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on Labour Economics |
| By: | Martin Halla; Julia Schmieder; Andrea Weber |
| Abstract: | We study the effectiveness of intra-household insurance among married couples when the husband loses his job due to a mass layoff or plant closure. Empirical results based on Austrian administrative data show that husbands suffer persistent employment and earnings losses, while wives’ labor supply increases moderately due to extensive margin responses. Wives’ earnings gains recover only a tiny fraction of the household income loss and, in the short-term, public transfers and taxes are a more important form of insurance. We show that the presence of children in the household is a crucial determinant of the wives’ labor supply response. |
| Keywords: | Firm Events, Household Labor Supply, Intra-household Insurance, Added Worker Effect. |
| JEL: | D19 J22 J65 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2018_16&r=lab |
| By: | Richard Akresh; Daniel Halim; Marieke Kleemans |
| Abstract: | In 1973, the Indonesian government began one of the largest school construction programs ever. We use 2016 nationally representative data to examine the long-term and intergenerational effects of additional schooling as a child. We use a difference-in-differences identification strategy exploiting variation across birth cohorts and regions in the number of schools built. Men and women exposed to the program attain more education, although women’s effects are concentrated in primary school. As adults, men exposed to the program are more likely to be formal workers, work outside agriculture, and migrate. Households with parents exposed to the program have improved living standards and pay more government taxes. Education benefits are transmitted to the next generation. Increased parental education has larger impacts for daughters, particularly if mothers are exposed to school construction. Intergenerational results are driven by changes in the marriage partner’s characteristics, with spouses having more education and improved labor market outcomes. |
| JEL: | I2 J13 J62 O15 O22 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25265&r=lab |
| By: | Vives Coscojuela, Cecilia |
| Abstract: | This paper studies the effect of home-owners' migration costs on unemployment in an economy where workers move both for work- and non-work-related reasons. To this end, a search model with heterogeneous locations is developed and calibrated to the US economy. Both the employment and unemployment exit rates are endogenous. Migration costs imply that home-owners quit their jobs less often than renters and find jobs at a higher rate. Consistent with the empirical evidence, the model predicts that home-owners have a lower unemployment rate than renters. |
| Keywords: | unemployment, labour, mobility, home, ownership |
| JEL: | J61 J64 R23 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:ehu:ikerla:30207&r=lab |
| By: | Patrick Mokre (Department of Economics, New School for Social Research); Miriam Rehm (AK Wien) |
| Abstract: | Persistent inter-industry wage differentials are an enduring puzzle for neoclassical economics. This paper applies the classical theory of ‘real competition’ to inter-industry wage differentials. Theoretically, we argue that competitive wage determination can be decomposed into equalizing, dispersing and turbulently equalizing factors. Empirically, we show graphically and econometrically for 31 U.S. industries in 1987-2016 that wage differentials, like regulating profit rates, are governed by turbulent equalization. Furthermore, we apply a fixed effects OLS as well as a hierarchical Bayesian inference model and find that the link between regulating profit rates and wage differentials is positive, significant and robust. |
| Keywords: | Wage inequality, industry wages, inter-industry wage differentials, incremental wages, real competition, convergence, gravitation, panel data, Bayesian econometrics |
| JEL: | B12 B51 B52 C11 D24 J31 J51 J52 J62 L20 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:1818&r=lab |
| By: | Simon Jäger; Benjamin Schoefer; Samuel Young; Josef Zweimüller |
| Abstract: | Nonemployment is often posited as a worker’s outside option in wage setting models such as bargaining and wage posting. The value of this state is therefore a fundamental determinant of wages and, in turn, labor supply and job creation. We measure the effect of changes in the value of nonemployment on wages in existing jobs and among job switchers. Our quasi-experimental variation in nonemployment values arises from four large reforms of unemployment insurance (UI) benefit levels in Austria. We document that wages are insensitive to UI benefit levels: point estimates imply a wage response of less than $0.01 per $1.00 UI benefit increase, and we can reject sensitivities larger than 0.03. In contrast, a calibrated Nash bargaining model predicts a sensitivity of 0.39 – more than ten times larger. The empirical insensitivity holds even among workers with a priori low bargaining power, with low labor force attachment, with high predicted unemployment duration, among job switchers and recently unemployed workers, in areas of high unemployment, in firms with flexible pay policies, and when considering firm-level bargaining. The insensitivity of wages to the nonemployment value we document presents a puzzle to widely used wage setting protocols, and implies that nonemployment may not constitute workers’ relevant threat point. Our evidence supports wage-setting mechanisms that insulate wages from the value of nonemployment. |
| JEL: | J31 J60 J65 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7342&r=lab |
| By: | Melanie Borah; Andreas Knabe; Kevin Pahlke |
