nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2012‒01‒25
twelve papers chosen by
Erik Jonasson
Lund University

  1. Analysis of Gender Wage Differential in China's Urban Labor Market By Su, Biwei; Heshmati, Almas
  2. Men's Sexual Orientation and Job Satisfaction By Drydakis, Nick
  3. Racial and Ethnic Inequality in Employer Provided Fringe Benefits By Mok, Wallace; Siddique, Zahra
  4. Wage growth and career patterns of German low-wage workers By Stephani, Jens
  5. Hours of Work and Retirement Behavior By Machado, C. Sofia; Portela, Miguel
  6. Firm-Level Labour Demand: Adjustment in Good Times and During the Crisis By Jan Babecky; Kamil Galuscak; Lubomir Lizal
  7. How Acid are Lemons? Adverse Selection and Signalling for Skilled Labour Market Entrants By Robert Wagner; Thomas Zwick
  8. Are All Migrants Really Worse Off in Urban Labour Markets? New Empirical Evidence from China By Gagnon, Jason; Xenogiani, Theodora; Xing, Chunbing
  9. Wage Mobility in East and West Germany By Riphahn, Regina T.; Schnitzlein, Daniel D.
  10. What Explains Trends in Labor Supply Among U.S. Undergraduates, 1970-2009? By Judith Scott-Clayton
  11. English Proficiency and Labour Supply of Immigrants in Australia By Vincent Law
  12. Does Linking Worker Pay to Firm Performance Help the Best Firms Do Even Better? By Douglas L. Kruse; Joseph R. Blasi; Richard B. Freeman

  1. By: Su, Biwei (Korea University); Heshmati, Almas (Korea University)
    Abstract: This paper estimates the gender wage gap and its composition in China's urban labor market using the 2009 survey data from the Chinese Family Panel Studies. Several estimation and decomposition methods have been used and compared. First, we examine the gender wage gap using ordinary least square regression method with a gender dummy variable. Then, we apply Oaxaca (1973) decomposition method with different weighting systems to analyze the logarithmic wage differential. To be more specific, we prove the existence of sample selection bias caused by the female's labor force participation. We eliminate it by using the Heckman's two-step procedure. Empirical results reveal that male workers generally receive a higher wage than female workers, and a great deal of this difference is unexplained. Meanwhile, this unexplained part, which is usually referred to as discrimination turns out to be higher when the adjustment is made for the selection bias. A further breakdown of the wage gap shows that among all the individual characteristics, occupations explain the largest share of the wage gap, followed by their working experience. On the other hand, education acts as a contributor for discrimination in the labor market.
    Keywords: discrimination, wage gap, decomposition, gender, Chinese labor market
    JEL: J70 J31 J16 J78
    Date: 2011–12
  2. By: Drydakis, Nick (University of Patras)
    Abstract: This study investigates the differences in three aspects of job satisfaction – total pay, promotion prospects, and respect received from one's supervisor – between male heterosexual and gay employees in Athens, Greece. Gay employees are found to be less satisfied according to all job satisfaction measures. Affect Theory proposes that the extent to which one values a given facet of work moderates how dissatisfied one becomes when one's expectations are not met. Furthermore, the data enable us to estimate that gay employees' job satisfaction is not associated more (as compared to heterosexuals' job satisfaction) with adverse mental health symptoms. This finding is crucial given the rising interest between job satisfaction and life satisfaction. Finally, wage gaps against gay employees are found after accounting for basic asymmetries. Interestingly, however, the wage gaps grow for very dissatisfied employees and shrink for very satisfied employees. As long as, the general patterns in Greece suggest that homosexual employees face labour market discrimination, gay employees will report being less satisfied at work. Actually, in this study, job satisfaction is associated with wage inequality. This research initiates efforts to compare job satisfaction based on sexual orientation.
    Keywords: job satisfaction, sexual orientation
    JEL: J28 C93 J7 J16 J31 J42 J64 J71
    Date: 2012–01
  3. By: Mok, Wallace (Chinese University of Hong Kong); Siddique, Zahra (IZA)
    Abstract: We examine racial and ethnic inequality in offers of employer provided fringe benefits (health insurance, life insurance and pension). Restricting to full-time workers in the private sector, we find that African Americans are significantly less likely to get fringe benefit offers than non-Hispanic whites after we control for individual differences in age and youth characteristics that matter for labor market success using the 1979 cohort of the National Longitudinal Survey of Youth. We do not find ethnic differences in the 1979 cohort or racial/ethnic differences in the 1997 cohort to be significantly large after controlling for individual differences in age and youth characteristics. Irrespective of race, ethnicity, gender or cohort, we always find that older workers are more likely to get fringe benefit offers as are workers with higher cognitive ability and years of education at age 22. We find that the cross-sections from the 1979 cohort of the National Longitudinal Survey of Youth have more fringe benefit offers than cross-sections from the 1997 cohort. A large part of the difference across cohorts can be explained by the older age profile of cross-sections from the 1979 cohort. Some part of the difference across cohorts can also be explained by differences in family background characteristics, particularly changing family structures which are important for non-Hispanic whites and for African American men. Improvements in cognitive ability and years of education at age 22 for the 1997 cohort increase the unexplained difference in fringe benefit offers across the two cohorts for women (irrespective of race or ethnicity), but not for men.
