|
on Labour Economics |
|
Issue of 2013‒10‒18
thirty-two papers chosen by Erik Jonasson National Institute of Economic Research |
| By: | Philipp Kircher (University of Edinburgh) |
| Abstract: | We develop a neoclassical trade model with heterogeneous factors of production. We consider a world with two factors, labor and ?managers?, each with a distribution of ability levels. Production combines a manager of some type with a group of workers. The output of a unit depends on the types of the two factors, with complementarity between them, while exhibiting diminishing returns to the number of workers. We examine the sorting of factors to sectors and the matching of factors within sectors, and we use the model to study the determinants of the trade pattern and the e¤ects of trade on the wage and salary distributions. Finally, we extend the model to include search frictions and consider the distribution of employment rates. |
| Keywords: | heterogeneous labor, matching, sorting, productivity, wage distribution, international trade. |
| JEL: | F11 F16 |
| Date: | 2013–10–11 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:227&r=lab |
| By: | Andri Chassamboulli (University of Cyprus); Theodore Palivos (Athens University of Economics and Business) |
| Abstract: | We analyze the impact of the immigration influx that took place during the years 2000-2007 in Greece on labor market outcomes. We employ a search and matching framework that allows for skill heterogeneity and differential unemployment income (search cost) between immigrants and natives. Within such a framework, we .find that skilled native workers, who complement immigrants in production, gain in terms of both wages and employment. The effects on unskilled native workers, who compete with immigrants, on the other hand, are ambiguous and depend first on the presence of a statutory minimum wage and second on the way that this minimum wage is determined. |
| Keywords: | Immigration; Search and Matching; Unemployment; Skill-heterogeneity;Minimum Wage; Greek Economy. |
| JEL: | F22 J61 J64 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:bog:wpaper:160&r=lab |
| By: | Tillmann Schwörer |
| Abstract: | This paper estimates the effects of offshoring on labour market inequalities between skill groups based on German industry level data from 1995 to 2007. Our main findings are the following: First, offshoring is on average biased in favour of high-skilled employees and in disfavour of low-skilled employees. This effect is strongly driven by the manufacturing sector, material offshoring, and offshoring to Central and Eastern Europe. Second, we find that the labour market adjusts to offshoring mainly through changes in relative wages rather than changes in relative employment. This runs counter to the classical argument that German labour market institutions (collective bargaining, unemployment benefits, etc.) lead to rigid wage structures and high unemployment rates. Third, in the service sector it is the group of medium-skilled employees which is particularly exposed to offshoring, possibly due to the different nature of tasks there. Fourth, medium-skilled employees are also negatively affected by technological change, which explains recent trends towards a polarisation in labour demand |
| Keywords: | offshoring, skills, labour market, inequalities, seemingly unrelated regression |
| JEL: | F14 J23 J24 J31 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1877&r=lab |
| By: | Yin King Fok (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Rosanna Scutella (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Roger Wilkins (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | We investigate transitions between unemployment, low-paid employment and higher-paid employment using household panel data for the period 2001 to 2011. Dynamic panel data methods are used to estimate the effects of labour force status on subsequent labour force status. A distinctive feature of our study is the investigation of heterogeneity in the effects of unemployment and low-paid employment on future employment prospects. We find that there is state dependence in both unemployment and low-paid employment and clear evidence of a low-pay no-pay cycle for both men and women. Significant differences in effects across different subgroups of the population are, however, found. Typically, the young and the better educated face less severe penalties from unemployment or low-paid employment, and, for women, the cycle between low pay and no pay varies across subgroups. Moreover, in the case of men who have completed secondary schooling but have no further qualifications, low-paid employment actually decreases the chances of entering higher-paid employment by more than unemployment does. This is not the case for women, however, who clearly have a higher likelihood of entering higher-paid employment from low-paid employment than from unemployment, regardless of their age, education level or other characteristics. |
| Keywords: | Employment dynamics, state dependence, heterogeneous impacts |
