nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2013‒06‒30
seventeen papers chosen by
Erik Jonasson
National Institute of Economic Research

  1. The Economics of Severance Pay By Boeri, Tito; Garibaldi, Pietro; Moen, Espen R.
  2. The Employment of the Low-Skilled Youth in France By Cahuc, Pierre; Carcillo, Stéphane; Zimmermann, Klaus F.
  3. Retirement and Cognitive Development: Are the Retired Really Inactive? By DE GRIP Andries; DUPUY Arnaud; JOLLES Jelle; VAN BOXTEL Martin
  4. Does It Pay to Volunteer? The Relationship Between Volunteer Work and Paid Work By Helene Jorgensen
  5. Gender Differences in Earnings and Labor Supply in Early Career: Evidence from Kosovo's School-to-Work Transition Survey By Pastore, Francesco; Sattar, Sarosh; Tiongson, Erwin R.
  6. Job Promotion in Mid-Career: Gender, Recession and ‘Crowding’ By John T. Addison; Orgul D.Ozturk; Si Wang
  7. Worker flows and establishment wage differentials : a breakdown of the relationship By Richard Duhautois; Fabrice Gilles; Héloïse Petit
  8. Maternity Leave and the Responsiveness of Female Labor Supply to a Household Shock By Tominey, Emma
  9. Human capital, social mobility and the skill premium By Konstantinos Angelopoulos; James Malley; Apostolis Philippopoulos
  10. Fair Wages Survive Multiple Sources of Income Inequality By Karina Gose
  11. Gender differences in preferences for health-related absences from work By Avdic, Daniel; Johansson, Per
  12. Incidence of Strict Quality Standards: Protection of Consumers or Windfall for Professionals? By Kawaguchi, Daiji; Murao, Tetsushi; Kambayashi, Ryo
  13. Report No. 53: Combining the Entry of Young People in the Labour Market with the Retention of Older Workers By Eichhorst, Werner; Boeri, Tito; Braga, Michela; De Coen, An; Galasso, Vincenzo; Gerard, Maarten; Kendzia, Michael J.; Mayrhuber, Christine; Pedersen, Jakob Louis; Schmidl, Ricarda; Steiber, Nadia
  14. Is Formal Employment Discouraged by the Provision of Free. Health Services to the Uninsured ? Evidence From a Natural Experiment in Mexico By Alejandro Del Valle
  15. Revisiting the use of initial jobless claims as a labor market indicator By John Carter Braxton
  16. Labor Decomposition: A Firm Level Analysis on Import Quality and Labor Demand By Warda, Peter

  1. By: Boeri, Tito (Bocconi University); Garibaldi, Pietro (University of Turin); Moen, Espen R. (Norwegian Business School (BI))
    Abstract: All OECD countries have either legally mandated severance pay or compensations imposed by industry-level bargaining in case of employer initiated job separations. According to the extensive literature on Employment Protection Legislation such transfers are either ineffective or highly distortionary. In this paper we show that mandatory severance is optimal in presence of wage deferrals when there is moral hazard of employers and workers, notably when employers cannot commit not to fire a non-shirker and shirkers can also get away with it. Our model also accounts for two neglected features of EPL. The first is that dismissal costs depend not only on whether the dismissal is deemed fair or unfair, but also on the nature, economic vs. disciplinary, of the layoff. The second feature is that compensation for unfair dismissal or severance is generally increasing with tenure.
    Keywords: severance, unfair dismissal, graded security
    JEL: J63 J65 J33
    Date: 2013–06
  2. By: Cahuc, Pierre (Ecole Polytechnique, Paris); Carcillo, Stéphane (OECD); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: Youth unemployment is notoriously high in France, in particular for the low-skilled. Within the EU, only the crisis countries of Southern Europe fare worse. This report delivered to the French Council of Economic Analysis analyzes the causes and consequences of this alarming trend. In addition, drawing on the available evidence on various measures that could improve the current situation, concrete policies proposals are derived that cover the areas of vocational education, second chance programs, job search assistance, income support, employment subsidies and dismissal protection.
