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on Labour Economics |
| By: | Timothy J. Moore |
| Abstract: | While time out of work normally decreases subsequent employment, Social Security Disability Insurance (DI) may improve the health of disabled individuals and increase their ability to work. In this paper, I examine the employment of individuals who lost DI eligibility after the 1996 removal of drug and alcohol addictions as qualifying conditions. Approximately one-fifth started earning at levels that would have disqualified them for DI, an employment response that is large relative to their work histories. This response is largest for those who had received DI for 2.5-3 years, when it is 50% larger than for those who had received DI for less than one year and 30% larger than for those who had received DI for six years. A similar relationship between time on DI and the employment response is found among those whose primary disability was an addiction, mental disorder, or musculoskeletal condition, but not those with chronic conditions like heart or liver disease. The results suggest that a period of public assistance can maximize the employment of some disabled individuals. |
| JEL: | H53 H55 J14 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19793&r=lab |
| By: | John Karl Scholz (University of Wisconsin-Madison); Ananth Seshadri (University of Wisconsin-Madison) |
| Abstract: | We develop a rich model to study the complex interrelationship between health insurance and retirement decisions. The decision to retire depends on a number of factors including availability of health insurance, health shocks, pensions, Social Security, and how consumption and health interact in the utility function. We incorporate these features in a computational model of optimal wealth and retirement decisions, solving the model household-by-household using data from the HRS. We use the model to study two important SSA priority areas: first, to what extent do people remain in the labor force until age 65 in order to maintain health insurance for themselves (and after age 65 to maintain health insurance for their spouses)? Second, do early retirees have poorer health than others and does the availability of Medicare interact with their decision to claim benefits? |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp292&r=lab |
| By: | Christopher J. Erceg; Andrew Levin |
| Abstract: | In this paper, we provide compelling evidence that cyclical factors account for the bulk of the post-2007 decline in the U.S. labor force participation rate. We then proceed to formulate a stylized New Keynesian model in which labor force participation is essentially acyclical during “normal times†(that is, in response to small or transitory shocks) but drops markedly in the wake of a large and persistent aggregate demand shock. Finally, we show that these considerations can have potentially crucial implications for the design of monetary policy, especially under circumstances in which adjustments to the short-term interest rate are constrained by the zero lower bound. |
| Keywords: | Economic recession;United States;Labor markets;Unemployment;Monetary policy;labor force participation, unemployment, and monetary policy rules |
| Date: | 2013–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:13/245&r=lab |
| By: | Charles L. Baum, II; Christopher J. Ruhm |
| Abstract: | Using data from the 1997-cohort of the National Longitudinal Survey of Youth (NLSY-97), we examine the effects of California’s first in the nation government-mandated paid family leave program (CA-PFL) on mothers’ and fathers’ use of leave during the period surrounding child birth, and on the timing of mothers’ return to work, the probability of eventually returning to pre-childbirth jobs, and subsequent labor market outcomes. Our results show that CA-PFL raised leave-taking by around 2.4 weeks for the average mother and just under one week for the average father. The timing of the increased leave use – immediately after birth for men and around the time that temporary disability insurance benefits are exhausted for women – is consistent with causal effects of CA-PFL. Rights to paid leave are also associated with higher work and employment probabilities for mothers nine to twelve months after birth, possibly because they increase job continuity among those with relatively weak labor force attachments. We also find positive effects of California’s program on hours and weeks of work during their child’s second year of life and possibly also on wages. |
| Keywords: | Paid Leave, Family Leave, Employment, Wages, Leave-Taking, Return-to-Work Decisions |
| JEL: | J1 J2 J3 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:mts:wpaper:201401&r=lab |
| By: | Melanie Ward-Warmedinger; Corrado Macchiarelli |
