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on Labour Economics |
| By: | Lance Lochner; Youngki Shin |
| Abstract: | We consider a general framework to study the evolution of wage and earnings residuals that incorporates features highlighted by two influential but distinct literatures in economics: (i) unobserved skills with changing non-linear pricing functions and (ii) idiosyncratic shocks with both permanent and transitory components. We first provide nonparametric identification conditions for the distribution of unobserved skills, all unobserved skill pricing functions, and (nearly) all distributions for both permanent and MA(q) transitory shocks. We then discuss identification and estimation using a moment-based approach, restricting unobserved skill pricing functions to be polynomials. Using data on log earnings for men ages 30-59 in the PSID, we estimate the evolution of unobserved skill pricing functions and the distributions of unobserved skills, transitory, and permanent shocks from 1970 to 2008. We highlight five main findings: (i) The returns to unobserved skill rose over the 1970s and early 1980s, fell over the late 1980s and early 1990s, and then remained quite stable through the end of our sample period. Since the mid-1990s, we observe some evidence of polarization: the returns to unobserved skill declined at the bottom of the distribution while they remained relatively constant over the top half. (ii) The variance of unobserved skill changed very little across most cohorts in our sample (those born between 1925 and 1955). (iii) The variance of transitory shocks jumped up considerably in the early 1980s but shows little long-run trend otherwise over the more than thirty year period we study. (iv) The variance of permanent shocks declined very slightly over the 1970s, then rose systematically through the end of our sample by 15 to 20 log points. The increase in this variance over the 1980s and 1990s was strongest for workers with low unobserved ability. (v) In most years, the distribution of unobserved skill pricing is positively skewed, while the distributions of permanent and (especially) transitory shocks are negatively skewed. |
| JEL: | C14 C23 J31 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20068&r=lab |
| By: | Fredrik Andersson; John C. Haltiwanger; Mark J. Kutzbach; Henry O. Pollakowski; Daniel H. Weinberg |
| Abstract: | This paper presents a new approach to the measurement of the effects of spatial mismatch that takes advantage of matched employer-employee administrative data integrated with a person-specific job accessibility measure, as well as demographic and neighborhood characteristics. The basic hypothesis is that if spatial mismatch is present, then improved accessibility to appropriate jobs should shorten the duration of unemployment. We focus on lower-income workers with strong labor force attachment searching for employment after being subject to a mass layoff – thereby focusing on a group of job searchers that are plausibly searching for exogenous reasons. We construct person-specific measures of job accessibility based upon an empirical model of transport modal choice and network travel-time data, giving variation both across neighborhoods in nine metropolitan areas, as well as across neighbors. Our results support the spatial mismatch hypothesis. We find that better job accessibility significantly decreases the duration of joblessness among lower-paid displaced workers. Blacks, females, and older workers are more sensitive to job accessibility than other subpopulations. |
| JEL: | J64 R23 R41 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20066&r=lab |
| By: | Raven Molloy; Christopher L. Smith; Abigail Wozniak |
| Abstract: | Interstate migration has decreased steadily since the 1980s. We show that this trend is not primarily related to demographic and socioeconomic factors, but instead appears to be connected to a concurrent secular decline in labor market transitions. We explore a number of reasons for the declines in geographic and labor market transitions, and find the strongest support for explanations related to a decrease in the net benefit to changing employers. Our preferred interpretation is that the distribution of relevant outside offers has shifted in a way that has made labor market transitions, and thus geographic transitions, less desirable to workers. |
| JEL: | J0 J11 J6 N3 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20065&r=lab |
| By: | Abigail K. Wozniak |
| Abstract: | Nearly half of U.S. employers test job applicants and workers for drugs. A common assumption is that the rise of drug testing must have had negative consequences for black employment. However, the rise of employer drug testing may have benefited African-Americans by enabling non-using blacks to prove their status to employers. I use variation in the timing and nature of drug testing regulation to identify the impacts of testing on black hiring. Black employment in the testing sector is suppressed in the absence of testing, a finding which is consistent with ex ante discrimination on the basis of drug use perceptions. Adoption of pro-testing legislation increases black employment in the testing sector by 7-30% and relative wages by 1.4-13.0%, with the largest shifts among low skilled black men. Results further suggest that employers substitute white women for blacks in the absence of testing. |
