|
on Labour Economics |
| By: | Brendan Moore; Judith Scott-Clayton |
| Abstract: | We use employer-employee matched administrative data from Ohio to study the role of firm pay premiums in explaining the large, persistent earnings losses of displaced workers. We estimate that earnings for displaced workers from the mid-2000s are depressed by 22 percent after four years, consistent with prior work. Drawing upon empirical approaches from the displaced worker and firm heterogeneity literature, we then estimate how much of this earnings loss can be explained by the forfeiture of a favorable employer-specific pay premium. Our preferred estimate attributes one quarter (24 percent) of long-run earnings deficits to lost firm pay premiums. Such firm rents explain up to half the earnings deficits for those laid off from manufacturing firms and employers with particularly generous pay policies. We test for sensitivity to different samples from which we derive firm specific-pay premiums and definitions of displacement. Our estimates persist in a narrow range between 16 and 24 percent for the share explained by firm rents, adding to the evidence that firm rents do not explain the majority of earnings or wage losses sustained by displaced workers in the United States. |
| JEL: | J31 J63 J65 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26525&r=all |
| By: | Ran Abramitzky; Philipp Ager; Leah Platt Boustan; Elior Cohen; Casper W. Hansen |
| Abstract: | In the 1920s, the United States substantially reduced immigrant entry by imposing country-specific quotas. We compare local labor markets with more or less exposure to the national quotas due to differences in initial immigrant settlement. A puzzle emerges: the earnings of existing US-born workers declined after the border closure, despite the loss of immigrant labor supply. We find that more skilled US-born workers – along with unrestricted immigrants from Mexico and Canada – moved into affected urban areas, completely replacing European immigrants. By contrast, the loss of immigrant workers encouraged farmers to shift toward capital-intensive agriculture and discouraged entry from unrestricted workers. |
| JEL: | J6 J61 N21 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26536&r=all |
| By: | Marzinotto, Benedicta; Wintr, Ladislav |
| Abstract: | This paper finds that employment protection legislation (EPL) had a significant impact on employment adjustment in Europe over 2001-2013, once we account for firm-size related exemptions to EPL. We construct a novel coverage-adjusted EPL indicator and find that EPL hinders employment growth at the firm level and increases the share of firms that remain in the same size class. This suggests that stricter EPL restrains job creation because firms fear the costs of shedding jobs during downturns. We do not find evidence that EPL has positive effects on employment by limiting job losses after adverse shocks. In addition to standard controls for the share of credit-constrained firms and the position in the business cycle, we also control for sizerelated corporate tax exemptions and find that these also significantly constrain job creation among incumbent firms. |
| Keywords: | employment protection,firm growth,job reallocation |
| JEL: | D22 J08 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhcom:52019&r=all |
| By: | Marco Pagano (Università di Napoli Federico II, CSEF, EEIF, CEPR and ECGI) |
| Abstract: | Labor income risk is key to the welfare of most people. This paper starts by asking why this risk is mainly insured “within the firm” and not by financial markets, and what restricts the extent of such risk sharing. It identifies four main constraining factors: public unemployment insurance, moral hazard on the workers’ side, limited commitment by firms, and workers’ wage bargaining power. These factors explain three empirical regularities: (i) family firms provide more employment insurance than nonfamily firms; (ii) the former pay lower real wages, and (iii) firms provide less employment insurance where public unemployment benefits are more generous. The paper also explores the connection between risk sharing and firms’ capital structure: highly leveraged firms have more unstable employment, so that greater leverage calls for high wages to compensate employees for job risk; nevertheless, firms may want to lever up strategically in order to offset the bargaining power of labor unions. Hence, the distributional conflict between shareholders and workers may limit risk sharing within the firm. By contrast, bondholders and workers are not necessarily in conflict, as both are harmed by firms’ risk-taking. Finally, firms may also insure employees against the risk due to uncertainty about their own talent, but their capacity to do so is constrained by the fact that, in the presence of labor market competition, talented employees require high wages, making uncertainty about talent uninsurable. Lastly, the paper offers evidence that risk sharing within firms has declined steadily in recent decades and discusses possible explanations. |
| Keywords: | risk sharing, insurance, unemployment, social security, wage, implicit labor contracts, family firms. |
| JEL: | D21 D22 D80 G32 G39 H55 J63 J65 M51 M52 |
| Date: | 2019–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:553&r=all |
| By: | Thomas C. Buchmueller; Helen G. Levy; Robert G. Valletta |
