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on Labour Economics |
| By: | Nikolas Mittag |
| Abstract: | Models with high dimensional sets of fixed effects are frequently used to examine, among others, linked employer-employee data, student outcomes and migration. Estimating these models is computationally difficult, so simplifying assumptions that cause bias are often invoked to make computation feasible and specification tests are rarely conducted. I present a simple method to estimate large two-way fixed effects (TWFE) and worker-firm match effect models without additional assumptions. It computes the exact OLS solution including estimates of the fixed effects and makes testing feasible even with multi-way clustered errors. An application using German linked employer-employee data illustrates the advantages: The data reject the assumptions of simpler estimators and omitting match effects biases estimates including the returns to experience and the gender wage gap. Specification test detect both problems. Firm fixed effects, not match effects, are the main channel through which job transitions drive wage dynamics, which underlines the importance of firm heterogeneity for labor market dynamics. |
| Keywords: | multi-way fixed effects; linked employer-employee data; matching, wage dynamics; |
| JEL: | J31 J63 C23 C63 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp532&r=lab |
| By: | Bjuggren, Carl Magnus (Research Institute of Industrial Economics (IFN)) |
| Abstract: | The theoretical predictions of how employment protection affects firm productivity are ambiguous. In this paper I study the effect of employment protection rules on labor productivity using micro data on Swedish firms. A reform of the employment protection rules in 2001 made it possible for small firms with less than eleven employees to exempt two workers from the seniority rules. I exploit the reform as a natural experiment. My results indicate that increased labor market flexibility increases labor productivity. The increase appears to be driven mainly by the older and the smallest firms. It is not explained by capital intensity or the educational level of workers. |
| Keywords: | Employment Protection; Labor Market Regulations; Labor Productivity; Last-in-First-out Rules |
| JEL: | D22 J23 J24 J32 J38 K31 M51 |
| Date: | 2015–03–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1061&r=lab |
| By: | Akgüc, Mehtap (Center for European Policy Studies (CEPS)); Ferrer, Ana (University of Waterloo) |
| Abstract: | Using a recent survey of immigrants to France, we provide a detailed analysis of the educational attainment and labor market performance of various sub-population groups in France. Our results indicate that immigrants to France are less educated than the native born and that these differences can be tracked down to differences in socioeconomic background for most groups of immigrants. Similarly, there is a significant wage gap between immigrant and native-born workers, but this is reduced and sometimes disappears after correcting for selection into employment. In most cases the remaining differences in education and labor market outcomes seem related to the area of origin of the immigrant as well as where the education of the immigrant is obtained. |
| Keywords: | immigration, France, labor market performance of immigrants, educational attainment |
| JEL: | F22 J15 J61 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8925&r=lab |
| By: | Adrian Chadi (Institute for Labour Law and Industrial Relations in the EU, University of Trier); Laszlo Goerke (Institute for Labour Law and Industrial Relations in the EU, University of Trier) |
| Abstract: | Economists often interpret absenteeism as an indicator of effort. Using data from the German Socio-Economic Panel (SOEP) study, this paper offers a comprehensive discussion of this view by analysing various forms of job mobility. The evidence reveals a significantly negative (positive) link between sickness-related absence and the probability of a subsequent promotion (dismissal). In line with the interpretation of absenteeism as a proxy for effort, instrumental variable analyses suggest no causal impact of absence behaviour on the likelihood of such career events when variation in illness-related absence is triggered exogenously. We observe no consistent gender differences in the link between absence and subsequent career events. |
| Keywords: | dismissal, gender difference, German Socio-Economic Panel (SOEP), instrumental variables, job mobility, promotion, sickness-related absence |
| JEL: | J16 J22 J63 M51 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:iaa:dpaper:201504&r=lab |
| By: | Beissinger, Thomas (University of Hohenheim); Chusseau, Nathalie (University of Lille 1); Hellier, Joël (LEMNA - University of Nantes) |
| Abstract: | A usual interpretation of the high performance of the German economy since 2005 is that the Hartz labour market reforms have boosted German competitiveness, resulting in higher exports, higher production and lower unemployment. This explanation is at odds with the sequence of observed facts. We propose and model an alternative scenario in which offshoring explains the gains in competitiveness but increases unemployment and inequality, and the subsequent labour market reforms lower unemployment by lessening the reservation wage and expanding the non-tradable sector. The model replicates the developments of the German economy since 1995: 1) Germany offshores more intensively than other advanced countries; 2) The increase in competitiveness and in the exports/production ratio occurs before the implementation of the labour market reform, and this comes with both higher inequality and higher unemployment; 3) The implementation of the reform reduces unemployment, but also decreases the exports/production ratio and increases inequality. The model also predicts that the reduction in unemployment in Germany would have occurred without the Hartz reforms, but later and less intensively. We finally discuss the possible extension of this 'strategy' to other Eurozone countries, and alternative policies that activate similar mechanisms without increasing inequality. |
