|
on Labour Economics |
| By: | Oliver Denk |
| Abstract: | Public questioning about the role of finance has been fuelled by the perception that financial sector pay is an important factor behind high economic inequalities. This paper is the first to provide a comprehensive look at the level of earnings in finance and the implications for labour income inequality for European countries. Financial sector workers are shown to make up 19% among the top 1% earners, although the overall employment share of finance is only 4%. Nonetheless, the relatively small size of the sector limits the contribution that financial sector pay has on income inequality to a small, but noticeable amount. Simulations indicate that most of this contribution is explained by financial institutions paying salaries and bonuses which are above what employees with similar profiles get in other sectors. Estimations that allow for heterogeneity across workers reveal that this wage premium is more than twice as high for financial sector workers at the top of the distribution than at the bottom. The labour market in finance displays other symptoms of imperfection, with, for example, male financial sector workers earning a large wage premium over female financial sector workers, again especially at the top.<P>Rémunérations du secteur financier et inégalités des revenus du travail : Données d'observation en Europe<BR>Les interrogations dans l’opinion sur le rôle de la finance se sont nourries du sentiment que les rémunérations dans ce secteur sont un élément important des fortes inégalités économiques. Ce document est le premier à donner une vue d’ensemble du niveau des rémunérations dans la finance et de leurs implications pour les inégalités des revenus du travail dans les pays européens. Il s’avère que les travailleurs du secteur financier constituent 19 % des 1 % de salariés les mieux rémunérés, alors que la part de ce secteur dans l’emploi total n’est que de 4 %. Néanmoins, sa taille relativement modeste fait que son impact sur les inégalités de revenu est réduit, mais visible. Les simulations réalisées montrent que cet impact s’explique essentiellement par les rémunérations et les primes versées par les établissements financiers, supérieures à celles des salariés au profil comparable des autres secteurs. Des estimations qui tiennent compte de l’hétérogénéité entre les travailleurs montrent que cet avantage de salaire du secteur financier est, en haut de la distribution, deux fois plus élevé qu’en bas. Le marché du travail dans la finance révèle d’autres signes d’imperfection, notamment le fait que les travailleurs masculins y bénéficient d’un avantage de salaire conséquent par rapport à leurs homologues femmes, là encore tout particulièrement en haut de la distribution. |
| Keywords: | income inequality, finance, European Union, Wage premium, gender inequality, earnings, Gini coefficient, wage differential, coefficient de Gini, finance, inégalités de revenu, avantage salarial, surqualification, Inégalités de genre, Union européenne |
| JEL: | D63 G21 G22 J16 J24 J31 |
| Date: | 2015–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1225-en&r=lab |
| By: | Timo Bettendorf; Miguel A. Leon-Ledesma |
| Abstract: | German labor market reforms in the 1990s and 2000s are generally believed to have driven the large increase in the dispersion of current account balances in the Euro Area. We investigate this hypothesis quantitatively. We develop an open economy New Keynesian model with search and matching frictions from which we derive robust sign restrictions for a wage bargaining shock. We then impose these restrictions on a Global VAR consisting of Germany and 8 EMU countries to identify a wage bargaining shock in Germany. Our results show that, although the German current account was significantly affected by wage bargaining shocks, their contribution to European current account imbalances was negligible. We conclude that the reduction in bargaining power of German unions after labor market reforms cannot be the lone driver of European imbalances. |
| Keywords: | European imbalances; German wage moderation; DSGE; Global VAR; sign restrictions |
| JEL: | F10 F32 F41 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:ukc:ukcedp:1510&r=lab |
| By: | Esther Ann Bøler; Beata Javorcik; Karen Helene Ulltveit-Moe |
| Abstract: | While the impact of globalization on income inequality has received a lot of attention, little is known about its effect on the gender wage gap (GWG). This study argues that there is a systematic difference in the GWG between exporting firms and non-exporters. By the virtue of being exposed to higher competition, exporters require greater commitment and flexibility from their employees. If commitment is not easily observable and women are perceived as less committed workers than men, exporters will statistically discriminate against female employees and will exhibit a higher GWG than non-exporters. We test this hypothesis using matched employer-employee data from the Norwegian manufacturing sector from 1996 to 2010. Our identification strategy relies on an exogenous shock, namely, the legislative changes that increased the length of the parental leave that is available only to fathers. We argue that these changes have narrowed the perceived commitment gap between the genders and show that the initially higher GWG observed in exporting firms relative to non-exporters has gone down after the changes took place. |
