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on Labour Economics |
| By: | Parsons, Donald O. (George Washington University) |
| Abstract: | Earnings losses from permanent job separations are a serious threat to the financial security of long-tenured workers. Job displacement insurance is presumably designed to offset these losses, but evidence suggests that consumption smoothing among the long-tenured displaced is seriously incomplete, at least in lightly regulated labor markets. Unemployment and reemployment wage insurance could fully cover these losses, but are costly to provide. Severance pay has emerged as a supplemental, if much criticized, instrument. Moral hazard limitations on unemployment insurance generosity mean that severance pay functions as scheduled (partial) unemployment insurance and scheduled wage insurance. Consumption smoothing over time through savings and borrowing is less efficient than ideal insurance, but may be preferred in second-best situations. Long-tenured separated workers are older on average, which introduces special problems, but also additional policy options, including early access to retirement accounts. |
| Keywords: | job displacement, unemployment insurance, wage insurance, severance pay, insurance adequacy, early retirement |
| JEL: | J65 J41 J33 J08 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8223&r=lab |
| By: | Huber, Martin; Mellace, Giovanni; Lechner, Michael |
| Abstract: | Previous research found that less accommodating caseworkers are more successful in placing unemployed workers into employment. This paper tries to shed more light on the causal mechanisms behind this result using semiparametric mediation analysis. Analysing very informative linked jobseeker-caseworker data for Switzerland, we find that the positive employment effects of less accommodating caseworkers are not driven by a particularly ef-fective mix of labour market programmes they use, but rather by other dimensions of the counselling process, possibly including threat effects of sanctions, pressure to accept jobs, and other factors related to the caseworker’s counselling style. |
| Keywords: | Unemployment, counselling style, active labour market policy, direct effects, indirect effects, causal mechanisms, causal channels, matching estimation |
| JEL: | J64 J68 C21 C31 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2014:14&r=lab |
| By: | Löfström, Åsa (Department of Economics, Umeå School of Business and Economics) |
| Abstract: | The Swedish gender wage gap decreased substantially from the 1960s until the beginning of the 1980s. At the same time women had been narrowing men in employment experience and education. While women continued to catch up on men the average wage gap remained almost the same as in the 1980s. The catch-up hypothesis was obviously not the sole answer to the wage-gap. The purpose here was to discuss other factors of relevance for the evolution of the average pay gap. Data for the period 1972-2012 is used in the analysis: The results are mixed and firm conclusions are scarce. Some indications though, the older the women are at first birth the smaller the pay gap and the same for female union membership while unemployment, economic growth, fertility and time made the gap larger. It seems as “time”, often reliable on issues such as changes in attitudes and prejudices, cannot settle this. One finding, common in other studies as well, is the influence “children” may have on the wage gap. If postponement of motherhood and/or fewer children is necessary to reduce the gender wage gap the question whether this is desirable or not must be addressed more seriously. If the answer is “no” it may be high time for men to catch up on women - through sharing the full responsibility for children and household duties. |
| Keywords: | Gender wage-gap; education; employment; fertility; parental leave |
| JEL: | J30 J31 J38 J68 |
| Date: | 2014–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0889&r=lab |
| By: | Merlino, Luca Paolo; Parrotta, Pierpaolo; Pozzoli, Dario (Department of Economics, Copenhagen Business School) |
| Abstract: | In this paper, we investigate the sorting of workers in firms to understand gender gaps in labor market outcomes. Using Danish employer-employee matched data, we find strong evidence of glass ceilings in certain firms, especially after motherhood, preventing women from climbing the career ladder and causing the most productive female workers to seek better jobs in more female-friendly firms in which they can pursue small career advancements. Nonetheless, gender differences in promotion persist and are found to be similar in all firms when we focus on large career advancements. These results provide evidence of the sticky floor hypothesis, which, together with the costs associated with changing employer, generates persistent gender gaps. |
| Keywords: | Sorting; Assortative Matching; Gender Gap; Glass Ceiling; Sticky Floor. |
| JEL: | J16 J24 J62 |
| Date: | 2014–05–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2014_001&r=lab |
| By: | Westéus, Morgan (Department of Economics, Umeå School of Business and Economics) |
| Abstract: | This paper analyses possible effects on total employment, and the distribution between agency work and regular contracts as a consequence of the implementation of the EU Temporary and Agency Workers Directive in Sweden in a dual labour market Mortensen-Pissarides search model. The directive states that the agency worker compensation must be equal to the compensation for similar work at the client firm, and that all parties should actively facilitate the transition from agency employment to employment directly at the firm. The results suggest an overall negative net effect on total employment, but also that an increased transition into regular employment from the agency sector could help to offset this effect. |
| Keywords: | Labour law; EU directive implementation; temporary agency work; unemployment |
