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on Labour Economics |
| By: | Fran çois Langot (University of Le Mans (GAINS-TEPP & IRA), Paris School of Economics, CEPREMAP and IZA.); Shaimaa Yassin (University of Neuchâtel (IRENE), University of Paris 1 Panthéon-Sorbonne (CES and Paris School of Economics) and University of Le Mans (GAINS-TEPP).) |
| Abstract: | This paper proposes an equilibrium matching labor market model for developing countries where the interaction between public, formal and informal sectors is considered. Theoretical analysis shows that labor markets' liberalization reforms can be evicted by shifts in public employment. Since the public sector accounts for a substantial share of employment in developing countries, this approach is crucial to understand their labor market outcomes. Wage offers to public sector employees increase the outside option value of workers during their bargaining processes in the formal and informal sectors. It becomes more profitable for workers to search on-the-job to access more attractive and stable jobs. The public sector therefore acts as an additional tax imposed on private firms. Using workers flows data from Egypt, we show that labor markets' liberalization plays against informal employment by increasing formal jobs' profitability, but is evicted by the increase of public sector wages observed at the same time. |
| Keywords: | Job search, Informality, Public Sector, Egypt, Unemployment, Wages, Policy Interventions. |
| JEL: | E24 E26 J60 J64 O17 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:irn:wpaper:16-09&r=lab |
| By: | Ryuta Ray Kato (International University of Japan) |
| Abstract: | This paper numerically examines the impact of the financial and time cost of child care as well as elderly care on economic growth and welfare in an aging Japan within a dynamic general equilibrium framework of multi-period overlapping generations with endogenized labor supply. Simulation results indicate that the replacement rate of the public pension scheme becomes below 50 percent from year 2039, even if the currently accumulated public pension funds are used up for paying pension benefits by year 2115. Financial burdens for the first group (age 65 and over) and for the second group (age 40 - 64) in the public long-term care insurance in year 2060 become more than double and more than five times as much as the level of year 2010 in an aging Japan, respectively. While increased child benefits stimulate savings and thus they improve welfare, the impact of elimination of the time cost of child care and elderly care is quite mixed, depending on the gender and job contract types of workers within the household. When the time cost of elderly care spent by all workers irrespective of gender and job contract types is eliminated, many generations enjoy welfare gain, but when the time cost of child care by all workers is eliminated, then almost all generations, except for relatively elder generations, reversely suffer from welfare loss. When a starting age to contribute to the long-term care insurance becomes earlier from the current age of 40 to age 35, welfare of all generations improves. |
| Keywords: | Child Care, Child Benefits, Elderly Care, Long-Term Care Insurance, Public Pension, Female Labor Supply, Aging, Economic Growth, Simulation, CGE Model |
| JEL: | C68 H51 E62 H55 J16 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:iuj:wpaper:ems_2016_13&r=lab |
| By: | Petreski, Marjan (University American College Skopje); Mojsoska-Blazevski, Nikica (University American College Skopje); Bergolo, Marcelo (IECON, Universidad de la República) |
| Abstract: | The objective of this study is to assess how the duration of the unemployment spell of Macedonia youth affects later employment (the employment 'scarring' effect) and wage outcomes (the wage 'scarring' effect). To that end, we first devise a model in which the unemployment spell is determined by individual and household characteristics and work attitudes and preferences. Discrete-time duration method is used to estimate this model. Then, we rely on a standard employment and Mincer earnings functions. We repeatedly impute missing wages to address the selection on observables, and use the regional unemployment rate when individual finished school as an instrument to mitigate the selection on unobservables. The School to Work Transition Survey 2012 is used. Results robustly suggest a presence of employment scar as those young persons who stay unemployed over a longer period of time were found to have lower chances to find a job afterwards. On the other hand, the study does not provide evidence for the existence of the wage scar. |
| Keywords: | employment scarring, wage scarring, extremely high unemployment, Macedonia |
| JEL: | E24 J24 J64 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10342&r=lab |
| By: | Barbara Engels; Johannes Geyer; Peter Haan |
| Abstract: | In this paper we exploit a cohort-specific pension reform to estimate the causal labour market effects of changes in the financial incentives to retire. In particular, we analyze the effects of the introduction of cohort-specific deductions for early retirement on female retirement, employment and unemployment. For the empirical analysis we use high-quality administrative data from the German pension insurance. We present evidence for sizable labour market effects. In addition to direct effects on women older than 60 we find important anticipation effects before reaching the pension eligibility age. Overall we document that the pension reform leads to a postponement of retirement, an increase in employment and a shifting in unemployment over age rather than a substitution into unemployment. |
