nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2013‒06‒16
nineteen papers chosen by
Erik Jonasson
National Institute of Economic Research

  1. Credible Research Designs for Minimum Wage Studies By Allegretto, Sylvia; Dube, Arindrajit; Reich, Michael; Zipperer, Ben
  2. He's a Chip Off the Old Block - The Persistency of Occupational Choices among Generations By Bodo Knoll; Nadine Riedel; Eva Schlenker
  3. The Female Labor Force and Long-run Development: The American Experience in Comparative Perspective By Claudia Olivetti
  4. The evolving supply and demand of skills in the labour market By Maselli, Ilaria
  5. Occupational Choice and the E¤ects of Skill Supply on Relative Wages By Gregory Kurtzon
  6. Foreign direct investment, productivity, demand for skilled labour and wage inequality: an analysis for Uruguay By Adriana Peluffo
  7. Matching worker skills to job tasks in the Netherlands: Sorting into cities for better careers By Suzanne Kok
  8. The Changing Roles of Education and Ability in Wage Determination. By Gonzalo Castex; Evgenia Dechter
  9. Good Firms, Worker Flows and Productivity By Serafinelli, Michel
  11. Default options and training participation By Golsteyn B.H.H.; Borghans L.
  12. The Composition of Wage Differentials between Migrants and Natives By Panagiotis Nanos; Christian Schluter
  13. Town and city jobs: Your job is different in another location By Suzanne Kok
  14. The Wage Effects of Not-for-Profit and For-Profit Certifications: Better Data, Somewhat Different Results By Kevin Lang; Russell Weinstein
  15. Productivity and age: Evidence from work teams at the assembly line By Weiss M.; B?rsch-Supan A.
  16. How to Hire Helpers? Evidence From a Field Experiment By Julian Conrads; Bernd Irlenbusch; Tommaso Reggiani; Rainer Michael Rilke; Dirk Sliwka
  17. Do labor force evolutions affect the work incapacity caseload? By Leen Meeusen; Annemie Nys
  18. Self-employment and Small Workplaces in the Czech and Slovak Republics: Microeconometric Analysis of Labor Force Transitions By Pavla Nikolovova; Filip Pertold; Mario Vozar
  19. Employment Relations and Wages: What Can We Learn from Subjective Assessments? By Marta Lachowska

  1. By: Allegretto, Sylvia; Dube, Arindrajit; Reich, Michael; Zipperer, Ben
    Abstract: Over the past two decades, the states that experienced larger minimum wage increases have been spatially clustered. We show that these states also systematically differed from other states with respect to the depth of their business cycles, growthin upper-half wage inequality, increased job polarization, and political-economy. We present estimates of minimum wage effects for teens and restaurant workers using fivedatasets and six different approaches to controlling for spatial confounds. We show thatthe dis-employment results suggested by the canonical two-way fixed effects model arespurious, as these specificiations generally fail falsification tests for pre-existing trends. Using policy variation within local areas (county pairs, commuting zones) or regions, as well as inclusion of state-specific trends, typically renders the employment effect smallin magnitude and statistically indistinguishable from zero. We additionally find that employment effects are close to zero when we account for heterogeneity using lagged dependent variables and dynamic panel models. We also present evidence using the synthetic control estimator: pooling across state minimum wage increases between 1997 and 2007, the synthetic control estimate shows no evidence of job losses for teens. We confirm the validity of local controls by demonstrating that synthetic control weights decline with distance: a donor state 100 miles away receives a weight seven times as large as a state 2,000 miles away. We also directly show that neighboring counties are more similar in terms of covariates than are other counties. These findings refute the claims made in a recent paper by Neumark, Salas and Wascher that criticize the use of local controls. We conclude by proposing some guidelines for assessing convincing research designs for minimum wage studies.
    Keywords: Applied Economics, Credible Research Designs, Minimum Wages Studies
    Date: 2013–06–11
  2. By: Bodo Knoll; Nadine Riedel; Eva Schlenker
    Abstract: The purpose of this paper is to assess if parents exert an influence on the occupation choices of their children. Using data from the German Socioeconomic Panel (SOEP), we find a high persistency of occupational decisions across fathers and children using nested and conditional logit models. To separate effects related to genetic factors (nature) and parental education or role models (nurture), we determine the persistency separately for children who grew up with their biological fathers and for those who did not. Our results suggest that especially nurture plays a decisive role in explaining the choice of one's occupation.
