nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2013‒05‒11
fourteen papers chosen by
Erik Jonasson
National Institute of Economic Research

  1. The Heterogeneous Effects of Workforce Diversity on Productivity, Wages and Profits By Garnero, Andrea; Rycx, Francois
  2. Female Labour Supply, Human Capital and Welfare Reform By Richard Blundell; Monica Costa Dias; Costas Meghir; Jonathan M. Shaw
  3. Earnings Differentials and Returns to Education in China, 1995-2008 By Cui, Yuling; Nahm, Daehoon; Tani, Massimiliano
  4. The Great Recession and the Public-Private Wage Gap: Distributional Decomposition Evidence from Croatia 2008-2011 By Rubil, Ivica
  5. Within-establishment wage inequality and satisfaction By Poggi, Ambra
  6. Firm Entry Deregulation, Competition and Returns to Education and Skill By Ana P. Fernandes; Priscila Ferreira; L. Alan Winters
  7. Firm Heterogeneity, Sorting and the Minimum Wage By Rafael Lopes de Melo
  8. Workers on the move: migrated labour in post-reform india By Majumder, Rajarshi
  9. “Double Penalty in Returns to Education: Informality and Educational Mismatch in the Colombian Labour market” By Paula Herrera; Enrique López-Bazo; Elisabet Motellón
  10. Nokia’s Labor Inflows and Outflows in Finland: Observations from 1989 to 2010 By Pajarinen, Mika; Rouvinen, Petri
  11. Globalization, occupational restructuring and firm performance By Maliranta, Mika
  12. Declining bargaining power of workers and the rise of early retirement in Europe By Batyra, Anna; de la Croix, David; Pierrard, Olivier; Sneessens, Henri R.
  13. Which firms train disadvantaged youth? By Jens Mohrenweiser
  14. The Determinants of Informality in Mexico's States By Sean Dougherty; Octavio Escobar

  1. By: Garnero, Andrea (Paris School of Economics); Rycx, Francois (Free University of Brussels)
    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: wages, productivity, labour diversity, linked panel data, GMM
    JEL: D24 J24 J31 M12
    Date: 2013–04
  2. By: Richard Blundell; Monica Costa Dias; Costas Meghir; Jonathan M. Shaw
    Abstract: We consider the impact of Tax credits and income support programs on female education choice, employment, hours and human capital accumulation over the life-cycle. We thus analyze both the short run incentive effects and the longer run implications of such programs. By allowing for risk aversion and savings we are also able to quantify the insurance value of alternative programs. We find important incentive effects on education choice, and labor supply, with single mothers having the most elastic labor supply. Returns to labour market experience are found to be substantial but only for full-time employment, and especially for women with more than basic formal education. For those with lower education the welfare programs are shown to have substantial insurance value. Based on the model marginal increases to tax credits are preferred to equally costly increases in income support and to tax cuts, except by those in the highest education group.
    JEL: H2 H3 I21 J22 J24 J31
    Date: 2013–05
  3. By: Cui, Yuling (Macquarie University, Sydney); Nahm, Daehoon (Macquarie University, Sydney); Tani, Massimiliano (Macquarie University, Sydney)
    Abstract: This paper estimates the returns to education of rural-urban migrants during the period of transition of China's economy between 1995 and 2008. Using data from CHIP and RUMiC, we find that rural migrants' earning differentials with urban residents are substantial and mainly depend on the type of occupation, industry, and employers' ownership, rather than the level of education completed. Returns to formal schooling for migrants remained stable at approximately 3% and 5% throughout the period, and differences across quantiles are generally statistically insignificant. Increasing gaps in the return to schooling by gender have instead emerged. These results raise questions about the incentives to invest in human capital for rural migrants and for the governments funding education in emigration regions.
    Keywords: returns to education, rural migrants, quantile regression, ownership enterprises, China, returns to schooling
    JEL: C31 J24 J61 O15
    Date: 2013–04
  4. By: Rubil, Ivica
    Abstract: We study the pay gap between the public and the private sectors in Croatia just before and in the wake of the recent Great Recession. Using the Labor Force Survey data, we decompose the real hourly wage gap of full-time workers in 2008 and 2011 into the contributions of differences in workers’ characteristics and differences in marginal returns to these characteristics. Besides decomposing the gaps in the two years, we analyze the main drivers of changes in the 2008-2011 period. The decompositions are performed at the mean, as well as at a number of quantiles along the distribution. In addition to quantifying the aggregate effects of characteristics and their marginal returns, we further decompose each of the two effects into the contributions of specific characteristics or groups of them. For the decomposition of the mean gap, the standard Oaxaca-Blinder framework is used, while in the case of quantile decompositions, this framework is combined with the recently developed unconditional quantile regressions. The results show that in both 2008 and 2011 there was a notable wage premium in favor of the public sector workers along the entire distribution, with both the differences in characteristics and marginal returns playing a role. The premium in favor of the public sector increased in the period considered, driven almost exclusively by changes in marginal returns.
