nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2011‒08‒15
eighteen papers chosen by
Erik Jonasson
Lund University

  1. How Does Occupational Status Impact Bridge Job Prevalence? By Kevin E. Cahill; Michael D. Giandrea; Joseph F. Quinn
  2. Substitution Between Individual and Cultural Capital: Pre-Migration Labor Supply, Culture and US Labor Market Outcomes Among Immigrant Women By Francine D. Blau; Lawrence M. Kahn
  3. Evolution of the Industrial Wage Structure in China Since 1980 By Kwon, O Hyun; Fleisher, Belton M.; Deng, Quheng
  4. Ethnic patterns of returns to education in Bulgaria: Do minorities have an incentive to invest in education? By Claudia Trentini
  5. UNDECLARED WORK AND WAGE INEQUALITY By Leandro Elia; Edoardo Di Porto
  6. OnâFarm and OffâFarm Returns to Education among Farm Operators in Northern Ireland By Wallace, Michael T.; Jack, Claire G.
  7. Statistical Discrimination, Employer Learning, and Employment Differentials by Gender, Race, and Education By Seik Kim
  8. Educational Spillovers at the Firm Level: Who Benefits from Whom? By Uschi Backes-Gellner; Christian Rupietta; Simone N. Tuor
  9. Do Employment Quotas Explain the Occupational Choices of Disadvantaged Minorities in India? By Howard, Larry L.; Prakash, Nishith
  10. Estimating the impact of trade and offshoring on American workers using the current population surveys By Ebenstein, Avraham; Harrison, Ann; McMillan, Margaret; Phillips, Shannon
  11. Exporting wage premium in the exporting sector: evidence from manufacturing firms in China By Fu, Dahai; Wu, Yanrui
  12. Financial Shocks and Industrial Employment By Erdem Basci; Yusuf Soner Baskaya; Mustafa Kilinc
  13. Bounds on the Return to Education in Australia using Ability Bias By Martine Mariotti; Juergen Meinecke
  14. Child Care, Maternal Employment and Persistence: A Natural Experiment from Spain By Nollenberger, Natalia; Rodriguez-Planas, Nuria
  15. Commuter Effects on Local Labour Markets: A German Modelling Study By Giovanni Russo; Federico Tedeschi; Aura Reggiani; Peter Nijkamp
  16. The Incredible Shrinking Portuguese Firm By Serguey Braguinsky; Lee G. Branstetter; Andre Regateiro
  17. Households' Time Allocation to Micro Credit By Akhimienmhonan, Douglas; Fulton, Murray E.
  18. Economic Returns to Education: What We Know, What We Don’t Know, and Where We Are Going – Some Brief Pointers By Matt Dickson; Colm Harmon

  1. By: Kevin E. Cahill (Sloan Center on Aging & Work at Boston College); Michael D. Giandrea (U.S. Bureau of Labor Statistics); Joseph F. Quinn (Boston College)
    Abstract: Is bridge job prevalence reduced significantly if a change in occupation is required in addition to the hours and tenure requirements that typically define bridge job employment? Prior research has shown that the majority of older Americans with career employment do not exit the labor force directly from their careers. Rather, most career individuals take on a “bridge job” later in life, that is, a job that follows full-time career (FTC) employment and precedes complete labor force withdrawal (i.e., retirement). One criticism of this finding is that bridge job prevalence may be overstated because the definition of a bridge job in the existing literature does not require a change in occupation. This paper investigates the extent to which bridge jobs involve a change in occupation or a switch to part-time status, both of which may signal retirement transitions as opposed to continued career employment, albeit with a different employer. We use the Health and Retirement Study (HRS), a nationally-representative longitudinal dataset of older Americans that began in 1992 as the basis for our analysis. We find that, among HRS respondents who were on a FTC job at the time of the first interview and who changed jobs in subsequent waves, 48 percent of the men and 40 percent of the women also changed occupations, using 2-digit occupation codes. Further, when hours worked are also considered, we find that more than three quarters of FTC respondents who changed jobs later in life had either a change in occupation or a switch from full-time to part-time status. Finally, an examination of those career workers who changed jobs but not occupations and who remained working full time reveals that, as a whole, they resemble those who took bridge jobs rather than those who remained on their FTC job. We conclude that the vast majority of career workers who changed jobs later in life did in fact do so as part of a retirement transition.
