nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2016‒02‒17
twenty papers chosen by
Joseph Marchand
University of Alberta

  1. The Gender Wage Gap: Extent, Trends, and Explanations By Blau, Francine D.; Kahn, Lawrence M.
  2. Higher Education Expansion and Labor Market Outcomes for Young College Graduates By Ou, Dongshu; Zhao, Zhong
  3. Remittances and Expenditure Patterns of the Left Behinds in Rural China By Démurger, Sylvie; Wang, Xiaoqian
  4. The Wage Returns to Education over the Life-Cycle: Heterogeneity and the Role of Experience By Buscha, Franz; Dickson, Matt
  5. Changing Faculty Employment at Four-Year Colleges and Universities in the United States By Zhang, Liang; Ehrenberg, Ronald G.; Liu, Xiangmin
  6. Asymmetric Labor-Supply Responses to Wage-Rate Changes: Evidence from a Field Experiment By Doerrenberg, Philipp; Duncan, Denvil; Loeffler, Max
  7. Fiscal Sustainability and Demographic Change: A Micro Approach for 27 EU Countries By Dolls, Mathias; Doorley, Karina; Paulus, Alari; Schneider, Hilmar; Siegloch, Sebastian; Sommer, Eric
  8. Multiple Job Holding, Local Labor Markets, and the Business Cycle By Hirsch, Barry; Husain, Muhammad M.; Winters, John V.
  9. Who Works for Whom? Worker Sorting in a Model of Entrepreneurship with Heterogeneous Labor Markets By Dinlersoz, Emin; Hyatt, Henry R.; Janicki, Hubert P.
  10. The Effectiveness of Medical and Vocational Interventions for Reducing Sick Leave of Self-Employed Workers By Baert, Stijn; van der Klaauw, Bas; van Lomwel, Gijsbert
  11. Television, Cognitive Ability, and High School Completion By Hernæs, Øystein; Markussen, Simen; Røed, Knut
  12. Local Labor Market Conditions and Crime: Evidence from the Brazilian Trade Liberalization By Dix-Carneiro, Rafael; Soares, Rodrigo R.; Ulyssea, Gabriel
  13. A Wage-Efficiency Spatial Model for US Self-Employed Workers By Gimenez-Nadal, J. Ignacio; Molina, José Alberto; Velilla, Jorge
  14. Do Higher Corporate Taxes Reduce Wages? By Fuest, Clemens; Peichl, Andreas; Siegloch, Sebastian
  15. When Does HRM 'Work' in Small British Enterprises? By White, Michael; Bryson, Alex
  16. Worker Flows and Labour Market Adjustment during the Great Recession: Evidence from a Large Shock By Lehmann, Hartmut; Razzolini, Tiziano; Zaiceva, Anzelika
  17. Connections in Scientific Committees and Applicants' Self-Selection: Evidence from a Natural Randomized Experiment By Bagues, Manuel F.; Sylos-Labini, Mauro; Zinovyeva, Natalia
  18. Long-Lasting Effects of Socialist Education By Fuchs-Schündeln, Nicola; Masella, Paolo
  19. Heterogeneous peer effects in education By Eleonora Patacchini; Edoardo Rainone; Yves Zenou
  20. Women Do Not Play Their Aces: The Consequences of Shying Away By Claussen, Jörg; Czibor, Eszter; van Praag, Mirjam C.

  1. By: Blau, Francine D. (Cornell University); Kahn, Lawrence M. (Cornell University)
    Abstract: Using PSID microdata over the 1980-2010, we provide new empirical evidence on the extent of and trends in the gender wage gap, which declined considerably over this period. By 2010, conventional human capital variables taken together explained little of the gender wage gap, while gender differences in occupation and industry continued to be important. Moreover, the gender pay gap declined much more slowly at the top of the wage distribution that at the middle or the bottom and by 2010 was noticeably higher at the top. We then survey the literature to identify what has been learned about the explanations for the gap. We conclude that many of the traditional explanations continue to have salience. Although human capital factors are now relatively unimportant in the aggregate, women's work force interruptions and shorter hours remain significant in high skilled occupations, possibly due to compensating differentials. Gender differences in occupations and industries, as well as differences in gender roles and the gender division of labor remain important, and research based on experimental evidence strongly suggests that discrimination cannot be discounted. Psychological attributes or noncognitive skills comprise one of the newer explanations for gender differences in outcomes. Our effort to assess the quantitative evidence on the importance of these factors suggests that they account for a small to moderate portion of the gender pay gap, considerably smaller than say occupation and industry effects, though they appear to modestly contribute to these differences.
