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on Labour Economics |
| By: | Philipp Ager; Markus Brueckner; Benedikt Herz |
| Abstract: | This paper provides new insights on the link between structural change and the fertility transi-tion. In the early 1890s agricultural production in the American South was severely impaired by the spread of an agricultural pest, the boll weevil. We use this plausibly exogenous variation in agricultural production to establish a causal link between changes in earnings opportunities in agriculture and fertility. Our estimates show that lower earnings opportunities in agriculture lead to fewer children. We identify two channels: households staying in agriculture reduced fertility because children are a normal good, and households switching to manufacturing faced higher opportunity costs of raising children. The lower earnings opportunities in agriculture also stimulated human capital formation, which we argue is consistent with the predictions of a quantity-quality model of fertility. |
| Keywords: | Fertility Transition, Structural Change, Industrialization, Agricultural Income |
| JEL: | J13 N31 O14 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:auu:hpaper:062&r=lab |
| By: | Alexandros Karakitsios (Athens University of Economics and Business); Manos Matsaganis (Athens University of Economics and Business) |
| Abstract: | Minimum wage effect on employment is one of the mostly studied fields in labour economics. Minimum wage is also considered as a redistributive tool but its efficiency is strongly doubted due to potential disemployment effect that may cause. In the present paper, redistributive ability of minimum wage is studied through microsimulation techniques and under several scenarios of employment elasticity. The results indicate that minimum wage can reduce poverty even under the presence of a disemployment effect. Though, this anti-poverty effect is limited as employment elasticity is more negative. Similarly, inequality decreases when minimum wage increases are adopted, but the redistributive effect is weaker when they cause job losses. The above indicate that minimum wage policies should be used with caution and always take into account any possible impact on employment. |
| Keywords: | minimum wages, unemployment, poverty, inequality |
| JEL: | I38 J01 J08 J58 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:aue:wpaper:1801&r=lab |
| By: | Benoît Schmutz (Ecole Polytechnique; CREST); Modibo Sidibé (Duke University; CREST) |
| Abstract: | We build a dynamic model of migrationwhere, in addition to usual mobility costs,workers face spatial frictions that decrease their ability to compete for distant job opportunities. We estimate the model on a matched employer-employee panel dataset describing labor market transitions within and between the 100 largest French cities. Our identification strategy is based on the premise that frictions affect the frequency of job transitions, while mobility costs impact the distribution of acceptedwages. We find that: (i) controlling for spatial frictions reduces mobility cost estimates by one order of magnitude; (ii) the urban wage premium is driven by better opportunities for local job-to-job transitions in larger cities; (iii) migration dramatically reduces lifetime inequalities due to initial location; (iv) labor mobility policies based on relocation subsidies are inefficient, unlike switching from nationwide to local minimum wages. |
| Keywords: | mobility costs; spatial frictions;migration; local labor markets |
| JEL: | J61 J64 R12 R23 |
| Date: | 2017–12–11 |
| URL: | http://d.repec.org/n?u=RePEc:crs:wpaper:2017-48&r=lab |
| By: | David Jaeger (CUNY Graduate Center); Joakim Ruist (University of Gothenburg); Jan Stuhler (Universidad Carlos III de Madrid) |
| Abstract: | A large literature exploits geographic variation in the concentration of immigrants to identify their impact on a variety of outcomes. To address the endogeneity of immigrants’ location choices, the most commonly-used instrument interacts national inflows by country of origin with immigrants’ pastgeographic distribution. We present evidence that estimates based on this “shift-share†instrument conflate the short- and long-run responses to immigration shocks. If the spatial distribution of immigrant inflows is stable over time, the instrument is likely to be correlated with ongoing responses to previous supply shocks. Estimates based on the conventional shift-share instrument are therefore unlikely to identify the short-run causal effect. We propose a “multiple instrumentation†procedure that isolates the spatial variation arising from changes in the country-of-origin composition at the national level and permits us to estimate separately the short- and long-run effects. Our results are a cautionary tale for a large body of empirical work, not just on immigration, that rely on shift-share instruments for causal inference. |
| JEL: | C36 J15 J21 J61 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1802&r=lab |
| By: | Dino Pinelli; Roberta Torre; Lucianajulia Pace; Laura Cassio; Alfonso Arpaia |
| Abstract: | Italy undertook a major reform of the labour market in 2014-2015 (Jobs Act). This paper provides a compendium of the key changes introduced. The analysis shows that the Jobs Act has contributed to bringing Italian labour market institutions more closely into line with international benchmarks and with the principles of flexicurity. Employment protection legislation for permanent contracts has been brought into line with that of major European partners, although it remains more restrictive than the OECD average. The focus of passive labour market policies has shifted from job to worker protection, which will facilitate the reallocation of workers to more productive occupations. The designed strengthening of active labour market policies would improve job matching and reduce structural unemployment, but thorough implementation remains the key factor for achieving this critical goal. Extending the new rules on employment protection legislation also to existing permanent contracts and the strengthening of the collective bargaining framework could be considered as a follow up to the recent reform. Flanking measures to open product markets and reform the public sector are crucial to deliver the entire potential impact of the reform. |
