nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2012‒02‒27
thirteen papers chosen by
Erik Jonasson
Lund University

  1. Wage inequality, tasks and occupations By Carol A. Scotese
  2. Hiring Costs of Skilled Workers and the Supply of Firm-Provided Training By Blatter, Marc; Mühlemann, Samuel; Schenker, Samuel; Wolter, Stefan
  3. The Labor Market Return to an Attractive Face: Evidence from a Field Experiment By López Bóo, Florencia; Rossi, Martín A.; Urzua, Sergio
  4. The Finnish payroll tax cut experiment revisited By Ossi Korkeamäki
  5. The Future of Contractual Mandatory Retirement in South Korea By Klassen, Thomas R.
  6. Wage-Productivity Gap in Turkish Manufacturing Sector By Ceyhun Elgin; Tolga Umut Kuzubas
  7. Risky jobs and wage differentials An indirect test for segregation By Vincenzo Carrieri; Edoardo Di Porto; Leandro Elia
  8. Why do some employers prefer to interview Matthew but not Samir? New evidence from Toronto, Montreal and Vancouver By Dechief, Diane; Oreopoulos, Philip
  9. A Note on the Robustness of Card and Krueger (1994) and Neumark and Wascher (2000) By Olli Ropponen
  10. To work or not to work? The effct of child-care subsidies on the labour supply of parents By Tuomas Kosonen
  11. The Firm as the Locus of Social Comparisons: Internal Labor Markets versus Up-or-Out By Auriol, Emmanuelle; Friebel, Guido; Lammers, Frauke
  12. The Healthy Fright of Losing a Good One for a Bad One By Cristini, Annalisa; Origo, Federica; Pinoli, Sara
  13. Young workers‟ overeducation and cohort effects in “P.I.G.S.†countries versus the Netherlands: a pseudo-panel analysis By Emanuela Ghignoni

  1. By: Carol A. Scotese (Department of Economics, VCU School of Business)
    Abstract: This paper assesses the relationship between occupation attributes and changes in wage inequality finding partial support for the computerization hypothesis. While wages associated with non-routine cognitive tasks have risen; current versions of the hypothesis cannot explain the pattern of within occupation wage changes, the differential impact of various types of non-routine cognitive tasks and the declining return to tasks that complement machines. Despite significant employment shifts, occupational composition alone matters little for changes in wage inequality. Changes in wage dispersion within occupations are quantitatively just as important as wage changes between occupations for explaining wage inequality between 1980 and 2000.
    Keywords: wage inequality, computerization, skill, tasks
    JEL: J31 E24 J24
    Date: 2012–02
  2. By: Blatter, Marc (University of Bern); Mühlemann, Samuel (University of Bern); Schenker, Samuel (University of Bern); Wolter, Stefan (University of Bern)
    Abstract: This paper analyzes how the costs of hiring skilled workers from the external labor market affect a firm's supply of training. Using administrative survey data with detailed information on hiring and training costs for Swiss firms, we find evidence for substantial and increasing marginal hiring costs. However, firms can invest in internal training of unskilled workers and thereby avoid costs for external hiring. Controlling for a firm's training investment, we find that a one standard deviation increase in average external hiring costs increases the number of internal training positions by 0.7 standard deviations.
    Keywords: hiring costs, apprenticeship training, firm-sponsored training
    JEL: J23 J24 J32
    Date: 2012–02
  3. By: López Bóo, Florencia (Inter-American Development Bank); Rossi, Martín A. (Universidad de San Andrés); Urzua, Sergio (University of Maryland)
    Abstract: We provide new evidence on the link between beauty and hiring practices in the labor market. Specifically, we study if people with less attractive faces are less likely to be contacted after submitting a resume. Our empirical strategy is based on an experimental approach. We sent fictitious resumes with pictures of attractive and unattractive faces to real job openings in Buenos Aires, Argentina. We find that attractive people receive 36 percent more responses (callbacks) than unattractive people. Given the experimental design, this difference can be attributed to the exogenous manipulation of facial attractiveness of our fake job applicants.
    Keywords: facial attractiveness, callback rates, labor market discrimination
    JEL: J71 J78
    Date: 2012–02
  4. By: Ossi Korkeamäki
    Abstract: In this paper I evaluate the effects of a regional experiment that reduced payroll taxes by 3?6 percentage points of the firms? wage sum in northern and eastern Finland. I estimate the effect of the payroll tax reduction on firms? employment levels, wage sum and profits, and on workers? hourly pay and monthly hours worked, by comparing the changes in employment and wages before and after the start of the experiment to a control region. My results indicate that the reduction in payroll taxes did not lead to any unequivocal aggregate effects in the target region.
