nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2012‒08‒23
34 papers chosen by
Erik Jonasson
Lund University

  1. Wage Sorting Trends By Jesper Bagger; Rune Vejlin; Kenneth L. Sørensen
  2. Relative pay and labor supply By Anat Bracha; Uri Gneezy
  3. The Effect of Recent Increases in the U.S. Minimum Wage: Results from Three Data Sources By John T. Addison; McKinley L. Blackburn; Chad D. Cotti
  4. Lost in Transition? – Minimum Wage Effects on German Construction Workers By Ronald Bachmann; Marion König; Sandra Schaffner
  5. Wage setting in Hungary: evidence from a firm survey By Gábor Kézdi; István Kónya
  6. What explains the decline in wage mobility in the German low-wage sector? By Aretz, Bodo; Gürtzgen, Nicole
  7. Flexicurity, wage dynamics and inequality over the life-cycle By Paul Bingley; Lorenzo Cappellari; Niels Westergård-Nielsen
  8. Spillover Effect of the Minimum Wage in France: An Unconditional Quantile Regression Approach By R. AEBERHARDT; P. GIVORD; C. MARBOT
  9. Somewhere over the Rainbow: Sexual Orientation Discrimination in Germany By Stephan Humpert
  10. A scarred generation? French evidence on young people entering into a tough labour market By M. GAINI; A. LEDUC; A. VICARD
  11. The industry-occupation mix of U.S. job openings and hires By Bart Hobijn
  12. Does Raising the Retirement Age increase Employment of Older Workers? By Stefan Staubli; Josef Zweimüller
  13. Are efficiency wages equality wages? Exogenously induced fairness norms in working environments By Gary Bolton; Peter Werner
  14. SLOWING DOWN By Yu-Fu Chen; Gylfi Zoega
  15. Sorting on Skills and Preferences: Tinbergen Meets Sattinger By Arnaud Dupuy
  16. GINI DP 24: On gender gaps and self-fulfilling expectations: An alternative approach based on paid-for-training By Sara Rica; Juan Dolado; Cecilia Garcia Peñalosa
  17. Employers' selection behavior during short-time work By Scholz, Theresa
  18. Changes in the Labour Supply of Japanese Women between 1993 and 2008: A Panel Data Analysis By Tomoko Kishi
  19. Height, Skills, and Labor Market Outcomes in Mexico By Tom Vogl
  20. Do Employees Profit from Profit Sharing? Evidence from Canadian Panel Data By Long, Richard J.; Fang, Tony
  21. Careers in firms: estimating a model of learning, job assignment, and human capital aquisition By Elena Pastorino
  22. NILS Working paper no 180. Job anxiety, work-related psychological illness and workplace performance By Jones, Melanie K.; Latreille, Paul L.; Sloane, Peter J.
  23. Stepping Stones versus Dead End Jobs: Exits from Temporary Contracts in Italy after the 2003 Reform By Bruno, Giovanni S. F.; Caroleo, Floro Ernesto; Dessy, Orietta
  24. New Casinos and Local Labor Markets: Evidence from Canada By Humphreys, Brad; Marchand, Joseph
  25. Immigration and Production Technology By Ethan G. Lewis
  26. Steady-State Equilibrium in a Model of Short-Term Wage-Posting By Alan Manning
  27. Agglomeration, Accessibility, and Productivity: Evidence for Urbanized Areas in the US By Daniel Graham; Patricia Melo; David Levinson
  28. Degrees of satisfaction: An exploration of multi-level constructs of learning. By Kandy Dayaram; Gail Pacheco
  29. The changing influence of culture on job satisfaction across Europe: 1981-2008 By Gail Pacheco; De Wet van der Westhuizen; Don J. Webber
  30. Product-Marketing Innovation, Skills, and Firm Productivity By Junge, Martin; Severgnini, Battista; Sørensen, Anders
  31. Incentives in the Public Sector: Evidence from a Government Agency By Burgess, Simon; Propper, Carol; Ratto, Marisa; Tominey, Emma
  32. Retirement and Cognitive Development: Are the Retired Really Inactive? By Andries de Grip; Arnaud Dupuy; Jelle Jolles; Martin van Boxtel
  33. Why Do Entrepreneurial Parents Have Entrepreneurial Children? By Lindquist, Matthew J.; Sol, Joeri; van Praag, Mirjam
  34. A Good Worker is Hard to Find: Skills Shortages in New Zealand Firms By Mok, Penny; Mason, Geoff; Stevens, Philip; Timmins, Jason

  1. By: Jesper Bagger (Royal Holloway College, UK); Rune Vejlin (Department of Economics and Business, Aarhus University, Denmark); Kenneth L. Sørensen (Department of Economics and Business, Aarhus University, Denmark)
    Abstract: Using a population-wide Danish Matched Employer-Employee panel from 1980-2006, we document a strong trend towards more positive assortative wage sorting. The correlation between worker and firm fixed effects estimated from a log wage regression increases from -0.07 in 1981 to .14 in 2001. The nonstationary wage sorting pattern is not due to compositional changes in the labor market, primarily occurs among high wage workers, and comprises 41 percent of the increase in the standard deviation of log real wages between 1980 and 2006. We show that the wage sorting trend is associated with worker reallocation via voluntary quits.