| Abstract: | We examine how a key provision of the Affordable Care Act--the expansion of Medicaid eligibility--affected health insurance coverage, access to care, and labor market transitions of unemployed workers. Comparing trends in states that implemented the Medicaid expansion to those that did not, we find that the ACA Medicaid expansion substantially increased insurance coverage and improved access to health care among unemployed workers. We then test whether this strengthening of the safety net affected transitions from unemployment to employment or out of the labor force. We find no meaningful statistical evidence in support of moral hazard effects that reduce job finding or labor force attachment. |
| JEL: | I13 I18 J18 J2 J6 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26553&r=all |
| By: | José Pedro Pontes; Ana Paula Buhse |
| Abstract: | This paper tries to explain differences in high education growth across European countries by using a coordinantion game (Stag Hunt) played by n candidates to college education. The payoff of enrolling in the university is positive only if there is "unanimity" i.e. if all candidates engage in higher education, being zero otherwise. This coordination requirement follows from the specialized nature of skills acquired through higher education, which can only be made profitable if each graduate is matched with graduate complementary specialists. This game has two strict Nash equilibria, where either all youngsters enter the university or none does. We show that the assessment of the factors that explain the differential growth of universities across countries is related with alternative ways of selecting a Nash equilibrium in the coordination game. By using empirical data, we can conclude that demographic trends and a cumulative causation factor play a major role in tertiary education growth, while the "wage premium" associated with college attendance also matters but is relatively secondary. "Tuition fees" and other direct financial costs do not appear to be a significant cause or hindrance of university development. |
| Keywords: | Higher Education; Regional Development; Coordination Games; Risk Dominance. |
| JEL: | C72 I20 O12 R11 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp01052019&r=all |
| By: | Kelly Jones |
| Abstract: | Nearly 30% of working women leave the labor force when they have a child. Access to paid family leave may allow some women to take temporary leave rather than quitting, which may have significant implications for their labor force participation in the long run. We test this hypothesis relying on two policy-based natural experiments: implementation of state-legislated paid family leave programs in California and New Jersey. We estimate an event-study difference-in-differences model comparing pre-topost-policy trends in labor force participation between women with young children and women with no minor children in each state. We find that in the absence of paid leave, maternal labor market detachment is nearly 30% following a birth; it attenuates over time but remains significantly different from zero as much as eleven years later. We find that access to paid family leave at the time of a birth significantly increases labor market participation by more than 5% in the year of a birth; it attenuates over time but remains significantly different from zero as much as five years later. The impacts are the largest for women with higher educational attainment, indicating that paid leave policies induce the most productive workers to remain in the labor market. |
| Keywords: | paid family leave, labor supply, motherhood, California, New Jersey |
| JEL: | J20 J38 J16 J1 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2019-07&r=all |
| By: | Bhuller, Manudeep (Dept. of Economics, University of Oslo); Kostøl, Andreas (W.P. Carey School of Business); Vigtel, Trond Christian (Frisch Centre) |
| Abstract: | How the internet affects job matching is not well understood due to a lack of data on job vacancies and quasi-experimental variation in internet use. This paper helps fill this gap using plausibly exogenous roll-out of broadband infrastructure in Norway, and comprehensive data on recruiters, vacancies and job seekers. We document that broadband expansions increased online vacancy-postings and lowered the average duration of a vacancy and the share of establishments with unfilled vacancies. These changes led to higher job-finding rates and starting wages and more stable employment relationships after an unemployment-spell. Consequently, our calculations suggest that the steady-state unemployment rate fell by as much as one-fifth. |
| Keywords: | Unemployment; Information; Job Search; Matching |
| JEL: | D83 J63 J64 L86 |
| Date: | 2019–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2019_010&r=all |
| By: | Dang, Hai-Anh (World Bank); Hiraga, Masako (World Bank); Nguyen, Cuong Viet (National Economics University Vietnam) |
| Abstract: | Little literature currently exists on the effects of childcare use on maternal labor market outcomes in a developing country context, and the few recent studies offer mixed results. We attempt to fill these gaps by analyzing several latest rounds of the Vietnam Household Living Standards Survey spanning the early to mid-2010s. Addressing endogeneity issues with a regression discontinuity estimator based on children's birth months, we find a sizable effect of childcare attendance on women's labor market outcomes, including their total annual wages, household income, and poverty status. The effects of childcare attendance differ by women's characteristics and are particularly strong for younger, more educated women. Furthermore, we also find that childcare has a medium-term effect. |
