nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒07‒04
fourteen papers chosen by
Joseph Marchand
University of Alberta

  1. Cognitive, Non-Cognitive Skills and Gender Wage Gaps: Evidence from Linked Employer-Employee Data in Bangladesh By Nordman, Christophe Jalil; Sarr, Leopold; Sharma, Smriti
  2. Technological Change, Occupational Tasks and Declining Immigrant Outcomes: Implications for Earnings and Income Inequality in Canada By Casey Warman; Christopher Worswick
  3. Health inequality and the use of time for workers in Europe By Gimenez-Nadal, J. Ignacio; Molina, Jose Alberto
  4. Human Capital Quality and Aggregate Income Differences: Development Accounting for U.S. States By Hanushek, Eric A.; Ruhose, Jens; Woessmann, Ludger
  5. Does Exporting Improve Matching? Evidence from French Employer-Employee Data By Matilde Bombardini; Gianluca Orefice; Maria D. Tito
  6. The Returns to Microenterprise Support Among the Ultra-Poor: A Field Experiment in Post-War Uganda By Christopher Blattman; Eric P. Green; Julian C. Jamison; M. Christian Lehmann; Jeannie Annan
  7. Import Competition and the Great U.S. Employment Sag of the 2000s By Acemoglu, Daron; Autor, David; Dorn, David; Hanson, Gordon; Price, Brendan
  8. Estimating the External Returns to Education: Evidence from China By Fan, Wen; Ma, Yuanyuan; Wang, Liming
  9. The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment By Amy Finkelstein; Nathaniel Hendren; Erzo F.P. Luttmer
  10. The Effects of the Kalamazoo Promise Scholarship on College Enrollment, Persistence, and Completion By Timothy J. Bartik; Brad J. Hershbein; Marta Lachowska
  11. Sources of Increasing Differential Mortality Among the Aged by Socioeconomic Status By Barry P. Bosworth; Gary Burtless; Kan Zhang
  12. How Social Networks Shape Our Beliefs: A Natural Experiment among Future French Politicians By Yann Algan; Quoc-Anh Do; Nicolò Dalvit; Alexis Le Chapelain; Yves Zenou
  13. Trade, global value chains and wage-income inequality By Javier Lopez Gonzalez; Przemyslaw Kowalski; Pascal Achard
  14. Ontario's Productivity Performance, 2000-2012: A Detailed Analysis By Andrew Sharpe

  1. By: Nordman, Christophe Jalil (IRD, DIAL, Paris-Dauphine); Sarr, Leopold (World Bank); Sharma, Smriti (UNU-WIDER)
    Abstract: We use a first-hand linked employer-employee dataset representing the formal sector of Bangladesh to explain gender wage gaps by the inclusion of measures of cognitive skills and personality traits. Our results show that while cognitive skills are important in determining mean wages, personality traits have little explanatory power. However, quantile regressions indicate that personality traits do matter in certain parts of the conditional wage distribution, especially for wages of females. Cognitive skills as measured by reading and numeracy also confer different benefits across the wage distribution to females and males respectively. Quantile decompositions indicate that these skills and traits reduce the unexplained gender gap, mainly in the upper parts of the wage distribution. Finally, results suggest that employers place greater consideration on observables such as academic background and prior work experience, and may also make assumptions about the existence of sex-specific skills of their workers, which could then widen the within-firm gender wage gap.
    Keywords: gender wage gap, cognitive skills, personality traits, matched worker-firm data, quantile decompositions, Bangladesh
    JEL: J16 J24 J31 J71 C21 O12
    Date: 2015–06
  2. By: Casey Warman; Christopher Worswick
    Abstract: The earnings and occupational task requirements of immigrants to Canada are analyzed. The growing education levels of immigrants in the 1990s have not led to a large improvement in earnings as one might expect if growing computerization and the resulting technological change was leading to a rising return to non-routine cognitive skills and a greater wage return to university education. Controlling for education, we find a pronounced cross-arrival cohort decline in earnings that coincided with cross-cohort declines in cognitive occupational task requirements and cross-cohort increases in manual occupational task requirements. The immigrant earnings outcomes had only a small effect on overall Canadian earnings inequality.
