nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒07‒05
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. The Decline of Drudgery and the Paradox of Hard Work By Epstein, Brendan; Kimball, Miles S.
  2. Biomarkers and Long-term Market Outcomes: The Case of Creatine By Petri Bockerman; Alex Bryson; Christian Hakulinen; Jaakko Pehkonen; Laura Pulkki-Raback; Olli Raitakari; Jutta Viinikainen
  3. Made in China, sold in Norway: Local labor market effects of an import shock. By Balsvik, Ragnhild; Jensen, Sissel; Salvanes, Kjell G.
  4. 30,000 minimum wages: The economic effects of collective agreement extensions By Pedro S. Martins
  5. Effects of Payroll Tax Cuts for Young Workers By Skedinger, Per
  6. Reemployment effects from increased activation: Evidence from times of crisis By Pedro S. Martins; Sofia Pessoa e Costa
  7. Lifting the Burden: State Care of the Elderly and Labor Supply of Adult Children By Løken, Katrine V.; Lundberg, Shelly; Riise, Julie
  8. Maternity Leave in the Context of Couples: The Impact of Both Partners' Characteristics and Employment Experiences on Mothers' Re-entry into the Labour Market By Stefanie Hoherz
  9. Breaking the Glass Ceiling? The Effect of Board Quotas on Female Labor Market Outcomes in Norway By Marianne Bertrand; Sandra E. Black; Sissel Jensen; Adriana Lleras-Muney
  10. Extremal Quantile Regressions for Selection Models and the Black-White Wage Gap By Xavier D'Haultfoeuille; Arnaud Maurel; Yichong Zhang
  11. The “Business Climate” and Economic Inequality By David Neumark; Jennifer Muz
  12. Understanding the Effect of Retirement on Health Using Regression Discontinuity Design By Peter Eibich
  13. Attrition Bias in Panel Data: A Sheep in Wolf’s Clothing? A Case Study Based on the MABEL Survey By Terence C. Cheng; Pravin K. Trivedi

  1. By: Epstein, Brendan (Board of Governors of the Federal Reserve System (U.S.)); Kimball, Miles S. (University of Michigan)
    Abstract: We develop a theory that focuses on the general equilibrium and long-run macroeconomic consequences of trends in job utility. Given secular increases in job utility, work hours per capita can remain approximately constant over time even if the income effect of higher wages on labor supply exceeds the substitution effect. In addition, secular improvements in job utility can be substantial relative to welfare gains from ordinary technological progress. These two implications are connected by an equation flowing from optimal hours choices: improvements in job utility that have a significant effect on labor supply tend to have large welfare effects.
    Keywords: Labor supply; work hours; drudgery; income effect; substitution effect; job utility
    JEL: E24 J22 O40
    Date: 2014–06–06
  2. By: Petri Bockerman; Alex Bryson; Christian Hakulinen; Jaakko Pehkonen; Laura Pulkki-Raback; Olli Raitakari; Jutta Viinikainen
    Abstract: Using the Young Finns Study (YFS) combined with the Finnish Linked Employer-Employee Data (FLEED) we show that quantities of creatine measured in 1980 prior to labour market entry affect labour market outcomes over the period 1990-2010. Those with higher levels of creatine (proxied by urine creatinine) prior to labour market entry spend more time in the labour market in the subsequent two decades and earn more. Creatine is not associated with high educational attainment. The associations between creatine and labour market outcomes are robust to controlling for other biomarkers, educational attainment and parental background. Creatine is a naturally occurring nitrogenous organic acid which supplies energy to body cells, including muscles. Our findings are consistent with high energy levels, induced by creatine, leading to productivity-enhancing traits such as a high propensity for effort, perseverance, and high-commitment.
    Keywords: Biomarkers, creatine, creatinine, labour market, earnings, employment
    JEL: I19 J3
    Date: 2014–06
  3. By: Balsvik, Ragnhild (Dept. of Economics, Norwegian School of Economics and Business Administration); Jensen, Sissel (Dept. of Economics, Norwegian School of Economics and Business Administration); Salvanes, Kjell G. (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: We analyze whether regional labor markets are affected by exposure to import competition from China. We find negative employment effects for low-skilled workers, and observe that low-skilled workers tend to be pushed into unemployment or leave the labor force altogether. We find no evidence of wage effects. We partly expect this in a Nordic welfare state where firms are flexible at the employment margin, while centralized wage bargaining provides less flexibility at the wage margin. Our estimates suggest that import competition from China explains almost 10% of the reduction in the manufacturing employment share from 1996 to 2007 which is half of the effect found by Autor, Dorn and Hanson (2013) for the US.
    Keywords: Import Competition; Local Labor Markets; Norway.
