nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒11‒17
nine papers chosen by
Joseph Marchand
University of Alberta

  1. The supply and demand of skilled workers in cities and the role of industry composition By Brinkman, Jeffrey
  2. Wage dynamics and labor market transitions: a reassessment through total income and “usual†wages By Canon, Maria E.; Pavan, Ronni
  3. Population aging, migration spillovers, and the decline in interstate migration By Karahan, Fatih; Rhee, Serena
  4. A closer look at the Phillips curve using state-level data By Kumar, Anil; Orrenius, Pia M.
  5. Skills and Jobs in the Internet Economy By OECD
  6. How Did the Housing and Labor Market Crises Affect Young Adults' Living Arrangements? By William H. Rogers; Anne E. Winkler
  7. Pension Enhancements and the Retention of Public Employees By Cory Koedel; P. Brett Xiang
  8. Does mandating nondiscrimination in hiring practices influence women's employment ? evidence using firm-level data By Amin, Mohammad; Islam, Asif
  9. Unemployment Flows, Participation, and the Natural Rate for Turkey By Sengul, Gonul; Tasci, Murat

  1. By: Brinkman, Jeffrey (Federal Reserve Bank of Philadelphia)
    Abstract: The share of high-skilled workers in U.S. cities is positively correlated with city size, and this correlation strengthened between 1980 and 2010. Furthermore, during the same time period, the U.S. economy experienced a significant structural transformation with regard to industrial composition, most notably in the decline of manufacturing and the rise of high-skilled service industries. To decompose and investigate these trends, this paper develops and estimates a spatial equilibrium model with heterogeneous firms and workers that allows for both industry-specific and skill-specific technology changes across cities. The estimates imply that both supply and demand of high-skilled labor have increased over time in big cities. In addition, demand for skilled labor in large cities has increased somewhat within all industries. However, this aggregate increase in skill demand in cities is highly concentrated in a few industries. The finance, insurance, and real estate sectors alone account for 35 percent of the net change over time.
    Keywords: Production; Amenities; Cities; Skilled labor
    JEL: J21 J61 R12
    Date: 2014–10–20
  2. By: Canon, Maria E. (Federal Reserve Bank of St. Louis); Pavan, Ronni (University of London)
    Abstract: We present a simple on-the-job search model in which workers can receive shocks to their employer-specific c productivity match. Because the firm-specific match can vary, wages may increase or decrease over time at each employer. Therefore, for some workers, job-to-job transitions are a way to escape job situations that worsened over time. The contribution of our paper relies on our novel approach to identifying the presence of the shock to the match specific productivity. The presence two independent measures of workers compensation in our dataset of is crucial for our identification strategy. In the first measure, workers are asked about the usual wage they earn with a certain employer. In the second measure, workers are asked about their total amount of labor earnings during the previous year. While the first measure records the wages at a given point in time, the second measure records the sum of all wages within one year. We calibrate our model using both measures of workers compensation and data on employment transitions. The results show that 59% of the observed wage cuts following job-to- job transitions are due to deterioration of the firm-specific component of wages before workers switch employers.
    Keywords: wage dynamics; earnings dynamics; job mobility.
    JEL: J3 J6
    Date: 2014–10–30
  3. By: Karahan, Fatih (Federal Reserve Bank of New York); Rhee, Serena
    Abstract: Interstate migration in the United States has declined by 50 percent since the mid-1980s. This paper studies the role of the aging population in this long-run decline. We argue that demographic changes trigger a general equilibrium effect in the labor market, which affects the migration rate of all workers. We document that an increase in the share of middle-aged workers (those ages 40 to 60) in the working-age population in one state causes a large fall in the migration rate of all workers in that state, regardless of their age. To understand this finding, we develop an equilibrium search model of many locations populated by workers whose moving costs differ. Firms prefer hiring local workers with high moving costs as they command lower wages due to their lower outside option. An increase in the share of middle-aged workers causes firms to recruit more from the local labor market instead of hiring from other locations, which increases the local job-finding rate and reduces everyone’s migration rate (“migration spilloversâ€). Our model reproduces remarkably well several cross-sectional facts between population flows and the age structure of the labor force. Our quantitative analysis suggests that population aging accounts for about half of the observed decline, of which 75 percent is attributable to the general equilibrium effect.
    Keywords: interstate migration; labor mobility; population aging
    JEL: D83 J11 J24 J61 R12 R23
    Date: 2014–11–01
  4. By: Kumar, Anil (Federal Reserve Bank of Dallas); Orrenius, Pia M. (Federal Reserve Bank of Dallas)
    Abstract: Studies that estimate the Phillips curve for the U.S. use mainly national-level data and find mixed evidence of nonlinearity, with some recent studies either rejecting nonlinearity or estimating only modest convexity. In addition, most studies do not make a distinction between the relative impacts of short-term vs. long-term unemployment on wage inflation. Using state-level data from 1982 to 2013, we find strong evidence that the wage-price Phillips curve is nonlinear and convex; declines in the unemployment rate below the average unemployment rate exert significantly higher wage pressure than changes in the unemployment rate above the historical average. We also find that the short-term unemployment rate has a strong relationship with both average and median wage growth, while the long-term unemployment rate appears to only influence median wage growth.