    Keywords: gender, gender pay gap, wage differentials, discrimination, human capital investment, occupations, occupational segregation
    JEL: J16 J24 J31 J71
    Date: 2016–01
  2. By: Ou, Dongshu (Chinese University of Hong Kong); Zhao, Zhong (Renmin University of China)
    Abstract: We examine the causal impact of China's higher education expansion on labor market outcomes for young college graduates using China's 2005 1% Population Sample Survey. Exploiting variation in the expansion of university spots across provinces and high school cohorts and applying a difference-in-differences model, we find that the expansion of higher education in China decreases unemployment rates, especially among males and high school graduates. However, the policy also decreases women's labor force participation and individual earnings in highly-skilled white-collar jobs. We further discuss potential channels affecting the observed outcomes. Our results illustrate the strong demand for a skilled labor force in China and the broad economic benefits of higher education.
    Keywords: higher education expansion, labor force participation, unemployment, wage, difference-in-differences
    JEL: I23 I28 J31 O15
    Date: 2016–01
  3. By: Démurger, Sylvie (CNRS, GATE); Wang, Xiaoqian (GATE, University of Lyon)
    Abstract: This paper investigates how private transfers from internal migration in China affect the expenditure behaviour of families left behind in rural areas. Using data from the Rural-Urban Migration in China (RUMiC) survey, we assess the impact of remittances sent to rural households on consumption-type and investment-type expenditures. We apply propensity score matching to account for the selection of households into receiving remittances, and estimate average treatment effects on the treated. We find that remittances supplement income in rural China and lead to increased consumption rather than increased investment. Moreover, we find evidence of a strong negative impact on education expenditures, which could be detrimental to sustaining investment in human capital in poor rural areas in China.
    Keywords: remittances, labour migration, expenditure behaviour, left-behind, China, propensity score matching
    JEL: O15 J22 R23 D13 O53
    Date: 2016–01
  4. By: Buscha, Franz (University of Westminster); Dickson, Matt (University of Bath)
    Abstract: This paper re-examines the wage returns to the 1972 Raising of the School Leaving Age (RoSLA) in England and Wales using a high-quality administrative panel dataset covering the relevant cohorts for almost 40 years of their labour market careers. With best practice regression discontinuity methods we find at best a zero return to the additional education for men. However, we contend that regression discontinuity methods in this context will give unreliable estimates of the return. Using the panel data to correct for this we find a local average treatment effect of 7% over the lifetime for this additional year of education.
    Keywords: returns to education, life-cycle, earnings, experience
    JEL: I28 J24 J31
    Date: 2015–12
  5. By: Zhang, Liang (Pennsylvania State University); Ehrenberg, Ronald G. (Cornell University); Liu, Xiangmin (Pennsylvania State University)
    Abstract: We use panel data models to examine variations and changes in faculty employment at four-year colleges and universities in the United States. The share of part-time faculty among total faculty has continued to grow during the last two decades, while the share of full-time lecturers and instructors has been relatively stable. Meanwhile, the share of non-tenure track faculty among full-time faculty has been growing, especially among the professorial ranks. Dynamic panel data models suggest that employment levels of different types of faculty respond to a variety of economic and institutional factors. Colleges and universities have increasingly employed faculty whose salaries and benefits are relatively inexpensive; the slowly deteriorating financial situations at most colleges and universities have led to an increasing reliance on a contingent academic workforce. A cross-sectional comparison of the share of full-time non-tenure track faculty also reveals significant variations across institutions.
    Keywords: faculty employment, non tenure-track faculty
    JEL: I23 J23
    Date: 2015–12
  6. By: Doerrenberg, Philipp (ZEW Mannheim); Duncan, Denvil (Indiana University); Loeffler, Max (ZEW Mannheim)
    Abstract: The standard labor-supply literature typically assumes that the labor supply response to wage increases is the same as that for equivalent wage decreases. However, evidence from the behavioral-economics literature suggests that people are loss averse and thus perceive losses differently than gains. This behavioral insight may imply that workers respond differently to wage increases than to wage decreases. We estimate the effect of wage increases and decreases on labor supply using a randomized field experiment with workers on Amazon's Mechanical Turk. The results provide evidence that wage increases have smaller effects than wage decreases, suggesting that the labor-supply response to wage changes is asymmetric. This finding is especially strong on the extensive margin where the elasticity for a wage decrease is twice that for a wage increase. These findings suggest that a reference-dependent utility function that incorporates loss aversion is the most appropriate way to model labor supply.
