nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2016‒03‒10
fourteen papers chosen by
Joseph Marchand
University of Alberta

  1. Offshoring and Labor Markets By Hummels, David; Munch, Jakob R.; Xiang, Chong
  2. Understanding Declining Fluidity in the U.S. Labor Market By Molloy, Raven S.; Smith, Christopher L.; Trezzi, Riccardo; Wozniak, Abigail
  3. The German Labor Market Miracle, 2003 -2015: An Assessment By Michael C. Burda; ; ;
  4. Female Labor Force Participation in Asia: Indonesia Country Study By Schaner , Simone; Das, Smita
  5. Modeling the Effects of Grade Retention in High School By Stijn BAERT; Bart COCKX; Matteo PICCHIO
  6. If You Don't Snooze You Lose: Evidence on Health and Weight By Giuntella, Osea; Mazzonna, Fabrizio
  7. Open Borders, Transport Links and Local Labor Markets By Aslund, Olof; Engdahl, Mattias
  8. Subjective completion beliefs and the demand for post-secondary education By Johannes S. Kunz; Kevin E. Staub
  9. How Bad Is Involuntary Part-time Work? By Borowczyk-Martins, Daniel; Lalé, Etienne
  10. Behind the Fertility-Education Nexus: What Triggered the French Development Process? By Claude Diebolt; Audrey-Rose Menard; Faustine Perrin
  11. Trade Costs and Income in European Regions By Christoph Hammer; Aurélien Fichet de Clairfontaine
  12. The impact of a computer based adult literacy program on literacy and numeracy : evidence from India By Deshpande, Ashwini; Desrochers, Alain; Ksoll, Christopher; Shonchoy, Abu S.
  13. Enriching Students Pays Off: Evidence from an Individualized Gifted and Talented Program in Secondary Education By Booij, Adam S.; Haan, Ferry; Plug, Erik
  14. College Choice and the Selection of Mechanisms: A Structural Empirical Analysis By J.-R. Carvalho; T. Magnac; Qizhou Xiong

  1. By: Hummels, David (Purdue University); Munch, Jakob R. (University of Copenhagen); Xiang, Chong (Purdue University)
    Abstract: In this paper we survey the recent empirical literature on the effects of offshoring on wage, employment and displacement. We start with an overview of the measurement of offshoring, organizing our discussion around the three key elements of offshoring: that it involves intermediate inputs for production (vs. final goods for consumption); that it involves imported inputs (vs. domestically produced ones); and that the inputs involved could have been produced internally within the same firm. We then briefly discuss the theories of offshoring, and survey the literature that examines the wage effects of offshoring: the wave of studies using industry-level data; the wave using firm-level data; the wave using worker-level data; and the wave using matched worker-firm data. For each wave we highlight the identification strategies used, critically assess its strength and weakness, discuss its connections with theory, and draw out potential policy implications of its findings. Finally we survey the literature that examines how offshoring affects employment and displacement. We highlight the recent development of a novel cohort-based approach that is specifically designed to address selection with displacement, and capable of identifying the overall effects of offshoring, including wage, displacement, and all other types of transition.
    Keywords: offshoring, wages, unemployment
    JEL: F1 J2 J3 L2
    Date: 2016–02
  2. By: Molloy, Raven S. (Board of Governors of the Federal Reserve System (U.S.)); Smith, Christopher L. (Board of Governors of the Federal Reserve System (U.S.)); Trezzi, Riccardo (Board of Governors of the Federal Reserve System (U.S.)); Wozniak, Abigail (University of Notre Dame)
    Abstract: We document a clear downward trend in labor market fluidity that is common across a variety of measures of worker and job turnover. This trend dates to at least the early 1980s if not somewhat earlier. Next we pull together evidence on a variety of hypotheses that might explain this downward trend. It is only partly related to population demographics and is not due to the secular shift in industrial composition. Moreover, the decline in labor market fluidity seems unlikely to have been caused by an improvement in worker-firm matching, the formalization of hiring practices, or an increase in land use regulation or other regulations. Plausible avenues for further exploration include changes in the worker-firm relationship, particularly with regard to compensation adjustment; changes in firm characteristics such as firm size and age; and a decline in social trust, which may have increased the cost of job search or made both parties in the hiring process more risk averse.
    Keywords: demographic trends; hires and separations; job creation and destruction; job turnover; labor market churn; labor market transitions; labor reallocation
    JEL: J11 J21 J30 J60 R23
    Date: 2016–03–02
  3. By: Michael C. Burda; ; ;
    Abstract: This paper reviews the dramatic and widely noted developments in the German labor market in the past decade and surveys the most plausible reasons for these changes. Alternative hypotheses are compared and contrasted. I argue that the labor market reforms associated with the Agenda 2010 – the Hartz reforms – played a role at least as great as that of increasing flexibility of wage determination and the allocation of hours across workers. Until 2010, the German economic miracle could be accounted for by an expansion of part-time work, which has since been supplanted by a sustained expansion of full-time employment. Supported by wage flexibility in this segment, part-time employment represents an important new margin of flexibility in the German labor market.
