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on Labour Economics |
| By: | Daron Acemoglu; David Autor; David Dorn; Gordon H. Hanson; Brendan Price |
| Abstract: | Even before the Great Recession, U.S. employment growth was unimpressive. Between 2000 and 2007, the economy gave back the considerable gains in employment rates it had achieved during the 1990s, with major contractions in manufacturing employment being a prime contributor to the slump. The U.S. employment “sag” of the 2000s is widely recognized but poorly understood. In this paper, we explore the contribution of the swift rise of import competition from China to sluggish U.S. employment growth. We find that the increase in U.S. imports from China, which accelerated after 2000, was a major force behind recent reductions in U.S. manufacturing employment and that, through input-output linkages and other general equilibrium effects, it appears to have significantly suppressed overall U.S. job growth. We apply industry-level and local labor market-level approaches to estimate the size of (a) employment losses in directly exposed manufacturing industries, (b) employment effects in indirectly exposed upstream and downstream industries inside and outside manufacturing, and (c) the net effects of conventional labor reallocation, which should raise employment in non-exposed sectors, and Keynesian multipliers, which should reduce employment in non-exposed sectors. Our central estimates suggest net job losses of 2.0 to 2.4 million stemming from the rise in import competition from China over the period 1999 to 2011. The estimated employment effects are larger in magnitude at the local labor market level, consistent with local general equilibrium effects that amplify the impact of import competition. |
| JEL: | F16 J23 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20395&r=lab |
| By: | Daniel S. Hamermesh; Daiji Kawaguchi; Jungmin Lee |
| Abstract: | Are workers in modern economies working “too hard”—would they be better off if an equilibrium with fewer work hours were achieved? We examine changes in life satisfaction of Japanese and Koreans over a period when hours of work were cut exogenously because employers suddenly faced an overtime penalty that had become effective with fewer weekly hours per worker. Using repeated cross sections we show that life satisfaction in both countries may have increased relatively among those workers most likely to have been affected by the legislation. The same finding is produced using Korean longitudinal data. In a household model estimated over the Korean cross-section data we find some weak evidence that a reduction in the husband’s work hours increased his wife’s well-being. Overall these results are consistent with the claim that legislated reductions in work hours can increase workers’ happiness. |
| JEL: | E24 J23 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20398&r=lab |
| By: | Charles L. Baum; Christopher J. Ruhm |
| Abstract: | We examine whether the benefits of high school work experience have changed over the last 20 years by comparing effects for the 1979 and 1997 cohorts of the National Longitudinal Survey of Youth. Our main specifications suggest that the future wage benefits of working 20 hours per week in the senior year of high school have fallen from 8.3 percent for the earlier cohort, measured in 1987-1989, to 4.4 percent for the later one, in 2008-2010. Moreover, the gains of work are largely restricted to women and have diminished over time for them. We are able to explain about five-eighths of the differential between cohorts, with most of this being attributed to the way that high school employment is related to subsequent adult work experience and occupational attainment. |
| JEL: | J22 J38 J4 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20413&r=lab |
| By: | Joseph E. Aldy |
| Abstract: | In 2010, the Gulf Coast experienced the largest oil spill, the greatest mobilization of spill response resources, and the first Gulf-wide deepwater drilling moratorium in U.S. history. Taking advantage of the unexpected nature of the spill and drilling moratorium, I estimate the net effects of these events on Gulf Coast employment and wages. Despite predictions of major job losses in Louisiana — resulting from the spill and the drilling moratorium — I find that Louisiana coastal parishes, and oil-intensive parishes in particular, experienced a net increase in employment and wages. In contrast, Gulf Coast Florida counties, especially those south of the Panhandle, experienced a decline in employment. Analysis of accommodation industry employment and wage, business establishment count, sales tax, and commercial air arrival data likewise show positive economic activity impacts in the oil-intensive coastal parishes of Louisiana and reduced economic activity along the Non-Panhandle Florida Gulf Coast. |
| JEL: | J30 J64 Q40 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20409&r=lab |
| By: | Alan Krueger; Alexandre Mas; Xiaotong Niu |
