nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2016‒03‒17
nineteen papers chosen by
Joseph Marchand
University of Alberta

  1. Reconciling the Differences in Aggregate U.S. Wage Series By Julien Champagne; André Kurmann; Jay Stewart
  2. Estimating participation responses using transfer program reform By Bastani, Spencer; Moberg, Ylva; Selin, Håkan
  3. The Shifting Job Tenure Distribution By Hyatt, Henry R.; Spletzer, James R.
  4. Equal Opportunity? Gender Gaps in CEO Appointments and Executive Pay By Keluoharju, Matti; Knüpfer, Samuli; Tåg, Joacim
  5. Paid Sick Leave and Absenteeism: The First Evidence from the U.S. By Ahn, Thomas; Yelowitz, Aaron
  6. Ownership Restructuring and Wage Inequality in Urban China By Whalley, John; Xing, Chunbing
  7. Effects of Welfare Reform on Women's Voting Participation By Dave, Dhaval M.; Corman, Hope; Reichman, Nancy E.
  8. Earnings premiums and penalties for self-employment and informal employees around the world By Gindling,T. H.; Mossaad,Nadwa; Newhouse,David Locke
  9. What's the price of consulting? Effects of public and private sector consulting on academic research By Fudickar, Roman; Hottenrott, Hanna; Lawson, Cornelia
  10. Circadian Rhythms, Sleep and Cognitive Skills: Evidence from an Unsleeping Giant By Giuntella, Osea; Han, Wei; Mazzonna, Fabrizio
  11. The lost generation: Effects of youth labor market opportunities on long-term labor market outcomes By Venke Furre Haaland
  12. Long Run Effects of Youth Training Programs: Experimental Evidence from Argentina By Alzúa, María Laura; Cruces, Guillermo; Lopez, Carolina
  13. Assessing the Effects of Disability Insurance Experience Rating: The Case of the Netherlands By De Groot, Nynke; Koning, Pierre
  14. Revisiting the Effects of Unemployment Insurance Extensions on Unemployment: A Measurement Error-Corrected Regression Discontinuity Approach By Steven Dieterle; Otavio Bartalotti; Quentin Brummet
  15. Occupational Choice, Human Capital, and Financial Constraints By Rui Castro; Pavel Sevcik
  16. Women’s Leadership and Corporate Performance By Qian, Meijun
  17. The Labor Market Performance of Immigrants in Germany By Robert C. M. Beyer
  18. Gender, ethnicity and teaching evaluations : Evidence from mixed teaching teams By Wagner, N.; Rieger, M.; Voorvelt, K.J.
  19. Competition and the Racial Wage Gap: Testing Becker's Model of Employer Discrimination By Hirata, Guilherme; Soares, Rodrigo R.

  1. By: Julien Champagne; André Kurmann; Jay Stewart
    Abstract: Average hourly real wage series from the Labor Productivity and Costs (LPC) program and the Current Employment Statistics (CES) program have evolved very differently over the past decades. While the LPC wage has grown consistently over time and become markedly more volatile since the mid-1980s, the CES wage stagnated from the early 1970s to the mid-1990s and experienced a substantial drop in volatility since the mid-1980s. These differences are due to the divergent evolution of average weekly earnings in the two data sets. Average weekly hours, by contrast, have evolved very similarly. Using information from the Current Population Survey and other publicly available data, we identify two principal sources for the divergent evolution of weekly earnings: differences in earnings concept (employer-paid supplements and irregular earnings of high-income individuals included in the LPC data but not in the CES data); and differences in worker coverage (all non-farm business workers for the LPC data versus production and nonsupervisory workers in private non-agricultural establishments for the CES data). The results have important implications for the appropriate choice of aggregate wage series in macroeconomic applications.
