nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2013‒11‒29
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. Wage Comparisons in and out of the Firm. Evidence from a Matched Employer-Employee French Database By Olivier Godechot; Claudia Senik
  2. Price effects of minimum wages: Evidence from the construction sector in East and West Germany By Werner, Thomas; Sell, Friedrich L.; Reinisch, David C.
  3. The impact of low-skilled immigration on female labour supply By Forlani, Emanuele; Lodigiani, Elisabetta; Mendolicchio, Concetta
  4. Skilled Immigration and the Employment Structures of U.S. Firms By Sari Pekkala Kerr; William R. Kerr; William F. Lincoln
  5. The occupational segregation of Black women in the United States: A look at its evolution from 1940 to 2010 By Olga Alonso-Villar; Coral del Rio
  6. A set of time series data labour market stocks and flows for the Netherlands 1980 to 2010 By Mullers, Manuel; Muysken, Joan; Regt, Erik de
  7. Labour Market Dynamics in Spanish Regions: Evaluating Asymmetries in Troublesome Times By Sala, Hector; Trivín, Pedro
  8. Income Mobility By Jäntti, Markus; Jenkins, Stephen P.
  9. Hiring subsidies for people with a disability: Helping or hindering? - Evidence from a small scale social field experiment By Deuchert, Eva; Kauer, Lukas
  10. Analyzing the impact of labor market integration By Keisuke Kawata; Kentaro Nakajima; Yasuhiro Sato
  11. People, Places and Public Policy: Some Simple Welfare Economics of Local Economic Development Programs By Patrick Kline; Enrico Moretti
  12. Inclusive Institutions and Long-Run Misallocation By Galor, Oded; Munshi, Kaivan; Wilson, Nicolas
  13. Unemployment Fluctuations in a Small Open-Economy Model with Segmented Labour Markets: The Case of Canada By Yahong Zhang

  1. By: Olivier Godechot (IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris - Institut d'Études Politiques [IEP] - Paris - PRES Sorbonne Paris Cité - Fondation Nationale des Sciences Politiques [FNSP], OSC - Observatoire sociologique du changement - Sciences Po - CNRS : UMR7049, MaxPo - Max Planck Sciences Po Center on Coping with Instability in Market Societies - Max Planck Institute for the Study of Societies - IEP Paris); Claudia Senik (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), UP4 - Université Paris 4, Paris-Sorbonne - Université Paris IV - Paris Sorbonne - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique)
    Abstract: This paper looks at the association between wage satisfaction and different notions of reference wage, based on a matched employer-employee dataset. It shows that workers' satisfaction depends on otherpeople's income in different ways. Relative income concerns are important, but we also find robust evidence of signal effects. For instance, workers are happier the higher the median wage in their firm, holding their own wage constant. This is true of all employees, whatever their relative position in the firm. This signal effect is stronger for young people and for women. These findings are based on objective measures of earnings as well as subjective declarations about wage satisfaction, awareness of other people's wage and reported income comparisons.
    Keywords: Income comparisons ; Income distribution ; Job satisfaction ; Wage satisfaction ; Signal effect ; Matched employer-employee survey data
    Date: 2013–11
  2. By: Werner, Thomas; Sell, Friedrich L.; Reinisch, David C.
    Abstract: In this paper, the authors present a new approach to estimate the impact of a minimum wage on the labor market of the construction sector in Germany. Instead of estimating the effect on employment, the authors focus on the change of prices on a firm level in order to differentiate between a competitive and a monopsonistic structured labor market. The composition of the sector-specific labor market serves again as a basis to evaluate whether the consequences of the minimum wage can be taken as economically advantageous or disadvantageous. Using firm data monthly conducted by the Ifo Institute for Economic Research, the estimations show that the minimum wage did have a different impact in East and West Germany. In East Germany, we find significant positive price effects of the minimum wage which exclude the possibility of positive employment effects due to monopsonistic structures. On the contrary, our results indicate a competitive sectorspecific labor market and declining employment. In contrast, there was no significant price reaction observed for West Germany. The minimum wage seems too low compared to the wages paid in the West German construction sector. Therefore, the introduction of the minimum wage cannot be assumed to be binding. --
    Keywords: labor market,minimum wage,employment effects,construction industry,difference-in-differences
    JEL: J08 J38 J42 J48
    Date: 2013
  3. By: Forlani, Emanuele; Lodigiani, Elisabetta; Mendolicchio, Concetta (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    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 nativeborn 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 nativeborn 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." (Author's abstract, IAB-Doku) ((en)) Additional Information Auch erschienen als: DEM working papers series 58
    Keywords: Einwanderer, ausländische Arbeitnehmer, Hochqualifizierte, Niedrigqualifizierte, Arbeitskräfteangebot, Frauen, Erwerbsbeteiligung, Familienpolitik, Australien, Bundesrepublik Deutschland, Großbritannien, USA, Schweiz, Bundesrepublik Deutschland
    JEL: J22 J61
    Date: 2013–11–18
  4. By: Sari Pekkala Kerr; William R. Kerr; William F. Lincoln
    Abstract: We study the impact of skilled immigrants on the employment structures of U.S. firms using matched employer-employee data. Unlike most previous work, we use the firm as the lens of analysis to account for a greater level of heterogeneity and the fact that many skilled immigrant admissions are driven by firms themselves (e.g., the H-1B visa). OLS and IV specifications find rising overall employment of skilled workers with increased skilled immigrant employment by firm. Employment expansion is greater for younger natives than their older counterparts, and departure rates for older workers appear higher for those in STEM occupations compared to younger worker.
