|
on Labor Markets - Supply, Demand, and Wages |
| By: | George J. Borjas; Kirk B. Doran |
| Abstract: | Knowledge generation is key to economic growth, and scientific prizes are designed to encourage it. But how does winning a prestigious prize affect future output? We compare the productivity of Fields medalists (winners of the top mathematics prize) to that of similarly brilliant contenders. The two groups have similar publication rates until the award year, after which the winners’ productivity declines. The medalists begin to “play the field,” studying unfamiliar topics at the expense of writing papers. It appears that tournaments can have large post-prize effects on the effort allocation of knowledge producers. |
| JEL: | J22 J24 J33 O31 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19445&r=lma |
| By: | Görlich, Dennis; Snower, Dennis J. |
| Abstract: | This paper sheds light on how changes in the organization of work can help to understand increasing wage inequality. We present a theoretical model in which workers with a wider span of competence (higher level of multitasking) earn a wage premium. Since abilities and opportunities to expand the span of competence are distributed unequally among workers across and within education groups, our theory helps to explain (1) rising wage inequality between groups, and (2) rising wage inequality within groups. Under certain assumptions, it also helps to explain (3) the polarization of the income distribution. Using a rich German data set covering a 20-year period from 1986 to 2006, we provide empirical support for our model. |
| Keywords: | multitasking; organizational change; tasks; wage inequality |
| JEL: | J24 J31 L23 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9455&r=lma |
| By: | Kramarz, Francis; Nordström Skans, Oskar |
| Abstract: | The conditions under which young workers find their first real post-graduation jobs are both very important for the young’ future careers and insufficiently documented given their potential importance for young workers welfare. To study these conditions, and in particular the role played by social ties, we use a Swedish population-wide linked employer-employee data set of graduates from all levels of schooling which includes detailed information on family ties, neighborhoods, schools, class composition, and parents’ and children’ employers over a period covering years with both high and low unemployment, together with measures of firm performance. We find that strong social ties (parents) are an important determinant for where young workers find their first job. The effects are larger if the graduate’s position is “weak” (low education, bad grades), during high unemployment years, and when information on potential openings are likely to be scarce. On the hiring side, by contrast, the effects are larger if the parent’s position is “strong” (long tenure, high wage) and if the parent’s plant is more productive. The youths appear to benefit from the use of strong social ties through faster access to jobs and by better labor market outcomes as measured a few years after entry. In particular, workers finding their entry jobs through strong social ties are considerably more likely to remain in this job, while experiencing better wage growth than other entrants in the same plant. Firms also appear to benefit from these wage costs (relative to comparable entrants) starting at a lower base. They also benefit on the parents’ side; parents’ wage growth drops dramatically exactly at the entry of one of their children in the plant, although this is a moment when firm profits tend to be growing. Indeed, the firm-side benefits appear large enough for (at least small) firms to increase job creation at the entry level in years when a child of one of their employees graduates. |
| Keywords: | network; strong tie; youth employment |
| JEL: | J30 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9620&r=lma |
| By: | Aurora Galego (University of Évora, Department of Economics and CEFAGE-UE); João Pereira (University of Évora, Department of Economics and CEFAGE-UE) |
| Abstract: | Unlike previous studies, in this paper we estimate the contribution of covariates for the regional wage decomposition components along the wage distribution employing Firpo et al. (2009) method. We consider the case of Portugal, a country with persistent and large regional wage gaps. We find that education, occupation and firm size are the most important factors to explain the growing importance of the composition effect. The wage structure effect, in turn, is mainly determined by differences in rewards to experience and tenure. Moreover, we conclude that the importance of these covariates for both effects is not equal along the wage distribution. |
| Keywords: | Regions; Wage differentials; Wage decompositions; Unconditional quantile regression; Recentered influence function. |
| JEL: | J31 J38 C21 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cfe:wpcefa:2013_16&r=lma |
| By: | Theodore Koutmeridis (University of St Andrews) |
