nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2012‒01‒03
thirty-one papers chosen by
Erik Jonasson
Lund University

  1. Labor Market Signaling and Self-Confidence: Wage Compression and the Gender Pay Gap By Luis Santos-Pinto
  2. Informal workers across Europe : evidence from 30 European countries By Hazans, Mihails
  3. What explains prevalence of informal employment in European countries : the role of labor institutions, governance, immigrants, and growth By Hazans, Mihails
  4. The public sector pay gap in a selection of Euro area countries By Raffaela Giordano; Domenico Depalo; Manuel Coutinho Pereira; Bruno Eugène; Evangelia Papapetrou; Javier J. Perez; Lukas Reiss; Mojca Roter
  5. Impact of the 2008-2009 Food, Fuel, and Financial Crisis on the Philippine Labor Market By van der Meulen Rodgers, Yana; Menon, Nidhiya
  6. The Effect of Relative Standing on Considerations About Self-Employment By Schneck, Stefan
  7. Counterfactual distributions of wages via quantile regression with endogeneity By Elena Martínez Sanchis; Ilker Kandemir; Juan Mora López
  8. Work Hours Constraints: Impacts and Policy Implications By Constant, Amelie F.; Otterbach, Steffen
  9. Assignment Reversals: Trade, Skill Allocation and Wage Inequality By Thomas Sampson
  10. The Supply and Demand Factors Behind the Relative Earnings Increases in Urban China at the Turn of the 21st Century By Gao, Hang; Marchand, Joseph; Song, Tao
  11. When strong ties are strong Networks and youth labor market entry By Kramarz, Francis; Nordström Skans, Oskar
  12. Trade, Wages, and Profits By Egger, Hartmut; Egger, Peter; Kreickemeier, Udo
  13. Can Compulsory Military Service Increase Civilian Wages? Evidence from the Peacetime Draft in Portugal By David Card; Ana Rute Cardoso
  14. Retirement Process in Japan: New evidence from Japanese Study on Aging and Retirement (JSTAR) By ICHIMURA Hidehiko; SHIMIZUTANI Satoshi
  15. Quasi-Experimental Impact Estimates of Immigrant Labor Supply Shocks: The Role of Treatment and Comparison Group Matching and Relative Skill Composition By Abdurrahman Aydemir; Murat G. Kirdar
  16. Family Proximity, Childcare, and Women's Labor Force Attachment By Janice Compton; Robert A. Pollak
  17. Accounting for the Self-Employed in Labour Share Estimates: The Case of the United States By Rebecca Ann Freeman
  18. Quasi-experimental impact estimates of immigrant labor supply shocks: the role of treatment and comparison group matching and relative skill composition By Aydemir, Abdurrahman; Kirdar, Murat G.
  19. A segmented labor supply model estimation for the construction of a CGE microsimulation model: An application to the Philippines By Dorothée Boccanfuso; Luc Savard
  20. Earnings inequality and skill mismatch in the U.S.: 1973-2002 By Slonimczyk, Fabian
  21. An attempt to measure the trends in shadow employment in Poland By Walewski, Mateusz
  22. Human Capital Prices, Productivity and Growth By Bowlus, Audra J.; Robinson, Chris
  23. Aggregate Impacts of a Gift of Time By Lee, Jungmin; Kawaguchi, Daiji; Hamermesh, Daniel S.
  24. Social Welfare and Wage Inequality in Search Equilibrium with Personal Contacts By Anna Zaharieva
  25. Smoking and Returns to Education: Empirical Evidence for Germany By Julia Reilich
  26. Working hours in dual-earner couples: Does one partner work less when the other works more? By Ragni Hege Kitterød, Marit Rønsen and Ane Seierstad
  27. Job competition, product market competition and welfare By Pompermaier, Alberto
  28. Organisational change and job separation in France : endure or escape ?. By Coralie Perez
  29. Immigrant Selection Systems and Occupational Outcomes of International Medical Graduates in Canada and the United States By James Ted McDonald; Casey Warman; Christopher Worswick
  30. The Determinants of Hiring in Local Labor Markets: The Role of Demand and Supply Factors By Eriksson, Stefan; Stadin, Karolina
  31. Network mechanisms and social ties in markets for low- and unskilled jobs: (theory and) evidence from North-India By Iversen, Vegard Iversen; Torsvik, Gaute

  1. By: Luis Santos-Pinto
    Abstract: I extend Spence's (1973) signaling model by assuming some workers are overconfident - they underestimate their marginal cost of acquiring education - and some are underconfident. Firms cannot observe workers' productive abilities and beliefs but know the fractions of high-ability, overconfident, and underconfident workers. I find that biased beliefs lower the wage spread and compress the wages of unbiased workers. I show that gender differences in self-confidence can contribute to the gender pay gap. If education raises productivity, men are overconfident, and women underconfident, then women will, on average, earn less than men. Finally, I show that biased beliefs can improve welfare.
