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on Labour Economics |
| By: | Woodcock, Simon D. (Simon Fraser University) |
| Abstract: | We use linked longitudinal data on employers and employees to estimate how the 2003-2005 Hartz reforms affected the wages of displaced German workers after they returned to work. We also present a simple new method to decompose the wage effects into components attributable to selection on unobservables, and to changes in the way that displaced workers are sorted across firms and worker-firm matches upon re-employment. We find that the Hartz reforms substantially reduced the wages of displaced workers after their return to work. Women experienced smaller wage losses than men. For both sexes, over 80 percent of the increased wage loss was because displaced workers found re-employment in lower-wage firms after the reforms. A disproportionate share of these low-wage firms offer temporary employment services to other firms, and we document a large increase in post-displacement employment in the temporary work sector after the reforms. Sorting into worse matches with employers explains a smaller 5-9 percent of the wage loss experienced by men, and 12.5-23 percent of the female wage loss. Collectively, the sorting and matching channels explain almost all of the Hartz reforms' effect on post-displacement wages. |
| Keywords: | Hartz reforms, displacement, unemployment insurance, reallocation, sorting, matching, selection, linked employer-employee data, fixed effects |
| JEL: | J65 J64 J62 J68 J63 J31 C23 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13300&r=all |
| By: | Paul Gregg (Department of Social & Policy Sciences, University of Bath); Lindsey Macmillan (Centre for Education Policy and Equalising Opportunities, UCL Institute of Education, University College London) |
| Abstract: | Recent studies of intergenerational income mobility have used cross-area and cross-national variation in intergenerational elasticities to explore possible drivers of persistence in incomes across generations. We contribute to this literature, and the parallel literature on the effects of social exclusion, utilising a conceptual framework to explore the role of family factors (education and welfare generosity) and labour market conditions in accounting for intergenerational joblessness across Europe. Country-level differences suggest that lower expenditure on education and less generous welfare systems are associated with more intergenerational persistence in jobless spells across countries. We show that simple explanations, such as high unemployment and low education alone do not account for individual-level intergenerational joblessness. Instead, a combination of living in a jobless household in (late) childhood, low education and weak labour markets co-load to create penalties. Taken together, the individual- and country-level analysis point to multiple disadvantage creating persistence of deprivation across generations rather than individual risk factors. This suggests that a targeted and combined policy intervention is required to reduce such associations. |
| Keywords: | Joblessness; Poverty; Education; Labour markets; Welfare |
| JEL: | J62 J64 I24 I38 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:ucl:cepeow:20-11&r=all |
| By: | Fasani, Francesco; Frattini, Tommaso; Minale, Luigi |
| Abstract: | This article investigates the medium to long-term effects on refugee labour market outcomes of the temporary employment bans being imposed in many countries on recently arrived asylum seekers. Using a newly collected dataset covering almost 30 years of employment restrictions together with individual data for refugees entering European countries between 1985 and 2012, our empirical strategy exploits the geographical and temporal variation in employment bans generated by staggered introduction and removal coupled with frequent changes at the intensive margin. We find that exposure to a ban at arrival reduces refugee employment probability in post-ban years by 15%, an impact driven primarily by lower labour market participation. These effects are not mechanical, since we exclude refugees who may still be subject to employment restrictions, are non-linear in ban length, confirming that the very first months following arrival play a key role in shaping integration prospects, and last up to 10 years post arrival. We further demonstrate that the detrimental effects of employment bans are concentrated among less educated refugees, translate into lower occupational quality, and seem not to be driven by selective migration. Our causal estimates are robust to several identification tests accounting for the potential endogeneity of employment ban policies, including placebo analysis of non-refugee migrants and an instrumental variable strategy. To illustrate the costs of these employment restrictions, we estimate a EUR 37.6 billion output loss from the bans imposed on asylum seekers who arrived in Europe during the so-called 2015 refugee crisis. |
| Keywords: | asylum policies; asylum seekers; economic assimilation |
| JEL: | F22 J61 K37 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14765&r=all |
| By: | Congressional Budget Office |
| Abstract: | In 2018, 46 million foreign-born people lived in the United States, accounting for 14 percent of the total population. Three-quarters of them were here legally, CBO estimates. The population with legal status increased steadily from 20 million in 1998 to 35 million in 2018. The increase in the population without legal status was smaller; that number grew from an estimated 8 million in 1998 to a high of more than 11 million in 2007 and has changed little since then. |