| JEL: | J01 J31 J60 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2013n32&r=lab |
| By: | Daniel D. Schnitzlein; Jens Stephani |
| Abstract: | We investigate whether non-cognitive skills – in particular Locus of Control – are important determinants of the labour market processes at the low-wage margin. Based on data from the German Socio-Economic Panel, we estimate dynamic multinomial logit models with random effects and investigate whether Locus of Control influences the probability of being higher-paid or low-paid as well as the probability of escaping low wages by moving up to higher-paid employment. Our results reveal a significant amount of state dependence in low pay even after controlling for Locus of Control and other non-cognitive skills. Furthermore, compared to individuals with an external Locus of Control, individuals with a more internal Locus of Control have a significantly higher probability of being higher-paid instead of low-paid. Conditional on being low-paid, individuals with an internal Locus of Control additionally have a significantly higher probability of moving to higher-paid employment in the following year than individuals with an external Locus of Control. |
| Keywords: | low-wage, wage mobility, personality, non-cognitive skills, inequality, SOEP |
| JEL: | J30 J60 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp589&r=lab |
| By: | Birol Kanik; Enes Sunel; Temel Taskin |
| Abstract: | In this paper, we study the Beveridge curve and the matching function in Turkey. The analysis illustrates that the empirical Beveridge curve for the 2005 : M1-2013 : M2 period posits a negative relationship between unemployment and vacancies. When the sample period is divided into sub-periods around the recent global financial crisis, the unemployment-vacancies pairs are found to follow a counterclockwise trajectory (around the empirical Beveridge curve) during the transition from trough into the recovery. The estimation of the matching function implies that the congestion externality of unemployment on job finding is in line with the literature. Disaggregation of the Beveridge curve suggests that recent labor market reforms were beneficial for the targeted employment groups. |
| Keywords: | Beveridge curve, unemployment, matching function |
| JEL: | J20 J63 J64 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:1335&r=lab |
| By: | Bryan, Mark L.; Longhi, Simonetta |
| Abstract: | We examine how couples labour supply behaviour in the UK responds to a job loss by one partner, using the Labour Force Survey to compare the period of growth of 1995-2007 to the Great Recession and its aftermath of 2008-11. In single earner couples during the recession, both men and women substantially increased their job search activity following a partners job loss, while the increase in search during the boom was smaller (and non-existent for men). However, the increase in job search during recession did not appear to translate into more success in finding work for either men or women. Among dual earner couples, we find little evidence that individuals searched for alternative jobs or tried to increase their hours if their partner lost their job, except that women working part-time were more likely to start looking for another job. Both men and women were more likely to quit their job voluntarily if their partner lost their job, but the recession seems to have made people more cautious about voluntarily quitting their job. We find little evidence that people react in advance of job losses, suggesting that unemployment typically comes as a surprise. |
| Date: | 2013–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2013-20&r=lab |
| By: | Lisa J. Dettling |
| Abstract: | This paper investigates how high-speed home Internet has impacted married women's labor force participation. I estimate the net effect of individual Internet usage on labor supply using an instrumental variables strategy which exploits cross-state variation in supply-side constraints to residential broadband Internet access. Results indicate that married women who use the Internet are more likely to participate in the labor force. The average effects mask substantial heterogeneity and increases in participation are concentrated on women with higher levels of education and children. The results suggest home Internet facilitates work-family balance for highly educated women. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-65&r=lab |
| By: | Etienne Lehmann (TEPP - Travail, Emploi et Politiques Publiques - CNRS : FR3435 - Université Paris-Est Marne-la-Vallée (UPEMLV), CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, ERMES - Equipe de recherche sur les marches, l'emploi et la simulation - CNRS : UMR7017 - Université Paris II - Panthéon-Assas); Claudio Lucifora (Università Cattolica di Milano - Università Cattolica di Milano); Simone Moriconi (Università Cattolica di Milano - Università Cattolica di Milano); Bruno Van Der Linden (ACE - Applied and Computational Electromagnetics - Université de Liège - Institut Montefiore - Département d'Electricité, Electronique et Informatique (Liège) - Fonds de la Recherche Scientifique [FNRS]) |
