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on Labour Economics |
| By: | Dorsett, Richard (National Institute of Economic and Social Research (NIESR)); Oswald, Andrew J. (University of Warwick) |
| Abstract: | Many politicians believe they can intervene in the economy to improve people's lives. But can they? In a social experiment carried out in the United Kingdom, extensive in-work support was randomly assigned among 16,000 disadvantaged people. We follow a sub-sample of 3,500 single parents for 5 ensuing years. The results reveal a remarkable, and troubling, finding. Long after eligibility had ceased, the treated individuals had substantially lower psychological well-being, worried more about money, and were increasingly prone to debt. Thus helping people apparently hurt them. We discuss a behavioral framework consistent with our findings and reflect on implications for policy. |
| Keywords: | randomized controlled trials, government policy, in-work benefits, wage subsidies, well-being, happiness |
| JEL: | I31 D03 D60 H11 J38 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7943&r=lab |
| By: | Alan L. Gustman; Thomas L. Steinmeier |
| Abstract: | This paper constructs and estimates a dynamic model of the evolution of health for those over the age of 50 and then embeds that model of health dynamics in a structural, econometric model of retirement and saving. The health model traces the effects of smoking, obesity, alcohol consumption, depression and other proclivities on medical conditions, including hypertension, diabetes, cancer, lung disease, heart problems, stroke, psychiatric problems and arthritis. These in turn influence an overall index of health status based on self-reported health, work limitations and ADLs, which is used to classify the population into good, fair, poor or terrible health. Compared to a situation where the entire population is in good health, the current health status of the population reduces the retirement age of the entire population by an average of about one year. While poor health or terrible health have a great impact on the disutility of work and thus on retirement, fair health as opposed to good health has a relatively minor effect. Smoking depresses full-time work effort by up to 3.5 percentage points by those in the early sixties, reducing the average retirement age by four to five months. Effects of trends in health care and health policies on retirement are also analyzed. Including detailed measurement of health dynamics in a retirement model improves understanding of the effects of health on retirement. It does not, however, influence estimates of the marginal effects of economic incentives on retirement. |
| JEL: | D31 D91 E21 H55 I1 I3 J14 J18 J26 J3 J32 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19902&r=lab |
| By: | Julia Jauer; Thomas Liebig; John P. Martin; Patrick Puhani |
| Abstract: | The question of whether migration can be an equilibrating force in the labour market is an important criterion for an optimal currency area. It is of particular interest currently in the context of high and rising levels of labour market disparities, in particular within the Eurozone where there is no exchange-rate mechanism available to play this role. We shed some new light on this question by comparing pre- and post-crisis migration movements at the regional level in both Europe and the United States, and their association with asymmetric labour market shocks. We find that recent migration flows have reacted quite significantly to the EU enlargements in 2004 and 2007 and to changes in labour market conditions, particularly in Europe. Indeed, in contrast to the pre-crisis situation and the findings of previous empirical studies, there is tentative evidence that the migration response to the crisis has been considerable in Europe, in contrast to the United States where the crisis and subsequent sluggish recovery were not accompanied by greater interregional labour mobility in reaction to labour market shocks. Our estimates suggest that, if all measured population changes in Europe were due to migration for employment purposes – i.e. an upper-bound estimate – up to about a quarter of the asymmetric labour market shock would be absorbed by migration within a year. However, in the Eurozone the reaction mainly stems from migration of third-country nationals. Even within the group of Eurozone nationals, a significant part of the free mobility stems from immigrants from third countries who have taken on the nationality of their Eurozone host country. La question de savoir si la migration peut être une force d'équilibre sur le marché du travail est un critère non négligeable pour l’optimisation d’une zone monétaire. Elle est particulièrement importante dans un contexte où les disparités du marché du travail connaissent des niveaux élevés et croissants, en particulier