| JEL: | F22 F66 J11 J15 J61 |
| Date: | 2020–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:cbo:report:56357&r=all |
| By: | Han Ye |
| Abstract: | I estimate the effect of additional pension benefits on women’s retirement decisions by examining a German pension subsidy program. The subsidies have a kinked relationship with the recipients’ past pension contributions, creating a sharply different slope of benefits for similar women on either side of the kink point. I find that a 100 euro increase in the monthly benefit induces female recipients to claim their pensions six months earlier. Recipients also adjust their labor supply by using unemployment insurance (UI) as a stepping stone to retirement and by reducing time spent in marginal employment. A back-of-the-envelope calculation suggests that the ratio of behavioral to mechanical costs for this subsidy program is 0.25, which is smaller than that of other income support programs. |
| Keywords: | pension subsidy, pension generosity, retirement, regression kink design |
| JEL: | H55 J18 J21 J26 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2020_177&r=all |
| By: | Jones, Melanie (Cardiff Business School); Kaya, Ezgi (Cardiff Business School) |
| Abstract: | Northern Ireland forms an important outlier to the established international pattern of a pronounced gender pay gap in favour of men. Using contemporary data from the Quarterly Labour Force Survey we provide a comprehensive analysis of the gender pay gap in Northern Ireland and make comparisons to the rest of the UK. Despite the relatively common institutional and policy context, the gender pay gap in Northern Ireland is found to be far smaller than in the rest of the UK. This can largely be attributed to the superior productivity-related characteristics of women relative to men in Northern Ireland, which partially offset the influence of gender differences in the returns to these characteristics. Our analysis highlights the importance of occupation Ð both in terms of occupational allocation and the returns to occupations Ð in explaining the cross-country differential. This is reinforced by the impact of lower earnings inequality in Northern Ireland. |
| Keywords: | consumption; citizenship; informality; (un)documented immigrants; work permit |
| JEL: | D12 E21 F22 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2020/9&r=all |
| By: | Guo, Audrey |
| Abstract: | This paper investigates whether and to what extent state-level differences in business taxes influence the location decisions and labor demand of multi-establishment firms. In the United States each state administers its own unemployment insurance (UI) program, and cross-state variation leads to significant differences in the potential UI tax costs faced by employers in different states. Using US Census data on the locations of multi-state manufacturing firms for identification, I find that high tax plants were more likely to exit during economic downturns, and less likely to hire during the recovery. Moving a given plant's outside option from a high tax state to a low tax state would increase its likelihood of exit by 20% during the Great Recession. These findings suggest that decentralized administration of UI taxes may contribute to jobless recoveries and additional misallocation in the economy. |
| Keywords: | Unemployment Insurance; Taxation; Labor Demand; Firm Behavior |
| JEL: | D22 H25 H71 J23 J65 J68 |
| Date: | 2020–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:97919&r=all |
| By: | Marios Michaelides (University of Cyprus); Peter Mueser (University of Missouri, and IZA); Jeffrey Smith (University of Wisconsin, NBER, IZA, CESifo, and HCEO) |
| Abstract: | We present experimental evidence on the effects of four U.S. reemployment programs for youth Unemployment Insurance (UI) recipients during the Great Recession. The three programs that emphasized monitoring and service referrals reduced UI receipt but had minimal effects on employment and earnings; these programs mainly induced the early exit of participants. The fourth program, which combined mandatory job counseling with monitoring, caused the largest reductions in UI receipt and clearly increased employment and earnings. Both early participant exits and effective job counseling underlie these impacts. We conclude that policymakers should require job counseling for youth UI recipients during recessions. |
| Keywords: | Youth, Great Recession, REA, WPRS, job counseling, active labor market policies, unemployment, Unemployment Insurance, program evaluation |
| JEL: | J6 H4 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:2003&r=all |
| By: | Folke, Olle; Rickne, Johanna |
