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on Labour Economics |
| By: | Lacava, Chiara |
| Abstract: | I measure the effects of workers' mobility across regions of different productivity through the lens of a search and matching model with heterogeneous workers and firms estimated with administrative data. In an application to Italy, I find that reallocation of workers to the most productive region boosts productivity at the country level but amplifies differentials across regions. Employment rates decline as migrants foster job competition, and inequality between workers doubles in less productive areas since displacement is particularly severe for low-skill workers. Migration does affect mismatch: mobility favors co-location of agents with similar productivity but within-region rank correlation declines in the most productive region. I show that worker-firm complementarities in production account for 33% of the productivity gains. Place-based programs directed to firms, like incentives for hiring unemployed or creating high productivity jobs, raise employment rates and reduce the gaps in productivity across regions. In contrast, subsidies to attract high-skill workers in the South have limited effects. |
| Keywords: | cross-regional mobility,mismatch,search-matching,sorting,productivity differentials |
| JEL: | J61 J64 R13 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:icirwp:4421&r= |
| By: | Patrick Bennett |
| Abstract: | This paper examines how and why returning to education fosters recovery from negative employment shocks among high school dropouts. High school dropout remains a problem, particularly as employment is increasingly skilled over time. Exploiting a policy expanding a Norwegian vocational certification scheme in a triple difference framework, workers displaced post-expansion certify their skills at significantly higher rates relative to those displaced pre-expansion. Increases in certification post-expansion significantly reduce income losses after job loss. Certifying skills fosters recovery among early career displaced workers through the retention of relevant industry-specific human capital, which increases job stability over 20 years later. |
| Keywords: | job displacement, vocational education, unemployment |
| JEL: | J63 J65 I26 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9417&r= |
| By: | Åslund, Olof (IFAU - Institute for Evaluation of Labour Market and Education Policy); Bratu, Cristina (Aalto University); Lombardi, Stefano (VATT Institute for Economic Research); Thoresson, Anna (IFAU - Institute for Evaluation of Labour Market and Education Policy) |
| Abstract: | We study the role of firm productivity in explaining earnings disparities between immigrants and natives using population-wide matched employer-employee data from Sweden. We find substantial earnings returns to working in firms with higher persistent productivity, with greater gains for immigrants from non-Western countries. Moreover, the pass-through of within-firm productivity variation to earnings is stronger for immigrants in low-productive, immigrant-dense firms. But immigrant workers are underrepresented in high-productive firms and less likely to move up the productivity distribution. Thus, sorting into less productive firms decreases earnings in poor-performing immigrant groups that would gain the most from working in high-productive firms. |
| Keywords: | Firm productivity; Immigrant-native earnings gaps; Wage inequality |
| JEL: | J15 J31 J62 |
| Date: | 2021–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2021_018&r= |
| By: | Cairo, Sofie (Copenhagen Business School); Mahlstedt, Robert (University of Copenhagen) |
| Abstract: | We study how the transparency of welfare systems affects labor market outcomes of unemployed workers in a large-scale field experiment. Our low-cost information intervention uses a personalized online tool that informs benefit recipients about their personal risk of a benefit reduction when not complying with a work requirement. We find disparate effects reflecting individuals' job search status. Providing personalized information improves labor market outcomes by mitigating the pressure to accept unstable part-time jobs among active job seekers with a low sanction risk. Inactive persons with a high sanction risk leave welfare and rely on alternative income support more frequently. |
| Keywords: | unemployment, transfer programs, transparency, sanctions, uncertainty, work requirements, field experiments, information treatment |
| JEL: | J68 D83 C93 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14940&r= |
| By: | J. Carter Braxton; Kyle F. Herkenhoff; Jonathan L. Rothbaum; Lawrence Schmidt |
| Abstract: | For whom has earnings risk changed, and why? To answer these questions, we develop a filtering method that estimates parameters of an income process and recovers persistent and temporary earnings for every individual at every point in time. Our estimation flexibly allows for first and second moments of shocks to depend upon observables as well as spells of zero earnings (i.e., unemployment) and easily integrates into theoretical models. We apply our filter to a unique linkage of 23.5m SSA-CPS records. We first demonstrate that our earnings-based filter successfully captures observable shocks in the SSA-CPS data, such as job switching and layoffs. We then show that despite a decline in overall earnings risk since the 1980s, persistent earnings risk has risen for both employed and unemployed workers, while temporary earnings risk declined. Furthermore, the size of persistent earnings losses associated with full year unemployment has increased by 50%. Using geography, education, and occupation information in the SSA-CPS records, we refute hypotheses related to declining employment prospects among routine and low-skill workers as well as spatial theories related to the decline of the Rust-Belt. We show that rising persistent earnings risk is concentrated among high-skill workers and related to technology adoption. Lastly, we find that rising persistent earnings risk while employed (unemployed) leads to welfare losses equivalent to 1.8% (0.7%) of lifetime consumption, and larger persistent earnings losses while unemployed lead to a 3.3% welfare loss. |
