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on Labour Economics |
| By: | Richard Layard |
| Abstract: | This lecture argues that mental health is a major factor of production. It is the biggest single influence on life satisfaction, with mental health eight years earlier a more powerful explanatory factor than current income. Mental health also affects earnings and educational success. But, most strikingly, it affects employment and physical health. In advanced countries mental health problems are the main illness of working age - amounting to 40% of all illness under 65. They account for over one third of disability and absenteeism in advanced countries. They can also cause or exacerbate physical illness. It is estimated that in the absence of mental illness, the costs of physical healthcare for chronic diseases would be one third lower. The good news is that cost-effective treatments for the most common mental illnesses now exist (both drugs and psychological therapy). But only a quarter of those who suffer are in treatment. Yet psychological therapy, such as cognitive behavioural therapy, if more widely available would pay for itself in savings on benefits and lost taxes. The lecture ends by illustrating how rational policy can be made using life-course models of wellbeing. Such policies should include a much greater role for the treatment and prevention of mental illness. |
| Keywords: | mental health, wellbeing, employment |
| JEL: | I30 J30 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1213&r=lab |
| By: | World Bank |
| Keywords: | Social Protections and Labor - Labor Markets Health, Nutrition and Population - Population Policies Social Protections and Labor - Labor Policies Tertiary Education Access & Equity in Basic Education Education |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:11924&r=lab |
| By: | Frank van Erp; Niels Vermeer; Daniel van Vuuren |
| Abstract: | This paper first confronts the observed aggregate retirement pattern in the Netherlands with predictions of traditional economic models of retirement. The retirement peaks observed in the data cannot entirely be reconciled with models putting financial incentives central to individual decision-making. After surveying different explanations from psychology and sociology, the paper concludes that social norms, default options, and reference-dependent utility are likely explanations for the observed individual propensity to retire at standard retirement ages. Most empirical evidence on these factors is, however, not related to the retirement age, so that a great deal of research remains to be done. |
| JEL: | J26 D01 D03 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:243&r=lab |
| By: | Anita Alves Pena (Colorado State University) |
| Abstract: | While a stated goal of minimum wage increases is to benefit low-income workers, some employers are not obligated to provide at least minimum wages to all employees. U.S. farm employers comprise one of these groups. Employees of large farms and H2-A workers (temporary nonimmigrant workers lawfully admitted to perform temporary or seasonal agricultural services) are protected by minimum wage legislation, while other migrant workers (especially those who are paid piece rate) are exempt. Furthermore, U.S. agriculture is characterized by a large percentage of illegal migrants, and workers who are illegal may or may not receive wages above minimum levels. This paper presents a case study, drawing from agriculture, that examines if and how minimum wage laws affect uncovered workers. Analysis examines wages and hours worked as functions of federal and state minimum wages using data from a nationally and regionally representative survey of employed farm workers. Results suggest wage increases for both covered and uncovered workers, greatest gains to those who are formally covered, and gains not being at the expense of hours worked. |
| Keywords: | minimum wage exemptions, poverty, agriculture |
| JEL: | I32 J33 Q12 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:13-194&r=lab |
| By: | Michael J. Boehm |
| Abstract: | Over the last two decades, earnings in the United States increased at the top and at the bottom of the wage distribution but not in the middle - the intensely debated middle class squeeze. At the same time there was a substantial decline of employment in middle-skill production and clerical occupations - so-called job polarization. I study whether job polarization has caused the middle class squeeze. So far little evidence exists about this because the endogenous selection of skills into occupations prevents credible identification of polarization's effect on wages. I solve the selection-bias problem by studying the changes in returns to occupation-specific skills instead of the changes in occupational wages using data over the two cohorts of the National Longitudinal Study of Youth (NLSY). This data features multidimensional and pre-determined test scores, which predict occupational sorting and thus measure relative occupation-specific skills. My estimation equations are derived from the Roy (1951) model over two cross-sections with job polarization amounting to a shift in the occupation-specific skill prices. In line with polarization, I find that a one percentage point higher propensity to enter high- (low-) as opposed to middle-skill occupations is associated with a .29 (.70) percent increase in expected wages over time. I then compute a counterfactual wage distribution using my estimates of the shifts in occupation-specific skill prices and show that it matches the increase at the top of the wage distribution but fails to explain the increase at the bottom. Thus, despite the strong association of job polarization with changes in the returns to occupation-specific skills, there remains room for alternative (e.g. policy related) explanations about the increase in the lower part of the wage distribution. |