    Keywords: labor policy, youth unemployment, minimum wage, vocational education, employment protection, France
    JEL: J24 J38 J68
    Date: 2013–06
  3. By: DE GRIP Andries; DUPUY Arnaud; JOLLES Jelle; VAN BOXTEL Martin
    Abstract: This paper uses longitudinal test data to analyze the relation between retirement and cognitive development. Controlling for individual fixed effects and lagged cognition, we find that retirees face greater declines in information processing speed than those who remain employed. However, remarkably, their cognitive flexibility declines less, an effect that appears to be persistent 6 years after retirement. Both effects of retirement on cognitive development are comparable to the effect of a five to six-year age difference. Controlling for changes in blood pressure, which are negatively related to cognitive flexibility, we still find lower declines in cognitive flexibility for retirees. Since the decline in information processing speed after retirement holds particularly for the low educated, activating these persons after retirement could lower the social costs of an aging society.
    Keywords: Cognitive decline; Labor market activity; Retirement
    JEL: J24 J26
    Date: 2013–06
  4. By: Helene Jorgensen
    Abstract: It is widely believed that volunteering will improve workers’ job prospects. The logic is that volunteering offers opportunities to expand work-related experience, develop new skills, and build a network of professional contacts. For young people with little history of paid employment it can also signal that a person would be a reliable and motivated employee. In spite of these widespread views about volunteering, surprisingly little research has been done on the effect of volunteering on employment and pay in the United States. This analysis examines volunteering as a pathway to employment during a period of high unemployment, when it is reasonable to expect the beneficial effects of volunteering to be especially pronounced.
    Keywords: volunteering, jobs, employment, unemployment, economy, volunteer, job prospects
    JEL: J J6 J2 J64 J2
    Date: 2013–06
  5. By: Pastore, Francesco (University of Naples II); Sattar, Sarosh (World Bank); Tiongson, Erwin R. (World Bank)
    Abstract: Very little is known about gender wage disparities in Kosovo and, to date, nothing is known about how such wage disparities evolve over time, particularly during the first few years spent by young workers in the labor market. More generally, not much is known about gender wage gaps in early career worldwide, a period which is perceived to be an important determinant of the overall gender wage disparity. This paper analyzes data from the School-to-Work Transition (SWT) survey, an unusual survey conducted by the ILO between 2004 and 2006 in eight countries, including Kosovo, that documents the labor market experiences of the youngest age segment in the labor force (age 15–25 years). The results of the analysis suggest that, on average, women have lower education attainment than men but this educational disparity is masked among the sample of employed men and women who tend to be well-educated. The consequences of this dramatic segmentation of labor market participation are striking. On average, there is little or no gender wage gap. The results of the Juhn et al. (1993) decomposition analysis reveals that gender wage differences are almost entirely driven by differences in characteristics (rather than either the returns to those characteristics or the residual). The greater average educational attainment of employed women, among other characteristics, tends to fully offset the gender wage gap. Not surprisingly, the returns to women's education among employed women are low because there is little variation in educational attainment among the sample of well-educated employed women. When the analysis controls for sample selection bias and heterogeneity, the returns to women's education rise, confirming the lower productivity-related characteristics of non-employed women compared to employed women. The relatively small sample constrains a fuller analysis of the emergence of the gender wage gap, which, according to a small but growing international literature, typically materializes during childbearing years.
    Keywords: gender wage gap and dynamics, early labor market outcomes, school-to-work transitions, earnings equations, decomposition analysis, Balkans area, Kosovo
    JEL: I21 J13 J15 J16 J24 J31 J7 P30
    Date: 2013–06
  6. By: John T. Addison (Department of Economics, Moore School of Business, University of South Carolina, and GEMF / University of Coimbra, Portugal); Orgul D.Ozturk (Department of Economics, Moore School of Business, University of South Carolina); Si Wang (Department of Economics, Moore School of Business, University of South Carolina)
    Abstract: Data from the National Longitudinal Survey of Youth 1979 indicate that between 1996 and 2010 females on average lost some of the promotion momentum they had achieved at the beginning of mid-career, although they outperformed males in this regard. For both genders economic downturn has contributed to reduced promotion probabilities. In the case of women, however, cohort effects rather than the cycle seem to explain the promotion experience during the Great Recession. Promotions translate into higher real wage increases, and typically more so where job responsibilities increase. Crowding effects, if not necessarily a thing of the past, are no longer manifested in reduced female promotion rates or earnings.
