nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒01‒14
nineteen papers chosen by
Joseph Marchand
University of Alberta

  1. Field of Study, Earnings, and Self-Selection By Lars Kirkebøen; Edwin Leuven; Magne Mogstad
  2. Baby-Boom, Baby-Bust and the Great Depression By Bellou, Andriana; Cardia, Emanuela
  3. Does College Education Reduce Small Business Failure? By Asoni, Andrea; Sanandaji, Tino
  4. Age and skill bias of trade liberalisation? Heterogeneous employment effects of EU Eastern Enlargement By Fries, Jan
  5. The Production and Stock of College Graduates for U.S. States By Winters, John V.
  6. Following the Crowd: Leisure Complementarities Beyond the Household By Georges-Kot, Simon; Goux, Dominique; Maurin, Eric
  7. From the glass door to the glass ceiling: An analysis of the gender wage gap by age groups By Elena Dalla Chiara; Eleonora Matteazzi; Ilaria Petrarca
  8. The Impact of the Minimum Wage on Match Stability By Centeno, Mario; Duarte, Claudia; Novo, Alvaro A.
  9. Trends in Earnings Inequality and Earnings Instability among U.S. Couples: How Important Is Assortative Matching? By Hryshko, Dmytro; Juhn, Chinhui; McCue, Kristin
  10. Polarization or Upgrading? Evolution of Employment in Transitionary Russia By Gimpelson, Vladimir; Kapeliushnikov, Rostislav
  11. The Effects of Youth Employment: Evidence from New York City Summer Youth Employment Program Lotteries By Alexander Gelber; Adam Isen; Judd B. Kessler
  12. Fixed-Term Employment and Fertility: Evidence from German Micro Data By Wolfgang Auer; Natalia Danzer
  13. An Empirical Model of the Medical Match By Nikhil Agarwal
  14. Dynasties in professions: the role of rents By Sauro Mocetti
  15. Sexual Orientation Discrimination in the United Kingdom's Labour Market: A Field Experiment By Drydakis, Nick
  16. Women Helping Women? Evidence from Private Sector Data on Workplace Hierarchies By Kunze, Astrid; Miller, Amalia
  17. Efficacy vs. Equity: What Happens When States Tinker with College Admissions in a Race-Blind Era? By Sandra E. Black; Kalena E. Cortes; Jane Arnold Lincove
  18. Active labour-market policies in Germany : do regional labour markets benefit? By Wapler, Rüdiger; Werner, Daniel; Wolf, Katja
  19. Expropriation with Hukou Change: Evidence from a Quasi-Natural Experiment By Akgüc, Mehtap; Liu, Xingfei; Tani, Massimiliano

  1. By: Lars Kirkebøen; Edwin Leuven; Magne Mogstad
    Abstract: Why do individuals choose different types of post-secondary education, and what are the labor market consequences of those choices? We show that answering these questions is difficult because individuals choose between several unordered alternatives. Even with a valid instrument for every type of education, instrumental variables estimation of the payoffs require information about individuals’ ranking of education types or strong additional assumptions, like constant effects or restrictive preferences. These identification results motivate and guide our empirical analysis of the choice of and payoff to field of study. Our context is Norway’s post-secondary education system where a centralized admission process covers almost all universities and colleges. This process creates credible instruments from discontinuities which effectively randomize applicants near unpredictable admission cutoffs into different fields of study. At the same time, it provides us with strategy-proof measures of individuals’ ranking of fields. Taken together, this allows us to estimate the payoffs to different fields while correcting for selection bias and keeping the next-best alternatives as measured at the time of application fixed. We find that different fields have widely different payoffs, even after accounting for institutional differences and quality of peer groups. For many fields the payoffs rival the college wage premiums, suggesting the choice of field is potentially as important as the decision to enroll in college. The estimated payoffs are consistent with individuals choosing fields in which they have comparative advantage. We also test and reject assumptions of constant effects or restrictive preferences, suggesting that information on next-best alternatives is essential to identify payoffs to field of study.
