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on Labour Economics |
| By: | François Gerard; Lorenzo Lagos; Edson Severnini; David Card |
| Abstract: | A growing body of research shows that firms' employment and wage-setting policies contribute to wage inequality and pay disparities between groups. We measure the effects of these policies on racial pay differences in Brazil. We find that nonwhites are less likely to work at establishments that pay more to all race groups, a pattern that explains about 20% of the white-nonwhite wage gap for both genders. The pay premiums offered by different employers are also compressed for nonwhites relative to whites, contributing another 5% of the overall gap. We then ask how much of the under-representation of nonwhites at higher-paying workplaces is due to the selective skill mix at these establishments. Using a counterfactual based on the observed skill distribution at each establishment and the nonwhite shares in different skill groups in the local labor market, we conclude that assortative matching accounts for about two- thirds of the under-representation gap for both men and women. The remainder reflects an unexplained preference for white workers at higher-paying establishments. The wage losses associated with unexplained sorting and differential wage setting are largest for nonwhites with the highest levels of general skills, suggesting that the allocative costs of race-based preferences may be relatively large in Brazil. |
| JEL: | E24 J15 J31 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25176&r=lab |
| By: | Pizzinelli, Carlo; Theodoridis, Konstantinos; Zanetti, Francesco |
| Abstract: | This paper documents state dependence in labor market fluctuations. Using a Threshold Vector-Autoregression model, we establish that the unemployment rate, the job separation rate and the job finding rate exhibit a larger response to productivity shocks during periods with low aggregate productivity. A Diamond-Mortensen-Pissarides model with endogenous job separation and on-the-job search replicates these empirical regularities well. The transition rates into and out of employment embed state dependence through the interaction of reservation productivity levels and the distribution of match-specific idiosyncratic productivity. State dependence implies that the effect of labor market reforms is different across phases of the business cycle. A permanent removal of layoff taxes is welfare enhancing in the long run, but it involves distinct short-run costs depending on the initial state of the economy. The welfare gain of a tax removal implemented in a low-productivity state is 4.9 percent larger than the same reform enacted in a state with high aggregate productivity. |
| Keywords: | search and matching models; state dependence in business cycles; threshold vector autoregression. |
| JEL: | C11 E24 E32 J64 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:90380&r=lab |
| By: | Belot, Michèle (European University Institute); Kircher, Philipp (University of Edinburgh); Muller, Paul (University of Gothenburg) |
| Abstract: | We study how job seekers respond to wage announcements by assigning wages randomly to pairs of otherwise similar vacancies in a large number of professions. High wage vacancies attract more interest, in contrast with much of the evidence based on observational data. Some applicants only show interest in the low wage vacancy even when they were exposed to both. Both findings are core predictions of theories of directed/competitive search where workers trade off the wage with the perceived competition for the job. A calibrated model with multiple applications and on-the-job search induces magnitudes broadly in line with the empirical findings. |
| Keywords: | online job search, directed search, wage competition, field experiments |
| JEL: | J31 J63 J64 C93 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11814&r=lab |
| By: | Docquier, Frédéric (Université catholique de Louvain); Turati, Riccardo (IRES, Université catholique de Louvain); Valette, Jérôme (CES, University of Paris); Vasilakis, Chrysovalantis (Bangor University) |
| Abstract: | This paper empirically revisits the impact of birthplace diversity on economic growth. We use panel data on US states over the 1960-2010 period. This rich data set allows us to better deal with endogeneity issues and to conduct a large set of robustness checks. Our results suggest that diversity among college-educated immigrants positively affects economic growth. We provide converging evidence pointing at the existence of skill complementarities between workers trained in different countries. These synergies result in better labor market outcomes for native workers and in higher productivity in the R&D sector. The gains from diversity are maximized when immigrants originate from economically or culturally distant countries (but not both), and when they acquired part of their secondary education abroad and their college education in the US. Overall, a 10% increase in high-skilled diversity raises GDP per capita by about 6%. On the contrary, low-skilled diversity has insignificant effects. |
| Keywords: | immigration culture, birthplace diversity growth |
| JEL: | F22 J61 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11802&r=lab |
| By: | Bachmann, Ronald; Bechara, Peggy |
| Abstract: | Using administrative data on individual workers' employment history and firms, we investigate the cyclicality of worker flows on the German labour market. Focusing on heterogeneities on both sides of the labour market, we find that small firms hire much more workers from unemployment than large firms, and that they do so at the very beginning of an economic expansion. Later on in the expansion, overall hirings more frequently result from direct job-to-job transitions to larger firms. Transitions from unemployment to employment at large firms are generally found to be more (pro-)cyclical. However, this stylised fact disappears when the composition of the workforce is controlled for. |
