nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒08‒28
eleven papers chosen by
Joseph Marchand
University of Alberta

  1. Skill Gaps, Skill Shortages and Skill Mismatches: Evidence for the US By Peter Cappelli
  2. Firm Entry and Employment Dynamics in the Great Recession By Siemer, Michael
  3. Labor market transitions and the availability of unemployment insurance By Bradbury, Katharine L.
  4. How Far Away Is a Single European Labor Market? By Krause, Annabelle; Rinne, Ulf; Zimmermann, Klaus F.
  5. Who Cares – and Does It Matter? Measuring Wage Penalties for Caring Work By Hirsch, Barry; Manzella, Julia
  6. The public sector wage premium in Spain: evidence from longitudinal administrative data By Laura Hospido; Enrique Moral-Benito
  7. Routinization and the Decline of the U.S. Minimum Wage By Finn Martensen
  8. Evolving wage cyclicality in Latin America By Messina, Julian; Gambetti, Luca
  9. Financial incentives and labor market duality. By Clémence Berson; Nicolas Ferrari
  10. The Glass Ceiling in Politics: Formalization and Empirical Tests By Folke, Olle; Rickne, Johanna
  11. The intergenerational transmission of liberal professions: nepotism versus abilities By Carmen Aina; Cheti Nicoletti

  1. By: Peter Cappelli
    Abstract: Concerns that there are problems with the supply of skills, especially education-related skills, in the US labor force have exploded in recent years with a series of reports from employer-associated organizations but also from independent and even government sources making similar claims. These complaints about skills are driving much of the debate around labor force and education policy, yet they have not been examined carefully. The discussion below examines the range of these charges as well as other evidence about skills in the labor force. There is very little evidence consistent with the complaints about skills and a wide range of evidence suggesting that they are not true. Indeed, a reasonable conclusion is that over-education remains the persistent and even growing situation of the US labor force with respect to skills. I consider three possible explanations for the employer complaints as well as the implications associated with those changes.
    JEL: J08 J23 J24
    Date: 2014–08
  2. By: Siemer, Michael (Board of Governors of the Federal Reserve System (U.S.))
    Abstract: The 2007-2009 recession is characterized by: a large drop in employment, an unprecedented decline in firm entry, and a slow recovery. Using confidential firm-level data, I show that financial constraints reduced employment growth in small relative to large firms by 4.8 to 10.5 percentage points. The effect of financial constraints is robust to controlling for aggregate demand and is particularly strong in small young firms. I show in a heterogeneous firms model with endogenous firm entry and financial constraints that a large financial shock results in a long-lasting recession caused by a "missing generation" of entrants.
    Keywords: Employment; firm entry; financial crisis; small business; financial friction; slow recovery; start-ups
    JEL: E24 E32 E44 G01 J20 L25
    Date: 2014–07–30
  3. By: Bradbury, Katharine L. (Federal Reserve Bank of Boston)
    Abstract: Economists often expect unemployment insurance (UI) benefits to elevate unemployment rates because recipients may choose to remain unemployed in order to continue receiving benefits, instead of accepting a job or dropping out of the labor force. This paper uses individual data from the Current Population Survey for the period between 2005 and 2013 — a period during which the federal government extended and then reduced the length of benefit availability to varying degrees in different states — to investigate the influence of program parameters in the UI system on monthly transition rates of unemployed individuals. The main finding is that unemployed job losers tend to remain unemployed until they exhaust UI benefits, at which point they become more likely to drop out of the labor force; transitions to a job appear to be unaffected by UI benefit extensions. These findings imply that the longer periods of benefit eligibility under the federal programs EUC08 and EB — up to 99 weeks in many states in 2011 and 2012 — contributed to the elevated jobless rates observed during that period, but not via lower employment. By the same token, the sharp contraction of benefit weeks that occurred in 2012 and continued more gradually in 2013 likely contributed to declines in unemployment and participation rates beyond what one would expect based on the improving economy alone. Similarly, the December 28, 2013 sudden cutoff of federal UI payments to an estimated 1.3 million jobless Americans who had been looking for work for more than six months is adding to the pace of transitions from unemployment to dropping out of the labor force, thus reducing the unemployment rate and the labor force participation rate further in the first half of 2014, although very modestly.
