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on Labour Economics |
| By: | De Groot, Nynke (Free University Amsterdam); van der Klaauw, Bas (VU University Amsterdam) |
| Abstract: | This paper exploits a substantial reform of the Dutch UI law to study the effect of the entitlement period on job finding and subsequent labor market outcomes. Using detailed administrative data covering the full population we find that reducing the entitlement period increases the job finding rate, but decreases the job quality. Unemployed workers accept more often temporary jobs with lower wages and fewer working hours. Therefore, they also change jobs more frequently. The reform did not affect total post-unemployment earnings indicating that the positive effects on job finding and job turnover cancel out the negative effects on job quality. We also observe a spike in job finding around benefits exhaustion even, although more modest, for individuals who do not experience a drop in benefits level when moving to welfare. |
| Keywords: | unemployment benefits entitlement, job finding, job quality, difference-in-differences, duration model |
| JEL: | J64 J65 C21 C41 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8336&r=lab |
| By: | Loeffler, Max (ZEW Mannheim); Peichl, Andreas (ZEW Mannheim); Siegloch, Sebastian (University of Mannheim) |
| Abstract: | There is still considerable dispute about the magnitude of labor supply elasticities. While differences in micro and macro estimates are recently attributed to frictions and adjustment costs, we show that relatively low labor supply elasticities derived from microeconometric models can also be explained by modeling assumptions with respect to wages. Specifically, we estimate 3,456 structural labor supply models each representing a plausible combination of frequently made choices. While most model assumptions do not systematically affect labor supply elasticities, our analysis shows that the results are very sensitive to the treatment of wages. In particular, the often-made but highly restrictive independence assumption between preferences and wages is key. To overcome this restriction, we propose a flexible estimation strategy that nests commonly used models. We show that loosening the exogeneity assumption leads to labor supply elasticities that are much higher. |
| Keywords: | labor supply, elasticity, random utility models, wages |
| JEL: | C25 C52 H31 J22 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8281&r=lab |
| By: | John Pencavel (Stanford University) |
| Abstract: | If workers in cooperatives are like workers in conventional workplaces, they care about the length of their working hours. In this paper, their choice of hours is characterized as a conventional labor supply decision and a familiar hours-wage relationship is derived. This is estimated using mill-year observations on the plywood co-ops in the Pacific Northwest. The results are compared with those from the labor supply behavior of self-employed workers and with those in capitalist plywood mills. |
| Keywords: | labor supply, hours, worker co-ops |
| JEL: | J22 J54 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:sip:dpaper:13-036&r=lab |
| By: | Sonja C. Kassenboehmer (Centre for Health Economics, Monash University; and Institute for the Study of Labor (IZA)); Sonja G. Schatz (Mercator School of Management, University of Duisburg-Essen) |
| Abstract: | Using a nationally representative panel dataset, this study investigates the extent and impact of systematic misconceptions of the currently unemployed concerning their statistical reemployment probability, affecting their labor market behavior in a sub-optimal way. Specifically, people with unemployment experience of 3 to 5 years significantly underestimate their objective re-employment probabilities as determined by the econometrician’s all-seeing ‘Eye of Providence’. Simply having information concerning the individuals’ previous unemployment experience is sufficient to make more accurate predictions than the individuals themselves. People who underestimate their re-employment probability are less likely to search actively for a job and indeed more likely to exit the labor force. If re-employed, they are more likely to accept lower wages, work fewer hours, work part-time and experience lower levels of job satisfaction. This information can be used by employment agency case workers to counsel clients better and prevent client adverse behavior and outcomes. |
| Keywords: | Job insecurity, re-employment expectations, prediction errors |
| JEL: | J64 J01 D84 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2014n11&r=lab |
| By: | Bryson, Alex (National Institute of Economic and Social Research (NIESR)); Forth, John (National Institute of Economic and Social Research (NIESR)); Stokes, Lucy (National Institute of Economic and Social Research (NIESR)) |
| Abstract: | Using nationally representative linked employer-employee data we find one-quarter of employees in Britain are paid for performance. The log hourly wage gap between performance pay and fixed pay employees is .36 points. This falls to .15 log points after controlling for observable demographic, job and workplace characteristics. It falls still further to .10 log points when comparing "like" employees in the same workplace, indicating that performance pay contracts are used in higher paying workplaces. The premium rises markedly as one moves up the wage distribution: it is seven times higher at the 90th percentile than it is at the 10th percentile in the wage distribution (.42 log points compared to .06 log points). |
