nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒01‒26
fifteen papers chosen by
Joseph Marchand
University of Alberta

  1. The Skill Complementarity of Broadband Internet By Anders Akerman; Ingvil Gaarder; Magne Mogstad
  2. Learning New Technology: the Polarization of the Wage Distribution By Manuel Hidalgo-Pérez; Benedetto Molinari
  3. Technology and Labor Regulations: Theory and Evidence By Alberto Alesina; Michele Battisti; Joseph Zeira
  4. Slow to Hire, Quick to Fire: Employment Dynamics with Asymmetric Responses to News By Cosmin Ilut; Matthias Kehrig; Martin Schneider
  5. Turbulence and the Employment Experience of Older Workers By Etienne Lalé
  6. "School’s out for summer, school’s out forever": the long-term health consequences of leaving school during a bad economy By Godard, Mathilde; Garrouste, Clémentine
  7. Leveling Up: Early Results from a Randomized Evaluation of Post-Secondary Aid By Joshua Angrist; David Autor; Sally Hudson; Amanda Pallais
  8. The labour market impacts of a youth guarantee: lessons for Europe? By Kari Hämäläinen; Juha Tuomala; Ulla Hämäläinen
  9. A Taxonomy of Multi-Industry Labour Force Skills By Consoli,Davide; Rentocchini,Francesco
  10. Even Education and Experience has its Limits: Closing the Wage Gap By Gil S. Epstein; Dalit Gafni; Erez Siniver
  11. Gender Differences in Skill Content of Jobs By Rita Pető; Balázs Reizer
  12. Tax and Transfer Policies and the Female Labor Supply in the EU By Klara Kaliskova
  13. The effect of decentralized wage bargaining on the structure of wages and firm performance By Andréasson, Hannes
  14. The Evolution of Occupational Segregation in the U.S., 1940-2010: Gains and Losses of Gender- Race/ethnicity Groups By Coral del Río; Olga Alonso-Villar
  15. The impact of minimum wage on employment in an economic downturn using data from 17 OECD countries for the period 1985-2008 By Chletsos, Michael; Giotis, Georgios P.

  1. By: Anders Akerman; Ingvil Gaarder; Magne Mogstad
    Abstract: Does adoption of broadband internet in firms enhance labor productivity and increase wages? And is this technological change skill biased or factor neutral? We exploit rich Norwegian data to answer these questions. A public program with limited funding rolled out broadband access points, and provides plausibly exogenous variation in the availability and adoption of broadband internet in firms. Our results suggest that broadband internet improves (worsens) the labor outcomes and productivity of skilled (unskilled) workers. We explore several possible explanations for the skill complementarity of broadband internet. We find suggestive evidence that broadband adoption in firms complements skilled workers in executing nonroutine abstract tasks, and substitutes for unskilled workers in performing routine tasks. Taken together, our findings have important implications for the ongoing policy debate over government investment in broadband infrastructure to encourage productivity and wage growth.
    JEL: J23 J24 J31 O33
    Date: 2015–01
  2. By: Manuel Hidalgo-Pérez (Department of Economics, Universidad Pablo de Olavide); Benedetto Molinari (Department of Economics, Universidad Pablo de Olavide)
    Abstract: This paper presents novel evidence regarding the relationship between technological progress, occupational tasks and wage inequality. By applying a counterfactual quantile regression analysis to historic U.S. data, we show that the evolution of wage inequality in the lower echelon of the wage distribution was due entirely to a reduction of within-group wage inequality, which was determined, in turn, by more homogeneous remuneration paid to workers performing routine tasks. Changes in the differential between the remuneration paid to technology-complementary and technology-substitute tasks had only a negligible impact on wage inequality among low-wage workers, which casts some doubt on the validity of basing a theory of wage inequality on routinization-biased technical change operating through a labor demand channel. To reconcile the routinization hypothesis with the data, we develop a model in which skill-heterogeneous workers face endogenous occupational choices and learning costs in connection with operating a new technology. Even in the absence of changes in wage differentials, the model argues that technical change can generate an empirically consistent non-monotone effect on wage inequality by affecting the average level of skills within different groups of workers.
    Keywords: Residual Wage Inequality, Wage Polarization, Price and Composition Effects, Routinization hypothesis, Skill Biased Technical Change, Occupational Tasks, Job Polarization.