    Keywords: Occupational choice, SOEP, parental educational investment
    JEL: J24 J62
    Date: 2013
  3. By: Claudia Olivetti
    Abstract: This paper provides additional evidence on the U-shaped relationship between the process of economic development and women's labor force participation. The experience of the United States is studied in a comparative perspective relative to a sample of rich economies observed over the period 1890-2005. The analysis confirms the existence of a U-shaped female labor supply function, coming from both cross-country and within country variation. Further analysis of a large cross section of economies observed over the post-WWII period suggests that the timing of a country's transition to a modern path of economic development affects the shape of women's labor supply.
    JEL: J22 N11 N12
    Date: 2013–06
  4. By: Maselli, Ilaria
    Abstract: This paper analyses labour demand and supply with respect to skills and tasks. The literature on this topic is abundant, especially in light of education expansion and the impact of technology on labour demand. The goal of this work is not to add evidence to the causes and effects of labour demand and supply but rather to sketch the broader picture of their equilibrium and then to try to anticipate what type of skills mismatch EU countries will encounter during the next decade. The paper begins with separate considerations of labour demand and supply with respect to qualifi cation, outlining the main trends and their causes. This is followed by an analysis of their equilibrium and a matrix which can be used to understand the potential types of mismatches. Finally, conclusions and avenues for future research are drawn.
    Date: 2012–02
  5. By: Gregory Kurtzon (U.S. Bureau of Labor Statistics)
    Abstract: It is shown that an economy where agents with one dimensional skill choose among occupations as intermediate complementary inputs with di¤erent learning costs has an equilibrium hierarchy from the lowest cost/skill/wage occupations to the highest which agents will cascade along away from the skill level of new entrants. This can explain why di¤erently/similarly skilled agents act like comple- ments/substitutes. The distinction between lifetime wages including the learning cost and current wages implies a more elastic e¤ect of immigration, but a more inelastic e¤ect of the minimum wage. These conclusions don?t rely on the typical assumptions of scale, preferences, or comparative advantage.
    Keywords: Occupation, Occupational Choice, Skill, Occupational Training, Occupational Wage Differential, Wage Distriubtion, Relative Wages, Labor Complementarity
    JEL: J24 J21 J31 I24
    Date: 2013–05
  6. By: Adriana Peluffo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This work analyses the impact of foreign direct investment (FDI) on productivity, the demand for skilled labour and wage inequality of the Uruguayan Manufacturing firms for the period 1997-2005. Firstly, we estimate the effects of FDI on productivity, relative wages and relative employment of skilled workers, through conventional pooled OLS. Then, we estimate quantile regressions, which reveal that consistently with firm heterogeneity, the response to foreign ownership is not homogenous, but varies over the conditional distribution of each dependent variable. Nevertheless, since we cannot attribute causality from the previous correlations we use discrete treatment effect techniques for analyzing causality. Our preliminary results seem to indicate that FDI is associated with higher productivity and an increased demand for skilled labour. Furthermore, though average wages are higher in foreign owned firms, the wage gap between skilled and unskilled workers is higher in foreign owned firms than in domestic ones. Then, it follows that promoting foreign investment enhances productivity. On the other hand, due to the higher demand for skilled workers policies such as training of workers would be conductive to further productivity improvements, while other social policies could help to mitigate wage inequality effects.
    Keywords: Fdi, Productivity, Labour markets
    JEL: F23 J23 J24 J31 O39
    Date: 2013–02
  7. By: Suzanne Kok
    Abstract: Matches between workers and jobs are better in thick labour markets than in thin ones. This CPB Discussion Paper measures match quality by the gap between worker skills and their job tasks in the Netherlands. The smaller the gap, the better the match between skills and tasks. The measured gaps are 14 percent of a standard deviation smaller in cities than in the Dutch countryside. The location of work explains the observed higher quality of matches, while the location of residence does not. Robustness analyses show that these results are not explained by more efficient learning in cities or the spatial distribution of industrial and service occupations. Higher matching quality is associated with higher wages and explains part of the urban wage premia.
    JEL: J24 J23 R12 R23
    Date: 2013–06
  8. By: Gonzalo Castex (Central Bank of Chile); Evgenia Dechter (University of New South Wales)
    Abstract: This study examines changes in returns to formal education and cognitive skills over the last 20 years using the 1979 and 1997 waves of the National Longitudinal Survey of Youth. We show that cognitive skills had a 30%-50% larger effect on wages in the 1980s than in the 2000s. Returns to education were higher in the 2000s. These developments are not explained by changing distributions of workers’ observable characteristics or by changing labor market structure. We show that the decline in returns to ability can be attributed to differences in the growth rate of technology between the 1980s and 2000s.
