nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒03‒08
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. Overeducation at a glance. Determinants and wage effects of the educational mismatch, looking at the AlmaLaurea data By Floro Ernesto Caroleo; Francesco Pastore
  2. Culture and Household Decision Making: Balance of Power and Labor Supply Choices of US-born and Foreign-born Couples By Oreffice, Sonia
  3. The Miracle Drugs: Hormone Replacement Therapy and Labor Market Behavior of Middle-Aged Women By Daysal, N. Meltem; Orsini, Chiara
  4. The Firm Size Distribution across Countries and Skill-Biased Change in Entrepreneurial Technology By Poschke, Markus
  5. From Outsourcing to Productivity, Passing Through Training: Microeconometric Evidence from Italy By Roberto Antonietti
  6. Of Firms and Captives: Railway Infrastructures and the Economics of Forced Labour (Spain, 1937 – 1957) By Fernando Mendiola
  7. Indirect Job Creation and the Informal Sector in Mexico By Mariana Pereira-López
  8. The Surprisingly Swift Decline of U.S. Manufacturing Employment By Justin R. Pierce; Peter K. Schott
  9. Impact of minimum wage on income distribution and poverty in Russia By Kapelyuk Sergey
  10. Interacting product and labor market regulation and the impact of immigration on native wages By Prantl, Susanne; Spitz-Oener, Alexandra
  11. From the Substance to the Shadow: The Court Embedded into Japanese Labor Markets By NAKABAYASHI, Masaki
  12. Obesity and the Labor Market: A Fresh Look at the Weight Penalty By Marco Caliendo; Markus Gehrsitz

  1. By: Floro Ernesto Caroleo (University of Naples "Parthenope”, IZA); Francesco Pastore (Seconda Università di Napoli, IZA)
    Abstract: This paper provides the first available evidence on overeducation/overskilling based on AlmaLaurea data. We focus on jobs held 5 years after graduation by pre-reform graduates in 2005. Overeducation/overskilling are relatively high – at 11.4 and 8% – when compared to EU economies. Ceteris paribus they tend to be more frequent among children of parents with lower educational levels, through school tracking. Most arts degrees and social sciences, but also Geology and Biology are associated to both types of the educational mismatch. The quality of education is also a factor, suggesting that in addition to the low demand for skills, one should also reckon the inability of the educational system to provide work-related skills. Moreover, we find a non-conditional wage penalty of 20% and 16% and a conditional one of about 12% and of 7%, respectively. Heckit returns a sample selection corrected penalty slightly higher, supporting not only the job competition and job assignment models, but also the human capital model.
    Keywords: University-to-Work Transition; Overeducation; Overskilling; Sample Selection Bias; AlmaLaurea; Italy.
    JEL: C25 C26 C33 I2 J13 J24
    Date: 2014–02
  2. By: Oreffice, Sonia (University of Surrey)
    Abstract: This study investigates how spouses' cultural backgrounds mediate the role of intra-household bargaining in the labor supply decisions of foreign-born and US-born couples, in a collective-household framework. Using data from the 2000 US Census, I show that the hours worked by US-born couples, and by those foreign-born coming from countries with gender roles similar to the US, are significantly related to common bargaining power forces such as differences between spouses in age and non-labor income, controlling for both spouses' demographic and socioeconomic characteristics. Households whose culture of origin supports strict and unequal gender roles do not exhibit any association of these power factors with their labor supply decisions. This cultural asymmetry suggests that spousal attributes are assessed differently across couples within the US, and that how spouses make use of their outside opportunities and economic and institutional environment may depend on their ethnicities.
    Keywords: culture, gender roles, household bargaining power, labor supply
    JEL: D1 J15 J22
    Date: 2014–02
  3. By: Daysal, N. Meltem (University of Southern Denmark); Orsini, Chiara (London School of Economics)
    Abstract: In an aging society, determining which factors contribute to the employment of older individuals is increasingly important. We examine the impact of medical innovations on the employment of middle-aged women focusing on the specific case of Hormone Replacement Therapy (HRT), a common treatment for the alleviation of negative menopausal symptoms. HRT medications were among the most popular prescriptions in the United States until 2002 when the Women's Health Initiative Study – the largest randomized control trial on women ever undertaken – documented the health risks associated with their long term use. We exploit the release of these findings within a Fixed Effect Instrumental Variable framework to address the endogeneity in HRT use. Our results indicate substantial benefits of HRT use to the short-term employment of middle-aged women.
