nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2014‒12‒13
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. In Search of Labor Demand By Paul Beaudry; David A. Green; Benjamin M. Sand
  2. Cashier or Consultant? Entry Labor Market Conditions, Field of Study, and Career Success By Joseph G. Altonji; Lisa B. Kahn; Jamin D. Speer
  3. Reemployment and Substitution Effects from Increased Activation: Evidence from Times of Crisis By Martins, Pedro S.; Pessoa e Costa, Sofia
  4. Re-Employment Expectations and the Eye of Providence By Sonja C. Kassenboehmer; Sonja G. Schatz
  5. Will They Take the Money and Work? An Empirical Analysis of People's Willingness to Delay Claiming Social Security Benefits for a Lump Sum By Raimond Maurer; Olivia S. Mitchell; Ralph Rogalla; Tatjana Schimetschek
  6. How Much Are Public School Teachers Willing to Pay for Their Retirement Benefits? By Maria Donovan Fitzpatrick
  7. Wages and return to work of injured workers By Monica Galizzi; Roberto Leombruni; Lia Pacelli; Antonella Bena
  8. What Do Field Experiments of Discrimination in Markets Tell Us? A Meta Analysis of Studies Conducted since 2000 By Rich, Judy
  9. A Biological Basis for the Gender Wage Gap: Fecundity and Age and Educational Hypogamy By Polachek, Solomon; Zhang, Xu; Zhou, Xing
  10. Housework Share between Partners: Experimental Evidence on Gender Identity By Auspurg, Katrin; Iacovou, Maria; Nicoletti, Cheti
  11. Do women earn less even as social entrepreneurs? By ESTRIN, Saul; STEPHAN, Ute; VUJIC, Suncica
  12. The Impact of the German Autobahn Net on Regional Labor Market Performance: A Study Using Historical Instrument Variables By Möller, Joachim; Zierer, Marcus
  13. Documentation IZAΨMOD v3.0: The IZA Policy Simulation Model By Loeffler, Max; Peichl, Andreas; Pestel, Nico; Siegloch, Sebastian; Sommer, Eric

  1. By: Paul Beaudry; David A. Green; Benjamin M. Sand
    Abstract: We propose and estimate a novel specification of the labor demand curve incorporating search frictions and the role of entrepreneurs in new firm creation. Using city-industry variation over four decades, we estimate the employment - wage elasticity to be -1 at the industry-city level and -0.3 at the city level. We show that the difference between these estimates likely reflects the congestion externalities predicted by the search literature. Also, holding wages constant, an increase in the local population is associated with a proportional increase in employment. These results provide indirect information about the elasticity of job creation to changes in profits.
    JEL: J23
    Date: 2014–10
  2. By: Joseph G. Altonji; Lisa B. Kahn; Jamin D. Speer
    Abstract: We analyze the early labor market outcomes of U.S. college graduates from the classes of 1974 to 2011, as a function of the economic conditions into which they graduated. We have three main findings. First, poor labor market conditions substantially disrupt early careers. A large recession at time of graduation reduces earnings by roughly 10% in the first year, for the average graduate. The losses are driven partially by a reduced ability to find employment and full-time work and partially by a roughly 4% reduction in hourly wage rates. Second, these effects differ by field of study. Those in majors with typically higher earnings experience significantly smaller declines in most labor market outcomes measured. As a result, the initial earnings and wage gaps across college majors widen by almost a third and a sixth, respectively, for those graduating into a large recession. Most of these effects fade out over the first 7 years. Those in higher paying majors are also slightly less likely to obtain an advanced degree when graduating into a recession, consistent with their relative increase in opportunity cost. Our third set of results focuses on a recent period that includes the Great Recession. Early impacts on earnings are much larger than what we would have expected given past patterns and the size of the recession, in part because of a large increase in the cyclical sensitivity of demand for college graduates. The effects also differ much less by field of study than those of prior recessions.
    JEL: J24 J31
    Date: 2014–09
  3. By: Martins, Pedro S. (Queen Mary, University of London); Pessoa e Costa, Sofia (Catholic University Louvain)
    Abstract: Although activation services such as monitoring, training, or job subsidies have been shown to increase exits from unemployment, there is little comprehensive evidence about the effects of activation during recessions. Here we evaluate a large activation programme introduced in Portugal in 2012, a time of very high unemployment. This programme required specific unemployment benefit recipients to meet jobcentre caseworkers and then participate in active labour market policies. Our analysis draws on rich longitudinal data, the programme's focus on those unemployed for at least six months, and fuzzy regression discontinuity methods. We find that, despite the weak labour market, the programme is very successful as it doubles the monthly reemployment probability. The results are robust to a number of checks, including a falsification exercise based on pre-programme data and an analysis of non-employment and income effects. Moreover, in a novel IV approach using information on all unemployed, we find no evidence of substitution effects such as decreased transitions to employment amongst non-eligible individuals.
