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on Labour Economics |
| By: | Dahl, Gordon B. (University of California, San Diego); Loken, Katrine Vellesen (University of Bergen); Mogstad, Magne (University College London); Salvanes, Kari Vea (University of Oslo) |
| Abstract: | Paid maternity leave has gained greater salience in the past few decades as mothers have increasingly entered the workforce. Indeed, the median number of weeks of paid leave to mothers among OECD countries was 14 in 1980, but had risen to 42 by 2011. We assess the case for paid maternity leave, focusing on parents' responses to a series of policy reforms in Norway which expanded paid leave from 18 to 35 weeks (without changing the length of job protection). Our first empirical result is that none of the reforms seem to crowd out unpaid leave. Each reform increases the amount of time spent at home versus work by roughly the increased number of weeks allowed. Since income replacement was 100% for most women, the reforms caused an increase in mother's time spent at home after birth, without a reduction in family income. Our second set of empirical results reveals the expansions had little effect on a wide variety of outcomes, including children's school outcomes, parental earnings and participation in the labor market in the short or long run, completed fertility, marriage or divorce. Not only is there no evidence that each expansion in isolation had economically significant effects, but this null result holds even if we cumulate our estimates across all expansions from 18 to 35 weeks. Our third finding is that paid maternity leave has negative redistribution properties. The program makes regressive transfers both from ineligibles to eligibles and within the group of eligible mothers. Since there was no crowd out of unpaid leave, the extra leave benefits amounted to a pure leisure transfer, primarily to middle and upper income families. Finally, we investigate the financial costs of the extensions in paid maternity leave. We find these reforms had little impact on parents' future tax payments and benefit receipt. As a result, the large increases in public spending on maternity leave imply a considerable increase in taxes, at a cost to economic efficiency. Taken together, our findings suggest the generous extensions to paid leave were costly, had no measurable effect on outcomes and poor redistribution properties. In a time of harsh budget realities, our findings have important implications for countries that are considering future expansions or contractions in the duration of paid leave. |
| Keywords: | paid maternity leave, redistribution effects of social programs |
| JEL: | J13 J18 H42 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7707&r=lab |
| By: | Gill, Indermit (World Bank); Koettl, Johannes (World Bank); Packard, Truman (World Bank) |
| Abstract: | Today, Europe is a continent of low participation, low employment labor markets. Many observers would like to blame poor employment outcomes on the Euro or on austerity. But these are dangerous distractions from real problems that constitute imperatives for structural reform. There are differences across countries, but there is a "European model" of work: almost every European economy has more stringent employment protection and more generous social benefits than peers in North America, Oceania, and East Asia. This has led to low labor force participation and high unemployment, especially among young Europeans. Layered on top of these weak labor markets is the rapid onset of aging; if policies are not changed, Europe will lose about a million workers every year for the next five decades, especially in the 2030s. In short, Europe has to increase both the demand for and supply of labor. To do so, Europeans have to begin viewing competition as a necessary good, not an unnecessary evil. Restructuring unemployment and pension benefits will help to increase participation and reverse the decline of the workforce, but policies that promote competition for jobs and mobility of job-seekers are needed to increase the demand for labor. To get to full employment, Europe has to alter the employment protection laws that give too much power to those with jobs while marginalizing others to the fringes of the economy. Europeans will have to reduce and restructure the generous social benefits that simultaneously discourage young people from searching seriously for work and encourage older workers to quit work too early. Europeans will have to view mobility of workers as a prerequisite of European integration, not just a possible consequence of it. If all this is augmented by reforms to reduce public debt, encourage enterprise and innovation, and stabilize finance, Europe will have a vibrant economy, with high participation and full employment. |
| Keywords: | European labor markets, segmented labor markets, employment protection, social benefits, labor mobility |
| JEL: | I38 J08 J21 J24 J32 J42 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7663&r=lab |
| By: | Cozzi, Guido (University of St. Gallen); Mantovan, Noemi (Bangor University); Sauer, Robert M. (Royal Holloway, University of London) |
| Abstract: | Working as a volunteer is a widespread phenomenon that has both individual and societal benefits. In this paper, we identify the wage returns to working for free by exploiting exogenous variation in rainfall across local area districts in England, Scotland and Wales. Instrumental variables estimates reveal large returns for both men and women. However, the returns are differentially greater for men and account for a substantial proportion of the gender earnings gap. A comparison of OLS and IV estimates also indicates negative selection into volunteering for both genders. In a model of optimal volunteering, negative selection implies that a reduction in the cost of volunteering will lead to an expanded and higher-skilled pool of volunteers, and greater societal benefits. A policy that has the effect of reducing the cost relatively more for women may also narrow the gender earnings gap. |
| Keywords: | volunteering, altruism, gender differences, discrimination, instrumental variables, rainfall, negative selection |
| JEL: | C26 D64 H41 J16 J31 J71 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7697&r=lab |
| By: | Bargain, Olivier (University of Aix-Marseille II); Peichl, Andreas (ZEW Mannheim) |