    Keywords: economics of minorities and races, non-wage labor costs and benefits
    JEL: I11 J15 J32
    Date: 2011–12
  4. By: Stephani, Jens (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Using administrative linked employer-employee data from Germany, this paper analyses the real wage growth and career patterns of full-time employed low-wage workers between 2001 and 2006. Multivariate models accounting for sample selection demonstrate the relevance of individual characteristics and firm heterogeneity in this context. I observe substantial upward and downward wage mobility in the low-wage sector, with the worst-paid workers having considerably higher relative wage growth than better-paid workers. The majority of those lowwage workers who had escaped the low-wage sector by 2004 were still higher-paid two years later, indicating that their upward mobility is not just a transitory phenomenon." (Author's abstract, IAB-Doku) ((en))
    Keywords: Niedriglohn, Reallohn, Lohnentwicklung, Niedrigqualifizierte, Integrierte Erwerbsbiografien
    JEL: J30 J60
    Date: 2012–01–20
  5. By: Machado, C. Sofia (Instituto Politécnico do Cávado e do Ave); Portela, Miguel (University of Minho)
    Abstract: Using a novel dataset from the 2006 Portuguese Labor Force Survey this paper examines the impact of a voluntary reduction in hours of work, before retirement, on the moment of exit from the labor force. If, as often suggested, flexibility in hours of work is a useful measure to postpone retirement, then a reduction in working hours should be associated with retirement at later ages. Results prove otherwise suggesting that reducing hours of work before retirement is associated with early exits from the labor force. A reduction in hours of work seems to signal the worker's wish to retire sooner rather than to announce the desire of remaining in the labor market. This result may enclose the need for some alternative policy strategies regarding working hours.
    Keywords: aging, retirement, working hours, older workers
    JEL: J14 J26 J22 J21
    Date: 2012–01
  6. By: Jan Babecky; Kamil Galuscak; Lubomir Lizal
    Abstract: Using a large panel of Czech manufacturing firms with 50 or more employees, we update the firm-level labour demand elasticity estimates for 2002-2009. The economic crisis of 2008-2009 provides a source of variation needed for getting estimates that cover not only times of growth, but also a period of economic contraction. We find that in normal times (until 2007), the short-term elasticity is -0.53 with respect to wages and 0.43 with respect to sales, while the long-term elasticities are close to or below unity, standing at -0.94 for wages and 0.76 for sales. Both the wage and sales elasticities increased during the crisis, suggesting that firms became demand constrained, but only the sales elasticity is significantly different. The long-term wage elasticity close to -1 in the period before and during the crisis suggests that firms’ employment decisions are made within fixed budgets. Finally, we find that the inclusion of workers hired through temporary work agencies does not significantly affect the results, indicating that firms take into account total labour when deciding on employment and that hired workers are used as an equal labour demand channel with lower adjustment costs. As a robustness check, our results are qualitatively comparable with the narrative evidence from an ad-hoc firm-level survey on wage and price formation conducted in 2007 and 2009 within the ESCB Wage Dynamics Network.
    Keywords: Czech Republic, elasticity, firm-level data, labour demand, sales elasticity, wage elasticity, the crisis of 2008-2009.
    JEL: C23 J23 J33 P23
    Date: 2011–12
  7. By: Robert Wagner (Ludwig-Maximilians University, Munich); Thomas Zwick (Ludwig-Maximilians University, Munich and Centre for European Economic Research, Mannheim)
    Abstract: This paper jointly analyses the consequences of adverse selection and signalling on entry wages of skilled employees. It uses German linked employer employee panel data (LIAB) and introduces a measure for relative productivity of skilled job applicants based on apprenticeship wages. It shows that post-apprenticeship employer changers are a negative selection from the training firms’ point of view. Negative selection leads to lower average wages of employer changers in the first skilled job than stayers. Entry wages of employer changers are specifically reduced by high occupation and training firm retention rates. Additional training firm signals are high apprenticeship wages that a positive selection of apprenticeship applicants, works councils and firm size that increase training quality. Finally, positive individual signals such as schooling background affect the skilled entry wages of employer changers positively.