    Keywords: labor supply, loss aversion, labor supply elasticities, w.r.t. wages
    JEL: J22 J31 D03
    Date: 2016–01
  7. By: Dolls, Mathias (ZEW Mannheim); Doorley, Karina (LISER (CEPS/INSTEAD)); Paulus, Alari (ISER, University of Essex); Schneider, Hilmar (LISER (CEPS/INSTEAD)); Siegloch, Sebastian (University of Mannheim); Sommer, Eric (IZA)
    Abstract: The effect of demographic change on the labor force and on fiscal revenues is topical in light of potential pension shortfalls. This paper evaluates the effect of demographic changes between 2010 and 2030 on labor force participation and government budgets in the EU-27. Our analysis involves the incorporation of population projections, and an explicit modeling of the supply and demand side of the labor market. Our approach overcomes a key shortcoming of most existing studies that focus only on labor supply when assessing the effects of policy reforms. Ignoring wage reactions greatly understates the increase in fiscal revenues, suggesting that fiscal strain from demographic change might be less severe than currently perceived. Finally, as a policy response to demographic change and worsening fiscal budgets, we simulate the increase in the statutory retirement age. Our policy simulations confirm that raising the statutory retirement age can balance fiscal budgets in the long run.
    Keywords: demographic change, fiscal effects, labor supply, labor demand, pension systems
    JEL: H68 J11 J21
    Date: 2015–12
  8. By: Hirsch, Barry (Georgia State University); Husain, Muhammad M. (Georgia State University); Winters, John V. (Oklahoma State University)
    Abstract: About 5 percent of U.S. workers hold multiple jobs, which can exacerbate or mitigate employment changes over the business cycle. Theory is ambiguous and prior literature is not fully conclusive. We examine the relationship between multiple job holding and local unemployment rates using a large Current Population Survey data set of workers in urban labor markets during 1998-2013. High unemployment labor markets have moderately lower rates of multiple job holding. Yet no relationship between multiple job holding and unemployment is found within markets over time, with near zero estimates being precisely estimated. The response of multiple job holding to unemployment is acyclic.
    Keywords: multiple jobs, local labor markets, business cycle
    JEL: J21
    Date: 2016–01
  9. By: Dinlersoz, Emin (U.S. Census Bureau); Hyatt, Henry R. (U.S. Census Bureau); Janicki, Hubert P. (U.S. Census Bureau)
    Abstract: Young and small firms are typically matched with younger and nonemployed individuals, and they provide these workers with lower earnings compared to other firms. To explore the mechanisms behind these facts, a dynamic model of entrepreneurship is introduced, where individuals can choose not to work, become entrepreneurs, or work in one of the two sectors: corporate or entrepreneurial. The differences in production technology, financial constraints, and labor market frictions lead to sector-specific wages and worker sorting across the two sectors. Individuals with lower assets tend to accept lower-paying jobs in the entrepreneurial sector, an implication that finds support in the data. The effect on the entrepreneurial sector of changes in key parameters is also studied to explore some channels that may have contributed to the decline of entrepreneurship in the United States.
    Keywords: entrepreneurship, borrowing constraints, financial frictions, labor market frictions, worker sorting, decline in entrepreneurship
    JEL: L26 J21 J22 J23 J24 J30 E21 E23 E24
    Date: 2016–01
  10. By: Baert, Stijn (Ghent University); van der Klaauw, Bas (Vrije Universiteit Amsterdam); van Lomwel, Gijsbert
    Abstract: We investigate whether interventions by (i) medical doctors and (ii) occupational specialists are effective in reducing sick leave durations among self-employed workers. To this end, we exploit unique administrative data comprising all sick leave claims by self-employed workers insured with the major Dutch private insurer between January 2009 and March 2014. We estimate a multivariate duration model dealing with non-random selection into the two intervention types by controlling for observable and unobservable claimant characteristics. We find adverse treatment effects for both interventions, which are heterogeneous by the physical toughness of the claimants' occupation.
