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on Labour Economics |
| By: | Johannes Goensch; Andreas Gulyas; Ioannis Kospentaris |
| Abstract: | This paper develops a life-cycle search model with a labor force participation decision of workers, job-to-job transitions and endogenous job creation to study unemployment insurance (UI) reforms. The calibrated model replicates the aggregate and life-cycle patterns of labor market flows from the Current Population Survey, as well as the worker labor market histories over four months. The model predicts that an UI extension to 99 weeks leads to a slight decrease in labor productivity, the employment to population ratio and the labor force participation rate, but to a non-trivial increase in the unemployment rate. An equally expensive increase in UI benefits, holding the eligibility duration unchanged, yields a smaller increase in the unemployment rate and a smaller decrease in the labor force participation rate. We show that disregarding the effect of flows in and out of the labor force and job-to-job transitions would significantly bias the response of the unemployment rate and labor productivity to UI reforms. |
| Keywords: | Unemployment Insurance; Labor Market Flows; Directed Search |
| JEL: | E24 J63 J64 J65 J68 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2021_264&r=all |
| By: | Benghalem, Helène (University of Lausanne); Cahuc, Pierre (Sciences Po, Paris); Villedieu, Pierre (Sciences Po, Paris) |
| Abstract: | We ran a large randomized controlled experiment among about 150,000 recipients of unemployment benefits insurance in France in order to evaluate the impact of part-time unemployment benefits. We took advantage of the lack of knowledge of job seekers regarding this program and sent emails presenting the program. The information provision had a significant positive impact on the propensity to work while on claim, but reduced the unemployment exit rate, showing important lock-in effects into unemployment associated with part-time unemployment benefits. The importance of these lock-in effects implies that decreasing the marginal tax rate on earnings from work while on claim in the neighborhood of its current level does not increase labor supply and increases the expenditure net of taxes of the unemployment insurance agency. |
| Keywords: | unemployment insurance, part-time unemployment benefits, lock-in effects, unemployment duration |
| JEL: | H5 J64 J65 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14189&r=all |
| By: | Francesco D'Amuri (Bank of Italy); Marta De Philippis (Bank of Italy); Elisa Guglielminetti (Bank of Italy); Salvatore Lo Bello (Bank of Italy) |
| Abstract: | Motivated by the magnitude and cyclicality of transitions into and out of the labour force, we jointly estimate natural unemployment and participation rates through a forward-looking Phillips curve informed by structural labour market flows and demographic trends. We find that the estimated reaction of inflation to the participation gap is twice as large as that to the unemployment gap, and that the participation margin accounts for a significant share of total slack. Moreover, by exploiting a far-reaching and unexpected pension reform, we study the effects of a sudden expansion in labour supply that was not directly related to unemployment. The reform triggered a marked reduction in the employment to inactivity transitions of the elderly, determining an increase in natural participation (stronger than that in observed participation) but not in natural unemployment. Thus, the trends in activity explain in part why inflation has been so low in the recent years. |
| Keywords: | labour market flows, labour supply, demographic trends, phillips curve, business cycles |
| JEL: | J11 J21 J64 E32 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_599_21&r=all |
| By: | Furtado, Delia (University of Connecticut); Kong, Haiyang (Beijing Normal University) |
| Abstract: | This paper examines the link between trade-induced changes in local labor market opportunities and English language fluency rates among low-skilled immigrants in the United States. Many of the production-based manufacturing jobs lost in recent years due to Chinese import competition did not require strong English-speaking skills while many of the jobs in expanding industries, mostly in the service sector, did. Consistent with responses to these changing labor market opportunities, we find that a $1,000 increase in import exposure per worker in a local area led to an increase in the share of low-skilled immigrants speaking English very well in that area by about half a percentage point. As evidence that at least part of this is a result of actual improvements in English language speaking abilities, we show that low-skilled immigrants in trade-impacted areas became especially likely to be enrolled in school compared to similarly low-skilled natives. However, while we find little support for selective domestic migration in response to trade shocks, we present evidence suggesting that new immigrants arriving from abroad choose where to settle based either on their English fluency or their ability to learn English. Regardless of whether low-skilled immigrants respond to trade shocks via actual improvements in English fluency or migration choices, our results suggest that immigrants help to equilibrate labor markets, an implication we find evidence for in the data. |