| Abstract: | Previous reviews of static labor supply estimations concentrate mainly on the evidence from the 1980s and 1990s, Anglo-Saxon countries and early generations of labor supply modeling. This paper provides a fresh characterization of steady-state labor supply elasticities for Western Europe and the US. We also investigate the relative contribution of different methodological choices in explaining the large variation in elasticity size observed across studies. While some recent studies show that genuine preference heterogeneity across countries explains only a modest share of this variation (Bargain et al., 2013), we focus here on time changes and estimation methods as key contributors of the differences across studies. Both factors can explain larger elasticities in older studies (i.e. an increase in female labor market attachment over time and a switch from the Hausman estimation approach to discrete-choice models with tax-benefit simulations). Meta-analysis evidence suggests that smaller elasticities in the recent period may be due to the time factor, i.e. a likely change in work preferences, both in the US and in Europe. |
| Keywords: | household labor supply, elasticity, taxation, Europe, US |
| JEL: | C25 C52 H31 J22 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7698&r=lab |
| By: | Aaberge, Rolf (Statistics Norway); Flood, Lennart (University of Gothenburg) |
| Abstract: | An essential difference between the design of the Swedish and the US in-work tax credit systems relates to their functional forms. Where the US earned income tax credit (EITC) is phased out and favours low and medium earnings, the Swedish system is not phased out and offers 17 and 7 per cent tax credit for low and medium low incomes and a lump-sum tax deduction equal to approximately 2300 USD for medium and higher incomes. The purpose of this paper is to evaluate the efficiency and distributional effects of these two alternative tax credit designs. We pay particular attention to labour market exclusion; i.e. individuals within as well as outside the labour force are included in the analysis. To highlight the importance of the joint effects from the tax and the benefit systems it appears particular relevant to analyse the labour supply behaviour of single mothers. To this end, we estimate a structural random utility model of labour supply and welfare participation. The model accounts for heterogeneity in consumption-leisure preferences as well as for heterogeneity and constraints in job opportunities. The results of the evaluation show that the Swedish system without phase-out generates substantial larger labour supply responses than the US version of the tax credit. Due to increased labour supply and decline in welfare participation we find that the Swedish reform is self-financing for single mothers, whereas a 10 per cent deficit follows from the adapted EITC version used in this study. However, where income inequality rises modestly under the Swedish tax credit system, the US version with phase-out leads to a significant reduction in the income inequality. |
| Keywords: | labour supply, single mothers, in-work tax credit, social assistance, random utility model |
| JEL: | J22 I38 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7706&r=lab |
| By: | Anabela Carneiro; Pedro Portugal; José Varejão |
| Abstract: | In this article we study the resilience of the Portuguese labor market, in terms of job flows, employment and wage developments, in the context of the current recession. We single out the huge contribution of job destruction, especially due to the closing of existing firms, to the dramatic decline of total employment and increase of the unemployment rate. We also document the very large increase in the incidence of minimum wage earners and nominal wage freezes. We explore three different channels that may have amplified the employment response to the great recession: the credit channel, the wage rigidity channel, and the labor market segmentation channel. We uncover what we believe is convincing evidence that the severity of credit constraints played a significant role in the current job destruction process. Wage rigidity is seen to be associated with lower net job creation and higher failure rates of firms. Finally, labor market segmentation seems to have favored a stronger job destruction that was facilitated by an increasing number of temporary workers. |
| JEL: | E24 J23 J63 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w201314&r=lab |
| By: | Kneip, Alois (University of Bonn); Merz, Monika (University of Vienna); Storjohann, Lidia (University of Bonn) |
| Abstract: | The aggregate Frisch elasticity of labor supply has played a key role in business cycle analysis. This paper develops a statistical aggregation procedure which allows for worker heterogeneity in observables and unobservables and is applicable to an individual labor supply function with non-employment as a possible outcome. Performing a thought experiment in which all offered or paid wages are subject to an unanticipated temporary change, we can derive an analytical expression for the aggregate Frisch elasticity and illustrate its main components: (i) the intensive and extensive adjustment of hours worked, (ii) the extensive adjustment of wages, and (iii) the aggregate employment rate. We use individual-specific data from the German Socio-Economic Panel (SOEP) for males at working-age in order to quantify each component. This data base provides indirect evidence on non-employed workers' reservation wages. We use this variable in conjunction with a two-step conditional density estimator to retrieve the extensive adjustment of hours worked and wages paid. The intensive hours' adjustment follows from estimating a conventional panel data model of individual hours worked. Our estimated aggregate Frisch elasticity varies between .63 and .70. These results are sensitive to the assumed nature of wage changes. |
| Keywords: | aggregation, reservation wage distribution, labor supply, extensive and intensive margin of adjustment, time-varying Frisch elasticities |
| JEL: | C51 E10 J22 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7699&r=lab |
| By: | Stoyanov, Andrey (York University, Canada); Zubanov, Nikolay (Goethe University Frankfurt) |
| Abstract: | We estimate how much of the gains from productivity spillovers through worker mobility is retained by the hiring firms, by the workers who bring spillovers, and by the other workers. Using linked employer-employee data from Danish manufacturing for the period 1995-2007, we find that at least two-thirds of the total output gain of 0.11% per year is netted by the firms, while the workers who bring spillovers receive at most 6% of it as the wage premium. The large share retained by the firms implies that spillovers through worker mobility are mostly a positive externality to them. |
