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on Labour Economics |
| By: | Hellerstein, Judith K. (University of Maryland); Kutzbach, Mark J. (U.S. Census Bureau); Neumark, David (University of California, Irvine) |
| Abstract: | We measure the impact of labor market referral networks defined by residential neighborhoods on re-employment following mass layoffs. Because networks can only be effective when hiring is occurring, we focus on a measure of the strength of the labor market network that includes not only the number of employed neighbors of a laid off worker, but also the gross hiring rate at that person's neighbors' workplaces. We provide additional evidence from two alternative measures of network strength that try to disentangle the mechanism by which networks operate – either by conveying information to job seekers about vacancies or conveying information to hiring employers about potential hires. Our evidence indicates that stronger local labor market networks are linked not just to more rapid re-employment following mass layoffs but to re-employment specifically at neighbors' employers. We also find evidence suggesting that this effect is stronger via network connections that convey information to job seekers about vacancies. Finally, we find evidence that the effects of networks for displaced workers declined during the Great Recession relative to prior or subsequent years. |
| Keywords: | networks, displacement, re-employment |
| JEL: | J63 J64 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9852&r=lab |
| By: | Matteo Cacciatore; Romain Duval; Giuseppe Fiori; Fabio Ghironi |
| Abstract: | We study the consequences of product and labor market reforms in a two-country model with endogenous producer entry and labor market frictions. We focus on the role of business cycle conditions and external constraints at the time of reform implementation (or of a credible commitment to it) in shaping the dynamic effects of such policies. Product market reform is modeled as a reduction in entry costs and takes place in a non-traded sector that produces services used as input in manufacturing production. Labor market reform is modeled as a reduction in firing costs and/or unemployment benefits. We find that business cycle conditions at the time of deregulation significantly affect adjustment. A reduction of firing costs entails larger and more persistent adverse short-run effects on employment and output when implemented in a recession. By contrast, a reduction in unemployment benefits boosts employment and output by more in a recession compared to normal times. The impact of product market reforms is less sensitive to business cycle conditions. Credible announcements about future reforms induce sizable short-run dynamics, regardless of whether the announcement takes place in normal times or during an economic downturn. Whether the immediate effect is expansionary or contractionary varies across reforms. Finally, lack of access to international lending in the wake of reform can amplify the costs of adjustment. |
| JEL: | E24 E32 F41 J64 L51 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22128&r=lab |
| By: | Bicakova, Alena (CERGE-EI); Jurajda, Štepán (CERGE-EI) |
| Abstract: | This paper reports evidence on the strong tendency of the college educated to match with partners who graduated in the same field of study – a dimension of assortative matching that has been overlooked thus far. We employ Labor Force Survey data covering most EU countries to measure the extent of field-of-study homogamy in prevailing married and cohabiting couples within several years of college graduation. We find that field-of-study homogamy increases almost immediately after graduation to reach very high levels, especially for spouses working in the same industry, and that it varies dramatically across countries. Graduates in Social Sciences display a particularly strong tendency towards homogamy and also have the highest matching theory-implied match gains from homogamous matches. |
| Keywords: | field-of-study homogamy, college graduates, marriage and cohabitation |
| JEL: | I23 J13 J16 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9844&r=lab |
| By: | Vinish Shrestha (Department of Economics, Towson University) |
| Abstract: | I evaluate the effect of basic maternal literacy skills such as the ability to read, write, and the highest level of schooling on child health outcomes in Nepal. The National Education System Plan in 1971 reshaped the education system of Nepal by increasing access to education among females. Using within cohort and across district variations in educational outcomes due to the reform, I find that improvements in basic maternal literacy skills reduce infant mortality. Access to clean water supply, and a reduction in gender inequality among relatively educated mothers are some potential mechanisms contributing to improvements in infant mortality. |
| Keywords: | Mother's literacy, infant mortality, returns to education. |
| JEL: | I10 I15 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:tow:wpaper:2016-08&r=lab |
| By: | Atsuko Tanaka (University of Calgary) |
