nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒11‒21
sixteen 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. The Major Decision: Labor Market Implications of the Timing of Specialization in College By Luc Bridet; Margaret Leighton
  3. Education Expansion and Decline in Tertiary Premium in Brazil: 1995-2013 By Yang Wang
  4. The Pros and Cons of Sick Pay Schemes: Testing for Contagious Presenteeism and Shirking Behavior By Stefan Pichler; Nicolas R. Ziebarth
  5. Labor Supply Responses to New Rural Pension Insurances in China: A Regression Discontinuity Approach By Chen, Zeyuan; Bengtsson, Tommy; Helgertz, Jonas
  6. How are work-related characteristics linked to sickness absence and presenteeism? Theory and data By Arnold, Daniel; De Pinto, Marco
  7. Have inflation targeting and EU labour immigration changed the system of wage formation in Norway? By Marit Linnea Gjelsvik; Ragnar Nymoen; Victoria Sparrman
  8. The Employment Effects of the Minimum Wage: A Selection Ratio Approach to Measuring Treatment Effects By David Pence Slichter
  9. The value of air quality in Chinese cities: Evidence from labor and property market outcomes By Xuan Huang; Bruno Lanz
  10. Evaluating Progress Toward an Equal Opportunity Goal: Assessing the German Educational Reforms of the First Decade of the 21st Century. By Gordon Anderson; Thomas Fruehauf; Maria Grazia Pittau; Roberto Zelli
  11. Efficiency of Female Leaders in Family and Non-Family Firms By Bjuggren, Per-Olof; Nordström, Louise; Palmberg, Johanna
  12. Travel Time Use Over Five Decades By Chen Song; Chao Wei
  13. Gender and the Effect of Working Hours on Firm-Sponsored Training By Picchio, Matteo; van Ours, Jan
  14. Dutch Disease or Agglomeration? The Local Economic Effects of Natural Resource Booms in Modern America By Hunt Allcott; Daniel Keniston
  15. Effects of foreign acquisitions on R&D and high-skill activities By Eliasson, Kent; Hansson, Pär; Lindvert, Markus
  16. Long-Term Impacts of High Temperatures on Economic Productivity By Paul E. Carrillo; Ram Fishman; Jason Russ

  1. By: Lorenzo Cappellari (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); 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: 2015–11
  2. By: Luc Bridet (University of St Andrews); Margaret Leighton (University of St Andrews)
    Abstract: College students in the United States choose their major much later than their counterparts in Europe. In this paper we estimate the benefits of flexible specialization: specifically, whether additional years of multi-disciplinary education help students make a better choice of specialization, and at what cost in foregone specialized skills. We first document that students who choose their major later are more likely to change fields on the labor market. We then build and estimate a dynamic model of college education where the optimal timing of specialization reflects a tradeoff between discovering comparative advantage and acquiring occupation-specific skills. Estimates suggest that delaying specialization is informative, although noisy. Working in the field of comparative advantage accounts for up to 20% of a well-matched worker’s earnings. While education is transferable across fields with only a 10% penalty, workers who wish to change fields incur a large, one-time cost. We use these estimates to compare the current system to one which imposes specialization at college entry. In this counterfactual the number of workers who switch fields drops from 24% to 20%; however, comparative advantage-occupation mismatch rises from 23% to 30%, resulting in an overall expected welfare reduction of approximately 1.5% of earnings.