    Keywords: signaling; education; self-confidence; wage compression; gender pay gap
    JEL: D03 D82 J24 J31
    Date: 2011–12
  2. By: Hazans, Mihails
    Abstract: The European Social Survey data are used to analyze informal employment in 30 countries, focusing on employees without contracts and on informal self-employed workers (who are distinguished from formal workers). Overall the size of informal employment decreases from South to West to East to North. However, working without a contract is more prevalent in Eastern Europe than in the West, except for Ireland, the United Kingdom, and Austria. Between 2004 and 2009, no cases were found when unemployment and dependent informality rates in a country went up together, suggesting that working without a contract is pro-cyclical in Europe. The dependent informality rate is inversely related to skills (measured by either schooling or occupation). Both in Southern and in Western Europe, the highest dependent informality rate is found among immigrants from Central and Eastern Europe and the Former Soviet Union, while in Eastern Europe this group is second after minorities without immigrant background. In the Southern and part of Western Europe, immigrants not covered by European Union free mobility provisions are much more likely to work without a contract than otherwise similar natives. The paper provides evidence that exclusion and discrimination plays an important role in pushing employees into informality, while this seems not to be the case for informal self-employed workers. Both on average and after controlling for a rich set of individual characteristics, informal employees in all parts of Europe are having the largest financial difficulties among all categories of the employed population (yet they fare much better than the unemployed and discouraged), while informal self-employed workers are at least as well off as formal employees. Finally, there is a negative and significant effect of individual-level satisfaction with the national government on the propensity to work without a contract in Eastern Europe, as well as in Western Europe.
    Keywords: Labor Markets,Work&Working Conditions,Labor Policies,Labor Management and Relations,Tertiary Education
    Date: 2011–12–01
  3. By: Hazans, Mihails
    Abstract: This paper looks into institutional and other macro determinants of prevalence of informal dependent employment, as well as informal self-employment, in European countries, using European Social Survey data on work without legal contract in on 30 countries, covering years 2004-2009. Consistently with theoretical predictions, quality of business environment has a significant negative impact on prevalence of both types of informal employment. The share of non-contracted employees is negatively affected by perceived quality of public services and positively related to economic growth. Informal self-employment is positively related to growth in Europe at large, as well as in Eastern and Southern Europe. The level of GDP per capita also has a positive impact on the prevalence of informal employment in Europe at large and within Eastern and Southern Europe, whilst an opposite effect is found in Western and Northern Europe. Other things equal, the share of non-contracted employees in the labor force across European countries increases with the minimum-to-average wage ratio, with union density, with the share of first and second generation immigrants, and with income inequality, but falls with stricter employment protection legislation (EPL) and higher tax wedge on labor. Thus it appears that in Europe at large, labor cost effects of EPL and taxes are weaker than their impact via perceptions of job security and law enforcement, along with tax morale and the income effect. Yet the EPL effect on informality is positive (i.e., cost-related) when either Eastern and Southern Europe or Western and Northern Europe are considered separately. Furthermore, within Western and Northern Europe, the minimum wage effect is negative, whilst within Eastern and Southern Europe, the union effect is negative; in both cases, we offer a supply side explanation.
    Keywords: Labor Markets,Labor Policies,Debt Markets,Economic Theory&Research,Markets and Market Access
    Date: 2011–12–01
  4. By: Raffaela Giordano (Banca d’Italia, Via Nazionale 91, 00184 Roma, Italy.); Domenico Depalo (Banca d’Italia, Via Nazionale 91, 00184 Roma, Italy.); Manuel Coutinho Pereira (Banco de Portugal, R. Francisco Ribeiro 2, 1150-165 Lisboa, Portugal.); Bruno Eugène (Banque Nationale de Belgique, de Berlaimontlaan 14, 1000 Brussels, Belgium.); Evangelia Papapetrou (Bank of Greece, 21 E. Venizelos Avenue, 102 50 Athens, Greece.); Javier J. Perez (Banco de España, Calle Alcalá, 48, 28014 Madrid, Spain.); Lukas Reiss (Oesterreichische Nationalbank, Otto-Wagner-Platz 3, 1090 Vienna, Austria.); Mojca Roter (Banka Slovenije, Slovenska 35, 1505 Ljubljana, Slovenija.)
