nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒09‒11
fifteen papers chosen by
Joseph Marchand
University of Alberta

  1. Precarious and Less Well Paid? Wage Differences between Permanent and Fixed-term Contracts across the EU By Dias da Silva, António; Turrini, Alessandro
  2. Is there publication selection bias in minimum wage research during the five-year period from 2010 to 2014? By Giotis, Georgios; Chletsos, Michael
  3. Wage Inequality, Skill Inequality, and Employment: Evidence from PIAAC By Sonja Jovicic
  4. The dynamics of earnings in Germany: Evidence from social security records By Bönke, Timm; Giesecke, Matthias; Lüthen, Holger
  5. The Role of Establishments and the Concentration of Occupations in Wage Inequality By Handwerker, Elizabeth; Spletzer, James R.
  6. ‘Good’ Firms, Worker Flows and Local Productivity By Michel Serafinelli
  7. On the Optimal Provision of Social Insurance: Progressive Taxation versus Education Subsidies in General Equilibrium By Krueger, Dirk; Ludwig, Alexander
  8. The Effectiveness of Fiscal Stimuli for Working Parents By de Boer, Henk-Wim; Jongen, Egbert L. W.; Kabátek, Jan
  9. Intra Firm Bargaining and Shapley Values By Brügemann, Björn; Gautier, Pieter A.; Menzio, Guido
  10. Efficiency and Labor Market Dynamics in a Model of Labor Selection By Chugh, Sanjay K.; Merkl, Christian
  11. The challenge of measuring UK wealth inequality in the 2000s By Alvaredo, Facundo; Atkinson, Tony; Morelli, Salvatore
  12. Support for Redistribution in an Age of Rising Inequality: New Stylized Facts and Some Tentative Explanations By Vivekinan Ashok; Ilyana Kuziemko; Ebonya Washington
  13. The Effectiveness of Policies that Promote Labor Force Participation of Women with Children: A Collection of National Studies By Cascio, Elizabeth U.; Haider, Steven J.; Nielsen, Helena Skyt
  14. Experimenting with Measurement Error: Techniques with Applications to the Caltech Cohort Study By Ben Gillen; Erik Snowberg; Leeat Yariv
  15. Network Effects in Knowledge Creation: Evidence from Academia By Nelson Sá; Ana Paula Ribeiro; Vitor Carvalho

  1. By: Dias da Silva, António (VU University Amsterdam); Turrini, Alessandro (European Commission)
    Abstract: We analyse wage differences between permanent and fixed-term contracts across the EU using data from the European Structure of Earnings Survey. We find that, after controlling for individual and job characteristics, workers on permanent contracts earn on average about 15% more than workers on fixed-term contracts with similar observable characteristics. The permanent contract wage premium is higher for men, workers at middle age and with middle education, and performing non-elementary occupations. We also find that permanent workers enjoy a higher wage premium for education and age. We explore cross-country differences in the wage premium for permanent workers and correlate them with indicators of labour market institutions. In particular, results indicate that the wage premium is higher the stricter is employment protection for permanent contracts and the higher the share of temporary employment, which supports the view that workers with fixed-term contracts suffer from a negative wage gap due to lower bargaining power.
    Keywords: contract type, wage premium, segmentation
    JEL: J31 J41 J42
    Date: 2015–08
  2. By: Giotis, Georgios; Chletsos, Michael
    Abstract: The impact of minimum wages on employment has always been a field of conflicts among economists and this divergence of views has usually taken the form of competing studies. Doucouliagos and Stanley (Publication selection bias in minimum-wage research? A meta-regression analysis, 2009) conducted a meta-analysis of 64 US studies which showed that literature is contaminated by publication selection bias, and once it is corrected, little or no evidence of a negative association between minimum wages and employment remains. This result contradicts the neoclassical theory and gives a Keynesian perspective which suggests that changes in minimum wages are not related with positive or negative employment effects. In their analysis, the authors use a meta-sample of 45 empirical studies published in academic journals in the 2010-2014 five-year period, to investigate whether minimum wage research has been affected by Doucouliagos and Stanley's study. Their results indicate that there is evidence of publication selection in the elasticities' meta-sample, but once it is corrected only a small negative effect remains and, in the coefficients' meta-sample, publication selection bias is not found and the genuine effect is again negative but small. In addition, the authors find that study characteristics related to the data, the model specifications, the minimum wage and employment measure used, and the industry concerned, diversify the sign of the minimum wage effect.
