nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2012‒06‒25
thirty-one papers chosen by
Erik Jonasson
Lund University

  1. Changes in Wage Structure in Mexico Going Beyond the Mean: An Analysis of Differences in Distribution, 1987-2008 By Tello, Claudia; Ramos, Raul; Artís, Manuel
  2. Gender Discrimination in the Australian Graduate Labour Market By Li, Ian W.; Miller, Paul W.
  3. Discrimination and the Effects of Drug Testing on Black Employment By Wozniak, Abigail
  4. Real Wage Flexibility in the European Union: New Evidence from the Labour Cost Data By Jan Babecky; Kamil Dybczak
  5. The Formal Sector Wage Premium and Firm Size for Self-employed Workers By Bargain, Olivier; El Badaoui, Eliane; Kwenda, Prudence; Strobl, Eric; Walsh, Frank
  6. Public-private wage gaps in the period prior to the adoption of the euro: an application based on longitudinal data By Maria Manuel Campos; Mário Centeno
  7. Long-run costs of piecemeal reform: wage inequality and returns to education in Vietnam By Phan, Diep; Coxhead, Ian A.
  8. A Price for Flexibility? The Temp Agency Wage Gap in Sweden 1998-2008 By Andersson Joona, Pernilla; Wadensjö, Eskil
  9. Rising Wage Inequality Within Firms: Evidence from Japanese health insurance society data By SAITO Yukiko; KOUNO Toshiaki
  10. Employer Learning and the "Importance" of Skills By Light, Audrey; McGee, Andrew
  11. Wage Effects of High-Skilled Migration: International Evidence By Grossmann, Volker; Stadelmann, David
  12. Do Male-Female Wage Differentials Reflect Differences in the Return to Skill? Cross-City Evidence From 1980-2000 By Paul Beaudry; Ethan Lewis
  13. Labor Force Participation of Married Women in Turkey: Is There an Added or a Discouraged Worker Effect? By Karaoglan, Deniz; Okten, Cagla
  14. Management of Knowledge Workers By Hvide, Hans K.; Kristiansen, Eirik Gaard
  15. The Wage Premium of Foreign Education: New Evidence from Australia By Chan, Gavin; Heaton, Christopher; Tani, Massimiliano
  16. Wage rigidity and employment adjustment at the firm level: evidence from survey data By Daniel Dias; Carlos Robalo Marques; Fernando Martins
  17. The Unexpected Appearance of a New German Model By Eichhorst, Werner
  18. Causal Returns to Schooling and Individual Heterogeneity By Pfeiffer, Friedhelm; Pohlmeier, Winfried
  19. Spousal Labor Supply Responses to Government Programs: Evidence from the Disability Insurance Program By Susan E. Chen
  20. The Quest for More and More Education: Implications for Social Mobility By Lindley, Joanne; Machin, Stephen
  21. The Effect of Public Sector Employment on Local Labour Markets By Giulia Faggio; Henry G. Overman
  22. Life Skills, Employability and Training for Disadvantaged Youth: Evidence from a Randomized Evaluation Design By Ibarrarán, Pablo; Ripani, Laura; Taboada, Bibiana; Villa, Juan Miguel; García, Brígida
  23. Health and Retirement of Older New Zealanders By Emma Gorman; Grant M Scobie; Andy Towers
  24. Theoretical and practical arguments for modeling labor supply as a choice among latent jobs By John K. Dagsvik, Zhiyang Jia, Tom Kornstad and Thor O. Thoresen
  25. Excess worker turnover and fixed-term contracts: Causal evidence in a two-tier system By Mário Centeno; Álvaro A. Novo
  26. Employment Effects of State Legislation against the Hiring of Unauthorized Immigrant Workers By Bohn, Sarah; Lofstrom, Magnus
  27. "Time Use of Mothers and Fathers in Hard Times: The US Recession of 2007-09" By Gunseli Berik; Ebru Kongar
  28. Female Labour Force Participation and Child Education in India: The Effect of the National Rural Employment Guarantee Scheme By Afridi, Farzana; Mukhopadhyay, Abhiroop; Sahoo, Soham
  29. Collateral damage: Educational attainment and labor market outcomes among German war and post-war cohorts By Jürges, Hendrik
  30. Asymmetric information and overeducation By Mendolicchio, Concetta; Paolini, Dimitri; Pietra, Tito
  31. Working Paper 07-12 - Offshoring and the Skill Structure of Labour Demand in Belgium By Bart Hertveldt; Bernhard Klaus Michel

  1. By: Tello, Claudia (University of Barcelona); Ramos, Raul (University of Barcelona); Artís, Manuel (University of Barcelona)
    Abstract: This paper conducts an empirical analysis of the relationship between wage inequality, employment structure, and returns to education in urban areas of Mexico during the past two decades (1987-2008). Applying Melly's (2005) quantile regression based decomposition, we find that changes in wage inequality have been driven mainly by variations in educational wage premia. Additionally, we find that changes in employment structure, including occupation and firm size, have played a vital role. This evidence seems to suggest that the changes in wage inequality in urban Mexico cannot be interpreted in terms of a skill-biased change, but rather they are the result of an increasing demand for skills during that period.