| Abstract: | This paper presents information on labour market mobility in 23 EU countries, using Eurostat’s Labour Force Survey (LFS) data over the period 1998-2008. More specifically, it discusses alternative measures of labour market churning; including the ease with which individuals can move between employment, unemployment and inactivity over time. The results suggest that the probability of remaining in the same labour market status between two consecutive periods is high for all countries. Nonetheless, transitions from unemployment and inactivity back into the labour market are relatively weak in the euro area and central eastern European EU (CEE EU) countries compared to Denmark and, particularly, Sweden. Moreover, comparisons of transition probabilities over time suggest that – until the onset of the financial crisis – the probability of remaining in unemployment over two consecutive periods decreased in Sweden, the euro area, and, to a lesser extent, Denmark, while it increased in the average CEE EU countries. At the same time, however, successful labour market entries (from outside the labour market) increased in the average CEE EU countries, Denmark and Sweden. On the basis of an index for labour markets turnover used in the paper (Shorrocks, 1987), labour markets in Spain, Luxemburg, the Netherlands, Denmark and Sweden are the most mobile on average, with these results mainly reflecting higher mobility of people below the age of 29, highly educated and female workers. We also find that mobility of all worker groups has generally increased over time in the euro area, Denmark and Sweden. Finally, we ask whether some of the observed changes in mobility can be broadly restraint to some “macro” explanatory factors, including part time and temporary employment, unemployment and structure indicators. The results provide a mixed picture, suggesting that the sense of mobility strongly varies across countries. |
| Keywords: | Transition probabilities, labour market mobility, LFS micro data, EU countries |
| JEL: | J21 J60 J82 E24 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:eiq:eileqs:69&r=lab |
| By: | Yuriy Gorodnichenko (University of California - Berkley); Jae Song (Social Security Administration); Dmitriy Stolyarov (Dmitriy Stolyarov) |
| Abstract: | We analyze lifetime earnings histories of white males during 1960-2010 and categorize the labor force status of every worker as either working full-time, partially retired or fully retired. We find that the fraction of partially retired workers has risen dramatically (from virtually zero to 15 percent for 60-62 year olds), and that the duration of partial retirement spells has been steadily increasing. We estimate the response of retirement timing to variations in unemployment rate, inflation and house prices. Flows into both full and partial retirement increase significantly when the unemployment rate rises. Workers around normal retirement age are especially sensitive to variations in unemployment rate. Workers who are partially retired show a differential response to high unemployment rate: younger workers increase their partial retirement spell, while older workers accelerate their transition to full retirement. We also find that high inflation discourages full-time work and encourages partial and full retirement. House prices do not have a significant impact on retirement timing. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp281&r=lab |
| By: | Marco Angrisani (University of Southern California and RAND Corporation); Michael D. Hurd (RAND Corporation); Erik Meijer (University of Southern California and RAND Corporation); Andrew M. Parker (RAND Corporation); Susann Rohwedder (RAND Corporation) |
| Abstract: | Besides compensation and financial incentives, several other work-related factors may affect individual retirement decisions. Specifically, job characteristics such as autonomy, skill variety, task significance and difficulty, stress and physical demands, peer pressure and relations with co-workers, play a crucial role in determining psychological commitment to work at older ages. While financial preparedness for retirement and health shocks are often cited as main predictors of the choice to exit the labor force, there exists relatively little research documenting the extent to which the work environment itself and its interaction with economic variables influence retirement decisions. We document that job characteristics are associated with labor force transitions at older ages, in particular transitions to retirement and part-time employment. Additionally, we show that while personality traits do not directly drive labor force transitions, the effect of job characteristics on labor supply outcomes varies with the “intensity” of personality traits. We also document that job characteristics themselves are strongly related to personality traits. This suggests that, depending on their personality, individuals may select into specific jobs, whose characteristics ultimately shape their retirement paths. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp295&r=lab |
| By: | David Neumark (University of California, Irvine); Patrick Button (University of California, Irvine) |
