nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒02‒21
nine papers chosen by
Joseph Marchand
University of Alberta

  1. Labor income dynamics and the insurance from taxes, transfers and the family By Richard Blundell; Michael Graber; Magne Mogstad
  2. On the Importance of Fertility Behavior in School Finance Policy Design By Kuzey Yilmaz
  3. Same Same but Different: School-to-work Transitions in Emerging and Advanced Economies By Glenda Quintini; Sébastien Martin
  4. Overeducation among graduates: An overlooked facet of the gender pay gap? Evidence from East and West Germany By Boll, Christina; Leppin, Julian Sebastian
  5. Human Well-being and In-Work Benefits: A Randomized Controlled Trial By Dorsett, Richard; Oswald, Andrew J.
  6. Commute Costs and Labor Supply: Evidence from a Satellite Campus By Fu, Shihe; Viard, Brian
  7. From Engineer to Taxi Driver? Language Proficiency and the Occupational Skills of Immigrants By Susumu Imai; Derek Stacey; Casey Warman
  8. Collaborating With People Like Me: Ethnic co-authorship within the US By Richard B. Freeman; Wei Huang
  9. Obesity and the Labor Market: A Fresh Look at the Weight Penalty By Caliendo, Marco; Gehrsitz, Markus

  1. By: Richard Blundell (Institute for Fiscal Studies and University College London); Michael Graber (Institute for Fiscal Studies); Magne Mogstad (Institute for Fiscal Studies)
    Abstract: What do labor income dynamics look like over the life-cycle? What is the relative importance of persistent shocks, transitory shocks and heterogeneous profiles? To what extent do taxes, transfers and the family attenuate these various factors in the evolution of life-cycle inequality? In this paper, we use rich Norwegian data to answer these important questions. We let individuals with different education levels have a separate income process; and within each skill group, we allow for non-stationarity in age and time, heterogeneous experience profiles, and shocks of varying persistence. We find that the income processes differ systematically by age, skill level and their interaction. To accurately describe labor income dynamics over the life-cycle, it is necessary to allow for heterogeneity by education levels and account for non-stationarity in age and time. Our findings suggest that the progressive nature of the Norwegian tax-transfer system plays a key role in attenuating the magnitude and persistence of income shocks, especially among the low skilled. By comparison, spouse's income matters less for the dynamics of inequality over the life-cycle.
    Date: 2014–01
  2. By: Kuzey Yilmaz (Department of Economics, University of Rochester)
    Abstract: To design an optimal education policy, it is essential to account for the fertility differential between the poor and the rich because it affects the human capital investment through the child quantity-quality tradeoff of children. We develop a dynamic general equilibrium in which parents choose the quantity of children, transfer a preschool ability to their children, determine the quality of children by choosing private expenditures on basic education in addition to public expenditures on basic education, leave a bequest that could be used to finance college education. Moreover, there is an uncertainty in college completion depending on ability and endogenous wage determination based on the amount of schooling in the economy. It is very important to consider general equilibrium effects because the change in either fertility behavior or college outcomes as a result of policy changes leads to a large change in aggregate skill distribution. We find that ignoring fertility behavior, especially differential fertility substantially underestimates the role of credit constraints in the economy. We also analyze the impact of basic education subsidies and college subsidies on welfare, inequality, and intergenerational mobility. Strikingly, the choice between these two policies is found to be dependent on the magnitude of differential fertility rate.
    Keywords: differential fertility; human capital investment; education subsidies; general equilibrium; inequality; intergenerational mobility.
    JEL: H2 I2 D5 J1 J3
    Date: 2014–02
  3. By: Glenda Quintini; Sébastien Martin
    Abstract: Improving school-to-work transitions and ensuring better career opportunities for youth after labour market entrance are common goals in emerging and advanced economies as they can contribute to raising the productive potential of the economy and to increasing social cohesion. However, the challenges faced in achieving these objectives and the policies required vary between emerging and advanced economies. This paper analyses youth labour market outcomes in 16 countries: eight emerging countries and eight advanced economies. In light of this analysis, it also discusses differences and similarities in the policy measures countries have at their disposal to tackle the key emerging challenges. Améliorer les transitions de l’école à l’emploi et assurer aux jeunes des meilleures opportunités professionnelles après l’entrée sur le marché du travail sont des buts partagés par les pays développés et émergents car ils peuvent contribuer à augmenter le potentiel productif de l’économie et à accroitre la cohésion sociale. Toutefois, les défis auxquels les pays sont confrontés pour atteindre ces objectifs et les politiques requises varient entre les pays émergents et les économies plus avancées. Ce document analyse la réussite des jeunes sur le marché du travail dans 16 pays : huit pays émergents et huit économies avancées. En vue de cette analyse, ce document expose les différences et similarités dans les mesures de politique économique que les pays ont à leur disposition pour faire face aux défis émergeants.
    JEL: I28 J08 J21 J38 J41
    Date: 2014–01–28
  4. By: Boll, Christina; Leppin, Julian Sebastian
    Abstract: Germany's occupational and sectoral change towards a knowledge-based economy calls for high returns to education. Nevertheless, female graduates are paid much less than their male counterparts. We wonder whether overeducation affects sexes differently and whether this might answer for part of the gender pay gap. We decompose total year of schooling in years of over- (O), required (R), and undereducation (U). As ORU earnings estimations based on German SOEP cross-section and panel data indicate, overeducation pays off less than required education in the current job even when unobserved heterogeneity is taken into account. Moreover, analyses of job satisfaction and self-assessed overeducation point to some real mismatch. However, overeducation does not matter for the gender pay gap. By contrast, women's fewer years of required education reasonably do, answering for 7.61 pp. of the East German (18.79 %) and 2.22 pp. of the West German (32.98 %) approximate gap. Moreover, job biography and the household context affect the gap more seriously in the old Bundesländer than in the new ones. Overall, the West German pay gap almost doubles the East German one, and different endowments answer for roughly three quarters of the approximate gap in the Western but only for two thirds in the Eastern part. We conclude that the gendered earnings gap among German graduates is rather shaped by an employment behaviour suiting traditional gender roles and assigned gender stereotypes than being subject to gendered educational inadequacy. --
