nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒06‒13
eighteen papers chosen by
Joseph Marchand
University of Alberta

  1. The Big Sort: College Reputation and Labor Market Outcomes By W. Bentley MacLeod; Evan Riehl; Juan E. Saavedra; Miguel Urquiola
  2. Back to School? Labor-Market Returns to Vocational Postsecondary Education By Böckerman, Petri; Haapanen, Mika; Jepsen, Christopher
  3. The Consequences of Academic Match between Students and Colleges By Dillon, Eleanor; Smith, Jeffrey A.
  4. Temporary Help Employment in Recession and Recovery By Susan N. Houseman; Carolyn Heinrich
  5. Can Compulsory Dialogues Nudge Sick-Listed Workers Back to Work? By Markussen, Simen; Røed, Knut; Schreiner, Ragnhild C.
  6. The Impact of Pharmaceutical Innovation on Premature Cancer Mortality in Canada, 2000-2011 By Frank R. Lichtenberg
  7. Do Parental Networks Pay Off? Linking Children's Labor-Market Outcomes to their Parents' Friends By Plug, Erik; van der Klaauw, Bas; Ziegler, Lennart
  8. Youth unemployment and the effect of personality traits By Silvia Mendolia; Ian Walker
  9. Early Childhood Education by MOOC: Lessons from Sesame Street By Melissa S. Kearney; Phillip B. Levine
  10. Explaining the Unexplained: Residual Wage Inequality, Manufacturing Decline, and Low-Skilled Immigration By Gould, Eric D
  11. Does Holding a Postdoctoral Position Bring Benefits for Advancing to Academia? By Lin, Eric S.; Chiu, Shih-Yung
  12. Trade, Technologies, and the Evolution of Corporate Governance By Schymik, Jan Simon
  13. Education and Growth with Learning by Doing By Marconi, Gabriele; de Grip, Andries
  14. Competing with Superstars By Ammann, Manuel; Horsch, Philipp; Oesch, David
  15. Does Daylight Saving Time Really Make Us Sick? By Jin, Lawrence; Ziebarth, Nicolas R.
  16. How Large is the Stock Component of Human Capital? By Mark Huggett; Greg Kaplan
  17. The Occupational Feminization of Wages By Addison, John T.; Ozturk, Orgul Demet; Wang, Si
  18. The Effect of Statutory Sick Pay Regulations on Workers' Health By Halla, Martin; Pech, Susanne; Zweimüller, Martina

  1. By: W. Bentley MacLeod; Evan Riehl; Juan E. Saavedra; Miguel Urquiola
    Abstract: Spence (1973) noted that individuals’ choice of educational quantity—measured by years of schooling—may stem partially from a desire to signal their ability to the labor market. This paper asks if individuals’ choice of educational quality—measured by college reputation—may likewise signal their ability. We use data on the admission scores of all Colombian college graduates to define a measure of reputation that gives clear predictions in a signaling framework. We find that college reputation, unlike years of schooling, is correlated with graduates’ earnings growth. We also show that Colombia’s staggered rollout of a new signal of skill—a college exit exam—reduced the earnings return to reputation and increased the return to individual admission scores. These results are consistent with the hypothesis that a college’s reputation provides information about the ability of its student body and about its value added, broadly understood.
    JEL: I21 I23 I24 I25 J01 J24 J3
    Date: 2015–06
  2. By: Böckerman, Petri (Labour Institute for Economic Research); Haapanen, Mika (Jyväskylä University School of Business and Economics); Jepsen, Christopher (University College Dublin)
    Abstract: Outside the U.S., little is known about the labor-market returns to vocational (or polytechnic) postsecondary education. This paper focuses on the labor-market returns to polytechnic bachelor's degrees in Finland. Using detailed administrative data, we estimate person fixed effect models to study returns for individuals with labor-force attachment prior to polytechnic school enrollment. We find sizable earnings and employment impacts for polytechnic bachelor's degrees, although the returns vary by personal characteristics and field of study.
