nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒09‒29
nine papers chosen by
Joseph Marchand
University of Alberta

  1. The extent and cyclicality of career changes: evidence for the U.K By Carrillo-Tudela, Carlos; Hobijn, Bart; She, Powen; Visschers, Ludo
  2. Interfacing a CGE Labour Market Model with the E3ME Multi-Sector Macroeconomic Model By G.A. Meagher; Felicity Pang; R.A. Wilson
  3. Flattening Firms and Wage Distribution By Xin Jin
  4. Testing the importance of search frictions, matching, and reservation prestige through randomized experiments in Jordan By Groh, Matthew; McKenzie, David; Shammout, Nour; Vishwanath, Tara
  5. The Effect of Immigration on Wages: Exploiting Exogenous Variation at the National Level By Joan Llull
  6. A Decomposition of the Decline in Japanese Nominal Wages in the 1990s and 2000s By Kodama, Naomi; Inui, Tomohiko; Kwon, Hyeogug
  7. The Spatial Polish Wage Curve with Gender Effects: Evidence from the Polish Labor Survey By Badi Baltagi; Bartlomiej Rokicki
  8. Inequality in the risk of job loss between young and prime-age workers: Can it be explained by human capital or structural factors? By Anna Baranowska-Rataj; Iga Magda
  9. Comparing Distributional Policy Parameters between Populations with Different Outcome Structures By Strittmatter, Anthony

