nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2013‒11‒16
fifteen papers chosen by
Erik Jonasson
National Institute of Economic Research

  1. Working in family firms : less paid but more secure ? Evidence from French matched employer-employee data By Rebérioux, Antoine; Caroli, Eve; Breda, Thomas; Bassanini, Andrea
  2. The gap between public and private wages: new evidence for the EU By Francisco de Castro; Matteo Salto; Hugo Steiner
  3. Education, experience and dynamic urban wage premium By Fredrik Carlsen; Jorn Rattso; Hildegunn E. Stokke
  4. Returns to Foreign Language Skills in a Developing Country: The Case of Turkey By Antonio Di Paolo; Aysit Tansel
  5. The Impact of Immigration on Native Wages and Employment. By Anthony Edo
  6. Women Labor Market Participation in Europe: Novel Evidence on Trends and Shaping Factors By Cipollone, Angela; Patacchini, Eleonora; Vallanti, Giovanna
  7. The cohort size-wage relationship in Europe By John Moffat; Duncan Roth
  8. Can working conditions explain the return-to-entrepreneurship puzzle? By Lechmann, Daniel S. J.
  9. The rise and fall of piecework-timework wage differentials: market volatility, labor heterogeneity, and output pricing By Hart, Robert A; Roberts, J Elizabeth
  10. Retirement patterns of couples in Europe By Laura Hospido; Gema Zamarro
  11. Functional literacy, heterogeneity and the returns to schooling : multi-country evidence By Fasih, Tazeen; Patrinos, Harry Anthony; Sakellariou, Chris
  12. Full Childcare Coverage: Higher Maternal Labour Supply and Childcare Usage? By Vanleenhove, Pieter
  13. Worktime Regulations and Spousal Labor Supply By Dominique Goux; Eric Maurin; Barbara Petrongolo
  14. Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy By A. Kerem Cosar; Nezih Guner; James Tybout
  15. Do wage subsidies for disabled workers result in deadweight loss? – evidence from the Danish Flexjob scheme By Nabanita Datta Gupta; Mona Larsen; Lars Brink Thomsen

  1. By: Rebérioux, Antoine; Caroli, Eve; Breda, Thomas; Bassanini, Andrea
    Abstract: We study the compensation package offered by family firms. Using matched employer-employee data for a sample of French establishments in the 2000s, we first show that family firms pay on average lower wages to their workers. This family/non-family wage gap is robust to controlling for several establishment and individual characteristics and does not appear to be due either to the differential of productivity between family and non-family firms or to unobserved establishment and individual heterogeneity. Moreover, it is relatively homogeneous across workers with different gender, educational attainment and age. By contrast, the family/non-family wage gap is found to be larger for clerks and blue-collar workers than for managers, supervisors and technicians, for whom we find no significant wage gap. As a second step, we investigate why workers stay in family firms while being paid less. We show that these firms offer greater job security. We find evidence that the rate of dismissal is lower in family than in non-family firms. We also show that family firms rely less on dismissals and more on hiring reductions when they downsize. These results are confirmed by subjective data : the perceived risk of dismissal is significantly lower in family firms than in non-family ones. We speculate that our results can be explained either by a compensating wage differential story or by a model in which workers sort in different firms according to their preferences.
    Keywords: Family firms; wages; job security; linked employer-employee data;
    JEL: G34 J31 J33 J63 L26
    Date: 2013–04
  2. By: Francisco de Castro; Matteo Salto; Hugo Steiner
    Abstract: This paper aims to assess the size of the wage gap between the public and private sectors within all European Union countries by using the European Structure of Earnings Survey (SES henceforth), compiled by Eurostat for the years 2006 and 2010. Public sector employees are found to enjoy on average higher wages than comparable workers in the private sector in 2010, even after controlling for the level of educational attainment. Regarding gender, contrary to other empirical papers, for the countries with full public sector coverage, we do not find evidence of a higher positive wage gap for women. On average the public wage premium is higher for older workers and workers with lower levels of education. Finally, negative public wage premia are found for workers at higher positions, whereas the positive and sometimes large overall public wage gaps are mainly explained by the sizeable gaps observed at lower job positions.
