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

  1. Is There an Informal Employment Wage Penalty in Egypt? By Tansel, Aysit; Keskin, Halil Ibrahim; Ozdemir, Zeynel Abidin
  2. Moving Up or Falling Behind? Gender, Promotions, and Wages in Canada By Javdani, Mohsen; McGee, Andrew
  3. Intra-Household Commuting Choices and Local Labour Markets By Roberts, Jennifer; Taylor, Karl
  4. The Impact of Syrian Refugees on Natives' Labor Market Outcomes in Turkey: Evidence from a Quasi-Experimental Design By Ceritoglu, Evren; Gurcihan Yunculer, H. Burcu; Torun, Huzeyfe; Tumen, Semih
  5. Long-Term Direct and Spillover Effects of Job Training: Experimental Evidence from Colombia By Herrera Prada, Luis Omar; Kugler, Adriana D.; Kugler, Maurice; Saavedra, Juan Esteban
  6. The Japanese Labour Market during the Global Financial Crisis and the Role of Non-Standard Work: A Micro Perspective By Hijzen, Alexander; Kambayashi, Ryo; Teruyama, Hiroshi; Genda, Yuji
  7. Stemming the Tide: What Have EU Countries Done to Support Low-Wage Workers in an Era of Downward Wage Pressures? By Marchal, Sarah; Marx, Ive
  8. Ten Facts You Need To Know About Hiring By Mühlemann, Samuel; Strupler Leiser, Mirjam
  9. Heterogeneity of Skill Needs and Job Complexity: Evidence from the OECD PIAAC Survey By Pouliakas, Konstantinos; Russo, Giovanni
  10. Labor Supply Responses to New Rural Social Pension Insurance in China: A Regression Discontinuity Approach By Chen, Zeyuan; Bengtsson, Tommy; Helgertz, Jonas
  11. Disentangling the Role of Contract Types and Sector Disparities for Public Service Motivation By Grund, Christian; Thommes, Kirsten
  12. Man-cessions, Fiscal Policy, and the Gender Composition of Employment By Christian Bredemeier; Falko Juessen; Roland Winkler
  13. Lifting the Iron Curtain: School-Age Education and Entrepreneurial Intentions By Falck, Oliver; Gold, Robert; Heblich, Stephan
  14. Review of Best Practices in Labour Market Forecasting with an Application to the Canadian Aboriginal Population By Jasmin Thomas
  15. Understanding the productivity slowdown. The importance of entry and exit of workers By Thomas von Brasch; Ådne Cappelen; Diana-Cristina Iancu
  16. Post-Secondary Education and Information on Labor Market Prospects: A Randomized Field Experiment By Pekkala Kerr, Sari; Pekkarinen, Tuomas; Sarvimäki, Matti; Uusitalo, Roope
  17. Income Guarantees and Borrowing in Risky Environments: Evidence from India's Rural Employment Guarantee Scheme By Bell, Clive; Mukhopadhyay, Abhiroop
  18. The Effects of State Merit Aid Programs on Attendance at Elite Colleges By Sjoquist, David L.; Winters, John V.
  19. Aboriginal Labour Market Information in Canada: An Overview By Fanny McKellips
  20. Impact on Health on Labour Force Participation in South Africa By Chijioke O. Nwosu and Ingrid Woolard
  21. Life-Cycle and Intergenerational Effects of Child Care Reforms By Chan, Marc K.; Liu, Kai

  1. By: Tansel, Aysit (Cornell University); Keskin, Halil Ibrahim (Gazi University); Ozdemir, Zeynel Abidin (Gazi University)
    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: J21 J31 J40 O17
    Date: 2015–09
  2. By: Javdani, Mohsen (University of British Columbia, Okanagan); McGee, Andrew (Simon Fraser University)
    Abstract: We estimate gender differences in internal promotion experiences for a representative sample of Canadian workers using linked employer-employee data. We find that women in Canada are 3 percentage points less likely to be promoted and have received fewer promotions than similar men, but these differences stem almost entirely from gender differences in industry and occupation. By contrast, women experience an estimated 2.9 percent less wage growth in the year of a promotion than similar men even after controlling for industry, occupation, and firm effects – though a significant "family gap" exists among women as single women and women without children experience essentially the same wage returns to promotion as men.
