nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2013‒11‒22
twenty-two papers chosen by
Erik Jonasson
National Institute of Economic Research

  1. Male-Female Labor Market Participation and the Extent of Gender-Based Wage Discrimination in Turkey By Günalp, Burak; Cilasun, Seyit Mümin; Acar, Elif Öznur
  2. Age-productivity patterns in talent occupations for men and women: a decomposition By Barbara Liberda; Joanna Tyrowicz; Magdalena Smyk
  3. Immigrants' Educational Mismatch and the Penalty of Over-Education By Kalfa, Eleni; Piracha, Matloob
  4. Returns to Foreign Language Skills in a Developing Country: The Case of Turkey By Di Paolo, Antonio; Tansel, Aysit
  5. The impact of an increase in the legal retirement age on the effective retirement age. By Bernal, Noelia; Vermeulen, Frederic
  6. The effect of universal child benefits on labour supply By Schirle, Tammy
  7. The Impact of Low-Skilled Immigration on Female Labour Supply By Emanuele Forlani; Elisabetta Lodigiani; Concetta Mendolicchio
  8. Detailed Decompositions in Generalized Linear Models By Boris Kaiser
  9. Full childcare coverage: higher maternal labour supply and childcare usage?. By Vanleenhove, Pieter
  10. Economic Benefits of Studying Economics in Canada: A Comparison of Wages of Economics Majors with those in Other Disciplines Circa 2005 By Akbari, Ather H.; Aydede, Yigit
  11. Earnings Mobility of Canadian Immigrants: A Transition Matrix Approach By Abbott, Michael G.; Beach, Charles M.
  12. Determinants of the Transition from Work into Retirement By Monika Riedel; Helmut Hofer
  13. After-school care and parents’ labor supply By Felfe, Christina; Lechner, Michael; Thiemann, Petra
  14. Macroeconomic Determinants of Retirement Timing By Yuriy Gorodnichenko; Jae Song; Dmitriy Stolyarov
  15. Female labor force participation and child education in India: The Effect of the National Rural Employment Guarantee Scheme By Farzana Afridi; Abhiroop Mukhopadhyay; Soham Sahoo
  16. Decomposing Differences in Arithmetic Means: A Doubly-Robust Estimation Approach By Boris Kaiser
  17. Employer-provided pensions, incomes, and hardship in early transitions to retirement By Milligan, Kevin
  18. Retirement Incomes, Labour Supply and Co-residency Decisions of Older Immigrants in Canada: 1991-2006 By McDonald, James Ted; Worswick, Christopher
  19. Work in the Shadow: Some Facts By Friedrich Schneider
  20. Do wages reflect labor productivity? The case of Belgian regions. By Konings, Joep; Marcolin, Luca
  21. The Economic Payoff of Name Americanization By Biavaschi, Costanza; Giulietti, Corrado; Siddique, Zahra
  22. Who Creates Jobs? Estimating Job Creation Rates at the Firm Level By Huber, Peter; Oberhofer, Harald; Pfaffermayr , Michael

  1. By: Günalp, Burak; Cilasun, Seyit Mümin; Acar, Elif Öznur
    Abstract: A gender differential in wages is considered to be discriminatory if the differential cannot be explained by gender differences in productivity. Numerous studies have been performed to measure the extent of gender wage discrimination in countries across the world, and most report a substantial amount of wage differential after adjusting for productivity differences. This differential has been attributed to labor market discrimination against women. Using data from 2003 and 2010 Household Budget Surveys conducted by Turkish Statistical Institute, this study examines the male-female earnings differentials and measures the extent of pay discrimination in Turkey. To analyze the components of the earnings gap, two methodologies are employed: The standard Oaxaca–Blinder decomposition method and the Juhn–Murphy–Pierce decomposition method. The results of the study indicate that in both years, a significant portion of the observed wage differential is attributable to wage discrimination which records a rise over the period.