    Keywords: minimum wage,employment,meta-analysis
    JEL: J38 J21 C12
    Date: 2015
  3. By: Sonja Jovicic (Schumpeter School, University of Wuppertal)
    Abstract: This paper investigates how much of the difference in wage distributions is related to differences in skill distributions and whether a compressed wage distribution is associated with high unemployment across core OECD countries. Some countries that have more compressed (dispersed) wage structures simultaneously have more compressed (dispersed) skill structures as well, and according to many economists, variations in skill inequality can explain variations in wage inequality across different countries. Firstly, this paper examines the relationship between skill compression and wage compression; secondly, wage compression is linked to labor market outcomes in terms of employment. Compressed wage structure (usually caused by labor market institutions) is often seen as a cause for high unemployment in the low-skill sector. Does the wage compression hypothesis hold? Based on the PIAAC survey of adult skills for seventeen OECD countries, this paper seeks to shed light on these two important topics.
    Keywords: wage distribution, earnings, skill distribution, employment
    JEL: J31 J24 E24
    Date: 2015–08
  4. By: Bönke, Timm; Giesecke, Matthias; Lüthen, Holger
    Abstract: This paper uncovers ongoing trends in idiosyncratic earnings volatility across generations by decomposing residual earnings auto-covariances into a permanent and a transitory component. We employ data on complete earnings life cycles for prime age men born 1935 through 1974 that covers earnings between 1960 and 2009. Over this period, the German labor market undergoes a heavy transformation and experiences strong deregulation, deunionization and a shift in employment from the industrial to the service sector. Our findings of increases in both components reflect the distinct phases of this transformation process. In magnitude, the transitory component increases most strongly in the early 1970s and the 1990s for young workers, whereas the permanent component displays the strongest increases for older workers in the early 1980 and the 2000s. Thus, the changes complicate the labor market entry for young workers while widening wage differences for established workers.
    Keywords: Earnings dynamics,Life cycle,Earnings distribution,Inequality,Earnings volatility
    JEL: D31 D33 H24
    Date: 2015
  5. By: Handwerker, Elizabeth (U.S. Bureau of Labor Statistics); Spletzer, James R. (U.S. Census Bureau)
    Abstract: This paper uses the microdata of the Occupational Employment Statistics (OES) Survey to assess the contribution of occupational concentration to wage inequality between establishments and its growth over time. We show that occupational concentration plays an important role in wage determination for workers, in a wide variety of occupations, and can explain some establishmentlevel wage variation. Occupational concentration is increasing during the 2000-2011 time period, although much of this change is explained by other observable establishment characteristics. Overall, occupational concentration can help explain a small amount of wage inequality growth between establishments during this time period.
    Keywords: wage inequality, establishments, occupational concentration, employers, employer-employee microdata
    JEL: J31 D31 L11 D22 M12 M50
    Date: 2015–08
  6. By: Michel Serafinelli (Department of Economics, University of Toronto, Canada)
    Abstract: This paper is the first to present direct evidence showing how localized knowledge spillovers arise from workers changing jobs within the same local labor market. Using a unique dataset combining Social Security earnings records and balance sheet information for the Veneto region of Italy, I first identify a set of highly productive firms, then show that hiring workers with experience at these firms significantly increases the productivity of other firms. My findings imply that worker flows explain around 10 percent of the productivity gains experienced by incumbent firms when new highly productive firms are added to a local labor market.
    Date: 2015–08
  7. By: Krueger, Dirk; Ludwig, Alexander
    Abstract: In this paper we compute the optimal tax and education policy transition in an economy where progressive taxes provide social insurance against idiosyncratic wage risk, but distort the education decision of households. Optimally chosen tertiary education subsidies mitigate these distortions. We highlight the quantitative importance of general equilibrium feedback effects from policies to relative wages of skilled and unskilled workers: subsidizing higher education increases the share of workers with a college degree thereby reducing the college wage premium which has important redistributive benefits. We also argue that a full characterization of the transition path is crucial for policy evaluation. We find that optimal education policies are always characterized by generous tuition subsidies, but the optimal degree of income tax progressivity depends crucially on whether transitional costs of policies are explicitly taken into account and how strongly the college premium responds to policy changes in general equilibrium.