    Keywords: "field of study" "occupation choice" productivity mis-match education "higher education" specialization "general education" "specialized education"
    JEL: J24 J31 J62 I23
    Date: 2015–10–16
  3. By: Yang Wang (Department of Economics, Tulane University)
    Abstract: According to the Brazil Naional Household Survey 1995-2013 data, the decline in the relative wage of tertiary-educated workers coincides with an education expansion that shifted the relative supply and might also change the quality composition of the tertiary group. This paper tries to decompose the change in the tertiary premium in Brazil during the 1995-2013 period into the "price effect", which refers to the change in educational premium caused by the shifts in suppl and demand, and the "composition effect", which refers to whether there was any significant decline in the average quality of tertiary-educated workers of the recent cohorts and how the changes in cohort quality had impacted the relative wage of the tertiary group. The results demonstrate that the growth in the relative supply had a significant negative impact on the decline of tertiary premium. The results also show that the average quality of the tertiary-educated workers of the recent cohorts declined, which also accounts for a substantial proportion of the decline in the relative wage.
    Keywords: earning inequality, education expansion, decline in tertiary premium, skill supply and demand, average cohort quality
    JEL: I24 J24 J31 O15
    Date: 2015–11
  4. By: Stefan Pichler (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Nicolas R. Ziebarth (Cornell University)
    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: 2015–09
  5. By: Chen, Zeyuan (Department of Economic History, Lund University); Bengtsson, Tommy (Department of Economic History, Lund University); Helgertz, Jonas (Department of Economic History, 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: 2015–10–20
  6. By: Arnold, Daniel; De Pinto, Marco
    Abstract: This paper investigates how changes in work-related factors affect workers' absence and presenteeism behavior. Previous studies (implicitly) assume that there is a substitutive relationship, i.e. a change in a work-related factor decreases the level of absence and simultaneously increases presenteeism (or vice versa). We set up a theoretical model in which work-related characteristics not only affect a worker's absence decision but also the individual-specific sickness definition. Since workrelated factors affect presenteeism through these two channels, nonsubstitutive relationships between absence and presenteeism are also conceivable. Using European cross-sectional data, we find only few substitutive and complementary relationships, while the bulk of the work-related characteristics is related only to one of the two sickness states.
    Keywords: sickness absence,presenteeism,annual duration,workrelated characteristics,health at work
    JEL: J22 J28 I1 M50
    Date: 2015
  7. By: Marit Linnea Gjelsvik; Ragnar Nymoen; Victoria Sparrman (Statistics Norway)
    Abstract: Collective agreements have played a central role in the system of wage formation in Norway for more than fifty years. Although the degree of coordination achieved has been variable, pattern wage bargaining has been a mainstay of the system. We investigate the degree of invariance in wage formation in Norway with respect to two recent structural changes: the transition towards inflation targeting in monetary policy and an unprecedented surge in labour supply due to higher immigration rates. We report empirical results that support the view that a semi-permanent high immigration may affect wages negatively in a significant way. However, we do not find evidence that the stability of the arbitration system, and in particular the wage-bargaining pattern, has been changed by labour immigration or by inflation targeting monetary policy. An explanation of why we do not find evidence of structural changing effects of the transition of monetary policy, can be found in the fact that the wage arbitration system itself has syncronized the inflation expectations of the social partners. In that analysis, inflation targeting became a new layer of nominal stabilization, on top of the existing one.
    Keywords: IInflation modelling; pattern wage bargaining; inflation targeting; dynamic econometrics; cointegration; small open economy.
    JEL: C52 E24 E31 E37 J31
    Date: 2015–10
  8. By: David Pence Slichter
    Abstract: This paper studies the employment effects of the minimum wage using a novel empirical strategy which can allow the researcher to identify treatment effects when more than one control group is available but each such control group is imperfect. Expanding on previous researchers who have compared regions which increase the minimum wage with nearby regions which do not change the minimum wage, I compare border counties in which the minimum wage increases to the set of neighboring counties, the set of neighbor-of-neighboring counties, etc. The key innovation is to model the ratio of the bias of these comparisons. The model I select uses the relative similarity of control groups to the treated group on observables as a guide to their relative similarity on unobservables. Crucially, models of this type have a testable implication when there are enough control groups. Using data from the United States, I find that recent minimum wage increases have produced modest or zero disemployment effects for teenagers.