    Keywords: Male-Female Earnings Differentials, Gender Wage Discrimination, Oaxaca–Blinder Decomposition, Juhn–Murphy–Pierce Decomposition
    JEL: J16 J31 J70 J71 O15
    Date: 2013–11–16
  2. By: Barbara Liberda (Faculty of Economic Sciences, University of Warsaw); Joanna Tyrowicz (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland); Magdalena Smyk (Faculty of Economic Sciences, University of Warsaw)
    Abstract: One could expect that in the so-called talent occupations, while access to these professions may differ between men and women, gender wage gap should be actually smaller due to high relevance of human capital quality. Wage regressions typically suggest an inverted U-shaped age-productivity pattern. However, such analyses confuse age, cohort and year effects. Deaton (1997) decomposition allows to disentangle these effects. We apply this method to inquire the age-productivity pattern for the so-called “talent†occupations. Using data from a transition economy (Poland) we find that indeed talent occupations have a steeper age-productivity pattern. However, gender differences are larger for talent occupations than for general occupations.
    Keywords: age-productivity pattern, gender wage gap, transition
    JEL: J24 J31 I20 J71
    Date: 2013
  3. By: Kalfa, Eleni (University of Kent); Piracha, Matloob (University of Kent)
    Abstract: This paper analyses immigrants' education-occupation mismatch as well as its impact on their wages in Spain. Using cross-sectional data from the National Immigrant Survey of Spain 2007, we estimate a probit model taking into account the possible problem of selection bias. We show that the incidence of immigrants' education-occupation mismatch in the Spanish labour market can largely be explained by the incidence of education-occupation mismatch in the last job held in the home country. The probability of having been over-educated at home shows to have a higher effect on the probability of being over-educated in the first job upon arrival where work experience gained in the home country shows to be highly valued by Spanish employers. In addition, our results show that those who were over-educated in their first job after arrival are more likely to continue in being overeducated in their current/last job in Spain. Furthermore, we analyse the performance of immigrants in Spain by estimating the wage penalty of over-education. Using log wage equation as well as predicted and counterfactual values distinguishing between immigrants being in the correctly matched occupation and those who are over-educated, we show that over-educated immigrants earn significantly lower wage compared to their correctly-matched counterparts, while over-educated immigrants' would have earned an even larger amount if the same individuals were employed in a correctly matched job instead. Significant differences are also apparent when restricting the models to the level of education.
    Keywords: sample selection, education-occupation mismatch, immigration
    JEL: C34 J24 J61
    Date: 2013–11
  4. By: Di Paolo, Antonio (University of Barcelona); Tansel, Aysit (Middle East Technical University)
    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: Bernal, Noelia; Vermeulen, Frederic
    Abstract: We analyze the impact of an increase in the legal retirement age on the effective retirement age in the Netherlands. We do this by means of a dynamic programming model for the retirement behavior of singles. The model is applied to new administrative data that contain very accurate and detailed information on individual incomes and occupational pension entitlements. Our model is able to capture the main patterns observed in the data. We observe that as individuals get older their labor supply declines considerably and this varies by health status. We simulate a soon to be implemented pension reform which aims at gradually increasing the legal retirement age from 65 to 67. The simulation results show a rather small impact on the effective retirement age. Individuals postpone their retirement by only 3 months on average, while differences across individuals mainly depend on their health status.
    Date: 2013–02
  6. By: Schirle, Tammy
    Abstract: I study the effect of a universal child-related income transfer on the labour supply of married individuals. Using a difference-in-differences estimator, I find the Canadian Universal Child Care Benefit has significant negative income effects. The likelihood of lower-educated mothers to participate in the labour force is reduced 3.3 percentage points when receiving the benefit. Median hours worked per week among lower-educated mothers is reduced by 2.3 hours. The effects on higher-educated mothers are also substantial, though an effect on hours may reflect greater flexibility in hours worked while mothers enjoy job protection and employment benefits until children reach 12 months of age. For men, the evidence suggests small, significant income effects that are consistent with the literature on labour supply elasticities.
    Keywords: Labour supply, public policy, child benefits, demogrant
    JEL: J22 J18
    Date: 2013–09–26
  7. By: Emanuele Forlani (Department of Economics and Management, University of Pavia); Elisabetta Lodigiani (Department of Economics, University of Venice Ca' Foscari); Concetta Mendolicchio (Institute for Employment Research, IAB)
    Abstract: This paper contributes to the literature on the impact of immigrants on native female labour supply. By segmenting the market by educational levels, we are able to investigate which native-born women are more affected by an increase of low-skilled immigrants working in the household service sector. We present a model of individual choice with home production and, using an harmonized dataset (CNEF), we test its main predictions. Our sample includes countries implementing different family policies. Our results suggest that the share of immigrants working in services in a given local labour market is positively associated with the probability of native-born women to increase their labour supply at the intensive margin (number of hours worked per week), if skilled, and at the extensive margin (participation decision), if unskilled. Moreover, they show that these effects are larger in countries with less family-supportive policies.
