nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒09‒26
seventeen papers chosen by
Joseph Marchand
University of Alberta

  1. Cultural and Ethnic Differences in the Transitions from Work to "Retirement" of Rural Elders in China's Minority Regions By Connelly, Rachel; Maurer-Fazio, Margaret
  2. Fertility, Household Structure, and Parental Labor Supply: Evidence from Rural China By Li, Hongbin; Yi, Junjian; Zhang, Junsen
  3. Is There an Informal Employment Wage Penalty in Egypt? By Tansel, Aysit; Keskin, Halil Ibrahim; Ozdemir, Zeynel Abidin
  4. Big plant closures and agglomeration economies By Jordi Jofre-Monseny; Maria Sánchez-Vidal; Elisabet Viladecans-Marsal
  5. The Political Economy of State and Local Investment in Pre-K Programs By Kahn, Matthew E.; Barron, Kyle
  6. Pacts for Employment and Competitiveness as a Role Model? Their Effects on Firm Performance By John T. Addison; Paulino Teixeira; Katalin Evers; Lutz Bellmann
  7. The Affordable Care Act and the Growth of Involuntary Part-Time Employment By Even, William E.; Macpherson, David A.
  8. Locate Your Nearest Exit: Mass Layoffs and Local Labor Market Response By Andrew Foote; Michel Grosz; Ann Stevens
  9. Economic incentives and long-term sickness absence: the indirect effect of replacement rates on absence behavior By Nilsson, Martin
  10. The Great Recession and its Aftermath: What Role for Structural Changes? By Rothstein, Jesse
  11. Structural empirical evaluation of job search monitoring By van den Berg, Gerar J.; van der Klaauw, Bas
  12. Strive to be First or Avoid Being Last: An Experiment on Relative Performance Incentives By Dutcher, E. Glenn; Balafoutas, Loukas; Lindner, Florian; Ryvkin, Dmitry; Sutter, Matthias
  13. Does Informal Learning at Work Differ between Temporary and Permanent Workers? Evidence from 20 OECD Countries By Ferreira Sequeda, Maria; de Grip, Andries; Van der Velden, Rolf
  14. How Does Household Income Affect Child Personality Traits and Behaviors? By Randall Akee; Emilia Simeonova; E. Jane Costello; William Copeland
  15. Work-related ability as source of information advantages of training employers By Mohrenweiser, Jens; Wydra-Sommaggio, Gaby; Zwick, Thomas
  16. Individual Poverty Paths and the Stability of Control-Perception By Thiel, Hendrik; Thomsen, Stephan L.
  17. Non-Cognitive Deficits and Young Adult Outcomes: The Long-Run Impacts of a Universal Child Care Program By Michael Baker; Jonathan Gruber; Kevin Milligan

  1. By: Connelly, Rachel (Bowdoin College); Maurer-Fazio, Margaret (Bates College)
    Abstract: This paper considers the work to "retirement" transitions of the rural elders in China who reside in seven regions with substantial minority populations. The data employed, those of the China Household Ethnicity Survey, are ideal for examining the effect of cultural differences on this key lifecycle event, the reduction of market-oriented work with age. Membership in particular ethnic minority groups is used to proxy the potential differences in the culture of aging and caregiving. We find that beyond education, the strongest predictors of labor force participation for China's rural elders are age, disability, widowhood, and ethnic minority status. The effects of ethnic minority group status on labor force participation are robust and the differences in participation among ethnic groups are sometimes large. It is thus misleading, in the analysis of the labor force participation of China's rural elders, to simply dichotomize ethnic minority and majority (Han) group membership. Further careful research is needed to help understand the differences in perceptions of aging among China's rural ethnic minority groups.
