nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2011‒07‒21
fifteen papers chosen by
Erik Jonasson
Lunds University

  1. The distribution of the gender pay gap in Austria: Evidence from matched employer-employee data and tax-records By Rene Boeheim; Klemens Himpele; Helmut Mahringer; Christine Zulehner
  2. Self-employment of rural-to-urban migrants in China By Giulietti, Corrado; Ning, Guangjie; Zimmermann, Klaus F
  3. Does the Sector Experience Affect the Pay Gap for Temporary Agency Workers? By Jahn, Elke J.; Pozzoli, Dario
  4. Bias in the Legal Profession: Self-Assessed versus Statistical Measures of Discrimination By Antecol, Heather; Cobb-Clark, Deborah A.; Helland, Eric
  5. Is there still a wage penalty for being overeducated but well-matched in skills? A panel data analysis of a Swiss graduate cohort By Marco PECORARO
  6. How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria By Marius Brülhart; Céline Carrere; Federico Trionfetti
  7. Wage Rigidity, Collective Bargaining and the Minimum Wage: Evidence from French Agreement Data By Avouyi-Dovi, Sanvi; Fougère, Denis; Gautier, Erwan
  8. The UK Minimum Wage at Age 22: A Regression Discontinuity Approach By Richard Dickens; Rebecca Riley; David Wilkinson
  9. Why Care? Social Norms, Relative Income and the Supply of Unpaid Care By Marina Della Giusta; Nigar Hashimzade; Sarah Jewell
  10. The Effects of Agglomeration on Wages: Evidence from the Micro-Level By Bernard Fingleton; Simonetta Longhi
  11. Job creation in business services:Innovation, Demand, Polarisation. By Francesco Bogliacino; Matteo Lucchese; Mario Pianta
  12. The Effect of Health on Income: Quasi-Experimental Evidence from Commuting Accidents By Halla, Martin; Zweimüller, Martina
  13. Graduates’ employment and employability after the “Bologna Process” reform. Evidence from the Italian experience and methodological issues By Gilberto Antonelli; Andrea Cammelli; Furio Camillo; Angelo di Francia; Silvia Ghiselli; Matteo Sgarzi
  14. Do firms that create intellectual property also create and sustain more good jobs? Evidence for UK firms, 2000-2006 By Christine Greenhalgh; Mark Rogers; Philipp Schautschick
  15. Do Windfall Gains Affect Labour Supply? Evidence from the European Household Panel By Urban Sila; Ricardo M. Sousa

  1. By: Rene Boeheim; Klemens Himpele; Helmut Mahringer; Christine Zulehner
    Abstract: We examine the gender wage gap in Austria using new matched employer-employee data from 2007. We investigate the gap at the conditional wage distribution of men and women, and decompose it into the parts which are attributed to different characteristics and different returns to these characteristics. We find that women earn on average about 14% less than men for given characteristics, and that about 50% of the gender wage gap cannot be attributed to observable characteristics. The extent of different returns for women and men increase over the wage distribution where wage bargaining is predominantly on an individual basis (in contrast to low wage jobs, where collective bargaining contracts are binding).
    Keywords: gender wage differentials, quantile regressions, decomposition, matched employer-employee data
    JEL: J13 J71
    Date: 2011–07
  2. By: Giulietti, Corrado; Ning, Guangjie; Zimmermann, Klaus F
    Abstract: This paper focuses on the determinants of self-employment among rural to urban migrants in China. Two self-selection mechanisms are analysed: the first relates to the manner in which migrants choose self-employment or paid work based on the potential gains from either type of employment; the second takes into account that the determinants of the migration decision can be correlated with employment choices. Using data from the 2008 Rural-Urban Migration in China and Indonesia (RUMiCI) survey, a selection model with endogenous switching is estimated. Earnings estimates are then used to derive the wage differential, which in turn is used to model the employment choice. The procedure is extended to account for migration selectivity and to compare individuals with different migration background and employment histories. The results indicate that self-employed individuals are positively selected with respect to their unobserved characteristics. Furthermore, the wage differential is found to be an important driver of the self-employment choice.
    Keywords: European Union; rural to urban migration; selection bias magnets; self-employment; wages
    JEL: J23 J61 O15
    Date: 2011–07
  3. By: Jahn, Elke J. (Institute for Employment Research (IAB), Nuremberg); Pozzoli, Dario (University of Aarhus)
    Abstract: It is a well-known fact that temporary agency workers have to accept high pay penalties. However, remarkably little is known about the remuneration of workers who are frequently employed in this sector or who are employed for a substantial length of time. Based on a rich administrative data set, we estimate the effects of the intensity of agency employment on the temp wage gap and post-temp earnings in Germany. Using a two-stage selection-corrected method in a panel data framework, we show that the wage gap for temps with low treatment intensity is high but decreases with exposure to the sector. It seems that temps are able to accumulate human capital while being employed in this sector. Temps who move to permanent jobs have to accept a sizeable wage disadvantage at first, indicating that temporary agency employment might stigmatise workers. However, agency employment does not seem to leave a long-lasting scar.
