nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒08‒13
twelve papers chosen by
Joseph Marchand
University of Alberta

  1. Crowding-Out Effect of Publicly Provided Childcare: Why Maternal Employment Did Not Increase By Asai, Yukiko; Kambayashi, Ryo; Yamaguchi, Shintaro
  2. People and Machines: A Look at the Evolving Relationship Between Capital and Skill in Manufacturing 1860-1930 Using Immigration Shocks By Lafortune, Jeanne; Tessada, José; Lewis, Ethan Gatewood
  3. Minimum Wages in Sub-Saharan Africa: A Primer By Bhorat, Haroon; Kanbur, Ravi; Stanwix, Benjamin
  4. Expanding Disability Discrimination Protections to Those with Less Severe Impairments: Evidence from California's Prudence Kay Poppink Act By Patrick Button
  5. Differences in the Estimates of Gender Wage Gap Over The Life Cycle By Joanna Tyrowicz; Lucas van der Velde; Irene van Staveren
  6. Are “Better” Ideas More Likely to Succeed? An Empirical Analysis of Startup Evaluation By Erin L. Scott; Pian Shu; Roman M. Lubynsky
  7. Getting the poor to work: Three welfare increasing reforms for a busy Germany By Jessen, Robin; Rostam-Afschar, Davud; Steiner, Viktor
  8. Bound To Lose, Bound To Win? The Financial Crisis and the Informal-Formal Sector Earnings Gap in Serbia By Blunch, Niels-Hugo
  9. The Diversity of Personnel Practices and Firm Performance By Pedro S. Martins
  10. Systemic flexibility and human capital development: the relationship between non-standard employment and workplace training By G. Guidetti; G. Pedrini
  11. Human Capital Risk, Contract Enforcement, and the Macroeconomy By Krebs, Tom; Kuhn, Moritz; Wright, Mark L. J.
  12. Social Interactions Through Space and Time: Evidence from College Enrollment and Academic Mobility By Goulas, Sofoklis; Megalokonomou, Rigissa

  1. By: Asai, Yukiko; Kambayashi, Ryo; Yamaguchi, Shintaro
    Abstract: We estimate the causal effects of childcare availability on the maternal employment rate using prefecture panel data constructed from the Japanese quinquennial census 1990-2010. We find that childcare availability did not increase maternal employment due to the crowding-out effects. Namely, families substituted accredited childcare for informal care by grandparents. We also find evidence that more and more families do not live with grandparents who used to take care of grandchildren, as the availability of accredited childcare increases.
    Keywords: childcare, female labor supply, maternal employment, nuclear family, three-generation family
    JEL: J13 J21 J22
    Date: 2015–07
  2. By: Lafortune, Jeanne (Pontificia Universidad Catolica de Chile); Tessada, José (Pontificia Universidad Catolica de Chile); Lewis, Ethan Gatewood (Dartmouth College)
    Abstract: This paper estimates the elasticity of substitution between capital and skill using variation across U.S. counties in immigration-induced skill-mix changes between 1860 and 1930. We find that capital began as a q-complement for skilled and unskilled workers, and then dramatically increased its relative complementary with skilled workers around 1890. Simulations of a parametric production function calibrated to our estimates imply the level of capital-skill complementarity after 1890 likely allowed the U.S. economy to absorb the large wave of less-skilled immigration with a modest decline in less-skilled relative wages. This would not have been possible under the older production technology.
    Keywords: immigration, capital-skill complementarity, skill-biased technical change, manufacturing, Second Industrial Revolution
    JEL: J24 N61 O33
    Date: 2015–07
  3. By: Bhorat, Haroon (University of Cape Town); Kanbur, Ravi (Cornell University); Stanwix, Benjamin (University of Cape Town)
    Abstract: Although the sectors and fraction of workers covered are small given the low rates of formality and urbanization in Sub-Saharan Africa (SSA), as the number of covered workers grows wage regulation will become increasingly significant. We find that higher minimum wage values are associated with higher GDP per capita. Importantly, however, we find that the minimum wage relative to the mean wage is higher in low income countries than in lower- and upper-middle income countries. Indeed, SSA as a whole reflects a bias towards a more aggressive minimum wage policy compared to the rest of the world. There is limited research on the employment effect of minimum wages in SSA, but the few findings are consistent with the broad summary of global research. By and large, introducing and raising the minimum wage has a small negative impact or no measurable negative impact. However, there is significant variation around this average finding – the employment elasticities are not constant nor linear. Where increases in a minimum wage are large and immediate, this can result in employment losses, but more modest increases usually have very little observably adverse effects and may have positive impacts on wages. The great variability in findings on employment could be due partly to the great variation in the detail of the minimum wage regimes and schedules country by country, but also by the variations in compliance. We find that higher Kaitz indices are associated with higher levels of non-compliance. The release of country-level earnings and employment data at regular intervals lies at the heart of a future country-focused minimum wage research agenda for Africa.
