nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒02‒05
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. The Impact of Unemployment Benefit Extensions on Employment: The 2014 Employment Miracle? By Marcus Hagedorn; Iourii Manovskii; Kurt Mitman
  2. The Effect of Extended Unemployment Insurance Benefits: Evidence from the 2012-2013 Phase-Out By Farber, Henry; Rothstein, Jesse; Valletta, Robert G.
  3. Making do with less: working harder during recessions By Edward P. Lazear; Kathryn L. Shaw; Christopher Stanton
  4. Job Displacement Risk and Severance Pay By Marco Cozzi; Giulio Fella
  5. Effects of Changes in Pensions on the Age of First Benefit Receipt: Regression Discontinuity Evidence from Repatriated Ethnic Germans By Puhani, Patrick A.; Tabbert, Falko
  6. Skill biased labour demand and the wage growth of younger workers: Evidence from an unexpected pension reform By Alexander M. Danzer
  7. Youth Unemployment in Advanced Europe: Okun’s Law and Beyond By Angana Banerji; Hannah Huidan Lin; Sergejs Saksonovs
  8. Are College Costs Worth It? How Individual Ability, Major Choice, and Debt Affect Optimal Schooling Decisions By Webber, Douglas A.
  9. Leaving school in an economic downturn and self-esteem across early and middle adulthood By Johanna Catherine Maclean; Terrence D. Hill
  10. Why Are There So Few Women in Executive Positions? An Analysis of Gender Differences in the Life-Cycle of Executive Employment By Frederiksen, Anders; Halliday, Timothy J.
  11. Can Changing Economic Factors Explain the Rise in Obesity? By Charles J. Courtemanche; Joshua C. Pinkston; Christopher J. Ruhm; George Wehby
  12. The Impact of Syrian Refugees on Natives' Labor Market Outcomes in Turkey: Evidence from a Quasi-Experimental Design By Ceritoglu, Evren; Gurcihan Yunculer, H. Burcu; Torun, Huzeyfe; Tumen, Semih
  13. Determinants of Transitions across Formal / Informal Sectors in Egypt By Tansel, Aysit; Ozdemir, Zeynel Abidin

  1. By: Marcus Hagedorn; Iourii Manovskii; Kurt Mitman
    Abstract: We measure the effect of unemployment benefit duration on employment. We exploit the variation induced by the decision of Congress in December 2013 not to reauthorize the unprecedented benefit extensions introduced during the Great Recession. Federal benefit extensions that ranged from 0 to 47 weeks across U.S. states at the beginning of December 2013 were abruptly cut to zero. To achieve identification we use the fact that this policy change was exogenous to cross-sectional differences across U.S. states and we exploit a policy discontinuity at state borders. We find that a 1% drop in benefit duration leads to a statistically significant increase of employment by 0.0161 log points. In levels, 1.8 million additional jobs were created in 2014 due to the benefit cut. Almost 1 million of these jobs were filled by workers from out of the labor force who would not have participated in the labor market had benefit extensions been reauthorized.
    JEL: E24 J63 J64 J65
    Date: 2015–01
  2. By: Farber, Henry (Princeton University); Rothstein, Jesse (University of California, Berkeley); Valletta, Robert G. (Federal Reserve Bank of San Francisco)
    Abstract: Unemployment Insurance benefit durations were extended during the Great Recession, reaching 99 weeks for most recipients. The extensions were rolled back and eventually terminated by the end of 2013. Using matched CPS data from 2008-2014, we estimate the effect of extended benefits on unemployment exits separately during the earlier period of benefit expansion and the later period of rollback. In both periods, we find little or no effect on job-finding but a reduction in labor force exits due to benefit availability. We estimate that the rollbacks reduced the labor force participation rate by about 0.1 percentage point in early 2014.
    Keywords: extended unemployment benefits, job search, labor force
    JEL: J64 J65
    Date: 2015–01
  3. By: Edward P. Lazear; Kathryn L. Shaw; Christopher Stanton
    Abstract: Why did productivity rise during recent recessions? One possibility is that average worker quality increased. A second is that each incumbent worker produced more. The second effect is termed “making do with less.” Using data from 2006 to 2010 on individual worker productivity from a large firm, these effects can be measured and separated. For this firm, most of the gain in productivity during the recession was a result of increased effort. Additionally, the increase in effort is correlated with the increase in the local unemployment rate, presumably reflecting the costs of losing a job.