    JEL: C31 J24 J31
    Date: 2014–12
  2. By: Bellou, Andriana (University of Montreal); Cardia, Emanuela (University of Montreal)
    Abstract: The baby-boom and subsequent baby-bust have shaped much of the history of the second half of the 20th century; yet it is still largely unclear what caused them. This paper presents a new unified explanation of the fertility Boom-Bust that links the latter to the Great Depression and the subsequent economic recovery. We show that the 1929 Crash attracted young married women 20 to 34 years old in 1930 (whom we name D-cohort) in the labor market possibly via an added worker effect. Using several years of Census micro data, we further document that the same cohort kept entering into the market in the 1940s and 1950s as economic conditions improved, decreasing wages and reducing work incentives for younger women. Its retirement in the late 1950s and in the 1960s instead freed positions and created employment opportunities. Finally, we show that the entry of the D-cohort is associated with increased births in the 1950s, while its retirement turned the fertility Boom into a Bust in the 1960s. The work behavior of this cohort explains a large share of the changes in both yearly births and completed fertility of all cohorts involved.
    Keywords: retirement, added worker effect, Great Depression, baby bust, baby boom, fertility
    JEL: J11 J12 J13 J21 J24 J26 J31
    Date: 2014–12
  3. By: Asoni, Andrea (Charles River Associates); Sanandaji, Tino (Research Institute of Industrial Economics (IFN))
    Abstract: We estimate the effect of college education on business survival using the NLSY79. The endogeneity of both education and business ownership is accounted for by a competing risks duration model augmented with a college selection equation. Contrary to the previous literature, we fi…nd no effect of college education on business failure. College however signi…cantly increases “employment survival.” Unlike college, cognitive skills have a positive impact on employment survival for both the self-employed and employees. The results suggest that college affects the self-employed and salaried employees in different ways, for example generating skills more useful in employment than self-employment.
    Keywords: Selection; Entrepreneurship; College Education; Intelligence; Self-con…dence
    JEL: C41 J24 L26
    Date: 2014–12–17
  4. By: Fries, Jan
    Abstract: This study analyses the 2004 Eastern Enlargement to the European Union to obtain evidence on the employment effects of an increase in trade liberalisation. The Enlargement is thought to generate a trade-induced demand shock with no (or only limited) supply effects. Besides the variation over time induced by the Enlargement, identification of the effects is based on a Melitz (2003) type productivity term to differentiate firms by the extent of exposure to the demand shock. The idea is that the effects of the demand shock should be driven by differences in firm-level productivity from the period before the new member countries actually entered the EU. German linked employer-employee data allow to observe the relation of initial establishment productivity with employment changes over a long panel from 1995 to 2009. The estimates show that the Enlargement had a negative effect on establishment-level employment growth, which is driven by increased worker separations and increased job destruction. Besides the overall employment effect, the study focuses on effect heterogeneity across age and skill groups of the workforce. These estimates point to a skill bias in the effect of the Enlargement that disadvantages low- and medium-skilled workers in terms of higher worker separation and job destruction. In addition, lowskilled workers suffer fewer accessions by firms, where against medium-skilled workers enjoy increased accessions and creation of new jobs. Besides this indication for a skill bias, there are no clear indications that point to an age bias in the employment effect of the Eastern Enlargement.
    Keywords: market integration,productivity,worker flows,job flows,skills,age
    JEL: J21 J63
    Date: 2014
  5. By: Winters, John V. (Oklahoma State University)
    Abstract: The stock of human capital in an area is important for regional economic growth and development. However, highly educated workers are often quite mobile and there is a concern that public investments in college graduates may not benefit the state if the college graduates leave the state after finishing their education. This paper examines the relationship between the production of college graduates from a state and the stock of college graduates residing in the state using microdata from the decennial census and American Community Survey. I examine the relationship across states and across cohorts within states. The descriptive analysis suggests that the relationship between the production and stock of college graduates has increased over time and is nearly proportional in recent years. I also employ instrumental variables methods to estimate causal effects. The preferred IV results yield an average point estimate for the production-stock relationship of 0.52, but the effect likely decreases with age.