    Keywords: public employment services, job search, public policy evaluation
    JEL: J64 J68 J22
    Date: 2014–10
  4. By: Sonja C. Kassenboehmer; Sonja G. Schatz
    Abstract: Using a nationally representative panel dataset, this study investigates the extent and impact of systematic misconceptions of the currently unemployed concerning their statistical re-employment probability, affecting their labor market behavior in a sub-optimal way. Specifically, people with unemployment experience of 3 to 5 years significantly underestimate their objective re-employment probabilities as determined by the econometrician's all-seeing `Eye of Providence'. Simply having information concerning the individuals' previous unemployment experience is sufficient to make more accurate predictions than the individuals themselves. People who underestimate their re-employment probability are less likely to search actively for a job and indeed more likely to exit the labor force. If re-employed, they are more likely to accept lower wages, work fewer hours, work part-time and experience lower levels of job satisfaction. This information can be used by employment agency case workers to counsel clients better and prevent client adverse behavior and outcomes.
    Keywords: Job Insecurity, Re-employment Expectations, Prediction Errors
    JEL: J64 J01 D84
    Date: 2014
  5. By: Raimond Maurer; Olivia S. Mitchell; Ralph Rogalla; Tatjana Schimetschek
    Abstract: This paper investigates whether exchanging the Social Security delayed retirement credit (currently paid as an increase in lifetime annuity benefits) for a lump sum would induce later claiming and additional work. We show that people would voluntarily claim about half a year later if the lump sum were paid for claiming any time after the Early Retirement Age, and about two-thirds of a year later if the lump sum were paid only for those claiming after their Full Retirement Age. Overall, people will work one-third to one-half of the additional months, compared to the status quo. Those who would currently claim at the youngest ages are likely to be most responsive to the offer of a lump sum benefit.
    JEL: D04 D1 D12 D14 G22 H55
    Date: 2014–10
  6. By: Maria Donovan Fitzpatrick
    Abstract: Public sector employees receive large fractions of their lifetime income in the form of deferred compensation. The introduction of the opportunity provided to Illinois public school employees to purchase additional pension benefits allows me to estimate employees' willingness-to-pay for benefits relative to the cost of providing them. The results show employees are willing to pay 20 cents on average for a dollar increase in the present value of expected retirement benefits. The findings suggest substantial inefficiency in compensation and cast doubt on the ability of deferred compensation schemes to attract employees.
    JEL: H55 H72 H75 I22 J26 J45
    Date: 2014–10
  7. By: Monica Galizzi; Roberto Leombruni; Lia Pacelli; Antonella Bena
    Abstract: This is the first analysis of determinants of the return to work of injured workers in an institutional setting where workers earnings are fully compensated during the disability spell. Employers carry the costs associated to the time off work; hence they could face an incentive to put pressure on workers to shorten their leave. We use a matched employer-employees panel data merged with Italian workers compensation records. We find that even when we control for measures of commitment and job security, workers with high wages and high relative wages (who are more costly for the employer) return to work sooner.
    Keywords: Return to Work; Injury; Workers’ Compensation; Relative wages; Commitment; Hazard models
    JEL: J22 J28
    Date: 2014
  8. By: Rich, Judy (University of Portsmouth)
    Abstract: Sixty-seven field experiments of discrimination in markets conducted since 2000 across seventeen countries were surveyed. Significant and persistent discrimination was found on all bases in all markets. High levels of discrimination were recorded against ethnic groups, older workers, men applying to female-dominated jobs and homosexuals in labour markets. Minority applicants for housing needed to make many more enquiries to view properties. Geographical steering of African-Americans in US housing remained significant. Higher prices were quoted to minority applicants buying products. More information made no significant improvement to minority applicant outcomes. Clear evidence of statistical discrimination was found only in product markets.
