nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒08‒25
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. Employment and Wage Insurance within firms - Worldwide Evidence By Andrew Ellul; Marco Pagano; Fabiano Schivardi
  2. The Volatility of Earnings: Evidence from High-Frequency Firm-Level Data By Andreas Georgiadis; Alan Manning
  3. Does Higher Education Quality Matter in the UK? By Chevalier, Arnaud
  4. Birthplace diversity and productivity spill-overs in firms By René Böheim; Thomas Horvath; Karin Mayr
  5. The Effect of Tuition Fees on University Applications: Evidence from the UK By Sa, Filipa
  6. Same-Occupation Spouses: Preferences and Search Costs By Mansour, Hani; McKinnish, Terra
  7. Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training By Fairlie, Robert W.; Karlan, Dean; Zinman, Jonathan
  8. Personality Characteristics, Educational Attainment and Wages: An Economic Analysis Using the British Cohort Study By Pamela Lenton
  9. Indirect Job Creation and the Informal Sector in Mexico By Mariana Pereira-López
  10. Progressive Taxation in a Tournament Economy By Carpenter, Jeffrey P.; Matthews, Peter Hans; Tabb, Benjamin
  11. Flying the nest: How the home department shapes researchers' career paths By Hottenrott, Hanna; Lawson, Cornelia
  12. Search Frictions, Financial Frictions and Labour Market Fluctuations in Emerging Markets By Sumru Altug; Serdar Kabaca
  13. On the real effects of financial pressure: Evidence from euro area firm-level employment during the recent financial crisis By Filipa Fernandes; Alexandros Kontonikas; Serafeim Tsoukas

  1. By: Andrew Ellul (Kelley School of Business, Indiana University, CSEF and ECGI); Marco Pagano (University of Naples "Federico II", CSEF, EIEF, CEPR and ECGI); Fabiano Schivardi (LUISS, EIEF and CEPR)
    Abstract: We investigate the determinants of firms’ implicit employment and wage insurance to employees against industry-level and idiosyncratic shocks. We rely on differences between family and nonfamily firms to identify the supply of insurance, and between national public insurance programs to gauge workers’ demand for insurance. Using firm-level data from 41 countries, we find that family firms provide greater employment protection but less wage stability. Employment protection comes at a price: family firms pay 5 percent lower wages, controlling for country, industry and time effects. The additional protection afforded by family firms is greater, and the wage discount larger, the less generous the public unemployment insurance program, indicating that firm and government employment insurance are substitutes. The cross-country evidence is broadly confirmed by Italian employee-employer matched data, which also show that in family firms the adjustment to shocks occurs mostly through the hiring margin, while separations are not responsive to shocks.
    Date: 2014
  2. By: Andreas Georgiadis; Alan Manning
    Abstract: The first contribution of this paper is to use UK monthly firm-level data to show that there is a large amount of transitory volatility in firm-level average earnings from month to month. We conclude that this cannot all be explained away as the consequence of measurement error, composition effects or variation in remunerated hours i.e. we suggest this volatility is real. The second contribution of the paper is to argue that this volatility cannot be interpreted as high flexibility in the shadow cost of labour to employers because of sizeable frictions in the labour market. Indeed we point out that it is the existence of frictions that allow the volatility to exist. Consequently we argue that this volatility would be expected to have only small allocational consequences and that measures of base wages are more useful in drawing conclusions about wage flexibility.
    Keywords: Wages, wage flexibility
    JEL: E24 J30
    Date: 2014–08
  3. By: Chevalier, Arnaud (Royal Holloway, University of London)
    Abstract: This paper estimates the financial returns to higher education quality in the UK. To account for the selectivity of students to institution, we rely on a selection on observable assumptions. We use several estimates including the Generalised Propensity Score of Hirano and Imbens, which relies on a continuous measure of institutional quality. This highlights that the returns to quality are heterogenous, and mostly driven by high quality institutions. Moving from an institution in the 3rd quality quartile to a top quality institution is associated with a 7% increase in earnings.
    Keywords: college quality, returns to education, generalised propensity score
    JEL: I22 J31
    Date: 2014–08
  4. By: René Böheim; Thomas Horvath; Karin Mayr
    Abstract: We determine workforce composition and wages in rms in the presence of productivity spill-overs between co-workers. In equilibrium, workers' wages depend on the production struc- ture of rms, own group size, and aggregate workforce composition in the rm. We estimate the wage eects of workforce diversity and own group size by birthplace and the implied pro- duction structure in Austrian rms using a comprehensive matched employer-employee data set. In our data, we identify a positive eect of workforce diversity and a negative eect of own group size on wages, which suggest that workers of dierent birthplaces are complements in production on average.
    JEL: D21 D22 F22 J31
    Date: 2014–08
  5. By: Sa, Filipa (King's College London)
    Abstract: This article exploits variation in university tuition fees over time and across countries in the UK to examine the effect of fees on applications to higher education. It focuses on two policy changes: the removal of upfront tuition fees in Scotland in 2001 and the increase in fees in England in 2012. The findings suggest that the 2001 reform increased applications by 24.4%, while the 2012 reform reduced applications by 30.3%. The 2012 reform had a larger negative effect for applicants aged 20 and over and for courses with lower expected earnings after graduation.
    Keywords: tuition fees, university applications
    JEL: I21 J24
    Date: 2014–08
  6. By: Mansour, Hani (University of Colorado Denver); McKinnish, Terra (University of Colorado, Boulder)
    Abstract: Married individuals match with spouses who share their occupation more frequently than predicted by chance, suggesting either a preference for same-occupation matches or lower search costs within occupation. To distinguish between these explanations, we use a differences-in-differences strategy that compares the difference in wages between same-occupation husbands and different-occupation husbands across occupations with different percent male workers. Under the preferences mechanism, the difference should be decreasing in percent male. Under the search cost mechanism, the difference should be increasing in percent male. Our results are consistent with the search cost explanation, especially in occupations with greater degree of workplace communication.