au sein de la zone euro où il n'existe pas de mécanisme de taux de change à même de jouer ce rôle. Nous espérons apporter un éclairage nouveau sur cette question en comparant les flux migratoires avant et après la crise au niveau régional en Europe et aux États-Unis , et leur combinaison avec les chocs asymétriques du marché du travail. Nous avons constaté que les flux migratoires récents ont réagi de manière assez significative aux élargissements de l'UE en 2004 et 2007 et aux changements du marché du travail, en particulier en Europe. En effet, contrairement à la situation qui prévalait avant la crise et aux résultats des études empiriques antérieures, il semblerait que la réponse de la migration à la crise ait été considérable en Europe, contrairement aux États-Unis où la crise et la faible reprise ultérieure n'ont pas été accompagnées par une plus grande mobilité interrégionale des travailleurs en réaction aux chocs du marché du travail. Nos estimations semblent suggérer que si tous les changements de population mesurés en Europe sont dus à la migration à des fins d'emploi - c'est à dire une estimation de la limite supérieure - jusqu'à environ un quart des chocs asymétriques du marché du travail seraient absorbés par la migration dans l'année. Cependant, dans la zone euro, cette réaction s'explique principalement par la migration de ressortissants de pays tiers. Même au sein du groupe des ressortissants de la zone euro, une partie importante des mouvements de libre circulation émanent de migrants de pays tiers ayant pris la nationalité de leur pays d'accueil de la zone euro. |
| Keywords: | migration, United States, labour market adjustments, economic crisis, free mobility, Europe, Eurozone |
| JEL: | F15 F16 F22 J61 |
| Date: | 2014–01–09 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:155-en&r=lab |
| By: | Eric Strobl; Frank Walsh |
| Abstract: | We show in a monopsony model that in response to a small increase in migration employment will increase in both low productivity non-compliant firms who pay less than and in high productivity firms who pay more than the minimum wage, but will increase by proportionately more in minimum wage firms who are constrained by the labour supply curve. Using data from Thailand we provide evidence that increases in inward net migration are indeed associated with a proportionately greater increase in employment at than below the minimum wage. |
| Date: | 2014–01–06 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-069&r=lab |
| By: | Alessio J. G. Brown; Christian Merkl; Dennis Snower |
| Abstract: | This paper sheds new light on the effects of the minimum wage on employment from a two-sided theoretical perspective, in which firms' job offer and workers' job acceptance decisions are disentangled. Minimum wages reduce job offer incentives and increase job acceptance incentives. We show that sufficiently low minimum wages may do no harm to employment, since their job-offer disincentives are countervailed by their job-acceptance incentives |
| Keywords: | Minimum wage, labor market, employment, unemployment, job offer, job acceptance |
| JEL: | J3 J6 J2 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1906&r=lab |
| By: | Caliendo, Marco (University of Potsdam); Gehrsitz, Markus (City University of New York) |
| Abstract: | This paper applies semiparametric regression models to shed light on the relationship between body weight and labor market outcomes in Germany. We find conclusive evidence that these relationships are poorly described by linear or quadratic OLS specifications, which have been the main approaches in previous studies. Women's wages and employment probabilities do not follow a linear relationship and are highest at a body weight far below the clinical threshold of obesity. This indicates that looks, rather than health, is the driving force behind the adverse labor market outcomes to which overweight women are subject. Further support is lent to this notion by the fact that wage penalties for overweight and obese women are only observable in white-collar occupations. On the other hand, bigger appears to be better in the case of men, for whom employment prospects increase with weight, albeit with diminishing returns. However, underweight men in blue-collar jobs earn lower wages because they lack the muscular strength required in such occupations. |
| Keywords: | obesity, wages, employment, semiparametric regression, gender differences |
| JEL: | J31 J71 C14 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7947&r=lab |
| By: | Pedro S. Amaral (Federal Reserve Bank of Cleveland); Murat Tasci (Federal Reserve Bank of Cleveland) |
