nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2013‒10‒25
fourteen papers chosen by
Erik Jonasson
National Institute of Economic Research

  1. Has Atypical Work Become Typical in Germany?: Country Case Studies on Labour Market Segmentation By Werner Eichhorst; Verena Tobsch
  2. Wage posting or wage bargaining? Evidence from the employers' side By Brenzel, Hanna; Gartner, Hermann; Schnabel, Claus
  3. Maternity Leave and the Responsiveness of Female Labor Supply to a Household Shock By Emma Tominey
  4. Job Satisfaction and Self-Selection into the Public or Private Sector: Evidence from a Natural Experiment By Danzer, Natalia
  5. Educational mismatches and skills: New empirical tests of old hypotheses By Allen J.P.; Velden R.K.W. van der; Levels M.
  6. Extreme Wage Inequality: Pay at the Very Top By Brian Bell; John Van Reenen
  7. How large second-generation migrants and natives differ in terms of human capital accumulation and why? Empirical evidence for France By Fleury, Nicolas
  8. The Structure of Hiring Costs in Germany: Evidence from Firm-Level Data By Mühlemann, Samuel; Pfeifer, Harald
  9. Skill mismatch and use in developed countries: Evidence from the PIAAC study By Velden R.K.W. van der; Allen J.P.; Levels M.
  10. The impact of European Union austerity policy on women's work in Southern Europe By Lina Gálvez-Muñoz; Paula Rodríguez-Modroño; Tindara Addabbo
  11. Economic Reform and Productivity Convergence in China By Kang, Lili; Peng, Fei
  12. The Consequences of a Piece Rate on Quantity and Quality: Evidence from a Field Experiment By Heywood, John S.; Siebert, W. Stanley; Wei, Xiangdong
  13. The UK Productivity and Jobs Puzzle: Does the Answer Lie in Labour Market Flexibility? By Joao Paulo Pessoa; John Van Reenen
  14. To what extent does disability discourage from work? An empirical analysis of labour force participation of disabled people in Italy By Tindara Addabbo; Jaya Krishnakumar; Elena Sarti

  1. By: Werner Eichhorst; Verena Tobsch
    Abstract: This paper gives an overview of the transformation of the German labor market since the mid-1990s with a special focus on the changing patterns of labor market segmentation or ‘dualization’ of employment in Germany. While labor market duality in Germany can partially be attributed to labor market reforms promoting in particular non-standard forms of employment and allowing for an expansion of low pay, structural changes in the economy as well as strategic choices by employers and social partners also play a prominent role.
    Keywords: Germany, non-standard work, low pay, labor market segmentation
    JEL: J21 J31 J58
    Date: 2013
  2. 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 pro-cess 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 charac-terized 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 bar-gaining 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 reprä-sentativen Betriebsbefragung die Verbreitung von fixen Lohnangeboten der Arbeit-geber und von Lohnverhandlungen bei Neueinstellungen. Wir zeigen, dass sowohl individuelle Lohnverhandlungen als auch fixe Lohnangebote in Deutschland vor-kommen, wobei bei rund zwei Drittel der Neueinstellungen ein fixer Lohn angeboten wird. Besonders häufig gibt es fixe Lohnangebote im öffentlichen Dienst, in tarif-gebundenen 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
  3. By: Emma Tominey (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: 2013–10
  4. By: Danzer, Natalia (Ifo Institute for Economic Research)
    Abstract: Are public sector jobs better than private sector jobs? To answer this question, this paper investigates observed differences in job satisfaction between public- and private-sector workers and disentangles the effect of worker sorting from the one caused by sector-specific job characteristics. A natural experiment – the massive privatization process in post-Soviet countries – allows correcting potential self-selection bias. Industry-specific privatization probabilities are assigned to workers based on unique individual-level survey information regarding pre-determined Soviet jobs during the 1980s. The results reveal a causal public-sector satisfaction premium and a negative selection of individuals into the public sector. Part of the public-private satisfaction gap can be explained by the different availability of fringe benefits in the two sectors.
    Keywords: public sector, job satisfaction, self-selection, quasi-experiment, privatization, fringe benefits
    JEL: J28 J45 J31 J32
    Date: 2013–09
  5. By: Allen J.P.; Velden R.K.W. van der; Levels M. (GSBE)
    Abstract: In this paper, we empirically explore how the often reported relationship between overeducation and wages can best be understood. Exploiting the newly published Programme for International Assessment of Adult Competencies PIAAC data OECD 2013, we are able to achieve a better estimation of the classical ORU-model Duncan and Hoffman, 1981, by controlling for heterogeneity of observable skills. Our findings suggest that 1 a considerable part of the effect of educational mismatches can be attributed to skills heterogeneity, and 2 that the extent to which skills explain educational mismatches varies by institutional contexts. These observations suggest that skills matter for explaining wage effects of education and educational mismatches, but the extent to which this is the case also depends on institutional contexts.
