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on Labour Economics |
| By: | Carrillo-Tudela, Carlos (University of Essex); Clymo, Alex (University of Essex); Coles, Melvyn (University of Essex) |
| Abstract: | This paper develops and estimates a fully microfounded equilibrium business cycle model of the US labor market with aggregate productivity shocks. Those microfoundations are consistent with evidence regarding the underlying distribution of firm growth rates across firms [by age and size] and, when aggregated, are consistent with macro-evidence regarding gross job creation and job destruction flows over the cycle. By additionally incorporating on-the-job search, we systematically characterise the stochastic relationships between aggregate job creation and job destruction flows across firms, gross hire and quit flows [churning] by workers across firms, as well as the persistence and volatility of unemployment and worker job finding rates over the cycle. |
| Keywords: | business cycle, firm dynamics, job search |
| JEL: | E24 E32 J62 J63 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14869&r= |
| By: | Holzer, Harry J. (Georgetown University); Hubbard, Glenn (Columbia University); Strain, Michael R. (American Enterprise Institute for Public Policy Research) |
| Abstract: | The generosity of Unemployment Insurance (UI) benefits was expanded during the pandemic (FPUC), along with the groups of workers eligible for benefits (PUA). These two programs were set to expire in September 2021, but 18 states opted out of both in June 2021. Using Current Population Survey data, we present difference-in-difference and event study estimates that the flow of unemployed workers into employment increased by over one half following early termination. We construct a counterfactual scenario that implies the national unemployment rate in each of July and August would have been around 0.3 percentage point lower than they were, and the employment-population ratio would have been around 0.1-0.2 percentage point higher than it was, had all states ended FPUC and PUA in June. Expanded eligibility and generosity of UI may have both slowed transitions from unemployment to employment. We also present some suggestive evidence that households with relatively high confidence in their ability to meet expenses may have been less sensitive to the termination of expanded benefits. Finally, we present evidence that early termination reduced the share of households that had no difficulty meeting expenses by five percent. The welfare implications of the early termination of FPUC and PUA are therefore ambiguous. |
| Keywords: | unemployment insurance, FPUC, PUA, unemployment rate |
| JEL: | J08 J65 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14927&r= |
| By: | Basu, Arnab K. (Cornell University); Chau, Nancy H. (Cornell University); Park, Brian (Cornell University) |
| Abstract: | Canonical models of migration feature border enforcement as a strategy to contain undocumented immigration by effectively exacting a mobility cost. This paper revisits the role of border enforcement policy in a task-based model of the labor market where employers simultaneously hire circular migrants to take temporary tasks at low wages, in addition to permanent and native workers who perform complementary tasks at the efficiency wage. We show that stricter border enforcement is effectively a tax on temporary employment, and as such it incentivizes the reallocation of work along the task spectrum. Employers’ dependence on low-wage transient work force diminishes, while more migrants prefer permanent migration, with labor market tightness consequences that favor both native and migrant workers. We explore the empirical implication of this finding, by investigating the pattern of spousal reunion among Mexican agricultural workers in the United States subsequent to major border enforcement reforms in the 1990’s. |
| Keywords: | labor shortages, family migration, circular migration, border enforcement |
| JEL: | F22 J61 J68 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14867&r= |
| By: | Kjell G. Salvanes; Barton Willage; Alexander L.P. Willén |
| 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 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 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 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 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9491&r= |
| By: | Bagger, Jesper (Royal Holloway, University of London); Moen, Espen R. (Norwegian Business School (BI)); Vejlin, Rune Majlund (Aarhus University) |
| Abstract: | We analyse the deadweight losses of tax-induced labor misallocation in an equilibrium model of the labour market where workers search to climb a job ladder and firms post vacancies. Workers differ in abilities. Jobs differ in productivities and amenities. A planner uses affine tax functions to finance lump-sum transfers to all workers and unemployment benefits. The competitive search equilibrium maximizes after-tax utility subject to resource constraints and the tax policy. A higher tax rate distorts search effort, job ranking and vacancy creation. Distortions vary on the job ladder, but always result in deadweight losses. We calibrate the model using matched employer-employee data from Denmark. The marginal deadweight loss is 33 percent of the tax base, and primarily arise from distorted search effort and vacancy creation. Steeply rising deadweight losses from distorted vacancy creation imply that the deadweight loss in the calibrated economy exceeds those incurred by very inequality averse social planners. |
| Keywords: | vacancy creation, job ranking, job search, labour allocation, redistribution, optimal taxation, deadweight loss, amenities, matched employer-employee data |
