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on Labour Economics |
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Issue of 2013‒08‒05
seventeen papers chosen by Erik Jonasson National Institute of Economic Research |
| By: | Sónia Torres; Pedro Portugal; John T. Addison; Paulo Guimarães |
| Abstract: | This paper estimates a wage equation with three high-dimensional fixed effects, using a longitudinal matched employer-employee dataset covering virtually all Portuguese wage earners over a little more than two decades. The variation in log real hourly wages is decomposed into different components related to worker, firm, and job title characteristics (both observed and unobserved) and a residual component. It is found that worker permanent heterogeneity is the most important source of wage variation (36.0 percent) and that the unobserved component plays a more important role (21.0 percent) than the observed component (15.0 percent) in explaining wage differentials. Firm permanent effects are less important overall (28.7 percent) and are due in almost equal parts to the unobserved component and the observed component. Job title effects emerge as the least important dimension but they still explain close to 10 percent of wage variation. Equally important, we found definitive evidence of positive assortative matching. |
| JEL: | J2 J41 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w201309&r=lab |
| By: | Cette, Gilbert (Bank of France); Chouard, Valérie (Bank of France); Verdugo, Gregory (Bank of France) |
| Abstract: | This paper investigates whether increases in the minimum wage in France have the same impact on the average wage when intended to preserve the purchasing power of the minimum wage as when intended to raise it. We find that the impact of the minimum wage on the average wage is strong, but differs depending on the indexation factor. We also find some empirical evidence of circularity between the average wage and the minimum wage. |
| Keywords: | minimum wage, average wage, France |
| JEL: | E24 J31 J58 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7502&r=lab |
| By: | Mark J. Holmes (Department of Economics, Waikato University, New Zealand); Jesus Otero (Facultad de Economia, Universidad del Rosario, Colombia); Theodore Panagiotidis (Department of Economics, University of Macedonia, Greece) |
| Abstract: | Abstract This paper provides evidence that unemployment rates across US states are stationary and therefore behave according to the natural rate hypothesis. We provide new insights by considering the effect of key variables on the speed of adjustment associated with unemployment shocks. A highly-dimensional VAR analysis of the half-lives associated with shocks to unemployment rates in pairs of states suggests that distance between states and vacancy rates respectively exert a positive and negative influence. We find that higher homeownership rates do not lead to higher half-lives. When the symmetry assumption is relaxed through quantile regression, support for the Oswald hypothesis through a positive relationship between homeownership rates and half-lives is found at the higher quantiles. |
| Keywords: | Unemployment; market integration; speed of adjustment. |
| JEL: | E24 J60 F15 R10 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:1315&r=lab |
| By: | Carsten Sauer; Peter Valet; Stefan Liebig |
| Abstract: | This paper investigates justice perceptions of employees towards their own earnings. Earnings are decomposed into three components: (1) In returns based on human capital endowments, (2) in returns based on individual residual differences and (3) in returns based on differences between occupations. The legitimacy of these earnings components is measured via the justice assessments of employees. Based on theoretical models from justice research and class theory it is hypothesized that earnings inequality resulting from human capital factors is evaluated as just, whereas residual inequality and occupational inequality are perceived as unjust. The hypotheses are tested by using data from a German longitudinal panel study (SOEP) of the years 2005 to 2011. These data allow studying changes of individual earnings and justice evaluations in a household panel over the time span of six years (with four biennial measurement points). The findings support our hypotheses indicating that losses or gains in earnings which are due to changes in human capital endowments do not affect justice perceptions of own earnings. Losses or gains stemming from changes of a person's earnings position within the occupational group or the position of a person's occupational group within the earnings hierarchy of a society, however, affect justice perceptions remarkably. Thus, we can show that justice evaluations of own earnings do not solely depend on compensation for individual investments but also on residual differences in earnings within and between occupational groups. |
| Keywords: | Earnings inequality, fairness of earnings, decomposition of justice evaluations, group identification, panel regression |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp567&r=lab |
| By: | Myck, Michal (Centre for Economic Analysis, CenEA); Kurowska, Anna (Warsaw University); Kundera, Michał (Centre for Economic Analysis, CenEA) |