| Keywords: | immigrants, language fluency, import competition, immigrant assimilation |
| JEL: | J15 J61 J24 F16 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14152&r=all |
| By: | Kyyrä, Tomi (VATT, Helsinki) |
| Abstract: | Many countries have a two-tiered unemployment compensation system which provides earnings-related unemployment insurance for a limited period of time and less generous unemployment assistance thereafter. This study evaluates the effects of a reform in Finland that increased the level of unemployment assistance by 22%. The reform led to a drop of 9% in the unemployment exit hazard, which can be attributed to fewer exits to both employment and inactivity. The implied elasticities suggest that a 10% increase in unemployment assistance reduces the unemployment exit hazard by 4% and the job finding hazard by 6%. These effects are relatively small compared to the existing evidence on the effects of unemployment insurance benefits. |
| Keywords: | unemployment assistance, labor market subsidy, hazard rate, unemployment duration |
| JEL: | J64 J68 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14194&r=all |
| By: | Foged, Mette (University of Copenhagen); Hasager, Linea (University of Copenhagen); Yasenov, Vasil (Stanford University) |
| Abstract: | We study the role of institutions in affecting the labor market impacts of immigration using a cross-country meta-analysis approach. To accomplish this, we gather information on 1,030 previously estimated wage effects and 432 employment effects of immigration from 61 academic studies covering 18 developed countries. The mean and median impact on the relative wage of directly exposed native workers are negative and significantly different from the small positive mean and median impact on the average wage level. This pattern is reversed for employment effects where the magnitudes are smaller. We combine this database with country-level data on labor market institutions from the OECD. The results suggest that institutions may shield native workers from distributional (relative) wage consequences of immigration but exacerbate the impacts on average wages in the economy. We do not detect a significant and robust association for the employment effects of foreign workers. |
| Keywords: | immigration, wages, employment, labor market institutions, meta-analysis |
| JEL: | D02 J08 J15 J31 J61 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14158&r=all |
| By: | Bernhardt, Robert; Munro, David; Wolcott, Erin |
| Abstract: | Since 2010 and before the pandemic hit, the share of households refusing to participate in the Current Population Survey (CPS) tripled. We show that partially-responding households - households that respond to some but not all of the survey's eight panels - account for most of the rise. Leveraging the labor force status of partially-responding households in the months surrounding their non-response, we find that rising refusals artificially suppressed the labor force participation rate and employment-population ratio but had little discernible effect on the unemployment rate. Factors robustly correlated with state-level refusal rates include a larger urban population, a smaller Democratic vote share (our proxy for sentiment towards government), and the economic and social changes brought about by manufacturing decline. |
| Keywords: | Current Population Survey,Non-Response,Unemployment,Labor Force Participation,Employment-Population Ratio |
| JEL: | C83 E24 J64 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:781&r=all |
| By: | Duleep, Harriet (College of William and Mary); Jaeger, David A. (University of St. Andrews); McHenry, Peter (College of William and Mary) |
| Abstract: | We present a novel theory that immigrants facilitate innovation and entrepreneurship by being willing and able to invest in new skills. Immigrants whose human capital is not immediately transferable to the host country face lower opportunity costs of investing in new skills or methods and will be more exible in their human capital investments than observationally equivalent natives. Areas with large numbers of immigrants may therefore lead to more entrepreneurship and innovation, even among natives. We provide empirical evidence from the United States that is consistent with the theory's predictions. |
| Keywords: | immigration, innovation, entrepreneurship, human capital |
| JEL: | J15 J24 J39 J61 L26 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14188&r=all |
| By: | Job Boerma; Loukas Karabarbounis |
