nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒08‒19
fourteen papers chosen by
Joseph Marchand
University of Alberta

  1. Trade, FDI, Migration, and the Place Premium: Mexico and the United States By Gandolfi, Davide; Halliday, Timothy J.; Robertson, Raymond
  2. Minimum Wages in Sub-Saharan Africa: A Primer By Bhorat, Haroon; Kanbur, Ravi; Stanwix, Benjamin
  3. Ownership and Pay in Britain By Pendleton, Andrew; Bryson, Alex; Gospel, Howard
  4. The Effects of Longer School Days on Mothers' Labor Force Participation By Berthelon, Matias; Kruger, Diana; Oyarzún, Melanie
  5. Does Compulsory Licensing Discourage Invention? Evidence From German Patents After WWI By Joerg Baten; Nicola Bianchi; Petra Moser
  6. Hysteresis and the European Unemployment Problem Revisited By Jordi Galí
  7. School Quality and the Development of Cognitive Skills between Age Four and Six By Borghans, Lex; Golsteyn, Bart H.H.; Zölitz, Ulf
  8. Optimal Wage Redistribution in the Presence of Adverse Selection in the Labor Market By Spencer Bastani; Tomer Blumkin; Luca Micheletto
  9. Long Term Impacts of Vouchers for Vocational Training: Experimental Evidence for Colombia By Orazio Attanasio; Arlen Guarín; Carlos Medina; Costas Meghir
  10. Performance Standards and Employee Effort: Evidence from Teacher Absences By Gershenson, Seth
  11. The Post Crisis Growth in the Self-Employed: Volunteers or Reluctant Recruits? By Henley, Andrew
  12. How Teachers Respond to Pension System Incentives: New Estimates and Policy Applications By Shawn Ni; Michael Podgursky
  13. Losing Our Minds? New Research Directions on Skilled Migration and Development By Clemens, Michael A.
  14. The Effects of Two Influential Early Childhood Interventions on Health and Healthy Behaviors By Gabriella Conti; James J. Heckman; Rodrigo Pinto

  1. By: Gandolfi, Davide (Macalester College, Minnesota); Halliday, Timothy J. (University of Hawaii at Manoa); Robertson, Raymond (Macalester College, Minnesota)
    Abstract: Large wage differences between countries ("place premiums") are well documented. Theory suggests that factor price convergence should follow increased migration, capital flows, and commercial integration. All three have increased between the United States and Mexico over the last 25 years. This paper evaluates the degree of wage convergence between these countries during the period 1988 and 2011. We match survey and census data from Mexico and the United States to estimate the change in wage differentials for observationally identical workers over time. We find very little evidence of convergence. What evidence we do find is most likely due to factors unrelated to US-Mexico integration. While migration, trade, and FDI may reduce the US-Mexico wage differential, these effects are small when compared to the overall wage gap.
    Keywords: migration, labor-market integration, factor price equalization
    JEL: F15 F16 J31 F22
    Date: 2015–07
  2. By: Bhorat, Haroon; Kanbur, Ravi; Stanwix, Benjamin
    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: employment elasticities; minimum wages; Sub-Saharan Africca (SSA)
    JEL: J01 J08 J20 J23 J38
    Date: 2015–08
  3. By: Pendleton, Andrew (University of Durham); Bryson, Alex (National Institute of Economic and Social Research (NIESR)); Gospel, Howard (King's College London)
    Abstract: Drawing on principal-agent perspectives on corporate governance, this paper examines whether employees' hourly pay is linked to ownership dispersion. Using linked workplace-worker data from the British Workplace Employment Relations Survey (WERS) 2011, we find average hourly pay is higher in dispersed ownership workplaces. The raw gap of 30 log points falls to 8 log points when we control for differences in worker and workplace characteristics. The premium is constant across most of the wage distribution, but falls a little at the 90th percentile to become statistically non-significant. This contrasts with earlier papers which indicate that higher level employees are the primary beneficiaries of higher pay from dispersed ownership.
    Keywords: ownership structure, corporate governance, principal agent, pay
    JEL: G3 G32 G31
    Date: 2015–07
  4. By: Berthelon, Matias (Universidad Adolfo Ibañez); Kruger, Diana (Universidad Adolfo Ibañez); Oyarzún, Melanie (Universidad Catolica de Valparaiso, Chile)
    Abstract: Lack of adequate childcare is a main reason women cite for not participating in the labor force. We investigate the effect of a reform that lengthened school schedules from half to full days in Chile – essentially providing zero-cost childcare – on different maternal labor participation outcomes. We identify the effect of the policy from its implementation across municipalities over time and rule out alternative explanations, finding evidence of positive and important effects on participation and more permanent attachment to the labor force. Additionally, we also find results are driven by the provision of full day schooling in 1st and 2nd grades.
