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on Labour Economics |
| By: | Conti, Gabriella (University College London); Ginja, Rita (University of Bergen); Narita, Renata (University of Sao Paulo) |
| Abstract: | Do households value access to free health insurance when making labor supply decisions? We answer this question using the introduction of universal health insurance in Mexico, the Seguro Popular (SP), in 2002. The SP targeted individuals not covered by Social Security and broke the link between access to health care and job contract. We start by using the rollout of SP across municipalities in a differences-indifferences approach, and find an increase in informality of 4% among low-educated families with children. We then develop and estimate a household search model that incorporates the pre-reform valuation of formal sector amenities relative to the alternatives (informal sector and non-employment) and the value of SP. The estimated value of the health insurance coverage provided by SP is below the government's cost of the program, and the corresponding utility gain is, at most, 0.56 per each peso spent. |
| Keywords: | search, household behavior, health insurance, informality, unemployment |
| JEL: | J64 D10 I13 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11706&r=lab |
| By: | Immervoll, Herwig (OECD); Knotz, Carlo (Bremen International Graduate School of Social Sciences) |
| Abstract: | This paper presents new information on activity-related eligibility criteria for unemployment and related benefits in OECD and EU countries in 2017, comparing the strictness of "demanding" elements built into unemployment benefits across countries and over time. Eligibility criteria for unemployment benefits determine what claimants need to do to successfully claim benefits initially or to continue receiving them. Benefit systems feature specific rules that define the type of job offers that claimants need to accept, requirements for reporting on the outcomes of independent job-search efforts, obligations to participate in active labour market programmes, as well as sanctions for failing to meet these requirements. Such rules aim to strengthen incentives to look for, prepare for, and accept employment. They may also be used as a targeting device to reduce demands on benefit systems, and on associated employment services. While this may serve to limit support to genuine jobseekers, strict requirements can also exclude some intended recipients from financial and re-employment support, e.g., by discouraging them from applying. This paper presents detailed information on policy rules in 2017, summarises them into an overall policy indicator of eligibility strictness, and gauges recent policy trends by documenting changes in the strictness measures. A novelty is the inclusion of lower-tier unemployment or social assistance benefits in the compilation of policy rules. Results document a large number of reforms enacted after the Great Recession and suggest a slight convergence of policy rules across countries even though overall measures of the strictness of activity-related eligibility criteria have remained broadly unchanged during the recent past. In countries with multiple layers of support for the unemployed, availability requirements tend to be more demanding for lower-tier assistance benefits, while sanction rules tend to be more stringent for first-tier programmes. |
| Keywords: | unemployment benefits, activation, targeting, incentives, job-search |
| JEL: | I38 J08 J68 J65 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11704&r=lab |
| By: | Albert Jan Hummel; Bas Jacobs |
| Abstract: | This paper extends the Diamond (1980) model with labor unions to study optimal income taxation and to analyze whether unions can be desirable for income redistribution. Unions bargain with firms over wages in each sector and firms unilaterally determine employment. Unions raise the efficiency costs of income redistribution, because unemployment benefits and income taxes raise wage demands and thereby generate involuntary unemployment. Optimal unemployment benefits and optimal income taxes are lower in unionized labor markets. We show that unions are socially desirable only if they represent (low-income) workers whose participation is subsidized on a net basis. By creating implicit taxes on work, unions alleviate the labor-market distortions caused by income taxation. Numerical simulations demonstrate that optimal taxes and transfers are much less redistributive in unionized labor markets than in competitive labor markets. |
| Keywords: | optimal taxation, unions, wage bargaining, labor participation |
| JEL: | H21 H23 J51 J58 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7188&r=lab |
| By: | Rodríguez-Planas, Núria (Queens College, CUNY); Sanz-de-Galdeano, Anna (Universidad de Alicante); Terskaya, Anastasia (Universidad de Alicante) |
