nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2012‒05‒29
nine papers chosen by
Erik Jonasson
Lund University

  1. What Happened to God's Time? The Evolution of Secularism and Hours of Work in America, Evidence from Religious Holidays By Lozano, Fernando A.
  2. Misclassification Errors and the Underestimation of the U.S. Unemployment Rate By Shuaizhang Feng; Yingyao Hu
  3. Do Reservation Wages Decline Monotonically? A Novel Statistical Test By Gutknecht, Daniel
  4. Intertemporal Substitution in the Time Allocation of Married Women By Ken Yamada
  5. Skilled labor supply, IT-based technical change and job instability By Luc Behaghel; Julie Moschion
  6. Who pays for it? The Heterogeneous Wage Effects of Employment Protection Legislation By Marco Leonardi; Giovanni Pica
  7. A "Glass-Ceiling" Effect for Immigrants in the Italian Labour Market? By Dell'Aringa, Carlo; Lucifora, Claudio; Pagani, Laura
  8. Structural change in developing countries: has it decreased gender inequality? By Michelle Rendall
  9. Ownership and wages: Spatial econometric approach By Ogorevc, Marko; Verbič, Miroslav

  1. By: Lozano, Fernando A. (Pomona College)
    Abstract: Are American workers less likely to observe a religious holiday now than they were 30 years ago? In this paper I use evidence from religious holidays to explore the evolution of market hours' flexibility and religious observance during the last thirty years. To do so, I take advantage of three different sources of exogenous variation: the first is the timing of the Current Population Survey, which allows me to observe data that is collected during different holidays in different years. The second is the timing of the religious holiday, as most are scheduled either with the lunar or the solar calendar. The third is the required observance of the holiday: in some holidays believers are called to abstain from work (Yom Kippur), in other holidays not (Tu b'Shevat), some holidays have been secularized (Saint Patrick's Day), and other holidays not (Good Friday). Additionally, I differentiate between any changes in hours of work during religious holidays across time and changes across cohorts. My results suggest that work schedules' flexibility has changed little during the sample period, yet less people are taking time off from work during Good Friday, while more people take time off from work during Yom Kippur, Rosh Hashanah, Mardigras and Saint Patrick's Day. These results are consistent with the increasing secularization of Christians in America, the Baal Teshuva movement among Jewish Americans, and the commercialization of Mardigras or Saint Patrick's Day. These results suggest a change in which holidays workers choose to observe.
    Keywords: hours flexibility, religious holidays, secularization, work week
    JEL: J22 Z12
    Date: 2012–05
  2. By: Shuaizhang Feng; Yingyao Hu
    Abstract: Using recent results in the measurement error literature, we show that the official U.S. unemployment rate substantially underestimates the true level of unemployment, due to misclassification errors in the labor force status in the Current Population Survey. During the period from January 1996 to August 2011, the corrected monthly unemployment rates are between 1 and 4.4 percentage points (2.1 percentage points on average) higher than the official rates, and are more sensitive to changes in business cycles. The labor force participation rates, however, are not affected by this correction.
    Date: 2012–05
  3. By: Gutknecht, Daniel (Department of Economics, University of Warwick)
    Abstract: This paper develops a test for monotonicity of the regression function under endogeneity. The novel testing framework is applied to study monotonicity of the reservation wage as a function of elapsed unemployment duration. Hence, the objective of the paper is twofold : from a theoretical perspective, it proposes a test that formally assesses monotonicity of the regression function in the case of a continuous, endogenous regressor. This is accomplished by combining different nonparametric conditional mean estimators using either control functions or unobservable exogenous variation to address endogeneity with a test statistic based on a functional of a second order U-process. The modified statistic is shown to have a non-standard asymptotic distribution (similar to related tests) from which asymptotic critical values can directly be derived rather than approximated by bootstrap resampling methods. The test is shown to be consistent against general alternatives. From an empirical perspective, the paper provides a detailed investigation of the effect of elapsed unemployment duration on reservation wages in a nonparametric setup. This effect is difficult to measure due to the simultaneity of both variables. Despite some evidence in the literature for a declining reservation wage function over the course of unemployment, no information about the actual form of this decline has yet been provided. Using a standard job search model, it is shown that monotonicity of the reservation wage function, a restriction imposed by several empirical studies, only holds under certain (rather restrictive) conditions on the variables in the model. The test from above is applied to formally evaluate this shape restriction and it is found that reservation wage functions (conditional on different characteristics) do not decline monotonically. JEL classification: C14 ; C36 ; C54 ; J64
    Keywords: Reservation Wages ; Test for Montonicity ; Endogeneity ; Control Function ; Unobservable Instruments.
    Date: 2012
  4. By: Ken Yamada (School of Economics, Singapore Management University)
    Abstract: This paper studies a life-cycle model of home production to examine how married women change their allocation of time in response to evolutionary movements along the life-cycle wage profile in Japan. After accounting for the potential bias due to heterogeneity, measurement error, weak instruments, and missing data, the estimates of intertemporal substitution elasticity obtained from the home production model are moderate and similar to those obtained from the standard labor supply model.