    Keywords: Economics of Aging, Partial Retirement, Occupation Change, Gradual Retirement
    JEL: J26 J14 J32 H55
    Date: 2011–08
  2. By: Francine D. Blau; Lawrence M. Kahn
    Abstract: In this paper we use New Immigrant Survey data to investigate the impact of immigrant women’s own labor supply prior to migrating and female labor supply in their source country to provide evidence on the role of human capital and culture in affecting their labor supply and wages in the United States. We find, as expected, that women who migrate from countries with relatively high levels of female labor supply work more in the United States. Moreover, most of this effect remains when we further control for each woman’s own labor supply prior to migrating, which itself also strongly affects labor supply in the United States. Importantly, we find a significantly negative interaction between pre-migration labor supply and source country female labor supply. We obtain broadly similar effects analyzing the determinants of hourly earnings among the employed in the United States, although the results are not always significant. These results suggest an important role for culture and norms in affecting immigrant women’s labor supply, since the effect of source country female labor supply on immigrant women’s US work hours is still strong even controlling for the immigrant’s own pre-migration labor supply. The negative interaction effects between previous work experience and source country female labor supply on women’s US work hours and wages suggest that cultural capital and individual job-related human capital act as substitutes in affecting preparedness for work in the US.
    JEL: J16 J22 J24 J61
    Date: 2011–08
  3. By: Kwon, O Hyun (Peking University); Fleisher, Belton M. (Ohio State University); Deng, Quheng (Chinese Academy of Social Sciences)
    Abstract: Industry mean wages in China have exhibited sharply increased dispersion since the early 1990s. The upward trend in differences of average wages among major industry groups parallels increases in wage and income inequality not only between rural and urban sectors but within the urban economy as well. Research on the trend has focused on (1) how market forces have led to a better match between worker pay and worker skills; on (2a) how the growing share of employment in the private sector has “caused” growing wage inequality; and (2b) how residual government control in a few industrial sectors has contributed to wage inequality due monopoly rent sharing. We show that the industrial wage dispersion in China has evolved to match long-recognized international patterns of industrial wage dispersion and that an increasing proportion of industrial wage dispersion can be explained as returns to observed worker characteristics.
    Keywords: industry-wage structure, inequality, China
    JEL: J31 D33 L16 O53
    Date: 2011–07
  4. By: Claudia Trentini (United Nations Economic Commission for Europe)
    Abstract: It is widely accepted that disparities in education contribute to the poor labor market outcomes experienced by ethnic minority groups and consequently to their poverty. However, incentives to invest in education are significantly diminished if individuals are discriminated in the labor market and precluded from access to employment. In this paper we analyze differential educational benefits in Bulgaria and compare Roma returns to education with the majority population and the Turkish minority. We show that both ethnic minority groups have lower educational levels and employment rates than the majority population and that they also have lower returns to education. However, the gap in returns to education is much wider for the Roma with respect to both employment and labour-market earnings. The evidence suggests that this group is more vulnerable to discrimination, with a high percentage of the employment gap unexplained by differences in observable skills or characteristics.
    Keywords: minorities, Roma, discrimination, returns to education, transition
    JEL: J15 J7 P36
    Date: 2011–07
  5. By: Leandro Elia; Edoardo Di Porto (Dipartimento di Economia e Statistica, Università della Calabria)
    Abstract: In this paper we study how undeclared work affects the wages of undeclared and declared workers and in particular the declared wage inequality. Using individual data on Italy in the years 2000-2004, we compute a cross and own labor demand elasticity for undeclared and declared work. We provide an identification strategy relying on Italian amnesty tax laws in 2002. Such laws have changed the shape of Italian undeclared sector causing a quick emersion of undeclared workers. Our results based on a set of 2SLS regressions suggest that undeclared work: 1) decreases declared wages, 2) adversely affects undeclared wages and 3) raises wage inequality in the declared sector. Undeclared work competes more with least skilled jobs, while do not affect high skilled jobs. We found complementarity between undeclared workers and medium skills jobs. As a consequence reducing undeclared work decreases wage inequality as well as it decreases the earnings in medium skill sectors. This result suggests that undertaking reducing undeclared labor-policy might encounter resistance because of welfare loss of the medium class of workers.
