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on Labour Economics |
| By: | Girum Abebe; Stefano Caria; Marcel Fafchamps; Paolo Falco; Simon Franklin; Simon Quinn; Forhad Shilpi |
| Abstract: | Do matching frictions affect youth employment in developing countries? We organise job fairs in Addis Ababa, to match firms with a representative sample of young, educated job-seekers. We create very few jobs: one for approximately 10 firms that attended. We explore reasons for this, and find significant evidence for mismatched expectations: about wages, about firms requirements and about the average quality of job-seekers. We find evidence of learning and updating of beliefs in the aftermath of the fair. This changes behaviour: both workers and rms invest more in formal job search after the fairs. |
| Keywords: | Matching; labour; job-search; firms; recruitment; experiment |
| JEL: | O18 J22 J24 J61 J64 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2017-06&r=lab |
| By: | Research Department, Federal Reserve Bank of Kansas City (Federal Reserve Bank of Kansas City) |
| Abstract: | Broad indicators are often used to evaluate the health of the labor market but may mask disparities in outcomes across age, education, gender, and race. Understanding these disparate outcomes is part of the process of monitoring the labor market. As such, this paper summarizes work the research staff of the Federal Reserve Bank of Kansas City has done to better understand differences in labor market outcomes. Some of these findings reinforce earlier work, while others offer novel perspectives. {{p}} First, differences in outcomes across race remain substantial. Despite a significant increase in educational attainment among black individuals, their wages are lower and their unemployment rate significantly higher than for white individuals, even after controlling for education. Second, black individuals are nearly two times more likely to become long-term unemployed than white individuals. This difference, however, explains only a modest amount of the difference in the overall unemployment rates for these groups. Third, job polarization has affected black individuals relatively more due to an education gap that has made it more difficult for those without a college education to secure high-skill employment. |
| Keywords: | Race; Age; Education; Gender; Labor market |
| JEL: | J1 J15 J24 J3 J7 |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkrw:rwp17-03&r=lab |
| By: | Boll, Christina; Jahn, Malte; Lagemann, Andreas |
| Abstract: | Research on the gender earnings divide so far mostly focuses on the gender gap in hourly wages which, due to its snapshot nature, is inappropriate to capture the biographical dimension of gendered pay. With the 'gender lifetime earnings gap' (GLEG), we introduce a new measure that meets this requirement. Based on a group of 93,511 German individuals born 1950-64 from the 'Sample of Integrated Labour Market Biographies' (SIAB 7510), we find that at the end of the employment career, women accumulated 49.8 % less earnings than men. Thus, the GLEG is more than twice as high as the current German gender pay gap. The GLEG is the largest (smallest) at the bottom (top) of the earnings distribution. It most prominently widens during the period of family formation (age 25-35). Relatedly, gender differences in endowments, mainly in terms of experience and hours, answer for three quarters of the GLEG. For younger cohorts, family breaks tend to lose importance whereas the role of work hours remains unchanged. Furthermore, the GLEG notably differs between occupational segments. |
| Keywords: | lifetime earnings,Blinder & Oaxaca decomposition,occupational segments,cohort analysis,gender,life course,wage distribution,wage gap |
| JEL: | D31 J31 J16 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hwwirp:179&r=lab |
| By: | Molina Millán, Teresa (Universidade Nova de Lisboa); Macours, Karen (Paris School of Economics) |
| Abstract: | This paper starts from a review of RCT studies in development economics, and documents many studies largely ignore attrition once attrition rates are found balanced between treatment arms. The paper analyzes the implications of attrition for the internal and external validity of the results of a randomized experiment with balanced attrition rates, and proposes a new method to correct for attrition bias. We rely on a 10-years longitudinal data set with a final attrition rate of 10 percent, obtained after intensive tracking of migrants, and document the sensitivity of ITT estimates for schooling gains and labour market outcomes for a social program in Nicaragua. We find that not including those found during the intensive tracking leads to an overestimate of the ITT effects for the target population by more than 35 percent, and that selection into attrition is driven by observable baseline characteristics. We propose to correct for attrition using inverse probability weighting with estimates of weights that exploit the similarities between missing individuals and those found during an intensive tracking phase. We compare these estimates with alternative strategies using regression adjustment, standard weights, bounds or proxy information. |
