nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2012‒11‒11
nineteen papers chosen by
Erik Jonasson
Lund University

  1. Fame and the Fortune of Academic Economists: How the Market Rewards Influential Research in Economics By Hilmer, Christiana E.; Hilmer, Michael J.; Ransom, Michael R.
  2. Do Women Avoid Salary Negotiations? Evidence from a Large Scale Natural Field Experiment By Andreas Leibbrandt; John A. List
  3. Goals (th)at Work – Goals, Monetary Incentives, and Workers’ Performance By Sebastian Goerg; Sebastian Kube
  4. Signalling and Productivity Effects of Overeducation: Is It Really a Waste of Resources? By Kedir, Abbi; Kyrizi, Andri; Martínez Mora, Francisco,
  5. Female Labour Force Participation in Arab Countries: The Role of Identity By Tobias Caris; Bernd Hayo
  6. Learning by Doing: Skills and Jobs in Urban Ghana By Monazza Aslam; Kim Lehrer
  7. Discretion, Productivity, and Work Satisfaction By Bartling, Björn; Fehr, Ernst; Schmidt, Klaus M.
  8. The Effect of Emigration from Poland on Polish Wages By Christian Dustmann; Tommaso Frattini; Anna Rosso
  9. The Frisch Elasticity in Labor Markets with high Job Turnover By Nikita Céspedes Reynaga; Silvio Rendon
  10. Wages and unemployment across business cycles: a high-frequency investigation By Lei Fang; Pedro Silos
  11. The Impact of Language Proficiency on Immigrants' Earnings in Spain By Budría, Santiago; Swedberg, Pablo
  12. Welfare Programs and Labor Supply in Developing Countries: Experimental Evidence from Latin America By Alzúa, María Laura; Cruces, Guillermo; Ripani, Laura
  13. Occupational and Earnings Mobility of Polish Migrants in Ireland in the Recession By Peter Mühlau;
  14. Migration, Remittances and Rural Employment Patterns: Evidence from China By Sylvie Démurger; Li Shi
  15. Dual Labour Markets and the Tenure Distribution: Reducing Severance Pay or Introducing a Single Contract? By J. Ignacio García Pérez; Victoria Osuna
  16. How Does Child Labor Affect the Demand for Adult Labor? Evidence from Rural Mexico By Kirk Doran
  17. Globalization and Female Labor Force Participation in Developing Countries: An Empirical (Re-)Assessment By Arusha Cooray; Isis Gaddis; Konstantin M. Wacker
  18. The effect of age-targeted tax credits on retirement behavior By Laun, Lisa
  19. The effect of long term subsidies on female labor supply and fertility By Evelyn Korn; Matthias Wrede

  1. By: Hilmer, Christiana E. (San Diego State University, California); Hilmer, Michael J. (San Diego State University, California); Ransom, Michael R. (Brigham Young University)
    Abstract: We analyze the pay and position of 1,009 faculty members who teach in doctoral-granting economics departments at fifty-three large public universities in the United States. Using the Web of Science, we have identified the journal articles published by these scholars and the number of times each of these articles has been subsequently cited in published research articles. We find that research influence, as measured by various measures of total citations, is a surprisingly strong predictor of the salary and the prestige of the department in which professors are employed. We also examine how coauthorship is rewarded by the market.
    Keywords: academic labor markets, professor's salaries
    JEL: J31 J44
    Date: 2012–10
  2. By: Andreas Leibbrandt; John A. List
    Abstract: One explanation advanced for the persistent gender pay differences in labor markets is that women avoid salary negotiations. By using a natural field experiment that randomizes nearly 2,500 job-seekers into jobs that vary important details of the labor contract, we are able to observe both the nature of sorting and the extent of salary negotiations. We observe interesting data patterns. For example, we find that when there is no explicit statement that wages are negotiable, men are more likely to negotiate than women. However, when we explicitly mention the possibility that wages are negotiable, this difference disappears, and even tends to reverse. In terms of sorting, we find that men in contrast to women prefer job environments where the ‘rules of wage determination’ are ambiguous. This leads to the gender gap being much more pronounced in jobs that leave negotiation of wage ambiguous.
