nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2012‒07‒14
eleven papers chosen by
Erik Jonasson
Lund University

  1. Native-immigrant wage differentials in Greece: discrimination and assimilation By Chletsos, Michael; Roupakias, Stelios
  2. Peer Salaries and Employee Satisfaction in the Workplace By Mumford, Karen A.; Smith, Peter N.
  3. One Way the Demand for Labor May Adapt to the Availability of Labor By Duleep, Harriet
  4. Myth or Fact? The Beauty Premium across the Wage Distribution By Doorley, Karina; Sierminska, Eva
  5. The incidence and wage effects of overeducation using the worker’s self-assessment of skill utilization By Marco PECORARO
  6. Extra Status and Extra Stress: Are Promotions Good for Us? By Johnston, David W.; Lee, Wang-Sheng
  7. Base Wage Rigidities: Evidence From a Survey of Slovak Firms By Marianna Cervena
  8. Labor Cost Adjustment: Evidence From a Survey of Slovak Firms By Marianna Cervena
  9. Overeducation among Immigrants in Sweden: Incidence, Wage Effects and State-Dependence By Andersson Joona, Pernilla; Datta Gupta, Nabanita; Wadensjö, Eskil
  10. Children and non-participation in a model of collective household labor supply By Jaime Andres Sarmiento Espinel
  11. Impact of Elasticities of Substitution, Technical Change, and Labour Regulations on Labour Welfare in Indian Industries By Nitin Gupta

  1. By: Chletsos, Michael; Roupakias, Stelios
    Abstract: Abstract: This paper applies the Blinder-Oaxaca methodology in order to decompose the average earnings differentials between Greek workers and different groups of immigrants. We use information about 8,429 individuals of which 1,185 are immigrants. The data are drawn from the Greek Labor Force Survey (2009). The main objective is to explore how much of the differential is explained by differences in observed characteristics. We also investigate the effect that assimilation has on the immigrants’ earnings. Our results provide empirical evidence that the part of the wage gap due to differences in the coefficients is largest for immigrants originating from non-EU countries and negative for those immigrants who terminated education in Greece.
    Keywords: immigration; discrimination; assimilation
    JEL: J71 J61
    Date: 2012–07–05
  2. By: Mumford, Karen A. (University of York); Smith, Peter N. (University of York)
    Abstract: We explore the relationship between reported job satisfaction and own wage, relative wage and average comparison group wage; allowing for asymmetry in these responses across genders. We find that the choice of relevant comparison group is affected by gender in Britain; men display behaviour characteristic of competitiveness whilst women do not.
    Keywords: job satisfaction, earnings, gender, segregation, workplace
    JEL: J3 J7 J28
    Date: 2012–06
  3. By: Duleep, Harriet (College of William and Mary)
    Abstract: This paper presents and tests a model that may partially explain why the demand for labor adapts to the availability of labor. In particular, I postulate that the cost of hiring declines with increases in the amount of labor available. The cost of hiring would decrease with a growth in available labor for two reasons: (1) individuals seeking employment would be coming to employers instead of the latter seeking them out and (2) the larger set of potential employees would increase the probability of employers finding individuals suitable for unfilled jobs. Moreover, individuals seeking employment may engender employers to think of new ways in which labor can be used. An increase in the number of entrants to the labor force would lower the cost of hiring and increase employment demand at any given wage rate. Hence, a change in the labor force – such as the addition of women or immigrants – does not increase unemployment as much as is predicted for current workers because demand for labor increases as the cost of hiring decreases. The paper may provide some insight into the relationship between the size of the labor force and employment demand as recently highlighted by Stock and Watson in their examination of the 2007-2009 recession.