| Keywords: | Retirement age, pension reform, labour supply, actuarial deductions, cohort-specific pension reform, labour market effects |
| JEL: | J14 J18 J22 J26 H21 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1617&r=lab |
| By: | Anna Rosso (University of Milan and Centro Studi Luca d'Agliano) |
| Abstract: | In this paper, I examine wage developments among Eastern European immigrants versus UK natives between 1998 and 2008 by measuring the extent to which intergroup wage differentials are explainable by these groups’ changing attributes or by differences in returns to these characteristics. Specifically, by applying unconditional quantile regression to immigrant-native wage gaps before and after the 2004 EU enlargement to Eastern countries, I show that a major part of the decrease in the average wages of Eastern European migrants in the UK results from a large decrease in wage levels at the top of the distribution. At all distribution points, major role is played by occupational downgrading, which increases over time. The results further suggest that the decreased wage levels at the top of the distribution stem mainly from low transferability of skills acquired in the source country. |
| Keywords: | migration, EU enlargement, labour market outcomes |
| JEL: | J31 J61 F22 |
| Date: | 2016–10–21 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:405&r=lab |
| By: | Goerke, Laszlo (IAAEU, University of Trier) |
| Abstract: | We theoretically analyse the effects of sick pay and employees' health on collective bargaining, assuming that individuals determine absence optimally. If sick pay is set by the government and not paid for by firms, it induces the trade union to lower wages. This mitigates the positive impact on absence. Moreover, a union may oppose higher sick pay if it reduces labour supply sufficiently. Better employee health tends to foster wage demands. If the union determines both wages and sick pay, we identify situations in which it will substitute wages for sick pay because adverse absence effects can be mitigated. |
| Keywords: | absence, employment, sick pay, trade union, wage determination |
| JEL: | D62 I13 I18 J22 J51 J52 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10335&r=lab |
| By: | Arni, Patrick (University of Bristol); Schiprowski, Amelie (IZA) |
| Abstract: | Enforcing the compliance with job search obligations is a core task of conditional benefit systems like unemployment insurance (UI) or welfare. For targeted policy design, it is key to understand how the enforcement regime affects job search outcomes. This paper provides first estimates that separately identify the effects of increasing enforcement strictness in UI. As a natural experiment, we exploit a reform which induced a sharp and unanticipated increase in the probability of being sanctioned after the failure to document job search effort. Using a difference-in-differences design, we find that the probability of job finding within six months increases by 6 percentage points in response to the policy change. This effect comes at the cost of lower job stability. As a consequence, early job finders experience losses in total earnings driven by fewer months in employment within the considered post-unemployment period. We use these estimates to quantify the elasticities to changes in enforcement strictness, trading off the short-run gains (job finding) against the mid-run costs (job quality). |
| Keywords: | unemployment insurance, job search, natural experiment, enforcement |
| JEL: | J64 J65 J68 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10353&r=lab |
| By: | Thomas Buser (University of Amsterdam, The Netherlands); Huaiping Yuan (University of Amsterdam, The Netherlands) |
| Abstract: | We conduct three lab experiments and use field data from the Dutch Math Olympiad to study how the gender gap in willingness to compete evolves in response to experience. The main result is that women are more likely than men to stop competing if they lose. In the Dutch Math Olympiad, this means that girls who do not make the top 1000, and therefore do not advance to the next round, are less likely to compete again one year later while there is no effect on boys. In an additional experiment, we show that men are more likely than women to start and keep competing after receiving positive feedback. In a third experiment, we show that the gender difference in the reaction to losing is not present when winning and losing are random rather than the outcome of competition. The fact that women are more likely to give up competing after a setback may help to explain why fewer women make it to the top in business and academia. |
| Keywords: | willingness to compete; gender; feedback; career decisions; laboratory experiment |
| JEL: | C91 D03 J01 J16 |
| Date: | 2016–11–10 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20160096&r=lab |
| By: | Marios Michaelides; Scott Davis |