    Keywords: unemployment insurance; federal benefit extensions; labor force participation
    JEL: E24 J22 J65
    Date: 2014–07–09
  4. By: Krause, Annabelle (IZA); Rinne, Ulf (IZA); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: A Single European Labor Market, particularly involving the free movement of workers within Europe, has been a goal of the European community since the 1950s. Whereas it may entail opportunities and drawbacks alike, the benefits – such as greater economic welfare for most citizens – are supposed to outweigh the losses. However, over fifty years after the aim was first established, a Single European Labor Market has not yet been achieved. This paper gives an overview of current European macroeconomic trends, with a particular focus on the Great Recession, and also explores the drivers of and obstacles to labor mobility. Complementarily, it analyzes the results of a unique opinion survey among labor market experts, as well as formulates policy recommendations to enhance mobility. The development of a Single European Labor Market is also discussed in relation to the German model.
    Keywords: European labor market integration, worker mobility, economic crisis, economic migration, German model
    JEL: J40 J61 J68
    Date: 2014–08
  5. By: Hirsch, Barry (Georgia State University); Manzella, Julia (Georgia State University)
    Abstract: Economists and sociologists have proposed arguments for why there can exist wage penalties for work involving helping and caring for others, penalties borne disproportionately by women. Evidence on wage penalties is neither abundant nor compelling. We examine wage differentials associated with caring jobs using multiple years of Current Population Survey (CPS) earnings files matched to O*NET job descriptors that provide continuous measures of 'assisting and caring' and 'concern' for others across all occupations. This approach differs from prior studies that assume occupations either do or do not require a high level of caring. Cross-section and longitudinal analyses are used to examine wage differences associated with the level of caring, conditioned on worker, location, and job attributes. Wage level estimates suggest substantive caring penalties, particularly among men. Longitudinal estimates based on wage changes among job switchers indicate smaller wage penalties, our preferred estimate being a 2 percent wage penalty resulting from a one standard deviation increase in our caring index. We find little difference in caring wage gaps across the earnings distribution. Measuring mean levels of caring across the U.S. labor market over nearly thirty years, we find a steady upward trend, but overall changes are small and there is no evidence of convergence between women and men.
    Keywords: caring wage penalties, occupational job attributes, gender wage gaps
    JEL: J16 J31
    Date: 2014–08
  6. By: Laura Hospido (Banco de España and IZA); Enrique Moral-Benito (Banco de España)
    Abstract: This paper studies the public sector wage gap in Spain by gender, skill level and type of contract, using recent administrative data from tax records. We estimate wage distributions in the presence of covariates separately for men and women in the public and in the private sectors, and we take advantage of the longitudinal structure of the data to control for selection. We find a positive public wage premium for men and women even after accounting for characteristics and endogenous selection; the observed average gap in hourly wages of 35 log points is reduced to 20 when accounting for observed characteristics, and to 10 once endogenous selection is also taken into consideration. We also find substantial variation in the public premium along the wage distribution once observed characteristics are accounted for. This variation, however, is offset by opposite patterns of selection into the public sector: while we observe positive selection into the public sector at the bottom of the wage distribution, workers at the top of the distribution select negatively into the public sector.