| Abstract: | In this paper, we provide estimates of the subjectively perceived cost of children depending on the extent of parental time restrictions. Building on a study by Koulovatianos et al. (2009) that introduces a novel way of using subjective income evaluation data for such estimations, we conduct a refined version of the underlying survey, focusing on young women with children in Germany. Our study confirms that the monetary cost of children is substantial and increases with parental nonmarket time restrictions. The loss in the material living standard associated with supplying time to the labor market is sizeable for families with children. |
| Keywords: | child cost, equivalence scales, full-time employment, subjective income evaluations |
| JEL: | I32 J13 J22 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7321&r=lab |
| By: | Maritza Caicedo (Instituto de Investigaciones Sociales, UNAM); Edwin van Gameren (El Colegio de México); Catalina Amuedo-Dorantes (San Diego State University) |
| Abstract: | We compare unemployed and underemployed immigrants from Mexico, Colombia, and the Dominican Republic in the US with people living under similarly precarious employment conditions in the countries of origin, in order to understand better differences in psychological distress. In doing so, we deviate from and add to the literature on the Hispanic Health Paradox, addressing heterogeneity between Hispanics and comparison with people in the sending country instead of the US-based population. We follow a mixed research strategy, performing and analyzing a survey, and by organizing focus groups, allowing for a profound analysis of the importance of both objective and subjective characteristics. We find that a more precarious socioeconomic situation, financial tensions, and a reduced labor satisfaction increase depression and anxiety levels. Mexican immigrants report fewer symptoms than those in Mexico City, but this difference disappears when controlling for differences in labor conditions and the importance respondent give to work. Colombian immigrants, generally in more favorable conditions than other immigrants, report more distress than their counterparts in Colombia. Subjective factors including the intentions of migration appear relevant for the reported distress. Importantly, we encounter ambiguity regarding the connotation respondents have with symptoms of depression and anxiety. |
| Keywords: | immigrants, countries of origin, unemployment, underemployment, psychological distress, depression, anxiety, qualitative research, Mexico, Colombia, Dominican Republic. |
| JEL: | J15 J61 Z13 I14 N36 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:emx:ceedoc:2018-07&r=lab |
| By: | Giulia Giupponi; Camille Landais |
| Abstract: | The Great Recession has seen a revival of interest in policies encouraging labor hoarding by firms. Short time work (STW) policies, which consist in offering subsidies for hours reductions to workers in firms experiencing temporary shocks, are the most emblematic of these policies, and have been used aggressively during the recession. Yet, very little is known about their employment and welfare consequences. This paper leverages unique administrative social security data from Italy and quasi-experimental variation in STW policy rules to offer compelling evidence of the effects of STW on firms' and workers' outcomes, and on reallocation in the labor market. Our results show large and significant negative effects of STW treatment on hours, but large and positive effects on headcount employment. Results also show that employment effects disappear when the program stops, and that STW offers no long term insurance to workers. Finally, we identify the presence of significant negative reallocation effects of STW on employment growth of untreated firms in the same local labor market. We develop a simple conceptual framework to rationalize this empirical evidence, from which we derive a general formula for the optimal STW subsidy that clarifies the welfare trade-offs of STW policies. Calibrating the model to our empirical evidence, we conduct counterfactual policy analysis and show that STW stabilized employment during the Great Recession in Italy, and brought (small) positive welfare gains. |
| Keywords: | short-time work, employment, reallocation, social insurance, optimal policy |
| JEL: | H20 J20 J65 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1585&r=lab |
| By: | Hao Wang; Jan Fidrmuc; Qi Luo; Mingzhong Luo |
| Abstract: | While much research on China has focused on rural to urban migration and transitions of rural households away from agriculture, little is known about the changes within the rural agricultural sector. Yet, the agricultural sector continues to account for a large share of employment. We study the determinants of transitions from subsistence farming into either formal agricultural employment or agricultural self-employment. We pay particular attention to the role of capital endowments. We find that financial capital plays a relatively limited role, compared to natural, human, social and political capital. |
| Keywords: | on-farm transitions, rural household livelihood strategy, capital endowments, labor allocation |
| JEL: | D13 O18 Q10 Q12 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7306&r=lab |
| By: | Stark, Oded; Jakubek, Marcin; Szczygielski, Krzysztof |