    Keywords: Recession; productivity; sorting
    JEL: D20 E32 L22 M50
    Date: 2014–12
  4. By: Marco Cozzi (Queen's University); Giulio Fella (Queen Mary)
    Abstract: This paper is a quantitative, equilibrium study of the insurance role of severance pay when workers face displacement risk and markets are incomplete. A key feature of our model is that, in line with an established empirical literature, job displacement entails a persistent fall in earnings upon reemployment due to the loss of job-specific human capital. The model is solved numerically and calibrated to the US economy. In contrast to previous studies that have analyzed severance payments in the absence of persistent earning losses, we find that the welfare gains from the insurance against job displacement afforded by severance pay are sizable. These gains are higher if, as in most OECD countries, severance pay increases with tenure. The result is a consequence of the higher persistence of earnings losses for workers with a larger stock of job-specific human capital at the time of displacement.
    Keywords: Severance Payments, Incomplete Markets, Welfare
    JEL: E24 D52 D58 J65
    Date: 2015–01
  5. By: Puhani, Patrick A. (Leibniz University of Hannover); Tabbert, Falko (Leibniz University of Hannover)
    Abstract: To estimate the effects of large cuts in pensions on the age of first benefit receipt, we exploit two natural experiments in which such cuts affect a group of repatriated ethnic German workers. The pensions were cut by about 12%, yet, according to our regression discontinuity estimates based on administrative pension data, there was no significant delay in the age of first pension receipt. Based on additional data sources, we find (i) that almost all pension recipients of our study population had left the labor force and (ii) that repatriated ethnic Germans hold similar jobs and exhibit similar retirement behavior as low-skilled Germans. The results are consistent with low-skilled workers in Germany being frozen in a corner-solution equilibrium in which the optimal choice is to retire as early as possible.
    Keywords: policy, evaluation, pension reform, labor supply, retirement
    JEL: J26 H55
    Date: 2015–01
  6. By: Alexander M. Danzer
    Abstract: Large-scale pension reforms can have redistributive wage effects across generations and education groups when the labour market suffers from skill mismatch. A quasi-experimental ‘retirement shock’ in Ukraine illustrates the effect of labour scarcity on wage growth and returns to education: it reveals that young and well educated workers enjoyed significant wage growth accelerations while older workers with outdated skills did not benefit from the retirement of their comparable peers. The estimated wage effects are in line with predictions from a simple heterogeneous labour demand model applied to a cross-section of Ukrainian firms. The paper illustrates that general equilibrium wage effects can be estimated in a policy evaluation framework if quasi-experiments fulfil very restrictive preconditions.
    Keywords: Pension increase, wage growth, labour substitution, returns to education, skill-mismatch, Ukraine, quasi-experiment
    JEL: J2 J31 J14 P23
    Date: 2015–01
  7. By: Angana Banerji; Hannah Huidan Lin; Sergejs Saksonovs
    Abstract: The crisis has intensified what was previously a chronic unemployment problem in Europe; youth unemployment is now at unprecedented highs in some European countries. This paper assesses the main drivers of youth unemployment in Europe. It finds that much of the increase in youth unemployment rates during the crisis can be explained by output dynamics and the greater sensitivity of youth unemployment to economic activity than adult unemployment. Labor market institutions also play a significant role in explaining the persistently high levels of youth unemployment, especially the tax wedge, minimum wages relative to the median wage, spending on active labor market policies, the opportunity cost of working (measured by the unemployment benefits), vocational training, and labor market duality. This suggests that policies to address youth unemployment should be comprehensive and country-specific, focused on reviving growth and advancing labor market reforms.
    Keywords: Unemployment;Europe;Euro Area;Labor market characteristics;Labor market institutions;Migrations;Business cycles;Developed countries;Youth employment, youth unemployment, Okun’s law, business cycle, labor market factors
    Date: 2015–01–21
  8. By: Webber, Douglas A. (Temple University)
    Abstract: This paper examines the financial value over the course of a lifetime of pursuing a college degree under a variety of different settings (e.g. major, student loan debt, individual ability). Using a lifecycle simulation approach, I account for ability/selection bias and the substantial probability that entering college freshmen will not eventually graduate, two critically important factors when evaluating the value of pursuing a college degree. I find that financial proposition of attending college is an unambiguously good investment for the vast majority of individuals with low to average college costs, although majors with a lower expected return do not pay off until middle age. However, when the financial costs of attending college are high (defined here as roughly $30,000 per year), the gains from attending college are far more tenuous, particularly among those with below median ability and those pursuing an Arts/Humanities degree. I estimate the net present discounted value of attending college to vary between $95,000 and $275,000 depending on the major (STEM, Business, Social Sciences, Arts/Humanities) pursued.