    Date: 2013–06
  7. By: Richard Duhautois (CEE - Centre d'études de l'emploi - Ministère de l'Enseignement supérieur et Recherche - Ministère du Travail, de l'Emploi et de la Santé, ERUDITE - Equipe de Recherche sur l'Utilisation des Données Individuelles Temporelles en Economie - Université Paris-Est Créteil Val-de-Marne (UPEC) : EA437 - Université Paris-Est Marne-la-Vallée (UPEMLV)); Fabrice Gilles (CEE - Centre d'études de l'emploi - Ministère de l'Enseignement supérieur et Recherche - Ministère du Travail, de l'Emploi et de la Santé, EQUIPPE - ECONOMIE QUANTITATIVE, INTEGRATION, POLITIQUES PUBLIQUES ET ECONOMETRIE - Université Lille I - Sciences et technologies); Héloïse Petit (CEE - Centre d'études de l'emploi - Ministère de l'Enseignement supérieur et Recherche - Ministère du Travail, de l'Emploi et de la Santé, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)
    Abstract: We address the relation between establishment wage differentials and worker flows, i.e., the churning rate and the quit rate. Our analysis is based on a linked employer-employee dataset covering the French private sector from 2002 to 2005. Our estimations support the hypothesis that wage premium is an efficient human resource management tool to stabilize workers: churning rates are lower in high-paying firms due to lower quit rates. We further show that the relation is not linear, and it differs among skill groups and according to establishment size: it is strongest for low-wage levels, for low-skilled workers and in large establishments.
    Keywords: establishment wage effects; worker flows; spline regression; linked employer-employee data
    Date: 2012–11–15
  8. By: Tominey, Emma (University of York)
    Abstract: Female labor supply can insure households against shocks to paternal employment. The paper estimates whether the female labor supply response to a paternal employment shock differs by eligibility to maternity employment protection. We exploit time-state variation in the implementation of unpaid maternity leave through the Family and Medical Leave Act (FMLA) in the US which increased employment protection from 0 to 12 weeks. We find that mothers eligible for FMLA speed up their return to work in response to a paternal shock, with a conditional probability of being in work 53% higher than in households with no paternal shock. In contrast, there was a negligible insurance response for mothers with no employment protection.
    Keywords: female labor supply, insurance, maternity leave
    JEL: I30 J13 J20 J64
    Date: 2013–06
  9. By: Konstantinos Angelopoulos; James Malley; Apostolis Philippopoulos
    Abstract: This paper considers the role of human capital accumulation of agents differentiated by skill type in the joint determination of social mobility and the skill premium. Our approach allows us to evaluate the dynamic e¤ects of tax reforms and education spending policies on economic e¢ ciency as well as on social and wage inequality. The analysis contributes to the literature by showing that endogenous so- cial mobility, human capital for skilled and unskilled labour, and exter- nalities from skilled human capital on social mobility are key channels through which tax-spending policy is transmitted.
    Keywords: social mobility, skill premium, tax and education policy
    JEL: E62 J31 J62
    Date: 2013–06
  10. By: Karina Gose (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: When an employee in a gift exchange game earns significantly less than the employer, the source of employer income does not affect effort choices. However, to induce one unit of effort, the employer has to pay higher wages than in a game without payoff inequality.
    Keywords: Gift exchange, fair wage-effort hypothesis, reciprocity, inequity aversion, tit for tat
    JEL: C91 D31 M52
    Date: 2013–06
  11. By: Avdic, Daniel (IFAU - Institute for Evaluation of Labour Market and Education Policy); Johansson, Per (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: Women are on average more absent from work for health reasons than men. At the same time, they live longer. This conflicting pattern suggests that part of the gender difference in health-related absenteeism arises from differences between the genders unrelated to actual health. An overlooked explanation could be that men an women's preferences for absenteeism differ, for example because of gender differences in risk preferences. These differences may originate from the utility-maximizing of households in which women's traditional dual roles influence household decisions to invest primarily in women's health. Using detailed administrative data on sick leave, hospital visits and objective health measures we first investigate the existence of gender-specific preferences for abstenteeism and subsequently test for the household investment hypothesis. We find evidence for the existence of gender differences in preferences for absence from work, and that a non-trivial part of these preference differences can be attributed to household investments in women's health.
    Keywords: Sickness absence; gender norms; health investments
    JEL: D13 J22
    Date: 2013–05–28
  12. By: Kawaguchi, Daiji (Hitotsubashi University); Murao, Tetsushi (Kyushu University); Kambayashi, Ryo (Hitotsubashi University)
    Abstract: This paper examines the effects of upgrading product quality standards on product and professional labor-market equilibriums when both markets are regulated. The Japanese government revised the Building Standards Act in June 2007, requiring a stricter review process for admitting the plans of large-scale buildings. This regulatory change increased the wage of certified architects in Tokyo by 30% but did not increase their total hours worked because of an inelastic labor supply. The stricter quality standards created a quasi-rent for certified architects and owners of condominiums at a cost to consumers. Evidence suggests that the stricter quality standards increased the transaction price of used condominiums by 15% in the Tokyo metropolitan area.
