nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2012‒04‒03
twenty-one papers chosen by
Erik Jonasson
Lund University

  1. What Explains the Gender Earnings Gap in Self-Employment? A Decomposition Analysis with German Data By Lechmann, Daniel S. J.; Schnabel, Claus
  2. The Gender Wage Gap by Education in Italy By Mussida, Chiara; Picchio, Matteo
  3. Why Are Migrants Paid More? By Alex Bryson; Giambattista Rossi; Rob Simmons
  4. Promotion Signals, Age and Education By Bognanno, Michael L.; Melero Martín, Eduardo
  5. Work Hours in Chinese Enterprises: Evidence From Matched Employer-Employee Data By Vinod Mishra; Russell Smyth
  6. Self-Employment and the Gender Division of Labour: The Swedish Experience By Mångs, Andreas
  7. Sorting and local wage and skill distributions in France By Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent; Roux, Sébastien
  8. HIV, Wages, and the Skill Premium By Marinescu, Ioana E.
  9. Unemployment risk and wage differentials By Roberto Pinheiro; Ludo Visschers
  10. The Opt-In Revolution? Contraception and the Gender Gap in Wages By Martha J. Bailey; Brad Hershbein; Amalia R. Miller
  11. Age segregation and hiring of older employees: low mobility revisited By Ilmakunnas, Pekka; Ilmakunnas, Seija
  12. The immigrant wage gap and assimilation in Australia: the impact of unobserved heterogeneity By Mosfequs Salehin; Robert Breunig
  13. Explaining the Dynamics in Perceptions of Job Insecurity in Russia By Lokshin, Michael; Gimpelson, Vladimir; Oshchepkov, Aleksey
  14. The effect of non-pecuniary job attributes on labour supply By Holguer Xavier JARA TAMAYO
  15. Dynamic Wage and Employment Effects of Elder Parent Care By Meghan Skira
  16. Explaining job polarization: the roles of technology, offshoring and institutions By Maarten GOOS; Alan MANNING; Anna SALOMONS
  17. Age and Gender Differences in Job Opportunities By Stephan Humpert
  18. Testing a Forgotten Aspect of Akerlof's Gift Exchange Hypothesis: Relational Contracts with Individual and Uniform Wages By Kocher, Martin G.; Luhan, Wolfgang J.; Sutter, Matthias
  19. The Shadow Economy and Work in the Shadow: What Do We (Not) Know? By Schneider, Friedrich
  20. Wage dispersion and team performance: a theoretical model and evidence from baseball By Robert Breunig; Bronwyn Garrett-Rumba; Mathieu Jardin; Yvon Rocaboy
  21. Housing credit and female labour supply: assessing the evidence from Greece By Sarantis Lolos; Evangelia Papapetrou

  1. By: Lechmann, Daniel S. J. (University of Erlangen-Nuremberg); Schnabel, Claus (University of Erlangen-Nuremberg)
    Abstract: Using a large data set for Germany, we show that both the raw and the unexplained gender earnings gap are higher in self-employment than in paid employment. Applying an Oaxaca-Blinder decomposition, more than a quarter of the difference in monthly self-employment earnings can be traced back to women working fewer hours than men. In contrast variables like family background, working time flexibility and career aspirations do not seem to contribute much to the gender earnings gap, suggesting that self-employed women do not earn less because they are seeking work-family balance rather than profits. Differences in human capital endowments account for another 13 percent of the gap but segregation does not contribute to the gender earnings gap in a robust way.
    Keywords: earnings differential, entrepreneurship, gender pay gap, Germany, self-employed, self-employment
    JEL: J31 J71
    Date: 2012–03
  2. By: Mussida, Chiara (Università Cattolica del Sacro Cuore); Picchio, Matteo (Ghent University)
    Abstract: This paper studies the gender wage gap by educational attainment in Italy using the 1994–2001 ECHP data. We estimate wage distributions in the presence of covariates and sample selection separately for highly and low educated men and women. Then, we decompose the gender wage gap across all the wage distribution and isolate the part due to gender differences in the remunerations of the similar characteristics. We find that women are penalized especially if low educated. When we control for sample selection induced by unobservables, the penalties for low educated women become even larger, above all at the bottom of the wage distribution.
