nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2013‒07‒28
twelve papers chosen by
Erik Jonasson
National Institute of Economic Research

  1. Minimum Wage Shocks, Employment Flows and Labor Market Frictions By Dube, Arindrajit; Lester, T. William; Reich, Michael
  2. Exporting and Labor Demand: Micro-Level Evidence from Germany By Lichter, Andreas; Peichl, Andreas; Siegloch, Sebastian
  3. China's 2008 labor contract law : implementation and implications for China's workers By Gallagher, Mary; Giles, John; Park, Albert; Wang, Meiyan
  4. How Does China's New Labor Contract Law Affect Floating Workers? By Richard B. Freeman; Xiaoying Li
  5. Postgraduate Education, Labor Participation, and Wages: An empirical analysis using micro data from Japan By MORIKAWA Masayuki
  6. Job Changes and Wage Changes: Estimation with Measurement Error in a Binary Variable By Adele Bergin;
  7. The effects of children on mothers' employment and earnings : evidence from Spain By Alfonso Alba; Julio Cáceres-Delpiano
  8. Social security, economic development and the labor force participation of the elderly in Latin America By Bernardo Queiroz
  9. Reconciling Micro and Macro Labor Supply Elasticities: A Structural Perspective By Michael Keane; Richard Rogers
  10. Cheating in the workplace: An experimental study of the impact of bonuses and productivity By David Gill; Victoria Prowse; Michael Vlassopoulos
  11. Prospects of Employment Growth in Andhra Pradesh By Motkuri, Venkatanarayana
  12. Individual Determinants of Self-Employment Entry – What Do We Really Know? By Simoes, Nadia; Moreira, Sandrina B.; Crespo, Nuno

  1. By: Dube, Arindrajit; Lester, T. William; Reich, Michael
    Abstract: We provide the first estimates of the effects of minimum wages on employment flows in the U.S. labor market, identifying the impact by using policy discontinuities at state borders. We find that minimum wages have  sizeable negative effect on employment flows but not stocks. Separations and accessions fall among affected workers, especially those with low tenure. We do not find changes in the duration of non-employment for separations or hires. This evidence is consistent with search models with endogenous separations, but explanations focused only on quits or only on layoffs are unlikely to explain the full complement of findings.
    Keywords: Social and Behavioral Sciences, Minimum Wage, Labor Market Flows, Job Turnover, Search Frictions, Monopsony, Unemployment
    Date: 2013–07–20
  2. By: Lichter, Andreas (IZA); Peichl, Andreas (IZA); Siegloch, Sebastian (IZA)
    Abstract: It is widely believed that globalization increases the volatility of employment and decreases the bargaining power of workers. One mechanism explaining this relationship is given by the long-standing Hicks-Marshall laws of derived demand: with international trade increasing competition and therefore the price elasticity of product demand, exporters are predicted to have higher labor demand elasticities. Our paper is the first to test this relationship empirically by analyzing the effects of exporting on firms' labor demand. Using rich, administrative linked employer-employee panel data from Germany, we explicitly control for issues of self-selection and endogeneity in the firms' decisions to export by providing fixed effects and instrumental variable estimates. Our results show that exporting indeed has a positive and significant effect on the own-wage elasticity of unconditional labor demand, due to higher price elasticities of product demand.
    Keywords: trade, export, labor demand, wage elasticity, microdata, Germany
    JEL: F16 J23
    Date: 2013–07
  3. By: Gallagher, Mary; Giles, John; Park, Albert; Wang, Meiyan
    Abstract: This paper presents empirical evidence from household and firm survey data collected during 2009-2010 on the implementation of the 2008 Labor Contract Law and its effects on China's workers. The government and local labor bureaus have made substantial efforts to enforce the provisions of the new law, which has likely contributed to reversing a trend toward increasing informalization of the urban labor market. Enforcement of the law, however, varies substantially across cities. The paper analyzes the determinants of worker satisfaction with the enforcement of the law, the propensity of workers to have a labor contract, workers'awareness of the content of the law, and their likelihood of initiating disputes. The paper finds that all of these factors are highly correlated with the level of education, especially for migrants. Although higher labor costs may have had a negative impact on manufacturing employment growth, this has not led to an overall increase in aggregate unemployment or prevented the rapid growth of real wages. Less progress has been made in increasing social insurance coverage, although signing a labor contract is more likely to be associated with participation in social insurance programs than in the past, particularly for migrant workers.