| Keywords: | Germany, inequality, labour market reform, offshoring, unemployment |
| JEL: | H55 J31 J65 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8920&r=lab |
| By: | Topal, Pinar |
| Abstract: | This paper investigates whether a fiscal stimulus implies a different impact for flexible and rigid labour markets. The analysis is done for 11 advanced OECD economies. Using quarterly data from 1999 to 2013, I estimate a panel threshold structural VAR model in which regime switches are determined by OECD's employment protection legislation index. My empirical results indicate significant differences between rigid and flexible labour markets regarding the impact of the fiscal stimulus on output and unemployment. While the impulse response of real GDP to a government spending shock is positive and more effective in flexible labour markets, it has less impact in the rigid ones. Moreover, it is found that a fiscal stimulus leads to higher overall unemployment in highly regulated countries. |
| Keywords: | fiscal policy,labour economics,labour market policies,panel VAR,non-linear VAR,impulse response analysis |
| JEL: | E62 H30 J01 J08 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:90&r=lab |
| By: | Pastore, Francesco (University of Naples II) |
| Abstract: | This essay aims to discuss the conditions for a successful implementation of the European Youth Guarantee in Italy. In principle, the program should be able to affect the frictional and mismatch components of unemployment, if not the Keynesian and neoclassical ones, as also the experience of Scandinavian countries suggests. However, this requires an in-depth transformation of the entire school-to-work transition system, involving not only public employment services, but also educational and training systems. To tackle the Keynesian and neoclassical components of unemployment, instead, it is vital to rethink the European austerity and reduce the labor wedge. |
| Keywords: | European Youth Guarantee, European Social Model, school-to-work transition, youth unemployment, youth experience gap, Keynesian unemployment, neoclassical unemployment, mismatch and frictional unemployment, Italy |
| JEL: | E12 E62 H52 J13 J24 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8921&r=lab |
| By: | d'Agostino, Giorgio; Pieroni, Luca; Scarlato, Margherita |
| Abstract: | In this paper, we assess the effects of the Italian labour market reforms which began in 2001 and which led to widespread deployment of temporary work contracts. Using a hitherto unexploited administrative dataset of work histories for the period 2003-2010, we estimate transition probabilities in the states of non-employment and employment and find a small positive effect on job creation, imputed to the reforms. Estimates also indicate a large increase in transitions to temporary contracts, which offset the reduction in permanent employment flows, although transition probabilities for men and women explain little heterogeneity. While we do find a substitution effect of the reforms on the transition between temporary and permanent contracts, the increased probability of being employed in temporary jobs mostly involved young people and workers in the depressed areas of the south of Italy. |
| Keywords: | Labour market policy; Atypical contract; Panel data; Inverse probability of weighting estimator |
| JEL: | C33 J41 J58 J64 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:63239&r=lab |
| By: | Delia Furtado (University of Connecticut) |
| Abstract: | While there is debate regarding the magnitude of the impact, immigrant inflows are generally understood to depress wages and increase employment in immigrant-intensive sectors. In light of the over-representation of the foreign-born in the childcare industry, this paper examines whether college-educated native women respond to immigrant-induced lower cost and potentially more convenient childcare options with increased fertility. An analysis of U.S. Census data between 1980 and 2000 suggests that immigrant inflows are indeed associated with increased likelihoods of having a baby, and responses are strongest among women who are most likely to consider childcare costs when making fertility decisions—namely, married women and women with a graduate degree. Given that woman also respond to immigrant inflows by working long hours, the paper ends with an analysis of the types of women who have stronger fertility relative to labor supply responses to immigration. |
| Keywords: | Fertility, child care, immigration, labor supply |
| JEL: | D10 F22 J13 J22 R23 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2015-01&r=lab |
| By: | Falck, Oliver (Ifo Institute for Economic Research); Lameli, Alfred (University of Marburg); Ruhose, Jens (Ifo Institute for Economic Research) |
| Abstract: | Ever since Sjaastad (1962), researchers have struggled to quantify the psychic costs of migration. We monetize psychic cost as the wage premium for moving to a culturally different location. We combine administrative social security panel data with a proxy for cultural difference based on historical dialect dissimilarity between German counties. Conditional on geographic distance and pre-migration wage profiles, we find that migrants demand a (indexed with respect to local rents) wage premium of about 1 (1.5) percent for overcoming one standard deviation in cultural dissimilarity. The effect is driven by males and those who earn above average occupational wages before migration, more pronounced for geographically short moves, and persistent over time. |