| Keywords: | Exporters, Globalization, Gender Wage Gap |
| JEL: | F10 F14 F16 J16 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1358&r=lab |
| By: | Sephorah Mangin |
| Abstract: | How do labor market conditions such as the unemployment rate influence the labor share? To answer this question, I develop a search-theoretic model of the labor market that generates a simple relationship between unemployment, workers' reservation wage, and the labor share. I derive expressions for the dynamic evolution of factor shares and present some comparative statics results regarding factor shares in the steady state equilibrium. I simulate the model and compare its predictions for factor shares to the U.S. data from 1951-2012. The results suggest that labor market conditions – specifically, unemployment fluctuations and changes in workers' reservation wage – can account for much of the variation in the U.S. labor share at an annual frequency during this period. |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2015-28&r=lab |
| By: | Michael Siegenthaler (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Boris Kaiser (Department of Economics, University of Bern, Switzerland) |
| Abstract: | This paper examines the linkages between real exchange rate movements and firms’ skill demand. Real exchange rate movements may affect unskilled workers differently than skilled workers because of skill-specific adjustment costs, or because exchange rates lead to changes in relative factor prices and firms’ competition intensity. Using panel data on Swiss manufacturers, we find that an appreciation increases high-skilled and reduces low-skilled employment in most firms, while total employment remains roughly unchanged. We find evidence that exchange rates influence firms’ skill intensity because they affect outsourcing activities, innovation efforts, and firms’ compensation schemes. |
| Keywords: | Labor Demand, Skill Intensity, Employment, Real Exchange Rates, Firms’ Foreign Exposure |
| JEL: | E24 F16 F31 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:kof:wpskof:15-385&r=lab |
| By: | Judith K. Hellerstein; Mark J. Kutzbach; David Neumark |
| Abstract: | We test the effects of labor market networks defined by residential neighborhoods on re-employment following mass layoffs. We develop and use two measures of labor market network strength that correspond to the leading theoretical models. One measure captures the flows of information to job seekers about the availability of job vacancies at employers of workers in the network. The second is intended to capture referrals provided to employers by others in the network. These measures of network strength – especially the first – are linked to more rapid re-employment following mass layoffs, and both are linked to re-employment at neighbors’ employers. These effects are substantially stronger for low-earners than for high earners. We also estimate differences in the effects of network strength on displaced workers in the period prior to, during, and just after the labor market disruptions of the Great Recession. Not surprisingly, we find slower re-employment rates (and hence larger earnings losses) for those displaced during the Great Recession. We also find clear evidence that network connections – especially those that provide information about vacancies to job searchers – became less useful in the recovery of employment during the Great Recession. |
| JEL: | J01 R12 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21262&r=lab |
| By: | Fitzenberger, Bernd; Sommerfeld, Katrin |
| Abstract: | Union representation has been in strong decline in most OECD countries with potentially important consequences for wages. What drives this decline? We try to answer this question by developing and implementing a detailed decomposition approach based on Fairlie (2005). Using linked employer-employee data from the German Structure of Earnings Survey for 2001 and 2006, we document a sharp drop in collective bargaining coverage that amounts to 17 percentage points for males and 20 percentage points for females in West, and eight and 14 percentage points, respectively, in East Germany. We find that neither changes in the characteristics nor changes in the coefficients associated with the characteristics as a whole provide an explanation for the drop in collective bargaining coverage. The drop in coverage is the result of an unexplained time trend. |
| Keywords: | collective bargaining,unions,sequential decomposition |
| JEL: | C21 J51 J52 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:15039&r=lab |
| By: | Abigail Cooke; Thomas Kemeny |
