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on Labour Economics |
| By: | Mitman, Kurt; Rabinovich, Stanislav |
| Abstract: | Countercyclical unemployment benefit extensions in the United States act as a propagation mechanism, contributing to both the high persistence of unemployment and its weak correlation with productivity. We show this by modifying an otherwise standard frictional model of the labor market to incorporate a stochastic and state-dependent process for unemployment insurance estimated on US data. Accounting for movements in both productivity and unemployment insurance, our calibrated model is consistent with unemployment dynamics of the past 50 years. In particular, it explains the emergence of jobless recoveries in the 1990's as well as their absence in previous recessions, the low correlation between unemployment and labor productivity, and the apparent shifts in the Beveridge curve following recessions. Next, we embed this mechanism into a medium-scale DSGE model, which we estimate using standard Bayesian methods. Both shocks to unemployment benefits and their systematic component are shown to be important for the sluggish recovery of employment following recessions, in particular the Great Recession, despite the fact that shocks to unemployment benefits account for little of the overall variance decomposition. If we also incorporate other social safety nets, such as food stamps (SNAP), the estimated model assigns an even bigger role to policy in explaining sluggish labor market recovery. We also find that unemployment benefit extensions prevented deflation in the last three recessions, thus acting similarly to a wage markup shock. |
| Keywords: | business cycles; jobless recoveries; Unemployment insurance |
| JEL: | E24 E32 J65 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13760&r=all |
| By: | von Buxhoeveden, Mathias (IFAU - Institute for Evaluation of Labour Market and Education Policy) |
| Abstract: | This paper estimates the effects of unemployment insurance (UI) benefits on job finding rates and entry level wages for unemployed high school leavers. Up to year 2007, Swedish high school-students who became unemployed shortly after graduation were entitled to UI-benefits once they became 20 years of age. Therefore, the start of an unemployment spell relative to the 20:th birthday creates potentially exogenous variation in time to treatment. I exploit this to estimate the effect of UI benefits on unemployment duration and entry level wages. The results show that there is a large and statistically significant negative effect of UI benefits on the employment hazard. There are no detectable effects on entry level wages. This would suggest that unemployment benefits induce high school leavers to postpone labor market entry but does not seem to effect job match quality. |
| Keywords: | youth; unemployment; insurance; labor; market; entry |
| JEL: | J64 J65 |
| Date: | 2019–06–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2019_012&r=all |
| By: | von Buxhoeveden, Mathias (IFAU - Institute for Evaluation of Labour Market and Education Policy) |
| Abstract: | Wage setting models typically posit a tight relationship between the generosity of unemployment insurance (UI) and equilibrium wages. This paper estimates the effect of UI on workers’ wages. I build on a unique feature of the unemployment policy in Sweden, where workers can opt to buy supplement UI coverage above a minimum mandated level. In January 2007, the government sharply increased the price of UI, and the share of workers with supplement coverage fell from 90% to 80%. I exploit variation in the price of UI across industries to measure the effect of industry level UI-coverage on wages. My estimates suggest that a 10 percentage point reduction in the share of workers covered by supplement UI reduce wages by 5%. Since I rely on variation in UI-coverage at the industry level, these estimates contain wage adjustments from collective and individual level bargaining. Finally, I use the estimated UI-wage effect to derive bounds on worker bargaining power in a simple DMP model and find that it can be at most 0.12. This evidence support wage setting mechanisms that tie wages to the generosity of UI. |
| Keywords: | unemployment; insurance; youth; labor; market; wage; formation |
| JEL: | J31 J65 |
| Date: | 2019–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2019_013&r=all |
| By: | Ashwin, Sarah; Oka, Chikako; Schüßler, Elke; Alexander, Rachel; Lohmeyer, Nora |
| Abstract: | Using qualitative data comprising interviews with multiple respondents in 45 garment brands and retailers, and unions and other stakeholders, the authors analyze the emergence of the Action Collaboration Transformation (ACT) living wages initiative, asking how the interfirm coordination and firm-union cooperation demanded by a multifirm transnational industrial relations agreement (TIRA) developed. Synthesizing insights from the industrial relations and private governance literatures along with recent collective action theory, they identify a new pathway for the emergence of multi-firm TIRAs based on common group understandings, positive experiences of interaction and trust. The central finding is that existing union-inclusive governance initiatives provided a platform from which spillover effects developed, facilitating the formation of new TIRAs. The authors contribute a new mapping of labor governance approaches on the dimensions of inter-firm coordination and labor inclusiveness, foregrounding socialization dynamics as a basis for collective action, and problematizing the limited scalability of this mode of institutional emergence. |