    Keywords: Female labour participation, international migration, family policy
    JEL: J22 J61
    Date: 2013–11
  8. By: Boris Kaiser
    Abstract: We propose a new approach for performing detailed decompositions of average outcome differentials, which can be applied to all types of generalized linear models. A simulation exercise demonstrates that our method produces more convincing results than existing methods. An empirical application to the immigrant-native wage differential in Switzerland is presented.
    Keywords: Oaxaca-Blinder; Detailed Decomposition; Generalized Linear Models
    JEL: C10 C50 C51 J31
    Date: 2013–10
  9. By: Vanleenhove, Pieter
    Abstract: According to many studies, childcare is important for its pedagogical, economical and social function for both children and parents. 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 Strøm (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: 2013–10
  10. By: Akbari, Ather H.; Aydede, Yigit
    Abstract: In universities across many western countries, student enrolments in economics discipline rose sharply towards the end of last decade but not in Canada. One reason for this outcome may be the continued perception of Canadian students of a lower economic reward to an economics degree. Using micro data from the 2006 census, we perform a comparative analysis of the wages earned by university degree holders in 50 disciplines in relation to economics. At undergraduate level, economics majors earned the 9th highest average wage in 2005, after controlling for demographic variables. On average, after controlling for demographic differences, workers whose wages were below those of economics majors earned about 16 percent lower while those who earned above economics majors earned about 10 percent higher. Similarity of their wages with physical science majors and their wage advantage over political science majors are also striking findings of this study. At graduate level, economics majors have greater wage advantage over other disciplines except for the business majors.
    Keywords: Education, Economics degree , Economic returns to human capital, Wage differentials
    JEL: J6 J15 J61
    Date: 2013–02–25
  11. By: Abbott, Michael G.; Beach, Charles M.
    Abstract: This Study examines the earnings mobility of Canadian immigrants using the large IMDB microdata file. We examine earnings transition matrices of immigrants over ten years after landing in Canada for three landing cohorts – 1982, 1988, and 1994. Immigrants also arrive under four separate admission classes: independent economic, other economic, family class, and refugees. The study reports five major empirical findings. First, overall earnings mobility was slightly greater for male immigrant earners than for male workers as a whole in the Canadian labour market, but was considerably greater for female immigrant earners than for all female earners in Canada. But both male and female immigrants over their first decade in Canada were much more likely to experience downward earnings mobility than were all earners of the same gender in Canada. Second, across the four immigrant admission classes, independent economic immigrants have markedly the highest average probability of moving up and the lowest probability of moving down the earnings distribution. Third, overall earnings mobility is slightly higher for female than male immigrants – opposite to the situation for workers as whole in Canada. Fourth, the degree of immigrant earnings mobility declines over immigrants’ first ten post-landing years in Canada as they integrate into the Canadian labour market. Fifth, overall earnings mobility across landing cohorts has shown only minor changes between the 1982 and 1994 cohorts, where the average probability of moving up has significantly increased and the average probability of moving down has significantly decreased. The early 1990s economic recession is seen to have had substantial negative or dampening effects on immigrant earnings mobility for the 1988 landing cohort.
    Keywords: Immigrant earnings, transition matrices, Canadian immigrants
    JEL: J31 J61
    Date: 2013–10–27
  12. By: Monika Riedel (Institute for Advanced Studies (IHS), Vienna); Helmut Hofer
    Abstract: This NEUJOBS research report is concerned with determinants for planned retirement from work in European countries, using data from the 2006 ad hoc module of the European Labour Force Survey. The research uses multivariate analysis, taking into account factors that affect retirement planning including personal as well as workrelated characteristics, and some characteristics of national pension systems. In the context of the NEUJOBS project, the key conclusions of the report is that the interaction between planned retirement age and personal and work-related variables is not identical across Europe. Sex as well as country type need to be taken into consideration. Our results hint at EU states being in different phases of the transition from physically demanding to intellectually demanding work environments, which relates to earlier planned retirement where working is physically more demanding. This interpretation, however, is very tentative due to the crude identification of job characteristics via broad ISCO and NACE codes.
