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on Labour Economics |
| By: | Dean Corbae; Andrew Glover |
| Abstract: | We develop a framework to understand pre-employment credit screening through adverse selection in labor and credit markets. Workers differ in an unobservable characteristic that induces a positive correlation between labor productivity and repayment rates in credit markets. Firms therefore prefer to hire workers with good credit because it correlates with high productivity. A poverty trap may arise, in which an unemployed worker with poor credit has a low job finding rate, but cannot improve her credit without a job. In our calibrated economy, this manifests as a large and persistent wage loss from default, equivalent to 2.3% per month over ten years. Banning employer credit checks eliminates the poverty trap, but pools job seekers and reduces matching efficiency: average unemployment duration rises by 13% for the most productive workers after employers are banned from using credit histories to screen potential hires. |
| JEL: | E24 E44 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25005&r=lab |
| By: | Leyva Gustavo |
| Abstract: | The unemployed in the United States appear to allocate time to job search activities regardless of the stance of the economy. Drawing on the American Time Use Survey between 2003 and 2014, I document that the unemployed increase their search intensity only slightly if at all during recessions. Roughly, 30 minutes in a week is the additional search intensity attributed to the unemployed in response to the Great Recession. While their search intensity depends on a number of factors that would predict otherwise, such as the odds of finding work, one argument shows promise: the search costs that accumulate over an expected long period of unemployment make a job more valuable during recessions. I estimate the elasticity of the value of a job to changes in labor productivity to be at least 0.67 and at most -0.04. |
| Keywords: | unemployed;search intensity;value of a job;business cycle |
| JEL: | E24 E32 J22 J64 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:bdm:wpaper:2018-13&r=lab |
| By: | David Card; Ciprian Domnisoru; Lowell Taylor |
| Abstract: | We use 1940 Census data to study the intergenerational transmission of human capital for children born in the 1920s and educated during an era of expanding but unequally distributed public school resources. Looking at the gains in educational attainment between parents and children, we document lower average mobility rates for blacks than whites, but wide variation across states and counties for both races. We show that schooling choices of white children were highly responsive to the quality of local schools, with bigger effects for the children of less-educated parents. We then narrow our focus to black families in the South, where state-wide minimum teacher salary laws created sharp differences in teacher wages between adjacent counties. These differences had large impacts on schooling attainment, suggesting an important causal role for school quality in mediating upward mobility |
| JEL: | I24 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25000&r=lab |
| By: | Pierre Cahuc; Sandra Nevoux |
| Abstract: | This paper shows that the reforms which expanded short-time work in France after the great 2008-2009 recession were largely to the benefit of large firms which are recurrent short-time work users. We argue that this expansion of short-time work is an inefficient way to provide insurance to workers, as it entails cross-subsidies which reduce aggregate production. An efficient policy should provide unemployment insurance benefits funded by experience rated employers’ contributions instead of short-time work benefits. We find that short-time work entails significant production losses compared to an unemployment insurance scheme with experience rating. |
| Keywords: | Short-time work, unemployment insurance, experience rating. |
| JEL: | J63 J65 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:693&r=lab |
| By: | Chris Bidner (Simon Fraser University); John Knowles (Simon Fraser University) |
| Abstract: | We analyse the intergenerational transmission of ‘innate ability’, focusing on the role of marital sorting. The heritability of ability induces a concern for the ability of potential spouses independently of a concern for their earning capacity. Marriages form on the basis of beliefs about ability (since it is not observed) as well earning capacity (which is observed). Beliefs are informed by earning capacity, but crucially also by family background. We show how the intergenerational transmission of ability becomes sensitive to elements of the economic environment once marital sorting is endogenously determined, but also that policy variables (e.g. income redistribution) generally have no impact. The analysis also reveals a novel ‘status motive’ for parental investment and channel through which the fortunes of grandparents and prior generations persist. |
| Keywords: | Family Economics, Inequality, Household Formation, Marriage |
| JEL: | D10 D19 D31 D80 D83 H31 H52 I24 J11 J12 J18 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:sfu:sfudps:dp18-05&r=lab |
| By: | Phiri, Andrew |
| Abstract: | The purpose of this study is to examine whether we can identify a Philips curve fit for the Kingdom of Swaziland as a low middle income Sub-Saharan Africa monarchy using data collected between 1991 and 2016. In our approach we rely on the recently introduced nonlinear autoregressive distributive lag (N-ARDL) model to a variety of Phillips curve specifications. For robustness sake, we further employ three filters (one-sided HP, two-sided HP and Corbae-Oularis filters) to extract the gap variables necessary for empirical analysis. Our findings point to a linear, short-run traditional Philips curve whereas we find strong support for concave shaped unemployment-gap and output –gap based Phillips curve specifications. Given the specific form of concavity discovered in the Phillips curves, the low inflation rate experienced over the last couple of decades can be attributed to a worsening labour and goods markets. Moreover, our evidence also cautions Swazi policymakers of ‘overheating’ of the economy during economic booms in which stabilization tools are required to implemented in such instances. Given the overall absence of empirical studies establishing the Philips curve for the Swazi economy our study makes a valid contribution to the literature. |