| Abstract: | This paper argues that, for a given overall level of labour income taxation, a more progressive tax schedule reduces the unemployment rate and increases the employment rate. From a theoretical point of view, higher progressivity induces a wage-moderation e ect and increases overall employment since employment of low-paid workers is more responsive. We test these theoretical predictions on a panel of 21 OECD countries over 1998-2008. Controlling for the burden of taxation at the average wage, we show that a more progressive taxation reduces the unemployment rate and increases the employment rate. These ndings are con rmed when we account for the potential endogeneity of both average taxation and progressivity. Overall our results suggest that policy-makers should not only focus on the detrimental e ects of tax progressivity on in-work e ort. |
| Keywords: | wage moderation; employment; taxation |
| Date: | 2013–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00870050&r=lab |
| By: | Cai, Lixin |
| Abstract: | Using the Household, Income and Labour Dynamics in Australia (HILDA) survey, this study shows that the largest proportion of low pay spells originated from higher pay; only a small proportion were from non-employment or recent graduates. While the majority of low pay spells transitioned to higher pay, a significant proportion ended up with non-employment. The multivariate analysis shows that workers who entered low pay from higher pay also have a higher hazard rate of transitioning to higher pay; and those who entered low pay from non-employment are more likely to return to non-employment. Union members, public sector jobs and working in medium to large size firms increase the hazard rate of transitioning to higher pay, while immigrants from non-English speaking countries and workers with health problems have a lower hazard rate of moving into higher pay. There is some evidence that the longer a worker is in low paid employment, the less likely they are to transition to higher pay. |
| Keywords: | Low pay, competing risk, Australia |
| JEL: | J2 J3 J33 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:50521&r=lab |
| By: | Paul Gomme (Concordia University and CIREQ); Damba Lkhagvasuren (Concordia University and CIREQ) |
| Abstract: | Shimer's puzzle is that the textbook Diamond-Mortensen-Pissarides model exhibits fluctuations in labor market variables that are an order of magnitude too small. Introducing search effort of the unemployed brings the model's predictions for these fluctuations very close to those seen in the data. The search cost function and the matching technology are intimately related and thus should be estimated simultaneously. Ignoring worker search effort leads to a large upward bias in the elasticity of matches with respect to vacancies. Evidence in support of the model's prediction of procyclical search effort is presented. |
| Keywords: | Variable Search Effort, Educational Differences in Unemployment Volatility, Endogenous Matching Technology, Time Use, Wage Posting, Competitive Search |
| JEL: | E24 E32 J63 J64 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:crd:wpaper:13002&r=lab |
| By: | J nos Kollo (Institute of Economics, Center for Economic and Regional Studies, Hungarian Academy of Sciences) |
| Abstract: | The paper looks at how the distribution of jobs by complexity and firms' willingness to hire low educated labor for jobs of different complexity contribute to unskilled employment in Norway, Italy and Hungary. In search of how unqualified workers can attend complex jobs, it compares their involvement in various forms of post-school skills formation. The countries are also compared by the weight of small firms, which are assumed to assist low skilled workers through interpersonal relationships. The data suggest that unskilled employment in Norway benefits from synergies between work in skill-intensive jobs, intense adult training, informal learning and involvement in civil activities. In Italy, workplaces requiring no literacy skills at all have the largest contribution but small businesses tend to employ low educated workers at a large scale even in highly complex jobs. In Hungary, insufficient skills (relative to Norway) and an undersized small-firm sector (relative to Italy) set limits to the inclusion of the low educated. An extreme degree of social isolation is likely to deteriorate their skills and jobs prospects further. |
| Keywords: | skills, skill requirements, unemployment, firm size |
| JEL: | J21 J24 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:has:bworkp:1315&r=lab |
| By: | Schaffer M.E.; Dohmen T.J.; Lehmann H. (ROA) |
| Abstract: | We use a rich personnel data set from a Russian firm for the years 1997 to 2002 to analyze how the firm adjusts wages and employment during this period in which local labor market conditions changed in the aftermath of the financial crisis in 1998. We relate the development of turnover and wages for various employment categories to alternative models of wage and employment determination. We argue that the firms behavior is consistent with the predictions of efficiency wage models of the shirking and turnover type. |