| JEL: | E24 J21 J42 J48 J64 K31 |
| Date: | 2014–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0887&r=lab |
| By: | Ozden, Caglar; Wagner, Mathis |
| Abstract: | The impact of immigration on native workers is driven by two countervailing forces: the degree of substitutability between natives and immigrants, and the increased demand for native workers as immigrants reduce the cost of production and output expands. The literature so far has focused on the former substitution effect, while ignoring the latter scale effect. This paper estimates both of these effects using labor force survey data from Malaysia (1990-2010), a country uniquely suited for understanding the impact of low-skilled immigration. The instrumental variable estimates imply that the elasticity of labor demand (3.4) is greater than the elasticity of substitution between natives and immigrants (2.5). On average the scale effect outweighs the substitution effect. For every ten additional immigrants, employment of native workers increases by 4.1 in a local labor market. These large reallocation effects are accompanied by negligible relative wage changes. At the national level, a 10 percent increase in immigrants, equivalent to 1 percent increase in labor force, has a small positive effect on native wages (0.14 percent). The impact of immigration is highly heterogeneous for natives with different levels of education, resulting in substantial changes in skill premiums and hence inequality. Immigrants on net displace natives with at most primary education; while primarily benefiting those with a little more education, lower secondary or completed secondary education. |
| Keywords: | Labor Markets,Population Policies,Labor Policies,Economic Theory&Research,Markets and Market Access |
| Date: | 2014–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6900&r=lab |
| By: | Franz, Nele |
| Abstract: | Subject of this paper is the investigation of wage developments of women interrupting their careers for giving birth tochildren in comparison to men's wages not facing a parental interruption. We estimate OLS regression models for different subcategories defined by age and point in time. We use data from the German Socioeconomic Panel from 1984 to 2011 to show the importance of legal job protection on reentry wages. Furthermore, we show that wages and the penalty for maternity differs by the duration of interruption as well as in short-, intermediate and long-run perspective. We find less wage penalty for women interrupting their careers within legal protection in the short run, but delayed compensating penalties for the same group in the long run. -- |
| Keywords: | human capital,parental leave,wages,OLS |
| JEL: | C21 J13 J24 J31 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ciwdps:12014&r=lab |
| By: | Hirsch, Boris (University of Erlangen-Nuremberg); Merkl, Christian (University of Erlangen-Nuremberg); Müller, Steffen (University of Erlangen-Nuremberg); Schnabel, Claus (University of Erlangen-Nuremberg) |
| 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: | collective bargaining, bargaining coverage, Germany |
| JEL: | J50 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8242&r=lab |
| By: | Alfonso R. Sánchez; J. Ignacio García-Pérez; Sergi Jiménez-Martín |
| 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 find 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 benefits, and making it more actuarially fair with age). This alternative reform strikes a better balance between individual welfare and labour supply stimulus. |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1422&r=lab |
| By: | Gustafsson, Björn Anders (University of Gothenburg); Li, Shi (Beijing Normal University); Nivorozhkina, Ludmila (Rostov State Economic University); Wan, Haiyuan (National Development and Reform Commission) |
| Abstract: | Earnings inequality and earnings determination in urban China 2002 and Russia 2003 are compared using samples covering large parts of the two countries. The results from estimated earnings functions are put in perspective of the outcome from a similar comparison made at the end of the 1980s. We confirm that earnings inequality has increased rapidly in both countries and is found to be similar across countries. As at the end of the 1980s, the gender wage gap is larger in Russia where earnings reach a maximum at a lower age than in China. The association between education and income in China has increased to become stronger than in Russia. The earnings penalty of being employed in the public service sector in Russia has increased while the publically employed in China enjoy a positive payoff of limited magnitude. |
| Keywords: | wages, wage inequality, gender wage gap, China, Russia |
| JEL: | J16 J31 J45 P23 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8241&r=lab |
| By: | Alex Bryson; Michael White |
| Abstract: | The links between unionisation and job satisfaction remain controversial. In keeping with the existing literature we find strong statistically significant negative correlations between unionisation and overall job satisfaction. However, in contrast to the previous literature we find that once one accounts for fixed unobservable differences between covered and uncovered employees, union coverage is positively and significantly associated with satisfaction with pay and hours of work. Failure to account for fixed unobservable differences between covered and uncovered employees leads to a systematic underestimate of the positive effects of coverage on job satisfaction for both union members and non-members. It seems union coverage has a positive impact on job satisfaction that is plausibly causal. |
| Keywords: | Unions, union coverage, union membership, job satisfaction |
| JEL: | C35 J28 J51 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1271&r=lab |
| By: | Abdulloev, Ilhom (Open Society Institute Assistance Foundation, Tajikistan); Gang, Ira N. (Rutgers University); Yun, Myeong-Su (Tulane University) |