    Keywords: wage inequality, quantile regressions, decomposition
    JEL: J31
    Date: 2012–05
  2. By: Li, Ian W. (University of Western Australia); Miller, Paul W. (Curtin University of Technology)
    Abstract: This paper examines gender discrimination in the Australian graduate labour market, using data from the Graduate Destination Surveys 1999-2009. A framework of analysis provided by the overeducation/required education/undereducation literature is applied. A smaller gender wage gap is found for university graduates than that reported for all workers in earlier studies. It is shown, however, that the gender wage gap widens with the age at graduation. This pattern is argued to reflect the influence of the mismeasurement of actual labour market experience in the conventional education and experience earnings equation on the standardised gender pay gap. Female graduates are less likely to be overeducated, compared to male graduates. Overeducation, while associated with substantial penalties, is not a substantial contributor to the gender wage gap.
    Keywords: gender, graduates, overeducation, discrimination
    JEL: J24 J31 J70
    Date: 2012–05
  3. By: Wozniak, Abigail (University of Notre Dame)
    Abstract: Nearly half of U.S. employers test job applicants and workers for drugs. I use variation in the timing and nature of drug testing regulation to study discrimination against blacks related to perceived drug use. Black employment in the testing sector is suppressed in the absence of testing, consistent with ex ante discrimination on the basis of drug use perceptions. Adoption of pro-testing legislation increases black employment in the testing sector by 7-30% and relative wages by 1.4-13.0%, with the largest shifts among low skilled black men. Results suggest that employers substitute white women for blacks in the absence of testing.
    Keywords: employer drug testing, discrimination, black employment, labor market outcome disparities
    JEL: J7 J15 K2 K3 M5
    Date: 2012–05
  4. By: Jan Babecky; Kamil Dybczak
    Abstract: This paper presents evidence on the extent of real wage flexibility in 24 EU member countries based on the Eurostat labour cost data covering 2000Q1-2010Q2. The term 'wages' refers, for brevity, to total hourly labour costs and their two main components, namely wages and salaries per hour, and non-wage costs. Following the structural VAR approach, real wage flexibility is measured as the responsiveness of real wages to real (permanent) versus nominal (temporary) shocks. The data shows that the impact of the 2008/2009 crisis on real wage adjustment has not been uniform across the sample countries, with some evidence for an increase in real wage rigidity. A strong negative correlation is observed between our aggregate measure of wage flexibility and both the ESCB Wage Dynamics Network firm-level survey estimates of downward real wage rigidity and the International Wage Flexibility Project microeconomic estimates of downward real wage rigidity. Finally, we find that institutional features of labour markets could help explain the variation in the results across countries; for example, stricter employment protection legislation and stronger presence of unions go hand in hand with higher real wage rigidity.
    Keywords: Labour cost indices, real wage rigidity, structural VAR.