    Keywords: Matched Employer-Employee Data, Firmfixed effects, Worker fixed effects, Wage sorting, Wage inequality, Voluntary quits.
    JEL: J30 J31 J62
    Date: 2012–08–09
  2. By: Anat Bracha; Uri Gneezy
    Abstract: The authors use a labor supply; relative pay; experimental economics laboratory experiment to examine the impact of relative wages on labor supply. They test the hypothesis that, ceteris paribus, making a given wage high (low) relative to other wage levels will lead to an increase (decrease) in labor supply. They find that labor supply does respond significantly to relative pay, and in the expected direction. However, when a strong enough reason is given for the relative low pay, this difference disappears.
    Keywords: Labor supply ; Wages
    Date: 2012
  3. By: John T. Addison (Department of Economics, Moore School of Business, University of South Carolina, USA; RCEA, Italy); McKinley L. Blackburn (Department of Economics, Moore School of Business, University of South Carolina, USA); Chad D. Cotti (Department of Economics, University of Wisconsin-Oshkosh, USA)
    Abstract: This paper investigates the impact on earnings and employment of substantive increases in the minimum wage under the Fair Minimum Wage Act of 2007. Against the backdrop of a thin contemporary literature offering mixed results, our study uses three different data sets, and three different estimation strategies for addressing geographically-disparate trends. Despite the concatenation of seemingly large wage increases and a soft labor market, our evidence is generally unsupportive of material disemployment effects among industrial and demographic groups typically associated with low-wage employment. Our results are consistent with minimum wage workers being concentrated in sectors of the economy for which the labor-demand response to wage increases is seemingly modest.
    Keywords: minimum wages, disemployment, earnings, low-wage sectors, geographically-disparate employment trends, recession
    JEL: J2 J3 J4 J8
    Date: 2012–07
  4. By: Ronald Bachmann; Marion König; Sandra Schaffner
    Abstract: Using a linked employer-employee data set on the German construction industry, we analyse the effects of the introduction of minimum wages in this sector on labour market dynamics. In doing so, we focus on accessions and separations, as well as the underlying labour market flows, at the establishment level. The fact that minimum wages in Germany are sector-specific enables us to use other industries as control groups within a difference-in-differences framework. We find that both accessions and separations rise in East Germany as a result of the minimum wage introduction. The evidence on detailed worker flows suggests that this is mainly due to increased recalls. Furthermore, the minimum wage introduction lowered job-to-job transitions in East Germany, which can be explained by a more compressed wage distribution making on-the-job search less worthwhile. No clear effects on labour market dynamics in West Germany arise.
    Keywords: Minimum wage; labour market flows; difference-in-differences; linked employer-employee
    JEL: J23 J38 J42 J63
    Date: 2012–07
  5. By: Gábor Kézdi (Magyar Nemzeti Bank (central bank of Hungary), Central European University, Institute of Economics of the Hungarian Academy of Sciences); István Kónya (Magyar Nemzeti Bank (central bank of Hungary))
    Abstract: This paper presents new evidence on the flexibility of the Hungarian labor market, with special emphasis on wages. The results are based on a new survey on wage setting among Hungarian firms. The survey is part of the Eurosystem Wage Dynamics Network (WDN), and it is a harmonized questionnaire administered in 17 countries in Europe, including almost all Euro Area countries as well as five Central and Eastern European countries. The survey results show that the Hungarian labor market, while institutionally flexible, appears to be surprisingly rigid. The survey evidence points to low turnover and possibly more rigid wages than previously thought.
