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on Labour Economics |
| By: | Bart Cockx; Eva Van Belle (-) |
| Abstract: | In Belgium school-leavers are entitled to unemployment benefits after a waiting period and eligible to intensified counselling and training in the Youth Work Plan (YWP) if a job is not found within three months. The length of the waiting period and eligibility to the YWP are sharply determined by two distinct age thresholds. These are exploited to estimate the impact of these policies on the transition rate to employment and on the quality of work. Both policies increase job finding only slightly and insignificantly. The accepted wage is unaffected, but the number of working days falls and, hence, also earnings. |
| Keywords: | youth unemployment, policy evaluation, regression discontinuity design,survival analysis, quality of employment |
| JEL: | J64 J65 J68 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:16/922&r=lab |
| By: | Luisito Bertinelli (CREA, Université du Luxembourg); Olivier Cardi (LEO, Université de Tours, Université de Paris 2, CRED); Romain Restout (BETA, Université de Lorraine - IRES, Université catholique de Louvain) |
| Abstract: | This paper develops a tractable version of a two-sector open economy model with search frictions in order to account for the relative price and relative wage effect of technology shocks biased toward the traded sector. Using a panel of eighteen OECD countries, our estimates show that higher productivity in tradables relative to non trad- ables causes an appreciation in the relative price of non tradables along with a decline in non traded relative to traded wages while both responses display a considerable dis- persion across countries. The fall in the relative wage reveals the presence of mobility costs preventing wage equalization across sectors, while the cross-country dispersion in the relative wage responses suggest differences in labor market regulation. Using a set of indicators capturing the heterogeneity of labor market frictions across economies, we find that the relative wage significantly declines more and the relative price appreciates less in countries where labor market regulation is more pronounced. We show that 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. When we calibrate the model to country-specific data, the model performs well in reproducing the cross-country pattern in the relative wage responses and to a lesser extent in the relative price changes. While the responses of the relative wage and the relative price display a wide dispersion across countries, both display a significant negative relationship with labor market regulation. |
| Keywords: | Productivity differential; Sectoral wages; Relative price of non tradables; Search theory; Labor market institutions; Labor mobility. |
| JEL: | E24 F16 F41 F43 J65 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:16-14&r=lab |
| By: | C. Hémet; C. Malgouyres |
| Abstract: | This paper aims at determining whether and how the level of origins' diversity of a community affects its members' employment prospects. Relying on detailed data from the French Labor Force Survey, we measure diversity at two geographic levels: the neighborhood and the local labor market. The correlation between diversity and employment varies accordingly: it is negative at the former level but positive at the latter level. We then tackle the endogenous location selection issue in two ways. First, we rely on a standard instrumental variable approach to deal with diversity at the local labor market level, and propose a new instrument: diversity in the public housing sector. After correcting for endogeneity, the positive effect of diversity at this level is driven down to zero, revealing that it was mostly due to self-selection. Second, regarding neighborhood diversity, we adopt the strategy developed by Bayer et al. (2008) which takes advantage of the very precise localization of the data. The negative effect of diversity on employment at the neighborhood level is reinforced. We also show that diversity in terms of nationalities (a proxy for cultural diversity) matters more than diversity based on parents' origins (a proxy for ethnic diversity). These results reveal that local diversity may act as a barrier to communication, preventing job information transmission, and hence reducing employment prospects. |
| Keywords: | diversity, employment, neighborhood effects. |
| JEL: | J15 J60 R23 Z13 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:605&r=lab |
| By: | Fornaro, Paolo; Luomaranta, Henri |
| Abstract: | We contribute to the extensive literature on the relationship between firm size and job creation, by examining the effects of dependencies between enterprises. Using Finnish monthly data encompassing the population of Finnish private businesses, we calculate the gross job creation and destruction, together with the net job creation, for different size classes and industries. Importantly, we divide firms into a dependent (i.e. owned, at least partially, by a large company) and independent category. Due to the quality of the data, we are able to isolate the 'organic' growth of firms, disregarding the effects of mergers, split-offs and other legal restructuring. We find that independent companies have shown a considerably higher net job creation, regardless of their size class. However, dependent firms do not show particularly different behaviors with respect to the sensitivity to aggregate conditions, compared to their independent counterparts. Once we control for age, we find that independent firms generate more (net) jobs during the early years of their existence but destroy more jobs once they become older. |