    Keywords: Sub-Saharan Africa, minimum wages, wage regulation, employment elasticities, Kaitz indices, compliance
    JEL: J08 J20 J21 J30 J38
    Date: 2015–07
  4. By: Patrick Button (Department of Economics, Tulane University)
    Abstract: Individuals with less severe impairments are often ineligible for disability programs and are not covered under Americans with Disabilities Act, but this group still faces employment barriers through discrimination or requiring on-the-job accommodations. Effective 2001, California passed the Prudence Kay Poppink Act which broadened California's disability employment discrimination laws to cover individuals with less severe impairments. I estimate how this act affected the labor market outcomes for these newly-covered disabled workers using both difference-in-differences and difference-in-differences-in-differences regression analyses using data from the Current Population Survey's Annual Social and Economic Supplement. The results generally show a large increase in employment.
    Keywords: disability, discrimination, employment non-discrimination law, Prudence Kay Poppink Act, Americans with Disabilities Act
    JEL: J71 K31
    Date: 2015–07
  5. By: Joanna Tyrowicz (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland); Lucas van der Velde (Faculty of Economic Sciences, University of Warsaw); Irene van Staveren (Erasmus University)
    Abstract: Given theoretical premises, there is some ground to expect the gender wage gap adjusted for individual characteristics to be age specific. We rely on a long panel of data from the German Socio-Economic Panel covering the 1984-2008 period. We employ the DiNardo et al. (1996) technique to disentangle cohort and age effects. Our results indicate that the gender wage gap increases over the lifetime, but decreases with time. This finding runs contrary to the hypothesis that it is during the reproductive age that women's wages relative to men's wages suffer most. We suggest explanations for this pattern.
    Keywords: gender wage gap, age, decomposition, non-parametric estimates
    JEL: J31 J71
    Date: 2015
  6. By: Erin L. Scott (National University of Singapore Business School); Pian Shu (Harvard Business School, Technology and Operations Management Unit); Roman M. Lubynsky (Massachusetts Institute of Technology)
    Abstract: Entrepreneurs face high uncertainty, and often make costly investments in new business ideas without knowing the expected payoff. This paper empirically examines whether ex-ante assessment of early-stage startup ideas can predict their subsequent commercialization. We leverage an entrepreneurship program at the Massachusetts Institute of Technology in which early-stage venture ideas, presented in the form of succinct standardized summaries, elicit subjective evaluations from a large set of experienced entrepreneurs and executives. Using data on 652 ventures in multiple industry sectors, evaluated over an 8-year period, we find that ideas that elicit more positive evaluations are significantly more likely to ultimately reach commercialization. We further show that these results are driven by venture ideas with documented intellectual capital in research-and-development-intensive sectors, such as life sciences and medical devices. We find no evidence, by contrast, that experts can effectively assess the commercial potential of venture ideas in non-R&D-intensive sectors such as consumer web and enterprise software. Finally, we find that industry-specific and scientific expertise is not critical to experts' collective ability to predict ventures' commercial viability.
    JEL: L26 M13 O31 J24 G32
    Date: 2015–07
  7. By: Jessen, Robin; Rostam-Afschar, Davud; Steiner, Viktor
    Abstract: We study three budget-neutral reforms of the German tax and transfer system designed to improve work incentives for people with low incomes: a feasible flat tax reform that provides a basic income which is equal to the current level of the means tested unemployment benefit, and two alternative reforms that involve employment subsidies to stimulate participation and full-time work, respectively. We estimate labor supply reactions and welfare effects using a microsimulation model based on household data from the Socio-Economic Panel (SOEP) and a structural labor supply model. We find that all three reforms increase labor supply in the first decile of the income distribution. However, the flat tax scenario reduces overall labor supply by 4.9%, the reform scenario designed to increase participation reduces labor supply by 1%, while the reform that provides improved incentives to work full-time has negligible effects on overall labor supply. With equal welfare weights, aggregate welfare gains are realizable under all three reforms.