| Abstract: | With an aging population and a rising prevalence of chronic conditions in the United States (U.S.), it is important to understand what happens when workers suffer unanticipated reductions in productivity. This paper investigates who pays for the loss caused by labor productivity reductions---a phenomenon often described as “presenteeism†or “absenteeism†---due to a stroke. Using the Health and Retirement Study (HRS) data, I find that, in the case of older workers, the employer often pays through higher costs of labor, rather than the worker through lower wages, because wages and earnings remain at the level before the worker had a stroke despite reduced hours. The existence of such rigidity in the employment contract translates to an increase in calculated hourly wages. Thus, this study warns that wages, earnings, or salaries cannot be clearly interpreted as accurate values of the marginal product of labor. |
| Date: | 2016–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:clg:wpaper:2016-31&r=lab |
| By: | Robert Anderton; Arno Hantzsche; Simon Savsek; Mate Toth |
| Abstract: | We estimate wage Phillips curve relationships between sectoral wage growth, unemployment and productivity in a country-industry panel of euro area countries. We find that institutional rigidities – such as labour and product market institutions and regulations – limit the adjustment of euro area wages to unemployment, in both upturns and downturns, particularly in manufacturing and, to a lesser extent, in the construction and service sectors. In addition, there are also further limitations in the response of wages to changes in unemployment during economic downturns which suggests that euro area wages are also characterised by significant downward wage rigidities, especially in the manufacturing sector. These results are robust to specifications that account for factors that may affect structural unemployment (such as duration-dependent unemployment effects), as well as changes in the skill composition of employment that may affect the evolution of aggregate wages. The results also hold for panels including or excluding the public sector (where wages may be determined differently to the private sector also due to the effects of fiscal consolidation on public sectorwages during the crisis). From a policy perspective, reforms in product and labour markets which reduce wage rigidities can facilitate employment growth and enhance the rebalancing process in the euro area. |
| Keywords: | sector wages, wage rigidity, wage Phillips curve, labour market institutions, product market institutions |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcfc:16/01&r=lab |
| By: | Melanie Morten; Jaqueline Oliveira |
| Abstract: | How integrated are labor markets within a country? Labor mobility is key to the integration of local labor markets and therefore to understanding the efficacy of policies to reduce regional inequality. We present a comprehensive framework for understanding migration decisions, focusing on the costs of migrating. We construct and then estimate a spatial equilibrium model where mobility is determined not only by idiosyncratic tastes, but also by moving costs that are origin-destination dependent. We use rich data on the inter-municipality moves of 18 million people together with exogenous variation in the road network caused by the construction of a capital city to identify the bilateral costs of moving between two regions. The mean observed migration cost is between 0.8-1.2 times the mean wage. 84% of the migration cost is a fixed cost, 3.5% depends on the distance between locations, and 9.6% is dependent on the travel time on the road. This imperfect integration of labor markets has two key implications. First, costly migration generates heterogeneity in regional responses to economic shocks. A region 10% more connected will have a 5.6 percentage point higher population elasticity to wage shocks. Second, costly migration changes the incidence of regional shocks. We estimate that 37% of the total incidence of a shock falls on residents, compared to 1% in a model where migration is costless. Our results have important implications for understanding the impact of economic development as well as the impact of place-based development policies. |
| JEL: | J61 O18 O54 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22158&r=lab |
| By: | Riphahn, Regina T.; Wiynck, Frederik |
| Abstract: | We exploit the 1996 reform of the German child benefit program to identify the causal effect of child benefits on fertility. Generally, the reform increased child benefits. However, the exact amount of the increase varied by household income and sibship size. We use this heterogeneity of the reform to identify causal effects on fertility using a difference-in-differences setting. We apply the large samples of the German Mikrozensus and the rich data of the German Socioeconomic Panel (SOEP). The child benefit reform did not yield robust or statistically significant fertility effects for low income couples. We find some support for positive fertility effects for higher income couples deciding on a second birth. |
| Keywords: | child benefits,fertility,tax allowance,causal effect,difference-in-differences,Mikrozensus,SOEP |
| JEL: | J13 I38 C54 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwqwdp:042016&r=lab |
| By: | Frédéric Gannon (EconomiX); Gilles Le Garrec (OFCE); Vincent Touze (OFCE) |