| Abstract: | This paper documents that rotation group bias — the tendency for labor force statistics to vary systematically by month in sample in labor force surveys — in the Current Population Survey (CPS) has worsened considerably over time. The estimated unemployment rate for earlier rotation groups has grown sharply relative to the unemployment rate for later rotation groups; both should be nationally representative samples. The rise in rotation group bias is driven by a growing tendency for respondents to report job search in earlier rotations relative to later rotations. We investigate explanations for the change in bias. We find that rotation group bias increased discretely after the 1994 CPS redesign and that rising nonresponse is likely a significant contributor. Survey nonresponse increased after the redesign, and subsequently trended upward, mirroring the time pattern of rotation group bias. Consistent with this explanation, there is only a small increase in rotation group bias for households that responded in all eight interviews. An analysis of rotation group bias in Canada and the U.K. reveal no rotation group bias in Canada and a modest and declining bias in the U.K. There is not a “Heisenberg Principle” of rotation group bias, whereby the bias is an inherent feature of repeated interviewing. We explore alternative weightings of the unemployment rate by rotation group and find that, despite the rise in rotation group bias, the official unemployment does no worse than these other measures in predicting alternative measures of economic slack or fitting key macroeconomic relationships. |
| JEL: | J01 J64 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20396&r=lab |
| By: | Christopher Cotton; Brent R. Hickman; Joseph P. Price |
| Abstract: | The empirical literature on Affirmative Action (AA) in college admissions tends to ignore the effects admissions policies have on incentives of students to invest developing pre-college human capital. We explore the incentive effects of AA using a field experiment that creates a microcosm of the college admissions market. Our experimental design is based on the asymmetric, multi-object, all-pay auction framework in Bodoh-Creed and Hickman (2014). We pay 5th through 8th grade students based on their performance on a national mathematics exam relative to other competitor students, and observe the use of a study website as students prepare for the exam. An AA treatment favors "disadvantaged" students by reserving prizes for lower grade students who on average have less mathematics training and practice. We find that the AA policy significantly increases both average time investment and subsequent math achievement scores for disadvantaged students. At the same time, we find no evidence that it weakens average human capital investment incentives for advantaged students. We also find strong evidence that AA can narrow achievement gaps while promoting greater equality of market outcomes. |
| JEL: | C93 D44 D82 J15 J24 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20397&r=lab |
| By: | Alicia Adsera (Woodrow Wilson School, Princeton University); Ana Ferrer (Department of Economics, University of Waterloo) |
| Abstract: | We use the confidential files of the 1991-2006 Canadian Census, combined with information from O*NET on the skill requirements of jobs, to explore whether Canadian immigrant women behave as secondary workers, remaining marginally attached to the labour market and experiencing little career progression over time. Our results show that the labor market patterns of female immigrants to Canada do not fit the profile of secondary workers, but rather conform to patterns recently exhibited by married native women elsewhere, with rising participation (and wage assimilation). At best, only relatively uneducated immigrant women in unskilled occupations may fit the profile of secondary workers, with slow skill mobility and low-status job-traps. Educated immigrant women, on the other hand, experience skill assimilation over time: a reduction in physical strength and an increase in analytical skills required in their jobs relative to those of natives. |
| Keywords: | skill assimilation, labour market outcomes of immigrant women, wage gaps, female labor force participation, Canadian migration |
| JEL: | J01 J61 F22 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1434&r=lab |
| By: | De Vita, Glauco; Livanos, Ilias; Salotti, Simone |
| Abstract: | Using European Union Labour Force Survey data on over 2.5 million workers in Italian regions for the period 1999-2010, we investigate the determinants of involuntary non-standard (temporary and part-time) employment (INE). We find that regional differences significantly affect the probability of workers being involuntarily employed in non-standard jobs, with higher probabilities for workers in the southern and insular regions than in the rest of the country. Women, young individuals, and low-skilled workers are particularly at risk of INE. The same holds for graduates, whose chances of finding satisfactory full-time permanent jobs are lower than those of individuals with diplomas. Finally, we find that INE follows a counter-cyclical behaviour, with it more likely to be higher when GDP growth is low and unemployment high. |
| Keywords: | Involuntary employment, regions, part-time employment, temporary employment, non-standard employment |
| JEL: | J21 R12 R23 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:58117&r=lab |
| By: | Ali Fakih |