| Abstract: | Financial support for families with children implies inherent trade-offs some of which are less obvious than others. In the end these trade-offs determine the effectiveness of policy with respect to the material situation of families and employment of their parents. We analyse several kinds of trade-offs involved using a careful selection of potential changes to the system of financial support for families with children. We focus on: 1) the trade-off between redistribution of income to poorer households and improving work incentives, 2) the trade-off between improving work incentives for first and for second earners in couples, 3) the trade-off between improving work incentives for those facing strong and weak incentives in the baseline system. The exercise is conducted on data from Poland, a country characterized by high levels of child poverty, low female employment and one of the lowest fertility rates in Europe. We demonstrate the complexity of potential consequences of family support policy and stress the need for well-defined policy goals and careful analysis ahead of any reform. |
| Keywords: | labour supply, tax and benefit reforms, microsimulation, family policy |
| JEL: | J22 J13 J18 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7506&r=lab |
| By: | Sónia Cabral; Cláudia Duarte |
| Abstract: | Using matched employer-employee data, we examine the wage gaps between immigrant and native workers in the Portuguese labour market in the 2002-2008 period. We use the relation between the Gelbach’s and Oaxaca-Blinder’s decompositions to split the unconditional average wage gap as the sum of a composition effect and a wage structure effect. Most of the wage gap is not due to worst endowments of the immigrants but to differences in the returns to those characteristics and to the immigrant status effect. In particular, education and foreign experience of the average immigrants are significantly less valued in the Portuguese labour market. Overall, the wages of immigrants do not fully converge to those of comparable natives as experience in the Portuguese labour market increases. The assimilation rates tend to be stronger in the first years after migration and for immigrants with higher levels of pre-immigration experience. Total immigrants are a heterogeneous group of different nationalities, with immigrants from the EU15 and China starring as the two extreme cases. |
| JEL: | F22 J31 J61 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w201305&r=lab |
| By: | John Schmitt; Janelle Jones |
| Abstract: | Over the past three decades, the “human capital” of the employed black workforce has increased enormously. In 1979, only one-in-ten (10.4 percent) black workers had a four-year college degree or more. By 2011, more than one in four (26.2 percent) had a college education or more. Over the same period, the share of black workers with less than a high school degree fell from almost one-third (31.6 percent) to only about one in 20 (5.3 percent). The black workforce has also grown considerably older. In 1979, the median employed black worker was 33 years old; today, the median is 39. Economists expect that increases in education and work experience will increase workers' productivity and translate into higher compensation. But, the share of black workers in a “good job” – one that pays at least $19 per hour (in inflation-adjusted 2011 dollars), has employer-provided health insurance, and an employer-sponsored retirement plan – has actually declined. This paper looks at this trend and policies that would have a large, positive impact on the quality of jobs for black workers. |
| Keywords: | black workers, good jobs, retirement, pensions, health insurance, wages, labor, education, bad jobs, gender, pay equity |
| JEL: | J J3 J31 J32 J38 J5 J1 J11 J15 I I2 I24 I25 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2013-11&r=lab |
| By: | Cockx, Bart (Ghent University) |
| Abstract: | In Belgium youth unemployment is structurally higher than the European (EU27) average, in particular for the low educated. In this study we set a diagnosis of the main structural factors and advance key remedies. We analyze the system of employment protection, education and passive and active labor market policies. A high minimum wage, a strict separation between school and work, and a vertically segmented schooling system with high retention rates and too early tracking are identified as main causal factors. Strict employment protection legislation is only concern for high-skilled youth. Reducing labor costs at low wages and a fundamental schooling reform that aims at dismantling the strict barrier between school and work are proposed as key remedies. In addition, youth should be entitled as of the start of unemployment to a low benefit based on the principle of “mutual obligation”. Very intensive and durable guidance is to be targeted to the low educated. |
| Keywords: | youth unemployment, employment protection, education, active and passive labor market policies, Belgium |
| JEL: | J24 J38 J68 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp66&r=lab |
| By: | Cory Koedel (Department of Economics, University of Missouri-Columbia); Shawn Ni (Department of Economics, University of Missouri-Columbia); Michael Podgursky (Department of Economics, University of Missouri-Columbia); Jason A. Grissom |