    Keywords: wage setting, survey, wage dynamics network, Hungary
    JEL: C83 J01 J30
    Date: 2012
  6. By: Aretz, Bodo; Gürtzgen, Nicole
    Abstract: In this paper, we study how wage mobility in the low-wage sector has changed in western Germany between 1984 and 2004. Using German individual register data, we document a clear upward trend in the persistence of low-wage employment for both men and women. Next to compositional shifts of the low-wage sector relative to the high-wage sector, this trend may be explained by an increase in genuinestate dependence, which occurs if low-wage employment today causes lowwage employment in the future for reasons of, e.g., stigmatization or human capital depreciation. To isolate the latter, we model low-pay transitions by estimating a series of multivariate probit models. We address the initial conditions problem and the endogeneity of earnings attrition in our estimation approach by accounting for the selection into low-wage employment and earnings retention. Our findings for men and women point to an upward trend of genuine state dependence among low paid workers especially since the beginning of the 1990s. Using decomposition techniques, we show that between 35 and 54 per cent of the increase in genuine state dependence during the 1990s is accounted for by compositional effects. --
    Keywords: Wage Mobility,Trivariate Probit,Administrative Data
    JEL: C23 J31 L13
    Date: 2012
  7. By: Paul Bingley; Lorenzo Cappellari; Niels Westergård-Nielsen
    Abstract: We investigate the relationship between life-cycle wages and flexicurity in Denmark. We separate permanent from transitory wages and characterise flexicurity using membership of unemployment insurance funds. We find that flexicurity is associated with lower wage growth heterogeneity over the life-cycle and greater wage instability, changing the nature of wage inequality from permanent to transitory. While we are in general unable to formally test for moral hazard against adverse selection into unemployment insurance membership, robustness checks suggest that moral hazard is the relevant interpretation.
    Keywords: Unemployment insurance, wage dynamics, wage inequality, wage instability
    JEL: J31 J65
    Date: 2012–03
  8. By: R. AEBERHARDT (Dares-Crest); P. GIVORD (Insee); C. MARBOT (Insee)
    Abstract: This study evaluates the impact of the minimum wage on the earnings distribution in France, using an unconditional quantile regression method proposed by Firpo, Fortin, and Lemieux (2009). To address the endogeneity issue due to the specific French revaluation process of the minimum wage, we use a natural experiment. As several minimum wage levels coexisted because of different schedules in the French 35-hour week" application, they were forced to converge to one single level between 2003 and 2005. We find significant effects of the minimum wage on the earnings distribution of male and female employees up to the seventh decile.
    Keywords: Minimum wage, earnings distribution, unconditional quantile regressions
    JEL: J31 J38 C18
    Date: 2012
  9. By: Stephan Humpert (Leuphana University Lueneburg, Germany)
    Abstract: This paper observes sexual orientation based differences in German incomes. Gay men and lesbian women sort themselves into different occupations and sectors than their heterosexual counterparts. I find evidence that cohabitating gay men have an income penalty of 9 to 10 percent compared with married men, while lesbian women have a premium of about 10 to 12 percent compared with married women. Lesbians in a registered same-sex union have an income gain of about 16 to 21 percent, while the effect for men is not statistically significant. There is evidence that gay households have 9 to 15 percent higher household income than mixed-sex couples. The results for lesbian household income are not statistically significant.
    Keywords: Wage Discrimination, Labor Supply, Sexual Orientation
    JEL: J31 J16 J22
    Date: 2012–07
  10. By: M. GAINI (Crest-Insee); A. LEDUC (Insee); A. VICARD (Insee)
    Abstract: The late 2000s recession has hit youth very hard, lowering the employment and wage prospects of the entrants into the labour market. In this paper, we address the question of the persistence of these adverse shocks faced by young people who enter into the labour market during an economic downturn, focusing on the French case. Using the French Labour Force Surveys for the cohorts entering the labour market between 1982 and 2009 (which includes more than two entire business cycles), we find no long term effect on wage or employment of having entered the labour market during an economic crisis. "Unlucky" young people completing their studies during a recession have lower employment rates, are more often part-time and temporary workers, but catch-up with "lucky" one within 3 years. This fast catch-up contrasts with results for other countries. Potential explanations for those differences are twofold: first, in France a large share of young entrants are paid at the minimum wage and, second, young people unemployment is high in France, so that unemployment at entry on the labour market may be less often used as a screening device by employers.
    Keywords: Scarring effect, Business cycle, Initial labour market conditions
    JEL: J30 J21
    Date: 2012
  11. By: Bart Hobijn
    Abstract: I introduce a method that combines data from the U.S. Current Population Survey, Job Openings and Labor Turnover Survey, and state-level Job Vacancy Surveys to construct annual estimates of the number of job openings in the U.S. in the Spring by industry and occupation. I present these estimates for 2005-2011. The results reveal that: (i) During the Great Recession job openings for all occupations declined. (ii) Job openings rates and vacancy yields vary a lot across occupations. (iii) Changes in the occupation mix of job openings and hires account for the bulk of the decline in measured aggregate match efficiency since 2007. (iv) The majority of job openings in all industries and occupations are filled with persons who previously did not work in the same industry or occupation.
