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on Labour Economics |
| By: | Blanchflower, David G. (Dartmouth College); Bryson, Alex (University College London) |
| Abstract: | Unemployment is notoriously difficult to predict. In previous studies, once country and year fixed effects are added to panel estimates, few variables predict changes in unemployment rates. Using panel data for 29 European countries collected by the European Commission over 444 months between January 1985 and October 2022 in an unbalanced country*month panel of just over 10000 observations, we predict changes in the unemployment rate 12 months ahead. We do so using individuals' fears of unemployment which predict subsequent changes in unemployment 12 months later in the presence of country fixed effects and lagged unemployment. We also use industrial firm's expectations of future employment, which are also predictive of what happens to unemployment three months later. Using our preferred model specification, we present out-of-sample predictions based on replications from 1, 000 random samples. These track actual movements in unemployment rates closely over a period in which there were two major recessions and unemployment shifted by a factor of two. |
| Keywords: | unemployment, fear, business sentiment, expectations, forecasting recession, COVID-19, supply shocks |
| JEL: | J60 J64 J68 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15905&r=lab |
| By: | Rajshri Jayaraman; Bisma Khan |
| Abstract: | We examine the effect of co-residence with fathers- and mothers-in-law on married women’s employment in India. Instrumental variable fixed effects estimates using two different household panel datasets indicate that co-residence with a father-in-law reduces married women’s employment by 11-13%, while co-residence with a mother-in-law has no effect. Difference-in-difference estimates show that married women’s employment increases following the death of a co-residing father-in-law, but not mother-in-law. We investigate three classes of explanations for this: income effects, increased domestic responsibilities, and social norms. Our evidence is consistent with gender- and generational norms intersecting to constrain married women’s employment when parents-in-law co-reside. |
| Keywords: | female employment, family structure, labour supply, parents-in-law |
| JEL: | J16 J22 J12 O12 Z13 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10238&r=lab |
| By: | Malte Sandner (Technical University Nürnberg); Frederik Wiynck (Nuremberg Institute of Technology & Institute for Employment Research) |
| Abstract: | Despite long-term interest in whether welfare benefits motivate fertility, evidence from research has not been consistent. This paper contributes new evidence to this debate by investigating the fertility effect of a German welfare reform. The reform decreased the household income of families on welfare by 18% in the first year after the birth of a baby. Using exclusive access to German social security data on over 460, 000 affected women, our analysis finds that the reform leads to a fertility reduction of 6.8%. This result implies that for mothers on welfare, fertility has an income elasticity of 0.38, which is much smaller than that of general populations reported in the literature. Our findings suggest that welfare recipients' fertility reacts less strongly to financial incentives than the fertility of overall populations. |
| Keywords: | welfare benefits, fertility, parental leave |
| JEL: | J13 I38 C54 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2023-003&r=lab |
| By: | Bastiaans, Mareen (Erasmus University Rotterdam); Dur, Robert (Erasmus University Rotterdam); Gielen, Anne C. (Erasmus University Rotterdam) |
| Abstract: | In many Western countries, a sizeable group of people live on welfare benefits for a long time. Many of them suffer from mental health issues. This paper studies the labor market and mental health effects of an activation program targeting these long-term inactive people. We exploit the staggered implementation of the program in a difference-in-differences design. We find that the activation program hardly affects labor market outcomes. However, for those on mental health medication prior to the start of the program, the use of mental health medication substantially drops in the years following the start of the program. This effect is particularly pronounced for men. We also study spillover effects on the children of those targeted by the program, finding some suggestive evidence for improved learning and mental health outcomes. |
| Keywords: | activation program, long-term inactive, welfare beneficiaries, mental health, intergenerational spillovers |
| JEL: | H53 I19 I38 J68 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15891&r=lab |
| By: | Hai-Anh Dang (World Bank); Trong-Anh Trinh (Monash University); Paolo Verme (World Bank) |
| Abstract: | Hardly any evidence exists on the effects of mental illness on refugee labor outcomes. We offer the first study on this topic in the context of Australia, one of the host countries with the largest number of refugees per capita in the world. Analyzing the Building a New Life in Australia longitudinal survey, we exploit the variations in traumatic experiences of refugees interacted with post-resettlement time periods to causally identify the impacts of refugee mental health. We find that worse mental health, as measured by a one-standard-deviation increase in the Kessler mental health score, reduces the probability of employment by 14.1% and labor income by 26.8%. We also find some evidence of adverse impacts of refugees’ mental illness on their children’s mental health and education performance. These effects appear more pronounced for refugees that newly arrive or are without social networks, but they may be ameliorated with government support. |
