nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒11‒01
thirteen papers chosen by
Joseph Marchand
University of Alberta

  2. Offshoring, Mismatch, and Labor Market Outcomes By Arseneau, David M.; Epstein, Brendan
  4. Globalization, Wage Polarization, and the Unstable Great Ratio By Guido Cozzi; Giammario Impullitti
  5. Analyzing the Labor Market Outcomes of Occupational Licensing By Kleiner, Morris M.; Gittleman, Maury; Klee, Mark
  6. Getting a First Job: Quality of the Labor Matching in French Cities By Brahim Boualam
  7. Which firms create the most jobs in developing countries ? evidence from Tunisia By Rijkers, Bob; Arouri, Hassen; Freund, Caroline; Nucifora, Antonio
  8. Let’s get to Work! The Future of Labour in Europe By Beblavý, Miroslav; Maselli, Ilaria; Veselkova, Marcela
  9. Immigration and Internal Mobility in Canada By Michel Beine; Serge Coulombe
  10. Female Labour Supply in the Czech Transition: Effects of the Work-Life Conciliation Policies By Alzbeta Mullerova
  11. Does Public Education Expansion Lead to Trickle-Down Growth? By Böhm, Sebastian; Grossmann, Volker; Steger, Thomas M.
  12. Academic performance and the Great Recession By Effrosyni Adamopoulou; Giulia Martina Tanzi
  13. The Effects of Elite Sports on Later Job Success By Dewenter, Ralf; Giessing, Leonie

  1. By: Erling Barth; Alex Bryson; James C. Davis; Richard Freeman
    Abstract: This paper links data on establishments and individuals to analyze the role of establishments in the increase in inequality that has become a central topic in economic analysis and policy debate. It decomposes changes in the variance of ln earnings among individuals into the part due to changes in earnings among establishments and the part due to changes in earnings within-establishments and finds that much of the 1970s-2010s increase in earnings inequality results from increased dispersion of the earnings among the establishments where individuals work. It also shows that the divergence of establishment earnings occurred within and across industries and was associated with increased variance of revenues per worker. Our results direct attention to the fundamental role of establishment-level pay setting and economic adjustments in earnings inequality.
    Keywords: earnings; earnings inequality; productivity
    JEL: J3 J31 D3
    Date: 2014–09
  2. By: Arseneau, David M. (Board of Governors of the Federal Reserve System (U.S.)); Epstein, Brendan (Board of Governors of the Federal Reserve System (U.S.))
    Abstract: We study the role of labor market mismatch in the adjustment to a trade liberalization that results in the offshoring of high-tech production. Our model features two-sided heterogeneity in the labor market: high- and low-skilled workers are matched in a frictional labor market with high- and low-tech firms. Mismatch employment occurs when high-skilled workers choose to accept a less desirable job in the low-tech industry. The main result is that--perhaps counter-intuitively--this type of job displacement is actually beneficial for the labor market in the country doing the offshoring. Mismatch allows the economy to reallocate domestic high-skilled labor across both high- and low-tech industries. In doing so, mismatch dampens both the increase in the aggregate unemployment rate and the decline in aggregate wages that come as a consequence of shifting domestic production abroad.
    Keywords: Labor market frictions; globalization; trade liberalization; heterogeneous workers; search and matching
    Date: 2014–09–08
  3. By: Aleksandra Parteka (Gdansk University of Technology, Gdansk, Poland); Joanna Wolszczak-Derlacz (Gdansk University of Technology, Gdansk, Poland)
    Abstract: This paper assesses the impact of international outsourcing/offshoring practices on the process of wage equalization across manufacturing sectors in a sample of EU27 economies (1995-2009). We discriminate between heterogeneous wage effects on different skill categories of workers (low, medium and high skill). The main focus is on the labour market outcomes of vertical integration, so we augment a model of conditional wage convergence through the inclusion of sector-specific broad and narrow outsourcing/offshoring indices based on input-output data (World Input Output Database, April 2012 release). Two-way relations between trade and wages are addressed through the use of a gravity-based sector-level instrument. We find no evidence supporting unconditional skill-specific wage convergence in EU sectors. In a conditional setting, (slow) wage convergence takes place, but international outsourcing plays a negligible role in wage equalization. Moreover, even though regression results indicate that offshoring reduces the wage growth of domestic medium- and low-skilled workers, we show that this negative effect is economically small.