    JEL: C22 E24 F02 J30 P20
    Date: 2012–01
  5. By: Bargain, Olivier (University of Aix-Marseille II); El Badaoui, Eliane (University Paris Ouest-Nanterre); Kwenda, Prudence (University College Dublin); Strobl, Eric (Ecole Polytechnique, Paris); Walsh, Frank (University College Dublin)
    Abstract: We develop a model where formal sector firms pay tax and informal ones do not, but informal firms risk incurring the penalty associated with non-compliance. Workers may enter self-employment or search for jobs as employees. Workers with higher managerial skills will run larger firms while workers with lower will manage smaller firms and will be in self-employment only when they cannot find a salary job. For these workers self-employment is a secondary/informal form of employment. The Burdett and Mortensen (1998) equilibrium search model turns out to be a special case that we amend by incorporating taxes and a penalty for non-payment of taxes. Our model is also consistent with some of the empirical literature in that the informal wage penalty does appear to be limited to low wage/skill workers while firm size is an important determinant of the employee formal sector premium. We test theoretical predictions using empirical evidence from Mexico and find that firm size wage effects for employees and self-employed workers are broadly consistent with the model.
    Keywords: informality, self-employment, Burdett and Mortensen model
    JEL: J31 O17
    Date: 2012–05
  6. By: Maria Manuel Campos; Mário Centeno
    Abstract: This paper analyses the evolution of public wages and the public-private wage gaps in the period prior to the adoption of the euro in the countries then engaged on the fulfillment of the Maastricht criteria. The wage gaps are estimated controlling for employees’ observed and unobservable individual attributes, using a novel methodology of fixed effects quantile regressions. The results suggest, on the one hand, a relative moderation in the growth of public sector wages in several European countries in the 1990s. On the other hand, estimates obtainedfor the public-private wage differential imply an increase in the same period in the majority of countries in the sample, with public employees generally becoming more beneficiated vis-à-vis private sector employees with the same observed and unobservable characteristics. Therefore, the fact that European countries were undertaking efforts to comply with the requirements for adopting the single currency does not seem to have contributed to the reduction of the wage premium that the literature has typically associated with public sector employment. It is noteworthy that the countries where the wage differential is higher are Portugal, Ireland, Greece and Spain. This differential is, to a large extent, an actual wage premium associated with the public sector, but self-selection effects determining that the best workers prefer the public sector can not be neglected. Nevertheless, the wage premia tend to be smaller in the case of individuals with higher earnings, making it difficult to attract the more qualified workers to the public sector. This difficulty may be worsened by accross-the-board measures to reduce wages and employees.
    JEL: J31 J45 C21 C23
    Date: 2012
  7. By: Phan, Diep; Coxhead, Ian A.
    Abstract: “Shock therapy” transitions in Eastern Europe facilitated movement of skilled workers into privatized industries offering high wage premia relative to state industries. Other transitional economies (notably China and Vietnam) have been slower to relinquish control over key industries and factor markets. Some costs of this piecemeal approach are now becoming apparent. We examine the spillover of continuing capital market distortions into the market for a complementary factor, skilled labor. Using Vietnamese data we find that capital market segmentation creates a two-track market for skills, in which state sector workers earn high salaries while non-state workers face lower demand and lower compensation. Growth is reduced directly by diminished allocative efficiency and incentives to acquire education, and indirectly by higher wage inequality and rents for workers with access to state jobs.
    Keywords: Labor, skills, state-owned, inequality, wages, Vietnam, International Development, Labor and Human Capital, J31, P23, F16,
    Date: 2012
  8. By: Andersson Joona, Pernilla (SOFI, Stockholm University); Wadensjö, Eskil (Stockholm University)
    Abstract: Temporary agency employment has grown rapidly in Sweden as in many other countries. The sector was deregulated in the early 1990s and there are now only few remaining restrictions. Even though there are collective agreements covering a large part of the workers in the sector, the unions are worried about low wages and poor working conditions in the sector. This paper analyzes the development of the temporary agency wage gap during the period 1998-2008 using Swedish register data. We find that from a nearly non-existent gap in 2001 and a positive wage gap for women, both male and female temp agency workers received between 16 and 18 percent lower wages in 2008. This development appears partly to be explained by a lower return to university education among temp agency workers than among those employed in other sectors.
    Keywords: temporary agency employment, wages
    JEL: J31 J42 J62
    Date: 2012–05
  9. By: SAITO Yukiko; KOUNO Toshiaki
    Abstract: Using a novel dataset compiled from Japanese health insurance societies covering about 1,500 firms and 15 million employees in total, we examine wage inequality within and between firms. Employing the mean log deviation approach to decompose wage inequality into within-firm and between-firm inequality, we find that it increased among male employees during the period we examined (FY2003-2007). Moreover, even after controlling for changes in the compositional structure of firms' employees, an increase in wage inequality within firms can be observed, greatly contributing to the increase in overall wage inequality, which likely reflects the growing prevalence of performance-based wage systems.
