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on Labour Economics |
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Issue of 2014‒06‒07
twenty-one papers chosen by Erik Jonasson National Institute of Economic Research |
| By: | Brian Clark; Clément Joubert; Arnaud Maurel |
| Abstract: | In this paper we analyze career dynamics for the large share of U.S. workers who have more schooling than their peers in the same occupation. We use data from the NLSY79 combined with the CPS to analyze transitions into and out of overeducated employment, together with the corresponding effects on wages. Overeducation is a fairly persistent phenomenon at the aggregate and individual levels, with 66% of workers remaining overeducated after one year. Overeducation is not only more common, but also more persistent among blacks and low-AFQT individuals. Further, the hazard rate out of overeducation drops by about 60% during the first 5 years spent overeducated. However, the estimation of a mixed proportional hazard model suggests that this is attributable to selection on unobservables rather than true duration dependence. Finally, overeducation is associated with lower current as well as future wages, which points to the existence of scarring effects. |
| JEL: | J24 J31 J62 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20167&r=lab |
| By: | Tamar Khitarishvili; Kijong Kim |
| Abstract: | In times of economic crises, household production, and the unpaid work time associated with it, can serve as a coping mechanism for absorbing the impact of shocks. Evidence from the Great Recession has been supportive of this possibility, and has revealed the presence of gender asymmetries stemming from men having experienced disproportionately high job losses. In this paper, we further examine the presence of poverty-based asymmetries in the unpaid work time changes of men and women given that the role of household production as a coping mechanism may vary by poverty status. We use the 2003-12 American Time Use Survey and conduct the Oaxaca Blinder decompositions of the changes in the unpaid work time along the business cycle. Our findings reveal that the changes in men's and women's unpaid work time indeed varied by poverty status. In particular, the reduction in women's unpaid work time was driven by nonpoor women. Among men, the lack of the change masked the increase in poor men's unpaid work time and the decrease in nonpoor men's unpaid work time. The decomposition results indicate that, in addition to the shifts in own employment status, shifts in spousal employment status also played a considerable role in explaining the gender differences in unpaid work time changes. In turn, varied shifts in the household structure were important drivers of the poverty-based differences in the unpaid work time changes. Furthermore, the forces underlying the changes in unpaid work time were not limited to the shifts in individual and household characteristics, as the portion of the unpaid work time changes unexplained by these characteristics remained sizable. This finding supports the hypothesis of poverty-based variation in unpaid work time adjustments in that, even without shifts in characteristics, poor and nonpoor individuals appeared to have responded to the recession in different ways. |
| Keywords: | Time Use; Household Production; Poverty; Gender; Great Recession |
| JEL: | J22 D13 I32 J16 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_806&r=lab |
| By: | Pabilonia, Sabrina Wulff (U.S. Bureau of Labor Statistics) |
| Abstract: | This paper uses individual-level data from both the 2003-2011 American Time Use Survey and Youth Risk Behavior Survey and state-level unemployment rates to examine the effects of the Great Recession on teenagers' activities. I present results by gender and gender by race/ethnicity. Over the period, I find changes in sexual activity for males associated with changes in time spent with parents; but results vary significantly by race. In addition, Hispanic males gained weight during the recession, due perhaps to a decrease in time spent playing sports. Hispanic females, on the other hand, made greater educational investments while spending less time working. All females significantly decreased TV viewing during the Great Recession. However, there were signs that female teenagers were stressed as they slept less and were more likely to smoke regularly. |
| Keywords: | teenagers, risky behaviors, time use, Great Recession, economy |
| JEL: | J22 J11 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8204&r=lab |
| By: | Schurer, Stefanie (University of Sydney) |