| JEL: | H21 H30 J63 J64 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14865&r= |
| By: | Nikolova, Elena; Polansky, Jakub |
| Abstract: | Although a large body of literature has argued that motherhood has a profound and long-lasting negative effect on the employment and earnings of women, there is little evidence focusing on the post-communist region. This paper exploits the latest round of the EBRD-World Bank Life in Transition Survey (LiTS) and of the Mongolian National Statistics Office Household Socio- Economic Survey (HSES) to examine the correlation between the presence of children of different age categories in a family and female employment in Mongolia in 2016. We examine the availability of childcare, social norms and attitudes towards women, as well as household decision-making as potential explanations. We find that small children decrease the probability of female employment relative to women with no small children. In particular, women with two children aged one to six years are 21.5 percentage points less likely to be employed. Our results also suggest that cultural biases against women may be - at least partially - responsible for the low female employment levels which we uncovered. These results are unlikely to be driven by omitted variable bias. |
| Keywords: | children,female employment,Mongolia,women |
| JEL: | J16 J13 J20 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1015&r= |
| By: | Wikle, Jocelyn (Brigham Young University); Wilson, Riley (Brigham Young University) |
| Abstract: | We explore how access to Head Start impacts maternal labor supply. By relaxing child care constraints, public preschool options like Head Start might lead mothers to reallocate time between employment, child care, and other activities. Using the 1990s enrollment and funding expansions and the 2002 Head Start Impact Study randomized control trial, we show that Head Start increases short-run employment and wage earnings of single mothers. The increase in labor supply does not appear to reduce quality parent-child interactions. Viewing Head Start as a bundle of family-level treatments can shed new light on the impacts of the program beyond children. |
| Keywords: | Head Start, child care subsidies, maternal labor supply |
| JEL: | J13 J22 H4 I28 H52 I38 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14880&r= |
| By: | Max Deter; Martin Lange |
| Abstract: | The empirical literature is inconclusive about whether a country’s democratization goes hand in hand with a reallocation of economic resources. With newly available individual-level data of former residents of the socialist German Democratic Republic (GDR), we analyse how supporters and opponents of the socialist system performed within the market-based democracy of West Germany after reunification. Protesters, those who helped to overthrow the socialist regime in the Peaceful Revolution show higher life satisfaction and better labor market outcomes in the new economic system. Former members of the ruling socialist party and employees in state-supervised sectors become substantially less satisfied. These results do not seem to be driven by individual reactions to the transition, but rather by the removal of discriminatory practices in the GDR. Additional results indicate that conformism in the GDR also explains political preferences over the almost three decades after the reunification of Germany. |
| Keywords: | East Germany, state socialism, transition, labor market, life satisfaction |
| JEL: | H10 N44 P20 D31 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9492&r= |
| By: | Gabriela López Noria |
| Abstract: | This paper assesses the effects of trade and technological change on Mexico''s labor market between 1994 and 2019. The implications of the exposure of local labor markets to greater trade integration under NAFTA and to greater competition from China in the US market are analyzed, as are the consequences of the exposure of local labor markets to automation. The main results show that trade integration under NAFTA promoted employment in Mexico for all demographic groups, especially for women and the less educated. In addition, it is also found that trade integration reduced unemployment and the non-participation rate. China''s competition in the US market had the opposite effects on these indicators. Finally, the analysis by sector (manufacturing and non-manufacturing) suggests that those markets susceptible to automation experienced a pattern of labor polarization. |
| JEL: | F13 F16 O33 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdm:wpaper:2021-22&r= |
| By: | Samuel Bazzi; Lisa Cameron; Simone G. Schaner; Firman Witoelar |
| Abstract: | Job seekers often face substantial information frictions related to potential job quality. This is especially true in international labor markets, where intermediaries match prospective migrants with employers abroad. We conducted a randomized trial in Indonesia to explore how information about intermediary quality shapes migration choices and outcomes. Information reduces the migration rate, lowering use of low-quality intermediaries. However, workers who migrate receive better pre-departure preparation and have higher-quality job experiences abroad, despite no change in occupation or destination. Information does not change intentions to migrate or beliefs about the return to migration or intermediary quality. Nor does selection explain the improved outcomes for workers who choose to migrate with the information. Together, our findings are consistent with an increase in the option value of search: with better ability to differentiate offer quality, workers become choosier and ultimately have better migration experiences. This offers a new perspective on the importance of information and matching frictions in global labor markets. |
