nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒08‒20
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. Changes in Bargaining Status and Intra-Plant Wage Dispersion in Germany: A Case of (Almost) Plus Ça Change? By Addison, John T.; Kölling, Arnd; Teixeira, Paulino
  2. Spousal Labor Market Effects from Government Health Insurance: Evidence from a Veterans Affairs Expansion By Melissa A. Boyle; Joanna N. Lahey
  3. Changes in Public and Private Sector Pay Structures in Two Emerging Market Economies during the Crisis By Jelena Nikolic; Ivica Rubil; Iva Tomic
  4. Pappa Ante Portas: The Retired Husband Syndrome in Japan By Bertoni, Marco; Brunello, Giorgio
  5. Spillover Effects of Unionisation on Non-members' Well-being By Haile, Getinet Astatike; Bryson, Alex; White, Michael
  6. Overcoming Skills Shortages in Canada By David Carey
  7. Occupational Sorting of School Graduates: The Role of Economic Preferences By Fouarge, Didier; Kriechel, Ben; Dohmen, Thomas
  8. Skill Disparities and Unequal Family Outcomes By Lundberg, Shelly
  9. Wage Subsidies and Hiring Chances for the Disabled: Some Causal Evidence By Baert, Stijn
  10. Do Preferences Impact Behavior and Wellbeing? A Panel Study of Preferred and Actual Working Time 2001-2008/09 By Bonke, Jens; Schultz-Nielsen, Marie Louise
  11. Agglomeration and Innovation By Gerald Carlino; William R. Kerr
  12. Moving Towards Estimating Lifetime Intergenerational Economic Mobility in the UK By Paul Gregg; Lindsey Macmillan; Claudia Vittori
  13. A Decade of Labour Market Reforms in the EU: Insights from the LABREF Database By Turrini, Alessandro; Koltay, Gabor; Pierini, Fabiana; Goffard, Clarisse; Kiss, Aron

  1. By: Addison, John T. (University of South Carolina); Kölling, Arnd (Berlin School of Economics and Law); Teixeira, Paulino (University of Coimbra)
    Abstract: Recent studies have pointed to the association between declining collective bargaining coverage and rising overall wage inequality. This association holds more or less across-the-board, at least for broad swathes of recent history. That said, the exact contribution of deununionization is a matter of debate, perhaps no more so than in Germany, our case study. The present paper takes a less conventional approach to this particular source of rising inequality by examining intra-plant wage dispersion in the wake of establishments either exiting from or entering into collective agreements. Several measures of inequality are constructed for German establishments over the twelve-year period 1996-2008, an interval of continuously declining union representation. Using linked employer-employee data, our estimation strategy hinges upon the identification of comparable groups of establishments and on both instantaneous and medium- to long-term changes in the wage structure. A modest widening effect on dispersion of exiting from a sectoral agreement is detected in the data once we effect a comparison across observationally-equivalent individuals. The converse does not apply in respect of joiners. The scale of the former effect casts doubt on some of the more exaggerated claims of the importance of deunionization to wage inequality and the resurgence of Germany more generally.
    Keywords: Germany, collective bargaining, deunionization, intra-plant wage inequality, sectoral agreement exits and accessions
    JEL: J31 J51 J53
    Date: 2014–07
  2. By: Melissa A. Boyle; Joanna N. Lahey
    Abstract: Measuring the overall impact of public health insurance receipt is important in an era of increased access to publicly-provided and subsidized insurance. Although government expansion of health insurance to older workers leads to labor supply reductions for recipients, there may be spillover effects on the labor supply of uncovered spouses. While theory predicts a decrease in overall household work hours, financial incentives such as credit constraints, target income levels, and the need for own health insurance suggest that spousal labor supply might increase. In contrast, complementarities of spousal leisure would predict a decrease in labor supply for both spouses. Utilizing a mid-1990s expansion of health insurance for U.S. veterans, we provide evidence on the effects of public insurance availability on the labor supply of spouses. Using data from the Current Population Survey and Health and Retirement Study, we employ a difference-in-differences strategy to compare the labor market behavior of the wives of older male veterans and non-veterans before and after the VA health benefits expansion. Our findings suggest that although household labor supply may decrease because of the income effect, wives’ labor supply increases, suggesting that financial incentives dominate complementarities of spousal leisure. This effect is strongest for wives with lower education levels and lower levels of household wealth. Moreover, wives with employer-provided health insurance in the previous year remain on the job while those without increase their hours, suggesting incentives to retain or obtain health insurance. Finally, non-working wives enter the labor force, those who were working part-time increase their hours, and full-time “career” women are largely unaffected.