| Abstract: | This paper analyses how the economic, demographic and institutional differences between two regions -one developed and called the North, the other emerging and called the South- drive the international capital flows and explain the world economic equilibrium. To this end, we develop a simple two-period OLG model. We compare closed-economy and open-economy equilibria. We consider that openness facilitates convergence of South’s characteristics towards North’s. We examine successively the consequences of a technological catching-up, a demographic transitionand an institutional convergence of pension schemes. We determine the analytical solution of the dynamics of the world interest rate and deduce the evolution of the current accounts. These analytical results are completed by numerical simulations. They show that the technological catching-up alone leads to a welfare loss for the North in reason of capital flows towards the South. If we add to this Örst change a demographic transition, the capital demand is reduced in the South whereas its saving increases in reason of a higher life expectancy. These two effects contribute to reduce the capital flows from the North to the South. Finally, an institutional convergence of the two pension schemes reduces the South’s saving rate which increases the capital flow from the North to the South. |
| Keywords: | International capital flows; Economic Convergence; Demographic transition |
| JEL: | D91 F40 J10 O33 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/6dhper3pho8nspmsluhrt4lcd8&r=lab |
| By: | Emre Akgunduz; Suzanne Heijnen |
| Abstract: | We analyze the effectiveness of the early childhood programme (ECP) in the Netherlands. The programme is designed for 2.5 to 4 year olds from disadvantaged backgrounds. 37 municipalities received an additional subsidy to expand ECP programmes, which allows us to analyze the effects of the programme within a difference-in-difference-in-differences framework. Most children first enroll in primary schools at age 4 in the Netherlands, but pupils begin to learn reading and mathematics in grade 3 at age 6. We use grade repetition constructed from school registry data from 2008 to 2015 in the first two grades as an indicator of school readiness. Our results show significantly lower grade repetition rates for targeted boys who are in regions that receive the subsidy. Grade repetition drops by 1 to 3 percentage points from a mean of 10.5 percent for the disadvantaged group targeted by the programme. |
| JEL: | C21 I28 I21 J13 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:328&r=lab |
| By: | De Paola, Maria (University of Calabria); Brunello, Giorgio (University of Padova) |
| Abstract: | We examine the role of education in fostering the economic integration of immigrants. Although immigrants in Europe are – on average – slightly less educated than native individuals, there is a large heterogeneity across countries. We discuss evidence on student performance in international tests showing that children with an immigrant background display worse results than natives. While in some countries, such as Denmark and France, this gap is almost entirely explained by differences in socio-economic background, in others (Finland, Austria, Belgium and Portugal) the factors driving the gap are more complex and have roots also outside socio-economic conditions. We investigate how educational policies in the host count can affect the educational outcomes of immigrants. We focus our attention on pre-school attendance, school tracking, the combination of students and teacher characteristics, and class composition. |
| Keywords: | education, immigration, European migration policies, school tracking, class composition |
| JEL: | I20 I21 I28 J24 J61 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9836&r=lab |
| By: | Sunil Kumar; Melissa Fernández |
| JEL: | N0 R14 J01 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:65861&r=lab |
| By: | Bhuller, Manudeep (University of Chicago); Brinch, Christian (Norwegian Business School (BI)); Königs, Sebastian (OECD) |
| Abstract: | Dynamic discrete-choice models are an important tool in studies of state dependence in benefit receipt. A common assumption of such models is that benefit receipt sequences follow a conditional Markov process. This property has implications for how estimated period-to-period benefit transition probabilities should relate when receipt processes are aggregated over time. This paper assesses whether the conditional Markov property holds in welfare benefit receipt dynamics in Norway using high-quality monthly data from administrative records. We find that the standard conditional Markov model is seriously misspecified. Estimated state dependence is affected substantially by the chosen time unit of analysis, with the average treatment effect of past benefit receipt increasing with the level of aggregation. The model can be improved considerably by permitting richer types of benefit dynamics: We find strong evidence for both duration and occurrence dependence in benefit receipt. Allowing for heterogeneity in the entry and persistence processes, we find important disparities in the effects of observed and persistent unobserved characteristics. Based on our preferred model, the month-to-month persistence probability in benefit receipt for a first-time entrant is 37 percentage points higher than the entry rate of an individual without previous benefit receipt. Over a 12-month period, this corresponds to an average treatment effect of 5 percentage points. |
| Keywords: | time aggregation, Markov property, state dependence, welfare dynamics |
| JEL: | I38 J60 J64 C23 C41 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9785&r=lab |