    Abstract: We investigate the public-private wage differentials in ten euro area countries (Austria, Belgium, France, Germany, Greece, Ireland, Italy, Portugal, Slovenia and Spain). To account for differences in employment characteristics between the two sectors, we focus on micro data taken from EU-SILC. The results point to a conditional pay differential in favour of the public sector that is generally higher for women, at the low tail of the wage distribution, in the Education and the Public administration sectors rather than in the Health sector. Notable differences emerge across countries, with Greece, Ireland, Italy, Portugal and Spain exhibiting higher public sector premia than other countries. JEL Classification: J310, J450, O520.
    Keywords: Wage differentials, public/private sector.
    Date: 2011–12
  5. By: van der Meulen Rodgers, Yana (Rutgers University); Menon, Nidhiya (Brandeis University)
    Abstract: This study examines how the 2008-2009 surges in international food and fuel prices and coinciding global financial crisis impacted the Philippine labor market, with a focus on gendered outcomes. A battery of descriptive statistics and probit regressions based on repeated cross sections of the Philippine Labor Force Survey indicate that both men and women experienced declines in the likelihood of employment, especially in 2008 and in manufacturing. While men's job losses were limited to wage employment, women lost job opportunities in wage- and self-employment, and they experienced increases in unpaid family work. Real wages fell for men and women, with much of the decline at the upper tails of the wage distribution. If one considers education as a proxy for skill, results suggest that unskilled workers were affected most adversely when the crisis began, especially in terms of employment losses, but as the crisis conditions wore on, skilled workers experienced negative impacts as well, especially in terms of real wage cuts.
    Keywords: crises, Philippines, women, labor market
    JEL: J31 J24 O12
    Date: 2011–12
  6. By: Schneck, Stefan
    Abstract: This paper uses unique German data to examine the effects of the relative standing on the individual propensity to become self-employed in the next two years. The results suggest that the relationship between relative wage positions and propensity to become self-employed is U-shaped. This is interpreted as evidence that low status translates into entrepreneurial motivation for workers in low relative wage positions. Employees with high relative standing, in turn, seem to be more concerned about the lack of future career prospects in paid employment and consider self-employment as a next step on the individual career ladder.
    Keywords: Relative wage position, status, self-employment
    JEL: L26 L29
    Date: 2011–12
  7. By: Elena Martínez Sanchis (Dpto. Fundamentos del Análisis Económico); Ilker Kandemir (Department of Economics); Juan Mora López (Universidad de Alicante)
    Abstract: Counterfactual decompositions allow the researcher to analyze the changes in wage distributions by discriminating between the effect of changes in the population characteristics and the effect of changes in returns to these characteristics. In this paper, counterfactual distributions are derived by recovering the conditional distribution via a set of quantile regressions, and correcting for the endogeneity of schooling decisions using a control function approach. Our proposal enables us to isolate the effect on the wage distribution of changes in both the conditional and unconditional distribution of schooling and changes in the distribution of unobserved ability. This methodology is used to analyze the sources of the changes in wage distribution that took place in the United States between 1983 and 1993, using proximity to college for different parental background as instruments. Our results show that the change in the distribution of ability had a negative effect on wages at the low quantiles, which almost compensates the positive effect of the change in the schooling distribution over this period. It is also found that the impact on wages of changes in the conditional distribution of unobserved ability is larger than the impact of changes in the conditional distribution of distance to college.
    Keywords: Counterfactual Decomposition, Wage Inequality, Quantile Regression, Endogeneity
    JEL: C21 C14 D63 J31
    Date: 2011–12
  8. By: Constant, Amelie F. (DIW DC, George Washington University); Otterbach, Steffen (University of Hohenheim)
    Abstract: If individuals reveal their preference as consumers, then they are taken seriously. What happens if individuals, as employees, reveal their preferences in working hours? And what happens if there is a misalignment between actual hours worked and preferred hours, the so-called work hours constraints? How does this affect the productivity of workers, their health, and overall life satisfaction? Labor supply and corresponding demand are fundamental to production. Labor economists know for long that the fit of a worker in a job and the matching of skills to the assigned employment are of paramount importance; they guarantee high productivity, quality output, and individual happiness. Employees demand higher social awareness and a working environment where they feel useful and happy. The evidence shows that discrepancies between preferred hours of work and actual hours of work can have serious detrimental effects on workers, perverse effects on labor supply with unintended direct ramifications on the labor market and indirect implications on the goods and services markets. The sooner employers acknowledge and address working hours constraints the faster we can build work lives that make us better off.