| JEL: | D83 F22 L15 O15 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29588&r= |
| By: | David G. Blanchflower; Alex Bryson |
| Abstract: | A growing literature identifies associations between subjective and biometric indicators of wellbeing. These associations, together with the ability of subjective wellbeing (SWB) metrics to predict health and behavioral outcomes, have spawned increasing interest in SWB as an important concept in its own right. However, some social scientists continue to question the usefulness of SWB metrics. We contribute to this literature in three ways. First, we introduce a biometric measure of wellbeing – pulse – which has been largely overlooked. Using nationally representative data on 165,000 individuals from the Health Survey for England (HSE) and Scottish Health Surveys (SHeS) we show that its correlates are similar in a number of ways to those for SWB, and that it is highly correlated with SWB metrics, as well as self-assessed health. Second, we examine the determinants of pulse rates in mid-life (age 42) among the 9,000 members of the National Child Development Study (NCDS), a birth cohort born in a single week in 1958 in Britain. Third, we track the impact of pulse measured in mid-life (age 42) on health and labor market outcomes at age 50 in 2008 and age 55 in 2013. The probability of working at age 55 is negatively impacted by pulse rate a decade earlier. The pulse rate has an impact over and above chronic pain measured at age 42. General health at 55 is lower the higher the pulse rate at age 42, while those with higher pulse rates at 42 also express lower life satisfaction and more pessimism about the future at age 50. Taken together, these results suggest social scientists can learn a great deal by adding pulse rates to the metrics they use when evaluating people’s wellbeing. |
| JEL: | I10 J1 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29587&r= |
| By: | Giorgio Chiovelli; Stelios Michalopoulos; Elias Papaioannou; Sandra Sequeira |
| Abstract: | We examine the impact of conflict-driven displacement on human capital. We focus on the Mozambican civil war (1977–1992), during which more than four million civilians fled to the countryside, cities, and refugee camps and settlements in neighboring countries. We leverage the full post-war census to compare siblings separated during the war, using those who stayed behind as a counterfactual to one’s displacement path. Uprooted children register higher investments in education. Second, we quantify the relative importance of place-based and displacement effects. The latter increases education and decreases attachment to agriculture by the same rate as being exposed to an environment approximately one standard deviation more developed than one’s birthplace. Third, we conduct a survey in Nampula, whose population doubled during the civil war. Those who fled to the city have significantly higher education than their siblings who remained in the countryside and they converged to the levels of schooling of non-mover urban-born individuals. However, those displaced exhibit significantly lower social/civic capital and have worse mental health, even three decades after the war. These findings reveal that displacement shocks can trigger human capital investments, breaking links with subsistence agriculture, but at the cost of long-lasting, social, and psychological traumas. |
| JEL: | J10 J15 J20 O1 O15 O18 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29589&r= |
| By: | Bhalotra, Sonia (University of Warwick, CEPR, IEA, CAGE and IZA); Brito, Emilia (Brown University, Department of Economics); Clarke, Damian (University of Chile, Department of Economics, MIPP and IZA); Larroulet, Pilar (Pontificia Universidad Católica de Chile, Instituto de Sociología); Pino, Francisco (University of Chile, Department of Economics and IZA) |
| Abstract: | We leverage staggered implementation of lockdown across Chile’s 346 municipalities, identifying dynamic impacts on domestic violence (DV). Using administrative data, we find lockdown imposition increases indicators of DV-related distress, while decreasing DV reports to the police. We identify male job loss as a mechanism driving distress, and female job loss as driving decreased reporting. Stimulus payments to poor households act on both margins, their impacts partially differentiated by lockdown status. Once lockdown is lifted, police reports surge but we see a ratchet effect in distress. Our findings accentuate the controversy around welfare impacts of lockdown mandates. |
| Keywords: | domestic violence ; social safety net ; public health ; COVID-19 JEL Classification: J12 ; I38 ; H53 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1392&r= |
| By: | Cooke, Fang Lee; Wood, Geoffrey |