| Keywords: | productivity spillovers, worker mobility, wages, matched employer-employee data |
| JEL: | D24 J31 J60 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7702&r=lab |
| By: | Emma Tominey (University of York) |
| Abstract: | Female labor supply can insure households against shocks to paternal employment. The paper estimates whether the female labor supply response to a paternal employment shock differs by eligibility to maternity employment protection. We exploit time-state variation in the implementation of unpaid maternity leave through the Family and Medical Leave Act (FMLA) in the US which increased employment protection from 0 to 12 weeks. We find that mothers eligible for FMLA speed up their return to work in response to a paternal shock, with a conditional probability of being in work 53% higher than in households with no paternal shock. In contrast, there was a negligible insurance response for mothers with no employment protection. |
| Keywords: | female labor supply, insurance, maternity leave |
| JEL: | I30 J13 J20 J64 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2013-016&r=lab |
| By: | Hensvik, Lena (IFAU - Institute for Evaluation of Labour Market and Education Policy); Nordström Skans, Oskar (IFAU - Institute for Evaluation of Labour Market and Education Policy) |
| Abstract: | The paper provides an overview of existing knowledge regarding the role played by social networks in the process where young workers are matched to employing firms. We discuss standard theories of why social networks may be an important element in the job-matching process and survey the empirical literature on labor market networks with an emphasis on studies pertaining to the role of social contacts during the school-to-work transition phase. In addition, we present some novel evidence on how contacts established while working during the final year in high school affect youth labor market entry. Finally, we discuss how insights from this literature can be used to improve the quality of social programs targeted towards young workers in the Nordic countries. |
| Keywords: | Referrals; school-to-work transition; youth unemployment |
| JEL: | J24 J64 M51 Z13 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2013_023&r=lab |
| By: | Ryo Kambayashi (Institute of Economic Research, Hitotsubashi University); Daiji Kawaguchi (Faculty of Economics, Hitotsubashi University); Ken Yamada (Singapore Management University, School of Economics) |
| Abstract: | The statutory minimum wage in Japan has increased continuously for a few decades until the early 2000s even during a period of deflation. This paper examines the impact of the minimum wage on wage and employment outcomes under this unusual circumstance. We find that the minimum-wage increase resulted in the compression of the lower tail of the wage distribution among women and that the wage compression is only partially attributable to the loss of employment. The continuous increase in the minimum wage accounts for one half of the reduction in lower-tail inequality that occurred among women during the period between 1994 and 2003. |
| Keywords: | minimum wage, wage inequality, employment loss, truncated distribution, deflation |
| JEL: | J23 J31 J38 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:siu:wpaper:07-2013&r=lab |
| By: | Olivier Bargain (Aix-Marseille School of Economics); Eliane El Badaoui (Université de Cergy-Pontoise); Prudence Kwenda (University College Dublin); Eric Strobl (Ecole Polytechnique Paris); Frank Walsh (University College Dublin) |
| Abstract: | We develop a model where workers may enter self-employment or search for jobs as employees and where there is heterogeneity across workers’ managerial ability. Workers with higher skills will manage larger firms while workers with low managerial ability will run smaller firms and will be in self-employment only when they cannot find a salaried job. For these workers self-employment is a secondary/informal form of employment. The Burdett and Mortensen (1998) equilibrium search model is used for illustration as a special case of our more general framework. Empirical evidence from Mexico is provided and demonstrates that firm size wage effects for employees and selfemployed workers are broadly consistent with the model. |
| Keywords: | Self-employment, Managerial ability, Informal sector |
| JEL: | J31 O17 |
| Date: | 2013–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:wpaper:201317&r=lab |
| By: | Poot, Jacques (University of Waikato); Roskruge, Matthew (University of Waikato) |
| Abstract: | The education services provided in any given country increasingly contribute to human capital that is employed in another country. On the one hand, graduates may seek to obtain the highest return to the knowledge they gained in their home country by working abroad. On the other hand, some students purchase educational services abroad and will subsequently work abroad, or return home to utilize the internationally acquired knowledge in the domestic labour market. In this paper we use data from the 2006-07 Adult Literacy and Life Skills survey in New Zealand to examine how years of foreign and domestic education affect earnings in the labour market. We account for differences in innate ability by aggregating subjective responses to pertinent questions in the survey and by incorporating parents' educational background. Our findings reconfirm the extensive evidence that education gained in a country of birth has generally a lower return in a foreign labour market than the native born receive in this labour market for the equivalent education. Post-settlement education in the host country has a higher return for migrants than for comparable native born. We also find that the highest returns are obtained among those who, after studying abroad, return home to work – a fact for which there has been to date scarce evidence. Thus, exposure to foreign education can lead to a triple gain: for the country where the education is obtained, for the students' home country and for the students themselves. |
| Keywords: | international education, human capital, earnings, selection effects |