| Abstract: | Reparations is a policy proposal aiming to address the wealth gap between Black and White households. We provide a first formal analysis of the economics of reparations using a long-run model of heterogeneous dynasties with an occupational choice and bequests. Our innovation is to introduce endogenous dispersion of beliefs about risky returns, reflecting differences in dynasties' experiences with entrepreneurship over time. Feeding the exclusion of Black dynasties from labor and capital markets as driving force, the model quantitatively reproduces current and historical racial gaps in wealth, income, entrepreneurship, mobility, and beliefs about risky returns. We use the model to evaluate reparations and find that transfers eliminating the racial gap in average wealth today do not lead to wealth convergence in the long run. The logic is that century-long exclusions lead Black dynasties to enter into reparations with pessimistic beliefs about risky returns and to forego investment opportunities. We conclude by showing that entrepreneurial subsidies are more effective than wealth transfers in achieving racial wealth convergence in the long run. |
| Keywords: | Reparations; Race gaps; Wealth; Entrepreneurship; Beliefs |
| JEL: | E21 D31 J15 |
| Date: | 2021–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmwp:90186&r=all |
| By: | Jesús Fernández-Villaverde; Federico Mandelman; Yang Yu; Francesco Zanetti |
| Abstract: | This paper develops a dynamic general equilibrium model with heterogeneous firms that face search complementarities in the formation of vendor contracts. Search complementarities amplify small differences in productivity among firms. Market concentration fosters monopsony power in the labor market, magnifying profits and further enhancing high-productivity firms’ output share. Firms want to get bigger and hire more workers, in stark contrast with the classic monopsony model, where a firm aims to reduce the amount of labor it hires. The combination of search complementarities and monopsony power induces a strong “Matthew effect” that endogenously generates superstar firms out of uniform idiosyncratic productivity distributions. Reductions in search costs increase market concentration, lower the labor income share, and increase wage inequality. |
| Keywords: | Market concentration, superstar firms, search complementarities, monopsony power in the labor market |
| JEL: | C63 C68 E32 E37 E44 G12 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2021-22&r=all |
| By: | Harju, Jarkko (VATT, Helsinki); Jäger, Simon (Massachusetts Institute of Technology); Schoefer, Benjamin (University of California, Berkeley) |
| Abstract: | We estimate the effects of worker voice on job quality and separations. We leverage the 1991 introduction of worker representation on boards of Finnish firms with at least 150 employees. In contrast to exit-voice theory, our difference-in-differences design reveals no effects on voluntary job separations, and at most small positive effects on other measures of job quality (job security, health, subjective job quality, and wages). Worker voice slightly raised firm survival, productivity, and capital intensity. A 2008 introduction of shop-floor representation had similarly limited effects. Interviews and surveys indicate that worker representation facilitates information sharing rather than boosting labor's power. |
| Keywords: | industrial relations, corporate governance, codetermination, exit-voice theory, separations, job quality |
| JEL: | J0 J53 J54 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14163&r=all |
| By: | Hochmuth, Brigitte (Friedrich-Alexander University of Erlangen-Nürnberg (FAU) and Institute for Advanced Studies Vienna, Austria (IHS)); Kohlbrecher, Britta (Friedrich-Alexander University of Erlangen-Nürnberg (FAU)); Merkl, Christian (Friedrich-Alexander University of Erlangen-Nürnberg (FAU) and IZA); Gartner, Hermann (Friedrich-Alexander University of Erlangen-Nürnberg (FAU) and Institute for Employment Research (IAB)) |
| Abstract: | This paper proposes a new approach to evaluate the macroeconomic effects of the “Hartz IV” reform, which reduced the generosity of long-term unemployment benefits. We propose a model with different unemployment durations, where the reform initiates both a partial effect and an equilibrium effect. We estimate the relative importance of these two effects and the size of the partial effect based on the IAB Job Vacancy Survey. Our approach does not hinge on an external source for the decline in the replacement rate for long-term unemployed. We find that Hartz IV was a major driver for the decline of Germany’s steady state unemployment and that partial and equilibrium effect were nearly of equal importance. In addition, we provide direct empirical evidence on labor selection, one potential dimension of recruiting intensity. |
| Keywords: | Unemployment benefits reform, search and matching, Hartz reforms |
| JEL: | E24 E00 E60 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:ihs:ihswps:31&r=all |
| By: | Laszlo Goerke; Markus Pannenberg |