    Keywords: Labor market ; Employment
    Date: 2012
  12. By: Stefan Staubli; Josef Zweimüller
    Abstract: Two pension reforms in Austria increased the early retirement age from 60 to 62 for men and from 55 to 58.25 for women. The reforms reduced early retirement by 18.9 percentage points among affected men aged 60-62 and by 22.3 percentage points among affected women aged 55-58.25. The associated increase in employment was merely 6.8 percentage points among men and 10.1 percentage points among women. The reforms had large spillover effects to the unemployment insurance program but negligible effects on disability insurance claims. Specifically, unemployment increased by roughly 10 percentage points both among men and women. Spillover effects had substantial fiscal implications. Absent spillover effects, the reduction of net government expenditures would have amounted to 264 million Euros per year. Due to higher unemployment insurance claims and associated foregone income tax revenues the actual reduction was only 148 million Euros. High-wage and healthy workers carried the bulk of the fall in net government expenditures. Low-wage and less healthy workers generated much less government savings as they either continue to retire early via disability pensions or bridge the gap to regular retirement by drawing unemployment benefits.
    Keywords: Retirement age, policy reform, labor supply, disability, unemployment
    JEL: J14 J26
    Date: 2012–05
  13. By: Gary Bolton; Peter Werner
    Abstract: We investigate how the introduction of a salient norm for pay differentiation influences wage offers and effort exertion in a gift exchange experiment. Exogenously induced claims indeed lead to substantial differentiation in wages. At the same time, unequal wage schemes do not crowd out effort exertion. In particular, we do not observe strong detrimental effects resulting from disadvantageous relative wage positions. Finally, we find that specific communication patterns have a significant impact on effort exertion.
    Keywords: Communication, entitlements, fairness norms, gift exchange, relative wages
    JEL: J31 M52 D63 C92
    Date: 2012–08–03
  14. By: Yu-Fu Chen; Gylfi Zoega
    Abstract: We extend the efficiency wage model of Shapiro and Stiglitz to account for the observation that workers’ effort has a tendency to fall when they approach the end of their employment contract. In particular, we find that the efficiency wage increases when the end of term approaches for a given rate of unemployment. We draw implications for the behavior of workers who are approaching retirement, temporary employment contracts, and the advance notice of impending job loss.
    Keywords: Wage setting, shirking, finite horizons
    JEL: J31 J21
    Date: 2012–06
  15. By: Arnaud Dupuy (ROA, IZA. Corresponding address: ROA, Maastricht University PO Box 616, NL-6200 MD, The Netherlands. Email:
    Abstract: This paper proposes an assignment model where sorting occurs on at- tributes that are simultaneously a skill (Sattinger, 1979) and a preference (Tinbergen, 1956). The key feature of this model is that the wage func- tion admits both jobs and workers attributes as arguments. Since this function is generically nonlinear (Ekeland et al., 2004), even under positive assortative matching, the correlation between the contribution of workers' attributes to wages and that of jobs attributes can vary from -1 to 1 de- pending on the parameters of the model, i.e. preference, technology and the distribution of both sets of attributes. The paper discusses a closed form solution of the model, presents conditions for the nonparametric identi…cation of compensating wage di¤erentials and nonadditive marginal utility functions using observations from a single hedonic market and proposes a nonparametric estimator.
    Keywords: Hedonic models, Compensating wage differentials, Personality traits, Firms and workers fi…xed effects, Nonparametric Identi…cation.
    JEL: D3 J21 J23 J31
    Date: 2012–05
  16. By: Sara Rica (DFAE II, Universidad del Pais Vasco); Juan Dolado (Universidad Carlos III); Cecilia Garcia Peñalosa (Centre de la Vieille Charité, GREQAM)
    Abstract: This paper presents a model of self-fulfilling expectations by firms and households which generates multiplicity of equilibria in pay and housework time allocation for ex-ante identical spouses. Multiplicity arises from statistical discrimination exerted by firms in the provision of paid-for training to workers, rather than from incentive problems in the labor market. Employers´ beliefs about differences in spouses´ reactions to housework shocks lead symmetric (ungendered) and asymmetric (gendered) equilibria. We find that: (i) the ungendered equilibrium tends to prevail as aggregate productivity in the economy increases (regardless of the generosity of family aid policies), (ii) the ungendered equilibrium could yield higher welfare under some scenarios, and (iii) gender-neutral job subsidies are more effective that gender-targeted ones in removing the gendered equilibrium. JEL Classification: J16 and J71.
