nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2016‒02‒29
seventeen papers chosen by
Joseph Marchand
University of Alberta

  1. How do Average Hours Worked Vary with Development? Cross-Country Evidence and Implications By Bick, Alexander; Fuchs-Schündeln, Nicola; Lagakos, David
  2. Asymmetric labor-supply responses to wage-rate changes: Evidence from a field experiment By Doerrenberg, Philipp; Duncan, Denvil; Löffler, Max
  3. Technology Or Upskilling? Trends In The Task Composition Of Jobs In Central And Eastern Europe By Piotr Lewandowski; Wojciech Hardy; Roma Keister
  4. Productivity and Organization in Portuguese Firms By Lorenzo Caliendo; Giordano Mion; Luca David Opromolla; Esteban Rossi-Hansberg
  5. Evaluating Professor Value-added: Evidence from Professor and Student Matching in Physics By Yuta Kikuchi; Ryo Nakajima
  6. Holdup and hiring discrimination with search friction By Sheng Bi; Yuanyuan Li
  7. Profiling the US Sick Leave Landscape By Susser, Philip; Ziebarth, Nicolas R.
  8. Estimating participation responses using transfer program reform By Bastani, Spencer; Moberg, Ylva; Selin, Håkan
  9. What Has Been Happening to UK Income Inequality since the Mid-1990s? Answers from Reconciled and Combined Household Survey and Tax Return Data By Burkhauser, Richard V.; Herault, Nicolas; Jenkins, Stephen P.; Wilkins, Roger
  10. Differences in Job De-Routinization in OECD Countries: Evidence from PIAAC By de la Rica, Sara; Gortazar, Lucas
  11. Does skill-biased technical change diffuse internationally? By Schulte, Patrick
  12. Gray Matters: Fetal Pollution Exposure and Human Capital Formation By Prashant Bharadwaj; Matthew Gibson; Joshua Graff Zivin; Christopher Neilson
  13. Educational attainment of young adults in India: Measures, trends and determinants By Runu Bhakta
  14. Search and Matching Frictions and Business Cycle Fluctuations in Bulgaria By Aleksandar Vasilev
  15. The Effects of the Minimum Wage on Earnings Inequality: Evidence from China By Lin, Carl; Yun, Myeong-Su
  16. Public Expenditure, Demography and Growth: Theory and Evidence from India By Das, Pranab Kumar; Kar, Saibal
  17. Regional age structure and young workers' wages By Garloff, Alfred; Roth, Duncan

  1. By: Bick, Alexander; Fuchs-Schündeln, Nicola; Lagakos, David
    Abstract: How do average hours worked vary across the world income distribution? To answer this question, we build a new internationally comparable database of hours worked covering countries of all income levels. We document that average hours worked per adult are substantially higher in low-income countries than in high-income countries. This pattern holds for both men and women, for adults of all ages and education levels, and along both the extensive margin (employment rates) and intensive margin (hours per worker). Our results imply that labor productivity and welfare differences across countries are larger than suggested by differences in consumption per capita.
    Keywords: hours worked; labor supply
    JEL: E01 E24 J21 J22
    Date: 2016–02
  2. By: Doerrenberg, Philipp; Duncan, Denvil; Löffler, Max
    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
  3. By: Piotr Lewandowski; Wojciech Hardy; Roma Keister
    Abstract: In this paper we analyse the changes in the task content of jobs in Central and Eastern European countries between 1998 and 2013. We link the O*NET data on occupational characteristics with EU-LFS, following the approach of Autor, Levy and Murnane (2003) as well as Acemoglu and Autor (2011). We find that the CEE countries witnessed similar trends of rising intensity of non-routine cognitive tasks, and a decreasing intensity of manual tasks, although they differed with regards to changes in the routine cognitive task content. We identify the contribution of structural and within-sector changes to this evolution of tasks. Furthermore, we assess the relative role played by education and technology in the development of task contents. Our results show that workforce upskilling was the major factor behind the evolution of non-routine cognitive and manual tasks in CEE, whereas structural changes have shaped routine cognitive tasks. Finally, we show that the evolution of task content was not uniform across cohorts, and a shift to non-routine tasks was most abundant among the youngest cohorts.
    Keywords: task content of jobs, routinisation, job polarisation, Central and Eastern Europe
    JEL: I25 J21 J23 J24
    Date: 2016–02
  4. By: Lorenzo Caliendo; Giordano Mion; Luca David Opromolla; Esteban Rossi-Hansberg
    Abstract: The productivity of firms is, at least partly, determined by a firm’s actions and decisions. One of these decisions involves the organization of production in terms of the number of layers of management the firm decides to employ. Using detailed employer-employee matched data and firm production quantity and input data for Portuguese firms, we study the endogenous response of revenue-based and quantity-based productivity to a change in layers: a firm reorganization. We show that as a result of an exogenous demand or productivity shock that makes the firm reorganize and add a management layer, quantity based productivity increases by about 4%, while revenue-based productivity drops by more than 4%. Such a reorganization makes the firm more productive, but also increases the quantity produced to an extent that lowers the price charged by the firm and, as a result, its revenue-based productivity.
