nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒10‒17
eight 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. Did closures do any good? Labour productivity, mine dynamics, and rationalization in interwar Ruhr coal-mining By Tobias A. Jopp; Martin Uebele
  3. Offshoring and the Geography of Jobs in Great Britain By Luisa Gagliardi; Simona Iammarino; Andrés Rodríguez-Pose
  4. Resurrecting the Role of the Product Market Wedge in Recessions By Bils, Mark; Klenow, Peter J.; Malin, Benjamin A.
  5. Addressing the absence of hours information in linked employer-employee data By Richard Fabling; David C Maré
  6. Mapping the Occupational Segregation of White Women in the U.S.: Differences across Metropolitan Areas By Olga Alonso-Villar; Coral del Río
  7. The Effectiveness of Fiscal Stimuli for Working Parents By Henk-Wim de Boer; Egbert L.W. Jongen; Jan Kabatek
  8. More effort with less pay: On information avoidance, belief design and performance By Huck, Steffen; Szech, Nora; Wenner, Lukas M.

  1. By: Lorenzo Cappellari; Antonio Di Paolo
    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: 2015–10
  2. By: Tobias A. Jopp (History Department, Tsinghua University); Martin Uebele (University of Regensburg)
    Abstract: Over the later 1920s and up to the mid-1930s, German coal-mining saw an exceptional surge in labour productivity led primarily by the Ruhr coalminesÕ performance. It is a commonly accepted view that the economy-wide Ôrationalization boomÕ between currency stabilization and the depression years explains that pattern. We test the related hypothesis that Ônegative rationalizationÕ in the form of a massive wave of mine closures over 1924-29 played a significant role in pushing aggregate labour productivity in the Ruhr coal district up to new levels. Based on an original dataset on the population of Ruhr coalmines, the sources of productivity change over the extended period 1913-38 are identified using the decomposition method of Foster, Haltiwanger and Krizan (2001). Results suggest that labour productivity in Ruhr coal-mining was driven to a large extent by improvements at individual mines attributable to the intensified mechanization of underground operations. Closures regularly raised aggregate productivity in the year after the closure had been conducted; closures also pushed productivity by way of ceding resources to high(er) productivity surviving mines over gradual shut-down. However, on the whole, turnover-effects were marginal compared to the effects stemming from the producer dynamics among surviving mines. Thus, the practical productivity implications of mine closures over the rationalization boom are negligible and still overrated in the relevant literature. These findings call for testing more rigorously the relative importance of Ônegative rationalizationÕ in the form of plant closures in other branches of the Weimar economy.
    Keywords: closures, coal-mining, Germany, labour productivity, productivity decomposition, rationalization
    JEL: L11 N14 N54
    Date: 2015–10
  3. By: Luisa Gagliardi; Simona Iammarino; Andrés Rodríguez-Pose
    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: Offshoring, local labour markets, job creation and destruction, routine and non-routine occupations
    JEL: F21 J42 J23 J24
    Date: 2015–10
  4. By: Bils, Mark (University of Rochester); Klenow, Peter J. (University of Stanford); Malin, Benjamin A. (Federal Reserve Bank of Minneapolis)
    Abstract: Employment and hours appear far more cyclical than dictated by the behavior of productivity and consumption. This puzzle has been called “the labor wedge” — a cyclical intratemporal wedge between the marginal product of labor and the marginal rate of substitution of consumption for leisure. The intratemporal wedge can be broken into a product market wedge (price markup) and a labor market wedge (wage markup). Based on the wages of employees, the literature has attributed the intratemporal wedge almost entirely to labor market distortions. Because employee wages may be smoothed versions of the true cyclical price of labor, we instead examine the self-employed and intermediate inputs, respectively. Looking at the past quarter century in the United States, we find that price markup movements are at least as important as wage markup movements — including during the Great Recession and its aftermath. Thus, sticky prices and other forms of countercyclical markups deserve a central place in business cycle research, alongside sticky wages and matching frictions.
    Keywords: Business cycles; Labor wedge; Price markups; Wage markups
    JEL: E24 E32
    Date: 2015–10–09
  5. By: Richard Fabling (Independent Researcher); David C Maré (Motu Economic and Public Policy Research)
    Abstract: The availability of tax-based payroll data has proved a blessing to labour and business economists wishing to understand workers, their jobs and their employers. Unfortunately, administrative data do not always include key variables of interest. In the case of New Zealand, linked employer-employee data do not include any information on hours worked. We implement a set of complementary methods to patch this gap, deriving an approximate measure of full-time equivalent labour input. In addition, and more specific to the New Zealand data environment, we describe a method for identifying working proprietors using annual tax-filed information, thus providing a more complete picture of total firm labour input.
    Keywords: Linked employer-employee tax data, measuring labour input, full-time equivalent, working proprietors
    JEL: D22 L11 Q54
    Date: 2015–10
  6. By: Olga Alonso-Villar; Coral del Río
    Abstract: This paper investigates the occupational segregation of white women in the U.S. at a metropolitan area level. Our results show substantial variation across areas and suggest that the national scale does not reveal the real situation of white women. The proportion of white women who would have to shift occupations to achieve zero segregation ranges between 20% in some areas and 40% in others. The consequences that occupational segregation has in terms of earnings also vary dramatically within the country, which suggests that in dealing with labor inequalities, local authorities should play an active role.
    Date: 2015–10
  7. By: Henk-Wim de Boer (CPB Netherlands Bureau for Economic Policy Analysis; and Faculty of Economics and Business Administration, VU University Amsterdam); Egbert L.W. Jongen (CPB Netherlands Bureau for Economic Policy Analysis); Jan Kabatek (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; Institute for the Study of Labor (IZA); and Netspar)
    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. Largescale 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. Classification-C25, C52, H31, J22
    Keywords: Discrete choice, household labor supply, latent classes, differences-indifferences, work and care policies
    Date: 2015–09
  8. By: Huck, Steffen; Szech, Nora; Wenner, Lukas M.
    Abstract: In a tedious real effort task, subjects know that their piece rate is either low or ten times higher. When subjects are informed about their piece rate realization, they adapt their performance. One third of subjects nevertheless forego this instrumental information when given the choice - and perform stunningly well. Agents who are uninformed regarding their piece rate tend to outperform all others, even those who know that their piece rate is high. This also holds for enforced instead of self-selected information avoidance. All our findings can be captured by a model of optimally distorted expectations following Brunnermeier and Parker (2005).
    Keywords: Optimal Expectations,Belief Desing,Performance,Real Effort Task,Coarse Incentive Structures,Workplace Incentives
    JEL: D83 D84 J31 M52
    Date: 2015

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