    Keywords: temporary agency employment, treatment intensity, dose response function approach, wages, Germany
    JEL: J30 J31 J42 J41
    Date: 2011–07
  4. By: Antecol, Heather (Claremont McKenna College); Cobb-Clark, Deborah A. (University of Melbourne); Helland, Eric (Claremont McKenna College)
    Abstract: Legal cases are generally won or lost on the basis of statistical discrimination measures, but it is workers' perceptions of discriminatory behavior that are important for understanding many labor-supply decisions. Workers who believe that they have been discriminated against are more likely to subsequently leave their employers and it is almost certainly workers' perceptions of discrimination that drive formal complaints to the EEOC. Yet the relationship between statistical and self-assessed measures of discrimination is far from obvious. We expand on the previous literature by using data from the After the JD (AJD) study to compare standard Blinder-Oaxaca measures of earnings discrimination to self-reported measures of (i) client discrimination; (ii) other work-related discrimination; and (iii) harassment. Overall, our results indicate that conventional measures of earnings discrimination are not closely linked to the racial and gender bias that new lawyers believe they have experience on the job. Statistical earnings discrimination is only occasionally related to increases in self-assessed bias and when it is the effects are very small. Moreover, statistical earnings discrimination does not explain the disparity in self-assessed bias across gender and racial groups.
    Keywords: labor market discrimination, lawyers, gender and racial bias, wages
    JEL: J71 J15 J16 J44
    Date: 2011–07
  5. By: Marco PECORARO (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and SFM, Université de Neuchâtel)
    Abstract: Using two periods’ panel data from the Swiss Graduate Survey, this study examines the incidence and wage effects of overeducation. Contrary to most prior research, we account for graduate heterogeneity in perceived skills mismatch when measuring overeducation and correct for potential omitted ability bias in the estimated pay penalty associated with overeducation. We find that graduates who are overeducated and mismatched in skills (i.e. genuinely overeducated) are the most penalized in terms of earnings. This evidence is still valid when using the fixed effects approach, while the pay penalty is no more significant for graduates who are overeducated but matched in skills (i.e. apparently overeducated). This indicates that the wage effects for apparently overeducated graduates are mainly due to the omission of unobserved ability.
    Keywords: Overeducation, skills mismatch, wages, panel data analysis
    Date: 2011–05–09
  6. By: Marius Brülhart (HEC - LAUSANNE - École des HEC, Université de Lausanne Département d'économétrie et économie politique - Université de Lausanne); Céline Carrere (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Federico Trionfetti (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579)
    Abstract: We study the responses of regional employment and nominal wages to trade liberalization, exploiting the natural experiment provided by the opening of Central and Eastern European markets after the fall of the Iron Curtain in 1990. Using data for Austrian municipalities, we examine differential pre- and post-1990 wage and employment growth rates between regions bordering the formerly communist economies and interior regions. If the 'border regions' are defined narrowly, within a band of less than 50 kilometers, we can identify statistically significant liberalization effects on both employment and wages. While wage responses preceded employment responses, the employment effect over the entire adjustment period is estimated to be around three times as large as the wage effect. The implied slope of the regional labor supply curve can be replicated in a new economic geography model that features obstacles to labor migration due to immobile housing and to heterogeneous locational preferences.
    Keywords: trade liberalization; spatial adjustment; regional labor supply; natural experiment
    Date: 2011–07–11
  7. By: Avouyi-Dovi, Sanvi (Bank of France); Fougère, Denis (CREST); Gautier, Erwan (Bank of France)
    Abstract: Using several unique data sets on wage agreements at both industry and firm levels in France, we document stylized facts on wage stickiness and the impact of wage-setting institutions on wage rigidity. First, the average duration of wages is a little less than one year and around 10 percent of wages are modified each month by a wage agreement. Data patterns are consistent with predictions of a mixture of Calvo and Taylor models. The frequency of wage change agreements is rather staggered over the year but the frequency of effective wage changes is seasonal. The national minimum wage has a significant impact on the probability of a wage agreement and on the seasonality of wage changes. Negotiated wage increases are correlated with inflation, the national minimum wage increases and the firm profitability.
