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on Labour Economics |
| By: | Irina Merkurieva (University of St Andrews) |
| Abstract: | This paper provides an empirical analysis of the effect of involuntary job loss on the lifetime income and labor supply of older workers. I develop and estimate a dynamic programming model of retirement and savings with costly job search and exogenous layoffs. The structural estimates from the Health and Retirement Study data show that older displaced workers lose up to one and a half years of pre-displacement earnings over the remaining lifetime. Most of this loss (80%) is due to the permanent wage penalty following displacement, while the rest is explained by search frictions. Involuntary job loss makes an average worker retire fifteen months earlier. However, workers who were approaching retirement at the onset of the Great Recession will increase their labor supply by approximately five months in response to the joint impact of changes in the value of household assets and the probabilities of losing and finding a job. |
| Keywords: | retirement, life-cycle labor supply, layoff cost, saving, cyclical unemployment |
| JEL: | J14 J26 J64 |
| Date: | 2016–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:san:wpecon:1606&r=lab |
| By: | Massimiliano Bratti (Università degli Studi di Milano, IZA and Centro Studi Luca d’Agliano); Simona Fiore (Università degli Studi di Bologna); Mariapia Mendola (Università degli Studi di Milano - Bicocca, IZA and Centro Studi Luca d’Agliano) |
| Abstract: | This paper examines the effects of family size and demographic structure on offspring’s international migration. We use rich survey data from Mexico to estimate the impact of sibship size, birth order and sibling composition on teenagers’ and Young adults’ migration outcomes. We find little evidence that high fertility drives migration. The positive correlation between sibship size and migration disappears when endogeneity of family size is addressed using biological fertility miscarriages) and infertility shocks. Yet, the chances to migrate are not equally distributed across children within the family. Older siblings, especially firstborn males, are more likely to migrate, while having more sisters than brothers may increase the chances of migration, particularly among girls. |
| Keywords: | International Migration, Mexico, Family Size, Birth Order, Sibling Composition |
| JEL: | J13 F22 O15 |
| Date: | 2016–04–13 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:390&r=lab |
| By: | Parsons, Donald O. (George Washington University) |
| Abstract: | Efforts to insure long-tenured displacement workers against earnings losses from unemployment spells and lower wages on subsequent jobs have led to an array of government and employer programs. A policy typology is proposed to impose order on these programmatic efforts. The basic typology involves the familiar distinction between (i) separation benefit type – fixed sum severance or unemployment-linked – and (ii) financing type – insurance or savings. In this four-way categorization, severance savings accounts are the least familiar, perhaps because they are often mislabeled as unemployment insurance savings accounts (UISA). A third policy dimension – the job separation events that trigger plan payouts – is also fundamental to understanding program performance and consequences. Indeed insurance plan performance converges on that of savings plans as the range of insured events and their likelihoods expand. Severance "savings" plans require payouts other than for involuntary separation, most commonly for retirement, which highlights the link with pensions. Conversely the severance properties of pension plans vary with ownership rights (vesting) and "rollover" rules. Forced savings plans that also permit fund access for house purchases and/or human capital investments (provident funds) are an obvious extension of strict severance savings plans. |
| Keywords: | job displacement, unemployment insurance, severance pay, moral hazard, job turnover, pensions, provident funds |
| JEL: | J65 J41 J33 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9865&r=lab |
| By: | Hendrik van Broekhuizen (Department of Economics, University of Stellenbosch) |
| Abstract: | The emerging consensus regarding high and rising levels of graduate unemployment in South Africa in recent years has primarily been based on a select number of studies, all of which have serious shortcomings ranging from deficient definitions of “graduates” to the use of outdated, incomplete, or unrepresentative data. Moreover, given the heterogeneity in the quality of higher education in South Africa, existing findings regarding aggregate graduate unemployment in the country, even if accurate, mask the substantial variation in labour market outcomes which are likely to be faced by graduates from different higher education institutions. This paper attempts to address these issues by examining graduate unemployment and employment in South Africa with specific emphasis on the type and quality of higher education using multiple labour force survey and administrative datasets. Its primary contribution is to incorporate the effect of potential measures of higher education