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on Labour Economics |
| By: | Céline Piton (Economics and Research Department, National Bank of Belgium & Université libre de Bruxelles (SBS-EM, CEB and DULBEA), GLO, humanOrg, IRES and IZA); François Rycx (Université libre de Bruxelles (SBS-EM, CEB and DULBEA)) |
| Abstract: | This paper provides a comprehensive quantitative assessment of the relationship between people’s migration background and their likelihood of being employed in Belgium. Using detailed quarterly data for the period 2008-2014, we find not only that first-generation immigrants face a substantial employment penalty (up to -36% points) vis-à-vis their native counterparts, but also that their descendants continue to face serious difficulties in accessing the labour market. The employment gap is, ceteris paribus, more pronounced for the first than for the second generation. Yet, intergenerational mobility patterns are found to be quite heterogeneous: although the children of immigrants from the European Union (EU) fare much better than their parents, the improvement is much more limited for those from EU candidate countries, and almost null for the second generation from the Maghreb. The situation of second-generation immigrants with only one foreign-born parent seems to be fairly good. In contrast, it appears that the social elevator is broken for descendants of two non-EU-born immigrants. Immigrant women are also found to be particularly affected, especially those originating from outside the EU. As regards education, it appears to be an important tool for fostering the labour market integration of descendants of non-EU-born immigrants. For firstgeneration immigrants, though, it proves to be much less effective overall. Focusing on the first generation, we find that: i) access to jobs increases with the duration of residence, though fairly slowly on average; ii) citizenship acquisition is associated with significantly better employment outcomes, for both EU and non-EU-born immigrants; iii) proficiency in the host country language is a key driver of access to employment, especially for non-EU-born immigrants; and iv) around a decade is needed for the employment gap between refugees and other foreign-born workers to be (largely) suppressed. |
| Keywords: | First- and second-generation immigrants, employment, moderating factors. |
| JEL: | J15 J16 J21 J24 J61 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:202001-381&r=all |
| By: | Abu-Qarn, Aamer (Ben Gurion University); Lichtman-Sadot, Shirlee (Ben Gurion University) |
| Abstract: | Disadvantaged communities are often geographically segregated from employment and higher education opportunities. Increasing access can entail substantial welfare gains, but this can also affect the tradeoff faced by young adults between investing in higher education and working for pay. We evaluate the introduction of bus services to Arab towns in Israel, which substantially and differentially increased access either to work only or to work and higher education opportunities among a disadvantaged population. Exploiting the variation that different bus line connections created in the opportunity cost of schooling, we find that young adult responses are consistent with a tradeoff between investing in higher education and working for pay. For females, under certain circumstances, there is a simultaneous decrease in both labor market and educational attainment outcomes. We argue that this is due to a combination of a household income effect and social stigma that is associated with female labor force participation. Our results demonstrate the importance of accounting for potential reductions in educational attainment when expanding work opportunities to disadvantaged communities and that traditional barriers can play a large role in female integration into the labor market. |
| Keywords: | public transportation, spatial mismatch, higher education, opportunity cost |
| JEL: | I24 I25 J22 J61 O18 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12824&r=all |
| By: | Buchmueller, Thomas C. (University of Michigan); Levy, Helen (University of Michigan); Valletta, Robert G. (Federal Reserve Bank of San Francisco) |
| 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. |
| Keywords: | medicaid, insurance coverage, access to care, unemployment, labor force transitions |
| JEL: | J64 J68 I13 I18 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12842&r=all |
| By: | Patrick J. Kehoe; Pierlauro Lopez; Virgiliu Midrigan; Elena Pastorino |
| Abstract: | Recent critiques have demonstrated that existing attempts to account for the unemployment volatility puzzle of search models are inconsistent with the procylicality of the opportunity cost of employment, the cyclicality of wages, and the volatility of risk-free rates. We propose a model that is immune to these critiques and solves this puzzle by allowing for preferences that generate time-varying risk over the cycle, and so account for observed asset pricing fluctuations, and for human capital accumulation on the job, consistent with existing estimates of returns to labor market experience. Our model reproduces the observed fluctuations in unemployment because hiring a worker is a risky investment with long-duration surplus flows. Intuitively, since the price of risk in our model sharply increases in recessions as observed in the data, the benefit from creating new matches greatly drops, leading to a large decline in job vacancies and an increase in unemployment of the same magnitude as in the data. |
