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on Labour Economics |
| By: | Christopher L. Foote; Richard W. Ryan |
| Abstract: | Job losses during the Great Recession were concentrated among middle-skill workers, the same group that over the long run has suffered the most from automation and international trade. How might long-run occupational polarization be related to cyclical changes in middle-skill employment? We find that middle-skill occupations have traditionally been more cyclical than other occupations, in part because of the volatile industries that tend to employ middle-skill workers. Unemployed middle-skill workers also appear to have few attractive or feasible employment alternatives outside of their skill class, and the drop in male participation rates during the past several decades can be explained in part by an erosion of middle-skill job opportunities. Taken together, these results imply that a formal labor market model relating polarization to middle-skill employment fluctuations should include industry-level employment effects and a labor force participation margin as well as pure job-search considerations. The results thus provide encouragement for a growing literature that integrates "macro-labor" search models with "macro-macro" models featuring differential industry cyclicalities and convex preferences over consumption and leisure. |
| JEL: | E24 J22 J23 J24 J62 J63 J64 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21030&r=lab |
| By: | Mette Foged (University of Copenhagen); Giovanni Peri (UC Davis) |
| Abstract: | Using longitudinal data on the universe of workers in Denmark during the period 1991-2008 we track the labor market outcomes of low skilled natives in response to an exogenous inflow of low skilled immigrants. We innovate on previous identification strategies by considering immigrants distributed across municipalities by a refugee dispersal policy in place between 1986 and 1998. We find that an increase in the supply of refugee-country immigrants pushed less educated native workers (especially the young and low-tenured ones) to pursue less manual-intensive occupations. As a result immigration had positive effects on native unskilled wages, employment and occupational mobility. |
| Keywords: | Refugees, dispersal policy, manual skills, employment, wages |
| JEL: | F22 J24 J61 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1507&r=lab |
| By: | Iga Magda; David Marsden; Simone Moriconi |
| Abstract: | In this paper we use the national samples from the European Structure of Earnings Survey (ESES) to analyze the evolution of the wage premium of firm- and industry-level agreements in the Czech Republic, Hungary, and Poland (the CE3) around the time of their accession to the EU. We find that despite a generalized reduction in union coverage in these countries, the union wage premium after accession to the EU became bigger and statistically more significant. This is particularly the case for Poland and Hungary, where in the years immediately following EU accession a wage premium associated with industry-level agreements emerged which mostly applied to low-income workers ages 30 and older. We interpret these findings in terms of the institutional reforms that occurred in the CE3 between 2002 and 2006. These reforms, which were prompted by the EU Commission’s requirements for EU accession, increased the social partners' ability to bargain and enforce wage agreements, and made industry-level unions more effective in guaranteeing the protections provided by labor standards. |
| Keywords: | institutional change, unions, wages |
| JEL: | J51 J31 P2 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:ibt:wpaper:wp082015&r=lab |
| By: | Michael Amior |
| Abstract: | The skill gap in geographical mobility is entirely driven by workers who report moving for a new job. A natural explanation lies in the large expected surplus accruing to skilled job matches. Just as large surpluses ease the frictions which impede job search in general, they also help overcome those frictions (specifically moving costs) which plague cross-city matching in particular. I reject the alternative hypothesis that mobility differences are driven by variation in the moving costs themselves, based on PSID evidence on self-reported willingness to move. Evidence on wage processes also supports my claims. |
| Keywords: | internal migration; job search; education; skills |
| JEL: | J24 J61 J64 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:61279&r=lab |
| By: | Andri Chassamboulli (University of Cyprus); Giovanni Peri (UC Davis) |
| Abstract: | A controversial issue in the US is how to reduce the number of illegal immigrants and what effect this would have on the US economy. To answer this question we set up a two-country model with search in labor markets and featuring legal and illegal immigrants among the low skilled. We calibrate it to the US and Mexican economies during the period 2000-2010. As immigrants, especially illegal ones, have a worse outside option than natives their wages are lower. Hence their presence reduces the labor cost of employers who, as a consequence, create more jobs per unemployed when there are more immigrants. Because of such effect our model shows that increasing deportation rates and tightening border control weakens the low-skilled labor markets, increasing unemployment of native low skilled. Legalization, instead decreases the unemployment rate of low-skilled natives and it increases income per native. |