    JEL: C93 J0
    Date: 2012–11
  3. By: Sebastian Goerg (Florida State University, Department of Economics); Sebastian Kube (University of Bonn, Department of Economics)
    Abstract: In a randomized field experiment, we investigate the connection between work goals, monetary incentives, and work performance. Employees are observed in a natural work environment where they have to do a simple, but effort-intense task. Output is perfectly observable and workers are paid for performance. While a regular piece-rate contract serves as a benchmark, in some treatments workers are paid a bonus conditional on reaching a pre-specified goal. We observe that the use of personal work goals leads to a significant output increase. The positive effect of goals not only prevails if they are self-chosen by the workers, but also if goals are set exogenously by the principal – although in the latter case, the exact size of the goal plays a crucial role. Strikingly, the positive effect of self-chosen goals persists even if the goal is not backed up by monetary incentives. We propose a novel incentive contract where – through the choice of a personal work goal – workers themselves determine the risk and the size of their bonus payment at the same time.
    Keywords: Field experiment, Goal setting, monetary incentives, bonus payments, pay-for-performance contracts, workplace behavior
    JEL: J33 C93 D01 A12 M52 D03 D24 J24
    Date: 2012–10
  4. By: Kedir, Abbi; Kyrizi, Andri; Martínez Mora, Francisco,
    Abstract: Overeducation raises concerns that governments may be overinvesting in education. To inform the debate, this paper studies the impact of overeducation on productivity. We advance the literature by considering that returns to overeducation may be due both to productivity and signalling effects. To disentangle both effects, we apply Wolpin’s (1977) methodology and compare the rates of return of screened (employed) and unscreened (selfemployed) workers. To overcome well-known endogeneity problems due to unobserved heterogeneity, we estimate a panel with individual and employment-status fixed effects. Our results show that signalling effects are relevant and that overeducation does not carry a productivity penalty. Keywords: Overeducation, signalling model, human capital model, unobserved heterogeneity. JEL classification: I20, J24, J31.
    Keywords: Educació -- Aspectes econòmics, Mercat de treball, Salaris, Efectes de l'educació sobre els, 37 - Educació. Ensenyament. Formació. Temps lliure,
    Date: 2012
  5. By: Tobias Caris (University of Marburg); Bernd Hayo (University of Marburg)
    Abstract: We investigate why female labour market participation is low in the Arab region. Utilising Akerlof and Kranton’s (2000) ‘identity economics’ approach, we show in a simple gametheoretic framework that women socialised in a traditional family environment violate their identities by taking a job. In the empirical analysis, we study the respective impact of two determinants of identity in the Arab region, Islam and cultural tradition. Employing two waves of the World Values Survey, we find significant evidence that identity affects female labour market participation. Moreover, our estimates suggest that in the Arab region, Muslim women do not participate in the labour market less than non-Muslim women, whereas those with strong traditional identities have a 7 percentage point lower probability of entering the labour market.
    Keywords: Female labour market participation, Arab region, Islam, Identity, Religion
    JEL: J16 J21 Z12 Z13 O53
    Date: 2012
  6. By: Monazza Aslam; Kim Lehrer
    Abstract: This paper investigates the relationship between skills acquisition and job characteristics using a panel dataset of individuals in urban Ghana by analyzing on-the-job skills acquisition and exploring the link between mathematics skills and jobs which involve the handling of money. These mathematics skills are important, not only, in the workplace but also more generally. Survey respondents were administered a short mathematics test involving a number of theoretical and practical math questions. The relationship between skills and jobs is identified by examining individuals who changed jobs between survey rounds while controlling for individual time invariant characteristics. We argue that the process of job choice in Ghana allows us to identify causal impacts. The findings show that money handling is positively associated with higher math skills for women. These results are not driven by differences in mathematics scores between self-employed individuals and wage employed individuals and are robust to changes in the classification of money handling jobs. Moreover, the findings show that working in a job involving the handling of money is positively associated with higher math scores among women with high levels of education. This suggests that individuals at the low end of the distribution of years of education are not acquiring mathematics skills through money handling jobs. It is only the 36% of women who are already quite highly educated in the Ghanaian context who are acquiring these skills on the job.