| JEL: | E0 E2 E24 E32 J6 J63 J64 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26580&r=all |
| By: | Gu, Ran |
| Abstract: | This paper examines how specific human capital affects labour turnover and real wage cyclicality in a frictional labour market. I develop an equilibrium search model with long-term contracts and imperfect monitoring of worker effort. Imperfect monitoring creates a moral hazard problem that requires firms to pay efficiency wages. The optimal contract implies that more specific capital reduces job separation, thereby alleviating the moral hazard and increasing wage stability over the business cycle. I apply this model to explain novel stylised facts about the cyclicality of the postgraduate-undergraduate wage premium. Postgraduate degree holders experience lower cyclical variation in real wages than those with undergraduate degrees. This effect is significant for workers with a long tenure, but not for new hires. Moreover, postgraduates have more specific human capital than undergraduates. Estimates reveal that specific capital can explain the educational gaps both in labour turnover and in real wage cyclicality. |
| Keywords: | specific human capital, real wage cyclicality, postgraduates, wage premium, contracts, search |
| JEL: | E24 E32 I24 J31 J64 |
| Date: | 2019–12–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:98027&r=all |
| By: | Pia M. Orrenius; Madeline Zavodny; Sarah Greer |
| Abstract: | E-Verify is a federal electronic verification system that allows employers to check whether their newly hired workers are authorized to work in the United States. To use E-Verify, firms first must enroll with the Department of Homeland Security (DHS). Participation is voluntary for most private-sector employers in the United States, but eight states currently require all or most employers to use E-Verify. This article uses confidential data from DHS to examine patterns of employer enrollment in E-Verify. The results indicate that employers are much more likely to sign up in mandatory E-Verify states than in states without such mandates, but enrollment is still below 50 percent in states that require its use. Large employers are far more likely to sign up than small employers. In addition, employers are more likely to newly enroll in E-Verify when a state’s unemployment rate or population share of likely unauthorized immigrants rises. However, enrollment rates are lower in industries with higher shares of unauthorized workers. Taken as a whole, the results suggest that enrolling in the program is costly for employers in terms of both compliance and difficulty in hiring workers. A strictly enforced nationwide mandate that all employers use an employment eligibility program like E-Verify would be incompatible with the current reliance on a large unauthorized workforce. Allowing more workers to enter legally or legalizing existing workers might be necessary before implementing E-Verify nationally. |
| Keywords: | Illegal immigration; unauthorized workers; E-Verify; worksite enforcement; immigration policy |
| JEL: | J15 J61 L20 |
| Date: | 2020–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddwp:87381&r=all |
| By: | van den Berg, Gerard J. (University of Bristol); Kesternich, Iris (University of Munich); Müller, Gerrit (Institute for Employment Research (IAB), Nuremberg); Siflinger, Bettina M. (Tilburg University) |
| Abstract: | We investigate how negatively reciprocal traits of unemployed individuals interact with "sticks" policies imposing constraints on individual job search effort in the context of the German welfare system. For this we merge survey data of long-term unemployed individuals, containing indicators of reciprocity as a personality trait, to a unique set of register data on all unemployed coached by the same team of caseworkers and their treatments. We find that the combination of a higher negative reciprocity and a stricter regime have a negative interaction effect on search effort exerted by the unemployed. The results are stronger for males than for females. Stricter regimes may therefore drive long-term unemployed males with certain types of social preferences further away from the labor market. |
| Keywords: | behavioral response, active labor market policy, monitoring, welfare, job search |
| JEL: | J16 J24 N44 D90 J64 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12835&r=all |
| By: | Gustafsson, Björn Anders (University of Gothenburg); Katz, Katarina (Karlstad University); Österberg, Torun (University of Gothenburg) |