| Abstract: | This paper uses data from the Growing America Through Entrepreneurship (GATE) program to assess the effectiveness of providing self-employment training to unemployed workers during a period of moderate unemployment and during the Great Recession. Results show that self-employment training can significantly improve the short-term self-employment and overall employment rates of unemployed workers, with effects on self-employment persisting for long periods after program entry. Although it appears unlikely that self-employment training may improve self-employment earnings, there is evidence that some participants may achieve higher salary and total earnings when the labor market is relatively strong. Based on these findings, we conclude that self-employment training can potentially be an effective short-term reemployment strategy, regardless of the overall economic conditions, but it is unlikely to help unemployed workers improve their long-term employment and earnings outcomes. |
| Keywords: | Great Recession; Self-employment; Small business; Training; Unemployment; Program evaluation. |
| JEL: | J6 H4 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:ucy:cypeua:09-2016&r=lab |
| By: | Sahn, David E. (Cornell University); Villa, Kira M. (University of New Mexico) |
| Abstract: | There is growing evidence that noncognitive skills affect economic, behavioral, and demographic outcomes in the developed world. However, little such evidence exists from developing countries. This paper estimates the joint effect of five specific personality traits and cognition on a sequence of labor market outcomes for a sample of Malagasy individuals as they transition from adolescence to young adulthood. Specifically we model these individuals' age of entry into the labor market, labor market sectoral selection, and within sector earnings. The personality traits we examine are the Big Five Personality Traits: Openness to Experience, Conscientiousness, Extraversion, Agreeableness, and Neuroticism. Additionally, we look at how these traits interact with household-level shocks in determining their labor market entry decisions. We find that personality, as well as cognitive test scores, affect these outcomes of interest, and that their impact on labor supply is, in part, a function of how individuals respond to exogenous shocks. |
| Keywords: | personality, cognitive, noncognitive, returns to skills, informal sector, formal sector, labor market entry, shocks, Madagascar |
| JEL: | O15 O17 J16 J24 J22 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10359&r=lab |
| By: | Crépon, Bruno (CREST); van den Berg, Gerard J. (University of Bristol) |
| Abstract: | Active labor market policies are massively used with the objective being to improve labor market outcomes of individuals out of work. Many observational evaluation studies have been published. In this review, we critically assess policy effectiveness. We emphasize insights from recent randomized controlled trials. In addition, we examine policy effects that have not been the primary object of most of the past evaluations, such as anticipatory effects of advance knowledge of future treatments and equilibrium effects, and we discuss the actual implementation of policies. We discuss the importance of heterogeneity of programs and effects and examine the extent to which potential participants are interested in enrollment. We also discuss the assessment of costs and benefits of programs. |
| Keywords: | subsidized jobs, matching, job search assistance, evaluation, active labor market program, training, unemployment, wages |
| JEL: | J08 J64 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10321&r=lab |
| By: | Ken-ichi Hashimoto (Graduate School of Economics, Kobe University); Ryonghun Im (Japan Society for the Promotion of Science, Research Fellowship for Young Scientists, Graduate School of Economics, Kobe University) |
| Abstract: | Employing an overlapping generations model of research and development (R&D)-based growth with labor market frictions, this paper examines how employment changes induced by labor market frictions influence asset bubbles and long-run economic growth. Asset bubbles can (cannot) exist when the employment rate is high (low), which leads to higher (lower) economic growth through labor market efficiency. We also explore the steady state and transitional dynamics of bubbles, economic growth, and employment. Furthermore, we show that policy or parameter changes that have a negative influence on the labor market can lead to a bubble burst. |
| Keywords: | overlapping generations, asset bubbles, labor market friction, employment rate, R&D |
| JEL: | J64 O41 O42 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:koe:wpaper:1642&r=lab |
| By: | Gray Kimbrough |
| Abstract: | A wealth of research has shown that the commutes of American women are shorter, both in time and distance, than those of American men. This study takes advantage of a large, nationally representative dataset, the American Time Use Survey (ATUS), to examine gender differences in commute character and time. A method of calculating commuting time that accounts for stops along the journey is applied to ATUS data; analysis of gender differences in the number, type, and length of stops demonstrates the need for this commuting measure. Explanations for womenâs shorter commutes are reviewed and tested alongside predicted relationships from a simple labor supply model. Controlling for marital status and the presence of children, women are more likely to be accompanied by children for their commute, and women tend to make longer stops than men. Multivariate regression results support two previously proposed explanations for the gender commuting time gap, based on gender differences in wages and types of jobs held. Contrary to the previously proposed Household Responsibility Hypothesis, this analysis provides evidence that greater household responsibility does not explain womenâs shorter commutes. |