| Keywords: | Dependencies, firm size, firm age, employment creation |
| JEL: | D22 E24 E32 L25 |
| Date: | 2016–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:rif:wpaper:44&r=lab |
| By: | Lichter, Andreas (IZA) |
| Abstract: | Findings of prolonged non-employment spells due to more generous unemployment benefits are commonly seen as an indication of reduced job search effort and moral hazard behavior. However, to date, there is hardly any direct evidence of benefit-induced reductions in search effort. This paper exploits quasi-experimental variation in the potential benefit duration in Germany paired with individual-level data on job search behavior to directly investigate this assumed relationship. The results of this study provide substantial support for strategic job search behavior in response to the generosity of the benefit scheme: the extension of the benefit duration caused job search effort to significantly decrease, lowering the number of filed applications and the probability of applying for a job that requires moving. In line with theory, it is shown that the reduction in search effort is accompanied by a significant decrease in the short-run job-finding rate. Instrumental variables estimates further provide causal evidence on the direct relationship between search effort and unemployment duration: a 10 percent increase in the number of filed job applications is found to increase the short-run job-finding probability by 1.3 percentage points. |
| Keywords: | job search, unemployment insurance, natural experiment, Germany |
| JEL: | D83 I38 J64 J68 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10264&r=lab |
| By: | Fredrik Andersson; John C. Haltiwanger; Mark J. Kutzbach; Giordano E. Palloni; Henry O. Pollakowski; Daniel H. Weinberg |
| Abstract: | To date, research on the long-term effects of childhood participation in voucher-assisted and public housing has been limited by the lack of data and suitable identification strategies. We create a national-level longitudinal data set that enables us to analyze how children’s housing experiences affect adult earnings and incarceration rates. While naive estimates suggest there are substantial negative consequences to childhood participation in voucher-assisted and public housing, this result appears to be driven largely by selection of households into housing assistance programs. To mitigate this source of bias, we employ household fixed-effects specifications that use only within-household (across-sibling) variation for identification. Compared to naive specifications, household fixed-effects estimates for earnings are universally more positive, and they suggest that there are positive and statistically significant benefits from childhood residence in assisted housing on young adult earnings for nearly all demographic groups. Childhood participation in assisted housing also reduces the likelihood of incarceration across all household race/ethnicity groups. Time spent in voucher-assisted or public housing is especially beneficial for females from non-Hispanic Black households, who experience substantial increases in expected earnings and lower incarceration rates. |
| JEL: | I38 J15 J31 J62 R23 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22721&r=lab |
| By: | serena Rhee (Department of Economics, University of Hawaii); Soojin Kim (Purdue University) |
| Abstract: | We evaluate the Americans with Disabilities Act(ADA) using a directed search model in which firms post health-contingent wage contracts. We theoretically show that the ADA benefits disabled workers at the expense of non-disabled workers if firms face a high penalty for preferentially hiring non-disabled, whereas the disabled are worse off if the expected cost from terminating a disabled employee is high. Our estimation results imply that disabled job-finding and job-separation rates decreased, suggesting that for firms, the cost of hiring discrimination is lower than disabled worker termination. Overall, the ADA caused a 2:2 percentage point decline in disabled employment rates. |
| Keywords: | Americans with Disabilities Act, employment protection, search friction, wage posting, job-finding rate |
| JEL: | J78 J64 J68 K31 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:201621&r=lab |
| By: | Colin Davis (Institute for the Liberal Arts, Doshisha University); Ken-ichi Hashimoto (Graduate School of Economics, Kobe University) |
| Abstract: | This paper investigates the relationship between net offshoring patterns for innovation and manufacturing and fully endogenous productivity growth in a two-country model. The occupational choice of skill-differentiated workers into low-skilled employment in production and high-skilled employment in innova- tion determines labor market allocations, and perfect investment mobility allows firms to shift innovation and manufacturing independently between countries. These mechanisms generate a tension between access to technical knowledge and low-cost high-skilled labor in the location decision for innovation, which results in innovation and manufacturing tending to concentrate in the asset-wealthy (asset-poor) country when trade costs are high (low). The model exhibits a positive relationship between innovation costs and the concentration of industry and innovation, ensuring that a rise in knowledge diffusion between countries coincides with increases in net offshoring flows in innovation and manufacturing from the asset-wealthy country to the asset-poor country, and a faster rate of productivity growth, when the asset-wealthy country has larger shares of innovation and production. |
