nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2013‒03‒23
seventeen papers chosen by
Erik Jonasson
National Institute of Economic Research

  1. The Labor Market Behavior of Married Women with Young Children in the U.S.: Have Differences by Religion Disappeared? By Lehrer, Evelyn L.; Chen, Yu
  2. Labour Market, Welfare Reform and Inequality in the United Kingdom By Christophe André; Clara Garcia; Giulia Giupponi; Jon Kristian Pareliussen
  3. “Changes in Wage Structure in Mexico Going Beyond the Mean: An Analysis of Differences in Distribution, 1987-2008” By Claudia Tello; Raul Ramos; Manuel Artís
  4. Labour-Market Outcomes of Older Workers in the Netherlands: Measuring Job Prospects Using the Occupational Age Structure By Bosch, Nicole; ter Weel, Bas
  5. Migration and Wage Effects of Taxing Top Earners: Evidence from the Foreigners' Tax Scheme in Denmark By Henrik Jacobsen Kleven; Camille Landais; Emmanuel Saez; Esben Anton Schultz
  6. Real Wages, Amenities and the Adjustment of Working Hours Across Regional Labour Markets By Teresa Schlüter
  7. Job polarization in Britain from a task-based perspective.Evidence from the UK Skills Surveys By Martina Bisello
  8. The Sources of Wage Variation: A Three-Way High-Dimensional Fixed Effects Regression Model By Torres, Sónia; Portugal, Pedro; Addison, John T.; Guimaraes, Paulo
  9. The impact of managed care on the gender earnings gap among physicians By Alicia Sasser Modestino
  10. How Sensitive Are Individual Retirement Expectations to Raising the Retirement Age? By de Grip, Andries; Fouarge, Didier; Montizaan, Raymond
  11. The effect of hightech services offshoring on skilled employment: intrafirm evidence By Mery Patricia Tamayo; Elena Huergo
  12. Management-Employee Relations, Firm Size, and Job Satisfaction By Aysit Tansel; Saziye Gazioglu
  13. Entrepreneurship of the Left-Behind By Giulietti, Corrado; Wahba, Jackline; Zimmermann, Klaus F.
  14. The Determinants and Effects of Early Job Separation in Japan By Fujii, Mayu; Shiraishi, Kousuke; Takayama, Noriyuki
  15. Is Germany the North Star of Labor Market Policy? By Rinne, Ulf; Zimmermann, Klaus F.
  16. Skill Premia and Intergenerational Skill Transmission: The French Case By B. Ben Halima; N. Chusseau; J. Hellier
  17. Regional Variation of Returns to Education By Backman, Mikaela

  1. By: Lehrer, Evelyn L. (University of Illinois at Chicago); Chen, Yu (University of Illinois at Chicago)
    Abstract: Using data from the 2006-2010 National Survey of Family Growth, conducted in the United States, we study the role of religious affiliation and participation in the labor supply behavior of non-Hispanic married women with young children. We estimate ordered probit models with a trichotomous dependent variable indicating full-time employment, part-time employment or non-employment. We find that the labor market decisions of Catholic women are not significantly different from those of their mainline Protestant counterparts, and that women affiliated with conservative Protestant denominations continue to stand out for their low levels of labor market attachment. With regard to religious participation, we find a non-linear association: the probability of non-employment is high both among women who have zero attendance at religious services and among those who attend more than once a week - the latter especially. Reasons for these non-linearities are explored. Our results suggest that future research on relationships between religious participation and various economic and demographic outcomes should be based on models that allow for non-linearities and also for differences in the effects of religious participation by religious affiliation.
