nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒11‒12
nine papers chosen by
Joseph Marchand
University of Alberta

  1. Globalization, Wage Polarization, and the Unstable Great Ratio By Guido Cozzi; Giammario Impullitti
  2. The Gender Wage Gap and Sample Selection via Risk Attitudes By Seeun Jung
  3. Employment and Technological Change: On the Geography of Labour Market Adjustments By Luisa Gagliardi
  4. Rising Skill Premium?: The Roles of Capital-Skill Complementarity and Sectoral Shifts in a Two-Sector Economy By Naoko Hara; Munechika Katayama; Ryo Kato
  5. Labour market effects of job displacement for prime-age and older workers By Anja Deelen; Marloes de Graaf-Zijl; Wiljan van den Berge
  6. Wage inequality in Uruguay: Technological change impact on occupational tasks By Sandra Rodríguez
  7. “Job loss among immigrant and native workers: evidence from Spain’s economic downturn” By Elisabet Motellón; Enrique López-Bazo
  8. Adjusted Employment-to-Population Ratio as an Indicator of Labor Market Strength By Hotchkiss, Julie L.
  9. Fiscal Policy Spillovers: Points of Employment to Places of Residence By Dupor, William D.; McCrory, Peter B.

  1. 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 firms 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 find 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. JEL Classification: F16; J31; O33
    Date: 2014
  2. By: Seeun Jung (Université de Cergy-Pontoise, THEMA)
    Abstract: This paper investigates a new way to estimate the gender wage gap with the introduction of individual risk attitudes using representative Korean data. We es- timate the wage gap with correction for the selection bias, which latter results in the overestimation of this wage gap. Female workers are more risk averse. They hence prefer working in the public sector, where wages are generally lower than in the private sector. It goes on to explain the reduced gender wage gap by develop- ing an appropriate sample-selection model, with wage decompositions corrected for selectivity. Self-selection based on risk attitudes therefore explains, in part, what is popularly perceived as gender discrimination.
    Keywords: Occupational Choice; Gender Wage Gap; Risk Preference; Selection Bias
    JEL: J24 J31 D81 C52
    Date: 2014
  3. By: Luisa Gagliardi
    Abstract: This paper investigates the impact of technological change on local labour market outcomes in Britain. Using a newly assembled panel database for the period 2000-2007 and a directly observed measure of technological change based on patent records, the analysis suggests that employment levels are relatively lower in places that are more exposed to technological shocks depending on their existing industrial specialization. Results also suggest that the magnitude of the impact varies across locations and typologies of workers. The negative impact on employment is particularly evident in areas characterized by weaker agglomeration economies and specialization in mature industries and for intermediate skilled individuals employed in "routinary" activities
    Keywords: Local labour market, employment, technological change, skills
    JEL: R12 R23 R21 O33 J24
    Date: 2014–10
  4. By: Naoko Hara (Bank of Japan); Munechika Katayama (Kyoto University); Ryo Kato (Bank of Japan)
    Abstract: Empirical studies report a marked dispersion in skill-premium changes across economies over the past few decades. Structural models in early studies successfully replicate the increases in skill premiums in many economies, while some other cases with a decline in the skill premium are yet to be explained. To this end, we develop a two-sector (i.e., manufacturing and non-manufacturing) general equilibrium model with skilled and unskilled labor, in which degrees of capital-skill complementarity differ across sectors. Based on the estimated structural parameters, we show that a decline in capital-skill complementarity in the non-manufacturing sector can provide a consistent explanation for the following aspects of the Japanese data at both the aggregate and industry levels: (i) a decline in the skill premium, (ii) widening of the sectoral wage gap due to a rise in manufacturing wages and decline in non-manufacturing wages, and (iii) an increase in the unskilled labor share in the non-manufacturing sector. We interpret that this change reflects compositional effects and uneven technology adoption of firms within non-manufacturing.
    Keywords: Capital-skill Complementarity; Skill Premium; Two-sector DSGE Model; Bayesian Estimation
    JEL: E22 E24 J31
    Date: 2014–10–28
