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on Labour Economics |
| By: | David G. Blanchflower (Peterson Institute for International Economics); Andrew J. Oswald (University of Warwick) |
| Abstract: | The authors explore the hypothesis that high home-ownership damages the labor market. The results are relevant to, and may be worrying for, a range of policymakers and researchers. The authors find that rises in the home-ownership rate in a US state are a precursor to eventual sharp rises in unemployment in that state. The elasticity exceeds unity: A doubling of the rate of home-ownership in a US state is followed in the long-run by more than a doubling of the later unemployment rate. What mechanism might explain this? The authors show that rises in home-ownership lead to three problems: (i) lower levels of labor mobility, (ii) greater commuting times, and (iii) fewer new businesses. The argument is not that owners themselves are disproportionately unemployed. Evidence suggests, instead, that the housing market can produce negative 'externalities' upon the labor market. The time lags are long. That gradualness may explain why these important patterns are so little-known. |
| Keywords: | Natural rate of unemployment, labor market, housing market, structural, business cycles, mobility |
| JEL: | I1 I3 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iie:wpaper:wp13-3&r=lab |
| By: | Fuest, Clemens (ZEW Mannheim); Peichl, Andreas (IZA); Siegloch, Sebastian (IZA) |
| Abstract: | Because of endogeneity problems very few studies have been able to identify the incidence of corporate taxes on wages. We circumvent these problems by using an 11-year panel of data on 11,441 German municipalities' tax rates, 8 percent of which change each year, linked to administrative matched employer-employee data. Consistent with our theoretical model, we find a negative effect of corporate taxation on wages: a 1 euro increase in tax liabilities yields a 77 cent decrease in the wage bill. The direct wage effect, arising in a collective bargaining context, dominates, while the conventional indirect wage effect through reduced investment is empirically small due to regional labor mobility. High and medium-skilled workers, who arguably extract higher rents in collective agreements, bear a larger share of the corporate tax burden. |
| Keywords: | business tax, wage incidence, administrative data, local taxation |
| JEL: | H2 H7 J3 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7390&r=lab |
| By: | Leah Platt Boustan; William J. Collins |
| Abstract: | Black women were more likely than white women to participate in the labor force from 1870 until at least 1980 and to hold jobs in agriculture or manufacturing. Differences in observables cannot account for most of this racial gap in labor force participation for the 100 years after Emancipation. The unexplained racial gap may be due to racial differences in stigma associated with women’s work, which Goldin (1977) suggested could be traced to cultural norms rooted in slavery. In both nineteenth and twentieth century data, we find evidence of inter-generation transmission of labor force participation from mother to daughter, which is consistent with the role of cultural norms. |
| JEL: | J22 N11 N12 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19040&r=lab |
| By: | Javdani, Mohsen (University of British Columbia, Okanagan); McGee, Andrew (Simon Fraser University) |
| Abstract: | We examine how immigrants in Canada fare in terms of promotions relative to their native peers. Using linked employer-employee data and firm effects, we identify the extent to which differences in promotion outcomes result from immigrants sorting into firms offering "dead-end" jobs versus facing intra-firm barriers to advancement. We find that while white immigrants experience broadly similar promotion outcomes relative to their white native peers, visible minority immigrants – particularly those in their first five years in Canada – are substantially less likely to have been promoted and have been promoted fewer times with their employers than their white native peers. Newly arrived female visible minority immigrants sort into firms offering "dead end" jobs, but most of the differences in promotion outcomes between immigrants and their native peers result from intra-firm differences in promotion outcomes. The findings imply that policies that do not tackle barriers to advancement within firms may be insufficient to address the difficulties faced by immigrants in the labor force. |
| Keywords: | promotions, immigration |
| JEL: | J61 J71 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7378&r=lab |
| By: | Stefania Albanesi; Aysegül Sahin |
| Abstract: | The unemployment gender gap, defined as the difference between female and male unemployment rates, was positive until 1980. This gap virtually disappeared after 1980--except during recessions, when men's unemployment rates always exceed women's. We study the evolution of these gender differences in unemployment from a long-run perspective and over the business cycle. Using a calibrated three-state search model of the labor market, we show that the rise in female labor force attachment and the decline in male attachment can mostly account for the closing of the gender unemployment gap. Evidence from nineteen OECD (Organisation for Economic Co-operation and Development) countries also supports the notion that convergence in attachment is associated with a decline in the gender unemployment gap. At the cyclical frequency, we find that gender differences in industry composition are important in recessions, especially the most recent, but they do not explain gender differences in employment growth during recoveries. |