    Keywords: labor market, work time, work hours constraints, health, happiness, satisfaction
    JEL: I10 J21 J22
    Date: 2011–12
  9. By: Thomas Sampson
    Abstract: Understanding the allocation of skilled labor across industries is necessary to explain inter-industry wage differences and the effect of trade on wages. This paper develops a multi-sector assignment model with both heterogeneous labor and a non-labor input in which high skill agents match with high input productivity sectors where they can best leverage their talent. When the ranking of sectors by input productivity differs across countries, their ranking by workforce skill also differs - this is an assignment reversal. In a two sector, two country model the existence of an assignment reversal implies that each country has a comparative advantage in its high skill sector. Consequently, trade integration causes both the relative wage of high skill workers, and wage inequality within the high skill sector, to increase in both countries. Using exogenous differences in capital productivity induced by a country's proximity to major capital exporters the paper shows that international variation in the industry wage structure supports the existence of assignment reversals and is consistent with the model's sorting predictions.
    Keywords: skilled labor, productivity, workforce, wage inequality, skill intensity reversal
    JEL: J30 L60 O30
    Date: 2011–12
  10. By: Gao, Hang (University of Alberta, Department of Economics); Marchand, Joseph (University of Alberta, Department of Economics); Song, Tao (University of Alberta, Department of Economics)
    Abstract: Real earnings have increased for all demographic and skill groups within China’s urban labor market from the mid-1990s to the early 2000s. This paper analyzes these changes in earnings with respect to the relative supply and demand changes of each of the imperfectly substitutable labor inputs. These movements are found to be consistent with real earnings increases for some of the input groups but are inconsistent for others. This implies that China has transitioned closer to a free labor market from its planned origin. In addition, labor supply is shown to be moving towards a more educated workforce, and firm privatization and international trade are found to play significant roles in determining the labor demand movements.
    Keywords: China; earnings; labor demand; labor supply; transitional economies
    JEL: J20 P23 P31
    Date: 2011–12–01
  11. By: Kramarz, Francis (Center for Research in Economics and Statistics (CREST), CEPR, IZA, IFAU); Nordström Skans, Oskar (Uppsala Center for Labor Studies)
    Abstract: The conditions under which young workers find their first real post-graduation jobs are both very important for the young’s future careers and insufficiently known given their public policy implications. To study these conditions, and in particular the role played by networks, we use a Swedish population-wide linked employer-employee data set of graduates from all levels of schooling which includes detailed information on family ties, neighborhoods, schools, and class composition over a period covering high as well as low unemployment years. We find that strong social ties (parents) are an important determinant of where young workers find their first job. This remarkably robust effect is estimated controlling for all confounding factors related to time, location, education, occupation, and the interaction of these. The effect is larger if the graduate’s position is “weak” (low education) or during high unemployment years, a pattern which does not emerge when analyzing the role of weak ties (neighbors or friends as measured using classmates and their parents). On the hiring side, by contrast, the effects are larger if the parent’s position is “strong” (e.g. by tenure or wage). We find no evidence of substitution in recruitment over time and fields induced by “family ties hires”. However, we do find that, just after their child is hired in their plant, parents experience a sharp drop in their wage growth. Overall, our results show that strong (family) ties are more important in the job finding process of young workers in weak positions than those weak ties usually measured in the literature (neighbors, in particular), suggesting that labor market experience and education are essential conditions for weak ties to be strong.
    Keywords: Weak ties; social networks; youth employment
    JEL: J24 J62 J64
    Date: 2011–10–27
  12. By: Egger, Hartmut; Egger, Peter; Kreickemeier, Udo
    Abstract: This paper formulates a structural empirical model of heterogeneous firms whose workers exhibit fair-wage preferences. In the underlying theoretical framework, such preferences lead to a link between a firm's operating profits on the one hand and wages of workers employed by this firm on the other hand. The latter establishes an exporter wage premium, since exporters have higher profits, given their productivity, than non-exporting firms. We estimate the parameters of the model in a data-set of five European economies and find that, when evaluated at these parameter values, the model has a high level of explanatory power. The estimates also enable us to quantify the exporter wage premium and the consequences of trade for the main variables of interest. According to our results, openness to international trade contributes to greater inequality across firms in terms of both operating profits and average wages. We also find evidence for gains from trade for all five countries, which go along with negative, but quantitatively moderate, aggregate employment effects.
