nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒10‒04
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. Bilingual Schooling and Earnings: Evidence from a Language-in-Education Reform By Lorenzo Cappellari; Antonio Di Paolo
  2. A structural analysis of labour supply and involuntary unemployment in the Netherlands By Henk-Wim de Boer
  3. Intra-household Commuting Choices and Local Labour Markets By Jennifer Roberts; Karl Taylor
  4. The Pros and Cons of Sick Pay Schemes: Testing for Contagious Presenteeism and Shirking Behavior By Stefan Pichler; Nicolas R. Ziebarth
  5. Housing Booms and Busts, Labor Market Opportunities, and College Attendance By Kerwin Kofi Charles; Erik Hurst; Matthew J. Notowidigdo
  6. The Wage Impact of the Marielitos: A Reappraisal By George J. Borjas
  7. Achievement Effects of Individual Performance Incentives in a Teacher Merit Pay Tournament By Margaret Brehm; Scott A. Imberman; Michael F. Lovenheim
  8. Tenure and street-level bureaucrats: how assessment tools are used at the frontline of the public sector By Assadi, Anahita; Lundin, Martin
  9. Can Fixed-Term Contracts Put Low Skilled Youth on a Better Career path? Evidence from Spain By José Ignacio García Pérez; Ioana Marinescu; Judit Vall Castello
  10. Explaining the Evolution of Educational Attainment in the U.S. By Rui Castro; Daniele Coen-Pirani
  11. The Labor Market and School Finance Effects of the Texas Shale Boom on Teacher Quality and Student Achievement By Marchand, Joseph; Weber, Jeremy
  12. Offshoring and the Geography of Jobs in Great Britain By Gagliardi, Luisa; Iammarino, Simona; Rodriguez-Pose, Andres
  13. Team Production, Endogenous Learning about Abilities and Career Concerns By Evangelia Chalioti

  1. By: Lorenzo Cappellari (Università Cattolica Milano); Antonio Di Paolo (AQR-IREA, University of Barcelona)
    Abstract: We exploit the 1983 language-in-education reform that introduced Catalan alongside Spanish as medium of instruction in Catalan schools to estimate the labour market value of bilingual education. Identification is achieved in a difference-in-differences framework exploiting variation in exposure to the reform across years of schooling and years of birth. We find positive wage returns to bilingual education and no effects on employment, hours of work or occupation. Results are robust to education-cohort specific trends or selection into schooling and are mainly stemming from exposure at compulsory education. We show that the effect worked through increased Catalan proficiency for Spanish speakers and that there were also positive effects for Catalan speakers from families with low education. These findings are consistent with human capital effects rather than with more efficient job search or reduced discrimination. Exploiting the heterogeneous effects of the reform as an instrument for proficiency we find sizeable earnings effects of skills in Catalan.
    Keywords: Bilingual education, returns to schooling, language-in-education reform, Catalonia
    JEL: J24 J31 I28
    Date: 2015–09
  2. By: Henk-Wim de Boer
    Abstract: Most structural models for labour supply ignore the possibility of involuntary unemployment which may lead to biased behavioural responses. This may have important policy implications. We estimate a structural model for labour supply without and with involuntary unemployment for the Netherlands, using data for the period 2006-2009. We estimate both models for four groups separately: singles without children, single parents, couples without children and couples with children. We use information on job search behaviour to estimate the determinants of involuntary unemployment. We find that average labour supply elasticities are only slightly lower in the model with involuntary unemployment than in the model without involuntary unemploy- ment. The main reason for this small bias is the relatively small share of individuals who are involuntary unemployed in the period 2006{2009. A simulation of tax-benefit reforms confirms that the upward bias in average labour supply responses is limited in the model without involuntary unemployment. Only for subgroups with a high risk of being involuntary unemployed, such as lower educated individuals and immigrants, we find a relatively large upward bias in labour supply elasticities in the model without involuntary unemployment.
    JEL: C25 C52 H31 J22
    Date: 2015–09
  3. By: Jennifer Roberts (Department of Economics, University of Sheffield); Karl Taylor (Department of Economics, University of Sheffield)
    Abstract: While the job search literature has increasingly recognised the importance of the spatial distribution of employment opportunities, local labour market conditions have been a notable omission from much of the empirical literature on commuting outcomes. This study of the commute times of dual earner couples in England and Wales finds that local labour market conditions are closely associated with commute times and their effects are not gender neutral. Male commute times are much more sensitive to local unemployment rates than women’s; where women earn less than one–third of household income, their commute times do not seem to be sensitive to local unemployment. In addition, the more conducive the local labour market is to female employment, the less time women spend commuting. On average the ‘female friendliness’ of the local labour market has no effect on male commute times, but in households where women earn the majority of household income, men commute further if the local labour market is female friendly. We also show that it is important to account for the heterogeneity of household types; there are important differences in our results according to female income share, housing tenure, mover status and mode of travel.
