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on Labour Economics |
| By: | Schulz, Bastian (Aarhus University) |
| Abstract: | I study a dynamic search-matching model with two-sided heterogeneity, a production complementarity that induces labor market sorting, and aggregate shocks. In response to a positive productivity shock, incentives to sort increase disproportionately. Firms respond by posting additional vacancies, and the strength of the response is increasing in firm productivity. The distribution of unemployment worker types adjusts slowly, which amplifies job creation in the short run. In the long run, falling unemployment curtails the firms' vacancy posting. The model closely matches time-series moments from U.S. labor market data and produces realistic degrees of wage dispersion and labor market sorting. |
| Keywords: | search, matching, sorting, mismatch, aggregate shocks, worker heterogeneity, firm heterogeneity, unemployment dynamics |
| JEL: | E24 E32 J63 J64 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16467&r=lab |
| By: | Wunsch, Conny (University of Basel); Zabrodina, Véra (University of Basel) |
| Abstract: | The generosity of social insurance coverage often increases with the beneficiary's age and their contribution time to social security, but existing policies vary considerably. We study the differentiation of unemployment insurance (UI) generosity by evaluating how the insurance-incentive trade-off varies with age and contribution time. We exploit numerous discontinuities in potential benefit duration in Germany. Contribution time in the last three years carries information on job search efforts, as it is associated with lower moral hazard responses and fiscal externality. We find no significant response heterogeneity in age or longer contribution time horizons. Contrasting these gradients with an approximated insurance value for four UI regimes, we document that steepening the potential benefit duration schedule in contribution time and flattening it in age would have increased welfare. |
| Keywords: | policy differentiation, response heterogeneity, unemployment insurance |
| JEL: | J08 J64 J65 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16509&r=lab |
| By: | Nam, Hoseung (King's College London); Portes, Jonathan (King's College London) |
| Abstract: | We investigate the impact of immigration on productivity in the UK, using newly published ONS data on employees of non-UK origin by region and sector. Consistent with earlier research, we find some evidence of a positive association between non-EU migration and productivity, and some weaker evidence of a negative association between EU migration and productivity, although results are sensitive to the specifications used. |
| Keywords: | migration, productivity, labour markets, Brexit |
| JEL: | F22 J48 J61 J68 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16472&r=lab |
| By: | Cardullo, Gabriele (University of Genova); Sechi, Agnese (University of Genoa) |
| Abstract: | We study the effects on employment, costs of living, and income inequality of local shocks in the housing market or in the productivity of a tradable good. We construct a two-region search and matching model in which housing is considered a necessity good. Mobility of labor implies that any change in one region propagates into the other. The model is analytically tractable and provides some intuitive comparative statics results. We then calibrate the model on the basis of German data. Our simulations indicate that both types of shock produce limited employment gains but have a significant impact on housing prices and real income inequality: poorer, unemployed workers experience a larger increase in their cost of living index. This depends on the assumption of a non-homothetic utility function that generates a specific nominal wage to housing price positive relationship, partially safeguarding employed individuals against the rising cost of living. |
| Keywords: | local labor markets, income inequality, costs of living, housing expenditures, housing prices |
| JEL: | R23 R21 R31 J31 J61 J64 D31 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16533&r=lab |
| By: | Iv\'an Fern\'andez-Val; Aico van Vuuren; Francis Vella |
| Abstract: | Using CPS data for 1976 to 2022 we explore how wage inequality has evolved for married couples with both spouses working full time full year, and its impact on household income inequality. We also investigate how marriage sorting patterns have changed over this period. To determine the factors driving income inequality we estimate a model explaining the joint distribution of wages which accounts for the spouses' employment decisions. We find that income inequality has increased for these households and increased assortative matching of wages has exacerbated the inequality resulting from individual wage growth. We find that positive sorting partially reflects the correlation across unobservables influencing both members' of the marriage wages. We decompose the changes in sorting patterns over the 47 years comprising our sample into structural, composition and selection effects and find that the increase in positive sorting primarily reflects the increased skill premia for both observed and unobserved characteristics. |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2310.07839&r=lab |
| By: | Schmidpeter, Bernhard (University of Linz) |
| Abstract: | Little is known about how workers update expectations about job search and earnings when exposed to labor market news. To identify the impact of news on expectations, I exploit Foxconn’s unexpected announcement to build a manufacturing plant in Racine County. Exposure to positive news leads to an increase in expected salary growth at the current firm. Individuals also revise their expectations about outside offers upward, anchoring their beliefs to Foxconn's announced wages. They act on their updated beliefs with a small increase in current consumption. Negative news from a scaled-down plan leads to a revision of expectations back toward baseline. |