| Abstract: | Using Canadian linked employer-employee data covering the period 1999-2005, I examine the determinants of the availability of family-friendly “care” practices and the impact of such practices on wages. The results show that the provision of family-friendly practices is not mainly derived from socio-demographic characteristics of workers but rather from job- and firm-related factors. The findings also reveal that there is a trade-off between the provision of family-friendly practices and earnings indicating the existence of an implicit market in which workers face reductions in their wages. This result supports the hypothesis that family-friendly benefits are to some extent conceived as a gift or a signal that employers care about employees’ family responsibilities and, in return, employees are willing to “buy” these practices and thus accept a wage offset. |
| Keywords: | Family-friendly “care” practices, linked employer-employee data, simultaneous probit model, wage equation., |
| JEL: | J13 J32 J70 |
| Date: | 2014–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2014s-33&r=lab |
| By: | Nicola Fuchs-Schündeln (Goethe University Frankfurt /Main); Alexander Bick (Arizona State University) |
| Abstract: | We document contemporaneous differences in the aggregate labor supply of married couples across 18 OECD countries along the extensive and the intensive margin. We quantify the contribution of international differences in non-linear labor income taxes and consumption taxes, as well as gender wage gaps and educational premia, to the international differences in the data. Our model replicates the comparatively small cross-country differences of married men's hours worked very well. Moreover, taxes and wages account for a large part of the observed large differences in married women's labor supply between the US and Europe. The non-linearity of labor income taxes leads to substantially different effects of taxation on married men and women. We find that going to a system of strictly separate taxation would increase labor supply of married women by more than 100 hours annually in a third of our sample countries. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed014:321&r=lab |
| By: | Marco Caliendo; Robert Mahlstedt; Oscar A. Mitnik |
| 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: | Matching, Unconfoundedness, Unobervables, Selection Bias, Heterogeneity, Personality Traits, Active Labor Market Policy |
| JEL: | C21 D4 J68 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1407&r=lab |
| By: | Luca Marchiori (Central Bank of Luxembourg); Patrice Pieretti (CREA, Université de Luxembourg); Benteng Zou (CREA, Université de Luxembourg) |
| Abstract: | This paper investigates the theoretical effects of immigration in an occupa- tional choice model with three sectors: a low-skilled, a high-skilled and a pu- blic sector. The originality of our approach is to consider (i) intersectoral mobi- lity of labor and (ii) public employment. We highlight the fact that including a public sector is crucial, since omitting it implies that low-skilled immigration un- ambiguously reduces wages and welfare of all workers. However, when public employment is considered, we demonstrate that immigration increases wages in the high-skilled and the public sectors, provided that the immigrant workforce is not too large and the access to public jobs is not too easy. The average wage of natives may also increase accordingly. Moreover, immigration may improve workers' welfare in each sector. Finally, the mechanism underlying these results does not require complementarity between natives and immigrants, |
| Keywords: | Immigration, occupational choice model, public employment |
| JEL: | J24 J61 J45 H44 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:14-15&r=lab |
| By: | Thibaut Lamadon (University College London) |
| Abstract: | This paper examines how employer and worker specific productivity shocks transmit to wage and employment in an economy with search frictions and firm commitment. I develop an equilibrium search model with worker and firm shocks and characterize the optimal contract offered by competing firms to attract and retain workers. In equilibrium risk-neutral firms offer risk-averse workers contingent contracts where payments are back-loaded in good times and front-loaded in bad ones: the combination of search frictions, productivity shocks and private worker actions results in partial insurance against firm and worker shocks. I estimate the model on matched employer-employee data from Sweden, using information about co-workers to separately identify firm specific and worker specific earnings shocks. Preliminary estimates suggest that firm level shocks are responsible for about 20% of permanent income fluctuations, the remaining being accounted for by individual level shocks (30% to 40%) and by job mobility (40% to 50%). The wage contract attenuates 80% of individual productivity shocks but passes through 30% of firm productivity fluctuations. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed014:243&r=lab |
| By: | FERNANDO MARTINS; Daniel Dias; Carlos Marques |
