nep-lab New Economics Papers
on Labour Economics
Issue of 2013‒06‒09
24 papers chosen by
Erik Jonasson
National Institute of Economic Research

  1. Worker Identity, Employment Fluctuations and Stabilization Policy By Snower, Dennis J.; Lechthaler, Wolfgang
  2. Wage Bargaining Institutions – from crisis to crisis By Jelle Visser
  3. The Impact of Wage Subsidies on Jobseekers' Outcomes and Firm Employment By Sarah Crichton; Maré, David C
  4. Female labour supply, human capital and welfare reform By Richard Blundell; Monica Costa Dias; Costas Meghir; Jonathan Shaw
  5. Earned income tax credits, unemployment benefits and wages: empirical evidence from Sweden By Bennmarker, Helge; Calmfors, Lars; Larsson Seim, Anna
  6. Strike, coordination, and dismissal in uniform wage settings By Karina Gose; Abdolkarim Sadrieh
  7. 1 Open borders, transport links and local labor markets By Åslund, Olof; Engdahl, Mattias
  8. The effects of school entry laws on educational attainment and starting wages in an early tracking system By Martina Zweimüller
  9. Over-education among A8 migrants in the UK By Stuart Campbell
  10. Youth Unemployment in Korea: From a German and Transitional Labour Market Point of View By Schmid, Günther
  11. An empirical analysis of cross-border labour mobility in the case of Estonia By Marta Kaska; Tiiu Paas
  12. How have Labour Market Developments Affected Labour Costs in China? By Wenlang Zhang; Gaofeng Han
  13. Incentive Contracts and Efficient Unemployment Benefits in a Globalized World By Carsten Helm; Dominique Demougin
  14. Do wages reflect labor productivity? The case of Belgian regions By Jozef Konings; Luca Marcolin
  15. Firm-level Hiring Difficulties: Persistence, Business Cycle and Local Labour Market Influences By Richard Fabling; Maré, David C
  16. For Love or Money? Motivating Workers By Saima Naeem; Asad Zaman
  17. Labor Market Effects of Social Programs: Evidence from India's Employment Guarantee By Clement Imbert; John Papp
  18. The scars of youth : effects of early-career unemployment on future unemployment experience By Schmillen, Achim; Umkehrer, Matthias
  19. When the first interaction matters: Recruitment in the French retailing By Géraldine Rieucau; Marie Salognon
  20. How Public Pension affects Elderly Labor Supply and Well-being: Evidence from India By Neeraj Kaushal
  21. Network social capital and labour market outcomes Evidence from Ireland By Brady, Gerard
  22. Global Value Chains and Developing Country Employment: A Literature Review By Ben Shepherd
  23. Labor Market Laws and Intra-European Migration: The Role of the State in Shaping Destination Choices By John Palmer; Mariola Pytlikova
  24. Understanding the Employment Outcomes of Trainees in the Trade Adjustment Assistance (TAA) Program Under the 2002 Amendments. By Jillian Berk

  1. By: Snower, Dennis J. (Kiel Institute for the World Economy); Lechthaler, Wolfgang (Kiel Institute for the World Economy)
    Abstract: This paper provides a model of "social hysteresis" whereby long, deep recessions demotivate workers and thereby lead them to change their work ethic. In switching from a pro-work to an anti-work identity, their incentives to seek and retain work fall and consequently their employment chances fall. In this way, temporary recessions may come to have permanent effects on aggregate employment. We also show that these permanent effects, along with the underlying identity switches, can be avoided through stabilization policy. The size of the government expenditure multiplier can be shown to depend on the composition of identities in the workforce.
    Keywords: economics of identity, work ethic, hysteresis, business cycle policy
    JEL: E24 E60 J21 J28
    Date: 2013–05
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp7413&r=lab
  2. By: Jelle Visser
    Abstract: This essay reviews half a century of developments in bargaining coverage, the structure of bargaining, and bargaining coordination respectively in thirty countries, with an emphasis on the last twenty years. Under coverage or the extent of collective bargaining and pay setting, the connection with union density, employer organization, and administrative extension is analysed. In the section on bargaining structure the main issues are decentralisation, multi- or single-employer bargaining, the level at which most bargaining takes place, the organization or articulation of multi-level bargaining, and the existence and use of opening clauses. The discussion of coordination includes an attempt to identify different mechanisms through which wage leadership may be established, varying from state controls to social pacts, and from associational controls to trend- or pattern setting behaviour.