| JEL: | F22 I24 J24 J31 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7696&r=lab |
| By: | Nieto, Sandra (University of Barcelona); Matano, Alessia (University of Barcelona); Ramos, Raul (University of Barcelona) |
| Abstract: | The objective of this paper is to analyse and explain the factors behind the observed differences in skill mismatches (vertical and horizontal) between natives and immigrants in EU countries. Using microdata from the 2007 wave of the Adult Education Survey (AES), different probit models are specified and estimated to analyse differences in the probability of each type of skill mismatch between natives and immigrants. Next, Yun's decomposition method is used to identify the relative contribution of characteristics and returns to explain the differences between the two groups. Our analysis shows that immigrants are more likely to be skill mismatched than natives, being this difference much larger for vertical mismatch. In this case, the difference is higher for immigrants coming from non-EU countries than for those coming from other EU countries. We find that immigrants from non-EU countries are less valued in the EU labour markets than natives with similar characteristics, a result that is not observed for immigrants from EU countries. These results could be related to the limited transferability of the human capital acquired in non-EU countries. The findings suggest that specific programs to adapt immigrants' human capital acquired in home country are required to reduce differences in the incidence of skill mismatch and a better integration in the EU labour markets. |
| Keywords: | immigrant overeducation, vertical mismatch, horizontal mismatch, human capital transferability |
| JEL: | J15 J24 J31 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7701&r=lab |
| By: | Cho, Sungwook (Sogang University); Heshmati, Almas (Sogang University) |
| Abstract: | This study examines the correlation between childhood poverty and its influence on adulthood wage distribution, where childhood poverty refers to experience of poverty or poor family background during one's childhood. With the data from Korean Labor Income Panel Study, KLIPS, quantile regression technique and decomposition method are conducted to identify and decompose the wage gap between low (poor) and middle class income group along the whole current wage distribution, based on a simulated counterfactual distribution. The results show that, those who had been less fortunate during their childhood likely had less opportunity to gain labor market favored characteristics such as a higher level of education, and even earn lower returns to their labor market characteristics in the current labor market. This leads to a discount of about fifteen percentages points off of the wage on average in total for those with underprivileged backgrounds during childhood compared to those with the middle class background, and that disadvantage is observed heterogeneously, greater at the lower quantiles than the higher quantiles of the current wage distribution. Then this research contributes to the literature by providing a partial understanding of poverty in Korea and its possible causes, in particular, in form of poor family background or childhood poverty, with which the implication of intergenerational effect issue is considered. |
| Keywords: | labor market outcome, family background, childhood poverty, wage inequality, wage distribution, decomposition, quantile regression, Korea |
| JEL: | C21 E24 J13 J31 J62 O15 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7708&r=lab |
| By: | Lechner, Michael (University of St. Gallen); Downward, Paul (Loughborough University) |
| 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:iza:izadps:dp7690&r=lab |
| By: | Sandra Nieto (Faculty of Economics, University of Barcelona); Alessia Matano (Faculty of Economics, University of Barcelona); Raul Ramos (Faculty of Economics, University of Barcelona) |
| Abstract: | The objective of this paper is to analyse and explain the factors behind the observed differences in skill mismatches (vertical and horizontal) between natives and immigrants in EU countries. Using microdata from the 2007 wave of the Adult Education Survey (AES), different probit models are specified and estimated to analyse differences in the probability of each type of skill mismatch between natives and immigrants. Next, Yun’s decomposition method is used to identify the relative contribution of characteristics and returns to explain the differences between the two groups. Our analysis shows that immigrants are more likely to be skill mismatched than natives, being this difference much larger for vertical mismatch. In this case, the difference is higher for immigrants coming from non-EU countries than for those coming from other EU countries. We find that immigrants from non-EU countries are less valued in the EU labour markets than natives with similar characteristics, a result that is not observed for immigrants from EU countries. These results could be related to the limited transferability of the human capital acquired in non-EU countries. The findings suggest that specific programs to adapt immigrants’ human capital acquired in home country are required to reduce differences in the incidence of skill mismatch and a better integration in the EU labour markets. |
| Keywords: | Immigrant overeducation, vertical mismatch, horizontal mismatch, human capital transferability. JEL classification: J15, J24, J31 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:201318&r=lab |
| By: | O'Higgins, Niall (University of Salerno) |
| Abstract: | The Roma are both the largest 'minority' ethnic group in Central and South Eastern Europe and the one which suffered most from transition to the market. Still today, nearly forty years after the introduction of the EU's 1975 Discrimination Directive and with the end of the 'Roma Decade' (2005-15) in sight, people from the Roma minority have unemployment rates far above – and employment rates and wages far below – those of majority populations. One issue which has received relatively attention concerns the 'double' discrimination facing Roma women. Not only do Roma women face poorer employment and wage outcomes in the labour market than non-Roma women, in most CSEE countries the gender wage gap is significantly larger amongst Roma compared to non-Roma. This paper seeks to analyze and explain differences in the gender gap in the wages amongst Roma. The paper employs a non-parametric matching approach to identify the main factors underlying the gender wage gap. Educational attainment plays a relatively small role, explaining only around one-fifth of the gap. Industrial and occupational segregation appear to be playing a strong role as does the civil status of individuals, household socioeconomic status and whether individuals living in a predominantly Roma community. |
