nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒09‒05
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. Does Labor Legislation Benefit Workers? Well-Being after an Hours Reduction By Daniel S. Hamermesh; Daiji Kawaguchi; Jungmin Lee
  2. The Changing Benefits of Early Work Experience By Charles L. Baum; Christopher J. Ruhm
  3. Immigration, occupational choice and public employment By Luca Marchiori; Patrice Pieretti; Benteng Zou
  4. The Labor Market Impacts of the 2010 Deepwater Horizon Oil Spill and Offshore Oil Drilling Moratorium By Joseph E. Aldy
  5. The Evolution of Rotation Group Bias: Will the Real Unemployment Rate Please Stand Up? By Alan Krueger; Alexandre Mas; Xiaotong Niu
  6. Import Competition and the Great U.S. Employment Sag of the 2000s By Daron Acemoglu; David Autor; David Dorn; Gordon H. Hanson; Brendan Price
  7. A repeated principal-agent model with on-the-job search By Herbold, Daniel
  8. Affirmative Action and Human Capital Investment: Evidence from a Randomized Field Experiment By Christopher Cotton; Brent R. Hickman; Joseph P. Price
  9. Coal Mining, Economic Development, and the Natural Resource Curse By Betz, Mike; Farren, Michael; Lobao, Linda; Partridge, Mark D.
  10. Taxation and Labor Supply of Married Women across Countries: A Macroeconomic Analysis By Nicola Fuchs-Schündeln; Alexander Bick
  11. Worker Mobility in a Global Labor Market: Evidence from the United Arab Emirates By Suresh Naidu; Yaw Nyarko; Shing-Yi Wang
  12. Gender and occupational wage gaps in Romania: from planned equality to market inequality? By Daniela Andrén; Thomas Andrén
  13. Echoes of the crises in Spain and US in the Colombian labor market: a differences-in-differences approach By María Dolores de la Mata; Luis Eduardo Arango; Nataly Obando

  1. By: Daniel S. Hamermesh; Daiji Kawaguchi; Jungmin Lee
    Abstract: Are workers in modern economies working “too hard”—would they be better off if an equilibrium with fewer work hours were achieved? We examine changes in life satisfaction of Japanese and Koreans over a period when hours of work were cut exogenously because employers suddenly faced an overtime penalty that had become effective with fewer weekly hours per worker. Using repeated cross sections we show that life satisfaction in both countries may have increased relatively among those workers most likely to have been affected by the legislation. The same finding is produced using Korean longitudinal data. In a household model estimated over the Korean cross-section data we find some weak evidence that a reduction in the husband’s work hours increased his wife’s well-being. Overall these results are consistent with the claim that legislated reductions in work hours can increase workers’ happiness.
    JEL: E24 J23
    Date: 2014–08
  2. By: Charles L. Baum; Christopher J. Ruhm
    Abstract: We examine whether the benefits of high school work experience have changed over the last 20 years by comparing effects for the 1979 and 1997 cohorts of the National Longitudinal Survey of Youth. Our main specifications suggest that the future wage benefits of working 20 hours per week in the senior year of high school have fallen from 8.3 percent for the earlier cohort, measured in 1987-1989, to 4.4 percent for the later one, in 2008-2010. Moreover, the gains of work are largely restricted to women and have diminished over time for them. We are able to explain about five-eighths of the differential between cohorts, with most of this being attributed to the way that high school employment is related to subsequent adult work experience and occupational attainment.
    JEL: J22 J38 J4
    Date: 2014–08
  3. By: Luca Marchiori (Central Bank of Luxembourg); Patrice Pieretti (CREA, Université de Luxembourg); Benteng Zou (CREA, Université de Luxembourg)
    Abstract: This paper investigates the theoretical effects of immigration in an occupa- tional choice model with three sectors: a low-skilled, a high-skilled and a pu- blic sector. The originality of our approach is to consider (i) intersectoral mobi- lity of labor and (ii) public employment. We highlight the fact that including a public sector is crucial, since omitting it implies that low-skilled immigration un- ambiguously reduces wages and welfare of all workers. However, when public employment is considered, we demonstrate that immigration increases wages in the high-skilled and the public sectors, provided that the immigrant workforce is not too large and the access to public jobs is not too easy. The average wage of natives may also increase accordingly. Moreover, immigration may improve workers' welfare in each sector. Finally, the mechanism underlying these results does not require complementarity between natives and immigrants,
    Keywords: Immigration, occupational choice model, public employment
    JEL: J24 J61 J45 H44
    Date: 2014
  4. By: Joseph E. Aldy
    Abstract: In 2010, the Gulf Coast experienced the largest oil spill, the greatest mobilization of spill response resources, and the first Gulf-wide deepwater drilling moratorium in U.S. history. Taking advantage of the unexpected nature of the spill and drilling moratorium, I estimate the net effects of these events on Gulf Coast employment and wages. Despite predictions of major job losses in Louisiana — resulting from the spill and the drilling moratorium — I find that Louisiana coastal parishes, and oil-intensive parishes in particular, experienced a net increase in employment and wages. In contrast, Gulf Coast Florida counties, especially those south of the Panhandle, experienced a decline in employment. Analysis of accommodation industry employment and wage, business establishment count, sales tax, and commercial air arrival data likewise show positive economic activity impacts in the oil-intensive coastal parishes of Louisiana and reduced economic activity along the Non-Panhandle Florida Gulf Coast.