    Keywords: ethnicity, retirement, labor force participation, elders, aging, China Household Ethnicity Survey
    JEL: J14 J15 J16 J26 D13 O53
    Date: 2015–09
  2. By: Li, Hongbin (Tsinghua University); Yi, Junjian (National University of Singapore); Zhang, Junsen (Chinese University of Hong Kong)
    Abstract: This paper tests the effects of fertility on household structure and parental labor supply in rural China. To solve the endogeneity problem, we use a unique survey on households with twin children and a comparison group of non-twin households. The ordinary least squares estimates show a negative correlation between fertility and parental labor supply. Using twinning as a natural experiment, we do not find evidence on the negative effects of fertility on parental labor supply. By contrast, we find that the twinning-induced increase in fertility enhances significantly the coresidence of grandparents. The results remain robust when we use the Chinese 1990 population census. We suggest that the negative effects of fertility on parental labor supply are mitigated by the childcare provided by grandparents. Our results have important implications for population and public childcare policies.
    Keywords: fertility, parental labor supply, household structure
    JEL: J13 J18 J22 O10
    Date: 2015–09
  3. By: Tansel, Aysit; Keskin, Halil Ibrahim; Ozdemir, Zeynel Abidin
    Abstract: This paper considers the private sector wage earners in Egypt and examine their wage distribution during 1998-2012 using Egyptian Labor Market Panel Survey. We first estimate Mincer wage equations both at the mean and at different quantiles of the wage distribution taking into account observable characteristics. Then we make use of the panel feature of the data and estimate models taking into account unobservable characteristics. We also consider the possibility of nonlinearity in covariate effects and estimate a variant of matching models. In all cases we find a persistent informal wage penalty in the face of extensive sensitivity checks. It is smaller when unobserved heterogeneity is taken into account and larger at the top than at the bottom of the conditional wage distribution. We also examine the informal wage penalty over time during the study period and in different groups according to experience and education. The informal wage penalty has increased recently over time and is larger for the better educated but smaller for the more experienced.
    Keywords: Formal and informal wage gap; Formal and informal employment; Panel data; Egypt.
    JEL: J31 J33
    Date: 2015–09–04
  4. By: Jordi Jofre-Monseny (Universitat de Barcelona & IEB); Maria Sánchez-Vidal (London School of Economics); Elisabet Viladecans-Marsal (Universitat de Barcelona & IEB)
    Abstract: This paper analyses the effects of large manufacturing plant closures on local employment. Specifically, we estimate the net employment effects of the closure of 45 large manufacturing plants in Spain, which relocated abroad between 2001 and 2006. We run differences-in-differences specifications in which locations that experience a closure are matched to locations with similar pre-treatment employment levels and trends. The results show that when a plant closes, for each job directly lost in the plant closure, between 0.3 and 0.6 jobs are actually lost in the local economy. The adjustment is concentrated in incumbent firms in the industry that suffered the closure, providing indirect evidence of labor market pooling effects. We find no employment effects in the rest of manufacturing industries or in the services sectors. These findings suggest that traditional input-output analyses tend to overstate the net employment losses of large plant closures.
    Keywords: Local employment, plant closures, input-output, agglomeration economies
    JEL: R12 R23 R58 J23
    Date: 2015
  5. By: Kahn, Matthew E. (University of California, Los Angeles); Barron, Kyle (University of California, San Francisco)
    Abstract: The expansion of access to publicly provided pre-kindergarten bundles together redistribution to the poor with an early human capital investment. Financing publicly provided pre-K investment is mainly a state and local issue. Which voters favor local pre-K expansion? This paper uses several new data sets to describe the circumstances such that local voters reveal a willingness to spend on an early intervention that may not yield direct benefits for them. Republican voters consistently oppose the expansion of publicly provided pre-K. Suburban voters also tend to oppose such investment. We explore several possible explanations for these facts.