| Abstract: | The German law on co-determination at the plant level (Betriebsverfassungsgesetz) stipulates that works councilors are neither to be financially rewarded nor penalized for their activities. This regulation contrasts with publicized instances of excessive payments. The divergence has sparked a debate about the need to reform the law. This paper provides representative evidence on wage payments to works councilors for the period 2001 to 2015. We find wage premia of 2% to 6% in OLS-specifications, which are more pronounced for long-term works councilors. Moreover, we observe no wage premia in linear fixed-effects panel data specifications, suggesting that the OLS-results capture the effect of selection into works councillorship. We obtain no evidence for a delayed compensation or a special treatment of works councillors released from work. Hence, our results indicate that payments to works councilors are broadly in line with legal regulations. |
| Keywords: | labor law, wages, works councils, Socio-economic Panel (SOEP) |
| JEL: | J30 J51 J53 J83 K31 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8923&r=all |
| By: | Emmler, Julian (Humboldt University Berlin); Fitzenberger, Bernd (Institute for Employment Research (IAB), Nuremberg) |
| Abstract: | Job loss expectations were widespread among workers in East Germany after reunification with West Germany. Though experiencing a large negative employment shock, East German workers were still overpessimistic immediately after reunification with respect to their job risk. Over time, job loss expectations fell and converged to West German levels, which was driven by a stabilizing economic environment and by an adaptation of the interpretation of economic signals with workers learning to distinguish individual risk from firm level risk. In fact, conditional on actual job loss risk, East German workers quickly caught up to West Germans regarding the accuracy of job loss expectations. |
| Keywords: | job loss, expectations, transition economies |
| JEL: | D84 J64 J63 P20 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14149&r=all |
| By: | Dodini, Samuel (Cornell University); Lovenheim, Michael (Cornell University); Willén , Alexander (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | Private-sector unionization rates have fallen precipitously in the United States over the past half century, from 25% in 1973 to only 7% in 2018. We take a skill-based approach to studying this decline, using data from the Current Population Survey combined with occupation-specific task requirements from the Dictionary of Occupational Titles and the Occupational Information Network. We find that for both men and women, private sector unionized jobs became higherskilled by requiring more non-routine, cognitive skills and fewer manual or routine skills. We further show that union, non-union skill differences have polarized, with unionized worker occupations becoming relatively more intensive in non-routine, cognitive skills and in manual/routine skills. These changes have been more pronounced for women than for men. Next, we decompose these skill changes into three parts: (1) changes in skills within an occupation, (2) changes in worker concentration across existing occupations, and (3) changes to the occupational mix from both entry and exit. Most of the skill changes we document are driven by the second two forces. The third part of the analysis estimates union wage premiums that account for changing skill mix. We find that accounting for skills has a small effect on the union wage premium and that the premium remains high at over 20% for both men and women. Finally, we show how this evidence can be reconciled with a model of skill-biased technological change that explicitly accounts for the institutional framework surrounding collective bargaining. |
| Keywords: | Private-sector; unionization |
| JEL: | J00 |
| Date: | 2021–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2021_007&r=all |
| By: | Sari Pekkala Kerr; William R. Kerr |
| Abstract: | We explore co-ethnic hiring among new ventures using U.S. administrative data. Co-ethnic hiring is ubiquitous among immigrant groups, averaging about 22.5% and ranging from 2% to 40%. Co-ethnic hiring grows with the size of the local ethnic workforce, greater linguistic distance to English, lower cultural/genetic similarity to U.S. natives, and in harsher policy environments for immigrants. Co ethnic hiring is remarkably persistent for ventures and for individuals. Co-ethnic hiring is associated with greater venture survival and growth when thick local ethnic employment surrounds the business. Our results are consistent with a blend of hiring due to information advantages within ethnic groups with some taste-based hiring. |
| Keywords: | Hiring, immigration, entrepreneurship, job creation, E-Verify |
| JEL: | F22 J15 J44 J61 J62 J71 L26 M13 M51 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:21-05&r=all |
| By: | Alina K. Bartscher; Paul Wachtel; Moritz Kuhn; Moritz Schularick |
