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on Labour Economics |
| By: | Alex Bryson; Richard B. Freeman |
| Abstract: | Many large listed firms offer workers the opportunity to buy shares in the firm at discounted rates through employee stock purchase plans (ESPP). The discounted rate creates a gift exchange, where the firm hopes that workers who accept the gift reciprocate with greater loyalty and effort. But ESPPs diverge from standard gift exchange or efficiency wage models. Employees have to invest some of their own money by purchasing shares at the discounted rate to accept the gift. A sizeable number choose to reject the gift. In addition, the value of the ESPP gift varies with the share price and thus with the performance of the firm and the effort of workers in total. For workers who buy subsidized shares, an ESPP sets up a group incentive pay system analogous to profit sharing, all-employee stock options, or an employment ownership scheme that makes part of workers' compensation depend on company performance. |
| Keywords: | Share ownership, job search, quits, sickness absence, effort, gift exchange, incentives |
| JEL: | J24 J33 J54 J63 M52 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1307&r=lab |
| By: | Brinkman, Jeffrey (Federal Reserve Bank of Philadelphia) |
| Abstract: | The share of high-skilled workers in U.S. cities is positively correlated with city size, and this correlation strengthened between 1980 and 2010. Furthermore, during the same time period, the U.S. economy experienced a significant structural transformation with regard to industrial composition, most notably in the decline of manufacturing and the rise of high-skilled service industries. To decompose and investigate these trends, this paper develops and estimates a spatial equilibrium model with heterogeneous firms and workers that allows for both industry-specific and skill-specific technology changes across cities. The estimates imply that both supply and demand of high-skilled labor have increased over time in big cities. In addition, demand for skilled labor in large cities has increased somewhat within all industries. However, this aggregate increase in skill demand in cities is highly concentrated in a few industries. The finance, insurance, and real estate sectors alone account for 35 percent of the net change over time. |
| Keywords: | Production; Amenities; Cities; Skilled labor |
| JEL: | J21 J61 R12 |
| Date: | 2014–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:14-32&r=lab |
| By: | Canon, Maria E. (Federal Reserve Bank of St. Louis); Pavan, Ronni (University of London) |
| Abstract: | We present a simple on-the-job search model in which workers can receive shocks to their employer-specific c productivity match. Because the firm-specific match can vary, wages may increase or decrease over time at each employer. Therefore, for some workers, job-to-job transitions are a way to escape job situations that worsened over time. The contribution of our paper relies on our novel approach to identifying the presence of the shock to the match specific productivity. The presence two independent measures of workers compensation in our dataset of is crucial for our identification strategy. In the first measure, workers are asked about the usual wage they earn with a certain employer. In the second measure, workers are asked about their total amount of labor earnings during the previous year. While the first measure records the wages at a given point in time, the second measure records the sum of all wages within one year. We calibrate our model using both measures of workers compensation and data on employment transitions. The results show that 59% of the observed wage cuts following job-to- job transitions are due to deterioration of the firm-specific component of wages before workers switch employers. |
| Keywords: | wage dynamics; earnings dynamics; job mobility. |
| JEL: | J3 J6 |
| Date: | 2014–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2014-032&r=lab |
| By: | Johansson, Per (IFAU - Institute for Evaluation of Labour Market and Education Policy); Laun, Lisa (IFAU - Institute for Evaluation of Labour Market and Education Policy); Palme, Mårten (Department of Economics, Stockholm University) |
| Abstract: | We study how economic incentives affect labor force exit through different income security programs, old-age pensions as well as income taxes in Sweden. We use the option value for staying in the labor force as a measure of economic incentives and estimate an econometric model for the choice of leaving the labor market. Besides old-age pension, we focus on the Disability Insurance (DI), which is the most important exit path before age 65. By simulating the effect of different probabilities to be admitted DI we show how changes in the stringency of DI admittance affects labor supply among older workers through economic incentives. |
| Keywords: | Disability Insurance; option value; labor market exit; labor supply |
| JEL: | H55 J14 J26 |
| Date: | 2014–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2014_020&r=lab |
| By: | Taniguchi, Kiyoshi (Asian Development Bank); Tuwo, Alika (World Bank, Jakarta Country Office) |