    Keywords: college graduates, human capital, migration, higher education policy
    JEL: I25 J24 R23
    Date: 2014–12
  6. By: Georges-Kot, Simon (INSEE); Goux, Dominique (CREST-INSEE); Maurin, Eric (Paris School of Economics)
    Abstract: Leisure externalities across households have potentially very important implications for labor market regulations, but they have proven difficult to identify. This paper exploits the unique features of school holidays and regulations about paid leave in France to identify how changes in the timing of work and leisure activities for individuals living with children affect the time use decisions of individuals living in other households. We find that exogenous increases in holidays for individuals living with children actually induce very significant increases in the demand for holidays from individuals living in other households. These positive interactions across households are all the more striking as exogenous increases in the number of individuals on holidays are also shown to be associated with very significant increases in the costs of holidays.
    Keywords: social interactions, leisure demand, paid leave, school holidays
    JEL: J22 D62
    Date: 2014–12
  7. By: Elena Dalla Chiara (University of Verona, Italy); Eleonora Matteazzi (University of Trento, Italy); Ilaria Petrarca (University of Verona, Italy)
    Abstract: Using 2009 EU-SILC data for France, Italy, the Netherlands and the United Kingdom, we decompose the gender wage gap for prime age workers. We adopt an age group approach to identify when and how the glass door and the glass ceiling effects arise and their persistency over time. The empirical results verify that the raw gender wage gap increases with age. In all considered countries, the glass ceiling effect is completely realized by the age of 30 and increases over time. French, Italian and British women have also to cope with the glass door as they enter the labor market.
    Keywords: Gender wage gap, labor force participation, wage decomposition, glass ceiling, glass door.
    JEL: C31 C49 J21 J24 J31 J71
    Date: 2014–11
  8. By: Centeno, Mario (Banco de Portugal); Duarte, Claudia (Banco de Portugal); Novo, Alvaro A. (Banco de Portugal)
    Abstract: We explore increases in the nominal minimum wage in a difference-in-differences setting to estimate match survival wage elasticity. The elasticity is negative and larger than one for matches directly affected by minimum wage increases, those with paying below the new minimum wage. The impact of the minimum wage is stronger for young workers and the manufacturing sector, groups with a large and increasing share of low-wage workers. Given the low-wage mobility in the Portuguese labor market and the large share of workers directly affected by the minimum wage increase (reaching almost 18%), these results call for a careful analysis of the set of policies that interfere with low-wage employment.
    Keywords: minimum wage, employment and match elasticities, spillover
    JEL: J23 J38
    Date: 2014–12
  9. By: Hryshko, Dmytro (University of Alberta); Juhn, Chinhui (University of Houston); McCue, Kristin (U.S. Census Bureau)
    Abstract: We examine changes in inequality and instability of the combined earnings of married couples over the 1980-2009 period using two U.S. panel data sets: Social Security earnings data matched to Survey of Income and Program Participation panels (SIPP-SSA) and the Panel Study of Income Dynamics. Relative to male earnings inequality, the inequality of couples' earnings is both lower in levels and rises by a smaller amount. We also find that couples' earnings instability is lower in levels compared to male earnings instability and actually declines in the SIPP-SSA data. While wives' earnings played an important role in dampening the rise in inequality and year-to-year variation in resources at the family level, we find that marital sorting and coordination of labor supply decisions at the family level played a minor role. Comparing actual couples to randomly paired simulated couples, we find very similar trends in earnings inequality and instability.
