nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒03‒05
nine papers chosen by
Joseph Marchand
University of Alberta

  1. College Access, Initial College Choice and Degree Completion By Joshua Goodman; Michael Hurwitz; Jonathan Smith
  2. Teachers’ Pay for Performance in the Long-Run: Effects on Students’ Educational and Labor Market Outcomes in Adulthood By Victor Lavy
  3. Diversity and employment prospects: neighbors matter! By Camille Hémet
  4. How Job Changes Affect People's Lives - Evidence from Subjective Well-being Data By Adrian Chadi; Clemens Hetschko
  5. Gender Roles and Medical Progress By Stefania Albanesi; Claudia Olivetti
  6. Multinational resilience or dispensable jobs? : German FDI and employment in the Czech Republic around the Great Recession By Eisermann, Merlind; Moritz, Michael; Stockinger, Bastian
  7. Tariff reductions, trade patterns and the wage gap By Francesco Di Comite; Antonella Nocco; Gianluca Orece
  8. Testing for Changes in the SES-Mortality Gradient When the Distribution of Education Changes Too By Thomas Goldring; Fabian Lange; Seth Richards-Shubik
  9. College Diversity and Investment Incentives By Thomas Gall; Patrick Legros; Andrew Newman

  1. By: Joshua Goodman; Michael Hurwitz; Jonathan Smith
    Abstract: The relatively low degree completion rate of U.S. college students has prompted debate over the extent to which the problem is attributable to the students or to their choice of colleges. Estimating the impact of initial college choice is confounded by the non-random nature of college selection. We solve this selection problem by studying the universe of SAT-takers in the state of Georgia, where minimum SAT scores required for admission to the four-year public college sector generate exogenous variation in initial college choice. Regression discontinuity estimates comparing the relatively low-skilled students just above and below this minimum threshold show that access to this sector increases enrollment in four-year colleges, largely by diverting students from two-year community colleges. Most importantly, access to four-year public colleges substantially increases bachelor’s degree completion rates, particularly for low-income students. Conditional on a student’s own academic skill, the institutional completion rate of his initial college explains a large fraction of his own probability of completion. Consistent with prior research on college quality and the two-year college penalty, these results may explain part of the labor market return to college quality.
    JEL: I2 I23 J24
    Date: 2015–02
  2. By: Victor Lavy
    Abstract: The long term effect of teachers’ pay for performance is of particular interest, as critics of these schemes claim that they encourage teaching to the test or orchestrated cheating by teachers and schools. In this paper, I address these concerns by examining the effect of teachers’ pay for performance on long term human capital outcomes, in particular attainment and quality of higher education, and labor market outcomes at adulthood, in particular employment and earnings. I base this study on an experiment conducted a decade and a half ago in Israel and present evidence that the pay for performance scheme increased a wide range of long run human capital measures. Treated students are 4.3 percentage points more likely to enroll in a university and to complete an additional 0.17 years of university schooling, a 60 percent increase relative to the control group mean. These gains are mediated by overall improvements in the high school matriculation outcomes due to the teachers’ intervention at 12th grade. The pay scheme led also to a significant 7 percent increase in annual earnings, to a 2 percent reduction in claims for unemployment benefits, and a 1 percent decline in eligibility for the government disability payment.
    JEL: J24 J3
    Date: 2015–02
  3. By: Camille Hémet (Universidad de Barcelona & IEB)
    Abstract: This paper explores how diversity affects individuals’ employment prospects, using data from the French Labor Force Survey. Employment correlates positively with local labor market diversity, but negatively with neighborhood diversity. Using an instrumental variable approach to deal with local labor market diversity drives the positive correlation to zero, confirming the suspicion of self-selection. Regarding neighborhood diversity, I adopt the strategy of Bayer et al. (2008), taking advantage of the very precise localization of the data: the negative effect of diversity is reinforced. I also show that nationalitybased diversity matters more than parents’ origin-based diversity, giving insights on the underlying mechanisms.
    Keywords: Diversity, employment, neighborhood effects
    JEL: J15 J60 R23 Z13
    Date: 2015
  4. By: Adrian Chadi (Institute for Labour Law and Industrial Relations in the EU, University of Trier); Clemens Hetschko (School of Business and Economics, Freie Universitaet Berlin)
    Abstract: For representative German panel data, we document that voluntary job switching is associated with higher levels of life satisfaction, though only for some time, whereas forced job changes do not affect life satisfaction clearly. Using plant closures as an exogenous trigger of switching to a new employer, we find that job mobility turns out to be harmful for satisfaction with family life. By investigating people’s lives beyond their workplaces, our study complements research on the well-being impact of labour mobility, suggesting some positive welfare effects of flexible labour markets, but also a previously undocumented potential for negative implications.