    Keywords: early childhood investment, voting, urban, suburban
    JEL: H41
    Date: 2015–09
  6. By: John T. Addison (University of South Carolina, Durham University, University of Coimbra/GEMF, and IZA Bonn.); Paulino Teixeira (Faculty of Economics, University of Coimbra/GEMF and IZA Bonn); Katalin Evers (Institute for Employment Research (IAB)); Lutz Bellmann (Friedrich-Alexander-Universität Erlangen-Nürnberg, IAB and IZA Bonn)
    Abstract: Pacts for employment and competitiveness are an integral component of the ongoing process of decentralization of collective bargaining in Germany, a phenomenon that has been hailed as key to that nation's economic resurgence. Yet little is known about the effects of pacts on firm performance. The evidence largely pertains to employment and is decidedly mixed. The present paper investigates the association between pacts and a wider set of outcomes – wages, employment, investment, productivity, innovation, and survivability – in a RDD framework where the controls comprise establishments that negotiated over pacts but failed to reach agreement on their implementation. An extensive set of simulations are run to test for robustness of the key findings of the model. There is no evidence of pacts negatively impacting any of the selected measures of establishment performance. Indeed, the positive effects reported for wages, productivity, and innovation are sustained in simulations.
    Keywords: pacts for employment and competitiveness, concession bargaining, opening clauses decentralization, firm performance, regression discontinuity design, Germany.
    JEL: D22 J3 J41 J50 J53
    Date: 2015–09
  7. By: Even, William E. (Miami University); Macpherson, David A. (Trinity University)
    Abstract: This study tests whether the employer mandate under the Affordable Care Act (ACA) increased involuntary part-time (IPT) employment. Using data from the Current Population Survey between 1994 and 2014, we find that IPT employment in 2014 was higher than predicted based on economic conditions and the composition of jobs and workers in the labor market. More importantly, using difference-in-difference methods, we find that the increase in the probability of IPT employment since 2010 was greatest in the industries and occupations where workers were most likely to be affected by the mandate. We also show that there has been virtually no change in the probability of IPT employment where the number of workers affected by the mandate was small. We estimate that approximately 1 million additional workers between the ages of 19 and 64 are in IPT employment as a result of the ACA employer mandate.
    Keywords: Affordable Care Act, involuntary part-time employment, employer mandate, health insurance
    JEL: J22 J23 J32 J33 H25
    Date: 2015–09
  8. By: Andrew Foote; Michel Grosz; Ann Stevens
    Abstract: Large shocks to local labor markets cause lasting changes to communities and their residents. We examine four main channels through which the local labor force adjusts following mass layoffs: in- and out-migration, retirement, and disability insurance enrollment. We show that these channels account for over half of the labor force reductions following a mass layoff event. By measuring the residual difference between these channels and labor force change, we also show that labor force non-participation grew in the period during and after the Great Recession. This result highlights the growing importance of non-participation as a response to labor demand shocks.
  9. By: Nilsson, Martin (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: Reductions in SI replacement levels has been a widely used instrument to lower sickness absence rates. The idea is that increasing the direct cost of absence would lower the absence rate. This paper explores a reform to the compulsory Swedish SI that meant that the replacement rate varied over the sickness absence spell. The reform reduced the replacement rate from 90 percent of foregone earnings to 65 percent during the 3 first days of a sickness absence spell and to 80 percent for days 4 – 90. From day 91 and onwards the rate remained at 90 percent. I show that the reform had, beside the previously shown direct effect, also an indirect effect on sickness absence behavior. The indirect effect stems from an increased cost of returning to work ”to soon” and having to return on sick leave, this time with a lower replacement rate. I find that the indirect effect significantly reduces the probability to end an absence spell, creating a locking-in effect in sickness absence.