    Date: 2012–06
  10. By: Light, Audrey (Ohio State University); McGee, Andrew (Simon Fraser University)
    Abstract: We ask whether the role of employer learning in the wage-setting process depends on skill type and skill importance to productivity. Combining data from the NLSY79 with O*NET data, we use Armed Services Vocational Aptitude Battery scores to measure seven distinct types of pre-market skills that employers cannot readily observe, and O*NET importance scores to measure the importance of each skill for the worker's current three-digit occupation. Before bringing importance measures into the analysis, we find evidence of employer learning for each skill type, for college and high school graduates, and for blue and white collar workers. Moreover, we find that the extent of employer learning – which we demonstrate to be directly identified by magnitudes of parameter estimates after simple manipulation of the data – does not vary significantly across skill type or worker type. Once we allow parameters identifying employer learning and screening to vary by skill importance, we find evidence of distinct tradeoffs between learning and screening, and considerable heterogeneity across skill type and skill importance. For some skills, increased importance leads to more screening and less learning; for others, the opposite is true. Our evidence points to heterogeneity in the degree of employer learning that is masked by disaggregation based on schooling attainment or broad occupational categories.
    Keywords: employer learning
    JEL: J31 D83
    Date: 2012–06
  11. By: Grossmann, Volker (University of Fribourg); Stadelmann, David (University of Fribourg)
    Abstract: This paper argues that international migration of high-skilled workers triggers productivity effects at the macro level such that the wage rate of skilled workers may rise in host countries and decline in source countries. We exploit a recent data set on international bilateral migration flows and provide evidence which is consistent with this hypothesis. We propose different instrumentation strategies to identify the causal effect of skilled migration on log differences of GDP per capita, total factor productivity, and wages of skilled workers between pairs of source and destination countries. These address the endogeneity problem which potentially arises when international wage differences affect migration decisions.
    Keywords: international high-skilled migration, wage effects, total factor productivity
    JEL: F22 O30
    Date: 2012–05
  12. By: Paul Beaudry; Ethan Lewis
    Abstract: Over the 1980s and 1990s the wage differentials between men and women (with similar observable characteristics) declined significantly. At the same time, the returns to education increased. It has been suggested that these two trends may reflect a common change in the relative price of a skill which is more abundant in both women and more educated workers. In this paper we explore the relevance of this hypothesis by examining the cross-city co-movement in both male-female wage differentials and returns to education over the 1980-2000 period. In parallel to the aggregate pattern, we find that male-female wage differentials at the city levels moved in opposite direction to the changes in the return to education. We also find this relationship to be particularly strong when we isolate data variation which most likely reflects the effect of technological change on relative prices. We take considerable care of controlling for potential selection issues which could bias our interpretation. Overall, our cross-city estimates suggest that most of the aggregate reduction in the male-female wage differential observed over the 1980-2000 period was likely due to a change in the relative price of skill that both females and educated workers have in greater abundance.
    JEL: J16 J24 J31 O33
    Date: 2012–06
  13. By: Karaoglan, Deniz (Middle East Technical University); Okten, Cagla (Bilkent University)
    Abstract: This article analyzes married women's labor supply responses to their husbands' job loss (added worker effect) and worsening of unemployment conditions (discouraged worker effect). We find that married women whose husbands are unemployed or underemployed are more likely to participate in the labor force and work more hours using yearly cross-sectional data from Turkey for the 2000-2010 period. We also construct two year panels based on questions on previous year's labor market outcomes. Panel results provide further support for the added worker effect. Wives whose husbands experience a job loss are more likely to increase their labor force participation. However, a worsening of overall unemployment conditions appears to have a discouraging effect on wives' labor supply response, wives tend to decrease their labor participation when unemployment rate in their region increases.
