nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒05‒04
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. The Productivity of Working Hours By Pencavel, John
  2. Reassessing the Trends in the Relative Supply of College-Equivalent Workers in the U.S.: A Selection-Correction Approach By Elitas, Zeynep; Ercan, Hakan; Tumen, Semih
  3. Door Opener or Waste of Time? The Effects of Student Internships on Labor Market Outcomes By Saniter, Nils; Siedler, Thomas
  4. Transitions to Stable and Unstable Jobs Before and During the Crisis By Nagore García, Amparo; van Soest, Arthur
  5. Declining Migration within the US: The Role of the Labor Market By Molloy, Raven; Smith, Christopher L.; Wozniak, Abigail
  6. Offshoring, employment, labour market reform and inequality: Modelling the German experience By Thomas Beissinger; Nathalie Chusseau; Joel Hellier
  7. Assessing the incidence and wage effects of overeducation among Italian graduates using a new measure for educational requirements By L. Cattani; G. Guidetti; G. Pedrini
  8. Did the Intergenerational Solidarity Pact increase the employment rate of the elderly in Belgium? A macro-econometric evaluation By Catherine SMITH
  9. The Long-term Impact of the 1995 Hanshin–Awaji Earthquake on Wage Distribution By Ohtake, Fumio; Okuyama, Naoko; Sasaki, Masaru; Yasui, Kengo
  10. The Lifetime Earnings Premium in the Public Sector: The View from Europe By Dickson, Matt; Postel-Vinay, Fabien; Turon, Hélène
  11. Gender Gaps and the Rise of the Service Economy By Ngai, L. Rachel; Petrongolo, Barbara
  12. What Can Life Satisfaction Data Tell Us About Discrimination Against Sexual Minorities? A Structural Equation Model for Australia and the United Kingdom By Powdthavee, Nattavudh; Wooden, Mark
  13. Customer Discrimination and Employment Outcomes: Theory and Evidence from the French Labor Market By Combes, Pierre-Philippe; Decreuse, Bruno; Laouénan, Morgane; Trannoy, Alain

  1. By: Pencavel, John (Stanford University)
    Abstract: Observations on munition workers, most of them women, are organized to examine the relationship between their output and their working hours. The relationship is nonlinear: below an hours threshold, output is proportional to hours; above a threshold, output rises at a decreasing rate as hours increase. Implications of these results for the estimation of labor supply functions are taken up. The findings also link up with current research on the effects of long working hours on accidents and injuries.
    Keywords: working hours, output, productivity, women workers
    JEL: J24 J22 N34
    Date: 2014–04
  2. By: Elitas, Zeynep; Ercan, Hakan; Tumen, Semih
    Abstract: Among better-educated employed men, the fraction of full-time full-year (FTFY) workers is quite high and stable -- around 90 percent -- over time in the U.S. Among those with lower education levels, however, this fraction is much lower and considerably more volatile, moving within the range of 62-82 percent for high school dropouts and 75-88 percent for high school graduates. These observations suggest that the composition of unobserved skills may be subject to sharp movements within low-educated employed workers, while the scale of these movements is potentially much smaller within high-educated ones. The standard college-premium framework accounts for the observed shifts between education categories, but it cannot account for unobserved compositional changes within education categories. Our paper uses Heckman's two-step estimator on repeated Current Population Survey cross sections to calculate a relative supply series that corrects for unobserved compositional shifts due to selection into and out of the FTFY status. We find that the well-documented deceleration in the growth rate of relative supply of college-equivalent workers after mid-1980s becomes even more pronounced once we correct for selectivity. This casts further doubt on the relevance of the plain skill-biased technical change (SBTC) hypothesis. We conclude that what happens to the within-group unobserved skill composition for low-educated groups is critical for fully understanding the trends in the relative supply of college workers in the United States. We provide several interpretations to our selection-corrected estimates.
    Keywords: Wage inequality; self selection; relative supply index; college premium; SBTC; FTFY
    JEL: I24 J23 J24 J31 O33
    Date: 2014–04–15
  3. By: Saniter, Nils (DIW Berlin); Siedler, Thomas (University of Hamburg)
    Abstract: This paper studies the causal effect of student internship experience on labor market choices and wages later in life. We use variation in the introduction and abolishment of mandatory internships at German universities as an instrument for completing an internship while attending university. Employing longitudinal data from graduate surveys, we find positive and significant wage returns of about six percent in both OLS and IV regressions. This result is mainly driven by a higher propensity of working full-time and a lower propensity of being unemployed in the first five years after entering the labor market. Moreover, former interns pursue doctoral studies less frequently. The positive returns are particularly pronounced for individuals and areas of study that are characterized by a weak labor market orientation. Heterogeneous effects are not found across other subgroups of the population.