    Keywords: gender wage gaps, housework shares, multiple equilibria
    Date: 2012–05
  17. By: Scholz, Theresa (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "During the recession of 2008-09 Germany experienced a huge decrease in GDP. Employment, however, remained surprisingly stable. The so-called German labor market miracle is often ascribed to the intensive usage of short-time work. Despite the resurgence of this instrument, little is known about the employees affected by it. This paper analyzes whether employers select certain individuals for short-time work, where special focus is given on the effect of human capital. The analysis is based on a unique linked-employer-employee data set on short-time workers in the district of the employment agency of Nuremberg. We use methods of event history analysis to estimate transition rates from regular employment to short-time work. Our results indicate that employers select a broad range of workers for STW, irrespective of their level of human capital. Fears that short-time work is mainly applied to a certain group of workers are not confirmed." (Author's abstract, IAB-Doku) ((en))
    JEL: J23 J24 J3
    Date: 2012–08–15
  18. By: Tomoko Kishi
    Abstract: In Japan a negative relationship between the labour force participation rate of married women and spouse income has been observed. It has also been remarked that the labour force participation rate of married women has almost no correlation with their level of educational attainment. This paper examines whether there has been any changes in recent cohorts. Two kinds of panel data released in Japan (the JPSC and KHPS) are used for the analyses; one with two and the other, four observed labour market outcomes as dependent variables. The results suggest that the cohort differentials in both the probability of working and attaining full-time employment are weak. The effect of spouse income on female labour force participation is significantly negative, while that of higher education on working and full-time employment is not robust. The results also indicate both younger university graduates and their older counterparts have approximately the same probability of gaining full time employment, suggesting more needs to be done to ensure higher education is beneficial for Japanese women in terms of employment outcomes.
    JEL: C33 J21 J24
    Date: 2012
  19. By: Tom Vogl
    Abstract: Taller workers are paid higher wages. A prominent explanation for this pattern is that physical growth and cognitive development share childhood inputs, inducing a correlation between adult height and two productive skills: strength and intelligence. This paper explores the relative roles of strength and intelligence in explaining the labor market height premium in Mexico. While cognitive test scores account for a limited share of the height premium, roughly half of the premium can be attributed to the educational and occupational choices of taller workers. Taller workers obtain more education and sort into occupations with greater intelligence requirements and lower strength requirements, suggesting that the height premium partly reflects a return to cognitive skill.
    JEL: I15 J24 O15
    Date: 2012–08
  20. By: Long, Richard J. (University of Saskatchewan); Fang, Tony (York University, Canada)
    Abstract: Using panel data from a large sample of Canadian establishments, this paper examines whether employee earnings increase, decrease, or do not change in the period subsequent to adoption of profit sharing, relative to establishments that do not adopt profit sharing. Our research contributes to knowledge by utilizing longitudinal analysis to assess the effects of profit sharing adoption on employee earnings growth within a carefully constructed sample of Canadian establishments, and by assessing both cash real earnings growth and total real earnings growth, while controlling for a wide array of variables that may affect these results. On average, employees in Canadian establishments that adopted profit sharing during 1999-2001 appeared to benefit from the introduction of profit sharing, in terms of both their cash real earnings growth and total real earnings growth, in the five-year span following introduction of profit sharing. This advantage was both statistically and practically significant, adding about 15 percentage points to real employee earnings growth over the five-year period, a period during which employee earnings growth was generally modest.
    Keywords: profit sharing plans, employee earnings, firm-worker linked survey, Canada
    JEL: J33 J31 J38
    Date: 2012–07
  21. By: Elena Pastorino
    Abstract: This paper develops and structurally estimates an equilibrium model of the labor market that integrates learning, job assignment, and human capital acquisition to account for the main patterns of job and wage mobility characteristic of careers in firms. A key innovation is the modeling of firms’ incentives to experiment that arise from the ability of firms, through job assignment, to affect the rate at which they acquire information about workers. The resulting trade-off between output and information implies that a firm’s retention and job assignment policy solves an experimentation problem: a so-called multi-armed bandit with dependent arms. The model is estimated using longitudinal administrative data from one U.S. firm in a service industry (the same data used by Baker, Gibbs, and Holmström (1994a,b)) and fits the data remarkably well. My estimates indicate that learning during employment accounts for a significant fraction of measured wage growth on the job, whereas experimentation through job assignment primarily contributes to explaining the patterns of job mobility within the firm. Since learning is gradual, however, persistent uncertainty about workers’ abilities is responsible for a substantial compression of wage growth with tenure.