    JEL: D30 J50
    Date: 2013–04
    URL: http://d.repec.org/n?u=RePEc:euf:ecopap:0488&r=lab
  3. By: Sarah Crichton (Labour and Immigration Research Centre, Ministry of Business, Innovation and Employment); Maré, David C (Motu Economic and Public Policy Research)
    Abstract: The study examines the impact of wage subsidies on assisted jobseekers and on the firms that employ them, using propensity matching methods. Overall we find that starting a subsidised job leads to significant employment and earning benefits for assisted jobseekers over several years. Subsidised workers are disproportionately hired into expanding firms, though we cannot determine whether the expansion would have occurred in the absence of the subsidy.
    Keywords: wage subsidy, active labour market policies, propensity matching
    JEL: J08 J38 J64
    Date: 2013–05
    URL: http://d.repec.org/n?u=RePEc:mtu:wpaper:13_05&r=lab
  4. By: Richard Blundell (Institute for Fiscal Studies and University College London); Monica Costa Dias (Institute for Fiscal Studies and Institute for Fiscal Studies); Costas Meghir (Institute for Fiscal Studies and Yale University); Jonathan Shaw (Institute for Fiscal Studies)
    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 analyse both the short run incentive effects and the longer run implications of such programs. By allowing for risk aversion and savings, we quantify the insurance value of alternative programs. We find important incentive effects on education choice and labour supply, with single mothers having the most elastic labour 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.
    Date: 2013–05
    URL: http://d.repec.org/n?u=RePEc:ifs:ifsewp:13/10&r=lab
  5. By: Bennmarker, Helge (IFAU - Institute for Evaluation of Labour Market and Education Policy); Calmfors, Lars (Institute for International Economics Study, Stockholm University); Larsson Seim, Anna (Department of Economics, Stockholm University)
    Abstract: Although there is a large literature on employment effects of earned income tax credits (EITCs) and unemployment benefits, less is known about wage effects. In our model the impact is via the net (after-tax) replacement rate. Using a panel of individuals from Sweden, we find a positive relationship between the net replacement rate and wages with semi-elasticities in the range 0.2-0.4. This implies that a one percent reduction in the unemployment benefit level or a one percent increase in the net-of-tax rate is associated with a fall in the before-tax wage of 0.1-0.2 per cent. EITCs and unemployment benefit reductions are thus likely to induce wage moderation.
    Keywords: Earned income tax credit; unemployment benefits; wage formation
    JEL: H24 J31 J38
    Date: 2013–05–10
    URL: http://d.repec.org/n?u=RePEc:hhs:ifauwp:2013_012&r=lab
  6. By: Karina Gose (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Abdolkarim Sadrieh (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: In our laboratory experiment, the employer in a gift exchange game with 12 workers can incur a loss, if the employees fail to provide enough effort. When the employer can offer individually differentiated wages, we observe high wage and effort choices. When restricted to uniform wages, however, trust and reciprocity drop dramatically due to widespread free-riding by employees on the workforce's reputation. Introducing two collective action mechanisms, strike and effort coordination, does not mitigate the free-riding problem. Introducing employment risk, however, reduces free-riding substantially and reinstalls employees´ reciprocity at the price of a small, but sustained unemployment.
    Keywords: fair wage-effort hypothesis, efficiency wages, wage compression, labor unions, contract design
    JEL: C92 D23 J33 M52
    Date: 2013–03
    URL: http://d.repec.org/n?u=RePEc:mag:wpaper:130008&r=lab
  7. By: Åslund, Olof (Uppsala Center for Labor Studies); Engdahl, Mattias (Uppsala Center for Labor Studies)
    Abstract: We study the labor market impact of opening borders to low-wage countries. The analysis exploits time and regional variation provided by the 2004 EU enlargement in combination with transport links to Sweden from the new member states. The results suggest an adverse impact on earnings of present workers in the order of 1 percent in areas close to pre-existing ferry lines. The effects are present in most segments of the labor market but tend to be greater in groups with weaker positions. The impact is also clearer in industries which have received more workers from the new member states, and for which across-the-border work is likely to be more common. There is no robust evidence on an impact on employment or wages. At least part of the effects is likely due to channels other than the ones typically considered in the literature.
