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on Labour Economics |
| By: | Bello, Piera; Galasso, Vincenzo |
| Abstract: | Do elderly workers retire early voluntarily, or are they induced (or even forced) by their employees? To establish the relevance of the labor demand component in retirement decisions, we consider a trade liberalization between Switzerland and the EU -- the Mutual Recognition Agreement (MRA). A vast literature suggests that these trade liberalizations induce firms to relocate and to restructure, with large compositional effects on the labor market particularly for the elderly workers, who face higher mobility costs. Using Swiss Labor Force Survey data, we use a difference in differences approach to compare early retirement behavior in three periods (pre-liberalization, announcement, and implementation) for three groups of industries. MRA industries represent our treatment group; control groups are non-MRA manufacturing industries, and services. Our empirical results show that elderly workers are more likely to retire early in the MRA sector during the announcement period, and that the employment of young (30-years old) male workers increases. The distribution of wages by age is instead unaffected. Additional empirical evidence using Swiss Business Census and UN Comtrade data suggests that the increase in early retirement in MRA is not explained by more firms' exits, nor by more early retirement among the exiting firms. It is rather the surviving MRA firms, which react to the increase in competition by adjusting their labor force and use more early retirement. |
| Keywords: | early retirement; firms' restructuring; labor demand of elderly workers |
| JEL: | H55 J14 J23 J26 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11007&r=lab |
| By: | Luisito Bertinelli; Olivier Cardi; Romain Restout |
| Abstract: | This paper develops a tractable version of a two-sector open economy model with search frictions in order to account for the relative wage and the relative price effects of higher productivity growth in tradables relative to non tradables. Using a panel of eighteen OECD countries over the period 1970-2007, our estimates reveal that a 1 percentage point increase in the productivity differential between tradables and non tradables lowers the non traded wage relative to the traded wage (relative wage) by 0.22% and appreciates the relative price of non tradables by 0.64%. While the decline in the relative wage reveals the presence of mobility costs preventing wage equalization across sectors, the relative wage responses to a productivity differential display a large dispersion across countries, thus suggesting that labor market frictions vary substantially across OECD economies. Using a set of indicators capturing the heterogeneity of labor market frictions across economies, we find that the relative wage significantly declines more in countries where labor market regulation is more pronounced. These empirical findings can be rationalized in a two-sector open economy model with search in the labor market as long as we allow for an endogenous sectoral labor force participation decision. In line with our estimates, our quantitative analysis reveals that the relative wage falls more in countries where unemployment benefits are more generous, firing cost is high, the worker bargaining power is large. When calibrating the model to each OECD economy, our numerical results reveal that the model predicts the relative wage response fairly well, and to a lesser extent the relative price response. |
| Keywords: | Productivity growth; Sectoral wages; Relative price of non tradables; Search theory; Labor market institutions. |
| JEL: | E24 F16 F41 F43 J65 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2016-05&r=lab |
| By: | Berg, Gerard van den; Hofmann, Barbara; Uhlendorff, Arne |
| Abstract: | Unemployment insurance agencies may combat moral hazard by punishing refusals to apply to assigned vacancies. However, the possibility to report sick creates an additional moral hazard, since during sickness spells, minimum requirements on search behavior do not apply. This reduces the ex ante threat of sanctions. We analyze the effects of vacancy referrals and sanctions on the unemployment duration and the quality of job matches, in conjunction with the possibility to report sick. We estimate multi-spell duration models with selection on unobserved characteristics. We find that vacancy referrals increase the transition to work and that these jobs go along with a lower wage. However, we also find a positive effect of receiving a vacancy referral on the probability of reporting sick. This effect is smaller at high durations, which suggests that the value of a vacancy referral increases over the time spent in unemployment. Overall, around 9% of sickness absence during unemployment is induced by vacancy referrals. |
| Keywords: | monitoring; moral hazard; physician; unemployment; unemployment insurance; vacancy referrals; wage |
| JEL: | C21 C41 J64 J65 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11039&r=lab |
| By: | Daniel Schaefer; Carl A. Singleton |
| Abstract: | We apply well-known results of the econometric learning literature to the Mortensen-Pissarides real business cycle model. The unique rational expectations equilibrium (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. And so, from this perspective, the assumption of rational expectations in the model is not unreasonable. However, using a parametrisation with UK data, simulations suggest that the implied rate of convergence to the REE with least squares learning is 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: | E24 E32 J64 |
| Date: | 2016–01–26 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:267&r=lab |
| By: | Kadija Charni (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université) |