| Keywords: | innovation offshoring, manufacturing offshoring, endogenous productivity growth, process innovation, industry location, international trade |
| JEL: | F12 F43 R11 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:koe:wpaper:1636&r=lab |
| By: | Garcia-Medina Cecilia |
| Abstract: | I examine how changes in the receipt of social transfers benefits associated to program reforms have affected the Canadian income distribution over the 1996-2006 period. Using the Survey of Labour and Income Dynamics, I apply nonparametric decomposition methods to construct density counterfactuals that identify the distributive effects of each transfer program. Counterfactual densities are constructed by reweighting the income distribution with propensity score functions that reflect changes in the probability of receiving program benefits. I find that reforms to the Social Assistance program have reduced its redistributive effectiveness, whereas Child Benefits, Employment Insurance and Old Age Security are more redistributive than in 1996. |
| Keywords: | Redistribution;income inequality;tax and transfer system;nonparametric methods |
| JEL: | H23 D31 I38 C14 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdm:wpaper:2016-16&r=lab |
| By: | Lindquist, Matthew; Sol, Joeri; van Praag, Mirjam; Vladasel, Theodor |
| Abstract: | Promoting entrepreneurship has become an increasingly important part of the policy agenda in many countries. The success of such policies, however, rests in part on the assumption that entrepreneurship outcomes are not fully determined at a young age by factors that are unrelated to current policy. We test this assumption and assess the importance of family background and neighborhood effects as determinants of entrepreneurship, by estimating sibling correlations in entrepreneurship. We find that between 20 and 50 percent of the variance in different entrepreneurial outcomes is explained by factors that siblings share (i.e., family background and neighborhood effects). The average is 28 percent. Hence, entrepreneurship is far less than fully determined at a young age. Our estimates increase only a little when allowing for differential treatment within families by gender and birth order. We then investigate a comprehensive set of mechanisms that explain sibling similarities. Parental entrepreneurship plays a large role in explaining sibling similarities, as do shared genes. We show that neighborhood effects matter, but are rather small, particularly when compared with the overall importance of family factors. Sibling peer effects, and parental income and education matter even less. |
| Keywords: | Entrepreneurship; Family Background; Intergenerational Persistence; Neighborhood Effects; Occupational Choice; Sibling Correlations. |
| JEL: | D13 J62 L26 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11562&r=lab |
| By: | Vuillemey, Guillaume; Wasmer, Etienne |
| Abstract: | Bubbles are recurrent events, which contribute to both macroeconomic and employment volatility. We introduce stochastic bubbles in the standard search-and-matching model of the labor market. The economy alternates between latent and bubbly states, each being associated with a distinct solution for the market value of firms (respectively, stable or explosive). Bubbles in firm value induce distortions in hiring decisions and wages, which we explicitly characterize. Faced with bubbles, the social planner optimally deviates from the standard Hosios efficiency condition. The optimal share of workers in total surplus must be above the elasticity of hiring rates, by a small but increasing amount as the bubble expands. Finally, our specification for bubbles significantly improves the quantitative ability of the model to match U.S. data, along both real and financial dimensions. |
| Keywords: | bubbles; labor frictions; Unemployment volatility |
| JEL: | E32 J60 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11561&r=lab |
| By: | Claudia Olivetti; Dana E. Rotz |
| Abstract: | We study associations among women’s current marital status, past marital history, and later-life labor force participation. We first document these relationships using data from the 1986 to 2008 waves of the Survey of Income and Program Participation (SIPP). We then exploit variation in laws governing divorce across states and over time to quasi-experimentally identify how the timing of an exogenous increase in divorce risk (that is, the introduction of unilateral divorce) impacts employment and retirement outcomes for older women. The spread of unilateral divorce, we find, was associated with cross-cohort differences in the probability of divorce over the lifecycle. For women with a low risk of divorce, later exposure to unilateral divorce significantly increases the probability of full-time employment later in life, and significantly decreases retirement wealth. This finding suggests that ever-divorced women are working longer remedially; when a woman unexpectedly divorces later in life, she is less likely to have engaged in precautionary human capital investment and might have to work longer to increase her assets prior to retirement. For women with a high risk of divorce, later exposure to increases in divorce risk does not impact full-time employment after age 50 but is positively associated with investment in education post marriage. These women invest more in their own human capital within marriage, which might insure them against increases in exogenous divorce risk at later ages. |