    Keywords: wage stickiness, wage bargaining, minimum wage, downward nominal wage rigidity
    JEL: J31 J50 E30
    Date: 2011–07
  8. By: Richard Dickens (Department of Economics, University of Sussex; Centre for Economic Performance, London School of Economics); Rebecca Riley (National Institute of Economic and Social Research; LLAKES, Institute of Education); David Wilkinson (National Institute of Economic and Social Research)
    Abstract: A regression discontinuity approach is used to analyse the effect of the legislated increase in the UK National Minimum Wage (NMW) that occurs at age 22 on various labour market outcomes. Using data from the Labour Force Survey we find a 2- 4% point increase in the employment rate of low skilled individuals. Unemployment declines among men and inactivity among women. We find no such effect before the NMW was introduced and no robust impacts at age 21 or 23 years. Our results are robust to a range of specification tests.
    Keywords: Minimum Wage Legislation, Low Wage
    JEL: J31 J38
    Date: 2011–03
  9. By: Marina Della Giusta (Department of Economics, University of Reading); Nigar Hashimzade (Department of Economics, University of Reading); Sarah Jewell (Department of Economics, University of Reading)
    Abstract: We focus on the role of conformity with social norms and concern with relative income in the decision to supply unpaid care for parents. Individuals have different propensities to be influenced by both relative income and social norms, and face a time constraint on the provision of both paid work (which increases their income) and unpaid care. We estimate our model with a sample drawn from the British Household Panel Survey to assess these effects empirically, estimating both the supply of unpaid care and the effect on utility of different preferences for relative income and unpaid care. We find that providing care decreases individual utility: long care hours are bad for carers (and care recipients). Women feature disproportionately amongst care providers and their motivations for care provision differ to men's, both in respect to the importance attached to relative income and to conformity with social norms. After controlling for other factors, men are more envious than women (attach more weight to relative income) and indi¤erent to social norms in relation to caring, whereas the opposite holds for women, so status races are bad for the supply of care within families and particularly men's supply. This is an issue as caring (in right amounts) can be good for carers too if they agree with caring norms, even when they prefer paid work to caring (as men do). We discuss implications for care provision and working arrangements.
    Keywords: care, unpaid work, social norms, relative income
    JEL: J22 Z13 D01 D13
    Date: 2011–07–05
  10. By: Bernard Fingleton; Simonetta Longhi
    Abstract: This paper estimates individual wage equations in order to test two rival non-nested theories of economic agglomeration, namely New Economic Geography (NEG), as represented by the NEG wage equation and urban economic (UE) theory, in which wages relate to employment density. The paper makes an original contribution by evidently being the first empirical paper to examine the issue of agglomeration processes associated with contemporary theory working with micro-level data, highlighting the role of gender and other individual-level characteristics. For male respondents, there is no significant evidence that wage levels are an outcome of the mechanisms suggested by NEG or UE theory, but this is not the case for female respondents. We speculate on the reasons for the gender difference.
    Keywords: urban economics, new economic geography, household panel data
    JEL: C21 C31 C33 D1 O18 R20 R12
    Date: 2011–06
  11. By: Francesco Bogliacino (European Commission); Matteo Lucchese (Università di Urbino "Carlo Bo"); Mario Pianta (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo")
    Abstract: The patterns and mechanisms of job creation in business services are investigated in this article by considering the role of innovation, demand, wages and the composition of employment by professional groups. A model is developed and an empirical test is carried out with parallel analyses on a group of selected business services, on other services and on manufacturing sectors,considering six major European countries over the period 1996-2007. Within technological activities a distinction is made between those supporting either technological competitiveness, or cost competitiveness. Demand variables allow identifying the special role of intermediate demand. Job creation in business services appears to be driven by efforts to expand technological competitiveness and by the fast growing intermediate demand coming from other industries; conversely, process innovation leads to job losses and wage growth has a negative effect that is lower that in other industries. Business services show an increasingly polarised employment structure.
    Keywords: Business Services, Innovation, Employment.
    JEL: J20 J23 O30 O33
    Date: 2011
  12. By: Halla, Martin (University of Linz); Zweimüller, Martina (University of Linz)
    Abstract: This paper interprets accidents occurring on the way to and from work as negative health shocks to identify the causal effect of health on labor market outcomes. We argue that in our sample of exactly matched treated and control workers, these health shocks are quasi-randomly assigned. A fixed-effects difference-in-differences approach estimates a negative and persistent effect on subsequent employment and income. After initial periods with a higher incidence of sick leave, treated workers are more likely unemployed, and a growing share of them leaves the labor market via disability retirement. Those treated workers, who manage to stay in employment, incur persistent income losses. The effects are stronger for sub-groups of workers who are typically less attached to the labor market.