    Keywords: promotions, gender wage gap
    JEL: J16 J31 J62 J71
    Date: 2015–09
  3. By: Roberts, Jennifer (University of Sheffield); Taylor, Karl (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: commuting, local labour market, dual earner households
    JEL: D19 J24 R40
    Date: 2015–09
  4. By: Ceritoglu, Evren (Central Bank of Turkey); Gurcihan Yunculer, H. Burcu (Central Bank of Turkey); Torun, Huzeyfe (Central Bank of Turkey); Tumen, Semih (Central Bank of Turkey)
    Abstract: Civil war in Syria, which started in March 2011, has led to a massive wave of forced immigration from the Northern Syria to the Southeastern regions of Turkey. This paper exploits this natural experiment to estimate the impact of Syrian refugees on the labor market outcomes of natives in Turkey. Using a difference-in-differences strategy, we find that immigration has considerably affected the employment outcomes of natives, while its impact on wage outcomes has been negligible. We document notable employment losses among informal workers as a consequence of refugee inflows. The majority of those who lost their informal jobs have either left the labor force or remained unemployed. Overall, unemployment rates have increased, while labor force participation, informal employment, and job finding rates have declined among natives. Disadvantaged groups – i.e., females, younger workers, and less-educated workers – have been affected the worst. The prevalence of informal employment in the Turkish labor markets has amplified the negative impact of Syrian refugee inflows on natives' labor market outcomes.
    Keywords: Syrian civil war, immigration, Turkey, labor market, informality, difference in differences
    JEL: J15 J21 J61 C21
    Date: 2015–10
  5. By: Herrera Prada, Luis Omar; Kugler, Adriana D.; Kugler, Maurice; Saavedra, Juan Esteban
    Abstract: We use administrative data to examine medium and long-term formal education and labor market impacts among participants and family members of a randomized vocational training program for disadvantaged youth in Colombia. In the Colombian program, vocational training and formal education are complementary investments: relative to non-participants, randomly selected participants are more likely to complete secondary school and to attend and persist in tertiary education eight years after random assignment. Complementarity is strongest among applicants with high baseline educational attainment. Training also has educational spillover effects on participants’ family members, who are more likely to enroll in tertiary education. Between three and eight years after randomization, participants are more likely to enter and remain in formal employment, and have formal sector earnings that are at least 11 percent higher than those of non-participants.
    Keywords: education complementarities; formal employment; long-term effects; randomized experiments; spillover effects; vocational training; youth employment
    JEL: C9 I2 J24 J68 O2
    Date: 2015–10
  6. By: Hijzen, Alexander (OECD); Kambayashi, Ryo (Hitotsubashi University); Teruyama, Hiroshi (Kyoto University); Genda, Yuji (University of Tokyo)
    Abstract: This paper analyses aggregate labour dynamics during the global financial crisis in Japan and the role of nonstandard work using micro data. The analysis proceeds in two steps. First, using comprehensive establishment-level datasets for the period 1991-2009, it provides a detailed portrait of the adjustment behaviour of establishments at the micro level. Second, it compares aggregate labour market dynamics during the global financial crisis with that observed during the 1997 crisis and decomposes the observed differences into components that can be attributed to changes in the micro-adjustment behaviour of Japanese establishments, changes in the incidence of non-standard work and changes in the distribution of shocks across establishments. It finds that the incidence of non-standard work has increased considerably, worker turnover is much higher among non-standard than standard workers and adjustments in working-time are less important for non-standard workers. Counterfactual simulations suggest that the employment response during the global crisis would have been smaller if the incidence of non-standard work remained at the level observed during the 1997 crisis. The relatively small employment response observed during the global financial crisis is therefore driven by factors others than the increase in the incidence of non-standard work.
    Keywords: labour market duality, labour market resilience, job quality, temporary work, crisis
    JEL: D22 E24 J23 J41
    Date: 2015–09
  7. By: Marchal, Sarah (University of Antwerp); Marx, Ive (University of Antwerp)
    Abstract: Governments across the EU have been striving to get more people into work while at the same time acknowledging that more needs to be done to 'make work pay'. Yet this drive comes at a time when structural economic shifts are putting pressure on wages, especially of less skilled workers. This article focuses on trends in minimum wages, income taxes, and work-related benefits within a selection of 16 EU countries, for the period 2001-2012, with three US states included as reference cases. We find evidence for eroding relative minimum wages in various EU countries, yet combined with catch-up growth in the new Member States. We also find that governments counteracted eroding minimum wages through direct income support measures, especially for lone parents. Most prevalent among these were substantial declines in income tax liabilities. More generally we see a trend unfolding towards a fiscalization of income support policies.
