nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒01‒17
seven papers chosen by
Joseph Marchand
University of Alberta

  1. Transitions in labour market status in the European Union By Melanie Ward-Warmedinger; Corrado Macchiarelli
  2. The Effect of Cutting Disability Insurance Benefits on Labor Supply in Households By Kauer, Lukas
  3. Selection into Occupations and the Intergenerational Socioeconomic Mobility of Daughters and Sons By Julia Schwenkenberg
  4. Exiting Poverty: Does Sex Matter? By Lori J. Curtis; Kathleen Rybczynski
  5. The Determinants of Rising Inequality in Health Insurance and Wages, Second Version By Rong Hai
  6. Wages and Labour Productivity: the role of performance-related pay in Italian firms By Mirella Damiani; Fabrizio Pompei; Andrea Ricci
  7. An Exploratory Analysis of Heterogeneity on Regional Labour Markets and Unemployment Rates in Colombia: An MFACT approach By Camilo Alberto Cárdenas Hurtado; María Alejandra Hernández Montes; Jhon Edwar Torres Gorron

  1. By: Melanie Ward-Warmedinger; Corrado Macchiarelli
    Abstract: This paper presents information on labour market mobility in 23 EU countries, using Eurostat’s Labour Force Survey (LFS) data over the period 1998-2008. More specifically, it discusses alternative measures of labour market churning; including the ease with which individuals can move between employment, unemployment and inactivity over time. The results suggest that the probability of remaining in the same labour market status between two consecutive periods is high for all countries. Nonetheless, transitions from unemployment and inactivity back into the labour market are relatively weak in the euro area and central eastern European EU (CEE EU) countries compared to Denmark and, particularly, Sweden. Moreover, comparisons of transition probabilities over time suggest that – until the onset of the financial crisis – the probability of remaining in unemployment over two consecutive periods decreased in Sweden, the euro area, and, to a lesser extent, Denmark, while it increased in the average CEE EU countries. At the same time, however, successful labour market entries (from outside the labour market) increased in the average CEE EU countries, Denmark and Sweden. On the basis of an index for labour markets turnover used in the paper (Shorrocks, 1987), labour markets in Spain, Luxemburg, the Netherlands, Denmark and Sweden are the most mobile on average, with these results mainly reflecting higher mobility of people below the age of 29, highly educated and female workers. We also find that mobility of all worker groups has generally increased over time in the euro area, Denmark and Sweden. Finally, we ask whether some of the observed changes in mobility can be broadly restraint to some “macro” explanatory factors, including part time and temporary employment, unemployment and structure indicators. The results provide a mixed picture, suggesting that the sense of mobility strongly varies across countries.
    Keywords: Transition probabilities, labour market mobility, LFS micro data, EU countries
    JEL: J21 J60 J82 E24
    Date: 2013–11
  2. By: Kauer, Lukas
    Abstract: Previous empirical literature has shown a substantial extent of work disincentives in the Disability Insurance (DI). While its focus has been on the inflow into DI and on increases in benefits, this study focuses on a partial benefit cut and on existing beneficiaries. The partial benefit reduction affected married DI beneficiaries only and was also dependent on their entry into DI. The richness of the dataset allows me to look at the behavioral response on labor market participation from the spouse and not only from the beneficiary. Using a difference-in-differences methodology, I find no effect on labor supply or earnings for both members of the couple. If anything, there might be spillover effects into means-tested social insurance. These results indicate partially cutting benefits is not an effective policy to increase labor supply of existing DI beneficiaries.
    Keywords: Disability insurance, labor supply, policy reform
    JEL: H55 J21
    Date: 2014–01
  3. By: Julia Schwenkenberg
    Abstract: This paper shows that women experience less upward mobility in socioeconomic status with respect to their parents than men when the status measure places more weight on occupational earnings relative to occupational education, while the opposite holds when education becomes more important in the definition of occupational status. This holds whether we consider mobility with respect to fathers, mothers or with respect to the average parental status. Results also indicate that this mobility gap has been narrowing for the status measures that put more weight on earnings, and that the mobility advantage for women in education has been increasing. For the most recent cohorts there is no mobility gap when starting salaries are used in the occupational earnings measure. Moreover, while women and men still appear to be choosing different types of occupations, women are not choosing occupations that are characterized by low returns. Women are choosing occupations that offer them the flexibility to work less.
    Keywords: Gender Gap, Intergenerational Mobility, Occupational Choice
    JEL: J16 J24 J62
    Date: 2013–12