    Keywords: gender wage gap, education, counterfactual distributions, decompositions, hazard function
    JEL: C21 C41 J16 J31 J71
    Date: 2012–03
  3. By: Alex Bryson; Giambattista Rossi; Rob Simmons
    Abstract: In efficient global labour markets for very high wage workers one might expect wage differentials between migrant and domestic workers to reflect differences in labour productivity. However, using panel data on worker-firm matches in a single industry over a seven year period we find a substantial wage penalty for domestic workers which persists within firms and is only partially accounted for by individual labour productivity. We show that the differential partly reflects the superstar status of migrant workers. This superstar effect is also apparent in migrant effects on firm performance. But the wage differential also reflects domestic workers' preferences for working in their home region, an amenity for which they are prepared to take a compensating wage differential, or else are forced to accept in the face of employer monopsony power which does not affect migrant workers.
    Keywords: wages, migration, superstars, productivity, compensating wage differentials, sports
    JEL: J24 J31 J61 J71 M52
    Date: 2012–03
  4. By: Bognanno, Michael L. (Temple University); Melero Martín, Eduardo (Universidad Carlos III de Madrid)
    Abstract: This paper examines whether more informative job promotions carry larger wage increases. In job assignment models with asymmetric information, unexpected promotions send a signal to the external labor market to revise upward their assessment of a worker's ability. The employing firm must then increase wages to prevent the worker from being bid away. Less educated workers are assumed to come from a group with lower average ability. Their promotion is hypothesized to signal a larger positive assessment of their ability than for more highly educated workers for whom promotion is expected. Promotions for younger workers, with less known about their abilities, should also result in strong signaling effects. We find results in accordance with our hypotheses regarding the effect of both age and education on the gains to promotion. However, the statistical significance of the estimates hinges on the promotion definition. Younger workers receive statistically significantly higher wage increases upon promotion only when promotion is defined by the attainment of managerial responsibilities not previously held. Less educated workers obtain statistically significantly larger wage increases upon promotion at a weak level of significance (10%) across definitions of promotion but at a high level of significance (5%) only when the subjective definition of promotion is used. We interpret the sensitivity to the definition of promotion to suggest that promotions may be heterogeneous in the information they reveal about the employee in way that depends on the characteristics of the employee.
    Keywords: promotion, signaling, internal labor markets
    JEL: J3
    Date: 2012–03
  5. By: Vinod Mishra; Russell Smyth
    Abstract: The purpose of this paper is to explore the factors that are correlated with hours worked in China. A distinguishing feature of the study is that we use representative matched employer and employee data. Hence, in addition to the usual worker characteristics examined in conventional economic models of labour supply, we also take account of the influence of firm characteristics and policies in influencing the number of hours worked. The results suggest that in addition to the hourly wage rate, labour supply characteristics and human capital characteristics of the individual, firm-level differences are important in explaining variation in weekly hours worked in Chinese firms. In particular, our results suggest that there is a norm of longer working hours in firms which employ a high proportion of female workers, that hours worked are less in firms which pay overtime and that hours worked are less in firms in which labour disputes have disrupted production. The implications of the results for Chinese firms wishing to improve labour management practices are discussed.
    Keywords: China, hours worked, wages, firms
    JEL: J22 J30
    Date: 2012–03
  6. By: Mångs, Andreas (Centre for Labour Market Policy Research (CAFO))
    Abstract: In this study we examine time allocation between market work and domestic activities and the division of labour for a sample of gainfully employed women, focusing particularly on female self employed. Of primary interest for the present study is whether having resident children, and small children in particular, has an impact on time allocated to market work, domestic activities and the division of labour that can be differentiated between self employed and wage-employed. We use a unique data set that combines survey data with register data covering 10 000 individuals. In this study we use a subsample consisting of 2 155 married or cohabiting women of which 925 are self-employed. Our results suggest that Swedish self-employed women spend significantly more time on market work compared to female wage-employed. About 30 percent of all married/cohabiting self-employed women work on average 45 hours or more per week, the corresponding share for wage-employed being around 7 percent. The fact that this share is high among married or cohabiting self-employed women shows that the assumed gain in flexibility through self-employment is not due to a reduction of working hours. Rather, the flexibility offered by self employment manifests itself in an adaptation of when and presumably also where to work. However, it appears that female self-employed reduce the time spent on market work relatively more than wage-employed women do when they have resident small children. But on average, female self-employed with small children still devote more time to market work than corresponding wage-employed women. Our estimations also suggest that for mothers the number of children affects the time devoted to domestic and care activities differently according to employment status: One more resident child contributes to a significantly smaller increase in the time devoted to housework and care activities for married or cohabiting self-employed women compared to corresponding wage-employed women. We find also that, ceteris paribus, married/cohabitant female self employed have a higher tendency to report a more equal division of domestic tasks than married/cohabitant female wage-employed.