| Keywords: | outside options, wage expectations, beliefs formation, consumption |
| JEL: | C33 D84 E24 J31 J63 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16524&r=lab |
| By: | Drydakis, Nick |
| Abstract: | The study aims to examine whether beggar children are victims of forced labor, as well as to identify the manifestations of forced labor in beggar children, and assess whether forced child begging relates to deteriorated health-related quality of life and mental health. The study focused on the capital city of Greece, Athens, where beggar children are not a hard-to-reach group. Cross-sectional data were collected in 2011, 2014, 2018 and 2022, with 127 beggar children taking part in the study. The study adopted the Anti-Slavery International research toolkit, which sets methodological guidelines on researching child begging. A scale was developed to quantify forced child begging based on the International Labour Organization's definition of forced labor. The study found that most beggar children were forced by others to beg, experienced threats of violence, physical and verbal harassment aimed at forcing them to beg, and difficulty in terms of being allowed by others to stop begging. It was found that forced child begging was positively associated with living with unknown people, hunger due to food unavailability the previous week, and negatively associated with native beggar children. It was discovered that forced child begging was negatively associated with health-related quality of life and mental health for beggar children. Child begging encompasses elements of coercion and the deprivation of human freedom. These factors collectively amount to instances of forced labor and/or modern slavery. Policies should ensure that beggar children are removed from harm's way, and that those forcing children to beg are brought to justice. |
| Keywords: | beggar children, forced labor, coercion, modern slavery, health-related quality of life, mental health |
| JEL: | J10 J13 J46 J70 I14 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1337&r=lab |
| By: | Agan, Amanda (Rutgers University); Garin, Andrew (Carnegie Mellon University); Koustas, Dmitri (University of Chicago); Mas, Alexandre (UC Berkeley); Yang, Crystal S. (Harvard University) |
| Abstract: | We study the labor market impacts of retroactively reducing felonies to misdemeanors in San Joaquin County, CA, where criminal justice agencies implemented Proposition 47 reductions in a quasi-random order, without requiring input or action from affected individuals. Linking records of reductions to administrative tax data, we find employment benefits for individuals who (likely) requested their reduction, consistent with selection, but no benefits among the larger subset of individuals whose records were reduced proactively. A field experiment notifying a subset of individuals about their proactive reduction also shows null results, implying that lack of awareness is unlikely to explain our findings. |
| Keywords: | crime, labor markets |
| JEL: | J0 K0 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16528&r=lab |
| By: | Hicks, Jeffrey; Simard-Duplain, Gaëlle; Green, David A.; Warburton, William |
| Abstract: | Welfare caseloads in North America halved following reforms in the 1990s and 2000s. We study how this shift affected families by linking Canadian welfare records to tax returns, medical spending, educational attainment, and crime data. We find substantial and heterogeneous employment responses that increased average income despite reduced transfers. We find zero effects on aggregate health expenditures, but mothers saw reduced preventative care and increased mental health treatment, consistent with the transition to employment elevating time pressure and stress. We find no effect on teenagers' education and criminal charges as young adults but do find evidence of intergenerational welfare transmission. |
| JEL: | H23 H31 I14 I24 I38 J62 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:clefwp:63&r=lab |
| By: | Fritsch, Michael (University of Jena); Sorgner, Alina (John Cabot University); Wyrwich, Michael (University of Groningen) |
| Abstract: | We propose an extension of the standard occupational choice model to analyze the life satisfaction of senior entrepreneurs as compared to paid employees and particularly retirees in Germany. The analysis identifies income and health status as main factors that shape the relationship between occupational status and life satisfaction. Senior entrepreneurs enjoy higher levels of life satisfaction than retirees and senior paid employees. This higher life satisfaction is mainly due to their higher income. Physical and mental health play a crucial role in determining both an individual's occupational status and their overall life satisfaction. We find that senior self-employed report to be healthier compared to other groups of elderly individuals. However, when controlling for health, retirees exhibit an even higher level of life satisfaction compared to their self-employed counterparts. Heterogeneity analysis of various types of senior entrepreneurs and senior paid employees confirms this general pattern. In addition, we find some evidence indicating that senior entrepreneurs may compromise their leisure time, a main asset of retired individuals. Implications for research, policy, and practitioners are discussed. |
| Keywords: | senior entrepreneurship, health conditions, well‐being, life satisfaction, age |
