nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒04‒25
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. The Hidden Cost of Labor Market Entry During Recession: Unemployment Rate at Entry and Occupational Injury Risk of Young Workers By Leombruni, Roberto; Razzolini, Tiziano; Serti, Francesco
  3. Sorting through affirmative action: Three field experiments in Colombia By Ibañez, Marcela; Rai, Ashok; Riener, Gerhard
  4. Job and worker turnover in German establishments By Lutz Bellmann; Hans-Dieter Gerner; Richard Upward
  5. Government Policy and Labor Supply with Myopic or Targeted Savings Decisions By Louis Kaplow
  6. Labor Market Conditions at School-leaving: Long-run Effects on Marriage and Fertility By Johanna Catherine Maclean; Reginald Covington; Asia Sikora Kessler
  7. The Importance of Being in Control of Business: Work Satisfaction of Employers, Own-account Workers and Employees By Jolanda Hessels; José María Millán; Concepción Román
  8. Investor Sentiment and Employment By Maurizio Montone; Remco C.J. Zwinkels
  9. Ethnic Complementarities after the Opening of China: How Chinese Graduate Students Affected the Productivity of Their Advisors By George J. Borjas; Kirk B. Doran; Ying Shen
  10. Benefit Incidence with Incentive Effects, Measurement Errors and Latent Heterogeneity: A Case Study for China By Martin Ravallion; Shaohua Chen
  11. Borrowing from the Future: 401(k) Plan Loans and Loan Defaults By Timothy (Jun) Lu; Olivia S. Mitchell; Stephen P. Utkus; Jean A. Young
  12. Are women in the MENA region really that different from women in Europe? Globalization, conservative values and female labor market participation. By Fischer, Justina AV; Aydıner-Avşar, Nursel
  13. Effects of Fiscal Shocks in a Globalized World By Alan J. Auerbach; Yuriy Gorodnichenko

  1. By: Leombruni, Roberto (University of Turin); Razzolini, Tiziano (University of Siena); Serti, Francesco (Universidad de Alicante)
    Abstract: A unique dataset from Italy is used to study the effect of unfavorable business cycle conditions at entry on future workplace safety of young workers. We find that higher local unemployment rates at entry have a positive effect both on severe injuries and non-severe injuries. While the impact of unemployment at entry on severe injuries is constant over time, the effect on non-severe injuries is less pronounced and increases with experience, thus indicating that the reporting behavior is affected by initial conditions. In addition, the same cohorts of workers experience slower wage growth, despite being initially compensated for the occupational injury risk. These results suggest that entrants during recession may be persistently locked into low quality jobs and that the mix of hazardous tasks offered by employers throughout the business cycle can be used to overcome wage and other institutional rigidities of the Italian labor market.
    Keywords: unemployment at entry, young workers, workplace injury, job amenities
    JEL: J24 J28 J31
    Date: 2015–04
  2. By: Andrea Albanese; Bart Cockx (-)
    Abstract: In several OECD countries age-targeted wage subsidies have been introduced to increase the employment of older workers, but evidence on their effectiveness is scarce. This paper examines the effects of a permanent wage cost subsidy in Belgium on the employment rate, working time and hourly wage. We estimate these effects by integrating Inverse Probability Weighting in a, possibly trend-adjusted, Difference-in- Differences of endogenously sampled repeated cross sections. We find small positive short-run impacts on working time and larger ones on the employment rate, but only for employees at high risk of leaving to early retirement. The wage is not affected.
    Keywords: Wage cost subsidies, older workers, Weighted Difference-in-Differences,endogenous sampling
    JEL: J14 C21 J18 J3
    Date: 2015–04
  3. By: Ibañez, Marcela; Rai, Ashok; Riener, Gerhard
    Abstract: Affirmative action to promote women's employment is a intensely debated policy. Do affirmative action policies attract women and does it come at a cost of deterring high qualified men? In three field experiments in Colombia we compare characteristics of job-seekers who are told of the affirmative action selection criterion before they apply with those who are only told after applying. We find that the gains in attracting female applicants far outweigh the losses in male applicants. Affirmative action is more effective in areas with larger female discrimination and deters male job-seekers from areas with low discrimination.
    Keywords: Field experiment,Affirmative action,Labor market,Gender participation gap
    JEL: J21 J24 J48 C93
    Date: 2015
  4. By: Lutz Bellmann; Hans-Dieter Gerner; Richard Upward
    Abstract: We use a simple non-parametric regression approach to measure the relationship between employment growth, hirings and separations in a large panel of German establishments over the period 1993--2009. Although it is often claimed that firms in Europe have less flexibility in their ability to hire and fire, we find that the relationship between employment growth and worker flows in German establishments is very similar to the behaviour of US establishments. The relationship is stable over time, even during the most recent economic crisis, and across different types of establishment. We verify our results with independent measures from administrative data. We suggest that this result is due to: the strong relationship between employment reductions and voluntary separations; the low level of ``churning''; and the heterogeneity of jobs within establishments.