    Keywords: vocational education, postsecondary education, labor-market returns
    JEL: J24
    Date: 2015–05
  3. By: Dillon, Eleanor (Arizona State University); Smith, Jeffrey A. (University of Michigan)
    Abstract: We consider the effects of student ability, college quality, and the interaction between the two on academic outcomes and future earnings. Both ability and college quality strongly improve outcomes and earnings. We find little evidence to support the "mismatch" hypothesis that college quality and ability interact in substantively important ways. All students benefit from attending higher quality colleges. Our estimates imply that resorting students to eliminate mismatch, without changing the capacity of any colleges, would raise expected graduation rates by only 0.6 percentage points and mean earnings by $400 per year. The substantial gains for students who move to higher quality colleges under this reshuffling roughly cancel out the losses of students who move down.
    Keywords: college quality, mismatch
    JEL: I21 J31
    Date: 2015–05
  4. By: Susan N. Houseman (W.E. Upjohn Institute for Employment Research); Carolyn Heinrich (University of Texas at Austin)
    Abstract: The temporary help industry, although small, plays a significant role in the macro economy, reflecting employers' growing reliance on temporary help agencies to provide flexibility in meeting staffing needs. Drawing on detailed temporary-help order data between 2007 and 2011 from a large, nationally representative staffing company, we provide insights into the characteristics of temporary help work, employers’ use of temporary agencies to screen workers for permanent positions, and the industry's role in labor market adjustment over the business cycle. We estimate that the temporary help industry accounted for a large share of gross job losses and job gains over this period, as well as for a sizable share of net separations and hires. Nearly a third of assignments were observed to end prematurely due to worker performance problems (largely soft skills deficiencies) or quits, and hire rates of workers in temp-to-hire contracts were low. Although most temporary help assignments are short-lived, during the recession, companies lengthened temporary help assignments and reduced hiring from their pool of temps, possibly in response to economic uncertainty. Nominal wage growth among new temporary hires was weak over the five-year period and failed to keep pace with inflation.
    Keywords: temporary help employment, business cycle
    JEL: J23 J21 J49
    Date: 2015–05
  5. By: Markussen, Simen (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research); Schreiner, Ragnhild C. (Ragnar Frisch Centre for Economic Research)
    Abstract: We evaluate the impacts of a compulsory dialogue meeting for long-term sick-listed workers in Norway. The meeting is organised by the local social security administration after around six months of absence, and its purpose is to bring together the absentee, the employer, and the family physician to discuss whether arrangements can be made to facilitate partial or full work resumption. Our causal analysis is based on random-assignment-like geographical variation in the meeting propensity. We find that the meetings reduce absence duration considerably, both through a notification and an attendance effect. They also reduce the risk of premature labour market exit.
    Keywords: moral hazard, public social insurance, treatment effects, instrumental variables
    JEL: C21 H51 H55 I38 J22
    Date: 2015–05
  6. By: Frank R. Lichtenberg
    Abstract: The premature cancer mortality rate has been declining in Canada, but there has been considerable variation in the rate of decline across cancer sites. I analyze the effect that pharmaceutical innovation had on premature cancer mortality in Canada during the period 2000-2011, by investigating whether the cancer sites that experienced more pharmaceutical innovation had larger declines in the premature mortality rate, controlling for changes in the incidence rate. The estimates imply that pharmaceutical innovation during the period 1985-1996 reduced the number of years of potential life lost to cancer before age 75 in 2011 by 105,366. The cost per life-year before age 75 gained from previous pharmaceutical innovation is estimated to have been 2730 USD. The evidence suggests that, even if these drugs had been sold at branded rather than generic prices, the cost per life-year gained would have been below 11,000 USD, a figure well below even the lowest estimates of the value of a life-year gained.