    JEL: J30 J64 Q40
    Date: 2014–08
  5. By: Alan Krueger; Alexandre Mas; Xiaotong Niu
    Abstract: This paper documents that rotation group bias — the tendency for labor force statistics to vary systematically by month in sample in labor force surveys — in the Current Population Survey (CPS) has worsened considerably over time. The estimated unemployment rate for earlier rotation groups has grown sharply relative to the unemployment rate for later rotation groups; both should be nationally representative samples. The rise in rotation group bias is driven by a growing tendency for respondents to report job search in earlier rotations relative to later rotations. We investigate explanations for the change in bias. We find that rotation group bias increased discretely after the 1994 CPS redesign and that rising nonresponse is likely a significant contributor. Survey nonresponse increased after the redesign, and subsequently trended upward, mirroring the time pattern of rotation group bias. Consistent with this explanation, there is only a small increase in rotation group bias for households that responded in all eight interviews. An analysis of rotation group bias in Canada and the U.K. reveal no rotation group bias in Canada and a modest and declining bias in the U.K. There is not a “Heisenberg Principle” of rotation group bias, whereby the bias is an inherent feature of repeated interviewing. We explore alternative weightings of the unemployment rate by rotation group and find that, despite the rise in rotation group bias, the official unemployment does no worse than these other measures in predicting alternative measures of economic slack or fitting key macroeconomic relationships.
    JEL: J01 J64
    Date: 2014–08
  6. By: Daron Acemoglu; David Autor; David Dorn; Gordon H. Hanson; Brendan Price
    Abstract: Even before the Great Recession, U.S. employment growth was unimpressive. Between 2000 and 2007, the economy gave back the considerable gains in employment rates it had achieved during the 1990s, with major contractions in manufacturing employment being a prime contributor to the slump. The U.S. employment “sag” of the 2000s is widely recognized but poorly understood. In this paper, we explore the contribution of the swift rise of import competition from China to sluggish U.S. employment growth. We find that the increase in U.S. imports from China, which accelerated after 2000, was a major force behind recent reductions in U.S. manufacturing employment and that, through input-output linkages and other general equilibrium effects, it appears to have significantly suppressed overall U.S. job growth. We apply industry-level and local labor market-level approaches to estimate the size of (a) employment losses in directly exposed manufacturing industries, (b) employment effects in indirectly exposed upstream and downstream industries inside and outside manufacturing, and (c) the net effects of conventional labor reallocation, which should raise employment in non-exposed sectors, and Keynesian multipliers, which should reduce employment in non-exposed sectors. Our central estimates suggest net job losses of 2.0 to 2.4 million stemming from the rise in import competition from China over the period 1999 to 2011. The estimated employment effects are larger in magnitude at the local labor market level, consistent with local general equilibrium effects that amplify the impact of import competition.
    JEL: F16 J23
    Date: 2014–08
  7. By: Herbold, Daniel
    Abstract: This paper analyzes how on-the-job search (OJS) by an agent impacts the moral hazard problem in a repeated principal-agent relationship. OJS is found to constitute a source of agency costs because efficient search incentives require that the agent receives all gains from trade. Further, the optimal incentive contract with OJS matches the design of empirically observed compensation contracts more accurately than models that ignore OJS. In particular, the optimal contract entails excessive performance pay plus efficiency wages. Efficiency wages reduce the opportunity costs of work effort and hence serve as a complement to bonuses. Thus, the model offers a novel explanation for the use of efficiency wages. When allowing for renegotiation, the model generates wage and turnover dynamics that are consistent with empirical evidence. I argue that the model contributes to explaining the concomitant rise in the use of performance pay and in competition for high-skill workers during the last three decades. --
    Keywords: Repeated Principal-Agent Model,On-the-Job Search,Moral Hazard,Multitasking,Efficiency Wages
    JEL: C73 D82 D86 J33 L14
    Date: 2014
  8. By: Christopher Cotton; Brent R. Hickman; Joseph P. Price
    Abstract: The empirical literature on Affirmative Action (AA) in college admissions tends to ignore the effects admissions policies have on incentives of students to invest developing pre-college human capital. We explore the incentive effects of AA using a field experiment that creates a microcosm of the college admissions market. Our experimental design is based on the asymmetric, multi-object, all-pay auction framework in Bodoh-Creed and Hickman (2014). We pay 5th through 8th grade students based on their performance on a national mathematics exam relative to other competitor students, and observe the use of a study website as students prepare for the exam. An AA treatment favors "disadvantaged" students by reserving prizes for lower grade students who on average have less mathematics training and practice. We find that the AA policy significantly increases both average time investment and subsequent math achievement scores for disadvantaged students. At the same time, we find no evidence that it weakens average human capital investment incentives for advantaged students. We also find strong evidence that AA can narrow achievement gaps while promoting greater equality of market outcomes.
