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on Labour Economics |
| By: | Bartels, Charlotte (Freie Universität Berlin); Pestel, Nico (IZA) |
| Abstract: | Generous income support programs as provided by European welfare states have often been blamed to hamper employment. This paper investigates the importance of incentives inherent in the tax-benefit system for the individual decision to take up work. Using German microdata over the period 1993-2010 we find that recent reforms in Germany increased work incentives at the extensive margin measured by the Participation Tax Rate (PTR), particularly for low-income individuals. Work incentives are even higher if the time horizon is extended to more than one year, pointing at an overestimation of the disincentives by standard measures. Regression analysis reveals that a decrease in the PTR increases the likelihood of taking up work significantly. |
| Keywords: | labor force participation, work incentives, welfare, unemployment insurance, income taxation |
| JEL: | H24 H31 J22 J65 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9151&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 nonexporters has gone down after the changes took place. |
| Keywords: | Exporters; globalisation; gender wage gap |
| JEL: | F10 F14 F16 J16 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:62604&r=lab |
| By: | Huber, Martin (University of Fribourg); Lechner, Michael (University of St. Gallen); Strittmatter, Anthony (University of St. Gallen) |
| Abstract: | This paper evaluates the effect of a voucher award system for assignment into vocational training on the employment outcomes of unemployed voucher recipients in Germany, along with the causal mechanisms through which it operates. It assesses the direct effect of voucher assignment net of actual redemption, which may be driven by preference shaping/learning about (possibilities of) human capital investments or simply by costs of information gathering. Using a mediation analysis framework based on sequential conditional independence assumptions and semiparametric matching estimators, our results suggest that the negative short term and positive long term employment effects of voucher award are mainly driven by actual training participation. However, also the direct effect of just obtaining the voucher is negative in the short run. This points to potential efficiency losses of voucher award systems if individuals decide not to redeem, as employment chances are lower than under non-award in the short run and under redemption in the long run, making non-redemption the least attractive option. |
| Keywords: | mediation analysis, voucher award, training programmes, direct effects, indirect effects, causal mechanisms, causal channels, matching estimation |
| JEL: | J64 J68 C21 C31 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9138&r=lab |
| By: | Wolfgang Frimmel , Thomas Horvath, Mario Schnalzenberger, Rudolf Winter-Ebmer |
| Abstract: | In general, retirement is seen as a pure labor supply phenomenon, but firms can have strong incentives to send expensive older workers into retirement. Based on the seniority wage model developed by Lazear (1979), we discuss steep seniority wage profiles as incentives for firms to dismiss older workers before retirement. Conditional on individual retirement incentives, e.g., social security wealth or health status, the steepness of the wage profile will have different incentives for workers as compared to firms when it comes to the retirement date. Using an instrumental variable approach to account for selection of workers in our firms and for reverse causality, we find that firms with higher labor costs for older workers are associated with lower job exit age. |
| Keywords: | retirement, seniority wages, firm incentives |
| JEL: | J14 J26 J31 H55 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2015_05&r=lab |
| By: | Kristine Langenbucher |
| Abstract: | Eligibility criteria for unemployment benefits, which require recipients to actively look for work, take up suitable job offers or take part in active labour market programmes (ALMPs), or risk benefit sanctions, can play an important role in offsetting the negative impact of generous unemployment benefits on employment incentives. This paper presents information on the strictness of eligibility criteria for unemployment benefits for 40 OECD and/or EU member countries. It covers availability requirements during ALMPs and suitable work criteria, job search requirements and monitoring of independent job search effort, and sanctions for voluntary unemployment, refusing a job offer or participation in active labour market measures. These qualitative data are then used to compile a composite indicator of the strictness of eligibility criteria and some comparisons are made with the results of a similar exercise by the OECD in 2011. This indicator complements existing cross-country indicators relating to unemployment benefits, such as net replacement rate data from the OECD Taxes and Benefits Database and data on ALMP expenditure compiled annually by Eurostat and the OECD. |
| JEL: | J08 J65 J68 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:166-en&r=lab |
| By: | de la Rica, Sara (University of the Basque Country); Rebollo-Sanz, Yolanda Fatima (Universidad Pablo de Olavide) |
| Abstract: | The Great Recession has had a disproportionately negative effect on working men compared to working women in many OECD countries and led to gender convergence in aggregate unemployment rates. In this paper we seek the sources of this recent convergence by using Social Security records on individuals to study the determinants of unemployment ins and outs over the course of a whole business cycle, i.e. 2000‐2013. We focus on Spain – a country hit hard by unemployment increases in downturns. Our results indicate that unemployment outs are crucial in understanding changes in unemployment rates in Spain. Furthermore, the huge drop in unemployment outs in the recession, particularly for men, has led to unprecedented levels of long‐term unemployment, which has come to account for 64% of total unemployment. Negative state dependence emerges as a key barrier to job access for the long‐term unemployed and hence the rate of unemployment is expected to remain high for many years, even if there is a strong recovery. |
| Keywords: | state dependence, hazard rates, unemployment gross flows, gender differentials |
| JEL: | J63 J64 J16 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9135&r=lab |
| By: | Michael Amior; Alan Manning |