    Keywords: Exporter wage premium; Fair wages; Heterogeneous firms; Labour market imperfections; Structural models
    JEL: C31 F12 F16 J31
    Date: 2011–12
  13. By: David Card; Ana Rute Cardoso
    Abstract: Although military conscription was widespread during most of the past century, credible evidence on the effects of mandatory service is limited. We provide new evidence on the long-term effects of peacetime conscription, using longitudinal data for Portuguese men born in 1967. These men were inducted at a relatively late age (21), allowing us to use pre-conscription wages to control for ability differences between conscripts and non-conscripts. We find that the average impact of military service for men who were working prior to age 21 is close to zero throughout the period from 2 to 20 years after their service. These small average effects arise from a significant 4-5 percentage point impact for men with only primary education, coupled with a zero-effect for men with higher education. The positive impacts for less-educated men suggest that mandatory service can be a valuable experience for those who might otherwise spend their careers in low-level jobs.
    JEL: J24 J31
    Date: 2011–12
  14. By: ICHIMURA Hidehiko; SHIMIZUTANI Satoshi
    Abstract: While the average retirement age is higher in Japan, the retirement process has not been in-depth explored from multiple factors including economic, health and family statuses. We examine the transition of work status and working hours for Japanese males and females using JSTAR (Japanese Study on Aging and Retirement) in 2007 and 2009. We provide some empirical patterns of retirement. First, those who are aged 60 or over and retired stay retired two years later, either male or female, while some portion of those who are aged in 50s come back to work. Second, the probability to retire in 2009 for those who were not retired in 2007 ranges 20-30%. Higher index workers in their 60s are less likely to retire but quickly retire if working hours are reduced. Third, higher index workers seem to keep working at the current working hours than lower index counterparts.
    Date: 2011–12
  15. By: Abdurrahman Aydemir (Sabanci University); Murat G. Kirdar (Middle East Technical University)
    Abstract: This paper examines the employment effects of an increase in labor supply using the politically-driven exodus of ethnic Turks from Bulgaria into Turkey in 1989. The strong involvement of the Turkish state in the settlement of earlier waves of repatriates provides us a strong source of exogenous variation in the 1989 immigrant shock across locations. Using a potential sample of 613 cities and towns in Turkey with variable treatment intensity - in some locations the change in the labor force is almost 10 percent - this analysis places much attention on constructing a matched sample that is well balanced in terms of covariate distributions of the treatment and comparison groups, including matching based on an estimated propensity score. We find a positive effect of repatriates on the unemployment of non-repatriates. In fact, in certain regions, a 10-percentage-point increase in the share of repatriates in the labor force increases the unemployment rate of natives by 4 percentage points. When the analysis is done according to skill groups, we find that the impact is the strongest on the young and on non-repatriates with similar educational attainment.
    Keywords: Labor Force and Employment, Immigrant Workers, Quasi experiments
    JEL: J21 J61
    Date: 2011–12
  16. By: Janice Compton; Robert A. Pollak
    Abstract: We show that close geographical proximity to mothers or mothers-in-law has a substantial positive effect on the labor supply of married women with young children. We argue that the mechanism through which proximity increases labor supply is the availability of childcare. We interpret availability broadly enough to include not only regular scheduled childcare during work hours but also an insurance aspect of proximity (e.g., a mother or mother-in-law who can provide irregular or unanticipated childcare). Using two large datasets, the National Survey of Families and Households and the public use files of the U.S. Census, we find that the predicted probability of employment and labor force participation is 4-10 percentage points higher for married women with young children living in close proximity to their mothers or their mothers-in-law compared with those living further away.
    JEL: J13 J20
    Date: 2011–12
  17. By: Rebecca Ann Freeman
    Abstract: The imputation of the labour income of the self-employed typically relies upon the assumption that individuals of this group earn the same average hourly compensation as employees, either at the total economy or industry level. While this assumption is convenient in that it relies upon readily available information on the composition of the labour force and on the compensation of employees, it nevertheless remains somewhat simplistic and thus questionable in its validity. This shortcoming is addressed here by investigating a more refined method to impute the labour income of the self-employed in the United States. Imputations are based on the assumption that the labour income of the self-employed equals the average earnings of employees of the same sex and within the same age group, working in the same industry and having the same level of education. The proposed estimation of the labour income of the self-employed is followed by an analysis of how adjusted total labour income might impact the value of the labour share of output. Results for the United States show that applying this alternative methodology leads to a 2.5 percentage point rise in labour shares of output at the total economy level, led by larger increases of this indicator in sectors such as agriculture and hunting as well as professional, business and other service industries. The time profile in recent years, i.e. 2003-2009, of the labour share of output remains nevertheless unchanged when applying the proposed adjustment methodology.