    Keywords: German labor market miracle, Hartz reforms, part-time work, wage inequality
    JEL: E24 J21
    Date: 2016–02
  4. By: Schaner , Simone (Dartmouth College); Das, Smita (Harvard Kennedy School of Government)
    Abstract: This paper uses over 20 years of data from Indonesia’s labor force survey to study trends in female labor force participation (FLFP). We find that younger women in urban areas have increased their labor force participation in recent years, largely through wage employment, while younger women in rural areas have reduced their labor force participation, largely by opting out of informal, unpaid employment. We find evidence that wage jobs are more desirable than other types of work and that many women exit wage work due to family and childcare constraints. We outline a research-policy evaluation of female-centered vocational training and job placement services, which may be effective tools to increase FLFP.
    Keywords: gender; Indonesia; labor force participation
    JEL: J16 J22 O12
    Date: 2016–02–10
  5. By: Stijn BAERT (Sherppa, Ghent University, University of Antwerp, Universit‚ catholique de Louvain; IZA); Bart COCKX (Sherppa, Ghent University, IRES, Universit‚catholique de Louvain, IZA; CESifo); Matteo PICCHIO (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)
    Abstract: A dynamic discrete choice model is set up to estimate the effects of grade retention in high school, both in the short- (end-of-year evaluation) and long-run (drop-out and delay). In contrast to regression discontinuity designs, this approach captures treatment heterogeneity and controls for grade-varying unobservable determinants. We deal with initial conditions and with partial observability of the track choices at the start of high school. Forced track downgrading is considered as an alternative remedial measure. In the longrun, grade retention and its alternative have adverse effects on schooling outcomes and, more so, for less able pupils.
    Keywords: Education, dynamic discrete choice models, grade retention, heterogeneous treatment effects, track mobility
    JEL: C33 C35 I21
    Date: 2016–02
  6. By: Giuntella, Osea (University of Oxford); Mazzonna, Fabrizio (USI Università della Svizzera Italiana)
    Abstract: Most economic models consider sleeping as a pre-determined and homogeneous constraint on individuals' time allocation neglecting its potential effects on health and human capital. Several medical studies provide evidence of important associations between sleep deprivation and health outcomes suggesting a large impact on health care systems and individual productivity. Yet, there is little causal analysis of the effects of sleep duration. This paper uses a spatial regression discontinuity design to identify the effects of sleep on health status, weight, and cognitive abilities. Our results suggest that delaying morning work schedules and school start times may have non-negligible effects on health.
    Keywords: health, obesity, sleep deprivation, time use, regression discontinuity
    JEL: I12 J22 C31
    Date: 2016–02
  7. By: Aslund, Olof (IFAU); Engdahl, Mattias (Uppsala University)
    Abstract: We study the labor market impact of opening borders to low wage countries. The analysis exploits time and regional variation provided by the 2004 EU enlargement in combination with transport links to Sweden from the new member states. The results suggest an adverse impact on earnings of present workers in the order of 1 percent in areas close to pre-existing ferry lines. The effects are present in most segments of the labor market but tend to be greater in groups with weaker positions. The impact is also clearer in industries which have received more workers from the new member states, and for which across-the-border work is likely to be more common. There is no robust evidence on an impact on employment or wages. At least part of the effects is likely due to channels other than the ones typically considered in the literature.
    Keywords: migration policy, immigration, labor market outcomes
    JEL: J15 J31 J61
    Date: 2016–02
  8. By: Johannes S. Kunz; Kevin E. Staub
    Abstract: The outcome of pursuing a post-secondary educational degree is uncertain. A student might not complete a chosen degree for a number of reasons, such as academic insufficiency or financial constraints. Thus, when considering whether to invest in post-secondary education, students must factor in their completion probability into their decision. We study the role of this uncertainty in educational choices using students’ subjective beliefs about completing a post-secondary education, which were elicited prior to students’ completing secondary education. We relate these subjective completion probabilities to their subsequent educational choices and outcomes using representative survey data from Germany. Following the students over time, we find that the initial beliefs are predictive of intentions to invest in education, actual subsequent educational investments, and degree completion. We assess the heterogeneity of the impact across different educational paths. After controlling for academic ability, we find that subjective beliefs are most relevant in choosing a vocational education. In addition to reduced form models, we estimate a structural choice model of sequential investment in education that allows for unobserved tastes and preferences for education and forward-looking behavior. The results confirm the influence of subjective completion beliefs on choosing a post-secondary education.