| Abstract: | This paper uses firm level survey data from Portugal to investigate how firms adjust their labour costs in the presence of wage rigidities. In particular, the paper contributes to the literature by analysing how firms, in the presence of wage rigidity, combine different channels of labour-cost adjustment in response to adverse shocks. Wage rigidity is expected to have implications for unemployment because, in the face of negative shocks, employment adjustment is likely to be larger when wages are rigid downwards. Wage rigidity is also thought to have important implications for monetary policy, as it may condition the inflation target that monetary authorities should pursue. If nominal wages were perfectly flexible it would be optimal to aim at zero inflation but, in the presence of downward nominal wage rigidity, a certain amount of inflation may be required to "grease the wheels" of the labour market by easing reductions in real wages. Model estimated by single equation methods (probit model). Recursive triangular model. We conclude that base-wage flexibility has a strong positive impact on employment, and that such positive impact has been significantly strengthened by the possibility of firms resorting to alternative margins of labour cost adjustment, like more flexible compensation components (bonus, benefits and promotions) and the recruitment of new employees at wages lower than those received by the employees that have left the firm. |
| Keywords: | Portugal, Labor market issues, Microsimulation models |
| Date: | 2013–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:004912:4944&r=lab |
| By: | Suresh Naidu; Yaw Nyarko; Shing-Yi Wang |
| Abstract: | In 2011, a reform in the United Arab Emirates allowed any employer to renew a migrant's visa upon contract expiration without written permission from the initial employer. We find that the reform increased incumbent migrants' earnings and firm retention of these workers. This occurs despite an increase in employer transitions, and is driven by a fall in country exits. While the outcomes of workers already in the United Arab Emirates improved, our analysis suggests that the reform decreased demand for new migrant workers and lowered their earnings. These results are consistent with a model in which the reform reduces the monopsony power of firms. |
| JEL: | J42 J6 O15 O53 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20388&r=lab |
| By: | Laureys, Lien (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 output produced by other firms' 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. |
| Keywords: | Long-term unemployment; skill erosion; inefficiency |
| JEL: | E24 E31 E52 |
| Date: | 2014–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0505&r=lab |
| By: | María Dolores de la Mata; Luis Eduardo Arango; Nataly Obando |
| Abstract: | This paper presents evidence of the effect of the recent phases of the business cycle in Spain and United States, proxied by their respective unemployment rates, on the labor market of Colombian cities with high migration tradition. These countries are the main destination for labor Colombian migrants. Using information from the household survey between 2006 and 2011 for urban areas in Colombia and a differences-in-differences approach we find that unemployment rates of those countries negatively affect the probability and the amount of remittances received by Colombian households living in areas with high and moderate migration tradition. At a second stage we provide evidence that unemployment rates of those countries positively affect the labor force participation decisions in Colombian regions with the highest migration tradition. |
| Keywords: | migration, remittances, labor participation, Spanish and United States unemployment rates. |
| JEL: | C21 J21 J22 |
| Date: | 2014–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:012047&r=lab |
| By: | Gábor Kátay; Péter Benczúr; Áron Kiss; Olivér M. Rácz |
| Abstract: | This paper presents a unified parametric approach to estimate the impact of taxes and transfers on the participation decision. We extend existing structural form methodologies by considering the effect of both taxes and transfers. In our framework, participation probabilities are determined by the comparison of disposable income in and out of the labour force, consisting of the (often non-observed) amount of transfers and non-labour income an individual gets if not working and the gains to work (GTW; change in disposable income if accepting a job offer, the sum of net wages and lost transfers). Identification is achieved by utilizing a multitude of tax and transfer reforms. Unlike in the existing literature, our results allow a general assessment of the efficiency and effectiveness of government interventions into the labour market, and more importantly, a micro-based prediction of the impact of tax and welfare reforms.The underlying theory leads to a structural probit equation which relates participation probabilities to gains to work from a full time job, the total amount of non-labour income (including the hypothetical amount of transfers one gets or would get at zero hours worked) and other individual characteristics. The unobserved hypothetical amount of transfers are backed up using individual characteristics and the welfare system’s details for every given year. The estimation process follows the often used three step procedure, as e.g. in Kimmel and Kniesner (1998). The key element of the identification is the careful choice of labour demand