| Keywords: | refugees, mental health, labor outcomes, Australia |
| JEL: | I15 J15 J21 J61 O15 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:mhe:chemon:2023-02&r=lab |
| By: | Alex Grimaud (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | This paper studies the effects of discretionary fiscal policy responses to adverse aggregate shocks. For this, I build a tractable model where households face idiosyncratic unemployment risk in a Search-and-Matching (SaM) labor market with explicit intensive and extensive employment margins. Focusing on the spending side of fiscal stimuli, I investigate transitory increases in Unemployment Insurance (UI) benefits and public purchases. I show that the effects of transitory increases in fiscal spending largely depend on the state of the labor market and the type of adverse shock hitting the economy. At the aggregate level, the most welfare-improving fiscal stimuli appear to be rather small and over a long period. At the idiosyncratic level, welfare improvements are very unequally distributed. Front-loaded increases in fiscal spending may run into supply constraints and have important undesirable consequences. Fiscal stimuli through UI transfers are never Pareto efficient whereas fiscal stimuli through public purchases can be. |
| Keywords: | Search and matching, heterogeneous agents, UI transfers, unemployment risk, and fiscal spending |
| JEL: | E21 E24 E32 E62 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp335&r=lab |
| By: | Manudeep Bhuller; Domenico Ferraro; Andreas R. Kostøl; Trond C. Vigtel |
| Abstract: | How has the internet affected search and hiring, and what are the implications for aggregate unemployment? Answering these questions empirically has proven difficult due to selection in internet use and difficulty in measuring the search activities of both sides of the labor market. This paper overcomes these challenges by combining plausibly exogenous variation in the availability of high-speed internet in Norway with large-scale survey and administrative data on hiring firms, job seekers, and vacancies. Our empirical analysis shows that the internet expansion led more firms to recruit online and caused 9% shorter vacancy durations and 13% fewer unsuccessful hiring attempts. While the expansion increased job-finding rates by 2.4% and starting wages by 6% among the unemployed, we find no evidence of changes in job-to-job mobility or wage growth for employees. To interpret these findings, we develop and calibrate an equilibrium search model with endogenous job creation and destruction where workers decide how much search effort to exert on and off the job. Through the lens of the calibrated model, we find that better search technology is the main driving force behind our quasi-experimental evidence. Our calculations indicate that the steady-state unemployment rate fell by as much as 14% due to the broadband internet expansion. |
| JEL: | J21 J39 J64 J68 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30911&r=lab |
| By: | Bansak, Cynthia (St. Lawrence University); Dziadula, Eva (University of Notre Dame); Zavodny, Madeline (University of North Florida) |
| Abstract: | This study examines the impact of having a clear path to lawful permanent resident status, or a "green card, " and naturalized citizenship on marital status and spousal characteristics among Chinese immigrants in the United States. A series of U.S. policy changes in the early 1990s made all mainland Chinese immigrants already present in the country eligible for a green card. We examine the effect of those policy changes on Chinese immigrants' marriage market outcomes relative to other East Asian immigrants. Using 1990 and 2000 U.S. Census data, we find that the share of Chinese immigrants who are married increased after they became automatically eligible for a green card. In particular, highly educated Chinese immigrants became relatively more likely to be married with a spouse living with them and relatively less likely to be married with a spouse living elsewhere. This pattern suggests that some Chinese spouses immigrated after their husband or wife received legal status, or spousal chain migration occurred. We also find that highly educated Chinese immigrants benefited in the marriage market in terms of spousal education and earnings, but less-educated Chinese immigrants did not. Meanwhile, less-educated Chinese-born women became relatively more likely to marry a U.S. native. |
| Keywords: | immigration, marriage markets, assortative matching, legal status, China |
| JEL: | J12 J15 K37 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15911&r=lab |
| By: | Drydakis, Nick |
