nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒12‒03
eleven papers chosen by
Joseph Marchand
University of Alberta

  1. Why You Can't Find a Taxi in the Rain and Other Labor Supply Lessons from Cab Drivers By Henry S. Farber
  2. Fertility Responses of High-Skilled Native Women to Immigrant Inflows By Furtado, Delia
  3. Fertility Effects on Female Labor Supply: IV Evidence from IVF Treatments By Lundborg, Petter; Plug, Erik; Rasmussen, Astrid Würtz
  4. Long-Term Care Insurance and Carers' Labor Supply: A Structural Model By Johannes Geyer; Thorben Korfhage
  5. The Impact of the 'Free Choice' Work/Family Reforms of France and Belgium. A Synthetic Control Analysis By Federico Podestà
  6. Choosing to Be Trained: Do Behavioral Traits Matter? By Dasgupta, Utteeyo; Gangadharan, Lata; Maitra, Pushkar; Mani, Subha; Subramanian, Samyukta
  7. On the misery of losing self-employment By Hetschko, Clemens
  8. 30,000 Minimum Wages: The Economic Effects of Collective Bargaining Extensions By Martins, Pedro S.
  9. Are there long-term earnings scars from youth unemployment in Germany? By Möller, Joachim; Umkehrer, Matthias
  10. Socio-demographic Model of Gender Gap in Expected and Actual Wages in Estonia By Vassil, Kristjan; Eamets, Raul; Mõtsmees, Pille
  11. Wage Inequality and Wage Mobility in Turkey By Tansel, Aysit; Dalgıç, Başak; Güven, Aytekin

  1. By: Henry S. Farber
    Abstract: In a seminal paper, Camerer, Babcock, Loewenstein, and Thaler (1997) find that the wage elasticity of daily hours of work New York City (NYC) taxi drivers is negative and conclude that their labor supply behavior is consistent with target earning (having reference dependent preferences). I replicate and extend the CBLT analysis using data from all trips taken in all taxi cabs in NYC for the five years from 2009-2013. The overall pattern in my data is clear: drivers tend to respond positively to unanticipated as well as anticipated increases in earnings opportunities. This is consistent with the neoclassical optimizing model of labor supply and does not support the reference dependent preferences model. I explore heterogeneity across drivers in their labor supply elasticities and consider whether new drivers differ from more experienced drivers in their behavior. I find substantial heterogeneity across drivers in their elasticities, but the estimated elasticities are generally positive and only rarely substantially negative. I also find that new drivers with smaller elasticities are more likely to exit the industry while drivers who remain learn quickly to be better optimizers (have positive labor supply elasticities that grow with experience).
    JEL: D01 D03 J22
    Date: 2014–10
  2. By: Furtado, Delia (University of Connecticut)
    Abstract: While there is debate regarding the magnitude of the impact, immigrant inflows are generally understood to depress wages and increase employment in immigrant-intensive sectors. In light of the over-representation of the foreign-born in the childcare industry, this paper examines whether college-educated native women respond to immigrant-induced lower cost and potentially more convenient childcare options with increased fertility. An analysis of U.S. Census data between 1980 and 2000 suggests that immigrant inflows are indeed associated with increased likelihoods of having a baby, and responses are strongest among women who are most likely to consider childcare costs when making fertility decisions – namely, married women with a graduate degree. Given that women also respond to immigrant inflows by working long hours, the paper ends with an analysis of the types of women who have stronger fertility relative to labor supply responses to immigrant-induced changes in childcare options.
    Keywords: immigration, fertility, child care, labor supply
    JEL: D10 F22 J13 J22 R23
    Date: 2014–10
  3. By: Lundborg, Petter (Lund University); Plug, Erik (University of Amsterdam); Rasmussen, Astrid Würtz (Aarhus University)
    Abstract: This paper introduces a new IV strategy based on IVF induced fertility variation in childless families to estimate the causal effect of having children on female labor supply using IVF treated women in Denmark. Because observed chances of IVF success do not depend on labor market histories, IVF treatment success provides a plausible instrument for childbearing. Our IV estimates indicate that fertility effects are: (a) negative, large and long lasting; (b) much stronger at the extensive margin than at the intensive margin; and (c) similar for mothers, not treated with IVF, which suggests that IVF findings have a wider generalizability.