    Date: 2012
  7. By: Bartling, Björn; Fehr, Ernst; Schmidt, Klaus M.
    Abstract: In Bartling, Fehr and Schmidt (2012) we show theoretically and experimentally that it is optimal to grant discretion to workers if (i) discretion increases productivity, (ii) workers can be screened by past performance, (iii) some workers reciprocate high wages with high effort and (iv) employers pay high wages leaving rents to their workers. In this paper we show experimentally that the productivity increase due to discretion is not only sufficient but also necessary for the optimality of granting discretion to workers. Furthermore, we report representative survey evidence on the impact of discretion on workers’ welfare, confirming that workers earn rents.
    JEL: M5 J3
    Date: 2012–10
  8. By: Christian Dustmann (University College London and CReAM); Tommaso Frattini (Università degli Studi di Milano, CReAM, LdA and IZA); Anna Rosso (University College London and CReAM)
    Abstract: This paper analyses the effect of emigration from Poland around the time of EU accession on the Polish labour market. We develop a simple model that guides our empirical specification and provides a clear interpretation for our estimates. Focussing on the 1998–2007 period for Poland, we use a unique data set that contains information about household members who are currently living abroad, which allows us to develop region-specific emigration rates and estimate emigration’s effect on wages using within-region variation. Our results show that emigration from Poland was largest for workers with intermediate-level skills and that it is wages for this skill group that increased most. We also show that emigration led to a slight increase in wages overall but that workers at the low end of the skill distribution made no gains and may actually have experienced slight wage decreases.
    Keywords: Emigration, Wages, Impact.
    JEL: J31 J61
    Date: 2012–10
  9. By: Nikita Céspedes Reynaga (Central Bank of Peru); Silvio Rendon (Department of Economics, Stony Brook University)
    Abstract: We estimate Frisch elasticity in a labor market with high job turnover. In a context where only around 18% of the employed labor force has formal and stable jobs, we perform a fixed effects estimation as proposed by MaCurdy (1981) with a Heckman correction for selection into unemployment . We identify the positive slope of the labor supply using firms' size as an instrumental variables for wages. We use Peruvian data from the Permanent Employment Survey of Lima. We find that neglecting wage endogeneity implies a downward sloping labor supply, while the job turnover bias, not accounting for job turnover, overestimates Frisch elasticity. We estimate Frisch elasticity at around 0.38, which indicates fairly adjustable wages and little reaction of hours of work to wage variations. Moreover, we find that the Frisch elasticity is decreasing in income and tended to increase in the last decade.
    Keywords: Labor Supply, Frisch Elasticity, Hours of Work, Job Turnover
    JEL: E24 J22 J24 J41 J60 J63
    Date: 2012–10
  10. By: Lei Fang; Pedro Silos
    Abstract: This paper investigates the change in wages associated with a spell of unemployment. The novelty lies in using monthly data from the Survey of Income and Program Participation (SIPP) to analyze the dynamics of those wage changes across different business cycles. The level of education or the sector of re-employment affects the change in wages following an unemployment spell differently across different downturns. The degree of wage rigidity varies across recessions; wage changes pre- and post-unemployment are sometimes procyclical and sometimes countercyclical. These results may be useful for understanding the different aggregate employment dynamics observed across downturns and recoveries.
    Date: 2012
  11. By: Budría, Santiago (University of Madeira); Swedberg, Pablo (St. Louis University)
    Abstract: This article uses micro-data from the Spanish National Immigrant Survey to investigate the impact of Spanish language proficiency on immigrants' earnings. The results, based on Instrumental Variables (IV), point to a substantial earnings return to Spanish proficiency, of approximately 27%. This figure varies largely across educational groups, with high-qualified workers earning a premium of almost 50%. This conspicuous complementarity between formal qualifications and language skills poses a challenge for traditional language training policies, for these typically neglect the immigrants' heterogeneous educational background.