| Abstract: | This paper aims at an improved understanding of the relationship between monetary policy and racial inequality. We investigate the distributional effects of monetary policy in a unified framework, linking monetary policy shocks both to earnings and wealth differentials between black and white households. Specifically, we show that, although a more accommodative monetary policy increases employment of black households more than white households, the overall effects are small. At the same time, an accommodative monetary policy shock exacerbates the wealth difference between black and white households, because black households own less financial assets that appreciate in value. Over multi-year time horizons, the employment effects are substantially smaller than the countervailing portfolio effects. We conclude that there is little reason to think that accommodative monetary policy plays a significant role in reducing racial inequities in the way often discussed. On the contrary, it may well accentuate inequalities for extended periods. |
| Keywords: | monetary policy, racial inequality, income distribution, wealth distribution, wealth effects |
| JEL: | E40 E52 J15 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8877&r=all |
| By: | Bengali, Leila (Yale University); Daly, Mary C. (Federal Reserve Bank of San Francisco); Lofton, Olivia (Federal Reserve Bank of San Francisco); Valletta, Robert G. (Federal Reserve Bank of San Francisco) |
| Abstract: | People with disabilities face substantial barriers to sustained employment and stable, adequate income. We assess how they and their families fared during the long economic expansion that followed the Great Recession of 2007-09, using data from the monthly Current Population Survey (CPS) and the March CPS annual income supplement. We find that the expansion bolstered the well-being of people with disabilities and in particular their relative labor market engagement. We also find that applications and awards for federal disability benefits fell during the expansion. On balance, our results suggest that sustained economic growth can bolster the labor market engagement of people with disabilities and potentially reduce their reliance on disability benefits. |
| Keywords: | disability, employment, income, program participation |
| JEL: | J14 J11 J18 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14165&r=all |
| By: | Mark Borgschulte; Marius Guenzel; Canyao Liu; Ulrike Malmendier |
| Abstract: | We estimate the long-term effects of experiencing high levels of job demands on the mortality and aging of CEOs. The estimation exploits variation in takeover protection and industry crises. First, using hand-collected data on the dates of birth and death for 1,605 CEOs of large, publicly-listed U.S. firms, we estimate the resulting changes in mortality. The hazard estimates indicate that CEOs’ lifespan increases by two years when insulated from market discipline via anti-takeover laws, and decreases by 1.5 years in response to an industry-wide downturn. Second, we apply neural-network based machine-learning techniques to assess visible signs of aging in pictures of CEOs. We estimate that exposure to a distress shock during the Great Recession increases CEOs’ apparent age by one year over the next decade. Our findings imply significant health costs of managerial stress, also relative to known health risks. |
| JEL: | G01 G3 I10 J01 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28550&r=all |
| By: | Alexander Hijzen; Andrea Salvatori |
| Abstract: | This report provides an ex ante assessment of the distributional effects of introducing portable severance pay accounts in Spain based on micro-simulations. In the current system, permanent workers who are dismissed from their job are entitled to 20 days of severance pay per year of service, which is relatively high by OECD standards. The report considers a reform that replaces the current severance payment system with individual saving accounts financed through periodic contributions by employers. The report focuses on two versions of the reform that keep constant respectively the total compensation in case of dismissal (“constant benefit”) or the expected costs for firms of employing a permanent worker (“constant-cost”). Importantly, the analysis in the report does do not take account of the behavioural responses of firms and workers to the reform. |
| Keywords: | employment protection, individual savings accounts, job mobility, microsimulation |
| JEL: | H55 J32 J62 |
| Date: | 2021–03–17 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:259-en&r=all |
| By: | James Albrecht (Department of Economics, Georgetown University); Bruno Decreuse (Aiz-Marseille School of Economics); Susan Vroman (Department of Economics, Georgetown University) |
| Abstract: | When vacancies are filled, the ads that were posted are often not withdrawn, creating "phantom" vacancies. The existence of phantoms implies that older job listings are less likely to represent true vacancies than are younger ones. We assume that job seekers direct their search based on the listing age and so equalize the expected benefit of a job application across listing age. Forming a match with a vacancy of age a creates a phantom of age a with probability beta and this leads to a negative informational externality that affects all vacancies of age a and older. Thus, the magnitude of this externality decreases with the age of the listing when the match is formed. Relative to the constrained e¢ cient search behavior, the directed search of job seekers leads them to over-apply to younger listings. We illustrate the model using US labor market data. The contribution of phantoms to overall frictions is large, but, conditional on the existence of phantoms, the social planner cannot improve much on the directed search allocation. Classification- D83, J64 |