| JEL: | L26 I31 J10 D91 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16534&r=lab |
| By: | Giacomo Gabbuti; Maria Gomez Leon |
| Abstract: | In this paper, we aim to address a major gap in the economic history of interwar Italy, by discussing the evolution of women's incomes and employment during this crucial period of Italian and European history. After examining the available statistical evidence, we build on recently reconstructed dynamic social tables for Italy, from 1900 to 1950, to chart trends in both gender wage gap and female labour force participation, disaggregated by major sectors. Our methodology greatly contributes to the understanding of history of women's work for pay, placing it within the broader dynamics of income inequality. This approach also allows us to shed light on the growing gap between Fascist claims and the reality of women's work: despite discriminatory laws, throughout these decades women increased their presence and visibility in all sectors, with the only exception of agriculture. Conversely, the March on Rome marked the beginning of a strong reversal in terms of gender wage gaps. We are thus able to confirm the important role played by female work in the Fascist accumulation model, characterized by wage squeezes and reduced private consumption. |
| Keywords: | Fascist Italy; female labour force participation; wage gaps; dynamic social tables. |
| Date: | 2023–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2023/39&r=lab |
| By: | Renner, Anna-Theresa; Shaikh, Mujaheed; Spitzer, Sonja |
| Abstract: | Maternal leave policies aim at protecting the health of new mothers. However, the impact of such policies on precursors of health, such as smoking behavior, is both theoretically and empirically understudied. We investigate the effect of maternal leave duration on the long-term smoking behavior of mothers across 14 European countries by combining survey data on health behaviors with retrospective information on birth and employment histories, and link these with maternity and parental leave policies between 1960 and 2010. To identify the causal impact of maternal leave duration, we exploit between and within country variation in mothers’ exposure to statutory leave duration policies in an instrumental variable framework. We find that a one-month increase in maternal leave duration increases the probability that a woman smokes in the long run by 2.3 percentage points. Similarly, a one-month increase in leave duration increases the lifetime duration of smoking by 13 months. We document non-linearity in this effect for the first time, showing that shorter leave durations have a protective effect, while very long maternal leave promotes harmful health behavior. Suggestive evidence shows lack of financial support from spouse around childbirth as a mediator of the observed effects, while employment and other socio-demographic characteristics play no role. |
| Keywords: | risky health behavior, maternity leave, parental leave policies, SHARE, instrumental variables |
| JEL: | I12 J13 J22 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:118675&r=lab |
| By: | Vassiliki Koutsogeorgopoulou |
| Abstract: | Immigration has increased rapidly since the late 1990s, driven largely by strong economic growth and high standards of living. By mid-2023, foreign citizens made up around 18% of the population. This has brought important economic benefits to Iceland, including by boosting the working age population and helping the country to meet labour demands in fast-growing sectors. However, there are important challenges regarding the integration of immigrants and their children that need to be addressed through a comprehensive approach, helping to make the most of immigration. Successful labour market integration of immigrants requires more effective language training for adults and an improvement in skills recognition procedures. At the same time, immigrants need more opportunities to work in the public sector and the adult learning system should be adjusted to better encompass their training needs. Strengthening language skills is key to improving the weak educational outcomes of immigrant students. Enhancing teachers’ preparedness to accommodate students’ diverse educational needs is another pre-requisite. Strengthening integration further hinges upon meeting the housing needs of the immigrant population, including through an increase in the supply of social and affordable housing. |
| Keywords: | education, housing, immigration, integration, labour market, language training, skills |
| JEL: | F22 J24 J61 |
| Date: | 2023–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1772-en&r=lab |
| By: | OECD |
| Abstract: | In the north-western corner of Germany, the Ems-Achse, a rural region, has witnessed a decade of economic growth. This growth has exacerbated labour shortages, primarily due to an aging population and the outmigration of youth. Acknowledging the potential of teleworking, regional stakeholders aim to explore its capacity to address labour gaps and attract a broader talent pool. This paper delves into three main dimensions for harnessing teleworking's potential: activating individuals who are not currently seeking employment, expanding the talent pool to include surrounding areas, and attracting workers from congested urban areas or overseas. To facilitate successful teleworking, the region can bolster its high-speed internet infrastructure, promote a culture of flexibility in management and nurture digital skills. Additionally, increasing opportunities for higher education, improving public transportation and enhancing international accessibility could help profile the Ems-Achse as an attractive hub for teleworkers. |