| Abstract: | Using the National Longitudinal Study of Adolescent to Adult Health, we explore the causal effect of gender-identity norms on female teenagers' engagement in risky behaviors relative to boys in the US. To do so, we exploit idiosyncratic variation across adjacent grades within schools in the proportion of high-school peers' mothers who think that important skills for both boys and girls to possess are traditionally masculine ones, such as to think for him or herself or work hard, as opposed to traditionally feminine ones, namely to be well-behaved, popular or help others. We find that a higher proportion of mothers who believe that independent thinking and working hard matter for either gender reduces the gender gap in risky behaviors, traditionally more prevalent among males, both in the short and medium run. We also find evidence of convergence in the labor market in early adulthood. Short- and medium-run results are driven by a reduction in males' engagement in risky behaviors; long-run results are driven by females' higher annual earnings and lower welfare dependency. |
| Keywords: | gender-identity norms, short-, medium- and long-run effects, risky behaviors and labor market outcomes, Add Health |
| JEL: | I10 I12 J15 J16 J22 Z13 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11694&r=lab |
| By: | Patrick Arni; Amelie Schiprowski |
| Abstract: | How effective are effort targets? This paper provides novel evidence on the effects of job search requirements on effort provision and labor market outcomes. Based on large-scale register data, we estimate the returns to required job search effort, instrumenting individual requirements with caseworker stringency. Identification is ensured by the conditional random assignment of job seekers to caseworkers. We find that the duration of un- and non-employment both decrease by 3% if the requirement increases by one monthly application. When instrumenting actual applications with caseworker stringency, an additionally provided monthly application decreases the length of spells by 4%. In line with theory, we further find that the effect of required effort decreases in the individual's voluntary effort. Finally, the requirement level causes small negative effects on job stability, reducing the duration of re-employment spells by 0.3% per required application. We find a zero effect on re-employment wages. |
| Keywords: | effort targets, job search behavior, unemployment insurance, incentives |
| JEL: | J64 J65 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7200&r=lab |
| By: | Bhalotra, Sonia R. (University of Essex); Venkataramani, Atheendar (Massachusetts General Hospital); Walther, Selma (University of Warwick) |
| Abstract: | We investigate women's fertility, labor and marriage market responses to large declines in child and maternal mortality that occurred following a major medical innovation in the US. In response to the decline in child mortality, women delayed childbearing and had fewer children overall. Fewer women had three or more children, and a larger share remained childless. We present a new theory of the extensive margin response, premised upon improvements in child survival reducing the time women need to achieve their target number of children. This prompts fertility delay and labor market entry which, coupled with wage or fecundity shocks, can result in childlessness. Consistent with these predictions, we find that reductions in child mortality increased women's labor force participation, improved their occupational status and reduced their chances of ever having married. Maternal mortality decline had opposing effects on all of these outcomes. |
| Keywords: | women's labor force participation, fertility timing, childlessness, child mortality, maternal mortality, medical innovation |
| JEL: | J13 I18 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11716&r=lab |
| By: | Galasso, Vincenzo; Nunnari, Salvatore |
| Abstract: | This paper provides a novel test of the link from electoral rules to economic policies. We focus on unemployment benefits because their classification as a broad or targeted transfer may vary - over time and across countries - according to the geographical dispersion of unemployed citizens, the main beneficiaries of the program. A simple theoretical model delivers unambiguous predictions on the interaction between electoral institutions and the unemployment rate in contestable and safe districts: electoral incentives induce more generous unemployment benefits in majoritarian than in proportional systems if and only if the unemployment rate is higher in contestable than in safe districts. We test this prediction using a novel dataset with information on electoral competitiveness and unemployment rates at district level, and different measures of unemployment benefit generosity for 16 OECD countries between 1980 and 2011. The empirical analysis strongly supports the theoretical predictions. |
| Keywords: | Electoral Rules; Swing Districts; Unemployment Benefits |
| JEL: | D72 D78 H53 J65 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13081&r=lab |
| By: | Krueger, Alan B. (Princeton University); Ashenfelter, Orley (Princeton University) |
| Abstract: | In this paper we study the role of covenants in franchise contracts that restrict the recruitment and hiring of employees from other units within the same franchise chain in suppressing competition for workers. Based on an analysis of 2016 Franchise Disclosure Documents, we find that "no-poaching of workers agreements" are included in a surprising 58 percent of major franchisors' contracts, including McDonald's, Burger King, Jiffy Lube and H&R Block. The implications of these no-poaching agreements for models of oligopsony are also discussed. No-poaching agreements are more common for franchises in low-wage and high-turnover industries. |