| Abstract: | Using large samples of persons born in 1985 we investigate the relationship between characteristics of the neighbourhood where young people lived as adolescents and the probability that they will receive social assistance when aged 19, 20, and 21, for the three Swedish metropolitan regions – Stockholm, Gothenburg and Malmö. We estimated logistic regressions separately for the majority population and "visible immigrants" and included several characteristics of the neighbourhood and of the parental home in the specification. The probability of social assistance receipt as a young adult is strongly positively linked to social assistance receipt in the parental home and to several other factors. The major result is that the association with social assistance receipt in the neighbourhood where a person lived at age 16 remains strong when parental receipt and a number of other neighbourhood characteristics are controlled for. We conclude that measures to increase the education qualifications and various efforts to create jobs for young adults have a potential of decrease social assistance receipt among young adults. In addition there is also room for spatially focused measures aiming to reduce residential segregation and the demand for social assistance in locations with a comparably high rate of social assistance receipt. |
| Keywords: | neighbourhoods, Sweden, social assistance, young adults, immigrants |
| JEL: | I38 J15 R23 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12880&r=all |
| By: | Jong-Wha Lee; Do Won Kwak; Eunbi Song |
| Abstract: | This study examines how aging affects labor productivity using industry-level data of Japan and Korea. The analysis shows that, for both Japan and Korea, aging has positive effects on labor productivity when older workers are working in industries with a large share of information and communication technology (ICT) in the capital stock. We also find that, on average, older workers exert positive effects on labor productivity across all industries when they are low-educated in Japan and high-educated in Korea. In addition, a complementary effect between ICT capital and older workers is observed for both high- and low-educated workers in Japan but only for low-educated workers in Korea. We discuss the interplay among educational attainment, industry characteristics, and production techniques to explain the differences between the two countries in the productivity of their older workers. |
| Keywords: | aging, ICT capital, productivity, Japan, Korea |
| JEL: | J11 J14 O41 O47 O53 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2020-01&r=all |
| By: | Bütikofer, Aline (Norwegian School of Economics); Loken, Katrine Vellesen (Norwegian School of Economics); Willén, Alexander (Norwegian School of Economics) |
| Abstract: | We exploit the construction of the Öresund bridge, which connects a medium-sized city in Sweden to the capital of Denmark, to study the labor market effects of gaining access to a larger labor market. Using unique cross-country matched registry data that allow us to follow individuals across the border, we find that the bridge led to a substantial increase in cross-country commuting among Swedish residents. This effect is driven both by extensive and intensive margin employment responses, and translates into a 15% increase in the average wage of Swedish residents. However, the wage effects are unevenly distributed: the effect is largest for high-educated men and smallest for low-educated women. Thus, the wage gains come at the cost of increased income inequality and a widening of the gender wage gap, both within- and across-households. We show that these inequality effects are driven not only by differences in the propensity to commute, but also by educational specialization. |
| Keywords: | labor market expansions, wages, distributional consequences |
| JEL: | J3 J61 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12885&r=all |
| By: | Stefano Banfi; Sekyu Choi; Benjamín Villena |
| Abstract: | Job search is generally described by an intensive effort margin such as the number of applications sent or of hours devoted. Using rich online job board data and a novel network method to determine relevant sets of ads for each applicant, we also investigate the job search selective margin, i.e. why workers apply to or forgo job offers. We provide a comprehensive catalogue of search behavior. Gender and age affect the intensive search margin: males and older workers search more controlling for observable ad and worker traits. For the selective margin, we find that the alignment between applicant wage expectations and wage offers, as well as the applicant fit into ad requirements such as education, experience, job location, and occupation increase the application likelihood. On-the-job searchers and males seem more ambitious as they apply to jobs offering wages above their expectations and to jobs requiring more education than they possess. In contrast, unemployed seekers seem conservative: they comply to wage offers and apply to jobs for which they are overqualified. As workers age, or as their unemployment duration or elapsed tenure (for the employed) increase, they tend to make seeking behavior less ambitious and more flexible in terms of requirements compliance. Seekers’ effort is procyclical, except for the jobless when the unemployment rate is pretty high. Comparatively, the selective margin varies less over the cycle. Our empirical evidence can help discipline current and future search-theoretical frameworks. JEL Codes: E24, J40, J64. Key words: Applications,Networks.,On-the-job search,Online job search,Search frictions,unemployment |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:edj:ceauch:343&r=all |
