nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2013‒09‒13
eight papers chosen by
Erik Jonasson
National Institute of Economic Research

  1. Doing Well in Reforming the Labour Market? Recent Trends in Job Stability and Wages in Germany By Giannelli, Gianna Claudia; Jaenichen, Ursula; Rothe, Thomas
  2. Inequality-Adjusted Gender Wage Differentials in Germany By Ekaterina Selezneva; Philippe Van Kerm
  3. Geographic Differences in the Earnings of Economics Majors By Winters, John V.; Xu, Weineng
  4. People Skills and the Labor-Market Outcomes of Underrepresented Groups By Bas ter Weel; Lex Borghans; Bruce A. Weinberg
  5. Career progression, economic downturns, and skills By Jerome Adda; Christian Dustmann; Costas Meghir; Jean-Marc Robin
  6. Labour Force Participation of Mature Age Men in Australia: The Role of Spousal Participation By Mavromaras, Kostas G.; Zhu, Rong
  7. Changes in education, employment and earnings in South Africa – A cohort analysis By Nicola Branson; Cally Ardington; David Lam; Murray Leibbrandt
  8. Wage leadership models: a country-by-country analysis of the EMU By Gaetano D’Adamo; Mariam Camarero; Cecilio Tamarit

  1. By: Giannelli, Gianna Claudia (University of Florence); Jaenichen, Ursula (Institute for Employment Research (IAB), Nuremberg); Rothe, Thomas (Institute for Employment Research (IAB), Nuremberg)
    Abstract: The German "employment miracle", with a weak decline in employment and low unemployment during the great recession, seems to be a good example for a successful labour market reform. Nevertheless, there are concerns about rising inequality in the labour market. In this paper we analyze the quality of newly started jobs between 1998 and 2010 using a huge administrative data set which allows us to look at job durations and earnings for different groups of workers. We discuss changes in the distributions of job durations and earnings over time, and present microeconometric models controlling for individual, firm and regional characteristics. Our results show a fairly constant level of overall job stability, but decreasing real wages and rising wage dispersion over time.
    Keywords: labour market reforms, job quality, job duration, real wages, Germany, 1998-2010
    JEL: C34 C41 J31 J62 J68
    Date: 2013–08
  2. By: Ekaterina Selezneva; Philippe Van Kerm
    Abstract: This paper exploits data from the German Socio-Economic Panel (SOEP) to re-examine the gender wage gap in Germany on the basis of inequality-adjusted measures of wage differentials which fully account for gender differences in pay distributions. The inequality-adjusted gender pay gap measures are significantly larger than suggested by standard indicators, especially in East Germany. Women appear penalized twice, with both lower mean wages and greater wage inequality. A hypothetical risky investment question collected in 2004 in the SOEP is used to estimate individual risk aversion parameters and benchmark the ranges of inequality-adjusted wage differentials measures.
    Keywords: Gender gap, wage differentials, wage inequality, expected utility, risk aversion, East and West Germany, SOEP, Singh-Maddala distribution, copula-based selection model
    JEL: D63 J31 J70
    Date: 2013
  3. By: Winters, John V. (Oklahoma State University); Xu, Weineng (University of Arkansas, Fayetteville)
    Abstract: Economics has been shown to be a relatively high earning college major, but geographic differences in earnings have been largely overlooked. This paper uses the American Community Survey to examine geographic differences in both absolute earnings and relative earnings for economic majors. We find that there are substantial geographic differences in both the absolute and relative earnings of economics majors even controlling for individual characteristics such as age and advanced degrees. We argue that mean earnings in specific labor markets are a better measure of the benefits of majoring in economics than simply looking at national averages.
    Keywords: economics major, earnings differentials, college education, local labor markets
    JEL: I23 J24 J31 R23
    Date: 2013–08
  4. By: Bas ter Weel; Lex Borghans; Bruce A. Weinberg
    Abstract: This paper shows that people skills are important determinants of labor-market outcomes, including occupational choice and wages. Technological and organizational changes have increased the importance of people skills in the workplace. We particularly focus on how the increased importance of people skills has affected the labor-market outcomes of underrepresented groups assuming gender differences in interactions and that cultural differences (including prejudice) may impede cross-racial and ethnic interactions. Our estimates for Britain, Germany and the United States are consistent with such an explanation. Acceleration in the rate of increase in the importance of people skills between the late 1970s and early 1990s in the US can help explain why the gender-wage gap closed and the black-white wage gap stagnated in these years relative to the preceding and following years.
    JEL: J16 J21 J24 J31
    Date: 2013–09
  5. By: Jerome Adda (Institute for Fiscal Studies and European University Institute); Christian Dustmann (Institute for Fiscal Studies and University College London); Costas Meghir (Institute for Fiscal Studies and Yale University); Jean-Marc Robin (Institute for Fiscal Studies and Sciences Po)