    Keywords: Business fluctuations and cycles, Labour markets
    JEL: E01 E24 E30 J30
    Date: 2016
  2. By: Bastani, Spencer (Uppsala Center for Labor Studies); Moberg, Ylva (Uppsala Center for Labor Studies); Selin, Håkan (Uppsala Center for Labor Studies)
    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: 2016–02–17
  3. By: Hyatt, Henry R. (U.S. Census Bureau); Spletzer, James R. (U.S. Census Bureau)
    Abstract: There has been a shift in the U.S. job tenure distribution toward longer-duration jobs since 2000. This change is apparent both in the tenure supplements to the Current Population Survey and the Longitudinal Employer-Household Dynamics matched employer-employee data. A substantial portion of these changes are caused by the ageing of the workforce and the decline in the entry rate of new employer businesses. We show that the tenure distribution is a function of historical hiring rates and tenure-specific separation rates, and we use this framework to show that the shift in the tenure distribution is accounted for primarily by declines in the hiring rate, which are concentrated in the labor market downturns associated with the 2001 and 2007-2009 recessions. We also find that the increase in average real earnings since 2007 is less than what would be predicted by the shift toward longer-tenure jobs; this reflects declines in tenure-held-constant real earnings. Regression estimates of the returns to job tenure provide no evidence that the shift in the job tenure distribution is being driven by better matches between workers and employers.
    Keywords: tenure, hires and separations, earnings
    JEL: J10 J21 J31
    Date: 2016–02
  4. By: Keluoharju, Matti (Aalto University School of Business); Knüpfer, Samuli (BI Norwegian Business School); Tåg, Joacim (Research Institute of Industrial Economics (IFN))
    Abstract: This paper uses exceptionally rich data on Swedish corporate executives and their personal characteristics to study gender gaps in CEO appointments and pay. Both gaps are sizeable: 18% for CEO appointments and 27% for pay. At most one-eight of the gaps can be attributed to observable gender differences in executives’ and their firms’ characteristics. Further tests suggest that unobservable gender differences in characteristics are unlikely to account for the remaining gaps. Instead, our results are consistent with the view that male and female executives sharing equal attributes neither have equal opportunities to reach the top, nor are they equally paid.
    Keywords: CEOs; Compensation; Discrimination; Executives; Gender differences
    JEL: G34 J16 J24 J31
    Date: 2016–02–18
  5. By: Ahn, Thomas; Yelowitz, Aaron
    Abstract: Using a balanced sample of workers from the NHIS, we estimate of the impact of paid sick leave (PSL) insurance on absenteeism in the United States. PSL increases absenteeism by 1.2 days per year, a large effect given the typical benefit duration. Consistent with moral hazard, the effects are concentrated in moderate sick days, not severe ones. In addition, we merge the NHIS with Google Flu Trends. Severe influenza outbreaks lead workers to exhaust sick days, consequently leading to a replacement rate of zero for additional absences. Consistent with a lower replacement rate, worker absenteeism is reduced on the margin.
    Keywords: Paid Sick Leave, Absenteeism, Presenteeism, Moral Hazard, Google Flu Trends
    JEL: H51 I18 J22
    Date: 2016–03–01
  6. By: Whalley, John (University of Western Ontario); Xing, Chunbing (Beijing Normal University)
    Abstract: Within urban income inequality has become an increasingly important component in China's overall income inequality in recent years. Using three Chinese urban household surveys for 1995, 2002, and 2007, we examine how the change in ownership structure, one of the major changes in China's transition process, has contributed to China's rising within urban wage inequality. We show that the private sector had higher wage dispersion than the public sector in the period 1995-2007 and that the wage dispersion increased faster in the public sector. Decomposition exercises that follow show that over 50% of the increase in urban wage inequality was associated with labor being reallocated from the public to the private sector. Increases in wage dispersions within different ownerships (in particular the public sector) also make significant contributions to growing inequality. Counterfactual analysis indicates that the urban wage inequality may rise further if more labor is reallocated to the private sector in the future.
    Keywords: ownership, wage inequality, urban China, decomposition
    JEL: J31 I24
    Date: 2016–02
  7. By: Dave, Dhaval M. (Bentley University); Corman, Hope (Rider University); Reichman, Nancy E. (Rutgers University)
    Abstract: Voting is an important form of civic participation in democratic societies but a fundamental right that many citizens do not exercise. This study investigates the effects of welfare reform in the U.S. in the 1990s on voting of low income women. Using the November Current Population Surveys with the added Voting and Registration Supplement for the years 1990 through 2004 and exploiting changes in welfare policy across states and over time, we estimate the causal effects of welfare reform on women's voting registration and voting participation during the period during which welfare reform unfolded. We find robust evidence that welfare reform increased the likelihood of voting by about 4 percentage points, which translates to about a 10% increase relative to the baseline mean. The effects were largely confined to Presidential elections, were stronger in Democratic than Republican states, were stronger in states with stronger work incentive policies, and appeared to operate through employment, education, and income.