    Keywords: Payroll-tax, labour demand, tax incidence
    JEL: J18 J58 J38 J68 J23 J65
    Date: 2011–04–13
  5. By: Klassen, Thomas R.
    Abstract: Although contractual mandatory retirement at a specified age has been eliminated, or limited, in many Western nations, the practice remains widespread in other parts of the world. In South Korea (henceforth, Korea) most workers are subject to contractual mandatory retirement, often while still relatively young; that is, in the 50s. Korean retirement policies are deeply rooted in the belief by policy makers, employers and unions that mandatory retirement creates jobs for young workers. In addition, because worker compensation is linked to age, employers argue that the seniority-based wages paid to older workers are excessive. Notwithstanding the opposition to reforming retirement policies, Korea faces a rapidly aging population that will require modifications to existing retirement arrangements. Moreover, greater emphasis on human rights, and efforts to reduce age-based discrimination in employment, will add to the pressures to increase the age of contractual mandatory retirement.
    Keywords: Mandatory Retirement, South Korea, Age Discrimination, Population Aging
    JEL: J26 J14 J78
    Date: 2012–02–19
  6. By: Ceyhun Elgin; Tolga Umut Kuzubas
    Date: 2012–03
  7. By: Vincenzo Carrieri; Edoardo Di Porto; Leandro Elia
    Abstract: Social scientists have developed several indicators to address the existence of segregation processes. This paper deals with labor market segregation in risky jobs and suggests a simple indirect way to detect segregation based on battery of statistical tests in a well-established microeconomics setting: the theory of compensating wage differentials. The test is based on matching estimator and the Rosenbaum bounds test and allows us to detect segregation while correcting for the selection bias that affect standard estimates, commonly based on OLS. We apply our test to the Italian labor market and we detect a strong segmentation in risky jobs. According to the theory, workers segregated in risky jobs, earn a lower wage.
    Keywords: wage differentials, risky jobs, segregation, propensity score matching, Rosenbaum bounds.
    JEL: C14 J31 J28 I19
    Date: 2011–07
  8. By: Dechief, Diane; Oreopoulos, Philip
    Abstract: In earlier work (Oreopoulos, 2009), thousands of resumes were sent in response to online job postings across Toronto to investigate why Canadian immigrants struggle in the labor market. The findings suggested significant discrimination by name ethnicity and city of experience. This follow-up study focuses more on better understanding exactly why this type of discrimination occurs -- that is, whether this discrimination can be attributed to underlying concerns about worker productivity or simply prejudice, and whether the behaviour is likely conscious or not. We examine callback rates from sending resumes to online job postings across multiple occupations in Toronto, Montreal, and Vancouver. Substantial differences in callback rates arise again from simply changing an applicant’s name. Combining all three cities, resumes with English-sounding names are 35 percent more likely to receive callbacks than resumes with Indian or Chinese names, remarkably consistent with earlier findings from Oreopoulos (2009) for Toronto in better economic circumstances. If name-based discrimination arises from language and social skill concerns, we should expect to observe less discrimination when 1) including on the resume other attributes related to these skills, such as language proficiency and active extracurricular activities; 2) looking at occupations that depend less on these skills, like computer programming and data entry and 3); listing a name more likely of an applicant born in Canada, like a Western European name compared to a Indian or Chinese name, In all three cases, we do not find these patterns. We then asked recruiters to explain why they believed name discrimination occurs in the labour market. Overwhelmingly, they responded that employers often treat a name as a signal that an applicant may lack critical language or social skills for the job, which contradicts our conclusions from our quantitative analysis. Taken together, the contrasting findings are consistent with a model of ‘subconscious’ statistical discrimination, where employers justify name and immigrant discrimination based on language skill concerns, but incorrectly overemphasize these concerns without taking into account offsetting characteristics listed on the resume. Pressure to avoid bad hires exacerbates these effects, as does the need to review resumes quickly. Masking names when deciding who to interview, while considering better ways discern foreign language ability may help improve immigrants' chances for labour market success.
