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on Labour Economics |
| By: | Isaac Baley; Lars Ljungqvist; Thomas J. Sargent |
| Abstract: | Although they are studied too rarely, returns to labor mobility transmit important forces that decisively shape outcomes in macro-labor models. By focusing on returns to labor mobility, this paper sheds new light on calibrations of influential macro-labor studies and resolves an issue about the turbulence-theoretic explanation of trans-Atlantic unemployment experiences. It does so by invoking a cross-phenomenon restriction - in our case, how returns to labor mobility determine effects on unemployment of changes in layoff costs, on the one hand, and changes in quit turbulence, on the other hand. We also spotlight two distinct perspectives and associated sources of data: one from labor economics and another from the economics of industrial organization. Ultimately, we are reminded of the rule that new theories “must not throw out all the successes of former theories. . . . to preserve the successes of the past is not only a constraint, but also a guide. |
| Keywords: | labor mobility, quits, turnover, layoff cost, turbulence, unemployment, human capital, skills, matching model, search-island model. |
| JEL: | E24 J63 J64 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1798&r= |
| By: | Bruce Fallick; John C. Haltiwanger; Erika McEntarfer; Matthew Staiger |
| Abstract: | Who is harmed by and who benefits from worker reallocation? We investigate the earnings consequences of changing jobs and find a wide dispersion in outcomes. This dispersion is driven not by whether the worker was displaced, but by the duration of joblessness between job spells. Job movers who experience joblessness suffer a persistent reduction in earnings and tend to move to lower-paying firms, suggesting that job ladder models offer a useful lens through which to understand the negative consequences of job separations. |
| JEL: | E32 J3 J63 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29187&r= |
| By: | Haaris Mateen ⓡ; Joseph E. Stiglitz ⓡ; Jungyoll Yun |
| Abstract: | Imperfections in risk and capital markets imply that individuals who lose jobs suffer from imperfect smoothing of consumption across states and times. Compared to the first best, there will be too little search. Optimal unemployment programs, which balance the marginal benefit of consumption smoothing vs. the marginal cost of the insurance externality, increase welfare and may even increase GDP. Our analytical results suggest that welfare is higher if the unemployment benefits program includes income-contingent unemployment loans (ICL), where the amount repaid depends on the individual’s future income. Such loans can be financed by a risk premium imposed on the unemployed who avail themselves of the loans, and partially substitute for unemployment insurance (UI) benefits. Optimal unemployment benefits programs (UB) with ICL do a better job of smoothing consumption across states and time, and in particular total benefits when unemployed increase. We analyze how changes in key parameters, such as the degree of risk aversion and the nature of post-employment work, affect the design of the optimal UB program and the magnitude of the incremental benefits from including income-contingent loans. |
| JEL: | D15 H53 H81 I38 J64 J65 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29198&r= |
| By: | Benjamin Lerch (Department of Economics, Università della Svizzera italiana, Switzerland) |
| Abstract: | The adoption of labor-replacing technologies has already displaced thousands of workers in the US. In this paper, I analyze how the adverse effects of the implementation of robots in firms' production processes are spreading among the population and how they are shaping the composition of labor markets. Exploiting exogenous variation in robot exposure across local labor markets and over time, I find that the introduction of industrial robots between the mid-1990s and 2014 contributes to the decline in the gender employment gap but increases the race and ethnicity employment gap. This finding follows from men and racial and ethnic minorities being more exposed to robots because of their over-representation in blue-collar jobs. Despite their predominance in the manufacturing sector, the labor market impacts of robots are not confined to these industries, but spill over also to the service sector. |
| Keywords: | industrial robots, employment, gender, race and ethnicity |
| JEL: | J15 J16 J23 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:lug:wpidep:2102&r= |
| By: | Blanchflower, David G.; Bryson, Alex |
