nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2011‒11‒21
fifteen papers chosen by
Erik Jonasson
Lund University

  1. General Education, Vocational Education, and Labor-Market Outcomes over the Life-Cycle By Hanushek, Eric A.; Woessmann, Ludger; Zhang, Lei
  2. Wage Effects of On-the-Job Training: A Meta-Analysis By Haelermans, Carla; Borghans, Lex
  3. The Labor Supply and Retirement Behavior of China's Older Workers and Elderly in Comparative Perspective By Giles, John T.; Wang, Dewen; Cai, Wei
  4. Gender Gaps Across Countries and Skills: Supply, Demand and the Industry Structure By Claudia Olivetti; Barbara Petrongolo
  5. Ethnic Identity and Immigrants' Wages in Greece By Drydakis, Nick
  6. Rent-Sharing, Hold-up, and Wages: Evidence from Matched Panel Data By Card, David; Devicienti, Francesco; Maida, Agata
  7. Does High Involvement Management Improve Worker Wellbeing? By Alex Bryson; Petri Böckerman; Pekka Ilmakunnas
  8. Rising Labor Productivity during the 2008-9 Recession By Casey Mulligan
  9. Regional labor demand and national labor market institutions in the EU15 By Herwartz, Helmut; Niebuhr, Annekatrin
  10. Labor Demand During the Crisis: What Happened in Germany? By Bohachova, Olga; Boockmann, Bernhard; Buch, Claudia M.
  11. Ethnic origin, local labour markets and self-employment in Sweden: A Multilevel Approach By Andersson, Lina; Hammarstedt, Mats; Hussain, Shakir; Shukur, Ghazi
  12. Job and Worker Turnover in German Establishments By Bellmann, Lutz; Gerner, Hans-Dieter; Upward, Richard
  13. The gender gap of returns on education across West European countries By Mendolicchio, Concetta; Rhein, Thomas
  14. Further Evidence from Census 2000 About Earnings by Detailed Occupation for Men and Women: The Role of Race and Hispanic Origin By Daniel Weinberg
  15. Why Has the Fraction of Contingent Workers Increased? A Case Study of Japan By Hirokatsu Asano; Takahiro Ito; Daiji Kawaguchi

  1. By: Hanushek, Eric A. (Stanford University); Woessmann, Ludger (Ifo Institute for Economic Research); Zhang, Lei (Tsinghua University)
    Abstract: Policy debates about the balance of vocational and general education programs focus on the school-to-work transition. But with rapid technological change, gains in youth employment from vocational education may be offset by less adaptability and thus diminished employment later in life. To test our main hypothesis that any relative labor-market advantage of vocational education decreases with age, we employ a difference-in-differences approach that compares employment rates across different ages for people with general and vocational education. Using micro data for 18 countries from the International Adult Literacy Survey, we find strong support for the existence of such a trade-off, which is most pronounced in countries emphasizing apprenticeship programs. Results are robust to accounting for ability patterns and to propensity-score matching.
    Keywords: vocational education, apprenticeship, employment, wages, life-cycle, adult education, International Adult Literacy Survey (IALS)
    JEL: J24 J64 J31 I20
    Date: 2011–10
  2. By: Haelermans, Carla (Maastricht University); Borghans, Lex (Maastricht University)
    Abstract: A meta-analysis is used to study the average wage effects of on-the-job training. This study shows that the average reported wage effect of on-the-job training, corrected for publication bias, is 2.6 per cent per course. The analyses reveal a substantial heterogeneity between training courses, while wage effects reported in studies based on instrumental variables and panel estimators are substantially lower than estimates based on techniques that do not correct for selectivity issues. Appropriate methodology and the quality of the data turn out to be crucial to determine the wage returns.