    Keywords: labor market of professionals, product standard, safety regulation, incidence of government regulation
    JEL: J44
    Date: 2013–06
  13. By: Eichhorst, Werner (IZA); Boeri, Tito (Bocconi University); Braga, Michela (Fondazione Rodolfo DeBenedetti); De Coen, An (IDEA Consult); Galasso, Vincenzo (Bocconi University); Gerard, Maarten (IDEA Consult); Kendzia, Michael J. (IZA); Mayrhuber, Christine (WIFO - Austrian Institute of Economic Research); Pedersen, Jakob Louis (NIRAS); Schmidl, Ricarda (IZA); Steiber, Nadia (Vienna University of Economics and Business)
    Abstract: Report based on a study conducted for the European Parliament, Bonn 2013 (142 pages)
    Date: 2013–06–24
  14. By: Alejandro Del Valle (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales [EHESS] - Ecole des Ponts ParisTech - Ecole normale supérieure de Paris - ENS Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: This article analyzes whether the large scale provision of non-contributory health services encourages workers to move away from jobs that pay contributions to social security (formal employment). Using a difference-in-differences design, that exploits the variation generated by the municipal level roll-out of an intervention of this kind in Mexico, this paper finds that contemporaneous program exposure has no impact on the ratio of formal to total employed and that lagged exposure leads only to a small (0.78 percentage points) decrease. Two proxies of spillover effects further reveal that this estimate is robust and that the upper-bound of program effect is only moderately larger (1.5 percentage points).
    Keywords: Labor Markets ; Health Provision ; Informality ; Spillover Effects
    Date: 2013–06–24
  15. By: John Carter Braxton
    Abstract: Initial jobless claims provide a weekly snapshot of the labor market. While known for being volatile, when put into the appropriate context initial claims can provide valuable information on the upcoming employment report. This paper introduces a new labor market indicator, referred to as the threshold of initial jobless claims, that serves as a benchmark of comparison for the weekly reporting of initial jobless claims. The threshold incorporates multiple margins of the labor market such as hires, quits, layoffs, and labor force participation. Deviations of observed initial claims from the threshold are shown to provide accurate estimates of the upcoming change in the unemployment rate. Labor market followers can then make weekly comparisons of observed initial claims to the threshold to gain an updated understanding on the current state of the labor market.
    Date: 2013
  16. By: Warda, Peter (Jönköping International Business School (JIBS), Center of Excellence for Science and Innovation Studies (CESIS) KTH, Sweden)
    Abstract: Structural changes due to global integration certainly affect the employment, productivity and profitability of firms. An interesting case reflects how firms use imports to replace certain stages in production of physical goods. The relevant question here is: if imports make up a substantial part of firms’ sales value, then can the import quality affect firms’ labor composition? The purpose of this paper is to analyze how high and low quality imports affect the labor composition in importing firms in Swedish manufacturing. Inter-firm variation shows that an increase in high (low) quality imports, on average, decreases the share of high-educated (low-educated) labor wages in total wages. Hence, a substitution effect. However, when intra-firm variation is considered the results are instead in favor of a complementary effect.
    Keywords: Labor decomposition; labor composition; imports; quality of imports; manufacturing
    JEL: F14 J21 J23 O33
    Date: 2013–06–24
  17. By: Cansu Akpinar-Sposito (Centre de Recherche Magellan - Université Jean Moulin - Lyon III : EA3713)
    Abstract: Abstract: This study is particularly focused on the glass ceiling issues and the main career obstacles for female executives based on the findings of a cross-country comparative study between Turkey and France. Prior to collecting the required data, a review was carried out in both countries, the current available and attitudinal studies related to the concept of the 'glass ceiling'. A comparative descriptive analysis was conducted to show differences in career barriers for women between countries. The field study of this project generated 20 semi-structured interviews with 12 main questions concerning their career background and the glass ceiling syndrome with staff from 12 international companies in both France and Turkey. Interviews lasted approximately for one hour and were conducted in French, Turkish and English. After successively analyzing all the transcripts of the interviews, three ideological approaches have been identified from the field study. The three main topics that were mentioned by the women interviewed in both countries were personal Compromises, Career Encouragers, and Corporate Culture. These findings indicated that there were several similar approaches to helping the career advancement of women in both countries and also different approaches which are unique to each country involved in the study.
    Keywords: Career barriers, glass ceiling, women in management, Turkey, France.
    Date: 2013

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