    Keywords: Subjective beliefs, educational completion uncertainty, human capital investment
    JEL: I21 J24
    Date: 2016–02
  9. By: Borowczyk-Martins, Daniel (Sciences Po, Paris); Lalé, Etienne (University of Bristol)
    Abstract: We use a set of empirical and analytical tools to conduct parallel analyses of involuntary part-time work and unemployment in the U.S. labor market. In the empirical analysis, we document that the similar cyclical behavior of involuntary part-time work and unemployment masks major differences in the underlying dynamics. Unlike unemployment, variations in involuntary part-time work are mostly explained by its interaction with full-time employment, and since the Great Recession employed workers are at a greater risk of working part-time involuntarily than being unemployed. In the theoretical analysis, we show that the higher probability of regaining full-time employment is key to distinguish involuntary part-time work from unemployment from a worker's perspective. We also quantify the welfare costs of cyclical fluctuations in involuntary part-time work, and the amplification of these costs arising from the elevated levels of involuntary part-time work observed since the Great Recession.
    Keywords: employment, involuntary part-time work, welfare, Great Recession
    JEL: E21 E32 J21
    Date: 2016–02
  10. By: Claude Diebolt (BETA, University of Strasbourg Strasbourg, France); Audrey-Rose Menard (BETA, University of Strasbourg Strasbourg, France); Faustine Perrin (Department of Economic History, Lund University)
    Date: 2016
  11. By: Christoph Hammer (Department of Economics, Vienna University of Economics and Business); Aurélien Fichet de Clairfontaine (Department of Economics, Vienna University of Economics and Business)
    Abstract: Using a New Economic Geography (NEG) model, this study estimates the relationship between regional per capita income levels and the proximity of regions to large markets. Market access cannot be observed directly, so it has to be constructed. We follow a two-step-procedure of Redding and Venables (2004) and use results of a spatially-filtered gravity model to infer market access. To this end, we make use of a new dataset of constructed bi-regional trade flows between (and within) 240 European NUTS-2 regions (from 25 European countries excluding Bulgaria, Croatia and Romania) for the year 2010 (Thissen et al. 2014, IPTS). In a second step we test the hypothesis that access to large markets increases factor incomes. We find robust evidence that supports this hypothesis on a regional level. Controlling for a variety of factors that drive income differences, our findings highlight the robustness of the role of market access in explaining the uneven spatial distribution of income.
    Keywords: Wage equation, Gravity, European regions, New Economic Geography
    JEL: F12 F14
    Date: 2016–02
  12. By: Deshpande, Ashwini; Desrochers, Alain; Ksoll, Christopher; Shonchoy, Abu S.
    Abstract: With over 700 million illiterate adults in the world, many governments have implemented adult literacy programs across the world, although typically with low rates of success partly because the quality of teaching is low. One solution may lie in the standardization of teaching provided by computer-aided instruction. We present the first rigorous evidence of the effectiveness of a computer-based adult literacy program. A randomized control trial study of TARA Akshar Plus, an Indian adult literacy program, was implemented in the state of Uttar Pradesh in India. We find large, significant impacts of this computer-aided program on literacy and numeracy outcomes. We compare the improvement in learning to that of other traditional adult literacy programs and conclude that TARA Akshar Plus is effective in increasing literacy and numeracy for illiterate adult women.
    Keywords: India, Adult education, Literacy, Women, Adult Literacy Program, ICT
    JEL: O12
    Date: 2016–01
  13. By: Booij, Adam S. (University of Amsterdam); Haan, Ferry (University of Amsterdam); Plug, Erik (University of Amsterdam)
    Abstract: We examine the effect of a gifted and talented program in academic secondary education. Students are assigned based on a cutoff score in a cognitive aptitude test, which we exploit in a fuzzy regression discontinuity framework to identify program effects. We find that assigned students obtain higher grades, follow a more science intensive curriculum (most notably for girls), and report stronger beliefs about their academic abilities. We also find that these positive effects persist in university, where students choose more challenging fields of study with, on average, higher returns. Together, these findings are consistent with a human capital interpretation.
    Keywords: gifted and talented education, enrichment program, secondary education, regression discontinuity
    JEL: I22 I28
    Date: 2016–02
  14. By: J.-R. Carvalho; T. Magnac; Qizhou Xiong
    Abstract: We use rich microeconomic data on performance and choices of students at college entry to study the interaction between the revelation of college preferences through exams and the selection of allocation mechanisms. We propose a method in which preferences and expectations of students are identified from data on choices and multiple exam grades. Counterfactuals we consider balance costs arising from congestion and exam organization. Moving to deferred acceptance or inverting the timing of choices and exams are shown to increase welfare. Redistribution among students or schools is sizeable in all counterfactual experiments.
    Keywords: education, two-sided matching, school allocation mechanism, policy evaluation
    JEL: I21
    Date: 2016–02

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