  5. By: Anja Deelen; Marloes de Graaf-Zijl; Wiljan van den Berge
    Abstract: This paper studies the effect of firm closures for prime-age and older workers. Administrative data on the Dutch labour force are used to follow a sample of Dutch workers who lost their jobs due to firm closures in the period 2000 - 2009. Applying difference-in-difference techniques and using a control group created by exact matching, we find that involuntary job loss has a severe impact on older workers' labour market prospects. Finding a new job is relatively difficult, and wage cuts are more substantial once they find a new job. The differences between prime-age and older workers are partly mediated by tenure and industry effects. Not only do older workers on average have longer job tenures than prime-age workers, older workers with longer job tenures experience more negative effects of displacement as well. For prime-age workers tenure in the job before displacement makes less of a difference for their outcomes after displacement. Likewise, displaced older workers are more sensitive to the situation in the local labour market in the industry from which they are displaced. Moreover, older workers experience stronger negative effects of changing industries after displacement on their post-displacement wages.
    JEL: J14 J63 J65
    Date: 2014–09
  6. By: Sandra Rodríguez (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: Based on the “task approach” to labor markets this research seeks to analyze the contribution of technology content of tasks as another explanation factor to the distribution of men wages in Uruguay during the nineties and the first decade of the 2000s. We use unconditional quantile regressions (UQR) and a decomposition method based on the recentered influence function (RIF) regression approach. Our estimates suggest that technological task content of occupations contributes to explain changes in the distribution of men wages in Uruguay, but these effects are better capture by the information content of task rather than the automation content, therefore we cannot confirm Autor, Levy and Murnane’s routinization hypothesis.
    Keywords: wage inequality, RIF regressions, technology, occupational tasks
    JEL: J3 J5
    Date: 2014–10
  7. By: Elisabet Motellón (Faculty of Economics, University of Barcelona); Enrique López-Bazo (Faculty of Economics, University of Barcelona)
    Keywords: Immigration, Job Loss, Crisis, Labour Market Segregation, Spain JEL classification: I24, J24, J61
    Date: 2014–10
  8. By: Hotchkiss, Julie L. (Federal Reserve Bank of Atlanta)
    Abstract: As a measure of labor market strength, the raw employment-to-population ratio (EPOP) confounds employment outcomes with labor supply behavior. Movement in the EPOP depends on the relative movements of the employment rate (one minus the unemployment rate) and the labor force participation rate. This paper proposes an adjustment to the calculation of the EPOP using individual microdata to account for both individual characteristics and the probability of labor force participation, which can used to assess the strength of the labor market.
    Keywords: EPOP; employment-to-population ratio; labor force participation; unemployment rate; employment rate; structural versus cyclical
    JEL: J11 J21 J64
    Date: 2014–08–01
  9. By: Dupor, William D. (Federal Reserve Bank of St. Louis); McCrory, Peter B. (Federal Reserve Bank of St. Louis)
    Abstract: In this paper, we study the effects of interregional spillovers from the government spending component of the American Recovery and Reinvestment Act of 2009 (the Recovery Act). Using cross-county Census Journey to Work commuting data, we cluster U.S. counties into local labor markets, each of which we further partition into two subregions. We then compare differential labor market outcomes and Recovery Act spending at the regional and subregional levels using instrumental variables. Among pairs of subregions, we find evidence of fiscal policy spillovers. For example, $1 of Recovery Act spending in a large subregion increases its own wage bill by $0.79 and increases the wage bill in its neighboring subregion by $0.59. We find similar spillover effects when we replace the wage bill with employment as our measure of economic activity. Next, we build a dynamic equilibrium trade model with interregional commuting capable of propagating these spillovers across regions.
    Keywords: fiscal policy; spillovers; the American Recovery and Reinvestment Act.
    JEL: E52 E62
    Date: 2014–10–22

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