| Abstract: | We examine whether stronger age discrimination laws at the state level moderated the impact of the Great Recession on older workers. We use a difference-in-difference-in-differences strategy to compare older workers in states with stronger and weaker laws, to their younger counterparts, both before, during, and after the Great Recession. We find very little evidence that stronger age discrimination protections helped older workers weather the Great Recession, relative to younger workers. The evidence sometimes points in the opposite direction, with stronger state age discrimination protections associated with more adverse effects of the Great Recession on older workers. We suggest that this may be because during an experience like the Great Recession, severe labor market disruptions make it difficult to discern discrimination, weakening the effects of stronger state age discrimination protections, or because higher termination costs associated with stronger age discrimination protections do more to deter hiring when future product and labor demand is highly uncertain. |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp287&r=lab |
| By: | Etienne LEHMANN (CRED (TEPP) University Panthéon-Assas Paris 2 and CREST); Paola L. MONTERO LEDEZMA (Stockholm University and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Bruno VAN DER LINDEN (FNRS and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)) |
| Abstract: | This article examines unemployment disparities and efficiency in a densely populated economy with two job centers and workers distributed between them. We introduce commuting costs and search-matching frictions to deal with the spatial mismatch between workers and firms. In equilibrium, there exists a unique threshold location where job-seekers are indifferent between job centers. In a decentralized economy job-seekers do not internalize a composition externality they impose on all the unemployed. Their decisions over job-search is thus typically not optimal and hence the equilibrium unemployment rates are inefficient. We calibrate the model for Los Angeles and Chicago Metropolitan Statistical Areas. Simulations exercises suggest that changes in the workforce distribution have non-negligible effects on unemployment rates, wages and net output. |
| Keywords: | Spatial mismatch, commuting, urban unemployment, externality, United States |
| JEL: | J64 R13 R23 |
| Date: | 2013–12–10 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2013033&r=lab |
| By: | Yuriy Gorodnichenko (University of California - Berkley); John Laitner (University of Michigan); Jae Song (Social Security Administration); Dmitriy Stolyarov (Dmitriy Stolyarov) |
| Abstract: | Economists’ standard model assumes that improvements in total factor productivity (TFP) raise the marginal product of labor for all workers evenly. This paper uses an earnings dynamics regression model to study whether, in practice, older workers benefit less from TFP growth than younger workers. We utilize panel earnings data from the Social Security Administration’s Continuous Work History Sample. The data include workers of all ages, and we use annual figures for 1950-2004. Our first specification relies on BLS measurements of TFP. Our second model develops a new TFP measure using a principal components analysis. We find that although the earnings of younger workers track TFP growth 1-for-1, the earnings of older workers do not: we find, for example, that a 60-year-old male’s earnings grow only 85-90% as fast as TFP. Nevertheless, our analysis implies that in an economy with an aging labor force, gains from experience tend to outweigh older workers’ inability to benefit fully from TFP improvements. |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp280&r=lab |
| By: | Camilo Alberto Cárdenas Hurtado; María Alejandra Hernández Montes; Jhon Edwar Torres Gorron |
| Abstract: | In this paper we study the structural determinants of differentials in unemployment rates and labour markets’ performance for colombian cities. Following the framework proposed by Elhorst (2003) and using cross-sectional data for 23 metropolitan areas, we apply an extension of a principal axes method proposed by B´ecue-Bertaut and Pag`es (2004, 2008), Multiple Factor Analysis for Multiple Contingency Tables (MFACT), in order to establish unobserved factors that are relevant when disentangling the heterogeneity captured by groups of variables that are considered to explain regional unemployment differentials. Our findings suggest that differences on qualified labour supply levels, participation incentives and age structure are important to understand regional heterogeneity on labour markets and unemployment rates. In addition, we find that cities that display high unemployment rates do not necessarily share the same characteristics, that is, frictions that originate unemployment are not the same across colombian cities. |
| Keywords: | Unemployment; Unemployment rate, regional, heterogeneity, differentials, factor analysis. Classification JEL: R23, J40 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:802&r=lab |
| By: | Bassanini, Andrea; Caroli, Eve |