    Keywords: n/a
    Date: 2012–10
  9. By: Serafinelli, Michel
    Abstract: I present direct evidence on the role of firm-to-firm labor mobility in enhancing the productivity of firms located near highly productive firms. Using matched employer-employee and balance sheet data for the Veneto region of Italy, I identify a set of high-wage firms (HWF) and show they are more productive than other firms. I then show that hiring a worker with HWF experience increases the productivity of other (non-HWF) firms. A simulation indicates that worker flows explain 10-15 percent of the productivity gains experienced by other firms when HWFs in the same industry are added to a local labor market.
    Keywords: productivity, agglomeration advantages, linked employer-employee data, labor mobility.
    JEL: J24 J31 J61 R2 R23
    Date: 2013–06–09
  10. By: Liliana D. Sousa
    Abstract: This study uses linked employer-household data to measure the impact of immigrant social networks, as identified via neighborhood and workplace affiliation, on immigrant earnings. Though ethnic enclaves can provide economic opportunities through job creation and job matching, they can also stifle the assimilation process by limiting interactions between enclave members and non-members. I find that higher residential and workplace ethnic clustering among immigrants is consistently correlated with lower earnings. For immigrants with a high school education or less, these correlations are primarily due to negative self-selection. On the other hand, self-selection fails to explain the lower earnings associated with higher ethnic clustering for immigrants with post-secondary schooling. The evidence suggests that co-ethnic clustering has no discernible effect on the earnings of immigrants with lower education, but may be leading to human capital traps for immigrants who have more than a high school education.
    Keywords: migration, ethnic enclaves, neighborhood effects, labor market assimilation
    JEL: J15 J24 J31 J61
    Date: 2013–06
  11. By: Golsteyn B.H.H.; Borghans L. (GSBE)
    Abstract: This paper analyzes whether defaults affect the choice for courses followed at work. In addition, we analyze whether the size of the default effect varies with employees' personality and skill- deficiencies. We perform an experiment in which workers are hypothetically offered three courses which they can accept or exchange for other courses. Randomizing the default package of courses, we identify the default effect. Default courses are chosen approximately three times more often than other courses. They are chosen more often if people have skill-deficiencies in these courses, suggesting that people consider the default to be an advice. Women choose default courses more often than men. Women with less self-confidence and men with lower cognitive skills choose the default courses more often.
    Keywords: Human Capital; Skills; Occupational Choice; Labor Productivity; Wage Level and Structure; Wage Differentials;
    JEL: J24 J31 I2
    Date: 2013
  12. By: Panagiotis Nanos; Christian Schluter
    Abstract: We consider the role of unobservables, such as differences in search frictions, reservation wages, and productivities for the explanation of wage differentials between migrants and natives. We disentangle these by estimating an empirical general equilibrium search model with on-the-job search due to Bontemps, Robin, and van den Berg (1999) on segments of the labour market defined by occupation, age, and nationality using a large scale German administrative dataset. The native-migrant wage differential is then decomposed into several parts, and we focus especially on the component that we label "migrant effect", being the difference in wage offers between natives and migrants in the same occupation-age segment in firms of the same productivity. Counterfactual decompositions of wage differentials allow us to identify and quantify their drivers, thus explaining within a common framework what is often labelled the unexplained wage gap.
    Date: 2013–06
  13. By: Suzanne Kok
    Abstract: This CPB Discussion Paper shows that a job contains a different task package in a large city than the same job in a small city. We set out a theoretical model of the division of labour across cities, which shows that both the division of labour and the skill demand increase with city size. Most datasets hinder an empirical analysis of such a model as they lack spatial variation in job content. Using individual German task data, we are able to empirically estimate our model and analyse spatial variations in task content of jobs. The estimations support the predictions of the model: jobs in large cities consist of other task packages than the same jobs in small cities. Workers in large cities focus more on their core tasks and perform fewer subtasks than workers in small cities. Jobs demand more cognitive skills when they are performed in large cities. This spatial variation in job contents likely bias regional wage equations.
    JEL: J24 J44 R23
    Date: 2013–06
  14. By: Kevin Lang; Russell Weinstein
    Abstract: Using the Beginning Postsecondary Student Survey and Transcript Data, we find no statistically significant differential return to certificate or Associates degrees between for-profits and not-for-profits. Point estimates suggest a slightly lower return to a for-profit certificate and a slightly higher return to a for-profit Associates degree, largely because more students at not-for-profits earn a BA, making them less likely to have only an Associates degree. There is considerable variation in the return to certificates/degrees across majors, including many with negligible or negative returns. Differences across fields are large relative to differences across institution types.
