nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒06‒05
twelve papers chosen by
Joseph Marchand
University of Alberta

  1. The Earned Income Tax Credit (EITC) By Austin Nichols; Jesse Rothstein
  2. Comparing Micro-Evidence on Rent Sharing from Three Different Approaches By Sabien Dobbelaere; Jacques Mairesse
  3. The Great Escape: Intergenerational Mobility Since 1940 By Nathaniel G. Hilger
  4. The Dynamic Effects of Obesity on the Wages of Young Workers By Pinkston, Joshua
  5. Procuring Firm Growth: The Effects of Government Purchases on Firm Dynamics By Claudio Ferraz; Frederico Finan; Dimitri Szerman
  6. The UK's Productivity Puzzle By Alex Bryson; John Forth
  7. Does Exporting Improve Matching? Evidence from French Employer-Employee Data By Matilde Bombardini; Gianluca Orefice; Maria D. Tito
  8. Skills and labour market performance in Sweden By Margherita Bussi; Jon Kristian Pareliussen
  9. Skills and Inclusive Growth in Sweden By Jon Kristian Pareliussen; Margherita Bussi; Christophe André; Vincent Koen
  10. Aid for all: College coaching, financial aid, and post-secondary persistence in Tennessee By Celeste K. Carruthers; William F. Fox
  11. Gatekeepers in Russian High-Tech: A Study of Heads of Leading Research Centers By Natalia A. Shmatko; Yurij L. Katchanov
  12. Wall Street occupations By Ulf Axelson; Philip Bond

  1. By: Austin Nichols; Jesse Rothstein
    Abstract: We review research on the Earned Income Tax Credit (EITC), focusing on work appearing since the Hotz and Scholz (2003) review. Recent work has confirmed earlier findings that labor supply effects are positive for single mothers, smaller and negative for married mothers, and essentially nonexistent for men. Where earlier estimates indicated that all responses were on the extensive margin, some recent studies find evidence of non-zero, but small, intensive margin effects. We also review research on the incidence of the credit, suggesting that employers capture some of the program benefits through lower wages; on the large impact of the program on poverty rates and on children’s outcomes; and on families’ apparent preferences for lump-sum refunds over smaller payments distributed throughout the year. We present new evidence regarding the accuracy of EITC imputations in the Current Population Survey. We discuss proposals for reform, including a more generous childless credit, and argue that the EITC may be complementary to the minimum wage, rather than an alternative.
    JEL: D31 H2 H22 J2
    Date: 2015–05
  2. By: Sabien Dobbelaere (Faculty of Economics and Business Administration, VU University Amsterdam, the Netherlands); Jacques Mairesse (CREST (ParisTech-ENSAE), France, and Maastricht University, the Netherlands)
    Abstract: Empirical labor economists have resorted to estimating the responsiveness of workers' wages on firms' ability to pay to assess the extent to which employers share rents with their employees. This paper compares this labor economics approach with two other approaches that rely on standard micro production data only: the productivity approach for which estimates of the output elasticities of labor and materials and data on the respective revenue shares are needed and the accounting approach which boils down to directly computing the extent of rent sharing from firm accounting information. Using matched employer-employee data on 60,294 employees working in 9,849 firms over the period 1984-2001 in France, we quantify industry differences in rent-sharing parameters derived from the three approaches. We find a median absolute extent of rent sharing of about 0.30 using either the productivity or the accounting approach. Only exploiting firm-level information brings this median rent-sharing parameter down to 0.16 using the labor economics approach. Controlling for unobserved worker ability further reduces the median absolute extent of rent sharing to 0.08. Our analysis makes clear that the three different approaches face important trade-offs. Hence, empirical economists interested in establishing that profits are shared should select the appropriate approach based on the particular research question and on the data at hand.
    Keywords: Rent sharing; wage equation; production function; matched employer-employee data
    JEL: C23 D21 J31 J51
    Date: 2015–05–29
  3. By: Nathaniel G. Hilger
    Abstract: Tax records indicate that intergenerational mobility (IM) has been stable for cohorts entering the labor market since the 1990s. I show that when using educational attainment as a proxy for adult income, stable IM is a new phenomenon: IM rose significantly for cohorts entering the labor market from 1940 to 1980. I measure IM directly in historical Census data for children still living with their parents at ages 22-25, and indirectly for other children using an imputation procedure that I validate in multiple data sets with parent-child links spanning the full 1940-2000 period. Post-war mobility gains were larger in the South and for blacks, and were driven by gains in high school rather than college enrollment. Controlling for region and year, states with higher IM have had lower income inequality, higher income levels, more educational inputs, higher minimum dropout ages, and lower teen birth rates. IM gains plausibly increased aggregate annual earnings growth by 0.125-0.25 percentage points over the 1940-1980 period.
    JEL: J1 J24 J62 N01 N3 O15
    Date: 2015–05
  4. By: Pinkston, Joshua
    Abstract: This paper considers effects of body mass on wages in the years following labor market entry. The preferred models allow current wages to be affected by both past and current body mass, as well as past wages, while also addressing the endogeneity of body mass. I find that a history of severe obesity has a large negative effect on the wages of white men. White women face a penalty for a history of being overweight, with additional penalties for both past and current BMI that begin above the threshold for severe obesity. Furthermore, the effects of past wages on current wages imply that past body mass has additional, indirect effects on wages, especially for white women.
