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on Labour Economics |
| By: | Cardoso, Ana Rute (IAE Barcelona (CSIC)); Loviglio, Annalisa (Universitat Autònoma de Barcelona); Piemontese, Lavinia (Universitat Autònoma de Barcelona) |
| Abstract: | We analyze the impact of information frictions on workers' wages, contributing to the literature that tested search theory, which has so far focused on labor market frictions in general and not specifically on information asymmetries. Using data for 16 countries from the European Social Survey 2008, we find a sizeable gap between workers' perceptions of the unemployment rate and the actual unemployment rate in the country, which is a meaningful indicator of their misperception of labor market tightness. To handle the interval nature of our outcome of interest, the earnings variable, we estimate interval regressions, as well as ordered probit models. We follow a threefold strategy to tackle potential endogeneity problems, as the model includes: controls for the worker's ability; country-specific fixed effects; the unemployment rate in the region of residence, which might be the benchmark respondents have in mind when reporting their perception of the national unemployment rate and which is known to influence regional wages. Results show that when subjective perceptions overstate the unemployment rate in the country, a one percentage point gap between the perceived and the actual unemployment rate reduces individual wages by 0.4 to 0.7 percent. We discuss a potential mechanism generating this result. A pessimistic view of the labor market leads to concern over own future employment prospects and is thus likely to lower reservation wages; a too optimistic view, in turn, could raise reservation wages, but it would render job finding more difficult. |
| Keywords: | job search, matching, unemployment, frictions, wage dispersion, labor market tightness |
| JEL: | J31 J42 J64 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9070&r=lab |
| By: | Farber, Henry (Princeton University) |
| Abstract: | The Great Recession from December 2007 to June 2009 is associated with a dramatic weakening of the labor market from which, by some measures, it has not completely recovered. I use data from the Displaced Workers Survey (DWS) from 1984-2014 to investigate the incidence and consequences of job loss from 1981-2013. In particular, the 2010, 2012, and 2014 DWSs provide a window through which to examine the experience of job losers in the Great Recession and its aftermath and to compare their experience to that of earlier job losers. These data show a record high rate of job loss in the Great Recession, with almost one in six workers reporting having lost a job in the 2007-2009 period, that has not yet returned to pre-recession levels. The employment consequences of job loss are also very serious during this period with very low rates of reemployment and difficulty finding full-time employment. The reduction in weekly earnings for those job losers during the 2007-2013 period who were able to find new employment are not unusually large by historical standards. |
| Keywords: | job loss, unemployment, wage loss |
| JEL: | J63 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9069&r=lab |
| By: | Marinescu, Ioana E. (Harris School, University of Chicago); Wolthoff, Ronald P. (University of Toronto) |
| Abstract: | How do employers attract the right workers? How important are posted wages vs. other job characteristics? Using data from the leading job board CareerBuilder.com, we show that most vacancies do not post wages, and, for those that do, job titles explain more than 90% of the wage variance. Job titles also explain more than 80% of the across-vacancies variance in the education and experience of applicants. Finally, failing to control for job titles leads to a spurious negative elasticity of labor supply. Thus, our results uncover the previously undocumented power of words in the job matching process. |
| Keywords: | online job search, wages, vacancies, wage variance, occupations, skills |
| JEL: | J31 J63 J64 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9071&r=lab |
| By: | Nicolas Groshenny (School of Economics, University of Adelaide); Francesco Furlanetto (Norges Bank (Central Bank of Norway)) |
| Keywords: | Search and matching frictions; Unemployment; Natural rates. |
| JEL: | E32 C51 C52 |
| URL: | http://d.repec.org/n?u=RePEc:adl:wpaper:2015-14&r=lab |
| By: | Burdett, Ken; Carrillo-Tudela, Carlos; Coles, Melvyn G. |
| Abstract: | In this paper we develop and quantitatively assess a tractable equilibrium search model of the labour market to analyse the long-term wage costs of a job loss. In our framework, these costs occur due to losses in workers' human capital and firm specific compensation, interruptions to workers' on-the-job search and due to turnover heterogeneity. A key feature is that firms post wage-tenure contracts as an optimal response to their employees' search behaviour and human capital accumulation. We estimate the wage losses due to job separation for young workers in the UK and show that our calibrated model fits the observed patterns very well. We use the model to evaluate the importance of each of the components that affect the cost of job loss. Human capital losses exert a strong negative and permanent effect on future wages. The effects of workers' on-the-job search and firms' tenure contracts, although temporary and smaller in size, are long-lasting. It takes workers around 10 years to recover wages through these channels. Human capital losses play a more important role in explaining the extent and persistence of wage losses among low skilled workers. Among high skilled workers, on-the-job search implies re-employment wages start recovering sooner. |