    JEL: I23 J3
    Date: 2013–06
  15. By: Weiss M.; B?rsch-Supan A. (GSBE)
    Abstract: We study the relation between workers age and their productivity in work teams, based on a new and unique data set that combines data on errors occurring in the production process of a large car manufacturer with detailed information on the personal characteristics of workers related to the errors. We correct for non-random sample selection and the potential endogeneity of the age-composition in work teams. Our results suggest that productivity in this plant which is typical for large-scale manufacturing does not decline at least up to age 60.
    Keywords: Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity; Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination; Human Capital; Skills; Occupational Choice; Labor Productivity;
    JEL: J24 J14 D24
    Date: 2013
  16. By: Julian Conrads (University of Cologne); Bernd Irlenbusch (University of Cologne); Tommaso Reggiani (University of Cologne); Rainer Michael Rilke (University of Cologne); Dirk Sliwka (University of Cologne)
    Abstract: How to hire voluntary helpers? We shed new light on this question by reporting a field experiment in which we invited 2,859 students to help at the 'ESA Europe 2012' conference. Invitation emails varied non-monetary and monetary incentives to convince subjects to offer help. Students could apply to help at the conference and, if so, also specify the working time they want to offer. Just asking subjects to volunteer or offering them a certificate turned out to be significantly more motivating than mentioning that the regular conference fee would be waived for helpers. Increasing monetary incentives by varying hourly wages of 1, 5, and 10 Euros shows positive effects on the number of applications and on the working time offered. However, when comparing these results with treatments without any monetary compensation, the number of applications could not be increased by offering money and may even be reduced.
    Keywords: Recruitment, Voluntary work, Monetary incentives, Field experiment
    JEL: C93 J33 M52
    Date: 2013–05–29
  17. By: Leen Meeusen; Annemie Nys
    Abstract: Over the last two decades, the number of individuals entitled to work incapacity (WI) benefits increased strongly in Belgium, the Netherlands, Denmark and Sweden. The caseload has consequently increased but this has happened at a very different pace and to a very different degree. In order to draw correct conclusions regarding the actual growth in national caseload and to gain a new perspective on the very large cross-national variation, we introduce corrections on the growth of WI benefit uptake. By controlling for the evolution of the labor force and its respective gender and age components, we are able to formulate an answer to the following question: 'To what extent can the increase and cross-national variation in work incapacity caseload be explained by the evolution of the labor force and its components?' The results show that the evolution of the female labor force, and this mainly in the age brackets 15-49, had the greatest impact on the growth of WI caseload. We conclude that the corrections, based on the evolution of the different components of the labor force, reduce the growth rate of national WI caseload and narrow the gap in cross-national variation. Nevertheless, a proportion of national growth and cross-national variation remains unexplained.
    Keywords: labor force, female labor force participation rate, work incapacity caseload
    JEL: J21 Y10
    Date: 2013–06
  18. By: Pavla Nikolovova; Filip Pertold; Mario Vozar
    Abstract: In this paper we investigate the role of the business cycle for the transitions of Czech and Slovak workers to informal economy using Czech and Slovak Labor Force Survey data. We use two approximations for the participation in informal economy, self-employment and employment in small workplace (10 and fewer workers or 5 and fewer workers). Both statuses are potentially associated with the participation in an informal economy. Using the similar methodology as presented in Bosh and Maloney (2007), we show that recent recession caused substantial increase in transitions of workers from formal into both self-employment and employment. As compare to pre-recession time the flow into self- increased more than 4 times. The increase in transitions to small workplaces is less pronounced.
    Keywords: informal economy, business cycle, labor force
    JEL: J21 H26
    Date: 2013–05–31
  19. By: Marta Lachowska (W.E. Upjohn Institute for Employment Research)
    Abstract: This paper studies the link between hourly wages and workers’ subjective assessments of how easy it would be to find another job as good as the present one, and how easy it would be for an employer to replace an employee. First, using high-quality data, I study the correlates of these two assessments. Second, I study whether respondents who report better outside opportunities and respondents who think they are difficult to replace receive higher wages. The results appear to be consistent with predictions of at least three theoretical frameworks: human capital theory, search theory, and a “locus of control” model.
    Keywords: Wages, Employment Relations, Outside Options, Human Capital, Locus of Control, Labor Market Frictions
    JEL: J31 J41 J50 M51
    Date: 2013–05

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