    JEL: F16 H53 J23 J31
    Date: 2014–06–30
  4. By: Pedro S. Martins
    Abstract: Several countries extend collective bargaining agreements to entire sectors, therefore binding non-subscriber workers and employers. These extensions may address coordination issues but may also impose sector-specific minimum wages and other work conditions that are not appropriate for several workers and firms. In this paper, we analyse the impact of such extensions along several margins drawing on firm-level monthly data for Portugal, a country where extensions have been widespread until recently. We find that both formal employment and wage bills in the relevant sector fall, on average, by 2% - and by 25% more across small firms - over the four months after an extension is issued. These results are driven by both reduced hirings and increased firm closures. On the other hand, informal work, not subject to labour law or extensions, tends to increase. Our findings are robust to several checks, including a falsification exercise based on extensions that were announced but not implemented.
    Keywords: Collective agreements, Worker flows, Wage rigidity
    JEL: J31 J52 J23
    Date: 2014–06
  5. By: Skedinger, Per (Research Institute of Industrial Economics (IFN))
    Abstract: In response to high and enduring youth unemployment, large payroll tax cuts for young workers were implemented in two Swedish reforms in 2007 and 2009. This paper analyses the effects of the reforms on worker outcomes and firm performance in the retail industry, an important employer of young workers. In general, the estimated effects on job accessions, separations, hours and wages, are small. For workers close to the minimum wage the estimates suggest larger, but still modest, effects on the probability of job accession. There is also some evidence on increasing profits in a subsample of firms that employed relatively many young workers before the first reform, with estimated effects commensurate with small behavioural effects of the payroll tax cuts. The conclusion is that reducing payroll taxes is a costly means of improving employment prospects for the young.
    Keywords: Tax subsidy; Labour costs; Minimum wages; Retail industry
    JEL: H21 H25 H32 J38
    Date: 2014–06–27
  6. By: Pedro S. Martins; Sofia Pessoa e Costa
    Abstract: Although activation services such as monitoring, training, job subsidies or workfare have been shown to increase exits from unemployment, there is no evidence about their effects during recessions. We address this policy-relevant question by evaluating a large activation programme introduced in Portugal in early 2012, a time of very high and still increasing unemployment. The programme was based on requiring specific unemployment benefit recipients to meet caseworkers in jobcentres and then participate in active labour market policies. Our analysis draws on rich longitudinal data, the targeted nature of the programme (namely of its component focused on those unemployed for at least six months), and fuzzy regression discontinuity methods. We find that, despite the weak labour market, the programme is very succesful as it doubles the monthly reemployment probability. Moreover, we find no effects in terms of income or transitions to non-employment. The results are robust to a number of checks, including a falsification exercise based on pre-programme data.
    Keywords: Public employment services, job search, public policy evaluation
    JEL: J64 J68 J22
    Date: 2014–06
  7. By: Løken, Katrine V. (Department of Economics, University of Bergen); Lundberg, Shelly (Department of Economics, University of California, Santa Barbara); Riise, Julie (Department of Economics, University of Bergen)
    Abstract: In this paper, we use a 1998 reform in the federal funding of local home-based care for the elderly in Norway to examine the effects of formal care expansion on the labor supply decisions and mobility of middle-aged children. Our main finding is a consistent and signi cant negative impact of formal care expansion on work absences longer than 2 weeks for the adult daughters of single elderly parents. This effect is particularly strong for daughters with no siblings, and this group is also more likely to exceed earnings thresholds after the reform. We find no impacts of the reform on daughter's mobility or parental health, and no effects on adult sons. Our results provide evidence of substitution between formal home-based care and informal care for the group that is most likely to respond to the parent's need for care - adult daughters with no siblings to share the burden of parental care. These results also highlight the importance of labor market institutions that provide flexibility in enabling women to balance home and work responsibilities.
    Keywords: Formal and informal care; elderly; welfare state; women's career
    JEL: J14 J22
    Date: 2014–06–24
  8. By: Stefanie Hoherz
    Abstract: This research examines re-entry into the labour force for mothers after maternity leave. The empirical analysis focuses on the first twenty-two years of post-reunification Germany, using proportional hazards models. Results show that the re-entry into part-time employment is primarily affected by the mother's own resources and former career, the return to full-time work is more linked to the partner's resources. This behaviour is especially prevalent in families where the mother has a higher earning potential than the father, a group having the highest re-entry chances into full-time employment. The results concerning experiences of unemployment for the male partner show that mothers try to compensate uncertainties with increased labour force participation.
