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on Labour Economics |
| By: | Olivier Coibion; Yuriy Gorodnichenko; Dmitri Koustas |
| Abstract: | The persistence of U.S. unemployment has risen with each of the last three recessions, raising the specter that future U.S. recessions might look more like the Eurosclerosis experience of the 1980s than traditional V-shaped recoveries of the past. In this paper, we revisit possible explanations for this rising persistence. First, we argue that financial shocks do not systematically lead to more persistent unemployment than monetary policy shocks, so these cannot explain the rising persistence of unemployment. Second, monetary and fiscal policies can account for only part of the evolving unemployment persistence. Therefore, we turn to a third class of explanations: propagation mechanisms. We focus on factors consistent with four other cyclical patterns which have evolved since the early 1980s: a rising cyclicality in long-term unemployment, lower regional convergence after downturns, rising cyclicality in disability claims, and missing disinflation. These factors include declining labor mobility, changing age structures, and the decline in trust among Americans. To determine how these factors affect unemployment persistence, this paper exploits regional variation in labor market outcomes across Western Europe and North America during 1970-1990, in contrast to most previous work focusing either on cross-country variation or regional variation within countries. The results suggest that only cultural factors can account for the rising persistence of unemployment in the U.S., but the evolution in mobility and demographics over time should have more than offset the effects of culture. |
| JEL: | E24 E32 E52 J64 R11 R23 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19600&r=lab |
| By: | Prashant Bharadwaj; Leah K. Lakdawala; Nicholas Li |
| Abstract: | While bans against child labor are a common policy tool, there is very little empirical evidence validating their effectiveness. In this paper, we examine the consequences of India’s landmark legislation against child labor, the Child Labor (Prohibition and Regulation) Act of 1986. Using data from employment surveys conducted before and after the ban, and using age restrictions that determined who the ban applied to, we show that child wages decrease and child labor increases after the ban. These results are consistent with a theoretical model building on the seminal work of Basu and Van (1998) and Basu (2005), where families use child labor to reach subsistence constraints and where child wages decrease in response to bans, leading poor families to utilize more child labor. The increase in child labor comes at the expense of reduced school enrollment. We also examine the effects of the ban at the household level. Using linked consumption and expenditure data, we find that along various margins of household expenditure, consumption, calorie intake and asset holdings, households are worse off after the ban. |
| JEL: | J08 O1 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19602&r=lab |
| By: | Marcus Hagedorn; Fatih Karahan; Iourii Manovskii; Kurt Mitman |
| Abstract: | We exploit a policy discontinuity at U.S. state borders to identify the effects of unemployment insurance policies on unemployment. Our estimates imply that most of the persistent increase in unemployment during the Great Recession can be accounted for by the unprecedented extensions of unemployment benefit eligibility. In contrast to the existing recent literature that mainly focused on estimating the effects of benefit duration on job search and acceptance strategies of the unemployed—the micro effect—we focus on measuring the general equilibrium macro effect that operates primarily through the response of job creation to unemployment benefit extensions. We find that it is the latter effect that is very important quantitatively. |
| Keywords: | Recessions ; Unemployment ; Unemployment insurance ; Wages ; Employment ; Job creation |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:646&r=lab |
| By: | Paul Sullivan, (U.S. Bureau of Labor Statistics); Ted To (U.S. Bureau of Labor Statistics) |
| Abstract: | The empirical literature on compensating wage differentials has a mixed history. While there have been some successes, much of this literature finds weak support for the theory of equalizing differences. We argue that it is dispersion in total job values or "job dispersion" that leads to biased compensating wage differential estimates. We begin by demonstrating how job dispersion can lead to biased hedonic estimates. Then we take a partial equilibrium on-the-job search model with utility from non-wage job characteristics, structurally estimate it and then simulate a dataset. Using our simulated dataset, we conduct a detailed analysis of the sources of bias in hedonic wage estimates. While worker heterogeneity and job dynamics are important sources of job dispersion, a significant proportion of the variation in jobs can only be explained by the inherent randomness of job offers. |
| Keywords: | compensating wage differential, theory of equalizing differences, revealed preference, on-the-job search |
| JEL: | J3 J42 J64 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec130100&r=lab |
| By: | Thomas A. Lubik |
| Abstract: | One of the most striking aspects of the Great Recession in the United States is the persistently high level of unemployment despite an uptick in economic activity and an increased willingness by firms to hire. This has stimulated a debate on mismatch in the labor market. The argument is that despite the high unemployment rate the effective pool of job seekers is considerably smaller due to adverse effects of long-term unemployment, high unemployment benefits or structural change. Despite high vacancy postings, firms are therefore unable to hire desired workers. I study this issue from an aggregate perspective by deriving the Beveridge curve from a discrete-time search and matching model of the labor market driven by a variety of shocks. I first establish that the observed pattern in the data can only be described in the context of the model by the interaction of a cyclical decline in productivity and a decline in match efficiency. I then estimate the model using Bayesian methods on unemployment and vacancy data before the onset of the Great Recession. The posterior estimates indicate that the recent behavior of the Beveridge curve is most likely explained by a structural decline in match efficiency. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedrwp:13-16&r=lab |