    JEL: H42 I13 J14 J22 J26
    Date: 2014–08
  3. By: Jelena Nikolic (LSEE Research on South Eastern Europe, European Institute, LSE); Ivica Rubil (The Institute of Economics, Zagreb); Iva Tomic (The Institute of Economics, Zagreb)
    Abstract: This paper estimates public-private sector wage differentials in two emerging market economies - Croatia and Serbia - between 2008 and 2011 in order to understand changes in the gap resulting from austerity measures undertaken by each sector. The paper focuses on counterfactual decompositions of the wage gap at the mean and at selected quantiles along the wage distribution, performed using an extension to the Oaxaca-Blinder method based on Recentered Influence Function (RIF) regressions and reweighting. The main results indicate that there was a wage premium in the public sector for both countries and in both years. Although the total wage gap decreased in Serbia during the crisis, the wage structure effect, or the returns to workers’ characteristics, increased in both countries. The paper shows that the private sector in both countries adjusted wages relative to the public sector more at the bottom than at the top of the wage distribution, which led to an increase in the relative public sector wage compression, especially in Croatia. While in Croatia the wage gaps stemming from differences between the public and private sector in the returns to characteristics for similar workers were within the range usually estimated for EU countries, these gaps were considerably higher in the case of Serbia.
    Keywords: public-private wage gap, recession, unconditional quantile regression, recentered influence function, decomposition, Croatia, Serbia
    JEL: H3 J31 J33 J45 P2 P3
    Date: 2014–07
  4. By: Bertoni, Marco (University of Padova); Brunello, Giorgio (University of Padova)
    Abstract: The "Retired Husband Syndrome", that affects the mental health of wives of retired men around the world, has been anecdotally documented but never formally investigated. We use Japanese micro data and the exogenous variation generated by the 2006 revision of the Japanese Elderly Employment Stabilization Law, which mandated employers to guarantee continuous employment between mandatory retirement age and full pension eligibility age, to estimate the causal effect of the husband's retirement on the wife's mental health. We find that adding one year to the time spent in retirement by Japanese husbands increases the probability that their wives develop the syndrome by 5.8 to 13.7 percentage points, depending on the empirical specification. We discuss mechanisms at work and argue that – ceteris paribus – increasing female labour force participation might exacerbate rather than attenuate the phenomenon.
    Keywords: retirement, pension reforms, couples, stress, depression, Japan
    JEL: D1 I1 I3 J14 J26
    Date: 2014–07
  5. By: Haile, Getinet Astatike (University of Nottingham); Bryson, Alex (National Institute of Economic and Social Research (NIESR)); White, Michael (Policy Studies Institute)
    Abstract: The paper investigates whether unionisation has a spillover effect on wellbeing by comparing non-members in union and non-union workplaces. To this end, it adapts the social custom model of trade unions and goes on to conduct empirical analyses using linked employer-employee data and alternative empirical strategies. The findings in the paper reveal that unionisation does have a spillover effect lowering non-members' job satisfaction. Sub-group analysis based on workplace-level collective bargaining status uncovers that the adverse effect found is specific to establishments that set pay through collective bargaining.
    Keywords: trade union, spillover effect, wellbeing, linked employer-employee data, Britain
    JEL: J5 J51 J28 J82
    Date: 2014–07
  6. By: David Carey
    Abstract: Skills shortages have developed in certain fields and regions in recent years. Earnings premiums for people in some professions, notably health, engineering and skilled trades have increased. And vacancy rates have risen for skilled trades, with the increase being particularly large in Alberta and Saskatchewan. While reforms have been implemented to strengthen adjustment so as to overcome these shortages, there is still room to go further by improving labour market information, increasing responsiveness of the education and training system to labour market demand, making the immigration system more reactive to current labour market conditions and reducing regulatory barriers to inter-provincial labour mobility. This Working Paper relates to the 2014 OECD Economic Review of Canada ( c-survey-canada.htm).
    Keywords: apprenticeships, skills shortages, vacancy rates, inter-provincial mobility, employment insurance, earnings premiums, high-skilled immigrants
    JEL: J08 J15 J24 J31 J6
    Date: 2014–07–15
  7. By: Fouarge, Didier (ROA, Maastricht University); Kriechel, Ben (Economix Research & Consulting); Dohmen, Thomas (University of Bonn)
    Abstract: We relate risk attitudes and patience of young graduates from high-school, college and university, measured around the time that they start their labor market career in a large representative survey, to the riskiness and timing of earnings in the occupations they choose to work in. We find a systematic positive and significant relation between willingness to take risks and measures of occupational earnings risks and employment risk that we derive from a large administrative data set. Patient individuals are significantly more likely to choose for occupations with a steep earnings profile. Individuals whose economic preferences are not well aligned with the riskiness and timing of earnings in their initial occupation are more likely to change to an occupation that better matches their economic preferences.
    Keywords: risk preferences, earnings risk, sorting, occupational choice
    JEL: J24 J31 D01
    Date: 2014–07
  8. By: Lundberg, Shelly (University of California, Santa Barbara)
    Abstract: The prevalence and stability of marriage has declined in the United States as the economic lives of men and women have converged. Family change has not been uniform, however, and the widening gaps in marital status, relationship stability, and childbearing between socioeconomic groups raise concerns about child wellbeing in poor families and future inequality. This paper uses data from a recent cohort of young adults – Wave IV of the National Longitudinal Study of Adolescent Health – to investigate whether disparities in cognitive ability and non-cognitive skills contribute to this gap. Blinder-Oaxaca decompositions of differences in key family outcomes across education groups show that, though individual non-cognitive traits are significantly associated with union status, relationship instability and single motherhood, they collectively make no significant contribution to the explanation of educational gaps for almost all of these outcomes. Measured skills can explain as much as 25 percent of differences in these outcomes by family background (measured by mother's education), but this effect disappears when own education is added to the model. Both cognitive and non-cognitive skills are strongly predictive of education attainment but, conditional on education, explain very little of the socioeconomic gaps in family outcomes for young adults.