    JEL: C23 C33 I10 J11 J17 L65 O33
    Date: 2015–06
  7. By: Plug, Erik (University of Amsterdam); van der Klaauw, Bas (VU University Amsterdam); Ziegler, Lennart (University of Amsterdam)
    Abstract: This paper examines whether children are better off if their parents have stronger social networks. Using data on high-school friendships of parents, we analyze whether the number and characteristics of friends affect the labor-market outcomes of children. While parental friendships formed in high school appear long lasting, we find no significant impact on their children's occupational choices and earnings prospects. These results do not change when we account for network endogeneity, network persistency and network measurement error. Only when children enter the labor market, we find that friends of parents have a marginally significant but small influence on the occupational choice of children.
    Keywords: social networks, occupational choice, informal job search, intergenerational effects
    JEL: A14 J24 J62
    Date: 2015–05
  8. By: Silvia Mendolia; Ian Walker
    Abstract: This paper investigates the relationship between personality traits in adolescence and education and labour market choices. In particular, we investigate the impact of locus of control, effort and diligence, and self-esteem, on the risk of youths being unemployed (sometimes referred to as NEET (“Not in Education, Employment or Trainingâ€). Thus, our focus is on early drop-out from both education and the labour market at age 18-20. We use matching methods to control for a rich set of adolescent and family characteristics by estimating the treatment effects of multiple personality traits at the same time (Woolridge, 2010). Finally, we use the methodology proposed by Altonji et al. (2005) that involves making hypotheses about the correlation between the unobservables and observables that determine the outcomes and the unobservables that influence personality. Our results show that individuals that display low effort and diligence, low self-esteem, and external locus of control are more likely to drop out of education and employment.
    Keywords: personality, youth unemployment, NEET, effot, locus of control, self-esteem
    JEL: I10 I21
    Date: 2015
  9. By: Melissa S. Kearney; Phillip B. Levine
    Abstract: Sesame Street is one of the largest early childhood interventions ever to take place. It was introduced in 1969 as an educational, early childhood program with the explicit goal of preparing preschool age children for school entry. Millions of children watched a typical episode in its early years. Well-designed studies at its inception provided evidence that watching the show generated an immediate and sizeable increase in test scores. In this paper we investigate whether the first cohorts of preschool children exposed to Sesame Street experienced improved outcomes subsequently. We implement an instrumental variables strategy exploiting limitations in television technology generated by distance to a broadcast tower and UHF versus VHF transmission to distinguish counties by Sesame Street reception quality. We relate this geographic variation to outcomes in Census data including grade-for-age status in 1980, educational attainment in 1990, and labor market outcomes in 2000. The results indicate that Sesame Street accomplished its goal of improving school readiness; preschool-aged children in areas with better reception when it was introduced were more likely to advance through school as appropriate for their age. This effect is particularly pronounced for boys and non-Hispanic, black children, as well as children living in economically disadvantaged areas. The evidence regarding the impact on ultimate educational attainment and labor market outcomes is inconclusive.
    JEL: I24 J24
    Date: 2015–06
  10. By: Gould, Eric D
    Abstract: This paper investigates whether the increasing “residual wage inequality” trend is related to manufacturing decline and the influx of low-skilled immigrants. There is a vast literature arguing that technological change, international trade, and institutional factors have played a significant role in the inequality trend. However, most of the trend is unexplained by observable factors. This paper attempts to “explain” the growth in the unexplained variance of wages by exploiting variation across locations (states or cities) in the United States in the local level of “residual inequality.” The evidence shows that a shrinking manufacturing sector increases inequality. In addition, an influx of low-skilled immigrants increases inequality, but this effect is concentrated in areas with a steeper manufacturing decline. Similar results are found for two alternative measures linked to increasing inequality: the increasing return to education and the decline in the employment rate of non-college men. The overall evidence suggests that the manufacturing and immigration trends have hollowed-out the overall demand for middle-skilled workers in all sectors, while increasing the supply of workers in lower skilled jobs. Both phenomena are producing downward pressure on the relative wages of workers at the low end of the income distribution.