    Keywords: minimum wage, income support, fiscalization, lone parents
    JEL: I38
    Date: 2015–09
  8. By: Mühlemann, Samuel (University of Munich); Strupler Leiser, Mirjam (University of Bern)
    Abstract: We provide new empirical evidence regarding the magnitude and the determinants of a firm's costs required to fill a vacancy. The average costs required to fill a vacancy for a skilled worker in Switzerland amount to about 16 weeks of wage payments. The main components of the vacancy costs are initially low productivity, the formal instruction of a new hire (53 percent), disruption costs due to informal instruction of new hires (26 percent), and search costs (21 percent). Furthermore, hiring costs for small firms are associated with labor market tightness (i.e., the vacancy-unemployment ratio).
    Keywords: adaptation cost, disruption cost, hiring cost, search cost, vacancy-unemployment ratio
    JEL: J32 J63 M53
    Date: 2015–09
  9. By: Pouliakas, Konstantinos (European Centre for the Development of Vocational Training (Cedefop)); Russo, Giovanni (European Centre for the Development of Vocational Training (Cedefop))
    Abstract: We use information from the new OECD Survey of Adult Skills (PIAAC) to investigate the link between job tasks and cognitive skill demand in 22 advanced economies. Skill demand is operationalized by the assessed literacy and numeracy skills of workers with well-matched skills to their job duties. Jobs are categorised according to the nature of tasks, including the intensity of abstract reasoning, employee latitude, interactivity or manual work. The analysis confirms the significant relation between task complexity and higher skill needs. The significant relation holds independently of the endogenous supply of formal human capital, occupational or industrial structure and other job or individual characteristics. The results confirm the (indirect) mapping between tasks and skills as predicted by the task approach to labour economics. Given the marked heterogeneity in workplace practices adopted by employers, it is clear that enterprise level workplace development policies are warranted as enablers of skills matching and higher labour productivity.
    Keywords: skills, tasks, skill demand, job complexity, PIAAC, mismatch
    JEL: J24 M12 M54
    Date: 2015–09
  10. By: Chen, Zeyuan (Lund University); Bengtsson, Tommy (Lund University); Helgertz, Jonas (Lund University)
    Abstract: Transitioning into retirement is an under-researched phenomenon in developing countries. Largely, this is linked to a predominance of contexts where – in particular – the rural population remains outside the coverage of any formal pension system. In 2008, China introduced the New Rural Social Pension (NRSP), a program which by now covers the majority of the Chinese rural elderly. This paper examines the effects of the NRSP on the labor supply of the elderly in rural China. As pension benefit eligibility at the time of its implementation is conditional on age, a regression discontinuity design is applied to investigate the casual effect of the receipt of pension benefits on labor supply. Furthermore, as the NRSP is neither means-tested nor conditions on retirement, it induces a pure income effect on employment. Using data from the China Health and Retirement Longitudinal Study, a nationally representative data set, we find that the receipt of pension benefits increases the probability of retirement among the rural elderly by around 15%.
    Keywords: China, New Rural Social Pension, labor supply, regression discontinuity, retirement
    JEL: H55 J26
    Date: 2015–09
  11. By: Grund, Christian (RWTH Aachen University); Thommes, Kirsten (RWTH Aachen University)
    Abstract: The intention of "doing good for society" is regarded to be a crucial motivator for employees in the public sector in order for them to perform well. Recent research in the public sector literature calls for a deeper understanding of how this specific public service motivation (PSM) is shaped. In our paper, we analyze how different degrees of inclusion in the public sector impact PSM. We also investigate how prospects of employment relations (fixed-term versus permanent contracts), temporal differences (part-time versus full-time employment), and actual jobs (core versus subsidiary jobs) moderate PSM in public service. Our findings show that aspects of PSM are affected by these employment characteristics in various ways, suggesting that the factors influencing PSM are multifaceted and that actual employment conditions have to be taken into consideration when assessing PSM.
    Keywords: job characteristics, motivation, PSM, public sector, part-time, temporary employment
    JEL: M55 J45 H83
    Date: 2015–09
  12. By: Christian Bredemeier; Falko Juessen; Roland Winkler
    Abstract: In recessions, predominantly men lose their jobs, which has been described by the term ?man-cessions?. We analyze whether fiscal expansions bring men back into jobs. We show empirically that expansionary fiscal shocks predominantly raise the employment of women, which further destabilizes the gender composition of employment in recessions. Our results show that man-cessions are triggered by industry effects while the gender-specific employment effects of fiscal policy are driven by disproportionate employment changes in female-dominated occupations, specifically so-called ?pink-collar? occupations. We develop a business-cycle model that explains these occupational employment dynamics as a consequence of differences in the substitutability between capital and labor across occupations.