| Keywords: | gender equality, child care, maternal employment, women's empowerment, Vietnam |
| JEL: | J13 J16 J22 H42 O0 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12814&r=all |
| By: | Alfred Michael Dockery (Bankwest Curtin Economics Centre (BCEC), Curtin University); Alan S Duncan (Bankwest Curtin Economics Centre (BCEC), Curtin University); Astghik Mavisakalyan (Bankwest Curtin Economics Centre (BCEC), Curtin University); Toan Nguyen (Bankwest Curtin Economics Centre, Curtin University); Richard Seymour (Bankwest Curtin Economics Centre, Curtin Business School) |
| Abstract: | What are the key issues and challenges relating to immigration in Australia? Where do immigrants come from, where do they settle, and what types of jobs do they do? How do migrants affect the wages? To what extent do we see skills mismatch among migrants entering our workforce? Does discrimination and bias remain an issue in our society? Are we doing enough to support the forced immigrants to Australia? This seventh report in BCEC’s Focus on the States Series seeks to provide insights into these questions and many more. We explore the profile and evolution of immigration in Australia over recent years, and undertake a comprehensive assessment of the contributions immigrants make to Australia’s social and economic development. The report provides new evidence to better inform the debates on the labour market impact of immigrants and highlights the positive impact of immigrants on Australian economy. It also explores the extent of acceptance of multiculturalism in Australia and provides an assessment of immigrants’ health and wellbeing. There is a special focus on humanitarian migrants in the report through an analysis of a new longitudinal dataset of humanitarian migrants to Australia. Immigration is a defining feature of Australia’s economic and social life and will shape the nature of tomorrow’s Australia. |
| Keywords: | immigration, migration, skills mismatch, workforce and skills, economic growth, multiculturalism, humanitarian migration, refugees, regional migration. |
| JEL: | J15 F22 J61 O15 R23 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:ozl:bcecrs:fs07&r=all |
| By: | Aghelmaleki, Hedieh; Bachmann, Ronald; Stiebale, Joel |
| Abstract: | We investigate the effects of Chinese import competition on transitions into and out of employment using comparable worker-level data for 14 European countries. Our results indicate that, on average, Chinese imports are associated with an increased probability that employed workers become unemployed and with a reduction in worker flows from unemployment to employment. In countries with high levels of employment protection, incumbent workers are shielded against the risk of job loss due to Chinese competition, but unemployed workers' prospects seem to be particularly negatively affected in these countries. We also provide evidence that the effects of increased Chinese imports differ by worker groups and the tasks performed on the job. |
| Keywords: | trade adjustments,China,import competition,worker flows,employment transitions,employment protection |
| JEL: | F14 F16 J23 J63 J64 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:328&r=all |
| By: | Fergus Cumming (Centre for Macroeconomics (CFM); Bank of England) |
| Abstract: | This paper quantifies the impact of the cash-flow channel of monetary policy on employment by combining novel micro datasets with near-universal coverage. When policy interest rates fall, families with a mortgage spend the extra cash-flow in their local economy and this increases labor demand. Overall, a reduction in mortgage payments of £1,000 per household led to a 0.3 percentage point increase in locally non-tradable employment growth over three years of the Great Recession, with the most pronounced effects in the restaurant sector. Spatial variation in labor and mortgage market structures leads to regional heterogeneity in the traction of monetary policy. |
| Keywords: | Employment, Interest rates, Monetary policy, Mortgages |
| JEL: | E24 E52 G21 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:cfm:wpaper:1922&r=all |
| By: | Nicolas Morales |
| Abstract: | This paper examines the relationship between high-skill immigration and multinational activity. I assemble a novel firm-level dataset on high-skill visa applications and show that there is a large home-bias effect. Foreign multinational enterprises (MNEs) in the US tend to hire more migrant workers from their home countries compared to US firms. To quantify the general equilibrium implications for production and welfare, I build and estimate a quantitative model that includes trade, MNE production, and the migration decisions of high-skill workers. I use an instrumental variables approach to show that the relationship between immigration and MNEs proposed by the model holds in the data. The model is then used to run two counterfactual exercises. The first, evaluates the implications of a more restrictive immigration policy in the US. I find that MNEs play a significant role in how immigration affects the location of production and welfare. In the second counterfactual exercise, I increase the barriers to MNE production to calculate the welfare gains generated by MNEs. I show that a model not incorporating migration would overestimate the MNE welfare gains for high-skill workers by 35% and underestimate welfare gains for low-skill workers by 8%. |