    Keywords: Wages
    Date: 2012
  22. By: Jones, Melanie K.; Latreille, Paul L.; Sloane, Peter J.
    Abstract: This paper uses matched employee-employer data from the British Workplace Employment Relations Survey (WERS) 2004 to examine the determinants of employee job anxiety and work-related psychological illness. Job anxiety is found to be strongly related to the demands of the job as measured by factors such as occupation, education and hours of work. Average levels of employee job anxiety, in turn, are positively associated with work-related psychological illness among the workforce as reported by managers. The paper goes on to consider the relationship between psychological illness and workplace performance as measured by absence, turnover and labour productivity. Work-related psychological illness is found to be negatively associated with several measures of workplace performance.
    Keywords: Employment, Stress, Mental health, Absence, Productivity, Anxiety,
    Date: 2011
  23. By: Bruno, Giovanni S. F. (Bocconi University); Caroleo, Floro Ernesto (University of Naples, Parthenope); Dessy, Orietta (Università Cattolica del Sacro Cuore)
    Abstract: In this paper we study labor market transitions out of temporary jobs in Italy focussing on an interesting period of the Italian recent history: the one immediately following the last labor market reform aimed at flexibilizing and liberalizing the Italian labor market by a widespread use of temporary work arrangements in 2003, and immediately preceding the economic downturn starting in the second half of 2007. The data-set used is the 2004-2007 IT-SILC individual panel. We apply a discrete-time duration analysis and estimate a competing-risk model for assessing to which extent, and for whom, starting a temporary job after 2004 results within a 3-years span in a stepping stone to permanent employment rather than a dead end out of the labor market or in precarious jobs. We find that temporary contracts have a positive impact only on men's transitions to permanent employment. School leavers, workers in the South, as well as women, are instead rather penalized after a temporary job. They have an higher probability to remain trapped in temporary contracts than men and an higher probability of exiting the labour market. In particular, school leavers entering the labour market with a temporary contract experience relatively high exit-rates to non-employment just after the first year of the contract.
    Keywords: mixed multinomial logit, discrete duration data, temporary jobs
    JEL: J24 C41 C33 C35 J6
    Date: 2012–07
  24. By: Humphreys, Brad (University of Alberta, Department of Economics); Marchand, Joseph (University of Alberta, Department of Economics)
    Abstract: The local labor market effects of casinos are examined by comparing the employment and earnings growth in areas with new casinos to the growth in areas with existing casinos and with no casinos, exploiting numerous casino openings across multiple locations in Canada over several time periods. The opening of a new casino is found to directly double employment and earnings in the local gambling industry within five years, with indirect positive spillovers limited to differential employment growth in closely related local industries. For every job created in the gambling industry, roughly one to two additional jobs are created in the hospitality industry. Increased gambling employment does not appear to crowd out other employment in the entertainment industry.
    Keywords: casinos; gambling; job multipliers; local economic development
    JEL: J21 L83 R11
    Date: 2012–07–01
  25. By: Ethan G. Lewis
    Abstract: Research on the labor market impact of immigration typically relies on a single-good model of production with separable capital. This article discusses theory and evidence that suggest that this standard model is too simple to capture the labor market impact of immigration. A reasonable level of capital-skill complementarity, for which there is considerable support outside research on immigration, alone reduces the relative wage impact of immigration by 40 percent compared to simulations with skill-neutral capital. Other models in which the production structure responds to skill mix changes, including models with endogenous choice of technique, directed technical change, or human capital spillovers, can also imply the impact of immigration is considerably different than in the standard model. This article discusses new research which tries to credibly evaluate such models using immigration-induced variation in skill mix, an approach with further potential, and evidence that immigration impacts innovation and firm formation.
    JEL: J23 J24 J61 O31 O33
    Date: 2012–08
  26. By: Alan Manning
    Abstract: This paper takes the canonical Burdett-Mortensen model of wage- posting and relaxes the assumption that wages are set once-for-all, instead assuming they can only be committed one period at a time. It derives a closed-form solution for a steady-state Markov Rank-Preserving Equilibrium and shows how this relates to the canonical model and performs some comparative statics on it. By means of example it is shown that a Rank-Preserving Equilibrium may fail to exist and that this non-existence can be a problem for plausible parameter values. The paper discusses how the model can be modified to ensure existence of a Rank-Preserving equilibrium. It is also shown, by means of example, how the opposite, a Rank-Inverting Equilibrium may exist.