    Keywords: inequality, instability, matching
    JEL: J1 J2 J3
    Date: 2014–12
  10. By: Gimpelson, Vladimir (CLMS, Higher School of Economics, Moscow); Kapeliushnikov, Rostislav (CLMS, Higher School of Economics, Moscow)
    Abstract: This paper discusses the structural change in the Russian employment and explores whether the evolution of employment over 2000-2012 followed the scenario of progressive upgrading in job quality or brought about the polarization of jobs in terms of their quality. Jobs are defined here as occupation-industry cells and their quality is measured through relative earnings and education levels. Using detailed micro-data from a few complementary large scale surveys, we rank all jobs according to the earnings and educational criteria and divide these distributions into 5 quintiles. At the next stage, we explore dynamic changes in job quality and socio-demographic characteristics of workers in different quintiles. The paper rejects the polarization scenario and confirms the upgrading hypothesis.
    Keywords: job polarization, job upgrading, job quality, employment restructuring, Russia
    JEL: J31 J62
    Date: 2014–12
  11. By: Alexander Gelber; Adam Isen; Judd B. Kessler
    Abstract: Programs to encourage labor market activity among youth, including public employment programs and wage subsidies like the Work Opportunity Tax Credit, can be supported by three broad rationales. They may: (1) provide contemporaneous income support to participants; (2) encourage work experience that improves future employment and/or educational outcomes of participants; and/or (3) keep participants “out of trouble.” We study randomized lotteries for access to New York City's Summer Youth Employment Program (SYEP), the largest summer youth employment program in the U.S., by merging SYEP administrative data on 294,580 lottery participants to IRS data on the universe of U.S. tax records and to New York State administrative incarceration data. In assessing the three rationales, we find that: (1) SYEP participation causes average earnings and the probability of employment to increase in the year of program participation, with modest contemporaneous crowdout of other earnings and employment; (2) SYEP participation causes a moderate decrease in average earnings for three years following the program and has no impact on college enrollment; and (3) SYEP participation decreases the probability of incarceration and decreases the probability of mortality, which has important and potentially pivotal implications for analyzing the net benefits of the program.
    JEL: J08 J13 J18 J21 J24 J45 J48
    Date: 2014–12
  12. By: Wolfgang Auer; Natalia Danzer
    Abstract: We study the short- to medium-run effects of starting a career on a fixed-term contract on subsequent fertility outcomes. We focus on the career start since we expect that temporary contracts and their inherent economic uncertainty imply a path dependency which might have spill-over effects on other domains of life. Our empirical analysis is based on rich data from the German Socio-Economic Panel which provides comprehensive information about individuals’ labour market history as well as fertility behaviour. Our main results are: Women (i) tend to postpone their first birth due to fixed-term employment at labour market entry and (ii) reduce the number of children in the first 10 years after graduation. These associations are strongest in the subsample of native women with at least vocational training. (iii) In contrast, we find no significant correlations for men. We argue that these findings are robust to potential endogeneity threats.
    Keywords: Career start, fixed-term employment, postponement of maternity, fertility, economic uncertainty
    JEL: J13 J18 J41
    Date: 2014
  13. By: Nikhil Agarwal
    Abstract: This paper develops a framework for estimating preferences in two-sided matching markets with non-transferable utility using only data on observed matches. Unlike single-agent choices, matches depend on the preferences of other agents in the market. I use pairwise stability together with a vertical preference restriction on one side of the market to identify preference parameters for both sides of the market. Recovering the distribution of preferences is only possible in an environment with many-to-one matching. These methods allow me to investigate two issues concerning the centralized market for medical residents. First, I examine the antitrust allegation that the clearinghouse restrains competition, resulting in salaries below the marginal product of labor. Counterfactual simulations of a competitive wage equilibrium show that residents’ willingness to pay for desirable programs results in estimated salary markdowns ranging from $23,000 to $43,000 below the marginal product of labor, with larger markdowns at more desirable programs. Therefore, a limited number of positions at high quality programs, not the design of the match, is the likely cause of low salaries. Second, I analyze wage and supply policies aimed at increasing the number of residents training in rural areas while accounting for general equilibrium effects from the matching market. I find that financial incentives increase the quality, but not the number of rural residents. Quantity regulations increase the number of rural trainees, but the impact on resident quality depends on the design of the intervention.