    Keywords: employment, voting, welfare reform, income, civic participation, education, difference-in-differences
    JEL: H0 I2 J2 J3
    Date: 2016–02
  8. By: Gindling,T. H.; Mossaad,Nadwa; Newhouse,David Locke
    Abstract: This paper examines the earnings premiums associated with different types of employment in 73 countries. Workers are divided into four categories: non-professional own-account workers, employers and own-account professionals, informal wage employees, and formal wage employees. Approximately half of the workers in low-income countries are non-professional own-account workers and the majority of the rest are informal employees. Fewer than 10 percent are formal employees, and only 2 percent of workers in low-income countries are employers or own-account professionals. As per capita gross domestic product increases, there are large net shifts from non-professional own-account work into formal wage employment. Across all regions and income levels, non-professional own-account workers and informal wage employees face an earnings penalty compared with formal wage employees. But in low-income countries this earnings penalty is small, and non-professional own-account workers earn a positive premium relative to all wage employees. Earnings penalties for non-professional own-account workers tend to increase with gross domestic product and are largest for female workers in high-income countries. Men earn greater premiums than women for being employers or own-account professionals. These results are consistent with compensating wage differentials and firm quasi-rents playing important roles in explaining cross-country variation in earnings penalties, and raise questions about the extent to which the unskilled self-employed are rationed out of formal wage work in low-income countries.
    Keywords: Labor Management and Relations,Skills Development and Labor Force Training,Labor Policies,Income,Labor Markets
    Date: 2016–01–07
  9. By: Fudickar, Roman; Hottenrott, Hanna; Lawson, Cornelia
    Abstract: Academic consulting is recognised as an important and effective means of knowledge transfer with the public and private sectors. These interactions with external sectors offer opportunities for research application but also raise concerns over their potentially negative consequences for academic research and its dissemination. For a sample of social, natural and engineering science academics in Germany, we find consulting to be widespread, undertaken by academics at all seniority levels and in all disciplines, with academics in the social sciences more likely to provide advice to the public sector and those in engineering to the private sector. Controlling for the selection into consulting, we then investigate its effect on research performance. While previous research suggested that consulting activities might come at the cost of reduced research output, our analysis does not confirm this concern. The results, however, suggest that stronger engagement in consulting increases the probability to cease publishing research altogether. Moreover, public sector consulting comes with lower average citations which may suggest a move towards context-specific publications that attract fewer citations. We draw lessons for research institutions and policy about the promotion of academic consulting.
    Keywords: academic consulting,university-industry interaction,science advice,knowledge transfer,research performance,exit from academia
    JEL: O31 O33 O38 I23
    Date: 2016
  10. By: Giuntella, Osea (University of Oxford); Han, Wei (University of Oxford); Mazzonna, Fabrizio (USI Università della Svizzera Italiana)
    Abstract: This paper analyzes the effects of sleep duration on cognitive skills and depression symptoms of older workers in China. Cognitive skills and mental health have been associated with sleep duration and are known to be strongly related to economic behavior and performance. However, causal evidence is lacking and little is known about sleep deprivation in developing countries. We exploit the relationship between circadian rhythms and bedtime to identify the effects of sleep using sunset time as an instrument. Using the Chinese Health and Retirement Longitudinal Study, we show that a later sunset time reduces significantly sleep duration and that sleep duration increases cognitive skills and eases depression symptoms of workers aged over 45 years. The results are driven by employed individuals living in urban areas, who are more likely to be constrained by rigid working schedules. On the contrary, we find no evidence of significant effects on self-employed and farmers.
    Keywords: sleep deprivation, cognitive skills, risky behaviors
    JEL: I12
    Date: 2016–02
  11. By: Venke Furre Haaland (Statistics Norway)
    Abstract: Utilizing registry data for all Norwegian males born in 1959–1973, I demonstrate that local unemployment rates at the typical age of graduation from compulsory school (age 16) and highschool (age 19) have persistent, negative effects on males’ earnings, employment, and disability pension utilization when measured as late as age 35. With data on every male IQ, I study how labor market conditions at age of graduation have differential effects for low- and high-ability males. As one would expect, low-ability males are particularly vulnerable to business cycles at the time of labor market entry.