    Keywords: employment, pharmaceutical treatments, Hormone Replacement Therapy
    JEL: I1 H8 J2
    Date: 2014–02
  4. By: Poschke, Markus (McGill University)
    Abstract: How and why does the firm size distribution differ across countries? Using two datasets covering more than 30 countries, this paper documents that several features of the firm size distribution are strongly associated with income per capita: the entrepreneurship rate and the fraction of small firms fall with per capita income across countries, while average firm employment, the median and higher percentiles of the firm size distribution, and the dispersion and skewness of employment all rise with per capita income. The paper broadens existing evidence on the first three facts to cover more countries and newly introduces the last three to the literature. It then proposes a simple theory of skill-biased change in entrepreneurial technology motivated by recent microeconomic literature that fits with the evidence. For this, it introduces two additional features into an otherwise standard occupational choice, heterogeneous firm model a la Lucas (1978): technological change does not benefit all potential entrepreneurs equally, and there is a positive relationship between an individual's potential payoffs in working and in entrepreneurship. If some firms consistently benefit more from technological progress than others, they stay closer to the frontier, while others fall behind. Because wages rise for all workers, marginal entrepreneurs exit and become workers. Quantitatively, the model fits both the U.S. time series experience and cross-country patterns well.
    Keywords: occupational choice, entrepreneurship, firm size, skill-biased technical change
    JEL: E24 J24 L11 L26 O30
    Date: 2014–02
  5. By: Roberto Antonietti (Department of Economics and Management “Marco Fanno”, Italy)
    Abstract: The aim of this paper is to provide firm-level evidence on the short-run link between outsourcing and labor productivity using an original dataset of Italian manufacturing firms, and applying a two-stage probit least squares estimator. We find a positive effect on productivity from outsourcing only if firms provide training for the workforce. This indirect impact on productivity is independent of the type of activity outsourced and is bigger in the case of service outsourcing. This can be explained by the different feedback effect of labor productivity on training and by the different type of training provided. While production outsourcing induces an organizational change which stimulates off-the-job training for plant operators, service outsourcing induces firms to train a broader range of occupational profiles - both off and on the job. Similar results emerge for the case of joint outsourcing of both production and service activities. Therefore, we find that outsourcing generates positive productivity effects only if it is part of a broader knowledge management strategy that involves upgrading of workers’ skills.
    Keywords: Outsourcing, Productivity, Training, Two-Stage Probit Least Squares
    JEL: J24 L24 L25 L60
    Date: 2014–02
  6. By: Fernando Mendiola (Universidad Pública de Navarra / Nafarroako Unibertsitate Publikoa, Iruñea – Pamplona, Spain)
    Abstract: This article deals with the main economic keys that explain the evolution in the deployment of prisoners and prisoners of war on extending and reconstructing the railways. The first part presents a list of the works carried out during the Spanish civil war and the Francoist dictatorship. Subsequently, an analysis is made of the three main variables of work according to institutional change and the business structure of the Spanish railway. Thanks to this variety of situation, we can better understand to which extent labour supply and productivity levels are on the basis of the evolution of enterprises strategies towards this kind of labour in different situations, such as war economy, after-war reconstruction, and dictatorship, until 1957.
    Keywords: forced labour, railway infrastructures, railway companies, Franco´s Dictatorship, coercion
    JEL: J20 N84 N44 N34 L92
    Date: 2014–03
  7. By: Mariana Pereira-López (Postdoctoral Fellow Universidad Iberoamericana)
    Abstract: This paper analyzes the effects of localized labor demand shocks in the tradable sector, such as the establishment of a large tradable firm in a municipality, over nontradable formal and informal jobs in the case of Mexico. Results indicate that locations that experienced this shock have between 8 and 13 thousand more jobs than other municipalities over a ten--year period. Indirect job creation is similar in both the formal and the informal sectors, but informality appears to be more vulnerable to negative shocks. Furthermore, the effects of shocks are symmetric in the formal sector but not in the informal, where negative shocks have greater effects over nontradable employment.
    JEL: J23 R11 R12 R23
    Date: 2014–01
  8. By: Justin R. Pierce; Peter K. Schott
    Abstract: This paper finds a link between the sharp drop in U.S. manufacturing employment beginning in 2001 and a change in U.S. trade policy that eliminated potential tariff increases on Chinese imports. Industries where the threat of tariff hikes declines the most experience more severe employment losses along with larger increases in the value of imports from China and the number of firms engaged in China-U.S. trade. These results are robust to other potential explanations of the employment loss, and we show that the U.S. employment trends differ from those in the EU, where there was no change in policy.