    JEL: J15 J24 J31 J61 J71
    Date: 2015–06
  3. By: Gimenez-Nadal, J. Ignacio; Molina, Jose Alberto
    Abstract: This paper analyzes the relationship between health inequality and time allocation decisions of workers in six European countries. Using the Multinational Time Use Study, we find that a better perception of own health is associated with more time devoted to market work activities in all the countries, and with less time in housework activities, for both men and women. However, the evidence for the associations between health and leisure is mixed. This study represents a first step in understanding cross-country differences in the relationship between health status and time devoted to a range of activities for workers, in contrast with other analyses that have mainly focused only on market work. A better understanding of these cross-country differences may help to identify the effects of public policies on inequalities in the uses of time.
    Keywords: Health, Time Allocation, Inequality, Multinational Time Use Study
    JEL: D13 J16 J22
    Date: 2015–06–29
  4. By: Hanushek, Eric A. (Stanford University); Ruhose, Jens (Ifo Institute for Economic Research); Woessmann, Ludger (Ifo Institute for Economic Research)
    Abstract: Although many U.S. state policies presume that human capital is important for state economic development, there is little research linking better education to state incomes. In a complement to international studies of income differences, we investigate the extent to which quality-adjusted measures of human capital can explain within-country income differences. We develop detailed measures of state human capital based on school attainment from census micro data and on cognitive skills from state- and country-of-origin achievement tests. Partitioning current state workforces into state locals, interstate migrants, and immigrants, we adjust achievement scores for selective migration. We use the new human capital measures in development accounting analyses calibrated with standard production parameters. We find that differences in human capital account for 20-35 percent of the current variation in per-capita GDP among states, with roughly even contributions by school attainment and cognitive skills. Similar results emerge from growth accounting analyses.
    Keywords: economic growth, human capital, cognitive skills, schooling, U.S. states
    JEL: I25 O47 J24
    Date: 2015–06
  5. 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 construct the type of each worker using both a traditional wage regression and a model-based approach and construct measures of the average
    Keywords: Matching;Sorting;Exporting firms
    JEL: F14 F16
    Date: 2015–06
  6. By: Christopher Blattman; Eric P. Green; Julian C. Jamison; M. Christian Lehmann; Jeannie Annan
    Abstract: We show that extremely poor, war-affected women in northern Uganda have high returns to a package of $150 cash, five days of business skills training, and ongoing supervision. 16 months after grants, participants doubled their microenterprise ownership and incomes, mainly from petty trading. We also show these ultrapoor have too little social capital, but that group bonds, informal insurance, and cooperative activities could be induced and had positive returns. When the control group received cash and training 20 months later, we varied supervision, which represented half of the program costs. A year later, supervision increased business survival but not consumption.
    JEL: C93 D13 J24 O12
    Date: 2015–06
  7. By: Acemoglu, Daron; Autor, David; Dorn, David; Hanson, Gordon; Price, Brendan
    Abstract: Even before the Great Recession, U.S. employment growth was unimpressive. Between 2000 and 2007, the economy gave back the considerable employment gains achieved during the 1990s, with a historic contraction in manufacturing employment being a prime contributor to the slump. We estimate that import competition from China, which surged after 2000, was a major force behind both recent reductions in U.S. manufacturing employment and-through input-output linkages and other general equilibrium channels-weak overall U.S. job growth. Our central estimates suggest job losses from rising Chinese import competition over 1999 through 2011 in the range of 2.0 to 2.4 million.