    Keywords: on-the-job training, meta-analysis, publication bias
    JEL: J21 J24 M53 I21
    Date: 2011–10
  3. By: Giles, John T. (World Bank); Wang, Dewen (World Bank); Cai, Wei (World Bank)
    Abstract: This paper highlights the employment patterns of China’s over-45 population and, for perspective, places them in the context of work and retirement patterns in Indonesia, Korea, the United States, and the United Kingdom. As is common in many developing countries, China can be characterized as having two retirement systems: a formal system, under which urban employees receive generous pensions and face mandatory retirement by age 60, and an informal system, under which rural residents and individuals in the informal sector rely on family support in old age and have much longer working lives. Gender differences in age of exit from work are shown to be much greater in urban China than in rural areas, and also greater than observed in Korea and Indonesia. Descriptive evidence is presented suggesting that pension eligible workers are far more likely to cease productive activity at a relatively young age. A strong relationship between health status and labor supply in rural areas is observed, indicating the potential role that improvements in access to health care may play in extending working lives and also providing some basis for a common perception that older rural residents tend to work as long as they are physically capable. The paper concludes with a discussion of measures that may facilitate longer working lives as China’s population ages.
    Keywords: retirement, population aging, labor supply, pensions, China, Indonesia, Korea
    JEL: J26 J14 O15 O17 O57
    Date: 2011–10
  4. By: Claudia Olivetti; Barbara Petrongolo
    Abstract: The gender wage gap varies widely across countries and across skill groups within countries. Interestingly, there is a positive cross-country correlation between the unskilled- to-skilled gender wage gap and the corresponding gap in hours worked. Based on a canonical supply and demand framework, this positive correlation would reveal the presence of net demand forces shaping gender differences in labor market outcomes across skills and countries. We use a simple multi-sector framework to illustrate how differences in labor demand for different inputs can be driven by both within-industry and between-industry factors. The main idea is that, if the service sector is more developed in the US than in continental Europe, and unskilled women tend to be over-represented in this sector, we expect unskilled women to suffer a relatively large wage and/or employment penalty in the latter than in the former. We find that, overall, the between-industry component of labor demand explains more than half of the total variation in labor demand between the US and the majority of countries in our sample, as well as one-third of the correlation between wage and hours gaps. The between-industry component is relatively more important in countries where the relative demand for unskilled females is lowest.
    Keywords: gender gaps, education, demand and supply, industry structure
    JEL: E24 J16 J31
    Date: 2011–11
  5. By: Drydakis, Nick (University of Patras)
    Abstract: This study investigates the impact of ethnic identity on Albanian, Bulgarian, Romanian, Georgian, and Russian wages in Greece. Treating ethnic identity as a composite of language, cultural habits, ethnic-self identification, societal interaction, and future citizenship plans, the estimations suggest that assimilation and integration are positively associated with immigrant wages, while separation and marginalisation are negatively associated with immigrant wages, after considering various demographic and pre- and post-immigration characteristics. In addition, dramatic wage growth for fully assimilated and integrated immigrants, and vast wage losses for totally separated and marginalised immigrants are estimated. A healthy Greek – as well as a European – immigration system should recognise labour immigration flows and the potential of repeat immigration and evaluate the cornerstone features of ethnic identity.
    Keywords: ethnic identity, earnings
    JEL: F22 J15 J16 Z10
    Date: 2011–10
  6. By: Card, David (University of California, Berkeley); Devicienti, Francesco (University of Turin); Maida, Agata (University of Milan)
    Abstract: It is widely believed that rent-sharing reduces the incentives for investment when long term contracts are infeasible because some of the returns to sunk capital are captured by workers. We propose a simple test for the degree of hold-up based on the fraction of capital costs that are deducted from the quasi-rent that determines negotiated wages. We implement the test using a data set that combines Social Security earnings records for workers in the Veneto region of Italy with detailed financial information for employers. We find strong evidence of rent-sharing, with an elasticity of wages with respect to current profitability of the firm of 3-7%, arising mainly from firms in concentrated industries. On the other hand we find little evidence that bargaining lowers the return on investment. Instead, firm-level bargaining appears to split the rents after deducting the full cost of capital.