    JEL: J24 J31 O33
    Date: 2015–01
  3. By: Alberto Alesina; Michele Battisti; Joseph Zeira
    Abstract: This paper shows that different labor market policies can lead to differences in technology across sectors in a model of labor saving technologies. Labor market regulations reduce the skill premium and as a result, if technologies are labor saving, countries with more stringent labor regulation, which are binding for low skilled workers, become less technologically advanced in their high-skilled sectors, and more technologically advanced in their low-skilled sectors. We then present data on capital output ratios, on estimated productivity levels and on patent creation, which support the predictions of our model.
    JEL: J31 J50 O33
    Date: 2015–01
  4. By: Cosmin Ilut; Matthias Kehrig; Martin Schneider
    Abstract: We study the distribution of employment growth when hiring responds more to bad shocks than to good shocks. Such a concave hiring rule endogenously generates higher moments observed in establishment-level Census data for both the cross section and the time series. In particular, both aggregate conditional volatility ("macro-volatility") and the cross-sectional dispersion of employment growth ("micro-volatility") are countercyclical. Moreover, employment growth is negatively skewed in the cross section and time series, while TFP is not. The estimated response of employment growth to TFP innovations is su ciently concave to induce signi cant skewness as well as movements in volatility of employment growth.
    Keywords: business cycles, time varying volatility, asymmetric adjustment, skewness
    JEL: D2 D8 E2 J2
    Date: 2015–01
  5. By: Etienne Lalé
    Abstract: This paper studies the secular employment experience of older workers on both sides of the Atlantic, using a common framework to characterize changes in the macro-economy. We embed Ljungqvist and Sargent (1998, 2008)’s turbulence story into a general equilibrium environment with an operative labor supply margin. The model can jointly explain (i) the fall in (male) labor force participation in the United States, (ii) the similar but more pronounced decline in Europe along with rising unemployment rates and (iii) the concentration of these adverse employment outcomes on older workers. We use this framework to discuss the labor market effects of early retirement benefits. These benefits generate significant incentives to retire earlier, which in turn raises tax pressure and discourages job creation. We find that these effects are more pronounced in a turbulent economic environment, and especially so under stringent employment protection legislation.
    Keywords: Job-Search, Turbulence, European Unemployment, Labor Force Participation.
    JEL: E24 J21 J64
    Date: 2015–01
  6. By: Godard, Mathilde; Garrouste, Clémentine
    Abstract: This paper investigates whether leaving school in a bad economy deteriorates health in the longrun. We focus on individuals in England and Wales who left full-time education in their last year of compulsory schooling immediately after the 1973 oil crisis. Our identification strategy builds on two sources. First, it relies on the comparison of very similar individuals – born the same year – whose school-leaving behaviour in different economic conditions was exogeneously induced by compulsory schooling laws. More specifically, within a same birth cohort, pupils born at the end of the calendar year (September to December) were forced to leave school almost a year later than pupils born earlier in the year (January to August). Second, we exploit the sharp increase in unemployment rates generated by the 1973 oil crisis. Between 1974 and 1976, each school cohort indeed faced worse economic conditions at labour-market entry than the previous one. Unlike school-leavers who did postpone their entry on the labour market during the 1980s and 1990s recessions, we provide evidence that pupils’ decisions to leave school at compulsory age between 1974 and 1976 were not endogeneous to the contemporaneous economic conditions at labour market entry. We use a repeated cross section of individuals over 1983-2001 from the General Household Survey (GHS) and take a life-course perspective, from 7 to 26 years after school-leaving. Our results show that men who left school in a bad economy have a higher probability of smoking over the whole period (1983-2001) and of having ever smoked. Women who left school in a bad economy are more likely to report poorer health over the whole period under study. They also have a higher probability to restrict their activity due to illness or injury and to consult the General Practitioner. We do not find any significant effects of poor economic conditions at labour-market entry on subsequent labour-market, marriage and fertility outcomes.