    JEL: C51 C78 J41 J44 L44
    Date: 2014–12
  14. By: Sauro Mocetti (Bank of Italy)
    Abstract: The correlation between the socio-economic status of parents and their offspring has emerged as one of the stylized facts in economics, though cross-country and cross-occupation variation is remarkable. However, part of the underlying mechanism behind intergenerational persistence remains to be explained. This paper contributes to the existing literature by providing evidence on the role of rents � (unfair) economic benefits that individuals obtain as adults because of their parents� professional position. Several identification strategies, including the exploitation of discontinuities in regulation, suggest that rents significantly affect children�s propensity to follow their parents� professional career paths. From a policy perspective, the removal of anti-competitive regulation and other positional advantages may increase both social fluidity and labor market efficiency.
    Keywords: intergenerational mobility, professions, regulation, rents
    JEL: J62 J44
    Date: 2014–11
  15. By: Drydakis, Nick (Anglia Ruskin University)
    Abstract: Deviations from heteronormativity affect labour market dynamics. Hierarchies of sexual orientation can result in job dismissals, wage discrimination, and the failure to promote gay and lesbian individuals to top ranks. In this paper, I report on a field experiment (144 job-seekers and their correspondence with 5,549 firms) that tested the extent to which sexual orientation affects the labour market outcomes of gay and lesbian job-seekers in the United Kingdom. Their minority sexual orientations, as indicated by job-seekers' participation in gay and lesbian university student unions, negatively affected their workplace prospects. The probability of gay (lesbian) applicants receiving an invitation for an interview was 5.0% (5.1%) lower than that for heterosexual male (female) applicants. In addition, gays (lesbians) received invitations for interviews by firms that paid salaries that were 1.9% (1.2%) lower than those paid by firms that invited heterosexual male (female) applicants for interviews. In addition, in male- (female-) dominated occupations, gay men (lesbians) received fewer invitations for interviews than their non-gay (non-lesbian) counterparts. Furthermore, gay men (lesbians) also received fewer invitations to interview for positions in which masculine (feminine) personality traits were highlighted in job applications and at firms that did not provide written equal opportunity standards, suggesting that the level of discrimination depends partly on the personality traits that employers seek and on organisation-level hiring policies. I conclude that heteronormative discourse continues to reproduce and negatively affect the labour market prospects of gay men and lesbians.
    Keywords: field experiment, heteronormativity, interviews, selection, sexual orientation, wage offers
    JEL: C93 J7 J82
    Date: 2014–12
  16. By: Kunze, Astrid (Norwegian School of Economics); Miller, Amalia (University of Virginia)
    Abstract: This paper studies gender spillovers in career advancement using 11 years of employer-employee matched data on the population of white-collar workers at over 4,000 private-sector establishments in Norway. Our data include unusually detailed job information for each worker, which enables us to define seven hierarchical ranks that are consistent across establishments and over time in order to measure promotions (defined as year-to-year rank increases) even for individuals who change employers. We first find that women have significantly lower promotion rates than men across all ranks of the corporate hierarchy, even after controlling for a range of individual characteristics (age, education, tenure, experience) and including fixed effects for current rank, year, industry, and even work establishment. In measuring the effects of female coworkers, we find positive gender spillovers across ranks (flowing from higher-ranking to lower-ranking women) but negative spillovers within ranks. The finding that greater female representation at higher ranks narrows the gender gap in promotion rates at lower ranks suggests that policies that increase female representation in corporate leadership can have spillover benefits to women in lowers ranks.