| Keywords: | worker flows,accessions,hirings,separations,business cycle,job-to-job,employer-to-employer |
| JEL: | J63 J64 J21 E24 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:303&r=lab |
| By: | Andreas Koch; Andrea Kirchmann; Marcel Reiner; Tobias Scheu; Holger Bonin |
| Abstract: | The introduction of the statutory minimum wage in Germany directly affected firms with wage earners paid less than EUR 8.50 per hour. This paper studies a variety of responses by employers and employees to adapt to this shock, in particular changes in compensation packages, employment at the extensive and intensive margin, working conditions, and position in product markets. Strategies of non-compliance are also in focus. The analysis is qualitative and based on 131 semi-structured, in-depth interviews with firm representatives, workers and members of work councils. A key finding is that while many firms and workers changed behavior with the introduction of the minimum wage, these changes are less response to concomitant changes in labor costs. Rather, it appears that the reform at many workplaces served as a catalyst to trigger or accelerate pending change processes. |
| Keywords: | Minimum wage, Interview-based approach, Germany |
| JEL: | J08 J28 J81 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:iaw:iawdip:132&r=lab |
| By: | Ghosh, Ishan (Drexel University); Larch, Mario (University of Bayreuth); Murtazashvili, Irina (Drexel University); Yotov, Yoto (Drexel University) |
| Abstract: | We study the differential post-layoff responses in labor market outcomes for men vs. women when unemployment is caused by international trade. Our paper is the first to capitalize on the richness and unique design of the U.S. Trade Act Participant Report database (in combination with the Trade Adjustment Assistance dataset) in order to analyze gender differentials. The analysis identifies trade-affected workers as an overlooked and vulnerable group with very pronounced gender gaps in earnings. Three main results stand out from our estimates. First, we find that the pre-layoff wage gap between men and women who have lost their jobs due to trade is very wide; a striking 30% premium for men, even after controlling for education, experience, race, and other demographic characteristics. Second, we establish that the success rate in finding employment for women who have been laid off because of trade is not significantly lower as compared to men, however we do observe significant differences across some states and some sectors. Third, our estimates reveal that the pre-layoff wage premium for men is completely eliminated upon re-employment. However, we attribute this result to wage compression. Finally, our data enable us to document a series of gender-related outcomes across demographic characteristics, retraining choices, geography, and sectors. |
| Keywords: | Gender Differentials; Wage Premium; Re-employment; International Trade |
| JEL: | F16 J01 J16 |
| Date: | 2018–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2018_009&r=lab |
| By: | Ghassan Dibeh; Ali Fakih; Walid Marrouch |
| Abstract: | Irregular migration became an alarming issue over the last decade for both developed and developing countries. A prevailing assumption in migration policy is that labor market and institutional characteristics play a crucial role in pushing people to leave their home countries in search for better life prospects. This paper examines this hypothesis using a unique dataset covering young people aged 15 to 29 from five major MENA countries from the year 2016. Using a probit model, the paper finds that labor market drivers (unemployment, job sector, social security, contract type) are of great importance for the decision to migrate irregularly amongst the youth in the MENA region and that the quality of institutions matters. In addition, the lack of wealth and economic opportunities enhance their willingness to engage in irregular migration. |
| Keywords: | Irregular Migration,Youth,Labor Markets,Institutions,Arab Spring, |
| JEL: | J61 O17 |
| Date: | 2018–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2018s-34&r=lab |
| By: | B Ferreira Neto, Amir |
| Abstract: | This paper investigates the effect of public library programs and participation on unemployment and labor force participation in Appalachia. Appalachia is an economically distressed area, mostly rural, and with a sustained lower level of labor force participation and a higher level of unemployment. As public library programs can be countercyclical to labor market outcomes, I use public library staff and the amount of print resources and computers available as instruments. The results show that neither adult nor children’s programs and participation affect local labor market outcomes. These results are robust across different specifications. Spatial econometric estimates corroborate the main results and provide evidence of spatial spillover effects, especially for children’s programs. |
| Keywords: | Local Labor Market, Labor Force Participation, Public Library, Unemployment, Appalachia |
| JEL: | H40 J64 L39 R59 |
| Date: | 2018–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:89584&r=lab |
| By: | W. Similan Rujiwattanapong (Centre for Macroeconomics (CFM); Aarhus University) |
