nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2013‒10‒18
fifteen papers chosen by
Erik Jonasson
National Institute of Economic Research

  1. Wage policies of a Russian firm and the financial crisis of 1998: Evidence from personnel data - 1997-2002 By Schaffer M.E.; Dohmen T.J.; Lehmann H.
  2. Occupational Complexity, Experience, and the Gender Wage Gap By Elisa Keller
  3. Offshoring and Labour Market Inequalities By Tillmann Schwörer
  4. Locus of Control and Low-Wage Mobility By Daniel D. Schnitzlein; Jens Stephani
  5. The Relationship between Hours of Domestic Services and Female Earnings: Panel Register Data Evidence from a Reform By Halldén, Karin; Stenberg, Anders
  6. The Low-Pay No-Pay Cycle: Are There Systematic Differences across Demographic Groups? By Yin King Fok; Rosanna Scutella; Roger Wilkins
  7. The Dynamics of Low Pay Employment in Australia By Cai, Lixin
  8. State-Dependence and Stepping Stone Effects of Low Pay Employment in Australia By Cai, Lixin
  9. Unemployment Risk and Wage Differentials By Ludo Visschers (The University of Edinburgh, Universidad Carlos III de Madrid, and CESifo)
  10. The impact of immigration on the employment and wages of native workers By Andri Chassamboulli; Theodore Palivos
  11. Digitization and the Contract Labor Market: A Research Agenda By Ajay Agrawal; John Horton; Nicola Lacetera; Elizabeth Lyons
  12. Retiree Health Insurance for Public School Employees: Does it Affect Retirement? By Maria D. Fitzpatrick
  13. Employment Adjustment during the Global Crisis: Differences between State-Owned and Private Enterprises By Almos Telegdy
  14. Does Childcare Matter for Maternal Labor Supply? Pushing the limits of the Regression Discontinuity Framework By Anna Lovasz; Agnes Szabo-Morvai
  15. Externalities in Recruiting By Kräkel, Matthias; Szech, Nora; von Bieberstein, Frauke

  1. By: Schaffer M.E.; Dohmen T.J.; Lehmann H. (ROA)
    Abstract: We use a rich personnel data set from a Russian firm for the years 1997 to 2002 to analyze how the firm adjusts wages and employment during this period in which local labor market conditions changed in the aftermath of the financial crisis in 1998. We relate the development of turnover and wages for various employment categories to alternative models of wage and employment determination. We argue that the firms behavior is consistent with the predictions of efficiency wage models of the shirking and turnover type.
    Keywords: Labor Demand; Wage Level and Structure; Wage Differentials; Socialist Systems and Transitional Economies: Factor and Product Markets; Industry Studies; Population;
    JEL: J23 J31 P23
    Date: 2013
  2. By: Elisa Keller (University of Iowa)
    Abstract: I explore the role of individuals' skills and work experience in explaining the gender wage gap across occupations. I use the O*NET dataset to build an index of occupational complexity: the ratio of abstract to manual tasks. The ratio of female to male wages is U-shaped across occupations ordered by increasing complexity. The U-shape flattens over the lifecycle and across successive cohorts. I develop an occupational choice model with male and female individuals who are heterogeneous with respect to their level of skill. An individual's skill at a point in time depends on his/her exogenous initial level of skill and his/her work experience. Individuals decide how much time to spend in the labor market. Occupations differ by two features in my model: 1) the skill required to perform, and 2) the marginal product of skill. If occupations involve simple tasks, output and wages vary little across workers of different initial skill levels. Also, acquired work experience influences wages only slightly, since little can be learned by performing simple tasks. I discipline the model with data on occupational complexity, occupational choice, labor supply and male wages. The model reproduces the gender wage gap across occupations for cohorts born between 1915 and 1955. The little work experience of females relative to that of males is a key factor behind the U-shape. It decreases female wages disproportionately across occupations and it influences female occupational selection. I find that 69% of the lifecycle gender wage gap is attributable to work experience. Removing differences in work experience between genders results in a larger fraction of females choosing occupations for which the gender wage differential is smaller.