| Abstract: | Policy-makers worldwide are embarking on school programmes aimed at boosting students' resilience. One facet of resilience is a belief about cause and effect in life, locus of control. I test whether positive control beliefs work as a psychological buffer against health shocks in adulthood. To identify behavioural differences in labour supply, I focus on a selected group of full-time employed men of working age and similar health. Men with negative control beliefs, relative to men with positive beliefs, are 230-290% more likely to work part-time or drop out of the labour market after a health shock. In old age men with negative control beliefs are by a factor of 2.7 more likely to die after a health shock. The heterogeneous labour supply responses are also observed for other non-cognitive skills, but only for the ones which correlate with control beliefs. Interventions aimed at correcting inaccurate beliefs and negative perceptions may be a low-cost tool to moderate rising public expenditures on social protection and health care. |
| Keywords: | non-cognitive skills, locus of control, labor supply, mortality, health shocks, SOEP |
| JEL: | I12 J24 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8203&r=lab |
| By: | Salverda, Wiemer (University of Amsterdam); Checchi, Daniele (University of Milan) |
| Abstract: | Considering the contribution of the distribution of individual wages and earnings to that of household incomes we find two separate literatures that should be brought together, and bring 'new institutions' into play. Growing female employment, rising dual-earnership and part-time employment underline its relevance. We discuss the measurement of wage inequality, data sources, and stylized facts of wage dispersion for rich countries. The literature explaining the dispersion of wage rates and the role of institutions is evaluated, from the early 1980s to the recent literature on job polarization and tasks as well as on the minimum wage. Distinguishing between supply-and-demand approaches and institutional ones, we find the former challenged by the empirical measurement of technological change and a risk of ad hoc additions, without realizing their institutional preconditions. The institutional approach faces an abundance of institutions without a clear conceptual delineation of institutions and their interactions. Empirical cross-country analysis of the correlation between institutional measures and wage inequality incorporates unemployment and working hours dynamics, discussing the problems of matching individuals to their relevant institutional framework. Minimum wage legislation and active labour market policies come out negatively correlated to earnings inequality in US and EU countries. |
| Keywords: | labour-market institutions, household labour supply, hourly wages, hours worked, annual earnings, dispersion, inequality measures, household incomes, minimum wage, unions, employment protection |
| JEL: | D02 D13 D31 J22 J31 J51 J52 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8220&r=lab |
| By: | Suverato, Davide |
| Abstract: | This paper develops a two-sector, two-factor trade model with labor market frictions in which workers search for a job also when they are employed. On the job search (OJS) is a key ingredient to explain the response to trade liberalization of sectoral employment, unemployment and wage inequality. OJS generates wage dispersion and it leads to a reallocation of workers from less productive firms that pay lower wages to more productive ones. Following a trade liberalization the traditional selection effects are more severe than without OJS and the tradable sector experiences a loss of employment, while the opposite is true for the non tradable sector. Starting from autarky, the opening to trade has a positive effect on employment but it increases wage inequality. For an already open economy, a further increase of trade openness can, however, lead to an increase of unemployment. The dynamics of labor market variables is obtained in closed form. The model predicts overshooting at the time of implementation of a trade liberalization, then the paths of adjustment follow a stable transitional dynamics. |
| Keywords: | International Trade; Unemployment; Wage Inequality; Firm Dynamics |
| JEL: | F12 F16 E24 |
| Date: | 2014–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:20919&r=lab |
| By: | Jochen Kluve; Sebastian Schmitz |
| Abstract: | Increasing mothers’ labor supply is a key policy challenge in many OECD countries. Germany recently introduced a generous parental benefit that allows for strong consumption smoothing after childbirth and, by taking into account opportunity costs of childbearing, incentivizes working women to become mothers and return to the labor force rapidly. Using a sharp regression discontinuity design, we estimate policy impacts for up to 5 years after childbirth and find significant and striking patterns. First, medium-run effects on mothers’ employment probability are positive, significant and large, for some subgroups ranging up to 10 per cent. The effects are driven by gains in part-time but not full-time employment. We also find significant increases in working hours. Second, the probability of job continuity rises significantly, i.e. mothers return to their pre-childbirth employer at higher rates. Third, employers reward this return to work by raising job quality significantly and substantially. We argue that the policy generated a profound change in social norms: the new parental benefit defines an “anchor”, i.e. a societally preferred point in time at which mothers return to work after childbirth. |