    Keywords: Business cycle; graduation; careers
    JEL: E32 J31 J24
    Date: 2016–02
  12. By: Alzúa, María Laura (CEDLAS-UNLP); Cruces, Guillermo (CEDLAS-UNLP); Lopez, Carolina (CEDLAS-UNLP)
    Abstract: We study the effect of a job training program for low income youth in Cordoba, Argentina. The program included life-skills and vocational training, as well as internships with private sector employers. Participants were allocated by means of a public lottery. We rely on administrative data on formal employment, employment spells and earnings, to establish the effects of the program in the short term (18 months), but also – exceptionally for programs of this type in Latin America and in developing countries in general – in the medium term (33 months) and in the long term (48 months). The results indicate sizable gains of about 8 percentage points in formal employment in the short term (about 32% higher than the control group), although these effects dissipate in the medium and in the long term. Contrary to previous results for similar programs in the region, the effects are substantially larger for men, although they also seem to fade in the long run. Program participants also exhibit earnings about 40% higher than those in the control group, and an analysis of bounds indicates that these gains result from both higher employment levels and higher wages. The detailed administrative records also allow us to shed some light on the possible mechanisms underlying these effects. A dynamic analysis of employment transitions indicates that the program operated through an increase in the persistence of employment rather than from more frequent entries into employment. The earnings effect and the higher persistence of employment suggest that the program was successful in increasing the human capital of participants, although the transient nature of these results may also reflect better matches from a program-induced increase in informal contacts or formal intermediation.
    Keywords: youth labor training programs, youth unemployment, field experiment
    JEL: J08 J24 J68 O15
    Date: 2016–02
  13. By: De Groot, Nynke (Free University Amsterdam); Koning, Pierre (Vrije Universiteit Amsterdam)
    Abstract: Experience rated Disability Insurance (DI) premiums are often advocated as a means to stimulate firms to reduce DI inflow and increase DI outflow. To assess the size of these intended effects of experience rating, this study provides an empirical analysis of the effects of DI experience rating in the Netherlands. We use a difference-in-difference approach with administrative matched firm and worker data that exploits the removal of experience rating for small firms in 2003 and 2004. According to our results, removing experience rating caused an increase of DI inflow of about 7% for small firms, while DI outflow decreased by 12% as a result of the reform. We argue that these effects were largely confined to the sickness period that preceded the DI claims assessment, as well as the first year of DI benefit receipt.
    Keywords: disability insurance, experience rating, differences-in-differences
    JEL: H22 I12 C23
    Date: 2016–02
  14. By: Steven Dieterle; Otavio Bartalotti; Quentin Brummet
    Abstract: The extension of Unemployment Insurance (UI) benefits was a key policy response to the Great Recession. However, these benefit extensions may have had detrimental labor market effects. While evidence on the individual labor supply response indicates small effects on unemployment, recent work by Hagedorn et al. (2015) uses a county border pair identification strategy to find that the total effects inclusive of effects on labor demand are substantially larger. By focusing on variation within border county pairs, this identification strategy requires counties in the pairs to be similar in terms of unobservable factors. We explore this assumption using an alternative regression discontinuity approach that controls for changes in unobservables by distance to the border. To do so, we must account for measurement error induced by using county-level aggregates. These new results provide no evidence of a large change in unemployment induced by differences in UI generosity across state boundaries. Further analysis suggests that individuals respond to UI benefit differences across boundaries by targeting job search in high-benefit states, thereby raising concerns of treatment spillovers in this setting. Taken together, these two results suggest that the effect of UI benefit extensions on unemployment remains an open question.
    Date: 2016–02–26
  15. By: Rui Castro (University of Western Ontario); Pavel Sevcik (ESG UQAM)
    Abstract: We study the aggregate productivity effects of firm-level financial frictions. Credit constraints affect not only production decisions but also household-level schooling decisions. In turn, entrepreneurial schooling decisions impact firm-level productivities, whose cross-sectional distribution becomes endogenous. In anticipation of future constraints, entrepreneurs under-invest in schooling. Frictions lower aggregate productivity because talent is misallocated across occupations, and capital misallocated across firms. In addition, firm-level productivities are also lower due to distortions induced by the schooling responses. We find that these effects combined account for about 1/5 of the U.S.-India aggregate productivity difference. Requiring the model to match schooling differences significantly amplifies the impact of frictions, and the model accounts for 58% of the aggregate productivity difference.
