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on Labor Markets - Supply, Demand, and Wages |
| By: | Fernández, Raquel (New York University); Wong, Joyce Cheng (New York University) |
| Abstract: | Women born in 1935 went to college significantly less than their male counterparts and married women's labor force participation (LFP) averaged 40% between the ages of thirty and forty. The cohort born twenty years later behaved very differently. The education gender gap was eliminated and married women's LFP averaged 70% over the same ages. In order to evaluate the quantitative contributions of the many significant changes in the economic environment, family structure, and social norms that occurred over this period, this paper develops a dynamic life-cycle model calibrated to data relevant to the 1935 cohort. We find that the higher probability of divorce and the changes in wage structure faced by the 1955 cohort are each able to explain, in isolation, a large proportion (about 60%) of the observed changes in female LFP. After combining all economic and family structure changes, we find that a simple change in preferences towards work can account for the remaining change in LFP. To eliminate the education gender gap requires, on the other hand, for the psychic cost of obtaining higher education to change asymmetrically for women versus men. |
| Keywords: | divorce, labor force participation, gender gap, education and skill premium |
| JEL: | J12 J16 J22 E21 D91 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6046&r=lma |
| By: | Erling Barth (Institute for Social Research, Oslo); Bernt Bratsberg (Ragnar Frisch Centre for Economic Research); Oddbjørn Raaum (Ragnar Frisch Centre for Economic Research) |
| Abstract: | Life cycle wages of immigrants from developing countries fall short of catching up with wages of natives. This disparity reflects both lower wages at entry and lower wage growth. Using linked employer-employee data, we show that 40 percent of the native-immigrant wage gap is explained by differential sorting across establishments. Our findings point to differences in job mobility and intermittent spells of unemployment as major sources of the discrepancy in lifetime wages. The inferior wage growth of immigrants primarily results from failure to advance to higher paying establishments over time. This pattern is consistent with statistical discrimination in hiring but not with monopsonistic discrimination due to informational frictions. |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:nor:wpaper:2011019&r=lma |
| By: | Carroll, David (Macquarie University, Sydney); Tani, Massimiliano (Macquarie University, Sydney) |
| Abstract: | Recent research into the Australian labour market has reported that a substantial proportion of the tertiary-educated labour force is under-utilised relative to their level of education, echoing findings from an expanding international literature. This paper uses recent panel data from the 2010 Beyond Graduation Survey to analyse the incidence of labour force under-utilisation amongst recent Australian graduates and its effect on their wages, with an under-utilised graduate defined as a one who is in a job for which a sub-degree qualification would suffice. We find that 26% of graduates were under-utilised immediately after course completion and 15% were under-utilised three years later, although this varied considerably between subgroups. Recent graduates were much more likely to remain under-utilised than become under-utilised later in their careers. Being under-utilised appears to affect the earnings of different graduate age groups in different ways. Controlling for unobserved heterogeneity, we find that younger graduates tend to earn the same mean wages regardless of whether or not they are under-utilised, while older under-utilised bachelor degree graduates are at a significant wage disadvantage relative to their peers. This is suggestive of a graduate skills surplus and, by extension, inefficient public and individual investment in human capital. |
| Keywords: | graduate labour market, human capital, panel data |
| JEL: | I23 J24 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6047&r=lma |
| By: | Shutao Cao; Enchuan Shao; Pedro Silos |
| Abstract: | This paper constructs a theory of the coexistence of fixed-term and permanent employment contracts in an environment with ex-ante identical workers and employers. Workers under fixed-term contracts can be dismissed at no cost while permanent employees enjoy labor protection. In a labor market characterized by search and matching frictions, firms find it optimal to discriminate by offering some workers a fixedterm contract while offering other workers a permanent contract. Match-specific quality between a worker and a firm determines the type of contract offered. We analytically characterize the firm’s hiring and firing rules. Using matched employer-employee data from Canada, we estimate the model’s parameters. Increasing the level of firing costs increases wage inequality and decreases the unemployment rate. The increase in inequality results from a larger fraction of temporary workers and not from an increase in the wage premium earned by permanent workers. |
| Keywords: | Labour markets; Potential output; Productivity |
| JEL: | H29 J23 J38 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:11-21&r=lma |
| By: | TATIANE ALMEIDA DE MENEZES (PIMES/UFPE); ISABEL RAPOSO (FUNDAJ) |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2010:236&r=lma |
| By: | Jorge Friedman; Nanno Mulder; Sebastián Faúndez; Esteban Pérez Caldentey; Carlos Yévenes; Mario Velásquez; Fernando Baizán; Gerhard Reinecke |