    Keywords: Fiscal Policy, Gender, Employment, Occupations
    JEL: J16 E62 E32 J21
    Date: 2015–09–01
  13. By: Falck, Oliver (Ifo Institute for Economic Research); Gold, Robert (Kiel Institute for the World Economy); Heblich, Stephan (University of Bristol)
    Abstract: We exploit Germany's reunification to identify how school-age education affects entrepreneurial intentions. We look at university students in reunified Germany who were born before the Iron Curtain fell. During school age, all students in the West German control group received formal and informal education in a free-market economy, while East German students did or did not receive free-market education. Difference-in-differences estimations show that school-age education in a free-market economy increases entrepreneurial intentions. An event study supports the common-trends assumption. Results remain robust in matched samples and when we exploit within-student variation in occupational intentions to control for unobserved individual characteristics.
    Keywords: entrepreneurship, socialism, formal education, informal education
    JEL: L26 I21 J24 P30
    Date: 2015–09
  14. By: Jasmin Thomas
    Abstract: The Friendship Centres in Canada play a pivotal role in community and economic development by providing training and employment opportunities, facilitating social development, and building human and resource capacity for Aboriginal Canadians. The availability of occupational projections may facilitate the work of the Friendship Centres by providing valuable information concerning future labour market outcomes, allowing their programs to more appropriately prepare Aboriginal Canadians with the required skills, training and education to meet expected labour demand. By surveying the best practices in labour market demand and supply modeling used by national, sub-national and sectoral organizations, this report will help provide a stronger understanding of the potential power of labour market forecasting, while acknowledging the difficulties and obstacles inherent in any projection process. Furthermore, this report will discuss methodologies that could be implemented by the Friendship Centres to estimate the prospective occupational labour supply and demand facing Aboriginal Canadians.
    Keywords: Aboriginal, Labour Market, LMI, Labour Market Information, Canada, Labour Market Forecasting, Labour Supply, Labour Demand, Retirement, Expansion Demand, Replacement Demand
    JEL: J49 J41 J40
    Date: 2015–10
  15. By: Thomas von Brasch; Ådne Cappelen; Diana-Cristina Iancu (Statistics Norway)
    Abstract: Many OECD countries have experienced a slowdown in measured labour productivity from 2005 and onwards. Norway is no exception in this respect. Most countries use a simple aggregate of hours worked when measuring labour productivity. One way to improve measurement of labour services is to control for worker characteristics. A theoretical rationale for doing so is given by Diewert and Lippe (2010). We generalise previous analyses by allowing for exit and entry of workers when measuring labour services using Norwegian microdata. We find that the bias from using hours worked compared to a labour index capturing various compositional effects can be substantial and systematic over time. In the case of Norway the bias explains about a quarter of the productivity slowdown after 2005.
    Keywords: Labour productivity; Index numbers; Unit value indices; Drobisch index
    JEL: C43 E24 J24 O47
    Date: 2015–09
  16. By: Pekkala Kerr, Sari (Wellesley College); Pekkarinen, Tuomas (Government Institute for Economic Research, Helsinki); Sarvimäki, Matti (Aalto University); Uusitalo, Roope (HECER)
    Abstract: We examine the impact of an information intervention offered to 97 randomly chosen high schools in Finland. Graduating students in treatment schools were surveyed and given information on the labor market prospects associated with detailed post-secondary programs. A third of the students report that the intervention led them to update their beliefs. Experimental estimates suggest that it also affected the application behavior of the least informed students. However, this group of affected students is not sufficiently large for the intervention to have an average impact on applications or enrollment.
    Keywords: education, information, earnings, randomized field experiments
    JEL: J24 I23
    Date: 2015–09
  17. By: Bell, Clive (Heidelberg University); Mukhopadhyay, Abhiroop (Indian Statistical Institute)
    Abstract: This paper investigates the effects of an income guarantee on borrowing to smooth consumption and finance cultivation in a risky setting with marked seasonality. A three-season, infinite-horizon theoretical model is developed and analyzed. The insights yielded by the model are then used to interpret results from an empirical analysis which uses data on a sample of households in a semi-arid region of Odisha state. The potential endogeneity of borrowing and NREGS earnings is instrumented using the female reservation for local elections. An additional day of work at the regulated wage reduces the estimated amount borrowed for consumption by about half the wage. For the financing of working capital, it increases such borrowing by an estimated amount that is almost twice as large as the wage. NREGS is therefore effectively a substitute for borrowing if a household does not cultivate, but a complement if it does so.