| Abstract: | This paper reviews the literature on the impact of work on health. We consider work along two dimensions: (i) the intensive margin, i.e. how many hours an individual works and (ii) the extensive margin, i.e. whether an individual is in employment or not, independent of the number of hours worked. We show that most of the evidence on the negative health impact of work found in the literature is based on situations in which workers have essentially no control (no choice) over the amount of work they provide. In essence, what is detrimental to health is not so much work per se as much as the gap which may exist between the actual and the desired amount of work, both at the intensive and extensive margins. |
| Keywords: | health; work; retirement; hours worked; job loss; individual choice |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpm:docweb:1402&r=lab |
| By: | Mandelman, Federico S. (Federal Reserve Bank of Atlanta) |
| Abstract: | During the last thirty years, labor markets in advanced economies were characterized by their remarkable polarization. As job opportunities in middle-skill occupations disappeared, employment opportunities concentrated in the highest- and lowest-wage occupations. I develop a two-country stochastic growth model that incorporates trade in tasks, rather than in goods, and reveal that this setup can replicate the observed polarization in the United States. This polarization was not a steady process: the relative employment share of each skill group fluctuated significantly over short-to-medium horizons. I show that the domestic and international aggregate shocks estimated within this framework can rationalize such employment dynamics while providing a good fit to the macroeconomic data. The model is estimated with employment data for different skills groups and trade-weighted macroeconomic indicators. |
| Keywords: | labor market polarization; international business cycles; heterogeneous agents; stochastic growth; two-country models |
| JEL: | F16 F41 |
| Date: | 2013–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2013-17&r=lab |
| By: | Kauer, Lukas |
| Abstract: | Previous empirical literature has shown a substantial extent of work disincentives in the Disability Insurance (DI). While its focus has been on the inflow into DI and on increases in benefits, this study focuses on a partial benefit cut and on existing beneficiaries. The partial benefit reduction affected married DI beneficiaries only and was also dependent on their entry into DI. The richness of the dataset allows me to look at the behavioral response on labor market participation from the spouse and not only from the beneficiary. Using a difference-in-differences methodology, I find no effect on labor supply or earnings for both members of the couple. If anything, there might be spillover effects into means-tested social insurance. These results indicate partially cutting benefits is not an effective policy to increase labor supply of existing DI beneficiaries. |
| Keywords: | Disability insurance, labor supply, policy reform |
| JEL: | H55 J21 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2014:01&r=lab |
| By: | Mandelman, Federico S. (Federal Reserve Bank of Atlanta); Zanetti, Francesco (Oxford University) |
| Abstract: | Recent empirical evidence establishes that a positive technology shock leads to a decline in labor inputs. Can a flexible price model enriched with labor market frictions replicate this stylized fact? We develop and estimate a standard flexible price model using Bayesian methods that allows, but does not require, labor market frictions to generate a negative response of employment to a technology shock. We find that labor market frictions account for the fall in labor inputs. |
| Keywords: | technology shocks; employment; labor market frictions |
| JEL: | E32 |
| Date: | 2013–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2013-16&r=lab |
| By: | Mirella Damiani; Fabrizio Pompei; Andrea Ricci |
| Abstract: | This paper analyses the role of Performance Related Pay (PRP) agreements on labour productivity and wages. Its main contribution is thus to investigate the effects of PRP on both dimensions, i.e. productivity and distribution, whereas most of the studies of related literature are restricted to one of those aspects. All estimates are performed for a large sample of manufacturing and service Italian firms with more than five employees and a restricted sample including only unionised firms. It allows us to focus on a relevant feature of industrial relations represented by worker representation and its role in local wage setting in the Italian economy. The expected positive link between PRP and firm performance has been confirmed in all estimates, also controlling for a rich set of covariates. Furthermore, the comparison of productivity estimates with those for wages allows us to ascertain that payments by results might be not only rent-sharing devices, but schemes that substantially lead to efficiency enhancements. These findings have been validated by a number of robustness checks, also taking into account endogen eity by using instrumental variables and the treatments of 3SLS. The paper argues that well designed policies, that circumvent the limited implementation of PRP practices, would guarantee productivity improvement. The real effectiveness of these measures would not be weakened under union governance. |
