nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒10‒13
six papers chosen by
Joseph Marchand
University of Alberta

  1. Measuring Labour Mismatch in Europe By António Morgado; Tiago Neves Sequeira; Marcelo Santos; Alexandra Ferreira Lopes; Ana Balcão Reis
  2. Off-Shoring and Wage Inequality: where do we stand? By Fatima, Syeda Tamkeen
  3. Payroll Taxation and the structure of qualications and wages in a segmented frictional labor market with intra-rm bargaining By Clément Carbonnier
  4. Migration as an Adjustment Mechanism in the Crisis? A Comparison of Europe and the United States By Jauer, Julia; Liebig, Thomas; Martin, John P.; Puhani, Patrick A.
  5. Change and Persistence in the Economic Status of Neighborhoods and Cities By Stuart Rosenthal; Stephen L. Ross
  6. Shopping time By Petrosky-Nadeau, Nicolas; Wasmer, Etienne; Zeng, Shutian

  1. By: António Morgado (ISCAL - IPL. Polithecnic Institute of Lisbon); Tiago Neves Sequeira (Departamento de Gestão e Economia and CEFAGE-UBI); Marcelo Santos (Departamento de Gestão e Economia and CEFAGE-UBI); Alexandra Ferreira Lopes (Instituto Universitário de Lisboa, ISCTE-IUL, ISCTE); Ana Balcão Reis (Nova School of Business and Economics)
    Abstract: We calculate aggregate measures of mismatch in the labour market for 30 European countries. These indicators measure vertical mismatch (related to the level of education, e.g. overeducation, and undereducation) and horizontal mismatch (related to the eld of education) and are comparable across countries and through time. We obtain that in European countries between 15% to nearly 35% of workers have a job for which they have more (or less) qualications than the usual level. Approximately 20% to nearly 50% work in a job for which they do not have the usual eld qualication. There is a great variability on mismatch incidence across European labour markets. Undereducation affects more workers than overeducation in most European countries. Low correlations between mismatch and unemployment indicate that mismatch should be regarded as an additional informative variable, useful to characterize labour markets. We also study the in uence of the different measures of mismatch on the evolution of per capita output in both the short and long-run. We nd evidence of strong short-run effects of mismatch.
    Keywords: Education; Human Capital; Mismatch; Labour Market.
    JEL: J24 O50
    Date: 2014
  2. By: Fatima, Syeda Tamkeen
    Abstract: The distributional impact of globalization is of great academic interest. This paper traces the progression of theoretical trade models and their ability to explain the differential impact of off-shoring on skill premiums (i.e. skilled-unskilled wage dispersion) in the recipient developing countries. In light of the increasing trend of off-shoring activities, it is important to look at its consequence on labor demand and skill composition in the south which can in turn affect the wage dispersion in these economies. The varied impact of off-shoring activities onto the wage dispersion in the south as supported by the empirical evidence calls for a comprehensive model that can reconcile these differences. The class of theoretical models pointing in only one direction of either an increase, decrease or no change in wage dispersion need to be enriched to take account of multiple equilibrium or asymmetric pattern of skill premium obtained under different circumstances.
    Keywords: Off-shoring; Foreign direct investment; FDI; Wage inequality; Skill premium; Developing south
    JEL: F16 J31
    Date: 2014
  3. By: Clément Carbonnier (Université de Cergy-Pontoise, THEMA)
    Abstract: The present paper investigates the incidence of payroll taxation - and more generally labor income taxation - in a search and matching model. The model considers a production function with different type of workers, allowing to understand the interactions between segmented labor markets. Furthermore, the equilibrium is reach through a double process of intra-firm wage bargaining ex post and labor demand ex ante. The model is derived analytically for linear tax function differentiated for worker type, and numerically for non-linear tax functions. The bargaining power parameter is interpreted as reflecting the intra-segment substitutability, in parallel to the inter-segment substitutability deriving from the production function and the segment size and productivity. Some standard results are found, such as the wages,unemployment and incidence increasing with respect to bargaining power; or the payroll tax burden falling mainly on workers. Moreover, it is shown that over-shifting of payroll taxes on net wages may happen. It is also shown that a stronger bargaining power induced weaker direct effect of taxes but larger crossed eects on other segments. In addition, marginal incidence decreases with respect to the payroll tax level and is therefore significantly lower than mean incidence, which may induce an underestimation of overall incidence by empirical analyses. This also induces a marginally decreasing eect on loabor costs of payroll tax cuts.