    Keywords: public sector wage gap, quantile regression, wage distribution, panel data
    JEL: C21 C23 J31 J45
    Date: 2014–08
  7. By: Finn Martensen (Department of Economics, University of Konstanz, Germany)
    Abstract: The U.S. minimum wage declined in real terms since the late 1970s. In the same time, the wage of the least skilled workers fell in real terms, while the wage of the highest skilled workers increased. To shed light on these issues, I use a simple model of routinization. High-ability workers, after having received additional education, can substitute low-ability co-workers by machines. Technical progress results in more high-ability workers receiving additional education and in a declining wage for low-ability workers. A government opposes both unemployment and wage inequality. I calibrate the model and show that technical progress induces the government to lower the minimum wage. Hence, the model contributes to understand the decline in the U.S. minimum wage.
    Keywords: Minimum wage, Routinization, Education, Wage inequality, Unemployment
    JEL: E24 I24 J31 J88
    Date: 2014–08–15
  8. By: Messina, Julian; Gambetti, Luca
    Abstract: A vector autoregression model with time-varying coefficients is used to examine the evolution of wage cyclicality in four Latin American economies: Brazil, Chile, Colombia and Mexico, during the period 1980-2010. Wages are highly pro-cyclical in all countries up to the mid-1990s except in Chile. Wage cyclicality declines thereafter, especially in Brazil and Colombia. This decline in wage cyclicality is in accordance with declining real-wage flexibility in a low-inflation environment. Controlling for compositional effects caused by changes in labor force participation along the business cycle does not alter these results.
    Keywords: Labor Policies,Environmental Economics&Policies,Labor Markets,Youth and Governance,Economic Theory&Research
    Date: 2014–07–01
  9. By: Clémence Berson (Centre d'Economie de la Sorbonne et Banque de France); Nicolas Ferrari (Direction Générale du Trésor)
    Abstract: The French labor market is divided between workers in permanent jobs and those who alternate fixed-term contracts with unemployment spells. Among other public policies aiming at reducing this duality, financial incentives could induce employers to lengthen contract duration or favor permanent contracts. This article develops a matching model fitted to the French labor-market characteristics and calibrated on French data. A gradual decrease in unemployment contributions or a firing tax reduces the duality but increases market rigidity and lowers labor productivity. However, decreasing unemployment contributions gradually is less favorable for new entrants than a firing tax and lengthens unemployment spells. An additional contribution levied on short-term contracts to finance a bonus for permanent-contract hirings also decreases labor-market duality and increases activity but without negative impacts on labor-market flexibility and productivity.
    Keywords: Duality, public policies.
    JEL: J41 J42 J48
    Date: 2014–07
  10. By: Folke, Olle (Columbia University); Rickne, Johanna (Research Institute of Industrial Economics (IFN))
    Abstract: There is a scarcity of women and minorities at the apex of political power. This paper formalizes the concept of the glass ceiling for political organizations and builds on previous research to suggest four testable criteria. A glass ceiling exists if women and/or racial minorities (1) are discriminated against in the organization’s promotion process and (2) the discrimination increases in severity for the top levels of power and over an individual’s career trajectory. We suggest a series of empirical tests for this phenomenon and apply them to longitudinal data on Swedish politicians. Results show that women face a glass ceiling, while minorities’ career disadvantages are more severe at the earlier career steps (a "sticky floor").
    Keywords: Glass ceiling; Political careers; Subnational politics; Women and politics; Supply of politicians; Gender inequality; Racial inequality
    JEL: H10 J16 J21 J45
    Date: 2014–08–12
  11. By: Carmen Aina; Cheti Nicoletti
    Abstract: By using university administrative and survey data on Italian graduates, we analyse the transmission of liberal professions from fathers to children. We assess the effect of nepotism and family networking, separately from other transmission channels, on the probability of choosing a degree that gives access to liberal professions, of obtaining a licensing and of starting a liberal profession. The results suggest that the effect of nepotism and networking is irrelevant on the degree choice, modest on the success rate at the licensing exam, but large and significant on the probability to start a liberal profession.
    Keywords: Professional licensing, liberal profession, intergenerational mobility, nepotism
    JEL: J44 J62 J24
    Date: 2014–08

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