    JEL: J31 J24 J16
    Date: 2014
  5. By: Dorsett, Richard (National Institute of Economic and Social Research (NIESR)); Oswald, Andrew J. (University of Warwick)
    Abstract: Many politicians believe they can intervene in the economy to improve people's lives. But can they? In a social experiment carried out in the United Kingdom, extensive in-work support was randomly assigned among 16,000 disadvantaged people. We follow a sub-sample of 3,500 single parents for 5 ensuing years. The results reveal a remarkable, and troubling, finding. Long after eligibility had ceased, the treated individuals had substantially lower psychological well-being, worried more about money, and were increasingly prone to debt. Thus helping people apparently hurt them. We discuss a behavioral framework consistent with our findings and reflect on implications for policy.
    Keywords: randomized controlled trials, government policy, in-work benefits, wage subsidies, well-being, happiness
    JEL: I31 D03 D60 H11 J38
    Date: 2014–02
  6. By: Fu, Shihe; Viard, Brian
    Abstract: Whether, and how much, increased commute costs decrease labor supply is important for transport policy, city growth, and business strategies. Yet empirical estimates are limited and biased downward due to endogenous choices of residences, workplaces, commute modes, and wages. We use the transition of undergraduate teaching from a Chinese university’s urban to suburban campus and ten years of complete course schedule data to test how teachers’ labor supply responds to a longer commute. Exogeneity is ensured because few faculty change residences, nearly all faculty ride a free shuttle bus, and we control for wage changes. Employing a regression discontinuity design, the 1.0 to 1.5-hour (40-kilometer) increase in round-trip commute time reduces annual undergraduate teaching by 56 hours or 23%. Consistent with higher per-day commute costs annual teaching days decrease by 27 while daily teaching hours increase by 0.49. Difference-in-difference estimates using faculty-specific changes in commute time corroborate these results ruling out aggregate confounders. Faculty substitute toward graduate teaching but decrease research output. The university accommodated the reduced teaching time primarily by increasing class sizes implying that education quality declined.
    Keywords: commuting; commute costs; labor supply; satellite campus
    JEL: I23 I25 J22 R23 R41
    Date: 2014–02–17
  7. By: Susumu Imai (UTS Business School, University of Technology, Sydney, Australia); Derek Stacey (Department of Economics, Ryerson University, Toronto, Canada); Casey Warman (Department of Economics, Dalhousie University, Halifax, Canada)
    Abstract: We examine the ability of male immigrants to transfer the occupational human capital they acquired prior to immigration using information from the O*NET and a unique dataset that includes both the last source country occupation and the first four years of occupations in Canada. We first augment a model of occupational choice to study the implications of language proficiency on the cross-border transferability of occupational human capital. We then test the empirical predictions using the skill requirements of pre- and post-immigration occupations. We find that male immigrants to Canada were employed in source country occupations that required high levels of cognitive skills, but relied less intently on manual skills. Following immigration, they find initial employment in occupations that require the opposite. These discrepancies are both larger and more detrimental to earnings among immigrants with limited language fluency.
    Keywords: Occupational mobility; Language Proficiency; Skills; Human Capital; Immigration
    JEL: J24 J31 J61 J62 J71 J80
    Date: 2014–02
  8. By: Richard B. Freeman; Wei Huang
    Abstract: This study examines the ethnic identify of the authors of over 1.5 million scientific papers written solely in the US from 1985 to 2008. In this period the proportion of US-based authors with English and European names fell while the proportion of US-based authors with names from China and other developing countries increased. The evidence shows that persons of similar ethnicity co- author together more frequently than can be explained by chance given their proportions in the population of authors. This homophily in research collaborations is associated with weaker scientific contributions. Researchers with weaker past publication records are more likely to write with members of ethnicity than other researchers. Papers with greater homophily tend to be published in lower impact journals and to receive fewer citations than others, even holding fixed the previous publishing performance of the authors. Going beyond ethnic homophily, we find that papers with more authors in more locations and with longer lists of references tend to be published in relatively high impact journals and to receive more citations than other papers. These findings and those on homophily suggest that diversity in inputs into papers leads to greater contributions to science, as measured by impact factors and citations.
    JEL: J01 J1 J15
    Date: 2014–02
  9. By: Caliendo, Marco (University of Potsdam); Gehrsitz, Markus (City University of New York)
    Abstract: This paper applies semiparametric regression models to shed light on the relationship between body weight and labor market outcomes in Germany. We find conclusive evidence that these relationships are poorly described by linear or quadratic OLS specifications, which have been the main approaches in previous studies. Women's wages and employment probabilities do not follow a linear relationship and are highest at a body weight far below the clinical threshold of obesity. This indicates that looks, rather than health, is the driving force behind the adverse labor market outcomes to which overweight women are subject. Further support is lent to this notion by the fact that wage penalties for overweight and obese women are only observable in white-collar occupations. On the other hand, bigger appears to be better in the case of men, for whom employment prospects increase with weight, albeit with diminishing returns. However, underweight men in blue-collar jobs earn lower wages because they lack the muscular strength required in such occupations.
    Keywords: obesity, wages, employment, semiparametric regression, gender differences
    JEL: J31 J71 C14
    Date: 2014–02

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