| Abstract: | Indonesia has been experiencing impressive economic growth and rapid urbanization in recent years. However, urbanization could affect income inequality through people’s movement from rural to urban areas. Using the 2010 National Labor Force Survey (Sakernas) in Indonesia, this study examines how monthly wages are distributed between male and female workers and tests whether a wage gap exists between them. Regression results reveal that urbanization tends to benefit male workers more favorably, in terms of monthly wages, than female workers. The wage gap tends to be wider among younger workers, particularly among those who are underemployed and severely underemployed. It is also greater among public sector workers than those in the private sector. Gender wage gap in Indonesia is mainly due to gender discrimination. An act to equalize opportunity and wages among workers, especially in the public sector, is proposed. |
| Keywords: | gender; wage distribution; gender wage gap; Indonesia; urbanization; inclusive growth; migration |
| JEL: | E24 J16 J31 R23 |
| Date: | 2014–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0404&r=lab |
| By: | Sengul, Gonul (Istanbul School of Central Banking and the Central Bank of the Republic of Turkey); Tasci, Murat (Federal Reserve Bank of Cleveland) |
| Abstract: | This paper measures flow rates into and out of unemployment for Turkey and uses them to estimate the unemployment rate trend, that is, the unemployment rate to which the economy converges in the long run. In doing so, the paper explores the role of labor force participation in determining the unemployment rate trend. We find an inverse V-shaped pattern for Turkey’s unemployment rate trend over time, currently between 8.5 percent and 9 percent, with an increasing labor market turnover. We also find that allowing an explicit role for participation changes the results substantially, initially reducing the â€natural†rate but getting closer to the baseline over time. Finally, we show that this parsimonious model can be used to forecast unemployment in Turkey with relative ease and accuracy. |
| Keywords: | unemployment; unemployment flows; labor force participation; Turkey |
| JEL: | E24 E32 J64 |
| Date: | 2014–10–27 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1422&r=lab |
| By: | Aysit Tansel (Department of Economics, METU; Institute for the Study of Labor (IZA) Bonn, Germany; Economic Research Forum (ERF) Cairo, Egypt); Basak Dalgic (Department of Public Finance, Hacettepe University); Aytekin Güven (Department of Economics, Abant Izzet Baysal University) |
| Abstract: | This paper investigates wage inequality and wage mobility in Turkey using the Surveys on Income and Living Conditions (SILC). This is the first paper that explores wage mobility for Turkey. It differs from the existing literature by providing analyses of wage inequality and wage mobility over various socioeconomic groups such as gender, age, education and sector of economic activity. We first present an overview of the evolution of wages and wage inequality over the period 2005-2011. Next, we compute several measures of wage mobility and explore the link between wage inequality and wage mobility. Further, we compute the transition matrices which show movements of individuals across the wage distribution from one period to another and investigate the determinants of transition probabilities using a multinomial logit model. The results show that overall the real wages increased over the study period and wage inequality exhibits a slight increase.. Wage inequality is one of the highest among the European Union (EU) countries. The wage mobility in Turkey is lower than what is observed in the European Union countries although it increases as time horizon expands. Wage mobility has an equalizing impact on the wage distribution, however; this impact is not substantial enough to overcome the high and persistent wage inequality in Turkey. |
| Keywords: | Wage Inequality, Wage Mobility, Heterogeneity, Turkey. |
| JEL: | D31 D63 J31 J60 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:met:wpaper:1414&r=lab |
| By: | Himmler, Oliver; Jaeckle, Robert |
| Abstract: | Being able to read and write is one of the most important skills in modern economies. Literacy frequently is a prerequisite for employment and its relevance for productivity and wages is magnified by the fact that it is only through literacy that many other skills become usable. More so than for natives, this argument applies to migrants: even those with high levels of human capital acquired in the country of origin often have it rendered worthless by the absence of literacy in the host country language. Using novel data from a large-scale German adult literacy test (LEO - level-one study), we investigate the determinants of literacy and show that migrants have systematically lower language skills than natives. We find that any observed raw employment and wage gaps between natives and migrants can be fully explained by these differences. |
| Keywords: | Literacy, Migration, Employment, Earnings, Wage Gap, Discrimination |
| JEL: | J24 J31 J61 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:58812&r=lab |
| By: | Balkan, Binnur; Tumen, Semih |
