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on Labor Markets - Supply, Demand, and Wages |
| By: | David Hummels; Jakob R. Munch; Chong Xiang |
| Abstract: | We survey the recent empirical literature on the effects of offshoring on wages, employment and displacement. We start with the measurement of offshoring, focusing on the use of imported inputs that could have been produced by the importing firm. We overview key theories related to offshoring and its labor market effects and survey three waves of the literature on wage effects of offshoring: those using industry data, firm data, and worker data. For each wave we highlight the identification strategies used, critically assess strengths and weaknesses, discuss connections with theory, and draw out potential policy implications of its findings. Closely related, we address a new literature that looks at the differential impact of offshoring across occupations. 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 changes, displacement, and other types of transitions. |
| JEL: | F1 F16 J23 J24 J3 L2 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22041&r=lma |
| By: | Claudia Olivetti (Boston College; NBER); Eleonora Patacchini (Cornell University; IZA; EIEF; CEPR); Yves Zenou (Monash University; IFN; CEPR) |
| Abstract: | We study the formation of gender identity by looking at the labor-market decisions of young women. Specifically, we investigate whether and how a woman's work behavior depends on the work behavior of her mother and that of her friends' mothers. Using a representative sample of U.S. teenagers and their schoolmates followed over time, we find that both intergenerational channels positively affect a woman's work hours in adulthood. The peers' mother role model effect operates independently from the presence of peers' influence. Our evidence is consistent with the presence of behavioral effects of social norms about mothers. |
| Keywords: | Intergenerational transmission, role models, labor force participation, peer effects |
| JEL: | J22 Z13 |
| Date: | 2016–03–10 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:904&r=lma |
| By: | Wiemer Salverda |
| Abstract: | This paper argues that the sharp growth of educational attainment has won Tinbergen’s race as the qualification structure of employment lags increasingly behind, with a large and increasing underutilisation of individual attainment on the job as a result. With its strong gender dimension this has fostered the demise of the single-earner model of society to the advantage of dual-earner households. That shift has gone together with a strong expansion of part-time employment, albeit at different speeds internationally. In several countries this part-time growth is stimulated also by the combination of employment participation with the rapidly growing educational participation that underlies the growth in educational attainment. Taken together this has resulted in a steep uphill battle for the less educated when they try to secure jobs that allow making a living and sustaining a career in the labour market. This group faces strong competition from better-educated additional earners who are a member of dual-earner households, which often have an income found higher up the household income distribution. This institutes a self-reinforcing mechanism of income and labour-market inequalities. High-income households compete with low-income households for the same low-skill and low-paid jobs, and they do so frequently on a part-time basis that contributes to the fragmentation of those jobs. This process has established a job’s working time as an increasingly important vector of labour-market inequalities. In the paper the argument is first developed for the Netherlands because the country offers a special statistical classification of occupations (1960-2010) that directly links the occupational levels to levels of educational attainment. This case study is complemented with an international comparison using the ELFS and extending to incomes and earnings with the help of SILC. It shows the presence of similar effects found for the Netherlands for Austria, Belgium, Denmark, Finland, France, Germany, Italy, Sweden and the UK. |
| Keywords: | Educational attainment, Occupational structure, Underutilisation, Bumping down, Crowding out of low educated, Female employment, Part-time jobs, Elementary jobs, Household earnings, Household income distribution, Paid and domestic work, Paid work and educational participation. |
| JEL: | D31 D63 I24 J11 J16 J21 J22 J23 J24 O15 |
| URL: | http://d.repec.org/n?u=RePEc:hdl:improv:1604&r=lma |
| By: | Stefan Bender; Nicholas Bloom; David Card; John Van Reenen; Stefanie Wolter |