| Abstract: | This paper offers a comprehensive empirical analysis of sexual harassment in the Swedish labor market. First, we use nationally representative survey data linked with employer-employee data to describe rates of self-reported sexual harassment across occupations and workplaces. The risk of sexual harassment is clearly imbalanced across the sex segregated labor market. In gender-mixed and male-dominated occupations and workplaces, women have a higher risk than men, and men have a higher risk than women in female-dominated contexts. We use a hypothetical job-choice experiment with vignettes for sexual harassment to measure the disutility of sexual harassment risks. Both men and women have an equally high willingness to pay for avoiding workplaces where sexual harassment has occurred. But the willingness to pay is conditional on the sex of the fictional harassment victim. People reject workplaces where the victim is the same sex as themselves, but not where the victim is of the opposite sex. We return to the administrative data to study employer compensation for the disutility of sexual harassment risks. Within workplaces, a high risk is associated with lower, not higher wages. People who self-report sexual harassment also have higher job dissatisfaction, more quit intentions, and more actual quits. Both these patterns indicate a lack of full compensation. We conclude that sexual harassment should be conceptualized as gender discrimination in workplace amenities, and that this discrimination reinforces sex segregation and pay-inequalities in the labor market. |
| Keywords: | Gender Inequality; occupational gender segregation; Sexual harassment; workplace amenities |
| JEL: | J16 J24 J81 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14737&r=all |
| By: | Joseph Price; Christian vom Lehn; Riley Wilson |
| Abstract: | Using recent innovations in linking historical U.S. Census data, we study the economic impacts of immigration on natives, including their geographic migration response. We find that the arrival of foreign immigrants significantly increases both native out-migration and in-migration. Accounting for this selective geographic migration, we find smaller economic impacts of immigration for native workers than previous work, including no positive impact on worker incomes. We present evidence of significant “losers” from increased immigration, namely workers who appear to be displaced by immigrant labor and move out of their local labor market, whereas the workers who remain see significant benefits. We also find that younger and lowerskilled workers are “losers” from increased immigration, whereas older and higher-skilled workers are “winners.” |
| JEL: | J21 J31 J61 J62 N32 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27156&r=all |
| By: | Bart Cockx (Department of Economics, Ghent University); Michael Lechner (Swiss Institute for Empirical Economic Research (SEW), University of St. Gallen); Joost Bollens (Vlaamse Dienst voor Arbeidsbemiddeling en Beroepsopleiding (VDAB)) |
| Abstract: | Based on administrative data of unemployed in Belgium, we estimate the labour market effects of three training programmes at various aggregation levels using Modified Causal Forests, a causal machine learning estimator. While all programmes have positive effects after the lock-in period, we find substantial heterogeneity across programmes and unemployed. Simulations show that “black-box” rules that reassign unemployed to programmes that maximise estimated individual gains can considerably improve effectiveness: up to 20% more (less) time spent in (un)employment within a 30 months window. A shallow policy tree delivers a simple rule that realizes about 70% of this gain. |
| Keywords: | Policy evaluation, active labour market policy, causal machine learning, modified causal forest, conditional average treatment effects |
| JEL: | J68 |
| Date: | 2020–05–04 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2020016&r=all |
| By: | Diego Daruich (University of Southern California (Marshall)); Sabrina Di Addario (Bank of Italy); Raffaele Saggio (University of British Columbia) |
| Abstract: | We combine matched employer-employee data with firms’ financial records tostudy a 2001 Italian reform that lifted constraints on the employment of temporary contract workers while maintaining rigid employment protection regulationsfor employees hired under permanent employment contracts. Exploiting the stag-gered implementation of the reform across different sectoral collective bargainingagreements, we find that this policy change led to an increase in the incidence oftemporary contracts but failed to raise employment significantly. The reform hadboth winners and losers. Firms appear to be the main winners as the reform wassuccessful in decreasing labor costs, leading to higher profits. By contrast, youngworkers are the main losers since their earnings were substantially depressed follow-ing the policy change. Rent-sharing estimates show that workers on a temporarycontract receive only 68% of the rents shared by firms with workers hired under apermanent contract, helping explain the post-reform labor cost reductions. |
| Date: | 2020–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:463&r=all |
| By: | Andreas Gulyas; Krzysztof Pytka |
| Abstract: | We implement a generalized random forest (Athey et. al. 2019) to a difference-in-difference setting to identify substantial heterogeneity in earnings losses across displaced workers. Using administrative data from Austria over three decades we document that a quarter of workers face cumulative 11-year losses higher than 2 times their pre-displacement annual income, while almost 10% of individuals experience gains. Our methodology allows us to consider many competing theories of earnings losses. We find that the displacement firm's wage premia and the availability of well paying jobs in the local labor market are the two most important factors. This implies that earnings losses can be understood by mean reversion in firm wage premia and losses in match quality, rather than by a destruction of firm-specific human capital. We further show that 94% of the cyclicality of earnings losses is explained by compositional changes of displaced workers over the business cycle. |