    Keywords: Wage-posting, search
    JEL: J31 J42
    Date: 2012–07
  27. By: Daniel Graham; Patricia Melo; David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)
    Abstract: This paper undertakes an empirical analysis with the aim of improving the current understanding of the relationship between labor productivity and urban agglomeration economies across a sample of urbanized areas in the US. Agglomeration economies are represented with driving time measures of employment accessibility to establish a direct account for the link between transport and agglomeration economies. The paper investigates the presence of nonlinearities in the relationship between labor productivity and agglomeration economies, and examines the spatial decay pattern of the effects arising from this relationship. The findings indicate that there is considerable nonlinearity in the relation between productivity and transport induced agglomeration effects, implying that the estimation of country-level aggregate elasticities is likely to misrepresent the actual magnitude of any productivity gains from urban agglomeration. The results also suggest that the magnitude of the productivity-agglomeration effects decays very rapidly with time and is very strong within 20 minutes driving time. This suggests that knowledge spillover externalities are likely to be a very important Marshallian source of agglomeration economies.
    Keywords: agglomeration economies, network accessibility, labor productivity
    JEL: J31 R12 R40
    Date: 2012
  28. By: Kandy Dayaram (School of Management, Curtin University.); Gail Pacheco (Department of Economics, Auckland University of Technology, Auckland, New Zealand.)
    Abstract: This paper presents an investigation into the impact of three hierarchical levels of learning (individual, team and organizational) on job satisfaction. Through the employment of logit regression, this study assesses the relative influence of each level of learning on satisfaction in the workplace. A key finding of this study is the high level of significance across all specifications for individual learning. Consequently, this results in a two-fold postulation. First, the proposition of an alternative methodology, namely a bivariate probit which allows for a sequential process between an employee’s attitude towards individual learning and job satisfaction. Second, from a training perspective, a rethinking and realignment of learning strategies at various levels within a firms’ organizational architecture.
    Keywords: Job satisfaction; individual learning; team learning; organizational learning.
    JEL: J28 L0
    Date: 2012–03
  29. By: Gail Pacheco (Department of Economics, Auckland University of Technology); De Wet van der Westhuizen (Telecom, New Zealand.); Don J. Webber (Department of Accounting, Economics and Finance, University of the West of England, Bristol, UK)
    Abstract: This paper contributes to the growing multi-disciplinary body of literature on subjective wellbeing by investigating the temporal stability and impacts of cultural values on job satisfaction over time. It is generally believed that cultural values evolve fairly slowly, leading to the expectation that the impacts of these values on job satisfaction are likely to be fairly stable over an individual’s working life. This paper uses four waves of the European Values Study and investigates whether cultural values have evolved and whether their impacts on job satisfaction have changed across Europe over the period 1981-2008. We parameterise cultural values through reference to traditional vs. secular and survival vs. self-expression value continuums. Results indicate that the strength of many cultural values have declined, the impacts of traditional values on job satisfaction have remained fairly constant, and the impacts of survival values on job satisfaction have declined substantially over the sample period.
    Keywords: Culture; Job satisfaction.
    JEL: J28
    Date: 2012–06
  30. By: Junge, Martin; Severgnini, Battista (Department of Economics, Copenhagen Business School); Sørensen, Anders (Department of Economics, Copenhagen Business School)
    Abstract: The role of product and marketing innovation for productivity growth is addressed using survey and register data for the Danish economy. It is argued that marketing and product innovation are complementary inputs and that innovation activities are skill-intensive. It is found that product and marketing innovation in skill-intensive firms results in significantly faster productivity growth than in unskilled-intensive firms that introduce this combination of innovation activities. More precisely, an increase in the share of educated workers of one percentage point, increases productivity growth by around 0.1 percentage point in firms with product and marketing innovation. In addition, it is found that firms that engage in product innovation but not in marketing innovation or the other way around do not demonstrate a growth effect from their innovation activities. It is also found that product and marketing innovation has an independent role in productivity growth that cannot be attributed to organisational changes, even though the majority of innovative firms engage in this latter innovation type. JEL codes: J24, O31, M31
    Keywords: Product innovation; marketing innovation; organizational innovation; productivity growth; educational composition
    JEL: J24 M31 O31
    Date: 2012–07–04
  31. By: Burgess, Simon (University of Bristol); Propper, Carol (University of Bristol); Ratto, Marisa (Université Paris-Dauphine); Tominey, Emma (University of York)
    Abstract: This paper addresses a lack of evidence on the impact of performance pay in the public sector by evaluating a pilot scheme of incentives in a major government agency. The incentive scheme was based on teams and covered quantity and quality targets, measured with varying degrees of precision. We use data from the agency's performance management system and personnel records plus matched labour market data. We focus on three main issues: whether performance pay matters for public service worker productivity, what the team basis of the scheme implies, and the impact of the differential measurement precision. We show that the use of performance pay had no impact at the mean, but that there was significant heterogeneity of response. This heterogeneity was patterned as one would expect from a free rider versus peer monitoring perspective. We found that the incentive scheme had a substantial positive effect in small teams, and a negative response in large teams. We found little impact of the scheme on quality measures, which we interpret as due to the differential measurement technology. We show that the scheme in small teams had non-trivial effects on output, and our estimates suggest that the use of incentive pay is much more cost effective than a general pay rise.