| JEL: | R14 J01 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:100997&r=all |
| By: | Cristina Bellés-Obrero; Sergi Jiménez-Martín; Judit Vall Castello |
| Abstract: | We examine the gender asymmetries in the health benefits of acquiring further education at a time of increasing gender equality and women’s greater access to economic opportunities. A labor market reform in Spain in 1980 raised the minimum legal working age from 14 to 16, while the school-leaving age remained at 14. We apply a difference-in-difference strategy to identify the reform’s within-cohort effects, where treated and control individuals differ only in their month of birth. Although the reform improved the educational attainment of both women and men, the long-term effects over mortality differ by gender. We find that the reform decreased mortality at young ages (14-29) by 6.3% among men and by 8.9% among women. This was driven by a decrease (12.2% for men, 14.7% for women) in the probability of dying from external causes of death (accidents). However, we also find that the child labor reform increased mortality for prime-age women (30-45) by 6.3%. This effect is driven by increases in HIV mortality (11.6%), as well as by diseases of the nervous and circulatory system (8.7%). This pattern helps explain the narrowing age gap in life expectancy between women and men in Spain. |
| Keywords: | minimum working age, education, mortality, gender |
| JEL: | I12 I20 J10 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1660&r=all |
| By: | Teresa Ghilarducci; Aida Farmand (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | The bargaining power of workers cannot be measured directly, but it can be inferred from working conditions and institutional factors. This study documents the stagnation in older workers’ wages and the seven reasons older workers have lost bargaining power. Five factors relate to monopsony exposure from eroding retirement income security, union loss, more insecure employment relationships, persistent age discrimination, and geographical immobility. Two additional factors -- older workers' ineligibility for the Earned Income Tax Credit (EITC); and older workers’ relative propensity to work for smaller firms – also weaken bargaining power. Significant loss of bargaining power of workers over age 55 who are projected to fill 6.4 million of the 11.4 million net new jobs created between 2016 and 2026 could suppress wages and working conditions for all workers. |
| Keywords: | working conditions, wages, bargaining power, |
| JEL: | J50 J58 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepawp:2019-02&r=all |
| By: | Martin Labaj; Daniel Dujava |
| Abstract: | This paper examines the implications of automation capital in a Solow growth model withtwo types of labour. We study the transition from standard production to production usingautomation capital which substitutes low-skilled workers. We assume that despite advancesin technology, AI and machine learning, certain tasks can be performed only by high-skilledlabour and are not automatable. We show that under these assumptions, automation capitaldoes not generate endogenous growth without technological progress. However, assumingpresence of technological progress augmenting both effective number of workers and effectivenumber of industrial robots, automation increases rate of long-run growth. We analyse asituation in which some countries do not use robots at all and other group of countries startsthe transition to the economy where industrial robots replace low-skilled labour. We showthat this has potential non-linear effects on?-convergence and that the model is consistentwith temporary divergence of incomes per capita. We derive a set of estimable equationsthat allows us to test the hypotheses in a Mankiw-Romer-Weil framework. |
| Keywords: | Automation, Economic growth, Income inequality, Convergence, Robots |
| JEL: | D63 E25 O11 O41 |
| Date: | 2019–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:brt:depwps:017&r=all |
| By: | Andrew Mountford (Royal Holloway, University of London and CReAM); Jonathan Wadsworth (Royal Holloway, University of London, Centre for Economic Performance, CReAM) |
| Abstract: | While skilled immigration ceteris paribus provides an immediate boost to GDP per capita by adding to the human capital stock of the receiving economy, might it also reduce the number of 'good jobs', i.e. those with training, available to indigenous workers? This paper analyzes this issue theoretically and empirically. The theoretical model shows how skilled immigration may affect the sectoral allocation of labor and how it may have a positive or negative effect on the training and social mobility of native born workers. The empirical analysis uses UK data from 2001 to 2018 to show that training rates of UK born workers have declined in a period where immigration has been rising strongly, and have declined significantly more in high wage non-traded sectors. At the sectoral level however this link is much less strong but there is evidence of different effects of skilled immigration across traded and non-traded sectors and evidence that the hiring of UK born workers in high wage non-traded sectors has been negatively affected by skilled immigration, although this effect is not large. Taken together the theoretical and empirical analyses suggest that skilled immigration may have some role in allocating native born workers away from 'good jobs' sectors but it is unlikely to be a major driver of social mobility. |