| Keywords: | gender, discrimination, Roma, labour market |
| JEL: | J16 J15 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7667&r=lab |
| By: | Greg Kaplan (Princeton University); Guido Menzio (University of Pennsylvania) |
| Abstract: | We propose a novel theory of self-ful?lling ?uctuations in the labor market. A ?rm employing an additional worker generates positive externalities on other ?rms, because employed workers have more income to spend and have less time to shop for low prices than unemployed workers. We quantify these shopping externalities and show that they are su¢ ciently strong to create strategic complementarities in the employment decisions of di¤erent ?rms and to generate multiple rational expectations equilibria. Equilibria di¤er with respect to the agents?(rational) expectations about future unemployment. We show that negative shocks to the agents?expectations lead to ?uctuations in vacancies, unemployment, labor productivity and the stock market that closely resemble those observed in the US during the Great Recession. |
| Keywords: | vacancies, unemployment, labor productivity, stock market, Great Recession |
| JEL: | J01 J20 J21 J60 J68 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:pri:cepsud:234kaplan&r=lab |
| By: | Bertoni, Marco (University of Padova); Brunello, Giorgio (University of Padova) |
| Abstract: | While it is well known that birth order affects educational attainment, less is known about its effects on earnings. Using data from eleven European countries for males born between 1935 and 1956, we show that firstborns enjoy on average a 13.7 percent premium over laterborns in their wage at labour market entry. However, this advantage is short lived, and disappears by age 30, between 10 and 15 years after labour market entry. While firstborns start with a better match, partly because of their higher education, laterborns quickly catch up by switching earlier and more frequently to better paying jobs. We argue that a key factor driving our findings is that laterborns are more likely to engage in risky behaviours. |
| Keywords: | birth order, earnings, risk aversion, Europe |
| JEL: | D13 J12 J24 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7679&r=lab |
| By: | Pontus Rendahl |
| Abstract: | This paper studies a model of firm-sponsored investments in general human capital. When institutional settings permit simple contractual arrangements that are consistent with at-will employment, firms invest in a worker's general skills. And when market forces discipline contracts, the equilibrium level of training intimately relates to any match-specific component of surplus, such as mobility costs. If these relation-specific components are sufficiently large, all externalities may be internalized, and training attains the social optimum. In marked contrast to the existing literature, these predictions do not rely on complementarities between training and rents (e.g. “wage-compression"), and they are independent of the distribution of profits and wages. |
| Keywords: | Human capital; On-the-job training; Contracts and Reputations. |
| JEL: | D21 J24 J41 M52 M53 |
| Date: | 2013–10–07 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1336&r=lab |
| By: | Elena Vakulenko |
| Abstract: | We investigate the relationship between the main indicators of the labour market in Russia. We try to construct a model of the Russian labour market and identify key relationships. Our special attention is drawn to the impact of the crisis on the Russian labour market and influence of oil price on labor market indicators. We estimated two types of models. They are systems of simultaneous equations model (SEM) and VECM. We received that real wage in Russia are more flexible than employment. During the crisis period real wage was decreasing. SEM model shows that real wage positively depends on real oil price. While the number of employed and unemployment don’t depend on real oil price. |
| Keywords: | labour market, time series models, Russia |
| JEL: | J20 J40 |
| Date: | 2013–09–16 |
| URL: | http://d.repec.org/n?u=RePEc:pia:wpaper:120/2013&r=lab |
| By: | Tobias Stoehr |
| Abstract: | This paper analyses the wage premia associated with workers' occupational use of foreign languages in Germany. After eliminating time-invariant unobserved heterogeneity and other confounding factors, sizable returns of about 10 percent to applying fluent English skills are found. Returns to occupational use of other foreign languages are, if anything, restricted to a few specialized occupations. Compared to non-migrants, immigrants receive more than twice the return for using English. Returns depend crucially on speaking German well, thus excluding many first generation migrants and are found to occur particularly in service occupations that involve international factor flows. In such occupations it is likely that migrants can apply complementary skills such as international experience that their non-migrant counterparts lack. As immigrants do not earn significant wage premia for applying their native language on the job in addition to those for English, their trade-fostering potential seems to be unlocked by complementary fluency in the two business languages German and English |
| Keywords: | foreign language skills, Migration, wage structure, human capital, occupational choice |
| JEL: | J24 F22 J30 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1880&r=lab |
| By: | Eichhorst, Werner (IZA); Marx, Paul (University of Southern Denmark); Tobsch, Verena (E-x-AKT WIRTSCHAFTSFORSCHUNG) |
| Abstract: | The share of non-standard jobs in total employment has increased in Germany over recent decades. Research tends to attribute this in particular to labour market re-forms and socio-economic change. However, it becomes clear upon closer inspection that macro trends alone cannot provide satisfactory explanations. A striking yet rarely acknowledged aspect of the development in Germany is a large occupational heterogeneity, which is true for both current working conditions and trajectories of change. A process of asymmetric change has been witnessed in recent years, increasing the gap between occupational groups. Given this process, it seems increasingly questionable to aggregate data at the national level. Therefore, this paper analyses the role of different types of non-standard employment across occupations in Germany, explaining variation between occupations with reference to institutional conditions, industrial relations and patterns of labour supply and demand, in particular skill requirements. |