    Keywords: cognitive ability, non-cognitive skills, family, marriage, inequality
    JEL: I24 J12 J24
    Date: 2014–07
  9. By: Baert, Stijn (Ghent University)
    Abstract: We evaluate the effectiveness of wage subsidies as a policy instrument to integrate disabled individuals into the labour market. To identify causal effects, we conduct a large-scale field experiment in Belgium. Our results show that the likelihood of a disabled candidate receiving a positive response to a job application is not positively influenced by revealing entitlement to the Flemish Supporting Subsidy.
    Keywords: labour market policy evaluation, wage subsidies, disability, discrimination
    JEL: I38 J14 J78
    Date: 2014–07
  10. By: Bonke, Jens (Rockwool Foundation Research Unit); Schultz-Nielsen, Marie Louise (Rockwool Foundation Research Unit)
    Abstract: Various European studies show that the majority of those employed wish to work fewer hours than they actually do. The question addressed here is whether imbalanced working hours – working hour tensions – influence changes in behavior: do preferences transmit into reality? Based on a Danish longitudinal time-use study, we find that more Danes prefer shorter working hours over longer working hours, which is in contrast to the Americans. Moreover, not only do the vast majority of overworked Danes adjust their working hours, those who are underworked also do so within a decade. Factors behind these changes are analyzed and means to ensure an optimization of time- and money-related wellbeing are discussed.
    Keywords: labor supply, working hours
    JEL: J22
    Date: 2014–07
  11. By: Gerald Carlino; William R. Kerr
    Abstract: This chapter reviews academic research on the connections between agglomeration and innovation. We first describe the conceptual distinctions between invention and innovation. We then describe how these factors are frequently measured in the data and some resulting empirical regularities. Innovative activity tends to be more concentrated than industrial activity, and we discuss important findings from the literature about why this is so. We highlight the traits of cities (e.g., size, industrial diversity) that theoretical and empirical work link to innovation, and we discuss factors that help sustain these features (e.g., the localization of entrepreneurial finance).
    JEL: J2 J6 L1 L2 L6 O3 O4 R1 R3
    Date: 2014–08
  12. By: Paul Gregg (Department of Social and Policy Sciences, University of Bath); Lindsey Macmillan (Department of Quantitative Social Science, Institute of Education); Claudia Vittori (Department of Social and Policy Sciences, University of Bath)
    Abstract: Estimates of intergenerational economic mobility that use point in time measures of income and earnings suffer from lifecycle and attenuation bias. We consider these issues for the National Child Development Study (NCDS) and British Cohort Study (BCS) for the first time, highlighting how common methods used to deal with these biases do not eradicate these issues. To attempt to overcome this, we offer the first estimates of lifetime intergenerational economic mobility for the UK. In doing so, we discuss a third potential bias, regularly ignored in the literature, driven by spells out of work. When all three biases are considered, our best estimate of lifetime intergenerational economic persistence in the UK is 0.43, significantly higher than previously thought. We discuss why there is good reason to believe that this is still a lower bound.
    Keywords: Intergenerational mobility, measurement, income inequality
    JEL: I20 J62 J24
    Date: 2014–08–07
  13. By: Turrini, Alessandro (European Commission); Koltay, Gabor (European Commission, Directorate Economic and Financial Affairs); Pierini, Fabiana (European Commission, Directorate Economic and Financial Affairs); Goffard, Clarisse (European Commission, Directorate Economic and Financial Affairs); Kiss, Aron (European Commission, Directorate Economic and Financial Affairs)
    Abstract: This paper analyses the determinants and impact of labour market reforms in the European Union over the period of 2000-2011. The source of information on reforms is the LABREF database developed in DG ECFIN of the European Commission in cooperation with the Economic Policy Committee of the ECOFIN Council. The database collects information on measures adopted by EU Member States. Despite limitations of count data on reform events, the evidence permits a number of interesting insights. The 2008 crisis triggered increased policy activity in most policy domains in a large number of EU countries, in particular in domains with macro-structural relevance (employment protection legislation, unemployment benefits, wage setting). Reforms tend to be more frequently carried out in countries characterised by disappointing labour market outcomes and a high initial level of regulation or fiscal burden on labour. Econometric evidence on the effects of selected reforms on aggregate labour market outcomes is broadly supportive of common priors: tax and benefit reforms tend to be followed after a time lag, by improved activity rates and lower unemployment.
    Keywords: labour market, labour market reform, unemployment, financial crisis, European Union
    JEL: J20 J38 J48 J58 J68
    Date: 2014–07

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