| Abstract: | During the past four decades both between and within group wage inequality increased significantly in the US. I provide a microfounded justification for this pattern, by introducing private employer learning in a model of signaling with credit constraints. In particular, I show that when financial constraints relax, talented individuals can acquire education and leave the uneducated pool, this decreases unskilled-inexperienced wages and boosts wage inequality. This explanation is consistent with US data from 1970 to 1997, indicating that the rise of the skill and the experience premium coincides with a fall in unskilled-inexperienced wages, while at the same time skilled or experienced wages do not change much. The model accounts for: (i) the increase in the skill premium despite the growing supply of skills; (ii) the understudied aspect of rising inequality related to the increase in the experience premium; (iii) the sharp growth of the skill premium for inexperienced workers and its moderate expansion for the experienced ones; (iv) the puzzling coexistence of increasing experience premium within the group of unskilled workers and its stable pattern among the skilled ones. The results hold under various robustness checks and provide some interesting policy implications about the potential conflict between inequality of opportunity and substantial economic inequality, as well as the role of minimum wage policy in determining the equilibrium wage inequality. |
| Keywords: | wage inequality, experience premium, skill premium, employer learning, signaling, financial constraints, minimum wages |
| JEL: | D31 D82 E44 J31 |
| Date: | 2013–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:san:cdmawp:1307&r=lma |
| By: | Fernandes, Ana; Ferreira, Priscila; Winters, L. Alan |
| Abstract: | This paper investigates the effects of firm entry deregulation. We exploit a recent reform that simplified business entry in Portugal as a quasi-natural experiment. We use cross-municipality-year variation in the implementation of the reform for identification. Using matched employer-employee data for the universe of workers and firms, we find that the reform is associated with increased firm entry and competition within industries and regions. The returns to a university degree increased by 5% while the returns to skills increased by 3%. |
| Keywords: | Entry Deregulation; Product Market Competition; Returns to Education; Wage Structure |
| JEL: | J3 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9550&r=lma |
| By: | Klasen, Stephan (University of Göttingen); Pieters, Janneke (IZA) |
| Abstract: | We study the surprisingly low level and stagnation of female labor force participation rates in urban India between 1987 and 2009. Despite rising growth, fertility decline, and rising wages and education levels, women's labor force participation stagnated at around 18%. Using five large cross-sectional micro surveys, we find that a combination of supply and demand effects have contributed to this stagnation. The main supply side factors were rising household incomes, husband's education, stigmas against educated women engaging in menial work, and falling selectivity of highly educated women. On the demand side, employment in sectors appropriate for educated women grew less than the supply of educated workers, leading many women to withdraw from the labor force. |
| Keywords: | female labor force participation, education, India |
| JEL: | J20 J16 I25 O15 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7597&r=lma |
| By: | Kohei Kawamura (University of Edinburgh) and Jozsef Sakovics (University of Edinburgh) |
| Abstract: | We analyse a labour matching model with wage posting, where ?re?flecting institutional constraints - ?fi?rms cannot differentiate their wage offers within certain subsets of workers. Inter alia, we fi?nd that the presence of impersonal wage offers leads to wage compression, which propagates to the wages for high productivity workers who receive personalised offers. |
| Date: | 2013–09–13 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:221&r=lma |
| By: | Joan Llull |
| Abstract: | This paper analyzes the effect of immigration on wages taking into account human capital and labor supply adjustments. Using U.S. micro-data for 1967-2007, I estimate a labor market equilibrium model that includes endogenous decisions on education, participation, and occupation, and allows for skill-biased technical change. Results suggest important labor market adjustments that mitigate the effect of immigration on wages. These adjustments include career switches, labor market detachment and changes in schooling decisions, and are heterogeneous across the workforce. The adjustments generate substantial self-selection biases at the lower tail of the wage distribution that are corrected by the estimated model. |
| Keywords: | immigration, wages, human capital, labor supply, dynamic discrete choice, labor market equilibrium |
| JEL: | J2 J31 J61 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:711&r=lma |
| By: | Martin Huber; Michael Lechner; Conny Wunsch (University of Basel) |
| Abstract: | In this paper, we assess the impact of firms introducing part-time work schemes for gradual labour market exit of elderly workers on their employees’ labour market outcomes. The analysis is based on unique linked employer-employee data that combine high-quality survey and administrative data. Our results suggest that partial or gradual retirement options offered by firms are an important tool to alleviate the negative effects of low labour market attachment of elderly workers in ageing societies. |
| Keywords: | part-time work, elderly employees, treatment effects, matching |
| JEL: | J14 J26 C21 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2013/12&r=lma |
| By: | David Rosnick; |
| Abstract: | Recent estimates of the U.S. economic gains that would result from the proposed Trans-Pacific Partnership (TPP) are very small — only 0.13 percent of GDP by 2025. Taking into account the un-equalizing effect of trade on wages, this paper finds the median wage earner will probably lose as a result of any such agreement. In fact, most workers are likely to lose — the exceptions being some of the bottom quarter or so whose earnings are determined by the minimum wage; and those with the highest wages who are more protected from international competition. Rather, many top incomes will rise as a result of TPP expansion of the terms and enforcement of copyrights and patents. The long-term losses, going forward over the same period (to 2025), from the failure to restore full employment to the United States have been some 25 times greater than the potential gains of the TPP, and more than five times as large as the possible gains resulting from a much broader trade agenda. |