| Keywords: | Unemployment, directed search, phantom vacancies |
| Date: | 2021–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:geo:guwopa:gueconwpa~21-21-04&r=all |
| By: | Groshen, Erica L. (Cornell University); Holzer, Harry J. (Georgetown University) |
| Abstract: | We describe trends in wages and labor force participation for the "working class" – whom we define as workers with high school or less education – compared to those with college or more. We compare cyclical peaks over the entire period 1979-2019, with particular focus on the Great Recession (2007-2010) and recovery (2010-2019). We also present results by gender and race. We find real wage growth in the latter period for all workers, but not enough to change the long-term trends of growing inequality and stagnant wages for the less-educated; and we also find that labor force participation continued to decline for the less-educated, even during the recovery. Gaps between whites and blacks also grew while Hispanics and Asians made more progress. We consider various explanations of these findings, and show that the early effects of the 2020-21 pandemic recession that hurt less-educated workers and those of color more than anyone else. |
| Keywords: | wages, participation, working class, Great Recession, recovery |
| JEL: | J6 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp173&r=all |
| By: | Balgova, Maria (IZA); Trenkle, Simon (IZA); Zimpelmann, Christian (IZA); Pestel, Nico (IZA) |
| Abstract: | This paper studies job search behavior in the midst of a pandemic recession. We use long-running panel data from the Netherlands (LISS) and complement the core survey with our own COVID-specific module, conducted in June 2020, surveying job search effort of employed as well as unemployed respondents. We estimate an empirical model of job search over the business cycle over the period 2008-2019 to explore the gap between predicted and actual job search behavior in 2020. We find that job search during the pandemic recession differs strongly from previous downturns. The unemployed search significantly less than what we would normally observe during a recession of this size, while the employed search mildly more. Expectations about the duration of the pandemic seem to play a key role in explaining job search effort for the unemployed in 2020. Furthermore, employed subjects affected by changes in employment status due to COVID-19 are more likely to search for a job. Conversely, beliefs about infection risk do not seem to be related to job search in a systematic way. |
| Keywords: | COVID-19, job search, labor supply, survey |
| JEL: | J21 J64 J68 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14180&r=all |
| By: | Holzer, Harry J. (Georgetown University) |
| Abstract: | Workforce development in the US today is spread across higher education institutions (primarily public 2-year and for-profit colleges), labor market institutions and workplaces, with public funding from a range of sources. But outcomes for students and workers are weaker than they could be, especially among disadvantaged students and displaced workers; funding for workforce programs is insufficient and not always effective. I propose the following changes: 1) Reforms and additional funding in the Higher Education Act for postsecondary occupational training for disadvantaged students; 2) Modest taxes on worker displacement along with new funding for retraining; and 3) A permanent version of the Trade Adjustment Assistance Community College and Career Training (TAACCCT) grants, to fund partnerships between community colleges, workforce institutions and states. Together, these actions would improve credential attainment and employment outcomes among the disadvantaged and those at risk of being displaced. |
| Keywords: | workforce development, community college, training, displaced workers |
| JEL: | J0 I22 I23 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp174&r=all |
| By: | Sascha O. Becker; Volker Lindenthal; Sharun Mukand; Fabian Waldinger |
| Abstract: | We study the role of professional networks in facilitating the escape of persecuted academics from Nazi Germany. From 1933, the Nazi regime started to dismiss academics of Jewish origin from their positions. The timing of dismissals created individual-level exogenous variation in the timing of emigration from Nazi Germany, allowing us to estimate the causal effect of networks for emigration decisions. Academics with ties to more colleagues who had emigrated in 1933 or 1934 (early émigrés) were more likely to emigrate. The early émigrés functioned as “bridging nodes” that helped other academics cross over to their destination. Furthermore, we provide some of the first empirical evidence of decay in social ties over time. The strength of ties also decays across space, even within cities. Finally, for high-skilled migrants, professional networks are more important than community networks. |