| Keywords: | survey non response, sample selectivity, randomized controlled trial, inverse probability weights |
| JEL: | O1 C93 C52 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10711&r=lab |
| By: | Alimi, Omoniyi (University of Waikato); Maré, Dave C. (Motu Economic and Public Policy Research Trust); Poot, Jacques (University of Waikato) |
| Abstract: | As is the case in most developed countries, the population of New Zealand is ageing numerically and structurally. Population ageing can have important effects on the distribution of personal income within and between urban areas. The age structure of the population may affect the distribution of income through the life-cycle profile of earnings but also through the spatial-temporal distribution of income within the various age groups. By decomposing New Zealand census data from 1986 to 2013 by age and urban area, this paper examines the effects of population ageing on spatial-temporal changes in the distribution of personal income to better understand urban area-level income inequality (measured by the Mean Log Deviation index). We focus explicitly on differences between metropolitan and non-metropolitan urban areas. New Zealand has experienced a significant increase in income inequality over the last few decades, but population ageing has slightly dampened this trend. Because metropolitan areas are ageing slower, the inequality-reducing effect of ageing has been less in these areas. However, this urban-size differential-ageing effect on inequality growth has been relatively small compared with the faster growth in intra-age group inequality in the metropolitan areas. |
| Keywords: | inequality, age composition, urbanisation, population aging |
| JEL: | J11 D31 R23 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10690&r=lab |
| By: | Potter, Tristan (School of Economics Drexel University) |
| Abstract: | I document two new facts about job search during the Great Recession: (i) Search effort permanently increases after individuals receive (and reject) job offers, and (ii) search effort decreases with cumulative failed search. Motivated by these facts, I introduce a model in which Bayesian job seekers learn about the arrival rate of offers through their idiosyncratic search experiences. The model yields a tractable characterization of search effort in terms of an individual's past job offers and past search effort. I use the model to decompose the effect of learning on job search into static and dynamic components: Failing to find work exerts a negative influence on search by reducing the perceived opportunity cost of leisure in the current period, but also stimulates search by reducing the option value of unemployment in future periods. Because these effects vary endogenously over the spell, the model delivers rich – and potentially nonmonotonic – dynamics in search behavior. I estimate the model and demonstrate that learning accounts for the empirical profiles of search time, offer arrivals, and hazard rates over the unemployment spell. |
| Keywords: | unemployment; search theory; learning |
| JEL: | D83 E24 J64 |
| Date: | 2017–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2017_006&r=lab |
| By: | Sergi Jiménez-Martín; Arnau Juanmarti Mestres; Judit Vall-Castello |
| Abstract: | This article evaluates the effectiveness of hiring subsidies targeted to people with disabilities. By exploiting the timing of implementation among the different Spanish regions of a subsidy scheme implemented in Spain during the period 1990-2014, we employ a differencesin- differences approach to estimate the impact of the scheme on the probability of DI beneficiaries of transiting to employment and on the propensity of individuals of entering the DI program. Our results show that the introduction of the subsidy scheme is in general ineffective at incentivizing transitions to employment, and in some cases it is associated with an increased propensity of transiting to DI. Furthermore, we show that an employment protection component incorporated to the subsidy scheme, consisting in the obligation for the employer to maintain the subsidized worker in employment, is associated with less transitions to permanent employment, more transitions to temporary employment and more transitions to DI, suggesting that these type of employment protection measures can have undesired effects for people with disabilities. |
| Keywords: | disability, employment subsidies, labor market transitions, disability insurance, differences-in-differences |
| JEL: | H24 H55 J08 J14 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:967&r=lab |
