|
on Labor Markets - Supply, Demand, and Wages |
| By: | Sara Lemos |
| Abstract: | Using the underexplored, sizeable and long Lifetime Labour Market Database (LLMDB) we estimated the immigrant-native earnings gap across the entire earnings distribution, across continents of nationality and across cohorts of arrival in the UK between 1978 and 2006. We exploited the longitudinal nature of our data to separate the effect of observed and unobserved individual characteristics on earnings. This helped us to prevent selectivity biases such as cohort bias and survivor bias, which have been long standing unresolved identification issues in the literature. In keeping with the limited existing UK literature, we found a clear and wide dividing line between whites and non-whites in simple comparable models. However, in our more complete models we found a much narrower and subtler dividing line. This confirms the importance of accounting for unobservable individual characteristics, which is an important contribution of this paper. It also suggests that the labour market primarily rewards individual characteristics other than immigration status. We also found that the lowest paid immigrants, whom are disproportionately non-white, suffer an earnings penalty in the labour market, whereas higher paid immigrants, whom are disproportionately white, do not. Finally, we found less favourable earning gaps for cohorts that witnessed proportionately larger non-white and lower paid white immigration. |
| Keywords: | Immigration; wages; earnings; earnings-gap; UK |
| JEL: | J24 J31 J61 J71 J82 F22 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:11/38&r=lma |
| By: | José Mustre-del-Río |
| Abstract: | This paper examines the Frisch elasticity at the extensive margin of labor supply in an economy consistent with the observed dispersion in average employment rates across individuals. An incomplete markets economy with indivisible labor is presented where agents differ in their disutility of labor and market skills. The model's key parameters are estimated using indirect inference with panel data from the National Longitudinal Survey of the Youth-NLSY. The estimated model implies an elasticity of aggregate employment of 0.71. A simple decomposition reveals that labor disutility dierences, which capture the dispersion in employment rates, are crucial for this quantitative result. These differences alone generate an elasticity of 0.69. Meanwhile, skill differences alone imply an elasticity of 1.1. These results suggest that the literature generates large employment elasticities by ignoring individual labor supply differences. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkrw:rwp11-09&r=lma |
| 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: | structural models,heterogeneous firms,fair wages,labour market imperfections,exporter wage premium |
| JEL: | C31 F12 F16 J31 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuewef:23&r=lma |
| By: | Tor Eriksson (Department of economics - University of Aarhus); Marie-Claire Villeval (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure de Lyon) |
| Abstract: | Assuming that people care not only about what others do but also on what others think, we study respect in a labor market context where the length of the employment relationship is endogenous. In our three-stage gift-exchange experiment, the employer can express respect by giving the employee costly symbolic rewards after observing his level of effort. We study whether symbolic rewards are used by the employers mainly to praise employees or as a coordination device to build relational contracts by manipulating the balance between labor demand and supply in the market. We find that a high proportion of long-term relationships have been initiated by the assignment of symbolic rewards. However, the assignment of symbolic rewards decreases when it becomes clear that the relationship is durable, suggesting that employers mainly use symbolic rewards as a coordination device to initiate relational contracts. Compared to the balanced market condition, assigning symbolic rewards in initial relationships is less likely when there is excess demand in the market and more likely when there is excess supply, i.e. when the relationship is more valuable. Receiving symbolic rewards increases the employees' likelihood of accepting to continue the relationship with the same employer. It also motivates them to increase their effort further but only when the market is balanced. Overall, the ability to assign symbolic rewards does not give rise to higher profits because it is associated with lower rents offered to the employees on average, leading to lower effort levels. |
| Keywords: | Respect; Symbolic rewards; Coordination; Signaling; Labor market; Experiment |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00642527&r=lma |
| By: | Sara Lemos |
| Abstract: | We exploit a large and long longitudinal dataset to estimate the immigrant-native earnings gap at entry and over time for the UK between 1978 and 2006. That is, we attempt to separately estimate cohort and assimilation effects. We also estimate the associated immigrant earnings growth rate and immigrant-native earnings convergence rate. Our estimates suggest that immigrants from more recent cohorts fare better than earlier ones at entry. Furthermore, the earnings of immigrants from more recent cohorts catch up faster with natives' earnings. While the convergence took over 30 years for those entering in the post-war, it only took half as long for those entering in the early 2000s. This earnings growth is fastest in the first 10 years, and it considerably slows down after 30 years. |
| Keywords: | Immigration; assimilation; wages; earnings; earnings-gap; UK. |
| JEL: | J24 J31 J61 J71 J82 F22 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:11/39&r=lma |
| By: | Dwenger, Nadja; Rattenhuber, Pia; Steiner, Viktor |
| Abstract: | This study assesses the burden of capital income tax passed onto labor through wage bargaining over economic rents, using estimations based on a unique pseudo-panel data set from Germany for the period 1998 to 2006. Tax return data cover the universe of corporations subject to corporate income tax, and labor market variables reflect the full record of employees covered by Social Security. We find that wage bargaining after a reduction in tax rates does not increase the wage bill if employment effects neglected by previous empirical studies are taken into account. Any increase in the total wage bill by higher wage rates set is equally compensated for by lower levels of employment. If adjustments in employment due to the increased user cost of capital are taken into account, a cut in corporate income taxes by 1 euro increases the wage bill by 0.47 euro. The identification of these effects comes from variation in the firm-specific average corporate tax rate across firms and over time resulting from two substantial tax reforms. The endogeneity of the firmspecific tax rate is controlled for by an instrumental variable approach. The instrument for the observed average tax rate is the counterfactual tax rate that a corporation would have faced in a particular period, had there been no endogenous change of its tax base, constructed using a detailed microsimulation model. -- |