    Keywords: immigration, Spanish language proficiency, earnings, instrumental variables
    JEL: F22 J24 J61
    Date: 2012–10
  12. By: Alzúa, María Laura (CEDLAS-UNLP); Cruces, Guillermo (CEDLAS-UNLP); Ripani, Laura (Inter-American Development Bank)
    Abstract: This study looks at the effect of welfare programs on work incentives and the adult labor supply in developing countries. The analysis builds on the experimental evaluations of three programs implemented in rural areas: Mexico's PROGRESA, Nicaragua's RPS and Honduras' PRAF. Comparable results for the three countries indicate that the effects that the programs have had on the labor supply of participating adults have been mostly negative but are nonetheless small and not statistically significant. However, the evidence does point to the presence of other effects on labor markets. In the case of PROGRESA, there is a small positive effect on the number of hours worked by female beneficiaries and a sizeable increase in wages among male beneficiaries and a resulting increase in household labor income. Moreover, PROGRESA seems to have reduced female labor-force participation in ineligible households. These results imply that large-scale interventions may have broader equilibrium effects.
    Keywords: welfare programs, income support, labor supply, work incentives, conditional cash transfers, randomized control trials, developing countries
    JEL: J08 J22 I38
    Date: 2012–10
  13. By: Peter Mühlau (Institute for International Integration Studies, Trinity College Dublin);
    Abstract: How has the recession affected the employment and job quality of Polish migrants in Ireland? The paper analyse unique data of more than 600 Polish migrants in Dublin, that has been collected using respondent-driven sampling, to shed lights on this question. Based on the reconstruction of the employment histories of the respondents, the paper demonstrates that employment levels, occupational status and earnings have been surprisingly stable at the macro-level of the Polish community in Dublin between 2008 and 2010. Underlying this macro-stability is a high degree of individual transitions in and out of employment and of vertical earnings and occupational mobility. Up-to 50 percent of Polish migrants in 2008 may have seen a deterioration of their labour market position until 2010, while in the same period about 40 percent may have seen gains in terms of employment and occupational attainment. The position of Polish women improved strongly relative to Polish men in this period. The main reason is that men on particularly well-paid and prestigious jobs had a particular high risk of losing their job. Job losses among women were fewer and the quality of the lost jobs was poor relative to the average job women held in 2008. The study is the first longitudinal study of labour market and occupational attainment of immigrants in Ireland. Length: 33 pages
  14. By: Sylvie Démurger (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Li Shi (School of Economics and Business Administration - Beijing Normal University / Beijing)
    Abstract: This paper explores the rural labor market impact of migration in China using crosssectional data on rural households for the year 2007. A switching probit model is used to estimate the impact of belonging to a migrant-sending household on the individual occupational choice categorized in four binary decisions : farm work, wage work, self-employment and housework. The paper then goes on to estimate how the impact of migration differs across different types of migrant households identified along two additional lines : remittances and migration history. Results show that individual occupational choice in rural China is responsive to migration, at both the individual and the family levels, but the impacts differ : individual migration experience favors subsequent local off-farm work, whereas at the family level, migration drives the left-behinds to farming rather than to off-farm activities. Our results also point to the interplay of various channels through which migration influences rural employment patterns.
    Keywords: labor migration; labor supply; remittances; temporary migration; left-behind; China
    Date: 2012–10–23
  15. By: J. Ignacio García Pérez; Victoria Osuna
    Abstract: This paper evaluates Spain's recent labour market reform concerning the reduction in severance pay from 45 to 33 days of wages per year of seniority and the introduction of a new subsidized permanent contract. We also compare this policy with the introduction of a single open-ended labour contract with increasing severance payments for all new hirings. We use an equilibrium search and matching model to generate the main properties of this segmented labour market. Our steady {state results show this reform will reduce unemployment (by 20%) and job destruction (by 29%). However, in terms of wage subsidies, the cost of implementing this reform will be very high. A cheaper and more effective way to decrease the duality in the labour market would be to eliminate temporary contracts and introduce a single contract. Unemployment and job destruction in this case would be reduced by 28% and 42%, respectively. Most interestingly, tenure distribution would be even smoother than under the designed reform: 21% more workers would end up having tenures of more than three years, and there would be 32% fewer one year contracts. The transition shows that both changes would benefit a majority of workers: only 8.1% would be jeopardized under the approved reform (5.8% in the transition to the single contract) due to improvement in job stability.