    Keywords: female labor force participation, added worker effect, Turkey
    JEL: J21 J60
    Date: 2012–06
  14. By: Hvide, Hans K. (University of Aberdeen); Kristiansen, Eirik Gaard (Norwegian School of Economics (NHH))
    Abstract: We study how firm-specific complementary assets and intellectual property rights affect the management of knowledge workers. The main results show when a firm will wish to sue workers that leave with innovative ideas, and the effects of complementary assets on wages and on worker initiative. We argue that firms protected weakly by complementary assets must sue leaving workers in order to obtain positive profits. Moreover, firms with more complementary assets pay higher wages and have lower turnover, but the higher pay has a detrimental effect on worker initiative. Finally, our analysis suggests that strengthening firms' property rights protection reduces turnover costs but weakens worker initiative.
    Keywords: entrepreneurship, innovation, intellectual property rights, litigation, personnel economics, R&D, start-ups, worker mobility
    JEL: J30 J60
    Date: 2012–05
  15. By: Chan, Gavin (Macquarie University, Sydney); Heaton, Christopher (Macquarie University, Sydney); Tani, Massimiliano (Macquarie University, Sydney)
    Abstract: We study whether Australian employers recognise immigrants' education acquired abroad, and if so how. Using data from the Longitudinal Surveys of Immigrants in Australia, we apply interval regression to model migrant hourly earnings. We find substantially higher returns from human capital obtained in Australia and other OECD countries compared with non-OECD countries. These results suggest that the transfer of human capital acquired abroad is mediated by the country in which it was acquired, as found for Israel (Friedberg (2000) and the US (Bratsberg and Ragan (2002)). The results also suggest that immigrants from non-OECD countries are the ones who can gain the most from obtaining further education in Australia, and that targeted rather than generic policies in this area could reduce the extent of the education-occupation mismatch amongst immigrants.
    Keywords: immigration, education, economic assimilation
    JEL: C34 J24 J61
    Date: 2012–05
  16. By: Daniel Dias; Carlos Robalo Marques; Fernando Martins
    Abstract: <br />This paper uses firm level survey data from Portugal to investigate how firms adjust their labour costs in the presence of wage rigidities. We document that Portuguese firms, besides reducing employment or freezing nominal base wages, also make frequent use of other cost-cutting strategies, like freezing or cutting bonus and other monetary or non-monetary benefits, slowing down or freezing the rate at which promotions are filled, or recruiting new employees at wageslower than those received by the employees that have left the firm. We show that the utilization of these different adjustment strategies is affected by workers’ and firms’ attributes, as well as by some indicators of the economic environment in which firms operate. More importantly, we provide evidence that firms with more flexible base wages are less likely to reduce employment, and that such effect may be significantly strengthened by the availability of alternative labourcost adjustment margins that firms can use in bad times.
    JEL: J32 J60
    Date: 2012
  17. By: Eichhorst, Werner (IZA)
    Abstract: Most Continental European labour markets and welfare states underwent a substantial transformation over the last two decades moving from a situation of low employment and limited labour market inequality to higher employment, but also more inequality. Germany is a case in point as it exhibits growing employment figures and growing shares of low pay and non-standard work. Furthermore, the German labour market has been remarkably resilient during the recent crisis. How can this be explained? The paper claims that changes in labour market institutions such as unemployment benefits, active labour market policies and employment protection play a major role, but changes in industrial relations at the sectoral level and individual firms' staffing practices are equally important in explaining actual labour market outcomes. Regarding labour market institutions, the pattern found in Germany shows sequences of de- and re-regulatory reforms of employment protection and increasing or decreasing unemployment benefit generosity, both mostly addressing the margins of the labour market, i.e. 'outsiders', and contributing to a growing dualisation of the employment system. The institutional status of 'insiders' was hardly affected by legislative changes. This dualisation trend was reinforced by micro-level dynamics in industrial relations and company employment practices where we can observe growing reliance on mechanisms of internal flexibility for the skilled core work force and increasing use of non-standard types of employment in less specifically skilled occupations.
    Keywords: Germany, employment growth, labor market reforms, dualisation, flexibility
    JEL: J21 J31 J52 J68
    Date: 2012–06
  18. By: Pfeiffer, Friedhelm (ZEW Mannheim); Pohlmeier, Winfried (University of Konstanz)
    Abstract: In this paper, human capital investments are evaluated by assuming heterogeneous returns to schooling. We use the potential outcome approach to measure the causal effect of human capital investments on earnings as a continuous treatment effect. Empirical evidence is based on a sample of West German full-time employed males (BIBB/IAB survey on educational and vocational attainment and career 1998/99). Our estimate of the average partial effect (APE) of an additional year of schooling amounts to 8.7%, which is higher than OLS estimates and quite similar to conventional instrumental variable estimates.