| By: | Regina T. Riphahn; Rebecca Schrader |
| Abstract: | We investigate whether a cut in unemployment benefit payout periods affected older workers' labor market transitions. We apply rich administrative data and exploit a difference-in-differences approach. We compare the reference group of 40-44 year olds with constant benefit payout periods to older treatment groups with reduced payout durations. For the latter job exit rates declined, job finding rates increased, the propensity to remain employed increased, and the propensity to remain unemployed declined after the reform. These patterns suggest that the reform of unemployment benefits may be one of the reasons behind the recent incredible rise in old age employment in Germany. |
| Keywords: | labor force participation, employment, unemployment insurance, retirement |
| JEL: | J14 J26 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:bav:wpaper:169_riphahnschrader&r=lab |
| By: | Alessandro Tondini; Cally Ardington (SALDRU, University of Cape Town); Ingrid Woolard (SALDRU, University of Cape Town) |
| Abstract: | We investigate the impact of a reform of the public, non-contributory pension system in South Africa, which lowered the age of retirement from 65 to 60 for men only. Despite no explicit requirement to stop working when the public pension is received, we provide clear evidence that this reform triggered a large drop in old-age male employment. We show that this drop comes entirely from informal employment, while formal jobs, even if not covered by private pension schemes, are not affected. These results are consistent with the view that a significant portion of informal employment occurs out of "necessity", and that, in particular at an old-age, workers choose not to work informally when they receive other income support. Simple back-of-the-envelope calculations reveal that the public pension alone can explain up to 10% less informal employment at the national level. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ldr:wpaper:206&r=lab |
| By: | Khulan Altangerel (Department of Economics and CentER, Tilburg University); Jan C. van Ours (Erasmus School of Economics, Erasmus University Rotterdam and Tinbergen Institute) |
| Abstract: | The 1986 US Immigration Reform and Control Act (IRCA) was directed at tackling the problem of growing unauthorized migration through legalization of unauthorized immigrants, increasing border security and sanctioning employers who hired unauthorized immigrants. Our paper investigates how the IRCA affected the migration dynamics of Mexican immigrants focusing on their age of onset of migration and the duration of their first trip. We find that the IRCA had a positive effect in reducing unauthorized migration to the US. Although primarily aiming at unauthorized immigration, the IRCA had substantial effects on legal migration through its legalization program. |
| Keywords: | Immigration policy, migrant behavior |
| JEL: | J61 J68 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1704&r=lab |
| By: | Piera Bello (Istituto di economia pubblica (IdeP), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera) |
| Abstract: | This paper provides an empirical analysis of the effects of nominal exchange rate fluctuations on cross-border mobility and on retailer firms' sales. Exchange rate shocks may affect the labour supply decisions of cross-border workers and the propensity for consumers to shop across the border. By using hourly data on traffic flows in Ticino, the southernmost canton of Switzerland, and data on Italian supermarkets, I analyse the effects of the Swiss franc appreciation on cross-border travel by both Italian workers and Swiss consumers and on Italian retailers' sales. I find that a 10% appreciation of the Swiss franc increases the number of cars along the border by 1.5-3% more than in the rest of the canton. This effect is found only during specific time intervals, which differ according to the direction of the flow (the early morning from Italy to Switzerland, the afternoon from Switzerland to Italy and late morning for both directions). Moreover, I show that a stronger Swiss Franc positively affects supermarkets' sales in Italian provinces bordering Switzerland. Finally, I provide additional evidence for the labour supply hypothesis by using data on search volumes provided by Google Trends and official statistics on cross-border commuters in Switzerland. |
| Keywords: | Geographic labor mobility, Labor supply, Traffic flows |
| JEL: | J61 J22 R41 |
| Date: | 2017–05–05 |
| URL: | http://d.repec.org/n?u=RePEc:lug:wpidep:1701&r=lab |
| By: | van den Berg, Gerard J. (University of Bristol); Uhlendorff, Arne (CREST); Wolff, Joachim (Institute for Employment Research (IAB), Nuremberg) |