| Abstract: | Unemployment is notoriously difficult to predict. In previous studies, once country fixed effects are added to panel estimates, few variables predict changes in unemployment rates. Using panel data for 29 European countries - Austria; Belgium; Bulgaria; Croatia; Cyprus; Czechia; Denmark; Estonia; Finland; France; Germany; Greece; Hungary; Ireland; Italy; Latvia; Lithuania; Luxembourg; Malta; Netherlands; Poland; Portugal; Romania; Slovakia; Slovenia; Spain; Sweden; Turkey and the UK - over 439 months between January 1985 and July 2021 in an unbalanced country*month panel of just over 10000 observations, we predict changes in the unemployment rate 12 months in advance based on individuals' fears of unemployment, their perceptions of the economic situation and their own household financial situation. Fear of unemployment predicts subsequent changes in unemployment 12 months later in the presence of country fixed effects and lagged unemployment. Individuals' perceptions of the economic situation in the country and their own household finances also predict unemployment 12 months later. Business sentiment (industry fear of unemployment) is also predictive of unemployment 12 months later. The findings underscore the importance of the "economics of walking about". The implication is that these social survey data are informative in predicting economic downturns and should be used more extensively in forecasting. We also generate a 29 country-level annual panel on life satisfaction from 1985-2020 from the World Database of Happiness and show that the consumer level fear of unemployment variable lowers wellbeing over and above the negative impact of the unemployment rate itself. Qualitative survey metrics were able to predict the Great Recession and the economic slowdown in Europe just prior to the COVID pandemic. |
| Keywords: | unemployment,fear,sentiment,social attitudes,life satisfaction,recession,COVID |
| JEL: | J60 J64 J68 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:922&r= |
| By: | Daniela Del Boca (University of Turin and Collegio Carlo Alberto); Noemi Oggero; Paola Profeta; Maria Cristina Rossi |
| Abstract: | The COVID-19 pandemic has had a dramatic impact on families’ lives, with parents all over the world struggling to meet the increased demands of housework, childcare and home-schooling. Much of the additional burden has been shouldered by women, particularly in countries with a traditionally uneven division of household labor. Yet the dramatic increase in remote work from home since the pandemic also has the potential to increase paternal involvement in family life and thus to redress persistent domestic gender role inequalities. This effect depends on the working arrangements of each partner, whether working remotely, working at their usual workplace or ceasing work altogether. We examine the role of working arrangements during the pandemic on the traditional division of household labor in Italy using survey data from interviews with a representative sample of working women conducted during the two waves of COVID-19 (April and November 2020). Our data show that the gender gap in household care related activities was widest during the first wave of the pandemic, and although it was less pronounced during the second wave, it was still higher than pre-COVID-19. The time spent by women on housework, childcare, and assisting their children with distance learning did not depend on their partners’ working arrangements. Conversely, men spent fewer hours helping with the housework and distance learning when their partners were at home. It is interesting, however, that although men who worked remotely or not at all did devote more time to domestic chores and child care, the increased time they spent at home did not seem to lead to a reallocation of couples’ roles in housework and child care. Finally, we find that working arrangements are linked to women’s feelings of uncertainty, with heterogeneous effects by level of education. |
| Keywords: | COVID-19, work arrangements, housework, childcare, distance learning |
| JEL: | J13 J16 J21 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2021-043&r= |
| By: | John Forth (Bayes Business School, City, University of London, UK); Nikolaos Theodoropoulos (University of Cyprus); Alex Bryson (University College London, UK) |
| Abstract: | Using matched employer-employee data for Britain, we examine ethnic wage differentials among full-time employees. We find substantial ethnic segregation across workplaces: around three-fifths of workplaces in Britain employ no ethnic minority workers. However, this workplace segregation does not contribute to the aggregate wage gap between ethnic minorities and white employees. Instead, most of the ethnic wage gap exists between observationally equivalent co-workers. Lower pay satisfaction and higher levels of skill mismatch among ethnic minority workers are consistent with discrimination in wage-setting on the part of employers. The use of job evaluation schemes within the workplace is shown to be associated with a smaller ethnic wage gap. |
| Keywords: | ethnic wage gap; workplace segregation; skill mismatch; pay satisfaction; job evaluation |
| JEL: | J16 J31 M52 M54 |
| Date: | 2021–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:qss:dqsswp:2125&r= |
| By: | Liepmann, Hannah.; Pignatti, Clemente. |
| Abstract: | We analyze for the first time the welfare effects of unemployment benefits (UBs) in a context of high infor- mality, exploiting matched administrative and survey data with individual-level information on UB receipt, formal and informal employment, wages and consumption. Using a difference-in- differences approach, we find that dismissal from a formal job causes a large drop in consumption, which is between three to six times larger than estimates for developed economies. This is generated by a permanent shift of UB re- cipients towards informal employment, where they earn substantially lower wages. We then exploit a kink in benefits and show that more generous UBs delay program exit through a substitution of formal with informal employment. However, the disincentive effects are small and short-lived. Because of the high insurance value and the low efficiency costs, welfare effects from increasing UBs are positive for a range of values of the coefficient of relative risk aversion. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:995141693302676&r= |