    JEL: J31 J45 O52
    Date: 2013–11
  3. By: Fredrik Carlsen (Department of Economics, Norwegian University of Science and Technology); Jorn Rattso (Department of Economics, Norwegian University of Science and Technology); Hildegunn E. Stokke (Department of Economics, Norwegian University of Science and Technology)
    Abstract: We analyze static and dynamic agglomeration effects across education groups. The data are based on administrative registers covering all full time workers in the private sector of Norway during 2001-2010, about 6.5 million worker-year observations, including place and sector of work experience since 1993. Accounting for unobservable abilities with identification based on movers, the static urban wage premium is similar across education groups. When the history of work experience in different regions and sectors is included, we show that the dynamic wage premium increases in education level and that highly educated in high wage sectors have the largest learning advantage.
    Keywords: Agglomeration economies, sorting, education, worker experience
    JEL: J24 J31 J61 R12 R23
    Date: 2013–11–05
  4. By: Antonio Di Paolo (Department of Econometrics, University of Barcelona); Aysit Tansel (Department of Economics, METU)
    Abstract: Foreign language skills represent a form of human capital that can be rewarded in the labor market. Drawing on data from the Adult Education Survey of 2007, this is the first study estimating returns to foreign language skills in Turkey. We contribute to the literature on the economic value of language knowledge, with a special focus on a country characterized by fast economic and social development. Although English is the most widely spoken foreign language in Turkey, we initially consider the economic value of different foreign languages among the employed males aged 25 to 65. We find positive and significant returns to proficiency in English and Russian, which increase with the level of competence. Knowledge of French and German also appears to be positively rewarded in the Turkish labor market, although their economic value seems mostly linked to an increased likelihood to hold specific occupations rather than increased earnings within occupations. Focusing on English, we also explore the heterogeneity in returns to different levels of proficiency by frequency of English use at work, birth-cohort, education, occupation and rural/urban location. The results are also robust to the endogenous specification of English language skills.
    Keywords: Foreign Languages, Returns to Skills, Heterogeneity, Turkey
    JEL: I25 J24 J31 O15 O53
    Date: 2013–11
  5. By: Anthony Edo (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: This paper investigates the immigration impact on native outcomes using micro-level data for France. I find that immigration does not affect the wages of competing natives, but induces adverse employment effects. This finding is consistent with a wage structure that is much less flexible in France. The quality of the data allows to dig more deeply into the interpretation of the immigration impact. First, I show that immigrants displace native workers because they are more willing to have bad employment conditions. Second, I find that natives on short-term contracts, who are less subject to wage rigidities, do experience wage losses due to immigration.
    Keywords: Immigration, wage rigidities, employment, naturalization.
    JEL: F22 J31 J61
    Date: 2013–09
  6. By: Cipollone, Angela (LUISS Guido Carli University); Patacchini, Eleonora (Sapienza University of Rome); Vallanti, Giovanna (LUISS Guido Carli University)
    Abstract: We investigate the changes in women's participation patterns across 15 EU countries over the last 20 years using individual data from ECHP and EUSILC databases. Our findings reveal a role of social policies and institutional factors that is stronger than what has so far been assessed. Labor market reforms explain almost 25% of the actual increase in labor force participation for young women, and more than 30% for highly educated women. The effects of labor market reforms on the participation of low skilled women in the labor force are instead surprisingly small. We also find that reforms of the institutional framework towards a model of flexicure labor market are effective in enhancing women labor supply only when deregulation is accompanied by sufficient social compensation.
    Keywords: employment gender gap, labor market institutions, child-rearing, elderly care, flexicurity
    JEL: J11 J21 J2
    Date: 2013–10
  7. By: John Moffat (Durham University); Duncan Roth (University of Marburg)
    Abstract: The demographic and education composition of European countries is changing: the population share of young individuals is declining while that of the highly educated is rising. This paper estimates the impact of cohort size on wages using data on 21 European countries covering 2007-2010 to cast light on the economic consequences of changes in the profile of the labour force. The effect of cohort size on wages is identified through an instrumental variables strategy which, in contrast to previous analyses of European data, addresses self-selection into geographical areas as well as into educational groups. The results support the hypothesis that cohort size has a negative effect on male wages, particularly for the highly educated. However, these negative cohort size effects are not persistent.