    Keywords: wage, convergence, international outsourcing, offshoring, input-output
    JEL: F14 F16 C67
    Date: 2014–10
  4. By: Guido Cozzi; Giammario Impullitti
    Abstract: The US labour market has experienced a remarkable polarization in the 1980s and 1990s. Moreover, recent empirical work has documented a sharp increase in the wealth to income ratio in that period. Contemporary to these inequality trends, the US faced a fast technological catch-up as European countries and especially Japan drastically improved their global innovation and patenting activity. Is foreign technological convergence an important source of the recent evolution of the US wage and employment structure? Can it contribute shaping the dynamics of wealth-to-income ratio? To answer these questions, we set up a Schumpeterian model of endogenous technological progress with two asymmetric countries, heterogeneous workers, and endogenous skill formation. High ability people acquire education and become skilled, those with intermediate abilities work as unskilled workers in production jobs, and those at the bottom of the ability distribution work in service occupations. Service workers provide personal services allowing their employers to save working time. In equilibrium, only skilled workers buy personal services. Fiercer foreign competition triggered by technological catching up shifts production jobs abroad and forces domestic Â…rms to innovate more. Hence, the employment share of production workers shrinks, while the demand for both high skilled and service sector workers rises, thus increasing polarization. Calibrating the model to match key facts of the US economy, we Â…nd that foreign technological catching-up observed between the late 1970s and early 1990s reproduces a non-negligible part of US wage polarization and substantial part of the increase in the wealth-to-income ratio in that period.
    Keywords: wage polarization, heterogeneous workers, wealth-income ratio, endogenous technical change, international technology competition, personal service sector.
    Date: 2014
  5. By: Kleiner, Morris M. (Federal Reserve Bank of Minneapolis); Gittleman, Maury (Bureau of Labor Statistics); Klee, Mark (Census Bureau)
    Abstract: Recent assessments of occupational licensing have shown varying effects of the institution on labor market outcomes. This study revisits the relationship between occupational licensing and labor market outcomes by analyzing a new topical module to the Survey of Income and Program Participation (SIPP). Relative to previously available data, the topical module offers more detailed information on occupational licensing from government, with a larger sample size and access to a richer set of person-level characteristics. We exploit this larger and more detailed data set to examine the labor market outcomes of occupational licensing and how workers obtain these licenses from government. More specifically, we analyze whether there is evidence of a licensing wage premium, and how this premium varies with aspects of the regulatory regime such as the requirements to obtain a license or certification and the level of government oversight. After controlling for observable heterogeneity, including occupational status, we find that those with a license earn higher pay, are more likely to be employed, and have a higher probability of retirement and pension plan offers.
    Keywords: Occupational licensing; Wages; Non-wage benefits
    JEL: J30 J44 L50
    Date: 2014–10–22
  6. By: Brahim Boualam
    Abstract: This paper evaluates the influence of urban density on the quality of the match between workers' field of education and their first occupation. Using survey data on young individuals that entered the French labor market in 2004, I propose an original measure of skill matching and find that the quality of the match increases with urban density. I also show that a better skill match is associated with higher wages and that this matching premium comes in addition to the urban wage premium.
    Keywords: agglomeration, skills, labor matching, urban wage premium.
    Date: 2014–09
  7. By: Rijkers, Bob; Arouri, Hassen; Freund, Caroline; Nucifora, Antonio
    Abstract: This paper examines private sector job creation in Tunisia over the period 1996-2010 using a unique database containing information on all registered private enterprises, including self-employment. In spite of stable growth of gross domestic product, overall net job creation was disappointing and firm dynamics were sluggish. The firm size distribution has remained skewed toward small firms, because of stagnation of incumbents and entrants starting small, typically as one-person firms (self-employment). Churning is limited, especially among large firms, and few firms manage to grow. Post-entry, small firms are the worst performers for job creation, even if they survive. Moreover, the association between productivity, profitability, and job creation is feeble, pointing towards weaknesses in the re-allocative process. Weak net job creation thus appears to be due to insufficient firm dynamism rather than excessive job destruction.
    Keywords: Labor Markets,Microfinance,Small Scale Enterprise,Labor Policies,Science Education
    Date: 2014–10–01
  8. By: Beblavý, Miroslav; Maselli, Ilaria; Veselkova, Marcela
    Abstract: Work is both an essential part of our daily lives and one of the major policy concerns across Europe. Yet the public debate of labour issues is all too often driven by political rhetoric and short-term concerns. In this volume, researchers from seven European countries explain, in accessible language, the findings from various social sciences and what they mean for the future of labour in Europe. The conclusions they reach are addressed to policy-makers, the business world, journalists and fellow academics, and to anyone interested in the shape, size and character of the labour markets of tomorrow. “Many valuable synergies emerged between the various strands of NEUJOBS and the in-house analytical work of the European Commission.” László Andor, European Commissioner for Employment, Social Affairs and Inclusion.