| Abstract: | Local differences in US employment-population ratios and unemployment rates have persisted over many decades. Using decennial census data from 1950-2010, we investigate the reasons for this. The persistence cannot be explained by permanent differences in amenities, local demographic composition or the propensity of women to work. Population does respond strongly to differences in economic fortunes, although these movements are not large enough to eliminate shocks within a decade. Over the longer run, persistence in local joblessness is largely explained by serial correlation in the demand shocks themselves. |
| Keywords: | Local labor markets; unemployment; inactivity; internal migration; commuting |
| JEL: | J61 J64 R23 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:62590&r=lab |
| By: | Parey, Matthias (University of Essex); Ruhose, Jens (Ifo Institute for Economic Research); Waldinger, Fabian (University of Warwick); Netz, Nicolai (DZHW-German Centre for Research on Higher Education and Science Studies) |
| Abstract: | We measure selection of high-skilled migrants from Germany using predicted earnings. Migrants to less equal countries are positively selected relative to non-migrants, while migrants to more equal countries are negatively selected, consistent with the prediction in Borjas (1987). Positive selection to less equal countries is driven by university quality and grades, and negative selection to more equal countries by university subject and gender. Migrants to the U.S. are highly positively selected and concentrated in STEM fields. Our results highlight the relevance of the Borjas model for high-skilled individuals when credit constraints and other migration barriers are unlikely to be binding. |
| Keywords: | international migration, high-skilled migrants, selection, inequality, Roy/Borjas model |
| JEL: | F22 J24 J31 J61 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9164&r=lab |
| By: | Anek Belbase; Mashfiqur R. Khan; Alicia H. Munnell; Anthony Webb |
| Abstract: | This paper examines the relationship between age-related cognitive decline and three potential workplace outcomes: 1) coping with increased job difficulty; 2) shifting to a less cognitively demanding job; and 3) retiring early. It uses data from the Health and Retirement Study (HRS) and the O*NET database. Critical components of the analysis are the metric used to measure cognitive decline, inclusion of cognitive reserve as an independent variable, and the use of overlapping 10-year observation windows. A key limitation is that the study cannot conclusively discern a causal relationship between cognitive decline and workforce exit. The paper found that: - About 10 percent of workers between the ages of 55 and 69 experienced steep cognitive decline over a 10-year period. - Workers experiencing steep cognitive decline were more likely to “downshift” to a less demanding job or retire than workers experiencing no cognitive decline. - Workers experiencing steep cognitive decline retired significantly earlier than planned, compared to workers who experienced no change in cognitive ability. - Workers without cognitive reserves were more likely to exit the workforce and retire earlier than planned, compared to workers with cognitive reserves. The policy implications of the findings are: - Cognitive decline might prevent a significant minority of older individuals from working to their planned retirement ages, and thus should be considered when assessing reforms that incent delayed retirement. - Policies that support “downshifting” to a cognitively less demanding job might help workers at risk of steep cognitive decline to remain in the labor force. - Further research is needed to identify whether workers in specific occupations are more susceptible to age-related decline than others, and whether anything can be done to moderate the effect of age-related decline in work ability. |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2015-12&r=lab |
| By: | Nadia S. Karamcheva; April Yanyuan Wu; Alicia H. Munnell |
| Abstract: | While dramatic increases in women’s labor supply and earnings have led to a substantial decline in the fraction of women eligible for spouse benefits at retirement, most wives still receive a survivor benefit, as wives still typically have lower earnings than their husbands and live longer. Using the MINT microsimulation model and the HRS data linked with Social Security administrative earnings records, this paper examines the extent to which Social Security continues to favor couples and will do so in the future. The paper found that: - While the Old-Age and Survivors Insurance program still distributes lifetime income from singles to couples, the transfers appear to be shrinking over time. - Nevertheless, couples are still projected to have a higher benefit/tax ratio, a lower median net tax rate, and a greater likelihood of receiving positive net transfers from the system compared to those who are never married or divorced. - The increased labor force participation and earnings of women have contributed significantly to the decline in redistribution from men to women, and from singles to couples, while the effect of declining marriage rates has only a modest effect. The policy implications of the findings are: - Family benefit provisions within the Social Security program can have a significant impact on various measures of redistribution. - Policymakers may find the results of this paper helpful in evaluating any reform proposals that would change these provisions. |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2015-11&r=lab |
| By: | J. Kolsrud; Camille Landais; P. Nilsson; Johannes Spinnewijn |
| Abstract: | This paper provides a simple, yet general framework to analyze the optimal time profile of benefits during the unemployment spell. We derive simple sufficient-statistics formulae capturing the insurance value and incentive costs of unemployment benefits paid at different times during the unemployment spell. Our general approach allows to revisit and evaluate in a transparent way the separate arguments for inclining or declining proles put forward in the theoretical literature. We then estimate our sufficient statistics using administrative data on unemployment,income and wealth in Sweden. First, we exploit duration-dependent kinks in the replacement rate and find that the moral hazard cost of benefits is larger when paid earlier in the spell. Second, we find that the drop in consumption determining the insurance value of benefits is large from the start of the spell, but further increases throughout the spell. On average, savings and credit play a limited role in smoothing consumption. Our evidence therefore indicates that the recent change from a at to a declining benefit profile in Sweden has decreased welfare. In fact, the local welfare gains push towards an increasing rather than decreasing benefit profile over the spell. |
| Keywords: | Unemployment, Dynamic Policy, Suficient Statistics, Consumption Smoothing |
| JEL: | H20 J64 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:cep:stippp:25&r=lab |