nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2013‒03‒16
sixteen papers chosen by
Erik Jonasson
National Institute of Economic Research

  1. Wage effects of U.S. service offshoring by skills and tasks By Julia Püschel
  2. Minimum Wage Increases in a Recessionary Environment By John T. Addison; McKinley L. Blackburn; Chad D. Cotti
  3. Everything you always wanted to know about sex discrimination By Ana Rute Cardoso; Paulo Guimarães; Pedro Portugal
  4. Gender Wage Gaps, ‘Sticky Floors’ and ‘Glass Ceilings’ in Europe By Louis N. Christofides; Alexandros Polycarpou; Konstantinos Vrachimis
  5. Labour Market Effects of Parental Leave Policies in OECD Countries By Olivier Thévenon; Anne Solaz
  6. Does Better Pre-Migration Performance Accelerate Immigrants' Wage Assimilation? By Hirsch, Boris; Jahn, Elke J.; Toomet, Ott; Hochfellner, Daniela
  7. The Role of Source- and Host-Country Characteristics in Female Immigrant Labor Supply By Bredtmann, Julia; Otten, Sebastian
  8. Incentives, shocks or signals: labour supply effects of increasing the female state pension age in the UK By Jonathan Cribb; Carl Emmerson; Gemma Tetlow
  9. Earnings Gap, Cohort Effect and Economic Assimilation of Immigrants from Mainland China, Hong Kong and Taiwan in the United States By Lin, Carl
  10. A structural analysis of labour supply elasticities in the Netherlands By Nicole Bosch; Miriam Gielen; Egbert Jongen; Mauro Mastrogiacomo (DNB; CPB)
  11. Wage-productivity gap in OECD economies By Elgin, Ceyhun; Kuzubas, Tolga Umut
  12. Labour-market outcomes of older workers in the Netherlands: Measuring job prospects using the occupational age structure By Nicole Bosch; Bas ter Weel
  13. Declining Trends in Female Labour Force Participation in India: Evidence from NSSO By Mahapatro, Sandhya Rani
  14. Minimum Wages and the Creation of Illegal Migration By Epstein, Gil S.; Heizler (Cohen), Odelia
  15. Wages and Access to International Markets: Evidence from Urban China By He, Xiaobo
  16. Heterogeneous Economic Returns to Postsecondary Degrees: Evidence from Chile By Loreto Reyes; Jorge Rodríguez; Sergio S. Urzúa

  1. By: Julia Püschel
    Abstract: In this paper, I estimate the impact of service offshoring on the real wages of U.S. workers by controlling for workers’ skill levels and the offshoring susceptibility of different tasks. Matching individual-level wage data with input-output tables over the period from 2006 to 2009, I am further able to account for unobservable individual-level heterogeneity. The results from a Mincerian wage regression indicate that within skill groups, the impact of service offshoring on real wages depends on the task content of the respective occupation. The real wages of medium- and high-skilled workers employed in the least offshorable occupations were positively affected by service offshoring. However, within the groups of medium- and high-skilled workers, service offshoring negatively affected the real wage of the most tradable occupations.
    Keywords: Offshoring, services, tasks, wages
    JEL: F14 F16 J31 F20
    Date: 2013–03
  2. By: John T. Addison (Department of Economics, Moore School of Business, University of South Carolina, and GEMF/University of Coimbra); McKinley L. Blackburn (Department of Economics, Moore School of Business, University of South Carolina); Chad D. Cotti (Department of Economics, University of Wisconsin-Oshkosh)
    Abstract: Do seemingly large minimum-wage increases in an environment of deep recession produce clearer evidence of disemployment than is often observed in the modern minimum wage literature? This paper uses three data sets to examine the employment effects of the most recent increases in the U.S. minimum wage. We focus on two high-risk groups – restaurant-and-bar employees and teenagers – for the years 2005-2010. Although the evidence for a general disemployment effect is not uniform, estimates do suggest the presence of a negative minimum wage effect in states hardest hit by the recession.
    Keywords: minimum wages, disemployment, earnings, low-wage sectors, geographically-disparate employment trends, recession.