| Abstract: | This paper examines the relationship between wages and levels of trade and FDI openness in twenty-nine sectors of the Chilean economy. Over the last four decades, this country almost fully liberalized its trade and foreign direct investment, which accelerated growth of flows in both areas and contributed to important changes in the labour market. Using cluster analysis, we divide 29 sectors into three groups of high, medium and low levels of trade and foreign direct investment penetration in 2003 and 2008. Subsequently, an average wage equation is estimated for salaried workers in each group based on their characteristics (gender, education, work experience and union membership) using microdata of the Supplementary Income Survey (SIS) database. Differences between average wages of the three groups are decomposed with the Oaxaca-Blinder method. The results confirm that the group of most open sectors pays a “wage premium” to its workers. It is also shown that most of this premium is accounted for by higher levels of labour unionisation compared to other sectors. An alternative grouping of sectors into two categories of tradable and non-tradable sectors based on export intensity only yields similar results. |
| Keywords: | trade, employment, wages, Chile, inclusive growth, openness, unionisation, wage gap, Oaxaca-Blinder method |
| JEL: | F16 |
| Date: | 2011–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:134-en&r=lma |
| By: | Blundell, Richard W (University College London); Bozio, Antoine (Institute for Fiscal Studies, London); Laroque, Guy (CREST-INSEE) |
| Abstract: | This paper documents the key stylised facts underlying the evolution of labour supply at the extensive and intensive margins in the last forty years in three countries: United-States, United-Kingdom and France. We develop a statistical decomposition that provides bounds on changes at the extensive and intensive margins. This decomposition is also shown to be coherent with the analysis of labour supply elasticities at these margins. We use detailed representative micro-datasets to examine the relative importance of the extensive and intensive margins in explaining the overall changes in total hours worked. |
| Keywords: | labor supply, employment, hours of work |
| JEL: | J21 J22 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6051&r=lma |
| By: | Jonathan James |
| Abstract: | This paper develops and estimates an individual model of occupational choice and learning that allows for correlated learning across occupation-specific abilities. As an individual learns about their occupation-specific ability in one occupation, this experience will be broadly informative about their abilities in all occupations. Workers continually process their entire history of information, which they use to determine when to change careers, as well as which new career to go to. Endogenizing information in this manner has been computationally prohibitive in the past. I estimate the model in an innovative way using the Expectation and Maximization (EM) algorithm. The model is estimated on the National Longitudinal Survey of Youth 1997. The estimates suggest that both direct and indirect learning play an important role in early career wage growth, with those with the lowest levels of education achieving the largest increases. |
| Keywords: | Occupational training |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1125&r=lma |
| By: | Whelan, Kenneth T. (Cornell University); Ehrenberg, Ronald G. (Cornell University); Hallock, Kevin F. (Cornell University); Seeber, Ronald L. (Cornell University) |
| Abstract: | We evaluate potential determinants of enrollment in an early retirement incentive program for non-tenure-track employees at a large university. Using administrative records on the eligible population of employees not covered by collective bargaining agreements, historical employee count and layoff data by budget units, and public information on unit budgets, we find dips in per-employee finances in a budget unit during the application year and higher recent per employee layoffs were associated with increased probabilities of eligible employee program enrollment. Our results also suggest that, on average, employees whose salaries are lower than we would predict given their personal characteristics and job titles were more likely to enroll in the early retirement program. To the extent that employees' compensation reflect their productivity, as it should under a pay system in which annual salary increases are based on merit, this finding suggests that adverse selection was not a problem with the program. That is, we find no evidence that on average the "most productive" employees took the incentive. |
| Keywords: | retirement incentive program, adverse selection, layoff threat, university |
| JEL: | I23 J26 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6055&r=lma |
| By: | Luca Flabbi and Andrea Moro (Department of Economics, Georgetown University) |
| Abstract: | In this article, we develop a search model of the labor market in which jobs are characterized by work-hours flexibility. Workers value flexibility, which is costly for employers to provide. We estimate the model on a sample of women extracted from the CPS. The model parameters are empirically identified because the accepted wage distributions of flexible and non-flexible jobs are directly related to the preference for flexibility parameters. Results show that more than one-third of women place a small, positive value on flexibility. Women with a college degree value flexibility more than women with only a high school degree. Counterfactual experiments show that flexibility has a substantial impact on the wage distribution but a negligible impact on the unemployment rate. These results suggest that wage and schooling differences between males and females may be importantly related to flexibility. |