| Keywords: | professional networks, high-skilled emigration, Nazi Germany, Jewish academics, universities |
| JEL: | I20 I23 I28 J15 J24 N30 N34 N40 N44 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8916&r=all |
| By: | Kaufmann, Marc (Central European University); Machado, Joël (LISER); Verheyden, Bertrand (LISER (CEPS/INSTEAD)) |
| Abstract: | Empirical evidence suggests that a large proportion of immigrants who initially intended to stay temporarily in the destination country end up staying permanently, which may lead to suboptimal integration. We study systematic causes of unexpected staying that originate in migrant misperceptions. Our framework contains uncertainty about long-term wages, endogenous integration and savings in the short term, and return migration in the long term. We identify necessary and sufficient conditions on misperceptions that lead migrants to overestimate their probability of return migration, independently of their characteristics. We show that these conditions involve pessimism about the destination country, either in terms of short-term utility, of long-term utility, or of wage prospects. We then highlight specific behavioural biases that give rise to such forms of pessimism. Using the German Socio-Economic Panel, we find that relatively higher pessimism at arrival about future utility and wages is associated with migrants staying unexpectedly ex post. |
| Keywords: | migrant integration, return intentions, unexpected staying, misperceptions, pessimism, GSOEP |
| JEL: | F22 D91 J61 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14155&r=all |
| By: | Amuedo-Dorantes, Catalina (University of California, Merced); Borra, Cristina (University of Seville); Wang, Chunbei (University of Oklahoma) |
| Abstract: | With the onset of the Covid-19 pandemic, Asians became the victims of a sudden increase in racial discrimination as public officials repeatedly referred to the virus as the "Chinese virus." We document that Asian entrepreneurship has been disproportionally hurt after January 2020, particularly among Asian immigrants, declining by 17 percent when compared to non-Hispanic whites. Examining the dynamics of transitions into and out of self-employment, we find a substantial increase in Asian immigrants' self-employment exits, increased necessity entries, and reductions in opportunity entries – patterns suggestive of customer and employer 'taste discrimination'. The pandemic has also proven particularly harmful on businesses owned by recently arrived immigrants and by East Asian immigrants. While Asian enclaves help palliate the pandemic's damaging impact, the latter has reached a broad spectrum of businesses. Gaining a better understanding of how the pandemic has impacted Asian businesses is crucial to inform about the emergence of discriminatory behaviors that widen inequities and endanger a fast recovery. |
| Keywords: | asian, discrimination, COVID-19, business ownership, business dynamics |
| JEL: | J15 J61 J71 J78 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14182&r=all |
| By: | Müller, Daniel; Schmitz, Patrick W. |
| Abstract: | A principal hires an agent to provide a verifiable service. Initially, the agent can exert unobservable effort to reduce his disutility from providing the service. If the agent is free to waive his right to quit, he may voluntarily sign a contract specifying an inefficiently large service level, while there are insufficient incentives to exert effort. If the agent's right to quit is inalienable, the underprovision of effort may be further aggravated, but the service level is ex post efficient. Overall, it turns out that the total surplus can be larger when agents are not permitted to contractually waive their right to quit work. Yet, we also study an extension of our model in which even the agent can be strictly better off when the parties have the contractual freedom to waive the agent's right to quit. |
| Keywords: | Moral hazard; Incentive theory; Labor contracts; Efficiency wages; Law and economics |
| JEL: | D23 D86 J83 K12 K31 M55 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:106427&r=all |
| By: | Gürtzgen, Nicole; Lochner, Benjamin; Pohlan, Laura; van den Berg, Gerard J. |
| Abstract: | This paper studies the effects of the high-speed internet expansion on the match quality of new hires. They combine data on internet availability at the local level with German individual register and vacancy data. Results show that internet availability has no major impact on the stability of new matches and their wages. The authors confirm these findings using vacancy data, by explicitly comparing match outcomes of online and non-online recruits. Further results show that online recruiting not only raises the number of applicants and the share of unsuitable candidates per vacancy, but also induces employers to post more vacancies. |
| Keywords: | Matching,online search,information frictions,recruiting channels |
| JEL: | J64 H40 L96 C26 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:21002&r=all |