    Keywords: gender differences in promotions, women in leadership, workplace gender spillovers
    JEL: J6 J7 M5
    Date: 2014–12
  17. By: Sandra E. Black; Kalena E. Cortes; Jane Arnold Lincove
    Abstract: College admissions officers face a rapidly changing policy environment where court decisions have limited the use of affirmative action. At the same time, there is mounting evidence that commonly used signals of college readiness, such as the SAT/ACTs, are subject to race and socioeconomic bias. Our study investigates the efficacy and equity of college admissions criteria by estimating the effect of multiple measures of college readiness on freshman college grade point average and four-year graduation. Importantly, we take advantage of a unique institutional feature of the Texas higher education system to control for selection into admissions and enrollment. We find that SAT/ACT scores, high school exit exams, and advanced coursework are predictors of student success in college. However, when we simulate changes in college enrollment and college outcomes with additional admissions criteria, we find that adding SAT/ACT or high school exit exam criteria to a rank-based admissions policy significantly decreases enrollment among minorities and other groups, with the most negative effects generated by the SAT/ACT, while inducing only minimal gains in college GPA and four-year graduation rates.
    JEL: I21 I23 I24 J15 J18
    Date: 2014–12
  18. By: Wapler, Rüdiger (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Werner, Daniel (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Wolf, Katja (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Active labour-market policy (ALMP) not only affects the labour-market success of participants. Due to indirect effects, they might also affect the job perspectives of non-participants. Hence, even if ALMP programmes have a positive effect for the participants, this does not mean that ALMP improves the labour-market situation as a whole. Therefore, this paper deals with the question whether ALMP improves the matching-process between job-seekers and vacancies and thus increases the total number of outflows from unemployment into employment at the regional level. To answer this question, we use data for local employment offices of the German Federal Employment Agency for the time period 2006 to 2010 and focus on job-seekers subject to unemployment insurance. As microeconometric evaluation studies show, the search effectiveness of programme participants is low during participation due to the lock-in effect, but ideally increases at the end of the programme. In contrast to previous studies on aggregate effects of ALMP, we take this into account and explicitly differentiate current and former programme participants. The result from our augmented matching function shows that the lock-in effect is also present on the regional level. However, a higher search effectiveness after completion of the programme is not outweighed by potential indirect effects on non-participants. A higher share of former programme participants among the job-seekers in a region leads to an increase of the regional matches. This findings show that the application of ALMP improves the regional matching process. However, this effect varies largely between different types of programmes. Positive effects occur for long-term vocational training and wage subsidies as well as for in-firm training measures. Further, our results show that the effect of the different programme types depends to some extent on the regional labour-market situation." (Author's abstract, IAB-Doku) ((en))
    Keywords: Arbeitsmarktpolitik - Auswirkungen, Arbeitsuche, Arbeitsuchende, Arbeitslose, matching, offene Stellen, berufliche Reintegration, Teilnehmer, arbeitsmarktpolitische Maßnahme, regionaler Arbeitsmarkt, Integrierte Erwerbsbiografien
    JEL: C23 H43 J64 J68
    Date: 2014–12–17
  19. By: Akgüc, Mehtap (Center for European Policy Studies (CEPS)); Liu, Xingfei (IZA); Tani, Massimiliano (IZA)
    Abstract: We study the labor market outcomes of males aged 18-60 obtaining an urban hukou as a result of land expropriation across a number of provinces in China. Using 2008 and 2009 RUMiC data pooling urban, rural and migrant samples, we find that those obtaining an urban hukou have better labour market outcomes than rural stayers and migrants, and close the gap vis-à-vis native urbanites. We also find that children of families experiencing a hukou change due to expropriation have similar investment in human capital as the children of native urban hukou holders. The results confirm the hukou status as a strong economic determinant of labor market outcomes and as a source of inequality. Differences in educational investment, regardless of the differences in parental background, appear however to disappear for the children of families experiencing expropriation, suggesting that leveling the hukou status amongst children in an urban area may be a first step towards reducing intergenerational inequality.
    Keywords: expropriation, China, labour markets, economic reform, quasi-experiment
    JEL: D19 J18 O12 O43 R20
    Date: 2014–12

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