| Abstract: | Recent research suggests that much of the cross-firm variation in measured productivity is due to differences in use of advanced management practices. Many of these practices - including monitoring, goal setting, and the use of incentives - are mediated through employee decision-making and effort. To the extent that these practices are complementary with workers' skills, better-managed firms will tend to recruit higher-ability workers and adopt pay practices to retain these employees. We use a unique data set that combines detailed survey data on the management practices of German manufacturing firms with longitudinal earnings records for their employees to study the relationship between productivity, management, worker ability, and pay. As documented by Bloom and Van Reenen (2007) there is a strong partial correlation between management practice scores and firm-level productivity in Germany. In our preferred TFP estimates only a small fraction of this correlation is explained by the higher human capital of the average employee at better-managed firms. A larger share (about 13%) is attributable to the human capital of the highest-paid workers, a group we interpret as representing the managers of the firm. And a similar amount is mediated through the pay premiums offered by better-managed firms. Looking at employee inflows and outflows, we confirm that better-managed firms systematically recruit and retain workers with higher average human capital. Overall, we conclude that workforce selection and positive pay premiums explain just under 30% of the measured impact of management practices on productivity in German manufacturing. |
| Keywords: | management practices, productivity, wages |
| JEL: | L2 M2 O32 O33 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1416&r=lma |
| By: | Arnab Bhattacharjee (Heriot-Watt University, Edinburgh,UK); Jean Bonnet (Normandie Université, UNICAEN, CREM, France); Nicolas Le Pape (Normandie Université, UNICAEN, CREM, France); Régis Renault (Université de Cergy-Pontoise, THEMA) |
| Abstract: | An evaluation of the impact of an entrepreneur's human capital on her/his entrepre-neurial ability is likely to suffer from a sample selection bias if performed on a sample of new entrepreneurs alone. Our theoretical model of entrepreneurial choice allows us to characterize this bias. It is shown to be positive (respectively negative) for individuals who were in a favorable (respectively adverse) situation in the labor market at the time at which they decided to become self-employed. Our empirical application measures the impact of the entrepreneur's education on the newly created firm's survival. It is found to be strong and significant for individuals who were previously employed in the new firm's branch of activity, whereas it is at best weakly significant for individuals who were previously unemployed or employed in a branch di¤erent from that of the new firm, so that they are more likely to have been poorly matched. These results suggest a very substantial sample selection bias in our sample. |
| Keywords: | entrepreneurial ability, labor market, human capital, rm survival |
| JEL: | L26 C41 J24 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cremwp:2016-04&r=lma |
| By: | Frank Neffke; Anne Otto; César Hidalgo |
| Abstract: | Establishment closures leave many workers unemployed. Based on employment histories of 20 million German workers, we find that workers often cope with their displacement by moving to different regions and industries. However, which of these coping strategies is chosen depends on the local industry mix. A large local presence of predisplacement or related industries strongly reduces the rate at which workers leave the region. Moreover, our findings suggest that a large local presence of the predisplacement industry induces workers to shift search efforts toward this industry, reducing the spatial scope of search for jobs in alternative industries and vice versa. |
| Keywords: | Displacement, local industry mix, agglomeration externalities, matching, mobility |
| JEL: | J24 J61 J64 R12 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1605&r=lma |
| By: | Pamela Lenton (Department of Economics, University of Sheffield) |
| Abstract: | The expansion of higher education in the UK has led to an increase in the number of postgraduate as well as undergraduate students. This paper investigates the wage return to postgraduate degrees, differentiating between traditional Masters degrees, vocational postgraduate degrees and PhDs, over the period 1993-2014. We additionally, differentiate between the area of study for Masters degrees. Results show that wage returns to both undergraduate and all postgraduate degrees have increased over time. The subject undertaken at Masters level is more important in determining wages for males. Females holding a Masters degree in any subject earn a significant wage premium. There is also evidence of growth in the wage returns to other, vocational, non-Masters degrees. The findings of this paper imply that not only are postgraduates highly skilled individuals but that the provision of postgraduate courses, and thence postgraduate degree holders within the UK labour market should be increased. |