| Abstract: | We study the assimilation behavior of a group of migrants who live in a city populated by native inhabitants. We conceptualize the group as a community, and the city as a social space. Assimilation increases the productivity of migrants and, consequently, their earnings. However, assimilation also brings the migrants closer in social space to the richer native inhabitants. This proximity subjects the migrants to relative deprivation. We consider a community of migrants whose members are at an equilibrium level of assimilation that was chosen as a result of the maximization of a utility function that has as its arguments income, the cost of assimilation effort, and a measure of relative deprivation. We ask how vulnerable this assimilation equilibrium is to the appearance of a "mutant" - a member of the community who is exogenously endowed with a superior capacity to assimilate. If the mutant were to act on his enhanced ability, his earnings would be higher than those of his fellow migrants, which will expose them to greater relative deprivation. We find that the stability of the pre-mutation assimilation equilibrium depends on the cohesion of the migrants' community, expressed as an ability to effectively sanction and discourage the mutant from deviating. The equilibrium level of assimilation of a tightly knit community is stable in the sense of not being vulnerable to the appearance of a member becoming better able to assimilate. However, if the community is loose-knit, the appearance of a mutant will destabilize the pre-mutation assimilation equilibrium, and will result in a higher equilibrium level of assimilation. |
| Keywords: | Community cohesion,Social proximity,Interpersonal comparisons,Relative deprivation,Migrants' assimilation behavior |
| JEL: | D70 J15 J24 J61 J70 O12 Z10 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuewef:112&r=lab |
| By: | Ciaian, Pavel (European Commission – JRC); Ivanov, Andrey (European Union Agency for Fundamental Rights); Kancs, d'Artis (European Commission – JRC) |
| Abstract: | Although, the need for an efficient Roma integration policy is growing in Europe, surprisingly little robust scientific evidence regarding potential policy costs and expected benefits of alternative policy options has supported the policy design and implementation so far. The present study attempts to narrow this evidence gap and aims to shed light on long-run economic, budgetary and fiscal effects of selected education and employment policies for the inclusion of the marginalised Roma in the EU. We employ a general equilibrium approach that allows us to assess not only the direct impact of alternative Roma integration policies but also to capture all induced feedback effects. Our simulation results suggest that, although Roma integration policies would be costly for the public budget, in the medium- to long-run, economic, budgetary and fiscal benefits may significantly outweigh short- to medium-run Roma integration costs. Depending on the integration policy scenario and the analysed country, the full repayment of the integration policy investment (positive net present value) may be achieved after 7 to 9 years. In terms of the GDP, employment and earnings, the universal basic income scenario may have the highest potential, particularly in the medium- to long-run. |
| Keywords: | Roma, social marginalisation, education, labour market, integration policy, universal basic income |
| JEL: | I32 J6 J11 J24 O17 O43 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:jrs:wpaper:201807&r=lab |
| By: | Lydon, Reamonn; Mathä, Thomas Y.; Millard, Stephen |
| Abstract: | Using firm-level data from a large-scale European survey among 20 countries, we analyse the determinants of firms using short-time work (STW). We show that firms are more likely to use STW in case of negative demand shocks. We show that STW schemes are more likely to be used by firms with high degrees of firm-specific human capital, high firing costs, and operating in countries with stringent employment protection legislation and a high degree of downward nominal wage rigidity. STW use is higher in countries with formalised schemes and in countries where these schemes were extended in response to the recent crisis. On the wider economic impact of STW, we show that firms using the schemes are significantly less likely to lay off permanent workers in response to a negative shock, with no impact for temporary workers. Relating our STW take-up measure in the micro data to aggregate data on employment and output trends, we show that sectors with a high STW take-up exhibit significantly less cyclical variation in employment. JEL Classification: C25, E24, J63, J68 |
| Keywords: | crisis, firms, recession, short-time work, survey, wages |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20182212&r=lab |
| By: | Bartelsman, Eric; Lopez-Garcia, Paloma; Presidente, Giorgio |
| Abstract: | This paper uses cross-country micro-aggregated data on firm dynamics and productivity from the ECB CompNet database to provide empirical evidence on factor reallocation in the European Union (EU). The analysis finds that reallocation is towards more productive firms although the magnitude varies across countries and over time. Variation in reallocation is related to structural differences in firm size distribution across countries as well as to variation in labor and product market institutions. Productivity-enhancing reallocation generally rises in downturns but, similar to findings for the US, it did not pick up in the Great Recession. The sharp drop in exports and tightness in credit markets are seen to provide a partial explanation for this lack of a silver lining. JEL Classification: E24, E32, J63, O4 |
| Keywords: | factor reallocation, Great Recession |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20182210&r=lab |
| By: | Daniel Baumgarten; Gabriel Felbermayr; Sybille Lehwald |
| Abstract: | Using rich linked employer-employee data for (West) Germany between 1996 and 2014, we analyze the most important drivers of the recent rise in German wage dispersion and pin down the relative contribution of plant and worker characteristics. Moreover, we separately investigate the drivers of between-plant and within-plant wage dispersion. We also analyze the sources of the recent slowdown in German wage inequality and compare the results for West Germany to the ones for East Germany. We disentangle the relative contribution of each single variable to the rise in wage dispersion using recentered influence function (RIF) regressions. The most important drivers of wage dispersion are industry effects and the bargaining regime. The former predominantly works through the wage structure effect while, in the latter case, both the decline in collective bargaining coverage and the strong increase in wage dispersion within the group of covered plants have played a substantial role. While education has been another factor contributing to both between-plant and within-plant wage inequality, other candidate factors such as plant size, the exporting status, plant technology, and investment intensity are all of little if any direct quantitative importance for the increase in wage dispersion. |