    Keywords: wage gap, decomposition, Oaxaca-Blinder, recentered influence function, unconditional quantile regression, public, private, Great Recession, Croatia
    JEL: J31 J45
    Date: 2013–05–01
  5. By: Poggi, Ambra
    Abstract: The aim of this paper is to provide fresh empirical evidence of the mechanisms through which wage inequality affects worker satisfaction. Theoretically, wages of others may affect workers' utility for two main reasons: Workers may derive well-being from their social status (comparison hypothesis) and/or they may use others wages to help predict their own future wage (information hypothesis). Both hypotheses are tested. To achieve her aims, the author models individual utility from pay as a function of a worker's own wage and the earnings of all other workers within the same establishment, and she estimates the model using British employer-employee data. Incomplete information about others wages is assumed. The author finds that the comparison effects matter. Of most interest, she provides some first evidence about a positive relation between well-being and inequality. Her results are robust within the different specifications and different definitions of the reference group. --
    Keywords: satisfaction,comparison income,co-workers,inequality,incomplete information
    JEL: J28 J31 J33 C25
    Date: 2013
  6. By: Ana P. Fernandes (University of Exeter); Priscila Ferreira (NIMA, Universidade do Minho); L. Alan Winters (University of Sussex, CEPR, CEP and IZA)
    Abstract: This paper studies the effect of firm entry deregulation on the returns to skill and education. We use matched employer-employee data for the universe of workers and firms in Portugal and exploit a comprehensive episode of entry deregulation, unique in the industrialized world, as a quasi-natural experiment to investigate how increased competition affects wages. We find that after the reform the returns to a university degree increased by around 5 percent and the returns to skills increased by around 3 percent. We include match (worker-firm) fixed effects and thus identify the effect from individuals who stay in the same firm after the reform. Results are therefore not driven by changes in employment composition, and are supportive of education and skill becoming more valuable after the reform.
    Keywords: Entry, Deregulation, Product Market Competition, Wage Structure, Returns to Education
    JEL: J3
    Date: 2013–04
  7. By: Rafael Lopes de Melo (University of Chicago)
    Abstract: In this paper, we show that firm heterogeneity and labor market sorting can help us understand a number of empirical facts, and aspects related to the political economy of minimum wages. We study a competitive economy with non-transferable utility, and preferences which depend on worker and firm types. Sorting in this environment can be induced by complementarities in productions or forces related to preferences. With firm heterogeneity, minimum wage increases affect workers above the minimum wage threshold, reducing wage inequality, increasing dispersion in firm profits and reducing the size of employment effects. It can also explain why such policies have political support, as workers above the threshold benefit from the policy.
    Date: 2012
  8. By: Majumder, Rajarshi
    Abstract: Migration is a universal phenomenon. From time immemorial women and men have travelled in search of better living. Historical nomadic instinct of man had been in tune with his necessities – more endurable climate, adequate water supply, fertile land and general availability of resources have attracted the human being always. It is expected that with development migration of due to Push factors will decrease while that due to Pull factors will increase. One of the important facets of labour market is therefore the profile of migrant workers and the nature of their movements. In spite of extensive work on migration in Indian context, recent studies on migration in India have focussed mainly on rural-urban migration or on migration from/between specific regions. The present paper explores the post reform nature of migration in India with special focus on migrant workers. Types of movement, profile of migrants vis-a-vis the natives, occupational distribution, and wages received by them have been examined. This has been contrasted with the pre-reform situation. Whether wage setting process is different for migrants is also examined through estimation of the wage function. Results suggest that migration among males are more of an ‘assured’ type rather than a ‘search’ type, in response to regular wage employment, where the better endowed / skilled / trained are moving. Pull factors are definitely playing more important role than push factors in this regard, though in post-reform period push factors have strengthened. Though better-off states with lower incidence of poverty and higher per capita income have higher migration rates, net out migration rates are considerably higher for poorer states indicating that condition of the source region is perhaps the most important factor in migration decisions.
    Keywords: Migration; Wage Setting; Human Capital;
    JEL: J24 J31 O15 R23
    Date: 2012–09–15
  9. By: Paula Herrera (Faculty of Economics, University of Barcelona); Enrique López-Bazo (Faculty of Economics, University of Barcelona); Elisabet Motellón (Faculty of Economics, University of Barcelona)
    Abstract: This paper examines the returns to education taking into consideration the existence of educational mismatches in the formal and informal employment of a developing country. Results show that the returns of surplus, required and deficit years of schooling are different in the two sectors. Moreover, they suggest that these returns vary along the wage distribution, and that the pattern of variation differs for formal and informal workers. In particular, informal workers face not only lower returns to their education, but suffer a second penalty associated with educational mismatches that puts them at a greater disadvantage compare to their formal counterparts.
    Keywords: Educational Mismatch; Formal/Informal Employment; Economic Development; Wage Gap. JEL classification: O17; J21; J24.