| Abstract: | This chapter examines contemporary labor-management relations in autocratic regimes, drawing on two sets of countries, namely transitional peripheral economies in Central Asia (Uzbekistan and Turkmenistan) and hierarchical market economies in Latin America (Colombia and Honduras), for analysis. We discuss the political economy, work, and labor relations of these countries, highlighting the role of the state, business, and international non-government organizations. We also take into account the impact of large-scale (often in millions) migration of workers both internally within the country and cross-border. It is important to note that, just as there are different types of democratic systems, there are also different types of autocratic regimes with distinct political, economic, and social policy orientations, and this directly impacts the nature of labor relations. Under Latin American right-wing authoritarianism, a primary focus is on supporting a relatively small property-owning elite, and any countervailing worker power is seen as a direct attack on the latter. Even if workers have employment rights under the law, this zero-sum game view frequently results in extra-legal attacks on worker activists and their representatives, making union organization an extremely dangerous business. In contrast, the Central Asian autocracies, business elites are tied up within extended clan networks. Especially within Uzbekistan, a much closer emphasis has been placed on the provision of a critical mass of jobs as a means of buying political stability. Unions have been afforded a place in the system both for historical reasons and as proof of an ability to create a critical mass of decent work; at the same time, there is little room for union autonomy. |
| Keywords: | autocratic regimes,labor-management relations,Central Asia,Latin America,trade unions,international labor organisations |
| JEL: | E24 E26 F23 F66 J08 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1014&r= |
| By: | Gustavo Leyva; Carlos Urrutia |
| Abstract: | We document the evolution of labor markets of five Latin American countries during the COVID-19 pandemic, with emphasis on informal employment. We show, for most countries, a slump in aggregate employment, mirrored by a fall in labor participation, and a decline in the informality rate. The latter is unprecedented since informality used to cushion the decline in overall employment in previous recessions. Using a business cycle model with a rich labor market structure, we recover the shocks that rationalize the pandemic recession, showing that labor supply shocks and productivity shocks to the informal sector are essential to account for the employment and output loss and for the decline in the informality rate. |
| JEL: | E24 E32 F44 J65 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdm:wpaper:2021-21&r= |
| By: | Bhalotra, Sonia (Department of Economics, University of Warwick, CEPR, IEA, IZA, CAGE); Clarke, Damian (Department of Economics, University of Chile and IZA); Mühlrad, Hanna (Institute for Evaluation of Labour Market and Education Policy (IFAU)); Palme, Mårten (Department of Economics, Stockholm University) |
| Abstract: | IVF allows women to delay birth and pursue careers, but IVF massively increases the risk of twin birth. There is limited evidence of how having twins influences women’s post-birth careers. We investigate this, leveraging a single embryo transfer (SET) mandate implemented in Sweden in 2003, following which the share of twin births showed a precipitous drop of 70%. Linking birth registers to hospitalization and earnings registers, we identify substantial improvements in maternal and child health and women’s earnings following IVF birth, alongside an increase in subsequent fertility. We provide the first comprehensive evaluation of SET, relevant given the secular rise in IVF births and growing concerns over twin birth risk. We contribute new estimates of the child penalty imposed by twin as opposed to singleton birth, relevant to the secular rise in the global twin birth rate. |
| Keywords: | twins ; IVF ; single embryo transfer ; career costs of children ; child penalty ; gender wage gap ; fertility ; maternal health ; neonatal health ; gender JEL Classification: J13 ; I11 ; I12 ; I38 ; J24 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1391&r= |
| By: | Neidhöfer, Guido; Ciaschi, Matías; Gasparini, Leonardo; Serrano, Joaquín |
| Abstract: | We explore the role of social mobility as a driver of economic development. First, we map the geography of intergenerational mobility of education for 52 Latin American regions, as well as its evolution over time. Then, through a new weighting procedure that considers the participation of cohorts to the economy in each year, we estimate the impact of changes in mobility on regional economic indicators, such as income per capita, poverty, child mortality, and luminosity. Our findings show that increasing social mobility had a significant and robust effect on the development of Latin American regions. |
| Keywords: | Intergenerational Mobility,Equality of Opportunity,Development,Growth,Latin America |
| JEL: | D63 I24 J62 O15 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:21087&r= |
| By: | Marie Briere; James M. Poterba; Ariane Szafarz |
| Abstract: | This paper employs administrative data from one of the largest plan providers in France to investigate the role of plan and default characteristics in affecting whether employees participate in the plan and whether they accept its default investment option. The dataset includes information on the saving choices of 680,392 active employees at 1,610 firms. French employers have wide discretion in structuring employee saving plans. All plans must offer medium-term investments, which cannot be accessed for five years. Employers may also offer long-term investments that cannot be accessed until retirement. When plans include a long-term option, participation is lower than when the plan offers only more liquid medium term investments. The presence of a long-term saving option also reduces the take-up of the plan’s default investment allocation, which must include a long-term component. One interpretation of the findings, consistent with the theory of choice overload, is that some employees are unwilling to forego the liquidity of the medium-term option but find it costly to make an active election when they opt out of the default, and therefore choose not to participate in the plan at all. |
| JEL: | G41 G5 G51 H24 J14 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29601&r= |