    Keywords: BMI; Obesity; Wages; Discrimination; Dynamic Panel Data Models
    JEL: I1 J31 J7
    Date: 2015–05–08
  5. By: Claudio Ferraz; Frederico Finan; Dimitri Szerman
    Abstract: This paper tests whether demand shocks affect firm dynamics. We examine whether firms that win government procurement contracts grow more compared to firms that compete for these contracts but do not win. We assemble a comprehensive data set combining matched employer-employee data for the universe of formal firms in Brazil with the universe of federal government procurement contracts over the period of 2004 to 2010. Exploiting a quasi-experimental design, we find that winning at least one contract in a given quarter increases firm growth by 2.2 percentage points over that quarter, with 93% of the new hires coming from either unemployment or the informal sector. These effects also persist well beyond the length of the contracts. Part of this persistence comes from firms participating and wining more future auctions, as well as penetrating other markets.
    JEL: F14 J21 O0
    Date: 2015–05
  6. By: Alex Bryson; John Forth
    Abstract: The 2008 Great Recession was notable in the UK for three things: the enormity of the output shock; the muted unemployment response; and the very slow rate of recovery. We review the literature which finds most of the decline in productivity is within sector and within firm before presenting new micro-analysis of workplace-level behaviour between 2004 and 2011 to gain insights into the processes that may have contributed to this aggregate picture. We find clear evidence of labour intensification but employers appeared incapable of turning this effort into improved workplace level productivity. Widespread pay freezes and cuts were often initiated in direct response to the recession. Workplace closure rates were little different to those experienced prior to the recession, but there is some evidence of a "cleansing" effect with poorer performing workplaces being more likely to close. There is some evidence of labour "hoarding", especially hoarding of high skilled labour: this h as had no discernible impact on the rate of innovation. There is no impact of recession on either the number of HRM practices workplaces invested in, nor their returns on those investments. There is no evidence that workplaces have benefitted from Britain's "flexible" labour market as indicated by using recruitment channels used by welfare recipients or the use of numerically flexible workers. On the contrary, workplaces with increasing unionisation appeared to benefit in terms of improved workplace performance
    Keywords: Productivity, recession
    JEL: D22 E22 E23 E24 J23 J24 J3
    Date: 2015–05
  7. By: Matilde Bombardini; Gianluca Orefice; Maria D. Tito
    Abstract: Does opening a market to international trade affect the pattern of matching between firms and workers? And does the modified sorting pattern affect welfare? This paper answers these questions both theoretically and empirically in three parts. We set up a model of matching between heterogeneous workers and firms where variation in the worker type at the firm level exists in equilibrium only because of the presence of search costs. When firms gain access to the foreign market their revenue potential increases. When stakes are high, matching with the right worker becomes particularly important because deviations from the ideal match quickly reduce the value of the relationship. Hence exporting firms select sets of workers that are less dispersed relative to the average. We then document a novel fact about the hiring decisions of exporting firms versus non-exporting firms in a French matched employer-employee dataset. We find that exporting firms feature a lower type dispersion in the pool of workers they hire. The matching between exporting firms and workers is even tighter in sectors characterized by better exporting opportunities as measured by foreign demand or tariff shocks. In a calibrated general equilibrium version of the model we show that trade opening increases welfare by more when search costs are high, pointing to an additional source of gains from trade.