    Keywords: Cohort size; wages; causal effect; instrumental variables; EU-SILC
    JEL: J10 J21 J31
    Date: 2013
  8. By: Lechmann, Daniel S. J.
    Abstract: Most self-employed would apparently earn higher earnings if they were working in paid employment. One explanation for this 'return-to-entrepreneur-ship puzzle' could be that entrepreneurship entails substantial non-monetary bene-fits, such as autonomy, flexibility, and task variety. Utilizing German data and a de-composition analysis, this study examines the contribution of such working condi-tions to the observed earnings differential between self-employment and paid em-ployment. The results imply that working conditions differences do not contribute to resolve the return-to-entrepreneurship puzzle. Rather, (mis-)measurement of earnings seems to be an issue. -- Die meisten Selbständigen könnten als abhängig Beschäf-tigte anscheinend höhere Einkünfte erzielen. Möglicherweise arbeiten sie dennoch weiterhin als Selbständige, weil die Selbständigkeit nicht-monetäre Vorteile, wie etwa mehr Autonomie, Flexibilität und Abwechslung, mit sich bringt. Unter Verwendung eines Datensatzes deutscher Erwerbstätiger und mittels einer Zerlegungsanalyse untersucht diese Studie, inwiefern Unterschiede in solchen Arbeitsbedingungen die Unterschiede in den Einkünften zwischen Selbständigen und abhängig Beschäftigten erklären könnten. Die Ergebnisse deuten darauf hin, dass Unterschiede in den Arbeitsbedingungen nicht dazu beitragen, die (zu) niedrigen Einkünfte der Selbstän-digen zu erklären. Vielmehr scheinen Schwierigkeiten bei der Messung der Einkünfte eine Rolle zu spielen.
    Keywords: compensating differentials,Germany,returns to entrepreneurship,self-employment,working conditions
    JEL: J23 J31 J81
    Date: 2013
  9. By: Hart, Robert A; Roberts, J Elizabeth
    Abstract: Based on detailed payroll data of blue collar male and female labor in Britain's engineering and metal working industrial sectors between the mid-1920s and mid-1960s, we provide empirical evidence in respect of several central themes in the piecework-timework wage literature. The period covers part of the heyday of pieceworking as well as the start of its post-war decline. We show the importance of relative piece rate flexibility during the Great Depression as well as during the build up to WWII and during the war itself. We account for the very significant decline in the differentials after the war. Labor market topics include piecework pay in respect of compensating differentials, labor heterogeneity, and the transaction costs of pricing piecework output.
    Keywords: output pricing; labor heterogeneity; output fluctuations; Piecework - timework hourly pay differentials
    Date: 2013–11
  10. By: Laura Hospido (Banco de España and IZA); Gema Zamarro (Dornsife Center for Economic and Social Research. University of Southern California)
    Abstract: In this paper we study the retirement patterns of couples in a multi-country setting using data from the Survey of Health, Aging and Retirement in Europe. In particular, we test whether women’s (men’s) transitions out of the labor force are causally related to the actual realization of their husbands’ (wives’) transition, using the institutional variation in country-specific early and full statutory retirement ages to instrument the latter. Exploiting the discontinuities in retirement behavior across countries, we find a significant joint retirement effect, especially for women, of around 16 to 18 percentage points. For men, we find a similar but less precise effect. Our empirical strategy allows us to give a causal interpretation to the effect we estimate. In addition, this effect has important implications for policy analysis.
    Keywords: Joint retirement, Social security incentives
    JEL: J26 D10 C21
    Date: 2013–11
  11. By: Fasih, Tazeen; Patrinos, Harry Anthony; Sakellariou, Chris
    Abstract: Little is known about which of the skills that make up workers'human capital contribute to higher earnings. Past empirical evidence suggest that most of the return to schooling is generated by effects or correlates unrelated to the skills measured by the available tests. This paper uses the International Adult Literacy and the Adult Literacy and Life Skills surveys to obtain multi-country estimates of the components of the return to schooling. The results reveal considerable heterogeneity and a dichotomy between two groups of countries. For a subgroup of educationally advanced countries, nearly half of the return to schooling can be attributed to labor marker-relevant functional literacy skills associated with schooling, while for a subgroup of less educationally advanced countries, such skills account for just over 20 percent of the return to schooling, while the return to schooling mostly reflects the signaling value of schooling.