| Keywords: | migration costs, culture, internal migration, psychic cost |
| JEL: | D51 J61 R23 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8922&r=lab |
| By: | Can, Raif |
| Abstract: | The findings of the existing literature on the relationship between employment protection legislation and the unemployment rate are mixed. This study analyzes the relationship between employment protection legislation measured by the OECD Employment Protection Index and the unemployment rate between 2001 and 2008. After controlling country fixed effects, I find that more stringent employment protection legislation may not be a significant factor for higher a unemployment rate. The estimated model included output gap, government size, openness of the economy, real minimum wages, urbanization rate, population density, population, unemployment benefit generosity, and tax wedge as explanatory variables. I find that the output gap, as a measure of business cycle, and government size are significant factors determining the unemployment rate in selected 15 OECD countries. These findings suggest that employment protection legislation, especially in developed countries, may not be affective policy instrument for policy makers when combating unemployment. |
| Keywords: | Employment protection, unemployment, labor market flexibility |
| JEL: | J65 J68 J83 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:63329&r=lab |
| By: | Nie, Peng (University of Hohenheim); Otterbach, Steffen (University of Hohenheim); Sousa-Poza, Alfonso (University of Hohenheim) |
| Abstract: | Using several waves of the China Health and Nutrition Survey (CHNS), this study analyzes the effect of long work hours on health and lifestyles in a sample of 18- to 65-year-old Chinese workers. Although working long hours does significantly increase the probabilities of high blood pressure and poorer reported health, the effects are small. Also small are the negative effects of long work hours on sleep time, fat intake, and the probabilities of sports participation or watching TV. We find no positive association between work time and different measures of obesity and no evidence of any association with calorie intake, food preparation and cooking time, or the sedentary activities of reading, writing, or drawing. In general, after controlling for a rich set of covariates and unobserved individual heterogeneity, we find little evidence that long work hours affect either the health or lifestyles of Chinese workers. |
| Keywords: | long work hours, health, lifestyle, China |
| JEL: | I10 I12 J22 J81 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8911&r=lab |
| By: | Jørgen Modalsli (Statistics Norway) |
| Abstract: | There are large differences in intergenerational mobility between countries. However, little is known about how persistent such differences are, and how they evolve over time. This paper constructs a data set of 835,537 linked father-son pairs from census records and documents a substantial increase in intergenerational occupational mobility in Norway between 1865 and 2011. The increase is most pronounced in nonfarm occupations. The findings show that long-run mobility developments previously described for the US and UK are not necessarily representative for other countries, and that high mobility in a given country today need not reflect high mobility before industrialization. |
| Keywords: | Intergenerational mobility; Occupations; Mobility measurement; Economic history |
| JEL: | J62 N33 N34 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:798&r=lab |
| By: | Arthur Schram; Jordi Brandts; Klarita Gërxhani |
| Abstract: | Competition typically involves two main dimensions, a rivalry for resources and the ranking of relative performances. If socially recognized, the latter yields a ranking in terms of social status. The rivalry of resources resulting from interacting under a competitive incentive scheme has been found to negatively affect women’s performance relative to that of men. However, little is known about gender differences in the performance consequences of status ranking. We find that in anticipation of ranking women perform more poorly than men while there is no performance difference without status ranking. This is important because recent studies argue that women may be underrepresented in top positions because they shy away from –and sometimes underperform under– competition. It has been argued that adapting the institutions under which competition takes place could improve women’s position. Our results suggest that increased participation in competitive environments could harm women’s labor market success along a different channel. We thus highlight an overlooked impediment for workplace promotion of women that may have major implications for the design of labor market competitions. |
| Keywords: | status, competition, gender, experiments |
| JEL: | C91 J16 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:817&r=lab |
| By: | Ekrame BOUBTANE (Centre d'Etudes et de Recherches sur le Développement International); Dramane COULIBALY; Hippolyte D'ALBIS |
| Abstract: | This paper quantitatively assesses the interaction between permanent immigration into France and France's macroeconomic performance as seen through its GDP per capita and its unemployment rate. It takes advantage of a new database where immigration is measured by the flow of newly- issued long-term residence permits, categorized by both the nationality of the immigrant and the reason of permit issuance. Using a VAR model estimation of monthly data over the period 1994-2008, we find that immigration flow significantly responds to France's macroeconomic performance: positively to the country's GDP per capita and negatively to its unemployment rate. At the same time, we find that immigration itself increases France's GDP per capita, particularly in the case of family immigration. This family immigration also reduces the country's unemployment rate, especially when the families come from developing countries. |