| Keywords: | wages, wage inequality, performance pay, bonuses |
| JEL: | J33 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8360&r=lab |
| By: | Guido Matias Cortes (Department of Economics, University of Manchester, UK; The Rimini Centre for Economic Analysis, Italy); Giovanni Gallipoli (University of British Columbia, Canada; HCEO, USA; The Rimini Centre for Economic Analysis, Italy) |
| Abstract: | We estimate the costs of occupational mobility using a novel approach that relies on aggregate flows of workers across occupations rather than on wage data. The theoretical underpinnings for this approach are derived from a model of occupation choice that delivers a gravity equation linking worker flows to occupation characteristics and to transition costs, which we proxy using task data from the Dictionary of Occupational Titles (DOT). Occupation flow data are constructed from the matched monthly Current Population Survey (CPS) between 1994 and 2012. We find that transition costs vary widely across occupations, are increasing in task distance (the dissimilarity in the mix of tasks performed in the two occupations) and are higher for transitions across broad task categories. However, most of the transition costs are accounted for by general, task-independent entry costs, specific to each destination occupation. |
| Keywords: | Occupational Mobility, Tasks, Worker Flows, Mobility Costs, Gravity Model |
| JEL: | J62 J24 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:17_14&r=lab |
| By: | Caliendo, Marco (University of Potsdam); Mahlstedt, Robert (IZA); Mitnik, Oscar A. (University of Miami) |
| Abstract: | Many commonly used treatment effects estimators rely on the unconfoundedness assumption ("selection on observables") which is fundamentally non-testable. When evaluating the effects of labor market policies, researchers need to observe variables that affect both treatment participation and labor market outcomes. Even though in many countries it is possible to access (very) informative administrative data, concerns about the validity of the unconfoundedness assumption remain. The main concern is that the observed characteristics of the individuals may not be enough to properly address potential selection bias. This is especially relevant in light of the research on the influence of personality traits and attitudes on economic outcomes. We exploit a unique dataset that contains a rich set of administrative information on individuals entering unemployment in Germany, as well as several usually unobserved characteristics like personality traits, attitudes, expectations, and job search behavior. This allows us to empirically assess how estimators based on the unconfoundedness assumption perform when alternatively including or not these usually unobserved variables. Our findings indicate that these variables play a significant role for selection into treatment and labor market outcomes, but do not make for the most part a significant difference in the estimation of treatment effects, compared to specifications that include detailed labor market histories. This suggests that rich administrative data may be good enough to draw policy conclusions on the effectiveness of active labor market policies. |
| Keywords: | active labor market policy, personality traits, heterogeneity, selection bias, unobervables, unconfoundedness, matching |
| JEL: | C21 D04 J68 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8337&r=lab |
| By: | Gavrel, Frédéric (University of Caen); Lebon, Isabelle (University of Caen); Rebiere, Therese (CNAM, Paris) |
| Abstract: | The efficiency of educational choices is studied in a search-matching model where individuals face a tradeoff: acquiring formal education or learning while on the job. When their education effort is successful, newcomers directly obtain a high-skill job; otherwise, they begin with a low-skill job, learn-by-doing and then search while on-the-job for a high-skill job. Low-skill firms suffer from hold-up behavior by high-skill firms. The low-skill sector is insufficiently attractive and individuals devote too much effort to formal education. A self-financing tax and subsidy policy restores market efficiency. |
| Keywords: | formal education, learning-by-doing, market efficiency, on-the-job search, search unemployment |
| JEL: | H21 I20 J21 J64 J68 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8341&r=lab |
| By: | Loughrey, Jason; Donnellan, Trevor; Hanrahan, Kevin; Hennessy, Thia |
| Abstract: | Factor markets that function well are a crucial condition for the competitiveness and growth of agriculture. Institutions and regulation may give rise to agricultural labour market heterogeneity, which could have important effects on the functioning of the labour market and other agricultural factor markets in EU member states. This paper first defines the institutional framework for the labour market, and then presents a brief literature review of previous studies of labour market institutional frameworks. Based on the literature, a survey to characterise agricultural labour markets was undertaken, which was implemented for a selection of EU27 and EU candidate countries, with responses based on expert opinion. The survey data were then used to construct indices of labour market flexibility/rigidity for the countries examined. These indices were used to make inter-country labour market comparisons and to draw inferences about the institutions and functioning of the agricultural labour market. |