    Keywords: sickness absenteeism, self-employment, medical interventions, dynamic treatment effects
    JEL: C41 I13 J22 R31
    Date: 2016–01
  11. By: Hernæs, Øystein (Ragnar Frisch Centre for Economic Research); Markussen, Simen (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research)
    Abstract: We exploit supply-driven heterogeneity in the expansion of cable television across Norwegian municipalities to identify developmental effects of commercial television exposure during childhood. We find that higher exposure to commercial television reduces cognitive ability and high school graduation rates for young men. The effects are largest for exposure during pre-school and elementary school age. We find no effect on high school completion for women, suggesting availability of non-educational media content as a factor in the widening educational gender gap. Based on time-use data, we show that a possible explanation is that television-watching crowds out reading more for boys than girls.
    Keywords: human capital, media, education gender gap
    JEL: J13 J16 J24 L82
    Date: 2016–01
  12. By: Dix-Carneiro, Rafael (Duke University); Soares, Rodrigo R. (Sao Paulo School of Economics); Ulyssea, Gabriel (Pontifical Catholic University of Rio de Janeiro (PUC-Rio))
    Abstract: This paper estimates the effect of local labor market conditions on crime in a developing country with high crime rates. Contrary to the previous literature, which has focused exclusively on developed countries with relatively low crime rates, we find that labor market conditions have a strong effect on homicides. We exploit the 1990s trade liberalization in Brazil as a natural experiment generating exogenous shocks to local labor demand. Regions facing more negative shocks experience large relative increases in crime rates in the medium term, but these effects virtually disappear in the long term. This pattern mirrors the labor market responses to the trade shocks. Using the trade liberalization episode to design an instrumental variables strategy, we find that a 10% reduction in expected labor market earnings (employment rate × earnings) leads to a 39% increase in homicide rates. Our results highlight an additional dimension of adjustment costs following trade shocks that has so far been overlooked in the literature.
    Keywords: labor markets, crime, trade liberalization
    JEL: F16 J23 J24 K42
    Date: 2016–01
  13. By: Gimenez-Nadal, J. Ignacio (University of Zaragoza); Molina, José Alberto (University of Zaragoza); Velilla, Jorge (University of Zaragoza)
    Abstract: In this paper, we study self-employment in a theoretical setting derived from wage-efficiency spatial models, where leisure and effort at work are complementary. We develop a spatial model of self-employment in which effort at work and commuting are negatively related, and thus the probability of self-employment decreases with "expected" commuting time. We use time-use data from the American Time Use Survey 2003-2014 to analyze the spatial distribution of self-employment across metropolitan areas in the US, focusing on the relationship between commuting time and the probability of self-employment. Our empirical results show that the probability of self-employment is negatively related to the "expected" commuting time, giving empirical support to our theoretical model. Furthermore, we propose a GIS model to show that commuting and self-employment rates are, in relation to unemployment rates, negatively related.
    Keywords: wage-efficiency, self-employment, commuting, leisure, American Time Use Survey
    JEL: J21 J22 R12 R41
    Date: 2016–01
  14. By: Fuest, Clemens (ZEW Mannheim); Peichl, Andreas (ZEW Mannheim); Siegloch, Sebastian (University of Mannheim)
    Abstract: This paper estimates the incidence of corporate taxes on wages using a 20-year panel of German municipalities. Administrative linked employer-employee data allows estimating heterogeneous worker and firm effects. We set up a general theoretical framework showing that corporate taxes can have a negative effect on wages in various labor market models. Using an event study design, we test the predictions of the theory. Our results indicate that workers bear about 40% of the total tax burden. Empirically, we confirm the importance of both labor market institutions and profit shifting possibilities for the incidence of corporate taxes on wages.
    Keywords: business tax, wage incidence, administrative data, local taxation
    JEL: H2 H7 J3
    Date: 2015–12
  15. By: White, Michael (Policy Studies Institute); Bryson, Alex (University College London)
    Abstract: Using nationally representative workplace data we find substantial use of high-performance work systems (HPWS) in Britain's small enterprises. We find empirical support for the proposition that HPWS have a non-linear association with employees' overall job attitude, with a positive association apparent where HPWS are used intensively. These associations are robust to factors often cited as obstacles to HPWS implementation such as informality and family ownership.