    Keywords: Analysis of Education; Education and Economic Development; Labor Demand; Human Capital; Skills; Occupational Choice; Labor Productivity;
    JEL: I21 I25 J23 J24
    Date: 2013
  6. By: Brian Bell; John Van Reenen
    Abstract: We provide new evidence on the growth in pay at the very top of the wage distribution in the UK. Sectoral decompositions show that workers in the financial sector have accounted for the majority of the gains at the top over the last decade. New results are also presented on the pay of CEOs in the UK. We show how improved measurement of pay points to a stronger pay-performance link than previously estimated. This link is stronger, and more symmetric, for those firms in which institutional investors play a larger role.
    Keywords: wage inequality, firm performance, CEO compensation, performance pay, management
    Date: 2013–02
  7. By: Fleury, Nicolas
    Abstract: This paper analyses the differences in the determinants of the accumulation of human capital for second-generation immigrants relatively to natives for the French case. We use the Training and Occupational Skills survey to conduct our econometric analysis, where we distinguish the natives, the second-generation immigrants from ‘North Africa’ and from ‘Southern Europe’ origins. We don’t observe striking differences in the determinants between the second-generation immigrants as a whole and the natives. Moreover, the ‘second-generation immigrants’ group is a heterogeneous one. The significant determinants as well as the magnitude of the impact of these determinants substantially differ between the natives and the two main considered origins. There seems to be a lower ‘determinism’ through parental education for ‘Southern Europe’ than ‘North Africa’ origin, but differences in intergenerational correlations of education could be explained by parental transmission of education and/or by selection effects of the migrants. The Blinder-Oaxaca decomposition shows that parental endowments in education account for a large part of the mean outcome differences, but transmissions of education (and other components) also seems to be some relevant to explain differences in accumulation of human capital of second-generation migrants vs natives or between migrants.
    Keywords: accumulation of human capital, intergenerational mobility, immigrants
    JEL: J1 J24 J6
    Date: 2013–09
  8. By: Mühlemann, Samuel (University of Bern); Pfeifer, Harald (BIBB)
    Abstract: This paper analyzes the structure of hiring costs of skilled workers in Germany. Using detailed and representative firm-level data on recruitment and adaptation costs of new hires, we find that average hiring costs amount to more than 8 weeks of wage payments (4,700 Euros). The structure of hiring costs is convex, as an increase in the number of hires by 1% increases hiring costs by 1.3%. We find moderate effects of labor market institutions on the magnitude but none on the structure of hiring costs. Furthermore, we provide evidence in favor of monopsony power in the German labor market.
    Keywords: labor adjustment costs, hiring costs, search costs, adaptation costs
    JEL: J32 J63
    Date: 2013–09
  9. By: Velden R.K.W. van der; Allen J.P.; Levels M. (GSBE)
    Abstract: In this paper we develop and test a new set of measures of skill mismatches, based on data on skill levels and skill use in the domains of literacy and numeracy from the PIAAC project. The measures we develop represent the extent of skill use relative to ones own skill level. We test the measures by examining their relation to a number of labour market outcomes. We subsequently examine how mismatches are distributed across and within a large number of countries, and use our results to reflect on possible causes and consequences of mismatches. We find that, in general, higher skill utilization is always beneficial in terms of productivity and job satisfaction, and that overutilization of skills therefore points more towards a fuller use of the available human capital, rather than to a serious skill shortage. We find an asymmetry in returns between literacy and numeracy skills although numeracy skill level appears to pay higher dividends than literacy skill level, shifts in skill utilization within skill levels have greater consequences for literacy than for numeracy. The distribution of mismatches across and within countries is broadly consistent with the expectation that skills will be used more fully under competitive market conditions with few institutional or organizational barriers. Finally, skill mismatches are only quite weakly related to educational mismatches, reflecting the heterogeneity in skill supply and demand that cross-cuts the dividing lines set by formally defined qualification levels and job titles.