    Keywords: student loans, returns to college, major choice
    JEL: I21 I22 I23
    Date: 2015–01
  9. By: Johanna Catherine Maclean (Department of Economics, Temple University); Terrence D. Hill (Department of Sociology, The University of Utah)
    Abstract: In this study we test whether leaving school in an economic downturn impacts self-esteem. Self-esteem is an important dimension of non-cognitive skill that economists have recently begun to examine. Previous work documents that leaving school in a downturn persistently depresses career outcomes, and career success is an important determinant of self-esteem. We model responses to the Rosenberg Self-esteem Scale as a function of the state unemployment rate at school-leaving. We address the potential endogeneity of time and location of school- leaving with instrumental variables. Our results suggest that leaving school in an economic downturn lowers self-esteem men but effects do not emerge until middle adulthood, and are particularly strong for white and high skill men.
    Keywords: self-esteem, non-cognitive skills, school-leaving, macroeconomic fluctuations
    JEL: I1 I12 J2
    Date: 2015–01
  10. By: Frederiksen, Anders (Aarhus University); Halliday, Timothy J. (University of Hawaii at Manoa)
    Abstract: "Glass ceilings" and "sticky floors" are typical explanations for the low representation of women in top executive positions, but a focus on gender differences in promotions provides only a partial explanation. We consider the life-cycle of executive employment, which allows for a full characterization of the gender composition of executive management. We establish that there are few women in executive management because they have lower levels of human capital, are underrepresented in lower-level jobs, and are less likely to be perceived as high-productivity employees. We do not find that women have uniformly unfavorable promotion and demotion probabilities.
    Keywords: discrimination, dynamics, gender
    JEL: J71 J62
    Date: 2015–01
  11. By: Charles J. Courtemanche; Joshua C. Pinkston; Christopher J. Ruhm; George Wehby
    Abstract: A growing literature examines the effects of economic variables on obesity, typically focusing on only one or a few factors at a time. We build a more comprehensive economic model of body weight, combining the 1990-2010 Behavioral Risk Factor Surveillance System with 27 state-level variables related to general economic conditions, labor supply, and the monetary or time costs of calorie intake, physical activity, and cigarette smoking. Controlling for demographic characteristics and state and year fixed effects, changes in these economic variables collectively explain 37% of the rise in BMI, 43% of the rise in obesity, and 59% of the rise in class II/III obesity. Quantile regressions also point to large effects among the heaviest individuals, with half the rise in the 90th percentile of BMI explained by economic factors. Variables related to calorie intake – particularly restaurant and supercenter/warehouse club densities – are the primary drivers of the results.
    JEL: I12
    Date: 2015–01
  12. By: Ceritoglu, Evren; Gurcihan Yunculer, H. Burcu; Torun, Huzeyfe; Tumen, Semih
    Abstract: Civil war in Syria, which started in March 2011, has led to a massive wave of forced immigration from the Northern Syria to the Southeastern regions of Turkey. This paper exploits this natural experiment to estimate the impact of Syrian refugees on the labor market outcomes of natives in Turkey. Using a difference-in-differences strategy, we find that immigration has considerably affected the employment outcomes of natives, while its impact on wage outcomes has been negligible. We document notable employment losses among informal workers as a consequence of refugee inflows. The majority of those who lost their informal jobs have either left the labor force or remained unemployed. Overall, unemployment rates have increased, while labor force participation, informal employment, and job finding rates have declined among natives. Disadvantaged groups -- i.e., females, younger workers, and less-educated workers|have been affected the worst. The prevalence of informal employment in the Turkish labor markets has amplified the negative impact of Syrian refugee inflows on natives' labor market outcomes.
    Keywords: Syrian civil war; immigration; Turkey; labor market; informality; difference in differences.
    JEL: C21 J15 J21 J61
    Date: 2015–01–21
  13. By: Tansel, Aysit (Middle East Technical University); Ozdemir, Zeynel Abidin (Gazi University)
    Abstract: Informality is a salient feature of labor market in Egypt as it is the case with many developing countries. This is the first study of the determinants of worker transitions between various labor market states using panel data from Egypt. We first provide a diagnosis of dynamic worker flows across different labor market states. We develop transition probabilities by gender across different labor market states utilizing Markov transition processes. Next we identify the effects of individual, household, job characteristics and location on different mobility patterns by estimating a multinomial logit regression. The results point to the highly static nature of the Egyptian labor market. Government employment and the out of labor force are the most persistent labor market states. Further, only a few of the explanatory variables except high levels of education are found to have predictive power in explaining the transitions from formal wage, informal wage, self-employment, unemployment government employment and out of labor market states.
    Keywords: labor market dynamics, informality, Markov processes, multinomial logit, Egypt
    JEL: J21 J24 J40 J63 O17
    Date: 2015–01

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