    Keywords: labour income, Self-employed, labour share of output, wage share, US Current Population Survey (CPS), ASEC Supplement
    Date: 2011–12–01
  18. By: Aydemir, Abdurrahman; Kirdar, Murat G.
    Abstract: This paper examines the employment effects of an increase in labor supply using the politically-driven exodus of ethnic Turks from Bulgaria into Turkey in 1989. The strong involvement of the Turkish state in the settlement of earlier waves of repatriates provides us a strong source of exogenous variation in the 1989 immigrant shock across locations. Using a potential sample of 613 cities and towns in Turkey with variable treatment intensity—in some locations the change in the labor force is almost 10 percent—this analysis places much attention on constructing a matched sample that is well balanced in terms of covariate distributions of the treatment and comparison groups, including matching based on an estimated propensity score. We find a positive effect of repatriates on the unemployment of non-repatriates. In fact, in certain regions, a 10-percentage-point increase in the share of repatriates in the labor force increases the unemployment rate of natives by 4 percentage points. When the analysis is done according to skill groups, we find that the impact is the strongest on the young and on non-repatriates with similar educational attainment.
    Keywords: Labor Force and Employment; Immigrant Workers; Quasi experiments
    JEL: J21 J61
    Date: 2011–12
  19. By: Dorothée Boccanfuso (Département d’économique and GRÉDI, Université de Sherbrooke); Luc Savard (Département d’économique and GRÉDI, Université de Sherbrooke)
    Abstract: Labour market analysis is an important element to understand the inequality and poverty within a given population. The literature reveals that the informal sector is characterised by a great deal of flexibility and exempt from formal market rigidities but on the other hand, this sector can constitute a trap from which it is difficult to exit for workers active in the sector with low wages. In this paper we aim to identify the main characteristics differentiating the labor supply of workers on the informal and formal market in the Philippines while estimating these two labor supplies, capturing discrete choice or changes in employment status. We use these estimates to construct a labor supply model that can serve as an input for a broader macro-microsimulation model applied to the Philippines. The results of the estimation provide relatively intuitive findings, highlighting some differences between the two markets. We also contribute to shedding some light into this macro-microsimulation modelling framework that is generally opaque in describing how to construct a microsimulation model with endogenous discrete choice model linked to a CGE model.
    Keywords: labor supply, informal sector, microsimulation, discrete choice model, Philippines
    JEL: C35 O53 J24 C81 O17
    Date: 2011–11
  20. By: Slonimczyk, Fabian
    Abstract: This paper shows that skill mismatch is a significant source of inequality in real earnings in the U.S. and that a substantial fraction of the increase in wage dispersion during the period 1973-2002 was due to the increase in mismatch rates and mismatch premia. In 2000-2002 surplus and deficit qualifications taken together accounted for 4.3 and 4.6 percent of the variance of log earnings, or around 15 percent of the total explained variance. The dramatic increase in over-education rates and premia accounts for around 20 and 48 percent of the increase in the Gini coefficient during the 30 years under analysis for males and females respectively. The surplus qualification factor is important in understanding why earnings inequality polarized in the last decades.
    Keywords: Skill Mismatch; Earnings Inequality; Shapley Value Decomposition
    JEL: J31
    Date: 2011
  21. By: Walewski, Mateusz
    Abstract: This paper presents the results of an attempt to use the combined results of the dedicated survey performed by CASE in 2007 and Polish LFS data in order to: (a) analyze the development of the shadow employment in Poland in years 2003-2008 and, (b) analyze the transition probabilities in and out of shadow employment. The estimated share of shadow workers in total employment in Poland in years 2003-2008 was increasing until 2006 and then started to decrease in the years 2007 and 2008. Other results are in line with one of the main conclusions of the CASE study from 2007 suggesting that shadow employment is more a way of coping with lack of other employment opportunities than an equivalent or even superior alternative to any legal employment contracts. On the other hand those who enter shadow employment are more active part of the group having problems with finding full time/open term employment. They are much more inclined to cope with their situation by entering some form of self-employment than to stay passive and depend on social assistance.