    Keywords: Immigration, Audit Study, Point System
    JEL: J70 J61
    Date: 2012–02–19
  9. By: Olli Ropponen
    Abstract: This note adds to the discussion originating from David Card and Alan B. Krueger (1994; CK) and David Neumark and William Wascher (2000; NW). It re-evaluates their results by using the semiparametric difference-in-differences estimator introduced by Alberto Abadie (2005). The re-evaluation suggests that the original results on the average employment effect in CK and NW are fairly robust, although the NW results are slightly diluted when taking into account the differences in the distributions of the observed covariates.
    Keywords: Employment, minimum wage, nonlinear treatment effect models
    JEL: J38 J23 C21
    Date: 2011–06–14
  10. By: Tuomas Kosonen
    Abstract: This paper studies the effect of child-care subsidies on maternal labour supply. In the Finnish child-care system, parents taking care of their children at home receive a relatively generous home-care allowance. I use variation arising from changes in the municipality-specific supplement to this allowance to identify the causal effect of subsidies on the labour force participation of parents. A municipal supplement creates plausibly exogenous variation in subsidies, since the opportunity to take them up depends on municipal-level rules, but not on changes in individual labour supply decisions. Moreover, a supplement policy affects labour supply in a transparent way since the amount of supplement one is eligible for does not depend on income. Robustness checks indicate that the results are not driven by policy endogeneity or residential sorting. I find a large negative effect on the labour force participation and income of mothers. 100 euros higher supplement per month reduces the maternal labour supply by 3 per cent. The estimated effect is larger for higher-educated than for mediumeducated mothers.
    Keywords: Labour supply of parents, child care subsidies, participation tax rate
    JEL: J13 J22 H20
    Date: 2011–04–29
  11. By: Auriol, Emmanuelle (Toulouse School of Economics); Friebel, Guido (Goethe University Frankfurt); Lammers, Frauke (University of Bern)
    Abstract: We suggest a parsimonious dynamic agency model in which workers have status concerns. A firm is a promotion hierarchy in which a worker's status depends on past performance. We investigate the optimality of two types of promotion hierarchies: (i) internal labor markets, in which agents have a job guarantee, and (ii) "up-or-out", in which agents are fired when unsuccessful. We show that up-or-out is optimal if success is difficult to achieve. When success is less hard to achieve, an internal labor market is optimal provided the payoffs associated with success are moderate. Otherwise, up-or-out is, again, optimal. These results are in line with observations from academia, law firms, investment banks and top consulting firms. Here, up-or-out dominates, while internal labor markets dominate where work is less demanding or payoffs are more compressed, for instance, because the environment is less competitive. We present some supporting evidence from academia, comparing US with French economics departments.
    Keywords: status, promotion hierarchies, incentives, sorting
    JEL: J3 M5 L2
    Date: 2012–02
  12. By: Cristini, Annalisa (University of Bergamo); Origo, Federica (University of Bergamo); Pinoli, Sara (University of Bergamo)
    Abstract: In this paper we study the effect of different degrees of employment protection on absenteeism, paying attention to differences between workers moving from protected jobs to insecure jobs, on the one hand, and workers moving from insecure to secure jobs, on the other hand. Using a large representative sample of Italian workers, we show that workers' reaction in terms of sickness leave is not symmetric: losing protection (bad news) is more effective than gaining it (good news). We claim that this asymmetry is consistent with the behavior of financial markets responding to good and bad news. In our case, workers react in a more prudential way to improvements in their employment status ("wait and see" strategy), while they do immediately adjust to worsening job security by showing off healthy behavior.
    Keywords: absenteeism, employment protection, delayed reaction
    JEL: J22 J41
    Date: 2012–02
  13. By: Emanuela Ghignoni
    Abstract: According to theoretical and empirical evidence young workers are more likely to be overeducated than adult ones, especially in countries where the educational attainments of young people grow quickly and the school-to-work transition is difficult and/or lengthy. Nonetheless, if overeducation were expected to disappear during working life, it would not be a crucial problem. To test the transitory nature/persistence of this phenomenon, firstly, I estimated overeducation using the competences frontier method and, later, I studied the “destination†of different cohorts of workers by applying a pseudo-panel technique to Eurostat data referring to European Mediterranean countries and the Netherlands.
    Keywords: overeducation, transitoriness, youth employment, cohort effects, returns to education
    JEL: J21 J24 J31
    Date: 2011–10

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