| By: | Gustavsson, Magnus (Uppsala Center for Labor Studies) |
| Abstract: | This paper disentangles the effect of inequality in permanent and transitory wages on hours worked by, first, estimating the two components for Swedish industries and, second, using the resulting estimates as explanatory variables in an hours-worked equation. Consistent with Bell and Freeman’s (2001) inequality-hours hypothesis, permanent wage differentials are found to have a positive effect on individuals’ hours of work while transitory wage differentials have no effect. However, the analysis also shows that, in estimated hours-worked equations, inequality in observed wages is potentially a good approximation for inequality in permanent wages. |
| Keywords: | labor supply; wage dispersion; wage dynamics |
| JEL: | J22 J31 |
| Date: | 2013–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uulswp:2013_012&r=lab |
| By: | Regis Barnichon; Andrew Figura |
| Abstract: | The US labor market witnessed two apparently unrelated secular movements in the last 30 years: a decline in unemployment between the early 1980s and the early 2000s, and a decline in participation since the early 2000s. Using CPS micro data and a stock- �ow accounting framework, we show that a substantial, and hitherto unnoticed, factor behind both trends is a decline in the share of nonparticipants who are at the margin of participation. A lower share of marginal nonparticipants implies a lower unemployment rate, because marginal nonparticipants enter the labor force mostly through unemployment, while other nonparticipants enter the labor force mostly through employment. |
| Keywords: | marginal participant, want a job, stock-flow decomposition |
| JEL: | J6 E24 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:728&r=lab |
| By: | Paolo Falco; Luke Haywood |
| Abstract: | The self-employed constitute a large proportion of the workforce in developing countries and the sector is growing. Different accounts exist as to the causes of this development, with pull factors such as high returns to capital contrasted with push factors such as barriers to more desirable salaried jobs. Using data from Ghana, we investigate the changing structure of earnings in self-employment relative to salaried work. We decompose earnings in a two-sector labour market allowing for flexible patterns of sorting on unobservables by means of a correlated random coefficient model estimated by IV-GMM. A unique panel dataset provides us with suitable instruments to tackle the endogeneity of sector choice and capital accumulation. We show that returns to productive characteristics in SE have increased significantly over the period 2004-11 and the sector has attracted workers with higher skills. We conclude that pull factors have significantly strengthened, pointing against the grim view of self-employment as an occupation of last resort. |
| Keywords: | : self-employment, semiparametric models, comparative advantage, segmentation, African labour markets |
| JEL: | O15 J24 J42 C14 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1334&r=lab |
| By: | Anthony Edo (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | This paper investigates the immigration impact on native outcomes using micro-level data for France. I find that immigration does not affect the wages of competing natives, but induces adverse employment effects. This finding is consistent with a wage structure that is much less flexible in France. The quality of the data allows to dig more deeply into the interpretation of the immigration impact. First, I show that immigrants displace native workers because they are more willing to have bad employment conditions. Second, I find that natives on short-term contracts, who are less subject to wage rigidities, do experience wage losses due to immigration. |
| Keywords: | Immigration; wage rigidities; employment; naturalization |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00881131&r=lab |
| By: | Cain Polidano (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Domenico Tabasso (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; and Institute for the Study of Labor (IZA)) |
| Abstract: | In OECD countries, ‘real world’ upper-secondary vocational education and training (VET) programs are used to engage less academically oriented youth in learning, while helping to prepare them for post-school work and/or further training. In general terms, VET programs with high employer involvement, such as apprenticeship schemes, are considered to be superior to classroom-based VET programs that are typically found in many English-speaking countries. In this study, we examine outcomes from a potential ‘third way’: classroom-based VET with a short-term structured workplace learning component. Using propensity score matching and PISA data linked to information from the Longitudinal Survey of Australian Youth, we find this model is associated with higher school completion rates and better employment transitions. |
| Keywords: | Educational economics, vocational education and training, workplace learning |
| JEL: | I20 J01 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2013n31&r=lab |
| By: | Di Paolo, Antonio; Tansel, Aysit |