    Keywords: General Household Survey; Labour market; School-leavers; Economic crisis; Education; England; Wales;
    JEL: J17 N34 I29
    Date: 2014–12
  7. By: Joshua Angrist; David Autor; Sally Hudson; Amanda Pallais
    Abstract: Does financial aid increase college attendance and completion? Selection bias and the high implicit tax rates imposed by overlapping aid programs make this question difficult to answer. This paper reports initial findings from a randomized evaluation of a large privately-funded scholarship program for applicants to Nebraska's public colleges and universities. Our research design answers the challenges of aid evaluation with random assignment of aid offers and a strong first stage for aid received: randomly assigned aid offers increased aid received markedly. This in turn appears to have boosted enrollment and persistence, while also shifting many applicants from two- to four-year schools. Awards offered to nonwhite applicants, to those with relatively low academic achievement, and to applicants who targeted less-selective four-year programs (as measured by admissions rates) generated the largest gains in enrollment and persistence, while effects were much smaller for applicants predicted to have stronger post-secondary outcomes in the absence of treatment. Thus, awards enabled groups with historically-low college attendance to ʽlevel up,ʼ largely equalizing enrollment and persistence rates with traditionally college-bound peers, particularly at four-year programs. Awards offered to prospective community college students had little effect on college enrollment or the type of college attended.
    JEL: H52 I21 I22 I23 I28 J24
    Date: 2014–12
  8. By: Kari Hämäläinen; Juha Tuomala; Ulla Hämäläinen
    Abstract: This paper examines the youth guarantee programme introduced in Finland 2005. The reform consisted of early intervention, monitoring and individualized job search plans that guarantee activation measures for unemployed young persons. Using the age threshold set at 25 years, we find that the youth guarantee moderately increased unsubsidized employment while having a negligible impact on unemployment in the age range of 23-24. We also show that the positive impacts of the youth guarantee only materialize among unemployed young persons with a vocational education. There are no signs that the guarantee improved the labour market prospects of young uneducated people.
    Keywords: Youth unemployment, social exclusion, activation, youth guarantee, difference-in-differences
    JEL: J64 J68 C41 C21
    Date: 2014–12–18
  9. By: Consoli,Davide; Rentocchini,Francesco
    Abstract: This paper proposes an empirical study of the skill repertoires of 290 sectors in the United States over the period 2002-2011. We use information on employment structures and job content of occupations to flesh out structural characteristics of industry-specific know-how. The exercise of mapping the skills structures embedded in the workforce yields a taxonomy that discloses novel nuances on the organization of industry. In so doing we also take an initial step towards the integration of labour and employment in the area of innovation studies.
    Keywords: Industry dynamics, Skills, Taxonomy
    JEL: C38 L0 J24 O33
    Date: 2015–01–08
  10. By: Gil S. Epstein (Bar-Ilan University); Dalit Gafni (The College of Management, Israel); Erez Siniver (The College of Management, Israel)
    Abstract: Economic outcomes are compared for university graduates in Israel belonging to four different ethnic groups. A unique dataset is used that includes all individuals who graduated with a first degree from universities and colleges in Israel between the years 1995 and 2008 and which tracks them for up to 10 years from the year they graduated. The main finding is that education and experience appear to have a strong effect on earnings in the long run and that an ethnic group can improve its position relative to specific groups while it has no effects relative to other groups.
    Keywords: wage differences, immigrants, discrimination
    JEL: J15 J24 J31
    Date: 2015–01
  11. By: Rita Pető; Balázs Reizer
    Abstract: It is well-known that men and women segregate by occupation, but less is known about how they segregate by task within occupation. We show that the tasks performed by women are less skill intensive on the average than those performed by men having the same occupation. Neither demographic composition nor differences in cognitive and social skills can explain this pattern. In contrast, the fact that women use cognitive skills less often at home can explain one third of the differences in skill use at the workplace. As we control for work environment and the ability to use cognitive skills the remaining females' penalty in skill use suggest the possibility of labor market discrimination against women. Although skill use at the workplace has a significant wage premium, females' penalty in skill use cannot explain the gender wage gap.
    Date: 2015–01–05
  12. By: Klara Kaliskova
    Abstract: This study contributes to the female labor supply responsiveness literature by measuring the eect of tax-benefit policies on female labor supply based on a broad sample of 26 European countries in 2005-2010. The tax-benefit microsimulation model EUROMOD is used to calculate the measure of extensive margin work incentives - the participation tax rate, which is then used as the main explanatory variable in a female participation equation. This allows me to deal with the endogeneity of income in a new way by a simulated instrumental variable based on a fixed EU-wide sample of women. Results suggest that a 10 percentage point increase in the participation tax rate decreases the female employment probability by 2 percentage points. The effect is higher for single mothers, for women in the middle of the skills distribution, and in countries that have lower rates of female participation.