    Keywords: migration policy; immigration; labor market outcomes
    JEL: J16 J31 J61
    Date: 2013–04–24
    URL: http://d.repec.org/n?u=RePEc:hhs:uulswp:2013_007&r=lab
  8. By: Martina Zweimüller
    Abstract: Empirical evidence suggests that relative age, which is determined by date of birth and the school entry cutoff date, has a causal effect on track choice. Using a sample of male labor market entrants drawn from Austrian register data, I analyze whether the initial assignment to different school tracks has persistent effects on educational attainment and earnings in the first years of the career. I estimate the reduced-form effect of the school entry law on starting wages and find a wage penalty of 1.1–2.0 percent for students born in August (the youngest) compared to students born in September (the oldest). The analysis of educational attainment suggests that significant differences in the type of education exist. Younger students are more likely to pursue an apprenticeship and less likely to have higher education. After five years of labor market experience, the wage penalty amounts to 0.8–1.1 percent, suggesting a persistent (albeit decreasing) negative effect of the school entry rule on labor market outcomes in an early tracking system.
    Keywords: School entry law, early tracking, educational attainment, earnings, labor market entrants
    JEL: I21 J24 J31
    Date: 2013–05
    URL: http://d.repec.org/n?u=RePEc:jku:nrnwps:2013_05&r=lab
  9. By: Stuart Campbell (Department of Quantitative Social Science, Institute of Education, University of London)
    Abstract: I present new evidence on the incidence and wage associations of over-education among migrants to the UK from the ‘A8’ EU accession countries of Central and Eastern Europe from 2004-2011. Using the Labour Force Survey, I employ a novel strategy to maximise the number of migrants drawn from the dataset over the period of interest, creating a survey sample of A8 migrants of unprecedented size. I also use a new method of classifying education attained outside the UK, which takes account of different European education systems. I find that A8 migrants face a substantially higher risk of over-education in the UK than other recent EU migrants, and that this additional risk remains after taking account of observed characteristics. I argue that this result is driven by unobserved differences between the groups, arising from distinct self-selection processes associated with the institutional context of the EU accession. I also find that in non-graduate occupations, the wage penalties faced by A8 migrants in the UK are of such strength that even the over-educated are paid less than matched UK nationals. Moreover, A8 migrants are concentrated in a particular sub-group of occupations, where higher wages are not available for the over-educated.
    Keywords: Immigration, educational mismatch, labour market, skill recognition
    JEL: J24 J61 J62 F22
    Date: 2013–05–30
    URL: http://d.repec.org/n?u=RePEc:qss:dqsswp:1309&r=lab
  10. By: Schmid, Günther (WZB - Social Science Research Center Berlin)
    Abstract: By conventional statistics, youth unemployment seems to be quite moderate in Korea: ‘only’ 9.6 percent of the ‘active’ youth labour force was unemployed compared to 21.4 percent in EU-27 in 2011. Germany, with a youth unemployment rate of 8.5 percent, is one of the very few European countries outperforming Korea. But the Korean case is in one respect unusual. From the perspective of intergenerational risk sharing Korea’s youth unemployment rate is 4.6 times higher than the unemployment rate of adults aged 45 to 54; in Germany, this figure is only 1.7. Further peculiarities come up if unemployment is measured by the number of youth not in employment, education or training (NEET) in percent of the total youth population. Korea’s NEET figures are at the top in OECD countries, especially for youth with tertiary education. This paper throws some light to explain this conundrum: It sketches, first, the main causes of youth unemployment and the general policy interventions; because a large part of the problem is structural, possible immediate measures to avoid long-term scar effects for the unemployed youth are briefly reviewed; differences between Europe and the United States show in particular the importance of automatic stabilizers like unemployment insurance in order to reduce the pressure on unfavourable risk sharing for youth in times of recession. The main part is devoted to possible lessons for Korea from Europe, in particular from Germany. Dual education and vocational training systems that emphasise middle level and market oriented skills are identified as institutional device both for fairer intergenerational risk sharing as well as for a smoother transition from school to work. In its outlook, the paper comes back to the puzzle of highly and academically inflated youth unemployment by referring to a possible hidden cause in Korea: A strong insurance motive might explain the overall striving for an academic degree inducing not only wasteful congestion at labour market entries but also unfair job allocation through credentialism.