    JEL: J38 C21 C29
    Date: 2015–11–14
  9. By: Xuan Huang; Bruno Lanz
    Abstract: Using a dual-market sorting model of workers' location decisions, this paper studies the capitalization of air pollution in wages and property prices across Chinese cities. We exploit quasi-experimental variations in particulate matter (PM10) concentration induced by a policy subsidizing coal-based winter heating in northern China, specifying a regression discontinuity design based on cities' location relative to the policy boundary. We estimate that the elasticity of wages and house prices with respect to PM10 concentration is 0.41 and -0.71 respectively. Our results are robust to the use of an alternative source of exogenous variation in PM10 concentration (sandstorms), supporting the view that the local effect we measure provides policy-relevant information on the value of air quality improvements in China.
    Keywords: Hedonic model; Air pollution; Labor market; Housing prices; Local public goods.
    JEL: H41 J31 R31 Q53
    Date: 2015–11–16
  10. By: Gordon Anderson; Thomas Fruehauf; Maria Grazia Pittau; Roberto Zelli
    Abstract: The first Program for International Student Assessment (PISA) results on language literacy administered in Germany in 2000 shocked the nation bringing about some fundamental reforms in the education system. A e4 billion plan to reform the schooling system involved intensified parent and teacher training, increases in the number of schooling hours and changes in the way student performance was evaluated. By way of measuring the extent of the improvements, this paper proposes and implements new techniques for evaluating the effectiveness of the reforms in the context of a social justice imperative when outcomes before and after their introduction are not cardinally comparable. Fundamental changes in the structure of the dependency of child outcomes on circumstances were detected with some qualified improvements in equality of opportunity over the period.
    Keywords: Educational attainment, Equality of opportunity, PISA program
    JEL: I21 C14
    Date: 2015–11–20
  11. By: Bjuggren, Per-Olof (The Ratio institute and Jönköping School of Economics.); Nordström, Louise (; Palmberg, Johanna (Entreprenörskapsforum and Royal School of Technology (KTH))
    Abstract: Female leadership is an expanding area of research. It is a popular topic discussed frequently in both academia and in the popular press. Despite this, comparative studies of the impact of female leadership on firm level performance between family and non-family firms are rare. The present study has the ambition to fill this gap. This paper investigates female leadership in family firms and how it affects firm profitability. A unique database of ownership and leadership in private Swedish firms makes it possible to analyze difference in firm performance due to female leadership in family and non-family firms. Even though much has been written regarding the role of women in family firms we do not know so much about how female leadership in family firms affect the profitability of the firm. The analysis indicates that female leadership makes much more of a positive difference for performance in family firms. The effect is negative in non-family firms.
    Keywords: Family firms; Female Representation; Financial Performance
    JEL: G34 J31 L25
    Date: 2015–11–10
  12. By: Chen Song (Department of Economics/Institute for International Economic Policy, George Washington University); Chao Wei (Department of Economics/Institute for International Economic Policy, George Washington University)
    Abstract: In this paper, we use five decades of time use surveys, including the annual American Time Use Survey between 2003 and 2013, to document travel time uses in the aggregate and across demographic groups. We find that total travel time features an inverted-U shape over time, registering a 20 percent increase from 1975 to 1993, but an 18 percent decline from 1993 to 2013. We find that demographic shifts explain around 45 percent of the increase in total travel time from 1975 to 1993. Increases in educational attainment alone contribute to around 28 percent of the increase. Demographic shifts play a much smaller role in the evolution of total travel time afterwards. From 2003 to 2013 the shift of time allocation from travel-intensive non-market work to travel-non-intensive leisure accounts for around 50 percent of the decline in total travel time.