    Keywords: low-skilled immigration; manufacturing decline; residual wage inequality
    JEL: J31
    Date: 2015–06
  11. By: Lin, Eric S. (National Tsing Hua University); Chiu, Shih-Yung (National Cheng Kung University)
    Abstract: Postdoc is a special transitional position for those with a doctoral degree and is usually regarded as an investment to accumulate the additional human and social capital needed to facilitate future job searches or to add to an academic reserve army of unemployed PhDs. Given the prevalence of postdoctoral positions nowadays, it is crucial to explore the role played by postdoctoral participation in the post-PhD labor market. By taking advantage of a comprehensive data set from the National Profiles of Human Resources in Science and Technology in Taiwan, we first explore several characteristics associated with the choice of a postdoctoral position for newly-minted doctoral degree holders, such as age, discipline or the time taken to complete the degree. We then apply the control function approach to address the possible endogenous decision of postdoctoral experience when estimating the effects of postdoctoral positions on the current career choices between academic and non-academic jobs. The empirical results suggest that engaging in postdoctoral positions could increase the probability of advancing to the academic sector by about 6.1%. The heterogeneous effects of gender, major and cohort in regard to the postdoctoral experience are also found by splitting the data. Moreover, we experiment with several groupings for the definition of being awarded an academic position and obtain very robust empirical results.
    Keywords: academia, postdoctoral position, PhD, job choice
    JEL: I2 J24
    Date: 2015–05
  12. By: Schymik, Jan Simon
    Abstract: Do international trade and technological change influence how firms create incentives for human capital? I present a model that incorporates agency problems into a framework with firm heterogeneity and human capital. My model indicates that trade liberalizations and skill-biased technological change alter the way how the largest firms in an economy incentivize their managers. Increases in managerial reservation wages lead to a reduction in corporate governance investments and a rise in performance compensation since monitoring managers becomes less efficient. Using data on CEO compensation and entrenchment opportunities in public industrial firms in the U.S., I document strong empirical regularities in support of the model predictions. Firms allow for more managerial entrenchment and offer larger CEO compensation when their industries become more open to trade or when production becomes more I.T. intensive.
    Keywords: international trade and firm organization; agency problems in international trade; endogenous managerial entrenchment; corporate governance and CEO compensation
    JEL: F1 F16 G34 J33 L22 O33
    Date: 2015–06
  13. By: Marconi, Gabriele (OECD); de Grip, Andries (ROA, Maastricht University)
    Abstract: We develop a general equilibrium overlapping generations model which is based on the view that education makes workers more productive by increasing their ability to learn from work experience, rather than providing skills that directly increase productivity. One important implication of the model is that the enrolment rate to education has a negative effect on the GDP in the medium term and a positive effect in the long term. This could be an explanation for the weak empirical relationship between education and economic growth that has been found in the empirical macroeconomic literature. Conversely, for a given enrolment rate, the quality of education, as measured by workers' ability to learn, has a positive effect on the GDP both in the medium and in the long term.
    Keywords: education, learning-by-doing, productivity, economic growth, overlapping generations model
    JEL: I25 J24 O11 O41
    Date: 2015–05
  14. By: Ammann, Manuel; Horsch, Philipp; Oesch, David
    Abstract: This paper investigates the effect of superstar CEOs on their competitors. Exploiting shocks to CEO status due to prestigious media awards, we document a significant positive stock market performance of competitors of superstar CEOs subsequent to the award. The effect is more pronounced for competitors who have not received an award themselves, who are geographically close to an award winner and who are not entrenched. We observe an increase in risk-taking, operating performance and innovation activity of superstars’ competitors as potential channels for this positive performance. Our results suggest a positive overall welfare impact of corporate superstar systems due to the incentivizing effect on superstars’ competitors.