| Abstract: | We show that the inability of a standardly-calibrated labor search-and-matching model to account for labor market volatility extends beyond the U.S. to a set of OECD countries. That is, the volatility puzzle is ubiquitous. We argue cross-country data is helpful in scrutinizing between potential solutions to this puzzle. To illustrate this, we show that the solution proposed in Hagedorn and Manovskii (2008) continues to deliver counterfactually low volatility in countries where labor productivity persistence and/or steady-state job-finding rates are sufficiently low. Moreover, the model's ability to generate high enough volatility depends on vacancy-filling rate levels that seem counterfactual outside the U.S. |
| Keywords: | Labor Market, Vacancies, Unemployment, OECD countries. |
| JEL: | E24 E32 J63 J64 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:1405&r=lab |
| By: | Boll, Christina; Leppin, Julian Sebastian |
| Abstract: | Germany's occupational and sectoral change towards a knowledge-based economy calls for high returns to education. Nevertheless, female graduates are paid much less than their male counterparts. We wonder whether overeducation affects sexes differently and whether this might answer for part of the gender pay gap. We decompose total year of schooling in years of over- (O), required (R), and undereducation (U). As ORU earnings estimations based on German SOEP cross-section and panel data indicate, overeducation pays off less than required education in the current job even when unobserved heterogeneity is taken into account. Moreover, analyses of job satisfaction and self-assessed overeducation point to some real mismatch. However, overeducation does not matter for the gender pay gap. By contrast, women's fewer years of required education reasonably do, answering for 7.61 pp. of the East German (18.79 %) and 2.22 pp. of the West German (32.98 %) approximate gap. Moreover, job biography and the household context affect the gap more seriously in the old Bundesländer than in the new ones. Overall, the West German pay gap almost doubles the East German one, and different endowments answer for roughly three quarters of the approximate gap in the Western but only for two thirds in the Eastern part. We conclude that the gendered earnings gap among German graduates is rather shaped by an employment behaviour suiting traditional gender roles and assigned gender stereotypes than being subject to gendered educational inadequacy. -- |
| JEL: | J31 J24 J16 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hwwirp:147&r=lab |
| By: | Susumu Imai (UTS Business School, University of Technology, Sydney, Australia); Derek Stacey (Department of Economics, Ryerson University, Toronto, Canada); Casey Warman (Department of Economics, Dalhousie University, Halifax, Canada) |
| Abstract: | We examine the ability of male immigrants to transfer the occupational human capital they acquired prior to immigration using information from the O*NET and a unique dataset that includes both the last source country occupation and the first four years of occupations in Canada. We first augment a model of occupational choice to study the implications of language proficiency on the cross-border transferability of occupational human capital. We then test the empirical predictions using the skill requirements of pre- and post-immigration occupations. We find that male immigrants to Canada were employed in source country occupations that required high levels of cognitive skills, but relied less intently on manual skills. Following immigration, they find initial employment in occupations that require the opposite. These discrepancies are both larger and more detrimental to earnings among immigrants with limited language fluency. |
| Keywords: | Occupational mobility; Language Proficiency; Skills; Human Capital; Immigration |
| JEL: | J24 J31 J61 J62 J71 J80 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:rye:wpaper:wp040&r=lab |
| By: | Gonul Sengul (Central Bank of Turkey); Murat Tasci (Federal Reserve Bank of Cleveland) |
| Abstract: | This paper measures flow rates into and out of unemployment for Turkey and uses these rates to estimate the unemployment rate trend, that is the level of the unemployment rate the economy converges to in the long-run. In doing so, the paper explores the role of the labor force participation in determining the trend unemployment. We find an inverse V-shaped pattern for the unemployment rate trend over time in Turkey, currently standing between 8.5 and 9 percent, with an increasing labor market turnover. We also find that allowing for an explicit role for participation changes the results substantially, reducing the “natural” rate at first, but then getting closer to the baseline over time. Finally, we show that this parsimonious model can be used for forecasting unemployment in Turkey with relative ease and accuracy. |
| Keywords: | Risk measurement, systemic risk, connectedness, systemically important financial institutions, vector autoregression, variance decomposition |