    Keywords: human resource management, high-performance work system, small firms, organisational commitment, job satisfaction
    JEL: J28 M50 M54
    Date: 2016–01
  16. By: Lehmann, Hartmut (University of Bologna); Razzolini, Tiziano (University of Siena); Zaiceva, Anzelika (University of Modena and Reggio Emilia)
    Abstract: This paper analyzes how the labor market adjusts to the Great Recession. To this aim, we use the data for Latvia, a country that has experienced one of the most severe recessions in Europe and a subsequent remarkable recovery. Employing longitudinal EU SILC data and a panel data set constructed by us from various waves of the Latvian Labour Force Survey (LLFS), we estimate worker transitions between labor market states. Labor market adjustment takes place predominantly at the extensive margin since it is driven by flows from permanent wage employment to unemployment. We also show that older, non-Latvian and above all less skilled workers are especially hard hit by the economic crisis. Estimated transitions between four mutually exclusive occupational groups demonstrate that downward mobility is very limited even during the Great Recession. Finally, wage regressions suggest that job mobility is not associated with increased labour productivity during and immediately after the crisis.
    Keywords: labour market transitions, job and occupational mobility, Great Recession, Latvia
    JEL: J6 J21 P20 P23
    Date: 2015–12
  17. By: Bagues, Manuel F. (Aalto University); Sylos-Labini, Mauro (University of Pisa); Zinovyeva, Natalia (Aalto University)
    Abstract: We examine how the presence of connections in scientific committees affects researchers' decision to apply and their chances of success. We exploit evidence from Italian academia, where in order to be promoted to an associate or full professorship, researchers are firstly required to qualify in a national evaluation process. Prospective candidates are significantly less likely to apply when the committee includes, through luck of the draw, a colleague or a co-author. This pattern is driven mainly by researchers with a weak research profile. At the same time, information from 300,000 individual evaluation reports shows that applicants tend to receive more favorable evaluations from connected evaluators. Overall, this evidence is consistent with both the existence of a bias in favor of connected candidates and with academic connections reducing information asymmetries. Our study shows that connections are an important determinant of application decisions in academia and, more generally, it highlights the relevance of self-selection for empirical studies on discrimination.
    Keywords: scientific evaluations, connections, self-selection
    JEL: I23 M51 J45
    Date: 2015–12
  18. By: Fuchs-Schündeln, Nicola (Goethe University Frankfurt); Masella, Paolo (University of Sussex)
    Abstract: Political regimes influence contents of education and criteria used to select and evaluate students. We study the impact of a socialist education on the likelihood of obtaining a college degree and on several labor market outcomes by exploiting the reorganization of the school system in East Germany after reunification. Our identification strategy utilizes cutoff birth dates for school enrollment that lead to variation in the length of exposure to the socialist education system within the same birth cohort. An additional year of socialist education decreases the probability of obtaining a college degree and affects longer-term male labor market outcomes.
    Keywords: socialist education, non-meritocratic access restrictions, labor market success
    JEL: I25 J24 P36
    Date: 2016–01
  19. By: Eleonora Patacchini (Cornell University); Edoardo Rainone (Banca d'Italia); Yves Zenou (Stockholm University)
    Abstract: We investigate whether, how, and why individual education attainment depends on the educational attainment of schoolmates. Specifically, using longitudinal data on students and their friends during the school years in a nationally representative set of US schools, we consider the impact of different types of peers on education outcomes. We find that there are strong and persistent peer effects in education, but peers tend to be influential in the long run only when their friendships last more than one year. This evidence is consistent with a network model where convergence of preferences and the emergence of social norms among peers require long-term interactions.
    Keywords: spatial autoregressive model, heterogeneous spillovers, 2SLS estimation, Bayesian estimation, education
    JEL: C31 D85 Z13
    Date: 2016–01
  20. By: Claussen, Jörg (Copenhagen Business School); Czibor, Eszter (University of Amsterdam); van Praag, Mirjam C. (Copenhagen Business School)
    Abstract: The underrepresentation of women at the top of hierarchies is often explained by gender differences in preferences. We find support for this claim by analyzing a large dataset from an online card game community, a stylized yet natural setting characterized by self-selection into an uncertain, competitive and male-dominated environment. We observe gender differences in playing behavior consistent with women being more averse towards risk and competition. Moreover, we demonstrate how "shying away" makes female players less successful: despite no gender gap in playing skills, women accumulate lower scores than men due to their relative avoidance of risky and competitive situations.
    Keywords: gender, preferences, risk, competition, performance
    JEL: D03 J24 M52
    Date: 2015–12

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