    Keywords: Self-employment; Time allocation; Gender
    JEL: J16 J22 J24
    Date: 2011–11–25
  7. By: Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent; Roux, Sébastien
    Abstract: This paper provides descriptive evidence about the distribution of wages and skills in denser and less dense employment areas in France. We confirm that on average, workers in denser areas are more skilled. There is also strong overrepresentation of workers with particularly high and low skills in denser areas. These features are consistent with patterns of migration including negative selection of migrants to less dense areas and positive selection towards denser areas. Nonetheless migration, even in the longrun, accounts for little of the skill differences between denser and less dense areas. Finally, we find marked differences across age groups and some suggestions that much of the skill differences across areas can be explained by differences between occupational groups rather than within.
    Keywords: skill distribution; sorting; wage distribution
    JEL: J31 J61 R12 R23
    Date: 2012–03
  8. By: Marinescu, Ioana E. (Harris School, University of Chicago)
    Abstract: The HIV epidemic has dramatically decreased labor supply among prime-age adults in sub-Saharan Africa. Using within-country variation in regional HIV prevalence and a synthetic panel, I find that HIV significantly increases the capital-labor ratio in urban manufacturing firms. The impact of HIV on average wages is positive but imprecisely estimated. In contrast, HIV has a large positive impact on the skill premium. The impact of HIV on the wages of low skilled workers is insignificantly different from 0, and is strongly dampened by competition from rural migrants. The HIV epidemic disproportionately increases the incomes of high-skilled survivors, thus increasing inequality.
    Keywords: labor supply, wages, health, AIDS, HIV, development
    JEL: J22 I15 J31
    Date: 2012–03
  9. By: Roberto Pinheiro; Ludo Visschers
    Abstract: Workers in less secure jobs are often paid less than identical-looking workers in more secure jobs. We show that this lack of compensating differentials for unemployment risk can arise in equilibrium when all workers are identical, and firms differ, but do so only in offered job security (the probability that the worker is not sent into unemployment). In a setting where workers search on and off the job, wages paid increase with job security for at least all firms in the risky tail of the distribution of firm-level unemployment risk. As a result, unemployment spells become persistent for low-wage and unemployed workers, a seeming pattern of ‘unemployment scarring’, that is created entirely by firm heterogeneity alone. Higher in the wage distribution, workers can take wage cuts to move to more stable employment
    Keywords: Layoff rates, Unemployment risk, Wage differentials, Unemployment scarring
    JEL: J31 J63
    Date: 2012–01
  10. By: Martha J. Bailey; Brad Hershbein; Amalia R. Miller
    Abstract: Decades of research on the U.S. gender gap in wages describes its correlates, but little is known about why women changed their career paths in the 1960s and 1970s. This paper explores the role of “the Pill” in altering women’s human capital investments and its ultimate implications for life-cycle wages. Using state-by-birth-cohort variation in legal access to contraception, we show that younger access to the Pill conferred an 8-percent hourly wage premium by age fifty. Our estimates imply that the Pill can account for 10 percent of the convergence of the gender gap in the 1980s and 30 percent in the 1990s.
    JEL: J13 J16 J3 N32
    Date: 2012–03
  11. By: Ilmakunnas, Pekka; Ilmakunnas, Seija
    Abstract: We analyse age segregation in hirings and separations using linked employer-employee data from Finland in the period 1990-2004. This allows us to identify at the firm level employees in different age groups that have been hired during the previous year, and employees who have exited the firms. We analyze firm-level age segregation using segregation curves and Gini indices. The hirings of older employees have clearly been more segregated than exits or the stock of old employees even though hirings have become slightly less segregated towards the end of the period in question. At the same time age segregation in exits and stocks has increased and these trends are not sensitive to small unit bias in measurement. We also examine trends in hiring and exit rates using aggregate data. According to our results the oldest age group is again underrepresented in hirings. There is a positive upward trend in their recruitments related to the increasing cohort size, but it is much weaker than the trend in the relative share of older workers in employment. The exit rate of the older employees indicates cyclical variation while the small number of hirings seems to be insensitive to changing labour demand. We present a decomposition of employment change by age group and with that decomposition we disentangle the role of hirings and exits from factors related to demographics and cohort effects. The latter factors include the effect of the large baby boom generation entering the age group of older employees with higher employment rates than earlier cohorts. Finally, our regression analysis shows that larger firms are more likely to hire older employees, but their hiring rates are lower.