| Keywords: | job creation, search costs, illegal immigrants, border controls, deportations, legalization, unemployment, wages |
| JEL: | F22 J61 J64 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1506&r=lab |
| By: | Francesca Carta (Bank of Italy); Marta De Philippis (Bank of Italy) |
| Abstract: | This paper explores the effects of husbands' commuting time on their wives' labour market participation and on family time allocation. We develop a unitary family model of labour supply, which includes commuting times and household production. In a pure leisure model longer commuting time for husbands increases their wives' labour market participation and reduces their own working hours. However, a model that includes household production might determine the exact opposite result. We then examine the sign of these effects by using data from the German Socio-Economic Panel from 1997 to 2010. Employer-induced changes in home to work distances allow us to deal with endogeneity of commuting times. We find that a 1% increase in a husband's commuting distance reduces his wife's probability of participating in the labour force by 1.7 percentage points, 2% over the mean. Moreover, it increases his working hours by 0.2 hours per week. The average effect masks substantial heterogeneity: lower participation rates are concentrated in couples with children and where the husband has higher levels of education. |
| Keywords: | household production, gender economics, time allocation and labour supply, commuting time |
| JEL: | D13 J16 J21 J22 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1003_15&r=lab |
| By: | Samuel Mühlemann (University of Munich & IZA Bonn); Mirjam Strupler Leiser (University of Bern) |
| Abstract: | This paper provides new empirical evidence on the magnitude and the determinants of a firm's costs to fill a vacancy. We establish empirical facts about hiring costs based on representative establishment-level data from Switzerland. In 2009, average costs to fill a vacancy for a skilled worker in Switzerland amount about 16 weeks of wage payments. The main components of vacancy costs are initially low productivity and formal instruction of a new hire (53 percent), disruption costs that arise due to informal instruction of new hires (26 percent) and search costs (21 percent). Furthermore, hiring costs are associated with labor market tightness: a one standard deviation increase in the growth rate of the vacancy-unemployment ratio is associated with a 11 percent increase in average hiring costs for small firms. |
| Keywords: | hiring costs, search costs, adaptation costs, disruption costs, vacancy-unemployment ratio |
| JEL: | J32 J63 M53 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:iso:educat:0111&r=lab |
| By: | Juan F. Jimeno (Banco de España); Marta Martínez-Matute (Banco de España); Juan S. Mora-Sanguinetti (Banco de España) |
| Abstract: | Labor courts may introduce a significant wedge between “legal” firing costs and “effective” (post-trial) firing costs. Apart from procedural costs, there is uncertainty over judges’ rulings, in particular over the likelihood of a “fair” dismissal ultimately being ruled as “unfair”, which may increase firing costs significantly. In 2010 and 2012, reforms of Employment Protection Legislation widened the definition of fair economic dismissals in Spain. In this paper we look at Labor Court rulings on dismissals across Spanish provinces before and after the EPL reforms (2004-2014). We make this comparison taking into account a set of co-variates (local labor market conditions, characteristics of the Labor Courts, pre-trial conciliations, congestion of Labor Courts) which may determine the selection of dismissal cases ruled by Labor Courts. Our results suggest that, despite the 2010 and 2012 EPL reforms, the proportion of economic redundancies being ruled as fair by Labor Courts has not substantially increased, although it is now less negatively associated with the local unemployment rate than in the pre-reform period. |
| Keywords: | employment protection legislation, firing costs, unemployment. |
| JEL: | J52 J53 K31 K41 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1507&r=lab |
| By: | Pierre-Philippe Combes (Groupement de Recherche en Économie Quantitative d'Aix-Marseille); Sylvie Démurger (CNRS); Shi Li |
| Abstract: | We analyse the impact of internal migration in China on natives’ labour market outcomes. We find evidence of a large positive correlation of the city share of migrants with natives’ wages. Using different sets of control variables and instruments suggests that the effect is causal. The large total migrant impact (+10% when one moves from the first to the third quartile of the migrant variable distribution) arises from gains due to complementarity with natives in the production function (+6.4%), and from gains due to agglomeration economies (+3.3%). Finally, we find some evidence of a stronger effect for skilled natives than for unskilled, as expected from theory. Overall, our findings support large nominal wage gains that can be expected from further migration and urbanisation in China. |
