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on Labor Markets - Supply, Demand, and Wages |
| By: | Andrea Garnero; François Rycx |
| Abstract: | We estimate the impact of workforce diversity on productivity, wages and productivity-wage gaps (i.e. profits) using detailed Belgian linked employer-employee panel data. Findings, robust to a large set of covariates, specifications and econometric issues, show that educational (age) diversity is beneficial (harmful) for firm productivity and wages. The consequences of gender diversity are found to depend on the technological/knowledge environment of firms. While gender diversity generates significant gains in high-tech/knowledge intensive sectors, the opposite result is obtained in more traditional industries. Overall, findings do not point to sizeable productivity-wage gaps except for age diversity. |
| Keywords: | Labour diversity; productivity; wages; linked panel data;; GMM |
| JEL: | D24 J24 J31 M12 |
| Date: | 2013–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:dul:wpaper:2013/143169&r=lma |
| By: | Webber, Douglas A. (Temple University) |
| Abstract: | Using a dynamic labor supply model and linked employer-employee data, I find evidence of substantial search frictions, with females facing a higher level of frictions than males. However, the majority of the gender gap in labor supply elasticities is driven by across firm sorting rather than within firm differences, a feature predicted in the search theory literature, but which has not been previously documented. The gender differential in supply elasticities leads to 3.3% lower earnings for women. Roughly 60% of the elasticity differential can be explained by marriage and children penalties faced by women but not men. |
| Keywords: | monopsony, discrimination |
| JEL: | J42 J71 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7343&r=lma |
| By: | Fukase, Emiko |
| Abstract: | This paper investigates the differential impacts of foreign ownership on wages for different types of workers (in terms of educational background and gender) in Vietnam using the Vietnam Household Living Standards Surveys of 2002 and 2004. Whereas most previous studies have compared wage levels between foreign and domestic sectors using firm-level data (thus excluding the informal sector), one advantage of using the Living Standards Surveys in this paper is that the data allow wage comparison analyses to extend to the informal wage sector. A series of Mincerian earnings equations and worker-specific fixed effects models are estimated. Several findings emerge. First, foreign firms pay higher wages relative to their domestic counterparts after controlling for workers’ personal characteristics. Second, the higher the individual workers'levels of education, the larger on average are the wage premiums for those who work for foreign firms. Third, longer hours of work in foreign firm jobs relative to working in the informal wage sector are an important component of the wage premium. Finally, unskilled women experience a larger foreign wage premium than unskilled men, reflecting the low earning opportunities for women and a higher gender gap in the informal wage sector. |
| Keywords: | Labor Markets,Labor Policies,Economic Theory&Research,Gender and Development,Bankruptcy and Resolution of Financial Distress |
| Date: | 2013–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6421&r=lma |
| By: | albanese, marina; navarra, cecilia; Tortia, Ermanno |
| Abstract: | The standard explanation of wage rigidity in principal agent and in efficiency wage models is related to worker risk-aversion. However, these explanations do not consider at least two important classes of empirical evidence: (1) In worker cooperatives workers appear to behave in a less risk averse way than in for profit firms and to accept fluctuating wages; (2) The emerging experimental evidence on the employment contract shows that most workers prefer higher but more uncertain wages to lower fixed wages. Workers do not appear to express a preference for fixed wages in all situations and different ownership forms, in our case worker cooperatives and for-profit firms, behave in different ways when dealing with the trade-off between wage rigidity and employment fluctuations. More specifically, worker cooperatives are characterized, in relative terms, by fixed employment levels and fluctuating wages, while for-profit firms are characterized by fixed wages and fluctuating employment. Our paper reinterprets these stylized facts by focusing on the relationship between wage rigidity and worker risk aversion in light of the presence of employer post contractual opportunism. Contractual incompleteness and private information on the side of the employer can compound in favouring the pursuit of the employer’s objectives, when they diverge from the employee’s ones. The idea of employer moral hazard is able to disentangle the observed behavioural differences in different ownership forms. By resorting to the standard efficiency wage framework, we show that, in the presence of employer moral hazard, employees in capitalistic firms generally prefer fixed wage, accepting this way a positive risk of lay-off. On the contrary, one of the main functions of fluctuating wages in worker cooperatives is to minimize the risk of lay-off. |
| Keywords: | risk aversion; employer contract; moral hazard; asymmetric information; hidden action; risk aversion; income insurance; employment insurance; worker cooperatives |
| JEL: | D82 J31 L23 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46343&r=lma |
| By: | Webber, Douglas A. (Temple University) |
| Abstract: | Using linked employer-employee data, I compute firm-level measures of the labor supply elasticity facing each private non-farm firm in the US. I provide the first direct evidence of the positive relationship between a firm's labor supply elasticity and the earnings of its workers. I also contrast the dynamic model method employed by this paper with the more traditional use of concentration ratios to measure a firm's labor market power. Finally, I construct a counterfactual earnings distribution which allows the effects of firm market power to vary across the earnings distribution. |
| Keywords: | monopsony |
| JEL: | J42 J21 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7342&r=lma |
| By: | Marina Albanese; Cecilia Navarra; Ermanno Tortia |