    Keywords: returns to schooling, human capital, heterogeneity
    JEL: J21 J24 J31
    Date: 2012–05
  19. By: Susan E. Chen (University of Alabama, Tuscaloosa)
    Abstract: Disability is a permanent unexpected shock to labor supply which according to the theory of the added worker effect should induce a large spousal labor supply response. The Disability Insurance (DI) program is designed to mitigate the income lost due to disability. To the extent that it does this, it can crowd out the spousal labor supply response predicted by the added worker effect theory. Using a unique data that matches administrative data combining worker’s earnings histories and disability insurance applications, this study finds that DI crowds out spousal labor force participation by 6 percent and the displacement spans multiple years. The estimated crowd-out effects are also larger for younger wife cohorts and cohorts with particular types of impairments such as musculoskeletal disease.
    Date: 2012–04
  20. By: Lindley, Joanne (University of Surrey); Machin, Stephen (University College London)
    Abstract: In this paper, we discuss the quest for more and more education and its implications for social mobility. We document very rapid educational upgrading in Britain over the last thirty years or so and show that this rise has featured faster increases in education acquisition by people from relatively rich family backgrounds. At the same time, wage differentials for the more educated have risen. Putting these two together (more education for people from richer backgrounds and an increase in the payoff to this education) implies increasing within generation inequality and, by reinforcing already existent inequalities from the previous generation, this has hindered social mobility. We also highlight three important aspects that to date have not been well integrated into the social mobility literature: the acquisition of postgraduate qualifications; gender differences; and the poor education performance of men at the lower end of the education distribution.
    Keywords: wage differentials, wages, inequality, social mobility, education, educational inequality
    JEL: J24 J31
    Date: 2012–05
  21. By: Giulia Faggio; Henry G. Overman
    Abstract: This paper considers the impact of public sector employment on local labour markets. Using English data at the Local Authority level for 2003 to 2007 we find that public sector employment has no identifiable effect on total private sector employment. However, public sector employment does affect the sectoral composition of the private sector. Specifically, each additional public sector job creates 0.5 jobs in the nontradable sector (construction and services) while crowding out 0.4 jobs in the tradable sector (manufacturing). When using data for a longer time period (1999 to 2007) we find no multiplier effect for nontradables, stronger crowding out for tradables and, consistent with this, crowding out for total private sector employment.
    Keywords: Local labour markets, public and private sector employment, wages
    JEL: J31 J45
    Date: 2012–06
  22. By: Ibarrarán, Pablo (Inter-American Development Bank); Ripani, Laura (Inter-American Development Bank); Taboada, Bibiana (Inter-American Development Bank); Villa, Juan Miguel (University of Manchester); García, Brígida (Universidad Autónoma de Santo Domingo)
    Abstract: This paper presents an impact evaluation of a revamped version of the Dominican youth training program Juventud y Empleo. The paper analyzes the impact of the program on traditional labor market outcomes and on outcomes related to youth behavior and life style, expectations about the future and socio-emotional skills. In terms of labor market outcomes, the program has a positive impact on job formality for men of about 17 percent and there is also a seven percent increase in monthly earnings among those employed. However, there are no overall impacts on employment rates. Regarding non-labor market outcomes, the program reduces teenage pregnancy by five percentage points in the treatment group (about 45 percent), which is consistent with an overall increase in youth expectations about the future. The program also has a positive impact on non-cognitive skills as measured by three different scales. Scores improve between 0.08 and 0.16 standard deviations with the program. Although recent progress noted in the literature suggests that socio-emotional skills increase employability and quality of employment, the practical significance of the impacts is unclear, as there is only weak evidence that the life skills measures used are associated to better labor market performance. This is an area of growing interest and relevance that requires further research.