    Keywords: labor demand; trade flows
    JEL: F16 J21
    Date: 2015–06
  8. By: Fan, Wen (Nanjing University); Ma, Yuanyuan (Trinity College Dublin); Wang, Liming (University College Dublin)
    Abstract: Using longitudinal data from the China Health and Nutrition Survey, we examine how individual wages change in line with the share of college graduates in a given province. The individual fixed effect model shows that the external returns to education in China appear to be zero. We estimate an instrumental variables fixed effects model where share of college graduates is instrumented by the number of universities with special status and find positive external returns to education of about 10 per cent to 14 per cent. We also find that the returns are affected by individual heterogeneity. While negligible returns are found for urban, women, and high-educated workers, the returns are positive and statistically significant for rural, men, and low-educated workers. This finding provides the motivation for increasing education investment in rural China and targeting it more toward poorly educated workers.
    Keywords: education, public investment, externalities, China
    JEL: J0 J24 O15
    Date: 2015–06
  9. By: Amy Finkelstein; Nathaniel Hendren; Erzo F.P. Luttmer
    Abstract: We develop a set of frameworks for valuing Medicaid and apply them to welfare analysis of the Oregon Health Insurance Experiment, a Medicaid expansion for low-income, uninsured adults that occurred via random assignment. Our baseline estimates of Medicaid's welfare benefit to recipients per dollar of government spending range from about $0.2 to $0.4, depending on the framework, with at least two-fifths – and as much as four-fifths – of the value of Medicaid coming from a transfer component, as opposed to its ability to move resources across states of the world. In addition, we estimate that Medicaid generates a substantial transfer, of about $0.6 per dollar of government spending, to the providers of implicit insurance for the low-income uninsured. The economic incidence of these transfers is critical for assessing the social value of providing Medicaid to low-income adults relative to alternative redistributive policies.
    JEL: H51 I13
    Date: 2015–06
  10. By: Timothy J. Bartik (W.E. Upjohn Institute for Employment Research); Brad J. Hershbein (W.E. Upjohn Institute for Employment Research); Marta Lachowska (W.E. Upjohn Institute for Employment Research)
    Abstract: We estimate the effects on postsecondary education outcomes of the Kalamazoo Promise, a generous place-based college scholarship. We identify Promise effects using difference-in-differences, comparing eligible to ineligible graduates before and after the Promise’s initiation. According to our estimates, the Promise significantly increases college enrollment, college credits attempted, and credential attainment. Stronger effects occur for minorities and women. Predicted lifetime earnings effects of the Promise’s credential gains, compared to the Promise’s scholarship costs, represent an internal rate of return of 11.3 percent. Based on our results, simple and generous scholarships can significantly increase educational attainment and provide net economic benefits.
    Keywords: place-based scholarship, enrollment, college completion, natural experiment, difference-in-differences, education policy
    JEL: I21 I22 I24
    Date: 2015–06
  11. By: Barry P. Bosworth; Gary Burtless; Kan Zhang
    Abstract: This paper uses data from the Health and Retirement Study (HRS) to explore the extent and causes of widening differences in life expectancy by socioeconomic status (SES) for older persons. We construct alternative measures of SES using educational attainment and average (career) earnings in the prime working ages of 41-50. We also use information on causes of death, health status and various behavioral indicators (smoking, drinking, and obesity) that are believed to be predictors of premature death in an effort to explain the causes of the growing disparities in life expectancy between people of high and low SES. The paper finds that: - There is strong statistical evidence in the HRS of a growing inequality of mortality risk by SES among more recent birth cohorts compared with cohorts born before 1930. - Both educational attainment and career earnings as constructed from Social Security records are equally useful indicators of SES, although the distinction in mortality risk by education is greatest for those with and without a college degree. - There has been a significant decline in the risk of dying from cancer or heart conditions for older Americans in the top half of the income distribution, but we find no such reduction of mortality risk in the bottom half of the distribution. - The inclusion of the behavioral variables and health status result in substantial improvement in the predictions of mortality, but they do not identify the sources of the increase in differential mortality. The policy implications of the findings are: - Indexing the retirement age to increases in average life expectancy to stabilize OASDI finances may have unintended distributional consequences, because most mortality gains have been concentrated among workers in the top half of the earnings distribution. - The fact that we cannot identify the sources of the increase in differential mortality contributes to uncertainty about the distributional effects of increases in the retirement age in future years.