    Keywords: Elasticity of labor demand, Undeclared labor, Wage inequality
    JEL: H26 J23 J31
    Date: 2011–08
  6. By: Wallace, Michael T.; Jack, Claire G.
    Abstract: This paper estimates returns to education for a sample of farm operators in Northern Ireland. The analysis examines the relationship between education and on-farm and off-farm labour incomes. Human capital earnings functions are estimated to identify the marginal return to education measured as years of schooling as well as the qualification level attained. Extending to a structural model, the methodology controls for the endogeneity of education in the earnings function and potential selection bias associated with off-farm labour market participation. In off-farm employment, the analysis shows that returns to education are of the order of between 6% and 9% for each additional year of schooling. However, on-farm earnings were not found to be significantly related to years of education, although the analysis does identify a significant on-farm return to an agricultural qualification
    Keywords: Human Capital, Time Allocation and Labor Supply, Agricultural Labor Markets, Wage Level, Labor and Human Capital, J24, J22, J43, J31,
    Date: 2011–04
  7. By: Seik Kim
    Abstract: Previous papers on testing for statistical discrimination require variables that employers do not observe directly, but are observed by researchers or data on employer-provided performance measures. This paper develops a test that does not rely on these specific variables. The proposed test can be performed with individual-level cross-section data on employment status, potential experience, and some variables on which discrimination is based, such as race, gender, and education. This paper shows that if employers statistically discriminate among unexperienced workers, but learn about their productivity over time, then the unemployment rates for discriminated groups will be higher than those for non-discriminated groups at the time of labor market entry and that the unemployment rates for discriminated groups will decline faster than those for non-discriminated groups with experience. Using the March CPS for 1977-2010, the preliminary results suggest that employers statistically discriminate on the basis of race and education, but not on the basis of gender.
    Date: 2011–08
  8. By: Uschi Backes-Gellner (Department of Business Administration, University of Zurich); Christian Rupietta (Department of Business Administration, University of Zurich); Simone N. Tuor (Department of Business Administration, University of Zurich)
    Abstract: This paper examines spillover effects from education at the firm level, separating the effects for different levels and types of education and allowing for a curvilinear relationship. Modeling a Cobb-Douglas production function, we show that wages of tertiary-educated workers depend positively on the number of workers with an apprenticeship degree. These effects are the result of informational spillovers between differently educated workers. We estimate an aggregated Mincerian earnings equation using data from a large employer-employee survey and account for firm fixed effects as well as endogeneous workforce composition. Our results are highly significant and robust throughout our specifications and show that the number of workers with an apprenticeship degree has a positive impact on average wages of tertiary-educated workers but with a decreasing rate.
    Keywords: Education, Informational Spillovers, Wages
    JEL: I20 J24 J30
    Date: 2011–08
  9. By: Howard, Larry L. (California State University, Fullerton); Prakash, Nishith (Cornell University)
    Abstract: This article investigates the effects of a large-scale public sector employment quota policy for disadvantaged minorities (Scheduled Castes and Scheduled Tribes) in India on their occupational choices, as defined by skill level, during the 1980s and 1990s. We find that, first, the employment quota policy significantly affects the occupational structure of both disadvantaged minority populations. In response to the employment quotas, individuals belonging to the Scheduled Caste group are more likely to choose high-skill occupations and less likely to choose low- and middle-skill occupations, while individuals belonging to the Scheduled Tribe group are less likely to choose high-skill occupations and more likely to choose low- and middle-skill occupations. Second, the impact of the employment quotas is significantly related with an individual's years of schooling. Overall, the results indicate that the employment quota policy changes the occupational choices of individuals within the targeted populations and contributes to their improved socio-economic standing.
    Keywords: occupational choice, employment quota, affirmative action, skill, caste, India
    JEL: J62 J61 J24 O10 O2
    Date: 2011–07
  10. By: Ebenstein, Avraham; Harrison, Ann; McMillan, Margaret; Phillips, Shannon
    Abstract: The authors link industry-level data on trade and offshoring with individual-level worker data from the Current Population Surveys. They find that occupational exposure to globalization is associated with larger wage effects than industry exposure. This effect has been overlooked because it operates between rather than within sectors of the economy. The authors also find that globalization is associated with a reallocation of workers across sectors and occupations. They estimate wage losses of 2 to 4 percent among workers leaving manufacturing and 4 to 11 percent among workers who also switch occupations. These effects are most pronounced for workers who perform routine tasks.