    Keywords: women's labor market behavior, female employment, religion, religious affiliation, religious participation
    JEL: J22 J24 Z12 Z13
    Date: 2013–02
  2. By: Christophe André; Clara Garcia; Giulia Giupponi; Jon Kristian Pareliussen
    Abstract: Employment has risen by more and unemployment has risen less than expected, given the path of output. Nevertheless, long-term and youth unemployment and involuntary part-time work are high. A polarised labour market risks worsening income inequality, which is high by OECD standards, despite a recent and likely temporary decline. The UK welfare system is an essential safety net, which needs to promote employment, while protecting the most vulnerable. The reformed welfare system, Universal Credit, and the employment programme for disadvantaged workers, Work Programme, will generally improve work incentives and provide support for return to work, but need to be refined. Skill deficiencies are holding back employment and fostering inequality, as low education achievements penalise children from lower socio-economic backgrounds. Vocational training needs to be strengthened and cooperation with employers reinforced. Transition from education to work can prove challenging, requiring more attention to the integration of university graduates into the labour market.<P>Marché du travail, réforme de la protection sociale et inégalités au Royaume-Uni<BR>L’emploi a progressé plus et le chômage a augmenté moins que prévu au regard de l’évolution de la production. Néanmoins, le chômage de longue durée et le chômage des jeunes, ainsi que le travail à temps partiel involontaire, sont élevés. La polarisation du marché du travail risque d’accentuer les inégalités de revenu, qui sont très marquées par rapport aux autres pays de l’OCDE, malgré une atténuation récente et probablement temporaire. Le système de protection sociale du Royaume-Uni constitue un filet de sécurité essentiel, qui doit favoriser l’emploi tout en protégeant les plus vulnérables. Le système réformé de protection sociale (Universal Credit) et le programme d’emplois pour les travailleurs défavorisés (Work Programme) renforceront généralement les incitations à travailler et faciliteront le retour à l’emploi, mais des améliorations sont nécessaires. L’insuffisance des qualifications bride l’emploi et creuse les inégalités, de faibles niveaux d’instruction pénalisant les enfants issus de milieux socio-économiques défavorisés. Il est indispensable de développer la formation professionnelle et la coopération avec les employeurs. Le passage de l’école à l’emploi est parfois difficile, d’où la nécessité de prêter une plus grande attention à l’intégration des diplômés de l’université sur le marché du travail.
    Keywords: productivity, United Kingdom, welfare reform, vocational training, activation policies, labour market, inequality, workforce skills, Universal credit, childcare costs, productivité, Royaume-Uni, réforme de la protection sociale, formation professionnelle, incitation à travailler, inégalités, marchés du travail, politiques d’activation, qualification de la main d’oeuvre, Crédit Universel, frais de garde d'enfants
    JEL: I38 J21 J24
    Date: 2013–03–08
  3. By: Claudia Tello (Faculty of Economics, University of Barcelona); Raul Ramos (Faculty of Economics, University of Barcelona); Manuel Artís (Faculty of Economics, University of Barcelona)
    Abstract: This paper conducts an empirical analysis of the relationship between wage inequality, employment structure, and returns to education in urban areas of Mexico during the past two decades (1987-2008). Applying Melly’s (2005) quantile regression based decomposition, we find that changes in wage inequality have been driven mainly by variations in educational wage premia. Additionally, we find that changes in employment structure, including occupation and firm size, have played a vital role. This evidence seems to suggest that the changes in wage inequality in urban Mexico cannot be interpreted in terms of a skill-biased change, but rather they are the result of an increasing demand for skills during that period.
    Keywords: wage inequality, quantile regressions, decomposition. JEL classification: J31
    Date: 2013–03
  4. By: Bosch, Nicole (CPB Netherlands Bureau for Economic Policy Analysis); ter Weel, Bas (CPB Netherlands Bureau for Economic Policy Analysis)
    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.
    Keywords: occupational mobility, employment, older workers
    JEL: J24 J60
    Date: 2013–02
  5. By: Henrik Jacobsen Kleven; Camille Landais; Emmanuel Saez; Esben Anton Schultz
    Abstract: This paper analyzes the effects of income taxation on the international migration and earnings of top earners using a Danish preferential foreigner tax scheme and population-wide Danish administrative data. This scheme, introduced in 1991, allows new immigrants with high earnings to be taxed at a preferential flat rate for a duration of three years. We obtain three main results. First, the scheme has doubled the number of highly paid foreigners in Denmark relative to slightly less paid ineligible foreigners, which translates into a very large elasticity of migration with respect to the net-of-tax rate on foreigners, between 1.5 and 2. Hence, preferential tax schemes for highly paid foreign workers could create severe tax competition between countries. Second, we find compelling evidence of a negative effect of scheme-induced increases in the net-of-tax rate on pre-tax earnings at the individual level. This finding cannot be explained by the standard labor supply model where pay equals marginal productivity, but it can be rationalized by a matching frictions model with wage bargaining where there is a gap between pay and marginal productivity. Third, we find no evidence of positive or negative spillovers of the scheme-induced influx of high-skilled foreigners on the earnings of highly paid natives.