| Keywords: | migration; urban development; agglomeration economies; wage disparities; China. |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/6n1ke9ea1o83aqc0oducs7vd1q&r=lab |
| By: | Singleton, Carl; Schaefer, Daniel |
| Abstract: | We apply well-known results of the econometric learning literature to a standard RBC model with unemployment. The unique REE is always expectationally stable with decreasing gain learning, and this result is robust to over-parametrisation of the econometric model relative to the minimum state variable form used by agents (Strong E-stability). And so, from this perspective, the assumption of rational expectations in the Mortensen-Pissarides is not unreasonable. Using a parametrisation with UK data, simulations suggest that the implied rate of convergence to the rational expectations equilibrium (REE) with least squares learning is however slow. The cyclical response of unemployment to structural shocks is muted under learning, and a parametrisation which guarantees root-t convergence is generally not consistent with attempts to match the observed volatility of labour market data using the standard model. |
| Keywords: | Real business cycle, unemployment, adaptive learning, expectational stability |
| JEL: | D83 E24 E32 J64 |
| Date: | 2015–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:63162&r=lab |
| By: | Joan Monras (Département d'économie) |
| Abstract: | How does the US labor market absorb low-skilled immigration? I address this question using the 1995 Mexican Peso Crisis, an exogenous push factor that raised Mexican migration to the US. In the short run, high-immigration states see their low-skilled labor force increase and native low-skilled wages decrease, with an implied local labor demand elasticity of -.7. Internal relocation dissipates this shock spatially. In the long run, the only lasting consequences are for low-skilled natives who entered the labor force in high-immigration years. A simple quantitative many-region model allows me to obtain the counterfactual local wage evolution absent the immigration shock. |
| Keywords: | International and internal migration, local shocks, local labor demand elasticity. |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/31alui3q4c913als7a73udp5dv&r=lab |
| By: | James P. Ziliak |
| Abstract: | In this chapter I provide a brief history of the TANF program, including changes made as part of the 2005 Deficit Reduction Act. I then present a variety of program statistics, including trends in aggregate and state-level caseloads and spending, along with changes in the demographic composition of the program, especially the shift from adult with child cases to child-only cases. I also highlight the changing composition of spending on the program from cash assistance to in-kind assistance, and the challenges faced in documenting total (cash + in-kind) caseloads and spending. I follow this with a discussion of the behavioral issues surrounding TANF, including the four program goals and possible modifications as part of the 2014 reauthorization legislation, and then I provide a systematic review of the research evidence on whether those goals have been met. |
| JEL: | H53 I3 J1 J13 J22 J24 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21038&r=lab |
| By: | Francesco Figari; Edlira Narazani |
| Abstract: | It is widely recognized that childcare has important pedagogical, economic and social effects on both children and parents. This paper is the first attempt to estimate a joint structural model of labour supply and childcare decision applied to Italy. Such an approach is particularly informative given that it allows one to estimate the changes in family choices under different policy simulation scenarios, evaluating the effects on labour supply and childcare usage and the potential consequences for household income.We analyse how maternal labour supply and childcare usage can be affected by relaxing the existing constraints in terms of childcare availability and costs by considering public, private and informal childcare, with related imputed availability and costs and their interaction with the whole tax-benefit system.Due to the regional differences, costs and effects are highly differentiated among different areas of the country. Results suggest that Italian households might alter their childcare and labour supply decisions substantially if the coverage rate of formal childcare increases, in particular if the increase would correspond to the increase needed to reach the European target in the Southern regions. Overall, increasing child care coverage is estimated to be more effective in enhancing labour incentives than decreasing existing child care costs, at the same budgetary cost. However, the potential effects on the disposable income are larger in the latter scenario because decreasing the childcare costs is beneficial also for women who do not change their labour supply behaviour. |
| Keywords: | childcare, female labour market participation, labour supply, Italy |
| JEL: | H53 J13 J22 I38 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:hdl:improv:1509&r=lab |