    Date: 2013–04
  13. By: Felfe, Christina; Lechner, Michael; Thiemann, Petra
    Abstract: Does after-school care provision promote mothers’ employment and balance the allocation of paid work among parents of schoolchildren? We address this question by exploiting variation in cantonal (state) regulations of after-school care provision in Switzerland. To establish exogeneity of cantonal regulations with respect to employment opportunities and preferences of the population, we restrict our analysis to confined regions along cantonal borders. Using semi-parametric instrumental variable methods, we find a positive impact of after-school care provision on mothers’ full-time employment, but a negative impact on fathers’ full-time employment. Thus, the supply of after-school care fosters a convergence of parental working hours.
    Keywords: Childcare, parents’ labor supply, semi-parametric estimation methods
    JEL: J13 J22 C14
    Date: 2013–11
  14. By: Yuriy Gorodnichenko; Jae Song; Dmitriy Stolyarov
    Abstract: We analyze lifetime earnings histories of white males during 1960-2010 and categorize the labor force status of every worker as either working full-time, partially retired or fully retired. We find that the fraction of partially retired workers has risen dramatically (from virtually 0 to 15 percent for 60-62 year olds), and that the duration of partial retirement spells has been steadily increasing. We estimate the response of retirement timing to variations in unemployment rate, inflation and housing prices. Flows into both full and partial retirement increase significantly when the unemployment rate rises. Workers around normal retirement age are especially sensitive to variations in the unemployment rate. Workers who are partially retired show a differential response to a high unemployment rate: younger workers increase their partial retirement spell, while older workers accelerate their transition to full retirement. We also find that high inflation discourages full-time work and encourages partial and full retirement. Housing prices do not have a significant impact on retirement timing.
    JEL: E24 H55 J26
    Date: 2013–11
  15. By: Farzana Afridi (Indian Statistical Institute, New Delhi); Abhiroop Mukhopadhyay (Indian Statistical Institute, New Delhi); Soham Sahoo (Indian Statistical Institute, New Delhi)
    Abstract: The National Rural Employment Guarantee Scheme (NREGS) of India mandates 1/3rd of beneficiaries to be women and equal wages across gender. We study its impact on children's educational attainment via women's increased access to labor market opportunities. Using child level panel data, and taking advantage of the temporal, subdistrict level variation in the intensity of implementation of the NREGS, we find that a rise in mother's share in parental NREGS workdays increases school attendance and grade attainment of her children, particularly girls. This impact is over and above any income effect induced by the scheme.
    Keywords: labor, education, gender, bargaining
    JEL: I21 I38 J16
    Date: 2013–01
  16. By: Boris Kaiser
    Abstract: When decomposing differences in average economic outcome between two groups of individuals, it is common practice to base the analysis on logarithms if the dependent variable is nonnegative. This paper argues that this approach raises a number of undesired statistical and conceptual issues because decomposition terms have the interpretation of approximate percentage differences in geometric means. Instead, we suggest that the analysis should be based on the arithmetic means of the original dependent variable. We present a flexible parametric decomposition framework that can be used for all types of continuous (or count) nonnegative dependent variables. In particular, we derive a propensity-score-weighted estimator for the aggregate decomposition that is "doubly robust", that is, consistent under two separate sets of assumptions. A comparative Monte Carlo study illustrates that the proposed estimator performs well in a many situations. An application to the union wage gap in the United States finds that the importance of the unexplained union wage premium is much smaller than suggested by the standard log-wage decomposition.
    Keywords: Oaxaca-Blinder; Decomposition Methods; Quasi-Maximum-Likelihood; Doubly Robust Estimation; Arithmetic and Geometric Means; Inverse Probability Weighting
    JEL: C10 C50 C51 J31
    Date: 2013–10
  17. By: Milligan, Kevin
    Abstract: Canada and other countries are changing the age of public pension eligibility. A policy concern that arises is the welfare of those exiting the labour force before the age of pension eligibility. This paper addresses the welfare implications of early retirements by examining who isn’t working at older ages, how they form their incomes, and how those exiting the labour market early avoid low income. The paper finds that around three quarters of those not working are able to avoid low-income status. The most important factors for avoiding low income are other family income sources, good health, and employment-related pension income.