    Keywords: unemployment, education, vocational training, labour market policy, transitional labour markets, risk sharing
    JEL: E24 I24 J64
    Date: 2013–05
    URL: http://d.repec.org/n?u=RePEc:iza:izapps:pp63&r=lab
  11. By: Marta Kaska; Tiiu Paas
    Abstract: The aim of this paper is to outline differences in the socio-demographic and employment characteristics of Estonian people who have worked in a neighbouring country – Finland, Sweden, Latvia or Russia. The empirical part of this paper relies on data from CV Keskus – an online employment portal bringing together jobseekers and vacant job posts. The results of our analysis show that different destination regions – the wealthier countries of Finland and Sweden (referred to as East-West mobility) and Latvia and Russia (referred to as East-East mobility) have attracted workers with different personal and job-related characteristics. Ethnicity and higher education are important determinants in explaining differences between East-West and East-East labour flows. Non-Estonians and people with a higher education have been less likely to work in Finland or Sweden.
    Keywords: geographic labour mobility, neighbouring countries, cross-country labour flows, Estonia
    JEL: J61 O57 R P52
    Date: 2013–05
    URL: http://d.repec.org/n?u=RePEc:nor:wpaper:2013016&r=lab
  12. By: Wenlang Zhang (Hong Kong Monetary Authority); Gaofeng Han (Hong Kong Monetary Authority)
    Abstract: Labour markets in China have experienced remarkable changes in the past decade. In this paper we use above-scale industrial firm-level data of 2001-2008 to study how labour market developments have affected labour costs of firms across regions, and different levels of technology and ownership in China. Our estimates suggest that, labour market tightness has had some impact on the labour costs of Hong Kong-Macau-Taiwan (HMT) firms and private enterprises, particularly in coastal areas, but overall the impact is limited. Our research also shows that labour migration has had some impact on the labour costs and employment of HMT and private firms in East China. Our analysis suggests that China has not yet seen an absolute shortage of labour, but there have been structural problems in the labour market. Demand for young low-end workers and skilled workers has outpaced supply, while the opposite is true for better educated workers such as young college graduates. As the majority of the employees of HMT and private enterprises are at the low-education end, wage pressures for these firms have increased accordingly. As such, it is necessary to remove the barriers that hinder rural labour forces from working in urban areas and to develop vocational and technical education. It is also useful to upgrade production chains to reduce the relative demand for low-end workers and increase that for better-educated workers to reduce skill mismatch in labour markets.
    Keywords: Labour Market Tightness, Labour Migration, Labour Costs
    JEL: J21 J23 J31
    Date: 2013–05
    URL: http://d.repec.org/n?u=RePEc:hkm:wpaper:072013&r=lab
  13. By: Carsten Helm (University of Oldenburg); Dominique Demougin (European Business School at the EBS University, Wiesbaden)
    Abstract: Several European countries have reformed their labor market institutions. Incentive effects of unemployment benefits have been an important aspect of these reforms. We analyse this issue in a principal-agent model, higher level of unemployment benefits improves the workers' position in wage bargaining, leading to stronger effort incentives and higher output. However, it also reduces incentives for labor market participation. Accordingly, there is a trade-off. We analyze how changes in the economic environment such as globalization and better educated workers affect this trade-off.
    Keywords: Unemployment benefits, incentive contracts, Nash bargaining, moral hazard, globalization
    JEL: J65 D82 J41 E24
    Date: 2012–08
    URL: http://d.repec.org/n?u=RePEc:old:dpaper:348&r=lab
  14. By: Jozef Konings; Luca Marcolin
    Abstract: Unemployment rates are significantly different across regions in Belgium. In the search for an explanation for this fact, we simultaneously estimate a wage and labor productivity equations where we include regional dummies as explanatory variables. We find that the wage-productivity gap reached 11% for Brussels and 4.2% for Wallonia in the years 2005-2012. This was driven by the negative performance in labor productivity of the firms in these regions relative to Flanders, which more than compensated for the advantage in unit labor costs they could profit from. On the other hand, the gap for Brussels is found to be currently decreasing in time thanks to a positive growth rate in labor productivity. The sign and magnitude of the wage-productivity gap is robust to the estimation of the relationship using hours worked instead of employees, and including benefits to salaries into the cost of labor. These results are coherent with the existence at the regional level of institutional barriers to the firm-level adjustment of wages to labor productivity. Among the possible explanations for this, our estimations suggest that a reduction in the gap between labor costs and productivity may be achieved through greater wage flexibility at the regional level.