| JEL: | J24 J7 J8 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20095&r=lab |
| By: | Anyadike-Danes, Michael (Aston Business School and Enterprise Research Centre, UK); Bjuggren, Carl Magnus (Research Institute of Industrial Economics (IFN)); Gottschalk, Sandra (ZEW, Germany); Hölzl, Werner (WIFO, Austria); Johansson, Dan (HUI Research); Maliranta, Mika (ETLA); Myrann, Anja (Ragnar Frisch Centre for Economic Research, Norway) |
| Abstract: | The contribution of different-sized businesses to job creation continues to attract policymakers’ attention, however, it has recently been recognized that conclusions about size were confounded with the effect of age. We probe the role of size, controlling for age, by comparing the cohorts of firms born in 1998 over their first decade of life, using variation across half a dozen northern European countries Austria, Finland, Germany, Norway, Sweden, and the UK to pin down size effects. We find that a very small proportion of the smallest firms play a crucial role in accounting for cross-country differences in job growth. A closer analysis reveals that the initial size distribution and survival rates do not seem to explain job growth differences between countries, rather it is a small number of rapidly growing firms that are driving this result. |
| Keywords: | Birth cohort; Firm age; Firm size; Firm survival; Firm growth |
| JEL: | E24 L25 M13 |
| Date: | 2014–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1019&r=lab |
| By: | Huang, Yi (The Graduate Institute, Geneva); Loungani, Prakash (International Monetary Fund); Wang, Gewei (The Chinese University of Hong Kong) |
| Abstract: | This paper studies how minimum wage policies affect firm employment in China using a unique county level minimum wage data set matched to disaggregated firm survey data. We investigate both the effect of imposing a minimum wage, and the effect of the policies that tightened enforcement in 2004. We find that the average effect of minimum wage changes is modest and positive, and that there is a detectable effect after enforcement reform. Firms have heterogeneous responses to minimum wage changes which can be accounted for by differences in their wage levels and profit margins: firms with high wages or large profit margin increase employment, while those with low wages or small profit margin downsize. The increase in enforcement of China’s minimum wage in 2004 has since amplified this heterogeneity, which implies that labor regulation may reduce the monopsony rent of firms. Our results provide evidence for the theoretical predictions of the positive minimum wage employment relationship in a monopolistic labor market. |
| Keywords: | human capital; labor; manufacturing; industry; trade; wages |
| JEL: | F10 F14 J24 J31 O14 O14 |
| Date: | 2014–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddgw:173&r=lab |
| By: | Daniel Borowczyk-Martins (University of Bristol - University of Bristol); Jake Bradley (University of Bristol - University of Bristol); Linas Tarasonis (AMSE - Aix-Marseille School of Economics - Centre national de la recherche scientifique (CNRS) - École des Hautes Études en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM)) |
| Abstract: | In the US labor market the average black worker is exposed to a lower employment rate and earns a lower wage compared to his white counterpart. Lang and Lehmann (2012) argue that these mean differences mask substantial heterogeneity along the distribution of workers' skill. In particular, they argue that black-white wage and employment gaps are smaller for high-skill workers. In this paper we show that a model of employer taste-based discrimination in a labor market characterized by search frictions and skill complementarities in production can replicate these regularities. We estimate the model with US data using methods of indirect inference. Our quantitative results portray the degree of employer prejudice in the US labor market as being strong and widespread, and provide evidence of an important skill gap between black and white workers. We use the model to undertake a structural decomposition and conclude that discrimination resulting from employer prejudice is quantitatively more important than skill differences to explain wage and employment gaps. In the final section of the paper we conduct a number of counterfactual experiments to assess the effectiveness of different policy approaches aimed at reducing racial differences in labor market outcomes. |
| Keywords: | employment and wage differentials; discrimination; job search |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00989748&r=lab |
| By: | BROSIUS Jacques; RAY Jean-Claude; VERHEYDEN Bertrand; WILLIAMS Donald R. |