| Keywords: | Parental benefits; female labor supply; regression discontinuity |
| JEL: | H31 J13 J22 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0481&r=lab |
| By: | Dixon, Robert (University of Melbourne); Lim, Guay C. (University of Melbourne); van Ours, Jan C. (Tilburg University) |
| Abstract: | This paper presents an analysis of labour market dynamics, in particular of flows in the labour market and how they interact and affect the evolution of unemployment rates and participation rates, the two main indicators of labour market performance. Our analysis has two special features. First, apart from the two labour market states - employment and unemployment - we consider a third state - out of the labour force. Second, we study net rather than gross flows, where net refers to the balance of flows between any two labour market states. Distinguishing a third state is important because the labour market flows to and from that state are quantitatively important. Focussing on net flows simplifies the complexity of interactions between the flows and allows us to perform a dynamic analysis in a structural vector-autoregression framework. We find that a shock to the net flow from unemployment to employment drive the unemployment rate and the participation rate in opposite directions while a shock to the net flow from not in the labour force to unemployment drives the rates in the same direction. |
| Keywords: | net labour market flows, unemployment rate, participation rate |
| JEL: | E17 E24 J21 J64 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8221&r=lab |
| By: | Julia Bredtmann; Sebastian Otten; Christian Rulff |
| Abstract: | This paper investigates the responsiveness of women’s labor supply to their husband’s loss of employment – the so-called added worker effect. While previous empirical literature on this topic mainly concentrates on a single country, we take an explicit internationally comparative perspective and analyze whether the added worker effect varies across the European countries. |
| Keywords: | Added worker effect; labor supply; unemployment; cross-country analysis |
| JEL: | J22 J64 J82 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0484&r=lab |
| By: | Katja Görlitz; Sylvi Rzepka |
| Abstract: | Using data from the National Educational Panel Study of 2009/2010, this paper investigates the relationship between regional training supply and employees’ training participation. Controlling for other regional factors such as the local unemployment rate, the educational level, the population density and the regional industry composition, the results indicate that training participation is significantly higher in regions with many firms in the training supply market. The predictive power of the other regional factors is rather minor. |
| Keywords: | Training; local labor markets |
| JEL: | J24 R12 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0479&r=lab |
| By: | Valletta, Robert G. (Federal Reserve Bank of San Francisco) |
| Abstract: | In response to the 2007-09 “Great Recession,” the maximum duration of U.S. unemployment benefits was increased from the normal level of 26 weeks to an unprecedented 99 weeks. I estimate the impact of these extensions on job search, comparing them with the more limited extensions associated with the milder 2001 recession. The analyses rely on monthly matched microdata from the Current Population Survey. I find that a 10-week extension of UI benefits raises unemployment duration by about 1.5 weeks, with little variation across the two episodes. This estimate lies in the middle-to-upper end of the range of past estimates. |
| Keywords: | unemployment benefits; job search |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2014-13&r=lab |
| By: | Alfonso R. Sánchez Martín (Department of Economics, Universidad Pablo de Olavide); Jose Ignacio García Pérez (Department of Economics, Universidad Pablo de Olavide); Sergi Jiménez Martín (Department of Economics, Universitat Pompeu Fabra) |
| Abstract: | In this paper, we explore the links between pension reform, early retirement, and the use of unemployment as an alternative pathway to retirement. We use a dynamic rational expectations model to analyze the search and retirement behaviour of employed and unemployed workers aged 50 or over. The model is calibrated to reproduce the main reemployment and retirement patterns observed between 2002 and 2008 in Spain. It is subsequently used to analyze the effects of the 2011 pension reform in Spain, characterized by two-year delays in both the early and the normal retirement ages. We ?nd that this reform generates large increases in labour supply and sizable cuts in pension costs, but these are achieved at the expense of very large welfare losses, especially among unemployed workers. As an alternative, we propose leaving the early retirement age unchanged, but penalizing the minimum pension (reducing its generosity in parallel to the cuts imposed on individual pension bene?ts, and making it more actuarially fair with age). This alternative reform strikes a better balance between individual welfare and labour supply stimulus. |