| Keywords: | tax incidence,wage determination,corporate income taxation,corporate tax return data |
| JEL: | H22 H25 J21 J31 H32 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:201119&r=lma |
| By: | Cervini-Plá, María |
| Abstract: | This paper explores the mechanisms behind the intergenerational earnings mobility in Spain by means of three exercises: calculating the transition matrix, decomposing the sources of earnings elasticity and estimating quantile earnings regressions. By calculating the transition matrices we find a strong degree of persistence in educational attainment and especially in occupation. By decomposing the sources of earnings elasticity across generations, we find that the correlation between children's and their fathers' occupations is the most important component. Finally, quantile regressions estimates show that the influence of the father's earnings is greater when we move to the lower tail of the offspring's earnings distribution, especially in the case of daughters' earnings. |
| Keywords: | Intergenerational mobility; earnings; transition matrix; quantile regression; two sample two stage least square estimator; Spain |
| JEL: | D31 J62 J31 |
| Date: | 2012–01–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:36093&r=lma |
| By: | Lee E. Ohanian; Andrea Raffo |
| Abstract: | We build a dataset of quarterly hours worked for 14 OECD countries. We document that hours are as volatile as output, that a large fraction of labor adjustment takes place along the intensive margin, and that the volatility of hours relative to output has increased over time. We use these data to reassess the Great Recession and prior recessions. The Great Recession in many countries is a puzzle in that labor wedges are small, while those in the U.S. Great Recession - and those in previous European recessions - are much larger. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1039&r=lma |
| By: | Laenen, Wout; Moons, Cindy (Hogeschool-Universiteit Brussel (HUB), Belgium); Persyn, Damiaan (LICOS and VIVES, KULeuven, Faculty of Business and Economics, Leuven, Belgium) |
| Abstract: | This study examines the evolution of labour costs and taxes in Belgium and neighbouring countries. We try to clarify the common issues in the current debate concerning labour costs and labour demand in Belgium and neighbouring countries and investigate the influence of labour costs on employment by using macroeconomic OECD data. We conclude that the tax wedge in Belgium is one of the highest of all OECD countries. Labour costs in Belgium rose at a moderate tempo, but labour productivity evolved less favourably compared with neighbouring countries. Belgian unit labour costs, considered as an indicator of competitiveness, evolved unfavourably. By using a dynamic error correction model we find a statistically significant but limited negative relation between labour costs and employment. A decrease in labour costs of 10% results in an increase of employment of only 1.3%, which indicates a strongly inelastic labour demand. In contrast to studies based on microeconomic data, which find generally higher wage elasticities, on the basis of this study no decisive elements can be found to question the rationale of the current wage indexation mechanism. |
| Keywords: | economic history; ECSC; European Integration; regional concentration |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:hub:wpecon:201125&r=lma |
| By: | Hippolyte D'Albis (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne); Paul Lau Sau-Him (HKU - School of Economics and Finance - University of Hong Kong); Miguel Sanchez-Romero (mpidr - Max Planck Institute for Demographic Research - Max Planck Institute) |
| Abstract: | Many studies specify human mortality patterns parametrically, with a parameter change affecting mortality rates at different ages simultaneously. Motivated by the stylized fact that a mortality decline affects primarily younger people in the early phase of mortality transition but mainly older people in the later phase, we study how a mortality change at an arbitrary age affects optimal retirement age. Using the Volterra derivative for a functional, we show that mortality reductions at older ages delay retirement unambiguously, but that mortality reductions at younger ages may lead to earlier retirement due to a substantial increase in the individual's expected lifetime human wealth. |
| Keywords: | mortality decline; incentive for early retirement; years-to-consume effect; lifetime human wealth effect |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-00659868&r=lma |
| By: | Christian Merkl, Thijs van Rens |
| Abstract: | Firms select not only how many, but also which workers to hire. Yet, in standard search models of the labor market, all workers have the same probability of being hired. We argue that selective hiring crucially affects welfare analysis. Our model is isomorphic to a search model under random hiring but allows for selective hiring. With selective hiring, the positive predictions of the model change very little, but the welfare costs of unemployment are much larger because unemployment risk is distributed unequally across workers. As a result, optimal unemployment insurance may be higher and welfare is lower if hiring is selective |
| Keywords: | labor market models, welfare, optimal unemployment insurance |
| JEL: | E24 J65 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1752&r=lma |
| By: | Stolarick, Kevin (University of Toronto); Mellander, Charlotta (Jönköping International Business School); Florida, Richard (University of Toronto) |
| Abstract: | Research on human capital generally focuses on the regional level, and neglects the relative effects of its distribution between center cities and surrounding suburbs. This research examines the effects of this intra-metropolitan distribution on economic performance. The findings indicate that this distribution matters significantly to US regional performance. Suburban human capital matters more than center city human capital. However, this varies by regional size. Suburban human capital has the biggest effect on regional economic performance in smaller and medium size metros. Center city human capital has a relatively larger effect on economic performance in regions with over one million people. |
| Keywords: | Human Capital; Density; Intra-metropolitan distribution; Income; Housing prices |
| JEL: | J24 O30 R10 R20 |
| Date: | 2012–01–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0264&r=lma |