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:ete:vivwps:38&r=lab
  15. By: Richard Fabling (Motu Economic and Public Policy Research); Maré, David C (Motu Economic and Public Policy Research)
    Abstract: We examine the correlates of reported hiring difficulties at the firm level using linked employer-employee and panel survey data over 2005-2011, focussing on the relative influence of firm-level characteristics, persistence, the business cycle and local labour market liquidity. At both the aggregate and the firm level, hiring difficulties eased after the onset of the Global Financial Crisis. Even in the presence of large cyclical changes in demand and labour market conditions, firm-level persistence is a dominant feature of the data, with one- and two-year lags of reported hiring difficulties both positively related to current difficulties. Firms paying higher wages are more likely to report difficulties when trying to hire skilled workers, while firms with more long tenure workers are less likely to report any difficulty hiring. Local labour market conditions appear unrelated to reported hiring difficulties.
    Keywords: hiring difficulties, hard-to-fill vacancies, local labour market, Global Financial Crisis
    JEL: J23 J63 M51
    Date: 2013–05
    URL: http://d.repec.org/n?u=RePEc:mtu:wpaper:13_06&r=lab
  16. By: Saima Naeem (Pakistan Institute of Development Economics, Islamabad); Asad Zaman (Pakistan Institute of Development Economics, Islamabad)
    Abstract: We conducted a field experiment and tested how employers can use socioemotional resources, such as appreciation and recognition, in order to signal intentions and create positive reciprocal relationships with employees. Results showed that these resources led to a significant gain in productivity. The study was extended to account for relative wage concerns both with and without appreciation treatment. Efficiency gains with appreciation appeared to be robust even after including information regarding relatively disadvantageous wage discrimination. However, workers’ without socioemotional resources exhibited strong resentment toward relatively lower wages by showing a significant systematic decrease in their labour supply. Our results suggest that workers not only compare their wages, as pointed out in previous literature, but also compare the socioemotional resources provided by their employer. This provides important evidence against one-dimensional comparisons of relative wages relevant to worker productivity.
    Keywords: Appreciation, Recognition, Symbolic Gift Exchange, Wage Comparisons
    JEL: C93 M5 J31 J32 J53
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:pid:wpaper:2013:90&r=lab
  17. By: Clement Imbert; John Papp
    Abstract: Using the gradual roll out of a large rural workfare program in India, we estimate its effect on private employment and wages by comparing districts that received the program earlier relative to those that received it later.  Our results suggest that public sector hiring crowds out private sector work and increases private sector wages.  We compute the implied welfare gains of the program by consumption quintile.  Our calculations show that the welfare gains to the poor from the equilibrium increase in private sector wages are large in absolute terms and large relative to the gains received solely by program participants.
    Date: 2013–02–04
    URL: http://d.repec.org/n?u=RePEc:oxf:wpaper:wps/2013-03&r=lab
  18. By: Schmillen, Achim (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Umkehrer, Matthias (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Does early-career unemployment cause future unemployment? We answer this question with German administrative matched employer-employee data that track more than 800,000 individuals over 24 years. Using a censored quantile instrumental variable estimator and instrumenting early-career unemployment with local labor market conditions at labor market entry and firm-specific labor demand shocks, we find significant and longlasting scarring effects. At the median, an additional day of unemployment during the first eight years on the labor market increases unemployment in the following 16 years by 0.96 days. Effects are even stronger in the right tail of the unemployment distribution. Likely due to unobserved heterogeneity in returns to search, they are also understated by non-IV estimates." (Author's abstract, IAB-Doku) ((en))
    Keywords: Jugendarbeitslosigkeit - Auswirkungen, junge Erwachsene, Jugendliche, ältere Arbeitnehmer, mittleres Lebensalter, Arbeitslosigkeitsdauer - Determinanten
    JEL: J64 J62 C20
    Date: 2013–05–23
    URL: http://d.repec.org/n?u=RePEc:iab:iabdpa:201306&r=lab
  19. By: Géraldine Rieucau (CEE - Centre d'études de l'emploi - Ministère de l'Enseignement supérieur et Recherche - Ministère du Travail, de l'Emploi et de la Santé, LED - Laboratoire d'Economie Dionysien - Université Paris VIII - Vincennes Saint-Denis : EA3391); Marie Salognon (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)
    Abstract: In France, one of ten recently-hired workers works in retailing. The literature provides evidence about the screening criteria used to fill low-wage vacancies in stores. However, neither the stage when criteria matter nor the forefront role of information channels (direct applications, word-of-mouth, employment agency and job ads) has been well explored. Drawing on 35 interviews conducted in 2010-2011, with actors involved in recruitment activities and with recently-hired workers in large stores in Greater Paris, this article explores the initial interaction between job seekers and recruiters. It is argued that the screening criteria vary according to the way employers received information about applicants and first interact with them (by mail, phone or face-to-face). This contribution highlights the importance of walk-in applications, which prioritize selection based on residence, appearances and availability. Changes in the first interaction impact the whole selection process and may change the profile of the workers hired.