    Keywords: Job turnover, worker turnover, hirings and separations JEL Classification: J2, J23, J63, D22
    Date: 2015
  5. By: Louis Kaplow
    Abstract: A central justification for social insurance and for other policies aimed at retirement savings is that individuals may fail to make adequate provision during their working years. Much research has focused on myopia and other behavioral limitations. Yet little attention has been devoted to how these infirmities, and government policies to rectify them, influence labor supply. This linkage could be extremely important in light of the large pre-existing distortion due to income and consumption taxation and income-based transfer programs. For example, might myopic individuals, as a first approximation, view payroll taxes and other withholding to fund retirement savings as akin to an income tax, while largely ignoring the distant future retirement benefits that they fund? If so, the distortion of labor supply may be many times higher than otherwise, making savings-promotion policies much more costly than appreciated. Or consider what may be the labor supply implications for an individual who is defaulted into higher savings and, as a consequence, sees concomitantly lower take-home pay. This essay offers a preliminary, conceptual exploration of these questions. In most of the cases considered, savings policies do not act purely like a tax despite individuals’ non-optimizing savings behavior, and in some cases labor supply actually is raised, not lowered, in which event policies that boost savings may be significantly more welfare-enhancing than recognized. Accordingly, there is a compelling need for empirical exploration of the interaction between nonoptimal savings behavior and labor supply.
    JEL: D11 D91 H21 H24 H31 H55 J22 J26
    Date: 2015–04
  6. By: Johanna Catherine Maclean (Department of Economics, Temple University); Reginald Covington (Mathematica Policy Research); Asia Sikora Kessler (Department of Health Promotion, University of Nebraska Medical Center)
    Abstract: In this study, we assess the long-run impact of labor market conditions at the time of school-leaving on marriage and fertility outcomes. We draw data from the National Longitudinal Survey of Youth 1979. Our sample left school between 1976 and 1989, and we use variation in the state unemployment rate at the time of school-leaving to identify persistent effects. We find that men who left school when the state unemployment rate was high are less likely to be married and have children at age 45, but are more likely to be divorced. Women, however, are more likely to have children.
    Keywords: marriage; fertility; school-leaving; business cycles
    JEL: J1 J2
    Date: 2015–04
  7. By: Jolanda Hessels (Erasmus School of Economics, Erasmus Happiness Economics Research Organization (EHERO), Erasmus University Rotterdam, The Netherlands); José María Millán (University of Huelva, Spain); Concepción Román (University of Huelva, Spain)
    Abstract: Self-employed workers can be own-account workers who control their own work or employers who not only are their own boss but also direct others (their employees). We expect both types of self-employed, i.e., own-account workers and employers, to enjoy more independence in determining their work content (type of work) and more flexibility in shaping their work context (e.g., working conditions) compared to paid employees and hence to be more satisfied with their work. Furthermore, we suspect that employers (who can delegate work to their employees and can help them to develop and grow) enjoy even higher levels of work satisfaction compared to both own-account workers (who are their own boss but do not give direction to others) and (non-supervisory) paid employees (who have to obey orders from others within organizational hierarchies). While prior studies typically broadly compare the work satisfaction of self-employed and paid employees, we distinguish employers from own-account workers within the group of self-employed using data from the ECHP for 14 European countries. Our findings indeed show that employers are significantly more satisfied with their work than both own-account workers and paid employees. Additionally, while employers as well as own-account workers enjoy greater procedural utility than (non-supervisory) paid employees stemming from the content and the context of their work, there also seems to be an additional work satisfaction premium for employers.
    Keywords: entrepreneurship; self-employment; employers; own-account workers; work satisfaction
    JEL: J24 J28 L26 O52
    Date: 2015–04–14
  8. By: Maurizio Montone (Erasmus University Rotterdam, the Netherlands); Remco C.J. Zwinkels (VU University Amsterdam, the Netherlands)
    Abstract: We find that investor sentiment should affect a firm's employment policy in a world with moral hazard and noise traders. Consistent with the model's predictions, we show that higher sentiment among US investors leads to: (1) higher employment growth worldwide; (2) lower labor productivity, as the growth in employment is not matched by real value added growth; and (3) positive wage growth in countries with a greater proportion of high-skill labor, but negative wage growth otherwise. We also find evidence that sentiment induces greater labor instability during financial crises, which sheds new light on the view that financial development has a "dark side". Overall, the results suggest that sentiment has real effects, especially in countries that attract more foreign direct investments from the US and that are perceived as more popular among US investors.