    Keywords: labor demand, labor supply, cost of hiring
    JEL: J23 J21 J11 J32
    Date: 2012–06
  4. By: Doorley, Karina (University College Dublin); Sierminska, Eva (CEPS/INSTEAD)
    Abstract: We apply an innovative technique to allow for differential effects of physical appearance and self-confidence across the wage distribution, as traditional methods can confound opposing effects at either end of the wage distribution. Comparing the effects of beauty and confidence measures in two countries (Germany and Luxembourg), we find that wages are more driven by looks than self-esteem. Counterfactual wage distributions, constructed using distribution regression, show a beauty premium for women at the bottom of the wage distribution. However, most of this is explained by the fact that attractive women have better labor market attributes than their unattractive counterparts. We find a large wage premium for attractive men throughout the wage distribution which is largely unexplained by labor market attributes. There is a small wage penalty for self-confident individuals, particularly men, although their labor market characteristics are generally better than their less confident counterparts. We show that the difference in characteristics between beautiful and plain people contributes to the beauty premium identified using traditional models, particularly for women. Isolating the characteristic effect from the unexplained effect of beauty on wages leads to smaller beauty premium for women.
    Keywords: wages, distribution, physical appearance, discrimination
    JEL: D31 J24 J30 J70
    Date: 2012–06
  5. By: Marco PECORARO (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and SFM, Université de Neuchâtel)
    Abstract: This paper proposes an improved concept of educational mismatch that combines a statistical measure of over- and undereducation with the worker’s self-assessment of skill utilization. In that way, we account for worker heterogeneity in skills whose omission may generate biased estimates of the incidence and wage effects of over- and undereducation. Using cross-sectional data from the Swiss Household Panel survey, the empirical analyses provide the following results: (a) at least two third of the statistically defined overeducated workers perceive their skills as adequate for the job they hold and are then apparently overeducated; (b) among the overeducated with a given schooling level, the wage return to education is lower for those who are mismatched in skills than for those who are not; (c) apparently overeducated workers have similar wage returns compared to others with the same schooling level but who are statistically matched. These findings confirm that most of those overeducated according to the statistical measure have unobserved skills that allow them to work in a job for which they are well-matched.
    Keywords: Educational mismatch, skill utilization, wages
    Date: 2012–06–09
  6. By: Johnston, David W. (Monash University); Lee, Wang-Sheng (Deakin University)
    Abstract: Promotions ordinarily involve higher wages and greater privileges; but they also often involve increased responsibility, accountability and work hours. Therefore, whether promotions are good for workers' wellbeing is an empirical question. Using high-quality panel data we estimate pre- and post-promotion effects on job attributes, physical health, mental health and life satisfaction, in an attempt at answering this question. We find that promotions substantially improve job security, pay perceptions and overall job satisfaction in the short term, and that promotions have short and longer term effects on job control, job stress, income and hours worked. However, despite these large effects on job attributes, we find that promotions have negligible effects on workers' health and happiness. Only mental health seems affected, with estimates suggesting significant deterioration two years after receiving a promotion. Thus, it seems the additional stress involved with promotions eventually outweighs the additional status, at least for the average worker.
    Keywords: promotion, status, stress, job satisfaction
    JEL: I0 I31 J62
    Date: 2012–06
  7. By: Marianna Cervena (National Bank of Slovakia, Research Department)
    Abstract: Building on a unique survey of how Slovak firms adjust wages and prices, this paper studies the extent to which Slovak wages are rigid and the determinants for both nominal and real wage rigidity. Compared to other countries included in the survey, Slovakia has nominal base wage rigidity that is one of the highest and real base wage rigidity that is also relatively high. Apart from looking at the anecdotal evidence, I run multinomial logit regressions to capture the relationship between real wage rigidity, nominal wage rigidity, flexible wages and a number of firm-specific and institutional characteristics. Regression results suggest that the prevalent skill-level of the workforce matters: firms with mainly low-skilled blue-collar workers face lower probabilities of wage rigidities than firms with white-collar workers. Collective bargaining coverage is also a significant determinant. Firms covered by firm-level unions face higher probabilities of both types of wage rigidities compared to firms not covered by any level of collective bargaining. On the other hand, firms facing sectoral level unions have more flexible wages than those without any collective bargaining.