    Keywords: Labor Markets,Labor Policies,Labor Standards,Work&Working Conditions,Labor Law
    Date: 2013–07–01
  4. By: Richard B. Freeman; Xiaoying Li
    Abstract: China’s new Labor Contract Law took effect on January 2008 and required firms to give migrant workers written contracts, strengthened labor protections for workers and contained penalties for firms that did not follow the labor code. This paper uses survey data of migrant workers in the Pearl River Delta before and after the law and a retrospective question on when workers received their first labor contract to assess the effects of the law on labor outcomes. The evidence shows that the new law increased the percentage of migrant workers with written contracts, which in turn raised social insurance coverage, reduced the likelihood of wage arrears, and raised the likelihood that the worker had a union at their workplace.
    JEL: J01 J28 J53 K31
    Date: 2013–07
  5. By: MORIKAWA Masayuki
    Abstract: Using micro data from the 2007 Employment Status Survey, this paper analyzes the relationship between postgraduate education and labor market outcomes in Japan. According to the analysis, 1) the employment-population rates of females and elderly people with postgraduate education are higher than they are for those with undergraduate education. The negative effect of marriage on labor participation is small for postgraduate females. 2) The wage premium for postgraduates relative to undergraduates is approximately 30%. The postgraduate wage premium is similar in magnitude for male and female workers. 3) The wage reduction after age 60 is less for workers with a postgraduate education. 4) The private rate of return to postgraduate education exceeds 10%. Due to advanced technology and the growing demand for increased skills, the importance of postgraduate education to vitalize the economy is growing. At the same time, the expansion of postgraduate education may contribute to increasing the labor participation of females and elderly people.
    Date: 2013–07
  6. By: Adele Bergin (Department of Economics Finance and Accounting, National University of Ireland, Maynooth);
    Abstract: Many studies of labour market dynamics use survey data so it is valuable to know about the quality of the data collected. This paper investigates job transitions in Ireland over the period 1995 to 2001, using the Living in Ireland Survey, the Irish component of the European Community Household Panel. In applied work on job mobility, researchers often have to rely on self-reported accounts of tenure to determine whether or not a job change has taken place. There may be measurement error in these responses and consequently observations may be misclassified. The paper finds that there are substantial inconsistencies or measurement error in the responses used to determine job changes so there is a risk of misclassifying cases as being job changes when truly they are job stays and vice versa. The paper explores the impact of misclassification in a model of job change using an estimator developed by Hausman, Abrevaya and Scott-Morton (1998). It finds that ignoring misclassification may substantially underestimate the true number of job changes and it can lead to diminished covariate effects. The paper then investigates the relationship between job mobility and wage growth. Misclassification in a binary explanatory variable causes attenuation in OLS estimates. A two-step approach to controlling for misclassification in job changes is adopted to estimate the wage effects of job mobility. The paper finds that controlling for misclassification has a substantial impact on the estimated effect of changing jobs on wage growth.
    Keywords: J62, C25
    Date: 2013
  7. By: Alfonso Alba; Julio Cáceres-Delpiano
    Abstract: Using a large and rich data set from administrative sources, we study the effects of children on mothers’ employment and earnings in Spain. By being able to pinpoint the event of multiple births along a twenty-year panel of women’s work history, we address two methodological hurdles in this research: the omitted-variable problem and concerns about twins as a good instrument for family size. We find that the effects of fertility on mothers’ labor outcomes differ by level of education. Women with only compulsory education experience falls of 17 percent in employment and 15 percent in earnings, increased duration of non-employed spells, and reductions in the likelihood of holding a secondary job or chaining contracts within a certain employment spell. Among more educated women, the employment rate drops by a mere 4 percent and earnings increase slightly in some cases. Nonetheless, a relatively higher employment rate of more educated mothers, besides unexpected changes in family size, involves costs in terms of working conditions, like holding temporary contracts. Our results indicate that mothers in general have a hard time regaining employment as revealed by the sharp increase in the take-up rate of unemployment insurance benefits around the third month after the birth. Finally, we are able to obtain some results for the impact of family size on the labor supply of a second earner (husband) in the household. For instance, we find that second earners tend to compensate for mothers’ income diminution.
