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on Labour Economics |
| By: | Nie, Jun (Federal Reserve Bank of Kansas City); Fang, Lei |
| Keywords: | Unemployment; Unemployment Insurance (UI)Benefits; Matching Model; Human Capital; Labor Market |
| JEL: | E24 J08 |
| Date: | 2014–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkrw:rwp13-10&r=lab |
| By: | Timothy J. Bartik (W.E. Upjohn Institute for Employment Research) |
| Abstract: | This paper estimates how effects of shocks to local labor demand on local labor market outcomes vary with initial local economic conditions. The data are on U.S. metro areas from 1979 to 2011. The paper finds that demand shocks to local job growth have greater effects in reducing local unemployment rates if the local economy is initially depressed than if the local economy is booming. Demand shocks have greater effects on local wage rates if the local unemployment rate is initially low, but lesser effects if local job growth is initially high. These different effects of local demand shocks imply that social benefits of adding jobs are two to three times greater per job in more depressed local labor markets, compared to more booming local labor markets. |
| Keywords: | Local labor markets, labor demand, social benefits of job creation |
| JEL: | R23 H43 J64 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:14-202&r=lab |
| By: | Huber, Martin |
| Abstract: | The decomposition of gender or ethnic wage gaps into explained and unexplained components (often with the aim to assess labor market discrimination) has been a major research agenda in empirical labor economics. This paper demonstrates that conventional decompositions, no matter whether linear or non-parametric, are equivalent to assuming a (probably too) simplistic model of mediation (aimed at assessing causal mechanisms) and may therefore lack causal interpretability. The reason is that decompositions typically control for post-birth variables that lie on the causal pathway from gender/ ethnicity (which are determined at or even before birth) to wage but neglect potential endogeneity that may arise from this approach. Based on the newer literature on mediation analysis, we therefore provide more attractive identifying assumptions and discuss non-parametric identification based on reweighting. |
| Keywords: | Wage decomposition, causal mechanisms, mediation |
| JEL: | J31 J71 C21 C14 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2014:05&r=lab |
| By: | Orrenius, Pia M. (Federal Reserve Bank of Dallas); Zavodny, Madeline (Federal Reserve Bank of Dallas) |
| Abstract: | A number of states have adopted laws that require employers to use the federal government’s E-Verify program to check workers’ eligibility to work legally in the United States. Using data from the Current Population Survey, this study examines whether such laws affect labor market outcomes among Mexican immigrants who are likely to be unauthorized. We find evidence that E-Verify mandates reduce average hourly earnings among likely unauthorized male Mexican immigrants while increasing labor force participation and employment among likely unauthorized female Mexican immigrants. In contrast, the mandates appear to lead to better labor market outcomes among workers likely to compete with unauthorized immigrants. Employment and earnings rise among male Mexican immigrants who are naturalized citizens in states that adopt E-Verify mandates, and earnings rise among U.S.-born Hispanic men. |
| Keywords: | unauthorized immigration; immigration policy; electronic verification; E-Verify |
| JEL: | J15 J31 J61 |
| Date: | 2014–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddwp:1403&r=lab |
| By: | David W. Johnston; Grace Lordan |
| Abstract: | This paper assesses whether racial prejudice and labour market discrimination is counter-cyclical. This may occur if prejudice and discrimination are partly driven by competition over scarce resources, which intensifies during periods of economic downturn. Using British Attitudes Data spanning three decades, we find that prejudice does increase with unemployment rates. We find greater counter-cyclical effects for highly-educated, middle-aged, full-time employed men. For this group, a 1%-point increase in unemployment raises self-reported racial prejudice by 4.1%-points. This result suggests that non-White workers are more likely to encounter racially prejudiced employers and managers in times of higher unemployment. Consistent with the estimated attitude changes, we find using the British Labour Force Survey that racial employment and wage gaps increase with unemployment. The effects for both employment and wages are largest for high-skill Black workers. For example, a 1%-point increase in unemployment increases Black-White employment and wage gaps for the highly educated by 1.3%-points and 2.5%. Together, the attitude and labour market results imply that non-Whites disproportionately suffer during recessions. It follows that recessions exacerbate existing racial inequalities. |