    Keywords: manufacturing, trade policy, uncertainty, offshoring, supply chains, employment, China, World Trade Organizations, PNTR
    JEL: F13 F16 J23
    Date: 2014
  9. By: Kapelyuk Sergey
    Abstract: To the best of our knowledge, the influence of the minimum wage on poverty in Russia has never before been investigated. Russian data provide a unique opportunity for studying the poverty effects related to the minimum wage due to the significant increases of the minimum wage in recent years, almost complete coverage, and a high representation of full-time workers in poor households. This paper examines the effect of the minimum wage in Russia on the incidence of poverty and transitions into and out of poverty using data from the Russia Longitudinal Monitoring Survey of Higher School of Economics (RLMS-HSE) for the years 2006 to 2011. The results indicate slight poverty-reducing effects of the minimum wage in Russia.
    JEL: J31 J38
    Date: 2014–02–26
  10. By: Prantl, Susanne; Spitz-Oener, Alexandra (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Does interacting product and labor market regulation alter the impact of immigration on wages of competing native workers? Focusing on the large, sudden and unanticipated wave of migration from East to West Germany after German reunification and allowing for endogenous immigration, we compare native wage reactions across different segments of the West German labor market: one segment without product and labor market regulation, to which standard immigration models best apply, one segment in which product and labor market regulation interact, and one segment covering intermediate groups of workers. We find that the wages of competing native West Germans respond negatively to the large influx of similar East German workers in the segment with almost free firm entry into product markets and weak worker influence on the decision-making of firms. Competing native workers are insulated from such pressure if firm entry regulation interacts with labor market institutions, implying a strong influence of workers on the decision-making of profit-making firms." (Author's abstract, IAB-Doku) ((en))
    Keywords: Gütermarkt, Arbeitsmarkt, Regulierung, Binnenwanderung, Arbeitsmigration, institutionelle Faktoren, staatlicher Zusammenschluss, Handwerk, Handwerksordnung, Betriebsrat, Betriebsverfassungsgesetz, Arbeitsmarktentwicklung, regionaler Arbeitsmarkt, Einwanderung - Auswirkungen, Einkommenseffekte, Inländer, Westdeutschland, Ostdeutschland
    JEL: J61 L50 J3
    Date: 2014–02–25
  11. By: NAKABAYASHI, Masaki (Institute of Social Science, The University of Tokyo)
    Abstract: If a perfected claim cannot be placed on workers, investment in workers by employers could become less-than optimal. Thus, the protection of an employer's investment, balanced against mobility of the labor market for better employer-employee matches, is desired. We explore how Japanese state courts in their early period first directly protected the interests of employers, curbing mobility, and then indirectly governed trades between employers as a shadow off-the-equilibrium path, enabling labor market mobility with protection of an original employer's claim, in the labor market of the silk-reeling industry that led Japan's industrialization.
    Keywords: Employment contract; poaching; bystander's infringement on claim; shadow of the law; Japan
    JEL: K12 L14 J42
    Date: 2014–02–24
  12. By: Marco Caliendo; Markus Gehrsitz
    Abstract: This paper applies semiparametric regression models to shed light on the relation-ship 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
  13. By: Ashwini Deshpande (Department of Economics, Delhi School of Economics, Delhi, India); Smriti Sharma (Department of Economics, Delhi School of Economics, Delhi, India)
    Abstract: Using the India Human Development Survey data for 2004-05, we employ two methodologies to estimate the earnings structure of household nonfarm businesses owned by Scheduled Castes and Tribes (SCSTs) and non-SCSTs: OLS estimation of mean earnings, and quantile regressions. Correspondingly, we use two decomposition methods: the conventional Blinder-Oaxaca decomposition and Melly's (2006) refinement of the Machado and Mata (2005) decomposition of quantile gaps. We find clear differences in characteristics between SCST-owned and non-SCST owned businesses. The Blinder-Oaxaca decomposition reveals that depending on the specification of explanatory variables, as much as 70 percent of the earnings gap could be attributed to the "unexplained" or the discriminatory component. Quantile regressions reveal that gaps are higher at lower deciles than the higher ones (both raw gaps, as well as after controlling for characteristics), and the decompositions show that the unexplained component is higher at the lower deciles than higher, suggesting that SCST-owned businesses at the lower end of the conditional distribution face greater discrimination, as compared to those at the higher end. Thus, we find strong evidence of a "sticky floor", a phenomenon observed for gender wage gaps in developing countries (incontrast to a "glass ceiling" in developed countries).
    Keywords: Caste, discrimination, household nonfarm business, earning gaps, quantile regressions, earnings decomposition.
    JEL: J31 J71 C21 O15 O17
    Date: 2014–02

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