| Abstract: | This paper analyzes labour market position of unemployed older individuals after the implementation of two major pension reforms in France. We use the French Force Labour Survey for the period 2003-2011 to assess the effects of the 2003 and the 2010 pension reforms on the exit rate from unemployment of individuals aged over 54. Using a difference-in-differences approach, we look at the effects of these reforms on the exit from unemployment to employment, and into inactivity. We find that the 2003 pension reform reduces significantly the exit to employment, while there is no significant impact of the pension reform on the exit to inactivity. For the 2010 reform, we show that the reform leads to an increase of the probability to go back to work. At the same time, the transition out of labour force through inactivity exit also rises. Unemployment and other social schemes are used as a bridge to retire early. |
| Keywords: | difference-in-differences estimation,unemployed older workers,pension reforms |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01264447&r=lab |
| By: | Patterson, Christina; Sahin, Aysegul; Topa, Giorgio; Violante, Giovanni L. |
| Abstract: | The UK experienced an unusually prolonged stagnation in labor productivity in the aftermath of the Great Recession. This paper analyzes the role of sectoral labor misallocation in accounting for this “productivity puzzle.” If jobseekers disproportionately search for jobs in sectors where productivity is relatively low, hires are concentrated in the wrong sectors, and the post-recession recovery in aggregate productivity can be slow. Our calculations suggest that, quantified at the level of three-digit occupations, this mechanism can explain up to two thirds of the deviations from trend-growth in UK labor productivity since 2007. |
| Keywords: | Mismatch; Occupation; Productivity |
| JEL: | E24 J24 J63 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11055&r=lab |
| By: | Olivetti, Claudia; Petrongolo, Barbara |
| Abstract: | Women in developed economies have made major inroads in labor markets throughout the past century, but remaining gender differences in pay and employment seem remarkably persistent. This paper documents long-run trends in female employment, working hours and relative wages for a wide cross-section of developed economies. It reviews existing work on the factors driving gender convergence, and novel perspectives on remaining gender gaps. The paper finally emphasizes the interplay between gender trends and the evolution of the industry structure. Based on a shift-share decomposition, it shows that the growth in the service share can explain at least half of the overall variation in female hours, both over time and across countries. |
| Keywords: | female employment; gender gaps; industry structure |
| JEL: | E24 J16 J31 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11034&r=lab |
| By: | Krolikowski, Pawel (Federal Reserve Bank of Cleveland) |
| Abstract: | The vast majority of studies on the earnings of displaced workers use a control group of continuously employed workers to examine the effects of initial displacements. This approach implies long-lived earnings reductions following displacement even if these effects are not persistent, overstating the losses relative to the true average treatment effect. This paper’s approach isolates the impact of an average displacement without imposing continuous employment on the control group. In a comparison of the standard and alternative approaches using PSID data, the estimated long-run earnings losses fall dramatically from 25 percent to 5 percent. Model simulations reinforce these empirical findings. |
| Keywords: | Displacement; earnings; control group; treatment event; |
| JEL: | E24 J63 J64 |
| Date: | 2016–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1605&r=lab |
| By: | John Tang |
| Abstract: | Economic development leads to improved health over time due to increased access to medical treatment, sanitation, and income, but in the short run the relationship may be negative given disease exposure from market integration. Using a panel dataset of vital statistics for Meiji Japan, I find mortality rates increased during the country's early industrialization, with railroad access accounting for over five percent of average mortality between 1886 and 1893. Estimates from a triple-differences framework indicate that communicable disease mortality accounts for 91 percent of the additional incidence, which suggests that improved transport may have operated as a vector for transmission. |
| Keywords: | contagion, market integration, mortality Kuznets curve, public health, railroad transport |
| JEL: | J11 N75 O14 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:auu:hpaper:044&r=lab |
| By: | Bosquet, Clément; Overman, Henry G |
| Abstract: | We consider the link between birthplace and wages. Using a unique panel dataset we estimate a raw elasticity of wage with respect to birthplace size of 4.6%, two thirds of the 6.8% raw elasticity with respect to city size. We consider a number of mechanisms through which this birthplace effect could arise. Our results suggest that inter-generational transmission (sorting) and the effect of birthplace on current location (geography) both play a role in explaining the effect of birthplace. We find no role for human capital formation at least in terms of educational outcomes (learning). Our results highlight the importance of intergenerational sorting in helping explain the persistence of spatial disparities. |
| Keywords: | lifetime mobility; place of birth; spatial sorting |
| JEL: | J31 J61 J62 R23 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11085&r=lab |
| By: | Daniel Dietz (Department of Business Management, University of Wuerzburg); Thomas Zwick (Department of Business Management, University of Wuerzburg) |