institution type and quality on the likelihood of graduate unemployment and employment by probabilistically linking graduates that are observed in labour force survey data to the institutions from which they are likely to have graduated given their time-invariant observable characteristics and the known demographic composition of the graduates produced by each of South Africa’s formal higher education institutions every year. The analysis shows that graduate unemployment in South Africa is not only low in relation to overall unemployment in the country, but that much of the racially-delineated differentials in graduate unemployment and employment outcomes can likely be attributed to heterogeneity in the quality and type of higher education institutions commonly attended by individuals from different racial backgrounds. |
| Keywords: | graduates, unemployment, higher education |
| JEL: | J64 I23 I26 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers264&r=lab |
| By: | Marco Cozzi (University of Victoria); Giulio Fella (Queen Mary University of London) |
| Abstract: | This paper is a quantitative, equilibrium study of the insurance role of severance pay when workers face displacement risk and markets are incomplete. A key feature of our model is that, in line with an established empirical literature, job displacement entails a persistent fall in earnings upon re-employment due to the loss of tenure. The model is solved numerically and calibrated to the US economy. In contrast to previous studies that have analyzed severance payments in the absence of persistent earning losses, we find that the welfare gains from the insurance against job displacement afforded by severance pay are sizable. |
| Keywords: | Severance payments, Incomplete markets, Welfare |
| JEL: | E24 D52 D58 J65 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp795&r=lab |
| By: | Ransom, Tyler (Duke University); Winters, John V. (Oklahoma State University) |
| Abstract: | This paper examines effects of the U.S. Immigration Act of 1990 on STEM (science, technology, engineering, and mathematics) degree completion and labor market outcomes for native-born Americans. The Act increased the in-flow and stock of foreign STEM workers in the U.S., both by increasing green card allotments and by expanding temporary work visas via the H-1B visa program. These policy changes potentially altered the relative desirability of various college majors and occupations for natives. We examine effects of the policy on STEM degree completion, STEM occupational choice, and employment rates separately for black and white males and females. We identify the effects using variation in natives' exposure to foreign STEM workers and the geographic dispersion in foreign-born STEM workers in 1980, which precedes the Act and predicts future foreign STEM flows. We find that the Immigration Act changed natives' skill investment and utilization in three ways: (1) it pushed black males out of STEM majors; (2) it pushed white male STEM graduates out of STEM occupations; and (3) it pushed white female STEM graduates out of the workforce. |
| Keywords: | immigration, STEM, college major, occupation, crowd out |
| JEL: | J24 J61 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9920&r=lab |
| By: | Marco Manacorda; Stefano Gagliarducci |
| Abstract: | In this paper we investigate the effect of family connections to politicians on individuals’ labor market outcomes. We combine data for Italy over almost three decades from longitudinal social security records on a random sample of around 1 million private sector employees with the universe of around 500,000 individuals ever holding political office, and we exploit information available in both datasets on a substring of each individual’s last name and municipality of birth in order to identify family ties. Using a diff-in-diff analysis that follows individuals as their family members enter and leave office, and correcting for the measurement error induced by our fuzzy matching method, we estimate that the monetary return to having a politician in the family is around 3.5 percent worth of private sector earnings and that each politician is able to extract rents for his family worth between one fourth and one full private sector job per year. The effect of nepotism is long lasting, extending well beyond the period in office. Consistent with the view that this is a technology of rent appropriation on the part of politicians, the effect increases with politicians’ clout and with the resources available in the administration where they serve. |
| Keywords: | nepotism; family connections; politics; rent appropriation |
| JEL: | J51 J61 J81 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:66440&r=lab |
| By: | Andrew J.G. Cairns (Maxwell Institute for Mathematical Sciences and Heriot-Watt University 4AS, United Kingdom. E-mail: A.J.G.Cairns@hw.ac.uk); Malene Kallestrup-Lamb (Aarhus University and CREATES); Carsten P.T. Rosenskjold (Aarhus University and CREATES); David Blake (Pensions Institute, Cass Business School, City University of London); Kevin Dowd (Durham University Business School) |