    Keywords: education subsidy; progressive taxation; transitional dynamics
    JEL: E62 H21 H24
    Date: 2015–09
  8. By: de Boer, Henk-Wim (CPB Netherlands Bureau for Economic Policy Analysis); Jongen, Egbert L. W. (CPB Netherlands Bureau for Economic Policy Analysis); Kabátek, Jan (Tilburg University)
    Abstract: To promote the labor participation of parents with young children, governments employ a number of fiscal instruments. Prominent examples are childcare subsidies and in-work benefits. However, which policy works best for employment is largely unknown. We study the effectiveness of different fiscal stimuli in an empirical model of household labor supply and childcare use. We use a large and rich administrative data set for the Netherlands. Large-scale reforms in childcare subsidies and in-work benefits in the data period facilitate the identification of the structural parameters. We find that an in-work benefit for secondary earners that increases with income is the most effective way to stimulate total hours worked. Childcare subsidies are less effective, as substitution of other types of care for formal care drives up public expenditures. In-work benefits that target both primary and secondary earners are much less effective, because primary earners are rather unresponsive to financial incentives.
    Keywords: discrete choice, household labor supply, latent classes, differences-in-differences, work and care policies
    JEL: C25 C52 H31 J22
    Date: 2015–08
  9. By: Brügemann, Björn (VU University Amsterdam); Gautier, Pieter A. (VU University Amsterdam); Menzio, Guido (University of Pennsylvania)
    Abstract: The paper revisits the problem of wage bargaining between a firm and multiple workers. We show that the Subgame Perfect Equilibrium of the extensive-form game proposed by Stole and Zwiebel (1996a) does not imply a profile of wages and profits that coincides with the Shapley values as claimed in their classic paper. We propose an alternative extensive-form bargaining game, the Rolodex Game, that follows a simple and realistic protocol and that, under some mild restrictions, admits a unique Subgame Perfect Equilibrium generating a profile of wages and profits that are equal to the Shapley values. The vast applied literature that refers to the Stole and Zwiebel game to give a game-theoretic foundation to the use of the Shapley values as the outcome of the bargain between a firm and multiple workers should instead refer to the Rolodex game.
    Keywords: intra firm bargaining, Shapley value
    JEL: D21 J30
    Date: 2015–08
  10. By: Chugh, Sanjay K. (Boston College); Merkl, Christian (University of Erlangen-Nuremberg)
    Abstract: This paper characterizes efficient labor-market allocations in a labor selection model. The model's crucial aspect is cross-sectional heterogeneity for new job contacts, which leads to an endogenous selection threshold for new hires. With cross-sectional dispersion calibrated to microeconomic data, 40 percent of empirically-relevant fluctuations in the job-finding rate arise, which contrasts with results in an efficient search and matching economy. The efficient selection model's results hold in partial and general equilibrium, as well as with sequential search.
    Keywords: labor market, labor selection, labor market frictions, hiring costs, sequential search, efficiency, amplification
    JEL: E24 E32 J20
    Date: 2015–08
  11. By: Alvaredo, Facundo; Atkinson, Tony; Morelli, Salvatore
    Abstract: The concentration of personal wealth is now receiving a great deal of attention – after having been neglected for many years. One reason is the growing recognition that, in seeking explanations for rising income inequality, we need to look not only at wages and earned income but also at income from capital, particularly at the top of the distribution. In this paper, we use evidence from existing data sources to attempt to answer three questions: (i) what is the share of total personal wealth that is owned by the top 1 per cent, or the top 0.1 per cent? (ii) is wealth much more unequally distributed than income? (iii) is the concentration of wealth at the top increasing over time? The main conclusion of the paper is that the evidence about the UK concentration of wealth post-2000 is seriously incomplete and significant investment is necessary if we are to provide satisfactory answers to the three questions.