| Date: | 2015–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2015-12&r=lab |
| By: | Fassio, Claudio (Lund University); Montobbio, Fabio (University of Turin); Venturini, Alessandra (University of Turin) |
| Abstract: | This paper uses the French and the UK Labour Force Surveys and the German Microcensus to estimate the effects of different components of the labour force on innovation at the sectoral level between 1994 and 2005. The authors focus, in particular, on the contribution of migrant workers. We adopt a production function approach in which we control for the usual determinants of innovation, such as R&D investments, stock of patents and openness to trade. To address possible endogeneity of migrants we implement instrumental variable strategies using both two-stage least squares with external instruments and GMM-SYS with internal ones. In addition we also account for the possible endogeneity of native workers and instrument them accordingly. Our results show that highly-educated migrants have a positive effect on innovation even if the effect is smaller relative to the positive effect of educated natives. Moreover, this positive effect seems to be confined to the high-tech sectors and among highly-educated migrants from other European countries. |
| Keywords: | innovation, migration, skills, human capital |
| JEL: | O31 O33 F22 J61 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9062&r=lab |
| By: | Fulford, Scott L. (Boston College); Petkov, Ivan (Boston College); Schiantarelli, Fabio (Boston College) |
| Abstract: | The United States provides a unique laboratory for understanding how the cultural, institutional, and human capital endowments of immigrant groups shape economic outcomes. In this paper, we use census micro-sample information to reconstruct the country-of-ancestry distribution for US counties from 1850 to 2010. We also develop a county-level measure of GDP per capita over the same period. Using this novel panel data set, we investigate whether changes in the ancestry composition of a county matter for local economic development and the channels through which the cultural, institutional, and educational legacy of the country of origin affects economic outcomes in the US. Our results show that the evolution of the country-of-origin composition of a county matters. Moreover, the culture, institutions, and human capital that the immigrant groups brought with them and pass on to their children are positively associated with local development in the US. Among these factors, measures of culture that capture attitudes towards cooperation play the most important and robust role. Finally, our results suggest that while fractionalization of ancestry groups is positively related with county GDP, fractionalization in attributes such as trust, is negatively related to local economic performance. |
| Keywords: | immigration, ethnicity, ancestry, economic development, culture, institutions, human capital |
| JEL: | J15 N31 N32 O10 Z10 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9060&r=lab |
| By: | Munkacsi, Zsuzsa |
| Abstract: | I calculate unemployment multipliers of fiscal consolidation policies in a standard, closed-economy New Keynesian framework with search and matching frictions, and, as an innovation, in the presence of sectoral heterogeneity. Family and non-family firms behave differently in the labor market and are differently managed. This latter assumption is modeled by the inclusion of intangible capital in the family sector. The model is calibrated to match European data on countries with a large percentage of family firms in the labor force. I find that fiscal austerity raises unemployment. Both at peak and cumulatively, unemployment reacts least when the budget is consolidated by increasing the rate of value-added tax. At peak, the highest increase in unemployment is induced by a cut in government consumption, but, cumulatively, a hike in employees' labor income tax is just as costly in terms of employment. There are trade-offs, however, which a policymaker must face, as the value-added tax increase results in the steepest decline in consumption. Sectoral heterogeneity is crucial; multipliers of labor income tax policies and government consumption multipliers are usually biased downwards, while the consumption-tax multipliers are often biased upwards. Thus, ignoring sectoral heterogeneity might lead to incorrect policy conclusions. |
| Keywords: | fiscal austerity,government consumption,labor income tax,consumption tax,social security contribution,unemployment multiplier,sectoral heterogeneity,family firms,intangible capital |
| JEL: | E22 E24 E62 J64 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdps:062015&r=lab |
| By: | Gianmarco I.P. Ottaviano; Giovanni Peri; Greg C. Wright |
| Abstract: | This paper explores the impact of immigrants on the imports, exports and productivity of service-producing firms in the U.K. Immigrants may substitute for imported intermediate inputs (offshore production) and they may impact the productivity of the firm as well as its export behavior. The first effect can be understood as the re-assignment of offshore productive tasks to immigrant workers. The second can be seen as a productivity or cost cutting effect due to immigration, and the third as the effect of immigrants on specific bilateral trade costs. We test the predictions of our model using differences in immigrant inflows across U.K. labor markets, instrumented with an enclave-based instrument that distinguishes between aggregate and bilateral immigration, as well as immigrant diversity. We find that immigrants increase overall productivity in service-producing firms, revealing a cost cutting impact on these firms. Immigrants also reduce the extent of country-specific offshoring, consistent with a reallocation of tasks and, finally, they increase country-specific exports, implying an important role in reducing communication and trade costs for services. |