| Abstract: | With the introduction of a new welfare benefit system in 2005, Germany implemented quite strict benefit sanctions for welfare recipients aged younger than 25 years. For all types of non-compliance except for missing appointments, their basic cash benefit is withdrawn for three months. A second sanction of the same type within one year implies a complete benefit cut for three months. We analyze the impact of these sanctions on job search outcomes and on transitions out of the labor force. Our analysis is based on administrative data on a large inflow sample of young male jobseekers into welfare in West Germany. We estimate separate models for people living alone and people living with their family, as sanctioned welfare recipients living with other household members can partly rely on their support and might react less by increasing search intensity and lowering reservation wages. We estimate the parameters of multivariate duration models taking selection based on unobservables into account. Our results suggest that both the first and the second sanction increase the probability of finding a job, but that these jobs go along with lower earnings due to first but not the second sanction. Moreover, first sanctions significantly increase the transition rate out of the labor force of both groups of young men, while the second sanction amplify this effect only for young men living in single households. |
| Keywords: | social assistance, unemployment, sanctions, youth unemployment, post unemployment outcomes |
| JEL: | J64 J65 C41 C21 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10730&r=lab |
| By: | Monras, Joan (CEMFI, Madrid); Vázquez-Grenno, Javier (University of Barcelona); Elias Moreno, Ferran (Columbia University) |
| Abstract: | This paper investigates the consequences of the legalization of around 600,000 immigrants by the unexpectedly elected Spanish government of Zapatero following the terrorist attacks of March 2004 (Garcia-Montalvo (2011)). Using detailed data from payroll-tax revenues, we estimate that each newly legalized immigrant increased social-security revenues by 3,504 Euros on average. This estimate is only 49 percent of what we would have expected from the size of the newly documented immigrants, which suggests that newly legalized immigrants probably earned lower wages than, and maybe affected the labor-market outcomes of, other workers. We estimate that the policy change deteriorated the labor-market outcomes of some low-skilled natives and immigrants and improved the outcomes of high-skilled natives and immigrants. This led some low-skilled immigrants to move away from high-immigrant locations. Correcting for migration and selection, we obtain that each newly legalized immigrant increased payroll-tax revenues by 4,398 Euros or 26 percent more than the raw payroll-tax revenue data estimates. This shows the importance of looking both at public revenue data and the labor market to understand the consequences of amnesty programs fully. |
| Keywords: | immigration, amnesty programs |
| JEL: | J2 J6 R1 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10687&r=lab |
| By: | Ronchi, Maddalena; di Mauro, Filippo |
| Abstract: | The paper aims at investigating to what extent wage negotiation setups have shaped up firms’ response to the Great Recession, taking a firm-level cross-country perspective. We contribute to the literature by building a new micro-distributed database which merges data related to wage bargaining institutions (Wage Dynamic Network, WDN) with data on firm productivity and other relevant firm characteristics (CompNet). We use the database to study how firms reacted to the Great Recession in terms of variation in profits, wages, and employment. The paper shows that, in line with the theoretical predictions, centralized bargaining systems – as opposed to decentralized/firm level based ones – were accompanied by stronger downward wage rigidity, as well as cuts in employment and profits. JEL Classification: J30, J50, D22, D61 |
| Keywords: | firm level analysis, global financial crisis, productivity, wage bargaining |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20172051&r=lab |
| By: | Jacob Greenspon |
| Abstract: | Taking a gap year between high school and post-secondary education appears to be an increasingly popular phenomenon in popular culture, among well-known individuals and for Canadian youth. This report reviews the literature on issues related to gap years, with a focus on the Canadian context and the experiences of youth in several similar countries. Overall, taking a gap year appears to be a beneficial choice for many Canadian youth, although the impacts of a gap year are often dependent on the youth’s socioeconomic background and the activities they participate in during their gap year. Based on these findings in the literature, a number of options for public policy are proposed to improve knowledge of gap years, increase the take-up of gap years, and make gap years a more accessible option for disadvantaged segments of the population. |