| Keywords: | Retirement; Unemployment; Incentives; Pension system; Early Retirement; Pension reform; Spain |
| JEL: | H55 J14 J26 J64 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:14.04&r=lab |
| By: | Böckerman, Petri (Labour Institute for Economic Research); Kanninen, Ohto (Labour Institute for Economic Research); Suoniemi, Ilpo (Labour Institute for Economic Research) |
| Abstract: | This paper examines the effect of the replacement rule of the Finnish sickness insurance system on the duration of sickness absence. A pre-determined, piecewise linear policy rule in which the replacement rate is determined by past earnings allows identification of the effect using a regression kink design. We find a substantial and robust behavioral response. The statistically significant point estimate of the elasticity of the duration of sickness absence with respect to the replacement rate is on the order of 1.4. |
| Keywords: | sick pay, labor supply, sickness absence, paid sick leave, regression kink design |
| JEL: | I13 I18 J22 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8205&r=lab |
| By: | Boris Hirsch; Christian Merkl; Steffen Müller; Claus Schnabel |
| Abstract: | This paper is the first to show theoretically and empirically how firms' production technology affects the choice of their preferred wage formation regime. Our theoretical framework predicts, first, that the larger the total factor productivity of a firm, the more likely it is to opt for centralized wage formation where it can hide behind less productive firms. Second, the larger a firm's scale elasticity, the higher its incentive to choose centralized rather than decentralized wage setting due to labor cost and straitjacket effects. As firms in Germany are allowed to choose their wage formation regime, we test these two hypotheses with representative establishment data for West Germany. We find that establishments with centralized bargaining agreements indeed have economically and statistically significantly larger total factor productivities and scale elasticities than comparable establishments outside the centralized bargaining regime. |
| Keywords: | wage formation, bargaining, bargaining coverage, Germany |
| JEL: | J50 J30 J41 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1927&r=lab |
| By: | Antonio Di Paolo (Faculty of Economics, University of Barcelona); Anna Matas (GEAP, Universitat Autònoma de Barcelona); Josep Lluís Raymond (GEAP, Universitat Autònoma de Barcelona) |
| Abstract: | This paper analyses the effect of job accessibility by public and private transport on labour market outcomes in the metropolitan area of Barcelona. Beyond employment, we consider the effect of job accessibility on job-education mismatch, which represents a relevant aspect of job quality. We adopt a recursive system of equations that models car availability, employment and mismatch. Public transport accessibility appears as an exogenous variable in the three equations. Even though it may reflect endogenous residential sorting, falsification proofs suggest that the estimated effect of public transport accessibility is not entirely driven by the endogenous nature of residential decisions. |
| Keywords: | employment, job-education mismatch, job accessibility, public transport, Barcelona JEL classification: J61, J21, O18, P25, R41 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:201419&r=lab |
| By: | Olivier Giovannoni |
| Abstract: | Economic theory frequently assumes constant factor shares and often treats the topic as secondary. We will show that this is a mistake by deriving the first high-frequency measure of the US labor share for the whole economy. We find that the labor share has held remarkably steady indeed, but that the quasi-stability masks a sizable composition effect that is detrimental to labor. The wage component is falling fast and the stability is achieved by an increasing share of benefits and top incomes. Using NIPA and Piketty-Saez top-income data, we estimate that the US bottom 99 percent labor share has fallen 15 points since 1980. This amounts to a transfer of $1.8 trillion from labor to capital in 2012 alone and brings the US labor share to its 1920s level. The trend is similar in Europe and Japan. The decrease is even larger when the CPI is used instead of the GDP deflator in the calculation of the labor share. |
| Keywords: | Labor Share; Composition Effect; Income Inequality; Top Incomes; Purchasing Power |
