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on Labour Economics |
| By: | Davis, Jonathan (University of Chicago); Mazumder, Bhashkar (Federal Reserve Bank of Chicago) |
| Abstract: | We demonstrate that intergenerational mobility declined sharply for cohorts born between 1957 and 1964 compared to those born between 1942 and 1953. The former entered the labor market largely after the large rise in inequality that occurred around 1980 while the latter entered the labor market before this inflection point. We show that the rank-rank slope rose from 0.27 to 0.4 and the IGE rose from 0.35 to 0.51. The share of children whose income exceeds that of their parents fell by about 3 percentage points. These findings suggest that relative mobility fell by substantially more than absolute mobility. |
| Keywords: | Intergenerational mobility; income; labor market |
| JEL: | E2 J61 J62 |
| Date: | 2017–03–16 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-2017-05&r=lab |
| By: | Jackson, Osborne (Federal Reserve Bank of Boston); Zhao, Bo (Federal Reserve Bank of Boston) |
| Abstract: | Many regard the 2010–2012 Massachusetts Criminal Offender Record Information (CORI)Reform as a national model to improve ex-offenders’ labor market outcomes. This reform prohibits most employers from inquiring about an individual’s criminal history on the initial job application (the “ban the box” reform), and reduces employers’ access to an applicant’s criminal record (the record-access reform). Using the CORI Reform as a natural experiment and a unique large confidential dataset linking individuals’ CORI records with their unemployment insurance quarterly wage records, we examine the impact of changing employers’ access to applicants' criminal histories on ex-offenders’ labor market outcomes. We find that contrary to the intended goal, the CORI Reform has a small negative effect on ex-offenders’ employment that grows over time, with mixed effects on earnings and industry composition. Suggestive evidence shows that the negative employment effect is more likely to result from a labor supply response rather than a labor demand response to the policy changes. |
| Keywords: | ex-offenders; criminal history; Massachusetts CORI Reform; ban the box |
| JEL: | K14 K40 K42 |
| Date: | 2017–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:16-30&r=lab |
| By: | George J. Borjas |
| Abstract: | Over 11 million undocumented persons reside in the United States, and there has been a heated debate over the impact of legislative or executive efforts to regularize the status of this population. This paper examines the determinants of earnings for undocumented workers. Using newly developed methods that impute undocumented status for foreign-born persons sampled in microdata surveys, the study documents a number of findings. First, the age-earnings profile of undocumented workers lies far below that of legal immigrants and of native workers, and is almost perfectly flat during the prime working years. Second, the unadjusted gap in the log hourly wage between undocumented workers and natives is very large (around 40 percent), but half of this gap disappears once the calculation adjusts for differences in observable socioeconomic characteristics, particularly educational attainment. Finally, the adjusted wage of undocumented workers rose rapidly in the past decade. As a result, there was a large decline in the wage penalty associated with undocumented status. The relatively small magnitude of the current wage penalty suggests that a regularization program may only have a modest impact on the wage of undocumented workers. |
| JEL: | J31 J61 J68 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23236&r=lab |
| By: | Melissa S. Kearney; Phillip B. Levine |
| Abstract: | A large literature exists on the impact of family structure on children’s outcomes, typically focusing on average effects. We build on this with an economic framework that has heterogeneous predictions regarding the potential benefit for children of married parents. We propose that the gains to marriage from a child’s perspective depend on a mother’s own level of resources, the additional net resources that her partner would bring, and the outcome-specific returns to resources. Data from the Panel Study of Income Dynamics are consistent with the heterogeneous predictions of this framework. In terms of high school completion or avoiding poverty at age 25, the “marriage premium for children” is highest for children of mothers with high school degrees and mothers in their early/mid-20s. For the more advanced outcomes of college completion or high income at age 25, the marriage premium is monotonically increasing with observed maternal age and education. |
| JEL: | I3 J1 J12 J13 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23230&r=lab |
| By: | Zhuan Pei; Jörn-Steffen Pischke; Hannes Schwandt |