    Keywords: Labor Markets,Labor Policies,Economic Theory&Research,Emerging Markets,E-Business
    Date: 2011–08–01
  11. By: Fu, Dahai; Wu, Yanrui
    Abstract: This paper investigates whether exporting firms pay average higher wages than non-exporting firms by analyzing a large sample of Chinese manufacturing firms in 2004. Through rigorous exercises involving robust regressions, quantile regressions and nonparametric matching estimators, we find that the wage premium of exporting activities is not a prevailing phenomenon in China. It is unevenly distributed among firms with different ownerships, export-orientations and locations. Overall, exporters located in coastal regions but Guangdong province are more likely to pay higher average wages than nonexporters, while those producing in Guangdong offer a lower pay.
    Keywords: Exporters; Wage premium; Manufacturing; China
    JEL: F16 J31 L6
    Date: 2011–06–06
  12. By: Erdem Basci; Yusuf Soner Baskaya; Mustafa Kilinc
    Abstract: By using the U.S. NBER-CES industry-level data for the 1962-2005 period, we analyze how exogenous changes in firms'borrowing costs, measured by the spread between Baa and Aaa rated corporate bonds, affect employment dynamics and whether external finance dependence differences across industries lead to different employment responses to financial shocks. In order to identify the exogenous changes in the spreads, we use an index based on the exogenous economic and non-economic events provided by Bloom (2009). Our estimates suggest that a 1-standard deviation exogenous increase in the cost of borrowing, corresponding to a 0.28 percentage point increase in spreads, reduces employment growth by 0.39-0.70 percent for the industries at the median of external finance dependence distribution, depending on the specification. We also find that the industries with higher external finance dependence face higher employment losses following adverse financial shocks. Finally, our out of sample forecasts for the 2008-2009 crisis imply that the increase in spreads between August 2008 and December 2008 can generate a 4.7-5.8 percent decline in manufacturing industry employment, keeping all other factors constant, where the actual decline was 11.4% for 2009.
    Keywords: Employment, Financial Shocks, External Finance Dependence, Working Capital Channel.
    JEL: E24 J23 J63
    Date: 2011
  13. By: Martine Mariotti; Juergen Meinecke
    Abstract: We estimate the average return to education and the ability bias applying a parametric model of intra-household correlation suggested by Card (1999, 2001) to the Household, Income and Labour Dynamics in Australia survey. Using the subsample of dual-earner households, we obtain an average return to education of 5.5% and an ability bias of 19%. Our paper is also the first to provide informative inference results on ability bias. We extrapolate the ability bias estimate from dual-earner households to the whole sample. Using Manski's (1989) nonparametric no assumptions bounds to partially identify the ability bias for the whole sample, we find that ability bias lies between 9% and 63%. This implies an average return to education of between 3.0% and 7.4% for the whole sample. Our estimates are conservative and compare well to other estimates of the average return to education which typically lie to the right of that interval.
    JEL: I21 I28 J24
    Date: 2011–08
  14. By: Nollenberger, Natalia (Universitat Autònoma de Barcelona); Rodriguez-Planas, Nuria (Universitat Autònoma de Barcelona)
    Abstract: Reconciling work and family is high on many governments' agenda, especially in countries, such as Spain, with record-low fertility and female labor force participation rates. This paper analyzes the effects of a large-scale provision of publicly subsidized child care in Spain in the early 1990s, addressing the impact on mothers’ short- and long-run employment outcomes (up to four years after the child was eligible to participate in the program). Exploiting the staggered timing and age-targeting of this child-care expansion, our estimates show that the policy led to a sizable increase in employment (8%), and hours worked (9%) of mothers with age-eligible (3-year-old) children, and that these effects persisted over time. Heterogeneity matters. While persistence is strong among mothers with a high-school degree, the effects of the program on maternal employment quickly fade away among those without a high-school degree. These findings are consistent with the program reducing the depreciation of human capital. The lack of any results among college educated mothers, which represent less than one tenth of mothers, is most likely due to the fact that they are able to pay day care (even when it is mainly privately supplied), and that most of them are already strongly attached to the labor force.