    JEL: F16 J2
    Date: 2015–05
  8. By: Margherita Bussi; Jon Kristian Pareliussen
    Abstract: Both educational attainment and skills, as measured in the OECD Survey of Adult Skills (PIAAC), are high in Sweden. They are not perfect substitutes, but both are to some degree necessary for successfully integrating in the Swedish labour market. This paper describes the distribution of proficiency in literacy in the population and explores its determinants, and uncovers a strong relationship between literacy and the likelihood of being employed. The relationship between proficiency in literacy and the likelihood of participating in adult education is also explored. Lower employment prospects for immigrants are well explained by lower literacy proficiency, lower education and less favourable socio-economic backgrounds. This Working Paper relates to the 2015 OECD Economic Survey of Sweden<P>Compétences et performance du marché du travail en Suède<BR>Tant le niveau de qualification que celui de compétences, telles que mesuré dans l'évaluation des compétences des adultes (PIAAC), sont élevés en Suède. Ils ne sont pas de parfaits substituts, mais les deux sont dans une certaine mesure nécessaires à l'intégration avec succès sur le marché du travail suédois. Ce document décrit la distribution de la population en termes de niveau de compréhension de l’écrit et explore ses déterminants, et met en évidence une solide relation entre le niveau de compréhension de l’écrit et la probabilité d'être employé. La relation entre niveau de compréhension de l’écrit et la probabilité de participer à la formation continue est également explorée. Les moindres perspectives d'emploi des immigrants sont bien expliquées par un niveau inférieur de compréhension de l’écrit, un faible niveau de qualification et des milieux socio-économiques moins favorables. Ce document de travail se rapporte à l'Étude économique de l'OCDE de la Suède, 2015. que-suede.htm
    Keywords: education, employment, immigration, discrimination, PIAAC, adult skills, compétences des adultes, emploi, PIAAC, immigration, discrimination, éducation
    JEL: J1 J15 J21 J24 J71
    Date: 2015–05–28
  9. By: Jon Kristian Pareliussen; Margherita Bussi; Christophe André; Vincent Koen
    Abstract: A highly skilled workforce is crucial to sustain competitiveness and contain the rise in income inequality. Recent surveys of adult skills and educational performance suggest that younger cohorts are doing less well than their predecessors. Many immigrants struggle both in school and in the labour market partly because of low skills and language difficulties. Educational outcomes could be improved through raising the attractiveness of the teacher profession, improving teacher education and increasing support for struggling students. A more flexible labour market would facilitate access to jobs for youth with low qualifications and immigrants. This Working Paper relates to the 2015 OECD Economic Survey of Sweden<P>Compétences et croissance inclusive en Suède<BR>Il est essentiel que la Suède dispose d'une main-d'oeuvre hautement qualifiée pour rester compétitive et limiter la montée des inégalités de revenus. Des enquêtes récentes sur les compétences des adultes et les résultats scolaires laissent à penser que les cohortes jeunes font moins bien que les précédentes. De nombreux immigrés sont en difficulté tant dans le système scolaire que sur le marché du travail, en partie en raison de leur faible niveau de qualification et de leurs difficultés linguistiques. Les résultats du système d'enseignement pourraient être améliorés en rendant plus attractive la profession d'enseignant, en améliorant la formation des enseignants et en renforçant le soutien apporté aux élèves en difficulté. Un marché du travail plus flexible rendrait l’emploi plus accessible aux jeunes peu qualifiés et aux immigrés. Ce Document de travail a trait à l’Étude économique de l’OCDE de la Suède, 2015 que-suede.htm
    Keywords: immigration, PISA, education, employment, inequality, PIAAC, adult skills, compétences des adultes, emploi, PIAAC, éducation, PISA, immigration, inégalité
    JEL: I21 I28 J08 J21 J24 J61
    Date: 2015–05–28
  10. By: Celeste K. Carruthers (Department of Economics, University of Tennessee); William F. Fox (Department of Economics, University of Tennessee)
    Abstract: Beginning with the high school class of 2015, Tennessee Promise will provide college coaching and last-dollar aid to every high school graduate making a seamless transition to community college. We examine the program that preceded this effort and evaluate its potential effect on college-going and college persistence. Knox Achieves originated in Knox County, Tennessee with the class of 2009. Eligibility was neither need-based nor merit-based, negating some of the application hurdles that accompany other aid vehicles. We find that program participation is strongly associated with an increased likelihood of graduating from high school and enrolling directly in college, albeit with a modestly lower chance of starting in a four-year college. The evidence suggests that aid per se is not the only lever by which Knox Achieves worked: college enrollment and college credit gains are largest among lower-income students who likely saw little to no scholarship aid from the program.
    Date: 2015–05
  11. By: Natalia A. Shmatko (National Research University Higher School of Economics); Yurij L. Katchanov (National Research University Higher School of Economics)
    Abstract: The paper proposes one of the first attempts to conceptualize the “human capital” in science and technology gatekeeping in Russia, based on obtaining sociological data on real active subjects. The study strives to provide analytical information on the specific characteristics and stances of individuals making a decisive contribution to the development of strategic areas in science and technology. In Russia, the most perceptible impact on changing the situation of new scientific knowledge production and, in particular, high-tech development comes from heads of “advanced” research laboratories. Capable of forming and carrying out their own research programmes, in the majority of instances they act as “gatekeepers” of the high-tech sector. In the first stage a quantitative questionnaire survey was carried out by means of a formalized interview (312 respondents). In the second stage qualitative information was collected using in-depth semi-structured individual interviews with the managers of leading laboratories in their field (31 interviews). The information on the gatekeeping strategies in the six science and technology priority areas was obtained. Research on the expert community associated with high-tech projects logically fits into the “cluster” of foresight studies, supplementing it with “human capital”
    Keywords: expert, gatekeeper, human capital, high-tech industry, technology transfer, research and development
    JEL: I28 J24 O32 O33
    Date: 2015
  12. By: Ulf Axelson; Philip Bond
    Abstract: Many finance jobs entail the risk of large losses, and hard-to-monitor effort. We analyze the equilibrium consequences of these features in a model with optimal dynamic contracting. We show that finance jobs feature high compensation, up-or-out promotion and long work hours, and are more attractive than other jobs. Moral hazard problems are exacerbated in booms, even though pay increases. Employees whose talent would be more valuable elsewhere can be lured into finance jobs, while the most talented employees might be unable to land these jobs because they are “too hard to manage.”
    Keywords: investment banking; compensation contracts
    JEL: E24 G24 J31 J33 J41 M51 M52
    Date: 2015

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