| JEL: | E24 J3 J6 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29567&r= |
| By: | Salvanes, Kjell G. (Dept. of Economics, Norwegian School of Economics and Business Administration); Willage, Barton (Dept. of Economics, Norwegian School of Economics and Business Administration); Willén, Alexander (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | Adverse economic shocks occur frequently and may cause individuals to reevaluate key life decisions in ways that have lasting consequences for themselves and the broader economy. These life decisions are fundamentally tied to specific periods of an individual’s career, and economic shocks may therefore have substantially different impacts on individuals – and the broader economy - depending on when they occur. We exploit mass layoffs and establishment closures to examine the impact of adverse shocks across the life cycle on labor market outcomes and major life decisions: human capital investment, mobility, family structure, and retirement. Our results reveal substantial heterogeneity on labor market effects and life decisions in response to economic shocks across the life cycle. Individuals at the beginning of their careers invest in human capital and relocate to new local labor markets, individuals in the middle of their careers reduce fertility and adjust family formation decisions, and individuals at the end of their careers permanently exit the workforce and retire. As a consequence of the differential interactions between economic shocks and life decisions, the very long-term career implications of labor shocks vary considerably depending on when the shock occurs. We also document important heterogeneity across genders and education levels, both with respect to the immediate impact as well as the sum total of all these effects in the very long-term. We conclude that effects of adverse labor shocks are both more varied and more extensive than has previously been recognized, and that focusing on average effects among workers across the life cycle misses a great deal. |
| Keywords: | Labor Supply; Human Capital; Education; Fertility; Family Formation; Mobility; Retirement; Disability; Economic Shocks; Job Displacement |
| JEL: | I20 J63 |
| Date: | 2021–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2021_021&r= |
| By: | Elsby, Michael W. L. (University of Edinburgh); Smith, Jennifer C. (University of Warwick, CAGE, Migration Advisory Committee); Wadsworth, Jonathan (Royal Holloway University of London, Centre for Economic Performance at the LSE, CReAM at UCL and IZA Bonn) |
| Abstract: | This paper examines the role of population flows on labour market dynamics across immigrant and native-born populations in the United Kingdom. Population flows are large, and cyclical, driven first by the maturation of baby boom cohorts in the 1980s, and latterly by immigration in the 2000s. New measures of labour market flows by migrant status uncover both the flow origins of disparities in the levels and cyclicalities of immigrant and native labour market outcomes, as well as their more recent convergence. A novel dynamic accounting framework reveals that population flows have played a nontrivial role in the volatility of labour markets among both the UK-born and, especially, immigrants. |
| Keywords: | Immigration, worker flows, labour market dynamics JEL Classification: E24, J6 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:593&r= |
| By: | Martin Popp |
| Abstract: | Economists increasingly refer to monopsony power to reconcile the absence of negative employment effects of minimum wages with theory. However, systematic evidence for the monopsony argument is scarce. In this paper, I perform a comprehensive test of monopsony theory by using labor market concentration as a proxy for monopsony power. Labor market concentration turns out substantial in Germany. Absent wage floors, a 10 percent increase in labor market concentration makes firms reduce wages by 0.5 percent and employment by 1.6 percent, reflecting monopsonistic exploitation. In line with perfect competition, sectoral minimum wages lead to negative employment effects in slightly concentrated labor markets. This effect weakens with increasing concentration and, ultimately, becomes positive in highly concentrated or monopsonistic markets. Overall, the results lend empirical support to the monopsony argument, implying that conventional minimum wage effects on employment conceal heterogeneity across market forms. |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2111.13692&r= |
| By: | Marta Silva (Banco de Portugal); Jose Garcia-Louzao (Bank of Lithuania) |