    Abstract: This paper analyses the career progression of skilled and unskilled workers with a focus on how careers are affected by economic downturns and whether formal skills, acquired early on, can shield workers from the effect of recessions. Using detailed administrative data for Germany for numerous birth cohorts across different regions, we follow workers from labour market entry onwards and estimate a dynamic life-cycle model of vocational training choice, labour supply, and wage progression. Most particularly, our model allows for labour market frictions that vary by skill group and over the business cycle. We find that sources of wage growth differ: learning-by-doing is an important component for unskilled workers early on in their careers, while job mobility is important for workers who acquire skills in an apprenticeship scheme before labour market entry. Likewise, economic downturns affect skill groups through very different channels: unskilled workers lose out from a decline in productivity and human capital, whereas skilled individuals suffer mainly from lack of mobility.
    Keywords: wage determination, skills, business cycles, apprenticeship training, job mobility
    Date: 2013–08
  6. By: Mavromaras, Kostas G. (NILS, Flinders University); Zhu, Rong (NILS, Flinders University)
    Abstract: In this paper we estimate the interdependence of labour force participation decisions made by Australian couples from 2001 to 2011. We focus on couples with a mature age husband, and estimate the interdependence of the participation decision of the couple. We find that the decision of a wife to work or not influences positively, and in a causal fashion, the decision of her husband to work or not. In our paper we use counterfactual analysis to estimate the impact of the increasing labour force participation of a wife on her husband's participation. We find that the increased labour force participation of married women observed between 2002 and 2011 has been responsible for about a 4 percentage points increase in the participation of their mature age husbands.
    Keywords: labour force participation, spousal status, joint decision making, male employment trends, Australia
    JEL: J14 J21
    Date: 2013–08
  7. By: Nicola Branson (SALDRU, School of Economics, University of Cape Town); Cally Ardington (SALDRU, School of Economics, University of Cape TownAuthor-Email:); David Lam (; Murray Leibbrandt (SALDRU, School of Economics, University of Cape Town)
    Abstract: Rapid increases in educational attainment and the massification of secondary education in South Africa resulted in substantial differences in the supply and quality of educated workers across generations. This paper describes changes in the distribution of education across birth cohorts and how these relate to changes in the probability of employment, the distribution of earnings and the earnings premiums to complete secondary and tertiary education. Tracking cohorts over time allows us to disentangle generational and life-cycle components of these changes. Younger cohorts are shown to have increasingly faced worse labour market conditions than their predecessors, although this may be changing for cohorts born after 1980. Furthermore, the relative reward to complete secondary and tertiary education has remained positive, and increased for tertiary educated cohorts born since the 1960s. Increases in earnings inequality among those with complete secondary education suggests increased variance in education quality during the period when completed secondary education expanded rapidly.
    Keywords: Educational attainment, Earnings, Employment, South Africa, Cohort analysis
    JEL: I25 I24 J24
    Date: 2013
  8. By: Gaetano D’Adamo (Department of Applied Economics II, University of Valencia); Mariam Camarero (Department of Economics, Universidad Jaume I); Cecilio Tamarit (Department of Applied Economics II, University of Valencia)
    Abstract: According to the theory of wage leadership, if there is free inter-sectorial labor mobility, changes in the level of the wage in the leading sector cause changes in the same direction in other sectors’ wage. Moreover, since the traded sector (i.e. Industry) is affected by international competitive pressure, it should act as the leader, because this would be conducive to wage restraint. We apply a Vector Error Correction Model on four macro sectors (Industry, Services, Construction and the Public Sector) in ten EMU countries to test for wage leadership and wage adaptability. Our results show significant cross-country differences, with the Public Sector acting as the leader in Germany, Belgium and Greece. Countries that recently experienced a construction bubble such as Spain and Ireland show wage leadership of the construction sector. Moreover, in half of the countries, wages in different sectors are, to some extent, set autonomously, which suggests low intersectorial labor mobility. Finally, adjustment after a positive vs. negative shock to the leading sector’s wage, in Mediterranean countries, Ireland and the Netherlands is asymmetric.
    Keywords: Wage Leadership; Cointegrated VAR; Labor Market
    JEL: C32 E62 J51
    Date: 2013–07

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