    Keywords: female labor supply; tax and benefit system; Europe; instrumental variable;
    JEL: C25 H24 H31 J22
    Date: 2014–12
  13. By: Andréasson, Hannes (The Ratio institute)
    Abstract: This paper analyses how decentralised wage bargaining affects wage levels and the structure of wages as well as the impact on firm performance. By using unique employer-employee matched data for Sweden 2007 and 2010, the paper presents new evidence on the collective bargaining premium in Sweden and the linkages between decentralised bargaining and firm performance. By differentiating between decentralised, two-tiered and centralised collective wage bargaining the methodologies of Card and De La Rica (2006); Dahl, le Maire, and Munch (2013); Guertzgen (2014); Gürtzgen (2007); Jakubson (1991) are adopted and adjusted using pooled OLS, first difference OLS, and quantile regressions. Variation in individual worker’s bargaining regime is exploited for identification of the effect of decentralisation. Results indicate that a large share of the wage premium associated with decentralised and two-tiered bargaining is due to systematic selection/sorting into those regimes. Models that take into account individual and firm unobserved heterogeneity indicate that the wage premium associated with decentralised wage bargaining is around 5-7.5% and 0.7-4.1% for two-tiered bargaining. When examining the effect on the wage structure, results indicate that decentralised and two-tiered bargaining compresses the wage structure by awarding relatively higher wage premiums to low-wage earners, in particular in decentralised regimes. At the same time, no evidence is found of higher returns to education in either regime, but both regimes are associated with higher returns to experience than centralised bargaining. Lastly, unique evidence is found of a positive linkage between the level of decentralisation at the firmlevel and value added per employee and firm productivity. This is a novel contribution to the literature that has not yet considered the impact of decentralised wage bargaining on firm performance. Thus there is evidence that the level at which bargaining takes place influences both wage levels and wage structure as well as firm performance.
    Keywords: Collective bargaining; Union wage premium; Wage structure; Firm productivity
    JEL: D24 J31 J41 J51
    Date: 2014–12–31
  14. By: Coral del Río; Olga Alonso-Villar
    Abstract: The aim of this paper is twofold: a) to explore the evolution of occupational segregation of women and men of different racial/ethnic groups in the U. S. during the period 1940- 2010 and b) to assess the consequences of segregation for each of them. For that purpose, this paper proposes a simple index that measures the monetary loss or gain of a group derived from its overrepresentation in some occupations and underrepresentation in others. This index has a clear economic interpretation. It represents the per capita advantage (if the index is positive) or disadvantage (if it is negative) of the group, derived from its segregation, as a proportion of the average wage of the economy. Our index is a helpful tool not only for academics but also for institutions concerned with inequalities among demographic groups because it makes it possible to rank them according to their segregation nature.
    Keywords: occupational segregation; local segregation; race; ethnicity; gender; wages; U.S.
    JEL: J15 J16 J71 D63
    Date: 2014–12
  15. By: Chletsos, Michael; Giotis, Georgios P.
    Abstract: The impact of minimum wage on employment has been a field of conflicts among economists in labor economics. This divergence of views usually takes the form of conflicting empirical studies. However, in our research we managed to find only one study on the employment effect of minimum wages during economic recessions using cross-country evidence. In this paper we try to investigate this issue using a sample of 17 OECD countries with data for the period 1985-2008. We also try to account for institutional and other policy related differences that might have an impact on employment other than the minimum wage. Our empirical analysis points a positive effect of minimum wage on employment and labor force participation rate for teenagers, young adults and youth, but negative effect for the prime-aged and those who belong in the age group 55-64 years old. Regarding the economic circle, we find that, generally in economic downturns our initial results for all age groups do not change significantly.
    Keywords: Minimum wage, Employment, Economic downturn, Minimum wage systems, Labor market institutions and policies.
    JEL: E32 J21 J31 J38 J88
    Date: 2015–01–14

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