    Keywords: Absenteeism; sickness insurance; natural experiment
    JEL: H51 I18 J22
    Date: 2015–08–31
  10. By: Rothstein, Jesse
    Abstract: The last eight years have been disastrous for many workers, and particularly so for those with low human capital or other forms of disadvantage. Although the Great Recession officially ended in 2009, the labor market has been very slow to recover. One explanation attributes the ongoing poor labor market outcomes of young and non - college workers to the combination of deficient aggregate labor demand and greater sensitivity of marginal workers to cyclical conditions. A second attributes the recent outcomes to structural changes in the labor market. These have importantly different policy implications: Cyclical explanations imply that the main challenge is to raise aggregate labor demand and that if this is done many of the patterns seen in the last several years will revert to their prior trends. Structural explanations, by contrast, suggest the recent experience is the “new normal,†absent policy responses to encourage more (or different) labor supply. This paper reviews recent data for evidence on the two explanations, focusing on wage trends as an indicator of the relative importance of labor supply and demand. I find little evidence of wage pressure in any quantitatively important labor markets before 2015. The most recent data is more mixed, but still suggests substantial ongoing slack.
    Keywords: Social and Behavioral Sciences
    Date: 2015–08–01
  11. By: van den Berg, Gerar J. (IFAU - Institute for Evaluation of Labour Market and Education Policy); van der Klaauw, Bas (Department of Economics, University of Amsterdam)
    Abstract: To evaluate search effort monitoring of unemployed workers, it is important to take account of post-unemployment wages and job-to-job mobility. We structurally estimate a job search model with endogenous job search effort by the unemployed along various search channels that deals with this. The data are from an experiment in the Netherlands in which the extent of monitoring is randomized. They include registers of post-unemployment outcomes like wages and job mobility, and survey data on measures of search behavior. As such we are the first to study monitoring effects on post-unemployment outcomes. Once employed, individuals have the opportunity to further improve their position by moving to better-paid jobs, and we find that this reduces the extent to which monitoring induces substitution towards formal search channels in unemployment. In general, job mobility compensates for adverse long-run effects of monitoring on wages. We use the structural estimates to compare monitoring to counterfactual policies against moral hazard, like re-employment bonuses and changes in the unemployment benefits path. Replacing monitoring by an over-all benefits reduction in a way that is neutral to the worker results in slightly smaller effects with lower administrative costs.
    Keywords: Unemployment duration; search effort; active labor market policy; wage; job duration; job mobility; treatment; search channels; multi-tasking; randomized social experiment
    JEL: J23
    Date: 2015–08–25
  12. By: Dutcher, E. Glenn (University of Central Missouri); Balafoutas, Loukas (University of Innsbruck); Lindner, Florian (University of Innsbruck); Ryvkin, Dmitry (Florida State University); Sutter, Matthias (University of Cologne)
    Abstract: We utilize a laboratory experiment to compare effort provision under optimal tournament contracts with different distributions of prizes which motivate agents to compete to be first, avoid being last, or both. We find that the combined tournament contract incorporating both incentives at the top and at the bottom induces the highest effort, especially in larger groups. Avoiding being last produces the lowest variance of effort and is more effective at motivating employees compared to competing for the top.
    Keywords: tournament, winner, loser, contract, experiment, learning
    JEL: M52 J33 J24 D24 C90
    Date: 2015–09
  13. By: Ferreira Sequeda, Maria (ROA, Maastricht University); de Grip, Andries (ROA, Maastricht University); Van der Velden, Rolf (ROA, Maastricht University)
    Abstract: Several studies have shown that employees with temporary contracts have lower training participation than those with permanent contracts. There is, however, no empirical literature on the difference in informal learning on the job between permanent and temporary workers. In this paper, we analyse this difference across 20 OECD countries using unique data from the recent PIAAC survey. Using a control function model with endogenous switching, we find that workers in temporary jobs engage in informal learning more intensively than their counterparts in permanent employment, although the former are, indeed, less likely to participate in formal training activities. In addition, we find evidence for complementarity between training and informal learning for both temporary and permanent employees. Our findings suggest that temporary employment need not be dead-end jobs. Instead, temporary jobs of high learning content could be a stepping stone towards permanent employment. However, our results also suggest that labour market segmentation in OECD countries occurs within temporary employment due to the distinction between jobs with low and high learning opportunities.