    Keywords: impact evaluation, Dominican Republic, youth training programs, labor market outcomes, employment, life skills
    JEL: J24 J64 O15 O17
    Date: 2012–06
  23. By: Emma Gorman; Grant M Scobie; Andy Towers (The Treasury)
    Abstract: Increasing life expectancies and uncertainty about future retirement incomes are likely to lead to various changes in behaviour. As expectations are revised, one potentially important adjustment mechanism is in labour force participation rates. There is already evidence these are rising for those beyond the age of eligibility for New Zealand Superannuation. This paper uses a new source of longitudinal data on the health, labour force participation and retirement decisions of older New Zealanders. The central question addressed is the extent to which labour force participation of older New Zealanders is influenced by their health status (both mental and physical), in addition to a wide range of economic, social and demographic variables. Discrete choice models are employed, and particular attention is given to the potential effects of unobserved heterogeneity. We find a range of factors to be associated with the decision to retire, notably health status, marital status and financial incentives. After accounting for the confounding influence of unobservables, we find that physical health remains a determinant of labour force exit for older males. Further, we estimate both the marginal and aggregate effects of specific chronic conditions on labour force participation.
    Keywords: Labour force participation; Health; Retirement; New Zealand; Longitudinal survey
    JEL: J26 J14 J21 I10
    Date: 2012–06
  24. By: John K. Dagsvik, Zhiyang Jia, Tom Kornstad and Thor O. Thoresen (Statistics Norway)
    Abstract: Models of labor supply derived from stochastic utility representations and discretized sets of feasible hours of work have gained popularity because they are more practical than standard approaches based on marginal calculus. In this paper we argue that practicality is not the only feature that can be addressed by means of stochastic choice theory. This theory also offers a powerful framework for developing a more realistic model for labor supply choices, founded on individuals having preferences over jobs and facing restrictions on the choice of jobs and hours of work. We discuss and clarify how this modeling framework deviates from both the conventional discrete approach (van Soest, 1995), as well as the standard textbook approach based on marginal calculus (Hausman, 1985). We furthermore discuss how the model based on job choice offers the possibility of conducting a richer set of simulations of alternative policies.
    Keywords: Labor supply; Random utility models; Tax reforms
    JEL: C51 J22 H24
    Date: 2012–06
  25. By: Mário Centeno; Álvaro A. Novo
    Abstract: Portuguese firms engage in intense reallocation, most employers simultaneously hire and separate from workers, resulting in high excess worker turnover flows. These flows are constrained by the employment protection gap between open-ended and fixed-term contracts. We explore a reform that increased the employment protection of open-ended contracts and generated a quasi-experiment. The causal evidence points to an increase in the share and in the excess turnover of fixed-term contracts in treated rms. The excess turnover of open-ended contracts remained unchanged. This result is consistent with a high degree of substitution between open-ended and fixed-term contracts. At the firm level, we also show that excess turnover is quite heterogeneous and quantify its association with firm, match, and worker characteristics.  
    JEL: J21 J23 J63
    Date: 2012
  26. By: Bohn, Sarah (Public Policy Institute of California); Lofstrom, Magnus (Public Policy Institute of California)
    Abstract: We analyze the impact of the 2007 Legal Arizona Workers Act (LAWA) on employment outcomes of low-skilled Arizona workers, with a focus on the states' unauthorized population. The intent of LAWA was to limit unauthorized workers' economic opportunities as a way to deter further illegal immigration and as such is likely to increase poverty among an already marginalized population. Specifically, we assess whether the legislation reduced the formal employment opportunities of the targeted population. We also look for evidence of an unintended consequence of the policy: whether LAWA pushed workers into informal employment, and if so what are the likely consequences for these workers and their families. Using the synthetic control method developed by Abadie, Diamond and Hainmueller (2010), we find no statistically significant pre-post LAWA differences in wage and salary employment rate for the vast majority of workers in Arizona. Only among the workers most likely to be unauthorized – non-citizen Hispanic men with at most a high school education – do we observe a statistically significant relative decline in the probability of wage and salary employment. We also identify a substantial and statistically significant relative increase in the rate of self-employment among the same group of likely unauthorized workers, and not among other groups. Our data suggests that this shift is likely associated with an increase in poverty among unauthorized immigrants.