    Keywords: Phillips curve; monetary policy; unemployment; wage growth
    JEL: E52 E58
    Date: 2014–10–01
  5. By: OECD
    Abstract: Both generic and specialised ICT skills are becoming an important requirement for employment across the economy as the Internet becomes more engrained in work processes, but a significant part of the population lacks the basic skills necessary to function in this new environment. This paper examines the impact of the Internet on the labour market in this context. For example, between 7% and 27% of adults have no experience in using computers or lack the most elementary computer skills, such as the ability to use a mouse. In addition, the groups with the least ICT skills tend to be among the demographic groups at the most risk of losing jobs. Data also highlight a potential skills mismatch among those with the strongest ICT skills (youth) and those who actually use them at work (prime age and older adults).
    Date: 2014–10–24
  6. By: William H. Rogers (Department of Economics, University of Missouri-St. Louis); Anne E. Winkler (Department of Economics, University of Missouri-St. Louis)
    Abstract: The housing and labor market crises of the late 2000s left few families and individuals unscathed. In the wake of these events, evidence points to more “doubling-up” of families in the same household. To what extent have these crises affected individuals’ decisions to live independently? What differentiates this study from others is the careful attention paid to the role of housing market conditions – as measured by MSA-level housing prices, rents, and foreclosure rates – on this decision. The empirical analysis is conducted by appending data on area-level conditions for 85 of the largest MSAs in the United States to individual-level data from the ACS PUMS on living arrangements of young adults ages 22 to 34 living in these MSAs. The analysis spans the period 2005 (pre-crisis) through 2011. Within this time period, all MSAs experienced a rise in housing prices, a peak, and then a decline. Regarding the area-level variables, we find a robust statistically significant effect for rent only. Our broader conclusion is that it is individual-level factors, not area-level conditions that largely lie behind young adults’ living arrangement decisions.
    Keywords: Living Arrangements, Labor Market, Housing Market, Foreclosures.
    JEL: J12 R23
    Date: 2014–10
  7. By: Cory Koedel (Department of Economics, University of Missouri-Columbia); P. Brett Xiang
    Abstract: We use data on workers in the largest public-sector occupation in the United States – teaching – to examine the effect of pension enhancements on employee retention. Specifically, we study a 1999 enhancement to the pension formula for public school teachers in St. Louis that discretely and dramatically increased their incentives to remain in covered employment. The St. Louis enhancement is substantively similar to enhancements that occurred in other state and municipal pension plans across the United States in the late 1990s and early 2000s. To identify the effect of the enhancement on teacher retention, we leverage the fact that the strength of the incentive increase varied across the workforce depending on how far teachers were from retirement eligibility when it was enacted. The retention incentives for late-career teachers were increased the most by the enhancement but their behavioral response was modest. A cost-benefit analysis indicates that the pension enhancement was not a cost-effective way to improve employee retention
    Keywords: public pensions, pension enhancements, municipal pensions, teacher retention
    JEL: H75 J33 I22
    Date: 2014–10–14
  8. By: Amin, Mohammad; Islam, Asif
    Abstract: This study explores the relationship between mandating a nondiscrimination clause in hiring practices along gender lines and the employment of women versus men in 58 developing countries. The study finds a strong positive relationship between a nondiscrimination in hiring clause and women's relative to men's employment. The relationship is robust to several controls at the firm and country levels. The results also show sharp heterogeneity in the relationship between the nondiscrimination in hiring clause and women's versus men's employment, with the relationship being much larger in richer countries and in countries with more women in the population as well as among relatively smaller firms.
    Keywords: Population Policies,Gender and Law,Gender and Development,Gender and Health,Human Rights
    Date: 2014–10–01
  9. By: Sengul, Gonul (Istanbul School of Central Banking and the Central Bank of the Republic of Turkey); Tasci, Murat (Federal Reserve Bank of Cleveland)
    Abstract: This paper measures flow rates into and out of unemployment for Turkey and uses them to estimate the unemployment rate trend, that is, the unemployment rate to which the economy converges in the long run. In doing so, the paper explores the role of labor force participation in determining the unemployment rate trend. We find an inverse V-shaped pattern for Turkey’s unemployment rate trend over time, currently between 8.5 percent and 9 percent, with an increasing labor market turnover. We also find that allowing an explicit role for participation changes the results substantially, initially reducing the â€natural†rate but getting closer to the baseline over time. Finally, we show that this parsimonious model can be used to forecast unemployment in Turkey with relative ease and accuracy.
    Keywords: unemployment; unemployment flows; labor force participation; Turkey
    JEL: E24 E32 J64
    Date: 2014–10–27

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