    Keywords: inequality; United Kingdom; wealth
    JEL: D3 H2
    Date: 2015–09
  12. By: Vivekinan Ashok; Ilyana Kuziemko; Ebonya Washington
    Abstract: Despite the large increases in economic inequality since 1970, American survey respondents exhibit no increase in support for redistribution, in contrast to the predictions from standard theories of redistributive preferences. We replicate these results but further demonstrate substantial heterogeneity by demographic groups. In particular, the two groups who have most moved against income redistribution are the elderly and African-Americans. We find little evidence that these subgroup trends are explained by relative economic gains or growing cultural conservatism, two common explanations. We further show that the elderly trend is uniquely American, at least relative to other developed countries with comparable survey data. While we are unable to provide definitive evidence on the cause of these two groups' declining redistributive support, we offer additional correlations which may offer fruitful directions for future research on the topic. One story consistent with the data on elderly trends is that older Americans worry that redistribution will come at their expense, in particular via cuts to Medicare. We find that the elderly have grown increasingly opposed to government provision of health insurance and that controlling for this tendency explains about 40% of their declining support for redistribution. For blacks, controlling for their declining support of race-targeted aid explains nearly 45% of their differential decline in redistributive preferences (raising the question of why support for race-targeted aid has fallen during a period when black economic catch-up to whites has stalled).
    JEL: D63 H23 J14 J15
    Date: 2015–09
  13. By: Cascio, Elizabeth U. (Dartmouth College); Haider, Steven J. (Michigan State University); Nielsen, Helena Skyt (Aarhus University)
    Abstract: Numerous countries have enacted policies to promote the labor force participation of women around the years of childbearing, and unsurprisingly, many research articles have been devoted to evaluating their effectiveness. Perhaps more surprisingly, however, six such articles were submitted independently over several months to Labour Economics and subsequently made it through the normal review process. These articles are collected in the Special Section that follows. This article provides additional background to facilitate the understanding of the policies that are evaluated in the Special Section articles and, more importantly, a discussion of what can be learned from the articles as a collection. Taken together, the articles are quite informative in demonstrating how the effectiveness of policies can vary across different national contexts and how this variation itself can be usefully examined with the standard theoretical framework.
    Keywords: childcare, parental leave
    JEL: J13 J22
    Date: 2015–08
  14. By: Ben Gillen; Erik Snowberg; Leeat Yariv
    Abstract: Measurement error is ubiquitous in experimental work. It leads to imperfect statistical controls, attenuated estimated effects of elicited behaviors, and biased correlations between characteristics. We develop simple statistical techniques for dealing with experimental measurement error. These techniques are applied to data from the Caltech Cohort Study, which conducts repeated incentivized surveys of the Caltech student body. We illustrate the impact of measurement error by replicating three classic experiments, and showing that results change substantially when measurement error is taken into account. Collectively, these results show that failing to properly account for measurement error may cause a field-wide bias: it may lead scholars to identify "new" effects and phenomena that are actually similar to those previously documented.
    JEL: C81 C9 D8 J71
    Date: 2015–09
  15. By: Nelson Sá (Department of Economics, Vassar College, Poughkeepsie, New York 12604, USA); Ana Paula Ribeiro (CEF.UP and FEP, Universidade do Porto, Portugal); Vitor Carvalho (CEF.UP and FEP, Universidade do Porto, Portugal)
    Abstract: This paper makes use of a sample of articles published between 1999 and 2013 by economists affiliated in Portuguese institutions to examine the impact of co-authorship over the quality of academic research. We build a unique database to characterize the role played by distinct affiliations and educational backgrounds on this process, while controlling for experience and individual quality levels. Mentoring relations are identified as one possible source of negative bias on the measurement of teamwork productivity, which we proxy for and quantify here for the first time. The empirical results also suggest that co-authorship across domestic institutions does not carry any significant impact on research quality, but international collaboration enhances it. A doctorate earned abroad is shown to directly improve publication outcomes, besides making it easier to establish partnerships across frontiers. These findings underscore the importance of accessing external knowledge networks in academia, offering relevant policy insights for a large number of small and less developed countries.
    Keywords: Knowledge Networks; Co-Authorship; Academic Productivity
    JEL: A11 J44 I23
    Date: 2015–09

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