| Abstract: | This paper quantifies the effects of the increasing maximum unemployment insurance (UI) duration during recessions no the drop in the correlation between output and labour productivity in the U.S. since the early 1980’s – the so-called productivity puzzle. Using a general equilibrium search and matching model with stochastic UI duration, heterogeneous match quality, variable search intensity and on-the-job search. I demonstrate that the model can explain over 40 percent of the drop in this correlation (28 percent when the Great Moderation is taken into account). More generous UI extensions during recent recessions cause workers to be more selective with job offers and lower job search effort. The former channel raises the overall productivity in bad times. The later prolongs UI extensions since in the U.S. they are triggered by high unemployment. |
| Keywords: | Business cycles, Labour productivity, Unemployment insurance |
| JEL: | E32 J24 J64 J65 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:cfm:wpaper:1828&r=lab |
| By: | Camilla Adams; Jonathan Meer; CarlyWill Sloan |
| Abstract: | Labor market search-and-matching models posit supply-side responses to minimum wage increases that may lead to improved matches and lessen or even reverse negative employment effects. Yet there is no empirical evidence on this crucial assumption. Using event study analysis of recent minimum wage increases, we find that increases to minimum wage do not increase the likelihood of searching, but do lead to large yet very transitory spikes in search effort by individuals already looking for work. The results are not driven by changes in the composition of searchers. |
| JEL: | J22 J64 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25128&r=lab |
| By: | Fougère, Denis (Sciences Po, Paris); Gautier, Erwan (Banque de France); Roux, Sébastien (CREST-INSEE) |
| Abstract: | This paper examines empirically the dynamics of wage floors defined in industry-level wage agreements in France. It also investigates how industry-level wage floor adjustment interacts with changes in the national minimum wage (NMW hereafter). For this, we have collected a unique dataset of approximately 3,200 industry-level wage agreements containing about 70,000 occupation-specific wage floors in 367 industries over the period 2006Q1-2017Q4. Our main results are the following. Wage floors are quite rigid, adjusting only once a year on average. They mostly adjust in the first quarter of the year and the NMW shapes the timing of industry-level wage bargaining. Inflation but also changes in past aggregate wage increases and in the real NMW are the main drivers of wage floor adjustments. Elasticities of wage floors with respect to these macro variables are 0.6, 0.4 and 0.3 respectively. Inflation and the NMW have both decreasing but positive effects all along the wage floor distribution. |
| Keywords: | collective bargaining, wages, minimum wage, inflation |
| JEL: | J31 J51 E24 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11828&r=lab |
| By: | Mansour, Hani (University of Colorado Denver); Rees, Daniel I. (University of Colorado Denver); Rintala, Bryson; Wozny, Nathan (U.S. Air Force Academy) |
| Abstract: | Although women earn approximately 50% of science, technology, engineering and math (STEM) bachelor's degrees, more than 70% of scientists and engineers are men. We explore a potential determinant of this STEM gender gap using newly collected data on the career trajectories of United States Air Force Academy students. Specifically, we examine the effects of being assigned female math and science professors on occupation and postgraduate education. We find that, among high-ability female students, being assigned a female professor leads to substantial increases in the probability of working in a STEM occupation and the probability of receiving a STEM master's degree. |
| Keywords: | gender gap, STEM occupational choice, post-graduate education |
| JEL: | I20 J16 J24 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11820&r=lab |
| By: | Hugo Rojas-Romagosa (CPB Netherlands Bureau for Economic Policy Analysis); Johannes Bollen (CPB Netherlands Bureau for Economic Policy Analysis) |
| Abstract: | We estimate the impact of the free movement of people (FMP) principle on bilateral intra-EU migration stocks using a gravity model. Employing a combination of the World Bank and the UN’s global migration databases, with observations between 1960 and 2015, allows us to analyse the impact of the FMP for most EU member states. We find that implementing the FMP by an EU member state increased, on average, its stock of intra-EU migrants by 28%. The vast majority of intra-EU migration went to the old member states and we find that FMP had a substantial impact on migration originating from both old and new member states. The only exception is migration within new member states, which was negatively affected by FMP. |
| JEL: | F22 J61 R23 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:385&r=lab |
| By: | Shulamit Kahn; Megan MacGarvie |
| Abstract: | This paper assesses whether delays in obtaining permanent residency status can explain recent declines in the share of Chinese and Indian PhD graduates from US STEM programs who remain in the US after their studies. We find that newly-binding limits on permanent visas for those from China and India with advanced degrees are significantly associated with declines in stay rates. The stay rate of Chinese graduates declines by 2.4 percentage points for each year of delay, while Indian graduates facing delays of at least 5 1/2 years have a stay rate that is 8.9 percentage points lower. The per-country permanent visa cap affects a large share of STEM PhDs who are disproportionately found in fields of study that have been crucial in stimulating US economic growth yet enroll relatively few natives. Finally, results suggest that the growth of science in countries of origin has an important influence on stay rates, while macroeconomic factors such as GDP per capita affect stay rates only via their impact on science funding. We conclude that per-country limits play a significant role in constraining the supply of highly skilled STEM workers in the US economy. |