    Keywords: incentives, public sector, teams, performance, personnel economics
    JEL: J33 J45 D23
    Date: 2012–07
  32. By: Andries de Grip (ROA, Maastricht University, IZA and Netspar); Arnaud Dupuy (Reims Management School, ROA, IZA and Netspar. Corresponding address: Maastricht University PO Box 616, NL-6200, MD, The Netherlands. Email:; Jelle Jolles (Faculty of Psychology and Education, Free University of Amsterdam); Martin van Boxtel (Department of Neuropsychology, Maastricht University)
    Abstract: This paper uses longitudinal test data to analyze the relation be- tween retirement and cognitive development. Controlling for individ- ual …xed e¤ects and lagged cognition, we …nd that retirees face greater declines in information processing speed than those who remain em- ployed. However, remarkably, their cognitive exibility declines less, an e¤ect that appears to be persistent 6 years after retirement. Both e¤ects of retirement on cognitive development are comparable to the e¤ect of a …ve to six-year age di¤erence. We show that the e¤ects of retirement on cognitive decline cannot be explained by (1) a re- lief e¤ect after being employed in low-skilled jobs, (2) mood swings or (3) changes in lifestyle. Controlling for changes in blood pressure, which are negatively related to cognitive exibility, we still …nd lower declines in cognitive exibility for retirees. Since the decline in in- formation processing speed after retirement holds particularly for the low educated, activating these persons after retirement could lower the social costs of an aging society.
    Keywords: Cognitive decline, labor market activity, retirement
    JEL: J24 J26
    Date: 2012–07
  33. By: Lindquist, Matthew J. (SOFI, Stockholm University); Sol, Joeri (University of Amsterdam); van Praag, Mirjam (University of Amsterdam)
    Abstract: Parental entrepreneurship is a strong, probably the strongest, determinant of own entrepreneurship. We explore the origins of this intergenerational association in entrepreneurship. In particular, we identify the separate effects of pre- and post-birth factors (nature and nurture), by using a unique dataset of Swedish adoptees. Its unique characteristic is that it not only includes data on occupational status for the adoptees and their adoptive parents, but also for their biological parents. Moreover, we use comparable data on entrepreneurship for a large, representative sample of the Swedish population. Based on the latter sample, and consistent with previous findings, we show that parental entrepreneurship increases the probability of children's entrepreneurship by about 60%. We further show that for adoptees, both biological and adoptive parents make significant contributions. These effects, however, are quite different in size. The effect of post-birth factors (adoptive parents) is approximately twice as large as the effect of pre-birth factors (biological parents). The sum of these two effects for adopted children is almost identical to the intergenerational transmission of entrepreneurship for own-birth children. We explore several candidate explanations for this important post-birth effect and present suggestive evidence in favor of role modeling.
    Keywords: occupational choice, intergenerational mobility, self-employment, entrepreneurship, adoption, role model
    JEL: J24 J62 L26
    Date: 2012–07
  34. By: Mok, Penny (The New Zealand Treasury); Mason, Geoff (National Institute of Economic and Social Research); Stevens, Philip (Ministry of Economic Development, New Zealand); Timmins, Jason (Department of Labour)
    Abstract: This paper examines the determinants of firms’ skill shortages, using a specially-designed survey, the Business Strategy and Skills (BSS) module of the Business Operations Survey. We combine the BSS module with additional data on firms in the Statistics New Zealand’s prototype Longitudinal Business Database (LBD). We focus on vacancies that were hard-to-fill because the applicants lacked the necessary skills, qualification or experience - which we define as skill-related reasons (skill shortage vacancies). We also contrast these with vacancies that were hard-to-fill for non-skill-related reasons.
    Keywords: skill shortages; hard-to-fill vacancies; Business Operations Survey; Heckman Selection model
    JEL: J24 J31 L60
    Date: 2012–05–01

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