    Keywords: Education For All,Primary Education,Access&Equity in Basic Education,Teaching and Learning,Secondary Education
    Date: 2013–11–01
  12. By: Vanleenhove, Pieter
    Abstract: According to many studies, childcare is an important input for childrens development but it is also used to free up time for parents to work. However, many households are still confronted with availability constraints in childcare. In the recent past, many governments implemented policy reforms in order to increase the coverage rate of childcare. The empirical part of this paper focuses on the Flemish childcare market and analyzes how maternal labour supply and childcare usage is affected by a new Flemish decree which provides full childcare coverage. This paper adopts a modeling framework for analyzing labour supply developed by Aaberge, Colombino and Strm (1999) and Dagsvik (1994). To account for the possible interaction between labour supply and childcare choices the model also treats childcare type as an endogenous variable. The results of the policy reform analysis show that households switch to formal childcare when confronted with higher childcare availability. Total labour supply also increases but these effects are less pronounced as some households also reduce working hours.
    Date: 2013–11–14
  13. By: Dominique Goux (CREST); Eric Maurin (Paris School of Economics); Barbara Petrongolo (Queen Mary, University of London)
    Abstract: We study interdependencies in spousal labor supply by exploiting the design of the French workweek reduction, which introduced exogenous variation in one's spouse's labor supply, at constant earnings. Treated employees work on average two hours less per week. Husbands of treated women respond by reducing their labor supply by about half an hour, consistent with substantial leisure complementarity, and specifically cut the non-usual component of their workweek, leaving usual hours unchanged. Women's response to their husband's treatment is instead weak and rarely statistically significant, possibly due to heavier constraints in the organization of their workweek.
    Keywords: Labour supply, Workweek reduction, Leisure complementarity
    JEL: J22
    Date: 2013–10
  14. By: A. Kerem Cosar; Nezih Guner; James Tybout
    Abstract: This paper explores the combined effects of reductions in trade frictions, tariffs, and firing costs on firm dynamics, job turnover, and wage distributions. It uses establishment-level data from Colombia to estimate an open economy dynamic model that links trade to job flows in a new way. The fitted model captures key features of Colombian firm dynamics and labor market outcomes, as well changes in these features during the past 25 years. Counterfactual experiments imply that integration with global product markets has increased both average income and job turnover in Colombia. In contrast, the experiments find little role for this country’s labor market reforms in driving these variables. The results speak more generally to the effects of globalization on labor markets in Latin America and elsewhere.
    Keywords: international trade, firm dynamics, size distribution, labor market frictions, inequality
    JEL: F12 F16 E24 J64 L11
    Date: 2013–11
  15. By: Nabanita Datta Gupta (Department of Economics and Business, Aarhus University); Mona Larsen (SFI - The Danish National Centre for Social Research); Lars Brink Thomsen (Danmarks Nationalbank)
    Abstract: We evaluate the effects of wage subsidy programs for the disabled, in particular, their potential for welfare-loss reduction vs. deadweight loss creation. We do this in the context of the Danish Flexjob scheme, a large, nation-wide scheme that was implemented in 1998 and targeted towards improving the employment prospects of the long-term disabled with partial working capacity. We analyse the hiring response to a shock in the wage reimbursement amount to certain firms using the program. Firms received a salary reimbursement for both current and new employees granted a Flexjob subsidy. In 2002, the reimbursement to government firms was lowered while the reimbursement to municipal and regional employers remained the same. We combine the reform with unique data on whether or not a new Flexjob hiree was previously employed in a regular (unsubsidized) job at the same firm. Thus, we can investigate whether the changes in the reimbursement amount to governmental units affected the share of Flexjobs within such firms that were allocated to retained employees versus to new hires. The findings show substantial substitution between “insiders” and “outsiders” after the reform. After the reform, governmental firms create fewer Flexjobs. At the same time, the composition of Flexjob hires within such firms changes substantially: the share of new Flexjobs allocated to retained employees is twice as large as it would have been in absence of the reform. The finding on deadweight loss seems to run counter to the theoretical prediction. A possible alternative mechanism for the finding could be that when subsidies are reduced and worker productivity is not known with certainty, employers have an economic incentive to fill Flexjob positions from inside the firm.
    Keywords: disability, wage subsidies, deadweight loss, difference-in-differences
    JEL: I38 J14 C21
    Date: 2013–11–04

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