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on Labour Economics |
| By: | Eleonora Porreca (Bank of Italy); Alfonso Rosolia (Bank of Italy) |
| Abstract: | We test whether natives correctly assess the effects of immigration on their own labour market opportunities. We relate self-reported job loss and job finding probabilities to the presence of foreign-born residents in a native’s neighborhood. We interpret coefficient estimates through the lens of a simple learning model that allows us to disentangle the true effect of immigration from the perception bias. Our results show that natives greatly overestimate the effects of immigrants on their likelihood of losing the current job against the lack of significant true effects; job seekers’s perceptions are instead broadly unaffected, a largely correct assessment given the failure to detect significant true effects. Overestimation of the negative effects of immigration on separation rates is very much concentrated among females, the low educated, the youths, the residents of smaller towns and employees on permanent contracts; the complementary groups appear to correctly assess that immigration has at best only modest effects. We briefly discuss the implications of these findings for the interpretation of empirical work on the labour market effects of immigration. |
| Keywords: | immigration, beliefs, labour market outcomes |
| JEL: | J2 J6 D8 D9 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1273_20&r=all |
| By: | Dominik Grübl; Mario Lackner; Rudolf Winter-Ebmer |
| Abstract: | We estimate the causal effect of parents’ unemployment on unemployment among their children in their own adulthood. We use administrative data for Austrian children born between 1974 and 1984 and apply an instrumental variables (IV) identification strategy using parents’ job loss during a mass layoff as the instrument. We find evidence of unemployment inheritance in the next generation. An additional day of unemployment during childhood causally raises the average unemployment days of the adult child by 1 to 2%. The greatest effects are observed for unmarried parents, young children, children of low-education parents, and in families living in capital cities. We also explore various channels of intergenerational unemployment, such as education, income, and job matching by parents. |
| Keywords: | intergenerational transmission, mass layoff, unemployment duration, instrumental variable |
| JEL: | J62 J64 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2020-05&r=all |
| By: | Cantore, Cristiano (Bank of England, Centre for Macroeconomics and University of Surrey); Ferroni, Filippo (Federal Reserve Bank of Chicago); León-Ledesma, Miguel (University of Kent and CEPR) |
| Abstract: | The textbook New Keynesian (NK) model implies that the labor share is procyclical conditional on a monetary policy shock. We present evidence that a monetary policy tightening robustly increased the labor share and decreased real wages during the Great Moderation period in the US, the euro area, the UK, Australia and Canada. We show that this is inconsistent not only with the basic NK model, but with medium-scale NK models commonly used for monetary policy analysis and where it is possible to break the direct link between the labor share and the inverse mark-up. |
| Keywords: | Labor share; monetary policy shocks; DSGE models |
| JEL: | C52 E23 E32 |
| Date: | 2020–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0857&r=all |
| By: | Andreas Lichter; Amelie Schiprowski |
| Abstract: | This paper studies how the potential duration of unemployment benefits affects individuals’ job search behavior and re-employment outcomes. We exploit an unexpected reform of the German unemployment insurance scheme in 2008, which increased the potential benefit duration from 12 to 15 months for recipients of age 50 to 54. Based on detailed survey data and difference-in-differences techniques, we estimate that one additional month of benefits reduces the number of filed applications by around 10% on average over the first two months of unemployment. Treatment effects on the reservation wage are positive but statistically insignificant. In a complementary analysis, we use social security data to investigate how the reform affected re-employment outcomes. The difference-in-differences estimates yield an elasticity of 0.24 (0.1) additional months in unemployment (nonemployment) per additional month of potential benefits. A cautious back-of-the-envelope calculation reveals substantial returns to early search effort. |
| Keywords: | unemployment insurance, job search, re-employment outcomes, natural experiment |
| JEL: | D83 I38 J64 J68 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8194&r=all |
| By: | Javier Fernández-Blanco |
| Abstract: | A spouse's income provides consumption insurance, but also increases the risks job-seekers take on in labor markets. We use a tractable directed search model with households to study how much public insurance should be provided in addition to the private insurance arrangements, and how it varies with the spouse's income. Private insurance is provided within the household through the spouse's labor supply and sought in the labor markets by applying to less risky jobs. Both insurance channels are used excessively in the laissez-faire equilibrium. In line with the empirical evidence, and in sharp contrast to the social planner's allocation, the equilibrium exhibits falling job-finding rates over the spouse's income distribution. If spouse's productivity is observable, the planner's allocation can be decentralized by implementing falling unemployment benefits. |
