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on Labour Economics |
| By: | Céline Piton; François Rycx |
| Abstract: | This paper provides robust estimates of the impact of both product and labour market regulations on unemployment using data for 24 European countries over the period 1998-2013. Controlling for country-fixed effects, endogeneity and a large set of covariates, results show that product market deregulation overall reduces the unemployment rate. This finding is robust across all specifications and in line with theoretical predictions. However, not all types of reforms have the same effect: deregulation of state controls and in particular involvement in business operations tends to push up the unemployment rate. Labour market deregulation, proxied by the employment protection legislation index, is detrimental to unemployment in the short run while a positive impact (i.e. a reduction of the unemployment rate) occurs only in the long run. Analysis by sub-indicators shows that reducing protection against collective dismissals helps in reducing the unemployment rate. The unemployment rate equation is also estimated for different categories of workers. While men and women are equally affected by product and labour market deregulations, workers distinguished by age and by educational attainment are affected differently. In terms of employment protection, young workers are almost twice as strongly affected as older workers. Regarding product market deregulation, highly-educated individuals are less impacted than low- and middle-educated workers. |
| Keywords: | Unemployment; Structural reform; Product market; Labour market; Regulation; Employment Protection |
| JEL: | E24 E60 J48 J64 L51 |
| Date: | 2018–06–04 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/271461&r=lab |
| By: | Amuedo-Dorantes, Catalina (San Diego State University); Furtado, Delia (University of Connecticut); Xu, Huanan (Indiana University) |
| Abstract: | Academia and the public media have emphasized the link between STEM majors and innovation, as well as the need for STEM graduates in the U.S. economy. Given the proclivity of international students to hold STEM degrees, immigration policy may be used to attract and retain high-skilled STEM workers in the United States. We examine if a 2008 policy extending the Optional Practical Training (OPT) period for STEM graduates affected international students' propensities to major in a STEM field. Using data from the National Survey of College Graduates, we find that, relative to foreign-born U.S. college graduates who arrived on other visas allowing them to work, foreign-born students who first came to the United States on student visas became 18 percent more likely to major in STEM following the OPT policy change. We also find that the OPT policy change increased the likelihood of adding a STEM major among students who had listed a non-STEM major as their first major, as well as the propensity to pursue a master's degree in a STEM field among students whose bachelor's degree was in a non-STEM field. |
| Keywords: | Optional Practical Training, H-1B visas, foreign-born workers, United States |
| JEL: | F22 J61 J68 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11548&r=lab |
| By: | Mukhopadhyay, Sankar (University of Nevada, Reno) |
| Abstract: | Large-scale immigrant legalization programs (such as the 1986 Immigration Reform and Control Act or the IRCA) may produce supply shocks that may affect wages of newly legalized immigrants. The effect of supply shock may be especially relevant given that certain occupations have a high density undocumented immigrants. Thus comparing the legalization premium for those who were legalized based on family ties or small-scale legalization programs, to the legalization premium from the IRCA may provide an estimate about the importance of labor supply shock. It may also provide an estimate of the long-term wage gain (as the supply shock of any large-scale amnesty program dissipates) from large-scale legalization programs. We use data from the New Immigrant Survey (NIS) for data on immigrants who were legalized based on family ties or small-scale legalization programs, and the Legalized Population Survey (LPS) for data on immigrants legalized by the IRCA. Estimates suggest that the increase in wage after legalization is about 22% higher for male immigrants who were legalized based on family ties, or smaller scale legalization programs, compared to IRCA beneficiaries. Difference-in-Difference-Difference regressions with National Longitudinal Survey of Youth (1979 cohort and 1997 cohort) comparison groups suggest similar results. We further show that the NIS respondents received a larger wage gain from legalization compared to the LPS respondents even though they had similar wages in their first U.S. job. This suggests that supply shock brought on by the IRCA restricted the wage gains of IRCA beneficiaries. |
| Keywords: | immigration, illegal immigration, legalization, undocumented immigrants, wage |
| JEL: | J3 J6 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11525&r=lab |
| By: | Adriaan Kalwij; Arie Kapteyn; Klaas de Vos |
| Abstract: | Labor force participation at older ages has been rising in the Netherlands since the mid-nineteen-nineties. Reforms of the social security and pension systems have often been put forward as main explanations for this rise. However, participation rates above the normal retirement age of 65 have almost tripled for men and quadrupled for women despite the fact that at those ages reforms are unlikely to have had much impact. This suggests other factors may have played an important role in this rise as well. In addition to the effects of reforms in social security and pension systems, this chapter examines the importance for men’s labor force participation at older ages of improved health, increased levels of education, and differences in skills across cohorts, as the older cohorts moved into retirement, such that workers’ characteristics better matched labor demand. These changes on the labor supply side are likely to have contributed to the success of the reforms since the mid-nineteen-nineties and to have had a large independent impact on men’s labor force participation at older ages. |