| Keywords: | Immigration, Training, Income Distribution |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1907&r=all |
| By: | Michele Tuccio |
| Abstract: | This paper introduces a new set of indicators aimed at benchmarking how OECD countries fare in attracting talented migrants. Three different profiles of talent are considered: workers with graduate (master or doctorate) degrees, entrepreneurs, and university students. After providing a definition of the notion of talent attractiveness, this paper develops a conceptual framework for the study of the phenomenon, and discusses the variables used to construct the composite indicators. Sensitivity analysis is performed in order to make sure the indicators are robust to several statistical checks. Finally, the paper documents the attractiveness of OECD countries to the different profiles of talented migrants. |
| Keywords: | Entrepreneurs, High-skilled Workers, Immigrants, Students, Talent |
| JEL: | F22 J61 O15 R23 |
| Date: | 2019–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:229-en&r=all |
| By: | Allison Dunatchik; Berkay Özcan |
| Abstract: | This paper investigates whether daddy quotas - non-transferable paternity leave policies - mitigate motherhood penalties women face in the labor market. Using the introduction of a daddy quota in Quebec, Canada as a natural experiment, the authors employ labor force survey data to conduct a difference-in-difference estimation of the policy's impact on a range of mothers' career outcomes. The results suggest Quebec mothers exposed to the policy are 5 percentage points more likely to participate in the labor force and to work full-time, 5 percentage points less likely to work part-time, and 4 percentage points less likely to be unemployed. These results are robust to an alternative semiparametric difference-in-difference methodology and to a battery of placebo and sensitivity tests. However, the authors find that the policy's effects are largest two to three years post-reform, reducing in size and significance thereafter, raising questions about the durability of such effects. |
| Keywords: | Family policy, maternal employment, work-family balance, families and work, labor force participation |
| JEL: | J16 J18 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sticas:/213&r=all |
| By: | Sheely, Amanda |
| Abstract: | This paper investigates the potentially cumulative effects of being arrested, convicted, and incarcerated on labor market outcomes among women, as well as whether decreased employment levels are due to labor market exclusion or detachment. Using data from the National Longitudinal Survey of Youth 1997, I find that arrested women have reduced levels of employment, due to both labor market exclusion (unemployment) and labor market detachment (not in the labor force). Once the effect of being arrested is taken into account, women who are convicted or incarcerated do not face any additional negative employment consequences. These results demonstrate that policymakers must look beyond incarceration to reduce the impact of criminal justice involvement on women. |
| JEL: | R14 J01 |
| Date: | 2019–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:100986&r=all |
| By: | Valeria Cirillo; Rinaldo Evangelista; Dario Guarascio; Matteo Sostero |
| Abstract: | This paper explores the relation between the digitalization and of labour processes, the level of routineness of tasks and changes in employment. The levels of digitalization and routineness of occupations in 796 5-digit ISCO professional groups are measured using data from a unique Italian profession-level survey on skill, task and work contents ó the INAPP-ISTAT Survey on Italian Occupations (ICP), an O*NET-type dataset. We develop three novel digitalization indices: a digital use index measuring the use of digital devices and technologies in the workplace, a digital skills index assessing the familiarity and skill in using digital technologies, and a digital tasks index capturing the frequency and importance of selected digital tasks. Using the same data-source the Autor and Dorn routine task intensity index is also computed. This allows us to explore, based on robust indicators on routinization and digitalization, the existence and the strength of a üroutinized biased technological changeý specifically associated to the use of digital technologies. Results show the multifaceted nature of both digitalization and routineness processes, both characterized by strong sectoral specificities and by being strongly associated with the skill content of labour professions. Professions characterized by higher digital skills are those showing the best employment performances (although this holds only in manufacturing sector). Both the descriptive and econometric evidences show a negative employment dynamics among professions combining high level of digitalization and routineness. |
| Keywords: | Digitalization; employment; task; skills. |
| Date: | 2019–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2019/18&r=all |