| Abstract: | During the Great Recession, the increase in Greece's unemployment rate was the highest in the European Union. However, there exists no multivariate study which has assessed the association between parental unemployment and adolescents' grades. The study utilised panel data from the same upper high schools in the periods 2011-2013 and 2017-2019 to assess whether the grades of adolescents were associated with parental unemployment. The exogeneity of parental unemployment with respect to adolescents' grade was confirmed. The analysis revealed that parental unemployment was associated with a decline in adolescents' grades. Periods of economic decline, i.e. in 2011-2013, were found to be associated with deterioration in adolescents' grades. Moreover, during periods of economic decline, parental unemployment was associated with a deterioration in adolescents' grades. Furthermore, parental unemployment was associated with lower adolescents' grades for those households that were not homeowners and whose schools were located in working-class areas. The outcomes were found to be robust, even after including information for government expenditure on education and social protection. The potential long-lasting effects of parental unemployment on children's human capital should be considered by policymakers, as should educational interventions to support households experiencing adverse economic conditions. |
| Keywords: | Economic Recession, Parental Unemployment, Grades, Adolescents, Academic Performance |
| JEL: | E24 J6 I24 J13 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1238&r=lab |
| By: | Tuna Dökmeci (Department of Economics, European University Institute); Carla Rainer (Department of Economics, Vienna University of Economics and Business); Alyssa Schneebaum (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | Using experimental data, this paper analyzes the relationship between households' economic security and their fertility decisions for low-income households. Between 1974 and 1977, a randomized controlled trial was conducted in Manitoba, Canada in which the treatment groups received differing levels of guaranteed annual income. All of the program participants were low-income households. We find positive effects of the program on the probability of child birth that range between 7 to 10 percentage points. |
| Keywords: | fertility, economic security, policy analysis, guaranteed annual income, negative income tax |
| JEL: | I38 J13 J18 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp332&r=lab |
| By: | Ryan M. Abman; Clark C. Lundberg; John McLaren; Michele Ruta |
| Abstract: | We study the impact of child labor standards in Regional Trade Agreements (RTAs) on a variety of child labor market outcomes, including employment, education, and household inequality. We develop a stylized general equilibrium model of child labor in an economy open to international trade and consider the impact of RTAs with and without child labor bans. We empirically investigate the effects of these clauses in trade agreements in a broad international panel of 101 developing countries using harmonized survey microdata. Exploiting quasi-experimental methods to obtain plausibly causal estimates, we find that RTAs without child-labor bans lead to reductions in child employment and increases in school enrollment, particularly for older children aged 14--17. Child labor bans in RTAs perversely increase child employment among 14--17 year olds and decrease school enrollment for both young and older children. These effects appear to decrease inter-household income inequality through increased child earnings. Our findings are consistent with theoretical predictions from our model and the literature on child labor bans. |
| JEL: | F66 J13 O15 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30908&r=lab |
| By: | Goes, Carlos (University of San Diego); Lopez-Acevedo, Gladys (World Bank); Robertson, Raymond (Texas A&M University) |
| Abstract: | This paper focuses on how gender segmentation in labor markets shapes the local effects of international trade. We first develop a theoretical framework that embeds trade and gender-segmented labor markets to show that foreign demand shocks may either increase or decrease the female-to-male employment ratio. The key theoretical result shows formally that the effects of trade on gender-segmented labor markets depend crucially on (a) the sectors that face the foreign demand shock; and (b) the domestic relevance of the foreign countries in which the demand shocks originate from. If the foreign demand shock from a relevant market happens in a female-intensive (male-intensive) sector, the model predicts that the female-to-male employment ratio should increase (decrease). We then use plausibly exogenous variation in the exposure of Tunisian local labor markets to foreign demand shocks and show that the empirical results are consistent with the theoretical prediction. In Tunisia, a country with a high degree of gender segmentation in labor markets, foreign-demand shocks have been relatively larger in male-intensive sectors. This induced a decrease in the female-to-male employment ratio, with households likely substituting female for male labor supply. |
| Keywords: | international trade, labor markets, gender, inequality |
| JEL: | F16 J16 O19 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15892&r=lab |
| By: | Jirjahn, Uwe (University of Trier); Le, Thi Xuan Thu (University of Trier) |
| Abstract: | Research on the consequences of works councils has been dominated by economic aspects. Our study provides evidence that works councils have nonfinancial consequences for civic society that go beyond the narrow boundaries of the workplace. Using panel data from a large sample of male workers, the study shows that works councils have an influence on workers' party preferences. The presence of a works council is negatively associated with preferences for extreme right-wing parties and positively associated with preferences for the Social Democratic Party and The Left. These results holds in panel data estimations including a large set of controls and accounting for unobserved individual-specific factors. Our findings fit the notion that workplace democracy increases workers' generalized solidarity and their awareness of social and political issues. |
