nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2016‒03‒06
ten papers chosen by
Joseph Marchand
University of Alberta

  1. It's About Time: Effects of the Affordable Care Act Dependent Coverage Mandate on Time Use By Colman, Gregory; Dave, Dhaval M.
  2. Long-Lasting Effects of Socialist Education By Fuchs-Schündeln, Nicola; Masella, Paolo
  3. Optimal Income Taxation with Unemployment and Wage Responses: A Sufficient Statistics Approach By Kroft, Kory; Kucko, Kavan; Lehmann, Etienne; Schmieder, Johannes F.
  4. Leadership experiences, labor market entry, and early career trajectories By Lundin, Martin; Nordström Skans, Oskar; Zetterberg, Pär
  5. The Effects of Knowledge Spillovers through Labor Mobility By Castillo, Victoria; Figal-Garone, Lucas; Maffioli, Alessandro; Rojo, Sofia; Stucchi, Rodolfo
  6. Remittances and expenditure patterns of the left behinds in rural China By Sylvie Démurger; Xiaoqian Wang
  7. The quality of demographic data on older Africans By Sara Randall; Ernestina Coast
  8. Ageing and the Skill Portfolio: Evidence from Job Based Skill Measures By Audra J. Bowlus; Hiroaki Mori; Chris Robinson
  9. Minimum Wages and Firm Value By Brian Bell; Stephen Machin
  10. Does Financial Deregulation Boost Top Incomes? Evidence from the Big Bang By Tanndal, Julia; Waldenström, Daniel