| Abstract: | Women who want to work often face many more hurdles than men. This is true in Tajikistan where there is a large gender gap in labour force participation. We highlight the role of two factors – international migration and education – on the labour force participation decision and its gender gap. Using probit and decomposition analysis, our investigation shows that education and migration have a significant association with the gender gap in labour force participation in Tajikistan. International emigration from Tajikistan, in which approximately 93.5% of the participants are men, reduces labour force participation by men domestically; increased female education, especially at the university and vocational level, increases female participation. Both women acquiring greater access to education and men increasing their migration abroad contribute to reducing the gender gap. |
| Keywords: | migration, education, gender gap, labour force participation, Tajikistan |
| JEL: | J01 J16 O15 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8226&r=lab |
| By: | Briggs Depew; Peter Norlander; Todd A. Sorensen |
| Abstract: | Critics of U.S. high-skilled guest worker visa programs argue that 1) program regulations tie workers to their sponsoring firm, creating working conditions akin to indentured servitude and that 2) the pro- grams lack a vehicle for adjusting downward the number of visas avail- able during a recession. We address these two criticisms using unique payroll data from firms that rely upon these programs. Contrary to popular belief, we find that the guest workers in our sample exhibit a significant amount of inter-firm mobility that varies over both the earn- ings distribution and the business cycle. This suggests that, despite regulatory frictions of the visa programs, competitive pressures are a driving force in this labor market. Furthermore, we find evidence of increased return migration during periods of high unemployment. This is especially true for lower paid workers, suggesting positive selection. |
| URL: | http://d.repec.org/n?u=RePEc:lsu:lsuwpp:2014-06&r=lab |
| By: | Lundborg, Per (Swedish Institute for Social Research); Skedinger, Per (Research Institute of Industrial Economics (IFN)) |
| Abstract: | We present a large survey with responses from Swedish firms on their attitudes towards refugees, regarding hiring, job performance, wage setting and discrimination. Generally, firms report positive experiences of having refugees as employees, but we also document a great deal of heterogeneity in attitudes. Firms that ceased to have refugees on the payroll are less satisfied with their job performance, which seems related to poor language skills and less screening of refugees but not to discrimination of them by staff or customers. While most firms agree with statements that wage cuts negatively affect worker cohesion, effort or the quality of applicants, employers who consider such cuts as employment-enhancing tend to not agree. |
| Keywords: | Refugee immigrants; Labour demand; Discrimination |
| JEL: | J15 J23 J71 |
| Date: | 2014–05–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1025&r=lab |
| By: | Karolina Goraus (Faculty of Economic Sciences, University of Warsaw); Joanna Tyrowicz (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland) |
| Abstract: | The raw gender wage gap over the period 1995-2012 amounts to app. 9% of hourly wage and is fairly stable. However, the raw gap does not account for differences in endowments between genders. In fact, the adjusted wage gap amounts to as much as 20% on average over the analyzed period and shows some cyclical properties. The estimates of adjusted gender wage gap do not seem to exhibit any long-term trends, which suggest that in general neither demographic changes nor the progressing transition underlie the phenomenon of unequal pay for the same work among men and women. |
| Keywords: | Wage gap, discrimination, decomposition, Oaxaca-Blinder, Nõpo, non-parametric estimation |
| JEL: | J21 J70 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2014-11&r=lab |
| By: | Andrew Rendall; Michelle Rendall |
| Abstract: | SBTC is a powerful mechanism in explaining the increasing gap between educated and uneducated wages. However, SBTC cannot mimic the US within-group wage inequality. This paper provides an explanation for the observed intra-college group inequality by showing that the top decile earners' significant wage growth is underpinned by the link between ex ante ability, math-heavy college majors and highly quantitative occupations. We develop a general equilibrium model with multiple education outcomes, where wages are driven by individuals' ex ante abilities and acquired math skills. A large portion of within-group and general wage inequality is explained by math-biased technical change (MBTC). |
| Keywords: | Wage inequality, SBTC, college majors, occupations, mathematics abilities |
| JEL: | E20 E24 E25 I20 I24 J24 J31 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:160&r=lab |
| By: | Leland D. Crane |
| Abstract: | I study the relationship between firm growth and the characteristics of newly hired workers. Using Census microdata I obtain a novel empirical result: when a given firm grows faster it hires workers with higher past wages. These results suggest that productive, fast-growing firms tend to hire more productive workers, a form of positive assortative matching. This contrasts with prior research that has found negligible or negative sorting between workers and firms. I present evidence that this difference arises because previous studies have focused on cross-sectional comparisons across firms and industries, while my results condition on firm characteristics (e.g. size, industry, or firm fixed effects). Motivated by the empirical findings I develop a search model with heterogeneous workers and firms. The model is the first to study worker-firm sorting in an environment with worker heterogeneity, firm productivity shocks, multi-worker firms, and search frictions. Despite this richness the model is tractable, allowing me to characterize assortative matching, compositional dynamics and other properties analytically. I show that the model reproduces the positive firm growth-quality of hires correlation when worker and firm types are strong complements in production (i.e. the production function is strictly log-supermodular). |