| Keywords: | immigration, Female and Family Migration, growth, Unemployment, VAR Models |
| JEL: | J61 F22 E20 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:cdi:wpaper:1662&r=lab |
| By: | Bassanini, Andrea (OECD); Brunello, Giorgio (University of Padova); Caroli, Eve (Université Paris-Dauphine) |
| Abstract: | We investigate the role of local social pressure in shaping the geographical pattern of firms' firing decisions. Using French linked employer-employee data, we show that social pressure exerted by the local communities where firms' headquarters are located induces CEOs to refrain from dismissing at short distance from their headquarters. More specifically, we find that, within firms, secondary establishments located further away from headquarters have higher dismissal rates than those located closer, taking into account the possible endogeneity of plant location. We also find that the positive effect of distance on dismissals increases with the visibility of the firm in the local community of its headquarters. These effects are stronger the greater the degree of selfishness of the community in which the headquarters are located. This suggests that local social pressure at headquarters is a key determinant of the positive relationship between distance to headquarters and dismissals. We show that our results cannot be entirely accounted for by alternative explanations of the distance-dismissal relationship that are put forward in the literature – e.g. monitoring costs or asymmetric information. |
| Keywords: | social pressure, layoffs, adjustment costs, selfishness, firm visibility, distance to headquarters |
| JEL: | J23 J63 M51 R12 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8910&r=lab |
| By: | Sara Cools; Rannveig Kaldager Hart (Statistics Norway) |
| Abstract: | While fertility is positively correlated across generations, the causal effect of children's experience with larger sibships on their own fertility in adulthood is poorly understood. Using the sex composition of the two first-born children as an instrumental variable, we estimate the effect of sibship size on adult fertility. Estimations are done on high-quality data from Norwegian administrative registers. Our study sample is all first- or second-borns during the 1960s in Norwegian families with at least two children (approximately 110 000 men and 104 000 women). An additional sibling has a positive effect on male fertility, both by shifting some men into fatherhood and increasing family size. For women, a negative quantum effect emerges, driven by a preference for two rather than three children among women from three-child families. Studying mediators we show that mothers of girls shift relatively less time from market to family work when an additional child is born. We speculate that this scarcity in parents' time makes girls aware of the strains of life in large families, leading them to limit their own number of children in adulthood. |
| Keywords: | Fertility; Intergenerational Transmission; Instrumental Variables |
| JEL: | C26 J13 J22 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:802&r=lab |
| By: | Synøve N. Andersen; Nina Drange; Trude Lappegård (Statistics Norway) |
| Abstract: | This paper assesses the relationship between cash transfers to families and subsequent childbearing. We take advantage of a cash-for-care (CFC) policy introduced in Norway in 1998, and compare the fertility behaviour of eligible and ineligible mothers over a four year period. Contrary to theoretical expectations, the results show that CFC eligible mothers had a slower progression to both second and third births, and short term fertility is hence lower in this group. The patterns differ somewhat between different groups of mothers, and there seems to be a polarisation between nonemployed mothers and mothers without upper secondary education, on one hand, and employed mothers and mothers with upper secondary and higher education, on the other. We suggest that this pattern may be driven by an interaction between the CFC benefit and the Norwegian parental leave scheme. |
| Keywords: | Fertility; Family policy; Cash for care |
| JEL: | J10 J13 J18 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:800&r=lab |
| By: | Lisi, Gaetano; Pugno, Maurizio |
| Abstract: | Economic growth and unemployment exhibit an ambiguous relationship – according to empirical studies. This ambiguity can be investigated by observing the role of the underground economy in shaping the productivity of firms. Indeed, unemployment may be absorbed by underground firms, which adopt backward technology, at the cost of reduced economic growth. Alternatively, unemployment diminishes because productivity grows by employing workers who prefer to become skilled, and thus not to work in underground firms. This paper develops these arguments by using a matching model with underground firms and heterogeneous entrepreneurial ability, and by assuming skill-driven growth. Economic growth thus becomes endogenous, and both the underground sector and unemployment become persistent. The main result is that, under conditions of strict monitoring of the regularity of firms, the underground economy is squeezed, unemployment is reduced, and growth is high, whereas in the case of lax monitoring, the underground economy expands, unemployment is absorbed, and growth is low. |
| Keywords: | unemployment, underground firms, entrepreneurship, endogenous growth, human capital, education, matching models. |
| JEL: | E26 J24 J64 L26 |
| Date: | 2015–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:63336&r=lab |