| Date: | 2011–01–04 |
| URL: | http://d.repec.org/n?u=RePEc:geo:guwopa:gueconwpa~11-11-04&r=lma |
| By: | Raymundo Miguel Campos-Vázquez; José Antonio Rodríguez-López |
| Abstract: | We analyze the effects of trade liberalization on Mexican employment at an occupational level for the period from 1992 to 2009, ranking occupations by skill level. We find that the reduction in trade costs associated with Mexico's entry to NAFTA is related to larger employment expansions in low-skill occupations. This evidence runs counter to a story of skilled-biased technological change in Mexico, and in favour of a heterogeneous-firm model of trade in tasks where the offshoring cost of an occupation is positively related to its skill level. After NAFTA, labour demand for unskilled workers has increased and labour demand for skilled workers has been stagnant, even though supply of skilled workers has increased in the last 20 years. We provide intuitive evidence to identify a number of relevant bottlenecks in the Mexican economy that may be associated with these developments. |
| Keywords: | trade, employment, wages, inclusive growth |
| JEL: | F16 |
| Date: | 2011–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:129-en&r=lma |
| By: | Alicia H. Munnell; Jean-Pierre Aubry; Josh Hurwitz; Laura Quinby |
| Abstract: | A widespread perception is that state-local government workers receive high pension benefits which, combined with Social Security, provide more than adequate retirement income. The perception is consistent with multiplying the 2-percent benefit factor in most plan formulae by a 35- to 40- year career and adding a Social Security benefit. But this calculation assumes that individuals spend enough of their career in the public sector to produce such a retirement outcome. This brief summarizes the results of a paper that uses Health and Retirement Study (HRS) and actuarial reports published by state and local pension systems to test the hypothesis that state-local workers have more than enough money for retirement. |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ibslp22&r=lma |
| By: | Laura Munro |
| Abstract: | This report provides a summary of the literature on the relationship between trade and informality in developing countries, with an emphasis on the BRIICS. While main conclusions of the ILO and WTO (2009) literature review are highlighted, the report focuses on additional and more recent literature. The report investigates four key issues in the literature on trade and informal labour markets: (1) theoretical predictions for trade and informality; (2) how trade liberalisation affects informal labour markets; (3) how trade flows affect the informal economy; and (4) what implications informality has for trade and growth. The main conclusion from this review is that empirical evidence on the relationship between trade and informality is complex and context-specific. Several of the empirical analyses reviewed in this report suggest that this variation is due to country-specific characteristics (in particular, labour market rigidity, capital mobility, level of economic development and heterogeneity of the informal workforce). Variation can also be partly explained by the fact that different methodologies are used and different measures of informality are employed across studies. |
| Keywords: | trade, employment, wages, inclusive growth |
| JEL: | F16 |
| Date: | 2011–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:132-en&r=lma |
| By: | Carolin V. Schürg (Justus Liebig University, Giessen); Nadeem Naqvi (Justus Liebig University, Giessen) |
| Abstract: | An economy’s production set is the collection of all net output vectors that the economy is capable of producing with a given technology and fixed quantities of primary factors of production. The boundary of this set is called the production possibility frontier or PPF. We show that, if the efficiency-wage hypothesis holds, a country’s PPF, though conceptually valid, is an operationally irrelevant concept, because the economy never operates on the PPF, which is a view that ought to be appreciated in light of persistent unemployment in the new structure of economies of the post-21st-Century-crisis world. |
| Keywords: | general equilibrium, production set, production possibility frontier, efficiency wage, economic policy, labor market |
| JEL: | A20 D50 E23 F11 J23 J31 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201146&r=lma |
| By: | Fabrizio Colonna (Banca d'Italia); Stefania Marcassa (Paris School of Economics) |
| Abstract: | Italy has the lowest labor force participation of women among OECD countries. Moreover, the participation rate of married women is positively correlated to their husbands' income. We show that a high tax schedule together with tax credits and transfers raise the burden of two-earner households, generating disincentives to work. We estimate a structural labor supply model for women, and use the estimated parameters to simulate the effects of alternative revenue-neutral tax systems. We find that joint taxation implies a drop in the participation rate. Conversely, working tax credit and gender-based taxation boost it, with the effects of the former concentrated on low educated women. |
| Keywords: | female labor force participation, Italian tax system, marginal tax rate, joint taxation, gender-based taxation, working tax credit |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2011-021&r=lma |
| By: | ADRIANA FONTES ROCHA EXPÓSITO DA SILVA (IETS); VALÉRIA LÚCIA PERO (UFRJ) |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2010:140&r=lma |