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on Labour Economics |
| By: | Elira Kuka; Na'ama Shenhav; Kevin Shih |
| Abstract: | This paper studies the human capital responses to a large shock in the returns to education for undocumented youth. We obtain variation in the benefits of schooling from the enactment of the Deferred Action for Childhood Arrivals (DACA) policy in 2012, which provides work authorization and deferral from deportation for high school educated youth. We implement a difference-in-differences design by comparing DACA eligible to non-eligible individuals over time, and we find that DACA had a significant impact on the investment decisions of undocumented youth. High school graduation rates increased by 15 percent while teenage births declined by 45 percent. Further, we find that college attendance increased by 25 percent among women, suggesting that DACA raised aspirations for education above and beyond qualifying for legal status. We find that the same individuals who acquire more schooling also work more (at the same time), counter to the typical intuition that these behaviors are mutually exclusive, indicating that the program generated a large boost in productivity. |
| JEL: | I20 J1 J13 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24315&r=lab |
| By: | Palviainen Heikki (Faculty of Management, University of Tampere) |
| Abstract: | In 2002, the Finnish government introduced an earnings disregard reform aimed at improving the incentives of low-income individuals who receive last-resort social assistance. The aim of the reform was to decrease unemployment by providing social assistance clients better incentives to receive at least temporary or part-time work. This paper evaluates the employment effects of the reform using a quasi-experimental design. After a behavioral adjustment period, there are positive results for females, single-person households and individuals with earnings. No effects on the extensive margin imply that a behavioural response requires some attachment to the labour market. No transition from social assistance to longer-term employment is observed. |
| Keywords: | Difference-in-differences matching, making work pay, earnings disregard, welfare |
| JEL: | C93 H53 I38 J68 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:tam:wpaper:1819&r=lab |
| By: | Riccardo Crescenzi; Mara Giua |
| Abstract: | Do regions in all Member States (MSs) of the European Union (EU) benefit from Cohesion Policy? Are regional impacts persistently diversified across countries? In order to answer these questions this paper explores how the impact of the EU Cohesion Policy on growth and employment varies across countries. A spatial Regression Discontinuity Design (RDD) makes it possible estimate distinct but fully comparable impacts for each individual MS both before the Great Recession and during recovery. The results show that Cohesion Policy has exerted a positive and significant EU-wide impact on both regional economic growth and employment. However, regional impacts are not evenly distributed across MSs. Large part of the regional growth bonus generated by Cohesion Policy is concentrated in Germany. Conversely, impacts on regional employment are confined to the United Kingdom. The picture for beneficiary regions in Southern European Member States is less rosy with positive impacts on employment in Italy until the Great Recession and on economic growth in the recovery period in Spain. |
| Keywords: | Cohesion policy, European Union, regions, growth, employment |
| JEL: | O18 R11 R58 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0230&r=lab |
| By: | Armanda Cetrulo; Valeria Cirillo; Dario Guarascio |
| Abstract: | This work explores the relationship between temporary employment and product innovation focusing on five major European economies (France, Germany, Italy, Spain and the Netherlands) observed between 1998 and 2012. Building on the conceptual framework proposed by Kleinknecht et al. (2014), the analysis distinguishes sectors according to their technological characteristics and regimes finding that industries using temporary employment tend to have a weaker product innovation propensity. The negative correlation between temporary employment and innovation is stronger in medium and hightech sectors, identified using both the "Cumulativeness" proxy stemming from Peneder's classification (Peneder, 2010) as well as distinguishing between different Schumpeterian regimes - Schumpeter Mark I vs II - of knowledge accumulation. |
| Keywords: | product innovation, labor market flexibility, temporary employment |
| Date: | 2018–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2018/06&r=lab |
| By: | Eyal Baharad; Leif Danziger |
| Abstract: | We determine the scoring rule that is most likely to select a high-ability candidate. A major result is that neither the widely used plurality rule nor the inverse-plurality rule are ever optimal, and that the Borda rule is hardly ever optimal. Furthermore, we show that only the almost-plurality, the almost-inverse-plurality, and the almost-Borda rule can be optimal. Which of the “almost” rules is optimal depends on the likelihood that a candidate has high ability and how likely committee members are to correctly identify the abilities of the different candidates. |
| Keywords: | committee decisions, scoring rules, "Almost" voting rules |
| JEL: | D71 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6851&r=lab |
| By: | Selen Andic |
| Abstract: | This paper estimates the potential output and output gap in Turkey using a multivariate filter. The filter employed links the output gap to slack in the labor market and changes in inflation. Additionally, it produces the output gap taking into account some macroeconomic variables. Though end-of-sample problem remains an issue, results show that the output gap estimates provided by the multivariate filter have a stronger relationship with inflation and are subject to smaller revisions compared to the Hodrick-Prescott filter. |
| Keywords: | Filter, Potential growth, Output gap, Turkey |
| JEL: | C51 E32 O40 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:1807&r=lab |
| By: | David L. Dickinson (Appalachian State University, IZA, ESI); David Masclet (Univ Rennes, CREM, CNRS, UMR 6211, F-35000 Rennes, France); Emmanuel Peterle (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France) |