| Keywords: | Job polarization, wage inequality, talent allocation, Roy model |
| JEL: | J21 J23 J24 J31 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1215&r=lab |
| By: | Laun, Tobias (Uppsala Center for Fiscal Studies); Wallenius, Johanna (Department of Economics, Stockholm School of Economics) |
| Abstract: | In this paper we study the role of social insurance, namely old-age pensions, disability insurance and healthcare, in accounting for the differing labor supply patterns of older individuals across OECD countries. To this end, we develop a life cycle model of labor supply and health with heterogeneous agents. The key features of the framework are: (1) people choose when to stop working, and when/if to apply for disability and pension benefits, (2) the awarding of disability insurance benefits is imperfectly correlated with health, and (3) people can partially insure against health shocks by investing in health, the cost of which is dependent on health insurance coverage. We find that the incentives faced by older workers differ hugely across countries. In fact, based solely on differences in social insurance programs, the model predicts even more cross-country variation in the employment rates of people aged 55-64 than we observe in the data. |
| Keywords: | Life cycle; Retirement; Disability insurance; Health |
| JEL: | E24 J22 J26 |
| Date: | 2013–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uufswp:2013_006&r=lab |
| By: | Abigail Wozniak (University of Notre Dame) |
| Abstract: | Nearly half of U.S. employers test job applicants and workers for drugs. I use variation in the timing and nature of drug testing regulation to study discrimination against blacks related to perceived drug use. Black employment in the testing sector is suppressed in the absence of testing, consistent with ex ante discrimination on the basis of drug use perceptions. Adoption of pro-testing legislation increases black employment in the testing sector by 7–30 percent and relative wages by 1.4–13.0 percent, with the largest shifts among low skilled black men. Results suggest that employers substitute white women for blacks in the absence of testing. |
| Keywords: | Employment drug testing, discrimination, employment, Current Population Survey |
| JEL: | J7 J15 K2 K3 M5 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:13-195&r=lab |
| By: | Alberto Bayo-Moriones (Departamento de Gestión de Empresas-UPNA); Jose Enrique Galdon-Sanchez (Departamento de Economía-UPNA); Sara Martinez-de-Morentin (Departamento de Economía-UPNA) |
| Abstract: | In this article, we use data from Spanish manufacturing plants to analyze the determinants of the importance attributed to several criteria when wages are adjusted. More specifically, the criteria we take into account in the study are the cost of living, the wages of the firm in relation to its competitors, the fulfillment of collective agreements at sector level, the need to recruit and retain employees, the performance of the organization, and the industrial relations climate. Our results show that the structural characteristics of the establishment, as well as the wage setting arrangements and trade unions, play a role in explaining the importance of the factors mentioned in shaping wage adjustments. The human resource management policies adopted by the employer seem to be less relevant. |
| Keywords: | human resource management, structural characteristics, trade unions, wage adjustment, wage setting arrangements |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:nav:ecupna:1306&r=lab |
| By: | Seamus McGuinness (Economic & Social Research Institute, Trinity College Dublin); Philip J. O’Connell (UCD Geary Institute, University College Dublin); Elish Kelly (Economic & Social Research Institute, Trinity College Dublin) |
| Abstract: | This paper uses a high quality longitudinal dataset to assess the impact of an active labour market intervention consisting of referral for interview plus Job Search Assistance (JSA) with the public employment service in Ireland during a period when both job search monitoring and sanctions were virtually non-existent. We find that, relative to a control group with no intervention, unemployed individuals that received the interview letter and participated in JSA were 15 per cent less likely to have exited to employment prior to 12 months. The results hold when tested against the influences of both sample selection and unobserved heterogeneity bias. The negative treatment impact is attributed to individuals lowering their job search intensity on learning, through the JSA activation interview, of the lax nature of the activation process. The research, which is unusual in the international literature in allowing rrthe assessment of the impact of job search assistance in the virtual absence of monitoring and sanctions, highlights the need for effective monitoring and sanctions as integral components of labour market activation programmes. |