    Keywords: children, extensive and intensive fertility margins, female labor supply
    JEL: J13 J22
    Date: 2014–10
  4. By: Johannes Geyer; Thorben Korfhage
    Abstract: In Germany, individuals in need of long-term care receive support through benefits of the long-term care insurance. A central goal of the insurance is to support informal care provided by family members. Care recipients can choose between benefits in kind (formal home care services) and benefits in cash. From a budgetary perspective family care is a cost-saving alternative to formal home care and to stationary nursing care. However, the opportunity costs resulting from reduced labor supply of the carer are often overlooked. We focus on the labor supply decision of family carers and the incentives set by the long-term care insurance. We estimate a structural model of labor supply and the choice of benefits of family carers. We find that benefits in kind have small positive effects on labor supply. Labor supply elasticities of cash benefits are larger and negative. If both types of benefits increase, negative labor supply effects are offset to a large extent.
    Keywords: Labor supply, long-term care, long-term care insurance, structural model
    JEL: J22 H31 I13
    Date: 2014
  5. By: Federico Podestà (FBK-IRVAPP)
    Abstract: Since the mid-1980s France and Belgium have modified their family policy system by introducing two long leave schemes and some measures to support childcare at home. Although this change has been presented under the umbrella of the 'free choice' for women rhetoric, several scholars have argued that it would have de facto reinforced the male bread-winner model and, consequently, discouraged female economic activity. In order to test this conjecture, this paper illustrates an impact evaluation of this policy-intervention period. The synthetic control method has allowed to contrast the evolution of French and Belgian female labour force participation rates, observed in consequence of the implementation of the policies under investigation, with the corresponding evolution of the same rates, observable in the absence of such work/family programs. This exercise has induced to think that, if both France and Belgium would have not exposed to this policy-treatment, their female labour market participation rates would be higher than those actually measured.
    Keywords: Female labour market participation, Parental leaves, Family allowances, France, Belgium, Policy evaluation, Synthetic control method
    JEL: J21 J13 C52 I38
    Date: 2014–11
  6. By: Dasgupta, Utteeyo (Wagner College); Gangadharan, Lata (Monash University); Maitra, Pushkar (Monash University); Mani, Subha (Fordham University); Subramanian, Samyukta (Pratham)
    Abstract: In this paper, we examine the determinants of self-selection into a vocational training program in India. To do this we combine data from an artefactual field experiment with survey data collected from the targeted community. We find that applicants and non-applicants differ in terms of socio-economic characteristics (measured using a survey), as well as selected behavioral traits (elicited using an artefactual field experiment). Even after controlling for a range of socio-economic characteristics, we find that individuals who have higher tolerance for risk, and are more competitive, are more likely to apply to the training program. This suggests that focusing only on the socio-economic and demographic characteristics might not be sufficient to fully explain selection into the program. Participants' behavioral traits are also crucial in influencing take up rates in such programs. Our results suggest that as a methodology, there is valuable information to be gained by dissecting the black box of unobservables using data on behavioral traits.
    Keywords: selection, artefactual field experiment, behavioral traits, household survey, training program
    JEL: J24 C93 C81
    Date: 2014–10
  7. By: Hetschko, Clemens
    Abstract: German panel data is used to show that the decrease in life satisfaction caused by an increase in the probability of losing work is higher when self-employed than when paid employed. Further estimations reveal that becoming unemployed reduces self-employed workers´ satisfaction considerably more than salaried workers´ satisfaction. These results indicate that losing self-employment is an even more harmful life event than losing dependent employment. Monetary and non-monetary reasons seem to account for the difference between the two types of work. Moreover, it originates from the process of losing self-employment and the consequences of unemployment rather than from advantages of self-employment.