| Abstract: | Luxembourg has a very unusual labor market, with only 29% of Luxembourgish nationals. The remaining workforce is composed of immigrants (27%) and cross- border workers (44%) who live in one of the three surrounding countries which are France, Germany and Belgium. Research on economic outcomes of immigrants has been a major focus of labor market research in many countries, but the cross-border population has only attracted scarce attention. Even though this topic is of limited relevance in most countries at the national level, similar situations as in Luxembourg can be found in regional and local labor markets in most other countries, around ma- jor cities for example. In this paper we use the example of Luxembourg to investi- gate the determinants of the wage gap between natives and cross-border workers. We first analyze whether this specific commuting workforce is concerned, like the non na- tional population in many other labor markets, by segregation into low-wage firms. We then use a matched employer-employee dataset to investigate the role that firm-specific characteristics play in determining the wage gap. This approach opens interesting per- spectives for expanding the literature on the native-immigrants wage gap. |
| Keywords: | wage gap; cross-border labor market; segregation; multilevel modeling |
| JEL: | J31 J61 J71 R23 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2014-04&r=lab |
| By: | Fahn, Matthias |
| Abstract: | The need to give incentives is usually absent in the literature on minimum wages. However, especially in the service sector it is important how well a job is done, and employees must be incentivized to perform accordingly. Furthermore, many aspects regarding service quality cannot be verified, which implies that relational contracts have to be used to provide incentives. The present article shows that in this case, a minimum wage increases implemented effort, i.e., realized service quality, as well as the efficiency of an employment relationship. Hence, this paper can explain why productivity and service quality went up after the introduction of the British National Minimum Wage, and that this might actually have caused a more efficient labor market. Furthermore, several empirically observed implications of a (higher) minimum wage can be explained. It might reduce turnover of employees, have spillover effects on higher wages, and reduce wage dispersion. |
| Keywords: | Minimum Wages; Relational Contracts; |
| JEL: | C73 D21 J24 J31 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:20831&r=lab |
| By: | CHOE Chung; VAN KERM Philippe |
| Abstract: | The presence of foreign workers is commonly deemed as driving wage inequality upwards. By 2006, seven in ten private sector workers in Luxembourg were foreign. This note builds on recentered influence function regression methods to identify where these foreign workers stand in the distribution of private sector wages, and assess whether and how much their wages contribute to overall wage inequality. Our analysis of the 2006 Structure of Earnings Survey reveals that foreign workers have generally lower wages than natives and therefore tend to haul the overall wage distribution downwards. Yet, surprizingly, their influence on wage inequality reveals small and negative. All impacts are further muted when accounting for human capital and, especially, job characteristics. Not observing any large positive inequality contribution on the Luxembourg labour market is a striking result given the sheer size of the foreign workforce and its polarization at both ends of the skill distribution. |
| Keywords: | immigrant wages; wage inequality; cross-border workers; influence function; RIF regression; Luxembourg |
| JEL: | J15 J31 J61 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2014-02&r=lab |
| By: | Perihan Ozge Saygin; Andrea Weber; Michèle A. Weynandt |
| Abstract: | Social networks are an important channel of information transmission in the labor market. This paper studies the mechanisms by which social networks have an impact on labor market outcomes of displaced workers. We base our analysis on administrative records for the universe of private sector employment in Austria where we define work-related networks formed by past coworkers. To distinguish between mechanisms of information transmission, we adopt two different network perspectives. From the job-seeker's perspective we analyze how network characteristics affect job finding rates and wages in the new jobs. Then we switch to the perspective of the hiring firm and analyze which types of displaced workers get hired by firms that are connected to a closing firm via past coworker links. Our results indicate that employment status and the firm types of former coworkers are crucial for the job finding success of their displaced contacts. Moreover, 21% of displaced workers find a new job in a firm that is connected to their former workplace. Among all workers that were displaced from the same closing firm those with a direct link to a former coworker are twice as likely to be hired by the connected firm than workers without a link. These results highlight the role of work related networks in the transmission of job information and strongly suggest that job referrals are an important mechanism. |
| Keywords: | Social Networks, Job Displacement, Plant Closure, Referral Hiring |
| JEL: | J63 J64 M51 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:jku:nrnwps:2014_06&r=lab |