| Abstract: | We investigate and model how the mortality of Danish males aged 55-94 has changed over the period 1985-2012. We divide the population into ten socio-economic subgroups using a new measure of affluence that combines wealth and income reported on the Statistics Denmark national register database. The affluence index, in combination with sub-group lockdown at age 67, is shown to provide consistent sub-group rankings based on crude death rates across all ages and over all years in a way that improves significantly on previous studies that have focused on life expectancy. The gap between the most and least affluent is confirmed to be widest at younger ages and has widened over time. We introduce a new multi-population mortality model that fits the historical mortality data very well and generates smoothed death rates that can be used to model a larger number of smaller sub-groups than has been previously possible without losing the essential character of the raw data. The model produces bio-demographically reasonable forecasts of mortality rates that preserve the sub-group rankings at all ages. It also satisfies reasonableness criteria related to the term structure of correlations across ages and over time through consideration of future death and survival rates. |
| Keywords: | Danish mortality data; affluence; CBD-X model; gravity model; multipopulation mortality modelling |
| JEL: | J11 C53 G22 |
| Date: | 2016–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:aah:create:2016-14&r=lab |
| By: | Ewa Galecka-Burdziak |
| Abstract: | I compare random, stock-flow and job queuing models to determine which mechanism prevails in the Polish labour market. I use monthly registered unemployment data for the period 1999 - 2013 and econometrically correct for temporal aggregation bias in the data. I extend the known solutions to make them directly applicable to a job queuing model. I find that stocks and inflows engage in a matching process. Job seekers (from the pool) seek work among old and new job posts, but only a small fraction of the newly unemployed individuals find work instantaneously. Vacancies are the driving force in aggregate hiring, but the inflow is more important than the stock. The random model has greater explanatory power, although the results do not negate the non-random model. The random model entails the need to improve information to facilitate matching. The stock-flow model implies that policy should aim at creating more job offers. |
| Keywords: | Stock-flow matching, Random matching, Job queuing, Polish labour market, Temporal aggregation |
| JEL: | J63 J64 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:sgh:kaewps:2016005&r=lab |
| By: | Bordeman, Adam (California Polytechnic State University); Kannan, Bharadwaj (University of Colorado at Boulder); Pinheiro, Roberto (Federal Reserve Bank of Cleveland) |
| Abstract: | Using data on layoff announcements by S&P 500 firms, we show that layoff announcements mostly contain industrywide news. Competitors’ stock price reactions are positively correlated with the announcer’s returns. This contagion effect is stronger for competitors whose values depend on growth opportunities. When layoff announcements induce positive stock returns to announcers, competitors with positive R&D see a 1.15% increase in their returns. Conversely, when announcements induce negative reactions to announcers, competitors with high sales growth see a reduction of 1.09% in returns. Our findings suggest that investors perceive layoffs as a change in growth options rather than a change in the competitive environment. |
| Keywords: | Mass Layoffs; Competitors; Firm characteristics; |
| JEL: | G14 J63 |
| Date: | 2016–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1610&r=lab |
| By: | Gil S. Epstein (Bar-Ilan University, IZA, CReAM and Centro Studi Luca d'Agliano); Odelia Heizler (Cohen) (Tel-Aviv_Yaffo Academic College) |
| Abstract: | In this paper, we examine possible types of network formation among immigrants in the diaspora and between those immigrants and the locals in different countries. We present the model by considering different possible interactions between immigrants and the new society in their host country. Spread of migrants from the same origin in the diaspora may well increase international trade between the different countries, depending on the types of networks formed. We present possible applications of network structure on the country of origin, such as on international trade. We find that when the size of the diaspora is sufficiently large, the natives in the different countries will be willing to bear the linking cost with the immigrants because the possible benefits increase with increasing size of the diaspora. |
| Keywords: | Immigrants, Networks, Diaspora |
| JEL: | D85 D74 J61 L14 |
| Date: | 2016–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:389&r=lab |
| By: | Francesco LISSONI |
| Abstract: | In the new era of mass migration, with highly skilled individuals playing a key role, the role of migration in innovation diffusion is a topical issue. The paper organizes several strands of literature, from the history of religious minorities to the spatial analysis of knowledge flows. Three main themes emerge: the distinction between mobility and migration, the directions of flows, and their contents. Migration supports diffusion from origin to host countries, but also in the opposite direction, as well as within and across destinations. Distinguishing between information access and knowledge exchanges remain a major item of the research agenda. |
