Blinder framework is used, while in the case of quantile decompositions, this framework is combined with the recently developed unconditional quantile regressions. The results show that in both 2008 and 2011 there was a notable wage premium in favor of the public sector workers along the entire distribution, with both the differences in characteristics and marginal returns playing a role. The premium in favor of the public sector increased in the period considered, driven almost exclusively by changes in marginal returns. |
| Keywords: | wage gap, decomposition, Oaxaca-Blinder, recentered influence function, unconditional quantile regression, public, private, Great Recession, Croatia |
| JEL: | J31 J45 |
| Date: | 2013–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46798&r=lab |
| By: | Loukas Karabarbounis |
| Abstract: | Do fluctuations of the labor wedge, defined as the gap between the firm’s marginal product of labor (MPN) and the household's marginal rate of substitution (MRS), reflect fluctuations of the gap between the MPN and the real wage or fluctuations of the gap between the real wage and the MRS? For many countries, fluctuations of the labor wedge reflect predominantly fluctuations of the gap between the real wage and the MRS. As a result, business cycle theories of the labor wedge should primarily focus on improving the household side of the labor market. Explanations of the labor wedge based on departures of the representative firm’s MPN from the real wage are rejected by the data because the labor share of income is not strongly procyclical. |
| JEL: | E2 E20 E24 E32 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19015&r=lab |
| By: | Almeida, Rita K. (World Bank); Poole, Jennifer (University of California, Santa Cruz) |
| Abstract: | This paper revisits the question of how trade openness affects labor market outcomes in a developing country setting. We explore the fact that plants face varying degrees of exposure to global markets and to the enforcement of labor market regulations, and rely on Brazil's currency crisis in 1999 as an exogenous source of variation in access to foreign markets. Using administrative data on employers matched to their employees and on the enforcement of labor regulations at the city level over Brazil's main crisis period, we document that the way trade openness affects labor market outcomes for plants and workers depends on the stringency of de facto labor market regulations. In particular, we show for Brazil, a country with strict labor market regulations, that after a trade shock, plants facing stricter enforcement of the labor law decrease job creation and increase job destruction by more than plants facing looser enforcement. Consistent with our predictions, this effect is strongest among small, labor-intensive, non-exporting plants, for which labor regulations are most binding. These findings are consistent with the hypothesis that, in the context of strict de jure labor market regulations, increased enforcement limits the plant-level productivity gains associated with increased trade openness. Therefore, increasing the flexibility of de jure regulations may allow for broader access to the gains from trade. |
| Keywords: | employer-employee data, globalization, enforcement, labor market regulations |
| JEL: | F16 J6 J8 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7358&r=lab |
| By: | José Ramón García Martínez (Dpto. Análisis Económico); Valeri Sorolla (Dpt. Economia i d'Història Econòmica) |
| Abstract: | This paper uses a model with a matching function in the labor market, where matches last for one period, to obtain the amount of frictional and non frictional (rationed/disequilibrium) unemployment for different standard wage-setting rules when there are matching frictions. We also compute the frictional and non frictional unemployment rate for two economies characterized by different labor market institutions, namely the Spanish and US economies. The empirical analysis takes into account two types of micro-foundations of the matching function: coordination failure and mismatch due to heterogeneity in the labor market. The empirical findings for Spain suggest that approximately half of all unemployment is due to job rationing and the other half to frictional and mismatch problems. However, the rationing unemployment rate for the US economy represents, two thirds of all unemployment on average, while frictional and mismatch problems account for only a third. |
| Keywords: | matching frictions, frictional unemployment, disequilibrium unemployment. |
| JEL: | E24 O41 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasad:2013-02&r=lab |
| By: | Cui, Yuling (Macquarie University, Sydney); Nahm, Daehoon (Macquarie University, Sydney); Tani, Massimiliano (Macquarie University, Sydney) |
| Abstract: | This paper estimates the returns to education of rural-urban migrants during the period of transition of China's economy between 1995 and 2008. Using data from CHIP and RUMiC, we find that rural migrants' earning differentials with urban residents are substantial and mainly depend on the type of occupation, industry, and employers' ownership, rather than the level of education completed. Returns to formal schooling for migrants remained stable at approximately 3% and 5% throughout the period, and differences across quantiles are generally statistically insignificant. Increasing gaps in the return to schooling by gender have instead emerged. These results raise questions about the incentives to invest in human capital for rural migrants and for the governments funding education in emigration regions. |
| Keywords: | returns to education, rural migrants, quantile regression, ownership enterprises, China, returns to schooling |
| JEL: | C31 J24 J61 O15 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7349&r=lab |
| By: | Anja Koebrich Leon (Institute of Economics, Leuphana University Lueneburg, Germany) |