    Keywords: Investor sentiment, labor market, financial development, financial crises
    JEL: G10 G30 F21 J30
    Date: 2015–04–02
  9. By: George J. Borjas; Kirk B. Doran; Ying Shen
    Abstract: The largest and most important flow of scientific talent in the world is the migration of international students to the doctoral programs offered by universities in industrialized countries. This paper uses the opening of China in 1978 to estimate the causal effect of this flow on the productivity of their professors in mathematics departments across the United States. Our identification strategy relies on both the suddenness of the opening of China and on a key feature of scientific production: intra-ethnic collaboration. The new Chinese students were more likely to be mentored by American professors with Chinese heritage. The increased access that the Chinese-American advisors had to a new pool of considerable talent led to a substantial increase in their productivity. Despite these sizable intra-ethnic knowledge spillovers, the relatively fixed size of doctoral mathematics programs (and the resulting crowdout of American students) implied that comparable non-Chinese advisors experienced a decline in the number of students they mentored and a concurrent decline in their research productivity. In fact, the productivity gains accruing to Chinese-American advisors were almost exactly offset by the losses suffered by the non-Chinese advisors. Finally, it is unlikely that the gains from the supply shock will be more evident in the next generation, as the Chinese students begin to contribute to mathematical knowledge. The rate of publication and the quality of the output of the Chinese students is comparable to that of the American students in their cohort.
    JEL: D83 J24 J61 O31
    Date: 2015–04
  10. By: Martin Ravallion; Shaohua Chen
    Abstract: In what is probably the largest cash transfer program in the world today China’s Dibao program aims to fill all poverty gaps. In theory, the program creates a poverty trap, with 100% benefit withdrawal rate (BWR). But is that what we see in practice? The paper proposes an econometric method of estimating the mean BWR allowing for incentive effects, measurement errors and correlated latent heterogeneity. Under the method’s identifying assumptions, a feasible instrumental variables estimator corrects for incentive effects and measurement errors, and provides a bound for the true value when there is correlated incidence heterogeneity. The results suggest that past methods of assessing benefit incidence using either nominal official rates or raw tabulations from survey data are deceptive. The actual BWR appears to be much lower than the formal rate, and is also lower than the rate implied by optimal income tax models for poverty reduction. The paper discusses likely reasons based on qualitative observations from field work. The program’s local implementation appears to matter far more than incentives implied by its formal rules.
    JEL: H22 I32 I38 O12
    Date: 2015–04
  11. By: Timothy (Jun) Lu; Olivia S. Mitchell; Stephen P. Utkus; Jean A. Young
    Abstract: Tax-qualified retirement plans seek to promote saving for retirement, yet most employers permit pre- retirement access by letting 401(k) participants borrow plan assets. This paper examines who borrows and why, and who defaults on their loans. Our administrative dataset tracks several hundred plans over 5 years, showing that 20% borrow at any given time, and almost 40% do at some point over five years. Employer policies influence borrowing behavior, in that workers are more likely to borrow and borrow more in aggregate, when a plan permits multiple loans. We estimate loan default “leakage” at $6 billion annually, more than prior studies.
    JEL: D04 D14 H24 J26
    Date: 2015–04
  12. By: Fischer, Justina AV; Aydıner-Avşar, Nursel
    Abstract: This article aims to compare women in the MENA region with women in Europe as to how globalization affects their conservative values and attitudes, and, thereby, their labor market participation. The authors define conservative values as both religious values and socio-political attitudes relating to family issues and leadership. Using micro data from the World Values Survey covering over 80 countries between 1981 and 2014, we employ three distinct indicators of globalization that reflect, first, international trade, and, second, cross-national flows of information via persons and media. In Western Europe, during the Cold War period economic globalization appears to weaken those conservative values that directly pertain to female labor market participation, mirroring the current development in the MENA countries. After the Cold War, in Western Europe all remaining secular-conservative values appear equally weakened by international trade, possibly predicting changes to come in the MENA region. Eastern Europe appears distinct from the other two regions. In the MENA region, women respond to intensifying economic globalization with deeper religiosity, possibly as a manifestation of self-protection. Global exchange of information, however, weakens all kinds of conservative values in general in either region. For both MENA countries and Europe likewise, women who are more conservative are less likely to participate in the labor market. Overall, this study suggests that economic globalization transforms not only the economy but also those conservative values that present an obstacle to gainful employment of women.
    Keywords: Globalization; economic integration; media; female labor force participation; religion; conservative values; identity; MENA; Europe
    JEL: C33 D83 F14 F16 J16 J21 Z12 Z13
    Date: 2015–04–21
  13. By: Alan J. Auerbach; Yuriy Gorodnichenko
    Abstract: While theoretical models consistently predict that government spending shocks should lead to appreciation of the domestic currency, empirical studies have been stubbornly finding depreciation. Using daily data on U.S. defense spending (announced and actual payments), we document that the dollar immediately and strongly appreciates after announcements about future government spending. In contrast, actual payments lead to no discernible effect on the exchange rate. We examine responses of other variables at the daily frequency and explore how the response of the exchange rate to fiscal shocks varies over the business cycle as well as at the zero lower bound and in normal times.
    JEL: E62 F41
    Date: 2015–04

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