| Keywords: | Prejudice, Attitudes, Recessions, Racism, Discrimination |
| JEL: | J7 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1257&r=lab |
| By: | Cooper, Daniel (Federal Reserve Bank of Boston) |
| Abstract: | One of the distinguishing features of the Great Recession and its aftermath has been the spike in the number of individuals experiencing long-duration unemployment spells, defined as lasting more than 26 weeks. This paper analyzes the effect of unemployment duration on individual's future earnings and other outcomes, such as homeownership and wealth, using data from the Panel Study of Income Dynamics (PSID). The results show a negative relationship between a worker's most recent unemployment spell and his or her current earnings. The earnings of displaced workers do not catch up to those of their nondisplaced counterparts for nearly 20 years. The effect of unemployment on earnings is even more substantial for workers unemployed 26 weeks or more. Unemployment spells also negatively impact future homeownership—this finding suggests that the consequences of the recent spike in unemployment duration could affect more than individuals' expected lifetime earnings. Given the costs of long-term unemployment, policies aimed at reducing the unemployment rate—such as the Federal Reserve's quantitative easing program—could have the added benefit of limiting the negative consequences of long-duration unemployment through fostering faster re-employment. |
| JEL: | J31 J64 J68 |
| Date: | 2014–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:13-8&r=lab |
| By: | Velden R.K.W. van der; Humburg M. (GSBE) |
| Abstract: | In this study we elicit employers preferences for a variety of CV attributes and types of skills when recruiting university graduates. Using two discrete choice experiments, we simulate the two common steps of the graduate recruitment process 1 the selection of suitable candidates for job interviews based on CVs, and 2 the hiring of graduates based on observed skills. We show that in the first step, employers attach most value to CV attributes which signal a high stock of occupation-specific human capital indicating low training costs and short adjustment periods; attributes such as relevant work experience and a good match between the field of study and the job tasks. In line with the preferences in the first step, employers actual hiring decision is mostly influenced by graduates level of professional expertise and interpersonal skills. Other types of skills also play a role in the hiring decision but are less important, and can therefore not easily compensate for a lack of occupation-specific human capital and interpersonal skills. |
| Keywords: | Analysis of Education; Human Capital; Skills; Occupational Choice; Labor Productivity; |
| JEL: | J24 I21 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2014003&r=lab |
| By: | Hendrik Jürges (University of Wuppertal); Lars Thiel (University of Wuppertal); Tabea Bucher-Koenen (Munich Center for the Economics of Aging); Johannes Rausch (Munich Center for the Economics of Aging); Morten Schuth (Munich Center for the Economics of Aging); Axel Börsch-Supan (Munich Center for the Economics of Aging) |
| Abstract: | About 20% of German workers retire on disability pensions. Disability pensions provide fairly generous benefits for those who are not already age-eligible for an old-age pension and who are deemed unable to work for health reasons. In this paper, we use two sets of individual survey data to study the role of health and financial incentives in early retirement decisions in Germany, in particular disability benefit uptake. We show that financial incentives to retire do affect sick individuals at least as much as healthy individuals. Based on 25 years of individual survey data and empirical models of retirement behavior, we then simulate changes in the generosity of disability pensions to understand how these changes would affect retirement behavior. Our results show that making the disability benefit award process more stringent without closing other early retirement routes would not greatly increase labor force participation in old age. |
| JEL: | H55 J14 J26 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:schdps:sdp14003&r=lab |
| By: | Stefano Caria; Paolo Falco |