| JEL: | J12 J21 J22 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22738&r=lab |
| By: | Dustmann, Christian; Fasani, Francesco; Frattini, Tommaso; Minale, Luigi; Schönberg, Uta |
| Abstract: | This paper provides a comprehensive analysis of refugee migration, with emphasis on the current refugee crisis. After first reviewing the institutional framework laid out by the Geneva Convention for Refugees, we demonstrate that, despite numerous attempts at developing a common European asylum policy, EU countries continue to differ widely in interpretation and implementation. We then describe key features of the current refugee crisis and document the overall magnitudes and types of refugee movements, illegal border crossings, and asylum applications to EU member states. We next turn to the economics of refugee migrations, contrasting economic and refugee migrants, discussing the trade-offs between long-term asylum and temporary protection, and highlighting the economic advantages of increasingly coordinating the different national asylum policies. Finally, we illustrate the economic integration of past refugee migrants to EU countries and conclude with several policy recommendations. |
| Keywords: | Asylum Policy; asylum seekers; refugee crisis |
| JEL: | F22 J15 J61 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11557&r=lab |
| By: | Shingo Ishiguro (Graduate School of Economics, Osaka University) |
| Abstract: | WThis paper presents a dynamic general equilibrium model to investigate the coevolution of employment and financial systems in the process of economic development when firms f commitment to financial and labor contracts is limited. We show that equilibrium modes of financial and labor contracts endogenously change from the informal contracting phase in which both of them are implicitly self-enforced to the formal contracting phase in which they are formally enforced and become more market-based as economies develop well. Furthermore, the formal contracting phase is irreversible in the sense that, once the economy enters that regime, it never returns back to the informal contracting phase. |
| Keywords: | Dynamic General Equilibrium, Insider Lending, Implicit and Explicit Labor Contracts, Market Lending |
| JEL: | D86 J41 J64 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1625&r=lab |
| By: | Holger Herz; Dmitry Taubinsky |
| Abstract: | People's fairness preferences are an important constraint for what constitutes an acceptable economic transaction, yet little is known about how these preferences are formed. In this paper, we provide clean evidence that previous transactions play an important role in shaping perceptions of fairness. Buyers used to high market prices, for example, are more likely to perceive high prices as fair than buyers used to low market prices. Similarly, employees used to high wages are more likely to perceive low wages as unfair. Our data further allows us to decompose this history dependence into the effects of pure observation vs. the experience of payoff-relevant outcomes. We propose two classes of models of path-dependent fairness preferences—either based on endogenous fairness reference points or based on shifts in salience—that can account for our data. Structural estimates of both types of models imply a substantial deviation from existing history-independent models of fairness. Our results have implications for price discrimination, labor markets, and dynamic pricing. |
| JEL: | C9 D0 J0 L1 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22728&r=lab |
| By: | Dobbie, Will (Princeton University); Goldsmith-Pinkham, Paul (Federal Reserve Bank of New York); Mahoney, Neale (University of Chicago Booth School of Business); Song, Jae (Social Security Administration) |
| Abstract: | Credit reports are used in nearly all consumer lending decisions and, increasingly, in hiring decisions in the labor market, but the impact of a bad credit report is largely unknown. We study the effects of credit reports on financial and labor market outcomes using a difference-in-differences research design that compares changes in outcomes over time for Chapter 13 filers, whose personal bankruptcy flags are removed from credit reports after seven years, to changes for Chapter 7 filers, whose personal bankruptcy flags are removed from credit reports after ten years. Using credit bureau data, we show that the removal of a Chapter 13 bankruptcy flag leads to a large increase in credit scores and an economically significant increase in credit card balances and mortgage borrowing. We study labor market effects using administrative tax records linked to personal bankruptcy records. In sharp contrast to the credit market effects, we estimate a precise zero effect of flag removal on employment and earnings outcomes. We conclude that credit reports are important for credit market outcomes, where they are the primary source of information used to screen applicants, but are of limited consequence for labor market outcomes, where employers rely on a much broader set of screening mechanisms. |
| Keywords: | consumer finance; bankruptcy; employment |
| JEL: | D14 G0 J0 |
| Date: | 2016–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:795&r=lab |