    Date: 2014–09
  9. By: Michel Beine (CREA, Université de Luxembourg); Serge Coulombe (University of Ottawa and RGIE)
    Abstract: We analyze the impact of temporary foreign workers (TFWs) and permanent immigrants on interprovincial mobility in Canada. Particular attention is given to the Canadian program of TFWs that has intensified enormously over the last 30 years. Results of the empirical analysis are analyzed through the lens of a small theoretical model that incorporates a job-matching framework (Pissaridès, 1985, 2000) in a migration model à la Harris and Todaro (1970). We find that the inflow of TFWs into a given province tends to substantially decrease net interprovincial mobility. This is not the case, however, for the inflow of permanent immigrants selected through the Canadian point system. On average, each inflow of 100 TFWs is found to decrease net interprovincial migrants within the year by about 50, a number substantially higher than is present in existing literature. This number increases to 180 in the long run. The negative impact of TFWs is ascribed to the fact that TFWs are hired directly by employers, take vacant jobs, and display employment and participation rates of close to 100 per cent. Our paper suggests that, in general, the impact of immigration on labor market conditions depends critically on the way immigrants are selected.
    Keywords: Internal Mobility, immigration, foreign workers, displacement effect
    JEL: F22 J08 J29 J61
    Date: 2014
  10. By: Alzbeta Mullerova
    Abstract: Czech conciliation policies, i.e. social, family and employment policies affecting households’ fertility and employment choices, have gone through dramatic changes since the 1989 transition to market economy. After a brief presentation of conciliation policies and practices before and after the transition, we focus on the 1995 Czech Parental Benefit reform and we evaluate its impact on mothers’ labour supply. The payment of parental benefits was extended to 4 years instead of 3 without an equivalent extension of the job protected parental leave, leaving to mothers the choice of either guaranteed employment or additional twelve months of benefits. We use difference-in-differences strategy of identification to assess the net effect of this reform on mother’s labour market participation. We find a sizeable and negative impact on mothers’ probability of return to work at the end of the parental leave.
    Keywords: Female Labour Supply, Parental Leave and Benefit, Policy Evaluation
    JEL: J13 J16 J18 P30
    Date: 2014
  11. By: Böhm, Sebastian; Grossmann, Volker; Steger, Thomas M.
    Abstract: The paper revisits the debate on trickle-down growth in view of the widely discussed evolution of the earnings and income distribution that followed a massive expansion of higher education. We propose a dynamic general equilibrium model to dynamically evaluate whether economic growth triggered by an increase in public education expenditure on behalf of those with high learning ability eventually trickles down to low-ability workers and serves them better than redistributive transfers. Our results suggest that, in the shorter run, low-skilled workers lose. They are better off from promoting equally sized redistributive transfers. In the longer run, however, low-skilled workers eventually benefit more from the education policy. Interestingly, although the expansion of education leads to sustained increases in the skill premium, income inequality follows an inverted U-shaped evolution.
    Keywords: Directed Technological Change; Publicly Financed Education; Redistributive Transfers; Transitional Dynamics; Trickle-Down Growth
    JEL: H20 J31 O30
    Date: 2014–10–21
  12. By: Effrosyni Adamopoulou (Bank of Italy); Giulia Martina Tanzi (Bank of Italy)
    Abstract: In this paper we study how the Great Recession affected university students in terms of performance, with a focus on the drop-out probability. To do so, we use individual-level data on a representative sample of university students in Italy in 2007 and 2011. We measure the severity of the recession in terms of increases in the adult and youth unemployment rates and we exploit geographical variation to achieve identification. On the one hand, an increase in the adult male unemployment rate worsens the financial condition of the family, raising the drop-out probability. On the other hand, by reducing the opportunity cost of tertiary education, an increase in the youth unemployment rate reduces the drop-out probability. Focusing on students who were enrolled at university before the Recession we are able to study the effects of the crisis on performance net of any potential effect on enrolment. We find evidence that overall, university drop-out decreased as a result of the Recession and that the probability of graduating on time increased for more motivated students.
    Keywords: academic performance, drop-out, Great Recession, unemployment
    JEL: D12 E32 J24
    Date: 2014–09
  13. By: Dewenter, Ralf (Helmut Schmidt University, Hamburg); Giessing, Leonie (DICE, University of Düsseldorf)
    Abstract: This paper analyses the income effect of the participation in elite sports. To quantify the average difference in the monthly net income of former elite athletes and non-athletes we estimate sample average treatment effect scores (SATT) by using covariate nearest-neighbour matching (CVM). While our treatment group consists of formerly funded top-level athletes, the control group of non-athletes is drawn from the SOEP database. Matching takes place by socio-demographic variables as well as measures of personal qualities and attitudes. On average, former athletes receive higher incomes than similar non-athletes. The income premium for former team sports and male athletes is even higher. Comparing the income of former female athletes with male non-athletes, we find that the participation in elite sports closes the gender-wage gap. Our results are robust to variations in the specification and statistically as well economically significant.
    Keywords: funding of elite sports; nearest-neighbour matching; job success; gender-wage gap
    JEL: C49 J30 L83
    Date: 2014–10–16

This nep-lma issue is ©2014 by Joseph Marchand. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.