| Abstract: | We examine both the private benefits and spillover costs of labor market favoritism in a unique laboratory experiment design. Group identities are first created and the data show that both employment preference rankings and wage offers favor in-group members. Workers positively reciprocate towards in-group employers by choosing higher effort in a gift exchange game. Thus, favoritism can be privately rational for employers. However, unemployed subjects are allowed to burn resources (at a cost to themselves), and we document significantly increased resource destruction when unemployment can be attributed to favoritism towards others. This highlights a significant spillover cost of favoritism that is often ignored, and it points to one possible micro-foundation of some anti-social behavior. |
| Keywords: | Discrimination, Experimental Economics, Social identity, Conflicts |
| JEL: | C90 C92 J15 J16 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cremwp:2018-01&r=lab |
| By: | Bradley J. Ruffle (Department of Economics, Wilfrid Laurier University, Canada; Rimini Centre for Economic Analysis); Anne Wilson (Department of Psychology, Wilfrid Laurier University, Canada) |
| Abstract: | Survey evidence suggests that the 40+ generation maintains negative stereotypes about tattoos, despite their prevalence. Because employers typically belong to this older generation, younger individuals' decision to get tattooed may reflect short-sightedness. Indeed, we show that, according to numerous measures, those with tattoos, especially visible ones, are more short-sighted and impulsive than the non-tattooed. Almost nothing mitigates these results, neither the motive for the tattoo, the time contemplated before getting tattooed nor the time elapsed since the last tattoo. Even the expressed intention to get a(nother) tattoo predicts increased short-sightedness and establishes the direction of causality between tattoos and short-sightedness. |
| Keywords: | experimental economics, tattoo, time preferences, impulsivity |
| JEL: | C91 Z10 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:18-15&r=lab |
| By: | Diego Daruich (New York University) |
| Abstract: | The macroeconomic consequences of large-scale early childhood development policies depend on intergenerational dynamics, general equilibrium (GE) effects on labor and capital markets, and the deadweight loss of raising taxes to finance the policies. To study these policies, this paper extends a standard GE heterogeneous-agent overlapping-generations macro model with earnings risk and credit constraints to incorporate early childhood investments (parental time and money) and estimates it using US data. We validate the model by performing an RCT evaluation of a short-run small-scale government program that funds early childhood investments and showing that the effects on children’s education and adult income in the model are similar to the empirical evidence. We then evaluate a permanent large-scale version of this early childhood program, taking into account GE and taxation effects, and find that it yields a 10% welfare increase (in consumption equivalence terms), reduces inequality by 7%, and increases intergenerational mobility of income by 30%—approximately enough for the US to achieve Canadian or Australian levels of inequality and mobility. Welfare gains are twice the ones obtained by introducing the same early childhood program as a short-run partial-equilibrium policy—similar to an RCT. Although GE and taxation effects reduce the gains by one-tenth each, the long-run change in the distribution of parental characteristics more than compensates for those reductions. Key to this welfare gain is that investing in a child not only improves her skills but also creates a better parent for the next generation. Although earlier generations gain less, welfare gains are positive for every new generation and grow rapidly during the transition. |
| Keywords: | Inequality, intergenerational mobility, early childhood, education, quantitative model |
| JEL: | J13 J24 J62 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2018-010&r=lab |
| By: | Assaf Razin |
| Abstract: | The exodus of Soviet Jews to Israel in the 1990s was a unique event. The immigration wave was distinctive for its large high skilled cohort, and its quick integration into the domestic labor market. Immigration also changed the entire economic landscape: it raised productivity, underpinned by the information technological surge, and had significant impact on income inequality. The extraordinary experience of Israel, which has received three quarter million migrants from the Former Soviet Union within a short time, is also relevant for the current debate about winners and losers from immigration. This paper provides a rigorous explanation for a possible link between the immigration wave and the changed level of redistribution in Israel’s welfare state. |
| JEL: | F2 H0 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24283&r=lab |
| By: | Romain A Duval; Davide Furceri; Bingjie Hu; João Tovar Jalles; Huy Nguyen |
| Abstract: | This paper describes a new database of major labor and product market reforms covering 26 advanced economies over the period 1970-2013. The focus is on large changes in product market regulation in seven individual network industries, employment protection legislation for regular and temporary workers, and the replacement rate and duration of unemployment benefits. The main advantage of this dataset is the precise identification of the nature and date of major reforms, which is valuable in many empirical applications. By contrast, the dataset does not attempt to measure and compare policy settings across countries, and as such is no substitute for other publicly available indicators produced, for example, by the ILO, the OECD or the World Bank. It should also be seen as work in progress, for researchers to build on and improve upon. Based on the dataset, major reforms appear to have been more frequent in product markets than in labor markets in the last decades, and were predominantly implemented during the 1990s and 2000s. |
| Date: | 2018–01–24 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:18/19&r=lab |
| By: | Ager, Philipp (Department of Business and Economics); Hansen, Casper Worm (University of Copenhagen); Lønstrup, Lars (Department of Business and Economics) |