    Date: 2013
  3. By: Tillmann Schwörer
    Abstract: This paper estimates the effects of offshoring on labour market inequalities between skill groups based on German industry level data from 1995 to 2007. Our main findings are the following: First, offshoring is on average biased in favour of high-skilled employees and in disfavour of low-skilled employees. This effect is strongly driven by the manufacturing sector, material offshoring, and offshoring to Central and Eastern Europe. Second, we find that the labour market adjusts to offshoring mainly through changes in relative wages rather than changes in relative employment. This runs counter to the classical argument that German labour market institutions (collective bargaining, unemployment benefits, etc.) lead to rigid wage structures and high unemployment rates. Third, in the service sector it is the group of medium-skilled employees which is particularly exposed to offshoring, possibly due to the different nature of tasks there. Fourth, medium-skilled employees are also negatively affected by technological change, which explains recent trends towards a polarisation in labour demand
    Keywords: offshoring, skills, labour market, inequalities, seemingly unrelated regression
    JEL: F14 J23 J24 J31
    Date: 2013–10
  4. By: Daniel D. Schnitzlein; Jens Stephani
    Abstract: We investigate whether non-cognitive skills – in particular Locus of Control – are important determinants of the labour market processes at the low-wage margin. Based on data from the German Socio-Economic Panel, we estimate dynamic multinomial logit models with random effects and investigate whether Locus of Control influences the probability of being higher-paid or low-paid as well as the probability of escaping low wages by moving up to higher-paid employment. Our results reveal a significant amount of state dependence in low pay even after controlling for Locus of Control and other non-cognitive skills. Furthermore, compared to individuals with an external Locus of Control, individuals with a more internal Locus of Control have a significantly higher probability of being higher-paid instead of low-paid. Conditional on being low-paid, individuals with an internal Locus of Control additionally have a significantly higher probability of moving to higher-paid employment in the following year than individuals with an external Locus of Control.
    Keywords: low-wage, wage mobility, personality, non-cognitive skills, inequality, SOEP
    JEL: J30 J60
    Date: 2013
  5. By: Halldén, Karin (Swedish Institute for Social Research, Stockholm University); Stenberg, Anders (Swedish Institute for Social Research, Stockholm University)
    Abstract: We provide evidence on the quantitative relationship between household time con-straints and female earnings. In 2007, a tax discount reform in Sweden reduced prices of outsourced domestic services (ODS) by 50 percent. Linking population register data on yearly tax discounts with annual earnings, we find that 60 percent of married women’s freed hours are applied to labor market work, with ODS of approximately 2-4 percent of full-time work in a year being linked to a 2-4 percent earnings increase, but with no additional increase thereafter. The analysis carefully considers potential bias and outlines the required assumptions regarding reverse causality.
    Keywords: household work; outsourcing; female labor supply
    Date: 2013–10–09
  6. By: Yin King Fok (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Rosanna Scutella (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Roger Wilkins (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: We investigate transitions between unemployment, low-paid employment and higher-paid employment using household panel data for the period 2001 to 2011. Dynamic panel data methods are used to estimate the effects of labour force status on subsequent labour force status. A distinctive feature of our study is the investigation of heterogeneity in the effects of unemployment and low-paid employment on future employment prospects. We find that there is state dependence in both unemployment and low-paid employment and clear evidence of a low-pay no-pay cycle for both men and women. Significant differences in effects across different subgroups of the population are, however, found. Typically, the young and the better educated face less severe penalties from unemployment or low-paid employment, and, for women, the cycle between low pay and no pay varies across subgroups. Moreover, in the case of men who have completed secondary schooling but have no further qualifications, low-paid employment actually decreases the chances of entering higher-paid employment by more than unemployment does. This is not the case for women, however, who clearly have a higher likelihood of entering higher-paid employment from low-paid employment than from unemployment, regardless of their age, education level or other characteristics.