| Keywords: | unemployment risks, intra-household risk-sharing, directed search, constrained, efficient insurance |
| JEL: | J08 J22 J64 J65 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1174&r=all |
| By: | Alexander Mihailov (Department of Economics, University of Reading) |
| Abstract: | This paper considers 3 scenarios regarding the duration of the COVID-19 pandemic lockdown, staying for 1, 2 or 3 quarters, and 2 types of exceptionally rare and devastating disruptions in employment modeled as adverse labor supply shocks, a temporary one with negligible loss in the labor force due to deaths or a permanent one, with significant loss from deaths. The temporary labor supply shock simulations delimit a lower bound, designed to match about 1/4 of the labor force unable to work, and an upper bound, matching about 3/4 of the labor force made economically inactive, broadly consistent with estimates. The permanent labor supply shock is designed to match, in 3 scenarios again, up to 1% loss of the labor force due to mortality, twice milder than the Spanish flu 2% death rate. Estimated calibrations of the Galí-Smets-Wouters (2012) model with indivisible labor for 5 major and most affected by the COVID-19 pandemic economies are simulated: the US, France, Germany, Italy and Spain. The simulations suggest that even in the most optimistic scenario of a brief (lasting for 1 quarter) and mild (with 1/4 of the labor force unable to work) lockdown, the loss of per-capita consumption (6-7% in annualized terms down from the long-run trend in the impact quarter) and per-capita output (3-4% down) will be quite damaging, but recoverable relatively quickly, in 1-2 years. In the most pessimistic simulated scenario of temporary loss the effects will be 10-15 times more devastating, and the loss of output and consumption will persist beyond 10-15 years. Permanent loss of up to 1.5 percentage points of per-capita consumption and output characterizes the simulated permanent labor supply shock. |
| Keywords: | COVID-19 pandemic, simulated macroeconomic effects, medium-scale New Keynesian DSGE models, indivisible labor, shocks to the disutility of labor supply, calibration according to Bayesian estimates |
| JEL: | C63 D58 E24 E27 E32 E37 |
| Date: | 2020–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2020-07&r=all |
| By: | Francine D. Blau; Lawrence Kahn; Matthew Comey; Amanda Eng; Pamela Meyerhofer; Alexander Willén |
| Abstract: | There is a well-known gender difference in time allocation within the household, which has important implications for gender differences in labor market outcomes. We ask how malleable this gender difference in time allocation is to culture. In particular, we ask if US immigrants allocate tasks differently depending upon the characteristics of the source countries from which they emigrated. Using data from the 2003-2017 waves of the American Time Use Survey (ATUS), we find that first-generation immigrants, both women and men, from source countries with more gender equality (as measured by the World Economic Forum’s Global Gender Gap Index) allocate tasks more equally, while those from less gender equal source countries allocate tasks more traditionally. These results are robust to controls for immigration cohort, years since migration, and other own and spouse characteristics. There is also some indication of an effect of parent source country gender equality for second-generation immigrants, particularly for second-generation men with children. Our findings suggest that broader cultural factors do influence the gender division of labor in the household. |
| Keywords: | housework, childcare, gender, immigration, time allocation |
| JEL: | J13 J15 J16 J22 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8195&r=all |
| By: | Amelie Schiprowski |
| Abstract: | Caseworkers are the main human resources used to provide social services. This paper asks if, and how much, caseworkers matter for the outcomes of unemployed individuals. Using large-scale administrative data, I exploit exogenous variation in unplanned absences among Swiss UI caseworkers. I find that individuals who lose a meeting with their caseworker stay unemployed 5% longer. Results show large heterogeneity in the personal impact of caseworkers: the effect of a foregone meeting is zero for caseworkers in the lower half of the productivity distribution, while it amounts to more than twice the average effect for caseworkers in the upper half. |
| Keywords: | unemployment insurance, caseworkers, job search |
| JEL: | J64 J65 J68 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8206&r=all |
| By: | Maqsood Aslam (Université de Lille, Faculté des Sciences Economiques et Sociales); Etienne Farvaque (Université de Lille, Faculté des Sciences Economiques et Sociales); Alexander Mihailov (Department of Economics, University of Reading) |