    Keywords: internships, skill development, higher education, labor market returns, instrument variable
    JEL: I23 J01 J31
    Date: 2014–04
  4. By: Nagore García, Amparo (Universidad de Valencia); van Soest, Arthur (Tilburg University)
    Abstract: Using administrative records data from Spanish Social Security, we analyse the pattern and the determinants of individual unemployment benefit spell durations. We compare a period of expansion (2005-2007) and the recent recession (2009-2011), allowing us to determine the impact of the current crisis. In line with the duality that characterizes the Spanish labour market, we distinguish between exits to a stable job and exits to an unstable job. We estimate a Multivariate Mixed Proportional Hazard Model for each time period. We find similar effects of the crisis for stable and unstable jobs, which are particularly strong in the first year of the spell. Moreover, slight negative duration dependence is found, especially for stable jobs in the expansion period until the time of unemployment benefit expires. Individuals who are most affected by the financial crisis tend to be males, those aged 16-24 and 40-51 years, those living in regions with higher unemployment rates, individuals who are less qualified or work in manual occupations (particularly construction) and immigrants.
    Keywords: unemployment durations, business cycle, dual labour markets, re-employment probability
    JEL: J64 C41 E32
    Date: 2014–04
  5. By: Molloy, Raven (Federal Reserve Board of Governors); Smith, Christopher L. (Federal Reserve Board of Governors); Wozniak, Abigail (University of Notre Dame)
    Abstract: Interstate migration has decreased steadily since the 1980s. We show that this trend is not primarily related to demographic and socioeconomic factors, but instead appears to be connected to a concurrent secular decline in labor market transitions. We explore a number of reasons for the declines in geographic and labor market transitions, and find the strongest support for explanations related to a decrease in the net benefit to changing employers. Our preferred interpretation is that the distribution of relevant outside offers has shifted in a way that has made labor market transitions, and thus geographic transitions, less desirable to workers.
    Keywords: migration, migration decline, labor market transitions, job transitions, returns to tenure
    JEL: J6 J1
    Date: 2014–04
  6. By: Thomas Beissinger (University of Hohenheim, Germany); Nathalie Chusseau (EQUIPPE, University of Lille, France); Joel Hellier (EQUIPPE, Univ. of Lille and LEMNA, Univ. of Nantes, France)
    Abstract: A usual interpretation of the high performance of the German economy since 2006 is that the Hartz labour market reforms have boosted German competitiveness, resulting in higher exports, higher production and lower unemployment. We start from the diagnosis that this explanation is at odds with the sequence of observed facts. We propose and model an alternative scenario in which offshoring explains the gains in competitiveness but increases unemployment and inequality, and the subsequent labour market reforms lower unemployment by lessening the reservation wage and expanding the non-tradable sector, amplifying the rise in inequality. The model outcomes are consistent with all the developments of the German economy since 1995: 1) The model explains why Germany offshored earlier and more intensively than other Eurozone countries; 2) The increase in competitiveness and in the exports/production ratio occurs before the setting of the labour market reform, and this comes with both higher inequality and higher unemployment; 3) The setting of the labour market reform reduces unemployment and increases production, and this comes with a decrease in the exports/production ratio and an increase in inequality. We finally discuss (i) the possible extension of this `strategy' to other Eurozone countries, and (ii) alternative policies that act through similar mechanisms, but without increasing inequality.
    Keywords: Germany, inequality, labour market reform, offshoring, unemployment.
    JEL: H55 J31 J65
    Date: 2014–04
  7. By: L. Cattani; G. Guidetti; G. Pedrini
    Abstract: This paper investigates three dimensions of overeducation: incidence, impact on earnings and possible determinants. The analysis focuses on Italian graduates and refers to the cohort that graduated in 2007 using data from the AlmaLaurea survey on graduates' career paths. A new measure of overeducation is introduced and it is jointly examined along with other pre-existing measures based on workers' self-assessment. The analysis is carried out by comparing the different results obtained adopting the two different measures of overeducation. Results show that the newly introduced measure can deal with the biases affecting workers' self-assessment measures.
    JEL: I2 J31
    Date: 2014–04
  8. By: Catherine SMITH (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: In December 2005, the Belgian government adopted the law on the Intergenerational Solidarity Pact (ISP) with the objective to increase the employment rate of the elderly. In order to meet that objective, several active ageing policies and reforms were taken. The aim of this paper is to investigate the overall effectiveness of the ISP in rising the elderly employment rate by gender. Two methods are used. Both rely on a macro-econometric model which explains the evolution of the elderly employment rate by the economic conditions. The first method uses forecasts of the macro-econometric model as an indicator of the value the employment rate would have taken in the absence of the policies. The second method tests for the presence of structural breaks after the introduction of the main policies of the ISP. The results of the first method suggest a positive impact of the policies on elderly employment rate which is slightly larger for men, and a negative impact on younger men's employment rate, suggesting a substitution effect. These effects are however too small to be statistically significant. Using the second method, no structural break is found.