| JEL: | J14 J18 J26 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24636&r=lab |
| By: | Pohlan, Laura |
| Abstract: | This paper analyzes the economic and social consequences of job loss which contribute to exclusion from society based on German linked survey and administrative data. To study the causal relationship between unemployment and multiple dimensions of social marginalization, I combine inverse propensity score weighting with a difference-in-differences approach. The results suggest that job loss has particularly detrimental effects on the subjective perception of social integration, life satisfaction, the access to economic resources and mental health. Moreover, this paper shows that becoming unemployed hinders the fulfillment of psychosocial needs that are typically associated with working, such as social status and higher self-efficacy. The effects of job loss are long-lasting, growing more profound the longer the duration of unemployment and persisting following reemployment. Looking at effect heterogeneity, I find that having a partner and being highly educated reduces the negative effects of job loss. |
| Keywords: | job loss,unemployment,social exclusion,inverse probability weighting |
| JEL: | I31 J64 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:18029&r=lab |
| By: | Nur Cahyadi; Rema Hanna; Benjamin A. Olken; Rizal Adi Prima; Elan Satriawan; Ekki Syamsulhakim |
| Abstract: | Conditional cash transfer (CCT) programs have spread worldwide, and are designed to promote comprehensive human capital investments in children, starting from encouraging pre-natal and maternal care and early childhood health interventions and continuing through incentivizing school attendance. Yet evaluating these claims over more than a few years is hard, as most CCT experiments extend the program to the control group after a short experimental period. This paper experimentally estimates the impacts of Indonesia’s cash transfer program (PKH) six years after the program launched, using data from about 14,000 households in 360 sub-districts across Indonesia, taking advantage of the fact that treatment and control locations remained largely intact throughout the period. We find that PKH continues to have large static incentive effects on many of the targeted indicators, increasing usage of trained health professionals for childbirth dramatically and halving the share of children age 7-15 who are not enrolled in school. Wage labor for 13-15 year olds was reduced by at least one-third. We also begin to observe impacts on outcomes that may require cumulative investments: for example, six years later, we observe large reductions in stunting and some evidence of increased high school completion rates. The results suggest that CCT investments can have substantial effects on the accumulation of human capital, and that these effects can persist even when programs are operating at large-scale without researcher intervention. |
| JEL: | I38 O10 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24670&r=lab |
| By: | David Prentice (Infrastructure Victoria); Rosanna Scutella (RMIT) |
| Abstract: | In this paper we take the first steps to providing parameters for use in the cost benefit analysis of investments in social housing by estimating its effects on outcomes for individual residents. This is done by applying statistical matching methods to the Journeys Home dataset to provide new estimates of the impacts of social housing on employment, education, health, incarceration and homelessness. We find placing an individual, vulnerable to becoming homeless, in social housing means they are less likely, compared with other similar individuals not in social housing, to become homeless. Hence, social housing is providing an important `safety net’ for people vulnerable to homelessness. We also find that in the short run individuals in social housing have similar outcomes in terms of employment, education, physical and mental health, and incarceration to similarly disadvantaged individuals not in social housing. These results are potentially due to strict targeting of individuals into relatively limited available spots in social housing and the averaging across cohort specific effects. The long run impacts, for some cohorts, may differ but analysing this requires longer datasets. Creation Date: 2018-05-16 |
| Keywords: | Social Housing, Matching Methods, Homelessness, Employment, Education, Health, Incarceration |
| JEL: | C21 D61 I38 H42 H54 |
| URL: | http://d.repec.org/n?u=RePEc:inv:tpaper:201801&r=lab |
| By: | Alves, Paulo |
| Abstract: | Using a firm-level survey database covering 41 countries, we evaluate firms’ abnormal retained earnings. The results of our work show that the trends of cash holdings and retained earnings are independent. While cash holdings around the world are increasing, the opposite has occurred for retained earnings. We show that cash holdings are influenced by precautionary motive and retained earnings by firms’ growth opportunities. Abnormal retained earnings have risen with GDP growth and decreased following the 2008 financial crisis. This result also confirms the hypothesis of firms’ growth opportunities. US firms present positive abnormal retained earnings after the 2008 financial crisis, contrary to the remaining firms around the world. This can explain recent trends in the US stock market. |
| Keywords: | Abnormal retained earnings; Cash holdings; Firms’ growth opportunities; Precautionary motive. |
| JEL: | G32 G38 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86660&r=lab |
| By: | Ghate, Chetan; Mazumder, Debojyoti |
| Abstract: | Governments in both developing and developed economies play an active role in labor markets in the form of providing both formal public sector jobs and employment through public workfare programs. We refer to this as employment targeting. In the context of a simple search and matching friction model, we show that the propensity for the public sector to target more employment can increase the unemployment rate in the economy and lead to an increase in the size of the informal sector. Employment targeting can therefore have perverse effects on labor market outcomes. |