| Abstract: | Despite their declining presence in the private sector, defined benefit (DB) pension plans still cover most public-sector workers. A distinguishing feature of these plans is that they impose severe penalties on worker mobility. We use administrative panel data from the largest public-sector occupation in the United States – teaching – to empirically examine the job-lock effects of DB pension plans. Our findings indicate that worker mobility is significantly reduced by pension borders. As expected, the effects are largest for individuals who face the steepest mobility penalties. |
| Keywords: | public pensions, defined benefit pensions, retirement benefits, job lock, pension job lock |
| JEL: | H75 J45 I20 |
| Date: | 2013–07–29 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:1310&r=lab |
| By: | Nguyen, Cuong |
| Abstract: | This study measures the effect of minimum wage increases on firm outcomes using fixed-effects regression and panel data from Vietnam Enterprise Censuses during 2008-2010. It is found that minimum wages reduce firms’ labor size, albeit at a small magnitude. A one percent increase in real minimum wages leads to a 0.1 percent reduction in the number of workers of firms. Firms are more likely to reduce male workers and those without social insurance. As a result, the proportion of female workers and workers with social insurance in firms increases due to minimum wages. Interestingly, under pressure of minimum wages, firms tend to increase assets, especially fixed assets, for labor substitution. |
| Keywords: | Minimum wages, firms, impact evaluation, panel data, Vietnam |
| JEL: | J31 L25 |
| Date: | 2012–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48656&r=lab |
| By: | Weiss M.; Börsch-Supan A. (ROA) |
| Abstract: | We study the relation between workers age and their productivity in work teams, based on a new and unique data set that combines data on errors occurring in the production process of a large car manufacturer with detailed information on the personal characteristics of workers related to the errors. We correct for non-random sample selection and the potential endogeneity of the age-composition in work teams. Our results suggest that productivity in this plant which is typical for large-scale manufacturing does not decline at least up to age 60. |
| Keywords: | Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity; Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination; Human Capital; Skills; Occupational Choice; Labor Productivity; |
| JEL: | D24 J14 J24 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umaror:2013009&r=lab |
| By: | Amélie Barbier-Gauchard; Francesco de Palma; Giuseppe Diana (LaRGE Research Center, Université de Strasbourg) |
| Abstract: | We consider a heterogeneous labor market in a two-country monetary union. The domestic economy is characterized by a dual labor market with formal and informal sectors as observed in most Southern EMU economies. Among formal workers, wage-levels result from efficiency considerations. In the foreign economy, with reference to Northern EMU economies, we assume another type of wage rigidity explained by the presence of unions. More precisely, only wages are bargained between firms and employees as in the right-to-manage model. These rigidities lead to inefficient allocations of workers in each country: a misallocation of workers among sectors in the domestic country and unemployment in the foreign one. In this context, the labor market flexibilization may appear as a relevant option for improving the situation of activity and employment in the monetary union. This is the reason why we investigate the overall effects of a decrease in trade union bargaining power in the foreign (Northern) economy. We show that, at the new equilibrium, a lower bargaining power in the foreign economy leads to a decrease in all prices and the effects are positive overall. In the foreign economy, the equilibrium level of production is higher, unemployment decreases and wages are lower. In the domestic one, the production also increases, the labor market benefits from a better allocation of workers between formal and informal sectors, and all wages are higher. |
| Keywords: | efficiency wage, dualism, EMU, trade unions, bargaining. |
| JEL: | E60 F16 F41 J31 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:lar:wpaper:2013-08&r=lab |
| By: | Brian C. Cadena; Brian K. Kovak |
| Abstract: | This paper demonstrates that low-skilled Mexican-born immigrants' location choices in the U.S. respond strongly to changes in local labor demand, and that this geographic elasticity helps equalize spatial differences in labor market outcomes for low-skilled native workers, who are much less responsive. We leverage the wage rigidity that occurred during Great Recession to identify the severity of local downturns, and our results confirm the standard finding that high-skilled populations are quite geographically responsive to employment opportunities while low-skilled populations are much less so. However, low-skilled immigrants, primarily those from Mexico, respond even more strongly than high-skilled native-born workers. These results are robust to a wide variety of controls, a pre-recession falsification test, and two instrumental variables strategies. A novel empirical test reveals that natives living in cities with a substantial Mexican-born population are insulated from the effects of local labor demand shocks compared to those in cities with few Mexicans. The reallocation of the Mexican-born workforce among these cities reduced the incidence of local demand shocks on low-skilled natives' employment outcomes by more than 40 percent. |
