nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2012‒11‒24
seven papers chosen by
Erik Jonasson
Lund University

  1. Reaching High: Occupational Sorting and Higher Education Wage Inequality in the UK By Jan Kleibrink; Maren M. Michaelsen
  2. The minimum wage affects them all: Evidence on employment spillovers in the roofing sector By Aretz, Bodo; Arntz, Melanie; Gregory, Terry
  3. The Effect of Overskilling Dynamics on Wages By Mavromaras, Kostas G.; Mahuteau, Stéphane; Sloane, Peter J.; Wei, Zhang
  4. Unretirement in England: An empirical perspective By Ricky Kanabar
  5. On aggregating human capital across heterogeneous cohorts By Jakub Growiec; Christian Groth
  6. Alike in Many Ways: Intergenerational and Sibling Correlations of Brothers' Earnings By Bingley, Paul; Cappellari, Lorenzo
  7. Mental Health and Labour Supply – Evidence from Mexico‘s Ongoing Violent Conflicts By Maren M. Michaelsen

  1. By: Jan Kleibrink; Maren M. Michaelsen
    Abstract: We analyse wage differentials between Higher Education graduates in the UK, differentiating between polytechnic and university graduates. Polytechnic graduates earned on average lower wages than university graduates prior to the UK Further and Higher Education Act of 1992. The reform changed the system of Higher Education by giving all polytechnics university status. We show that wage differentials can be explained by a glass ceiling which prevented polytechnic graduates from reaching managerial and professional occupations. After the reform, they overtook graduates of traditional universities in terms of average wages.
    Keywords: Higher education; wage differentials; occupational sorting; glass ceiling; United Kingdom
    JEL: I23 I24 J24 J31
    Date: 2012–10
  2. By: Aretz, Bodo; Arntz, Melanie; Gregory, Terry
    Abstract: This paper contributes to the sparse literature on employment spillovers on minimum wages by exploiting the minimum wage introduction and subsequent increases in the German roofing sector that gave rise to an internationally unprecedented hard bite of a minimum wage. We look at the chances of remaining employed in the roofing sector for workers with and without a binding minimum wage and use the plumbing sector that is not subject to a minimum wage as a suitable benchmark sector. By estimating the counterfactual wage that plumbers would receive in the roofing sector given their characteristics, we are able to identify employment effects along the entire wage distribution. The results indicate that the chances for roofers to remain employed in the sector in eastern Germany deteriorated along the entire wage distribution. Such employment spillovers to workers without a binding minimum wage may result from scale effects and/or capital-labour substitution. --
    Keywords: minimum wage,Germany,capital-labour substitution,labour-labour substitution,scale effect
    JEL: J38 J21 J23
    Date: 2012
  3. By: Mavromaras, Kostas G. (NILS, Flinders University); Mahuteau, Stéphane (NILS, Flinders University); Sloane, Peter J. (Swansea University); Wei, Zhang (NILS, Flinders University)
    Abstract: We use a random effects dynamic probit model to estimate the effect of overskilling dynamics on wages. We find that overskilling mismatch is common and more likely among those who have been overskilled in the past. It is also highly persistent, in a manner that is inversely related to educational level. Yet, the wages of university graduates are reduced more by past overskilling, than for any other education level. A possible reason for this wage effect is that graduates tend to be in better-paid jobs and therefore there is more at stake for them if they get it wrong.
    Keywords: mismatch, overskilling, wages, panel dynamic estimation
    JEL: J24 J31
    Date: 2012–11
  4. By: Ricky Kanabar
    Abstract: Ageing populations place an increasing financial burden on governments. Retired older workers are a source of untapped economic capacity. Maestas (2010) finds 26% of Health and Retirement Study (HRS) sample respondent's `unretire'. We estimate an unretirement rate of 5.11% and 2.70% for women using The English Longitudinal Study of Ageing (ELSA). Earlier studies using US longitudinal data include Rust (1980), Gustman and Steinmeier (1984) and Hardy (1990) estimate similar rates. Results suggest: age, education, financial planning, unanticipated increases in debt, spouse and time effects play an important role in the decision for a male to unretire.
    Keywords: ELSA, Labour supply, Labour demand, Unretirement
    JEL: J26
    Date: 2012–11
  5. By: Jakub Growiec (Warsaw School of Economics, Institute of Econometrics, and National Bank of Poland, Economic Institute); Christian Groth (University of Copenhagen, Department of Economics)
    Abstract: Based on a general framework for computing the aggregate human capital stock under heterogeneity across population cohorts, the paper derives aggregate human capital stocks in the whole population and in the labor force, and relates these variables to average years of schooling and average work experience. Under the scenarios considered here, the "macro-Mincer" (log-linear) relationship between aggregate human capital and average years of schooling is obtained only in cases which are inconsistent with heterogeneity in years of schooling and based on empirically implausible demographic survival laws. Our numerical results indicate that the macro-Mincer equation can be a reasonable approximation of the true relationship only if returns to schooling and work experience are roughly constant across countries.
    Keywords: human capital, aggregation, heterogeneity, population cohort, Mincer equation
    JEL: J24 O47
    Date: 2012–09–18
  6. By: Bingley, Paul (SFI - Danish National Centre for Social Research); Cappellari, Lorenzo (Università Cattolica del Sacro Cuore)
    Abstract: We model the correlations of brothers' life-cycle earnings separating for the first time the effect of paternal earnings from additional residual sibling effects. We identify the two effects by analysing sibling correlations and intergenerational correlations jointly within a unified framework. Our multi-person model of earnings dynamics distinguishes permanent earnings from transitory – serially correlated – shocks, allows for life-cycle effects and nests the models of previous research that have focussed either on intergenerational or sibling correlations. Using data on the Danish population of father/first-son/second-son triplets we find that sibling effects explain between one fourth and one half of inequality in life-cycle earnings, and largely account for individual differences in earnings growth. Intergenerational associations account for a considerable share of overall sibling correlations, between 30 and 60 per cent from youth to maturity. We also find that transitory shocks are correlated across family members, in particular between brothers. Extensions of the model show a distinctive effect of mothers' human capital on top of fathers' earnings and no evidence of differential intergenerational transmission between brothers.
    Keywords: intergenerational transmission, sibling correlations, life-cycle earnings
    JEL: D31 J62
    Date: 2012–11
  7. By: Maren M. Michaelsen
    Abstract: In Mexico, conflicts between drug-trafficking organisations result in a high number of deaths and immense suffering among both victims and non-victims every year. Little scientific research exists which identifi es and quantifi es the monetary and nonmonetary consequences of ongoing violent conflicts on individuals. Using the Mexican Family Life Survey for 2002 and 2005, the causal effect of mental health (symptoms of depression / anxiety) on the extensive and intensive margin of labour supply for working-aged men and women is estimated. Measures of the ongoing drug-related violent conflicts both at the macro level using intentional homicide rates by region, and at the micro level indicated by the presence of armed groups in the neighbourhood, serve as instruments for mental health. The results show a significant adverse impact of the conflicts on anxiety for men and women. Based on IV-Tobit model results, a worse mental health state decreases individual labour supply strongly and significantly for men. The findings demonstrate that Mexico‘s population not only suffers from the violent conflicts between drug-trafficking organisations by anxiety or even depression but also indirectly from less household income through less work which in turn has consequences for Mexico‘s social development and economic growth.
    Keywords: Mental health; labour supply; violent conflict; Mexico
    JEL: J22 I19 O12 D74
    Date: 2012–10

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