    JEL: H24 J61
    Date: 2013–03
  6. By: Teresa Schlüter
    Abstract: This article establishes a link between the traditional labour economics and the urban economics literature by analyzing differences in working hours across regional labour market areas in the UK. Using a real wage index reflecting skill adjusted earnings net of quality adjusted house prices in Britain and panel data on working hours the effect of regional real wages on labour supply is assessed. The identification strategy relies on workers who move across 157 labour market areas in Britain and includes individual fixed effects. The main finding is that working hours are significantly higher in labour market areas that offer lower real wages. Decreasing real wages by £1000 results in an increase of working hours of 0.3 %. Real wage differentials can be seen as a proxy for the local amenity level. I can replicate my finding including a set of amenities instead of the real wage index. The effect is mainly due to labour supply decisions of low skilled workers who work significantly longer hours in low real wage areas than high skilled workers. This indicates that low skilled workers are willing to increase their labour supply in order to afford living in high amenity areas.
    Date: 2013–03
  7. By: Martina Bisello
    Abstract: 2013 This paper analyses the pattern of occupational change in Britain between 1997 and 2006 from a task-based perspective using data from the UK Skills Surveys. We show that employment in Britain has been polarizing at the occupational level with increasing employment shares in high and low-paying occupations, while decreasing for those in the middle of the distribution. Next, we interpret employment changes in light of ALM (2003) "routinization hypothesis", providing evidence that computerization is positively associated with the demand for nonmanual tasks, carried out by high-paid workers, and negatively to that for manual and routine tasks, typical of those who are middlepaid. We also find that middle-paid workers, negatively affected by technological change, did not predominantly reallocate their labour supply to low-paying occupations. Explanations of the increase of low-paid jobs should also take into account the surge of low-skilled immigrants in Britain.
    Keywords: Job polarization, technological change, occupations, tasks.
    JEL: J21 J23 J24 J62
    Date: 2013–03–01
  8. By: Torres, Sónia (Statistics Portugal); Portugal, Pedro (Banco de Portugal); Addison, John T. (University of South Carolina); Guimaraes, Paulo (University of Porto)
    Abstract: This paper estimates a wage equation with three high-dimensional fixed effects, using a longitudinal matched employer-employee dataset covering virtually all Portuguese wage earners over a little more than two decades. The variation in log real hourly wages is decomposed into different components related to worker, firm, and job title characteristics (both observed and unobserved) and a residual component. It is found that worker permanent heterogeneity is the most important source of wage variation (36.0 percent) and that the unobserved component plays a more important role (21.0 percent) than the observed component (15.0 percent) in explaining wage differentials. Firm permanent effects are less important overall (28.7 percent) and are due in almost equal parts to the unobserved component and the observed component. Job title effects emerge as the least important dimension but they still explain close to 10 percent of wage variation. We found definitive evidence of positive assortative matching.
    Keywords: high dimensional fixed effects, wage decomposition, assortative matching
    JEL: J2 J41
    Date: 2013–03
  9. By: Alicia Sasser Modestino
    Abstract: Important differences in labor market characteristics suggest that men and women physicians may be viewed as imperfect substitutes in the labor market. Concerns about efficiency and cost-cutting, which have led to the adoption of managed care practices, may have (unintentionally) favored female physicians. Using data from the Young Physicians Survey, the author compares changes in the gender earnings gap for physicians in states with high versus low managed care growth during the 1980s. She finds that the gender gap in hourly earnings among physicians in states with high managed care growth narrowed by 10 percentage points relative to states with low managed care growth. Moreover, Census data show that this finding holds only for physicians and not for other professions requiring advanced degrees. Further analysis shows that managed care appears to affect the relative earnings of male and female physicians by compressing the overall distribution of physician earnings. Together, these results suggest that the spread of managed care has been a factor in improving the relative earnings of female physicians. More broadly, these results suggest that market changes can have important consequences for the gender earnings gap when there are large pre-existing differences between men and women within a profession.