| By: | Emilien Prost; Gaye del Lo |
| Abstract: | The aim of this experimental paper is to show how the willingness of an employee to accept inequality of wages between him and his executive will depend on the ability on which the executive is evaluated when he is promoted. This willingness to accept inequality is captured by the minimum wage enough to incentivize to work for his executive. We show that selecting an executive on his ability to outperform his employee at his own task will be counterproductive to make employee accepting inequality of wages. We argue that the efficiency of “merit-based” promotion procedure may be challenged by this result. |
| Keywords: | Legitimacy, leadership, tournament, contract theory, moral hazard, personnel economics. |
| JEL: | D00 J50 M50 M51 D86 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2019-21&r=all |
| By: | Luís Guimarães (Queen’s University Belfast and cef.up); Pedro Mazeda Gil (cef.up, FEP, Universidade do Porto) |
| Abstract: | We propose a simple model to assess the evolution of the US labor share and how automation affects employment. In our model, heterogeneous firms may choose a manual technology and hire a worker subject to matching frictions. Alternatively, they may choose an automated technology and produce using only machines (robots). Our model offers three main insights. First, automation-augmenting shocks reduce the labor share but increase employment and wages. Second, labor market institutions play an almost insignificant role in explaining the labor share. Third, the US labor share only (clearly) fell after 1987 because of a contemporaneous acceleration of automation's productivity. |
| Keywords: | Automation; Labor Share; Technology Choice; Employment; Matching Frictions. |
| JEL: | E24 J64 L11 O33 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:por:cetedp:1901&r=all |
| By: | Cools, Angela; Fernández, Raquel; Patacchini, Eleonora |
| Abstract: | This paper studies the effect of exposure to female and male "high-achievers" in high school on the long-run educational outcomes of their peers. Using data from a recent cohort of students in the United States, we identify a causal effect by exploiting quasi-random variation in the exposure of students to peers with highly-educated parents across cohorts within a school. We find that greater exposure to "high-achieving" boys, as proxied by their parents' education, decreases the likelihood that girls go on to complete a bachelor's degree, substituting the latter with junior college degrees. It also affects negatively their math and science grades and, in the long term, decreases labor force participation and increases fertility. We explore possible mechanisms and find that greater exposure leads to lower self-confidence and aspirations and to more risky behavior (including having a child before age 18). The girls most strongly affected are those in the bottom half of the ability distribution (as measured by the Peabody Picture Vocabulary Test), those with at least one college-educated parent, and those attending a school in the upper half of the socio-economic distribution. The effects are quantitatively important: an increase of one standard deviation in the percent of "high-achieving" boys decreases the probability of obtaining a bachelor's degree from 2.2-4.5 percentage points, depending on the group. Greater exposure to "high-achieving" girls, on the other hand, increases bachelor's degree attainment for girls in the lower half of the ability distribution, those without a college-educated parent, and those attending a school in the upper half of the socio-economic distribution. The effect of "high-achievers" on male outcomes is markedly different: boys are unaffected by "high-achievers" of either gender. |
| Keywords: | Cohort Study; education; Gender; High Achievers; Peers |
| JEL: | I21 J16 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13754&r=all |
| By: | Annalisa Scognamiglio (CSEF, Università di Napoli) |
| Abstract: | This paper studies the response of sickness absences to changes in the replacement rate for sick leave. In June 2008 a national law modified both the strength of monitoring and the monetary cost of sick leaves for public sector employees in Italy. This paper focuses on the National Health Service, which accounts for about 21% of the total number of workers employed in the Italian public administration. Using administrative data I show that absenteeism largely decreased following the reform. I identify the effects of an increase in the monetary cost of an absence using a difference-in-differences strategy that exploits variation in changes to the replacement rate for sick leave. Under the assumption that changes in monitoring had the same proportional impact on absenteeism within the same institutions, I estimate that a 1 percentage point decrease in the replacement rate reduces absenteeism by 1%. JEL Classification: J88, J08. |
| Keywords: | Public sector absenteeism, paid sick leave, incentives. |
| Date: | 2019–06–06 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:530&r=all |
| By: | Emilien Prost |