| Keywords: | H-1B visas; IT sector; Multinational companies; High-skill immigration |
| JEL: | F16 F22 F23 J61 |
| Date: | 2019–12–17 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedrwp:86664&r=all |
| By: | Esther Delesalle (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)) |
| Abstract: | It is often argued that negative productivity shocks have adverse effects on education in developing countries. In this paper, I assert that positive productivity shocks can also come at the expense of education. I present a theoretical model to predict the mechanisms when shocks occur in early childhood and in school-age. To capture exogenous shocks in productivity, I exploit variation in intensity of climate and prices across location and over time. The empirical part provides evidence that in early childhood, positive productivity shocks have persistent positive consequences on schooling performance. In contrast, the relationship becomes counter-cyclical when children are of school age. Current positive shocks increase child labor, reduce schooling performance, and decreases the education attainment when shocks become recurrent. |
| Keywords: | Human capital investment, cognitive skills, weather shocks, price shocks, Tanzania |
| JEL: | I25 |
| Date: | 2019–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2019021&r=all |
| By: | Zoë B. Cullen; Ricardo Perez-Truglia |
| Abstract: | The old boys’ club refers to the alleged advantage that male employees have over their female counterparts in interacting with powerful men. For example, male employees may schmooze with their managers in ways that female employees cannot. We study this phenomenon using data from a large financial institution. We use an event study analysis of manager rotation to estimate the causal effect of managers’ gender on their employees’ career progression. We find that when male employees are assigned to male managers, they are promoted faster in the following years than they would have been if they were assigned to female managers. Female employees, on the contrary, have the same career progression regardless of the manager’s gender. These differences in career progression cannot be explained by differences in effort or output. This male-to-male advantage can explain a third of the gender gap in promotions. Moreover, we provide suggestive evidence that these manager effects are due to socialization between male employees and male managers. We show that these manager effects are present only if the employee works in close proximity to the manager. We use survey data to show that, after transitioning to a male manager, male employees spend more time with their managers. Finally, we study a shock to socialization within males, based on the anecdotal evidence that employees who smoke tend to spend more time together. We find that when male employees who smoke switch to male managers who smoke, they spend more of their breaks with their managers and are promoted faster in the following years. Moreover, the effects of these smoking manager switches are similar in timing and magnitude to the effects of the gender manager switches. |
| JEL: | J01 J16 J7 Z1 Z13 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26530&r=all |
| By: | Stark, Oded; Jakubek, Marcin; Szczygielski, Krzysztof |
| Abstract: | We consider a tax-funded policy of admitting and integrating asylum seekers in a country in which the incomes of the native inhabitants are differentiated; for the sake of simplicity, we assume that there are just two groups of native inhabitants: high-income natives and low-income natives. As a consequence of their social preferences, the latter experience disutility caused by relative deprivation. Because integrating the asylum seekers into the mainstream labor force and thereby into the income distribution of the native population 'from below' reduces the relative deprivation of the low-income natives, admitting and integrating asylum seekers can be socially beneficial. We derive the optimal number of asylum seekers by maximizing the natives' social welfare function that incorporates these considerations. We find that as long as the cost of admission and integration is not exceptionally high, this number is strictly positive. We then address the issue of how to distribute a given number of asylum seekers among several receiving countries. We find that, rather than allocating the asylum seekers in proportion to the population of each country, aggregate welfare will be maximized through an allocation that is increasing in the within-country difference between the incomes of the high-income natives and the low-income natives. Additionally, we formulate conditions under which admission of the optimal number of asylum seekers is socially preferable to a direct transfer of income from high-income natives to low-income natives. |
| Keywords: | Admission and integration of asylum seekers,Social preferences,Relative deprivation,Tax-funded integration policy,Maximization of social welfare |
| JEL: | D60 F02 F22 I31 J61 J68 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuewef:126&r=all |