    Keywords: marital sorting, occupation, sex ratio, search frictions
    JEL: J12 J24
    Date: 2014–08
  7. By: Fairlie, Robert W. (University of California, Santa Cruz); Karlan, Dean (Yale University); Zinman, Jonathan (Dartmouth College)
    Abstract: Theories of market failures and targeting motivate the promotion of entrepreneurship training programs and generate testable predictions regarding heterogeneous treatment effects from such programs. Using a large randomized evaluation in the United States, we find no strong or lasting effects on those most likely to face credit or human capital constraints, or labor market discrimination. We do find a short-run effect on business ownership for those unemployed at baseline, but this dissipates at longer horizons. Treatment effects on the full sample are also short-term and limited in scope: we do not find effects on business sales, earnings, or employees.
    Keywords: entrepreneurship, training, random experiment, evaluation, self-employment
    JEL: L26 J24
    Date: 2014–08
  8. By: Pamela Lenton (Department of Economics, University of Sheffield, UK)
    Abstract: We look at the influence of personality traits and cognitive ability on both educational attainment and on the wages of individuals in the UK labour market at age 33 using the British Cohort Study. We control for a new cluster of nine personality characteristics, some of which we consider likely to influence labour market outcomes. We find that some personality characteristics have significant influence on the acquisition of educational qualifications, in particular internal and external locus of control, conscientiousness and extroversion. Our findings on the extrovert-introvert dimension of personality are paradoxical: we find that males with extrovert personalities have a significantly reduced probability of gaining degree level education, but within the labour market males are rewarded for this characteristic.
    Keywords: educational attainment; human capital; personality characteristics
    JEL: J24
    Date: 2014–08
  9. By: Mariana Pereira-López (Universidad Iberoamericana, Ciudad de México)
    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: 2014–08–20
  10. By: Carpenter, Jeffrey P. (Middlebury College); Matthews, Peter Hans (Middlebury College); Tabb, Benjamin (Middlebury College)
    Abstract: Not enough is known about the responsiveness of individuals, in particular those who tend to work under different incentives, to changes in marginal tax rates. We ask whether changes in marginal tax rates are less distortionary for workers engaged in a contest. To examine this potential rationale for a more progressive tax code, we first model the effort decisions of workers faced with progressive taxation under tournaments and piece rates. Because of the difficulty identifying any distortion that may be induced by the tax code in naturally occurring data, we then report on the results of a real-effort experiment based on this model. Consistent with a behavioral approach to public finance, we find that tournament workers are less sensitive, and conclude with a tentative evaluation of the welfare benefits of progressive taxation in tournament economies.
    Keywords: taxation, tournaments, public good, real effort experiment
    JEL: H20 H41 J22 J33 C91
    Date: 2014–08
  11. By: Hottenrott, Hanna; Lawson, Cornelia
    Abstract: Academic researchers face mobility related decisions throughout their careers. We study the importance of team and organisational characteristics of the home departments for career choices of departing researchers in the fields of science and engineering at higher education institutions in Germany. We find that the organisational environments - the nests - shape career paths. Research funding, research performance in terms of patents and publications as well as the industry ties of department heads shape job choices. In particular, public research grants increase the probability that departing researchers take a research job at a university or public research centre, while grants from industry increase the likelihood that they take a job in industry. Publication performance of the department head relates to R&D jobs in public, but not in industry and patents predict the probability that departing researchers will move to small and medium-sized firms. For these firms seeking technological knowledge from former university employees may be particularly crucial. Academic start-ups are more likely to be a job destination for departing researchers from technical universities, from departments with higher publication output and with a research focus on experimental development. --
    Keywords: R&D,Researcher Mobility,Research Funding,Science-Industry Technology Transfer,Academic Entrepreneurship,Academic Careers
    JEL: I23 J24 O3
    Date: 2014
  12. By: Sumru Altug; Serdar Kabaca
    Abstract: This paper examines the role of the extensive and intensive margins of labour input in the context of a business cycle model with a financial friction. We document significant variation in the hours worked per worker for many emerging-market economies. Both employment and hours worked per worker are positively correlated with each other and with output. We show that a search-theoretic context in a small open-economy model requires a small income effect to explain these regularities at the expense of a smaller wage response. On the other hand, introducing a financial friction in the form of a working capital requirement can explain the observed movements of labour market variables such as employment and hours worked per worker, as well as other distinguishable business cycle characteristics of emerging economies. These include highly volatile and cyclical real wages, labour share, and consumption.
    Keywords: Business fluctuations and cycles; Labour markets; Development economics; International topics; Interest rates
    JEL: F41 E44 J40
    Date: 2014
  13. By: Filipa Fernandes; Alexandros Kontonikas; Serafeim Tsoukas
    Abstract: Using a large panel of unquoted euro-area firms over the period 2003-11, this paper examines the impact of financial pressure on firms’ employment. The analysis finds evidence that financial pressure negatively affects firms’ employment decisions. This effect is stronger during the 2007-2009 financial crisis, especially for firms in the periph-ery area compared to their counterparts in the core European economies. We also find that impact of financial pressure on employment is more potent for firms classified as financially constrained and operating in periphery economies during the financial crisis.
    Keywords: Financial pressure; Firm employment; Euro area; Financial crisis
    JEL: J23 D22 E44 G01
    Date: 2014–08

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