| Abstract: | The paper makes use of the natural experiment of the length, and abrupt end, of the Cold War in Europe to examine empirically the persistence and evolution of social preferences. Using data from six West and four East European countries plus Germany in the 2016 wave of the International Social Survey Program, we focus on the role of government in providing living standard to the unemployed. We find an “East-West divide” of attitudes, still existing in 2016 across Europe, a generation after the collapse of communism. Perhaps surprisingly, the divide reveals less support in Eastern Europe for a role of the government in correcting adverse labor market outcomes, which we attribute empirically to preference persistence in the older generation (educated during communism). Nevertheless, we also show that social preferences do evolve, relatively fast, as the younger generation (educated after communism) does not reveal the same beliefs. We interpret the East-West Europe divide in terms of two hypotheses, reinforcing each other even if originating in the respective worldviews of the opposite social fractions that coexisted inside the communist society, and contributing both to preference persistence in the older generation: (i) the “lazy unemployed” stigma indoctrinated by the communist propaganda and those loyal to it; and (ii) the “defiance of the state apparatus” experience transmitted by dissidents and silent opponents to the regime. Our main results and their suggested interpretation are corroborated by several robustness checks and placebo tests. |
| Keywords: | social preferences, East-West Europe divide, communism, survey data, role of government, unemployment insurance |
| JEL: | D83 D91 H53 P16 P51 |
| Date: | 2020–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2020-06&r=all |
| By: | Ina Ganguli; Martina Viarengo; Ricardo Hausmann (Center for International Development at Harvard University) |
| Abstract: | We examine gender gaps in career dynamics in the legal sector using rich panel data from one of the largest global law firms in the world. The law firm studied is representative of multinational law firms and operates in 23 countries. The sample includes countries at different stages of development. We document the cross-country variation in gender gaps and how these gaps have changed over time. We show that while there is gender parity at the entry level in most countries by the end of the period examined, there are persistent raw gender gaps at the top of the organization across all countries. We observe significant heterogeneity among countries in terms of gender gaps in promotions and wages, but the gaps that exist appear to be declining over the period studied. We also observe that women are more likely to report exiting the firm for family and work-life balance reasons, while men report leaving for career advancement. Finally, we show that various measures of national institutions and culture appear to play a role in the differential labor-market outcomes of men and women. |
| Keywords: | gender gaps; human capital; job mobility; promotion; culture; legal sector |
| JEL: | I26 J16 J62 M51 Z |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cid:wpfacu:378&r=all |
| By: | Madsen, Jakob Brøchner; Strulik, Holger |
| Abstract: | In this paper we investigate the impact of technological change on inequalityin the presence of a landed elite using a standard unified growth model. We measure inequality by the ratio between land rent and wages and show that, before the onset of the fertility transition, technological progress increased inequality directly through land-biased technological change and indirectly through increasing population growth. Thefertility transition and the child quantity-quality trade-off eventually disabled the Malthusian mechanism, and technological progress triggered education and benefited workers. If the elasticity of substitution between land and labor is sufficiently high, the rent-wage ratio declines such that inequality is hump-shaped in the very long run. We use the publication of new farming book titles as a measure of technological progress in agriculture, and provide evidence for technology-driven inequality in Britain between 1525 and 1895. We confirm these results for a panel of European countries over the period 1265-1850 using agricultural productivity as a measure of technology. Finally, using patents in the period 1800-1980, we find a technology-driven inequality reversal around the onset of the fertility transition. |
| Keywords: | nequality,Malthus,Unified Growth Theory,Agriculture,Human Capital |
| JEL: | O40 O30 N30 N50 J10 I25 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:392&r=all |
| By: | Mathias Dolls |
| Abstract: | This paper develops a decomposition framework to study the importance of different stabilization channels of an unemployment re-insurance scheme for the euro area. Running counterfactual simulations based on household micro data for the period 2000–16, the paper finds that the re-insurance would have cushioned on average 12% (8%) of income losses through interregional (intertemporal) smoothing. These results suggest that the smoothing effect of the re-insurance which is due to asymmetries in labor market shocks would have raised the income insurance of a typical unemployment insurance scheme in the euro area by more than 50%. The simulated re-insurance scheme would have been revenue-neutral at EA-19, but not at the member-state level. Average annual net contributions would have amounted to -0.1–0.1 per cent of GDP. The paper discusses how different variants of the re-insurance might affect the risk of moral hazard. |