    Keywords: Employment dynamics, state dependence, heterogeneous impacts
    JEL: J01 J31 J60
    Date: 2013–10
  7. By: Cai, Lixin
    Abstract: Using the Household, Income and Labour Dynamics in Australia (HILDA) survey, this study shows that the largest proportion of low pay spells originated from higher pay; only a small proportion were from non-employment or recent graduates. While the majority of low pay spells transitioned to higher pay, a significant proportion ended up with non-employment. The multivariate analysis shows that workers who entered low pay from higher pay also have a higher hazard rate of transitioning to higher pay; and those who entered low pay from non-employment are more likely to return to non-employment. Union members, public sector jobs and working in medium to large size firms increase the hazard rate of transitioning to higher pay, while immigrants from non-English speaking countries and workers with health problems have a lower hazard rate of moving into higher pay. There is some evidence that the longer a worker is in low paid employment, the less likely they are to transition to higher pay.
    Keywords: Low pay, competing risk, Australia
    JEL: J2 J3 J33
    Date: 2013
  8. By: Cai, Lixin
    Abstract: Using the HILDA Survey, this study examines state-dependence and stepping stone effects of low pay in Australia. The results show that both state-dependence and stepping stone effects of low pay are present after observed and unobserved individual heterogeneity is accounted for. The results also show that, other things being equal, people who are on low pay are more likely to be in employment in the future than those who are either unemployed or not in the labour force. On the other hand, people on low pay do not appear to be more likely to become jobless in the future than those on higher pay.
    Keywords: Low pay, stepping stone effects, state dependence, multinomial logit model
    JEL: C35 J31 J38
    Date: 2013
  9. By: Ludo Visschers (The University of Edinburgh, Universidad Carlos III de Madrid, and CESifo)
    Abstract: We develop a neoclassical trade model with heterogeneous factors of production. We consider a world with two factors, labor and ?managers?, each with a distribution of ability levels. Production combines a manager of some type with a group of workers. The output of a unit depends on the types of the two factors, with complementarity between them, while exhibiting diminishing returns to the number of workers. We examine the sorting of factors to sectors and the matching of factors within sectors, and we use the model to study the determinants of the trade pattern and the effects of trade on the wage and salary distributions. Finally, we extend the model to include search frictions and consider the distribution of employment rates.
    Keywords: Layoff Rates, Unemployment risk, Wage Differentials, Unemployment Scarring.
    JEL: J31 J63
    Date: 2013–10–11
  10. By: Andri Chassamboulli (University of Cyprus); Theodore Palivos (Athens University of Economics and Business)
    Abstract: We analyze the impact of the immigration influx that took place during the years 2000-2007 in Greece on labor market outcomes. We employ a search and matching framework that allows for skill heterogeneity and differential unemployment income (search cost) between immigrants and natives. Within such a framework, we .find that skilled native workers, who complement immigrants in production, gain in terms of both wages and employment. The effects on unskilled native workers, who compete with immigrants, on the other hand, are ambiguous and depend first on the presence of a statutory minimum wage and second on the way that this minimum wage is determined.
    Keywords: Immigration; Search and Matching; Unemployment; Skill-heterogeneity;Minimum Wage; Greek Economy.
    JEL: F22 J61 J64
    Date: 2013–05
  11. By: Ajay Agrawal; John Horton; Nicola Lacetera; Elizabeth Lyons
    Abstract: Online contract labor globalizes traditionally local labor markets, with platforms that enable employers, most of whom are in high-income countries, to more easily outsource tasks to contractors, primarily located in low-income countries. This market is growing rapidly; we provide descriptive statistics from one of the leading platforms where the number of hours worked increased 55% from 2011 to 2012, with the 2012 total wage bill just over $360 million. We outline three lines of inquiry in this market setting that are central to the broader digitization research agenda: 1) How will the digitization of this market influence the distribution of economic activity (geographic distribution of work, income distribution, distribution of work across firm boundaries)?; 2) What is the magnitude and nature of information frictions in these digital market settings as reflected by user responses to market design features (allocation of visibility, investments in human capital acquisition, machine-aided recommendations)?; 3) How will the digitization of this market affect social welfare (increased efficiency in matching, production?)? We draw upon economic theory as well as evidence from empirical research on online contract labor markets and other related settings to motivate and contextualize this research agenda.