| Abstract: | Researchers frequently test identifying assumptions in regression based research designs (which include instrumental variables or difference-in-differences models) by adding additional control variables on the right hand side of the regression. If such additions do not affect the coefficient of interest (much) a study is presumed to be reliable. We caution that such invariance may result from the fact that the observed variables used in such robustness checks are often poor measures of the potential underlying confounders. In this case, a more powerful test of the identifying assumption is to put the variable on the left hand side of the candidate regression. We provide derivations for the estimators and test statistics involved, as well as power calculations, which can help applied researchers interpret their findings. We illustrate these results in the context of various strategies which have been suggested to identify the returns to schooling. |
| JEL: | C31 C52 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23232&r=lab |
| By: | Alex Bryson (University College London, National Institute of Social and Economic Research and Institute for the Study of Labor); Christine Erhel (Université Paris 1 Panthéon-Sorbonne, Centre d’Economie de la Sorbonne, CEET); Zinaïda Salibekyan (CNAM, LIRSA, CEET, LEST) |
| Abstract: | Using linked employer–employee data from two comparable surveys this article examines the links between non-pecuniary job quality and workplace characteristics in Britain and France – countries with very different employment regimes. The results show that job quality is better in Britain than it is in France, despite its minimalist regulatory regime. The difference is apparent for all dimensions of job quality (skill development, training participation, job autonomy, job insecurity, work-life balance and relations between employers and employees), except skills' match to a job. Firm size is negatively associated with non-pecuniary job quality in both countries but in France the association is confined to only the largest firms. Internal Labour Markets (ILMs) are associated with higher job quality in France, but not in Britain. |
| Keywords: | Job quality, Firm size, Internal labour market, Linked employer-employee data, Britain, France, Comparative |
| JEL: | I31 J30 J81 |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:qss:dqsswp:1708&r=lab |
| By: | Umakrishnan Kollamparambil |
| Abstract: | Despite the lack of clarity in literature with regards to the question of whether internal in-migration is a desirable phenomenon for the labor market outcomes, in-migration is often resisted under the premise that it leads to tighter job markets for the locals. This study therefore attempts an empirical verification of the impact of in-migration on labour market outcomes in South Africa. The results of dynamic system GMM regression analysis indicate that in-migration decreases the labour market participation rate of the migrant receiving districts, highlighting migration for non-economic purposes as well as discouraged migrants not seeking work post-migration. While In-migration is not found to alter significantly the employment rate of the receiving areas, indications are that the employment rate is maintained through an expansion of the informal wage employment. There is evidence of non-linear relationship between in-migration and the labour markets of the receiving areas. While initial migration results in the expansion of the formal sector employment, sustained increase in in-migration leads to informalisation of the labour markets. There is hence little evidence of positive self-selection among internal migrants in South Africa. Our results corroborate the Harris-Todaro model’s prediction that in-migration leads to increased informal sector share of the labour markets. |
| Keywords: | internal migration, labour markets, unemployment, informal sector, Self-employment |
| JEL: | J61 O17 R23 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:667&r=lab |
| By: | Haliassos, Michael (Goethe University Frankfurt); Jansson, Thomas (Research Department, Central Bank of Sweden); Karabulut, Yigitcan (Rotterdam School of Management, Erasmus University) |
| Abstract: | This paper uses unique administrative data and a quasi-field experiment of exogenous refugee allocation in Sweden to estimate effects of exposure to financially literate neighbors. It contributes evidence of causal impact of financial literacy and points to a social multiplier of financial education. Exposure promotes saving for retirement in the medium run and stockholding in the longer run, especially when neighbors have economics or business education, but only for educated or male-headed households. Findings point to knowledge transfer rather than mere imitation. We do not find significant effects on income or employment prospects, except for employment in the financial sector. |
| Keywords: | Household finance; financial literacy; social interactions; refugees |
| JEL: | D14 E21 F22 G11 I28 |
| Date: | 2017–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:rbnkwp:0333&r=lab |
| By: | Jenny Schuetz; Arturo Gonzalez; Jeff Larrimore; Ellen A. Merry; Barbara J. Robles |