    Keywords: ageing; hiring; segregation; labour demand
    JEL: J14 J26 J23
    Date: 2012–01
  12. By: Mosfequs Salehin; Robert Breunig
    Abstract: This paper provides an overview of asylum migration from poor strife-prone countries to the OECD since the 1950s. I examine the political and economic factors in source countries that generate refugees and asylum seekers. Particular attention is given to the rising trend of asylum applications up to the 1990s, and the policy backlash that followed. I consider the political economy of restrictive asylum policies, especially in EU countries, as well as the effectiveness of those policies in deterring asylum seekers. The paper concludes with an outline of the assimilation of refugees in host country labour markets. Immigrants to Australia are selected on observable characteristics. They may also differ from natives on unobservable characteristics such as ambition or motivation. Controlling for unobserved heterogeneity, we find a wage gap for immigrant men from English-speaking backgrounds, in contrast with previous research. Controlling for unobserved heterogeneity also seems important for finding cohort effects. Immigrants that arrived before 1976 faced a larger wage gap compared to native-born Australians than subsequent cohorts. Confirming other research, we find wage gaps for immigrant men and women from non-English speaking backgrounds. All immigrants experience wage assimilation as time spent in Australia increases.
    Keywords: immigrants; wage gap; assimilation; Australia; cohort effects
    JEL: J31 J61
    Date: 2012–03
  13. By: Lokshin, Michael (World Bank); Gimpelson, Vladimir (CLMS, Moscow Higher School of Economics); Oshchepkov, Aleksey (Higher School of Economics, Moscow)
    Abstract: Contrary to the experiences of other countries, perceptions of job insecurity in Russia were not correlated with the rates of unemployment and the business cycle over the last decade. We develop the theoretical framework that predicts that the individual perceptions of job insecurity depend on regional unemployment rates and on the within-group variance of wage distribution faced by workers. We test this hypothesis using data from ten panel rounds of Russia Longitudinal Monitoring Survey. Our results indicate that while higher rates of unemployment make workers feel less job secure, the wage compression during recessions reduces their fears of losing a job. In periods of economic expansion the effect of lower unemployment rates is offset by the higher fears of losing better paying jobs.
    Keywords: unemployment, job security, business cycle, Russia
    JEL: J28 J30 J64
    Date: 2012–03
  14. By: Holguer Xavier JARA TAMAYO
    Abstract: The aim of this paper is to analyse the effect of non-pecuniary job attributes on labour supply. We develop a discrete choice model of labour supply where the choice alternatives are characterised by bundles of hours of work and job insecurity. The parameters of the utility function are obtained using maximum simulated likelihood with Halton sequences to account for unobserved heterogeneity in preferences. We compare the predictive power and labour supply elasticities obtained with our model to those of a more traditional model where only discrete hours choices characterise a job. The results show that once job insecurity is included in the discrete choice alternatives, the predictive power of the model improves significantly. Labour supply elasticities are lower than those obtained by a traditional discrete hours model, but not significantly different. Finally, a decrease of job insecurity at work has a positive and significant effect on participation, implying that policies aimed at improving working conditions could be used to influence labour supply decisions.
    Date: 2011–10
  15. By: Meghan Skira (Boston College)
    Abstract: This paper formulates and estimates a dynamic discrete choice model of elder parent care and work to analyze how caregiving affects a woman’s current and future labor force participation and wages. Intertemporal tradeoffs, such as decreased future earning capacity due to a current reduction in labor market work, are central to the decision to provide care. The existing literature, however, overlooks such long-term considerations. I depart from the previous literature by modeling caregiving and work decisions in an explicitly intertemporal framework. The model incorporates dynamic elements such as the health of the elderly parent, human capital accumulation and job offer availability. I estimate the model on a sample of women from the Health and Retirement Study by efficient method of moments. The estimates indicate that intertemporal tradeoffs matter considerably. In particular, women face low probabilities of returning to work or increasing work hours after a caregiving spell. Using the estimates, I simulate several government sponsored elder care policy experiments: a longer unpaid leave than currently available under the Family and Medical Leave Act of 1993; a paid work leave; and a caregiver allowance. The leaves encourage more work among intensive care providers since they guarantee a woman can return to her job, while the caregiver allowance discourages work. A comparison of the welfare gains generated by the policies shows that half the value of the paid leave can be achieved with the unpaid leave, and the caregiver allowance generates gains comparable to the unpaid leave.
    Keywords: Informal care, employment, dynamic discrete choice, structural estimation, Fam- ily and Medical Leave Act
    JEL: J14 J18 J22 C51
    Date: 2012–03–27
  16. By: Maarten GOOS; Alan MANNING; Anna SALOMONS
    Abstract: This paper develops a simple and empirically tractable model of labor demand to explain recent changes in the occupational structure of employment as a result of technology, offshoring and institutions. This framework takes account not just of direct effects but indirect effects through induced shifts in demand for different products. Using data from 16 European countries, we find that the routinization hypothesis of Autor, Levy and Murnane (2003) is the most important factor behind the observed shifts in employment but that offshoring does play a role. We also find that shifts in product demand are acting to attenuate the impacts of recent technological progress and offshoring and that changes in wage-setting institutions play little role in explaining job polarization in Europe.