| Keywords: | trade, trans-pacific partnership, TPP, jobs, GDP growth, wages, workers |
| JEL: | E E2 E24 F F1 F13 F16 J J3 J31 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2013-14&r=lma |
| By: | Polat, Sezgin (Galatasaray University Economic Research Center) |
| Abstract: | In this article, I estimate the premium associated with fatal and non-fatal risk within broad industry categories, using official figures provided by the Ministry of Labor and Social Security and wage data from the 2010 and 2011 Household Labor Force Surveys. The results show only positive and significant fatal risk premiums in the manufacturing sector, whereas injury risk premiums exist in both the manufacturing and industry-wide samples. When wage heterogeneity is allowed, fatal risk compensation increases along the distribution, while that of injury risk follows an inverse-u pattern. Compared to similar country cases, the VSL and VSI estimates are relatively small and not significant for low wage earners. Industry averages show that longer working hours are correlated with accidents rates which implies the importance of firm heterogeneity and institutional factors on the high level and variance, particularly for Turkey. |
| Keywords: | Value of a statistical life; Value of a statistical injury; Hedonic wages; Quantile regression |
| JEL: | J17 J28 |
| Date: | 2013–09–18 |
| URL: | http://d.repec.org/n?u=RePEc:ris:giamwp:2013_011&r=lma |
| By: | Jara Tamayo, Holguer Xavier |
| Abstract: | The aim of this paper is to analyse the efect of job insecurity on labour supply. We propose an extension of traditional discrete choice models of labour supply in order to allow for the introduction of non-pecuniary job attributes in the analysis. In our extended model, the choice alternatives are characterised by bundles of income, hours of work and job insecurity. We compare the predictive power and labour supply elasticities obtained with our model to those of a traditional model where only income and discrete hours choices characterise a job. The results show that once job insecurity is included in the discrete choice alternatives, the predictive power of the model improves significantly. Labour supply elasticities are significantly higher than those obtained with a traditional model and increase with the level of job insecurity. Finally, a decrease of job insecurity at work has a positive and significant effect on participation. Policies aimed at improving working conditions could, in this sense, be useful to create incentives in labour market. |
| Date: | 2013–09–16 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2013-16&r=lma |
| By: | Gary Burtless |
| Abstract: | The labor force participation of men age 60-74 has increased in recent years. Since reaching a post-World War-II low point in 1993, the share of such older men either working or looking for work jumped about 11 percentage points, from 33 percent in 1993 to 44 percent in 2010. The increase came at a time when changes in the retirement income system provided incentives for career workers to remain in the labor force longer. The share of earnings that Social Security replaced at any given age was falling due to the rise in the program’s Full Retirement Age. Workers could partly or fully offset the decline by retiring later. Workers were also becoming increasingly dependent on 401(k)s for their workplace retirement savings. Unlike traditional (defined-benefit) pension plans, 401(k) plans do not offer strong financial incentives to retire earlier rather than later. Working longer provides more time to save and earn investment income and shortens the time in retirement that must be financed with 401(k) savings. The rise in labor force participation can thus be seen as a response to changes in the retirement income system that reduce benefits available at any given age and reward working longer. The question addressed in this brief is the extent to which the increased educational attainment of older men helps explain their increased participation in the labor force.Educational attainment is a key determinant of worker productivity. Better educated workers are paid more and have more employment opportunities. At older ages they also tend to have better health. An increase in the educational attainment of older men can thus be expected to increase the willingness and ability of older men to work longer. The discussion proceeds as follows. The first section presents data on the rising educational attainment of older men and the closing of the educational gap between older and prime-age men. The second section examines the wages earned by older and younger workers to see whether these educational gains made older men more attractive to employers. The third section reports the results of an analysis assessing the extent to which the rise in educational attainment can explain the rise in participation. The final section concludes that the rise in educational attainment is a significant factor that makes older men more willing and able to remain in the labor force. But the gains in older men’s schooling attainment, both absolutely and relative to attainment of younger workers, are slowing. Therefore, the gains we have seen in labor force participation among older men will probably slow in the near future. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2013-13&r=lma |