| By: | Tortia, Ermanno C. |
| Abstract: | This paper discusses the possibility of strong employment protection regimes (EPRs) in worker cooperatives (WCs), a unique organizational form in which employees coincide with members who hold control rights. Worker control is reported by several theoretical and empirical contributions to stabilize employment better than other proprietary forms. We leverage key theoretical insights from evolutionary theory and systems to discuss the possibility (benefits and critical elements) of constraining the dismissal of WC members to further strengthen employment stabilization and enforce member rights. Strong EPRs would be functional to meeting workers' needs for a decent life and job security. While stricter constraints on layoffs can cause short-term inefficiencies (e.g. preventing the dismissal of shirking workers), they also perform an insurance function against unemployment, favor the accumulation and conservation of firm specific human, relational and social capital and improve the equity of distributive patterns. It is also hypothesized that performance would increase in the medium to long run. Voluntary resignation, not involuntary dismissal would be the dominant mechanism allowing for the allocation of work to the most productive occupations. |
| Keywords: | Worker cooperatives; membership rights; dismissal; minimum wage; rules and routines; systems theory |
| JEL: | J31 J54 L2 L21 |
| Date: | 2021–08–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:109214&r= |
| By: | Jan Philipp Fritsche; Lea Steininger |
| Abstract: | Conditional on a contractionary monetary policy shock, the labor share of value added is expected to decrease in the basic New Keynesian model. By providing firm-level evidence, we are first to validate this proposition. Using local projections and high dimensional fixed effects, we show that a one standard deviation contractionary monetary policy shock decreases firms' labor share by 0.4 percent, on average. However, reactions are heterogeneous along two dimensions: The labor share is most informative to discriminate firms by their response in payroll expenses, firms' leverage is most informative to discriminate by their response in value added. We inform the policy debate on transmission and redistribution effects of monetary policy. |
| Keywords: | Monetary policy, firm heterogeneity, labor share, financial frictions, DSGE model validatio |
| JEL: | D22 D31 E23 E32 C52 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1967&r= |
| By: | Philippe Aghion; Antonin Bergeaud; Matthieu Lequien; Marc Melitz; Thomas Zuber |
| Abstract: | We decompose the “China shock” into two components that induce different adjustments for firms exposed to Chinese exports: a horizontal shock affecting firms selling goods that compete with similar imported Chinese goods, and a vertical shock affecting firms using inputs similar to the imported Chinese goods. Combining French accounting, customs, and patent information at the firm-level, we show that the horizontal shock is detrimental to firms’ sales, employment, and innovation. Moreover, this negative impact is concentrated on low-productivity firms. By contrast, we find a positive effect - although often not significant - of the vertical shock on firms’ sales, employment, and innovation. |
| JEL: | F14 F16 F6 O31 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29196&r= |
| By: | Hector Moreno (Paris School of Economics) |
| Abstract: | This paper examines the influence of parental and grandparental education in the transmission of human capital. A natural experimental set-up, from a regional conflict that occurred in 1926 is exploited to instrument years of schooling of the grandparents' generation whereas local labour market indicators at adolescence serve as an instrument for the education of the parents' generation. Using a nationally representative Mexican survey that gathers detailed information on three generations, the paper shows that accounting for endogeneity reveals significantly more inter-generational mobility rather than ignoring it. The paper also documents greater persistence of family background in the older pair of parent-child links, i.e. grandparent-parent, than in the younger pair, i.e. parent-grandchildren. Results show that the direct influence of parental education on the grandchildren's education is so dominant that the impact of grand-parental education fades away once accounting for parental education. |
| Keywords: | multigenerational, mobility, education, Mexico |
| JEL: | I21 I24 J62 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2021-588&r= |