| Abstract: | The use of social contacts in the labor market is widespread. This paper investigates the impact of personal connections on hiring probabilities and re-employment outcomes of displaced workers in Portugal. We rely on rich matched employer-employee data to define personal connections that arise from interactions at the workplace. Our empirical strategy exploits firm closures to select workers who are exogenously forced to search for a new job and leverages variation across displaced workers with direct connections to prospective employers. The hiring analysis indicates that displaced workers with a direct link to a firm through a former coworker are roughly three times more likely to be hired compared to workers displaced from the same closing event who lack such a tie. However, we find that the effect varies according to the type of connection as well as firms’ similarity. Finally, we show that successful displaced workers with a connection in the hiring firm have higher entry-level wages and enjoy greater job security although these advantages disappear over time. |
| Keywords: | Job Displacement, Coworker Networks, Re-Employment |
| JEL: | J23 J63 L14 |
| Date: | 2021–11–23 |
| URL: | http://d.repec.org/n?u=RePEc:lie:wpaper:95&r= |
| By: | Štěpán Mikula (Department of Economics, Faculty of Economics and Administration, Masaryk University); Josef Montag (Department of Economics, Faculty of Law, Charles University) |
| Abstract: | This paper tests for discriminatory treatment of the Roma minority by public officials in the Czech Republic. Our focus is on public servants at local job centers whose job is to advise unemployed individuals and process applications for unemployment benefit. Our experimental design facilitates testing for the presence of each of two key (but intertwined) drivers of discrimination: ethnic animus and socioeconomic status prejudice. We find substantial evidence for the presence of discrimination based on both of these sources. Since Roma tend to have lower socioeconomic status, the two sources of discrimination compound for them. |
| Keywords: | Discrimination, Roma, ethnicity, socioeconomic status, public services, social security, field experiment. |
| JEL: | J15 D73 H55 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:mub:wpaper:2022-01&r= |
| By: | Giulia Bettin (Dipartimento di Scienze Economiche e Sociali - Universita' Politecnica delle Marche); Isabella Giorgetti (Dipartimento di Scienze Economiche e Sociali - Universita' Politecnica delle Marche); Stefano Staffolani (Dipartimento di Scienze Economiche e Sociali - Universita' Politecnica delle Marche) |
| Abstract: | We study the gendered impact of the nationwide lockdown (March-May 2020) due to the Covid-19 pandemic on the Italian labour market. By using Labour Force Survey data on the first three quarters of 2020, we define a Triple Difference-in-Differences (DDD) strategy by exploiting the exact timing of the lockdown implementation. We found that in non essential sectors (treated group) the lockdown enlarged pre-existent gender inequalities in the extensive margin of labour force participation: the probability of job loss got 0.7 p.p. higher among female workers compared to their male counterparts, and this difference was mainly detected during the reopening period rather than in the strict lockdown phase. The probability to benefit from the wage guarantee fund (CIG) was also higher for female compared to male treated workers (3.6 p.p.), both during the lockdown and in the reopening phase. This is a great change with respect to the past, when men had always been more likely to benefit from this measure due to the fact that CIG application was traditionally restricted to male-dominated sectors of employment. On the other hand, no significant gender differences emerged among the treated group either on the intensive margin, in terms of working hours, or in terms of remote working, at least in the medium-term. |
| Keywords: | Covid-19, lockdown, labour market, gender gap, difference-indifferences |
| JEL: | C21 D04 J16 J21 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wpaper:460&r= |
| By: | Melanie Krause (Department of Economics, University of Hamburg); Sebastian Kripfganz (Department of Economics, University of Exeter) |
| Abstract: | The growth trajectory of a region is known to be influenced by the economic circumstances of other regions in its proximity. While proximity is often understood in a geographic sense, we consider commuting as a channel for cross-regional economic dependencies. Commuters, who spend a substantial portion of their income in a different place from where they earn it, connect peripheral regions to economic centers. In contrast to geographic measures, commuter flows are inherently asymmetric and heterogeneous, as are the economic dependencies among regions. We estimate a time-space dynamic panel model with German county-level data, and demonstrate a considerable variation in the distribution of shock responses which is hidden by the traditional focus on average marginal effects. In counterfactual experiments, the local spatial multipliers differ substantially depending on the nature of the shock or policy intervention and the assumed network structure, with implications for the growth convergence process. |
| Keywords: | regional convergence, commuting, spatial weight matrix, shock propagation, time-space dynamic panel data model |
| JEL: | R12 C23 J61 O18 |
| Date: | 2022–01–05 |
| URL: | http://d.repec.org/n?u=RePEc:exe:wpaper:2201&r= |
| By: | René Böheim; Thomas Horvath; Thomas Leoni; Martin Spielauer |