| By: | VAN KERM Philippe; YU Seunghee; CHOE Chung |
| Abstract: | This paper exploits a parametric variant of the Machado-Mata simulation methodology to examine wage distribution differences between native and foreign workers in Luxembourg. Relying on ?parametric quantile regression? in place of repeated linear quantile regressions cuts computing time drastically with no loss in the accuracy of unconditional quantile simulations. Substantively, we find a clear inverted-U-shaped native worker advantage: the advantage is small (possibly negative) for both low and high quantiles, but it is large for the middle half of the quantile range (between the 20th and 70th native wage percentiles). The pattern holds against both immigrants and cross-border workers, although the latter catch up much less at high percentiles. Differences in human capital and job characteristics hardly account for the gap, unlike sorting into different jobs and occupations which account for a substantial share?although not all?of the gap. |
| Keywords: | immigrant wages; cross-border workers; quantile regression; quantile process; distribution regression; Singh.Maddala distribution; Dagum distribution; Luxembourg |
| JEL: | J15 J31 J61 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2014-05&r=lab |
| By: | Vanessa Mertins (Institute for Labour Law and Industrial Relations in the EU, University of Trier); Jörg Franke (University of Dortmund (TU), Department of Economics); Ruslan Gurtoviy (University of Trier) |
| Abstract: | Our study analyzes the consequences of workers' participation in the wage setting process on effort exertion. The experimental design is based on a modified giftexchange game where the degree of workers’ involvement in the wage setting process is systematically varied among the workers. The experimental data reveals that workers' participation leads actually to a decline in effort exertion which can be explained by negative reciprocity of the respective worker. These results put some recently observed positive effects from workers' participation in experimental labor markets into perspective and are more in line with the ambiguous results from empirical studies. |
| Keywords: | participation, labor market, gift-exchange game, personnel economics, reciprocity |
| JEL: | C72 C91 J33 L23 M52 M55 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:iaa:dpaper:201407&r=lab |
| By: | Ueno, Yuko |
| Abstract: | This study finds a strong and positive correlation between the net job-creation rates of large employers and labor market tightness (i.e., ratio of job offers to job-seekers) in business cycle frequencies in Japan. This correlation is much stronger than that seen among smaller employers, and is mainly due to pro-cyclicality in job creation at large firms. Furthermore, large firms offer relatively higher wages to job-changers at the point of job transition in a tight labor market than do small firms. However, such pro-cyclicality in wage offers are less evident at large firms conditioned with the change in the level of new vacancies. One of the background factors for the weak pro-cyclicality of wage offers by large firms could be that they offer a superior internal market. |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:hit:cisdps:624&r=lab |
| By: | Giovanni Peri; Kevin Shih; Chad Sparber |
| Abstract: | Scientists, Technology professionals, Engineers, and Mathematicians (STEM workers) are fundamental inputs in scientific innovation and technological adoption, the main drivers of productivity growth in the U.S. In this paper we identify the effect of STEM worker growth on the wages and employment of college and non-college educated native workers in 219 U.S. cities from 1990 to 2010. In order to identify a supply-driven and heterogeneous increase in STEM workers across U.S. cities, we use the distribution of foreign-born STEM workers in 1980 and exploit the introduction and variation of the H-1B visa program granting entry to foreign-born college educated (mainly STEM) workers. We find that H-1B-driven increases in STEM workers in a city were associated with significant increases in wages paid to college educated natives. Wage increases for non-college educated natives are smaller but still significant. We do not find significant effects on employment. We also find that STEM workers increased housing rents for college graduates, which eroded part of their wage gains. Together, these results imply a significant effect of foreign STEM on total factor productivity growth in the average US city between 1990 and 2010. |
| JEL: | F22 J61 O33 R10 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20093&r=lab |
| By: | Laura Dague; Thomas DeLeire; Lindsey Leininger |
| Abstract: | This study provides plausibly causal estimates of the effect of public insurance coverage on the employment of non-elderly, non-disabled adults without dependent children (“childless adults”). We use regression discontinuity and propensity score matching difference-in-differences methods to take advantage of the sudden imposition of an enrollment cap, comparing the labor supply of enrollees to eligible applicants on a waitlist. We find enrollment into public insurance leads to sizable and statistically meaningful reductions in employment up to at least 9 quarters later, with an estimated size of from 2 to 10 percentage points depending upon the model used. |