  1. By: Carrillo-Tudela, Carlos (University of Essex); Hobijn, Bart (Federal Reserve Bank of San Francisco); She, Powen (University of Essex); Visschers, Ludo (University of Edinburgh)
    Abstract: U.K. data from 1993-2012 suggest that in economic downturns a smaller fraction of unemployed workers change their career when starting a new job. The proportion of total hires involving a career change also drops. This implies that career changes decline during recessions. The results indicate that recessions are times of subdued reallocation rather than of accelerated and involuntary structural transformation.
    Keywords: Labour market turnover; occupational and industry mobility; wage growth
    JEL: G10 J63 J64
    Date: 2014–08
  2. By: G.A. Meagher; Felicity Pang; R.A. Wilson
    Abstract: In recent years, a series of European labour market forecasts have been produced on behalf of, and have been published by, the European Centre for the Development of Vocational Training (CEDEFOP). These forecasts were generated using a modular modelling approach containing two major components: * a multi-sector macroeconomic model (E3ME) for 29 European countries, primarily developed and operated by Cambridge Econometrics, and * a labour market extension (WLME), primarily developed and operated by the Institute for Employment Research at the University of Warwick. The countries are treated as an integrated system in E3ME but the extension is applied to each country separately. Forecasts of employment by industry are determined by E3ME; forecasts of employment by occupation and qualification are determined by the extension. The two components rely mainly on time series econometric techniques to generate their forecasts. This paper describes how WLME can be replaced with an alternative extension (MLME) which incorporates a computable general equilibrium model. The CGE model has been developed primarily at the Centre of Policy Studies at Monash University. Compared to WLME, MLME relies less on time series extrapolation and more on explicitly modelled economic behaviour. This approach introduces a range of behavioural and technical parameters which offer more scope for modelling developments in the labour market which impact on occupations and skills rather industries. Forecasts produced using the new E3ME-MLME system are reported for the United Kingdom, Greece and the Netherlands, and compared with the corresponding forecasts produced using the existing E3ME-WLME system. The focus of the comparison is on qualitative differences in the way the two sets of forecasts are to be interpreted. In particular, the sense in which explicit specification of technical change and economic behaviour (in the new system) can be substituted for time series extrapolation techniques (in the existing system) is carefully considered. The primary objective of the paper, therefore, is to demonstrate the empirical feasibility of the alternative methodology rather than to produce robust alternative forecasts.
    Keywords: Forecasting, CGE models, hybrid models, labour markets
    JEL: C53 C58 D58 E27 J23 O41
    Date: 2014–09
  3. By: Xin Jin (Department of Economics, University of South Florida)
    Abstract: This article studies the consequences of firm delayering on wages and the wage distribution inside firms. I consider a job-assignment model with asymmetric information and a slot constraint. The model predicts that more efficient firms are not necessarily larger than less efficient firms if firms are allowed to adjust their internal organizational structure through delayering. After delayering, wages at all levels increase and the wage distribution becomes more unequal. These predictions match a set of empirical findings in recent studies that are not well explained by existing theories.
    Keywords: Delayering, asymmetric information, wage distribution, slot constraint
    JEL: J31 M51
    Date: 2014–09
  4. By: Groh, Matthew; McKenzie, David; Shammout, Nour; Vishwanath, Tara
    Abstract: Unemployment rates for tertiary-educated youth in Jordan are high, as is the duration of unemployment. Two randomized experiments in Jordan were used to test different theories that may explain this phenomenon. The first experiment tested the role of search and matching frictions by providing firms and job candidates with an intensive screening and matching service based on educational backgrounds and psychometric assessments. Although more than 1,000 matches were made, youth rejected the opportunity to even have an interview in 28 percent of cases, and when a job offer was received, they rejected this offer or quickly quit the job 83 percent of the time. A second experiment built on the first by examining the willingness of educated, unemployed youth to apply for jobs of varying levels of prestige. Youth applied to only a small proportion of the job openings they were told about, with application rates higher for higher prestige jobs than lower prestige jobs. Youth failed to show up for the majority of interviews scheduled for low prestige jobs. The results suggest that reservation prestige is an important factor underlying the unemployment of educated Jordanian youth.
    Keywords: Labor Markets,Tertiary Education,Disability,Labor Policies,Labor Management and Relations
    Date: 2014–09–01
  5. By: Joan Llull (MOVE Universitat Autonoma de Barcelona)
    Abstract: This paper estimates the effect of immigration on native wages at the national level taking into account the endogenous allocation of immigrants across skill cells. Time-varying exogenous variation across skill cells for a given country is provided by interactions of push factors, distance, and skill cell dummies: distance mitigates the effect of push factors more severely for less educated and middle experienced. Because the analysis focuses on the United States and Canada, I propose a two-stage approach (Sub-Sample 2SLS) that estimates the fiist stage regression with an augmented sample of destination countries, and the second stage equation with the restricted sub-sample of interest. I derive asymptotic results for this estimator, and suggest several applications beyond the current one. The empirical analysis indicates a substantial bias in estimated OLS wage elasticities to immigration. Sub-sample 2SLS estimates average - 1:2 and are very stable to the use of alternative instruments.
    Keywords: Immigration, Wages, Sub-Sample Two Stage Least Squares
    JEL: J31 J61
    Date: 2014–09
  6. By: Kodama, Naomi; Inui, Tomohiko; Kwon, Hyeogug
    Abstract: In the 1990s and the 2000s, the average nominal wage in Japan declined continuously. This is a sharp contrast to wage trends in other developed countries in the same period. This study seeks to provide new quantitative evidence on the possible factors contributing to the nominal wage decline in Japan’s so-called “two lost decades” employing the Blinder-Oaxaca decomposition method using data from the Basic Survey on Wage Structure for 1993-2008. We find that half of the decline of the average wage in the total economy is due to the growing employment share of low-wage industries. Further, we decompose changes in average wages at the industry level for three subperiods representing different phases of the business cycle in Japan. Controlling for worker characteristics, we find the wages of workers in the manufacturing, wholesale, and medical, health care, and welfare industries declined between 1998 and 2003. Further, our results show that 1997 was the turning point in terms of changes in the wage structure. In addition, we find that wages for workers with the same characteristics continued to decline in the 2000s, albeit at a slower pace, and the main factor responsible for the wage decline was changes in the composition of the workforce in the wholesale, retail, and medical, health care, and welfare industries.
    Keywords: nominal wage decline, deflation, changes in industrial structure, trade and labor market interactions
    JEL: J31 E24 E32 F16 L80
    Date: 2014–08
  7. By: Badi Baltagi (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244); Bartlomiej Rokicki (University of Illinois)
    Abstract: This paper reconsiders the Polish wage curve using individual data from the Polish Labor Force Survey (LFS) at the 16 NUTS2 level allowing for spatial spillovers between regions. In addition it estimates the total and gender-specific regional unemployment rate elasticities on individual wages. The paper finds significant spatial unemployment spillovers across Polish regions. In addition, it finds that the results for the Polish wage curve are sensitive to genderspecific regional unemployment rates. This is especially true for women.
    Keywords: Wage Curve; Fixed Effects; Spatial Spillovers; Regional Labor Markets
    JEL: C26 J30 J60
    Date: 2014–08
  8. By: Anna Baranowska-Rataj (Institute of Statistics and Demography, Warsaw School of Economics); Iga Magda (Institute of Statistics and Demography, Warsaw School of Economics)
    Abstract: In this paper we identify the determinants of the gap in job stability between young and prime-age workers. Using recently developed decomposition techniques and the panel dimension of data from the Polish Labor Force Survey, we examine to what extent age heterogeneity in job stability is shaped by differences in the composition of young and prime-age workers with respect to individual and job-related characteristics, and to what extent it is driven by different effects of those characteristics on the risk of job separation. Our results show that while differences in education and experience between young and prime-age workers are important, these differences explain only one-third of the gap in job stability. A substantial part of the gap is related to the propensity of young people to work in the most volatile segments of the labor market. Young workers are more likely than prime-age workers to work under a fixed-term contract in a small firm in the private sector, and in an industry that has high rates of both job creation and destruction. Because large numbers of young people have a job in this relatively narrow segment of the labor market, their employment opportunities are very sensitive to changing economic conditions. We also find that the public sector offers prime-age workers a higher level of employment protection than the private sector, but that young people who work at state-owned firms are at higher risk of losing their job than their counterparts who are employed by private firms. This asymmetric effect of public sector employment substantially increases the gap in job stability levels between young and prime-age workers in Poland.
    Keywords: youth; job stability; job separations; structural perspective
    JEL: J21 J24 J63
    Date: 2014
  9. By: Strittmatter, Anthony
    Abstract: In this study, we promote the estimation of alternative distributional policy parameters that identify horizontal changes in conditional distributions at quantiles from a reference distribution. The motivation underlying the introduction of these new parameters is the comparison of distributional policy parameters between populations with different outcome structures. If the outcome structures of different populations are not taken into consideration, then such comparisons could potentially yield to results that cannot be associated with the policy variation of interest. The suggested alternative distributional policy parameters account for the outcome structure and enable straightforward comparisons between different populations. The relevance of these parameters is demonstrated in an application of the Job Training Partnership Act.
    Keywords: Quantile Regression, Program Evaluation, Potential Outcome Distribution
    JEL: C21 J38 C46
    Date: 2014–09

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