    Keywords: local labour market; dual earner households
    JEL: D19 J24 R40
    Date: 2015–09
  4. By: Stefan Pichler; Nicolas R. Ziebarth
    Abstract: This paper proposes a test for the existence and degree of contagious presenteeism and negative externalities in sickness insurance schemes. First, we theoretically decompose moral hazard into shirking and contagious presenteeism behavior and derive testable conditions. Then, we implement the test exploiting German sick pay reforms and administrative industry-level data on certified sick leave by diagnoses. The labor supply adjustment for contagious diseases is significantly smaller than for non-contagious diseases. Lastly, using Google Flu data and the staggered implementation of US sick leave reforms, we show that flu rates decrease after employees gain access to paid sick leave.
    Keywords: Sickness Insurance, Paid Sick Leave, Presenteeism, Contagious Diseases, Infections, Negative Externalities, Shirking, US, Germany
    JEL: I12 I13 I18 J22 J28 J32
    Date: 2015
  5. By: Kerwin Kofi Charles; Erik Hurst; Matthew J. Notowidigdo
    Abstract: We study how the recent national housing boom and bust affected college enrollment and attainment during the 2000s. We exploit cross-city variation in local housing booms, and use a variety of data sources and empirical methods, including models that use plausibly exogenous variation in housing demand identified by sharp structural breaks in local housing prices. We show that the housing boom improved labor market opportunities for young men and women, thereby raising their opportunity cost of college-going. According to standard human capital theories, this effect should have reduced college-going overall, but especially for persons at the margin of attendance. We find that the boom substantially lowered college enrollment and attainment for both young men and women, with the effects concentrated at two-year colleges. We find that the positive employment and wage effects of the boom were generally undone during the bust. However, attainment for the particular cohorts of college-going age during the housing boom remain persistently low after the end of the bust, suggesting that reduced educational attainment may be an enduring effect of the housing cycle. We estimate that the housing boom explains roughly 30 percent of the recent slowdown in college attainment.
    JEL: E24 I21 J24
    Date: 2015–09
  6. By: George J. Borjas
    Abstract: This paper brings a new perspective to the analysis of the Mariel supply shock, revisiting the question and the data armed with the accumulated insights from the vast literature on the economic impact of immigration. A crucial lesson from this literature is that any credible attempt to measure the wage impact of immigration must carefully match the skills of the immigrants with those of the pre-existing workforce. The Marielitos were disproportionately low-skill; at least 60 percent were high school dropouts. A reappraisal of the Mariel evidence, specifically examining the evolution of wages in the low-skill group most likely to be affected, quickly overturns the finding that Mariel did not affect Miami’s wage structure. The absolute wage of high school dropouts in Miami dropped dramatically, as did the wage of high school dropouts relative to that of either high school graduates or college graduates. The drop in the relative wage of the least educated Miamians was substantial (10 to 30 percent), implying an elasticity of wages with respect to the number of workers between -0.5 and -1.5. In fact, comparing the magnitude of the steep post-Mariel drop in the low-skill wage in Miami with that observed in all other metropolitan areas over an equivalent time span between 1977 and 2001 reveals that the change in the Miami wage structure was a very unusual event. The analysis also documents the sensitivity of the estimated wage impact to the choice of a placebo. The measured impact is much smaller when the placebo consists of cities where pre-Mariel employment growth was weak relative to Miami.
    JEL: J2 J31 J61
    Date: 2015–09
  7. By: Margaret Brehm; Scott A. Imberman; Michael F. Lovenheim
    Abstract: This paper estimates the effect of the individual incentives teachers face in a teacher-based value-added merit pay tournament on student achievement. We first build an illustrative model in which teachers use proximity to an award threshold to update their information about their own ability, which informs their expected marginal return to effort. The model predicts that those who are closer to an award cutoff in a given year will increase effort and thus will have higher achievement gains in the subsequent year. However, if value-added scores are too noisy, teachers will not respond. Using administrative teacher-student linked data, we test this prediction employing a method akin to the bunching estimator of Saez (2010). Specifically, we examine whether teachers who are proximal to a cutoff in one year exhibit excess gains in test score growth in the next year. Our results show consistent evidence that teachers do not respond to the incentives they face under this program. In line with our model, we argue that a likely reason for the lack of responsiveness is that the value-added measures used to determine awards were too noisy to provide informative feedback about one's ability. This highlights the importance of value-added precision in the design of incentive pay systems.
    JEL: H75 I21 J33 J38
    Date: 2015–09
  8. By: Assadi, Anahita (IFAU - Institute for Evaluation of Labour Market and Education Policy); Lundin, Martin (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: The tension between governance and professional discretion is a question of constant interest in public administration research, and studies on street-level bureaucracy thus aim to understand the actions of frontline workers. Largely missing in this literature, however, is research on how tenure affects behavior. To fill in this gap, we analyze how caseworkers with varying degrees of tenure respond to steering signals. We study the nationwide introduction of an assessment support tool to be used to assess clients’ needs under the Swedish active labor market policy. We propose that accumulated experiences strengthen frontline workers’ confidence. In turn, this makes them less responsive to formal policy signals, such as the assessment tool. Qualitative and quantitative methods are both used in support of the current research. The analysis suggests that as tenure increases, street-level bureaucrats, especially male caseworkers, tend to use the assessment tool less carefully and act in accordance with policy signals to a lesser extent. The qualitative analysis indicates that this pattern can partly be explained by the fact that increasing experience with meeting clients face-to-face increases caseworkers’ perceived skills and confidence.
