nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2012‒04‒17
eleven papers chosen by
Erik Jonasson
Lund University

  1. Minimum Wage Effects on Employment, Substitution, and the Teenage Labor Supply: Evidence from Personnel Data By Laura Giuliano
  2. Does High Involvement Management Improve Worker Wellbeing? By Alex Bryson; Bockerman, P.; Ilmakunnas, P.
  3. The structure of hiring costs in Germany By Samuel Muehlemann; Harald Pfeifer
  4. The UK Minimum Wage at Age 22: A Regression Discontinuity Approach By Rebecca Riley; David Wilkinson; Richard Dickens
  5. Exports and Wages: Rent Sharing, Workforce Composition or Returns to Skills? By Macis, Mario; Schivardi, Fabiano
  6. Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings of Disability Applicants By David Autor; Nicole Maestas; Kathleen Mullen; Alexander Strand
  7. The impact of health events on individual labor market histories : the message from difference in differences with exact matching By Emmanuelle Duguet; Christine Le Clainche
  8. Employer Learning, Job Mobility, and Wage Dynamics By Seik Kim; Emiko Usui
  9. The Effect of Work First Job Placements on the Distribution of Earnings: An Instrumental Variable Quantile Regression Approach By David H. Autor; Susan N. Houseman; Sari Pekkala Kerr
  10. A back-door brain drain By Stark, Oded; Byra, Lukasz
  11. HRM and Workplace Motivation: Incremental and Threshold Effects By Alex Bryson; White, M.