| Keywords: | workplace democracy, worker participation, political spillover, party identification |
| JEL: | D72 J51 J52 J58 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15879&r=lab |
| By: | Qiren Liu; Sen Luo; Robert Seamans |
| Abstract: | The rising adoption of industrial robots is radically changing the role of workers in the production process. Robots can be used for some of the more physically demanding and dangerous production work, thus reducing the possibility of worker injury. On the other hand, robots may replace workers, potentially increasing worker anxiety about their job safety. In this paper, we investigate how individual physical health and mental health outcomes vary with local exposure to robots for manufacturing workers in China. We find a link between robot exposure and better physical health of workers, particularly for younger workers and those with less education. However, we also find that robot exposure is associated with more mental stress for Chinese workers, particularly older and less educated workers. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2301.10675&r=lab |
| By: | Strenio, Jacqueline (Norwich University); van der Meulen Rodgers, Yana (Rutgers University) |
| Abstract: | This article argues that a systematic integration of gender into labor economics courses based on standard textbooks is both beneficial and straightforward. An undergraduate course in labor economics presents an ideal opportunity to introduce students to the importance of gender differences in economic outcomes. We provide a prototype of such a course, and we show how gender-aware content and pedagogical tools can complement a course based on a standard textbook or set of articles. We also review the most popular textbooks in labor economics and show how gender issues are mostly contained in a single chapter on labor market discrimination rather than thoroughly integrated throughout the text. In addition to exposing students to more diverse content and methodologies, mainstreaming gender into an undergraduate labor economics class can help cultivate inclusivity and belongingness in the discipline. |
| Keywords: | labor economics, gender, women, curriculum, COVID-19 |
| JEL: | A2 J1 O1 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15886&r=lab |
| By: | Ilya Kukaev (Lehigh University); Edward J. Timmons (West Virginia University) |
| Abstract: | Occupational regulation is a labor market institution that has received a growing amount of attention by researchers. Existing research has explored the effects of occupational regulation on wages and employment. To the best of our knowledge, no existing study has estimated the effect of occupational credentials on unemployment duration in the US. We derive a random search model to explain differences in individual unemployment duration resulting from heterogeneous effects from licenses and certificates. Our model predicts that an occupational credential with a stronger signaling or human capital effect results in a shorter individual unemployment duration. To estimate the effect of occupational credentials, we use data from the Survey of Income and Program Participation (SIPP) for 2013-2019. We find that individual unemployment duration decreases on average by 3 to 9 days if an individual has a license. In contrast, certificates issued by businesses reduce individual unemployment duration by 24 to 27 days. Our results suggest that certificates issued by businesses contain stronger signals and human capital improvements than government issued licenses. |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:wvu:wpaper:23-02&r=lab |
| By: | Bratsberg, Bernt (Ragnar Frisch Centre for Economic Research); Godøy, Anna (University of Oslo); Hart, Rannveig Kaldager (Norwegian Institute of Public Health); Raaum, Oddbjørn (Ragnar Frisch Centre for Economic Research); Reme, Bjørn-Atle (Norwegian Institute of Public Health); Wörn, Jonathan (Norwegian Institute of Public Health) |
| Abstract: | We study the impact of work loss on mental health during the COVID-19 pandemic. Combining data on work loss and health care consultations from comprehensive individual-level register data, we define groups of employees delineated by industry, region, age, and gender. With these groups, we use a difference-in-differences framework to document significantly increased rates of consultations for psychological conditions among workers with higher exposure to work loss. The increases, and their persistence, were markedly higher for consultations in specialist (vs. primary) care, indicating that the deterioration of mental health was more than a widespread increase in lighter symptoms. Overall, our findings suggest that the economic disruptions of the COVID-19 pandemic adversely affected the mental health of workers most exposed to loss of work. |
| Keywords: | COVID-19, layoffs, work loss, job loss, mental health |
| JEL: | I12 I14 I18 J65 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15913&r=lab |
| By: | Almar, Frederik (Aarhus University); Friedrich, Benjamin (Northwestern University); Reynoso, Ana (University of Michigan); Schulz, Bastian (Aarhus University); Vejlin, Rune Majlund (Aarhus University) |