| Keywords: | Assortative Matching, Firm Growth, Wages, Unemployment, Vacancies, Search Theory, Microdata |
| JEL: | E24 J31 J63 J64 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:14-25&r=lab |
| By: | Tonin, Mirco (University of Southampton); Vlassopoulos, Michael (University of Southampton) |
| Abstract: | The public sector employs a large share of the labor force to execute important functions (e.g. regulation and public good provision) in an environment beset by severe agency problems. Attracting workers who are motivated to serve the public interest is important to mitigate these problems. We investigate whether public and private sector employees differ in terms of their public service motivation, as measured by their propensity to volunteer, using a representative sample of elderly workers from 12 European countries. To overcome potential identification difficulties related to unobservable differences in working conditions (e.g. working time, required effort, job security, career incentives), we also look at retired workers. We find that public sector workers, both those currently employed and those already retired, are significantly more prosocial; however, the difference in prosociality is explained by differences in the composition of the workforce across the two sectors, in terms of (former) workers' education and occupation. Looking across industries and within occupations, we find that former public sector workers in education are more motivated, while there are no differences across the two sectors when considering broad occupational categories. We also investigate other dimensions and find no differences in terms of trust, while there is evidence of some differences in risk aversion, political preferences, life and job satisfaction. |
| Keywords: | public sector, public service motivation, risk aversion, trust, life satisfaction, volunteering |
| JEL: | D64 H83 J45 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8238&r=lab |
| By: | Dur, Robert (Erasmus University Rotterdam); Zoutenbier, Robin (Erasmus University Rotterdam) |
| Abstract: | We examine differences in altruism and laziness between public sector employees and private sector employees. Our theoretical model predicts that the likelihood of public sector employment increases with a worker's altruism, and increases or decreases with a worker's laziness depending on his altruism. Using questionnaire data from the German Socio-Economic Panel Study, we find that public sector employees are significantly more altruistic and lazy than observationally equivalent private sector employees. A series of robustness checks show that these patterns are stronger among higher educated workers; that the sorting of altruistic people to the public sector takes place only within the caring industries; and that the difference in altruism is already present at the start of people's career, while the difference in laziness is only present for employees with sufficiently long work experience. |
| Keywords: | public service motivation, altruism, laziness, sorting, public sector employment, personality characteristics |
| JEL: | H1 J45 M5 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8239&r=lab |
| By: | Andre de Queiroz Brunelli |
| Abstract: | This paper aims at dissecting how stylized facts of labor supply and labor demand may explain the aggregate unemployment rate developments from 1992 to 2012 using a household level data (PNAD/IBGE) for Brazil as a whole and for its six main metropolitan regions. The conclusions follow. The main stylized fact regarding labor supply is the aging process of the labor force. It lessened the aggregate unemployment rise during the 1990’s by about 20% both in the entire country and in the metropolitan regions and strengthened the unemployment fall by about 30% in Brazil as a whole and by around 20% in the metropolitan regions during the 2000’s. With respect to labor demand, the main stylized facts are that the relative prices have favored the non-tradable sectors, which in addition has shown the most significant rise of the marginal productivity of labor in the last two decades. We argue that it affected sectorial reallocation of employment, which in turn has a negative effect on aggregate unemployment rate conditional on GDP growth. It thus is consistent with the argument which states that employment migrated from tradable sectors towards non-tradable sectors, which are more labor intensive sectors. Besides conventional business cycle changes, which explain the bulk of the actual aggregate unemployment rate developments, the answer to why the aggregate unemployment rate has become so much lower in Brazil is that population has become older and also that the sectorial profile of employment has become increasingly non-tradable |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:bcb:wpaper:348&r=lab |
| By: | Gensowski, Miriam (University of Copenhagen) |