    Keywords: labor supply, home production, intertemporal substitution
    JEL: J22
    Date: 2012–01
  5. By: Luc Behaghel (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique); Julie Moschion (Melbourne Institute of Applied Economic and Social Research - Melbourne Institute of Applied Economic and Social Research)
    Abstract: In this paper, we provide empirical evidence on the impact of IT diffusion on the stability of employment relationships. We document the evolution of the different components of job instability over a panel of 350 local labor markets in France, from the mid 1970s to the early 2000s. Although workers in more educated local labor markets adopt IT faster, they do not experience any increase in job instability. More specifically, we find no evidence that the faster diffusion of IT is associated with any change in job-to-job transitions, and we find that it is associated with relatively less frequent transitions through unemployment. Overall, the evidence goes against the view that the diffusion of IT has spurred job instability. Combining the local labor market variations with firm data, we argue that these findings can be explained by French firms' strong reliance on training and internal promotion strategies in order to meet the new skills requirement associated with IT diffusion.
    Keywords: Technical change; labor turnover; Skill bias; Job security; Internal labor markets
    Date: 2011–11
  6. By: Marco Leonardi; Giovanni Pica
    Abstract: This paper estimates the effect of employment protection legislation (EPL) on workers' individual wages in a quasi-experimental setting, exploiting a reform that introduced unjust-dismissal costs in Italy for firms below 15 employees and left firing costs unchanged for bigger firms. Accounting for the endogeneity of the treatment status, we find that the slight average wage reduction (between -0:4 and -0:1 percent) that follows the increase in EPL hides highly heterogeneous effects. Workers who change firm during the reform period suffer a drop in the entry wage, while incumbent workers are left unaffected. Results also indicate that the negative wage effect of the EPL reform is stronger on young blue collars and on workers at the low-end of the wage distribution. Finally, workers in low-employment regions suffer higher wage reductions after the reform. This pattern suggests that the ability of the employers to shift EPL costs onto wages depends on workers' and firms' relative bargaining power.
    Date: 2012
  7. By: Dell'Aringa, Carlo (Università Cattolica del Sacro Cuore); Lucifora, Claudio (Università Cattolica del Sacro Cuore); Pagani, Laura (University of Milan Bicocca)
    Abstract: This paper investigates earnings differentials between immigrants and natives. We focus on returns and on the (imperfect) international transferability of human capital. Data are drawn from the 2009 Italian Labour Force Survey (LFS). We show that returns to human capital are considerably lower for immigrants as compared to natives and that there is no return to pre-immigration work experience, suggesting imperfect transferability of human capital. We also explored the role of human capital, for immigrants and natives, in explaining inter-occupational and intra-occupational earnings progression (differentials). Our findings suggest that the returns on human capital (main source of wage progression) for immigrants (is) are mainly driven by intra-occupational earnings progression. Moreover, and contrary to what is observed for natives, we detect through quantile analysis a "glass-ceiling" effect for immigrant workers, who appear to face a large penalty in accessing high paying occupations. A number of robustness checks confirm our main results.
    Keywords: migration, earnings, human capital portability, occupational attainment, wage differentials, human capital
    JEL: J31 J24 J61 F22
    Date: 2012–05
  8. By: Michelle Rendall
    Abstract: This paper examines the evolution of female labor market outcomes from 1987 to 2008 by assessing the role of changing labor demand requirements in four developing countries: Brazil, Mexico, India and Thailand. The results highlight the importance of structural change in reducing gender disparities by decreasing the labor demand for physical attributes. The results show that India, the country with the greatest physical labor requirements, exhibits the largest labor market gender inequality. In contrast, Brazil's labor requirements have followed a similar trend seen in the United States, reducing gender inequality in both wages and labor force participation.
    Keywords: Structural change, job tasks, female employment, wage gap, Latin America, Asia
    JEL: J20 J23 J24 J31 O31 O33
    Date: 2012–05
  9. By: Ogorevc, Marko; Verbič, Miroslav
    Abstract: The aim of our paper is to disentangle the relationship between ownership and wages using cross-section data for Slovenian medium size and large companies, where we account for spatial dependencies in wage determination. Space here is not considered in geographical context, but as a set of relations between firms originating from the same owner. Using a detailed database on Slovenian ownership, we apply a spatial econometric approach to detect any ownership-based wage spillovers, while accounting for different standard factors, such as size, capital intensity and productivity, and also some ownership-based variables, such as ownership concentration and ratio of cash-flow to control rights. Our results indicate that ownership is an important factor in explaining differences in wage levels. Many large owners divert cash-flow into their own pockets which has a detrimental effect on wages and indicates that this behaviour induced by owners is not sustainable.
    Keywords: spatial econometrics; ownership; wage differentials; sustainability
    JEL: J31 G32 C21
    Date: 2012–05

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