    JEL: F15 F22 J44 J61 O31 O32
    Date: 2013–11
  5. By: Olga Alonso-Villar (Universidade de Vigo); Coral del Rio (Universidade de Vigo and EQUALITAS)
    Abstract: Based on harmonized and detailed occupation titles and making use of measures that do not require pair-wise comparisons among demographic groups, this paper shows that the occupational segregation of Black women dramatically declined from 1940 to 1980 (especially in the 1960s and 1970s), it slightly decreased from 1980 to 2000, and it remained stagnated in the first decade of the 21st century. To assess the reduction in segregation, this paper extends recent measures that penalize the concentration of Black women in low-paid jobs and finds that the integration process slightly reversed after 2000. Regarding the role that education has played, this study highlights that only from 1990 onward, Black women with either some college or university degrees have lower segregation (as compared with their peers) than those with lower education. Nevertheless, in 2010, Black women with university degrees still tend to concentrate in occupations that have wages below the average wage of occupations that high-skilled workers fill.
    Keywords: occupational segregation, local segregation measures, race, gender, Black women, status, wages, United States.
    JEL: J15 J16 J71 D63
    Date: 2013–09
  6. By: Mullers, Manuel (UNU-MERIT/MGSoG); Muysken, Joan (Department of Economics, Maastricht University); Regt, Erik de (Department of Economics, Maastricht University)
    Abstract: In this paper we present data on flows in the labour market for the period 1980 - 2010, which have been constructed using various sources. The focus of our analysis is on four labour market states within the working age population of age 15 - 64: Employment, Unemployment, Not working and Disabled. A comparison is provided with the earlier studies of Broersma and den Butter (1994) and Kock (1998), and with the data published by the CBS from the labour force survey (EBB). The latter comparison is also used to indicate the presence of the time aggregation bias in the CBS data.
    Keywords: labour market flows, time aggregation bias, the Netherlands
    JEL: J60 J63 J64 J82
    Date: 2013
  7. By: Sala, Hector (Universitat Autònoma de Barcelona); Trivín, Pedro (Universitat Autònoma de Barcelona)
    Abstract: The Spanish labour market disproportionately booms in expansions and bursts in recessions; meanwhile, its regions' relative position persists: those with the highest unemployment rates in 1996 were also in the worse position in 2012. To examine this twofold feature, we apply Blanchard and Katz's (1992) methodology and evaluate how the Spanish labour market reacts to regional employment shocks in a variety of cases. Shock responses are channelled via changes in unemployment, labour market participation, and spatial mobility. Our results provide evidence of asymmetric responses across business cycle phases (1996-2007 and 2008-2012). While changes in participation rates are the main adjustment mechanism in expansion, unemployment and spatial mobility become the central ones in recession. We also provide evidence of real wage rigidities in both periods, but strong asymmetries in house prices, which are sticky in recession but notably reactive in expansion. We conclude with a cluster analysis showing that high and low unemployment regions have similar responses in the short-run while, in the long-run, the former are more reactive in terms of spatial mobility. Overall, we provide evidence that people are more willing to migrate when a regional shock occurs in relatively worse economic contexts.
    Keywords: employment, unemployment, regional labour markets, Spain
    JEL: J20 E24 J61 R11
    Date: 2013–11
  8. By: Jäntti, Markus (SOFI, Stockholm University); Jenkins, Stephen P. (London School of Economics)
    Abstract: This paper is prepared as a chapter for the Handbook of Income Distribution, Volume 2 (edited by A. B. Atkinson and F. Bourguignon, Elsevier-North Holland, forthcoming). Like the other chapters in the volume (and its predecessor), the aim is to provide comprehensive review of a particular area of research. We survey the literature on income mobility, aiming to provide an integrated discussion of mobility within- and between-generations. We review mobility concepts, descriptive devices, measurement methods, data sources, and recent empirical evidence.