| Keywords: | collusion, no-poaching agreement, monopsony, oligopsony, franchise |
| JEL: | J42 J41 J63 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11672&r=lab |
| By: | Kevin Milligan; Tammy Schirle |
| Abstract: | We find a steep earnings-longevity gradient using fifty years of administrative data from Canada, with men in the top ventile of earnings living eight years (11 percent) longer than those in the bottom ventile. For women, the difference is 3.6 years. Unlike the United States, this longevity gradient in Canada has shifted uniformly through time, with approximately equal gains across the earnings distribution. We compare our results using cross-sectional and cohort-based methods, finding similar trends but a steeper gradient when using cohorts. For middle-aged men, we find a cessation of mortality improvements in recent years, comparable to changes observed in the United States. Changes in income do not explain cross-time or cross-country differences. |
| JEL: | I14 J11 J14 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24929&r=lab |
| By: | Arindrajit Dube; Laura Giuliano; Jonathan Leonard |
| Abstract: | We analyze how separations responded to arbitrary differences in own and peer wages at a large U.S. retailer. Regression-discontinuity estimates imply large causal effects of own wages on separations, and on quits in particular. However, this own-wage response could reflect comparisons either to market wages or to peer wages. Estimates using peer-wage discontinuities show large peer-wage effects and imply the own-wage separation response mostly reflects peer comparisons. The peer effect is driven by comparisons with higher-paid peers—suggesting concerns about fairness. Separations appear fairly insensitive when raises are similar across peers—suggesting search frictions and monopsony are relevant in this low-wage sector. |
| JEL: | D9 D91 J01 J3 J42 J63 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24906&r=lab |
| By: | El Badaoui, Eliane (University Paris Ouest-Nanterre); Mangiavacchi, Lucia (University of the Balearic Islands) |
| Abstract: | This article examines the effects of fostering on children's labour supply and schooling in host families in Niger. The focus is on the causal role of ethnic inherited cultural values and behaviours in perpetuating fostering. In particular, at the ethnic group level, we rely on the inherited level of community integration, the situation of frequent interethnic violence, and an indicator of great importance attributed to foster parents. We specify a simultaneous equations model with three outcomes for children (school attendance, hours of market work and hours of domestic work) and a treatment variable (fostering). The results show that foster children are more likely to attend school and to have longer hours of domestic work than biological children. Importantly, we find evidence of a schooling fostering for boys and a domestic fostering for girls. We provide heterogeneous effects for different samples and test the robustness of the results to different empirical specifications. All in all, ethnic inherited values and behaviours are found to have an important causal effect on children's welfare. |
| Keywords: | child fostering, culture, child labour, domestic work, schooling, Niger |
| JEL: | J13 J22 O12 C34 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11691&r=lab |
| By: | Farre, Lidia; Fasani, Francesco; Mueller, Hannes Felix |
| Abstract: | This article documents a strong connection between unemployment and mental distress using data from the Spanish National Health Survey. We exploit the collapse of the construction sector to identify the causal effect of job losses in different segments of the Spanish labour market. Our results suggest that an increase of the unemployment rate by 10 percentage points due to the breakdown in construction raised reported poor health and mental disorders in the affected population by 3 percentage points, respectively. We argue that the size of this effect responds to the fact that the construction sector was at the centre of the economic recession. As a result, workers exposed to the negative labor demand shock faced very low chances of re-entering employment. We show that this led to long unemployment spells, stress, hopelessness and feelings of uselessness. These effects point towards a potential channel for unemployment hysteresis. |
| Keywords: | great recession; hysteresis; mental health; unemployment |
| JEL: | C26 I10 J60 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13099&r=lab |
| By: | Pagliero, Mario |
| Abstract: | The combination of occupational licensing at the local market level often coexists with labor mobility across local markets. We empirically study a labor market in which a district-specific entry (licensing) examination is coupled with labor mobility across districts. Our analysis exploits a change in the grading procedure of the exam, from grading in the local district to grading in a randomly assigned different district. We document that licensing regulation leads to extreme heterogeneity across markets in admission outcomes (up to 50 percent differences in licensing exam pass rates), unfair (discriminatory) admission procedures (up to 49 percent unfair exam results), and inefficient mobility of workers. These findings, together with the estimated impact of the reform on exam outcomes and grading standards, provide the first evidence of regulatory competition based on strategic interaction among licensing boards. |