| Abstract: | This paper analyses the effect of training participation on employees’ retention in the training company. It for the first time empirically combines the human capital and the monopsony theory by jointly controlling for the portability, visibility, and credibility of training. Based on an extensive German linked-employer-employee data set with detailed information on training history (WeLL-ADIAB), we show that training increases employees’ retention. We compare the probability to stay at the same employer between training participants and accidental training non-participants (those who could not participate in planned training on the basis of exogeneous reasons). Higher portability of general human capital contents and visibility of training induced by training certificates however reduce the retention effect of training. Retention is further reduced when training is credibly provided and certified by external institutions, the full training effect on retention is still positive, however. We are careful to control for endogeneity of training participation in retention equations, unobserved time-invariant effects, and extensive individual and employer characteristics including wage increases and general job satisfaction. |
| Keywords: | Labor Mobility, Turnover, Employment, Training |
| JEL: | J62 J63 M51 M53 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:iso:educat:0113&r=lab |
| By: | Alexander Hijzen; Balint Menyhert |
| Abstract: | This paper provides a comprehensive discussion of the labour market security dimension of the OECD’s job quality framework, thereby complementing the analysis in Chapter 3 of the OECD Employment Outlook 2014 and Chapter 5 of the OECD Employment Outlook 2015. It makes three main contributions. First, it provides an in-depth discussion of the definition and measurement of labour market security. and discusses in detail the various methodological issues surrounding its measurement. Second, it offers a comprehensive statistical portrait of labour market security across countries, socio-economic groups and over time. Third, it investigates the statistical relationship between labour market insecurity and subjective measures of well-being. Importantly, we find that the risk of unemployment has a detrimental effect on the well-being of employed workers, and that this reflects to an important extent the risk of staying unemployed for a prolonged period of time. Policymakers should therefore focus not only on reducing the level of unemployment, but also on speeding up unemployment turnover at a given level of unemployment. Unemployment insurance also mitigates the adverse effect of unemployment risk, and particularly that of long-term unemployment, on the well-being of the employed. Ce papier propose une discussion complète autour de la sécurité du marché de travail, une des dimensions du nouveau cadre pour la qualité d’emploi de l’OCDE. Il complète ainsi l’analyse du Chapitre 3 de Perspectives de l’emploi de l’OCDE 2014 et celle du Chapitre 5 de Perspectives de l’emploi de l’OCDE 2015. Notre papier apporte trois contributions principales. Premièrement, il propose une discussion approfondie de la définition et la mesure de la sécurité sur le marché du travail. Deuxièmement, il donne un portrait statistique complet de la sécurité sur le marché du travail dans différents pays, groupes sociodémographiques ainsi qu’au fil du temps. Troisièmement, il étudie la relation statistique entre la sécurité sur le marché du travail et des mesures subjectives de bien-être. Un des résultats les plus importants est que le risque de chômage a des effets négatifs sur le bien-être des personnes employées, ce qui reflète à un degré important le risque de rester au chômage pour une période prolongée. Les décideurs politiques devraient donc, non seulement se concentrer sur la réduction du niveau de chômage, mais aussi sur l’accélération de la rotation des chômeurs à tout niveau de chômage. L’assurance chômage quant à elle attenue aussi les effets négatifs du chômage, et surtout du chômage de longue durée. |
| JEL: | I31 J08 J64 J65 |
| Date: | 2016–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:175-en&r=lab |
| By: | Marco Caliendo; Deborah A. Cobb-Clark; Juliane Hennecke; Arne Uhlendorff |
| Abstract: | Internal migration can substantially improve labor market e ciency. Consequently, policy is often targeted towards reducing the barriers workers face in moving to new labor markets. In this paper we explicitly model internal migration as the result of a job search process and demonstrate that assumptions about the timing of job search have fundamental implications for the pattern of internal migration that results. Unlike standard search models, we assume that job seekers do not know the true job o er arrival rate, but instead form subjective beliefs { related to their locus of control { about the impact of their search e ort on the probability of receiving a job o er. Those with an internal locus of control are predicted to search more intensively (i.e. across larger geographic areas) because they expect higher returns to their search e ort. However, they are predicted to migrate more frequently only if job search occurs before migration. We then test the empirical implications of this model. We nd that individuals with an internal locus of control not only express a greater willingness to move, but also undertake internal migration more frequently. |
| Keywords: | Locus of Control, Internal Migration, Mobility, Job Search |
| JEL: | J61 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp818&r=lab |
| By: | Giampiero Marra; Rosalba Radice; Till Bärnighausen; Simon N. Wood; Mark E. McGovern |
| Abstract: | Estimates of HIV prevalence are important for policy in order to establish the health status of a country's population and to evaluate the effectiveness of population-based interventions and campaigns. However, participation rates in testing for surveillance conducted as part of household surveys, on which many of these estimates are based, can be low. HIV positive individuals may be less likely to participate because they fear disclosure, in which case estimates obtained using conventional approaches to deal with missing data, such as imputation-based methods, will be biased. We develop a Heckman-type simultaneous equation approach which accounts for non-ignorable selection, but unlike previous implementations, allows for spatial dependence and does not impose a homogeneous selection process on all respondents. In addition, our framework addresses the issue of separation, where for instance some factors are severely unbalanced and highly predictive of the response, which would ordinarily prevent model convergence. Estimation is carried out within a penalized likelihood framework where smoothing is achieved using a parametrization of the smoothing criterion which makes estimation more stable and efficient. We provide the software for straightforward implementation of the proposed approach, and apply our methodology to estimating national and sub-national HIV prevalence in Swaziland, Zimbabwe and Zambia. |