    JEL: D22 D24 L23 F16 J24 J31
    Date: 2016
  5. By: Yuta Kikuchi (GISS, Yokohama National University); Ryo Nakajima (Faculty of Economics, Keio University)
    Abstract: This paper estimates a professor's value added to a postgraduate student's research achievement growth using unique panel data on matched advisor-advisee pairs in a world-leading physics graduate program. To address an identification problem related to the endogenous selection of advisors and advisees, we use professor turnover and estimate a semi-parametric lower bound of the variance in advisor quality affecting advisee research performance. We find that a one-standard-deviation increase in professor quality results in a 0.54 standard deviation increase in a doctoral student's research achievement growth, increasing the number of first-authored papers that are published in top journals by 0.64 at the doctoral level.
    Keywords: knowledge creation, postgraduate education, faculty quality, research apprenticeship
    JEL: D83 I23 J24
  6. By: Sheng Bi (Centre d'Economie de la Sorbonne and University of Bielefeld); Yuanyuan Li (University of Bielefeld and Centre d'Economie de la Sorbonne)
    Abstract: A holdup problem on workers' skill investment can arise when employers adopt discriminatory hiring norm to extract higher than socially optimal profit. When hiring priority is determined by both productivity-dependent (skill level) and -independent characteristics (discrimination), skill investment decision becomes strategic between the discriminated and favored group. We consider frictional markets with either posted or bargained wage (fixed sharing rule). With posted wage, depending on market tightness there may be equilibrium or multiple equilibria on skill investment. With discriminatory hiring, if in equilibrium both groups stay high skilled, both are worse off and firms better off; In any equilibrium where one group underinvest, the other group remain high skilled and are better off, while firms are worse off with discrimination. With bargained wage, similar equilibrium where the favored group underinvest exists, and firms incur cost for an intermediate range of bargaining power when they discriminate
    Keywords: Discrimination; Directed Search; Pre-matching Investment
    JEL: J7 J42
    Date: 2016–02
  7. By: Susser, Philip (Cornell University); Ziebarth, Nicolas R. (Cornell University)
    Abstract: This paper profiles the sick leave landscape in the US – the only industrialized country without universal access to paid sick leave or other forms of paid leave. We exploit the 2011 Leave Supplement of the American Time Use Survey (ATUS), a representative and comprehensive database on sick leave in the US. The two binary outcome variables measure (i) access to paid sick leave and (ii) suppressed sick leave ("presenteeism"). Thirty-five percent of US full-time employees lack access to paid sick leave. Low-income employees, service sector employees, and those in poor health have the lowest coverage rates. We estimate that, each week, up to three million US employees suppress their need for sick leave and engage in presenteeism behavior. These are primarily women with children and low-wage sector jobs.
    Keywords: sick leave, paid leave, medical leave, unpaid leave, low-income employees, gender inequality, presenteeism, US
    JEL: I12 I13 I18 J22 J28 J32
    Date: 2016–02
  8. By: Bastani, Spencer (Linnéuniversitetet); Moberg, Ylva (Uppsala universitet); Selin, Håkan (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: In this paper we estimate labor force participation responses for married women in Sweden using population-wide register data and detailed information about individuals’ budget sets. For identification we exploit a reform in the system for housing allowances in 1997 which affected participation tax rates for households with/without children differently. Using a simple theoretical framework we provide a structural interpretation of our estimates and highlight how the employment response depends on the employment level. Our central estimate of the participation elasticity is 0.13. When splitting the treated sample into four quartiles based on the wife’s skill level we find that the participation elasticity is more than twice as large for the lowest-skill sample than for the highest-skill sample.
    Keywords: labor supply; social assistance; housing allowance; in-work tax credits; take up of transfer programs
    JEL: H20 J22
    Date: 2016–01–20
  9. By: Burkhauser, Richard V. (Cornell University); Herault, Nicolas (Melbourne Institute of Applied Economic and Social Research); Jenkins, Stephen P. (London School of Economics); Wilkins, Roger (Melbourne Institute of Applied Economic and Social Research)
    Abstract: Estimates of UK income inequality trends differ substantially according to whether estimates are based on household survey data (used for official statistics) or tax return data (used in the top incomes literature). We reconcile differences in variable definitions and combine survey and tax return data in order to take advantage of the much better coverage of top incomes in the latter, and provide improved estimates of UK inequality trends since the mid-1990s. We show there was a marked increase in income inequality in the early 2000s that survey-based estimates do not reveal, and our conclusions are robust to changes in the definitions of income, income-sharing unit, and summary inequality measure. In addition, our reconciled and combined data provide more comparable estimates of UK-US inequality trends than the top incomes literature to date.