  4. By: Lori J. Curtis (Department of Economics, University of Waterloo); Kathleen Rybczynski (Department of Economics, University of Waterloo)
    Abstract: While Murphy, Zhang & Dionne (2012) report a slight decrease in the average duration of poverty spells in Canada over the past decade, little is understood about the factors associated with poverty duration in Canada, nor which factors, if any, may affect women and men differently. Moreover, research pays scant attention to how far Canadians transition out of poverty. For example, some may exit poverty only marginally while others exit to much higher incomes. We investigate the determinants of poverty duration among women and men in Canada. A major contribution of this paper is the examination of poverty duration across different exit destinations (competing risks); exits to just above the poverty line versus exits to higher levels of income. We find that nearly ¼ of poverty spells end within 110% of the poverty line (near poverty). Many of those that exit to near poverty experience multiple spells. As expected, we find that higher education increases the the lower the probability of exit, particularly to higher income levels. We find few significant gender differences in the coefficient estimates. However, several factors associated with exit to higher income levels differ from those factors that are associated with exits to near poverty.
    JEL: I30 G11 J22
    Date: 2013–09
  5. By: Rong Hai (Becker Friedman Institute for Research in Economics, University of Chicago)
    Abstract: What has caused the rising gap in health insurance coverage by education in the U.S. over the last thirty years? How does the employment-based health insurance market interact with the labor market? What are the effects of social insurance such as Medicaid? By developing and structurally estimating an equilibrium model, I find that the interaction between labor market technological changes and the cost growth of medical services explains 60% to 70% of the gap. Using counterfactual experiments, I also evaluate the impact of further Medicaid eligibility expansion and employer mandates introduced in the Affordable Care Act on labor and health insurance markets.
    Keywords: Inequality, Human Capital, Health Insurance, Health Care Reform, Labor Market Equilibrium
    JEL: I13 J31 J32
    Date: 2013–01–16
  6. By: Mirella Damiani; Fabrizio Pompei; Andrea Ricci
    Abstract: This paper analyses the role of Performance Related Pay (PRP) agreements on labour productivity and wages. Its main contribution is thus to investigate the effects of PRP on both dimensions, i.e. productivity and distribution, whereas most of the studies of related literature are restricted to one of those aspects. All estimates are performed for a large sample of manufacturing and service Italian firms with more than five employees and a restricted sample including only unionised firms. It allows us to focus on a relevant feature of industrial relations represented by worker representation and its role in local wage setting in the Italian economy. The expected positive link between PRP and firm performance has been confirmed in all estimates, also controlling for a rich set of covariates. Furthermore, the comparison of productivity estimates with those for wages allows us to ascertain that payments by results might be not only rent-sharing devices, but schemes that substantially lead to efficiency enhancements. These findings have been validated by a number of robustness checks, also taking into account endogen eity by using instrumental variables and the treatments of 3SLS. The paper argues that well designed policies, that circumvent the limited implementation of PRP practices, would guarantee productivity improvement. The real effectiveness of these measures would not be weakened under union governance.
    Keywords: Efficiency, Wages, Performance–related pay, unions.
    JEL: D24 J31 J33 J51
    Date: 2013–11–18
  7. By: Camilo Alberto Cárdenas Hurtado; María Alejandra Hernández Montes; Jhon Edwar Torres Gorron
    Abstract: In this paper we study the structural determinants of differentials in unemployment rates and labour markets’ performance for colombian cities. Following the framework proposed by Elhorst (2003) and using cross-sectional data for 23 metropolitan areas, we apply an extension of a principal axes method proposed by B´ecue-Bertaut and Pag`es (2004, 2008), Multiple Factor Analysis for Multiple Contingency Tables (MFACT), in order to establish unobserved factors that are relevant when disentangling the heterogeneity captured by groups of variables that are considered to explain regional unemployment differentials. Our findings suggest that differences on qualified labour supply levels, participation incentives and age structure are important to understand regional heterogeneity on labour markets and unemployment rates. In addition, we find that cities that display high unemployment rates do not necessarily share the same characteristics, that is, frictions that originate unemployment are not the same across colombian cities.
    Keywords: Unemployment; Unemployment rate, regional, heterogeneity, differentials, factor analysis. Classification JEL: R23, J40
    Date: 2014–01

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