    JEL: J2 J3 J4 J8
    Date: 2013–02
  3. By: Ana Rute Cardoso; Paulo Guimarães; Pedro Portugal
    Abstract: Earlier literature on the gender pay gap has taught us that occupations matter and so do firms. However, the role of the firm has received little scrutiny; occupations have most often been coded in a rather aggregate way, lumping together different jobs; and the use of samples of workers prevents any reliable determination of either the extent of segregation or the relative importance of access to firms versus occupations. Our contribution is twofold. We provide a clear measure of the impact of the allocation of workers to firms and to job titles shaping the gender pay gap. We also provide a methodological contribution that combines the estimation of sets of high-dimensional fixed effects and Gelbach's (2009) unambiguous decomposition of the conditional gap. We find that one fifth of the gender pay gap results from segregation of workers across firms and one fifth from job segregation. We also show that the widely documented glass ceiling effect operates mainly through worker allocation to firms rather than occupations.
    JEL: J31 J16 J24 J71
    Date: 2013
  4. By: Louis N. Christofides; Alexandros Polycarpou; Konstantinos Vrachimis
    Abstract: We consider and attempt to understand the gender wage gap across 26 European countries, using 2007 data from the European Union Statistics on Income and Living Conditions. The size of the gender wage gap varies considerably across countries, definitions of the gap, and selection-correction mechanisms. Most of the gap cannot be explained by the characteristics available in this data set. Quantile regressions show that, in a number of countries, the wage gap is wider at the top (‘glass ceilings’) and/or at the bottom of the wage distribution (‘sticky floors’). We find larger mean/median gender gaps and more evidence of glass ceilings for full-time full-year employees, suggesting more female disadvantage in ‘better’ jobs. These features may be related to country-specific policies that cannot be evaluated at the individual country level, at a point in time. We use the cross-country variation in the unexplained wage gaps of this larger-than-usual sample of states to explore the influence of (i) country policies that reconcile work and family life and (ii) their wage-setting institutions. We find that country policies and institutions are related to features of their unexplained gender wage gaps in systematic, quantitatively important, ways.
    Keywords: Gender wage gap, Selection, Quantiles, Work-family reconciliation, Wage-setting institutions
    Date: 2013–02
  5. By: Olivier Thévenon; Anne Solaz
    Abstract: This paper considers how entitlements to paid leave after the birth of children affect female labour market outcomes across countries. Such entitlements are granted for various lengths of time and paid at different rates, reflecting the influence of different objectives including: enhancing children’s wellbeing, promoting labour supply, furthering gender equality in labour market outcomes, as well as budget constraints. Although parental care is beneficial for children, there are concerns about the consequences of prolonged periods of leave for labour market outcomes and gender equality. This paper therefore looks at the long-run consequences of extended paid leave on female, male, and gender differences in prime-age (25-54) employment rates, average working hours, and earnings in 30 OECD countries from 1970 to 2010.<P> It finds that extensions of paid leave lengths have a positive, albeit small, influence on female employment rates and on the gender ratio of employment, as long as the total period of paid leave is no longer than approximately two years. Additional weeks of leave, however, exert a negative effect on female employment and the gender employment gap. This paper also finds that weeks of paid leave positively affect the average number of hours worked by women relative to men, though on condition – once again – that the total duration of leave does not exceed certain limits. By contrast, the provision of paid leave widens the earnings gender gap among full-time employees.
    JEL: E24 J16 J38
    Date: 2013–01–10
  6. By: Hirsch, Boris (University of Erlangen-Nuremberg); Jahn, Elke J. (Institute for Employment Research (IAB), Nuremberg); Toomet, Ott (University of Tartu); Hochfellner, Daniela (Institute for Employment Research (IAB), Nuremberg)
    Abstract: This paper analyzes wage assimilation of ethnic German immigrants to Germany. We use unique administrative data that include a standardized measure of immigrants' pre-migration wage based on occupation, industry, tenure, qualification, and the German wage structure. We find that immigrants experience a substantial initial wage disadvantage compared to natives. During their first 15 years in the host country they manage to close a considerable part of this gap, though assimilation is only partial. A 10% higher pre-migration wage translates into a 1.6% higher wage in Germany when also controlling for educational attainment, thus pointing at partial transferability of human capital acquired in the source country to the host country's labor market. We also find that wage assimilation is significantly accelerated for immigrants with a higher pre-migration wage. Our results are in line with strong complementarities between general skills and host country-specific human capital, in particular proficiency in the host country's language.