    JEL: J21 J26 H53 E32
    Date: 2014–04–09
  9. By: Ohtake, Fumio (Osaka University); Okuyama, Naoko (Kobe University); Sasaki, Masaru (Osaka University); Yasui, Kengo (Ritsumeikan University)
    Abstract: This paper explores the effects of the 1995 Hanshin–Awaji Earthquake on the wages of people in the area of the earthquake over the 17 years after its occurrence and identified which part of the wage distribution has been most affected by this event by comparing the wage distributions of disaster victims and non-victims. To do this, we used three decomposition methods, developed by (i) Oaxaca (1973) and Blinder (1973); (ii) DiNardo, Fortin, and Lemieux (1996) ("DFL"); and (iii) Machado and Mata (2005) and Melly (2006). Our findings are as follows. First, the Oaxaca and Blinder decomposition analysis shows that the negative impact of the earthquake still affects the mean wages of male workers. Second, the DFL decomposition analysis shows that middle-wage males would have earned more had the 1995 Hanshin–Awaji Earthquake not occurred. Finally, the Machado–Mata–Melly decomposition analysis shows that the earthquake had a large, adverse impact on the wages of middle-wage males, and that their wages have been reduced since the earthquake, by 5.0–8.6%. This result is similar to that from the DFL decomposition analysis. In the case of female workers, a long-term negative impact of the earthquake was also observed as the wages of high-wage females were reduced by 8.3–13.8%.
    Keywords: natural disasters, wage distribution, wage decomposition, earthquake
    JEL: J31 Q54
    Date: 2014–04
  10. By: Dickson, Matt (University of Bath); Postel-Vinay, Fabien (University College London); Turon, Hélène (University of Bristol)
    Abstract: In a context of widespread concern about budget deficits, it is important to assess whether public sector pay is in line with the private sector. Our paper proposes an estimation of differences in lifetime values of employment between public and private sectors for five European countries. We use data from the European Community Household Panel over the period 1994-2001 for Germany, the Netherlands, France, Italy and Spain. We look at lifetime values instead of wage levels because, as we show in our results, differences in earnings mobility, earnings volatility and job loss risk across sectors occur in many instances and these will matter to forward-looking individuals. When aggregated into a measure of lifetime value of employment in either sector, these differences yield estimates of the lifetime premium in the public sector for these five countries. We also present differences in the institutional and labour market structures in these countries and find that countries for which we estimate a positive lifetime premium in the public sector, i.e. France and Spain, are also the countries where access to the public sector requires costly entry procedures. This paper is to the best of our knowledge the first to use this dynamic approach applied to Europe, which we are able to do with a common dataset, time-period and model.
    Keywords: income dynamics, job mobility, public-private inequality, selection effects, institutions
    JEL: J45 J31 J62
    Date: 2014–04
  11. By: Ngai, L. Rachel (London School of Economics); Petrongolo, Barbara (Queen Mary, University of London)
    Abstract: This paper investigates the role of the rise of services in the narrowing of gender gaps in hours and wages in recent decades. We document the between-industry component of the rise in female work for the U.S., and propose a model economy with goods, services and home production, in which women have a comparative advantage in producing market and home services. The rise of services, driven by structural transformation and marketization of home production, acts as a gender-biased demand shift raising women's relative wages and market hours. Quantitatively, the model accounts for an important share of the observed trends.
    Keywords: gender gaps, structural transformation, marketization
    JEL: E24 J22 J16
    Date: 2014–04
  12. By: Powdthavee, Nattavudh (London School of Economics); Wooden, Mark (Melbourne Institute of Applied Economic and Social Research)
    Abstract: Very little is known about how the differential treatment of sexual minorities could influence subjective reports of overall well-being. This paper seeks to fill this gap. Data from two large surveys that provide nationally representative samples for two different countries – Australia (the HILDA Survey) and the UK (the UK Household Longitudinal Study) – are used to estimate a simultaneous equations model of life satisfaction. The model allows for self-reported sexual identity to influence a measure of life satisfaction both directly and indirectly through seven different channels: (i) income; (ii) employment; (iii) health (iv) partner relationships; (v) children; (vi) friendship networks; and (vii) education. Lesbian, gay and bisexual persons are found to be significantly less satisfied with their lives than otherwise comparable heterosexual persons. In both countries this is the result of a combination of direct and indirect effects.
    Keywords: sexual orientation, sexual minorities, discrimination, life satisfaction, HILDA Survey, UKHLS
    JEL: I31 J71
    Date: 2014–04
  13. By: Combes, Pierre-Philippe (GREQAM, University of Aix-Marseille); Decreuse, Bruno (GREQAM, University of Aix-Marseille); Laouénan, Morgane (IRES, Université catholique de Louvain); Trannoy, Alain (EHESS, Paris)
    Abstract: The paper investigates the link between the over-exposure of African immigrants to unemployment in France and their under-representation in jobs in contact with customers. We build a two-sector matching model with ethnic sector-specific preferences, economy-wide employer discrimination, and customer discrimination in jobs in contact with customers. The outcomes of the model allow us to build a test of ethnic discrimination in general and customer discrimination in particular. We run the test on French individual data in a cross-section of local labor markets (Employment Areas). Our results show that there is both ethnic and customer discrimination in the French labor market.
    Keywords: discrimination, matching frictions, jobs in contact, ethnic unemployment, local labor markets
    JEL: J15 J61 R23
    Date: 2014–04

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