| Keywords: | Unemployment, Labour Market Policy, Job Search |
| JEL: | J64 |
| Date: | 2013–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:201308&r=lab |
| By: | Andries Brandsma (European Commission – JRC - IPTS); d’Artis Kancs (European Commission – JRC - IPTS); Damiaan Persyn (European Commission – JRC - IPTS) |
| Abstract: | The present paper describes the modelling approach of regional labour markets taken in the newly developed dynamic spatial general equilibrium model RHOMOLO, where the labour market equilibrium is determined by ?rms’ labour demand, a wage-curve with unemployment, and inter-regional labour migration. The RHOMOLO model is parameterised by estimating the key structural parameters econometrically. In order to illustrate the potential of the proposed dynamic spatial general equilibrium approach to inter-regionally integrated labour markets, we carry out simulations showing the e?ects of a reduction in ransportation cost, and assess the impact on regional labour markets. Our results con?rm that wages and unemployment are by far the most important channels of adjustment to macro-economic and policy shocks in the EU. In contrast, labour migration plays a secondary role in labour market adjustments in the EU. Our results also suggest that the relationship between market access, labour demand and labour supply is non-linear and spatially inter-dependent, which underlines the importance of the proposed dynamic spatial general equilibrium approach. |
| Keywords: | Dynamic spatial general equilibrium model, labour, migration, unemployment, wage, RHOMOLO, DSGE, new economic geography. |
| JEL: | C68 D58 F22 J20 J61 J64 O15 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc80825&r=lab |
| By: | L. Rachel Ngai; Barbara Petrongolo |
| Abstract: | This paper explains the narrowing of gender gaps in wages and market hours in recent decades by the growth of the service economy. We propose a model with three sectors: goods, services and home production. Women have a comparative advantage in the production of services in the market and at home. The growth of the services sector, in turn driven by structural transformation and marketization of home services, acts as a gender-biased demand shift and leads to a rise in women's wages and market hours relative to men. Quantitatively, the model accounts for an important share of the observed rise in women's relative wage and market hours and the fall in men's market hours. |
| Keywords: | gender gaps, structural transformation, marketization |
| JEL: | E24 J22 J16 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1204&r=lab |
| By: | Dimitrios Bakas (Department of Economics, University of Athens, Greece; Rimini Centre for Economic Analysis (RCEA), Italy); Theodore Panagiotidis (Department of Economics, University of Macedonia, Greece; Rimini Centre for Economic Analysis (RCEA), Italy); Gianluigi Pelloni (Department of Economics, University of Bologna, Johns Hopkins University Bologna Center, and Rimini Centre for Economic Analysis (RCEA), Italy; Department of Economics, Wilfrid Laurier University, Canada) |
| Abstract: | This paper re-examines Lilien’s sectoral shifts hypothesis for U.S. unemployment. We employ a monthly panel that spans from 1990:01 to 2011:12 for 48 U.S. states. Panel unit root tests that allow for crosssectional dependence reveal the stationarity of unemployment. Within a framework that takes into account dynamics, parameter heterogeneity and cross-sectional dependence in the panel, we show that sectoral reallocation is significant not only at the aggregate level but also at the state level. The magnitude and the statistical significance of the latter as measured by Lilien’s index increases when both heterogeneity and cross-sectional dependence are taken into account. |
| Keywords: | Unemployment, Sectoral Shifts, Employment Fluctuations, Dynamic Panel Data, Parameter Heterogeneity, Cross-Sectional Dependence |
| JEL: | C33 E24 E32 J21 R23 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:26_13&r=lab |
| By: | KATO Takao; KAWAGUCHI Daiji; OWAN Hideo |
| Abstract: | This paper provides new evidence on the nature and causes of the gender pay gap using confidential personnel records from a large Japanese chemical manufacturing firm. Controlling only for the human capital variables that are typically included in the standard wage function results in a substantial gender pay gap—16% for unmarried and 31% for married workers. However, additionally controlling for job level, skill grade, hours worked, and number of dependents almost eliminates the "unexplained" gender pay gap. We estimate various models of promotion rates and additionally find that (i) there is a statistically and economically significant correlation between hours worked and the odds of promotion for women but not for men; (ii) maternity carries a substantial career penalty (up to a 20-30 percentage-point fall in future earnings), especially for college graduate women; and (iii) the maternity penalty can be avoided by promptly returning from parental leave and not reducing work hours after returning. As such, our evidence points to the importance of women's ability to signal their commitment to work (or the level of family support they receive)—through working long hours and taking shorter parental leave—for their career advancement. |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:13038&r=lab |