    Keywords: mother's labor supply, preschool children, childcare, quasi-natural experiment, differences-in-differences-in-differences
    JEL: H42 H52 I20 J13 J21 J22
    Date: 2011–07
  15. By: Giovanni Russo (VU University Amsterdam); Federico Tedeschi (University of Bologna); Aura Reggiani (University of Bologna); Peter Nijkamp (VU University Amsterdam)
    Abstract: This paper offers an exploratory investigation of the effects of inbound commuter flows on employment in regional labour markets in Germany. For this purpose, we distinguish three main channels that may transmit the effects concerned: a crowding-out mechanism, and two labour demand effects, namely, an aggregate demand effect and a positive externality on vacancy creation. To this end, we develop a stepwise commuting impact model. Our results bring to light that, on the whole, commuter flows have a positive and robust effect on both employment and the number of jobs in the receiving labour market districts, but a distinctly negative effect on the share of jobs filled by resident workers. We then interpret the implications of our results, and, finally, we suggest ways in which the analysis could be improved and expanded.
    Keywords: commuter flows; lacal labour markets
    JEL: J21
    Date: 2011–08–09
  16. By: Serguey Braguinsky; Lee G. Branstetter; Andre Regateiro
    Abstract: Using Portugal's extensive matched employer-employee data set, this paper documents an unusual feature of the Portuguese economy. For decades, the entire Portuguese firm size distribution has been shifting to the left. We argue in this paper that Portugal's shrinking firms are linked to the country's anemic growth and low productivity. We show that the shift in the Portuguese firm size distribution is not reflected in other advanced industrial economies for which we have been able to obtain comparable data. Careful attempts to account for expanding data coverage, a structural shift from manufacturing to services, and aggressive efforts to "demonopolize" the Portuguese economy leave about half of this shift unexplained by these factors. So, what does explain the shift? We argue that Portugal's uniquely strong protections for regular workers have played an important role. Drawing upon an emerging literature that that attributes much of the productivity gap between advanced nations and developing nations to the misallocation of resources across firms in developing countries, we develop a theoretical model that shows how Portugal's labor market institutions could prevent more productive firms from reaching their optimal size, thereby constraining GDP per capita. Calibration exercises based on this model quantify the degree of labor market distortion consistent with recent shifts in the Portuguese firm size distribution. These calibration exercises suggest quite substantial growth effects could arise if the distortions were lessened or abolished altogether.
    JEL: J21 J58 J80 K3 L51 O12 O41 O52
    Date: 2011–07
  17. By: Akhimienmhonan, Douglas; Fulton, Murray E.
    Abstract: This paper presents two models in explaining time allocation to micro credit (MC) by households in North America. The single-period model explains the optimal allocation of time to a microenterprise in any given period, conditional on the household having self-selected into the MC program. A householdâs time allocation is negatively affected by its wage in paid employment, its degree of risk aversion, and its relative preference for leisure. The multi-period model explains the householdâs decision to self-select into the MC program. This decision is anchored on the sequential lending attribute of most MC programs. Sequential lending means that a householdâs current use of MC gives it access to greater funds in the future. The likelihood of self-selecting into the program is positively influenced by the size of the micro credit loan, the future streams of loans anticipated from current participation, the rate of appreciation of the investment over time as well as the householdâs discount factor. This likelihood is negatively influenced by the householdsâ wage rate in paid employment and the costs of borrowing. Under certain conditions, the household â in a bid to access a future loan â would borrow money in the short run and repay it without having invested it in a microenterprise. Implications for the demand for MC in North America are discussed.
    Keywords: Microenterprise, Sequential lending, Time allocation, Micro credit, Discount factor, Consumer/Household Economics, Food Security and Poverty, Labor and Human Capital,
    Date: 2011
  18. By: Matt Dickson (UCD Geary Institute, University College Dublin CMPO, University of Bristol); Colm Harmon (UCD Geary Institute, University College Dublin Research School of Economics, Australian National University IZA, Bonn)
    Abstract: The estimation of the economic return to education has perhaps been one of the predominant areas of analysis in applied economics for over 50 years. In this short note we consider some of the recent directions taken by the literature, and also some of the blockages faced by both science and policymakers in pushing forward some key issues. This serves by way of introduction to a set of papers for a special issue of the Economics of Education Review.
    Keywords: Returns to education, education policy
    JEL: J08 J30 J38 C21
    Date: 2011–08–08

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