    Keywords: Wages - Women ; Medical care ; Career development - Sex differences
    Date: 2013
  10. By: de Grip, Andries (ROA, Maastricht University); Fouarge, Didier (ROA, Maastricht University); Montizaan, Raymond (ROA, Maastricht University)
    Abstract: This paper investigates the causal effects of the announcement of an increase in the statutory pension age on employee retirement expectations. In June 2010, the Dutch government signed a new pension agreement with the employer and employee organizations that entailed an increase in the statutory pension age from 65 currently to 66 in 2020 for all inhabitants born after 1954. Given the expected increase in average life expectancy, it was also decided that in 2025 the pension age would be further increased to 67 for those born after 1959. This new pension agreement received huge media coverage. Using representative matched administrative and survey data of public sector employees, we find that the proposed policy reform increased the expected retirement age by 3.6 months for employees born between 1954 and 1959 and by 10.8 months for those born after 1959. This increase is reflected in a clear shift in the retirement peak from age 65 to ages 66 and 67 for the respective treated cohorts. Men respond less strongly to the policy reform than women, but within couples we find no evidence that the retirement expectations of one spouse are affected by an increase in the statutory pension age of the other. Furthermore, we show that treatment effects are largely driven by highly educated individuals but are lower for employees whose job involves physically demanding tasks or managerial and supervisory tasks.
    Keywords: retirement, labor supply, pension system reform, cross-spouse effects
    JEL: J14 J26
    Date: 2013–03
  11. By: Mery Patricia Tamayo; Elena Huergo
    Abstract: The offshoring of high‐tech services has greatly increased in recent years, with consequences for firms demand for skilled employment in firms. This paper specifically analyzes the relationship between R&D offshoring and the demand for R&D employment using firm‐level data for Spanish manufacturing and services companies during the period 2004‐2009. Estimating different specifications with panel data techniques, we find that this association is statistically positive. In particular, for services firms a 1 percentage point increase in R&D offshoring raises the demand for researchers by about 11%. This suggests the existence of complementarity among them as productive inputs.
    Date: 2013–01–13
  12. By: Aysit Tansel (Department of Economics Middle East Technical University and Institute for the Study of labor (IZA) Bonn, Germany and Economic Research Forum (ERF) Cairo, Egypt); Saziye Gazioglu (Middle East Technical University and Department of Economics, University of Aberdeen)
    Abstract: This paper investigates the job satisfaction in relation to managerial attitudes towards employees and firm size using the linked employer-employee survey results in Britain. We first investigate the management-employee relationships and the firm size using maximum likelihood probit estimation. Next various measures of job satisfaction are related to the management-employee relations via maximum likelihood ordered probit estimates. Four measures of job satisfaction that have not been used often are considered. They are satisfaction with influence over job; satisfaction with amount of pay; satisfaction with sense of achievement and satisfaction with respect from supervisors. Main findings indicate that management-employee relationships are less satisfactory in the large firms than in the small firms. Job satisfaction levels are lower in large firms. Less satisfactory management-employee relationships in the large firms may be a major source of the observed lower level of job satisfaction in them. These results have important policy implications from the point of view of the firm management while achieving the aims of their organizations in particular in the large firms in the area of management-employee relationships. Improving the management-employee relations in large firms will increase employee satisfaction in many respects as well as increase productivity and reduce turnover. The nature of the management-employee relations with firm size and job satisfaction has not been investigated before.
    Keywords: Job Satisfaction, Managerial Attitudes, Firm size, Linked Employer-Employee data, Britain.
    JEL: J28 J5 J21 D23
    Date: 2013–03
  13. By: Giulietti, Corrado (IZA); Wahba, Jackline (University of Southampton); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: While there is evidence that return migration promotes entrepreneurship and self-employment of those who migrated, previous studies have not focused on whether migration provides the same benefits to individuals who did not migrate. Using a unique dataset that provides information on both current and return migrants in rural China (RUMiC), we investigate the impact of migration on entrepreneurship among individuals with no migration experience. We explore the self-employment choices of individuals who live in households with return migrants and individuals who live in households that have migrants currently in the city, comparing them with individuals living in non-migrant households. Our methodology allows us to control for the potential endogeneity between the migration and self-employment decisions. The results show that return migration promotes self-employment among household members that have not migrated. However, left-behind individuals are less likely to be self-employed when compared to those living in non-migrant households.