    Date: 2012–10
  16. By: Kirk Doran (Department of Economics, University of Notre Dame)
    Abstract: Do employers substitute adults for children, or do they treat them as complements? Using data from a Mexican schooling experiment, I find that decreasing child farm work is accompanied by increasing adult labor demand. This increase was not caused by treatment money reaching farm employers: there were no significant increases in harvest prices and quantities, non-labor inputs, or non-farm labor supply. Furthermore, coordinated movements in price and quantity can distinguish this increase in demand from changes in supply induced by the treatment's income effects. Thus, declining child supply caused increasing adult demand: employers substituted adults for children.
    Date: 2012–08
  17. By: Arusha Cooray (University of Wollongong); Isis Gaddis (Georg-August-University Göttingen); Konstantin M. Wacker (Georg-August-University Göttingen)
    Abstract: We investigate the impact of foreign direct investment (FDI) and trade, as two measures of globalization, on female labor force participation in a sample of 80 developing countries over the last decades. Contrary to the mainstream view in the literature, which is mainly based on country-case studies or simple cross-country variation, we find that both, FDI and trade have a generally negative impact on female labor force participation. While the impact is of negligible economic size, it is stronger for younger cohorts, potentially reflecting a higher incentive to stay out of the labor force and invest in education in view of an increased skill premium due to globalization. We also find that the direction of the effect depends on the industrial structure of the economy. This suggests that there is no evidence of a (conditional) anti-female bias in multinational corporations' factor demand once one controls for the interaction of FDI with the size of the agricultural sector. We can thereby explain why country studies find other effects and question the generalization of their results into an overarching globalization tale concerning female labor force participation.
    Keywords: Globalization; Labor Force Participation; FDI; Trade; Development; Hierarchical Panel Data Models
    JEL: F0 J22 O1
    Date: 2012–10–30
  18. By: Laun, Lisa (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: This paper analyzes the effect of two age-targeted policy initiatives to delay retirement that were simultaneously implemented in Sweden in 2007: an earned income tax credit and a payroll tax credit. Both policies were targeted at workers aged 65 or above at the beginning of the tax year. The paper exploits that the special rules for elderly were governed by the year of birth while the social security system is governed by age retirement,i.e., the day of birth, in analyzing the effect of the new policies. The results suggest that the age-targeted tax credits increased employment in the year following the 65th birthday by 1.5 percentage points among individuals with annual earnings above the 2007 tax liability threshold three to five years earlier. An analysis of fiscal implications indicates, however, that the increase in employment was not large enough to offset the implied decrease in tax revenues.
    Keywords: Labor supply; retirement; earned income tax credit; payroll taxes
    JEL: H24 J14 J18 J21
    Date: 2012–10–15
  19. By: Evelyn Korn (University of Marburg); Matthias Wrede (University of Erlangen)
    Abstract: Fertility and the provision of long-term care are connected by an aspect that has not received attention so far: both are time consuming activities that can be produced within the household or bought at the market and are, thus, connected through the intertemporal budget constraint of the household that accounts for time and money. This paper models that link and analyzes the effect of intervention in the long-term- care market on female labor-market related decisions. It shows that women’s fertility as well as their labor supply when young are affected by such policies. The overall effect can be decomposed into an opportunity-cost effect and a consumption-smoothing effect that each impact fertility as well as labor supply in opposite directions. Using European survey data, the paper shows that the consumption-smoothing effect is dominant
    Keywords: long-term care, child care, female labor supply, fertility
    JEL: J13 D91
    Date: 2012

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