    Date: 2013–07
  8. By: Bernardo Queiroz (Cedeplar-UFMG)
    Abstract: In this paper I investigate labor force participation of older males in Latin America. The empirical analysis is divided in two parts. First, I use household survey data from twenty-three (23) Latin American and the Caribbean countries, from around 2005, to perform a cross-country analysis on labor force participation focusing on differences rural and urban status, formal and informal relation to the labor market and coverage of public pension programs. I also use the data to show different patterns by income level and stage of the demographic transition to describe historical trends in labor force participation rates of older workers. The second part of the paper, I use data on the 23 Latin American countries to investigate the effects of economic development and social security system in the labor force participation of the elderly for the past 30 years.
    Keywords: labor force participation, economic development elderly, social security, retirement, Latin America
    JEL: J10 J11 J14 J18
  9. By: Michael Keane; Richard Rogers
    Abstract: This survey deals with an issue that is extremely important for a wide range of applied issues - the magnitude of aggregate labor supply responses to various changes in the economic environment.  In addition to being a very important issue, it is also well known to be quite controversial.  In particular, there is a long-standing controversy driven by the fact that on the one hand, researchers who look at micro data typically estimate relatively small labor supply elasticities, while on the other hand, researchers who use representative agent models to study aggregate outcomes typically employ parameterizations that imply relatively large aggregate labor supply elasticities.
    Date: 2012–10–31
  10. By: David Gill; Victoria Prowse; Michael Vlassopoulos
    Abstract: We use an online real-effort experiment to investigate how bonus-based pay and worker productivity interact with workplace cheating.  Firms often use bonus-based compensation plans, such as group bonuses and firm-wide profit sharing, that induce considerable uncertainty in how much workers are paid.  Exposing workers to a compensation scheme based on random bonuses makes them cheat more but has no effect on their productivity.  We also find that more productive workers behave more dishonestly.  These results are consistent with workers' cheating behavior responding to the perceived fairness of their employer's compensation scheme.
    Keywords: Bonus, compensation, cheating dishonesty, lying, employee crime, productivity, slider task, real effort, experiment
    JEL: C91 J33
    Date: 2013–07–08
  11. By: Motkuri, Venkatanarayana
    Abstract: The present paper examines the changes in work participation rates, participation rate in education and the growth of employment, and explores the prospects of employment growth in the state of Andhra Pradesh (India) in the scenario of declining population growth which acts as a limiting factors for the further employment growth.
    Keywords: Employment, Labourforce, Workforce, Andhra Pradesh, India
    JEL: J21
    Date: 2013–07
  12. By: Simoes, Nadia; Moreira, Sandrina B.; Crespo, Nuno
    Abstract: The analysis of the decision to enter into self-employment is a hot topic in economic literature. Among the elements that most directly influence this decision, individual factors are central. This study produces a comprehensive survey of the impact of these factors, covering both the theoretical arguments and the main conclusions emerging from the empirical studies. We analyze twelve critical determinant factors of the entry into self-employment grouped into seven categories: (i) basic individual characteristics (gender, age, and marital status and children); (ii) family background (parents and spouse); (iii) personality characteristics (risk attitude and other psychological traits); (iv) human capital (education and experience); (v) health condition; (vi) nationality and ethnicity; and (vii) access to financial resources. While for some of the factors solid conclusions can be found, for others additional research is still needed in order to shed further light on their influence.
    Keywords: self-employment, survey, individual determinant factors
    JEL: J21 J22
    Date: 2013–07–17

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