| Keywords: | Unemployment ; Women - Employment ; Business cycles ; Recessions |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:613&r=lab |
| By: | Joop Hartog (University of Amsterdam); Michael Sattinger (University at Albany) |
| Abstract: | The paper provides a theoretical foundation for the empirical regularities observed in estimations of wage consequences of overeducation and undereducation. Workers with more education than required for their jobs are observed to suffer wage penalties relative to workers with the same education in jobs that only require their educational level. Similarly, workers with less education than required for their jobs earn wage rewards. These departures from the Mincer human capital earnings function can be explained by Nash bargaining between workers and employers. Under fairly mild assumptions, Nash bargaining predicts a wage penalty for overeducation and a wage reward for undereducation, and further predicts that the wage penalty will exceed the wage reward. This paper reviews the established empirical regularities and then provides Nash bargaining results that explain these regularities. |
| Keywords: | Overeducation, Undereducation, Nash bargaining, Qualitative mismatches, Mincer earnings function, Wages |
| JEL: | J31 J24 C78 C51 |
| Date: | 2012–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012129&r=lab |
| By: | Devereux, Paul J. (University College Dublin); Hart, Robert A. (University of Stirling); Roberts, J. Elizabeth (University of Stirling) |
| Abstract: | We show that the distinction between job spells and employer spells matters for returns to tenure. Employer spells encompass between-job wage movements linked to promotions or demotions while job spells don't. Using a 1% sample of the British workforce over the period 1975-2010, we find that a significant proportion of the return to employer tenure arises due to job changes within employer spells. Conditional on tenure with employer, the return to job tenure is negative. This suggests that any positive effects of job-specific human capital on wage growth within jobs are outweighed by the effects of job changes within firms. |
| Keywords: | job spells, employer spells, wage-tenure profiles |
| JEL: | J31 J24 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7384&r=lab |
| By: | Chiswick, Barry R. (George Washington University); Miller, Paul W. (Curtin University of Technology) |
| Abstract: | This paper considers the labor market assimilation of immigrants in terms of earnings and employment (employment probability, unemployment probability, and hours worked per week). Using the 2006 Australian Census of Population and Housing the analyses are performed separately by gender, and separately by whether or not the origin is an English-speaking developed country (ESDC). Among men in general, 'negative assimilation' is found for immigrants from the ESDC, and positive assimilation for other origins. Among women, the pattern of assimilation in earnings and employment is more positive than among their male counterparts. This may reflect the greater tendency for female immigrants to be tied movers. Among never married immigrant women from the ESDC, who are more likely than married immigrant women from the same countries to be economic migrants, the pattern of negative assimilation is observed. |
| Keywords: | immigrants, assimilation, earnings, hours worked, employment, unemployment |
| JEL: | J61 J31 F22 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7389&r=lab |
| By: | L.J.H. Bettendorf (CPB Netherlands Bureau for Economic Policy Analysis); Egbert L.W. Jongen (CPB Netherlands Bureau for Economic Policy Analysis); Paul Muller (VU University Amsterdam) |
| Abstract: | Over the period 2005-2009 the Dutch government increased childcare subsidies substantially, reducing the average effective parental fee by 50%, and extended subsidies to so-called guestparent care. We estimate the labour supply effect of this reform with a difference-in-differences strategy, using parents with older children as a control group. We find that the reform had a moderately sized impact on labour supply. Furthermore, the effects are an upper bound since there was also an increase in an earned income tax credit for the same treatment group over the same period. The joint reform increased the maternal employment rate by 2.3%-points (3.0%). Average hours worked by mothers increased by 1.1 hours per week (6.2%). Decomposing the hours effect we find that most of the increase in hours is due to the intensive margin response. A number of robustness checks confirm our results. |
| Keywords: | Childcare subsidies, labour participation, hours worked, difference-in-differences |
| JEL: | C21 H40 J13 J22 |
| Date: | 2012–09–13 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012093&r=lab |