| Keywords: | Inflation; Unemployment; Phillips curve; Central Bank of Swaziland (CBS); Hodrick-Prescott (HP) filter; Corbae-Oularis (C-O) filter; Emerging Economies. |
| JEL: | C22 C32 C52 E24 E31 |
| Date: | 2018–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:89199&r=lab |
| By: | Chletsos, Michael; Roupakias, Stelios |
| Abstract: | In this paper we analyze the impact of immigration on Greek politics over the 2004-2012 period, exploiting panel data on 51 Greek regional units. We account for potential endogenous clustering of migrants into more “tolerant” regions by using a shift-share imputed instrument, based on their allocation in 1991. Overall, our results are consistent with idea that immigration is positively associated with the vote share of extreme-right parties. This finding appears to be robust to alternative controls, sample restrictions and different estimation methods. We do not find supportive evidence for the conjecture that natives “vote with their feet”, i.e. move away from regions with high immigrant concentrations. We also find that the political success of the far-right comes at the expense of “Leftist” parties. Importantly, concerns on criminality and competition for jobs and public resources appear to drive our findings. |
| Keywords: | Immigration, Elections, Political economy |
| JEL: | D72 J15 J61 |
| Date: | 2018–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:88545&r=lab |
| By: | Hull, Marie C. (University of North Carolina, Greensboro); Norris, Jonathan (University of Strathclyde) |
| Abstract: | In this paper, we study the evolution of cognitive and noncognitive skills gaps for children of immigrants between kindergarten and 5th grade. We find some evidence that children of immigrants begin school with lower math scores than children of natives, but this gap disappears in later elementary school. For noncognitive skills, children of immigrants and children of natives score similarly in early elementary school, but a positive gap opens up in 3rd grade. We find that the growth in noncognitive skills is driven by disadvantaged (e.g., low-SES) immigrant students. We discuss potential explanations for the observed patterns of skill development as well as the implications of our results for the labor market prospects of children of immigrants. |
| Keywords: | children of immigrants, cognitive and noncognitive skills, test score gap |
| JEL: | I21 J13 J15 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11724&r=lab |
| By: | Tracey, Marlon R. (Southern Illinois University Edwardsville); Polachek, Solomon (Binghamton University, New York) |
| Abstract: | The Short-Time Compensation (STC) program enables US firms to reduce work hours via pro-rated Unemployment Insurance (UI) benefits, rather than relying on layoffs as a cost-cutting tool. Despite the program's potential to preclude skill loss and rehiring/ retraining costs, firms' participation rates are still very low in response to economic downturns. Using firm-level UI administrative data, we show why by illustrating which type firms benefit from the program and which do not. Semiparametric estimation indicates STC reduces layoff rates for cyclically sensitive firms by about 15%, but has no effect for more cyclically stable firms. |
| Keywords: | short-time compensation, layoffs, inverse probability weighting, heterogeneity, finite mixture model |
| JEL: | C21 C38 J63 J65 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11746&r=lab |
| By: | Gilles Dufrénot |
| Abstract: | This paper proposes a new approach to quantify the demographic dividend and shows evidence of a demographic tax in the Arab countries in Transition (ACT). Our question is whether a shift in the age structure (a larger share of working-age population) is translated into less (more) efficient labor supply and demand and whether these in turn reduce (increase) per-capita GDP. We propose estimates based on stochastic frontier analysis and quantile regressions. We find several interesting results. First, we document the existence of a dividend gap for the ACT with unchanging inefficiency scores over time between 56% and 79% in Yemen, 35% on average in Egypt, between 4% and 23% in Tunisia, between 7% and 30% in Libya, between 6% and 21% in Jordan. Morocco in the only country showing a demographic dividend with an average 30% inefficiency score that decreases over time. Secondly, the variables that are sources of these inefficiencies are the gender gap (with a significant influence of female labor market participation), insufficient secured jobs (this variable carry a positive sign with GDP per-capita and has the largest size among of the coefficients in the regression), own-account employment (which can be considered as a proxy of the importance of the informal sector) and a low public spending in health. |
| Keywords: | Demographic Tax;Efficiency Score;Arab Countries;Stochastic Frontier;Quantile |
| JEL: | C31 J11 P51 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2018-15&r=lab |
| By: | Petrosky-Nadeau, Nicolas (Federal Reserve Bank of San Francisco); Wasmer, Etienne (NYU Abu Dhabi); Weil, Philippe (ULB and CEPR) |
| Abstract: | This paper studies the optimal sharing of value added between consumers, producers, and labor. We first define a constrained optimum. We then compare it with the decentralized allocation. They coincide when the price maximizes the expected marginal revenue of the firm in the goods market, an outcome of the competitive search equilibrium, and when the wage exactly offsets the congestion externality of firm entry in the labor market, which is the traditional Hosios condition. Under price and wage bargaining, this allocation is achieved under a double Hosios condition combining the logic of competitive search and Hosios efficiency. The consumer receives a share of the goodsmarket trading surplus equal to the amount of externality occasioned by its search activity and the worker receives a share of the labor match surplus to offset the externality of firm entry in the matching process. A calibration of the model to the US economy indicates that the labor market is near efficient, and free-entry of consumers leads to excess excess consumer market power in setting prices. Restoring efficiency leads to a modest change in welfare. |
| JEL: | E24 E32 J63 J64 |
| Date: | 2018–09–27 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2018-13&r=lab |