  1. By: Laura Giuliano (Department of Economics, University of Miami)
    Abstract: Using personnel data from a large U.S. retail firm, I examine the firm’s response to the 1996 federal minimum wage increase. Compulsory increases in average wages had negative but statistically insignificant effects on overall employment. However, increases in the relative wages of teenagers led to significant increases in the relative employment of teenagers, especially younger and more affluent teenagers. Further analysis suggests a pattern consistent with non-competitive models. Where the legislation affected mainly the wages of teenagers and so was only moderately binding, it led both to higher teenage labor market participation and to higher absolute employment of teenagers.
    Keywords: minimum wage, employment, teenage employment
    JEL: J23 J38 D22
    Date: 2011
  2. By: Alex Bryson; Bockerman, P.; Ilmakunnas, P.
    Abstract: Employees exposed to high involvement management (HIM) practices have higher subjective wellbeing, fewer accidents but more short absence spells than “like” employees not exposed to HIM. These results are robust to extensive work, wage and sickness absence history controls. We present a model which highlights the possibility of higher short-term absence in the presence of HIM because it is more demanding than standard production and because multi-skilled HIM workers cover for one another’s short absences thus reducing the cost of replacement labour faced by the employer. We find direct empirical support for the assumptions in the model. Consistent with the model, because long-term absences entail replacement labour costs for HIM and non-HIM employers alike, long-term absences are independent of exposure to HIM.
    Date: 2011–10
  3. By: Samuel Muehlemann (University of Bern and IZA Bonn); Harald Pfeifer (Federal Institute for Vocational Education and Training (BIBB) Bonn)
    Abstract: In this paper, we analyze the structure of hiring costs of skilled workers in Germany. Using detailed and representative firm-level data on recruitment and adaptation costs of new hires, we find that average hiring costs amount to more than 8 weeks of wage payments (4,700 Euros). The structure of hiring costs is convex, as an increase in the number of hires by 1% increases hiring costs by 1.3%. We find a moderate effects of labor market institutions on the magnitude, but none on the structure hiring costs.
    Keywords: Labor adjustment costs, hiring costs
    JEL: J32 J63
    Date: 2012–04
  4. By: Rebecca Riley; David Wilkinson; Richard Dickens
    Date: 2011–04
  5. By: Macis, Mario; Schivardi, Fabiano
    Abstract: We use linked employer-employee data from Italy to explore the relationship between exports and wages. Our empirical strategy exploits the 1992 devaluation of the Italian Lira, which represented a large and unforeseen shock to Italian firms' incentives to export. The results indicate that the export wage premium is due to exporting firms both (1) paying a wage premium above what their workers would earn in the outside labor market -- the 'rent-sharing' effect, and (2) employing workers whose skills command a higher price after the devaluation -- the ‘skill composition’ effect. The latter effect only emerges once we allow for the value of individual skills to differ in the pre- and post-devaluation periods. In fact, using a fixed measure of skills, as typically done in the literature, we would attribute the wage increase only to rent sharing. We also document that the export wage premium is larger for workers with more export-related experience. This indicates that the devaluation increased the demand for skills more useful for exporting, driving their relative price up.
    Keywords: Export wage premium; Linked employer employee data
    JEL: F16 J31
    Date: 2012–04
  6. By: David Autor (MIT and NBER); Nicole Maestas (RAND); Kathleen Mullen (RAND); Alexander Strand (Social Security Administration)
    Abstract: An influential body of research studies the labor supply and earnings of denied Social Security Disability Insurance (SSDI) applicants to estimate the potential employment and earnings of those awarded benefits. This research design implicitly treats employability as a stable applicant attribute that is not directly impacted by the process of applying for SSDI benefits. If, plausibly, applicants’ employment potential deteriorates while they are out of the labor force, then the labor force participation of denied applicants -- who spend an average of 10 months seeking benefits -- may understate their employment potential at the time of application. This paper tests whether the duration of SSDI applications causally affects applicants’ subsequent employment. We use a unique Social Security Administration workload database to identify exogenous variation in applicants’ initial decision times induced by differences in processing speed among the disability examiners to which they are randomly assigned. This variation significantly affects applicants’ total processing time but, importantly, is uncorrelated with their initial award and denial outcomes. We find that longer processing times reduce the employment and earnings of SSDI applicants in the years after their initial decision. A one standard deviation (2.4 month) increase in initial processing time reduces annual employment rates by 1 percentage point (3.2%) in years two, three and four post-decision. Extrapolating these effects to total applicant processing times, we estimate that the SSDI determination process directly reduces the post-application employment of denied applicants by approximately 3.6 percentage points (7%) and allowed applicants by approximately 5.2 percentage points (33%).
    Date: 2011–09
  7. By: Emmanuelle Duguet; Christine Le Clainche
    Abstract: We studied the effect of health events (accidents and chronic diseases) on the occupation probabilities at the individual level, while accounting for both correlated individual and time effects. Using difference-in-differences with exact matching estimators, we found that health events have a strong impact on individual labor market histories. The workers affected by a health event have a stronger probability of entering inactivity and a lower probability of keeping their jobs. We also found that the less qualified workers, women, and workers with short term jobs are the most negatively affected by health events.
    Date: 2012–03
  8. By: Seik Kim; Emiko Usui (Nagoya University and IZA)
    Abstract: This paper takes a new approach to testing whether employer learning is public or private. We show that public and private learning schemes make two distinct predictions about the curvature of wage growth paths when there is a job change, because the amount of information transferred to a new employer about workers' productivity is smaller in the private learning case than in the public learning case. This prediction enables us to account for individual and job-match heterogeneity, which was not possible in previous tests. Using the National Longitudinal Survey of Youth 1979 (NLSY79), we find that learning is primarily public.
    Date: 2012–03
  9. By: David H. Autor; Susan N. Houseman; Sari Pekkala Kerr
    Abstract: Federal and state employment programs for low-skilled workers typically emphasize rapid placement of participants into jobs and often place a large fraction of participants into temporary-help agency jobs. Using unique administrative data from Detroit's welfare-to-work program, we apply the Chernozhukov-Hansen instrumental variables quantile regression (IVQR) method to estimate the causal effects of welfare-to-work job placements on the distribution of participants' earnings. We find that neither direct-hire nor temporary-help job placements significantly affect the lower tail of the earnings distribution. Direct-hire placements, however, substantially raise the upper tail, yielding sizable earnings increases for more than fifty percent of participants over the medium-term (one to two years following placement). Conversely, temporary-help placements have zero or negative earnings impacts at all quantiles, and these effects are economically large and significant at higher quantiles. In net, we find that the widespread practice of placing disadvantaged workers into temporary-help jobs is an ineffective tool for improving earnings and, moreover, that programs focused solely on job placement fail to improve earnings among those who are hardest to serve. Methodologically, one surprising result is that a reduced-form quantile IV approach, akin to two-step instrumental variables, produces near-identical point estimates to the structural IVQR approach, which is based on much stronger assumptions.
    JEL: J24 J48 J62
    Date: 2012–04
  10. By: Stark, Oded; Byra, Lukasz
    Abstract: In this paper we study the impact of the international migration of unskilled workers on skill formation and the average skill level in the home country. We analyze what appears to be the least threatening scenario from the point of view of its effect on the supply of skills at home: namely, migration exclusively by unskilled workers. Somewhat surprisingly, we find that even without the departure of skilled workers, the home country suffers reduced aggregate skill formation. Although as a response to a higher wage rate per unit of human capital in the new equilibrium skilled workers choose to accumulate more human capital than before the opening up to migration of unskilled workers, the number and share of skilled workers in the home country’s workforce fall. The combined effect is a decrease in the average level of human capital in the home country.
    Keywords: Migration of unskilled workers, Human capital formation, Depletion of human capital, Labor and Human Capital, F22, J24, O15,
    Date: 2012–04
  11. By: Alex Bryson; White, M.
    Abstract: The HRM-performance linkage often invokes an assumption of increased employee commitment to the organization and other positive effects of a motivational type. We present a theoretical framework in which motivational effects of HRM are conditional on its intensity, utilizing especially the idea of HRM ‘bundling’. We then analyse the association between HRM practices and employees’ organisational commitment (OC) and intrinsic job satisfaction (IJS). HRM practices have significantly positive relationships with OC and IJS chiefly at high levels of implementation, but with important distinctions between the domain-level analysis (comprising groups of practices for specific domains such as employee development) and the across-domain or HRM-system level. Findings support a threshold interpretation of the link between HRM domains and employee motivation, but at the system-level both incremental and threshold models receive some support.
    Date: 2011–10

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