| Abstract: | Using comprehensive longitudinal matched employer-employee data for the U.S.,this paper provides new evidence on the relationship between productivity and immigration-spawned urban diversity. Existing empirical work has uncovered a robust positive correlation between productivity and immigrant diversity, supporting theory suggesting that diversity acts as a local public good that makes workers more productive by enlarging the pool of knowledge available to them, as well as by fostering opportunities for them to recombine ideas to generate novelty. This paper makes several empirical and conceptual contributions. First, it improves on existing empirical work by addressing various sources of potential bias, especially from unobserved heterogeneity among individuals, work establishments, and cities. Second, it augments identification by using longitudinal data that permits examination of how diversity and productivity co-move. Third, the paper seeks to reveal whether diversity acts upon productivity chiefly at the scale of the city or the workplace. Findings confirm that urban immigrant diversity produces positive and nontrivial spillovers for U.S. workers. This social return represents a distinct channel through which immigration generates broad-based economic benefits. |
| Keywords: | Immigrants, diversity, productivity, spillovers, cities |
| JEL: | O4 R0 O18 F22 J61 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:sercd0175&r=lab |
| By: | Barbara Broadway (Melbourne Institute of Applied Economic and Social Research, University of Melbourne); Duncan McVicar (Queen's University Belfast) |
| Abstract: | This paper examines the impact of a major Australian disability reform – the 2006 Welfare to Work reform – on welfare receipt. It uses a combination of difference-in-differences and propensity score matching to identify the treatment effect. The reform reduced the generosity and increased the conditionality of welfare payments by shifting partially disabled disability benefit claimants from disability benefits to unemployment benefits. This led to increases among partially disabled welfare recipients in the hazards for exiting welfare and for switching (back) from unemployment to disability benefits. It also led to an increase in the hazard for returning to welfare for those having previously exited welfare. Overall the reform had no impact on the probability of being on welfare 12 months or 24 months later. Disability reforms need to do more than simply reduce the generosity and tighten the conditionality of payments if they are to impact on welfare dependence among people with disability. |
| Keywords: | Welfare reform, disability, hazard rate, propensity score matching, difference-indifferences |
| JEL: | I38 J14 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2015n11&r=lab |
| By: | Aghion, Philippe; Akcigit, Ufuk; Bergeaud, Antonin; Blundell, Richard William; Hemous, David |
| Abstract: | In this paper we use cross-state panel data to show a positive and significant correlation between various measures of innovativeness and top income inequality in the United States over the past decades. Two distinct instrumentation strategies suggest that this correlation (partly) reflects a causality from innovativeness to top income inequality, and the effect is significant: for example, when measured by the number of patent per capita, innovativeness accounts on average across US states for around 17% of the total increase in the top 1% income share between 1975 and 2010. Yet, innovation does not appear to increase other measures of inequality which do not focus on top incomes. Next, we show that the positive effects of innovation on the top 1% income share are dampened in states with higher lobbying intensity. Finally, from cross-section regressions performed at the commuting zone (CZ) level, we find that: (i) innovativeness is positively correlated with upward social mobility; (ii) the positive correlation between innovativeness and social mobility, is driven mainly by entrant innovators and less so by incumbent innovators, and it is dampened in states with higher lobbying intensity. Overall, our findings vindicate the Schumpeterian view whereby the rise in top income shares is partly related to innovation-led growth, where innovation itself fosters social mobility at the top through creative destruction. |
| Keywords: | citations; entrant; incumbents; inequality; innovation; patenting; social mobility; top income |
| JEL: | D63 J14 J15 O30 O31 O33 O34 O40 O43 O47 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10659&r=lab |
| By: | Scott Fulford (Boston College); Ivan Petkov (Boston College); Fabio Schiantarelli (Boston College; IZA) |
| 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 |
| JEL: | J15 N31 N32 O10 Z10 |
| Date: | 2015–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:875&r=lab |
| By: | Timothy Halliday (University of Hawaii at Manoa); Wayne Liou (University of Hawaii at Manoa) |
| Abstract: | In 2007, the State of Arizona passed the Legal Arizona Workers Act (LAWA) which required all employers to verify the legal status of all prospective employ ees. Using the American Community Survey, we show that LAWA induced a large emigration away from Arizona. We estimate that roughly 36,000 Mexican-born people left Arizona as a consequence of LAWA and that about 25% of those who left relocated to New Mexico suggesting that LAWA had spillovers on adjoining states. Finally, the effects of LAWA were the most pronounced in the farming and construction sectors. |