    JEL: J24 J61 O15 O33
    Date: 2013–10
  12. By: Maria D. Fitzpatrick
    Abstract: Despite the widespread provision of retiree health insurance for public sector workers, little attention has been paid to its effects on employee retirement. This is in contrast to the large literature on health-insurance-induced “job-lock” in the private sector. I use the introduction of retiree health insurance for public school employees in combination with administrative data on their retirement to identify the effects of retiree health insurance. As expected, the availability of retiree health insurance for older workers allows employees to retire earlier. These behavioral changes have budgetary implications, likely making the programs self-financing rather than costly to taxpayers.
    JEL: H75 I21 I22 J26
    Date: 2013–10
  13. By: Almos Telegdy (Institute of Economics, Center for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: This paper analyses the employment adjustment of state- and privately-owned companies before and during the global crisis. Using Hungarian data, it finds that the net job creation rate is similar across the two ownership types before the crisis, but during the crisis state-owned companies have a net job creation rate larger by 7 percentage points than private enterprises. The effect is caused both by a larger gross job creation rate and by a drop in job destruction associated with state ownership.
    Keywords: Net job creation, Global crisis, State ownership, Hungary
    JEL: F23 L25 L32
    Date: 2013–04
  14. By: Anna Lovasz (Institute of Economics, Center for Economic and Regional Studies, Hungarian Academy of Sciences); Agnes Szabo-Morvai (Central European University and HTFA Research Institute)
    Abstract: We use an extension of the RD approach based on a kindergarten enrollment cutoff date and a new resampling design to estimate the causal impact of subsidized childcare availability on Hungarian mothers' labor market participation around the 3rd birthday of the child. Besides standard fuzzy RD, which holds calendar time constant, we apply an alternative version where child's age is held constant, which enables us to (a) separate the childcare effect from other, age-specific effects, and (b) consider the effect of not only point, but interval cutoffs for eligibility. We combine RD with a difference-in-differences approach using a comparison group of mothers with children aged 4-5 to control for seasonal effects (parent selection, child development, within-year labor market fluctuations). Our estimates indicate that a mother with a 3 year old is 15% more likely to be active if her child is eligible for subsidized kindergarten, corresponding to previous estimates of labor supply elasticity of 0.3-0.75. This suggests that increased subsidized childcare availability and parental leave alone cannot explain the sharp increase in the rate of maternal participation seen around children's 3rd birthday, highlighting the importance of other factors such as separation preferences and flexible work forms.
    Keywords: Subsidized Childcare Availability, Maternal Labor Supply, Regression Discontinuity
    JEL: J13 J22
    Date: 2013–07
  15. By: Kräkel, Matthias; Szech, Nora; von Bieberstein, Frauke
    Abstract: External recruiting at least weakly improves the quality of the pool of applicants, but the incentive implications are less clear. Using a contest model, this paper investigates the pure incentive effects of external recruiting. Our results show that if workers are heterogeneous, the opening of a firm’s career system may lead to a homogenization of the pool of contestants and, thus, encourage the firm’s high ability workers to exert more effort. If this positive effect outweighs the discouragement of low ability workers, the firm will benefit from external recruiting. If, however, the discouragement effect dominates the homogenization effect, the firm should disregard external recruiting. In addition, product market competition makes opening of the career system less attractive for a firm since it increases the incentives of its competitors’ workers and hence strengthens the competitors.
    Keywords: contest; externalities; recruiting; wage policy.
    JEL: C72 J2 J3
    Date: 2013

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