| By: | Peri, Giovanni (University of California, Davis); Shih, Kevin Y. (University of California, Davis) |
| Abstract: | In this paper we analyze the impact of foreign-born workers in the fields of Science, Technology, Engineering and Math (STEM) on employment and wages in Canadian geographical areas during the period 1991-2006. Canadian policies select immigrants with a strong emphasis on high educational attainment. Moreover the foreign-born constitute a third of the Canadian population making Canada a very good case to analyze the effect of foreign-STEM workers on the local economy. We use the dispersion of immigrants by nationality across 17 geographical areas in 1981 to predict the supply-driven increase in foreign Scientists and Engineers during the period 1991-2006. Then we analyze their impact on the employment and wages of college and non-college educated Canadian-born (native) workers. We find significant positive effects on the wages and (to a lesser extent) employment of college educated natives. We also find a smaller positive effect on the wages and employment of native workers with very low levels of education (i.e. those with no high school degree). This implies a positive productivity effect of foreign-STEM workers in Canada, and also a college bias in their contribution to productivity growth. Compared to the effect of foreign Scientists and Engineers in US cities, the Canadian results show similar effects on wages of college educated and at least partial evidence of a positive diffusion of the effect to non-college educated, which was not present in the US. |
| Keywords: | STEM workers, foreign-born, Canadian-born, college-educated, wage, employment |
| JEL: | J61 F22 O33 R10 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7367&r=lab |
| By: | Glitz, Albrecht (Universitat Pompeu Fabra) |
| Abstract: | This paper studies the effect of coworker-based networks on individual labour market outcomes. I analyse how the provision of labour market relevant information by former coworkers affects the employment probabilities and, if hired, the wages of male workers who have previously become unemployed as the result of an establishment closure. To identify the causal effect of an individual worker's network on labour market outcomes, I exploit exogenous variation in the strength of these networks that is due to the occurrence of mass-layoffs in the establishments of former coworkers. The empirical analysis is based on administrative data that comprise the universe of workers employed in Germany between 1980 and 2001. The results suggest a strong positive effect of a higher employment rate in a worker's network of former coworkers on his re-employment probability after displacement: a 10 percentage point increase in the prevailing employment rate in the network increases the re-employment probability by 7.5 percentage points. In contrast, there is no evidence of a statistically significant effect on wages. |
| Keywords: | networks, labour markets, employment, wages |
| JEL: | J63 J64 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7392&r=lab |
| By: | Burks, Stephen V. (University of Minnesota, Morris); Cowgill, Bo (University of California, Berkeley); Hoffman, Mitchell (Yale School of Management); Housman, Michael (Evolv on Demand) |
| Abstract: | Employee referrals are a very common means by which firms hire new workers. Past work suggests that workers hired via referrals often perform better than non-referred workers, but we have little understanding as to why. In this paper, we demonstrate that this is primarily because referrals allow firms to select workers better-suited for particular jobs. To test our model, we use novel and detailed productivity and survey data from nine large firms in three industries: call-centers, trucking, and high-tech (software). Referred workers are 10-30% less likely to quit and have substantially higher performance on rare "high-impact metrics" (e.g. creating patents and avoiding truck accidents), despite having similar characteristics and similar performance on non-rare metrics. To identify the source of these behavioral differences, we develop four new statistical tests, all of which indicate that firms benefit from referrals predominantly by selecting workers with a better fit for the job, as opposed to referrals selecting workers with higher overall quality; to referrals enabling monitoring or coaching; or to it being more enjoyable to work with friends. We document that workers refer others like themselves, not only in characteristics but in behavior (e.g. unsafe workers refer other unsafe workers), suggesting that firms may gain by incentivizing referrals most from their highest quality workers. Referred workers achieve substantially higher profits per worker and the difference is driven by referrals from high productivity workers. |
| Keywords: | referrals, productivity, worker selection, innovation, patents, cognitive ability, non-cognitive ability, job testing, call centers, high-tech, software, trucking, truck accidents |
| JEL: | M51 J24 O32 J63 L84 L86 L92 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7382&r=lab |
| By: | Jousten, Alain (University of Liège); Lefèbvre, Mathieu (CREPP, Université de Liège) |