| Keywords: | Labor Demand; Wage Level and Structure; Wage Differentials; Socialist Systems and Transitional Economies: Factor and Product Markets; Industry Studies; Population; |
| JEL: | J23 J31 P23 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umaror:2013012&r=lab |
| By: | Ludo Visschers (The University of Edinburgh, Universidad Carlos III de Madrid, and CESifo) |
| Abstract: | We develop a neoclassical trade model with heterogeneous factors of production. We consider a world with two factors, labor and ?managers?, each with a distribution of ability levels. Production combines a manager of some type with a group of workers. The output of a unit depends on the types of the two factors, with complementarity between them, while exhibiting diminishing returns to the number of workers. We examine the sorting of factors to sectors and the matching of factors within sectors, and we use the model to study the determinants of the trade pattern and the effects of trade on the wage and salary distributions. Finally, we extend the model to include search frictions and consider the distribution of employment rates. |
| Keywords: | Layoff Rates, Unemployment risk, Wage Differentials, Unemployment Scarring. |
| JEL: | J31 J63 |
| Date: | 2013–10–11 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:228&r=lab |
| By: | Ajay Agrawal; John Horton; Nicola Lacetera; Elizabeth Lyons |
| Abstract: | Online contract labor globalizes traditionally local labor markets, with platforms that enable employers, most of whom are in high-income countries, to more easily outsource tasks to contractors, primarily located in low-income countries. This market is growing rapidly; we provide descriptive statistics from one of the leading platforms where the number of hours worked increased 55% from 2011 to 2012, with the 2012 total wage bill just over $360 million. We outline three lines of inquiry in this market setting that are central to the broader digitization research agenda: 1) How will the digitization of this market influence the distribution of economic activity (geographic distribution of work, income distribution, distribution of work across firm boundaries)?; 2) What is the magnitude and nature of information frictions in these digital market settings as reflected by user responses to market design features (allocation of visibility, investments in human capital acquisition, machine-aided recommendations)?; 3) How will the digitization of this market affect social welfare (increased efficiency in matching, production?)? We draw upon economic theory as well as evidence from empirical research on online contract labor markets and other related settings to motivate and contextualize this research agenda. |
| JEL: | J24 J61 O15 O33 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19525&r=lab |
| By: | Cai, Lixin |
| Abstract: | Using the HILDA Survey, this study examines state-dependence and stepping stone effects of low pay in Australia. The results show that both state-dependence and stepping stone effects of low pay are present after observed and unobserved individual heterogeneity is accounted for. The results also show that, other things being equal, people who are on low pay are more likely to be in employment in the future than those who are either unemployed or not in the labour force. On the other hand, people on low pay do not appear to be more likely to become jobless in the future than those on higher pay. |
| Keywords: | Low pay, stepping stone effects, state dependence, multinomial logit model |
| JEL: | C35 J31 J38 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:50522&r=lab |
| By: | Maria D. Fitzpatrick |
| Abstract: | Despite the widespread provision of retiree health insurance for public sector workers, little attention has been paid to its effects on employee retirement. This is in contrast to the large literature on health-insurance-induced “job-lock” in the private sector. I use the introduction of retiree health insurance for public school employees in combination with administrative data on their retirement to identify the effects of retiree health insurance. As expected, the availability of retiree health insurance for older workers allows employees to retire earlier. These behavioral changes have budgetary implications, likely making the programs self-financing rather than costly to taxpayers. |
| JEL: | H75 I21 I22 J26 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19524&r=lab |
| By: | Lechner, Michael; Downward, Paul |