| Keywords: | Ems-Achse, Germany, labour shortage, local development, place-based policy, teleworking |
| JEL: | J68 O33 R11 R40 R58 R23 |
| Date: | 2023–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:oec:cfeaaa:2023/18-en&r=lab |
| By: | Green, David A.; Liu, Huju; Ostrovsky, Yuri; Picot, Garnett |
| Abstract: | Firm ownership is a defining feature of immigrant adaptation with 41% of immigrants owning a firm at some point in their first 10 years after arrival. We use rich Canadian administrative data linking immigrant arrival records with individual and firm tax data to examine the process by which immigrants enter firm ownership. We find that higher immigrant firm ownership rates are almost entirely associated with nonincorporated firm ownership, which looks like a state of last resort. Human capital plays no role in the opening of preferable incorporated firms. On balance, immigrants are not more entrepreneurial in terms of opening incorporated firms with employees and standard policy levers appear to have limited effect on this. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:clefwp:61&r=lab |
| By: | Lobeck, Max (University of Konstanz); Morten.Stostad@nhh.no, Morten Nyborg (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | What matters for individuals’ preferences for redistribution? In this paper we show that consequentialist beliefs about inequality – beliefs about how economic inequality changes the crime rate or the quality of democratic institutions, for example – have a large causal impact on individuals’ redistributive preferences. Using two representative surveys of a combined 6, 731 U.S. citizens, we show that a majority of respondents believe that inequality leads to a wide range of negative societal outcomes. We establish a causal link from such beliefs to individuals’ redistributive preferences by using exogenously provided video information treatments. With this and other methods we show that inequality externality beliefs impact redistributive preferences on the same order of magnitude as broad economic fairness views. These inequality externality beliefs are relatively equally held across political affiliations as well as incomes. We discuss whether a focus on inequality’s consequences could shape a distinct conversation about redistribution. |
| Keywords: | Behavioural economics; inequality; labour economics; public economics |
| JEL: | H23 J18 |
| Date: | 2023–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2023_017&r=lab |
| By: | Paolo Brunori (University of Florence & LSE); Francisco H.G. Ferreira (London School of Economics and Political Science & IZA); Pedro Salas-Rojo (London School of Economics and Political Science) |
| Abstract: | Scholars have sought to quantify the extent of inequality which is inherited from past generations in many different ways, including a large body of work on intergenerational mobility and inequality of opportunity. This paper makes three contributions to that broad literature. First, we show that many of the most prominent approaches to measuring mobility or inequality of opportunity fit within a general framework which involves, as a first step, a calculation of the extent to which inherited circumstances can predict current incomes. The importance of prediction has led to recent applications of machine learning tools to solve the model selection challenge in the presence of competing upward and downward biases. Our second contribution is to apply transformation trees to the computation of inequality of opportunity. Because the algorithm is built on a likelihood maximization that involves splitting the sample into groups with the most salient differences between their conditional cumulative distributions, it is particularly well-suited to measuring ex-post inequality of opportunity, following Roemer (1998). Our third contribution is to apply the method to data from South Africa, arguably the world’s most unequal country, and find that almost threequarters of its current inequality is inherited from predetermined circumstances, with race playing the largest role, but parental background also making an important contribution. |
| Keywords: | Inequality, opportunity, mobility, transformation trees, South Africa. |
| JEL: | D31 D63 J62 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2023-658&r=lab |
| By: | Carranza, Rafael; Nolan, Brian; Bavaro, Michele |
| Abstract: | While the influence of poverty in childhood on adulthood outcomes has been extensively studied, little is known about how the strength of intergenerational persistence in poverty itself varies across countries. Here we examine the intergenerational persistence of poverty in a comparative analysis of 30 European countries using data from the 2019 ad hoc module of the EU-SILC dataset. We construct proxy measures of poverty in the parental household employing information on the inability to meet basic needs, financial hardship, parental education and occupational social class. The strength of the association between current poverty based on the indicators at the core of the EU's social inclusion process and these measures of parental poverty is assessed by estimating odds ratios and marginal effects. The cross-country variation in poverty persistence is probed in terms of its relationship with country characteristics. Mediation analysis highlights the role of own education as well as occupation in underpinning the observed relationship between current and parental poverty. Finally, differences across age cohorts in the strength of poverty persistence are examined. |
| Keywords: | Intergenerational transmission , poverty, multidimensional poverty, cross-country comparison, disadvantage |
| JEL: | D63 I32 J62 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:amz:wpaper:2023-22&r=lab |