| Keywords: | Search and Matching Frictions, Labor Markets, Employment, Informal Sector, Public Sector. |
| JEL: | D83 O17 O20 |
| Date: | 2018–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:87065&r=lab |
| By: | Roed, Marianne (Institute for Social Research, Oslo); Schone, Pal (Institute for Social Research, Oslo); Umblijs, Janis (Institute for Social Research, Oslo) |
| Abstract: | In this paper we analyse the impact of labour market conditions at immigration on school performance for the immigrants' children. First, we establish the direct effect of initial labour market conditions on later labour market performance for the father. Along with several other studies in this field we find that later labour market performance of the father (measured by labour earnings and accumulated work experience) depend significantly initial labour market conditions. Second, we find evidence that this initial effect feeds into the children's school performance. Concretely, for the sons, we find a positive impact of initial favourable labour market conditions of the father on the grade point average in lower secondary school. Daughters' school performance seems to be unrelated to the same initial labour market conditions. |
| Keywords: | educational outcomes, immigration, local labour market conditions |
| JEL: | I20 J18 J61 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11526&r=lab |
| By: | Cristiano Cantore; Filippo Ferroni; Miguel A. Leon-Ledesma |
| Abstract: | The New-Keynesian transmission mechanism of monetary policy has clear implications for the behavior of the labor share. In the basic version of the model, the labor share is negatively related to the price markup and hence is pro-cyclical conditional on monetary policy shocks. However, little empirical evidence is available on the effect of monetary policy on the labor share and its components. We present a comprehensive cross country empirical analysis and find that the data are at odds with the theory. Cyclically, a monetary policy tightening increased the labor share and decreased real wages and labor productivity during the Great Moderation period in the US, the Euro Area, the UK, Australia and Canada. We then examine models allowing for a wide range of nominal and real rigidities that are important to separate the dynamics of the markup and the labor share. We show that models that do a good job at reproducing the responses of real variables to a monetary policy shock are unable to reproduce the responses of the labor share observed in the data. |
| Keywords: | Labor Share; Monetary Policy Shocks; DSGE models |
| JEL: | E23 E32 C52 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:ukc:ukcedp:1808&r=lab |
| By: | Richard Hornbeck; Enrico Moretti |
| Abstract: | We estimate the local and aggregate effects of total factor productivity growth on US workers' earnings, housing costs, and purchasing power. Drawing on four alternative instrumental variables, we consistently find that when a city experiences productivity gains in manufacturing, there are substantial local increases in employment and average earnings. For renters, increased earnings are largely offset by increased cost of living; for homeowners, the benefits are substantial. Strikingly, local productivity growth reduces local inequality, as it raises earnings of local less-skilled workers more than the earnings of local more-skilled workers. This is due, in part, to lower geographic mobility of less-skilled workers. However, local productivity growth also has important general equilibrium effects through worker mobility. We estimate that 38% of the overall increase in workers' purchasing power occurs outside cities directly affected by local TFP growth. The indirect effects on worker earnings are substantially greater for more-skilled workers, due to greater geographic mobility of more-skilled workers, which increases inequality in other cities. Neglecting these general equilibrium effects would both understate the overall magnitude of benefits from productivity growth and misstate their distributional consequences. Overall, US workers benefit substantially from productivity growth. Summing direct and indirect effects, we find that TFP growth from 1980 to 1990 increased purchasing power for the average US worker by 0.5-0.6% per year from 1980 to 2000. These gains do not depend on a worker's education; rather, the benefits from productivity growth mainly depend on where workers live. |
| JEL: | E24 J0 R0 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24661&r=lab |
| By: | Fanti, Luciano; Buccella, Domenico |
| Abstract: | In this paper the authors investigate whether and how, in a network industry, the intensity of network effects affect the total pollution under the presence of a union interested to "local" environmental damages (e.g. polluting production processes damaging workers' health and the local environment where workers live). Under monopoly, it is shown that network effects tend to increase, on the one hand, the investments in the cleaning technology but, on the other hand, the polluting output, so that their effects on the total pollution are theoretically ambiguous. In particular, the authors find that total pollution is reduced (resp. increased) with increasing network effects intensity if the market is sufficiently large (resp. small). Moreover the pollution-reducing result of the increasing network effect is more likely when the existing network effects, the union's environmental concerns and the technological efficiency are sufficiently large. These findings are qualitatively confirmed also under different union's preferences, Government's environmental standard and Cournot duopoly, and thus offer interesting empirical as well as policy implications. |
| Keywords: | network goods,cleaning technology,pollution production,green unions,monopoly,Cournot duopoly |
| JEL: | J51 L12 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201840&r=lab |