| By: | Brenzel, Hanna; Gartner, Hermann; Schnabel, Claus |
| Abstract: | Using a representative establishment dataset, this paper is the first to analyze the incidence of wage posting and wage bargaining in the matching process from the employer's side. We show that both modes of wage determination coexist in the German labor market, with about two-thirds of hirings being characterized by wage posting. Wage posting dominates in the public sector, in larger firms, in firms covered by collective agreements, and in part-time and fixed-term contracts. Job-seekers who are unemployed, out of the labor force or just finished their apprenticeship are also less likely to get a chance of negotiating. Wage bargaining is more likely for more-educated applicants and in jobs with special requirements as well as in tight regional labor markets. -- Dieser Aufsatz analysiert erstmals mit Hilfe einer repräsentativen Betriebsbefragung die Verbreitung von fixen Lohnangeboten der Arbeitgeber und von Lohnverhandlungen bei Neueinstellungen. Wir zeigen, dass sowohl individuelle Lohnverhandlungen als auch fixe Lohnangebote in Deutschland vorkommen, wobei bei rund zwei Drittel der Neueinstellungen ein fixer Lohn angeboten wird. Besonders häufig gibt es fixe Lohnangebote im öffentlichen Dienst, in tarifgebundenen Firmen und bei Teilzeit- oder befristeter Beschäftigung. Mit Personen, die vorher nicht erwerbstätig waren oder eine Ausbildung beendet haben, wird seltener über den Lohn verhandelt. Wahrscheinlicher ist eine Lohnverhandlung, wenn die eingestellte Person höher qualifiziert ist, wenn spezielle Qualifikationen verlangt werden oder wenn die regionale Arbeitslosigkeit gering ist. |
| Keywords: | wage posting,wage bargaining,hiring,matching,Germany |
| JEL: | E24 J30 J63 M51 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwqwdp:082013&r=lma |
| By: | Karthik Muralidharan; Ketki Sheth |
| Abstract: | Recruiting female teachers is frequently suggested as a policy option for improving girls' education outcomes in developing countries, but there is surprisingly little evidence on the effectiveness of such a policy. We study gender gaps in learning outcomes, and the effectiveness of female teachers in reducing these gaps using a large, representative, annual panel data set on learning outcomes in rural public schools in the Indian state of Andhra Pradesh. We report six main results in this paper. (1) We find a small but significant negative trend in girls' test scores in both math (0.02σ/year) and language (0.01σ/year) as they progress through the public primary school system; (2) Using five years of panel data, school-grade and student gender by grade fixed effects, we find that both male and female teachers are more effective at teaching students of their own gender; (3) However, female teachers are more effective overall, resulting in girls' test scores improving by an additional 0.036σ in years when they are taught by a female teacher, with no adverse effects on boys when they are taught by female teachers; (4) The overall gains from having a female teacher are mainly attributable to their greater effectiveness at improving math test scores than male teachers (especially for girls); (5) We find no effect of having a same-gender teacher on student attendance, suggesting that the mechanism for the impact on learning outcomes is not on the extensive margin of increased school participation, but on the intensive margin of more effective classroom interactions; (6) Finally, the increasing probability of having a male teacher in higher grades can account for around 10-20% of the negative trend we find in girls' test scores as they move to higher grades. |
| JEL: | I21 J16 O15 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19341&r=lma |
| By: | Garicano, Luis; Lelarge, Claire; Van Reenen, John |
| Abstract: | We show how size-contingent laws can be used to identify the equilibrium and welfare effects of labor regulation. Our framework incorporates such regulations into the Lucas (1978) model and applies this to France where many labor laws start to bind on firms with exactly 50 or more employees. Using data on the population of firms between 2002 and 2007 period, we structurally estimate the key parameters of our model to construct counterfactual size, productivity and welfare distributions. With flexible wages, the deadweight loss of the regulation is below 1% of GDP, but when wages are downwardly rigid welfare losses exceed 5%. We also show, regardless of wage flexibility, that the main losers from the regulation are workers (and to a lesser extent large firms) and the main winners are small firms. |
| Keywords: | firm size; labor regulation; power law; productivity |
| JEL: | J8 L11 L25 L51 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9495&r=lma |
| By: | Eric V. Edmonds; Maheshwor Shrestha |
| Abstract: | Can efforts to promote education deter child labor? We report on the findings of a field experiment where a conditional transfer incentivized the schooling of children associated with carpet factories in Nepal. We find that schooling increases and child involvement in carpet weaving decreases when schooling is incentivized. As a simple static labor supply model would predict, we observe that treated children resort to their counterfactual level of school attendance and carpet weaving when schooling is no longer incentivized. From a child labor policy perspective, our findings imply that “You get what you pay for” when schooling incentives are used to combat hazardous child labor. |
| JEL: | J22 J88 O15 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19279&r=lma |