| JEL: | I13 J22 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20111&r=lab |
| By: | Kunze, Astrid (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | This study reconsiders the empirical question of whether men’s earnings increase because of children. Large Norwegian register data are used for brother and twin pairs who are followed over their life cycle from their first entry into the labour market. The data permit family-fixed effects to be modeled in various ways, as well as observing earnings growth before and after having children. The simple conditional correlation between children and earnings is positive. When only variation from between-sibling differences is used, the earnings effect post entry into firstfatherhood declines. The effect becomes small and non-significant when we use twins. |
| Keywords: | Children; marriage; earnings; men; selection; siblings; twins; panel data. |
| JEL: | J13 J16 J22 J24 J31 |
| Date: | 2014–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2014_011&r=lab |
| By: | Lundborg, Per (Swedish Institute of Social Research (SOFI)); Skedinger, Per (Research Institute of Industrial Economics (IFN)) |
| Abstract: | This paper is the first to estimate the effects of minimum wages on the unemployment of refugee immigrants. The collectively agreed minimum wages raise both the incidence of unemployment and days in unemployment considerably for male refugees in Sweden; different estimation methods and models yield robust elasticities in the 1.8–2.0 range. The effects for young natives are about half as large. There are heterogeneous effects with regard to country of origin and time of residence in Sweden for both male and female refugees. We account for spatial trends – a concern in some of the recent literature – as well as industrial trends. It turns out that only the latter affect our results. |
| Keywords: | Minimum; Wages; and; the; Integration; of; Refugee; Immigrants |
| JEL: | J23 J61 J64 |
| Date: | 2014–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1017&r=lab |
| By: | Paolo Lucchino; Dr Richard Dorsett |
| Abstract: | We investigate young people's labour market transitions beyond compulsory schooling and, in particular, the dynamic effects of early experiences. We use a UK longitudinal survey to model transitions between four states: employment, unemployment, education and a residual category of those neither in education nor economically active. The results provide new evidence on the causal impact of prior experience and show the importance of distinguishing between unemployment and inactivity among non-students. A simulation exercise illustrates the evaluation potential of the model and provides some clues for the design of interventions aimed at improving young people's employment prospects. |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:niesrd:11735&r=lab |
| By: | Antoni, Manfred (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Janser, Markus (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Lehmer, Florian (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]) |
| Abstract: | "In light of Germany´s transition approaches towards a sustainable energy system this paper examines differences of employment structure and wage differentials between renewable energy establishments and their sector peers. To do so, we have developed a novel data set by linking company-level information from the German Renewable Energy Federation with establishment-level data of the IAB Establishment History Panel. According to our descriptive evidence, there are significant differences in wages and in several other characteristics. Looking at the top-four renewable energy sectors, our estimates show that human capital and other establishment- level characteristics mostly explain the wage differential among manufacturers and energy providers. However, we find a persistent 'renewable energy wage premium' of more than ten percent in the construction installation activities and the architectural and engineering services. We interpret this premium as a positive indirect effect of the promotion of renewable energies for the benefit of employees in renewable energy establishments within these two sectors." (Author's abstract, IAB-Doku) ((en)) |
| JEL: | J31 P48 Q42 Q52 C81 |
| Date: | 2014–05–05 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:201412&r=lab |
| By: | Arash Nekoei; Andrea Weber |
