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on Labor Markets - Supply, Demand, and Wages |
| By: | David Amirault; Paul Fenton; Thérèse Laflèche |
| Abstract: | The Bank of Canada conducted a Wage Setting Survey with a sample of 200 private sector firms from mid-October 2007 to May 2008. Results indicate that wage adjustments for the Canadian non-union private workforce are overwhelmingly time dependent, with a fixed duration of one year, and are clustered in the first four months of the year, suggesting that wage stickiness may not be constant over the year. Ad hoc adjustments between these fixed dates are rare, but when they do occur they are almost always upward and often in response to tight labour markets. The market wage rate is the most important factor managers consider when setting wages for their employees. Depending on firm size, different strategies are used to gain information about the market wage. Other important factors taken into account when setting wages include the firm’s profitability, its difficulty in attracting staff and workers’ productivity. While many managers acknowledge a link between the wage decision and inflation, very few use formal wage indexation rules such as a cost-of-living adjustment. Rather, most describe an informal backward-looking link. Survey results also suggest that managers are very reluctant to cut nominal base wages in times of weak demand. Managers are more likely to cut incentive pay, which would allow some flexibility in total compensation even if base pay is inflexible, or reduce the quantity of labour inputs (hours and employees). |
| Keywords: | Labour markets; Transmission of monetary policy |
| JEL: | E24 J33 M52 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocadp:13-1&r=lma |
| By: | Jorge De la Roca (New York University); Diego Puga (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | Individual earnings are higher in bigger cities. We consider three reasons: spatial sorting of initially more productive workers, static advantages from workers’ current location, and learning by working in bigger cities. Using rich administrative data for Spain, we find that workers in bigger cities do not have higher initial ability as reflected in fixed effects. Instead, they obtain an immediate static premium and accumulate more valuable experience. The additional value of experience in bigger cities persists after leaving and is stronger for those with higher initial ability. This explains both the higher mean and greater dispersion of earnings in bigger cities. |
| Keywords: | Learning, city size, earnings premium, agglomeration economies. |
| JEL: | R10 R23 J31 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2013_1301&r=lma |
| By: | Mike Brewer (Institute for Fiscal Studies and ISER, Essex University); Monica Costa Dias (Institute for Fiscal Studies and Institute for Fiscal Studies); Jonathan Shaw (Institute for Fiscal Studies) |
| Abstract: | Personal taxes and benefits affect the incentive to work over the lifecycle by altering income-age profiles, insuring against adverse shocks, and changing the returns to human capital. Previous work investigating the impact of taxes and benefits on work incentives has tended to ignore these dynamic considerations. In this paper, we use a dynamic model to show how a lifecycle perspective alters our impression of the effect of the tax and benefit system on female work incentives. We describe how work incentives change over the life and show how they depend on lifecycle circumstances. We also devise a forward-looking measure of work incentives that incorporates all the dynamic considerations likely to affect work decisions at any given age. We find that individuals experience considerable variability in work incentives across life that outweighs the variability across individuals. Changes pattern of family types across life is key to explaining these patterns: work incentives vary dramatically depending on family composition, and most women experience a number of different family types during the course of their lives. We also find that differences in family type are an important explanation for why static and forwardlooking PTRs diverge, though this is more to do with differences in how women in families with different compositions behave. |
| Keywords: | female labour supply, lifecycle, work incentives, taxes |
| JEL: | H24 I24 I38 J22 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:13/01&r=lma |
| By: | Jeremy Lise (University College London and IFS); Costas Meghir (Cowles Foundation, Yale University); Jean-Marc Robin (Sciences Po, Paris and University College of London) |
| Abstract: | We develop an empirical search-matching model which is suitable for analyzing the wage, employment and welfare impact of regulation in a labor market with heterogeneous workers and jobs. To achieve this we develop an equilibrium model of wage determination and employment which extends the current literature on equilibrium wage determination with matching and provides a bridge between some of the most prominent macro models and microeconometric research. The model incorporates productivity shocks, long-term contracts, on-the-job search and counter-offers. Importantly, the model allows for the possibility of assortative matching between workers and jobs due to complementarities between worker and job characteristics. We use the model to estimate the potential gain from optimal regulation and we consider the potential gains and redistributive impacts from optimal unemployment insurance policy. The model is estimated on the NLSY using the method of moments. |
| Keywords: | Matching, Equilibrium wage distributions, Job mobility, Simulated method of moments, MCMC |
| JEL: | J3 J6 J64 J65 J68 C15 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1886&r=lma |
| By: | Lawrence F. Katz; Robert A. Margo |
| Abstract: | This paper examines shifts over time in the relative demand for skilled labor in the United States. Although de-skilling in the conventional sense did occur overall in nineteenth century manufacturing, a more nuanced picture is that occupations “hollowed out”: the share of “middle-skill” jobs – artisans – declined while those of “high-skill” – white collar, non-production workers – and “low-skill” – operatives and laborers increased. De-skilling did not occur in the aggregate economy; rather, the aggregate shares of low skill jobs decreased, middle skill jobs remained steady, and high skill jobs expanded from 1850 to the early twentieth century. The pattern of monotonic skill upgrading continued through much of the twentieth century until the recent “polarization” of labor demand since the late 1980s. New archival evidence on wages suggests that the demand for high skill (white collar) workers grew more rapidly than the supply starting well before the Civil War. |
| JEL: | J23 N11 N12 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18752&r=lma |
| By: | Chinhui Juhn (University of Houston); Gergely Ujhelyi (University of Houston); Carolina Villegas-Sanchez (ESADE Universitat Ramon Llul) |
| Abstract: | This paper studies the effect of trade liberalization on an under-explored aspect of wage inequality - gender inequality. We consider a model where firms differ in their productivity and workers are differentiated by skill as well as gender. A reduction in tariffs induces more productive firms to modernize their technology and enter the export market. New technologies involve computerized production processes and lower the need for physically demanding skills. As a result, the relative wage and employment of women improves in blue-collar tasks, but not in white-collar tasks. We test our model using a panel of establishment level data from Mexico exploiting tariff reductions associated with the North American Free Trade Agreement (NAFTA). Consistent with our theory we find that tariff reductions caused new firms to enter the export market, update their technology and replace male blue-collar workers with female blue-collar workers. |
| Keywords: | trade, gender, inequality |
| JEL: | D3 F15 J16 |
| Date: | 2013–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:hou:wpaper:201303234&r=lma |
| By: | Jay Stewart (U.S. Bureau of Labor Statistics) |
| Abstract: | School-age children need 10-11 hours of sleep per night. It has been well-documented that lack of sleep leads to diminished cognitive performance and that people who sleep less are more likely to be overweight or obese. I use data from the American Time Use Survey (ATUS) to examine two factors that can potentially influence the amount of time children sleep: school and maternal employment. I find that school-age children sleep less when school is in session than during the summer, and that they get less sleep on school nights than on non-school nights. Children go to bed about 38 minutes earlier on school nights, but wake up about 72 minutes earlier on school days. This translates into about 34 minutes less sleep on school nights compared with non-school nights, and implies that these children have a cumulative sleep deficit of over two-and-a-half hours by the time they arrive at school Friday morning. In addition to the lost sleep time, the earlier wake-up times on school days appear to disrupt children’s natural sleep cycles. Maternal employment affects children’s sleep time in the summer, because children wake up earlier on days that their mothers work. But during the school year, maternal employment effects are dominated by school effects. |
| Keywords: | Sleep; school start times; maternal employment; time use; |
| JEL: | J22 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec130010&r=lma |