    Keywords: inequality, income inequality, top income shares, HBAI, SPI, top incomes, tax return data, survey data
    JEL: D31 C81
    Date: 2016–02
  10. By: de la Rica, Sara (University of the Basque Country); Gortazar, Lucas (World Bank)
    Abstract: The aim of the paper is threefold. First, we compute differences on the degree of de-routinization of job contents across a harmonized and hence comparable sample of Anglo-Saxon, many European and even Asian advanced countries. We do so by using very precise information on job contents at the worker level, which allows for job task heterogeneity within occupations. Second we assess the extent to which computer adoption leads to the observed difference in the degree of de-routinization of job contents. Third, we test whether higher degrees of technology adoption are associated to higher wage inequality. Our results show remarkable differences in the degree of de-routinization of job contents across countries, being computer adoption at work a key significant driver of such differences. In particular, ICT use at work explains 13.4% (6.3%) of the cross-country unconditional (conditional) differences in de-routinization of job contents. Regarding the impact of adoption technology on wage inequality, our results indicate that although differences in ICT adoption explain an important and significant part of wage differentials, the effect is homogeneous for all the wage distribution, implying that we cannot find a significant association between wage inequality and technology adoption.
    Keywords: routine-biased technological change, de-routinization, polarization, PIACC, RIF-Regressions, wage decomposition
    JEL: J24 J31 O33
    Date: 2016–02
  11. By: Schulte, Patrick
    Abstract: This paper studies the question whether skill-biased technical change diffuses internationally and that way contributes to the increasing relative skill demand in other countries. So far, the role of skill-biased technology diffusion has hardly been studied empirically. Using new sectoral data for a panel of 40 emerging and developed countries, 30 industries (covering manufacturing and service industries) and 13 years (1995-2007), the analysis shows that skill-biased technology diffusion is statistically and economically important in explaining skill-biased technical change. Countries further away from the skill-specific technological frontier subsequently show higher skill-specific productivity growth. For that, the bilateral distance between two countries proves to be an important mediating factor, whereas intersectoral trade linkages, so far, explain only a small part of it. The main results hold for both, developed and emerging countries.
    Keywords: skill-biased technical change,technology diffusion,distance,inputoutput linkages,industry-level data,emerging and developed countries
    JEL: F16 J24 O14 O33 C67
    Date: 2015
  12. By: Prashant Bharadwaj (University of California-San Diego); Matthew Gibson (Williams College); Joshua Graff Zivin (University of California-San Diego); Christopher Neilson (Princeton University)
    Abstract: This paper examines the impact of fetal exposure to air pollution on 4th grade test scores in Santiago, Chile. We rely on comparisons across siblings which address concerns about locational sorting and all other time-invariant family characteristics that can lead to endogenous exposure to poor environmental quality. We also exploit data on air quality alerts to help address concerns related to short-run time-varying avoidance behavior, which has been shown to be important in a number of other contexts. We find a strong negative effect from fetal exposure to carbon monoxide (CO) on math and language skills measured in 4th grade. These effects are economically significant and our back of the envelope calculations suggest that the 50% reduction in CO in Santiago between 1990 and 2005 increased lifetime earnings by approximately 100 million USD per birth cohort.
    Keywords: human capital, air pollution, avoidance behavior, carbon monoxide
    JEL: J24 Q51 Q53 Q56 I12 I18
    Date: 2016–02
  13. By: Runu Bhakta (Indira Gandhi Institute of Development Research)
    Abstract: Given the fact that education of young adults plays crucial role from both economic and social point of view, the objective of the study is to analyse the pattern of improvements in their education and to identify the factors that explain the rate of increase in educational indicators per year. Educational achievement is captured through literacy rate, percentage of population completed higher education and the average years of schooling. The study finds that significant disparities still prevail across gender, regions and rural-urban areas although the gap is reducing over time. Per capita public expenditure in different levels of education has increased monotonously but there prevails consistent spatial variation in the allocation pattern. The estimated models of the annual increase in those education indicators reveal the fact that social status still plays a crucial role in the society in determining actual progress in educational outcomes. The share of expenditure in higher education is an important factor for achieving greater percentage of population completed higher education. But expenditure on adult education does not have significant impact on literacy rate. Share of GSDP in industry and services, and percentage of registered manufacturing are identified as demand pull factors that encourage more education. Besides, percentage of rural households with irrigation facility is important to have better progress in education sector possibly via its impact on improving rural livelihood.