    Keywords: Competition; Firm performance; Risk-taking; Innovation; Awards; CEO
    JEL: G30 G31 G32 G34 J31 J33 L25
    Date: 2015–05
  15. By: Jin, Lawrence (Cornell University); Ziebarth, Nicolas R. (Cornell University)
    Abstract: This paper comprehensively studies the health effects of Daylight Saving Time (DST) regulation. Relying on up to 3.4 million BRFSS respondents from the US and the universe of 160 million hospital admissions from Germany over one decade, we do not find much evidence that population health significantly decreases when clocks are set forth by one hour in spring. However, when clocks are set back by one hour in fall, effectively extending sleep duration for the sleep deprived by one hour, population health slightly improves for about four days. The most likely explanation for the asymmetric effects are behavioral adjustments by marginal people in spring.
    Keywords: Daylight Saving Time (DST), BRFSS, hospital admissions, sleep deprivation, Germany, US
    JEL: H41 I18 I31
    Date: 2015–05
  16. By: Mark Huggett; Greg Kaplan
    Abstract: This paper examines the value of an individual’s human capital and the associated return on human capital using U.S. data on male earnings and financial asset returns. We find that (1) the value of human capital is far below the value implied by discounting earnings at the risk-free rate and (2) the stock component of the value of human capital is smaller than the bond component at all ages. The stock component averages less than 35 percent of the value of human capital at each age.
    JEL: D91 E21 G12 J24
    Date: 2015–06
  17. By: Addison, John T. (University of South Carolina); Ozturk, Orgul Demet (University of South Carolina); Wang, Si (Hunan University)
    Abstract: This paper updates the major study by Macpherson and Hirsch (1995) of the effect of the gender composition of occupations on female (and male) earnings. Using large representative national samples of employees from the Current Population Survey, cross-sectional estimates of the impact of proportion female in an occupation (or feminization) on wages are first provided, paying close attention to the role of occupational characteristics. Specification differences in the effects of feminization across alternative subsamples are examined as well as the contribution of the feminization argument to the explanation of the gender wage gap. An updated longitudinal analysis using the CPS data is also provided. This examination of two-year panels of individuals is supplemented using information from the 1979 National Longitudinal Survey of Youth which has the advantage of offering a longer panel. Analysis of the former suggests the reduction in gender composition effects observed for females in cross section with the addition of controls for occupational characteristics becomes complete after accounting for unobserved individual heterogeneity. This is not the case for the latter dataset, most likely reflecting heritage effects of discrimination in what is an aging cohort.
    Keywords: occupational segregation, gender wage gap
    JEL: J31 J71
    Date: 2015–05
  18. By: Halla, Martin (University of Innsbruck); Pech, Susanne (University of Linz); Zweimüller, Martina (University of Linz)
    Abstract: Social insurance programs typically comprise sick leave insurance. An important policy parameter is how the cost of sick leave are shared between workers, firms, and the social security system. We show that this sharing rule affects not only absence behavior, but also workers' subsequent health. To inform our empirical analysis we propose a simple model, where workers' absence decision is taken conditional on the sharing rule, health, and a dismissal probability. Our empirical analysis is based on high-quality administrative data sources from Austria. Identification is guaranteed by idiosyncratic variation in the sharing rule (caused by different policy reforms and sharp discontinuities at certain tenure levels and firm sizes). An increase in either the workers' or the firms' cost share (both at the public expense) decrease the number of sick leave days. Variations in the workers' cost are quantitatively more important (by a factor of about two). Policy-induced variation in sick leave has a significant effect on subsequent health (care cost). The average worker in our sample is in the domain of presenteeism, i.e. an increase in sick leave (due to reductions in the workers' or the firms' cost share) would reduce health care cost.
    Keywords: statutory sick-pay regulations, sick leave, presenteeism, absenteeism, moral hazard, health care cost
    JEL: I18 J22 J38
    Date: 2015–05

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