    Keywords: full day schooling, primary education, female labor participation, education reform, Chile
    JEL: H4 J2 J4 I2
    Date: 2015–07
  5. By: Joerg Baten; Nicola Bianchi; Petra Moser
    Abstract: This paper investigates whether compulsory licensing – which allows governments to license patents without the consent of patent-owners – discourages invention. Our analysis exploits new historical data on German patents to examine the effects of compulsory licensing under the US Trading-with-the-Enemy Act on invention in Germany. We find that compulsory licensing was associated with a 28 percent increase in invention. Historical evidence indicates that, as a result of war-related demands, fields with licensing were negatively selected, so OLS estimates may underestimate the positive effects of compulsory licensing on future inventions.
    JEL: N3 N32 N34 O3 O34 O38
    Date: 2015–07
  6. By: Jordi Galí
    Abstract: The unemployment rate in the euro area appears to contain a significant nonstationary component, suggesting that some shocks have permanent effects on that variable. I explore possible sources of this nonstationarity through the lens of a New Keynesian model with unemployment, and assess their empirical relevance.
    JEL: E24 E31 E32
    Date: 2015–07
  7. By: Borghans, Lex (Maastricht University); Golsteyn, Bart H.H. (Maastricht University); Zölitz, Ulf (IZA)
    Abstract: This paper studies the extent to which young children develop their cognitive ability in high and low quality schools. We use a representative panel data set containing cognitive test scores of 4-6 year olds in Dutch schools. School quality is measured by the school's average achievement test score at age 12. Our results indicate that children in high-quality schools develop their skills substantially faster than those in low-quality schools. The results remain robust to the inclusion of initial ability, parental background, and neighborhood controls. Moreover, using proximity to higher-achieving schools as an instrument for school choice corroborates the results. The robustness of the results points toward a causal interpretation, although it is not possible to erase all doubt about unobserved confounding factors.
    Keywords: cognitive skills, child development, school quality
    JEL: I2 I24 J24
    Date: 2015–07
  8. By: Spencer Bastani (Department of Economics, Uppsala University; Uppsala Center for Fiscal Studies; Uppsala Center for Labor Studies, Sweden; CESifo, Germany); Tomer Blumkin (BGU); Luca Micheletto (Department of Law, University of Milan, and Dondena Centre for Research on Social Dynamics and Public Policy, Bocconi University, Italy; Uppsala Center for Fiscal Studies, Sweden; CESifo, Germany)
    Keywords: adverse selection, labor market, optimal taxation, pooling, redistribution
    JEL: D82 H21 J31
    Date: 2015
  9. By: Orazio Attanasio; Arlen Guarín; Carlos Medina; Costas Meghir
    Abstract: We use experimental data of a training program in 2005 in Colombia. We find that even up to ten years ahead, the JeA program had a positive and significant effect on the probability to work in the formal sector, and to work for a large firm. Applicants in the treatment group also contributed more months to social security during the analyzed period. Earnings of treated applicants were 11.8% higher in the whole sample, and they made larger contributions to social security. We also present non parametric bounds showing that for some percentiles of the sample of women, there are positive and nearly significant effects of the program. Thus, the effects of the program would have been capitalized both in increases in the likelihood of being formal, and increases in productivity. We also present evidence that the estimated program effects on the likelihood of working for the formal sector, the likelihood of working for a large firm, and the earnings in the formal sector, are not an artifact of analyzing multiple outcomes. We also find those in the treatment group have 0.315 more years of education, and have a probability of graduating from high school 10 percent higher than the control group. We find no significant effect on the probability of attending college or any school program, nor on fertility decisions, marital status or some dimensions of assortative mating. Among applicants matching to the census of the poorest population, we find that beneficiaries are more likely to participate in the labor market, to be employed, and to be enrolled in a private health insurance at the time of the survey. Finally, we find that the benefits of the JeA program are higher than it costs, leading to an internal rate of return of at least 22.1 percent.
    Keywords: Vocational Training, Human Capital, Skills, Occupational Choice, Labor Productivity
    JEL: J24 M53
    Date: 2015–07–21
  10. By: Gershenson, Seth (American University)
    Abstract: The 2001 No Child Left Behind Act (NCLB) increased accountability pressure in U.S. public schools by threatening to impose sanctions on Title-1 schools that failed to make Adequate Yearly Progress (AYP) in consecutive years. Difference-in-difference estimates of the effect of failing AYP in the first year of NCLB on teacher effort in the subsequent year suggest that on average, teacher absences in North Carolina fell by about 10% and the probability of being absent 15 or more times fell by about 20%. Reductions in teacher absences were driven by within-teacher increases in effort.