| Abstract: | The paper studies retirement behavior of wage‐earners in Belgium – for the first time using rich survey data to explore retirement incentives as faced by individuals. Specifically, we use SHARE data to estimate a model à la Stock and Wise (1990). Exploring the longitudinal nature of SHARELIFE, we construct measures of financial and non‐financial incentive. Our analysis explicitly takes into account the different take‐up rates of the various early retirement exit paths across time and ages. The results show that financial incentives play a strong role. Health and education also matter, as does regional variation – though the latter in an unexpected way. A set of policy simulations illustrate the scope and also the limits associated with selective parametric reforms. |
| Keywords: | pensions, social security, disability, early retirement, unemployment, labor force participation |
| JEL: | H55 J21 J26 J14 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7387&r=lab |
| By: | Liangshu Qi; Xiao-Yuan Dong |
| Abstract: | This paper provides the first estimates of the effects of housework burdens on the earnings of men and women in China, using data from the country’s time use survey in 2008. The analysis shows that working women in China not only spend many more hours on housework than their male co-workers but are also more likely to experience interference with their market work by housework activities. Three indicators are introduced to measure the degree to which market work is intertwined with housework. The estimates show that both housework time and its interference with market work have negative effects on the earnings of men and women. Quantitatively, the gender differences in housework-related indicators account for 27 to 28 percent of the gender earnings gap. This result supports the feminist contention that gender inequality at home is a major contributor to the weaker position of women in the labor market. |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:win:winwop:2013-01&r=lab |
| By: | Lou O'Neil, Mary; Bilgin, Mehmet Huseyin; Lau, Chi Keung Marco |
| Abstract: | This paper examines the decision of Turkish women to participate in the labor force. We administered a original survey questionnaire in 2009 to 518 non-working women. Employing logistic regression, we found that religious belief is a crucial factor that discourages women from participating in the labor market. In particular, the regular performance of religious rituals have the greatest negative effect on labor market participation for educated women, who are the most productive human resource in the economy. |
| Keywords: | Women, religious beliefs, labor force, working decisions, Turkey |
| JEL: | J2 O5 Z12 |
| Date: | 2012–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46973&r=lab |
| By: | Böckerman, Petri (Labour Institute for Economic Research); Maliranta, Mika (ETLA - The Research Institute of the Finnish Economy) |
| Abstract: | This paper examines the relationship between outsourcing and various aspects of employee well-being by devoting special attention to the role of occupational restructuring as a conveying mechanism. Using linked employer-employee data, we find that offshoring involves job destruction, especially when the destination is a low-wage country. In such circumstances, staying employees' job satisfaction is reduced. However, the relationship between outsourcing and employee well-being is not entirely negative. Our evidence also shows that offshoring to high-wage countries stimulates the vertical mobility of employees in affected firms in a manner that improves perceived well-being, particularly in terms of better prospects for promotion. |
| Keywords: | globalization, outsourcing, offshoring, downsizing, working conditions, subjective well-being, job satisfaction |
| JEL: | J28 F23 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7399&r=lab |
| By: | Pieter Gautier (VU University Amsterdam); Paul Muller (VU University Amsterdam); Bas van der Klaauw (VU University Amsterdam, and CEPR); Michael Rosholm (Aarhus University); Michael Svarer (Aarhus University) |
| 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: | randomized experiment, policy-relevant treatment effects, job search, |
| JEL: | C21 E24 J64 |
| Date: | 2012–07–18 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012071&r=lab |
| By: | Montizaan R.M.; Fouarge D.; Grip A. de (GSBE) |
| Abstract: | This paper investigates the causal effects of the announcement of an increase in the statutory pension age on employee retirement expectations. In June 2010, the Dutch government signed a new pension agreement with the employer and employee organizations that entailed an increase in the statutory pension age from 65 currently to 66 in 2020 for all inhabitants born after 1954. Given the expected increase in average life expectancy, it was also decided that in 2025 the pension age would be further increased to 67 for those born after 1959. This new pension agreement received huge media coverage. Using representative matched administrative and survey data of public sector employees, we find that the proposed policy reform increased the expected retirement age by 3.6 months for employees born between 1954 and 1959 and by 10.8 months for those born after 1959. This increase is reflected in a clear shift in the retirement peak from age 65 to ages 66 and 67 for the respective treated cohorts. Men respond less strongly to the policy reform than women, but within couples we find no evidence that the retirement expectations of one spouse are affected by an increase in the statutory pension age of the other. Furthermore, we show that treatment effects are largely driven by highly educated individuals but are lower for employees whose job involves physically demanding tasks or managerial and supervisory tasks. |