    Keywords: migration, labor market assimilation, ethnic Germans, transferability of human capital
    JEL: J61 J31 J24
    Date: 2013–02
  7. By: Bredtmann, Julia; Otten, Sebastian
    Abstract: Using data from the European Social Survey 2002-2011 covering immigrants in 26 European countries, this paper analyzes the impact of source- and host-country characteristics on female immigrant labor supply. We find that immigrant women’s labor supply in their host country is positively associated with the labor force participation rate in their source country, which serves as a proxy for the country’s preferences and beliefs regarding women’s roles. The effect of this cultural proxy on the labor supply of immigrant women is robust to controlling for spousal, parental, and a variety of source-country characteristics. This result suggests that the culture and norms of their source country play an important role for immigrant women’s labor supply. Moreover, we find evidence for a strong positive correlation between the host-country female labor force participation rate and female immigrant labor supply, suggesting that immigrant women assimilate to the work behavior of natives.
    Keywords: female labor force participation, immigration, cultural transmission
    JEL: J16 J22 J61
    Date: 2013–01–22
  8. By: Jonathan Cribb (Institute for Fiscal Studies); Carl Emmerson (Institute for Fiscal Studies); Gemma Tetlow (Institute for Fiscal Studies)
    Abstract: In 1995, the UK government legislated to increase the earliest age at which women could claim a state pension from 60 to 65 between April 2010 and March 2020. This paper uses data from the first two years of this change coming into effect to estimate the impact of increasing the state pension age from 60 to 61 on the employment of women and their partners using a difference-in-differences methodology. Our methodology controls in a flexible way for underlying differences between cohorts born at different times. We find that women's employment rates at age 60 increased by 7.3 percentage points when the state pension age was increased to 61 and their probability of unemployment increased by 1.3 percentage points. The employment rates of the male partners also increased by 4.2 percentage points. The magnitude of these effects, and the results from subgroup analysis, suggest they are more likely explained by the increase in the state pension age being a shock or through it having a signalling effect rather than them being due to either credit constraints or the effect of individuals responding to changes in their financial incentives to work. Taken together, our results suggest that the fiscal strengthening arising from a one-year increase in the female state pension age is 10% higher than a costing based on no behavioural change, due to additional direct and indirect tax revenues arising from increased earnings.
    Keywords: Early retirement age; labour supply; policy reform; retirement
    JEL: H55 J21 J26
    Date: 2013–03
  9. By: Lin, Carl (Beijing Normal University)
    Abstract: Using 1990, 2000 censuses and a 2010 survey, I examine the economic performance of ethnically Chinese immigrants from mainland China, Hong Kong and Taiwan (CHT) in the U.S. labor market. Since 1990, relative wages of CHT migrants have been escalating in contrast to other immigrants. I show these widening gaps are largely explained by individual's endowments, mostly education. Rising U.S.-earned degrees by CHT migrants can account for this relatively successful economic assimilation. Cohort analysis shows that the economic performance of CHT migrants admitted to the U.S. has been improving, even allowing for the effect of aging.
    Keywords: Chinese immigration, economic assimilation, Oaxaca decomposition, synthetic cohort analysis
    JEL: J31 J61 J24
    Date: 2013–02
  10. By: Nicole Bosch; Miriam Gielen; Egbert Jongen; Mauro Mastrogiacomo (DNB; CPB)
    Abstract: We estimate the labour supply elasticity for a large number of groups on the Dutch labour market. We exploit a large administrative household panel data set for the period 1999-2005. The idenfication of the parameters benefits from the large 2001 Dutch tax reform that led to substantial exogenous variation in household budget constraints. Read also the accompanying attachment below, with supplementary material. For couples we find that men have much smaller elasticities than women, in particular when children are present. Furthermore, cross elasticities of men's wages on women's labour supply in couples are non-negligible. When they are single, men and women have similar labour supply elasticities. The elasticity is relatively high for single parents with small children, but much lower for single parents with children in secondary school. Low skilled singles and single parents have much higher labour supply elasticities than their high skilled counterparts. Differences by skill are less pronounced for couples. For all groups, the decision whether to participate or not is much more responsive to nancial incentives than the hours per week decision.