    Keywords: rural to urban migration, RUMiC dataset, self-employment
    JEL: J23 J61 O15
    Date: 2013–03
  14. By: Fujii, Mayu; Shiraishi, Kousuke; Takayama, Noriyuki
    Abstract: Using the panel data from the 2011 Japanese Longitudinal Survey on Employment and Fertility (LOSEF), this study aims to investigate (i) the determinants of early job separation of male workers who started their working career as regular employees, and (ii) the effects of early job separation on later labor market outcomes. In conducting this investigation, we take into account the possibility that (i) and (ii) may vary by cohort, reflecting the considerable changes in Japan’s industrial structure and labor market since the early 1990s. The results of the investigation can be summarized as follows. First, the percentage of individuals leaving the first job within the first five years is significantly higher for individuals in younger cohorts. Second, in line with previous studies, we find that the duration of the first job is significantly related with macroeconomic conditions at the time of searching for the first job. We also find that for the younger cohort the duration of the first job is related with individuals’non-cognitive skills (e.g., communication skills). Finally, individuals leaving their first job within the first few years are likely to be enrolled in the employees’pension insurance system for fewer years and more likely to change their job in the future. Furthermore, individuals who leave the first job very early - within one or two years - tend to change their job more frequently than others.
    Date: 2013–03
  15. By: Rinne, Ulf (IZA); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: Germany's recovery from an unemployment disease and its resilience to the Great Recession is remarkable. Its success story makes it a showcase for labor policy and labor market reforms. This paper assesses the potential of the German experience as a model for effective, evidence-based policymaking. Flexible management of working time (through overtime and short-time work, time accounts and labor hoarding), social cohesion and controlled unit labor costs, combined with a rigid, incentive-oriented labor policy supported by effective program evaluation, define the characteristics of a strong reference model. Austerity, sometimes seen as core to the German model, is not viewed as a key element.
    Keywords: labor market reforms, labor policy, unemployment, Great Recession, Germany, austerity
    JEL: J68 J21 P52 O57
    Date: 2013–03
  16. By: B. Ben Halima (EQUIPPE, Univ. of Lille 1 and MESHS); N. Chusseau (EQUIPPE, Univ. of Lille 1 and MESHS); J. Hellier (LEMNA, University of Nantes)
    Abstract: In the case of France, we analyse the changes (i) in the skill premium linked to each level of education and (ii) in the impact of parents’ skill and income upon the educational attainment of their children. To this end, we build a theoretical model which is subsequently estimated. Our calculations firstly reveal (i) a critical decline in the skill premium of the Baccalaureate in relation to the lowest skill level, and (ii) an increase in the skill premia of higher education in relation to the Baccalaureate, which however is not large enough to avoid the decrease in all the skill premia relative to the lowest skill. Secondly, we find (i) a significant increase in the impact of the family backgrounds upon the individuals’ education from 1993 to 2003 which essentially derives from a higher impact of parental income upon the educational attainment, and (ii) an increase in the impact of public expenditure upon education. Consequently, if inequality has decreased among the employed population, the slowdown in intergenerational mobility could reverse this tendency in the longer term. This may however be offset by higher public educational expenditure.
    Keywords: Family backgrounds, intergenerational mobility, return to education, skill premium
    JEL: I2 J24 J31
    Date: 2013–01
  17. By: Backman, Mikaela (Jönköping International Business School, & Centre for Entrepreneurship and Spatial Economics (CEnSE))
    Abstract: Returns to education are mainly influenced by the characteristics of the individual. However, returns are also likely to depend on location characteristics. Thus, there are different location premiums for educational attainment. This paper analyse the regional variation of returns to education where Swedish municipal markets are divided into four categories based on size and commuting patterns. Through the obtained results, the often-assumed hypothesis of equal returns to education for all regions in a country can be rejected. Highest returns to education are found in municipalities in metropolitan functional regions and the lowest in peripheral municipalities in small functional regions.
    Keywords: Returns to education; regional attributes; fixed-effects model
    JEL: H52 I21 I22 J61 R11
    Date: 2013–03–15

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