    Keywords: Labor Markets,Labor Policies,Labor Standards,Work&Working Conditions,Labor Management and Relations
    Date: 2011–12–01
  22. By: Bowlus, Audra J.; Robinson, Chris
    Abstract: Separate identification of the price and quantity of human capital has important implications for understanding key issues in economics. Price and quantity series are derived for four education levels. The price series are highly correlated and they exhibit a strong secular trend. Three resulting implications are explored: the rising college premium is found to be driven more by relative quantity than relative price changes, life-cycle wage profiles are readily interpretable as reflecting optimal human capital investment paths using the estimated price series, and adjusting the labor input for quality increases dramatically reduces the contribution of MFP to growth.
    Keywords: Human Capital, Productivity and Growth
    JEL: J24 J31 O47
    Date: 2011–12–22
  23. By: Lee, Jungmin (Sogang University); Kawaguchi, Daiji (Hitotsubashi University); Hamermesh, Daniel S. (University of Texas at Austin)
    Abstract: How would people spend additional time if confronted by permanent declines in market work? We examine the impacts of cuts in legislated standard hours that raised employers' overtime costs in Japan around 1990 and Korea in the early 2000s. Using time-diaries from before and after these shocks, we show that these shocks were effective – per-capita hours of market work declined discretely. The economy-wide drops in market work were reallocated solely to leisure and personal maintenance. In the absence of changing household technology a permanent time gift leads to no increase in time spent in household production by the average individual.
    Keywords: time use, household production, demand shock, macroeconomic effects
    JEL: J22 J11 E24
    Date: 2011–12
  24. By: Anna Zaharieva (Institute of Mathematical Economics, Bielefeld University)
    Abstract: This paper incorporates job search through personal contacts into an equilibrium matching model with a segregated labour market. Job search in the public submarket is competitive which is in contrast with the bargaining nature of wages in the informal job market. Moreover, the social capital of unemployed workers is endogenous depending on the employment status of their contacts. This paper shows that the traditional Hosios (1990) condition continues to hold in an economy with family contacts but it fails to provide efficiency in an economy with weak ties. This inefficiency is explained by a network externality: weak ties yield higher wages in the informal submarket than family contacts. Furthermore, the spillovers between the two submarkets imply that wage premiums associated with personal contacts lead to higher wages paid to unemployed workers with low social capital but the probability to find a job for those workers is below the optimal level.
    Keywords: Personal contacts, family job search, social capital, wages, equilibrium efficiency
    JEL: J23 J31 J64 D10
    Date: 2011–12
  25. By: Julia Reilich
    Abstract: Looking at smoking-behavior it can be shown that there are differences concerning the time-preference-rate. Therefore this has an effect on the optimal schooling decision in the way that we assume a lower average human capital level for smokers. According to a higher time-preference-rate we suppose a higher return to education for smokers who go further on education. With our empirical fondings we can confirm the presumptions. We use interactions-terms to regress the average rate of return with the instrumentvariable approach. Therefore we obtain that smokers have a significantly higher average return to education than non-smokers.
    Keywords: Returns to education, Human Capital, Smoking Effects
    JEL: J24 J31 I21
    Date: 2011
  26. By: Ragni Hege Kitterød, Marit Rønsen and Ane Seierstad (Statistics Norway)
    Abstract: In spite of increased labour market participation in recent decades, women in Norway still have high part-time rates and seldom work more than their partners. Given that an aging population implies a projected large labour demand in many Western countries, it is important to explore potential labour market reserves among women. Utilising the panel in the Norwegian part of the EU-SILC, we ask whether an increase in the mother’s paid hours is associated with an increase or a decrease in the father’s hours, or whether there is no relationship between changes in the partners’ working hours at all. An increase from parttime to normal full time for the mother is not associated with a change in the father’s hours, but an increase from full time to very long hours for the mother corresponds to an increase in the father’s hours. A positive association between the parents’ paid hours applies first and foremost to parents with school-aged children and to couples where both partners have either long or short education. When the mother has long education and the father has short, an increase in her paid hours is associated with a decrease in his.
    Keywords: Dual-earners; gender equality; labour market; working hours
    JEL: J22 J23
    Date: 2011–12
  27. By: Pompermaier, Alberto
    Abstract: This paper presents a model of labour supply determination under job competition. In the presence of a positive rate of unemployment and increasing returns to labour, the level of labour supply chosen by each individual lies above the one that, at the offered wage, maximises utility. There is a unique strictly positive degree of job competition that is consistent with the optimal allocation. If labour supply is upward-sloping, increasing job competition raises the equilibrium level of activity and, when job competition causes production to exceed its optimal level, reducing output market competition leads to a welfare improvement.