    Keywords: performance standards, employee effort, teacher absences, accountability, NCLB
    JEL: J45 J48 J22 I2
    Date: 2015–07
  11. By: Henley, Andrew (Aberystwyth University)
    Abstract: In the UK by late 2014 there were almost 0.75m more self-employed than at the start of the financial crisis in early 2008. This represents over 75% of jobs growth in the UK over the same period. This experience has attracted commentary from independent policy analysts and others, focusing on whether growth has been structural, reflecting changes in the nature of employment and attitudes towards business venturing, or cyclical, reflecting a post-crisis shift towards flexible insecure forms of employment as an alternative to long-term unemployment. Recent commentary has also focused on heterogeneity across UK regions. Longitudinal data covering 2009-2013 from the ESRC Understanding Society survey are used to examine transitions into self-employment, and regression correlation with indicators of labour market conditions (unemployment, earnings) in the area local to the individual. Transitions into self-employment from both previous paid employment and inactivity found to be are negatively correlated with lagged local unemployment rates and positively correlated with lagged lower quartile earnings in the local area. These correlation patterns, although varying in size, hold for men and women, and are robust to controlling for individual characteristics. This suggests that local pull factors are far more significant in driving transitions into self-employment, and explains why business formation rates are higher, post-2008, in more advantaged UK areas. Self-employed business ownership does not appear to a significant alternative to unemployment for those where of paid employment demand is weak. Entrepreneurial activity prospers were wages are higher and unemployment lower.
    Keywords: self-employment, local unemployment, local earnings, longitudinal analysis
    JEL: J21 M13 R23
    Date: 2015–07
  12. By: Shawn Ni (University of Missouri - Columbia); Michael Podgursky (University of Missouri - Columbia)
    Abstract: Rising costs of public employee pension plans are a source of ?scal stress in many cities and states and have led to calls for reform. To assess the economic consequences of plan changes it is important to have reliable statistical models of employee retirement behavior. The authors estimate a structural model of teacher retirement using administrative panel data. A Stock-Wise option value model provides a good ?t to the data and predicts well out-of-sample on the e?ects of pension enhancements during the 1990s. The structural model is used to simulate the e?ect of alternatives to the current de?ned bene?t plan.
    Keywords: teacher pensions, school staffing, school finance.
    JEL: I21 J26 J38
    Date: 2015–08
  13. By: Clemens, Michael A. (Center for Global Development)
    Abstract: This paper critiques the last decade of research on the effects of high-skill emigration from developing countries, and proposes six new directions for fruitful research. The study singles out a core assumption underlying much of the recent literature, calling it the Lump of Learning model of human capital and development, and describes five ways that research has come to challenge that assumption. It assesses the usefulness of the Lump of Learning model in the face of accumulating evidence. The axioms of the Lump of Learning model have shaped research priorities in this literature, but many of those axioms do not have a clear empirical basis. Future research proceeding from established facts would set different priorities, and would devote more attention to measuring the effects of migration on skilled-migrant households, rigorously estimating human capital externalities, gathering microdata beyond censuses, and carefully considering optimal policy – among others. The recent literature has pursued a series of extensions to the Lump of Learning model. This study urges discarding the Lump of Learning model, pointing toward a new paradigm for research on skilled migration and development.
    Keywords: brain drain, skill flow, development, migration, human capital, education
    JEL: F22 J24 O15
    Date: 2015–07
  14. By: Gabriella Conti (University College London); James J. Heckman (The University of Chicago); Rodrigo Pinto (The University of Chicago)
    Abstract: This paper examines the long-term impacts on health and healthy behaviors of two of the oldest and most widely cited U.S. early childhood interventions evaluated by the method of randomization with long-term follow-up: the Perry Preschool Project (PPP) and the Carolina Abecedarian Project (ABC). There are pronounced gender effects strongly favoring boys, although there are also effects for girls. Dynamic mediation analyses show a significant role played by improved childhood traits, above and beyond the effects of experimentally enhanced adult socioeconomic status. These results show the potential of early life interventions for promoting health.
    Keywords: Health, early childhood intervention, social experiments, randomized trial, Abecedarian Project, Perry Preschool Project
    JEL: C12 C93 I12 I13 J13 J24
    Date: 2015

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