| Abstract: | For much of the 20th century, America's central cities were viewed as synonymous with economic and social hardship, often used as proxy for low-income communities of color. Since the 1990s, however, many metropolitan areas have seen a resurgence of interest in central city neighborhoods. Theoretical models of income sorting lead to ambiguous predictions about where households of different income levels will live within metropolitan areas. In this paper, we explore intra-city spatial patterns of income and race for U.S. metropolitan areas, focusing particularly on the locations of low-income and minority neighborhoods. Results indicate that, on average, income and white population shares increase with distance to city centers. However, many centrally located neighborhoods are neither low-income nor majority non-white, while low-income and minority neighborhoods are spatially dispersed across most metropolitan areas. |
| Keywords: | Community development ; Demographic economics ; Housing policy ; Income sorting ; Neighborhood choice ; Racial segregation ; Urban spatial structure ; Urban, rural and regional economics |
| JEL: | I3 J1 R1 R2 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2017-31&r=lab |
| By: | Jon D. Wisman; Aaron Pacitti |
| Abstract: | The United States is falling behind many other rich nations on a broad spectrum of measures of the quality of life. These include social mobility, inequality, education, crime, health and longevity. Polls suggest that many Americans have not only lost their optimism concerning the future, but have become angry as well. This article sets forth the elements of a new social contract, one that would deliver substantial results almost overnight and which conforms to the traditional American values of the importance of work, that everyone should have a fair opportunity for upwards mobility, and the central importance of the family. This proposal is composed of two parts: The first is guaranteed employment, and where necessary, the retraining required to enable workers to successfully enter the regular workforce. The second is universal child care to give all parents the possibility of participating in the labor force. The article discusses in depth how these measures would reverse the relative decline in quality of life in America. It also reveals how, although these measure would be costly, their payoff for the economy would far offset the costs. |
| Keywords: | Guaranteed employment, retraining, social costs of unemployment, child care |
| JEL: | E24 J83 H10 I24 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2017-05&r=lab |
| By: | Gay, Victor; Hicks, Daniel L.; Santacreu-Vasut, Estefania; Shoham, Amir |
| Abstract: | Despite broad progress in closing many dimensions of the gender gap around the globe, recent research has shown that traditional gender roles can still exert a large influence on female labor force participation, even in developed economies. This paper empirically analyzes the role of culture in determining the labor market engagement of women within the context of collective models of household decision making. In particular, we use the epidemiological approach to study the relationship between gender in language and labor market participation among married female immigrants to the U.S. We show that the presence of gender in language can act as a marker for culturally acquired gender roles and that these roles are important determinants of household labor allocations. Female immigrants who speak a language with sex-based grammatical rules exhibit lower labor force participation, hours worked, and weeks worked. Our strategy of isolating one component of culture reveals that roughly two thirds of this relationship can be explained by correlated cultural factors, including the role of bargaining power in the household and the impact of ethnic enclaves, and that at most one third is potentially explained by language having a causal impact. |
| Keywords: | Culture, Female labor force participation, Immigrants, Language structure, Grammar |
| JEL: | J16 J22 J61 Z13 |
| Date: | 2017–03–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:77637&r=lab |
| By: | Sarena Goodman; Alice M. Henriques; Alvaro A. Mezza |
| Abstract: | Using a novel dataset that links an individual’s background, education, and federal financial aid participation to her future credit records, we document that, even though it is not, and cannot be, used by credit agencies in assigning risk, family background is a strong predictor of early-career credit health (that is, an individual’s credit score when she is around 30 years old). This relationship persists even after controlling for achievement, a range of postsecondary schooling variables (e.g., educational attainment, institutional quality, undergraduate borrowing), and key elements of early credit histories (e.g., default on educational loans). Interestingly, undergraduate borrowing, which is not underwritten, correlates with background and appears to explain some of the difference in scores. In light of the many important contexts in which credit scores are relied upon to evaluate consumers (e.g., lending, insurance, employment), our study offers a new dimension in understanding the transmission of socioeconomic status across generations. |
| Keywords: | Credit Health ; Credit Scores ; Intergenerational Mobility ; Socioeconomic Status ; Student Loans |
| JEL: | D12 D14 I22 I32 J10 J62 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2017-32&r=lab |