| Keywords: | Efficiency, Wages, Performance–related pay, unions. |
| JEL: | D24 J31 J33 J51 |
| Date: | 2013–11–18 |
| URL: | http://d.repec.org/n?u=RePEc:pia:wpaper:124/2013&r=lab |
| By: | Junyi Shen (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Kazuhito Ogawa (Faculty of Sociology, Kansai University); Hiromasa Takahashi (Faculty of International Studies, Hiroshima City University) |
| Abstract: | Previous investigations on performance-related pay have mainly analyzed its relationships with earnings, productivity, and job satisfaction. Less attention has been devoted to the investigations of individuals’ preferences for the performance-related payment system per se and consequently the tradeoff between fixed pay and performance-related pay. In this paper, we first use a choice experiment approach to investigate the tradeoff between fixed pay and performance-related pay, and then link the tradeoff for each individual with their risk preferences. Our main results indicate that individuals’ preferences for the payment system per se and the magnitude of tradeoffs between fixed pay and performance pay are different according to their risk preferences. |
| Keywords: | fixed pay; performance-related pay; choice experiment; risk preference |
| JEL: | C35 J33 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2014-01&r=lab |
| By: | Sebastien Lechevalier (Ecole des Hautes Etudes en Sciences Sociales, Paris); Cyrille Dossougoin (University of Orleans); Christophe Hurlin (University of Orleans); Satoko Takaoka (Kobe University) |
| Abstract: | Beyond the general issue of institutional change at the aggregate level, some studies have shown that the diversity of Japanese firms has increased since the late 1990s, both in terms of performance and organization. This paper contributes to this literature by investigating the evolving employment practices at the firm level. In mobilizing a database of listed manufacturing firms, we focus on the evolution of the speed of downsizing between the 1990s and the 2000s. A specificity of our paper is that we do not limit our analysis to the introduction of individual effects but we rather resort to a Bayesian estimation procedure, which yields to (firm-specific) individual forecasts of the parameters of the adjustment process modelled with random coefficients. The first major result we get is a decreasing average speed of downsizing, contrary to what is found in a simple estimation with individual effects. Second, we confirm the increasing heterogeneity of Japanese firms between the 1990s and the 2000s, through a rising dispersion of the speed of downsizing. Third, we are able, from a descriptive viewpoint to identify some characteristics of firms with different speed of downsizing. |
| Keywords: | Corporate Heterogeneity. Japanese Employment System. Speed pf Employment Adjustment. Downsizing. Panel. Random coefficient model. Bayesian estimation |
| JEL: | C23 G30 J23 L20 L63 L68 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:883&r=lab |
| By: | Leonie Gerhards (Department of Economics and Business, Aarhus University, Denmark); Neele Siemer (Goethe-University Frankfurt) |
| Abstract: | We experimentally compare the incentive effects of rewarding individuals for outstanding performance publicly versus privately. We implement two real-effort tasks, which differ in how prestigious subjects perceive working on them. In both tasks private and public feedback similarly enhances subjects' performance compared to the control treatment. Also high ability and a positive interim feedback increase performance. Competitive preferences matter only in the less prestigious task. Subjects' gender and overconfidence can in neither of the tasks explain performance. In a supplementary field experiment at a secondary school we furthermore compare the incentive effects of different forms of public recognition. |
| Keywords: | Private feedback, public feedback, relative performance, competitive preferences, laboratory experiment, field experiment |
| JEL: | C91 C93 D03 J33 M12 |
| Date: | 2014–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2014-01&r=lab |
| By: | Magnus Hatlebakk |
| Abstract: | We study the deep determinants of occupational choice, with a focus on what appears to be a particularly profitable pathway out of poverty, overseas labor migration. To what extent is this choice constrained by access to economic resources, in contrast to variation in preferences, or perceived costs of migration? We use previous migration choices as an indicator of preferences for migration. We find that early in-migrants to the frontier area we study have more labor migrants today. This indicates that in-migrants need a generation to settle in the new location. Present occupational choice is also restricted by predetermined landholdings. |
| Keywords: | Livelihood strategies, poverty trap |
| JEL: | J24 J61 O15 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:chm:wpaper:wp2013-2&r=lab |