| Keywords: | E-Verify, Legal Arizona Workers Act, Spillover |
| JEL: | J61 J68 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:201508&r=lab |
| By: | Raymond Fisman; Yongxiang Wang |
| Abstract: | We study the relationship between the political connections of Chinese firms and workplace fatalities. In our preferred specification we find that the worker death rate for connected companies is two to three times that of unconnected firms (depending on the sample employed), a pattern that holds for within-firm estimations. The connections-mortality relationship is attenuated in provinces where safety regulators' promotion is contingent on meeting safety targets. In the absence of fatalities, connected firms receive fewer reports of major violations for safety compliance, whereas in years of fatal accidents the rate of reported violations is identical. Moreover, fatal accidents produce negative returns at connected companies and are associated with the subsequent departure of well-connected executives. These results provide suggestive evidence that connections enable firms to avoid (potentially costly) compliance measures, rather than using connections to avoid regulatory response after accidents occur. Our findings emphasize the social costs of political connections, and suggest that appropriate regulatory incentives may be useful in mitigating these costs. |
| JEL: | D73 J81 P26 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21266&r=lab |
| By: | Nina Drange; Tarjei Havnes (Statistics Norway) |
| Abstract: | Young children are thought to be vulnerable to separation from the primary caregiver/s. This raises concern about whether early child care enrollment may harm children's development. We use child care assignment lotteries to estimate the effect of child care starting age on early cognitive achievement in Oslo, Norway. Getting a lottery offer lowers starting age by about four months, from a mean of about 19 months in the control group. Lottery estimates show significant score gains for children at age seven. Survey evidence and an increase in employment of both mothers and fathers following the offer, suggest that parental care is the most relevant alternative mode of care. We document that the assignment lottery generates balance in observable characteristics, supporting our empirical approach. |
| Keywords: | early child care; child development |
| JEL: | J13 J21 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:808&r=lab |
| By: | Eirini Andriopoulou; Panos Tsakloglou |
| Abstract: | In this paper, we analyze poverty dynamics in Europe for the period 1994-2001 using the European Community Household Panel (ECHP) and for the period 2005-2008 using the European Union Statistics on Income and Living Conditions (EU-SILC). The study first focuses on poverty profiles which depict the poverty duration, recurrence and persistence and then on the trigger events (income, demographic, labour market) associated with movements into and out of poverty, using a modified version of the Bane and Ellwood (1986) framework of event analysis. Multivariate logit analysis is employed at a second step in order to identify the socioeconomic factors that affect the transitions into and out of poverty. Cross-country differences, as well as differences in poverty dynamic trends between the two periods, are examined. Poverty profiles show a consistency with the welfare regime typology during the period 1994-2001, but the results are not entirely clear in the pre-crisis period. Moreover, the results show that new Member-States cannot be clustered into one group. The results differ significantly across countries when the events associated with poverty exits and entries are examined in detail with the event and multivariate logit analysis, reflecting the different importance of the various household income components, as well as the different effect that the 2 demographic changes have to transitions into and out of poverty in each country. The general patterns that can be observed are five: a) In both periods, income events and especially changes in head’s labour earnings seem to be highly associated with poverty transitions in all countries, but more so in the Mediterranean countries, while demographic events seem to be relatively more important in Northern countries; b) Employment events are more important for ending a poverty spell than unemployment events for starting a poverty spell; c) The importance of second income earners (finding a job or increasing earnings) for bringing the household out of poverty was established in both periods; d) The demographic events have a stronger effect in the EU-SILC than the ECHP for poverty entries and weaker for poverty exits; e) The socioeconomic characteristics of the household and the household head present a rather similar patterns across countries in both periods examined. |
| Keywords: | Poverty, EU, ECHP, EU-SILC, event analysis |
| JEL: | I32 I31 J64 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:hdl:improv:1513&r=lab |