  1. By: Colman, Gregory (Pace University); Dave, Dhaval M. (Bentley University)
    Abstract: One of the main purposes of recent healthcare reform (Patient Protection and Affordable Care Act - ACA) in the U.S. is to enable Americans to make more productive use of their time. We examine how the ACA's dependent care coverage mandate (DCM) affected young adults' time allocation. Based on more accurate measures from the American Time Use Surveys and difference-in-difference methods, we first confirm that the DCM reduced labor supply. The question then arises, what have these adults done with the extra time? We provide some of the first evidence on this issue. Estimates suggest that the DCM has reduced job-lock, as well as the duration of the average doctor's visit, including time spent waiting for as well as receiving medical care, among persons ages 19-25. The latter effect is consistent with substitution from hospital ER utilization to more routine physician care. The extra time has gone into socializing, and to a lesser extent, into educational activities and job search. A related question is whether these changes have made young adults better off. We find that the availability of insurance and change in work time appear to have increased their subjective well-being, enabling them to spend time on activities they view as more meaningful than those they did before insurance became available.
    Keywords: health insurance, labor supply, time use, leisure, medical care, Affordable Care Act, waiting time, well-being, work
    JEL: I1 J2 H0
    Date: 2016–02
  2. By: Fuchs-Schündeln, Nicola; Masella, Paolo
    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 cut-off 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: labor-market success; non-meritocratic access restrictions; socialist education
    JEL: I25 J24 P36
    Date: 2016–02
  3. By: Kroft, Kory (University of Toronto); Kucko, Kavan (Boston University); Lehmann, Etienne (CRED, Université Panthéon Assas Paris 2); Schmieder, Johannes F. (Boston University)
    Abstract: We derive a sufficient statistics optimal tax formula in a general model that incorporates unemployment and endogenous wages, to study the shape of the tax and transfer system at the bottom of the distribution. The sufficient statistics are the macro employment response to taxation and the micro and macro participation responses. We estimate these statistics using policy variation from the U.S. tax and transfer system. Our results suggest that the optimal tax more closely resembles a Negative Income Tax than an Earned Income Tax Credit relative to the case where unemployment and wage responses are not taken into account.
    Keywords: optimal income taxation, labor supply, labor demand
    JEL: H21 J22 J23
    Date: 2016–02
  4. By: Lundin, Martin (IFAU - Institute for Evaluation of Labour Market and Education Policy); Nordström Skans, Oskar (Uppsala universitet); Zetterberg, Pär (Uppsala universitet)
    Abstract: We study how leadership experiences before labor market entry affect subsequent labor market performance, using a regression discontinuity design to isolate the causal effects. The design is applied to elections of representatives at Swedish student union (SU) councils. Archive data on winning and losing candidates at three major Swedish universities are mapped to register data on their subsequent labor market careers. The results show that students who acquired a position in the SU councils are more likely to have a rapid transition into employment than candidates who just missed getting to get such a leadership role. The employment effects are not confined to workplaces, organizations, or industries where previous candidates are employed, suggesting that the benefits of having been a student representative are general in nature. Elected representatives are more likely to hold a well-paid job within three years, but not thereafter. Overall, our estimates suggest that leadership experiences before labor market entry boost individuals’ initial career trajectories, whereas mid-term outcomes appear unaffected.
    Keywords: leadership experiences; extracurricular activities; labor market entry; earnings; higher education; non-cognitive skills
    JEL: I23 J24
    Date: 2016–01–22
  5. By: Castillo, Victoria; Figal-Garone, Lucas; Maffioli, Alessandro; Rojo, Sofia; Stucchi, Rodolfo
    Abstract: We estimate the effects of knowledge spillovers on firms’ performance and workers’ wages. We use an innovation support program as an exogenous shock to the knowledge of non-participant firms and an employer-employee dataset to track the mobility of workers—and knowledge diffusion—between firms. We find that non-participants that acquired new knowledge by hiring skilled workers exposed to the program increased employment, the average wage they pay, exports, and productivity. Finally, we find that—depending on the level of competition—a wage premium was paid either by participant or non-participant firms to retain or acquire workers.
    Keywords: Knowledge spillover, Labor mobility, Innovation, Panel data
    JEL: D2 J3 O3 O38
    Date: 2016–01–30
  6. By: Sylvie Démurger (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Xiaoqian Wang (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    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, propensity score matching, China
    Date: 2016
  7. By: Sara Randall; Ernestina Coast
    Abstract: BACKGROUND Developing appropriate and equitable policies for older people in Africa requires accurate and reliable data. It is unclear whether existing data can accurately assess older African population structures, let alone provide the detailed information needed to inform policy decision making. OBJECTIVE To evaluate the quality of nationally representative data on older Africans through examining the accuracy of age data collected from different sources. METHODS To measure the accuracy of age reporting overall we calculate Whipple’s Index, and a modified Whipple’s Index for older adults, using the single year age-sex distributions from (a) the household roster of 17 Demographic and Health Surveys (DHS) (b) the censuses of 12 of these countries and (c) the Living Standards Measurement Study (LSMS) for Ethiopia and Niger. We compare reported sex ratios by age. RESULTS The quality of age data is very poor for most countries outside Southern Africa, especially for older adults. In some Sahelian countries DHS surveys appear to omit a considerable proportion of older women. Data on population structure of older people by age and sex produced by the DHS and the census are inconsistent and contradictory. CONCLUSIONS Different field methodological approaches generate contradictory data on older Africans. With the exception of Southern Africa, it is impossible to assess accurately the basic demographic structure of the older population. The data available are so problematic that any conclusions about age-related health and welfare and their evolution over time and space are potentially compromised. This has ramifications for policy makers and practitioners who demand, fund and depend on large scale demographic data sources.
    JEL: C1
    Date: 2016
  8. By: Audra J. Bowlus (University of Western Ontario); Hiroaki Mori (University of Western Ontario); Chris Robinson (University of Western Ontario)
    Abstract: The evolution of human capital over the life-cycle, especially during the accumulation phase, has been extensively studied within an optimal human capital investment framework. Given the ageing of the workforce, there is increasing interest in the human capital of older workers. The most recent research on wage patterns has adopted a new multidimensional skills/tasks approach. We argue that this approach is also well suited to the investigation of the evolution of the human capital of older workers. There is clear evidence that the typical concave Ben-Porath shape for a wage based single dimension human capital measure masks different shapes for the individual components in a multidimensional skill portfolio. Not all components evolve in the same way over the life-cycle. Some components of the skill vector are particularly sensitive to ageing effects for older workers, but this sensitivity is under-estimated using occupation level rather than individual level skill observations. The evidence suggests that workers can and do adjust their skill portfolios in various ways as they approach retirement and that the decline in skills is not purely driven by selection.
    Keywords: Ageing; Skills; Human Capital
    Date: 2016
  9. By: Brian Bell; Stephen Machin
    Abstract: How does the value of a firm change in response to a minimum wage hike? The evidence we have to date is not well-suited to answer this question, principally because events that have been studied are not completely unknown to the stock market or have uncertainty associated with them. This paper exploits the announcement of a sizeable change in the minimum wage in the UK that was both totally unanticipated and free of uncertainty. The stock market response of employers of minimum wage workers is examined in an event study setting, looking at minute-by-minute changes surrounding the announcement and at cumulative abnormal returns on a daily basis before and after the announcement. The analysis uncovers significant falls in the stock market value of low wage firms. The size of the fall in value is compared to the fall in profitability in response to the wage cost shock that will be induced by the announcement and is seen to be of a comparable magnitude.
    Keywords: minimum wages, firm value
    JEL: J23 L25
    Date: 2016–01
  10. By: Tanndal, Julia; Waldenström, Daniel
    Abstract: This study estimates the impact of financial deregulation on top income shares. Using the novel econometric method of constructing synthetic control groups, we show that the "Big Bang"-deregulations in the United Kingdom in 1986 and Japan 1997{1999 increased the share of pre-tax incomes going to top earners by over 20 percent in the U.K. and over 10 percent in Japan. The effect is strongest in the top five percentiles in the U.K. whereas it is mainly driven by the lower part of the top decile in Japan. The findings are robust to placebo tests, alternative ways to construct synthetic controls and scrutiny of post-treatment trends. Higher earnings among financial sector employees appear to be an important mechanism behind this result.
    Keywords: income inequality; institutions; synthetic control group
    JEL: D31 G28 H24 J30 N20
    Date: 2016–02

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