    Keywords: Analysis of Education; Education and Economic Development; Labor Demand; Human Capital; Skills; Occupational Choice; Labor Productivity;
    JEL: I25 I21 J23 J24
    Date: 2013
  10. By: Lina Gálvez-Muñoz; Paula Rodríguez-Modroño; Tindara Addabbo
    Abstract: Contrary to consolidated economic theory principles, in Europe (but also in other world regions), austerity policy has been implemented instead of stimulus measures which have proven to be successful in crisis associated with credit crunch and insufficient demand. These policies cannot be only considered as an "austericide" due to ideological blindness. They also need to be considered as a strategy for imposing an economic and social reform which proved too difficult to be implemented in the years previous to the great recession. The ongoing fiscal contraction policies include the typical adjustment measures which are now driving the European economy towards a new type of insertion within the international economy. And as a consequence, they imply deep changes on the gender division of work deepening gender inequality. This article analyses the different effects of European Union austerity policy on women and men’s participation in the labour markets in two Southern European countries beaten by the Debt crisis: Spain and Italy. During the first part of this economics crisis, unemployment grew higher for men than for women, but in the second phase with the all sectors hit by the recession and the implementation of harsh austerity policies affecting public-sector jobs, women are also losing their jobs at the same rate than men. We have estimated labour supply models for individuals aged 25 to 54 living in couples with or without children by gender by using the EU-SILC 2011 micro data for Spain and Italy. The analysis carried out shows a strong countercyclical added-worker effect for women in response to transitory shocks in partner’s earnings, in contrast with a procyclical discouraged-worker effect for men. However though the added-worker effect prevails for women in Spain, in Italy still the discouraged worker effect dominates. The results show also a positive effect of the provision of childcare services on women’s labour supply. A cut in social and care services due to austerity promotion may turn the tendency to a decline in women’s participation and employment rates in the labour force with the subsequent loss of total well-being, due to gender differences in education performance, and especially of women’s well-being.
    Keywords: gender, labour supply, austerity policy, Great Recession
    JEL: J22 J16 H53 E62
    Date: 2013–10
  11. By: Kang, Lili; Peng, Fei
    Abstract: This paper examines effects of the formation of physical and human capital on the growth of labour productivity, Total Factor Productivity (TFP) and wages in China, incorporating the market reform factors such as ownership shifts, population policy, openness and fiscal expenditures on education. We find that Chinese economic miracle is mainly pushed by the (physical) capital service rather than formation of human capital. The physical capital inputs contribute even more after 1994 as the returns to education decrease with the education expansion and increasing tuition fees. The traditional four economic regions of China show different growth patterns. The capital inputs mostly help the labour productivity growth in the West region and the wages growth in the Interior region, while human capital formation contributes to the TFP in all four regions. Moreover, provinces within each region present strong evidence of convergence of economic growth. The convergence is most prominent in the provinces within the Northeast and Coastal regions for labour productivity and TFP growth, suggesting fast technology spill-over within these regions.
    Keywords: labour productivity, convergence, regional inequality
    JEL: D24 D63 J24 O47
    Date: 2013–04–10
  12. By: Heywood, John S. (University of Wisconsin, Milwaukee); Siebert, W. Stanley (University of Birmingham); Wei, Xiangdong (Lingnan University)
    Abstract: This field experiment examines output quantity and quality for workers in a data input business. We observe two sets of workers that differ in monitoring intensity as they move from time to piece rates. The application of piece rates increases quantity, and we find that the resultant quality can be improved with sufficient monitoring. "Committed" workers also produce higher quantity and quality, showing the role of worker selection - which appears especially strong under time rates. Our results thus show how a firm can refine its worker selection and monitoring options together with the payment system to deliver its chosen quality-quantity combination.
    Keywords: piece rate, monitoring, shirking, quantity and quality trade off, field experiment, worker committment
    JEL: D2 J3 L2 M5
    Date: 2013–09
  13. By: Joao Paulo Pessoa; John Van Reenen
    Abstract: GDP per worker fell for the five years after 2008 which is unprecedented in post war UK history. In this paper we argue that "capital shallowing" (i.e. the fall in the capital-labour ratio) could be the main reason for this. This is likely to have occurred due to changes in factor prices: a large fall in real wages and increases in the cost of capital. In previous recessions real wages did not fall, but reforms to union strength and welfare have made wages more sensitive to negative demand shocks. This wage flexibility is desirable as it reduces the risks of long-term unemployment building up. After accounting for changes in capital TFP is more similar to earlier recessions and likely to be related to under-utilised resources and misallocation. The fall in labour productivity is therefore likely to reverse if demand improves - e.g. through stronger monetary or fiscal policy stimulus.
    Keywords: productivity, employment, wages, labour market flexibility
    JEL: J2 J3 O52
    Date: 2013–06
  14. By: Tindara Addabbo; Jaya Krishnakumar; Elena Sarti
    Abstract: This paper is an empirical study on the work opportunities of people with disability using Italian data collected through a survey carried out by ISTAT in 2004. Our analysis is guided by the conceptual framework of the capability approach and investigates the role of conversion factors in the ability to be employed and the type of employment. We first use a simple probit for labour force participation and then a sequential logit for the outcomes of participation as well as employment status. In all variants we and that chronic illness is a stronger deterrent for labour force participation than disability.Women are more discouraged by disability compared to men. Among the various types of disabilities, `intellectual' disability is the strongest barrier as can be expected and hearing the least influential. In a sequential decision-making process, we and that disability affects both labour force participation decision and the ability to be employed but not so much the choice between part-time and full-time
    Date: 2013–10

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