| Keywords: | European fiscal integration, unemployment re-insurance, automatic stabilizers, euro area reform |
| JEL: | F55 H23 J65 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8219&r=all |
| By: | Konrad B. Burchardi (Institute for International Economic Studies); Thomas Chaney (Sciences Po); Tarek A. Hassan (Boston University, NBER, and CEPR); Lisa Tarquinio (Boston University); Steohen Terry (Boston University) |
| Abstract: | We show a causal impact of immigration on innovation and dynamism in US counties. To identify the causal impact of immigration, we use 130 years of detailed data on migrations from foreign countries to US counties to isolate quasi-random variation in the ancestry composition of US counties that results purely from the interaction of two historical forces: (i) changes over time in the relative attractiveness of different destinations within the US to the average migrant arriving at the time and (ii) the staggered timing of the arrival of migrants from different origin countries. We then use this plausibly exogenous variation in ancestry composition to predict the total number of migrants flowing into each US county in recent decades. We show four main results. First, immigration has a positive impact on innovation, measured by the patenting of local firms. Second, immigration has a positive impact on measures of local economic dynamism. Third, the positive impact of immigration on innovation percolates over space, but spatial spillovers quickly die out with distance. Fourth, the impact of immigration on innovation is stronger for more educated migrants. |
| Keywords: | migrations, innovation, patents, endogenous growth, dynamism |
| JEL: | J61 O31 O40 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:bos:iedwpr:dp-339&r=all |
| By: | Assaf Razin; Alexander Horst Schwemmer |
| Abstract: | Life cycle and insurance-type considerations dominate redistribution policy. Wage and fiscal prospects of ageing dominate migration policy. The paper compares distinct policy regimes, directed at migration and redistribution issues. Migration quotas, provision of social benefits, labor income taxation, and capital income taxation, are all endogenously determined in a policy-optimizing framework. The analysis makes a three-way comparison: free-migration regime vs. restricted-migration regime, welfare-state regime vs. no-migration-quota, no-redistribution regime, and low-income-majority regime vs. high-income-majority regime. |
| JEL: | F2 F22 H3 H4 J11 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26998&r=all |
| By: | Axel Watanabe (Concordia University and CIREQ) |
| Abstract: | There has been a long tradition of presumed perfect mobility in urban economics. Workers switch their locations in direct response to differences in local economic performance. Recent empirical observations prove otherwise. The number of movers rapidly declines with distance moved while there is a positive correlation between distance moved and skill level. I build a general equilibrium model of a system of cities to explain the city-size distribution as a result of reduced mobility. Workers with a heterogeneous skill level have a corresponding distance-tolerance level and self-sort into select cities. The resulting size distribution reflects the trade-off between the distance moved and earning opportunities enhanced by agglomeration. I extrapolate consumers’ tolerance towards distance and skill level from US Census data on city size and intercity migration. |
| Keywords: | labor mobility, internal migration, city-size distribution |
| JEL: | J61 R12 |
| Date: | 2020–04–13 |
| URL: | http://d.repec.org/n?u=RePEc:crd:wpaper:20001&r=all |
| By: | Pierluigi Murro (LUISS-Guido Carli University.); Tommaso Oliviero (University of Naples Federico II and CSEF); Alberto Zazzaro (University of Naples Federico II, CSEF and MoFiR) |
| Abstract: | Using firm-level survey information, we investigate whether relationship lending affects firms' employment decisions when they experience negative shocks on sales. We find that firms maintaining long-lasting relationships with their main bank show a significantly lower sensitivity of employment growth rate to shocks in sales. This result is robust to measurement issues and to an instrumental variable strategy, and is stronger for young, small, human-capital-intensive firms. Our findings indicate that relationship lending acts as an insurance for firms' employees against adverse sales fluctuations, especially for firms whose internal workforce is more valuable and is thus substitutable at larger costs. |
| Keywords: | employment, relationship banking, insurance |
| JEL: | G32 G38 H53 J65 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wmofir:160&r=all |
| By: | Ingo Borchert (Department of Economics, University of Sussex, Falmer, United Kingdom); Paola Conconi (Université Libre de Bruxelles); Mattia Di Ubaldo (Department of Economics, University of Sussex, Falmer, United Kingdom); Cristina Herghelegiu (Université Libre de Bruxelles) |