| By: | Philip Arestis; Jesus Ferreiro; Carmen Gómez |
| Abstract: | For mainstream economics, rigidities in the labour market are a key determinant of the labour market results in terms of employment and unemployment. Thus, mainstream economics recommends full flexibility in the labour markets. Following these prescriptions, most European countries have introduced labour market reforms that have affected affect the conditions to hire and fire permanent workers and the constraints to the use of temporary employment contracts. However, the empirical evidence clearly shows that a conclusion about the impact of labour market reforms on total employment cannot be reached. Indeed, recent empirical evidence, argues that a higher flexibility in the employment protection has a negative impact on employment. This implies that a higher labour flexibility is associated with a higher labour segmentation, characterized by a rising share of temporary workers but not with a higher total employment |
| Keywords: | Employment protection legislation, employment, unemployment |
| JEL: | E24 J21 J41 J48 J68 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:ast:wpaper:0048&r=all |
| By: | Luz A. Flórez (Banco de la República de Colombia); Leidy Gómez D. |
| Abstract: | The objective of this paper is to analyze the impact of skill mismatch on labour turnover for the case of Colombia. Our work follows the of the job matching theory of Jovanovic (1979a, 1979b, 1984). In line with this theory we find a positive relationship between skill mismatch and labour turnover (measured as the worker reallocation rate) using a panel of 23 cities for the period 2009-2017. Our results suggest that cities with a higher proportion of mismatched workers present higher worker reallocation rates. In this case one standard deviation of increment in the proportion of mismatch workers increases the WR rate around 0.12 standard deviations. This result is explained mainly by the increase on separations as is suggested by the theory. **** RESUMEN: El objetivo de este documento es analizar el efecto del desajuste en habilidades en la rotación laboral para el caso de Colombia. Nuestro enfoque teórico sigue de cerca el modelo de búsqueda de empleo propuesto por Jovanovic (1979a, 1979b, 1984). Como es sugerido por esta literatura, usando el panel de 23 ciudades para el periodo 2009-2017, encontramos evidencia de una relación positiva entre el nivel del desajuste en las habilidades y la rotación laboral, medida como la reasignación de trabajadores. Un incremento de una desviación estándar en el nivel de desajuste de habilidades produce un incremento de 0.12 desviaciones estándar en la rotación laboral. Estos resultados se explican principalmente por el incremento en las separaciones como es sugerido por el modelo teórico. |
| Keywords: | Skill mismatch, overqualification, underqualification, worker reallocation, panel data, and cross-sectional dependence, desajuste de habilidades, sobre-calificación, baja calificación, datos panel, reasignación de trabajadores, y dependencia transversal |
| JEL: | I25 J62 J63 J64 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:1099&r=all |
| By: | Dalla-Zuanna, Antonio (Institute for Fiscal Study and Norwegian School of Economics); Liu, Kai (University of Cambridge) |
| Abstract: | In this paper we estimate the causal effect of a training program for disadvantaged youths on their long-run labor market outcomes. Individuals receive lottery offers to participate in the program, but are allowed to choose when to leave the program and to participate in alternative programs. We consider a multistage decision setting, where individuals sequentially select which program to participate in at every stage. The standard IV estimator using initial random assignment as instrumental variable identifies a weighted average of the effects of the treatment for subgroups of individuals differing in terms of potential duration of participation and choice of alternative programs. We estimate a sequential choice model that allows us to estimate the effect of the treatment for these different subgroups separately. We use the estimated model to investigate the dynamic complementarity between different training programs and explore program targeting to improve the cost-effectiveness relative to the existing program. |
| Keywords: | training, program evaluation, dynamic treatment effects, experiment |
| JEL: | J0 H4 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12839&r=all |