| Keywords: | migration ; innovation ; diffusion |
| JEL: | O33 F22 J61 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2016-11&r=lab |
| By: | C. Kirabo Jackson |
| Abstract: | In 2010, the Ministry of Education in Trinidad and Tobago converted 20 low-performing pilot secondary schools from coed to single-sex. I exploit these conversions to identify the causal effect of single-sex schooling holding other school inputs (such as teacher quality and leadership quality) constant. After also accounting for student selection, both boys and girls in single-sex cohorts at pilot schools score 0.14σ higher in the academic subjects on national exams. There is no robust effect on non-academic subjects. Additionally, treated students are more likely to earn the secondary-school leaving credential, and the all-boys cohorts have fewer arrests. Survey evidence reveals that these single-sex effects reflect both direct gender peer effects due to interactions between classmates, and also indirect effects generated through changes in teacher behavior. Importantly, these benefits are achieved at zero financial cost. |
| JEL: | H0 I20 J00 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22222&r=lab |
| By: | Antonakakis, Nikolaos; Collins, Alan |
| Abstract: | In 1955 Simon Kuznets hypothesized an inverted U-shaped relationship between economic growth and income inequality. Environmental and obesity variants substitute pollution and body mass metrics for income inequality. Graphical depictions of both feature widely in economic literature. In this study, we investigate the existence (or lack thereof) of a suicidal Kuznets curve. Controlling for several country-specific socioeconomic suicide determinants among 73 countries over the period 1990-2010, we find evidence of an N-shaped suicidal Kuznets curve between per capita income and suicide rates of the male population of 25-34, 34-54 and 55-74 age groups and the female population of the 55-74 age group. The turning points of per capita income for the male population of 25-34, 34-54 and 55-74 age groups are $7,727 and $46,306, $5,266 and $22,726, and $3,459 and $53,260, respectively, while for the female population of the 55-74 age groups are $4,022 and $43,351. On average and across both genders, as per capita income increases, suicide rates for those aged 25-34 and 35-54 follow an increasing trend and peak when per capita income reaches $7,304 and $6,498, respectively, then follow a declining trend until $60,819 and $25,129, respectively, and increase thereafter again. These results remain robust to a battery of robustness checks. |
| Keywords: | Suicide, GDP growth, Kuznets curve, Unemployment, Fertility, Life expectancy |
| JEL: | C33 E32 I15 I31 J13 |
| Date: | 2016–05–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:71108&r=lab |
| By: | Warn N. Lekfuangfu (Chulalongkorn University and CEP, London School of Economics); Nattavudh Powdthavee (CEP, London School of Economics); Nele Warrinnier (CEP, London School of Economics and University of Leuven); Francesca Cornaglia (Queen Mary University of London and CEP, London School of Economics) |
| Abstract: | This paper builds upon Cunha's (2015) subjective rationality model in which parents have a subjective belief about the impact of their investment on the early skill formation of their children. We propose that this subjective belief is determined in part by locus of control (LOC), i.e., the extent to which individuals believe that their actions can influence future outcomes. Consistent with the theory, we show that maternal LOC measured at the 12th week of gestation strongly predicts maternal attitudes towards parenting style, maternal time investments, as well as early and late cognitive outcomes. We also utilize the variation in inputs and outputs by maternal LOC to help improve the specification typically used in the estimation of skill production function parameters. |
| Keywords: | Locus of control, Parental investment, Human capital accumulation, Early skill formation, ALSPAC |
| JEL: | J01 I31 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp794&r=lab |
| By: | C. Kirabo Jackson |
| Abstract: | This paper extends the traditional test-score value-added model of teacher quality to allow for the possibility that teachers affect a variety of student outcomes through their effects on both students’ cognitive and noncognitive skill. Results show that teachers have effects on skills not measured by test-scores, but reflected in absences, suspensions, course grades, and on-time grade progression. Teacher effects on these non-test-score outcomes in 9th grade predict effects on high-school completion and predictors of college-going—above and beyond their effects on test scores. Relative to using only test-score measures of teacher quality, including both test-score and non-test-score measures more than doubles the predictable variability of teacher effects on these longer-run outcomes. |
| JEL: | I21 J00 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22226&r=lab |