    Keywords: Education, Human Capital, Young Adults, Public Expenditure on Education
    JEL: I21 I22 I28 J24
    Date: 2015–12
  14. By: Aleksandar Vasilev (American University in Bulgaria, Department of Economics)
    Abstract: In this paper we investigate the quantitative importance of search and matching fric- tions in Bulgarian labor markets. This is done by augmenting an otherwise standard real business cycle model a la Long and Plosser (1983) with both a two-sided costly search and fiscal policy. This introduces a strong propagation mechanism that allows the model to capture the business cycles in Bulgaria better than earlier models. The model performs well vis-a-vis data, especially along the labor market dimension, and in addition dominates the market-clearing labor market framework featured in the stan- dard RBC model, e.g Vasilev (2009), as well as the indivisible labor extension used in Hansen (1985).
    Keywords: general equilibrium, unemployment and wages, business cycles, fiscal policy
    JEL: D51 E24 E32 J40
    Date: 2016–02
  15. By: Lin, Carl (Bucknell University); Yun, Myeong-Su (Inha University)
    Abstract: The minimum wage has been regarded as an important element of public policy for reducing poverty and inequality. Increasing the minimum wage is supposed to raise earnings for millions of low-wage workers and therefore lower earnings inequality. However, there is no consensus in the existing literature from industrialized countries regarding whether increasing the minimum wage has helped lower earnings inequality. China has recently exhibited rapid economic growth and widening earnings inequality. Since China promulgated new minimum wage regulations in 2004, the magnitude and frequency of changes in the minimum wage have been substantial, both over time and across jurisdictions. The growing importance of research on the relationship between the minimum wage and earnings inequality and its controversial nature have sparked heated debate in China, highlighting the importance of rigorous research to inform evidence-based policy making. We investigate the contribution of the minimum wage to the well-documented rise in earnings inequality in China over the period from 2004 to 2009 by using city-level minimum wage panel data and a representative Chinese household survey, and we find that increasing the minimum wage reduces inequality – by decreasing the earnings gap between the median and the bottom decile – over the analysis period.
    Keywords: minimum wage, China, earnings inequality
    JEL: J31 J38 O15 R23
    Date: 2016–02
  16. By: Das, Pranab Kumar (Centre for Studies in Social Sciences, Calcutta); Kar, Saibal (Centre for Studies in Social Sciences, Calcutta)
    Abstract: Many countries in the developed world are ageing in terms of their distribution of population. Conversely, a number of countries in the south have younger population. India for example, has 60% of its population in the age group of 15-59, with the mean age close to 27 years as of present times. The lower share of population in the higher and lower age brackets make the dependency ratio lower than that of the ageing countries. The economic growth such a large share of working age population can usher in lies at the core of the demographic dividends. However, low human capital, poor health and inadequate physical infrastructure seems to create significant hurdles in the potential growth path such countries can achieve. We investigate through an endogenous growth model applied to the Indian macroeconomic data, as to whether public expenditures in education, health and physical infrastructure are conducive to rapid economic growth commensurate with the projected demographic dividends for India. We deploy a Structural Vector Autoregressive Model on data for shares of public expenditure on education and health as the main pillars of growth of human capital in the country, on the per capita GDP growth rate, the working age population, etc. Importantly, we find that a rise in expenditure on health imparts a positive impact on the working age population through greater participation. However, higher allocations for education and training draws workers away from the labor market in a country with large share of unskilled workers and employment opportunities in the large informal sector.
    Keywords: human capital, health, endogenous growth, demographic dividend, public expenditure
    JEL: E24 E6 J2 N3
    Date: 2016–02
  17. By: Garloff, Alfred (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Roth, Duncan (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This paper estimates the effect that changes in the size of the youth population have on the wages of young workers. Assuming that differently aged workers are only imperfectly substitutable, economic theory predicts that individuals in larger age groups earn lower wages. We test this hypothesis for a sample of young, male, fulltime employees in Western Germany during the period 1999-2010. In contrast to other studies, functional rather than administrative spatial entities are used as they provide a more accurate measure of the youth population in an actual labour market. Based on instrumental variables estimation, we show that an increase in the youth share by one percentage point is predicted to decrease a young worker's wages by 3 %. Our results also suggest that a substantial part of this effect is due to members of larger age groups being more likely to be employed in lower-paying occupations." (Author's abstract, IAB-Doku) ((en))
    JEL: J21 J31 R23
    Date: 2016–02–18

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