| JEL: | J22 R41 J16 |
| Date: | 2016–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:jmp:jm2016:pki275&r=lab |
| By: | Bode, Eckhardt; Brunow, Stephan; Ott, Ingrid; Sorgner, Alina |
| Abstract: | We present empirical evidence suggesting that technological progress in the digital age will be biased not only with respect to skills acquired through education but also with respect to noncognitive skills (personality). We measure the direction of technological change by estimated future digitalization probabilities of occupations, and noncognitive skills by the Big Five personality traits from several German worker surveys. Even though we control extensively for education and experience, we find that workers characterized by strong openness and emotional stability tend to be less susceptible to digitalization. Traditional indicators of human capital thus measure workers' skill endowments only imperfectly. |
| Keywords: | Worker personality,Noncognitive skills,Digital transformation,Direction of technical change,Germany |
| JEL: | F22 J61 O15 C63 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkwp:2057&r=lab |
| By: | Cahuc, Pierre (Ecole Polytechnique, Paris); Charlot, Olivier (University of Cergy-Pontoise); Malherbet, Franck (CREST (ENSAE)); Benghalem, Helène (CREST); Limon, Emeline (University of Cergy-Pontoise) |
| Abstract: | This paper analyzes the consequences of the taxation of temporary jobs recently introduced in several European countries to induce firms to create more open-ended contracts and to increase the duration of jobs. The estimation of a job search and matching model on French data shows that the taxation of temporary jobs does not reach its objectives: it reduces the mean duration of jobs and decreases job creation, employment and welfare of unemployed workers. We find that a reform introducing an open-ended contract without layout costs for separations occurring at short tenure would have opposite effects. |
| Keywords: | temporary jobs, employment protection legislation, taxation |
| JEL: | J63 J64 J68 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10352&r=lab |
| By: | Takhtamanova, Yelena F. (Federal Reserve Bank of San Francisco); Sierminska, Eva (LISER (CEPS/INSTEAD)) |
| Abstract: | This paper studies the mechanisms driving the persistently high unemployment rate during the last recession and mild recovery. Previous studies have examined the demographic aspect of the recession. We focus on specific industries. Consequently, we propose a methodology to decompose changes in the unemployment rate into worker inflows and outflows across industry groups and outline the unique characteristics of the latest recession (including examining cyclical and structural forces). We use harmonized- reclassified industry data for 1976-2011 in the United States, which allows us to make comparisons previously not possible. |
| Keywords: | unemployment, worker flows, job finding rate, separation rate, industry |
| JEL: | J1 J6 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10340&r=lab |
| By: | Pei, Yun (State University of New York at Buffalo); Xie, Zoe (Federal Reserve Bank of Atlanta) |
| Abstract: | During recessions, the U.S. government substantially increases the duration of unemployment insurance (UI) benefits through multiple extensions. This paper seeks to understand the incentives driving these increases. Because of the trade-off between insurance and job search incentives, the classic time-inconsistency problem arises. This paper endogenizes a time-consistent UI policy in a stochastic equilibrium search model, where a government without commitment to future policies chooses the UI benefit level and expected duration each period. A longer benefit duration increases unemployed workers’ consumption but reduces job search, leading to higher future unemployment. Quantitatively, the model rationalizes most of the variations in benefit duration during the Great Recession. We use the framework to evaluate the effects of the 2009–13 benefit extensions on unemployment and welfare. |
| Keywords: | time-consistent policy; unemployment insurance; labor market; business cycle |
| JEL: | E61 H21 J64 J65 |
| Date: | 2016–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2016-11&r=lab |
| By: | Stancanelli, Elena G. F. (Paris Jourdan Sciences Economiques) |
| Abstract: | Retirement policies are individually designed but the majority of people of retirement age live as couples. We estimate the effects of a French pension reform on spouses' employment decisions. We use labor-force survey data, pooled over different years, on fifty thousand French couples and apply a regression discontinuity framework, also controlling for couple's unobserved heterogeneity. We conclude that the reform immediately reduced both spouses' retirement probability. The wife's retirement probability also drops by 1 to 4 percentage points if the husband is hit by the reform, and vice-versa. Instrumenting spousal retirement with legal retirement age, own retirement probability rises by 2 to 6 percentage points upon spousal retirement. |
| Keywords: | policy evaluation, retirement, ageing |
| JEL: | J14 C1 C36 D04 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10322&r=lab |