| Abstract: | The participation rate of women in the labor market shows a sizeable variation across countries and across time. Following studies conducted for North America, this section tests the hypothesis whether, next to structural conditions, cultural norms with regard to existing role models within society about working women influence a woman’s participation decision. While using the epidemiological approach to economics, which aims to compare economic outcomes between immigrant groups to assess the role cultural factors may play, the persistence of heterogeneity in labor market outcomes across immigrant groups is used to assess the role cultural norms regarding working women may play in explaining differences in labor market outcomes between immigrant groups for first and second generation women in Germany. To overcome the problems associated with a qualitative proxy of culture, such as religiosity or ethnicity, the impact of culture on women working behavior is proxied by past female labor force participation (LFP) rates from the woman’s country of origin or their parents, respectively. Using data from the GSOEP for the years 2001 to 2011, compared to findings from Fernández and Fogli (2009) and Gevrek et al 2011, which use large census data sets, I find statistically significant results for the association between cultural norms towards labor market behavior of women, as measured either by past female LFP in country of origin, country of origin indicator variables or attitudes towards working women prevalent in their home country, merely for first generation immigrants in Germany. However, while cultural heritage was found to play an inferior role for second generation immigrant women, religious identity, as a specific cultural trait, exhibits a strong negative relation with Muslim labor market behavior for both generations. |
| Keywords: | female labor force participation; cultural norms; ethnicity; ethnic identity; religious identity |
| JEL: | J15 J21 Z10 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:270&r=lab |
| By: | Jens Mohrenweiser (Zentrum für Europäische Wirtschaftsforschung Mannheim (ZEW) (Centre for European Economic Research)) |
| Abstract: | The integration of disadvantaged youth into the labour market is a challenging policy issue. Since young people gain most from work experience and learning provided by firms, hence within apprenticeships, firms play a crucial role in training disadvantaged youths. Knowing firm characteristics that moderate the selection of firms in such training schemes might help to design more effective and efficient policy measures. This paper estimates the determinants of firms that participate in a training programme for disadvantaged youth in Germany. The paper shows that firms with greater training capacity in terms of full-time instructors and own training facilities and firms willing to invest own additional resources in the training of disadvantaged youth are more likely to participate in this training scheme. On the contrary, firm size, an increasing demand for skilled workers and difficulties in finding apprentices do not influence the participation. |
| Keywords: | disadvantaged youth, apprenticeship, policy evaluation |
| JEL: | J24 M53 M51 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iso:educat:0087&r=lab |
| By: | Maliranta, Mika |
| Abstract: | In this study, the patterns of occupational restructuring and their micro-level mechanisms are examined by applying standard measures of job and worker flows at the occupation and firm levels using longitudinal employeremployee data from the Finnish business sector for the years 2000-2006. Special attention is given to determining how global firms (i.e., multinational enterprises and offshoring firms) contribute to occupational restructuring and to establishing the role of occupational structures when explaining productivity and profitability gaps between global and local firms. The findings indicate that global firms have contributed to reshaping occupational structures, and although this contribution is clearly reflected in their productivity, it is not as clearly reflected in their profitability.The findings imply that employees have captured a dominant share of the productivity advantage of global firms. |
| Keywords: | globalization, offshoring, occupational restructuring, productivity, profitability |
| JEL: | J24 F23 |
| Date: | 2013–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:rif:wpaper:5&r=lab |
| By: | Pajarinen, Mika; Rouvinen, Petri |
| Abstract: | Nokia’s ascent, dominance, and descent have resulted in significant labor inflows and outflows in Finland. In this paper, we document the aspects of these flows using official register-based data covering virtually all individuals and organizations in Finland. Our setup may be compared to a laboratory experiment on the impacts of a single company on a country. During the 1990s, a large share of Nokia recruits were recent college graduates. Most of these recent graduates assumed various specialist and managerial positions at Nokia. During the 2000s, Nokia has been a good source of highly skilled labor for other businesses in Finland. More recently, an increasing share of former Nokia employees has been engaged with startups. Additionally, the proportion of former Nokia employees who have migrated to public sector jobs has grown. |
| Keywords: | Nokia, Finland, ICT, labor flows, employer-employee data |
| JEL: | D21 J63 M51 |
| Date: | 2013–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:rif:report:10&r=lab |
| By: | Michèle Belot (School of Management, University Edinburgh); Marina Schröder (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg) |