| Abstract: | Using a highly stylized dynamic microsimulation model, we project the labor force of the United States up to the year 2060 and contrast these projections with projections for Germany to assess differential effects on outcomes The projections are consistent with the U S Census Bureau’s and Eurostat’s demographic projections. Our modeling approach allows to show and quantify how policy changes the future size of the labor force, which we assess with a series of what-if scenarios. Both the US and Germany are expected to undergo demographic aging, but their demographic fundamentals differ starkly. This has strong implications for their labor force developments. According to our microsimulation, the US labor force will, despite population aging, increase by 16.2 percent in the age groups 15 to 74 (corresponding to 25.2 million workers) between 2020 and 2060, while Germany will experience a decline by 10.7 percent (4.4 million workers). In these baseline projections, improvements in the education structure will add about two million persons to the US labor force and about half a million persons to the German labor force by 2060. In the what-if scenarios, we examine the implications of improvements in the educational structure of the population and of policies which address the health impediments for labor force participation. Of the educational scenarios that we evaluate, increasing the number of persons who achieve more than lower education has the strongest positive impact on labor force participation, relative to the number of additional years of schooling implied by the various scenarios. Shifting people from intermediate to higher education levels also increases labor force participation in higher age groups, however, this is partially offset by lock in effects at younger ages. Our projections highlight that improvements in the labor market integration of people with health limitations provide a particularly promising avenue to increase labor force participation rates and thus help to address the challenges posed by demographic aging. If the health gap in participation rates in the United States were similar to that currently observed in Sweden, the labor force in 2060 would be larger by about 14.9 million persons. |
| JEL: | C5 J11 J21 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29534&r= |
| By: | Bonhomme, Stéphane (University of Chicago); Holzheu, Kerstin (Sciences Po); Lamadon, Thibaut (University of Chicago); Manresa, Elena (New York University); Mogstad, Magne (IFAU - Institute for Evaluation of Labour Market and Education Policy); Setzler, Bradley (University of Chicago) |
| Abstract: | Many studies use matched employer-employee data to estimate a statistical model of earnings determination where log-earnings are expressed as the sum of worker effects, firm effects, covariates, and idiosyncratic error terms. Estimates based on this model have produced two influential yet controversial conclusions. First, firm effects typically explain around 20% of the variance of log-earnings, pointing to the importance of firm-specific wage-setting for earnings inequality. Second, the correlation between firm and worker effects is often small and sometimes negative, indicating little if any sorting of high-wage workers to high-paying firms. The objective of this paper is to assess the sensitivity of these conclusions to the biases that arise because of limited mobility of workers across firms. We use employer-employee data from the US and several European countries while taking advantage of both fixed-effects and random-effects methods for bias-correction. We find that limited mobility bias is severe and that bias-correction is important. Once one corrects for limited mobility bias, firm effects dispersion matters less for earnings inequality and worker sorting becomes always positive and typically strong. |
| Keywords: | earnings inequality; firm effects; worker sorting; bias correction; fixed effects; random effects; matched employer employee data |
| JEL: | C23 J31 J62 |
| Date: | 2021–12–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2021_020&r= |
| By: | Marika Cabral; Marcus Dillender |
| Abstract: | While a growing body of evidence documents large gender disparities in health care and related social insurance programs, little is known about what drives these disparities. We leverage administrative data and random assignment of doctors to patients inherent within the workers’ compensation insurance claim dispute resolution process to study the impact of gender match between doctors and patients on medical evaluations and subsequent social insurance benefits received. Compared to differences among their male patient counterparts, female patients randomly assigned a female doctor rather than a male doctor are 5.0% more likely to be evaluated as disabled and receive 8.5% more subsequent cash benefits on average. There is no analogous gender-match effect for male patients. The magnitude of these effects implies that having female doctors evaluate patients entirely offsets the observed gender gap in the likelihood of being evaluated as disabled when male doctors evaluate patients. We explore mechanisms through further analysis of the administrative data and complementary survey evidence. In addition, we present broader evidence on gender gaps in workers' compensation insurance and gender homophily in patients' selections of doctors in settings where patients have choice. Combining this evidence, we conduct policy counterfactuals illustrating how policies increasing gender diversity among doctors or increasing gender homophily in patient-doctor matches may impact gender gaps in evaluated disability. Our findings indicate that policies increasing the share of female patients evaluated by female doctors may substantially shrink gender gaps in medical evaluations and associated outcomes. |