    Keywords: Economy of conventions, French retailing, information channels, low-wage jobs, recruitment, screening criteria
    Date: 2012
    URL: http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00825180&r=lab
  20. By: Neeraj Kaushal
    Abstract: We study the effect of a recent expansion in India’s National Old Age Pension Scheme on elderly well-being. Estimates suggest that public pension has a modestly negative effect on the employment of elderly/near elderly men with a primary or lower education but no effect of the employment of similar women. Pension raised family expenditures, lowering poverty, and the effect was smaller on families headed by illiterate persons suggesting lower pension coverage of this most disadvantaged group. Further, households spent most of the pension income on medical care and education. We find some weak evidence that pension raised longevity.
    JEL: I3
    Date: 2013–05
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:19088&r=lab
  21. By: Brady, Gerard
    Abstract: Using data from the International Social Survey Programme 2008 this paper tests empirically the effects of network social capital on Irish employment outcomes, while controlling for possible endogeneity. We allow the effects of social networks to vary for different groups and across different localities. We also test the hypothesis that network social capital works as a complement to human capital in the labour market, rather than as a substitute. We find that social participation and employment are not endogenous and that ‘weak ties’ matter for employment outcomes, whereas ‘strong ties’ are less important. The effects, however, vary across age and location. We also find that social and human capital may be substitutes rather than complements when it comes to the labour market. These findings are discussed with relevance and examples for policy.
    Keywords: Social Capital, Networks, Ireland, Employment, Labour market
    JEL: J64 J68
    Date: 2013–05–30
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:47391&r=lab
  22. By: Ben Shepherd
    Abstract: This paper provides a review of the available literature on global value chains (GVCs) and employment markets in developing countries. Due to the difficulty of observing intra-GVC transactions, there is very little direct empirical work on GVCs and labour markets. However, it is possible to extrapolate from the extensive empirical work already undertaken on firm internationalisation and labour markets to draw inferences as to the likely impacts of GVCs. The review therefore focuses on the labour market impacts of three processes that lie at the core of GVC development: importing, exporting, and foreign direct investment (FDI). It examines their impact on labour demand and wages, and disaggregates the effects whenever possible by skill level. The available empirical evidence strongly suggests that the type of activities undertaken by GVC participants influence labour market outcomes. For instance, many GVC firms are vectors of technological upgrading that in turn increases the relative demand for skilled labour. In these cases, GVC participation is linked to higher relative wages for skilled workers, but also greater wage inequality between skilled and unskilled workers. The evidence on outcomes is more mixed as regards pure processing trade (assembly), however: the limited data available on firms engaged purely in these activities suggests that they do not systematically pay higher wages than domestic firms, which is the reverse of the finding for foreign-owned firms, exporters, and importers in general. The labour market effects of GVCs in developing countries are therefore likely to be broadly positive, but highly case specific. The review therefore concludes with two case studies—electronics in Asia and services in Chile—that demonstrate the complexity of the issues involved, and the role of complementary policies in areas such as human capital development.
    Keywords: trade, labour markets, foreign direct investment, developing countries, global value chains
    JEL: F16 F21 F23 O24
    Date: 2013–05–14
    URL: http://d.repec.org/n?u=RePEc:oec:traaab:156-en&r=lab
  23. 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 multidestination world.
    Date: 2013–05
    URL: http://d.repec.org/n?u=RePEc:nor:wpaper:2013015&r=lab
  24. By: Jillian Berk
    Keywords: reemployment, job training, trade-related job losses, TAA
    JEL: J
    Date: 2012–12–30
    URL: http://d.repec.org/n?u=RePEc:mpr:mprres:7733&r=lab

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