| Abstract: | This paper examines the long-run effects on the spatial distribution of economic activity caused by historical shocks. Using variation in the potential damage intensity of the 1906 San Francisco Earthquake across cities in the American West, we show that more severely affected cities experienced lower population growth relative to less affected cities after the earthquake. This negative effect persisted until the late 20th century. The earthquake diverted migrants to less affected areas in the region, which, together with reinforcing dynamic agglomeration effects from scale economies, left a long-lasting mark on the location of economic activity in the American West. |
| Keywords: | Economic geography; Location of economic activity; Migration; Natural disasters |
| JEL: | O15 O40 R11 R12 |
| Date: | 2018–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sdueko:2018_002&r=lab |
| By: | Susan Payne Carter; Abigail Wozniak |
| Abstract: | We use exogenously determined, long-distance relocations of U.S. Army soldiers to investigate the impact of moving on marriage. We find that marriage rates increase sharply around the time of a move in an event study analysis. Reduced form exposure analysis reveals that an additional move over a five year period increases the likelihood of marriage by 14 percent. Moves increase childbearing by a similar magnitude, suggesting that marriages induced by a move are formed with long-term intentions. These findings are consistent with a model where the marriage decision is costly and relocation lowers the costs to making this decision. Our results have implications for understanding how people make major life decisions such as marriage, as well as the cost of migration. |
| JEL: | J1 J12 J13 J61 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24300&r=lab |
| By: | Rohan Alexander; Zachary Ward |
| Abstract: | We estimate the effect of age at arrival for immigrant outcomes with a new dataset of arrivals linked to the 1940 United States Census. Using within-family variation, we find that arriving at an older age, or having more childhood exposure to the European environment, led to a more negative wage gap relative to the native born. Infant arrivals had a positive wage gap relative to natives, in contrast to a negative gap for teenage arrivals. Therefore, a key determinant of immigrant outcomes during the Age of Mass Migration was the country of residence during critical periods of childhood development. |
| Keywords: | Age at arrival, Assimilation, Childhood environment. |
| JEL: | N31 F22 J61 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:auu:hpaper:064&r=lab |
| By: | Schmalz, Martin |
| Abstract: | What is the effect of unionization on corporate financial policies? The average unionized firm responds with lower cash and higher leverage to a unionization election than the average firm escaping unionization. However, using a regression discontinuity design I find that the causal effect of unionization is close to zero on average, but heterogeneous across firms. For the subset of large and financially unconstrained firms, the causal effect is positive on leverage and negative on cash; the opposite is true for small and financially constrained firms. These results help reconcile controversially discussed views on how corporate finance and labor interact. |
| Keywords: | Capital Structure; cash; Labor Adjustment Costs; Regression Discontinuity; Risk management; Unionization |
| JEL: | G32 J50 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12595&r=lab |
| By: | Dosi, Giovanni; Pereira, Marcelo C.; Roventini, Andrea; Virgillito, Maria Enrica |
| Abstract: | In this work we develop a set of labour market and fiscal policy experiments upon the labour and credit augmented "Schumpeter meeting Keynes" agent-based model. The labour market is declined under two institutional variants, the "Fordist" and the "Competitive" set- ups meant to capture the historical transition from the Fordist toward the post "Thatcher- Reagan" period. Inside these two regimes, we study the different effects of supply-side active labour market policies (ALMPs) vs. demand-management passive labour market ones (PLMPs). In particular, we analyse the effects of ALMPs aimed at promoting job search, and at providing training to unemployed people. Next, we compare the effects of these policies with unemployment benefits simply meant to sustain income and therefore aggregate demand. Considering the burden of unemployment benefits in terms of public budget, we link such provision with the objectives of the European Stability and Growth Pact. Our results show that (i) an appropriate level of skills is not enough to sustain growth when workers face adverse labour demand; (ii) supply-side policies are not able to reverse the perverse interaction between exibility and austerity; (iii) PLMPs outperform ALMPs in reducing unemployment and workers' skills deterioration; and (iv) demand-management policies are better suited to mitigate inequality and to improve and sustain long-run growth. |
| Keywords: | Industrial-relation Regimes,Flexibility,Active Labour Market Policies,Austerity,Agent-based models |
| JEL: | C63 E24 H53 J88 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:168&r=lab |
| By: | Carolina Fugazza (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy) |
| Abstract: | This paper investigates how job separation and job finding probabilities shape the unemployment risk across ages and working group characteristics. Improving on current methods, I estimate duration models for employment and unemployment separately. I then use the duration analysis results to derive the individual age profiles of conditional transitions in and out of unemployment as well as the unconditional unemployment risk profile over the whole working life. This approach allows adapting the decomposition of changes in unemployment risk, which has so far only been used to study aggregate unemployment dynamics (Shimer, 2007 and 2012; Fujita and Ramey, 2009). I find that differences in job separation rates across ages underlie the observed age differences in unemployment risk. When differences between working groups are under consideration, the job findings are just as important as the job separation probability. |
| Keywords: | Unemployment Risk, Duration Analysis, Heterogeneity, Semi-Markov Processes. |
| JEL: | C53 E24 J64 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:tur:wpapnw:048&r=lab |