| JEL: | C3 G2 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:1404&r=lab |
| By: | Fabrizio Mazzonna (IDEP and CEPRA, Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera.); Franco Peracchi (Istituto Einaudi per l'Economia e la Finanza (EIEF) and Dipartimento di Economia e Finanza Facoltà di Economia Università degli Studi di Roma "Tor Vergataâ€, Roma, Italia.) |
| Abstract: | We investigate the causal effect of retirement on health and cognitive abilities by exploiting the variation between and within European countries in old age retirement rules. We show negative and significant effect of retirement on both health and cognitive abilities. We also show evidence of significant heterogeneity across occupational groups. In particular, the negative effect of retirement disappears and turn to be even positive for those working in very physically demanding jobs. |
| Keywords: | Aging, cognitive abilities, retirement, occupation, SHARE |
| JEL: | C26 I14 J14 J24 J26 |
| Date: | 2014–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:lug:wpidep:1401&r=lab |
| By: | Eliane El Badaoui; Eric Strobl; Frank Walsh |
| Abstract: | We estimate the impact of internal migration on local labour markets in Thailand. Using an instrumental variable approach based on weather and distance we estimate an exogenous measure of the net migration inflow into each region. Our results show that instrumenting for the possible endogeneity of net inward migration is crucial to the analysis. The results suggest that wages of low skill male workers are highly flexible with substantial adjustments in hours worked and weekly wages in response to short term changes in labour supply. We find no effect on high skilled workers. |
| Keywords: | Internal migration, Labour markets, Thailand |
| JEL: | O15 J10 |
| Date: | 2014–01–06 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-071&r=lab |
| By: | Fu, Shihe; Viard, Brian |
| Abstract: | Whether, and how much, increased commute costs decrease labor supply is important for transport policy, city growth, and business strategies. Yet empirical estimates are limited and biased downward due to endogenous choices of residences, workplaces, commute modes, and wages. We use the transition of undergraduate teaching from a Chinese university’s urban to suburban campus and ten years of complete course schedule data to test how teachers’ labor supply responds to a longer commute. Exogeneity is ensured because few faculty change residences, nearly all faculty ride a free shuttle bus, and we control for wage changes. Employing a regression discontinuity design, the 1.0 to 1.5-hour (40-kilometer) increase in round-trip commute time reduces annual undergraduate teaching by 56 hours or 23%. Consistent with higher per-day commute costs annual teaching days decrease by 27 while daily teaching hours increase by 0.49. Difference-in-difference estimates using faculty-specific changes in commute time corroborate these results ruling out aggregate confounders. Faculty substitute toward graduate teaching but decrease research output. The university accommodated the reduced teaching time primarily by increasing class sizes implying that education quality declined. |
| Keywords: | commuting; commute costs; labor supply; satellite campus |
| JEL: | I23 I25 J22 R23 R41 |
| Date: | 2014–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:53740&r=lab |
| By: | Francois Gourio; Leena Rudanko |
| Abstract: | Intangible capital is an important factor of production in modern economies that is generally neglected in business cycle analyses. We demonstrate that intangible capital can have a substantial impact on business cycle dynamics, especially if the intangible is complementary with production capacity. We focus on customer capital: the capital embodied in the relationships a firm has with its customers. Introducing customer capital into a standard real business cycle model generates a volatile and countercyclical labor wedge, due to a mismeasured marginal product of labor. We also provide new evidence on cyclical variation in selling effort to discipline the exercise. |
| JEL: | E13 E32 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19900&r=lab |
| By: | Richard Blundell (Institute for Fiscal Studies and University College London); Michael Graber (Institute for Fiscal Studies); Magne Mogstad (Institute for Fiscal Studies) |