    Keywords: nominal and real wage rigidity, survey evidence
    JEL: J30 J50 E24 C81
    Date: 2012–06
  8. By: Marianna Cervena (Building on a unique survey of how Slovak firms adjust wages and prices, this paper studies the reduction of labour costs in two forms: base wage cuts and alternative margins for labour cost reduction. Anecdotal evidence suggests that wage-cutting by firms occurs more frequently in Slovakia than in any other country and that the use of alternative margins for labour cost reduction is also quite prevalent in Slovakia. Regression results support the strong relationship between the use of alternative margins and wage rigidities. I find that the use of any alternative margin is on average 30% more likely in firms facing nominal wage rigidity that in firms with flexible wages.)
    Keywords: nominal and real wage rigidity, alternative margins for labour cost cutting, survey evidence
    JEL: J30 J50 E24 C81
    Date: 2012–06
  9. By: Andersson Joona, Pernilla (SOFI, Stockholm University); Datta Gupta, Nabanita (University of Aarhus); Wadensjö, Eskil (Stockholm University)
    Abstract: The utilization and reward of the human capital of immigrants in the labor market of the host country has been studied extensively. In the Swedish context this question is of great policy relevance due to the high levels of refugee migration and inflow of tied movers. Using Swedish register data covering the period 2001-2008, we analyze the incidence and wage effects of overeducation among non-Western immigrants. We also analyze whether there is state-dependence in overeducation and extend the immigrant educational mismatch literature by investigating whether this is a more severe problem among immigrants than among natives. In line with previous research we find that the incidence of overeducation is higher among immigrants and the return to overeducation is lower indicating that immigrants lose more from being overeducated. We find a high degree of state-dependence in overeducation both among natives and immigrants, but to a higher extent among immigrants.
    Keywords: educational mismatch, immigrants, wages, state-dependence
    JEL: J61 I21 J24 J31 F22
    Date: 2012–06
  10. By: Jaime Andres Sarmiento Espinel (El Colegio de México)
    Abstract: The collective model of household behavior is extended to consider the existence of public consumption, like expenditures on children, together with the possibility of non-participation in the labor market of one partner of the adult couple. This model argues that structural elements of the decision process, such as individual preferences and the intra-household distribution rule of non-public expenditure, can be identified by observing labor supply of each individual and total expenditures on the public good. The identification rests on the existence of a variable that affects household behavior only through its impact on the decision process, i.e. a distribution factor, and the existence and uniqueness of a reservation wage for each household member at which both members are indifferent to whether a member participates or not. This setting provides a conceptual framework for addressing issues related to the impact of the potential wage of a non-participating member on household allocations and the targeting of specific benefits or taxes.
    Keywords: collective household models, children, labor supply, non-participation
    JEL: D11 J13 J22
    Date: 2012–05
  11. By: Nitin Gupta
    Abstract: This paper primarily investigates the issue of labour welfare in Indian industries, and seeks to make a contribution to the debate on labour reforms currently underway in India. It investigates the relative importance of technical change, elasticities of substitution, and labour regulations for labour welfare, proxied by the income shares of skilled and unskilled labour in total costs. Three primary conclusions arise. First, pure technical change has no discernible impact on income shares. Second, there is a clear pattern between the magnitudes of and changes in elasticities of substitution and associated incomes shares. Elasticity changes have tended to favour skilled labour and hurt unskilled labour. Finally, pro-worker labour regulations have a somewhat positive impact on unskilled labour shares, by mitigating the negative impact of substitution elasticities, but not completely reversing them. Pro-employer regulations, by contrast, do not have a good record of safeguarding labour interests. Based on these conclusions, the paper makes the case that a clear articulation of the goals for labour reforms should precede their designing.
    Keywords: Labour force & employment, labour policy, manufacturing, production structure, technological change
    JEL: J21 J78 L6 L11 O33
    Date: 2012

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