    Keywords: income guarantee, borrowing, NREGS, India
    JEL: J3 Q12 Q38
    Date: 2015–09
  18. By: Sjoquist, David L. (Georgia State University); Winters, John V. (Oklahoma State University)
    Abstract: State merit aid programs have been found to reduce the likelihood that students attend college out-of-state. Using the U.S. News & World Report rankings of colleges and universities to measure college quality and Integrated Postsecondary Education Data System data to measure enrollment, we explore how this reduction in out-of-state enrollment differs by the academic quality of the institution. Our results suggest that state merit aid programs do not reduce the likelihood that a student attends a top ranked school, but that these programs do reduce the likelihood of enrolling at less prestigious out-of-state schools, with generally larger effects the lower the ranking of the schools.
    Keywords: merit aid, college choice, college quality, elite college
    JEL: H31 I22 J24
    Date: 2015–09
  19. By: Fanny McKellips
    Abstract: This report, prepared for the Friendship Centres of Canada, provides a detailed overview and assessment of available sources of labour market information (LMI) on Aboriginal Canadians. The Friendship Centres play a pivotal role in community and economic development by providing training and employment opportunities, facilitating social development, and building human and resource capacity for Aboriginal Canadians. Better labour market information, and better use of existing LMI, can facilitate their work. The three most important sources of LMI for Aboriginal Canadians are the Labour Force Survey, National Household Survey, and Aboriginal Peoples Survey. The report identifies the exclusion of the Aboriginal population living on reserve in all Statistics Canada surveys except the National Household Survey and the Census as the most important lacuna in Canadian Aboriginal labour market information. The report concludes that despite the many gaps, there is a wealth of Aboriginal LMI available in Canada, at the national, regional and local levels, that can be used by Friendship Centres to better develop and target programs and services to the urban Aboriginal population.
    Keywords: Canada, Aboriginal Canadians, Aboriginals, Labour Market Information, Labour Markets, Labour Market, LMI
    JEL: J49 J41 J40
    Date: 2015–10
  20. By: Chijioke O. Nwosu and Ingrid Woolard
    Abstract: This paper quantifies the impact of health on labour force participation, using South Africa as a case study. This is important given the essential role the labour market plays in economic growth and the potential for poor health to adversely affect labour market outcomes. South Africa has experienced significant disease burden especially due to communicable diseases like HIV/AIDS and tuberculosis. Moreover, conditions like obesity remain a public health concern. Furthermore, the country has witnessed declining labour force participation in recent years. These health and labour market outcomes, coupled with relatively scant literature on the impact of health on the labour market in South Africa, motivate this study. Data is sourced from the first and third waves of the National Income Dynamics Study, a nationally representative panel dataset of South African households and a rich source of health and socio-economic data. Endogenous treatment of self-assessed health in a contemporaneous setting suggests positive and significant impact of health on labour force participation. The hypothesis of exogeneity of self-assessed health in a labour force participation equation is however not rejected. Finally, positive and significant association between health and LFP persists even four years after health assessment.
    Keywords: Labour force participation, health, Instrumental variables, average treatment effect, treatment effect on the treated, Local average treatment effect
    JEL: I15 J21
    Date: 2015
  21. By: Chan, Marc K. (University of Technology, Sydney); Liu, Kai (University of Cambridge)
    Abstract: We investigate the importance of various mechanisms by which child care policies can affect life-cycle patterns of employment and fertility among women, as well as long-run cognitive outcomes among children. A structural life-cycle model of employment, fertility, and child care use is estimated using Norwegian administrative data. The estimation exploits a large-scale child care reform, which provided generous cash transfers to mothers who did not use formal child care facilities. Combining with administrative data on national test scores, we examine the effects of mother's behavior on long-run cognitive outcomes of children, via estimating a cognitive ability production function that corrects for the endogeneity of inputs. We find that the child care reform generates sizable changes in employment and fertility decisions, especially among low-education women. This leads to lower reading scores among children, primarily as a result of mothers shifting away from formal care and becoming employed. Simulation results suggest that a partial reform, in which workers are ineligible for cash transfers, can generate a more balanced impact on the population. The implications of tax policy and maternity leave are also investigated.
    Keywords: child care, maternal employment, cognitive production function
    JEL: D91 J13 J22
    Date: 2015–09

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