| Abstract: | The standard explanation of wage rigidity in principal agent and in efficiency wage models is related to worker risk-aversion. However, these explanations do not consider at least two important classes of empirical evidence: (1) In worker cooperatives workers appear to behave in a less risk averse way than in for profit firms and to accept fluctuating wages; (2) The emerging experimental evidence on the employment contract shows that most workers prefer higher but more uncertain wages to lower fixed wages. Workers do not appear to express a preference for fixed wages in all situations and different ownership forms, in our case worker cooperatives and for-profit firms, behave in different ways when dealing with the trade-off between wage rigidity and employment fluctuations. More specifically, worker cooperatives are characterized, in relative terms, by fixed employment levels and fluctuating wages, while for-profit firms are characterized by fixed wages and fluctuating employment. Our paper reinterprets these stylized facts by focusing on the relationship between wage rigidity and worker risk aversion in light of the presence of employer post contractual opportunism. Contractual incompleteness and private information on the side of the employer can compound in favouring the pursuit of the employerÕs objectives, when they diverge from the employeeÕs ones. The idea of employer moral hazard is able to disentangle the observed behavioural differences in different ownership forms. By resorting to the standard efficiency wage framework, we show that, in the presence of employer moral hazard, employees in capitalistic firms generally prefer fixed wage, accepting this way a positive risk of lay-off. On the contrary, one of the main functions of fluctuating wages in worker cooperatives is to minimize the risk of lay-off. |
| Keywords: | risk aversion, employer contract, moral hazard, asymmetric information, hidden action, risk aversion, income insurance, employment insurance, worker cooperatives |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpem:2013/02&r=lma |
| By: | Garcia, Gustavo Adolfo (Autonomous University of Barcelona); Nicodemo, Catia (University of Oxford) |
| Abstract: | This paper analyses the relationship between social networks and the job search behaviour of individuals. Networking is not only based on friends and relatives but also on neighbourhood. The geographic closeness is associated to social interactions. Individuals who are in physical and social proximity share the same sources of information, because they divide individual characteristics or because they learn from one another's behaviour. Using data from Colombia in 2009 we explore how neighbourhoods have an effect on the channel used to search for a job (formal vs informal). People tend to opt for a formal or informal channel depending on the channel selected by employed people in their neighbourhood. In addition, we study the wage premium in using a formal or informal channel, exploring the inequality that can arise using a different job search method. Our results show that the neighbourhood affects the individual's job search method and referral workers earn less wage at the bottom of the wage distribution with respect to non-referred workers. At the top of the wage distribution the difference observed is due to different characteristics between the two groups. Colombia presents persistent high levels of informality and inequality. These features impose important social and economic costs such as low tax collection, low employee protection and deficiencies in the labour intermediation process with strong informational asymmetries in the job search. New policies to regulate the labour market are need. |
| Keywords: | neighborhood effects, formal and informal networks, job search, quantile regression |
| JEL: | J64 J31 J24 P23 J6 J7 J0 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7336&r=lma |
| By: | Pisa, M. Isabel; Sánchez, Rosario |
| Abstract: | Work incentives are closely related to production performance. This paper presents evidence that the value added of a firm increases when relative labor costs rise, or the level of unemployment increases. Both circumstances imply evidence in favor of the efficiency wage model. This theory is consistent with the views of many managers and personal administrators, who tend to ascribe primary importance to wage setting as an incentive to increase effort. We use a micro panel data set of Spanish manufacturing firms, during the period 2004–2009, to simultaneously estimate a stochastic frontier of a firm’s value added and the inefficiency determinants. The data source is published in the Spanish Industrial Survey on Business Strategies (Encuesta sobre Estrategias Empresariales, ESEE), collected by the Fundación SEPI. |
| Keywords: | efficiency, value added, labor economic, industrial relations. |
| JEL: | D2 J23 J24 L60 |
| Date: | 2013–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46487&r=lma |
| By: | Kjell Erik Lommerud (Department of Economics, University of Bergen, Norway); Odd Rune Straume (Universidade do Minho - NIPE and University of Bergen (Health Economics Bergen, Department of Economics), Norway); Steinar Vagstad (Department of Economics, University of Bergen, Norway) |
| Abstract: | Consider a model with two types of jobs. The profitability of promoting a worker to a fast-track job depends not only on his or her observable talent, but also on incontractible effort. We investigate whether self-fulfilling expectations may lead to higher promotion standards for women. If employers expect women to do more household work than men, thereby exerting less effort in their paid job, then women must be more talented to make promotion profitable. Moreover, specialization in the family will then result in women doing most of the household work. Such self-fulfilling prophecies can be defeated: both affirmative action and family policy can make women spend more effort in the market, which can lead the economy to a non-discriminatory equilibrium. However, we find that it is unlikely that temporary policy can move the economy to a symmetric equilibrium: policy must be made permanent. Anti-discrimination policy need not enhance efficiency, and from a distribution viewpoint this is a policy with both winners and losers. |
| Keywords: | self-fulfilling prophecies; gender discrimination; promotion |
| JEL: | D13 J16 J22 J71 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:05/2013&r=lma |