    Keywords: Travel time use; Time use survey; Market work; Non-market work; Leisure
    JEL: J22 R41 D13
    Date: 2015–09
  13. By: Picchio, Matteo (Tilburg University, Center For Economic Research); van Ours, Jan (Tilburg University, Center For Economic Research)
    Abstract: Using employees’ longitudinal data, we study the effect of working hours on the<br/>propensity of firms to sponsor training of their employees. We show that, whereas male part-time workers are less likely to receive training than male full-timers, parttime working women are as likely to receive training as full-time working women. Although we cannot rule out gender-working time specific monopsony power, we speculate that the gender-specific effect of working hours on training has to do with gender-specific stereotyping. In the Netherlands, for women it is common to work part-time. More than half of the prime age female employees work part-time. Therefore, because of social norms, men working part-time could send a different signal to their employer than women working part-time. This might generate a different propensity of firms to sponsor training of male part-timers than female part-timers.
    Keywords: part-time employment; working hours; firm-sponsored training; gender; human capital
    JEL: C33 C35 J24 M51 M53
    Date: 2015
  14. By: Hunt Allcott; Daniel Keniston
    Abstract: Do natural resources benefit producer economies, or is there a "Natural Resource Curse," perhaps as Dutch Disease crowds out manufacturing? We combine new data on oil and gas abundance with Census of Manufactures microdata to estimate how oil and gas booms have affected local economies in the United States. Migration does not fully offset labor demand growth, so local wages rise. Notwithstanding, manufacturing is actually pro-cyclical with resource booms, driven by growth in upstream and locally traded sectors. The results highlight the importance of highly local demand for many manufacturers and underscore how natural resource linkages can drive manufacturing growth.
    JEL: J2 L6 O4 Q43 R1
    Date: 2015–11
  15. By: Eliasson, Kent (Umeå University and Growth Analysis); Hansson, Pär (Örebro University School of Business); Lindvert, Markus (Growth Analysis)
    Abstract: Using Swedish micro data we find no evidence for the concerns circulating in the public debate that foreign acquisitions lead to reductions in R&D expenditures and high-skilled activities in targeted domestic firms, neither in MNEs nor in non-MNEs. Previous studies have only focused on larger firms. In this paper we are able to study the impact on smaller firms (less than 50 employees). This is important since 90 percent of the firms acquired by foreign enterprises have less than 50 employees. For this group of firms there is no information on R&D, but by using the register of educational attainment we have data on the share of high-skilled labor in all Swedish firms, irrespective of size. Interestingly, we find that among smaller firms foreign enterprises tend to acquire high-productive, skill-intensive firms (cherry-picking) and after the acquisitions skill upgrading appears in acquired smaller, non- MNE firms.
    Keywords: foreign acquisitions; skill upgrading; R&D; intensity; propensity score matching
    JEL: F23 J24 O32 O33
    Date: 2015–11–17
  16. By: Paul E. Carrillo (Department of Economics/Institute for International Economic Policy, George Washington University); Ram Fishman (Department of Economics/Institute for International Economic Policy, George Washington University); Jason Russ
    Abstract: A substantial body of recent evidence on the socio-economic and health related impacts of high temperature anomalies, alongside the literature on the long-term impacts of in-utero stress on adult welfare (the fetal origins hypothesis), suggests that exposure to high temperature anomalies in-utero may have long-term impacts on adult human capital accumulation and economic productivity. To test this hypothesis, we match and regress administrative data on the 2010 earnings of all formal sector workers in Ecuador (over 1.5 million individuals born between 1950 and 1989) on temperature and rainfall anomalies in and around the time of each individual’s birth, at the location of birth. We find that higher temperatures while in-utero lead to significantly lower earnings, especially for women, for whom a 1°C increase in temperature leads to a 1.1%-1.7% decrease in earnings. The results are robust to the inclusion of rich sets of flexible controls and a range of falsification tests., and suggest climate change may already have caused adverse long-term ô°€pipelineô° economic impacts that have not been appreciated to date.
    Keywords: Climate Change, Economic Impacts, Fetal Origins
    JEL: J31 Q50
    Date: 2015–10

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