    JEL: C25 C52 H31 J22
    Date: 2013–03
  11. By: Elgin, Ceyhun; Kuzubas, Tolga Umut
    Abstract: The Walrasian theory of labor market equilibrium predicts that in the absence of any market frictions, workers earn a wage rate equal to their marginal productivity. However, this observation is not supported empirically for various economies. Based on the neoclassical tradition, the ratio of the marginal product of labor to real wages is generally defined as the Pigouvian exploitation rate. In this paper, the authors calculate this specific wage-productivity gap for the manufacturing sector in OECD economies and investigate its relation to the unemployment rate along with other variables such as government taxation, capital expansion, unionization, inflation. The authors find that the wage productivity gap gives a robust and significantly positive response to shocks to the unemployment rate and negative response to shocks to unionization. --
    Keywords: wages,marginal productivity of labor,panel-VAR,OECD economies
    JEL: J24 J30 J64
    Date: 2013
  12. By: Nicole Bosch; Bas ter Weel
    Abstract: This paper analyses changes in job opportunities of older workers in the Netherlands in the period 1996-2010. The standard human capital model predicts that, as a result of human capital obsolescence, mobility becomes more costly when workers become older. We measure and interpret how changing job opportunities across 96 occupations affect different age and skill groups. Older workers end up in shrinking occupations, in occupations with a lower share of high-skilled workers, in occupations facing a higher threat of offshoring tasks abroad, more focus on routine-intensive tasks and less rewarding job content. This process is not only observed for the oldest group of workers, but for workers aged 40 and above. Observing older workers in declining occupations is to a large extent a market outcome, but declining job opportunities in terms of less satisfying working conditions and job tasks and content could potentially raise incentives to retire early.
    JEL: J24 J60
    Date: 2013–02
  13. By: Mahapatro, Sandhya Rani
    Abstract: The recent evidence from NSS reveals a decline in female labour force participation in India. The decline is difficult to explain in terms of economic variable as country is experiencing rapid economic changes. Perhaps age and cohort factors meaning that educational and time period advantages might be leading to postponement of labour market participation. The objective of the study is to investigate the declining trends in female labour force participation by sorting out the trends into age, period and cohort effect. To study this OLS regression model is used and the data for the study drawn from NSSO rounds. The findings suggest that age and period changes can account for a substantial decline in labour force participation though the importance of cohort is not undermined. Provision of higher education and creation of employment opportunities to younger cohorts of women will increase the labour force participation rate in near future.
    Keywords: Age, Period, Cohort, Labour, Female
    JEL: J1
    Date: 2013–02–14
  14. By: Epstein, Gil S. (Bar-Ilan University); Heizler (Cohen), Odelia (Academic College of Tel-Aviv Yaffo)
    Abstract: In this paper, we explore employers' decisions regarding the employment of legal and illegal immigrants in the presence of endogenous adjustment cost, minimum wages and an enforcement budget. We show that increasing the employment of legal foreign workers will increase the number of illegal immigrants which will replace the employment of the local population and thus creating illegal migration.
    Keywords: illegal immigration, foreign worker, minimum wages
    JEL: J3 K42
    Date: 2013–02
  15. By: He, Xiaobo
    Abstract: Using China Household Income Project Survey (2002) data, this paper addresses the causal relationship between individual wages and access to international markets. The ordinary least squares estimates show statistically insignificant and quantitatively zero effects of accessibility to international markets proxied by the length of contemporary transport routes connecting the origin city and its nearest major seaport. However, using prefecture-level population density in 1820 as exogenous variation in current transport routes, the two-stage least squares regressions provide an opposite picture indicating that every 1 percent increase in distance from the origin city to international markets (i.e. the nearest seaport), ceteris paribus, has a negative impact on individual wages of 0.086 percent. This causal effect remains robust to various sensitivity tests which include current labor market structure, historical factor endowments and initial population development.
    Keywords: O12, O15, F16
    JEL: F16 O12 O15
    Date: 2013–02–23
  16. By: Loreto Reyes; Jorge Rodríguez; Sergio S. Urzúa
    Abstract: We analyze the economic returns to different postsecondary degrees in Chile. We posit a schooling decision model with unobserved ability, observed test scores and labor market outcomes. We benefit from administrative records to carry out our empirical strategy. Our results show positive average returns to postsecondary degrees, especially for five-year degrees. However, we also uncover a large fraction of individuals with realized negative net returns. Although psychic benefits of postsecondary education could rationalize this result, we argue this might also suggest that individuals lack information at the time schooling decisions are made. Finally, our findings illustrate the importance of allowing for heterogeneous treatment effects when making policy recommendations.
    JEL: C25 C38 I21 I24 J24
    Date: 2013–02

This nep-lma issue is ©2013 by Erik Jonasson. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.