| JEL: | J61 O15 O3 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25175&r=lab |
| By: | Zhang, Hanzhe (Michigan State University, Department of Economics) |
| Abstract: | This paper provides a model that can explain why women go to college at higher rates but have lower average incomes than men in the US and other countries. Differential fecundity and a general-equilibrium marriage-market effect form the basis of our explanation. The model can also explain the relationships between age at marriage and personal midlife income for men and for women as well as the relationship between age at marriage and spousal midlife income for women. Our explanations for these facts are supported by empirical evidence and calibration results. |
| Keywords: | college gender gap; relationships between age at marriage and income |
| JEL: | C78 D01 J11 |
| Date: | 2018–10–18 |
| URL: | http://d.repec.org/n?u=RePEc:ris:msuecw:2018_007&r=lab |
| By: | Ye, Han (University of Mannheim) |
| Abstract: | This paper provides a clear and transparent setting to study the effect of additional pension benefits on women's retirement decision. Using administrative pension insurance records from Germany, I examine the impact of a pension subsidy program to low pay workers, implemented in 1992. The subsidies have a kinked relationship with the recipients' average pension contribution, which led to sharply different slopes of benefits for similar women to the left and to the right of the kink point. Using a regression kink design, I find that 100 euros additional monthly pension benefits induce female recipients to claim pension earlier by about 10 months. The hazard rate to claim a pension at age 60 increases by 17%. A back-of-the-envelope calculation suggests the ratio of behavioral cost to mechanical cost of this subsidy program is 0.3, which is smaller than other anti-poverty programs such as extending unemployment benefits and progressive taxation. I find that the phasing out of this subsidy program can account for one third of the increase in women's age of claiming pension over the past decade. |
| Keywords: | pension subsidy, pension generosity, retirement, regression kink design |
| JEL: | H55 J18 J21 J26 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11831&r=lab |
| By: | Andreas Kuhn; Stefan Staubli; Jean-Philippe Wuellrich; Josef Zweimüller |
| Abstract: | We estimate the causal effect of permanent and premature exits from the labor force on mortality. To overcome the problem of negative health selection into early retirement, we exploit a policy change in unemployment insurance rules in Austria that allowed workers in eligible regions to exit the labor force 3 years earlier compared to workers in non-eligible regions. Using administrative data with precise information on mortality and retirement, we find that the policy change induced eligible workers to exit the labor force significantly earlier. Instrumental variable estimation results show that for men retiring one year earlier causes a 6.8% increase in the risk of premature death and 0.2 years reduction in the age at death, but has no significant effect for women. |
| JEL: | I10 I12 J14 J26 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25124&r=lab |
| By: | W. Bentley MacLeod; Miguel Urquiola |
| Abstract: | Many observers have argued that giving parents freedom to choose schools would improve education (Friedman, 1955). We review the evidence, and find little indication that households systematically prefer higher value added schools. We show that this can be explained using a competitive labor market model that takes into account both student and employer choice. The setup implies that households will often rationally prefer schools with high absolute achievement rather than high value added. As a result, school choice can exacerbate inequality without improving opportunities for the most disadvantaged students. |
| JEL: | I2 J01 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25117&r=lab |
| By: | Maximilian Stockhausen |
| Abstract: | Are children better off than their parents? This highly debated question in politics and economics is investigated by analysing the trends in absolute and relative intergenerational labour income mobility for Germany and the US. High quality panel data is used for this purpose; the SOEP for Germany and the PSID for the US. In Germany, 67 per cent of sons born between 1955 and 1975 earned a significantly higher wage or salary than their fathers: Those with fathers from the lowest earnings bracket were particularly mobile in absolute terms. In contrast, the fraction of US sons earning more than their fathers is 60 per cent on average for the same cohorts. Their share decreased from 66 per cent in the 1956-60 birth cohort to 48 per cent in the 1971-75 birth cohort, while it almost did not change in Germany. Overall, absolute but also relative labour income mobility are larger in Germany than in the US. This indicates that economic growth has been distributed more broadly in Germany than in the US. While the majority of German males has been able to share in the country’s rising prosperity and are better off than their fathers, US males continue to lose ground. Hence, Chetty et al. (2017) seem to be right when they say that the American Dream is slowly fading away. |
| Keywords: | absolute intergenerational mobility; inequality; Labour income distribution; relative intergenerational mobility |
| JEL: | D63 J62 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp989&r=lab |