| Abstract: | Contrary to the predictions of standard reservation-wage search models, empirical studies consistently find that an extension of unemployment insurance (UI) increases unemployment duration without improving subsequent wages. Our paper addresses this puzzle in two steps. First, using administrative data from Austria and an age-based regression discontinuity design, we show that an extension of UI eligibility by nine weeks increases the average reemployment wage by a statistically significant 0.5%. The magnitude of this effect is consistent with the behavior of an optimizing agent since new higher wages tend to persist. We find that the UI effect on both unemployment durations and reemployment wages is larger for individuals with a high ex-ante likelihood of benefit exhaustion and for those laid off during local industry-specific downturns. Second, we show both theoretically and empirically that the UI effect on expected wage is determined by two offsetting forces: (i) agents on UI increase their reservation wages, which raises subsequent wages, but (ii) they also stay unemployed longer and thus experience a greater decrease in job opportunities, which reduces subsequent wages. Together, these results show that UI does have an economically significant impact on job quality consistent with theoretical predictions. Connecting these results to a normative model of UI points to an overlooked welfare benefit: UI increases future tax revenue through higher wages. We show that this positive fiscal externality is of the same order of magnitude as the traditional negative moral-hazard externality emphasized in prior work. These results suggest that taking gains in job quality into account could significantly change the optimal generosity of UI. |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:jku:nrnwps:2014_04&r=lab |
| By: | SOLOGON Denisa; VAN KERM Philippe |
| Abstract: | This paper exploits a large-scale administrative dataset to document trends in male earnings inequality in Luxembourg over twenty years of rapid economic growth. A detailed error components model is estimated to identify persistent and transitory components of log hourly earnings variance. Given the importance of foreign labour in Luxembourg, models and inequality trends are distinguished between native, immigrant and cross-border workers. Surprisingly, we observe only a modest increase in overall hourly earnings inequality between 1988 and 2009. This apparent stability is however the net result of somewhat more complex underlying changes, with marked increases in persistent inequality (except among native workers), growing contribution of foreign workers, divergence across subgroups, and a decrease in earnings instability (primarily for native workers). Overall, we interpret these results as showing a surprising stability in the face of the industrial re-development, the changes in the size and structure of employment, and the fast growth that characterized the country's economy in this period. Such results possibly hint at the role of strict labour market regulations and collective bargaining institutions in holding back earnings inequality, at least in a period of fast economic growth and soaring demand for labour. |
| Keywords: | earnings dynamics; persistent inequality; transitory inequality; cross-border workers; immigrant workers; Luxembourg |
| JEL: | C23 D31 J15 J31 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2014-03&r=lab |
| By: | Carlo Devillanova (University of Bocconi); Francesco Fasani (Queen Mary University); Tommaso Frattini (University of Milan) |
| Abstract: | This paper estimates the causal effect of the prospect of legal status on the employment outcomes of undocumented immigrants. Our identification strategy exploits a natural experiment provided by the 2002 amnesty program in Italy that introduced an exogenous discontinuity in eligibility based on date of arrival. We find that the prospect of legal status significantly increases the employment probability of immigrants that are potentially eligible for the amnesty relative to other undocumented immigrants. The size of the estimated effect is equivalent to about two thirds of the increase in employment that undocumented immigrants in our sample normally experience in their first year after arrival in Italy. These findings are robust to several falsification exercises. |
| Keywords: | Illegal immigration, Natural experiment, Legalization |
| JEL: | F22 J61 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1415&r=lab |
| By: | Morten Hedegaard (Department of Economics, Copenhagen University); Jean-Robert Tyran (Department of Economics, Copenhagen University) |
| Abstract: | We present a new type of field experiment to investigate ethnic prejudice in the workplace. Our design allows us to study how potential discriminators respond to changes in the cost of discrimination. We find that ethnic discrimination is common but remarkably responsive to the "price of prejudice", i.e. to the opportunity cost of choosing a less productive worker on ethnic grounds. In addition, we find that the standard theory of statistical discrimination fails to explain observed choices, and that taking ethnic prejudice into account helps to predict the incidence of discrimination. |
| Keywords: | Field experiment, discrimination, labor market |
| JEL: | C93 J71 |
| Date: | 2014–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:1409&r=lab |
| By: | Michèle A. Weynandt |