    Keywords: labour supply; job competition; welfare; product market competition
    JEL: J22 D60 D43
    Date: 2011–12–14
  28. By: Coralie Perez (Centre d'Economie de la Sorbonne)
    Abstract: The aim of this paper is twofold : to highlight the relationship between the types of change affecting organisations and modes of job separation (economic redundancy, dismissal on personal grounds or resignation), and to cast light on the process that leads to job separation. It relies upon both quantitative and qualitative data. The quantitative data come from a French matched employer-employee survey, the 2006 "Organisational Change and Computerisation" survey. The qualitative part draws on interviews with individuals who had left their firm. Our results show that job termination is most highly correlated with what the survey defines as "organisation change" alongside "financial restructuring". But they also show that it is quite impossible to disentangle, in such contexts, whether the termination is voluntary (resignation) or involuntary (dismissal). Termination appears in all cases as a way to "exit", i.e. to escape the degradation of working conditions and the loss of valuable job features.
    Keywords: Dismissal, job separation, organisational change, working conditions.
    JEL: J28 J63 M50
    Date: 2011–11
  29. By: James Ted McDonald (University of New Brunswick); Casey Warman (Queen's University); Christopher Worswick (Carleton University)
    Abstract: We analyze the process of immigrant selection and occupational outcomes of International Medical Graduates (IMGs) in the US and Canada. We extend the IMG relicensing model of Kugler and Sauer (2005) to incorporate two different approaches to immigrant selection: employer nomination systems and point systems. Analysis of the model indicates that point systems can allow IMGs to immigrate who would be unable to gain entry to the receiving country under an employer nomination system and who are subsequently unable to relicense and work as physicians in the receiving country. We apply the model to the case of IMGs migrating to the US and Canada since the 1960s and evaluate the empirical predictions from the model based on an analysis of the occupational outcomes of IMGs in Canada (where a point system has been in place) and in the US (where IMGs enter through employer nomination). In Canada, IMGs are less likely to be employed as a physician than are IMGs in the US and a large percentage of the IMGs in Canada either find work in lower skill occupations or are not employed. The empirical findings are consistent with our hypotheses based on the theoretical framework on the effects of immigrant selection systems on the probability of working as a physician in the two countries.
    Keywords: physicians, immigration, occupation, skills, human capital
    JEL: J24 J31 J61 J62 J71 J80
    Date: 2011–12
  30. By: Eriksson, Stefan (Department of Economics); Stadin, Karolina (Department of Economics)
    Abstract: This paper studies the determinants of hiring. We use the search-matching model with imperfect competition in the product market from Carlsson, Eriksson and Gottfries (2011) to derive an equation for total hiring in a local labor market, and estimate it on Swedish panel data. When product markets are imperfectly competitive, product demand shocks have a direct effect on employment. Our results show that product demand is important for hiring. Moreover, we show that conventional measures of vacancies do not fully capture the effect of product demand on hiring. Finally, we show that the number of unemployed workers has a positive effect on hiring as predicted by search-matching models.
    Keywords: Hiring; Search-matching; Imperfect Competition; Unemployment
    JEL: E24 J23 J64
    Date: 2011–12–21
  31. By: Iversen, Vegard Iversen (University of Manchester); Torsvik, Gaute (Department of Economics, University of Bergen)
    Abstract: Abstract: Workplace referrals may resolve incentive problems that arise due to incomplete contracts. We use an in-depth primary data set covering low- and unskilled migrants from Western Uttar Pradesh (India), to examine this and alternative explanations for referral-based recruitment. We find little evidence of referral screening for unobservable worker traits, but some support for a hypothesis of referral as a mechanism to enforce workforce discipline. Two observations back this conjecture: the high prevalence of strong kinship ties between referees and new recruits and that those who recruit are in more ‘prestigious’ jobs and therefore have higher stakes vis-à-vis their employer. These main findings are exposed to robustness checks to rule out rival explanations: that entry through a workplace insider merely reflects privileged access to job vacancy information; that workplace clustering results from preferences for working together or that the higher prevalence of referral for very young migrants that we observe may reflect that referral has an insurance dimension.
    Keywords: Work Migration; Social Networks; Screening; Moral Hazard
    JEL: J24 J61 R23 Z13
    Date: 2011–12–15

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