    Date: 2015–06
  12. By: Yann Algan (Département d'économie); Quoc-Anh Do (Département d'économie); Nicolò Dalvit (Departement d'Economie de Sciences Po, LIEPP); Alexis Le Chapelain (Département d'économie); Yves Zenou (Research Institute of Industrial Economics)
    Abstract: This paper shows how a public policy shapes convergence of beliefs through newly-formed social networks, with a focus on political opinion. We use a unique natural experiment that randomly assigns students into first-year groups at a French college that forms future top politicians. Pairs of students in the same group are much more likely to become friends. The randomized group membership serves as instrumental variable in a dyadic regression of differences in beliefs on friendship. We find that students’ political opinions converge particularly strongly between friends, reaching 11% of a standard deviation only after 6 months. Convergence is strongest among pairs least likely to become friends without the randomized exposure, or friends whose characteristics are the most different. While there is evidence of homophily in network formation, it does not seem to affect the estimates of convergence, except among very similar friends. The same strategy shows that a longer network distance implies slower convergence.
    Keywords: Political Beliefs; Peers; Social Networks; Convergence; Homophily; Belief Transmission; Learning; Diffusion; Natural Experiment
    JEL: C93 D72 Z13
    Date: 2015–06
  13. By: Javier Lopez Gonzalez; Przemyslaw Kowalski; Pascal Achard
    Abstract: The rise in global value chain (GVC) participation has coincided with significant changes in the distribution of wage income both within and across countries. This paper sets out to identify the linkages between these phenomena. It shows that GVC participation has a small effect on the distribution of wages and, when it has, it can reduce wage inequality when it concerns participation related to low-skilled segments of the labour force. This suggests that the potential tensions between equity and aggregate economic outcomes of GVC participation hold only in particular cases, namely when participation relates to high-skilled segments of the labour force. For policy-makers seeking to maximise the benefits of GVC participation, questions of a more equitable distribution of returns to workers might focus on skill-upgrading of low-skilled labour by promoting further tertiary education and development of skills.
    Keywords: globalisation, income inequality, global value chains, trade in tasks, GVCs, offshoring
    JEL: F14 F16 J31
    Date: 2015–06–26
  14. By: Andrew Sharpe
    Abstract: It is widely recognized that productivity growth is the key driver of long-run increases in living standards. Therefore, a slowdown in productivity growth is a major cause for concern. This has in fact been the situation in Ontario since 2000. After advancing at a 1.9 per cent average annual rate between 1987 and 2000, business sector productivity growth has fallen to 0.5 per cent per year between 2000 and 2012, the second lowest growth rate among the provinces. Indeed, given the relative size of Ontario’s economy, the province’s weak productivity growth has largely been responsible for Canada’s overall poor productivity performance. The objective of this report is to explain the slowdown in productivity growth in Ontario since 2000. The report provides an overview of the productivity performance of the Ontario economy, with a focus on the 2000-2012 period. The report also examines both the supply-side and demand-side factors that influenced Ontario’s productivity performance. The main cause of Ontario’s lackluster productivity growth is found to be the deterioration of external demand conditions. The drop in international exports, due to weak demand growth in the United States, loss of cost competitiveness linked to the appreciation of Canadian dollar and increasing international competition, played a direct role in the slowdown in Ontario’s productivity growth.
    Keywords: Ontario, Canada, Productivity, Cost Competitiveness, International Trade
    JEL: D24 J24 O47 N12 N32 N52 N62 N72 N92
    Date: 2015–06

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