| Abstract: | Talented individuals are seen as drivers of long-term growth, but how do they realize their full potential? In this paper, I show that even in a group of high-IQ men and women, lifetime earnings are substantially influenced by their education and personality traits. I identify a previously undocumented interaction between education and traits in earnings generation, which results in important heterogeneity of the net present value of education. Personality traits directly affect men's earnings, with effects only developing fully after age 30. These effects play a much larger role for the earnings of more educated men. Personality and IQ also influence earnings indirectly through educational choice. Surprisingly, education and personality skills do not always raise the family earnings of women in this cohort, as women with very high education and IQ are less likely to marry, and thus have less income through their husbands. To identify personality traits, I use a factor model that also serves to correct for prediction error bias, which is often ignored in the literature. This paper complements the literature on investments in education and personality traits by showing that they also have potentially high returns at the high end of the ability distribution. |
| Keywords: | personality traits, social skills, cognitive skills, returns to education, life-time earnings, Big Five, human capital, factor analysis |
| JEL: | J24 I24 J16 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8235&r=lab |
| By: | Sojourner, Aaron J. (University of Minnesota); Frandsen, Brigham R. (Brigham Young University); Town, Robert J. (Wharton School, University of Pennsylvania); Grabowski, David C. (Harvard Medical School); Chen, Michelle M. (Florida International University) |
| Abstract: | This paper studies the effects of nursing home unionization on numerous labor, establishment, and consumer outcomes using a regression discontinuity design. We find negative effects of unionization on staffing levels and no decline in care quality, suggesting positive labor productivity effects. Some evidence suggests that nursing homes in less competitive local product markets and those with lower union density at the time of election experienced stronger union employment effects. Unionization appears to raise wages for a given worker while also shifting the composition of the workforce away from higher-earning workers. By combining credible identification of union effects, a comprehensive set of outcomes over time with measures of market-level characteristics, this study generates some of the best evidence available on many controversial questions in the economics of unions. Furthermore, it generates evidence from the service sector, which has grown in importance and where evidence has been thin. |
| Keywords: | trade union, nursing homes, labor productivity, regression discontinuity, collective bargaining, health care quality |
| JEL: | J0 J5 D2 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8240&r=lab |
| By: | Keloharju, Matti (Aalto University); Knüpfer, Samuli (London Business School) |
| Abstract: | This paper analyzes the role three personal traits—cognitive and non-cognitive ability, and height—play in the market for CEOs. We merge data on the traits of more than one million Swedish males, measured at age 18 in a mandatory military enlistment test, with comprehensive data on their income, education, profession, and service as a CEO of any Swedish company. We find that the traits of large-company CEOs are at par or higher than those of other high-caliber professions. For example, large-company CEOs have about the same cognitive ability, and about one-half of a standard deviation higher non-cognitive ability and height than medical doctors. Their traits compare even more favorably with those of lawyers. The traits contribute to pay in two ways. First, higher-caliber CEOs are assigned to larger companies, which tend to pay more. Second, the traits contribute to pay over and above that driven by firm size. We estimate that 2758 percent of the effect of traits on pay comes from CEO’s assignment to larger companies. Our results are consistent with models where the labor market allocates higher-caliber CEOs to more productive positions. |
| Keywords: | CEO; Cognitive ability; Non-cognitive ability; Height; Compensation; Firm size |
| JEL: | G30 J24 J31 |
| Date: | 2014–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1024&r=lab |
| By: | Chiara Criscuolo; Peter N. Gal; Carlo Menon |
| Abstract: | Motivated by the on-going interest of policy makers in the sources of job creation, this paper presents results from a new OECD project on the dynamics of employment (DynEmp) based on an innovative methodology using firm-level data (i.e. national business registers or similar sources). It demonstrates that among small and medium sized enterprises (SMEs), young firms play a central role in creating jobs, whereas old SMEs tend to destroy jobs. This pattern holds robustly across 17 OECD countries and Brazil, extending recent evidence found in the United States. The paper also shows that young firms are always net job creators throughout the business cycle, even during the financial crisis. During the crisis, entry and post-entry growth by young firms were affected most heavily, although downsizing by old firms was responsible for most job losses. The results also highlight large cross-country differences in the growth potential of young firms, pointing to the role played by national policies in enabling successful firms to create jobs. |
| Keywords: | Business dynamics, employment growth, small businesses, business demography, startups, great recession, job creation and destruction |
| JEL: | D22 L26 E24 L25 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1274&r=lab |
| By: | Vincent Boitier (UP1 UFR02 - Université Paris 1, Panthéon-Sorbonne - UFR d'Économie - Université Paris I - Panthéon-Sorbonne - PRES HESAM) |
| Abstract: | In the present article, I provide a simple urban theory where agents do not bid for land. In absence of this baseline mechanism, I show that the spatial allocation of agents is governed by a Nash equilibrium. I underline the role of asymmetric local congestion effects in insuring the existence and the uniqueness of such an equilibrium. I then use this new framework to account for spatial variation in unemployment within big cities. Namely, applying this setting in an urban search model, I demonstrate that the obtained framework can generate a large number of new city configurations in which the local unemployment rate behaves differently. I also determine conditions for which each configuration may appear. I finally prove, the existence and the uniqueness of a labor market equilibrium for each urban pattern and I draw a link between the latter and the allocation of workers throughout space. |