| Keywords: | service sector, part-time work, low pay, fixed-term contracts, non-standard employment, manufacturing, Germany |
| JEL: | J24 J21 J41 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7662&r=lab |
| By: | Charlotte Cabane (University of St. Gallen - University of St. Gallen); Andrew E. Clark (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA)) |
| Abstract: | We here ask whether sports participation at school is positively correlated with adult labour-market outcomes. There are many potential channels for this effect, although, as usual, identifying a causal relationship is difficult. We appeal to two widely-separated waves of Add Health data to map out the correlation between school sports and adult labour-market outcomes. We show that different types of school sports are associated with different types of jobs and labour-market insertion when adult. We take the issue of the endogeneity of sport seriously and use data on siblings in order to obtain estimates that are as close to unbiased as possible. Last, we compare the effect of sporting activities to that of other leisure activities. |
| Keywords: | Job characteristics ; Education ; Sport ; School |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-00875305&r=lab |
| By: | S. BAERT; E. VERHOFSTADT |
| Abstract: | In view of policy action to integrate ex-offenders into society, it is important to identify the underlying mechanisms of the negative relationship between criminal record on the one hand and later employment and earnings on the other hand. Therefore we identify hiring discrimination against former juvenile delinquents in a direct way. To this end we conduct a field experiment in the Belgian labour market. We find that labour market discrimination is indeed a major barrier in the transition to work for former juvenile delinquents. Labour market entrants disclosing a history of juvenile delinquency get about 22 percent less callback compared to their counterparts without a criminal record. This discrimination is more outspoken among the low-educated. |
| Keywords: | juvenile delinquency, hiring discrimination, field experiments |
| JEL: | C93 J2 J71 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:13/852&r=lab |
| By: | Dube, Arindrajit (University of Massachusetts Amherst) |
| Abstract: | A recent paper by Meer and West argues that minimum wages reduce aggregate employment growth, and that this relationship is masked by looking at employment levels. I also find a negative association between minimum wages and aggregate employment growth using both the Business Dynamics Statistics and the Quarterly Census of Employment and Wages datasets, and it is sizable for some time periods. However, I show that this negative association is present in exactly the wrong sectors. It is particularly strong in manufacturing which hires very few minimum wage workers. At the same time, there is no such association in retail, or in accommodation and food services – which together hire nearly 2/3 of all minimum wage workers. These results indicate that the negative association between minimum wages and aggregate employment growth does not represent a causal relationship. Rather the association stems from an inability to account for differences between high and low minimum wage states and the timing of minimum wage increases. Consistent with that interpretation, when I use bordering counties to construct more credible control groups, I find no such negative correlation between minimum wages and overall employment growth. |
| Keywords: | minimum wage, employment growth |
| JEL: | J23 J38 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7674&r=lab |
| By: | Di Pietro, Giorgio (University of Westminster) |
| Abstract: | Despite the great popularity of international educational mobility schemes, relatively little research has been conducted to explore their benefits. Using data on a large sample of recent Italian graduates, this paper investigates the extent to which participation in study abroad programs during university studies impacts subsequent employment likelihood. To address the problem of endogeneity related to participation in study abroad programs, we use university-department fixed effects and instrumental variable estimation where the instrumental variable is exposure to international student exchange schemes. Our estimates show that studying abroad has a relatively large and statistically meaningful effect on the probability of being in employment 3 years after graduation. This effect is mainly driven by the impact that study abroad programs have on the employment prospects of graduates from disadvantaged backgrounds. |
| Keywords: | study abroad programs, graduates, employment, instrumental variable |
| JEL: | I2 J6 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7675&r=lab |
| By: | Tobias Brändle; |
| Abstract: | We analyse the interaction between different labour market institutions in Germany, a country with a long tradition of strong bargaining partners. A number of studies have established that industry-level bargaining exerts a moderating role on firm-level co-determination: works councils generate rather than redistribute rents in plants covered by collective bargaining agreements. This work analyses whether these findings still hold, given recent developments in the German system of industrial relations towards more bargaining decentralisation, such as opening clauses or company-level pacts for employment. In addition, we provide evidence pertaining to whether labour market reforms targeted at one institution (a push of collective bargaining agreements towards more flexibility) are counteracted by altering the effects of other, unaffected institutions (the rent-seeking behaviour of works councils). Analysing institutional changes and augmenting a theoretical model provides hypotheses, which are then tested using empirical analysis of representative German plant level data. We find that the existence of flexibility provisions in collective bargaining agreements do not drive works council behaviour towards rent-seeking. Regarding rent-generation, we find an amplifying effect: works council existence is associated with higher productivity in plants covered by industry-level contracts. These findings, however, depend on the level of collective bargaining: they do not hold in plants covered by firm-level contracts. |