| Abstract: | We conduct a field experiment to investigate employers’ trust in workers. A sample of real entrepreneurs and workers from urban Ghana are respectively assigned to the roles of employers and employees. Employers have the option to hire (trust) an employee, who can in turn choose whether to exert effort (trustworthiness) in a real-effort task. By comparing employers’ expectations to workers’ revealed trustworthiness, we are able to detect potential misperceptions leading to sub-optimal hiring. We further devise two randomized treatments to test for the existence of expectation bias against specific worker categories and estimate the elasticity of employers’ beliefs with respect to new information. We find that employers significantly underestimate workers’ trustworthiness and this reduces their profit. Employees are aware of employers’ sub-optimal trust. Expectations are largely inelastic with respect to news and negative signals have a stronger (downward) effect than positive ones. Our results suggest that raising employers’ expectations would have a strong impact on hiring. |
| Keywords: | trust, trustworthiness, expectations, effort, hiring, microenterprise, learning, discrimination, experiment, African labour markets |
| JEL: | J23 J71 O15 C9 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2014-07&r=lab |
| By: | Lichter, Andreas; Peichl, Andreas; Siegloch, Sebastian |
| Abstract: | It is widely believed that globalization affects the extent of employment and wage responses to economic shocks. To provide evidence for this, we analyze the effect of firms' exporting behavior on the elasticity of labor demand. Using rich, German administrative linked employer-employee panel data from 1996 to 2008, we explicitly control for self-selection into exporting and endogeneity concerns. In line with our theoretical model, we find that exporting at both the intensive and extensive margins significantly increases the (absolute value of the) unconditional own-wage labor demand elasticity. This is not only true for the average worker, but also for different skill groups. For the median firm, the elasticity is three-quarters higher when comparing exporting to nonexporting firms. -- |
| Keywords: | trade,export,labor demand,wage elasticity,administrative microdata |
| JEL: | F16 J23 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:14013&r=lab |
| By: | Cai, Hongbin; Wang, Miaojun; Yan, Se |
| Abstract: | Using a simple game-theoretical model, this paper provides a new explanation for why large firms in developing economies may willingly pay higher wages than market wage rate. We show that large firms can strategically create entry barriers to the modern sector by setting high wage standards. They may do so to reduce competition or to distort the government's resource allocation. Focusing on the latter case, we also show that the size of the primitive sector will be larger than the efficient level, and public resource allocation will be biased in favor of incumbent large businesses despite the benevolent nature of the government. Using a survey of Chinese industrial firms, we find that industrial concentration is positively correlated with the size-wage effect, and such effect is stronger in less developed provinces. These findings are consistent with our theoretical prediction. |
| Keywords: | size-wage effect; entry deterrence; government resource allocation |
| JEL: | J21 J31 J42 L11 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:53538&r=lab |
| By: | Volker Böhm (Bielefeld University); Oliver Claas (Center for Mathematical Economics, Bielefeld University) |
| Abstract: | This paper analyzes the implications of right-to-manage wage bargaining between a producers’ syndicate and a workers’ union representing finite numbers of identical members in a monetary macroeconomic model of the AS–AD type with government activity. At given prices and price expectations, nominal wages are set according to a Nash bargaining agreement. Producers then choose labor demand and commodity supply to maximize profits at given output prices. The commodity market clears in a competitive fashion. Unique temporary equilibria are shown to exist for each level of relative power of the union. These equilibria may exhibit under- or overemployment, depending on the level of union power. The paper presents a complete comparative-statics analysis of the temporary equilibrium, in particular of the role of union power on employment, wages, and income distribution, including a variety of different qualitative features compared to the situation under efficient bargaining. These differences arise primarily from a supply-side effect of union power under the right-to-manage approach as compared to a demand-side effect under efficient bargaining. In addition, the dynamic evolution under perfect foresight is monotonic with two coexisting balanced steady states, one of which is stable under certain conditions. These properties are qualitatively identical to those under efficient bargaining or under perfect competition. |
| Keywords: | Collective Bargaining, Nash Bargaining, Union Power, Aggregate Supply-Aggregate Demand, Government Deficits, Perfect Foresight, Dynamics, Stability |
| JEL: | C78 D61 E24 E25 E31 E42 J52 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:502&r=lab |