    Keywords: flat tax,basic income,work incentives,poverty,microsimulation
    JEL: H31 I38 J22 C25
    Date: 2015
  8. By: Blunch, Niels-Hugo (Washington and Lee University)
    Abstract: While the informal sector has received widespread attention in academic and policy arenas in recent decades, knowledge gaps and controversies remain. First, while the evidence is starting to emerge, there is still more to learn about the formal-informal sector earnings gap of the former Socialist regimes of Eastern Europe and Central Asia. Second, the widespread debate in both academic and policy circles of what constitutes "the" informal sector has led to substantial controversy and different definitions. Third, our knowledge is scarce regarding the impact of the current financial crisis on labor markets – both formal and informal. By examining the incidence and determinants of the formal-informal sector earnings gap for adult male dependent employees using two identical, nationally representative labor force surveys for Serbia – one just prior to the impact of the recent international financial crisis and one about a year into the crisis – for three alternative measures of informality, this paper adds to our understanding in all three of these dimensions. Among the main results is the finding of a substantively large formal-informal sector gap (favoring the formal sector), which appears to have decreased substantially overall following the crisis. Additional results suggest that formal sector workers are concentrated in better paying industries and occupations and have more education and other favorable characteristics than informal sector workers, and at the same time also have higher returns to their (already favorable) characteristics overall, with education and part-time status consistently among the main drivers of the observed gap.
    Keywords: detailed earnings decomposition, earnings decomposition, labor market segmentation, formal-informal sector earnings gap, international financial crisis, Serbia
    JEL: I24 J31 J42
    Date: 2015–07
  9. By: Pedro S. Martins
    Abstract: Personnel economics tends be based on single-firm case studies. Here we examine the personnel practices of nearly 5,000 firms, over a period of 20 years, using detailed matched employer-employee panel data from Portugal. In the spirit of Baker et al (1994a, b), we consider different dimensions of personnel management within each firm: worker turnover, the role of job levels and human capital as wage determinants, the dispersion of wages within job levels, the importance of tenure in terms of promotions and exits, and the scope for careers. We find a large degree of diversity in most of these practices across firms. Moreover, some personnel practices are shown to be robust predictors of higher levels of firm performance, even after controlling for time-invariant firm heterogeneity and other variables: low wage dispersion at low and intermediate job levels and a tight relationship between human capital variables and wages.
    Keywords: Personnel Economics, Job Levels, Wages, Big Data
    JEL: M51 M52 J31
    Date: 2015–08
  10. By: G. Guidetti; G. Pedrini
    Abstract: The aim of this paper is to explore the relationship between non-standard contracts (part-time, fixed-term) and workplace training by discussing the implications of two different theoretical frameworks grounding on human capital theory and strategic management, respectively. To achieve this purpose we develop alternative hypothesis on the association between the presence of non-standard workers and four different outcome variables related to workplace training and job-related practices. By using data on Italian firms we get different results according to the type of non-standard contract and training. Part-time and temporary contracts carry out distinct functions with respect to off-the job training as far as labour flexibility is concerned. On the other hand, although non-standard work seems to be unrelated to on-the-job training decisions, this is not the case when the overall number of job-related practices is taken into account. Overall, our evidence can reflect the decision to substitute off-the-job training with job-related practices in presence of part-time workers. Conversely, the recourse to temporary employment can be associated with the need to enhance systemic flexibility throughout the organization.
    JEL: J24 M53 M54
    Date: 2015–07
  11. By: Krebs, Tom (University of Mannheim); Kuhn, Moritz (University of Bonn); Wright, Mark L. J. (Federal Reserve Bank of Chicago)
    Abstract: We use data from the Survey of Consumer Finance and Survey of Income Program Participation to show that young households with children are under-insured against the risk that an adult member of the household dies. We develop a tractable macroeconomic model with human capital risk, age-dependent returns to human capital investment, and endogenous borrowing constraints due to the limited pledgeability of human capital. We show analytically that, consistent with the life insurance data, in equilibrium young households are borrowing constrained and under-insured. A calibrated version of the model can quantitatively account for the life-cycle variation of life-insurance holdings, financial wealth, earnings, and consumption inequality observed in the US data. Our analysis implies that a reform that makes consumer bankruptcy more costly, like the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, leads to a substantial increase in the volume of both credit and insurance.
    Keywords: human capital risk, limited enforcement, life insurance
    JEL: E21 E24 D52 J24
    Date: 2015–07
  12. By: Goulas, Sofoklis; Megalokonomou, Rigissa
    Abstract: In the recent years, the importance of one's group of peers-be that friends, colleagues, neighbors- has been widely emphasized in the literature. In this paper, we ask whether individuals derive utility from conformity in college enrollment and academic mobility. We propose a new methodology in mitigating reflection and endogeneity issues in identifying social interactions. We exploit a special institutional setting, in which schools are very close to each other, allowing for students from different schools to interact. We investigate utility spillovers from the educational choices of students in consecutive cohorts. Spatial variation allows us to identify social interactions in groups of various sizes. Using a new dataset that spans the universe of high school graduates, we estimate general equilibrium effects of social interactions. We find positive and significant externalities in the decision to enrol in college and the decision to migrate to a different city among peers that belong to the same social group.
    Keywords: college enrollment, social interactions, mobility, geography, reflection problem
    JEL: J24
    Date: 2015–08–01

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