| JEL: | F22 J21 J61 R23 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19272&r=lab |
| By: | Jonathan Meer; Jeremy West |
| Abstract: | The voluminous literature on minimum wages offers little consensus on the extent to which a wage floor impacts employment. For both theoretical and econometric reasons, we argue that the effect of the minimum wage should be more apparent in new employment growth than in employment levels. In addition, we conduct a simulation showing that the common practice of including state-specific time trends will attenuate the measured effects of the minimum wage on employment if the true effect is in fact on the rate of job growth. Using a long state-year panel on the population of private-sector employers in the United States, we find that the minimum wage reduces net job growth, primarily through its effect on job creation by expanding establishments. |
| JEL: | J21 J23 J38 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19262&r=lab |
| By: | John R. Graham; Hyunseob Kim; Si Li; Jiaping Qiu |
| Abstract: | This paper quantifies the “human costs of bankruptcy” by estimating employee wage losses induced by the bankruptcy filing of employers using employee-employer matched data from the U.S. Census Bureau’s LEHD program. We find that employee wages begin to deteriorate one year prior to bankruptcy. One year after bankruptcy, the magnitude of the decline in annual wages is 30% of pre-bankruptcy wages. The decrease in wages persists (at least) for five years post-bankruptcy. The present value of wage losses summed up to five years after bankruptcy amounts to 29-49% of the average pre-bankruptcy market value of firm. Furthermore, we find that the ex-ante wage premium to compensate for the ex-post wage loss due to bankruptcy can be of similar magnitude with that of the tax benefits of debt. |
| Keywords: | Bankruptcy; Costs of financial distress; Human capital; Wage loss; Capital structure |
| JEL: | G3 G32 G33 J24 J31 J33 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:13-37&r=lab |
| By: | Ritter, Joseph A. |
| Abstract: | Previous research has found that, after controlling for test scores, measured black-white wage gaps are small but unemployment gaps remain large. This paper complements this previous research by examining the incidence of employer-provided benefits from the same premarket perspective. However, marriage rates differ substantially by race, and the possibility of health-insurance coverage through a spouse’s employer therefore distorts how the distribution of benefits available in the market to an individual is expressed in the distribution of benefits received. Two imputation strategies are used to address this complication. The evidence suggests that benefit availability gaps are small. |
| Keywords: | Labor and Human Capital, Public Economics, |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:ags:umaemp:152497&r=lab |
| By: | Pablo Agnese (Department of Economics of the Duesseldorf University of Applied Sciences) |
| Abstract: | The subject of offshoring and productivity has not yet received the attention it deserves. Here I propose a simple framework for estimating the contribution of these strategies to the growth rate of labor productivity from a time-series perspective. This framework is then used to assess the impact of offshoring on skill upgrading and the labor share. For both empirical questions I take up the study of a group of Japanese industries during the recent years of slow growth. The results should be interpreted with caution yet clearly suggest that offshoring can improve labor productivity in the semiconductors industry. Moreover, offshoring is found to be the source of important changes among industries with different skills (skill upgrading) and an important factor behind the fall of the labor share. |
| Abstract: | Der Zusammenhang zwischen Ausgliederung von Unternehmensprozessen in andere Länder (Offshoring) und Produktivität hat noch nicht die Aufmerksamkeit in der wissenschaftlichen Debatte gefunden, die er verdient. Dieser Beitrag stellt eine einfache Methode vor, wie sich der Wachstumsbeitrag zur Arbeitsproduktivität von mit Outsourcing verbundenen Strategien ökonometrisch im Zeitablauf schätzen lässt. Der vorgeschlagene Ansatz wird dann dazu verwendet, die Wirkung von Offshoring auf die Qualifikationsentwicklung und die Lohnquote zu bestimmen. Zur Beantwortung der beiden empirischen Fragen verwendet die Studie ausgewählte japanische Branchen während der Phase geringen Wachstums in jüngerer Zeit. Die gefundenen Ergebnisse zeigen, dass Offshoring die Arbeitsproduktivität in der Halbleiterindustrie verbessert hat. Sie sollten jedoch mit der üblichen Vorsicht interpretiert werden. Darüber hinaus ist Offshoring eine wesentlicher Grund für den Wandel von Branchen mit unterschiedlicher Qualifikationszusammensetzung (verbesserte Durchschnittsqualifikation) und eine wichtige Determinante der gesunkenen Lohnquote. |
| Keywords: | Offshoring, Labor Productivity, Skill Upgrading, Labor Share, Arbeitsproduktivität , Qualifikation , Lohnquote , Outsourcing |
| JEL: | J23 J24 E25 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:ddf:wpaper:fobe23&r=lab |