| JEL: | I11 I14 J16 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29541&r= |
| By: | Andrea Beller (University of Illinois at Urbana-Champaign); Shoshana Grossbard (San Diego State University); Ana Fava (Federal University of ABC); Marouane Idmansour (Ecole Nationale de Commerce et de Gestion) |
| Abstract: | In the period 1960-1980 Gary Becker founded workshops for graduate students in economics, first the Labor Workshop at Columbia University and then the Applications of Economics Workshop at the University of Chicago. The workshops fostered novel applications of economics dealing with labor, consumption, household production, household formation, human capital, crime and politics. We document the high proportion of women in these workshops, comparing (1) Columbia to Chicago, (2) the Columbia Labor Workshop over various periods, under the leadership of Becker, Mincer, or both, and (3) the Becker-founded workshops to other workshops at Columbia. We estimate regressions of the odds that a PhD was awarded to a woman for students at Columbia or Chicago who graduated between 1960 and 1980, as a function of whether and when the student participated in a Becker-founded workshop. Tentative explanations are offered for inter-university and period variation in odds that graduates were women. In addition, we compare gender ratios of graduates from Columbia and Chicago, where Becker-founded workshops were available during all or part of the period, with that of students at universities located nearby, NYU and Northwestern, where Becker did not found workshops. |
| Keywords: | graduate education, graduation rates, gender ratios in economics |
| JEL: | A23 A14 J16 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2021-057&r= |
| By: | Maja Hoffmann; Clive L. Spash |
| Abstract: | Climate change mitigation – reducing emissions to zero and substituting fossil fuels through renewable energy within a maximum of two decades – entails major consequences for modern industrial societies and economies. Industrial societies are structurally centred and dependent on work, however, the implications for work are insufficiently studied. We conduct an empirical analysis of the impacts of climate mitigation on work across all sectors of the Austrian national economy. Using a mixed methods approach, we investigate all NACE-classified branches of economic activity, the respective number of persons employed, CO2 emissions, fossil fuel use, renewable energy potential, and the societal importance of work. We find that the impacts of climate mitigation on work are far more substantial than the literature usually suggests. Required are significant reductions of work across all sectors, and its structural reorganisation based on an altered energy basis. Yet, potential for deployment of renewable energy technologies is currently not given for many fields of work that are dependent on fossil fuels. While the category of essential work further indicates the kinds of work that may be prioritised in transformation processes, particularly problematic are those deemed both essential for society and incompatible with climate mitigation. The study provides an initial empirical basis for substantiated differentiation of kinds of work regarding these key aspects of climate change mitigation and structural transformation. It also points to the need for institutions to address these challenges and the problematic ways in which work is organised and held sacrosanct in modern society. |
| Keywords: | climate change mitigation, work, employment,fossil fuels, renewable energy, green jobs, just transition, degrowth, sectoral analysis, structural transformation |
| JEL: | J01 L00 O44 P18 P48 Q40 Q54 Q57 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwsre:sre-disc-2021_10&r= |
| By: | Deniz Dutz; Ingrid Huitfeldt; Santiago Lacouture; Magne Mogstad; Alexander Torgovitsky; Winnie van Dijk |
| Abstract: | We evaluate how nonresponse affects conclusions drawn from survey data and consider how researchers can reliably test and correct for nonresponse bias. To do so, we examine a survey on labor market conditions during the COVID-19 pandemic that used randomly assigned financial incentives to encourage participation. We link the survey data to administrative data sources, allowing us to observe a ground truth for participants and nonparticipants. We find evidence of large nonresponse bias, even after correcting for observable differences between participants and nonparticipants. We apply a range of existing methods that account for nonresponse bias due to unobserved differences, including worst-case bounds, bounds that incorporate monotonicity assumptions, and approaches based on parametric and nonparametric selection models. These methods produce bounds (or point estimates) that are either too wide to be useful or far from the ground truth. We show how these shortcomings can be addressed by modeling how nonparticipation can be both active (declining to participate) and passive (not seeing the survey invitation). The model makes use of variation from the randomly assigned financial incentives, as well as the timing of reminder emails. Applying the model to our data produces bounds (or point estimates) that are narrower and closer to the ground truth than the other methods. |