| Abstract: | Observationally equivalent workers are paid higher wages in larger firms. This fact is often named as the "firm-size wage gap" and is regarded as a key empirical puzzle. Using micro-level data from Turkey, we document a new stylized fact: the firm-size wage gap is more pronounced for informal (unregistered) jobs than for formal (registered) jobs. To explain this fact, we develop a two-stage wage-posting game with market imperfections and segmented markets, the solution to which produces wages as a function of firm size in a well-defined subgame-perfect equilibrium. The model proposes two explanations. First, taxes on formal employment generate a wedge between formal and informal size wage gaps. Thus, government policy can potentially affect the magnitude of the firm-size wage gaps. The second explanation features a market-based framework with strategic interactions. Relative to small firms, large firms typically post higher wages for both formal and informal jobs they open. A high-wage formal job attracts a larger pool of applicants than a high-wage informal job. The larger pool of applicants for the formal job, in turn, allows the firm to somewhat lower the initial wage offer, while this second-round effect is negligible for informal jobs. As a result, size differentials are lower in formal jobs than informal jobs. We argue that the observed patterns in the use of social connections in job search and heterogeneity in job preferences can be used to justify the validity of this second mechanism. |
| Keywords: | Firm size; wage gap; informal job; wage posting; subgame perfection; taxes; social networks. |
| JEL: | C78 J21 J31 L11 |
| Date: | 2014–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:58565&r=lab |
| By: | Stefan P.T. Groot (Centraal Planbureau, The Hague, the Netherlands); Henri L.F. de Groot (VU University Amsterdam, the Netherlands) |
| Abstract: | This paper employs a unique set of micro-data covering almost one third of the Dutch labor force, to estimate the relationship between agglomeration externalities and the level of education. While the positive relationship between economic density and productivity and wages has long been established in the economic literature, less is known about the effects of density on the productivity of different types of workers. This paper shows that there is substantial heterogeneity in the relationship between density and productivity for workers with different types of education. Apart from estimating the impact of aggregate density, we also estimate whether the composition of the local labor market in terms of education is related to the productivity of different types of workers. Using the presence of universities as an instrument, we estimate the effect of the supply of university graduates on wages, i.e. the social return to education. |
| Keywords: | agglomeration, education, knowledge-spillovers, wages, local labor markets |
| Date: | 2014–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20140088&r=lab |
| By: | Cory Koedel (Department of Economics, University of Missouri-Columbia); P. Brett Xiang |
| Abstract: | We use data on workers in the largest public-sector occupation in the United States – teaching – to examine the effect of pension enhancements on employee retention. Specifically, we study a 1999 enhancement to the pension formula for public school teachers in St. Louis that discretely and dramatically increased their incentives to remain in covered employment. The St. Louis enhancement is substantively similar to enhancements that occurred in other state and municipal pension plans across the United States in the late 1990s and early 2000s. To identify the effect of the enhancement on teacher retention, we leverage the fact that the strength of the incentive increase varied across the workforce depending on how far teachers were from retirement eligibility when it was enacted. The retention incentives for late-career teachers were increased the most by the enhancement but their behavioral response was modest. A cost-benefit analysis indicates that the pension enhancement was not a cost-effective way to improve employee retention |
| Keywords: | public pensions, pension enhancements, municipal pensions, teacher retention |
| JEL: | H75 J33 I22 |
| Date: | 2014–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:1418&r=lab |
| By: | Morescalchi, Andrea |
| Abstract: | Oswald's thesis posits that workers who own their own home should have longer unemployment spells due to restricted mobility, but repeatedly the reverse is found. We contribute to shed light on this puzzle in two key ways. First, we show that the thesis holds when stated in terms of search intensity instead of unemployment. In a job search model with moving costs we show that unemployed homeowners search less than renters. We confirm this result empirically using UK LFS data. Second, we provide evidence that homeowners select search methods associated with shorter unemployment spells, suggesting that they search more effciently. |
| Keywords: | job search, search methods, housing tenure, homeownership, Oswald effect. |
| JEL: | J61 J64 R21 R23 R29 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:59079&r=lab |
| By: | Claudio Lucifora (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Simone Moriconi (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore) |
| Abstract: | In the public debate, poor employment performance has often been associated with the existence of extensive labour market regulations and a lack of commitment to far- sighted public policies. This paper investigates the relation between policy myopia and labour market institutions. We develop a theoretical model in which policy myopia leads an incumbent government to choose institutions that allow the creation of rents in the labour market and reduce resources available to public goods provision and social expenditure. We test these predictions empirically using panel data for 21 OECD countries for the period 1985{2006. We show that policy myopia is associated with more regulated labour markets, lower unemployment benet replacement rates, and smaller tax wedges on labour. |
| Keywords: | Policy myopia, public good provision, labour market institutions |
| JEL: | J64 J88 H11 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie1:def13&r=lab |