    Date: 2013–05
  10. By: Pajarinen, Mika; Rouvinen, Petri
    Abstract: Nokia’s ascent, dominance, and descent have resulted in significant labor inflows and outflows in Finland. In this paper, we document the aspects of these flows using official register-based data covering virtually all individuals and organizations in Finland. Our setup may be compared to a laboratory experiment on the impacts of a single company on a country. During the 1990s, a large share of Nokia recruits were recent college graduates. Most of these recent graduates assumed various specialist and managerial positions at Nokia. During the 2000s, Nokia has been a good source of highly skilled labor for other businesses in Finland. More recently, an increasing share of former Nokia employees has been engaged with startups. Additionally, the proportion of former Nokia employees who have migrated to public sector jobs has grown.
    Keywords: Nokia, Finland, ICT, labor flows, employer-employee data
    JEL: D21 J63 M51
    Date: 2013–05–03
  11. By: Maliranta, Mika
    Abstract: In this study, the patterns of occupational restructuring and their micro-level mechanisms are examined by applying standard measures of job and worker flows at the occupation and firm levels using longitudinal employeremployee data from the Finnish business sector for the years 2000-2006. Special attention is given to determining how global firms (i.e., multinational enterprises and offshoring firms) contribute to occupational restructuring and to establishing the role of occupational structures when explaining productivity and profitability gaps between global and local firms. The findings indicate that global firms have contributed to reshaping occupational structures, and although this contribution is clearly reflected in their productivity, it is not as clearly reflected in their profitability.The findings imply that employees have captured a dominant share of the productivity advantage of global firms.
    Keywords: globalization, offshoring, occupational restructuring, productivity, profitability
    JEL: J24 F23
    Date: 2013–01–29
  12. By: Batyra, Anna (Galatasaray University Economic Research Center); de la Croix, David; Pierrard, Olivier; Sneessens, Henri R.
    Abstract: We offer an alternative explanation for the decline in labor force participation of senior workers. Typically, tax and transfer explanations have been proposed. On the contrary, a model with imperfectly competitive labor market allows to consider as well the effects of a drop in bargaining power, which would not be possible in a purely neoclassical framework. We find that a decline in the bargaining power of workers, which has taken place in the last four decades, has largely contributed to the rise in inactivity in Europe. However, we need a combination of these two explanations, along with population aging and a fall in the matching efficiency, in order to correctly reproduce the joint evolutions of other labor market variables such as the employment and unemployment rates.
    Keywords: Overlapping Generations; Search Unemployment; Labor Force Participation; Ageing; Labor Market Policy and Institutions
    JEL: E24 H55 J26 J64
    Date: 2013–05–03
  13. By: Jens Mohrenweiser (Zentrum für Europäische Wirtschaftsforschung Mannheim (ZEW) (Centre for European Economic Research))
    Abstract: The integration of disadvantaged youth into the labour market is a challenging policy issue. Since young people gain most from work experience and learning provided by firms, hence within apprenticeships, firms play a crucial role in training disadvantaged youths. Knowing firm characteristics that moderate the selection of firms in such training schemes might help to design more effective and efficient policy measures. This paper estimates the determinants of firms that participate in a training programme for disadvantaged youth in Germany. The paper shows that firms with greater training capacity in terms of full-time instructors and own training facilities and firms willing to invest own additional resources in the training of disadvantaged youth are more likely to participate in this training scheme. On the contrary, firm size, an increasing demand for skilled workers and difficulties in finding apprentices do not influence the participation.
    Keywords: disadvantaged youth, apprenticeship, policy evaluation
    JEL: J24 M53 M51
    Date: 2013–05
  14. By: Sean Dougherty; Octavio Escobar
    Abstract: Informality has important implications for productivity, economic growth, and the inequality of income. In recent years, the extent of informal employment has increased in many of Mexico's states, though highly heterogeneously. The substantial differences across states in terms of informal employment can be helpful in explaining differences in economic growth outcomes. This paper studies the determinants of informal employment using states' diverging outcomes to identify causal factors, taking into account potential endogeneity. The results suggest that multiple factors explain differences in informal employment across states, including per capita income, the quality of labour skills, differences in the prevalence of microenterprises, the cost to start a business, restrictions on foreign investment, the rule of law and incidence of corruption.<P>Les déterminants de l'informalité dans les États du Mexique<BR>L’informalité a des implications importantes sur la productivité, la croissance économique et l’inégalité des revenus. Ces dernières années, la mesure de l’emploi informel a augmenté dans la plupart des États du Mexique, bien que de manière très hétérogène. Les différences importantes entre les États en matière d’emploi informel peuvent être utiles pour expliquer les différences dans les résultats de la croissance économique. Cet article étudie les déterminants de l’emploi informel en utilisant les résultats divergents des États pour identifier les facteurs causaux, en tenant compte de l’endogénéité potentielle. Les résultats suggèrent que plusieurs facteurs expliquent les différences dans l’emploi informel à travers les États, y compris le revenu par habitant, la qualité de la main-d’oeuvre, les différences dans la prévalence des microentreprises, le coût pour démarrer une entreprise, les restrictions sur les investissements étrangers, l’État de droit et l’incidence de la corruption.
    Keywords: informal employment, microenterprises, regulatory policy, sub-national policy analysis, politique de réglementation, emploi informel, micro-entreprises, analyse politique sous nationale
    JEL: J21 O17 O54
    Date: 2013–04–11

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