| JEL: | C0 C01 C1 C36 C42 C83 H0 J0 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29549&r= |
| By: | Rebecca Diamond; Enrico Moretti |
| Abstract: | Income differences across US cities are well documented, but little is known about the level of standard of living in each city—defined as the amount of market-based consumption that residents are able to afford. In this paper we provide estimates of the standard of living by commuting zone for households in a given income or education group, and we study how they relate to local cost of living. Using a novel dataset, we observe debit and credit card transactions, check and ACH payments, and cash withdrawals of 5% of US households in 2014 and use it to measure mean consumption expenditures by commuting zone and income group. To measure local prices, we build income-specific consumer price indices by commuting zone. We uncover vast geographical differences in material standard of living for a given income level. Low-income residents in the most affordable commuting zone enjoy a level of consumption that is 74% higher than that of low-income residents in the most expensive commuting zone. We then endogenize income and estimate the standard of living that low-skill and high-skill households can expect in each US commuting zone, accounting for geographical variation in both costs of living and expected income. We find that for college graduates, there is essentially no relationship between consumption and cost of living, suggesting that college graduates living in cities with high costs of living—including the most expensive coastal cities—enjoy a standard of living on average similar to college graduates with the same observable characteristics living in cities with low cost of living—including the least expensive Rust Belt cities. By contrast, we find a significant negative relationship between consumption and cost of living for high school graduates and high school drop-outs, indicating that expensive cities offer a lower standard of living than more affordable cities. The differences are quantitatively large: High school drop-outs moving from the most to the least affordable commuting zone would experience a 26.9% decline in consumption. |
| JEL: | F1 J00 R00 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29533&r= |
| By: | Abbritti, Mirko; Consolo, Agostino; Weber, Sebastian |
| Abstract: | Standard New Keynesian (NK) models feature an optimal inflation target well below two percent, limited welfare losses from business cycle fluctuations and long-term monetary neutrality. We develop a NK framework with labour market frictions, endogenous productivity and downward wage rigidity (DWR) which challenges these results. The model features a non-vertical long-run Phillips curve between inflation and unemployment and a trade-off between price distortions and output hysteresis that change the welfare-maximizing inflation level. For a plausible set of parameters, the optimal inflation target is in excess of two percent, a target value commonly used across central banks. Deviations from the optimal target carry welfare costs multiple times higher than in traditional NK models. The main reason is that endogenous growth and DWR generate asymmetric and hysteresis effects on unemployment and output. Price level targeting or a Taylor-rule responding to the unemployment rate can handle better the asymmetric and hysteresis effects in our model and deliver significant welfare gains. Our results are robust to the inclusion of the effective lower bound on the monetary policy interest rate. JEL Classification: E24, E3, E5, O41, J64 |
| Keywords: | downward wage rigidity, endogenous growth, monetary policy, monetary policy invariance hypothesis, optimal inflation target, zero lower bound |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20212635&r= |
| By: | Alfonso Expósito ((University of Málaga, Spain) ORCID number: 0000-0002-9248-4879); Amparo Sanchis-Llopis ((University of Valencia and ERICES, Spain) ORCID number: 0000-0002-0872-7859); Juan A. Sanchis-Llopis ((University of Valencia and ERICES, Spain) ORCID number: 0000-0001-9664-4668) |
| Abstract: | Using a sample of 1,405 Spanish businesses, this paper explores the role of manager gender in SMEs’ decisions to get involved in exporting and importing activities. We borrow insights from international entrepreneurship theories and feminist theories to set testable hypotheses regarding how managerial gender and entrepreneurial orientation (proactiveness, risk-taking and innovativeness) may influence SMEs export and import propensities. Using a bivariate probit model and controlling for other managerial and business characteristics, results indicate that there are not significant differences in exporting propensities between male- and female-led businesses. However, female-led SMEs show a lower importing propensity, as compared to male-led counterparts. In addition, the three dimensions of entrepreneurial orientation (proactiveness, risk-taking and innovativeness) are important drivers for participating in overseas markets, and do not depend upon the manager gender. The role of managers gender in SMEs importing activities has not been investigated so far, and this is the main contribution of our research. |
| Keywords: | Manager gender; entrepreneurial orientation; small and medium-enterprises; exporting and importing; bivariate probit model. |
| JEL: | C35 J16 F14 M21 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:2115&r= |