| Keywords: | Job displacement, Earnings losses, Causal machine learning |
| JEL: | J3 J64 C55 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2020_131v2&r=all |
| By: | Ellul, Andrew; Pagano, Marco; Scognamiglio, Annalisa |
| Abstract: | Employees in finance are known to earn higher wages and returns to talent than non-finance workers since the 1990s, suggesting that finance may have attracted talent at the expense of other industries. However, the allocation of talent is likely to respond to differences in career paths across industries, not in wages at a given date. We analyze the careers of 9,964 individuals from 1980 to 2017 based on their resumes, and find that they tend to remain in the same industry for most of their working lives, consistently with them choosing occupations based on comparisons of entire career paths. Comparing various aspects of careers - levels, slopes, PDV and risk of pay profiles - we document that finance as a whole offers a career premium compared to manufacturing and high tech, through higher and steeper pay pro files. This however masks significant diversity within finance: while asset managers enjoy a large career premium and no commensurate career risks, the opposite applies to banking and insurance employees. Furthermore, relative to manufacturing, the asset management career premium has risen for cohorts entering soon before and during the financial crisis, even after controlling for career risk, while the high-tech career premium has become commensurately large for the latest cohorts. |
| Keywords: | asset managers; careers; Hedge Funds; market discipline; scarring effects |
| JEL: | G20 G23 J24 J62 J63 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14767&r=all |
| By: | Roberto Basile (Department of Industrial and Information Engineering and Economics. University of L'Aquila); Francesca Licari (Italian National Institute of Statistics (ISTAT)) |
| Abstract: | In this paper, we assess the effect of community networks on the location choice of foreign immigrants in Italy. Our results confirm the existence of strong network externalities, but they also suggest that these effects spill over the borders of local labor markets areas (LLMAs). Significant positive spatial spillovers are indeed evident up to the second-order of contiguity, while a negative (spatial competition) effect emerges at the third-order. A possible channel for the generation of these spatial spillovers is the existence of common markets for unskilled and ethnic-specific jobs. |
| Keywords: | Community networks, Immigration, Gravity models, Spatial dependence |
| JEL: | F22 J61 R23 C14 C21 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:ahy:wpaper:wp2&r=all |
| By: | Andy Glover (Federal Reserve Bank of Kansas City); Jonathan Heathcote (Federal Reserve Bank of Minneapolis); Dirk Krueger (University of Pennsylvania); Jose Victor Rios-Rull (University of Minnesota) |
| Abstract: | To slow the spread of COVID-19, many countries are shutting down non-essential sectors of the economy. Older individuals have the most to gain from slowing virus diffusion. Younger workers in sectors that are shuttered have the most to lose. In this paper, we build a model in which economic activity and disease progression are jointly determined. Individuals differ by age (young and retired), by sector (basic and luxury), and by health status. Disease transmission occurs in the workplace, in consumption activities, at home, and in hospitals. We study the optimal economic mitigation policy of a utilitarian government that can redistribute across individuals, but where such redistribution is costly. We show that optimal redistribution and mitigation policies interact, and reflect a compromise between the strongly diverging preferred policy paths of different subgroups of the population. We find that the shutdown in place on April 12 is too extensive, but that a partial shutdown should remain in place through the fall. People prefer deeper and longer shutdowns if a vaccine is imminent, especially the elderly. |
| Keywords: | COVID-19, economic policy, redistribution |
| JEL: | I14 I18 J14 J17 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2020-038&r=all |
| By: | Louis-Philippe Beland (Department of Economics, Carleton University); Abel Brodeur (Department of Economics, University of Ottawa); Joanne Haddad (Department of Economics, University of Ottawa); Derek Mikola (Department of Economics, Carleton University) |
| Abstract: | We study the impacts of COVID-19 on domestic violence and family stress. Our empirical analysis relies on a unique online survey, the Canadian Perspective Survey Series, which allows us to investigate the mechanisms through which COVID-19 may affect family stress and domestic violence. We find no evidence that changes in work arrangements are related to self-reported levels of family stress and violence in the home due to confinement, suggesting that remote work on a large scale does not lead to family violence. In contrast, we find that the inability to meet financial obligations and maintaining social ties significantly increase reported family stress and domestic violence. These findings are consistent with two alternative mechanisms: social isolation and decreased bargaining power for women. Last, we provide suggestive evidence that receiving financial relief does not mitigate the effect of financial worries on domestic violence and family stress. We conclude that targeted programs supporting victims of domestic violence may be more effective. |