    JEL: C93 D44 D82 J15 J24
    Date: 2014–08
  9. By: Betz, Mike; Farren, Michael; Lobao, Linda; Partridge, Mark D.
    Abstract: Coal mining has a long legacy of providing needed jobs in isolated communities but it is also associated with places that suffer from high poverty and weaker long-term economic growth. Yet, the industry has greatly changed in recent decades. Regulations, first on air, have altered the geography of coal mining, pushing it west from Appalachia. Likewise, technological change has reduced labor demand and has led to relatively new mining practices such as invasive mountain-top approaches. Thus, the economic footprint of coal mining has greatly changed in an era when the industry appears to be on the decline. This study investigates whether these changes along with coal’s “boom/bust” cycles have affected economic prosperity in coal country. We separately examine the Appalachian region from the rest of the U.S. due to Appalachia’s unique history and different mining practices. Our study takes a new look at the industry by assessing the winners and losers of coal development around a range of economic indicators and addressing whether the natural resources curse applies to contemporary American coal communities today. The results suggest that modern coal mining has rather nuanced effects that differ between Appalachia and the rest of the U.S. We do not find strong evidence of a resources curse, except that coal mining has a consistent inverse association with measures linked to population growth and entrepreneurship, and thereby future economic growth.
    Keywords: Coal, Economic Development, Regional Labor Markets
    JEL: O10 O13 R23
    Date: 2014–08–09
  10. By: Nicola Fuchs-Schündeln (Goethe University Frankfurt /Main); Alexander Bick (Arizona State University)
    Abstract: We document contemporaneous differences in the aggregate labor supply of married couples across 18 OECD countries along the extensive and the intensive margin. We quantify the contribution of international differences in non-linear labor income taxes and consumption taxes, as well as gender wage gaps and educational premia, to the international differences in the data. Our model replicates the comparatively small cross-country differences of married men's hours worked very well. Moreover, taxes and wages account for a large part of the observed large differences in married women's labor supply between the US and Europe. The non-linearity of labor income taxes leads to substantially different effects of taxation on married men and women. We find that going to a system of strictly separate taxation would increase labor supply of married women by more than 100 hours annually in a third of our sample countries.
    Date: 2014
  11. By: Suresh Naidu; Yaw Nyarko; Shing-Yi Wang
    Abstract: In 2011, a reform in the United Arab Emirates allowed any employer to renew a migrant's visa upon contract expiration without written permission from the initial employer. We find that the reform increased incumbent migrants' earnings and firm retention of these workers. This occurs despite an increase in employer transitions, and is driven by a fall in country exits. While the outcomes of workers already in the United Arab Emirates improved, our analysis suggests that the reform decreased demand for new migrant workers and lowered their earnings. These results are consistent with a model in which the reform reduces the monopsony power of firms.
    JEL: J42 J6 O15 O53
    Date: 2014–08
  12. By: Daniela Andrén; Thomas Andrén
    Abstract: In Romania, the communist regime promoted an official policy of gender equality for more than 40 years, providing equal access to education and employment, and restricting pay differentiation based on gender. After its fall in December 1989, the promotion of equal opportunities and treatment for women and men did not constitute a priority for any of the governments of the 1990s. This paper analyzes both gender and occupational wage gaps before and during the first years of transition to a market economy, and finds that the communist institutions did succeed in eliminating the gender wage differences in female- and male-dominated occupations, but not in gender-integrated occupations. During both regimes, wage differences were in general much higher among workers of the same gender working in different occupations than between women and men working in the same occupational group, and women experienced a larger variation of occupational wage differentials than men.
    Keywords: Romania, female- and male-dominated occupations, gender wage gap, occupational wage gap.
    JEL: J24 J31 J71 J78 P26 P27
    Date: 2014–08–25
  13. By: María Dolores de la Mata; Luis Eduardo Arango; Nataly Obando
    Abstract: This paper presents evidence of the effect of the recent phases of the business cycle in Spain and United States, proxied by their respective unemployment rates, on the labor market of Colombian cities with high migration tradition. These countries are the main destination for labor Colombian migrants. Using information from the household survey between 2006 and 2011 for urban areas in Colombia and a differences-in-differences approach we find that unemployment rates of those countries negatively affect the probability and the amount of remittances received by Colombian households living in areas with high and moderate migration tradition. At a second stage we provide evidence that unemployment rates of those countries positively affect the labor force participation decisions in Colombian regions with the highest migration tradition.
    Keywords: migration, remittances, labor participation, Spanish and United States unemployment rates.
    JEL: C21 J21 J22
    Date: 2014–08–20

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