| Keywords: | Matching models; Local congestion effects; Unemployment dispersion; Segregation; Bid rent theory |
| Date: | 2014–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00999559&r=lab |
| By: | Zareh Asatryan; Sebastian Braun; Wolfgang Lechthaler; Mariya Mileva; Catia Montagna |
| Abstract: | Fears of rising wage inequality and job loss loom large in current debates on free trade. Surprisingly, however, there exists little academic research on how to compensate those who lose from free trade. This policy paper reviews the existing theoretical literature on trade and compensation, and derives guidelines on how to design compensation schemes in practice. The existing theoretical literature suggests that active labour market policies, targeted to workers who lose from free trade, are a promising way of compensation. In line with this theoretical recommendation, we find that countries open to free trade also spend more on active labour market policies. |
| Keywords: | Challenges for welfare system, Globalisation, Labour markets, Policy options, Welfare state |
| JEL: | F10 F20 J30 J60 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:feu:wfewop:y:2014:m:6:d:0:i:63&r=lab |
| By: | Antman, Francisca M. (University of Colorado, Boulder) |
| Abstract: | This paper considers the relationship between work status and decision-making power of the head of household and his spouse. I use household fixed effects models to address the possibility that spousal work status may be correlated with unobserved factors that also affect bargaining power within the home. Consistent with the hypothesis that greater economic resources yield greater bargaining power, I find that the spouse of the head of household is more likely to be involved in decisions when she has been employed. Similarly, the head of household is less likely to be the sole decision-maker when his spouse works. |
| Keywords: | intra-household, bargaining power, decision-making, gender, family |
| JEL: | J12 J16 D13 O15 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8231&r=lab |
| By: | Boll, Christina; Leppin, Julian Sebastian; Schömann, Klaus |
| Abstract: | Overeducation is an often overlooked facet of untapped human resources. But who is overeducated and why? Relying on SOEP data 1984-2011, we use probit models for estimating the likelihood of entering overeducation and dynamic mixed multinomial logit models with random effects addressing state dependence and unobserved heterogeneity. As further robustness checks we use three specifications of the target variable, i.e. realized matches, self-assessment and twofold overeducation. We run separate analyses for men and women, East and West Germans and medium and highly educated persons. We find that overeducation is mainly state dependent. Nonetheless, even in the dynamic context staying employed proves to be risk-decreasing. By contrast, scars of past unemployment show up in a higher mismatch risk. Moreover, an employer change does not serve as a suitable exit strategy, and a dual qualification does not show up as a valid insurance against graduates' job mismatch. Overall, effects largely depend on the operationalization of overeducation. We conclude that to combat overeducation, focusing on continuous employment careers and circumventing unintentional withdrawals from the current job is crucial. Moreover, institutional impediments that restrain job match quality for certain groups (migrants, mothers) have to be tackled. -- Überqualifikation ist ein zuweilen übersehener Aspekt in der Debatte um ungenutzte Fachkräftepotenziale. Aber wer ist überqualifiziert, und warum? Basierend auf Daten des Sozio-oekonomischen Panels (SOEP) der Wellen 1984-2011 schätzen wir mit Probitmodellen die Wahrscheinlichkeit für neue Überqualifikation sowie mit dynamischen Multinomialen Mixed Logit-Modellen mit zufälligen Effekten die Wahrscheinlichkeit für Überqualifikation unter Berücksichtigung von Pfadabhängigkeit und unbeobachteter Populationsheterogenität. Das Messfehlerproblem kontrollieren wir durch drei verschiedene Spezifikationen der abhängigen Variable, die selbsteingeschätzte Überqualifikation, die statistische Überqualifikation (Realized Matches) sowie eine Kombination aus beidem. Wir führen die Schätzungen getrennt für Männer und Frauen, Ost- und Westdeutsche sowie Personen mittlerer und hoher Bildung durch. Unsere Analysen zeigen, dass Überqualifikation ein hohes Beharrungsvermögen hat. Allerdings vermindert Erwerbserfahrung das Risiko der Überqualifikation auch im dynamischen Modell unter Kontrolle unbeobachteter Heterogenität. Narbeneffekte früherer Arbeitslosigkeit hingegen zeigen sich in einem höheren Überqualifikationsrisiko. Weder ein Arbeitgeberwechsel noch (bei Akademiker/innen) eine Doppelqualifikation in Form von Lehre plus Studium taugen als wirksame Ausweichstrategien. Um Überqualifikation im Job zu vermindern, scheinen Strategien, die konti-nuierliche Erwerbskarrieren fördern, vielversprechend zu sein. Für bestimmte Gruppen am Arbeitsmarkt (Migranten, Mütter) erschweren zudem institutionelle Barrieren ein gutes Jobmatch, die es gezielt anzugehen gilt. |
| Keywords: | overeducation,dynamic mixed multinomial logit,probit model,mismatch,Germany,state dependence |
| JEL: | J24 C25 C33 J71 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hwwirp:149&r=lab |
| By: | Westéus, Morgan (Department of Economics, Umeå School of Business and Economics); Lindgren, Urban (Department of Geography and Economic History) |