| Keywords: | COVID-19; lockdown; domestic violence; family stress; isolation; remote work. |
| JEL: | D03 I18 J12 |
| Date: | 2020–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:car:carecp:20-09&r=all |
| By: | Anja Prummer (Queen Mary University of London) |
| Abstract: | Why do women hit the glass ceiling? Women are hired, but then fail to rise through the ranks. We propose a novel explanation for this pattern, namely preference- and belief-free discrimination. In our setting, an employer can increase effort by inducing differential value distributions for a promotion across workers, who compete for the promotion by exerting effort. Initially, workers possess the same distribution of valuations. Introducing inequal- ity between workers makes them more recognisable, reducing their information rent, which in turn increases effort. However, higher inequality reduces competition. If value is redistributed, the reduction in information rent outweighs the loss in competitiveness, making discrimination between workers optimal. |
| Keywords: | Discrimination, Mechanism Design, Information Design |
| JEL: | D82 J16 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:905&r=all |
| By: | Kyung nok Chun (Department of Economics, University of California-Irvine); Zachary Schaller (Department of Economics, University of California-Irvine); Stergios Skaperdas (Department of Economics, University of California-Irvine) |
| Abstract: | Strikes, just as other types of conflict, used to be difficult to explain from an economic perspective. Initially, it was thought that they were a result of mistakes or irrationality. Then, during the 1980s an explosion of research brought asymmetric information to prominence as a significant cause of strikes. After reviewing such long-standing potential explanations, we go over some more recent ones. When a strike changes the future strategic positions of unions relative to firms compared to a bargain, then a strike can ensue; significantly, the more important the future is considered to be (i.e., the higher is the discount factor), the more likely a strike is. In a new model we show how solidarity based on identification with the union can lead to strikes. Additionally, power asymmetries, reputation-building, and internal union politics can account for strikes within a rational-choice, economic perspective. |
| Keywords: | Unions; Strikes; Dispute Resolution; Bargaining |
| JEL: | J52 J53 C78 D74 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:192006&r=all |
| By: | John M. Barrios; Yael V. Hochberg; Hanyi Yi |
| Abstract: | The introduction of the gig economy creates opportunities for would-be entrepreneurs to supplement their income in downside states of the world and provides insurance in the form of an income fallback in the event of failure. We present a conceptual framework supporting the notion that the gig economy may serve as an income supplement and as insurance against entrepreneurial-related income volatility, and utilize the arrival of the on-demand, platform-enabled gig economy in the form of the staggered rollout of ridehailing in U.S. cities to examine the effect of the arrival of the gig economy on new business formation. The introduction of gig opportunities is associated with an increase of ~5% in the number of new business registrations in the local area, and a correspondingly-sized increase in small business lending to newly registered businesses. Internet searches for entrepreneurship-related keywords increase ~7%, lending further credence to the predictions of our conceptual framework. Both the income supplement and insurance channels are empirically supported: the increase in entry is larger in regions with lower average income and higher credit constraints, as well as in locations with higher ex-ante economic uncertainty regarding future wage levels and wage growth. |
| JEL: | G39 J01 L26 O3 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27183&r=all |
| By: | Manuel Flores Mallo; Barbara L. Wolfe |
| Abstract: | We expand on earlier studies investigating the links between early health and later health by including different dimensions of early-life health and multiple life course outcomes consisting of the age of onset of serious cardiovascular diseases (CVDs) and multiple job-related health outcomes. The four dimensions of childhood health are mental, physical, self-rated general health and severe headaches or migraines. The data set we use includes 21 countries from the Survey of Health, Ageing and Retirement in Europe. We find that the different dimensions of childhood health have unique ties to later outcomes. For men, early mental health problems play a stronger role for life course job-related health outcomes, but early poor or fair general health is more strongly linked to the spike in onset of CVDs in their late 40s. For women, these links between childhood health dimensions and life course outcomes are less clear-cut than for men. The spike in onset of CVDs in their late 40s is driven by those with severe headaches or migraines while those with early physical health problems generally do better as captured by job-related outcomes. We also explore and control for possible mediating factors and assess the importance of omitted variables using a test proposed by Oster (2019). |
| JEL: | D1 I10 I14 J0 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27174&r=all |