| JEL: | J08 E24 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:euf:dispap:072&r=lab |
| By: | Andersson, Martin (Blekinge Institute of Technology); Larsson, Johan P. (Swedish Entrepreneurship Forum); Öner, Özge (Research Institute of Industrial Economics (IFN)) |
| Abstract: | We explore the effects of neighborhood-level ethnic enclaves on the propensity of immigrants to use business ownership as a vehicle to transcend from labor market outsiders to insiders. We exploit an exogenously partitioned grid of geocoded 1–by–1 km squares to approximate neighborhoods, and match it with Swedish full-population data from 2011–2012 to study immigrants from the Middle East. We demonstrate a robust tendency for people to leave non-employment for self-employment if many members of the neighborhood ethnic diaspora are business owners, while we observe weak effects emanating from business ownership in other groups. Net of these effects, the overall scale of the enclave, measured by local concentration of co-ethnic peers, negatively influences the propensity to become self-employed. The results are consistent with the argument that it is not the scale, but the quality of local ethnic enclaves that influence labor market outcomes for immigrants. |
| Keywords: | Ethnic enclave; Segregation; Immigrant entrepreneurship; Self-employment; Labor market sorting; Integration |
| JEL: | J15 L26 P25 |
| Date: | 2017–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1195&r=lab |
| By: | John B. Donaldson; Christos Koulovatianos; Jian Li; Rajnish Mehra |
| Abstract: | Lucas (1990) argues that the neoclassical adjustment process fails to explain the relative paucity of FDI inflows from rich to poor countries. In this paper we consider a natural experiment: using China as the treated country and India as the control, we show that the dynamics of the relative FDI flows subsequent to the implementation of China's one-child policy, as seen in the data, are consistent with neoclassical fundamentals. In particular, following the introduction of the one-child policy in China, the capital-labor (K/L) ratio of China increased relative to that of India, and, simultaneously, relative FDI inflows into China vs. India declined. These observations are explained in the context of a simple neoclassical OLG paradigm. The adjustment mechanism works as follows: the reduction in the (urban) labor force due to the one-child policy increases the savings per capita. This increases the K/L ratio and reduces the marginal product of capital (MPK). The reduction in MPK (relative to India) reduces the relative attractiveness of investment in China and is thus associated with lower FDI/GDP ratios. Our paper contributes to the nascent literature exploring demographic transitions and their effects on FDI flows. |
| JEL: | E13 F11 F12 J11 O11 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24256&r=lab |
| By: | Timothy J Hatton; Zachary Ward |
| Abstract: | This chapter focuses on the economic analysis of what has been called the age of mass migration, 1850 to 1913, and its aftermath up to 1940. This has captured the interest of generations of economic historians and is still a highly active area of research. Here we concentrate on migration from Europe to the New World as this is where the bulk of the literature lies. We provide an overview of this literature focusing on key topics: the determinants of migration, the development of immigration policy, immigrant selection and assimilation, and the economic effects of mass migration as well as its legacy through to the present day. We explain how what were once orthodoxies have been revisited and revised, and how changes in our understanding have been influenced by advances in methodology, which in turn have been made possible by the availability of new and more comprehensive data. Despite these advances some issues remain contested or unresolved and, true to cliometric tradition, we conclude by calling for more research. |
| Keywords: | Mass migration; the Atlantic economy; immigrants and emigrants. |
| JEL: | N31 N32 J61 F22 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:auu:hpaper:063&r=lab |
| By: | Aghion, Philippe; Akcigit, Ufuk; Hyytinen, Ari; Toivanen, Otto |
| Abstract: | In this paper, we merge three datasets - individual income data, patenting data, and IQ data - to analyze the deterninants of an individual’s probability of inventing. We find that: (i) parental income matters even after controlling for other background variables and for IQ, yet the estimated impact of parental income is greatly diminished once parental education and the individual’s IQ are controlled for; (ii) IQ has both a direct effect on the probability of inventing an indirect impact through education. The effect of IQ is larger for inventors than for medical doctors or lawyers. The impact of IQ is robust to controlling for unobserved family characteristics by focusing on potential inventors with brothers close in age. We also provide evidence on the importance of social family interactions, by looking at biological versus non-biological parents. Finally, we find a positive and significant interaction effect between IQ and father income, which suggests a misallocation of talents to innovation |
| Keywords: | inventors; innovation; social mobility; IQ; education; parental background |
| JEL: | J18 O31 |
| Date: | 2017–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:86619&r=lab |