| Keywords: | Heckman-Type Selection Model, HIV, Penalized Regression Splines, Selection Bias, Simultaneous Equation Models, Spatial Dependence |
| JEL: | C30 J10 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:qub:wpaper:1602&r=lab |
| By: | Fotis Papadopoulos; Panos Tsakloglou (Athens University of Economics and Business) |
| Abstract: | In recent years research on the measurement of deprivation focuses increasingly on indices of multi-dimensional disadvantage rather than on more traditional uni-dimensional approaches of earlier studies that were focusing on income poverty. Further, the advent of panel survey data led to a large number of empirical studies that have been devoted to the investigation of dynamic aspects of poverty. Despite the availability of several longitudinal survey datasets that make it possible nowadays to use "smoothed" income distributions and identify persons who are poor in a longitudinal perspective, most empirical studies tend to use distributions of current income, thus ignoring aspects of inter-temporal transfers and income smoothing. The present paper examines the degree of overlap between people who experience chronic material deprivation and those who face long term income poverty (longitudinal poverty) in 22 European Union member states for the period 2005-2008, using the longitudinal data set of the European Union Statistics on Income and Living Conditions (EU-SILC) UDB 2008 version 4. In order to approximate chronic relative material deprivation we use a three-step index of chronic cumulative relative disadvantage. In the first step, population members deprived in three domains of static relative material deprivation are identified. In the second step, the extent of cumulative relative disadvantage of these individuals is examined and, in the final step, persons suffering from chronic cumulative relative disadvantage over the period 2005-2008 are identified, by aggregating the information on static cumulative relative disadvantage in each year covered. Further, we examine the overlap between chronic relative material deprivation and (smoothed) longitudinal poverty. The results reveal considerable differences across EU members regarding both the level and the structure of the population at high risk of chronic relative material deprivation and longitudinal poverty. Then, each country's population is subdivided into mutually exhaustive and exclusive groups according to the characteristics of the population member, when the population is grouped according to seven alternative criteria: sex, age employment status and education level of the household's reference person, age and education of the individual and household type. The results of the analysis reveal a number of qualitative similarities regarding the population groups that tend to be classified as "high risk" groups and quantitative differences regarding the "magnitude" of risk faced by these population groups, across EU member states. In almost all countries, though, under examination, lack of full employment by the individual or, especially, by the household's reference person, low educational qualifications, being a member of a lone parent household or living in a household headed by a woman or by a very young or, to a lesser extent, an elderly person, lead to high risks of chronic relative material deprivation and longitudinal poverty. |
| Keywords: | chronic relative material deprivation, EU-SILC, Europe, income smoothing, consistent poverty, longitudinal poverty |
| JEL: | I32 I31 J64 |
| Date: | 2016–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:aue:wpaper:1602&r=lab |
| By: | Jordi Brandts; Arno Riedl |
| Abstract: | We use laboratory experiments to study the causal effects of favorable and unfavorable competitive market experience on cooperation in a subsequent social dilemma game. The issues we study are part of the broader topic of whether there are behavioral spillovers between different spheres of social interactions. Market interaction takes place in a continuous double auction market in which one side of the market obtains the larger part of the surplus. We examine the efficiency of subsequent cooperation for pairs of market-winners, market-losers and mixed pairs and study both the cases where interaction in the social dilemma is with others from the same market, 'market-partners', and where it is with others from another market, 'market-strangers', and compare it with benchmark behavior in a stand-alone social dilemma game. We find that in market-partners, market experience has adverse effects on the efficiently of cooperation on both market-winner and market-loser pairs. In market-strangers, pairs of market-winners manage to cooperate more efficiently. These results indicate that it is not market experience per se that lowers the ability to cooperate. Rather, having competed for scarce resources on the same side of the market makes it difficult to overcome the social dilemma and positive market experience fosters cooperation only for those who did not have to compete with each other. We also show that differences in cooperation cannot be explained by ex-ante income differences and find that market experience also affects subjective well-being and social value orientation. |
| Keywords: | competition, cooperation, experiments |
| JEL: | A13 C92 D30 J50 M50 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:868&r=lab |