| JEL: | F16 F22 F23 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21200&r=lab |
| By: | van den Berg, Gerard J. (IFAU - Institute for Evaluation of Labour Market and Education Policy); Bozio, Antoine (Paris School of Economics); Costa Dias, Mónica (Institute for Fiscal Studies) |
| Abstract: | Causal effects of a policy change on hazard rates of a duration outcome variable are not identified from a comparison of spells before and after the policy change, if there is unobserved heterogeneity in the effects and no model structure is imposed. We develop a discontinuity approach that overcomes this by considering spells that include the moment of the policy change and by exploiting variation in the moment at which different cohorts are exposed to the policy change. We prove identification of average treatment effects on hazard rates without model structure. We estimate these effects by kernel hazard regression. We use the introduction of the NDYP program for young unemployed individuals in the UK to estimate average program participation effects on the exit rate to work as well as anticipation effects. |
| Keywords: | policy evaluation; hazard rate; identification; causality; regression discontinuity; selectivity; kernel hazard estimation; local linear regression; average treatment effect; job search assistance; youth unemployment |
| JEL: | C14 C25 J64 |
| Date: | 2015–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2015_010&r=lab |
| By: | Thomas Buser (University of Amsterdam, the Netherlands); Anna Dreber (Stockholm School of Economics, Sweden); Johanna Mollerstrom (George Mason University, United States) |
| Abstract: | Women are often less willing than men to compete, even in tasks where there is no gender gap in performance. Also, many people experience competitive contexts as stressful and previous research has documented that men and women sometimes react differently to acute stressors. We use two laboratory experiments to investigate whether factors related to stress can help explain the gender gap in competitiveness. Experiment 1 studies whether stress responses (measured with salivary cortisol and through self-assessment) to taking part in a mandatory competition predict individual willingness to participate in a voluntary competition. We find that while the mandatory competition does increase stress levels, there is no gender difference in this reaction. Cortisol response does not predict willingness to compete for men but is positively and significantly correlated with choosing to enter the voluntary competition for women. In Experiment 2 we exogenously induce stress using the cold-pressor task. We find no causal effect of stress on competitiveness for the sample as a whole and only tentative evidence of a positive effect for women. In summary, even though there are some gender differences in the relation between stress responses and the decision to enter a competition or not, these cannot explain the general gender gap in willingness to compete that is generally found in the literature and which we replicate. |
| Keywords: | gender; competitiveness; stress; cortisol; lab experiment |
| JEL: | C91 D03 J16 J24 J33 |
| Date: | 2015–05–19 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150059&r=lab |
| By: | Ali,Rubaba; Barra,Alvaro Federico; Berg,Claudia N.; Damania,Richard; Nash,John D.; Russ,Jason Daniel |
| Abstract: | This paper addresses an old and recurring theme in development economics: the slow adoption of new technologies by farmers in many developing countries. The paper explores a somewhat novel link to explain this puzzle -- the link between market access and the incentives to adopt a new technology when there are non-convexities. The paper develops a theoretical model to guide the empirical analysis, which uses spatially disaggregated agricultural production data from Spatial Production Allocation Model and Living Standards Measurement Study survey data for Nigeria. The model is used to estimate the impact of transport costs on crop production, the adoption of modern technologies, and the differential impact on returns of modern versus traditional farmers. To overcome the limitation of data availability on travel costs for much of Africa, road survey data are combined with geographic information road network data to generate the most thorough and accurate road network available. With these data and the Highway Development Management Model, minimum travel costs from each location to the market are computed. Consistent with the theory, analysis finds that transportation costs are critical in determining technology choices, with a greater responsiveness among farmers who adopt modern technologies, and at times a perverse (negative) response to lower transport costs among those who employ more traditional techniques. In sum, the paper presents compelling evidence that the constraints to the adoption of modern technologies and access to markets are interconnected, and so should be targeted jointly. |
| Keywords: | Economic Theory&Research,Agricultural Knowledgeand Information Systems,Technology Industry,Transport Economics Policy&Planning,ICT Policy and Strategies |
| Date: | 2015–05–18 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7272&r=lab |