    Keywords: life satisfaction,self-employment,probability of losing work,unemployment
    JEL: I31 J24 J65 L26
    Date: 2014
  8. By: Martins, Pedro S. (Queen Mary, University of London)
    Abstract: Several countries extend collective bargaining agreements to entire sectors, therefore binding non-subscriber workers and employers. These extensions may address coordination issues but may also distort competition by imposing sector-specific minimum wages and other work conditions that are not appropriate for many firms. In this paper, we analyse the impact of such extensions along several margins drawing on firm-level monthly data for Portugal, a country where extensions have been widespread until recently. We find that both formal employment and wage bills in the relevant sector fall, on average, by 2% – and by 25% more across small firms – over the four months after an extension is issued. These results are driven by both reduced hirings and increased firm closures. On the other hand, informal work, not subject to labour law or extensions, tends to increase. Our findings are robust to several checks, including a falsification exercise based on extensions that were announced but not implemented.
    Keywords: collective agreements, worker flows, wage rigidity
    JEL: J31 J52 J23
    Date: 2014–10
  9. By: Möller, Joachim; Umkehrer, Matthias
    Abstract: We analyze the relationship between early-career unemployment and prime-age earnings with German administrative linked employer-employee data. The careers of more than 720,000 male apprenticeship graduates from the cohorts of 1978 to 1980 are followed over 24 years. On average, early-career unemployment has substantial negative effects on earnings accumulated later in life. An identification strategy based on plant closure of the training firm at the time of graduation suggests that the revealed correlation is not the result of unobserved heterogeneity. Scarring effects also vary considerably across the earnings distribution. Workers with a high earnings potential are able to offset adverse consequences of early-career unemployment to a large extent. Workers who are located at the bottom of the prime-age earnings distribution, in contrast, suffer substantial and persistent losses. Our findings imply that a policy with the aim of preventing early-career unemployment would have long-lasting beneficial effects on future earnings.
    Keywords: scarring,state dependence,youth unemployment
    JEL: J30 J69 C21 C26
    Date: 2014
  10. By: Vassil, Kristjan (University of Tartu); Eamets, Raul (University of Tartu); Mõtsmees, Pille (University of Tartu)
    Abstract: Estonia ranks consistently on top of the list of countries with the largest gender pay gap. However, irrespective of abundant aggregate level evidence, little is known what motivates the gap at the individual level. In this paper we precisely address the issue of gender pay gap at the individual level. We examine how large is the gender pay gap in actual and expected wages and how it can be explained. We use a rich dataset from Estonian Labour Force Survey on actual wages, and the data from CV Keskus on people's wage expectations. Findings show that education and ethnicity are primary sources for gender based wage discrimination hinting at structural cleavages in Estonian society. Results have major policy implications for other multi-lingual countries with similar historical background.
    Keywords: gender wage gap, Estonia, expected wage gap, actual wage gap
    JEL: J16 J31
    Date: 2014–10
  11. By: Tansel, Aysit; Dalgıç, Başak; Güven, Aytekin
    Abstract: This paper investigates wage inequality and wage mobility in Turkey using the Surveys on Income and Living Conditions (SILC). This is the first paper that explores wage mobility for Turkey. It differs from the existing literature by providing analyses of wage inequality and wage mobility over various socioeconomic groups such as gender, age, education and sector of economic activity. We first present an overview of the evolution of wages and wage inequality over the period 2005-2011. Next, we compute several measures of wage mobility and explore the link between wage inequality and wage mobility. Further, we compute the transition matrices which show movements of individuals across the wage distribution from one period to another and investigate the determinants of transition probabilities using a multinomial logit model. The results show that overall the real wages increased over the study period and wage inequality exhibits a slight increase.. Wage inequality is one of the highest among the European Union (EU) countries. The wage mobility in Turkey is lower than what is observed in the European Union countries although it increases as time horizon expands. Wage mobility has an equalizing impact on the wage distribution, however; this impact is not substantial enough to overcome the high and persistent wage inequality in Turkey.
    Keywords: Wage Inequality, Wage Mobility, Heterogeneity, Turkey
    JEL: D31 D63 J31 J60
    Date: 2014–11–05

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