| Keywords: | works councils, collective bargaining, employment pacts, opening clauses,wages, productivity |
| JEL: | J53 J31 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iaw:iawdip:96&r=lab |
| By: | Louise Fox; Cleary Haines; Jorge Huerta Munoz; Alun H. Thomas |
| Abstract: | Estimates of the current and future structure of employment in sub-Saharan Africa (2005–20) are obtained based on household survey estimates for 28 countries and an elasticity-type model that relates employment to economic growth and demographic outcomes. Agriculture still employs the majority of the labor force although workers are shifting slowly out of the sector. Sub-Saharan Africa’s projected rapid labor force growth, combined with a low baseline level of private sector wage employment, means that even if sub-Saharan Africa realizes another decade of strong growth, the share of labor force employed in private firms is not expected to rise substantially. Governments need to undertake measures to attract private enterprises that provide wage employment, but they also need to focus on improving productivity in the traditional and informal sectors as these will continue to absorb the majority of the labor force. |
| Keywords: | Employment;Sub-Saharan Africa;Labor markets;Agricultural sector;Private sector;Wages;Cross country analysis;employment, labor force, agriculture, industry, services, wage employment, household enterprises, public employment, Sub-Saharan Africa. |
| Date: | 2013–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:13/201&r=lab |
| By: | M. Grazia Pittau (Sapienza Universita' di Roma); Shlomo Yitzhaki (The Hebrew University of Jerusalem and Central Bureau of Statistics); Roberto Zelli (Sapienza Universita' di Roma) |
| Abstract: | We provide a comprehensive picture of the relationship between labor market outcomes and age by gender in all the 28 European countries covered by the European Statistics on Income and Living Conditions (EU-SILC). The analysis is based on a somewhat unconventional approach that refers to concentration curves in the context of Gini regression framework. It allows to identify ranges in the explanatory variables where local slopes change sign and/or size, i.e. the components that \make up" a regression coecient. The European countries are clustered into five groups according to their employment, hours of work and earnings age-profiles by gender, as identified by the concentration curves. The most relevant differences in age proles concern working-hours-patterns: some countries are characterized by an almost specular behavior in men and women; other countries instead show similar patterns. Generally, earnings increase with age for both men and women. However, local regression coefficients are not monotonic over the entire age range and can even be locally negative in some countries. |
| Keywords: | Gini, OLS, Concentration curves, Regression decomposition, European labor market. |
| JEL: | C30 J16 J21 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:sas:wpaper:20134&r=lab |
| By: | Petri, Böckerman; Seppo, Laaksonen; Jari, Vainiomäki |
| Abstract: | We perform decompositions and regression analyses that test for the routinization hypothesis and job polarization at the firm level, instead of the aggregate or industry level as in previous studies. Furthermore, we examine the technology-based explanations for routinization and job polarization at the firm level using firm-level R&D as an explanatory variable in the regressions. Our results for the intermediate education group and the routine occupation group are consistent with polarization at the firm level, i.e. disappearing middle due to technological change. These results are robust for accounting for dynamic selection effects. |
| Keywords: | job polarization; routinization hypothesis |
| JEL: | J0 J2 J21 J24 J3 J31 |
| Date: | 2013–10–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:50833&r=lab |
| By: | Nicolas Herault (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Francisco Azpitarte (Brotherhood of St Laurence; and Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | In this paper we propose a framework to study changes in the redistributive consequences of income taxes and transfers. In contrast with previous approaches the new method allows decomposition of the change in the redistributive impact into four components: the immediate effect of changes in the tax-transfer system in the absence of labour supply responses; the effect of labour supply changes induced by changes in the tax-transfer system; the effect of all other labour supply changes; and a residual capturing the variation not explained by the previous factors. We illustrate the use of our decomposition method by analysing the changes in the redistributive impact of the tax and transfer system in Australia between 1999 and 2007. We find that labour supply changes, and in particular the increase in employment rates over the period, explain to a large extent the observed reduction in the redistributive effect of the tax-transfer system. A sizable part of these labour supply changes were found to be direct responses to tax-transfer reforms. Interestingly, we find that tax reforms were not responsible for the observed reduction in tax progressivity. |
| Keywords: | Income, redistributive effect, labour supply, taxes and transfers |
| JEL: | H23 J22 D31 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2013n33&r=lab |
| By: | Hethey-Maier, Tanja (Institute for Employment Research (IAB), Nuremberg); Schmieder, Johannes F. (Boston University) |