    Keywords: Benefits, Canada Pension Plan, Income Security, Low Income, Pension, Retirement, Seniors
    JEL: J26 J32
    Date: 2013–04–29
  18. By: McDonald, James Ted; Worswick, Christopher
    Abstract: The incomes, hours of work and co-residency behavior of older immigrants in Canada are analyzed using data from the confidential master files of the Canadian Census for the years 1991, 1996, 2001 and 2006. Older immigrants in Canada have lower incomes than the Canadian-born of the same age range and this difference is concentrated in the immigrants who arrived older than age 50. However, there is also evidence that the effects of the lower incomes on the welfare of these immigrants are mitigated to a certain extent through co-residency, presumably with their younger relatives already resident in Canada. Immigrants reside with, on average, more family members than do the Canadian born. A clear pattern is present of immigrant groups with relatively low average incomes being the ones living in larger economic families. Immigrants who arrive at younger ages (25-49) are more likely to be employed and if they are employed, they tend to work longer hours than their Canadian born counterparts. For immigrants who arrived after age 50, their employment decisions do not differ greatly from their Canadian born counterparts; however, if they work, their hours of work tend to be higher. Immigrants have relatively less income from private pensions compared with the Canadian born. Immigrants from non-traditional source countries have low levels of CPP/QPP income relative to immigrants from traditional source countries or the Canadian born. In terms of OAS/GIS income, immigrant men who arrived at age 60 or older have in the order of 50% lower incidence of receiving pension income than do immigrants who arrived at younger ages. In contrast, for immigrant men who arrived age 25-49, we do not see large differences in their incidence or level of income received from OAS/GIS relative to otherwise similar Canadian born men.
    Keywords: Retirement, pensions, income, immigrant, labour supply, housing, gender
    JEL: D31 H24 J14 J48
    Date: 2013–04–29
  19. By: Friedrich Schneider
    Abstract: In this paper the main focus lies on the shadow economy labor force in OECD, developing and transition countries. Besides informal employment in the rural and non-rural sector also other measures of informal employment like the share of women and men are shown. The most influential factors on the shadow economy labor force are tax policies and state regulation, which, if they rise, increase both. Furthermore the discussion of the recent micro studies underline that economic opportunities, the overall burden of the state (taxes and regulations), the general situation on the labor market, and unemployment are especially crucial for an understanding of the dynamics the shadow labour force.
    Keywords: Shadow economy work, undeclared work, shadow labor force, tax pressure, state regulation, labor market
    JEL: K42 H26 D78
    Date: 2013–08
  20. By: Konings, Joep; Marcolin, Luca
    Date: 2013
  21. By: Biavaschi, Costanza (IZA); Giulietti, Corrado (IZA); Siddique, Zahra (University of Reading)
    Abstract: We examine the impact of the Americanization of names on the labor market outcomes of migrants. We construct a novel longitudinal data set of naturalization records in which we track a complete sample of migrants who naturalize by 1930. We find that migrants who Americanized their names experienced larger occupational upgrading. Some, such as those who changed to very popular American names like John or William, obtained gains in occupation-based earnings of at least 14%. We show that these estimates are causal effects by using an index of linguistic complexity based on Scrabble points as an instrumental variable that predicts name Americanization. We conclude that the tradeoff between individual identity and labor market success was present since the early making of modern America.
    Keywords: Americanization, names, assimilation, migration
    JEL: J61 J62 Z1 N32
    Date: 2013–11
  22. By: Huber, Peter (Austrian Institute of Economic Research); Oberhofer, Harald (University of Salzburg); Pfaffermayr , Michael (University of Innsbruck)
    Abstract: This paper analyzes econometric models of the Davis, Haltiwanger and Schuh (1996) job creation rate. In line with the most recent job creation literature, we focus on employment-weighted OLS estimation. Our main theoretical result reveals that employment-weighted OLS estimation of DHS job creation rate models provides biased marginal effects estimates. The reason for this is that by definition, the error terms for entering and exiting firms are non-stochastic and non-zero. This violates the crucial mean independence assumption requiring that the conditional expectation of the errors is zero for all firms. Consequently, we argue that firm entries and exits should be analyzed with separate econometric models and propose alternative maximum likelihood estimators which are easy to implement. A small-scale Monte Carlo analysis and an empirical exercise using the population of Austrian firms point to the relevance of our analytical findings.
    Keywords: DHS job creation rate; firm size; firm age; maximum likelihood estimation; three-part model; multi-part model; Monte Carlo simulation
    JEL: C18 C53 D22 E24 L25 L26 M13
    Date: 2013–11–15

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