    Keywords: entry wages, employer change, adverse selection, signalling
    JEL: J24 J31 J62 J63 M52 M53
    Date: 2012–01
  8. By: Gagnon, Jason (OECD); Xenogiani, Theodora (OECD); Xing, Chunbing (Beijing Normal University)
    Abstract: The rapid and massive increase of rural-to-urban migration in China has drawn attention to the welfare of migrant workers, particularly to their working conditions and pay. This paper uses data from a random draw of the 2005 Chinese national census survey to investigate discrimination in urban labour markets against rural migrants, by comparing their earnings and the sector (formal vs. informal) they work in with those of urban residents and urban migrants. Exploiting differences in their status in the Chinese residential registration system (hukou) we find no earnings discrimination against rural migrants compared with urban residents, contrary to popular belief. In contrast, we find that urban migrants in fact gain a large wage premium by migrating. However, both rural and urban migrants are found to be discriminated out of the formal sector, working in informal jobs and lacking adequate social protection.
    Keywords: migration, China, discrimination, informal employment
    JEL: O15 R23 J24 J71
    Date: 2011–12
  9. By: Riphahn, Regina T. (University of Erlangen-Nuremberg); Schnitzlein, Daniel D. (DIW Berlin)
    Abstract: This article studies the long run patterns and explanations of wage mobility as a characteristic of regional labor markets. Using German administrative data we describe wage mobility since 1975 in West and since 1992 in East Germany. Wage mobility declined substantially in East Germany in the 1990s and moderately in East and West Germany since the late 1990s. Therefore, wage mobility does not balance recent increases in cross-sectional wage inequality. We apply RIF (recentered influence function) regression based decompositions to measure the role of potential explanatory factors behind these mobility changes. Increasing job stability is an important factor associated with the East German mobility decline.
    Keywords: wage mobility, earnings mobility, income mobility, Germany, East Germany, inequality, transition matrix, Shorrocks index, administrative data
    JEL: J30 J31 J60 D63
    Date: 2011–12
  10. By: Judith Scott-Clayton
    Abstract: Recent cohorts of college enrollees are more likely to work, and work substantially more, than those of the past. October CPS data reveal that average labor supply among 18 to 22-year-old full-time undergraduates nearly doubled between 1970 and 2000, rising from 6 hours to 11 hours per week. In 2000 over half of these “traditional” college students were working for pay in the reference week, and the average working student worked 22 hours per week. After 2000, labor supply leveled off and then fell abruptly in the wake of the Great Recession to an average of 8 hours per week in 2009. This paper considers several explanations for the long-term trend of rising employment—including compositional change and rising tuition costs—and considers whether the upward trend is likely to resume when economic conditions improve.
    JEL: I22 I23 J22 J24
    Date: 2012–01
  11. By: Vincent Law (Australian National University)
    Abstract: This paper explores the impact of English proficiency on the labour supply of recent immigrants in Australia. While previous research finds that English proficiency is crucial for participation and employment of immigrants, almost no research, and none in Australia, has been done with respect to hours worked by immigrants. The number of hours worked by immigrants is a strong indicator of economic wellbeing. This study uses the second cohort of the Longitudinal Survey of Immigrants to Australia data to estimate a Chamberlain style Tobit random effects estimator. The results suggest a positive relationship between English proficiency and hours worked by immigrants.
    Keywords: Labour Supply, English Proficiency, Australian Immigration, Australian Immigrants
    JEL: C23 C34 O15 J22
    Date: 2011–06
  12. By: Douglas L. Kruse; Joseph R. Blasi; Richard B. Freeman
    Abstract: This paper analyzes the linkages among group incentive methods of compensation, labor practices, worker assessments of workplace culture, turnover, and firm performance in a non-representative sample of companies: firms that applied to the “100 Best Companies to Work For in America” competition from 2005 to 2007. Although employers with good labor practices self- select into the 100 Best Companies firms sample, which should bias the analysis against finding strong associations among modes of compensation, labor policies, and outcomes, we find that in the firms that make more extensive use of group incentive pay employees participate more in decisions, have greater information sharing, trust supervisors more, and report a more positive workplace culture than in other companies. The combination of group incentive pay with policies that empower employees and create a positive workplace culture reduces voluntary turnover and increases employee intent to stay and raises return on equity. Finding these effects in the non-representative “100 Best Companies” sample strengthens the likelihood that the policies have a causal impact on employee well-being and firm performance.
    JEL: J33 J53 J54 J63 M50 M52 M54 P12 P13 P17
    Date: 2012–01

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