| Abstract: | What do labor income dynamics look like over the life-cycle? What is the relative importance of persistent shocks, transitory shocks and heterogeneous profiles? To what extent do taxes, transfers and the family attenuate these various factors in the evolution of life-cycle inequality? In this paper, we use rich Norwegian data to answer these important questions. We let individuals with different education levels have a separate income process; and within each skill group, we allow for non-stationarity in age and time, heterogeneous experience profiles, and shocks of varying persistence. We find that the income processes differ systematically by age, skill level and their interaction. To accurately describe labor income dynamics over the life-cycle, it is necessary to allow for heterogeneity by education levels and account for non-stationarity in age and time. Our findings suggest that the progressive nature of the Norwegian tax-transfer system plays a key role in attenuating the magnitude and persistence of income shocks, especially among the low skilled. By comparison, spouse's income matters less for the dynamics of inequality over the life-cycle. |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:14/01&r=lab |
| By: | Glenda Quintini; Sébastien Martin |
| Abstract: | Improving school-to-work transitions and ensuring better career opportunities for youth after labour market entrance are common goals in emerging and advanced economies as they can contribute to raising the productive potential of the economy and to increasing social cohesion. However, the challenges faced in achieving these objectives and the policies required vary between emerging and advanced economies. This paper analyses youth labour market outcomes in 16 countries: eight emerging countries and eight advanced economies. In light of this analysis, it also discusses differences and similarities in the policy measures countries have at their disposal to tackle the key emerging challenges. Améliorer les transitions de l’école à l’emploi et assurer aux jeunes des meilleures opportunités professionnelles après l’entrée sur le marché du travail sont des buts partagés par les pays développés et émergents car ils peuvent contribuer à augmenter le potentiel productif de l’économie et à accroitre la cohésion sociale. Toutefois, les défis auxquels les pays sont confrontés pour atteindre ces objectifs et les politiques requises varient entre les pays émergents et les économies plus avancées. Ce document analyse la réussite des jeunes sur le marché du travail dans 16 pays : huit pays émergents et huit économies avancées. En vue de cette analyse, ce document expose les différences et similarités dans les mesures de politique économique que les pays ont à leur disposition pour faire face aux défis émergeants. |
| JEL: | I28 J08 J21 J38 J41 |
| Date: | 2014–01–28 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:154-en&r=lab |
| By: | Andrén, Daniela (Örebro University School of Business); Andrén, Thomas (The Swedish Confederation of Professional Associations and IZA) |
| Abstract: | This study examines how the non-targeted earned income tax credit (EITC) introduced in Sweden in 2007 has affected the labor supply of men and women living together in two-adault households and the extent to which children affect related outcomes. Using a structural discrete labor supply model for two adult households, we estimate the impact of the EITC on both labor supply and disposable income separately for households with and without children. Our results suggest that wage elasticities differ for men and women with or without children, a result that is in line with earlier literature. However, women increased their labor supply bu 0.9 percent regardless of children in the household, whereas men with children increased their labor supply by approximately 0.5 percent and those without children increased their labor supply by 0.7 percent. |
| Keywords: | structural discrete labor supply model; EITC; younger children; two-adult households |
| JEL: | I30 I38 J18 |
| Date: | 2014–01–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:oruesi:2014_001&r=lab |
| By: | Jeremy Greenwood (University of Pennsylvania, Philadelphia, PA 19104, USA); Nezih Guner (ICREA-MOVE, Universitat Autonoma de Barcelona and Barcelona GSE, Spain); Georgi Kocharkov (Department of Economics, University of Konstanz, Germany); Cezar Santos (University of Mannheim, Department of Economics, Germany) |
| Abstract: | Has there been an increase in positive assortative mating? Does assortative mating contribute to household income inequality? Data from the United States Census Bureau suggests there has been a rise in assortative mating. Additionally, assortative mating a¤ects household income inequality. In particular, if matching in 2005 between husbands and wives had been random, instead of the pattern observed in the data, then the Gini coe¢ cient would have fallen from the observed 0.43 to 0.34, so that income inequality would be smaller. Thus, assortative mating is important for income inequality. The high level of married female labor-force participation in 2005 is important for this result. |
| Keywords: | Assortative mating, married female labor supply, inequality |
| JEL: | D31 J11 J12 J22 |
| Date: | 2014–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:knz:dpteco:1403&r=lab |