| Keywords: | bar exam; Labor market regulation; legal market; licensing; occupational regulation |
| JEL: | J08 J44 L50 L84 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13076&r=lab |
| By: | Barankay, Iwan; Contigiani, Andrea; Hsu, David |
| Abstract: | Does heightened employer-friendly trade secrecy protection help or hinder innovation? By examining U.S. state-level legal adoption of a doctrine allowing employers to curtail inventor mobility if the employee would "inevitably disclose" trade secrets, we investigate the impact of a shifting trade secrecy regime on individual-level patenting outcomes. Using a difference-in-differences design taking un-affected U.S. inventors as the comparison group, we find strengthening employer-friendly trade secrecy adversely affects innovation. We then investigate why. We do not find empirical support for diminished idea recombination from suppressed inventor mobility as the operative mechanism. While shifting intellectual property protection away from patenting into trade secrecy has some explanatory power, our results are consistent with reduced individual-level incentives to signaling quality to the external labor market. |
| Keywords: | Innovation; inter-firm mobility; knowledge workers; labor markets; signalling; trade secrets |
| JEL: | J08 O31 O34 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13077&r=lab |
| By: | Joan Costa-i-Font; Belen Saenz de Miera Juarez |
| Abstract: | Although the rise in obesity and overweight is related to time constraints influencing health investments (e.g., exercise, shopping and cooking time, etc.), there is limited causal evidence to substantiate such claims. This paper estimates the causal effect of a change in working times on overweight and obesity drawing from evidence from the Aubrey reform implemented in the beginning of the past decade in France. We use longitudinal data from GAZEL (INSERM) 1997-2006 that contains detailed information about health indicators, including measures of height and weight. Taking the Alsace-Mosselle department as a control group and a difference-in-differences strategy, we estimate the effect of a differential reduction in working times on body weight. Our results show evidence of 0.7% increase in average BMI an 8pp increase in the probability of overweight among blue collars exposed to the reform. In contrast, we find no effect among white collar workers. The effects are robust to different specifications and placebo tests. |
| Keywords: | obesity, overweight, working times, difference-in-differences, blue collar, white collar, Body Mass Index |
| JEL: | I13 J81 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7174&r=lab |
| By: | Ortega, Francesc (Queens College, CUNY); Hsin, Amy (Queens College, CUNY) |
| Abstract: | Wage gaps between documented (including natives) and undocumented workers may reflect employer exploitation, endogenous occupational sorting and productivity losses associated with lack of legal status. Identification of the undocumented productivity penalty is crucial to estimate the aggregate economic gains from legalization. This paper presents a new identification strategy based on the interplay between educational attainment and occupational barriers. Our main finding is that lack of legal status reduces the productivity of undocumented workers by about 12%. We also find that Dreamers are positively selected compared to similarly skilled natives, as one would expect if they face occupational barriers (Hsieh et al., 2013). Our estimates also imply that the degree of employer exploitation is likely to be small, suggesting that employer competition bids up the wages of undocumented workers and aligns them with their productivity. Last, we also find evidence suggesting that the occupational choices of undocumented workers are heavily influenced by licensing requirements and by the degree of exposure to apprehension by immigration enforcement agencies. In sum, our results strongly suggest that occupational barriers associated with lack of legal status lead to misallocation of talent and negatively affect economic growth. |
| Keywords: | migration, undocumented, legalization, amnesty, dreamers |
| JEL: | J15 J24 J31 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11680&r=lab |
| By: | Nirav Mehta |
| Abstract: | Researchers commonly “shrink” raw quality measures based on statistical criteria. This paper studies when and how this transformation’s statistical properties would confer economic benefits to a utility-maximizing decisionmaker across common asymmetric information environments. I develop the results for an application measuring teacher quality. The presence of a systematic relationship between teacher quality and class size could cause the data transformation to do either worse or better than the untransformed data. I use data from Los Angeles to confirm the presence of such a relationship and show that the simpler raw measure would outperform the one most commonly used in teacher incentive schemes. |
| Keywords: | economics of education, empirical contracts, teacher incentive schemes, teacher quality |
| JEL: | J01 I21 I28 D81 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7163&r=lab |