| Abstract: | Based on a unique composite dataset measuring heterogeneous sports participation, labour market outcomes and local facilities provision, this paper examines for the first time the association between different types of sports participation on employment and earnings in England. Clear associations between labour market outcomes and sports participation are established through matching estimation whilst controlling for some important confounding factors. The results suggest a link between different types of sports participation to initial access to employment and then higher income opportunities with ageing. However, these vary between the genders and across sports. Specifically, the results suggest that team sports contribute most to employability, but that this varies by age across genders and that outdoor activities contribute most towards higher incomes. |
| Keywords: | Sports Participation, Human Capital, Labour Market, Matching Estimation |
| JEL: | I12 I18 J24 L83 C21 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2013:25&r=lab |
| By: | Esfandiar Maasoumi; Le Wang |
| Abstract: | This paper presents a set of complementary tools for measurement and analysis of the gender gap that move beyond the simple moment-based comparison of the earnings distributions. In particular, we propose a new measure of the gender gap based on the the distance between two whole distributions, instead of their specific parts. We also introduce tests based on stochastic dominance to allow for robust welfare comparisons of the earnings distributions between men and women. Using the Current Population Survey data, we first construct a new series on the gender gap from 1976 to 2011 in the United States. We find that traditional moment-based measures severely underestimate the declining trend of the gender gap during this period. More important, these traditional measures do not necessarily reflect the cyclicality of the gender differentials in earnings distributions, and thus may even lead to a false conclusion about how labor market conditions are related to the gender gap at the aggregate level. Second, we find that stochastic dominance (or a clear ranking of the earnings distributions) is rare, and that instances in which we do find stochastic dominance appear to be disproportionately concentrated in the pre-welfare reform period and related to economic recessions. Finally, our counterfactual analysis show that in most cases neither changing earnings structure nor changing human capital characteristics would necessarily improve women’s well-being uniformly in the society. |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:emo:wp2003:1305&r=lab |
| By: | Parsons, Donald O. (George Washington University) |
| Abstract: | Severance pay, a fixed-sum payment to workers at job separation, has been the focus of intense policy concern for the last several decades, but much of this concern is unearned. The design of the ideal separation package is outlined and severance pay emerges as a natural component of job displacement insurance packages, serving both as scheduled reemployment wage insurance and, if search moral hazard is a problem, as scheduled UI. Like any firm-financed separation expenditure, severance pay can induce excessive job retention, but such distortions do not appear to be of practical significance at benefit levels typically mandated in the industrialized world. Moreover there is no evidence that firms attempt to avoid these firing cost distortions by substituting severance savings plans, which have zero firing costs. Indeed severance insurance plans similar to those mandated are often offered voluntarily in the U.S. The appropriate role of government in the market for severance pay is briefly considered. |
| Keywords: | severance pay, job displacement, firing costs, unemployment insurance, moral hazard |
| JEL: | J65 J41 J33 J08 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7641&r=lab |
| By: | Kräkel, Matthias; Szech, Nora; von Bieberstein, Frauke |
| Abstract: | External recruiting at least weakly improves the quality of the pool of applicants, but the incentive implications are less clear. Using a contest model, this paper investigates the pure incentive effects of external recruiting. Our results show that if workers are heterogeneous, the opening of a firm’s career system may lead to a homogenization of the pool of contestants and, thus, encourage the firm’s high ability workers to exert more effort. If this positive effect outweighs the discouragement of low ability workers, the firm will benefit from external recruiting. If, however, the discouragement effect dominates the homogenization effect, the firm should disregard external recruiting. In addition, product market competition makes opening of the career system less attractive for a firm since it increases the incentives of its competitors’ workers and hence strengthens the competitors. |
| Keywords: | contest; externalities; recruiting; wage policy. |
| JEL: | C72 J2 J3 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:414&r=lab |
| By: | Inderbitzin, Lukas; Staubli, Stefan; Zweimüller, Josef |