    Keywords: temporary contracts, informal learning, training, human capital investments
    JEL: E24 J24 J41
    Date: 2015–09
  14. By: Randall Akee; Emilia Simeonova; E. Jane Costello; William Copeland
    Abstract: Existing research has investigated the effect of early childhood educational interventions on the child’s later-life outcomes. These studies have found limited impact of supplementary programs on children’s cognitive skills, but sustained effects on personality traits. We examine how a positive change in unearned household income affects children’s emotional and behavioral health and personality traits. Our results indicate that there are large beneficial effects of improved household financial wellbeing on children’s emotional and behavioral health and positive personality trait development. Moreover, we find that these effects are most pronounced for children who are lagging behind their peers in these measures before the intervention. Increasing household incomes reduce differences across adolescents with different levels of initial emotional-behavioral symptoms and personality traits. We also examine potential channels through which the increased household income may contribute to these positive changes. Parenting and relationships within the family appear to be an important mechanism. We also find evidence that a sub-sample of the population moves to census tracts with better income levels and educational attainment.
    JEL: H24 H3 H31 I14 I3 I38 J24
    Date: 2015–09
  15. By: Mohrenweiser, Jens; Wydra-Sommaggio, Gaby; Zwick, Thomas
    Abstract: This paper addresses the puzzle how employers that invest in general human capital can gain an information advantage with respect to the ability of their employees when training is certified by credible external institutions. We apply an established model from the employer-learning literature and distinguish between two ability dimensions: cognitive and work-related ability. We apply this model to the German apprenticeship system and show that cognitive ability certified by external institutions at that the end of apprenticeship training can be signalled to outside employers. Apprenticeship graduates however cannot signal their work-related ability - measured by a small voluntary bonus paid by the training employer - to the outside market. We therefore show that the information advantage on work-related ability explains that training employers can positively select the apprentices they retain. As a consequence, this information advantage induces employers to invest in certified and transferable human capital.
    Keywords: training,employer learning,employer change,adverse selection,asymmetric information
    JEL: J24 J31 J62 J63 M52 M53
    Date: 2015
  16. By: Thiel, Hendrik (NIW Hannover, Leibniz Universität Hannover); Thomsen, Stephan L. (NIW Hannover, Leibniz Universität Hannover)
    Abstract: This paper investigates whether individual control-perception affects the probability of becoming poor, and vice versa, whether poverty experiences can be detrimental to these traits later on. The former relation is intuitive as control related traits underlay many idiosyncratic determinants of poverty. Though traits like control-perception are known to stabilize towards adulthood, the latter association may be plausible when some plasticity is maintained in case of more vigorous environmental influences like poverty. Such deterioration of control-perception would lead to poor people being literally "trapped". Yet, it is unclear what the underlying mediation paths are and whether control-perception or other potential factors are involved. Our empirical results suggest that poverty experiences affect individual control-perception to some extent. Despite rather modest magnitudes, the findings indicate that no invariance of control-perception is given in adulthood.
    Keywords: personality traits, control-perception, poverty constitution, poverty experience
    JEL: C33 C35 J21 J24 J30
    Date: 2015–09
  17. By: Michael Baker; Jonathan Gruber; Kevin Milligan
    Abstract: Past research has demonstrated that positive increments to the non-cognitive development of children can have long-run benefits. We test the symmetry of this contention by studying the effects of a sizeable negative shock to non-cognitive skills due to the introduction of universal child care in Quebec. We first confirm earlier findings showing reduced contemporaneous non-cognitive development following the program introduction in Quebec, with little impact on cognitive test scores. We then show these non-cognitive deficits persisted to school ages, and also that cohorts with increased child care access subsequently had worse health, lower life satisfaction, and higher crime rates later in life. The impacts on criminal activity are concentrated in boys. Our results reinforce previous evidence on the central role of non-cognitive skills for long-run success.
    JEL: I1 J13 K42
    Date: 2015–09

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