    Keywords: Search and matching; segemented labor market; intra-rm bargaining; tax incidence
    JEL: H22 J31 J38
    Date: 2014
  4. By: Jauer, Julia; Liebig, Thomas; Martin, John P.; Puhani, Patrick A.
    Abstract: The question of whether migration can be an equilibrating force in the labour market is an important criterion for an optimal currency area. It is of particular interest currently in the context of high and rising levels of labour market disparities, in particular within the Eurozone where there is no exchange-rate mechanism available to play this role. We shed some new light on this question by comparing pre- and post-crisis migration movements at the regional level in both Europe and the United States, and their association with asymmetric labour market shocks. We find that recent migration flows have reacted quite significantly to the EU enlargements in 2004 and 2007 and to changes in labour market conditions, particularly in Europe. Indeed, in contrast to the pre-crisis situation and the findings of previous empirical studies, there is tentative evidence that the migration response to the crisis has been considerable in Europe, in contrast to the United States where the crisis and subsequent sluggish recovery were not accompanied by greater interregional labour mobility in reaction to labour market shocks. Our estimates suggest that, if all measured population changes in Europe were due to migration for employment purposes – i.e. an upper-bound estimate – up to about a quarter of the asymmetric labour market shock would be absorbed by migration within a year. However, in the Eurozone the reaction mainly stems from migration of third-country nationals. Even within the group of Eurozone nationals, a significant part of the free mobility stems from immigrants from third countries who have taken on the nationality of their Eurozone host country.
    Keywords: Free mobility, migration, economic crisis, labour market adjustment, Eurozone, Europe, United States
    JEL: F15 F16 F22 J61
    Date: 2014–09
  5. By: Stuart Rosenthal (Syracuse University); Stephen L. Ross (University of Connecticut)
    Abstract: This paper reviews recent literature that considers and explains the tendency for neighborhood and city-level economic status to rise and fall. A central message is that although many locations exhibit extreme persistence in economic status, change in economic status as measured by various indicators of per capita income is common. At the neighborhood level, we begin with a set of stylized facts, and then follow with discussion of static and dynamic drivers of neighborhood economic status. This is mirrored at the metropolitan level. Durable but slowly decaying housing, transportation infrastructure, and self-reinforcing spillovers, all influence local income dynamics, as do enduring natural advantages, amenities and government policy. Three recurring themes run throughout the paper: (i) Long sweeps of time are typically necessary to appreciate that change in economic status is common; (ii) history matters; and (iii) a combination of static and dynamic forces ensure that income dynamics can and do differ dramatically across locations but in ways that can be understood.
    Keywords: Neighborhood income dynamics, city income dynamics, durable housing, transportation infrastructure, spillovers, persistence, path dependence, cycles
    JEL: R10 R20 R30
    Date: 2014–09
  6. By: Petrosky-Nadeau, Nicolas (Federal Reserve Bank of San Francisco); Wasmer, Etienne (Sciences Po); Zeng, Shutian (Carnegie Mellon University)
    Abstract: The renewal of interest in macroeconomic theories of search frictions in the goods market requires a deeper understanding of the cyclical properties of the intensive margins in this market. We review the theoretical mechanisms that promote either procyclical or countercyclical movements in time spent searching for consumer goods and services, and then use the American Time Use Survey to measure shopping time through the Great Recession. Average time spent searching declined in the aggregate over the period 2008-2010 compared to 2005-2007, and the decline was largest for the unemployed who went from spending more to less time searching for goods than the employed. Cross-state regressions point towards a procyclicality of consumer search in the goods market. At the individual level, time allocated to different shopping activities is increasing in individual and household income. Overall, this body of evidence supports procyclical consumer search effort in the goods market and a conclusion that price comparisons cannot be a driver of business cycles.
    Keywords: Goods market search; time allocation; American Time Use Survey; business cycles.
    JEL: D12 E32 J22
    Date: 2014–09

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