| Keywords: | Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination; |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umagsb:2013020&r=lab |
| By: | John Morgan (University of California, Berkeley); Dana Sisak (Erasmus University Rotterdam); Felix Vardy (University of California, Berkeley and IMF) |
| Abstract: | We study career choice when competition for promotion is a contest. A more meritocratic profession always succeeds in attracting the highest ability types, whereas a profession with superior promotion benefits attracts high types only if the hazard rate of the noise in performance evaluation is strictly increasing. Raising promotion opportunities produces no systematic effect on the talent distribution, while a higher base wage attracts talent only if total promotion opportunities are sufficiently plentiful. |
| Keywords: | career choice, promotion competition, selection, meritocracy |
| JEL: | J45 J24 M52 |
| Date: | 2012–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012077&r=lab |
| By: | Robert Dur (Erasmus University Rotterdam); Robin Zoutenbier (Erasmus University Rotterdam) |
| Abstract: | We examine differences in altruism and laziness between public sector employees and private sector employees. Our theoretical model predicts that the likelihood of public sector employment increases with a worker's altruism, and increases or decreases with a worker's laziness depending on his altruism. Using data from the German Socio-Economic Panel Study, we find that public sector employees are significantly more altruistic and lazy than observationally equivalent private sector employees. A series of robustness checks show that these patterns are stronger among higher educated workers; that the sorting of altruistic people to the public sector takes place only within the caring industries; and that the difference in altruism is already present at the start of people's career, while the difference in laziness is only present for employees with sufficiently long work experience. |
| Keywords: | public service motivation, altruism, laziness, sorting, public sector employment, personality characteristics |
| JEL: | H1 J45 M5 |
| Date: | 2012–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012135&r=lab |
| By: | Grund, Christian (RWTH Aachen University); Schmitt, Andreas (RWTH Aachen University) |
| Abstract: | We examine the relationship between works councils and two different types of employment separation: dismissals by the firm and voluntary quits by employees. Based on representative data from the German Socio-Economic Panel, we find a negative relationship between works councils and both kinds of separation. This is particularly true for skilled blue collar as well as qualified white collar workers compared to employees in other job categories. Additionally, we find first hints for a positive relation between works councils and the relevance of severance payments in the case of dismissals. |
| Keywords: | dismissal, employment separation, quit, severance pay, works council |
| JEL: | M5 J6 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7361&r=lab |
| By: | Dammert, Ana C. (Carleton University); Galdo, Jose C. (Carleton University); Galdo, Virgilio (World Bank) |
| Abstract: | Subjective expectations are fundamental for understanding individual behavior. Yet, little is known about how individuals use new information to formulate and update their subjective expectations. In this study, we exploit data from a multi-treatment field experiment to investigate how job-market information sent to jobseekers via short text messages (SMS) influence subjective job gain expectations in Peru. Results show that jobseekers who received digital intermediation based on a large information set increased their before-after job gain expectations relative to the control group. Independently of the information channel, no significant effects were found when labor-market intermediation is based on a restricted (short) set of information. |
| Keywords: | subjective expectations, labor-market intermediation, ICT, field experiments, Peru |
| JEL: | I3 J2 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7395&r=lab |
| By: | Feld, Jan (Maastricht University); Salamanca, Nicolas (Maastricht University); Hamermesh, Daniel S. (University of Texas at Austin, Royal Holloway) |