    Keywords: Aggregate Productivity; Financial Frictions; Entrepreneurship; Human Capital
    JEL: E24 I25 J24 O11 O15 O16
    Date: 2016
  16. By: Qian, Meijun (Australian National University)
    Abstract: This paper examines the gender diversity in corporate boardrooms in Asia and the Pacific and how the diversity affects corporate performance. We find that boardroom gender diversity is low in Asia with 7.5% female representation on average in 2012, but showing a 1.8% improvement in 2013. The appointment of female directors and a gender-diverse boardroom are on average positively associated with a firm’s subsequent performance, but with large cross-country and cross-measurement differences. Firm performance is the highest when there are two females on the board. Using two-stage analyses, we find that (i) a firm’s past performance does not predict its choice to add female directors; (ii) cross-country differences in female corporate leadership respond to its economic demand and supply as measured by gender equality in college education, labor participation, wages, and infant survival; and (iii) female representation on the board, when determined by these economic factors, is a significant predictor of a firm’s future performance.
    Keywords: corporate performance; development equality; director choices; female leadership
    JEL: G38 J71 O16
    Date: 2016–01–26
  17. By: Robert C. M. Beyer
    Abstract: The paper uses a large survey (GSOEP) to analyze the labor market performance of immigrants in Germany. It finds that new immigrant workers earn on average 20 percent less than native workers with otherwise identical characteristics. The gap is smaller for immigrants from advanced countries, with good German language skills, and with a German degree, and larger for others. The gap declines gradually over time. Less success in obtaining jobs with higher occupational autonomy explains half of the wage gap. Immigrants are also initially less likely to participate in the labor market and more likely to be unemployed. While participation fully converges after 20 years, immigrants always remain more likely to be unemployed than the native labor force.
    Keywords: Europe;Unemployment;Wages;Germany;Migration;labor market, participation, immigrants, immigrant, immigration, International Migration, Economics of Minorities, Time Allocation and Labor Supply,
    Date: 2016–01–21
  18. By: Wagner, N.; Rieger, M.; Voorvelt, K.J.
    Abstract: This paper studies the effect of teacher gender and ethnicity on student evaluations of teaching quality at university. We analyze a unique data-set featuring mixed teaching teams and a diverse, multicultural, multi-ethnic group of students and teachers. Co-teaching allows us to study the impact of teacher gender and ethnicity on students’ evaluations of teaching exploiting within course variation in an empirical model with course-year fixed effects. We document a negative effect of being a female teacher on student evaluations of teaching, which amounts to roughly one fourth of the sample standard deviation of teaching scores. Overall women are 11 percentage points less likely to attain the teaching evaluation cut-off for promotion to associate professor. The effect is robust to a host of co-variates such as course leadership, teacher experience and research quality. There is no evidence of a corresponding ethnicity effect. Our results point to an important gender bias and indicate that the use of teaching evaluations in hiring and promotion decisions may put female lectures at a disadvantage.
    Keywords: student evaluations of teaching, gender, ethnicity, bias, course fixed effects
    JEL: I21 J71
    Date: 2016–03–01
  19. By: Hirata, Guilherme (affiliation not available); Soares, Rodrigo R. (Sao Paulo School of Economics)
    Abstract: According to Becker's (1957) theory of taste-based employer discrimination, pure economic rents are necessary for discrimination to be observed in the labor market. Increased competition and reduced rents in the market for final goods should therefore lead to reduced labor market discrimination. We look at the natural experiment represented by the Brazilian trade liberalization from the early 1990s to study the effect of increased competition in the market for final goods on racial discrimination in the labor market. Changes in tariffs and initial employment structures are used to show that, in locations where there were relatively larger increases in exposure to foreign competition between 1990 and 1995, there were also relatively larger declines in the conditional racial wage gap between 1991 and 2000. As predicted by theory, the initial wage gap and its decline were more pronounced in regions with more employment in concentrated sectors. The effect of increased competition on the racial wage gap was not driven by changes in returns to productive attributes, in the structure of employment, or in other labor market outcomes. We find robust evidence of a negative effect of increased competition in the market for final goods on discrimination in the labor market.
    Keywords: discrimination, racial wage gap, competition, labor market, trade reform, Brazil
    JEL: J31 J71 J78
    Date: 2016–02

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