| Abstract: | The aim of this paper is to study in a theoretical perspective how the choice of the ability on which an executive is evaluated to be promoted may be a crucial stake. We show that a procedure where an executive is selected on a managerial ability will allow to increase his own wage, compared to a procedure where he needs to demonstrate ability on the same task than his employee. The intuition is that it would neutralize the issue of rivalry with the employee by preserving the self confidence of the employee in spite he has failed at being promoted, making him easier to incentivize. The consequence is that selecting leaders on their ability to outperform their employee will tend to favor the emergence of a leadership culture of humility during the promotion process in a sense that opponents will strategically reduce their performance to preserve the self-confidence of their employee and then make him less costly to incentivize. On the contrary, selecting leaders on managerial ability will favor the emergence of a leadership culture of demonstration of strength. |
| Keywords: | Legitimacy, leadership, tournament, contract theory, moral hazard, personnel economics. |
| JEL: | D00 D86 J50 M50 M51 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2019-20&r=all |
| By: | Emilien Prost |
| Abstract: | We design a two-stage model where the winner of a tournament becomes the executive of his former opponent. We call procedural legitimacy, the legitimacy an executive obtains if he is promoted through a competition with no unfair treatment. The aim of this paper is to study how effort may paradoxically bolster or undermine this type of legitimacy with respect to technological assumptions. Besides we show that, in bayesian terms, winning the competition reinforces the belief of having been advantaged but it also reinforces the belief that the looser will be disadvantaged in the future and thus be less productive. This will tend to make winning the competition by being advantaged much less profitable. To incentivize more effort during the competition, the firm has to design a procedure where opponents are not evaluated by their peers but by neutral and external people. Thus the competition will not bring information on a potential inequality of treatment in the future. We argue civil servant examination in public administration and human resources departments are designed partially for this reason.. |
| Keywords: | Legitimacy, leadership, tournament, contract theory, moral hazard, personnel economics. |
| JEL: | D00 D86 J50 M50 M51 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2019-19&r=all |
| By: | Elert, Niklas (Research Institute of Industrial Economics (IFN)); Stam, Erik (Utrecht School of Economics); Stenkula, Mikael (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Trust and entrepreneurship are seen as key ingredients of long-term prosperity. However, it is not clear how these two are related. Part of the confusion can be traced back to the measurement of entrepreneurship, biased towards independent entrepreneurship (self-employed and new firms), and excluding entrepreneurship within established organizations. We shed new light on the relationship between trust and entrepreneurship, by proposing two mechanisms relating trust to entrepreneurship by employees, so-called intrapreneurship. We hypothesize that generalized trust influences the prevalence of intrapreneurship in an economy, and the allocation of entrepreneurial talents between independent entrepreneurship and intrapreneurship, through two mechanisms. First, generalized trust may substitute for complete contracts as a means of organizing labor in society, enabling a level of job autonomy in organizations necessary for intrapreneurship to flourish. Second, by way of its influence on the size and scope of the welfare state, generalized trust may increase the benefits of employment relative to self-employment, causing entrepreneurial individuals to elect to be intrapreneurs rather than independent entrepreneurs. Using a novel dataset, we find support for these hypotheses in a cross-country regression model covering the time period 2011–2017. |
| Keywords: | Trust; Intrapreneurship; Entrepreneurship; Entrepreneurial behavior; Institutions; Job autonomy; Welfare state |
| JEL: | H30 J20 J83 L26 M13 O12 O31 O43 O57 |
| Date: | 2019–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1280&r=all |
| By: | Sikdar, Satadru (National Institute of Public Finance and Policy) |
| Abstract: | There is a general tendency in the literature to consider and analyse investment decisions on education, based upon the pecuniary rate of return, without focusing the `intrinsic' advantages of education. Without engaging in the inadequacy of such an approach, this paper presents the relationships between wage and education levels among employed persons from different socio-religious and occupational groups. Based on an analysis of the NSS 68th round data, the results show that in India, there are insignificant relationships between wages and education level, in most cases. However, persons with higher education level are able to get regular salaried jobs. In fact, even for those who are part of the socio-economically deprived sections, higher educational attainments facilitate better jobs. Diversification and exclusion problems are common features of job markets in India, as reflected in different indicators. Further, the paper also finds that wage differences in `formal' and `informal' sectors, `skill mismatch' and volatilities in job markets play important roles in job opportunities and returns to labour. |
| JEL: | J24 J01 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:npf:wpaper:19/270&r=all |