| Abstract: | The immense literature on discrimination treats outcomes as relative: One group suffers compared to another. But does a difference arise because agents discriminate against others – are exophobic – or because they favor their own kind – are endophilic? This difference matters, as the relative importance of the types of discrimination and their inter-relation affect market outcomes. Using a field experiment in which graders at one university were randomly assigned students' exams that did or did not contain the students' names, on average we find favoritism but no discrimination by nationality, and neither favoritism nor discrimination by gender, findings that are robust to a wide variety of potential concerns. We observe heterogeneity in both discrimination and favoritism by nationality and by gender in the distributions of graders' preferences. We show that a changing correlation between endophilia and exophobia can generate perverse predictions for observed market discrimination. |
| Keywords: | favoritism, discrimination, field experiment, wage differentials, economics of education |
| JEL: | J71 I24 B40 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7380&r=lab |
| By: | Ott Toomet (Tartu University); Marco van der Leij (University of Amsterdam); Meredith Rolfe (London School of Economics) |
| Abstract: | This paper analyzes the relationship between unexplained racial/ethnic wage differentials on the one hand and social network segregation, as measured by inbreeding homophily, on the other hand. Our analysis is based on both U.S. and Estonian surveys, supplemented with Estonian telephone communication data. In case of Estonia we consider the regional variation in economic performance of the Russian minority, and in the U.S. case we consider the regional variation in black-white differentials. Our analysis finds a strong relationship between the size of the differential and network segregation: regions with more segregated social networks exhibit larger unexplained wage gaps. |
| Keywords: | social networks, wage differential, homophily, segregation, race, minorities |
| JEL: | J71 J31 Z13 |
| Date: | 2012–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012120&r=lab |
| By: | Dur, Robert (Erasmus University Rotterdam); Tichem, Jan (Erasmus University Rotterdam) |
| Abstract: | This paper studies how altruism between managers and employees affects relational incentive contracts. To this end we develop a simple dynamic principal-agent model where both players may have feelings of altruism or spite toward each other. The con- tract may contain two types of incentives for the agent to work hard: a bonus and a threat of dismissal. We find that altruism undermines the credibility of a threat of dis- missal but strengthens the credibility of a bonus. Among others, these two mechanisms imply that higher altruism sometimes leads to higher bonuses, while lower altruism may increase productivity and players utility in equilibrium. |
| Keywords: | altruism, spite, incentives, relational contracts, efficiency wages, subjective performance evaluation, Nash bargaining |
| JEL: | D23 J33 M52 M55 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7363&r=lab |
| By: | Matthew Lindquist (SOFI Stockholm University); Joeri Sol (University of Amsterdam); Mirjam van Praag (University of Amsterdam) |
| Abstract: | Parental entrepreneurship is a strong, probably the strongest, determinant of own entrepreneurship. We explore the origins of this intergenerational association in entrepreneurship. In particular, we identify the separate effects of pre- and post-birth factors (nature and nurture), by using a unique dataset of Swedish adoptees. Its unique characteristic is that it not only includes data on occupational status for the adoptees and their adoptive parents, but also for their biological parents. Moreover, we use comparable data on entrepreneurship for a large, representative sample of the Swedish population. Based on the latter sample, and consistent with previous findings, we show that parental entrepreneurship increases the probability of children's entrepreneurship by about 60%. We further show that for adoptees, both biological and adoptive parents make significant contributions. These effects, however, are quite different in size. The effect of post-bir th factors (adoptive parents) is approximately twice as large as the effect of pre-birth factors (biological parents). The sum of these two effects for adopted children is almost identical to the intergenerational transmission of entrepreneurship for own-birth children. We explore several candidate explanations for this important post-birth effect and present suggestive evidence in favor of role modeling. |
| Keywords: | adoption, entrepreneurship, self-employment, intergenerational mobility, occupational choice, role model |
| JEL: | J24 J62 L26 |
| Date: | 2012–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012062&r=lab |
| By: | Brendan Epstein; Ryan Nunn |
| Abstract: | A large public finance literature argues that taxable income elasticities are a sufficient statistic for the social welfare consequences of taxation. We develop calibrations that show such deadweight loss calculations are overestimates proportional to the quantitative significance of heterogeneity in amenities across job matches. In particular, the endogenous supply of amenities can substantially exacerbate this overestimation in both static and dynamic environments. Given the possibility of gradual migration of workers into more amenity-focused job matches in response to tax increases, welfare calculations based on long-run taxable income elasticities can be more misleading than those based on short-run elasticities. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1079&r=lab |