| Abstract: | This paper uses the Austrian Social Security Register (ASSD) to explore what information firms infer from the three common types of displacement: individual layoffs, individuals displaced due to a closure and individuals displaced due to a mass layoff. I bring together two strands of the literature, namely signaling and sorting and contribute to it in three ways. First I test whether the individual layoffs are the least productive, second I investigate whether individual layoffs are perceived as “lemons” (with a specific focus on the high ability individuals) and third I raise the question whether the “lemon” exists in the resulting matching pattern. Using the Abowd et al. (1999) model I show that the individual layoffs are the least productive measured by the person fixed effect. I confirm the signaling argument of Gibbons and Katz (1991) that individual layoffs are perceived as “lemons” also for high ability individuals, but I reject the argument of Gibbons and Katz (1991) against the matching model (Becker, 1973). Using three different measures of sorting, I find that the matching changes differentially for the different layoff groups. This leads to the tentative conclusion that both sorting and signaling take place after an individual job loss. |
| Keywords: | Labor Markets, Employment, Wages, Displacement |
| JEL: | E24 J40 J63 J65 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:jku:nrnwps:2014_05&r=lab |
| By: | Daly, Mary C. (Federal Reserve Bank of San Francisco); Fernald, John G. (Federal Reserve Bank of San Francisco); Jorda, Oscar (Federal Reserve Bank of San Francisco); Nechio, Fernanda (Federal Reserve Bank of San Francisco) |
| Abstract: | This note examines labor market performance across countries through the lens of Okun’s Law. We find that after the 1970s but prior to the global financial crisis of the 2000s, the Okun’s Law relationship between output and unemployment became more homogenous across countries. These changes presumably reflected institutional and technological changes. But, at least in the short term, the global financial crisis undid much of this convergence, in part because the affected countries adopted different labor market policies in response to the global demand shock. |
| Keywords: | Okun’s Law; Labor Markets; Labor Hoarding |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2014-11&r=lab |
| By: | Marco de Pinto (IAAEU & University of Trier); Jochen Michaelis (University of Kassel) |
| Abstract: | Trade unions are typically able to convert their industrial power into political power. We show that, depending on the parameter constellation, stronger trade unions may be welfare-improving in terms of an increase in aggregate employment and output, if they successfully lobby for lower trade barriers set by the government. |
| Keywords: | Trade unions, lobbying, trade liberalization. |
| JEL: | F13 F16 J51 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201418&r=lab |
| By: | LEE SunYoun; OHTAKE Fumio |
| Abstract: | By analyzing the Japanese and U.S. survey data, this study investigates whether non-cognitive skills, as measured by Big 5 personality traits and behavioral characteristics indicated by risk aversion rate, time discount rate, and (over) confidence, explain the variation in educational and labor market outcomes. The obtained results indicate that non-cognitive skills, as well as behavioral characteristics, account for a significant portion in explaining the variation in schooling, wages, and career promotion. Some interesting country differences, particularly in educational attainment, are found in agreeableness and consciousness, which may suggest the existence of country-specific, non-cognitive determinants of educational success. With respect to labor market outcomes, in both Japan and the United States, conscientiousness seems to contribute to male earnings, whereas extraversion and emotional stability are more important predictors of female earnings. For career promotion, extraversion is an important determinant for the probability of being promoted to a management position among males in both countries. The overall findings suggest that personality traits are associated with educational and career success to different degrees between countries and genders. |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:14023&r=lab |
| By: | Slobodan Djajić; Michael S. Michael (IHEID, The Graduate Institute of International and Development Studies, Geneva) |
| Abstract: | We study the interaction between the optimal immigration policy of a host country and education policy of a source country in a model of international migration of skilled workers. Acquisition of human capital is driven by the academic and career opportunities at home and abroad. Greater opportunities to migrate are found to increase the source country's net stock of human capital only under very stringent conditions concerning the shape of the utility function and of the production function for human capital, the country's emigration rate, and the international wage dierential. We use the model to examine the eects of technological improvements in the educational sector, changes in the academic curricula in the source country, and attitudes to immigration in the host country. Of key interest are the implications for the optimal spending on education in the source country and the optimal immigration quota of the host country. |
| Keywords: | Migration of skilled workers, immigration policy, education policy |
| JEL: | F22 J24 O15 |
| Date: | 2014–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp09-2014&r=lab |