| By: | Elmar A. Janssen (University of Paderborn); Rene Fahr (University of Paderborn) |
| Abstract: | We investigate wage effects of deviations from peer group body mass index (BMI) to evaluate the influence of social norms on wages. Our approach allows to show the existence of the influence of the social norm and to disentangle it from any (anticipated) productivity effects associated with deviations from a clinically recommended BMI in certain sections of the weight distribution. Estimates of between-effects models for 9 European countries for the years 1998 to 2001 suggest that the influence of the social norm varies considerably between countries, and wage penalties are rather found for upward deviations from the norm and for men. |
| Keywords: | social norms, discrimination, body mass index, cross-country evidence, wage effects |
| JEL: | I10 J30 J70 M51 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:dispap:04&r=lab |
| By: | Latorre, Maria C. |
| Abstract: | This study analyzes the impact on male and female wages of tariff reform and the reduction of regulatory barriers faced by domestic and foreign firms operating in business services. The study applies the model to Tanzania and develops a data set that distinguishes labor and wages by gender for 52 sectors and four skill categories. The model is the first to incorporate modern trade theory to assess the gender implications of trade reform. Given that the Dixit-Stiglitz framework results in productivity gains from additional varieties of services, the analysis finds that real wages increase across all worker categories. However, the increase in wages is higher for males than for females, because business services use males more intensively than females. The most skilled (female and male) workers, who are also the most intensively used in the business services sectors, benefit more from the real increases in wages. The model illustrates that as the development process continues and developing countries become more business service oriented, these sectors demand more educated workers and their wages will increase relative to those of unskilled workers. The policy conclusion from this model is that it is crucial to invest in the education of females so their human capital increases and their skills are more marketable in business services and other more technologically modern occupations. Otherwise, the wage gap between males and females would likely widen further. |
| Keywords: | Economic Theory&Research,Labor Policies,Labor Markets,Gender and Health,Housing&Human Habitats |
| Date: | 2014–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7073&r=lab |
| By: | Alonso Ortiz, Jorge |
| Abstract: | Employment to population ratios differ markedly across Organization for Economic Cooperation and Development (OECD) countries, especially for people aged over 55 years. In addition, social security features differ markedly across the OECD, particularly with respect to features such as generosity, entitlement ages, and implicit taxes on social security benefits. This study postulates that differences in social security features explain many differences in employment to population ratios at older ages. This conjecture is assessed quantitatively with a life cycle general equilibrium model of retirement. At ages 60–64 years, the correlation between the simulations of this study׳s model and observed data is 0.67. Generosity and implicit taxes are key features to explain the cross-country variation, whereas entitlement age is not. |
| Keywords: | Social security; Retirement; Idiosyncratic labor income risk |
| JEL: | E24 H53 J14 J26 |
| Date: | 2014–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:59614&r=lab |
| By: | Fang, Lei (Federal Reserve Bank of Atlanta); Cara, McDaniel (Peking University) |
| Abstract: | Using data from the Multinational Time Use Study, this paper documents the trends and levels of time allocation, with a focus on home hours, for a relatively large set of industrialized countries during the past 50 years. Three patterns emerge. First, home hours have decreased in both the United States and European countries. Second, female time allocation contributes more to the cross-country difference in both the trends and the levels of market hours and home hours per person. Third, time allocations between the United States and Europe are more similar for the prime-age group than for the young and old groups. |
| Keywords: | time use; home hours; sex; age |
| JEL: | D13 J22 |
| Date: | 2014–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2014-05&r=lab |
| By: | Helge Braun; Björn Brügemann |
| Abstract: | We study welfare effects of public short-time compensation (STC) in a model in which firms respond to idiosyncratic profitability shocks by adjusting employment and hours per worker. Introducing STC substantially improves welfare by mitigating distortions caused by public UI, but only if firms have access to private insurance. Otherwise firms respond to low proprofitability by combining layoffs with long hours for remaining workers, rather than by taking up STC. Optimal STC is substantially less generous than UI even when firms have access to private insurance, and equally generous STC is worse than not offering STC at all. |
| Keywords: | Short-Time Compensation, Unemployment Insurance, Welfare |
| JEL: | J65 |
| Date: | 2014–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:kls:series:0077&r=lab |
| By: | Eva Moreno-Galbis; Ahmed Tritah |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:tep:teppwp:wp14-09&r=lab |