shifters, i.e. the variables which have no (or negligible) impact on labour supply directly, but strongly impact the wage and hence impacts activity indirectly. We argue that county dummies and (once we control for individuals’ lifecycle position with a large set of dummy variables) individuals’ age are such variables.Using data from the Hungarian Household Budget Survey, we find that a single equation can already explain a large heterogeneity of individual responsiveness to taxes and transfers: there are large differences among subgroups, driven partly by a composition effect, and partly by a different share of lost transfers in the GTW. The most responsive subgroups are low-skilled, (married) women at child-bearing age and elders, while prime-age higher educated individuals are practically unresponsive to tax and transfer changes at the extensive margin. As an illustration, we fed the main changes of the Hungarian personal income tax and transfer system of 2012 into this framework. We find that the complete elimination of the employee tax credit scheme, a reduction in the tax rate (from 20,3% to 16%) below the average monthly income and a 1 percentage point increase in the social contribution rate overall lead to a decrease in aggregate activity by about one percent. |
| Keywords: | Hungary, Tax policy, Labor market issues |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ekd:006356:6925&r=lab |
| By: | Herbold, Daniel |
| Abstract: | This paper analyzes how on-the-job search (OJS) by an agent impacts the moral hazard problem in a repeated principal-agent relationship. OJS is found to constitute a source of agency costs because efficient search incentives require that the agent receives all gains from trade. Further, the optimal incentive contract with OJS matches the design of empirically observed compensation contracts more accurately than models that ignore OJS. In particular, the optimal contract entails excessive performance pay plus efficiency wages. Efficiency wages reduce the opportunity costs of work effort and hence serve as a complement to bonuses. Thus, the model offers a novel explanation for the use of efficiency wages. When allowing for renegotiation, the model generates wage and turnover dynamics that are consistent with empirical evidence. I argue that the model contributes to explaining the concomitant rise in the use of performance pay and in competition for high-skill workers during the last three decades. -- |
| Keywords: | Repeated Principal-Agent Model,On-the-Job Search,Moral Hazard,Multitasking,Efficiency Wages |
| JEL: | C73 D82 D86 J33 L14 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:64&r=lab |
| By: | Bergin, Adele; Kelly, Elish; McGuinness, Seamus |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp485&r=lab |
| By: | Bögenhold, Dieter; Fachinger, Uwe |
| Abstract: | It is not clear, whether changes in self-employment are primarily driven by the necessity to take part in the labour market, or if those activities reflect new modes of labour market integration revealing new opportunities and markets, which are especially due in wide parts to the service and health care sector. A fundamental question is how gender matters when investigating the above-mentioned developments. Do we find specific “gender patterns” within the increasing expansion of self-employment, or will the new chances and risks lead to greater equality of opportunities? Is the increase of solo-self-employment of females driven by the need to earn a living, or is it the result of females taking risks, e.g. to become more economically independent? The structural changes of the labour market raise the question whether self-employment can be seen as a strategy for women to achieve work-life balance and whether these changes in the organisation of work are leading to an improvement of the quality of (working) life. To gather more reliable information, the relationship between self-employment, partner’s employment, the household and children is explored, using Germany as an example. The influence of personal as well as household and labour market characteristics for women and men in a family context and their probability of being self-employed as compared to those who have chosen formal, gainful employment are analysed. The empirical analysis shows that people’s intentions to engage in a specific volume and with specific degrees of motivation reflect diverse areas in the organization of private life. The rationality of private duties, needs, challenges and aspirations belongs to the factors, which influence the decision to engage in the labour market. A crucial impact on those decisions is given by the individual’s domestic background and what the household looks like. Issues of firm partnership, marital status, and the existence of children and age of children or elderly relatives are factors, which provide different life-worlds, which set relevant parameters. In the end, the household as the entity and composition of different interests, motivations, needs, and obstacles proves to be the real acting subject of our analysis. |
| Keywords: | Self-employment, Gender, Labour Market, Diversity, Household, Entrepreneurship, Inequality, Germany, Logistic Regression. |
| JEL: | J0 J00 Z13 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:58116&r=lab |