    Date: 2011–12
  17. By: Stephan Humpert (Institute of Economics, Leuphana University Lueneburg, Germany)
    Abstract: There is only a few literature on age specific occupational segregation. In this descriptive paper, I focus on job opportunities for newly hired older male and female workers. It is an enriched replication study of Hutchens (ILRR,1988), who showed that firms employ older workers, but hire them less. I use a rich dataset for West Germany with information for almost thirty years, the regional file of the IAB Employment Sample (IABS-R04). By drawing segregation curves and calculating different measures, such as Dissimilarity Index and Hutchens Square Root Segregation Index, I find clear evidence that age related segregation exists. While newly hired workers in the age groups of 18 to 34 and 35 to 54 are quiet similar distributed in terms of the indices, the oldest age group of 55 years and older, and especially older women, are more segregated. Differences for older male and female workers over time, may be explained by changes in labor and retirement policies.
    Keywords: Labor Demand, Age Segregation, Older Workers, Gender
    JEL: J23 J24 J21 J14 J16
    Date: 2012–03
  18. By: Kocher, Martin G. (University of Munich); Luhan, Wolfgang J. (Ruhr University Bochum); Sutter, Matthias (University of Innsbruck)
    Abstract: Empirical work on Akerlof's theory of gift exchange in labor markets has concentrated on the fair wage-effort hypothesis. In fact, however, the theory also contains a social component that stipulates that homogenous agents that are employed for the same wage level will exert more effort, resulting in higher rents and higher market efficiency, than agents that receive different wages. We present the first test of this component, which we call the fair uniform-wage hypothesis. In our laboratory experiment, we establish the existence of a significant efficiency premium of uniform wages. However, it is not the consequence of a stronger level of reciprocity by agents, but of the retrenchment of sanctioning options on the side of principals with uniform wages. Hence, implementing limitations to contractual freedom can have efficiency-enhancing effects.
    Keywords: gift exchange, multiple agents, uniform contracts, collective wage, experiment
    JEL: C72 C91 C92 D21 J31 J50
    Date: 2012–03
  19. By: Schneider, Friedrich (University of Linz)
    Abstract: In this paper the main focus lies on the shadow economy and on work in the shadow in OECD, developing and transition countries. Besides informal employment in the rural and non-rural sector also other measures of informal employment like the share of employees not covered by social security, own account workers or unpaid family workers are shown. The most influential factors on the shadow economy and/or shadow labor force are tax policies and state regulation, which, if they rise, increase both. Furthermore the discussion of the recent micro studies underline that economic opportunities, the overall burden of the state (taxes and regulations), the general situation on the labor market, and unemployment are crucial for an understanding of the dynamics of the shadow economy and especially the shadow labor force.
    Keywords: shadow economy, undeclared work, shadow labor force, tax morale, tax pressure, state regulation, labor market
    JEL: K42 H26 D78
    Date: 2012–03
  20. By: Robert Breunig; Bronwyn Garrett-Rumba; Mathieu Jardin; Yvon Rocaboy
    Abstract: We develop a general theoretical model of the effect of wage dispersion on team performance which nests two possibilities: wage inequality may have either negative or positive effects on team performance. A parameter which captures the marginal cost of effort, which we estimate using game-level data from Major League Baseball, determines whether wage dispersion and team performance are negatively or positively related. We find low marginal cost of effort; consequently wage disparity is negatively related to team performance. Results from game and season-level regressions also indicate a negative relationship between inequality and performance. We discuss a variety of interpretations of our results.
    Keywords: wage dispersion; labor economics; sports economics; baseball; ability; effort
    JEL: D3 J3
    Date: 2012–03
  21. By: Sarantis Lolos (Panteion University); Evangelia Papapetrou (Bank of Greece and University of Athens)
    Abstract: This paper brings new evidence on the relationship between housing credit and female labour participation decisions by investigating the possible interdependence between the two variables in the case of Greece. This relationship is analysed through the estimation of a probit model with endogenous regressors using household data of the Income and Living Conditions (EU-SILC) survey for 2008. The empirical results show that mortgage and female labour participation decisions are interrelated. In a broader perspective, the evidence provided in our analysis supports the existence of a finance (housing credit) and real economy activity (female labour supply) nexus.
    Keywords: Mortgage market; female labour market participation; endogeneity
    JEL: J2 D91 J21
    Date: 2011–11

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