| Abstract: | A person’s first experience of working life is not the individual’s actual first job, but rather the perception conveyed by his or her family and other reference groups. Using Swedish register data on young adults (aged 18–34), and controlling for personal characteristics, we find that individuals with family members or partners with work experience from the temporary agency sector are highly over-represented within that sector. These effects are also found to be among the most influential when determining the relative probability that a person will work in the temporary agency sector. |
| Keywords: | Temporary work agency; family work experience; young adults; Sweden |
| JEL: | J12 J42 J82 |
| Date: | 2014–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0888&r=lab |
| By: | Alex Bryson; John Forth; Lucy Stokes |
| Abstract: | Despite its potential to raise productivity, performance-related-pay (PRP) is not widespread in market-oriented economies. Furthermore, despite secular changes conducive to its take-up, there is mixed evidence as to whether it has become more prominent over time. Ours is the first paper to present firm-level data for the Britain on both the incidence and size of bonus payments in the 2000s. We decompose the share of the total wage bill accounted for by bonuses into the shares of employment in the PRP and non-PRP sectors, the ratio of base pay between the two sectors, and the gearing of bonus payments to base pay within the PRP sector. We show that there was some growth in the share of total pay accounted for by bonuses in Britain in the mid-2000s. However this rise - and subsequent fluctuations since the onset of recession in 2008 - can be almost entirely explained by changes in the gearing of bonus to base pay within the PRP sector. There has been no substantial change in the percentage of employment accounted for by PRP firms; if anything it has fallen over the past decade. Furthermore, the movements in the gearing of bonuses to base pay in the economy at large are heavily influenced by changes in the Finance industry: a sector which accounts for a large proportion of all bonus payments in the British economy. |
| Keywords: | Performance pay, bonuses, recession, business cycle, finance |
| JEL: | J33 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1272&r=lab |
| By: | Freund, Caroline; Rijkers, Bob |
| Abstract: | This paper studies the incidence and determinants of episodes of drastic unemployment reduction, defined as swift, substantial, and sustained declines in unemployment. Forty-three episodes are identified over a period of nearly three decades in 94 rich, middle-income, and transition countries. Unemployment reductions often coincide with an acceleration of growth and an improvement in macroeconomic conditions. Episodes are much more prevalent in countries with higher levels of unemployment and, given unemployment, are more likely in countries with better regulation. An efficient legal system that enforces contracts expeditiously is particularly important for reducing unemployment. The results imply that while employment is largely related to the business cycle, better regulation reduces the likelihood of high unemployment and facilitates a more rapid recovery in the event unemployment builds up. |
| Keywords: | Labor Markets,Population Policies,Labor Policies,Economic Theory&Research,Youth and Governance |
| Date: | 2014–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6891&r=lab |
| By: | Proto, Eugenio (University of Warwick and CAGE); Rustichini, Aldo (University of Minnesota) |
| Abstract: | Cooperating behavior may be fostered by personality traits re ecting either favorable inclination to others or willingness to comply with norms and rules. We test the relative importance of these two factors in an experiment where subjects provide real mental effort in two treatments with identical task, differing only by whether others' payment is affected. If the rst hypothesis is true, subjects reporting high Agreeableness score should put more effort; if the second is true, reporting higher Conscientiousness should predict more effort. We find experimental support for the second hypothesis but not for the first, as subjects reporting high Altruism do not behave consistently with this statement. |
| Keywords: | Personality Traits, Cooperation, Effort Provision |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:190&r=lab |
| By: | Niels Vermeer; Daniel van Vuuren; Maarten van Rooij (DNB/Netspar) |
| Abstract: | In this study, we gauge the impact of social interactions on individual retirement preferences. A survey including self-assessments and vignette questions shows that individual preferences are affected by preferences and actual retirement behavior of the social environment. Retirement from paid work depends on the retirement age of relatives, friends, colleagues and acquaintances. Information and advice provided by the social environment play a role in the retirement decision. A majority of respondents would postpone retirement when their social environment retires later. A one year increase in the social environment’s retirement age leads to an average increase of three months in the individual retirement age. In addition, people tend to stick more to the state pension age than to other retirement ages, which suggests a norm about retirement at the state pension age. |
| JEL: | J26 J14 Z13 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:278&r=lab |
| By: | Rosendahl Huber, Laura (University of Amsterdam); Sloof, Randolph (University of Amsterdam); van Praag, Mirjam (Copenhagen Business School) |