| Abstract: | This paper explores how extended unemployment insurance (UI) benefits targeted to older workers affect early retirement and social welfare. We argue that the analysis of UI's tradeoff between consumption smoothing and moral hazard needs to consider the entire early retirement system, which often consists of extended UI and relaxed access to disability insurance (DI). We argue that extended UI generates program complementarity (higher future take-up of DI and/or regular retirement benefits) or program substitution (lower contemporaneous take-up of DI benefits). Exploiting Austria's regional extended benefit program, which extended regular UI benefits to up to 4 years, we find: (i) program complementarity is quantitatively important for workers aged 50+; and (ii) program substitution is quantitatively relevant for workers aged 55+. We derive an optimal UI formula in the spirit of Baily (1978) and Chetty (2006) that features program complementarity and program substitution. Using the sufficient statistics approach, we conclude that UI for older workers was too generous and the regional extended benefit program was a suboptimal policy. |
| Keywords: | Early retirement, unemployment, disability, policy reform, optimal benefits |
| JEL: | J14 J26 J65 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2013:23&r=lab |
| By: | David Johnson (University of Calgary); David Cooper |
| Abstract: | Many incentive plans are inherently ambiguous, lacking an explicit mapping between performance and compensation. Using an online labor market, Amazon Mechanical Turk, we study the effect of ambiguity on willingness to accept contracts to do a real-effort task as well as completion and performance of this task. Ambiguity about the relationship between performance and compensation affects the willingness of individuals to accept contracts and the likelihood of quitting before completion, but not performance. These effects are non-monotonic in the level of ambiguity. Information about ability at the task reduces willingness to accept and increases quitting, but does not affect performance. |
| Keywords: | ambiguity, incentives, performance pay, quitting, online experiment |
| JEL: | C99 D81 J33 |
| Date: | 2013–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:clg:wpaper:2013-27&r=lab |
| By: | Brice Corgnet (Argyros School of Business and Economics, Chapman University); Roberto Hernán-González (Universidad de Granada); Eric Schniter (Economic Science Institute, Chapman University) |
| Abstract: | On-the-job leisure is a pervasive feature of the modern workplace. We studied its impact on work performance in a laboratory experiment by either allowing or restricting Internet access. We used a 2×2 experimental design in which subjects completing real-effort work tasks could earn cash according to either individual- or team-production incentive schemes. Under team pay, production levels were significantly lower when Internet browsing was available than when it was not. Under individual pay, however, no differences in production levels were observed between the treatment in which Internet was available and the treatment in which it was not. In line with standard incentive theory, individual pay outperformed team pay across all periods of the experiment when Internet browsing was available. This was not the case, however, when Internet browsing was unavailable. These results demonstrate that the integration of on-the-job leisure activities into an experimental labor design is crucial for uncovering incentive effects. |
| Keywords: | Incentive, Free riding, Internet access, Experimental method |
| JEL: | C92 D23 M52 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:13-22&r=lab |
| By: | DeNicco, James (Drexel University) |
| Abstract: | In this paper I study the effects on jobless recovery of diminishing the power of an employer to fire an employee through Employment-At-Will Exceptions (EWEs). I do so by using a dynamic panel with quarterly data ranging from 1976 to 2010 for the 50 states in the United States. I test both changes in state unemployment rates and state-weighted GDP growth in single variable regressions and VAR regressions. My contribution to the literature is threefold. First, I show two of the three EWEs contribute significantly to jobless recovery in the U.S. The statistical tests in this paper show that Implied Contract Exceptions slow decreases in the unemployment rate during recovery from recession by between 0.025 and 0.033 percentage points per quarter, and Covenant of Good Faith and Fair Dealing Exceptions do so by between 0.039 and 0.055 percentage points per quarter. Second, I lend support to the predictions of theory that increased firing costs decrease the rate of hiring during recoveries. Third, I resolve differences in the various sources documenting the three types of EWEs in different states. |
| Keywords: | Employment at will; jobless recovery |
| JEL: | E24 E32 J23 J32 J83 K12 K31 |
| Date: | 2013–07–29 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2013_001&r=lab |
| By: | Ester Manna |