| Keywords: | Productivity, Education, Academics, University, High School, Youth, Socioeconomic, Employment, Measurement, Canada, Gap Year |
| JEL: | J11 J18 Y I21 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:sls:resrep:1701&r=lab |
| By: | Chen, Zong Jia (University of Waterloo); Skuterud, Mikal (University of Waterloo) |
| Abstract: | Canada is increasingly looking to international students as a source of postsecondary tuition revenues and new immigrants. By 2014, international students accounted for 10% of graduates from Canadian postsecondary institutions, up from 3% in 2000, and 11% of new permanent residents, up from 7% in 2010. This article compares the labour market performance of former international students (FISs) entering the Canadian labour market during the first decade of the 2000s to their Canadian-born-and-educated (CBE) and foreign-born-and-educated (FBE) counterparts. We find that FISs outperform FBE immigrants by a substantial margin and underperform CBE individuals graduating from similar academic programs by a relatively modest margin. We also find some limited evidence, particularly among women, of a deterioration in FIS outcomes through the 2000s relative to both comparison groups. We argue that this deterioration is consistent with a quality tradeoff as postsecondary institutions and governments have reached deeper into international student pools to meet their demands for students and new immigrants without a commensurate increase in their supply. |
| Keywords: | international students, labour market integration, immigrant selection policy |
| JEL: | I23 J61 J31 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10699&r=lab |
| By: | Abeliansky, Ana; Prettner, Klaus |
| Abstract: | We analyze the effects of declining population growth on automation. A simple theoretical model of capital accumulation predicts that countries with lower population growth introduce automation technologies earlier. We test the theoretical prediction on panel data for 60 countries over the time span 1993-2013. Regression estimates support the theoretical prediction, suggesting that a 1% increase in population growth is associated with an approximately 2% reduction in the growth rate of robot density. Our results are robust to the inclusion of standard control variables, different estimation methods, dynamic specifications, and changes to the measurement of the stock of robots. |
| Keywords: | automation,industrial robots,demographic change,population growth,declining labor force,economic growth |
| JEL: | J11 O14 O33 O40 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:310&r=lab |
| By: | Pantsios, Archontis L. (Liverpool Hope University); Polachek, Solomon (Binghamton University, New York) |
| Abstract: | The "joint costs" model states that the incentive to strike is inversely related to the total costs associated with workers' and firms' strike activities. Not only has this model been tested with mixed results, but also the joint costs model is problematic in explaining several stylized facts in the strike literature because higher strike costs do not always yield a lower incidence of strike activity. This paper illustrates how the joint cost model can yield these counterintuitive results. It shows that strike incidence need not decrease when joint strike costs increase. The innovation is to raise union and firm joint strike costs in an asymmetric way. Increasing a particular side's strike costs necessarily decreases its incentive to strike. However, in response, the other side's incentive can increase, since under a number of circumstances it holds out with a higher probability in order to collect the relatively larger expected rents coming about because the other side's implicit threat point decreases. To illustrate this, we model contract negotiations as a simple one-period game. (No need for more complex repeated games such as attrition since our point is only to show as simply as possible why the joint-costs model yields ambiguous results.) We use standard Hicksian concession curves to derive a payoff matrix. The payoff matrix results in contract negotiations following along the lines of a "game of chicken". The solution to the game yields no one stable pure Nash-equilibrium strategy, but instead a mixed strategy so that choices become probabilistic depending upon union and firm concession curve parameters. The results indicate that increasing either party's strike costs can have ambiguous effects on strike incidence. This ambiguity may explain why higher strike costs need not always lead to fewer strikes, and thus may account for the mixed success observed in studies that empirically test the joint costs model with strike incidence data. Although couched in terms of strikes, the results are equally applicable to other negotiation situations. |
| Keywords: | strike activity, joint strike costs, game of chicken |
| JEL: | J51 J52 C72 C78 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10723&r=lab |