| Abstract: | This paper revisits the link between education-based marriage market sorting and income inequality. Leveraging Danish administrative data, we develop a novel categorization of marriage market types based on the starting wages and wage growth trajectories associated with educational programs: ambition types. We find a substantial increase in sorting by educational ambition over time, which explains more than 40% of increasing inequality since 1980. In contrast, sorting trends are flat with the commonly used level of education. Hence, the mapping between education and marriage-market types matters crucially for conclusions about the role of marital sorting in rising income inequality. |
| Keywords: | marital sorting, inequality, education |
| JEL: | D13 D31 I24 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15912&r=lab |
| By: | Artuc, Erhan (World Bank); Gomez-Parra, Nicolas (Inter-American Development Bank); Onder, Harun (World Bank) |
| Abstract: | Measuring the economic impact of a war is a daunting task. Common indicators like casualties, infrastructure damages, and gross domestic product effects provide useful benchmarks, but they fail to capture the complex welfare effects of wars. This paper proposes a new method to estimate the welfare impact of conflicts and remedy common data constraints in conflict-affected environments. The method first estimates how agents regard spatial welfare differentials by voting with their feet, using pre-conflict data. Then, it infers a lower-bound estimate for the conflict-driven welfare shock from partially observed post-conflict migration patterns. A case study of the conflict in Eastern Ukraine between 2014 and 2019 shows a large lower-bound welfare loss for Donetsk residents equivalent to between 7.3 and 24.8 percent of life-time income depending on agents' time preferences. |
| Keywords: | conflict, revealed-preferences, internally displaced people |
| JEL: | D74 J61 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15900&r=lab |
| By: | Vieira Marques Da Costa, Rui; Dhingra, Swati; Machin, Stephen |
| Abstract: | This paper studies consequences of the very large exchange rate depreciation occurring in June 2016 due to the UK electorate unexpectedly voting to leave the European Union. As news of a leave vote came in, the value of sterling plummeted, recording the biggest one day depreciation of any of the world’s four major currencies since the collapse of Bretton Woods. The prospect of Brexit really happening generated sizable differences in how much sterling depreciated against different currencies. Coupled with pre-referendum cross-country trade patterns, this generated variations in exchange rate depreciations facing businesses in different industries. The paper first considers revenue and cost channels operating through trade price responses, offering evidence of a cost shock from the price of intermediate imports rising by more in higher depreciation industries, but with no revenue offset from exports. Workers were impacted by the increased cost pressures facing businesses, not in terms of job loss but through relative real wage declines and stagnation for workers employed in industries facing larger depreciations. |
| Keywords: | Brexit; exchange rate depreciation; trade prices; labour outcomes |
| JEL: | J68 L52 P25 |
| Date: | 2022–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:118043&r=lab |
| By: | Ran Abramitzky; Netanel Ben-Porath; Victor Lavy; Michal Palgi |
| Abstract: | Research on the political and social impacts of financial crises has focused chiefly on free market economies, hindering our understanding of their effects in other settings. We exploit an episode of a financial crisis that hit the Israeli kibbutzim to study its impact in a socialist context. Contrary to findings in capitalistic economies, the crisis led to increased support of liberalized labor markets and reduced support for leftist political parties. These effects persisted in the long run, especially among the young. The crisis also reduced trust in leadership, but trust was restored shortly after agreements to settle the debt were signed, relieving the severity of the crisis. Our findings suggest that economic shocks may have different effects in a free market and socialist systems, in both cases leading individuals to question their current system. |
| JEL: | J0 P00 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30918&r=lab |
| By: | Jennifer, Robson; Lindsay M., Tedds |
| Abstract: | The Canada Disability Benefit Act is legislation that, when passed, will establish a new statutory program intended to reduce poverty and support the financial security of working-age persons with disabilities. However, the act is what is known as framework legislation meaning it sets out the high-level context and structure of the proposed program, but it does not provide any describe specific program details. The critical details—including eligibility conditions, the benefit unit and amount, and interactions with existing disability support programs—of the proposed Canada Disability Benefit program will, instead, be set out in regulations following stakeholder engagement. We use a benefit design framework to highlight the program elements that must be defined, highlighting the importance of conducting the design process through an inclusive and intersectional lens to ensure that ableist assumptions are not embedded into benefit design. The framework outlined in this paper should serve as a useful reference for all stakeholders involved in the benefit design process. |
| Keywords: | Benefit design, Canada Disability Benefit, disability policy, persons with disabilities, poverty |
| JEL: | H53 I38 J14 J18 |
| Date: | 2023–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:116191&r=lab |