| Abstract: | I investigate whether the presence of intrinsically motivated agents benefits firms in a competitive environment. I find that firms may obtain higher profits by hiring self-interested agents than by hiring motivated agents. This is because the agents' intrinsic motivation has counteracting effects on the profits obtained by the firms. On the one hand, motivation has a positive impact on the profits due to a reduction of wages. Motivated employees provide a given level of quality for a lower wage. On the other hand, motivation has a negative impact on each firm's profits. The agents' intrinsic motivation has a positive impact on the quality offered by the firms. With higher quality, the degree of differentiation of the products is relatively less important, increasing competition and reducing prices. Firms find themselves trapped in a prisoner's dilemma in which the strategy of hiring self-interested agents is strictly dominated by that of hiring motivated agents. Hence, the very presence of motivated agents may hurt firms. |
| JEL: | D03 D21 L13 |
| Date: | 2013–10–08 |
| URL: | http://d.repec.org/n?u=RePEc:jmp:jm2013:pma1910&r=lab |
| By: | Christian von Scheve; Frederike Esche; Jürgen Schupp |
| Abstract: | Unemployment continues to be one of the major challenges in industrialized societies. Aside from its economic dimensions and societal repercussions, questions concerning the individual experience of unemployment have recently attracted increasing attention. Although many studies have documented the detrimental effects of unemployment for subjective well-being, they overwhelmingly focus on life satisfaction as the cognitive dimension of well-being. Little is known about the emotional antecedents and consequences of unemployment. We thus investigate the impact of unemployment on emotional well-being by analyzing the frequency with which specific emotions are experienced in anticipation of and reaction to job loss. Using longitudinal data of the German Socio-Economic Panel (SOEP) and fixed effects regressions, we find that becoming unemployed leads to more frequent experiences of unpleasant emotions only in the short run and that adaptation occurs more rapidly as compared to life satisfaction. Contrary to existing studies, we find decreases on emotional well-being but not in life satisfaction in anticipation of unemployment. |
| Keywords: | Unemployment, emotions, well-being, life satisfaction, SOEP |
| JEL: | A14 D63 J17 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp593&r=lab |
| By: | Halldén, Karin (Swedish Institute for Social Research, Stockholm University); Stenberg, Anders (Swedish Institute for Social Research, Stockholm University) |
| Abstract: | We provide evidence on the quantitative relationship between household time con-straints and female earnings. In 2007, a tax discount reform in Sweden reduced prices of outsourced domestic services (ODS) by 50 percent. Linking population register data on yearly tax discounts with annual earnings, we find that 60 percent of married women’s freed hours are applied to labor market work, with ODS of approximately 2-4 percent of full-time work in a year being linked to a 2-4 percent earnings increase, but with no additional increase thereafter. The analysis carefully considers potential bias and outlines the required assumptions regarding reverse causality. |
| Keywords: | household work; outsourcing; female labor supply |
| Date: | 2013–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2013_004&r=lab |
| By: | Paul Gregg (Department of Social and Policy Science, University of Bath); Jan. O. Jonsson (Nuffield College, Oxford University and Swedish Institute for Social Research, Stockholm University); Lindsey Macmillan (Department of Quantitative Social Science, Institute of Education, University of London); Carina Mood (Institute for Future Studies, Stockholm and Swedish Institute for Social Research, Stockholm University) |
| Abstract: | A growing number of studies in several countries over the past twenty years have documented the persistence in incomes across generations, and much of the current literature is seeking to understand the processes driving intergenerational mobility and how these differ across time periods and across countries. Education is commonly seen, just as in sociological studies of social mobility or status attainment, as the key driving force of intergenerational associations. In this paper we study the role of education for intergenerational income associations in three countries over time, and across the life-span of sons. We pay particular attention to issues of life-cycle bias and measurement error in modelling income mobility in a comparative setting. To explore the role of education, we utilise a three-stage framework that decomposes the intergenerational elasticity into three parts: the relationship between income and education, the returns to education, and the direct relationship between parental income and their child’s income in the next generation after controlling for education. We find that the US and the UK have high levels of income persistence (low mobility) across generations while Sweden is more moderate. Levels of educational inequality are surprisingly similar in all three countries with the majority of the difference between the US/UK and Sweden working through unequal returns to education and, more strikingly, inequality of opportunities for people with similar educational qualifications. |