| By: | Vandenberghe, Vincent |
| Abstract: | The Belgian population is ageing due to demographic changes, so does the workforce of firms active in the country. Such a trend is likely to remain for the foreseeable future. And it will be reinforced by the willingness of public authorities to expand employment among individuals aged 50 or more. But are older workers employable? The answer depends to a large extent on the gap between older workers’ productivity and their cost to employers. To address this question we use a production function that is modified to reflect the heterogeneity of labour with workers of different age potentially diverging in terms of marginal products. Using unique firm-level panel data we produce robust evidence on the causal effect of ageing on productivity (value added) and labour costs. 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-mix choices in the short run) using (1) the structural approach suggested by Ackerberg et al. Structural identification of production functions. Department of Economics, UCLA, (2006), (2) alongside more traditional system-GMM methods (Blundell and Bond in J Econom 87:115–143, 1998) where lagged values of labour inputs are used as instruments. Our results indicate a negative impact of larger shares of older workers on productivity that is not compensated by lower labour costs, resulting in a lower productivity-labour costs gap. An increment of 10 %-points of their share causes a 1.3–2.8 % contraction of this gap. We conduct several robustness checks that largely confirm this result. This is not good news for older individuals’ employability and calls for interventions in the Belgian private economy aimed at combating the decline of productivity with age and/or better adapting labour costs to age-productivity profiles. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ner:louvai:info:hdl:2078.1/118112&r=lab |
| By: | Michael J. Boehm |
| Abstract: | Using administrative employer-employee data from Germany, I exploit two reductions of tax breaks for commuting in 2003/4 and 2006/7 to estimate commuting costs' effect on the decision to switch job and move house. Standard theory predicts that higher commuting costs should lead to increased concentration in urban centers. However, I find that re-matching of existing jobs and houses to reduce commuting distances is much more prevalent in the data. With these estimates I calculate the effect of a complete abolition of the tax breaks on overall travel distance, fuel usage, greenhouse gas emissions, the tax base, and the de-population of the countryside. |
| Keywords: | Work/residence location choice, commuting costs, environmental effects of tax policy, employer-employee data |
| JEL: | R00 J61 J68 Q48 Q58 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1207&r=lab |
| By: | Gustavo Canavire Bacarreza; Harold Vasquez Ruiz |
| Abstract: | This paper studies the impact of the conditional cash transfer program Solidaridad on changes in the labor market of the Dominican Republic based on statistical data from the Evaluation of the Social Security Survey 2010. The estimation methodology is based on matching techniques, which can discern the impact on both benene.t-receiving and non-benefit-receiving households. The results show a negative but very small impact of the different components of the program on labor market indicators, especially for the components related to children. However, the estimates show some heterogeneity in the effects on the most vulnerable sectors of the population. |
| Date: | 2013–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:col:000122:010732&r=lab |
| By: | John Palmer (Princeton University); Mariola Pytlikova (Danish Institute of Governmental Research (KORA) and CReAM London) |
| Abstract: | This article investigates the relationship between migrants' destination choices and the formal labor market access afforded by multiple potential host countries in the context of the EU's eastward enlargement. We use an index of labor market access laws combined with data on migration from new EU member states into the existing states of the EU and EFTA from 2004 through 2010 to test whether (1) migrants are attracted to destinations that give them greater formal labor market access, and (2) migration flows to any given destination are influenced by the labor market policies of competing destinations. Our data support both propositions: Migration between origin/destination pairs was positively associated with the loosening of destination labor market restrictions while negatively associated with the loosening of competing destinations' labor market restrictions. These relationships hold even when economic indicators, social welfare spending, and existing immigrant stocks are modeled. By combining rich EU data with a unique approach to evaluating competing legal regimes, the analysis helps us better understand how law shapes migration in a multi-destination world. |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1311&r=lab |
| By: | Jordi Jofre-Monseny (Universitat de Barcelona & Institut dEconomia de Barcelona (IEB)) (Universitat de Barcelona) |
| Keywords: | place-based policy, unemployment protection, migration, lagging regions, mobility |
| JEL: | J6 R23 H73 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bar:bedcje:2013292&r=lab |