    Keywords: health, employment, income
    JEL: I10 J22 D31 J31 J24 J26 J64 J28
    Date: 2011–07
  13. By: Gilberto Antonelli (AlmaLaurea Inter-University Consortium, University of Bologna); Andrea Cammelli (AlmaLaurea Inter-University Consortium, University of Bologna); Furio Camillo (University of Bologna, AlmaLaurea Inter-University Consortium); Angelo di Francia (AlmaLaurea Inter-University Consortium); Silvia Ghiselli (AlmaLaurea Inter-University Consortium); Matteo Sgarzi (AlmaLaurea Inter-University Consortium)
    Abstract: In a phase of depression and systemic crisis investments are essential assets in organizing the recovery, and the more so when innovation is relevant. This is why universities, companies, households and graduates implement strategies for overcoming the present crisis, leading to structural changes and competition both at the local and international level. In this framework, tracer studies on graduates transition to the labour markets provides fundamental insights and information not only to the organizations responsible for their training, but also to the economic system as a whole. Moreover, any such study is all the more useful when it can draw upon reliable and up-to-date information. This paper emphasizes three main points. First we present the results achieved by the AL model in tracing the transition path of graduates from the time they enrolled at the university until a few years after earning the degree. The survey is carried out every year by the AL and makes it possible to analyze the most recent labour market trends through the scrutiny of the career opportunities available for the graduates after 1, 3 and 5 years on from graduation. More specifically, we will present the results of the 2008 survey. This survey involved also all first and second level graduates from the 2007 vintage. Second, we examine the revision in our survey method, adopted in order to face the need to monitor a much higher number of post-reform graduates (more than 140 thousand overall) and the call of the Ministry and the universities to keep the information as much detailed as possible in assessing the employment outcomes for each single degree course, without losing feasibility in terms of costs and data collection time. In fact, we resorted to a mixed method: the computer assisted web interviewing (CAWI) and the computer assisted telephone interviewing (CATI). This is why it became necessary to measure and assess the effect of this approach on the answers given by interviewed graduates. In third place, we outline the results of some preliminary experiments carried on in order to allow for specific and recurrent comparisons between the results achieved with the AL model and other similar models dealing with the employment conditions of Italian graduates.
    Keywords: Graduates’ employment; Graduates’ employability; Bologna Process; University reform; University governance; Assessment of the higher education system; CAWI and CATI survey techniques; Propensity score matching; Data quality control; Counter factual analysis; Labour supply, Human capital.
    Date: 2011–06
  14. By: Christine Greenhalgh (Oxford University); Mark Rogers (Oxford University); Philipp Schautschick (University of Munich)
    Abstract: A common assumption in innovation policy circles is that creative and inventive firms will help to sustain employment and wages in high wage countries. The view is that firms in high cost production locations that do not innovate are faced with loss of market share from import competition, so jobs move to producers in developing countries with lower labour costs. Domestic firms are encouraged to innovate, and to obtain intellectual property assets to protect their innovations, so that they can sustain local employment and pay high wages. Policies to subsidise R&D and to encourage intellectual property protection are partly justified on these grounds. Nevertheless the available evidence concerning the employment and wage benefits of such activity is rather sparse. In this paper we first survey some existing literature on innovation and jobs. We outline arguments for using both patents and trade marks as indicators of innovation. We then construct a large sample of UK firms observed from 2000 to 2006, matching records of patents and trade marks to company data. We begin by estimating a cross section employment growth equation for 2003-2006 to discover if there is any impact of stocks of trade marks acquired in 2000-2003. We then explore in more detail the impact of recent trade mark and patenting activity on the level of employment and the average rate of pay in these firms. We do this using the data as a six year panel, estimating both an employment function and a relative earnings equation at the firm level. Our aim throughout is to identify and calibrate the assumed positive effects that underpin modern innovation policy.
    Keywords: patents, trademarks, innovation, labot costs, wages, firms
    JEL: D21 E22 H32 K13
    Date: 2011–05
  15. By: Urban Sila (Bank of Slovenia); Ricardo M. Sousa (Universidade do Minho - NIPE)
    Abstract: We investigate whether workers adjust hours worked in response to windfall gains using data from the European Household Panel. The results suggest that unexpected variation in income has a negative (although small) effect on working hours. In particular, after receiving an unanticipated windfall gain, individuals are more likely to drop out of the labour force and the effects become larger as the size of windfall increases. Furthermore, the empirical findings show that the impact of windfall gains on labour supply: (i) is more important for young and old individuals, (ii) is mostly negative for married individuals with young children, (iii) but can be positive for single individuals at the age of around 40 years.
    Keywords: windfall gains, working hours
    JEL: E37 E62
    Date: 2011

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