| Keywords: | wage inequality, decomposition, RIF-regression, linked employer-employee data |
| JEL: | J31 J51 C21 F16 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7356&r=lab |
| By: | James C. Cox; Daniel Kreisman; Susan Dynarski |
| Abstract: | We ask why so few student loan borrowers enroll in Income Driven Repayment when the majority would benefit from doing so. To do so we run an incentivized laboratory experiment using a facsimile of the government’s Student Loan Exit Counseling website. We test the role information complexity, uncertainty about earnings, and the default option play. We show that despite an ex ante optimal choice, the majority choose, or are defaulted into, a plan that offers no protection against default. We find the default option is a driver of this phenomenon, suggesting the government has an easy policy lever to lower default rates – change the default plan. |
| JEL: | I2 I20 I21 I22 I23 I28 J01 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25258&r=lab |
| By: | David Carey |
| Abstract: | Canada’s immigration policy aims to promote economic development by selecting immigrants with high levels of human capital, to reunite families and to respond to foreign crises and offer protection to endangered people. Economic-class immigrants, who are selected for their skills, are by far the largest group. The immigration system has been highly successful and is well run. Outcomes are monitored and policies adjusted to ensure that the system’s objectives are met. A problematic development, both from the point of view of immigrants’ well-being and increasing productivity, is that their initial earnings in Canada relative to the native-born fell sharply in recent decades to levels that are too low to catch up with those of the comparable native-born within immigrants’ working lives. Important causes of the fall include weaker official language skills and a decline in returns to pre-immigration labour market experience. Canada has responded by modifying its immigration policy over the years to select immigrants with better earnings prospects, most recently with the introduction in 2015 of the Express Entry system. It has also developed a range of settlement programmes and initiatives to facilitate integration. This chapter looks at options for further adjusting the system to enhance the benefits it generates. |
| Keywords: | debt, discrimination, government budgets, immigration, integration, points system, productivity, refugees, skills |
| JEL: | F22 J15 J24 J6 J71 |
| Date: | 2018–12–11 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1520-en&r=lab |
| By: | Christian Bayer (Weierstrass Institute); Alan Rendall (Johannes Gutenberg-University Mainz); Klaus Wälde (Johannes Gutenberg-University Mainz) |
| Abstract: | We study optimal savings in continuous time with exogenous transitions between employment and unemployment as the only source of uncertainty in a small open economy. We prove the existence of an optimal consumption path. We exploit that the dynamics of consumption and wealth between jumps can be expressed as a Fuchsian system. We derive conditions under which an invariant joint distribution for the state variables, i.e., wealth and labour market status, exists and is unique. We also provide conditions under which the distribution of these variables converges to the invariant distribution. Our analysis relies on the notion of T-processes and applies results on the stability of Markovian processes from Meyn and Tweedie (1993a, b,c) |
| Keywords: | uncertainty in continuous time, counting process, existence, uniqueness, stability |
| JEL: | C62 D91 J63 |
| Date: | 2018–11–28 |
| URL: | http://d.repec.org/n?u=RePEc:jgu:wpaper:1822&r=lab |
| By: | Carlotta Balestra (OECD); Ana Llena-Nozal (OECD); Fabrice Murtin (OECD); Elena Tosetto (OECD); Benoît Arnaud (OECD) |
| Abstract: | The paper describes inequality trends in selected emerging economies (Brazil, Colombia, Costa Rica, China, India, Indonesia and South Africa) in a range of monetary (i.e. income) and non-monetary dimensions of people’s life (i.e. education, health status, employment and subjective well-being). Inequalities are analysed not only in terms of overall dispersion, but also as gaps between population groups defined by specific characteristics (i.e. sex, age, educational attainment and place of living). To the extent made possible by the nature of available data, measures of income inequality for these emerging countries, as well as for 7 Latin American countries (Bolivia, Dominic Republic, Ecuador, Panama, Paraguay, Peru and Uruguay), are based on concepts and definitions similar to those used by the OECD for its member countries. All the emerging economies covered in the paper show levels of income inequality higher than in the five most unequal OECD countries, while the picture is more mixed when it comes to inequalities in other dimensions of people’s well-being. An annex complements the analysis by presenting an assessment of the quality of the available data on income distribution for the emerging countries covered in the paper. |
| Keywords: | database, emerging economies, inequality, poverty, well-being |
| JEL: | D31 D63 I14 I24 I32 J01 |
| Date: | 2018–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stdaaa:2018/13-en&r=lab |