    Keywords: rent-sharing, hold-up, employer-employee data
    JEL: J31
    Date: 2011–10
  7. By: Alex Bryson; Petri Böckerman; Pekka Ilmakunnas
    Abstract: Employees exposed to high involvement management (HIM) practices have higher subjective wellbeing, fewer accidents but more short absence spells than "like" employees not exposed to HIM. These results are robust to extensive work, wage and sickness absence history controls. We present a model which highlights the possibility of higher short-term absence in the presence of HIM because it is more demanding than standard production and because multi-skilled HIM workers cover for one another's short absences thus reducing the cost of replacement labour faced by the employer. We find direct empirical support for the assumptions in the model. Consistent with the model, because long-term absences entail replacement labour costs for HIM and non-HIM employers alike, long-term absences are independent of exposure to HIM.
    Keywords: Health, subjective wellbeing, sickness absence, job satisfaction, pain, high involvement management, high performance work system, performance-related pay, training, team working, information sharing
    JEL: I10 J28 J81 M52 M53 M54
    Date: 2011–11
  8. By: Casey Mulligan
    Abstract: During the recession of 2008-9, labor hours fell sharply, while wages and output per hour rose. Some, but not all, of the productivity and wage increase can be attributed to changing quality of the workforce. The rest of the increase appears to be due to increases in production inputs other than labor hours. All of these findings, plus the drop in consumer expenditure, are consistent with the hypothesis that labor market “distortions” were increasing during the recession and have remained in place during the slow “recovery.” Producers appear to be trying to continue production with less labor, rather than cutting labor hours as a means of cutting output.
    JEL: E24 E32 J22
    Date: 2011–11
  9. By: Herwartz, Helmut; Niebuhr, Annekatrin
    Abstract: The labor market effects of the recent financial and economic crisis are rather heterogeneous across countries and regions. Such differences in labor market performance among industrialized countries are an issue of ongoing research. The objective of this paper is to analyse labor market disparities among European regions and to provide evidence on the factors behind these differences. Whereas previous research focused on effects of national labor market institutions, we also take structural characteristics of regions into account and investigate differences in labor demand responsiveness and their potential determinants. The data set covers the NUTS2 regions in the EU15 for the period 1980 to 2008. We apply an error correction model that is combined with a spatial modeling approach in order to account for interaction among neighboring labor markets. Our findings point to substantially distinct labor demand responses to changes in output and wages among European countries and regions. Moreover, the rate of adjustment to disequilibrium is subject to a signifcant variation across units of observation. Whereas evidence on the significance of region specific variables as explanatory factors is weak, labor market institutions, especially regulations that affect the determination of wages, explain an important fraction of the disparities. --
    Keywords: Regional labor markets,labor demand,institutions,Europe,error correction model
    JEL: C23 J23 R23
    Date: 2011
  10. By: Bohachova, Olga (Institut für Angewandte Wirtschaftsforschung (IAW)); Boockmann, Bernhard (Institut für Angewandte Wirtschaftsforschung (IAW)); Buch, Claudia M. (University of Tübingen)
    Abstract: In Germany, the employment response to the post-2007 crisis has been muted compared to other industrialized countries. Despite a large drop in output, employment has hardly changed. In this paper, we analyze the determinants of German firms' labor demand during the crisis using a firm-level panel dataset. Our analysis proceeds in two steps. First, we estimate a dynamic labor demand function for the years 2000-2009 accounting for the degree of working time flexibility and the presence of works councils. Second, on the basis of these estimates, we use the difference between predicted and actual employment as a measure of labor hoarding as the dependent variable in a cross-sectional regression for 2009. Apart from total labor hoarding, we also look at the determinants of subsidized labor hoarding through short-time work. The structural characteristics of firms using these channels of adjustment differ. Product market competition has a negative impact on total labor hoarding but a positive effect on the use of short-time work. Firm covered by collective agreements hoard less labor overall; firms without financial frictions use short-time work less intensively.