    Keywords: illegal, unauthorized, undocumented, immigration, Hispanic, Arizona
    JEL: J8 J11 J15 J18 J48 J61
    Date: 2012–05
  27. By: Gunseli Berik; Ebru Kongar
    Abstract: The recession precipitated by the US financial crisis of 2007 accelerated the convergence of women's and men's employment rates, as men experienced disproportionate job losses and women's entry into the labor force gathered pace. Using the American Time Use Survey (ATUS) data for 2003-10, this study examines whether the recession also occasioned a decline in disparity in unpaid work burdens and provided impetus for overall progress toward equity in the workloads, leisure time, and personal care hours of mothers and fathers. Controlling for the prerecession trends, we find that the recession contributed to the convergence of both paid and unpaid work only during the December 2007-June 2009 period. The combined effect of the recession and the jobless recovery was a move toward equity in the paid work hours of mothers and fathers, a relative increase in the total workload of mothers, and a relative decline in their personal care and leisure time.
    Keywords: Economics of Gender; Unemployment; Time Use; Economic Crises
    JEL: D13 J16 J22 J64
    Date: 2012–06
  28. By: Afridi, Farzana (Indian Statistical Institute); Mukhopadhyay, Abhiroop (Indian Statistical Institute); Sahoo, Soham (Indian Statistical Institute)
    Abstract: We study the impact of India's National Rural Employment Guarantee Scheme (NREGS) on children's educational outcomes via women's labour force participation. Using data from the Young Lives Study and taking advantage of the spatial and temporal variation in the intensity of implementation of the NREGS, we find that greater participation of mothers in the program is associated with better educational outcomes of their children. Father's participation in the NREGS, on the other hand, has a negative effect on children's education. Further, the estimated impact of mother's program participation is over and above any income effect induced by the scheme and is robust to concerns about endogeneity of labour force participation and differences in economic trends between districts. We provide evidence which suggests that the mechanism through which children's educational outcomes improve is empowerment of mothers resulting from better labour market opportunities for females.
    Keywords: labour, education, gender, bargaining
    JEL: I21 I38 J16
    Date: 2012–05
  29. By: Jürges, Hendrik (Mannheim Research Institute for the Economics of Aging (MEA))
    Abstract: We use data from the West German 1970 census to explore the link between being born during or shortly after World War II and educational and labor market outcomes 25 years later. We document, for the first time, that men and women born in the relatively short period between November 1945 and May 1946 have significantly and substantially lower educational attainment and occupational status than cohorts born shortly before or after. Several alternative explanations for this new finding are put to test. Most likely, a short but severe spell of quantitative and qualitative malnutrition immediately around the end of the war has impaired intrauterine conditions in first trimester pregnancies and resulted in longterm detriments among the affected cohorts. This conjecture is corroborated by evidence from Austria.
    JEL: J24 N34
    Date: 2012–03–01
  30. By: Mendolicchio, Concetta (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Paolini, Dimitri; Pietra, Tito
    Abstract: "We consider an economy where production may use labor of two different skill levels. Workers are heterogeneous and, by investing in education, self-select into one of the two skills. Ex-ante, when firms choose their investments in physical capital, they do not know the level of human capital prevailing in the labor market they will be active in. We prove existence and constrained inefficiency of competitive equilibria, which are always characterized by overeducation. An increase in total expected surplus can be obtained by shrinking, at the margin, the set of workers investing in high skill. This can be implemented by imposing taxes on the cost of investing in high skill or by imposing a progressive labor earning tax." (Author's abstract, IAB-Doku) ((en))
    Keywords: ökonomische Theorie, Humankapital, Bildungsinvestitionen, Gleichgewichtstheorie
    JEL: J24 H2
    Date: 2012–06–14
  31. By: Bart Hertveldt; Bernhard Klaus Michel
    Abstract: A major concern regarding the consequences of offshoring is about the labour market position of low‐skilled workers. This paper provides evidence for Belgium that offshoring has had a negative impact on the employment share of low‐skilled workers in the manufacturing sector between 1995 and 2007. The main contribution to the fall in the low‐skilled employment share came from materials offshoring to Central and Eastern Europe (21%), followed by business services offshoring (8%). In manufacturing industries with a higher ICT capital intensity the impact of offshoring is smaller. For market services industries, no robust conclusions regarding the impact of offshoring on low‐skilled employment could be drawn.
    JEL: J24 F16
    Date: 2012–05–30

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