nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒08‒25
nine papers chosen by
Joseph Marchand
University of Alberta

  1. The Effects of Two Influential Early Childhood Interventions on Health and Healthy Behaviors By Conti, Gabriella; Heckman, James J.; Pinto, Rodrigo
  2. Getting Poor to Work: Three Welfare Increasing Reforms for a Busy Germany By Robin Jessen; Davud Rostam-Afschar; Viktor Steiner
  3. Employment effects of minimum wages in Europe revisited By Christl, Michael; Köppl Turyna, Monika; Kucsera, Denes
  4. What Works? A Meta Analysis of Recent Active Labor Market Program Evaluations By David Card; Jochen Kluve; Andrea Weber
  5. Reducing Risks in Wartime Through Capital-Labor Substitution: Evidence from World War II By Rohlfs, Chris; Sullivan, Ryan; Kniesner, Thomas J.
  6. An Analysis of Wage Differentials between Full- and Part-Time Workers in Spain By Ramos, Raul; Sanromá, Esteban; Simón, Hipólito
  7. How Labour Market Policies Affect Innovation and Trade Competitiveness By Siwage Dharma Negara
  8. The End of the Flat Tax Experiment in Slovakia By Michal Horvath; Matus Senaj; Zuzana Siebertova; Norbert Svarda
  9. Are Universities Becoming More Unequal? By Yan Lau; Harvey S. Rosen