    Keywords: labor demand, economic crisis, short-time work, financial frictions, labor market institutions, employment adjustment
    JEL: J23 J68 G32
    Date: 2011–10
  11. By: Andersson, Lina (Linnaeus University); Hammarstedt, Mats (Linnaeus University); Hussain, Shakir (University of Birmingham); Shukur, Ghazi (Jönköping International Business School & Linnaeus University)
    Abstract: We investigate the importance of ethnic origin and local labour markets conditions for self-employment propensities in Sweden. In line with previous research we find differences in the self-employment rate between different immigrant groups as well as between different immigrant cohorts. We use a multilevel regression approach in order to quantify the role of ethnic background, point of time for immigration and local market conditions in order to further understand differences in self-employment rates between different ethnic groups. We arrive at the following: The self-employment decision is to a major extent guided by factors unobservable in register data. Such factors might be i.e. individual entrepreneurial ability and access to financial capital. The individual’s ethnic background and point of time for immigration play a smaller role for the self-employment decision but are more important than local labour market conditions.
    Keywords: Self-employment; immigrant background; local labour market
    JEL: J15 R23
    Date: 2011–11–11
  12. By: Bellmann, Lutz (Institute for Employment Research (IAB), Nuremberg); Gerner, Hans-Dieter (Institute for Employment Research (IAB), Nuremberg); Upward, Richard (University of Nottingham)
    Abstract: We use a simple regression-based approach to measure the relationship between employment growth, hirings and separations in a large panel of German establishments over the period 1993-2009. Although the average level of hiring and separation is much lower in Germany than in the US, as expected, we find that the relationship between employment growth and worker flows in German establishments is very similar to the behaviour of US establishments described in Davis, Faberman & Haltiwanger (2006, 2011), and quite different to the behaviour of French establishments described in Abowd, Corbel & Kramarz (1999). The relationship is very stable over time, even during the most recent economic crisis, and across different types of establishment.
    Keywords: job turnover, worker turnover, hirings and separations
    JEL: J2 J23 J63
    Date: 2011–10
  13. By: Mendolicchio, Concetta (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Rhein, Thomas (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "We study the returns on education in Europe in a comparative perspective. We extend the model of de la Fuente [(2003). Human Capital in a Global and Knowledgebased Economy. part II: Assessment at the EU Country Level. Report for the European Commission], by estimating the values of the relevant parameters for men and women and introducing several variables specifically related to maternity leaves and benefits. As a preliminary step, we evaluate the effect of education on the wage profile. We estimate the Mincerian coefficients for 12 West European countries using the EU-SILC data for 2007 and use them as input in the optimisation problem of the individual to calibrate the model. Finally, we analyse the impact and relevance of several public policy variables. In particular, we evaluate the elasticities of the returns on education with respect to unemployment benefits, marginal and average tax rates, maternity leaves and childcare benefits." (Author's abstract, IAB-Doku) ((en))
    Keywords: Bildungsertrag - internationaler Vergleich, Humankapital, geschlechtsspezifische Faktoren, Westeuropa, Österreich, Belgien, Dänemark, Frankreich, Bundesrepublik Deutschland, Irland, Italien, Luxemburg, Niederlande, Portugal, Spanien, Schweden
    JEL: I21
    Date: 2011–10–11
  14. By: Daniel Weinberg
    Abstract: A 2004 report by the author reviewed data from Census 2000 and concluded "There is a substantial gap in median earnings between men and women that is unexplained, even after controlling for work experience (to the extent it can be represented by age and presence of children), education, and occupation." This paper extends the analysis and concludes that once those characteristics are controlled for, no further explanatory power is attributable to race or Hispanic origin.
    Date: 2011–11
  15. By: Hirokatsu Asano (Faculty of Economics, Asia University); Takahiro Ito (Graduate School for International Development and Cooperation, Hiroshima University); Daiji Kawaguchi (Faculty of Economics, Hitotsubashi University)
    Abstract: This paper explains the secular increase of contingent workers in Japan whose share of employment increased from 17 to 34 percent between 1986 and 2008. Changes in labor-forceand industrial compositions explain about one quarter of the increase of contingent workers. The uncertainty of product demand and the introduction of information and communication technologies increased firms' usage of contingent workers. The increase of contingent workers was concentrated among new entrants to the labor market, male workers of younger cohorts, and female workers of all cohorts, suggesting that the declining importance of the long-term employment relationship is a major cause for the increase of contingent workers.
    Keywords: Contingent Workers, Female Labor Supply, Uncertainty, ICT, Japan
    JEL: J23
    Date: 2011–09

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