| Abstract: | The European Union (EU) often conditions preferential access to its market upon compliance by its trading partners with Non-Trade Policy Objectives (NTPOs), including human rights and labor and environmental standards. We systematically document the coverage of NTPOs in EU trade agreements and in its Generalized System of Preferences (GSP). We then examine the extent to which trade agreements and GSP programs can be used to promote NTPOs. Preferential trade agreements are negotiated under multilateral rules, which require members to eliminate all tariffs reciprocally. As a result, once a trade agreement enters into force, the EU cannot easily restrict or extend access to its market so as to “punish bad behavior” or “reward good behavior” on NTPOs by its trading partners. By contrast, GSP preferences are granted on a unilateral basis, so they can be limited or extended, depending on compliance with NTPOs. EU GSP programs can thus provide a carrot-and-stick mechanism to promote NTPOs in partner countries. |
| Keywords: | Trade Agreements, GSP, Conditionality, Non-Trade Policy Objectives |
| JEL: | F13 F50 J80 K32 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:sus:susewp:0920&r=all |
| By: | J. Carter Braxton; Kyle F. Herkenhoff; Gordon M. Phillips |
| Abstract: | We show that unemployed individuals maintain significant access to credit. Following job loss, the unconstrained borrow, while the constrained default and delever. Both defaulters and borrowers are using credit to smooth consumption. We quantitatively show that long-term credit relationships and credit-registries allow the unemployed to partially offset income losses using credit. We estimate the model and find that the optimal provision of public insurance is unambiguously lower with greater credit access. Using a utilitarian welfare criterion, the optimal steady-state policy is to lower the replacement rate of public insurance from the current US policy of 41.2% to 38.3%. Moreover, lowering the replacement rate to 38.3% yields welfare gains to the majority of workers along the transition path. |
| JEL: | D14 E21 E24 J64 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27026&r=all |
| By: | Donald A. R. George; Eddi Fontanari; Ermanno C. Tortia |
| Abstract: | Standard economic theory predicts that the accumulation of capital by means of indivisible reserves would lead to underinvestment and undercapitalization due to the truncated temporal horizon of worker-members in cooperatives (the so-called “Furubotn-Pejovich effect†). An inefficiently low stock of capital would imply, other conditions being equal, lower labour productivity. We test the real effects of collective capital on productivity using a large panel of Italian worker and social cooperatives. Firm-level balance sheet data from Bureau van Dijk Aida database are used to estimate the effects of collective and individual reserves of capital on total factor productivity using an augmented Cobb-Douglas production function. Social security data on employment contracts in all Italian enterprises are used to measure firm-level full-time worker equivalents employment. Collective ownership and total factor productivity are positively and significantly related after controlling for factor productivity, individual capital ownership and other standard firm-level and sectoral controls. This result is robust to different specifications of the model and suggests a positive role of collective capital in strengthening financial sustainability, patrimonial and employment stability in the long run, favouring also firm specific investments. |
| Keywords: | Cooperatives, Total factor productivity, Self-finance, Under capitalization, Collective capital, Individual capital |
| JEL: | J54 P13 P14 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpeu:20110&r=all |
| By: | Zhe Wang (Department of Economics, University of Reading) |
| Abstract: | This paper analyses the impact of shocks and labor market institutions on unemployment across the Euro Area (EA) from 1999 to 2013. Specifically, I apply an empirical methodology to identify the direct effects of shocks and labor market institutions on unemployment, on the one hand, and the indirect effects of labor market institutions on changing the transmission of shocks to unemployment, on the other hand. The shocks consist of: 1) total factor productivity (TFP) shocks, 2) the real long-term interest rate, 3) labor demand shocks, 4) ECB money supply shocks and 5) ECB unsystematic monetary policy shocks. The labor market institutions cover the unemployment benefit system, active labor market policies (ALMPs), employment protection laws (EPLs), the system of wage determination and the labor tax wedge. The results suggest that the real interest rate and labor demand shocks significantly affect the unemployment rate in the EA. As for labor market institutions, EPLs play a favorable role in reducing unemployment. In contrast, a higher tax wedge tends to have an adverse effect on unemployment, not only directly increasing unemployment but also indirectly amplifying the effects of shocks on unemployment. |
| Keywords: | Unemployment, Shocks, Labor market institutions, Interactions, Monetary policy |
| JEL: | E24 J08 E52 F45 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2020-05&r=all |