    Keywords: field experiments, discrimination, survey, meta analysis
    JEL: J7 C93
    Date: 2014–10
  9. By: Polachek, Solomon (Binghamton University, New York); Zhang, Xu (State University of New York, Farmingdale); Zhou, Xing (Nankai University)
    Abstract: This paper shows how a shorter fecundity horizon for females (a biological constraint) leads to age and educational disparities between husbands and wives. Empirical support is based on data from a natural experiment commencing before and ending after China's 1980 one-child law. The results indicate that fertility in China declined by about 1.2-1.4 births per woman as a result of China's anti-natalist policies. Concomitantly spousal age and educational differences narrowed by approximately 0.5-1.0 and 1.0-1.6 years respectively. These decreases in the typical husband's age and educational advantages are important in explaining the division of labor in the home, often given as a cause for the gender wage gap. Indeed, as fertility declined, which has been the historical trend in most developed countries, husband-wife age and educational differences diminished leading to less division of labor in the home and a smaller gender wage disparity. Unlike other models of division of labor in the home which rely on innately endogenous factors, this paper's theory is based on an exogenous biological constraint.
    Keywords: gender wage gap, marital patterns, age at marriage, husband-wife age gap, husband-wife educational gap, homogamy, division of labor in the home, household economics
    JEL: J1 J2 J3 J43 J7 J8 N3 N9 O5 Y8 Z13
    Date: 2014–10
  10. By: Auspurg, Katrin (Goethe University Frankfurt); Iacovou, Maria (University of Cambridge); Nicoletti, Cheti (University of York)
    Abstract: Using an experimental design, we investigate the reasons behind the gendered division of housework within couples. In particular, we assess whether the fact that women do more housework may be explained by differences in preferences deriving from differences in gender identity between men and women. We find little evidence of any systematic gender differences in the preference for housework, suggesting that the reasons for the gendered division of housework lie elsewhere.
    Keywords: gender, housework, unpaid work, division of labor, experiment
    JEL: J16 J22 C35
    Date: 2014–10
  11. By: ESTRIN, Saul; STEPHAN, Ute; VUJIC, Suncica
    Abstract: Based upon unique survey data collected using respondent driven sampling methods, we investigate whether there is a gender pay gap among social entrepreneurs in the UK. We find that women as social entrepreneurs earn 29% less than their male colleagues, above the average UK gender pay gap of 19%. We estimate the adjusted pay gap to be about 23% after controlling for a range of demographic, human capital and job characteristics, as well as personal preferences and values. These differences are hard to explain by discrimination since these CEOs set their own pay. Income may not be the only aim in an entrepreneurial career, so we also look at job satisfaction to proxy for non-monetary returns. We find female social entrepreneurs to be more satisfied with their job as a CEO of a social enterprise than their male counterparts. This result holds even when we control for the salary generated through the social enterprise. Our results extend research in labour economics on the gender pay gap as well as entrepreneurship research on women’s entrepreneurship to the novel context of social enterprise. It provides the first evidence for a “contented female social entrepreneur” paradox.
    Keywords: Social entrepreneur, Gender pay gap, Social enterprise, Earnings, Job satisfaction
    JEL: J28 J31 J71 L32
    Date: 2014–11
  12. By: Möller, Joachim (Institute for Employment Research (IAB), Nuremberg); Zierer, Marcus (University of Regensburg)
    Abstract: This paper analyzes the impact of the German autobahn net on the economic performance of German regions. To address endogeneity and reverse causation problems, we use historical instrument variables, i.e. a plan of the railroad net in 1890 and a plan of the autobahn net in 1937. We find a statistically and economically significant causal effect of transport infrastructure investments as measured by changes in the length of the autobahn net of West German NUTS 3 areas on regional employment and the wage bill.
    Keywords: transport infrastructure, regional labor market performance, historical instrumental variables, reverse causation, new economic geography
    JEL: L91 N73 N74 R11 R40 R49
    Date: 2014–10
  13. By: Loeffler, Max (ZEW Mannheim); Peichl, Andreas (ZEW Mannheim); Pestel, Nico (IZA); Siegloch, Sebastian (University of Mannheim); Sommer, Eric (University of Cologne)
    Abstract: This paper describes IZAΨMOD, the policy microsimulation model of the Institute for the Study of Labor (IZA). The model uses household microdata from the German Socio-Economic Panel Study and firm data from the German linked employer-employee dataset LIAB. IZAΨMOD consists of three components: First, a static module simulates the effects of a tax-benefit reform on the budget of the individual household. This includes taxes on income and consumption, social security contributions, public transfers. Secondly, behavioral labor supply responses are estimated. The third component distinguishes our model from most other microsimulation tools. A demand module takes into account possible restrictions of labor demand and identifies the partial equilibrium of the labor market after the supply reactions.
    Keywords: microsimulation, tax and benefit systems, labor supply, labor demand, Germany
    JEL: D58 H20 J22 J23
    Date: 2014–10

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