    Keywords: life satisfaction, satisfaction with family life, job changes, honeymoon-hangover effect, employment protection legislation
    JEL: I31 J28 J61 J63
    Date: 2015–02
  5. By: Stefania Albanesi (Federal Reserve Bank of New York); Claudia Olivetti (Boston University and NBER)
    Abstract: Maternal mortality was the second largest cause of death for women in childbearing years up until the mid-1930s in the United States. For each death, twenty times as many mothers were estimated to suffer pregnancy related conditions, often leading to severe and prolonged disablement. Poor maternal health made it particularly hard for mothers to engage in market work. Between 1930 and 1960 there was a remarkable reduction in maternal mortality and morbidity. We argue that these medical advances, by enabling women to reconcile work and motherhood, were essential for the joint rise in married women's labor force participation and fertility over this period. We also show that the diffusion of infant formula played an important auxiliary role.
    Keywords: maternal mortality, female labor force participation, fertility, baby boom, human capital
    JEL: I15 J13 J22 N30
    Date: 2015–02
  6. By: Eisermann, Merlind (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Moritz, Michael (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Stockinger, Bastian (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: This article investigates the employment development of Czech-based firms in German ownership in the years around the Great Recession of 2008/2009. The intense involvement of German firms in the economy of the neighboring country via foreign direct investment (FDI) raises the question whether under the conditions of a historically deep global downturn, Czech employees in multinational companies were confronted with an increased volatility of their jobs. Using a unique firm-level dataset, we contrast the affiliates of German investors with purely Czech-owned enterprises. Our findings indicate that in the years before the crisis, firms with German capital exhibited a noticeably more positive employment development. The results from the year 2008 onwards give reason to the conclusion that German-owned firms played a stabilizing role for the Czech labor market during the recession.
    JEL: F23 J21 G01
    Date: 2015–03–02
  7. By: Francesco Di Comite (European Commission,Joint Research Centre and Institute for Prospective Technological Studies (IPTS)); Antonella Nocco (University of Salento, Department of Management, Economics, Mathematics and Statistics, Ecotekne); Gianluca Orece (CEPII)
    Abstract: This paper studies the impact of trade liberalization on labor market outcomes. First, we find that bilateral trade liberalization does not affect exports towards third countries. To accommodate this novel result, we deviate from existing literature and rely on a three-country monopolistic competition framework with variable elasticity of substitution and vertical linkages in fixed costs. The resulting model predicts that trade liberalization is associated with an increase in the skill-driven wage gap and a reduction in unskilled employment. This prediction is empirically validated using EU-KLEMS data on country-sector wage by skill level on 17 OECD countries from 1996 to 2005.
    Keywords: PTAs, Vertical linkages, Trade diversion, Trade creation, Wage gap
    JEL: F12 F16 J31
  8. By: Thomas Goldring; Fabian Lange; Seth Richards-Shubik
    Abstract: We develop a flexible test for changes in the SES-mortality gradient over time that directly accounts for changes in the distribution of education, the most commonly used marker of SES. We implement the test for the period between 1984 and 2006 using microdata from the Census, CPS, and NHIS linked to death records. Using our flexible test, we find that the evidence for a change in the education-mortality gradient is not as strong and universal as previous research has suggested. Our results indicate that the gradient increased for females during this time period, but we cannot rule out that the gradient among males has not changed. Informally, the results suggest that the changes for females are mainly driven by the bottom of the education distribution.
    JEL: I14 J11
    Date: 2015–02
  9. By: Thomas Gall; Patrick Legros; Andrew Newman (Boston University)
    Abstract: We study the aggregate economic effects of diversity policies such as affirmative action in college admission. If agents are constrained in the side payments they can make, the free market allocation displays excessive segregation relative to the first-best. Affirmative action policies can restore diversity within colleges but also affect incentives to invest in pre-college scholastic achievement. Affirmative action policies that are achievement-based can increase aggregate investment and income, reduce inequality, and increase aggregate welfare relative to the free market outcome. They may also be more effective than decentralized policies such as cross-subsidization of students by colleges.
    Keywords: matching, misallocation, nontransferable utility, multidimensional attributes, Affirmative Action, segregation, education
    JEL: C78 I28 J78
    Date: 2015–01

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