    Keywords: intragenerational mobility, intergenerational mobility, income mobility, earnings mobility
    JEL: D31 I30
    Date: 2013–11
  9. By: Deuchert, Eva; Kauer, Lukas
    Abstract: Many countries provide hiring subsidies aimed at promoting the employment of people with disabilities. The effectiveness of these subsidy schemes remains unclear. The subsidy lowers wages and may thus increase employment, but may also signal lower quality of the applicant (who has to disclose a disability), which deter employers from hiring. This paper evaluates the effectiveness of employer incentives provided by the Swiss Disability Insurance using a small scale social field experiment. Participants write application letters, where it is randomly decided whether the application discloses the subsidy to the potential employer or not. The effectiveness of the hiring subsidy is measured by call-back rates for interviews. The study is conducted in two waves. The first wave focuses on graduates from sheltered Vocational Education & Training Programs. The second wave is implemented in a sample of clients from employment consulting services. Our results reveal that the subsidy is ineffective or even counterproductive in a group of adolescents who are at the end of their vocational training program, but may increase call-back rates in a group of clients of job coaching services.
    Keywords: Hiring subsidies, Effectiveness, Social field experiment
    JEL: I38 C93
    Date: 2013–11
  10. By: Keisuke Kawata (Hiroshima University); Kentaro Nakajima (Tohoku University); Yasuhiro Sato (Osaka University)
    Abstract: We develop a competitive search model involving multiple regions, geographically mobile work- ers, and moving costs. Equilibrium mobility patterns are analyzed and characterized, indicating that shocks to a particular region, such as a productivity shock, can propagate to other regions through workersf mobility. Moreover, equilibrium mobility patterns are not efficient due to the existence of moving costs, implying that they affect social welfare not only because they are costs but also be- cause they distort equilibrium allocation. By calibrating our framework to Japanese regional data, we demonstrate that the impacts of eliminating migration costs are comparable to those of a 30% productivity increase.
    Keywords: geographical mobility of workers, competitive job search, moving costs, labor market inte- gration
    JEL: J61 J64 R23
    Date: 2013–11
  11. By: Patrick Kline; Enrico Moretti
    Abstract: Most countries exhibit large and persistent geographical differences in wages, income and unemployment rates. A growing class of "place based" policies attempt to address these differences through public investments and subsidies that target disadvantaged neighborhoods, cities or regions. Place based policies have the potential to profoundly affect the location of economic activity, along with the wages, employment, and industry mix of communities. These programs are widespread in the U.S. and throughout the world, but have only recently been studied closely by economists. We consider the following questions: Who benefits from place based interventions? Do the national benefits outweigh the costs? What sorts of interventions are most likely to be effective?To study these questions, we develop a simple spatial equilibrium model designed to characterize the welfare effects of place based policies on the local and the national economy. Using this model, we critically evaluate the economic rationales for place based policies and assess the latest evidence on their effects. We conclude with some lessons for policy and directions for future research.
    JEL: H1 H2 H3 H4 H7 J0 R0
    Date: 2013–11
  12. By: Galor, Oded; Munshi, Kaivan; Wilson, Nicolas
    Abstract: This research advances the hypothesis that resource abundant economies characterized by a socially cohesive workforce and network externalities triggered the emergence of efficiency-enhancing inclusive institutions designed to restrict mobility and to enhance the attachment of community members to the local labor market. However, the persistence of these institutions, and the inter-generational transmission of their value, ultimately resulted in the misallocation of talents across occupations and a reduction in the long-run level of income per capita in the economy as a whole. Exploiting variation in resource intensity across the American Midwest during its initial development, the empirical analysis establishes that higher initial resource-intensity in 1860 is indeed associated with greater community participation over the subsequent 150 years, and reduced mobility and labor misallocation in the contemporary period.
    Keywords: Inclusive institutions, Exclusive institutions, Growth, Networks, Labor misallocation, Persistence
    JEL: O1 O10 O15
    Date: 2013–10–01
  13. By: Yahong Zhang
    Abstract: The recent financial crisis and subsequent recession have spurred great interest in the sources of unemployment fluctuations. Previous studies predominantly assume a single economy-wide labour market, and therefore abstract from differences across sector-specific labour markets in the economy. In Canada, such differences are substantial. From 1991 to 2010, employment in the tradable sector is almost three times as volatile as that in the non-tradable sector, and wages are about twice as volatile. To capture the labour market differences at the sectoral level, I introduce a segmented labour market structure to a medium-scale dynamic stochastic general-equilibrium model with financial and labour market frictions and estimate the model using Canadian data from 1991 to 2010. I find that, in the long run, unemployment fluctuations are mainly driven by the shocks to firms’ net worth and production technology in the non-tradable sector and the shocks to the foreign interest rate. In the short run, however, it is the shocks to firms’ net worth in the tradable sector that account for about 50 per cent of unemployment fluctuations. I also find that inclusion of the recent financial crisis data in the estimation is crucial for assessing the effects of the financial wealth shocks.
    Keywords: Business fluctuations and cycles; Economic models; Labour markets
    JEL: E32 E44 J6
    Date: 2013

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