| Abstract: | Foreign language skills represent a form of human capital that can be rewarded in the labor market. Drawing on data from the Adult Education Survey of 2007, this is the first study estimating returns to foreign language skills in Turkey. We contribute to the literature on the economic value of language knowledge, with a special focus on a country characterized by fast economic and social development. Although English is the most widely spoken foreign language in Turkey, we initially consider the economic value of different foreign languages among the employed males aged 25 to 65. We find positive and significant returns to proficiency in English and Russian, which increase with the level of competence. Knowledge of French and German also appears to be positively rewarded in the Turkish labor market, although their economic value seems mostly linked to an increased likelihood to hold specific occupations rather than increased earnings within occupations. Focusing on English, we also explore the heterogeneity in returns to different levels of proficiency by frequency of English use at work, birth-cohort, education, occupation and rural/urban location. The results are also robust to the endogenous specification of English language skills. |
| Keywords: | : Foreign Languages, Returns to Skills, Heterogeneity, Turkey |
| JEL: | I2 I21 J3 J31 |
| Date: | 2013–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:51237&r=lab |
| By: | Jirjahn, Uwe; Mohrenweiser, Jens |
| Abstract: | Using representative data from the IAB Establishment Panel, we show that employees in establishments with active owners are less likely to introduce a works council. Moreover, we show that, in case of an introduction, the new works council is less likely to survive if active owners are present. Our findings conform to the hypothesis that active owners oppose codetermination because it reduces the utility they gain from being the ultimate bosses within the establishment. -- |
| Keywords: | Active Owner,Works Council Introduction,Works Council Dissolution,Liability of Newness,Employer Resistance to Change |
| JEL: | J50 J53 J54 M54 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:13080&r=lab |
| By: | Anthony Edo (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Nicolas Jacquemet (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, BETA - Bureau d'économie théorique et appliquée - CNRS : UMR7522 - Université de Strasbourg - Université Nancy II); Constantine Yannelis (Stanford University - Department of Economics - Department of Economics) |
| Abstract: | This paper investigates the importance of ethnic homophily in the hiring discrimination process, and provides a novel test for statistical discrimination. Our evidence comes from a correspondence test performed in France, in which we use three different kinds of ethnic identification: French sounding names, North African sounding names, and "foreign" sounding names with no clear ethnic association. Within both male and female groups, we show that all non-French applicants are equally discriminated against when compared to French applicants. This indicates that racial discrimination in employment is directed against members of non-majority ethnic groups, and highlights the importance of favoritism for in-group members. Moreover we find direct evidence of homophily: recruiters with European names are more likely to call back French named applicants and female recruiters are more likely to call back women. The paper also directly tests for statistical discrimination by adding a signal related to language skill ability in all resumes sent to half the job offers. Although the signal inclusion significantly impacts the discrimination experienced by non-French females, it is much weaker for male minorities. |
| Keywords: | Correspondence testing; gender discrimination; racial discrimination; ethnic homophily; language skills |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00877458&r=lab |
| By: | Marios Karabarbounis |
| Abstract: | Standard public finance principles imply that workers with more elastic labor supply should face smaller tax distortions. This paper quantitatively tests the potential of such an idea within a life-cycle model with heterogeneous two-member households. I find that younger and older-wealthier households have a larger labor supply elasticity than middle-aged households. The same is true for household members who are not the sole financial provider in the unit relative to primary breadwinners. To decrease inefficient distortions I study a tax system that uses information on the age, assets, and number of working members inside the household. The optimal tax code decreases tax rates on 1) younger and older workers, 2) wealthier households that are closer to retirement, and 3) two-earner households. The tax system raises revenues by targeting middle-aged households with a single earner. As a result, total supply of labor increases by 3.18 percent and consumption by 4.47 percent, which translates into welfare gains of 0.91 percent in terms of annual consumption. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedrwp:13-13&r=lab |
| By: | Christine Erhel (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, CEE - Centre d'études de l'emploi - Ministère de l'Enseignement supérieur et Recherche - Ministère du Travail, de l'Emploi et de la Santé); Charlotte Levionnois (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, CEE - Centre d'études de l'emploi - Ministère de l'Enseignement supérieur et Recherche - Ministère du Travail, de l'Emploi et de la Santé) |
| Abstract: | This article examines the reaction function of labour market expenditure to the economic cycle and especially to the labour market situation in 24 OECD countries, over the period 1985 to 2010. The level of public debt is also introduced as a potential determinant of labour market policy expenditures. Using a fixed effect model with interacting terms, it focuses on two periods of crisis (1992-1993 and 2007-2009). The results indicate that the level of reactivity of labour market expenditure did in general decrease between the early 1990s and the 2008 downturn. This could result from important reforms in this field, over the last 20 years. |
| Keywords: | Labour market policies; international comparisons; crisis |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00880933&r=lab |