| By: | Mark E. McGovern; Aditi Krishna; Victor M. Aguayo; S.V. Subramanian |
| Abstract: | To understand the full impact of stunting in childhood it is important to consider the long run effects of undernutrition on the outcomes of adults who were affected in early life. Focusing on the costs of stunting provides a means of evaluating the economic case for investing in childhood nutrition. We review the literature on the association between stunting and undernutrition in childhood and economic outcomes in adulthood. At the national level, we also evaluate the evidence linking stunting to economic growth. Throughout, we consider RCTs, quasi-experimental approaches, and observational studies. Long-run evaluations of two randomized nutrition interventions indicate substantial returns to the programs (a 25% and 46% increase in wages for those affected as children). Cost-benefit analyses of nutrition interventions report a median return of 17.9:1 per child. Assessing the wage premium associated with adult height, we find that a 1 centimeter increase in stature is associated with a 4% increase in wages for men and a 6% increase in wages for women in our preferred set of studies which attempt to address unobserved confounding and measurement error. In contrast, the evidence on the association between economic growth on stunting is mixed. Countries with high rates of stunting, such as those in South Asia and sub-Saharan Africa, should scale up policies and programmes aiming to reduce child undernutrition as cost-beneficial investments that which expand the economic opportunities of their children, better allowing them and their countries to reach their full potential. However, economic growth as a policy will only be effective at reducing the prevalence of stunting when increases in national income are directed at improving the diets of children, addressing gender inequalities and strengthening the status of women, improving sanitation, and reducing poverty and inequities. |
| Keywords: | Stunting; Productivity; Economic Growth; Early Childhood Investment |
| JEL: | I10 J10 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:qub:charms:1703&r=lab |
| By: | Mohammed Aït Lahcen |
| Abstract: | This paper studies the impact of informality on the long-run relationship between inflation and unemployment in developing economies. I present a dynamic general equilibrium model with informality in both labor and goods markets and where money and credit coexist. An increase in inflation affects unemployment through two channels: the matching channel and the hiring channel. On one hand, higher inflation reduces the surplus of monetary trades thus lowering firms entry and increasing unemployment. On the other hand, the lower impact of inflation on formal transactions where credit is partially available shifts firms hiring decision from high separation informal jobs to low separation formal jobs thus reducing unemployment. The model is calibrated to match certain long-run statistics of the Brazilian economy. Numerical results indicate that, in the presence of a sizable informal sector, inflation has a small negative effect on unemployment while producing a significant impact on labor allocation between formal and informal jobs. These results point to the importance of accounting for informality when considering the inflation-unemployment trade-off in the conduct of monetary policy. |
| Keywords: | Informality, Phillips curve, money, labor, search and matching |
| JEL: | E26 E41 J64 H26 O17 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:248&r=lab |
| By: | Willem Devriendt; Freddy Heylen (-) |
| Abstract: | In the absence of behavioural adjustments, demographic change may cut off about 0.4%- point on average from the annual per capita growth rate in the next 25 years. The behavioural responses of households and firms to declining fertility and rising life expectancy may significantly change this outcome, but the sign and the size of this change are unclear. In this paper we construct and parameterize a large-scale OLG model for a small open economy to quantify (the net effect of) these behavioural adjustments. Important endogenous variables in the model are hours worked and (un)employment, investment in human and physical capital, per capita growth and inequality. Individuals differ not only by age, but also by innate ability. We calibrate the model to Belgium and find that it replicates key data since about 1960 remarkably well. Simulating the model, we observe significant (positive) behavioural adjustments by households and firms, but these do not reverse the negative arithmetical effect of projected future demographic change on per capita growth. Many of the adjustments have already taken place in previous decades. Furthermore, ongoing adjustments do not affect future domestic output due to capital outflow in a small open economy. To counter (very) poor per capita growth in the next two decades, policy changes will be necessary. |
| Keywords: | demographic change, population ageing, economic growth, overlapping generations |
| JEL: | C68 D91 E17 J11 O40 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:17/931&r=lab |