| Keywords: | Agricultural Labour Market, Flexibility, Policy, Labor and Human Capital, J40, J43, |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:ags:famawp:155707&r=lab |
| By: | Skriabikova, Olga (Maastricht University); Dohmen, Thomas (University of Bonn); Kriechel, Ben (Economix Research & Consulting) |
| Abstract: | This paper analyses the impact of risk attitudes on the decision to become self-employed among individuals who grew up under the communist regime in Ukraine, which banned self-employment so that individuals could not observe what it is like to be self-employed. Since the intra-family transmission of self-employment experiences was largely shut down, the observed correlation between risk preferences and self-employment after transition is unlikely to be driven by parents transmitting self-employment experience and risk preferences to their children. Robustness checks on a sample of East Germans confirm that such a third factor explanation is implausible, thus shedding light on the causal nature of the relation between risk preferences and the decision to become self-employed. |
| Keywords: | self-employment, risk attitudes, intergenerational transmission of self-employment and risk attitudes, SOEP, ULMS |
| JEL: | J24 D81 P3 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8354&r=lab |
| By: | Gammage, Sarah; Alburquerque, Tomás; Durán, Gonzálo |
| Abstract: | This paper explores the relationship between labour market institutions, social policy and inequality in Chile from the early 1990s to the late 2000s. The paper analyses levels and changes in poverty as well as wage and income inequality using household and employment survey data and draws some preliminary conclusions about the role of key labour market institutions and policies that have affected the distribution of primary and secondary income over time. |
| Keywords: | poverty, income distribution, employment, collective bargaining, social protection, Chile, pauvreté, répartition du revenu, emploi, négociation collective, protection sociale, Chili, pobreza, distribución del ingreso, empleo, negociación colectiva, protección social, Chile |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:484955&r=lab |
| By: | Kozo Kiyota |
| Abstract: | This paper examines the effects of exports on employment in China, Indonesia, Japan and Korea. It draws on input-output data for the period from 1995 to 2009 to estimate the effects on each industry's employment (i.e. direct effects) and on other industries' employment through intra-industry linkages (i.e. indirect effects). There are four major findings. First, at the aggregate level, the implied employment from exports increased in China, Japan and Korea. Second, at the industry level, exports and the shares of implied employment from exports increased in machinery-related industries such as Machinery (NEC), Electrical and Optical Equipment, and Transport Equipment in China, Indonesia and Korea. Third, although more than 80% of exports in the four study countries are from manufacturing industries, the employment effects are not limited to manufacturing industries. A significant number of workers in non-manufacturing industries depend upon manufacturing exports through vertical inter-industry linkages. Non-manufacturing industries account for between 40% and 60% of the implied employment from exports. Finally, in 2009, the share of implied employment from Chinese final demand exceeded that from the US final demand in both Japan and Korea. An implication of the overall results is that even in cases where an industry is not particularly directly export-oriented, the industry may still be subject to potential effects – positive or negative – of changes in export demand. |
| Keywords: | trade, employment, intra-industry linkages, exports |
| JEL: | F16 |
| Date: | 2014–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:166-en&r=lab |
| By: | Checchi, Daniele (University of Milan); De Fraja, Gianni (University of Nottingham); Verzillo, Stefano (University of Milan) |
| Abstract: | We derive a theoretical model of effort in the presence of career concern based on the multi-unit all-pay auction, and closely inspired by the Italian academic market. In this model, the number of applicants, the number of new posts, and the relative importance of the determinants of promotion determine academics' effort. Because of the specific characteristics of Italian universities, where incentives operate only through promotion, and where all appointment panels are drawn from strictly separated and relatively narrow scientific sectors, the model fits well Italian academia, and we test it in a newly constructed dataset which collects the journal publications of all Italian academics working in universities. We find that individual researchers respond to incentives in the manner predicted by the theoretical model: more capable researchers respond to increases in the importance of the measurable determinants of promotion and in the competitiveness of the scientific sector by exerting more effort; less able researchers do the opposite. |