| Abstract: | This paper provides .eld experimental evidence on the effects of monitoring in a context where workers can engage in various forms of counterproductive behaviour and only one of them is monitored and incentivised. We hire students to do a job for us (identifying euro coins) for which they are paid a .at fee. There are various ways they can behave counterproductively: they can perform sloppily, not complete the task within the requested time or even steal some of the coins. We study how monitoring one productivity dimension (sloppiness) spills over to others (tardiness and theft). We find that introducing lax monitoring does not improve performance, but increases tardiness substantially. Strict monitoring increases tardiness to the same extent, but also leads to substantial improvements in performance. Theft, on the other hand, occurs more rarely and its prevalence is not affected by the monitoring scheme. We conclude that monitoring does have a discipling effect on workers, but at the same time, workers retaliate for being monitored and do so in the least costly manner for themselves (both in monetary and non-monetary terms). |
| Keywords: | counterproductive behaviour, monitoring, experiment |
| JEL: | C93 J24 J30 M42 M52 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:mag:wpaper:130006&r=lab |
| By: | Samuel Muehlemann (University of Bern and IZA Bonn); Romy Braendli; Stefan C. Wolter (University of Bern, CESifo & IZA) |
| Abstract: | The paper aims to test whether a firm’s provision of training depends on the intake quality of trainees. While a firm may just treat each trainee equally, independent of his or her intake quality, firms may alternatively also provide more training to less able individuals or focus on the most able ones. We develop a theoretical framework that illustrates under what circumstances a firm chooses a particular training strategy. We use representative administrative survey data for more than 1400 Swiss establishments. To test our theoretical predictions about a firm’s training strategy, we apply multivariate and instrumental variable (IV) regression models. In addition, we use case study evidence from a large Swiss retailer, allowing us to analyze how different instructors in a specific firm react when confronted with apprentices of different intake qualities. We find that a firm’s training strategy depends on a trainee’s intake quality and the expected net costs of a particular training occupation. Although firms generally provide less training to less qualified trainees, we find that a firm is willing to compensate low-ability trainees with additional training when training is on average profitable in the short run. When training regulations force firms to follow an investment-oriented training strategy (net costs in the short run), then low-ability trainees will not receive additional instruction time and the dropout risk increases. Generating a regulatory framework that allows firms to achieve a net benefit from work-based training is crucial for low-ability trainees to have the opportunity to receive additional training investments that compensate for a lack of competences at the time of the start of training. |
| Keywords: | Work-based training, heterogeneous trainee ability, apprenticeship training, firm-sponsored training |
| JEL: | J24 M53 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iso:educat:0086&r=lab |
| By: | Edward Prescott (Federal Reserve Bank of Minneapolis); Ellen McGrattan (Federal Reserve Bank of Minneapolis) |
| Abstract: | Prior to the mid-1980s, labor productivity growth was a useful barometer of the U.S. economy's performance: it was low during economic recessions and high during expansions. Since then, labor productivity has become significantly less procyclical. In the recent recession of 2008-2009, labor productivity actually rose as GDP plummeted. These facts have motivated the development of new business cycle theories because the conventional view is that they are inconsistent with existing business cycle theory. In this paper, we analyze recent events with existing theory and find that the labor productivity puzzle is much less of a puzzle than previously thought. In light of these findings, we argue that policy agendas arising from new untested theories should be disregarded. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed012:644&r=lab |
| By: | Sean Dougherty; Octavio Escobar |
| Abstract: | Informality has important implications for productivity, economic growth, and the inequality of income. In recent years, the extent of informal employment has increased in many of Mexico's states, though highly heterogeneously. The substantial differences across states in terms of informal employment can be helpful in explaining differences in economic growth outcomes. This paper studies the determinants of informal employment using states' diverging outcomes to identify causal factors, taking into account potential endogeneity. The results suggest that multiple factors explain differences in informal employment across states, including per capita income, the quality of labour skills, differences in the prevalence of microenterprises, the cost to start a business, restrictions on foreign investment, the rule of law and incidence of corruption.<P>Les déterminants de l'informalité dans les États du Mexique<BR>L’informalité a des implications importantes sur la productivité, la croissance économique et l’inégalité des revenus. Ces dernières années, la mesure de l’emploi informel a augmenté dans la plupart des États du Mexique, bien que de manière très hétérogène. Les différences importantes entre les États en matière d’emploi informel peuvent être utiles pour expliquer les différences dans les résultats de la croissance économique. Cet article étudie les déterminants de l’emploi informel en utilisant les résultats divergents des États pour identifier les facteurs causaux, en tenant compte de l’endogénéité potentielle. Les résultats suggèrent que plusieurs facteurs expliquent les différences dans l’emploi informel à travers les États, y compris le revenu par habitant, la qualité de la main-d’oeuvre, les différences dans la prévalence des microentreprises, le coût pour démarrer une entreprise, les restrictions sur les investissements étrangers, l’État de droit et l’incidence de la corruption. |
| Keywords: | informal employment, microenterprises, regulatory policy, sub-national policy analysis, politique de réglementation, emploi informel, micro-entreprises, analyse politique sous nationale |
| JEL: | J21 O17 O54 |
| Date: | 2013–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1043-en&r=lab |