| By: | Andersson, Fredrik W. (Statistics Sweden and Örebro University); Jordahl, Henrik (Örebro University); Kärnä, Anders (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Organizations, both non-profit and for-profit, needs to allocate labor for both production as well as internal administration. If this allocation is skewed towards internal administration, organizations, and especially non-profit organizations, might develop sclerosis over time with too much labor allocated to internal administration compared to production. Using detailed registry data on all individuals working at Swedish universities and colleges, we document a rapid increase in the number of qualified administrators, both in the number of employees and in total wages paid for these. This increase is not present in less qualified administration, and is mainly driven by an increase by a few professions such as communication and human resources. The increase does not lead to a significant reduction, or increase, in the time that researchers and teachers spend on administration. This in turn suggests that Swedish higher education over-allocates resources to high-skilled administration. |
| Keywords: | Organization theory; Sclerosis; Productivity Growth; Bureaucracy; Higher education |
| JEL: | L25 P16 |
| Date: | 2021–08–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1399&r= |
| By: | Benjamin Schoefer |
| Abstract: | I propose a financial channel of wage rigidity. In recessions, rather than propping up marginal (new hires’) costs of labor, rigid average wages squeeze cash flows, forcing firms to cut hiring due to financial constraints. Indeed, empirical cash flows and profits would turn acyclical if wages were only moderately more procyclical. I study this channel in a search and matching model with financial constraints and rigid wages among incumbent workers, while new hires’ wages are flexible. Individually, each feature generates no amplification. By contrast, their interaction can account for much of the empirical labor market fluctuations—breaking the neutrality of incumbents’ wages for hiring, and showing that financial amplification of business cycles requires wage rigidity. |
| JEL: | E2 G3 J01 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29201&r= |
| By: | Drydakis, Nick |
| Abstract: | Τhe study examines whether adverse working conditions for immigrants in Greece bear an association with deteriorated physical health and increased levels of depression during 2018 and 2019. Findings indicate that workers with no written contract of employment, receiving hourly wages lower than the national hourly minimum wages, and experiencing insults and/or threats in their present job experience worse physical health and increased levels of depression. The study found that the inexistence of workplace contracts, underpayment, and verbal abuse in the workplace may coexist. An increased risk of underpayment and verbal abuse reveals itself when workers do not have a contract of employment and vice versa. Immigrant workers without a job contract might experience a high degree of workplace precariousness and exclusion from health benefits and insurance. Immigrant workers receiving a wage lower than the corresponding minimum potentially do not secure a living income, resulting in unmet needs and low investments in health. Workplace abuse might correspond with vulnerability related to humiliating treatment. These conditions can negatively impact workers' physical health and foster depression. Policies should promote written employment contracts and ensure a mechanism for workers to register violations of fair practices. |
| Keywords: | Adverse Working Conditions,Physical Health,Depression,Immigrants,Refugees, Minimum Wages,Written Contracts of Employment,Threats in job,Workplace precariousness |
| JEL: | J81 O15 E24 I14 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:925&r= |
| By: | Drydakis, Nick |
| Abstract: | In Greece, given the precarious nature of the sex work industry, sex workers health and wellbeing is of concern. However, relevant research remains limited. This study examined whether sex workers' self-reported physical and mental health deteriorated across time points during the economic recession in Athens, Greece. The study focused on 13 areas where off-street and street-based sex work occured. Cross-sectional data was collected from the same areas in 2009 (i.e. before the economic recession began) and in 2013 and 2019 (i.e. at time points during the recession). Self-reported physical and mental health decreased in 2013 and in 2019 compared to 2009. A positive association was found between the country's gross domestic product and sex workers' self-reported physical and mental health. The opposite was found for annual aggregate unemployment. The determinants of better self-reported physical and mental health were sex workers' economic condition, Greek nationality, off-street sex work, and registered sex work status. The opposite was found for more years' involvement in sex work and drug consumption. Findings indicate the need for more inclusive health strategies, especially during periods of economic downturn when sex workers' physical/mental health is likely to decline. This is the first study to investigate the association between economic recession and sex workers' self-reported physical and mental health. |
| Keywords: | sex work,physical health,mental health,economic recession,drug consumption |
| JEL: | J81 G01 I10 I12 I18 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:924&r= |