| Keywords: | Intergenerational mobility, children, education |
| JEL: | J62 J13 J31 |
| Date: | 2013–10–08 |
| URL: | http://d.repec.org/n?u=RePEc:qss:dqsswp:1312&r=lab |
| By: | Anna Lovasz (Institute of Economics, Center for Economic and Regional Studies, Hungarian Academy of Sciences); Agnes Szabo-Morvai (Central European University and HTFA Research Institute) |
| Abstract: | We use an extension of the RD approach based on a kindergarten enrollment cutoff date and a new resampling design to estimate the causal impact of subsidized childcare availability on Hungarian mothers' labor market participation around the 3rd birthday of the child. Besides standard fuzzy RD, which holds calendar time constant, we apply an alternative version where child's age is held constant, which enables us to (a) separate the childcare effect from other, age-specific effects, and (b) consider the effect of not only point, but interval cutoffs for eligibility. We combine RD with a difference-in-differences approach using a comparison group of mothers with children aged 4-5 to control for seasonal effects (parent selection, child development, within-year labor market fluctuations). Our estimates indicate that a mother with a 3 year old is 15% more likely to be active if her child is eligible for subsidized kindergarten, corresponding to previous estimates of labor supply elasticity of 0.3-0.75. This suggests that increased subsidized childcare availability and parental leave alone cannot explain the sharp increase in the rate of maternal participation seen around children's 3rd birthday, highlighting the importance of other factors such as separation preferences and flexible work forms. |
| Keywords: | Subsidized Childcare Availability, Maternal Labor Supply, Regression Discontinuity |
| JEL: | J13 J22 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:has:bworkp:1313&r=lab |
| By: | Michael W.L. Elsby; Bart Hobijn; Aysegül Sahin |
| Abstract: | Over the past quarter century, labor’s share of income in the United States has trended downwards, reaching its lowest level in the postwar period after the Great Recession. Detailed examination of the magnitude, determinants and implications of this decline delivers five conclusions. First, around one third of the decline in the published labor share is an artifact of a progressive understatement of the labor income of the self-employed underlying the headline measure. Second, movements in labor’s share are not a feature solely of recent U.S. history: The relative stability of the aggregate labor share prior to the 1980s in fact veiled substantial, though offsetting, movements in labor shares within industries. By contrast, the recent decline has been dominated by trade and manufacturing sectors. Third, U.S. data provide limited support for neoclassical explanations based on the substitution of capital for (unskilled) labor to exploit technical change embodied in new capital goods. Fourth, institutional explanations based on the decline in unionization also receive weak support. Finally, we provide evidence that highlights the offshoring of the labor-intensive component of the U.S. supply chain as a leading potential explanation of the decline in the U.S. labor share over the past 25 years. ; Prepared for Brookings Panel on Economic Activity, September 19-20, 2013. |
| Keywords: | Monetary policy |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2013-27&r=lab |
| By: | Kai Daniel Schmid; Ulrike Stein |
| Abstract: | In Germany, inequality of net equivalized income increased noticeably in the first half of the new millennium. We aim to identify the main drivers of this rise in income inequality since the early 1990s. We provide a broad overview of the circumstances under which inequality evolved, i.e. which changes in the German economy are most likely to provide an explanation for changes in income concentration. To explain the development of the distribution of net equivalized income we analyze changes in the distribution of market income as well as shifts in the effectiveness of public redistribution mechanisms. We find that cyclical and structural changes in the labor market, the increasing relevance of capital income as well as the decreasing effectiveness of the public mechanisms of income redistribution are the main explanatory factors for the development of income inequality. In addition to this, we discuss several issues that are of high relevance for the distribution of economic resources but are not directly covered in the analysis of net equivalized income. Most significantly, the design of the tax and social security contributions burden as well as the rising relevance of value-added taxes have exhibited negative redistributive effects for low income households. |
| Keywords: | Income Inequality, Redistribution, SOEP |
| JEL: | D31 I30 J30 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp592&r=lab |