    Keywords: Street-level bureaucracy; policy implementation; discretion; tenure; assessment support tool; profiling; active labor market policy
    JEL: J20
    Date: 2015–09–16
  9. By: José Ignacio García Pérez (U. Pablo de Olavide & FEDEA); Ioana Marinescu (U. of Chicago & NBER); Judit Vall Castello (U. Pompeu Fabra)
    Abstract: By reducing the commitment made by employers, fixed-term contracts can help low-skilled youth find a first job. However, the long-term impact of fixed-term contracts on these workers’ careers may be negative. Using Spanish social security data, we analyze the impact of a large liberalization in the regulation of fixed-term contracts in 1984. Using a cohort regression discontinuity design, we find that the reform raised the likelihood of male high-school dropouts working before age 19 by 9%. However, in the longer run, the reform reduced number of days worked (by 4.5%) and earnings (by 9%).
    Keywords: Temporary Contracts, Long-term impact, Policy evaluation, Young workers, Discontinuity design, Spain.
    JEL: J23 J31 J42 H43 D04
    Date: 2015–09
  10. By: Rui Castro (University of Western Ontario); Daniele Coen-Pirani (University of Pittsburgh)
    Abstract: We study the evolution of educational attainment of the 1932–1972 cohorts using a human capital investment model with heterogeneous learning ability. Inter-cohort variation in schooling is driven by changes in skill prices, tuition, and education quality over time, and average learning ability across cohorts. Under static expectations the model accounts for the main empirical patterns. Rising skill prices for college explain the rapid increase in college graduation till the 1948 cohort. The decline in average learning ability, calibrated to match the evolution of test scores, explains half of the stagnation in college graduation between the 1948 and 1972 cohorts.
    Keywords: Educational Attainment; Human Capital; Skill Prices; Inequality; Cohorts
    JEL: I24 J24 J31 O11
    Date: 2015
  11. By: Marchand, Joseph (University of Alberta, Department of Economics); Weber, Jeremy (University of Pittsburgh)
    Abstract: Resource booms can affect student achievement through greater labor demand, where rising wages pull students or teachers out of schools, and through an expanded tax base, where increased school spending alters teacher quality or student productivity. Using shale depth variation across Texas school districts with annual oil and gas price variation, this study finds that resource development slightly decreased student achievement despite providing schools with more money. Vocational and economically disadvantaged students were pulled into the labor market, while teacher turnover and inexperience increased. Schools responded to the tax base expansion by spending more on capital projects but not on teachers.
    Keywords: local labor markets; local school finance; resource booms; teacher quality
    JEL: H70 I22 J24 J40 Q33 R23
    Date: 2015–09–30
  12. By: Gagliardi, Luisa; Iammarino, Simona; Rodriguez-Pose, Andres
    Abstract: This paper investigates the impact of the offshoring of production activities on domestic jobs in Great Britain. The paper considers both the spatial heterogeneity across local labour markets and variations in the intensity of outward flows of investments abroad (OFDI) across industries in order to shed new light on the job creation/destruction implications of offshoring. The results suggest that offshoring may generate significant job losses in routine occupations in areas that have been more exposed to the relocation of production abroad, regardless of whether the relocation has been to developed or developing/emerging countries. Offshoring to developing/emerging countries has, by contrast, a positive effect on the generation of non-routine jobs. Efficiency gains accruing from the international reorganization of production increase in the long-run, with compensation mechanisms operating through growth of employment in higher value added activities at home. Overall, our results uncover important spatial and interpersonal inequalities in job creation, which provide new challenges for public policy.
    Keywords: job creation and destruction; local labour markets; offshoring; routine and non-routine occupations
    JEL: F21 J23 J24 J42
    Date: 2015–09
  13. By: Evangelia Chalioti (Cowles Foundation, Yale University)
    Abstract: This paper studies career concerns in teams where the support a worker receives depends on fellow team members’ effort and ability. In this setting, by exerting effort and providing support, a worker can influence her own and her teammates’ performances in order to bias the learning process in her favor. To manipulate the market’s assessments, we argue that in equilibrium, a worker has incentives to help or even sabotage her colleagues in order to signal that she is of higher ability. In a multiperiod stationary framework, we show that the stationary level of work effort is above and help effort is below their efficient levels.
    Keywords: Career concerns, Team incentives, Incentives to help, Incentives to sabotage
    JEL: D83 J24 M54
    Date: 2015–08

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