| Keywords: | career concerns, applied auction theory, publications, academic job market, nepotism |
| JEL: | D44 I23 I21 M51 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8345&r=lab |
| By: | Søren Leth-Petersen (Department of Economics, University of Copenhagen); Peer Ebbesen Skov (Department of Economics, University of Copenhagen) |
| Abstract: | This paper measures the effect of changing the marginal tax rate on earned income on the supply of labor to the informal sector with the purpose of evading taxation. Unlike any previous study, we do this by directly measuring the effect of a Danish 2010 tax reform that changed the marginal rate of taxation of earned income from 63 percent to 56 percent. The analysis is based on longitudinal survey data collected over the period 2009–2012. In each survey round we asked people about their activity in the informal sector. The effect of the tax reform on informal sector activity is measured by comparing the evolution of informal sector activity from 2009 to 2012 for people who in 2009 paid the middle and top rate of tax with people who did not. We find that there is no connection between the marginal tax rate and the supply of labor to the informal sector. As part of the survey we asked people about their perceived marginal net-of-tax income, and we show that the survey participants did not change their perception of their marginal net-of-tax income from before to after the reform. This suggests that the respondents in our survey were not aware of the implications of the reform. We also investigate the effect of the introduction of a tax deduction for the purchase of selected services on the supply of labor to the informal sector. Here again we are unable to detect any effect. Overall, our results indicate the changing the after-tax price of services is not an effective way of reducing undeclared work. |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:rok:spaper:64&r=lab |
| By: | Bart Los; Marcel P. Timmer; Gaaitzen J. De Vries |
| Abstract: | We propose a new method to analyse the changing skills structure of employment in countries based on the input-output structure of the world economy. Demand for jobs, characterized by skill type and industry of employment, is driven by changes in technology, trade and consumption. Using structural decomposition analysis, we study the relative importance of these drivers for the period 1995-2008. In doing so, we derive a new measure of technological change in vertically integrated production chains and show that it has been skill-biased. We find that skill-biased technological change has played the most important role in the different employment growth rates of high-skilled, medium-skilled and low-skilled labour in advanced countries. For emerging countries, the patterns of employment growth are very heterogeneous. Analyse de l'évolution de la demande de compétences entre 1995 et 2008 sous l'angle des chaînes d'approvisionnement mondiales Nous proposons une nouvelle méthode pour étudier l’évolution de la structure de l’emploi en termes de compétences dans les pays, qui s’appuie sur une analyse entrées-sorties de l’économie mondiale. La demande d’emplois, selon le type de compétences et le secteur d’activité, est tirée par l’évolution des technologies, des échanges et de la consommation. À partir d’une analyse par décomposition structurelle, nous examinons le poids relatif de chacun de ces moteurs sur la période 1995-2008. Nous obtenons ainsi une nouvelle mesure du progrès technologique dans les chaînes de production intégrées verticalement, qui montre que le progrès technologique privilégie les qualifications. Nous estimons que, dans les pays avancés, c’est ce phénomène qui permet en premier lieu d’expliquer les différences entre les taux de croissance de l’emploi des travailleurs hautement qualifiés, moyennement qualifiés et peu qualifiés. Dans les pays émergents, les taux de croissance de l’emploi sont très variables. |
| Keywords: | technological change, global supply chains, trade, world input–output tables, demand for skills, échanges, demande de compétences, chaînes d’approvisionnement mondiales, tableaux entrées-sorties, progrès technologique |
| JEL: | D57 F16 |
| Date: | 2014–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1141-en&r=lab |
| By: | Badel, Alejandro (Federal Reserve Bank of St. Louis); Huggett, Mark (Georgetown University) |
| Abstract: | We assess the consequences of substantially increasing the marginal tax rate on U.S. top earners using a human capital model. The top of the model Laffer curve occurs at a 53 percent top tax rate. Tax revenues and the tax rate at the top of the Laffer curve are smaller compared to an otherwise similar model that ignores the possibility of skill change in response to a tax reform. We also show that if one applies the methods used by Diamond and Saez (2011) to provide quantitative guidance for setting the tax rate on top earners to model data then the resulting tax rate exceeds the tax rate at the top of the model Laffer curve. |
| Keywords: | Human Capital; Marginal Tax Rates; Inequality; Laffer Curve |
| JEL: | D91 E21 H2 J24 |
| Date: | 2014–07–23 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2014-017&r=lab |