| Abstract: | Economists have long been interested in analyzing entries and exits of establishments. In many countries administrative datasets provide an excellent source for detailed analysis on a fine and disaggregate level. However, administrative datasets are not without problems: restructuring and relabeling of firms is often poorly measured and can potentially create large biases. Information on worker flows between establishments can potentially alleviate these measurement issues, but it is typically hard to judge how well correction algorithms based on this methodology work. This paper evaluates the use of the worker flow methodology using a dataset from Germany, the Establishment History Panel (BHP), merged to information on all worker flows between establishment IDs and survey data. We first document the extent of misclassification that stems from relying solely on the first and last appearance of the establishment identifier (EID) to identify openings and closings. We show that the misclassification bias of using only the EID is very severe: Only about 35 to 40 percent of new and disappearing EIDs with more than 3 employees are likely to correspond to real establishment entries and exits. Among larger establishments misclassification is even more common. We provide 3 pieces of evidence that using a classification system based on worker flows is superior to using EIDs only: First, establishment birth years generated using the worker flow methodology is much higher correlated with establishment birth years from an independent survey. Second, establishment entries and exits which are identified using the worker flow methodology move closely with the business cycle, while events which are identified as simple ID changes are not. Third, establishment exits have a big negative impact on workers' earnings trajectories which is not present for ID changes. |
| Keywords: | firm dynamics, plant closings, establishment entry and exit |
| JEL: | L1 M1 J6 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7672&r=lab |
| By: | Akiomi KITAGAWA |
| Abstract: | This paper considers the long-run consequences of ranking job applicants on the basis of their unemployment durations by using a general equilibrium model in which statistical discrimination by firms against jobless workers may yield multiple stationary equilibria. Because the most inefficient equilibrium is supported by the belief that jobless workers have lost their employability, the government should dissuade firms from holding this extreme belief, thereby creating second chances for jobless workers. Moreover, by reducing the incomes of jobless workers through taxation, the government can create a new equilibrium in which job seekers can find new jobs without experiencing long-term unemployment. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:toh:tergaa:301&r=lab |
| By: | John B. Shoven; Sita Slavov |
| Abstract: | Most private sector workers with employer-provided health insurance have a strong incentive to continue working until Medicare eligibility in order to maintain group health coverage. However, most government employees have access to retiree health coverage, which allows them access to group health coverage even if they retire before Medicare eligibility. We study the impact of retiree health coverage on the probability of stopping work among public sector workers between the ages of 55 and 64. We find that, for state and local government employees, retiree health coverage raises the probability of stopping work by 5.1 percentage points (around 28 percent) between ages 60 and 64. However, we find no evidence that retiree health coverage influences state and local employees’ decisions to stop work at ages 55-59, or that such coverage has an effect on the probability of stopping work for federal and military employees. |
| JEL: | I1 J2 J3 J4 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19563&r=lab |
| By: | Katrin Olafsdottir |
| Abstract: | In this paper I develop a two-stage bargaining model determining wages and employment and apply it to the public sector. Solving the model leads to structural wage and employment equations that I estimate using data from the public sector in Iceland. Nested in the model are the major collective bargaining models (right-to-manage and efficient contracting). The model can be empirically tested to distinguish between the bargaining models. Significant changes were made to collective bargaining contracts in the public sector in Iceland at the same time the bargaining process was decentralized, which provides for a natural experiment. The model is estimated for the period before the changes were made and again after the changes had taken root. The result is that the bargaining power of unions has changed between the two periods and the bargaining structure has become more inefficient with the changes in the collective bargaining contracts. |
| Keywords: | wage structure, collective bargaining, decentralization, public sector, trade union models |
| JEL: | J31 J45 J52 |
| Date: | 2013–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:pia:wpaper:119/2013&r=lab |
| By: | Lamarche, Carlos (University of Kentucky) |
| Abstract: | In the early 1990's, the Argentine government promoted a framework for productivity-based negotiations between firms and unions at low levels of organization. The policy weakened the industry-wide collective bargaining system, which sets working conditions for all firms in an industry. This paper employs newly developed quantile regression approaches to investigate the effect of union practices on productivity within the context of the reform. The findings show that (i) industry-wide practices on displacement of workers and training have a negative impact on productivity; (ii) work practices do not appear to restrict economic efficiency in the post-reform period; (iii) union practices on technology acquisition have an adverse effect on high-productivity growth industries. Productivity seems to improve in an economy promoting policies to weaken industry-wide collective bargaining. |
| Keywords: | work practices, productivity, manufacturing, quantile regression |
| JEL: | J52 O14 O43 O54 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7673&r=lab |
| By: | S. BAERT |
| Abstract: | Using a field experiment, we investigate whether discrimination based on women's sexual orientation differs by age and family constraints. We find weakly significant evidence of discrimination against young heterosexual women because of their potential to have children. This effect is driven by age rather than by motherhood. We do not find any unequal treatment at older ages. This age effect is consistent with our theoretical expectation that, relative to lesbian women, young heterosexual women are penalised for having children more frequently and taking on, on average, more at-home-caring tasks. |
| Keywords: | experiments, labour market discrimination, motherhood, sexual orientation. |
| JEL: | C93 J13 J16 J71 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:13/842&r=lab |