  1. By: Conti, Gabriella (University College London); Heckman, James J. (University of Chicago); Pinto, Rodrigo (University of California, Los Angeles)
    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 experiment, randomized trial, Abecedarian Project, Perry Preschool Project
    JEL: C12 C93 I12 I13 J13 J24
    Date: 2015–08
  2. By: Robin Jessen; Davud Rostam-Afschar; Viktor Steiner
    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
  3. By: Christl, Michael; Köppl Turyna, Monika; Kucsera, Denes
    Abstract: The aim of this paper is to estimate the effect of minimum wage on employment rates taking into account potential nonlinearity. Focusing on three age groups, we find a significant nonlinear relationship between the minimum wage and employment for the young (15-24 years) and older working-age (55-64 years) groups, whereas for the prime-age workers (25-54 years) the minimum wage does not have a significant non-linear effect. Negative effect of the minimum wages on employment is stronger if the labor markets are otherwise strictly regulated and when workers are relatively unproductive.
    Keywords: minimum wage, employment, young workers, Europe
    JEL: J20 J38 J48
    Date: 2015–07–01
  4. By: David Card; Jochen Kluve; Andrea Weber
    Abstract: We present a meta-analysis of impact estimates from over 200 recent econometric evaluations of active labor market programs from around the world. We classify estimates by program type and participant group, and distinguish between three different post-program time horizons. Using meta-analytic models for the effect size of a given estimate (for studies that model the probability of employment) and for the sign and significance of the estimate (for all the studies in our sample) we conclude that: (1) average impacts are close to zero in the short run, but become more positive 2-3 years after completion of the program; (2) the time profile of impacts varies by type of program, with larger gains for programs that emphasize human capital accumulation; (3) there is systematic heterogeneity across participant groups, with larger impacts for females and participants who enter from long term unemployment; (4) active labor market programs are more likely to show positive impacts in a recession.
    JEL: J08 J24
    Date: 2015–07
  5. By: Rohlfs, Chris (Morgan Stanley); Sullivan, Ryan (Naval Postgraduate School); Kniesner, Thomas J. (Claremont Graduate University)
    Abstract: Our research uses data from multiple archival sources to examine substitution among armored (tank-intensive), infantry (troop-intensive), and airborne (also troop-intensive) military units, as well as mid-war reorganizations of each type, to estimate the marginal cost of reducing U.S. fatalities in World War II, holding constant mission effectiveness, usage intensity, and task difficulty. If the government acted as though it equated marginal benefits and costs, the marginal cost figure measures the implicit value placed on soldiers' lives. Our preferred estimates indicate that infantrymen's lives were valued in 2009 dollars between $0 and $0.5 million and armored troops' lives were valued between $2 million and $6 million, relative to the efficient $1 million to $2 million 1940s-era private value of life. We find that the reorganizations of the armored and airborne divisions both increased efficiency, one by reducing costs with little increase in fatalities and the other by reducing fatalities with little increase in costs.
    Keywords: cost of saving lives, World War II, military cost functions, military capital-labor substitution, European theater of operation
    JEL: H56 J17 N42 D24 J24 L11
    Date: 2015–08
  6. By: Ramos, Raul (University of Barcelona); Sanromá, Esteban (University of Barcelona); Simón, Hipólito (Universidad de Alicante)
    Abstract: This research examines wage differences between part-time and full-time workers using microdata from the Spanish Structure of Earnings Survey. The main contribution of the paper is related to the analysis of differences along the wage distribution using econometric decomposition methods and introducing a regional perspective. The evidence shows that part-time workers in Spain experience a significant wage disadvantage. This disadvantage is worse in the case of female workers and it is not homogenous along the wage distribution, being comparatively more relevant for the most qualified women and becoming positive for the most qualified men. However, the disadvantage is practically explained by the endowments of characteristics, with a leading role of segregation of part-time workers in low-wage firms. From a regional perspective, although in the majority of the regions wage differences tend to be explained by endowments of characteristics, there are several regions where the unexplained part of the differential is significant, particularly in the case of male workers. These regional differences seem to be related to differences in the market power of firms at the regional level.
    Keywords: part-time work, wage gap, regional differences
    JEL: J31 J22 J41 R23
    Date: 2015–08
  7. By: Siwage Dharma Negara (The Indonesian Institute of Sciences (LIPI), The Institute of Southeast Asian Studies (ISEAS))
    Abstract: Endogenous growth theory postulates that innovation is one of the key drivers of technological progress and productivity growth of a country. Technological improvements stemming from firms’ innovative activities can contribute to a country’s overall productivity and export competitiveness. For innovation to flourish, it necessitates an environment that is conducive to firms conducting risky innovative activities. Studies show that public policies, including labour market policies, can influence the operating conditions and institutional structures of firms to foster innovation that leads to productivity gains. However, the literature indicates that there is mixed empirical evidence on the impact of labour market policies on firms’ incentives to innovate. This paper argues that more flexible labour market policies that do not constrain workers’ adjustments and mobility will have positive associations with a country’s technological innovation competitiveness. In addition, innovation competitiveness affects a country’s productivity and trade competitiveness. Using a balanced panel of OECD and non-OECD countries, this study offers simple empirical models to measure the relationship between labour market policies and innovation capacity; and between innovation capacity and trade competitiveness. The main findings show that countries with more flexible labour market policies have higher levels of innovation competitiveness. In addition, the paper finds evidence of a positive correlation between innovation competitiveness and trade competitiveness.
    Keywords: Labour market policies, innovation, trade, competitiveness, labour market flexibility
    JEL: F16 J08 J38 J63 O31 O38
    Date: 2015–07
  8. By: Michal Horvath; Matus Senaj; Zuzana Siebertova; Norbert Svarda
    Abstract: The paper provides a quantitative assessment of the consequences of departing from a flat-tax system in the context of Slovakia. A behavioural microsimulation model of the labour supply is embedded into ageneral equilibrium framework with search and matching frictions. Some recently implemented marginal changes in the tax system leave aggregate labour market indicators as well as inequality measures virtually unaffected. We also examine hypothetical revenue-neutral reforms that would significantly increase the progressivity of the system through graduated marginal tax rates. We find that there are narrow limits to what policy makers could accomplish through such reforms in terms of employment and equality of income. Hence, an income tax reform should at best be seen as a complementary tool to other initiatives promoting such objectives. Moreover, we highlight an important trade-off: income tax reforms that promote employment may harm growth.
    Keywords: flat tax, microsimulation, general equilibrium, search and matching, labour supply elasticity
    JEL: E24 H24 H31 J22
    Date: 2015–08
  9. By: Yan Lau; Harvey S. Rosen
    Abstract: Observers have expressed concern about growing inequality in resources across universities. But are universities really becoming more unequal? We argue that the typical approach of examining endowment growth alone is not sensible. In line with the literature on household inequality, we focus instead on a comprehensive income measure. We find that although there is considerable inequality among institutions, concerns about the inexorable growth of inequality are overblown. Whether one looks at income, endowment wealth, or expenditure, inequality has been high but stable, exhibiting only negligible increases in recent years. Furthermore, there has been little mobility within the higher education sector.
    JEL: I22 I23
    Date: 2015–07

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