| Abstract: | Previous empirical studies have shown that solo entrepreneurs benefit from having balanced skills: Jacks-of-All-Trades (JATs) are better entrepreneurs than specialists are. Nowadays however, the majority of entrepreneurs start up and run ventures together in teams. In this paper we test whether the effect of more balanced skills is also positive in a team of entrepreneurs. We also explore whether (a lack of) individual balanced skills can be substituted by combining the skills of various specialists within one team. Our field experiment studies teams of children participating in an entrepreneurship education program. Based on pupils' precisely measured level of verbal and mathematical ability, we exogenously compose 179 teams separated into four different types: JAT teams, math-specialist teams, verbal-specialist teams and mixed specialist teams. Our results show that balanced skills are beneficial to team performance, and that it is hard to substitute individual balanced skills by combining different specialists within one team. |
| Keywords: | skill balance, team diversity, team performance, entrepreneurship, field experiment |
| JEL: | C93 D83 J24 L25 L26 M13 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8237&r=lab |
| By: | Emin Dinlersoz; Jeremy Greenwood; Henry Hyatt |
| Abstract: | What type of businesses do unions target for organizing and when? A dynamic model of the union organizing process is constructed to answer this question. A union monitors establishments in an industry to learn about their productivity, and decides which ones to organize and when. An establishment becomes unionized if the union targets it for organizing and wins the union certification election. The model predicts two main selection e?ects: unions target larger and more productive establishments early in their life-cycles, and among the establishments targeted, unions are more likely to win elections in smaller and less productive ones. These predictions find support in union certification elections data for 1977-2007 matched with data on establishment characteristics. |
| Keywords: | Unionization, Union Organizing, Union Certification Election, Diffusion of Unionization, Bayesian Learning, Productivity. |
| JEL: | J5 J50 J51 L11 L23 L25 L6 D24 D21 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:14-09r&r=lab |
| By: | Lisi, Domenico; Malo, Miguel |
| Abstract: | In this article, we study the impact of temporary employment (TE) on productivity and, in particular, we wonder if it differs according to sectors skill intensity. Our data set is an ad-hoc industry-level panel of European countries, which allows to deal with endogeneity problems. Our main result is that TE has a negative impact on productivity, but it is more damaging in skilled sectors. While an increase of 10 percentage points of the share of TE in skilled sectors decrease labour productivity growth about 1-1.5%, in unskilled sectors the decrease would be 0.5-0.8%. This result is robust to changes in the skill intensity index and in the sample composition. We also discuss policy implications of this result for labour market regulation. |
| Keywords: | Labour productivity, Temporary employment, Skill intensity, Differential effect. |
| JEL: | J24 J41 O47 |
| Date: | 2014–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:56470&r=lab |
| By: | Heyman, Fredrik (Research Institute of Industrial Economics (IFN)); Sjöholm, Fredrik (Lund University); Davidson, Carl (Michigan State University); Matusz, Steven (Michigan State University); Chun Zhu, Susan (Michigan State University) |
| Abstract: | Engagement in foreign markets can have an impact on firm organization and on the type of occupations that a firm needs. We examine the effect of globalization on the occupational mixes using detailed Swedish data that cover all firms and a representative sample of the labor force for 1997-2005. We find a robust relationship between a firm’s degree of international integration and its occupational mix. Multinationals, which are the most globally engaged firms, have a distribution of occupations skewed toward more skilled occupations. Non-multinational exporters have a distribution of occupations less skewed toward skilled compared to multinationals, but more skewed toward skilled occupations compared to Swedish non-exporters (which are the least globally engaged). Moreover, firms tend to have an even more skill intensive distribution of occupations when they mainly export to far away markets, or when they export differentiated goods. Our results are little changed (1) when we control for firm size, productivity, capital intensity, and firm age, (2) when we control for offshoring and R&D expenditures; (3) when we use alternative methods to rank occupations, or (4) when we conduct alternative robustness tests. In addition, the results are very similar for manufacturing and non-manufacturing, and for foreign and Swedish multinationals. We interpret our results using a decomposition motivated by recent theoretical models of selection into exporting and FDI. |
| Keywords: | Occupational mix; Globalization; Multinational Enterprises |
| JEL: | F10 F20 |
| Date: | 2014–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1026&r=lab |
| By: | Simon Gächter (School of Economics, University of Nottingham); Christian Thöni (Centre Walras-Pareto, University of Lausanne) |
| Abstract: | Social preferences and social influence effects (“peer effectsâ€) are well documented, but little is known about how peers shape social preferences. Settings where social preferences matter are often situations where peer effects are likely too. In a gift-exchange experiment with independent payoffs between two agents we find causal evidence for peer effects. Efforts are positively correlated but with a kink: agents follow a low-performing but not a high-performing peer. This contradicts major theories of social preferences which predict that efforts are unrelated, or negatively related. Some theories allow for positively-related efforts but cannot explain most observations. Conformism, norm following and social esteem are candidate explanations. |
| Keywords: | social preferences, voluntary cooperation, peer effects, reflection problem, gift-exchange; conformism; social norms; social esteem, experiments. |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2014-03&r=lab |