| JEL: | D33 E24 E25 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_805&r=lab |
| By: | Engelbert Stockhammer (Kingston University); Alexander Guschanski; Karsten Köhler |
| Abstract: | The paper restates the post-Keynesian view of unemployment within a NAIRU framework. In the short run the private effective labour demand need not be downward sloping because of debt deflation and wage-led demand regimes. In the medium run the NAIRU will be endogenous because of the social norm character of wage setting and the supply-side effects of capital accumulation. Capital investment rather than labour market institutions is the crucial variable that explains changes in unemployment performance. We provide econometric evidence that the post-Keynesian view holds up well in the recession following the crisis 2008. |
| Keywords: | unemployment, NAIRU, Post Keynesian economics, panel analysis |
| JEL: | E12 E24 E25 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp1406&r=lab |
| By: | Joubert, Clement (University of North Carolina, Chapel Hill) |
| Abstract: | This paper investigates empirically the fiscal and welfare trade-offs involved in designing a pension system when workers can avoid participation by working informally. A dynamic behavioral model captures a household's labor supply, formal/informal sector choice and saving decisions under the rules of Chile's canonical privatized pension system. The parameters governing household preferences and earnings opportunities in the formal and the informal sector are jointly estimated using a longitudinal survey linked with administrative data from the pension system's regulatory agency. The parameter estimates imply that formal jobs rationing is limited and that mandatory pension contributions play an sizeable role in encouraging informality. Our policy experiments show that Chile could achieve a reduction of 23% of minimum pension costs, while guaranteeing the same level of income in retirement, by increasing the rate at which the benefits taper off. |
| Keywords: | informality, pensions |
| JEL: | J24 J26 E21 E26 O17 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8211&r=lab |
| By: | Simon Burgess (Department of Economics, University of Bristol); Matt Dickson (Department of Social and Policy Sciences, University of Bath); Lindsey Macmillan (Department of Quantitative Social Science, Institute of Education) |
| Abstract: | We investigate the impact on earnings inequality of a selective education system in which school assignment is based on initial test scores. We use a large, representative household panel survey to compare adult earnings inequality of those growing up under a selective education system with those educated under a comprehensive system. Controlling for a range of background characteristics and the current location, the wage distribution for individuals who grew up in selective schooling areas is quantitatively and statistically significantly more unequal. The total effect sizes are large: 14% of the raw 90-10 earnings gap and 18% of the conditional 90-10 earnings gap can be explained by differences across schooling systems |
| Keywords: | selective schooling, inequality, wages |
| JEL: | I24 J31 |
| Date: | 2014–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:qss:dqsswp:1409&r=lab |
| By: | Trpeski, Predrag; Tevdovski, Dragan |
| Abstract: | The paper provides time-varying NAIRU estimates for Macedonian economy for the period 1998-2012, which were obtained using Ball and Mankiw (2002) approach and additionally supplemented with iterative procedure proposed by Ball (2009). The results revealed that the Macedonian NAIRU has the hump-shaped path: the estimated NAIRU is 23.5 percent in the second quarter of 1998, peaks at 28.3 percent in the last quarter of 2005 and falls to 23.6 percent in the last quarter of 2012. The estimation is based on the corrected LFS unemployment rate for the employment in the grey economy. |
| Keywords: | NAIRU, unemployment, inflation, Macedonia |
| JEL: | E24 J64 |
| Date: | 2014–03–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:56374&r=lab |
| By: | Dr Alex Bryson |
| Abstract: | Research on employers’ hiring discrimination is limited by the unlawfulness of such activity. Consequently, researchers have focused on the intention to hire. Instead, we rely on a virtual labour market, the Fantasy Football Premier League, where employers can freely exercise their taste for racial discrimination in terms of hiring and firing. The setting allows us to eliminate co-worker, consumer-based and statistical discrimination as potential sources of discrimination, thus isolating the effects of taste-based discrimination. We find no evidence of racial discrimination, either in initial hiring or through the season, in a context where employers are fully aware of current and prospective workers’ productivity. |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:niesrd:11832&r=lab |