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on Labour Economics |
| By: | Andrea Brandolini (Bank of Italy); Eliana Viviano (Bank of Italy) |
| Abstract: | This paper argues that we need more general statistical indices to analyse European labour markets. First, the paper discusses some normative aspects implicit in the current definition of the employment rate, which is a fundamental policy target in the new Europe 2020 strategy. Second, it proposes a class of generalised indices based on work intensity, as approximated by the total annual hours of work relative to a benchmark value. Third, it derives household-level employment indices within a consistent framework. These indices provide a more nuanced picture of the European labour markets, which better reflects the diversity in the use of part-time and fixed-term jobs as well as other factors affecting the distribution of work across and within households. |
| Keywords: | employment rate, jobless household rate, work intensity |
| JEL: | J21 E24 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_965_14&r=lab |
| By: | Du Caju, Philip; Kosma, Theodora; Lawless, Martina; Messina, Julian; Room, Tairi |
| Abstract: | Firms very rarely cut nominal wages, even in the face of considerable negative economic shocks. This paper uses a unique survey of fourteen European countries to ask firms directly about the incidence of wage cuts and to assess the relevance of a range of potential reasons for why the firms avoid cutting wages. The paper examines how firm characteristics and collective bargaining institutions affect the relevance of each of the common explanations put forward for the infrequency of wage cuts. Concerns about the retention of productive staff and a lowering of morale and effort were reported as key reasons for downward wage rigidity across all countries and firm types. Restrictions created by collective bargaining were found to be an important consideration for firms in Western European (EU-15) countries but were one of the lowest ranked obstacles in the new EU member states in Central and Eastern Europe. |
| Keywords: | Labor Markets,Labor Policies,Microfinance,Labor Management and Relations,Income |
| Date: | 2014–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6976&r=lab |
| By: | Robert J R Elliott; Joanne K Lindley |
| Abstract: | Green growth is increasingly being seen as a means of simultaneously meeting current and future climate change obligations and reducing unemployment. This paper uses detailed industry-level data from the Bureau of Labor Statistic's Green Goods and Services survey to examine how the provision of green goods and services has affected various aspects of the US economy. Our descriptive results reveal that those states and industries that were relatively green in 2010 became even greener in 2011. To investigate further we include green goods and services in a production function. The results show that between 2010 and 2011 industries that have increased their share of green employment have reduced their productivity although this negative correlation with productivity was only for the production of green goods and not for the supply of green services. In further analysis we investigate skill-technology complementarities in the production of green goods and services and show that industries that increased their provision of green goods and services grew more slowly, reduced their expenditure on technology inputs and increased their demand for medium educated workers, whilst simultaneously reducing their demand for low skilled workers. |
| Keywords: | Green Goods and Services; Productivity; Employment |
| JEL: | Q4 Q3 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:14-09&r=lab |
| By: | Alexandra De Pleijt; Jacob Weisdorf |
| Abstract: | We use occupational titles from English parish registers in an attempt to test the deskilling hypothesis, i.e. the notion that England’s Industrial Revolution was mainly skill saving. We code the occupational titles of over 30,000 male workers according to the skillcontent of their work (using HISCLASS) to track the evolution of working skills in England between 1550 and 1850. Although we observe a minor rise in the share of ‘high-quality workmen’ deemed necessary by Mokyr and others to facilitate the Industrial Revolution, such as joiners, turners, and wrights, we also find considerable growth in the share of unskilled workers, from 20% in around 1700 to 39% in around 1850, fed mainly by falling shares of semi-skilled blue-collar workers, such as tailors, shoemakers, and weavers. This supports the view that England’s Industrial Revolution was not only skill saving on average but also involved a proletarianization of the English workforce. |
| Keywords: | Deskilling, HISCLASS, Human Capital, Industrial Revolution, Occupations |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:ucg:wpaper:0057&r=lab |
| By: | Lien Laureys (Bank of England) |
| Abstract: | Skill erosion during unemployment was of particular concern as unemployment duration increased in the Great Recession. I argue that it generates an externality in job creation: firms ignore how their hiring decisions affect the unemployment pool’s skill composition, and hence the expected output produced by new hires. As a consequence, job creation is too low from a social point of view. But the extent to which it is too low varies over the cycle. This is because the externality’s magnitude, which depends on the impact of job creation on the pool’s skill composition, reduces when the share of unemployed workers who already have eroded skills increases. |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:cfm:wpaper:1420&r=lab |
| By: | Tom Kornstad; Marit Rønsen (Statistics Norway) |