    JEL: D13 J22 J64
    Date: 2014
  9. By: Marianne Bertrand; Sandra E. Black; Sissel Jensen; Adriana Lleras-Muney
    Abstract: In late 2003, Norway passed a law mandating 40 percent representation of each gender on the board of publicly limited liability companies. The primary objective of this reform was to increase the representation of women in top positions in the corporate sector and decrease gender disparity in earnings within that sector. We document that the newly (post-reform) appointed female board members were observably more qualified than their female predecessors, and that the gender gap in earnings within boards fell substantially. While the reform may have improved the representation of female employees at the very top of the earnings distribution (top 5 highest earners) within firms that were mandated to increase female participation on their board, there is no evidence that these gains at the very top trickled-down. Moreover the reform had no obvious impact on highly qualified women whose qualifications mirror those of board members but who were not appointed to boards. We observe no statistically significant change in the gender wage gaps or in female representation in top positions, although standard errors are large enough that we cannot rule economically meaningful gains. Finally, there is little evidence that the reform affected the decisions of women more generally; it was not accompanied by any change in female enrollment in business education programs, or a convergence in earnings trajectories between recent male and female graduates of such programs. While young women preparing for a career in business report being aware of the reform and expect their earnings and promotion chances to benefit from it, the reform did not affect their fertility and marital plans. Overall, in the short run the reform had very little discernible impact on women in business beyond its direct effect on the newly appointed female board members.
    JEL: J24 J3 J7 J78
    Date: 2014–06
  10. By: Xavier D'Haultfoeuille; Arnaud Maurel; Yichong Zhang
    Abstract: We consider the estimation of a semiparametric location-scale model subject to endogenous selection, in the absence of an instrument or a large support regressor. Identification relies on the independence between the covariates and selection, for arbitrarily large values of the outcome. In this context, we propose a simple estimator, which combines extremal quantile regressions with minimum distance. We establish the asymptotic normality of this estimator by extending previous results on extremal quantile regressions to allow for selection. Finally, we apply our method to estimate the black-white wage gap among males from the NLSY79 and NLSY97. We find that premarket factors such as AFQT and family background characteristics play a key role in explaining the level and evolution of the black-white wage gap.
    JEL: C21 C24 J31
    Date: 2014–06
  11. By: David Neumark; Jennifer Muz
    Abstract: “Business climate indexes” characterize state economic policies, and are often used to try to influence economic policy debate. However, they are also useful in research as summaries of a large number of state policies that cannot be studied simultaneously. Prior research found that business climate indexes focused on productivity and quality of life do not predict economic growth, while indexes emphasizing taxes and costs of doing business indicate that low-tax, low-cost states have faster growth of employment, wages, and output. In this paper, we study the relationship between these two categories of business climate indexes and the promotion of equality or inequality. We do not find that the productivity/quality-of-life indexes predict more equitable outcomes, although some of the policies underlying them suggest they might. We do find, however, that the same tax-and-cost related indexes that are associated with higher economic growth are also associated with increases in inequality.
    JEL: H71 J38
    Date: 2014–06
  12. By: Peter Eibich
    Abstract: This paper estimates the causal effect of retirement on health, health behavior, and healthcare utilization. Using Regression Discontinuity Design to exploit financial incentives in the German pension system for identification, I investigate a wide range of health behaviors (e.g. alcohol and tobacco consumption, physical activity, diet and sleep) as potential mechanisms. The results show a long-run improvement in health upon retirement. Relief from work-related stress and strain, increased sleep duration and more frequent physical exercise seem to be key mechanisms through which retirement affects health. Moreover, the improvement in health caused by retirement leads to a reduction in healthcare utilization.
    Keywords: retirement, health, regression discontinuity design, health behavior, healthcare
    JEL: I12 J14 J26
    Date: 2014
  13. By: Terence C. Cheng (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Pravin K. Trivedi (School of Economics, The University of Queensland; and Indiana University Bloomington)
    Abstract: This paper investigates the nature and consequences of sample attrition in a unique longitudinal survey of medical doctors. We describe the patterns of non-response and examine if attrition affects the econometric analysis of medical labour market outcomes using the estimation of physician earnings equations as a case study. We compare the econometric estimates obtained from a number of different modeling strategies: balanced versus unbalanced samples; an attrition model for panel data based on the classic sample selection model; and a recently developed copula-based selection model. Descriptive evidence shows that doctors who work longer hours, have lower years of experience, are overseas trained, and have changed their work location are more likely to drop out. Our analysis suggests that the impact of attrition on inference about earnings of General Practitioners is small. For specialists, the impact of attrition is statistically and economically significant, but is on the whole not very large. Finally we discuss how the top-up samples in the MABEL survey can be used to address the problem of panel attrition.
    Keywords: Attrition, medical doctors, earnings, copula
    JEL: C23 J31 I11
    Date: 2014–06

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