| Abstract: | Since the 1960s, Beckers’ New Home Economics has provided a central theoretical framework for studies of fertility behaviour. New Home Economics predict a negative effect of female wages on fertility. This prediction has been tested in a number of studies over the past decades, but the results are far from unanimous. In this paper we review past evidence of the impact of female wages on their childbearing behaviour and supply new evidence from Norway. We estimate a simultaneous hazard rate model of transitions to first, second and third birth, including predicted wage as a time-dependent variable. Using a very large dataset covering all women born in Norway during the period 1955-74, we find that timing of births is associated with wage changes. The wage effect on the log hazard is U-shaped for all the four 5-year cohorts we are studying, but the effect varies across cohorts and parity. We also find that the relationship between timing of births and wages are not very sensitive to the omission of the women’s non-labour income. |
| Keywords: | female fertility; wages; non-labor income; hazard model |
| JEL: | J13 J30 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:784&r=lab |
| By: | L. Behaghel; D. Blanchet; M. Roger |
| Abstract: | We analyze the influence of health and financial incentives on the retirement behavior of older workers in France, building upon Stock and Wise (1990) option value approach. The model accounts for three main retirement routes: the normal retirement, disability insurance (DI) and unemployment/preretirement pathways, and is estimated with a combination of microeconomic datasets that include the French data of the European SHARE survey. The estimates confirm that a decrease in the generosity of the pension and DI schemes induces people to stay longer in the labor market, and that people with better health tend to retire later. We present extreme situations simulating what individual's retirement behavior would have been if only one retirement route had existed and in the absence of constraints on work capabilities. We show that average years of work between 55 and 64 are nearly 14% greater when regular retirement incentives are applied to the whole population than when it is DI rules that are systematically applied. |
| Keywords: | Pensions, Social Security, Disability, Labor force participation, Senior. |
| JEL: | H55 J14 J26 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:500&r=lab |
| By: | Andrew Ellul (Indiana University); Marco Pagano (Università di Napoli Federico II CSEF, EEIF, CEPR and ECGI); Fabiano Schivardi (LUISS, EIEF and CEPR) |
| Abstract: | We investigate the determinants of firms’ implicit employment and wage insurance to employees against industry-level and idiosyncratic shocks. We rely on differences between family and non-family firms to identify the supply of insurance, and between national public insurance programs to gauge workers’ demand for insurance. Using firm-level data from 41 countries, we find that family firms provide greater employment protection but less wage stability. Employment protection comes at a price: family firms pay 5 percent lower wages, controlling for country, industry and time effects. The additional protection afforded by family firms is greater, and the wage discount larger, the less generous the public unemployment insurance program, indicating that firm and government employment insurance are substitutes. The cross-country evidence is broadly confirmed by Italian employee-employer matched data, which also show that in family firms the adjustment to shocks occurs mostly through the hiring margin, while separations are not responsive to shocks. JEL Classification: G31, G32, G38, H25, H26, M40. |
| Keywords: | risk-sharing, insurance, social security, unemployment, wages, family firms. |
| Date: | 2014–07–22 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:369&r=lab |
| By: | J. Carluccio; D. Fougère; E. Gautier |
| Abstract: | Using a unique French firm-level dataset, we study how international trade affects the wage bargaining process at the firm level. Using instrumental variables techniques, we find that exports shocks have a positive effect on the probability that a firm-level wage agreement is signed, while shocks increasing imports of finished goods have the opposite effect. Exports increase wages for all occupational categories, whereas offshoring has heterogeneous effects. In firms where wage agreements are frequently signed, the export wage premium is larger, and blue-collar workers are protected against the negative impact of offshoring on wages. |
| Keywords: | trade, wages, collective bargaining. |
| JEL: | F16 J51 E24 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:498&r=lab |
| By: | Luz Adriana Flórez |
| Abstract: | This paper contributes to the theoretical analysis of the informal sector in the search and matching framework. Building upon the work of Albrecht et al. (2009), where the informal sector consists of unregulated self-employment, I describe the search and matching equilibrium in an economy with an informal sector where workers are risk neutral and the government can observe when a worker is formal and informal. In this case I solve the matching equilibrium by introducing three policies: unemployment benefits, a formal lump sum tax, and a job creation subsidy. I analyze the effects of these policies on unemployment rates, formal employment and informal employment. I show that these policies affect the incentives of workers to be formal or informal changing the composition of these two types of workers in the labor market. Classification JEL: J46; J65; J68 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:831&r=lab |
| By: | Maiti, Abhradeep; Indra, Debarshi |
| Abstract: | We use a large panel dataset covering the years 1988 to 2010 to estimate county specific total wage elasticities of labor demand for four highly aggregated industries in the United States. Our industries are construction, finance/real estate/service, manufacturing, and retail trade, which together employ on average over eighty percent of the U.S. national labor force per year. We use both the conventional constant coefficient panel data model and a random coefficients panel data model to estimate labor demand elasticities in various industries. We find the labor demand curves in all the industries studied to be downward sloping. We also find significant evidence that the total wage elasticity of labor demand exhibits regional variation. The labor demand estimates obtained in this study are useful to investigate the differential impact of various shocks and policy changes on the labor market. As an example, we use the estimated county specific labor demand elasticities to identify the impact of union membership and right to work laws on labor demand. We show that labor demand tends to become less elastic with higher union membership rates. We also find that labor demand becomes more elastic if a right to work law is in place. |
| Keywords: | Labor Demand Elasticity, Random Parameter Model, Union Membership, Right to Work Law |
| JEL: | C35 J20 J23 J50 R14 R15 R21 R41 |
| Date: | 2014–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57544&r=lab |
| By: | Richard A. Brecher (Department of Economics, Carleton University); Till O. Gross (Department of Economics, Carleton University) |
| Abstract: | We add a minimum wage and hence involuntary unemployment to a conventional two-sector model of a perfectly competitive economy with optimal saving and endogenous growth. Our resulting model highlights the possible case of a backward-bending demand curve for labor, along which a hike in the minimum wage might increase total employment. This possibility provides theoretical support for some controversial empirical studies, which challenge the textbook prediction of an inverse relationship between employment and the minimum wage. Our model also implies that a minimum-wage hike has negative implications for both the growth rate and lifetime utility. |
| Keywords: | Optimal growth, Minimum wage, Learning by doing, Involuntary unemployment |
| JEL: | E24 O41 |
| URL: | http://d.repec.org/n?u=RePEc:car:carecp:14-05&r=lab |
| By: | Antonis Adam (University of Ioannina); Thomas Moutos (Athens University fo Economics and Business) |
| Abstract: | In this paper we estimate disaggregated labour demand equations using panel data involving observations across time (1970-2007) for twenty-three industries across eleven euro area countries. By using the EU KLEMS database, which provides data across countries, we provide industry-by-industry estimates of the labour demand function. The values of our estimated (own-price) elasticities of labour demand are substantial, and in accordance with the findings of the empirical literature. Independently of whether we use level or time-differenced data, the (absolute value of the) estimated conditional elasticities are bracketed in the interval [0.05, 0.80], with the (un-weighted) mean elasticity across the various methods ranging from 0.26 to 0.43. The values of the estimated unconditional elasticities are similar in size and range, and the same holds true for country-specific wage-elasticities of labour demand. Our results indicate that the wage declines experienced in the periphery countries of the euro area can, when the contractionary credit and budgetary policies come to an end, have a non-negligible, albeit modest, effect on future employment growth. |
| Keywords: | labour demand; wages; international trade; euro area |
| JEL: | J23 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:bog:wpaper:185&r=lab |
| By: | Pascal Michaillat (London School of Economics (LSE), Economics Department; Centre for Macroeconomics (CFM)); Emmanuel Saez (University of California-Berkeley, Department of Economics) |
| Abstract: | This paper develops a model of unemployment fluctuations. The model keeps the architecture of the Barro and Grossman [1971] general disequilibrium model but replaces the disequilibrium framework on the labor and product markets by a matching framework. On the product and labor markets, both price and tightness adjust to equalize supply and demand. There is one more variable than equilibrium condition on each market, so we consider various price mechanisms to close the model, from completely flexible to completely rigid. With some price rigidity, aggregate demand influences unemployment through a simple mechanism: higher aggregate demand raises the probability that firms find customers, which reduces idle time for firms’ employees and thus increases labor demand, which in turn reduces unemployment. We use the comparative-statics predictions of the model together with empirical measures of quantities and tightnesses to re-examine the origins of labor market fluctuations. We conclude that (1) price and real wage are not fully flexible because product and labor market tightness fluctuate significantly; (2) fluctuations are mostly caused by labor demand and not labor supply shocks because employment is positively correlated with labor market tightness; and (3) labor demand shocks mostly reflect aggregate demand and not technology shocks because output is positively correlated with product market tightness. |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:cfm:wpaper:1419&r=lab |
| By: | Luz Adriana Flórez |
| Abstract: | This paper analyzes efficiency in an economy with an informal sector that consists of unregulated self-employment, and where there are no costs of being informal, (Albrecht et al. (2009)). First, assuming workers in the formal sector are ex-ante heterogeneous, I show that this type of economy is inefficient. Second, I identify the optimal policies the government can implement, where the informal sector is unobserved (or search effort is unobserved). Allowing the government to use different policies such as social security payment, severance payment, formal tax, and job creation subsidy, I show that the government cannot affect worker’s behavior by using severance and social security payments because of the risk neutrality assumption (Lazear (1990)). However, it can achieve an efficient allocation through a tax-credit policy. This result is interesting since it can guide the way in which social security programs can be implemented in developing countries, where in general social protection programs are assumed to subsidize informal activities. Classification JEL: H21; J64; J65 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:832&r=lab |