| Keywords: | Human Capital; Postgraduate Education; Wage returns |
| JEL: | J24 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2016004&r=lma |
| By: | Egebark, Johan (IFAU - Institute for Evaluation of Labour Market and Education Policy) |
| Abstract: | I study the link between taxes and youth self-employment. I make use of a Swedish reform, implemented in 2007–09, which suddenly made the payroll tax and the self-employment tax vary by age. The results suggest that youth self-employment is insensitive to tax reductions, both in the short run and in the somewhat longer run. I also study the effect of the tax reductions on income. For those that are defined as self-employed, I find positive effects on income from self-employment, and negative effects on income from wage employment. This finding suggests that the lower taxes caused the self-employed to reallocate time from employment to self- employment. |
| Keywords: | youth unemployment; self-employment tax; tax subsidy; self-employment |
| JEL: | H25 H32 J23 J38 J68 |
| Date: | 2016–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2016_004&r=lma |
| By: | John P. Papay; Eric S. Taylor; John H. Tyler; Mary Laski |
| Abstract: | We study on-the-job learning among classroom teachers, especially learning skills from coworkers. Using data from a new field experiment, we document meaningful improvements in teacher job performance when high- and low-performing teachers working at the same school are paired and asked to work together on improving the low-performer’s skills. In particular, pairs are asked to focus on specific skills identified in the low-performer’s prior performance evaluations. In the classrooms of low-performing teachers treated by the intervention, students scored 0.12 standard deviations higher than students in control classrooms. These improvements in teacher performance persisted, and perhaps grew, in the year after treatment. Empirical tests suggest the improvements are likely the result of low-performing teachers learning skills from their partner. |
| JEL: | I2 J24 M53 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21986&r=lma |
| By: | Oliver Falck (University of Munich, ifo Institute and CESifo); Alexandra Heimisch (ifo Institute at the University of Munich); Simon Wiederhold (ifo Institute at the University of Munich and CESifo) |
| Abstract: | How important is mastering information and communication technologies (ICT) in modern labor markets? We present the first evidence on this question, drawing on unique data that provide internationally comparable information on ICT skills in 19 countries. Our identification strategy relies on the idea that Internet access is important in the formation of ICT skills, and we implement instrumental-variable models that leverage exogenous variation in Internet availability across countries and across German municipalities. ICT skills are substantially rewarded in the labor market: returns are at 8 percent for a one-standard-deviation increase in ICT skills in the international analysis and are almost twice as large in Germany. Placebo estimations show that exogenous Internet availability cannot explain numeracy or literacy skills, suggesting that our identifying variation is independent of a person’s general ability. Our results further suggest that the proliferation of computers complements workers in executing abstract tasks that require ICT skills. |
| Keywords: | ICT skills, broadband, earnings, international comparisons |
| JEL: | J31 L96 K23 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:doc2016-5&r=lma |
| By: | Elias Einiö; Overman; Henry |
| Abstract: | We investigate the impacts of a significant area-based intervention (LEGI) that aimed to increase employment and entrepreneurial activity in 30 disadvantaged areas across England. We examine the spatial pattern of effects at a fine spatial scale using panel data for small geographic units and a regression discontinuity design that exploits the programme eligibility rule. The results indicate considerable local displacement effects. Employment increases in treated areas close to the treatment area boundary at the cost of significant employment losses in untreated localities just across the boundary. These differences vanish quickly when moving away from the boundary and do not persist after the programme is abolished. These findings support the view that area-based interventions may have considerable negative displacement effects on untreated parts of the economy. This displacement can substantially reduce (or in this case eliminate) any net benefits. |
| Keywords: | Place-based policy, Programme evaluation, Displacement, Employment |
| JEL: | J20 O40 R11 H25 |
| Date: | 2016–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:fer:wpaper:71&r=lma |
| By: | David Neumark |
| Abstract: | Understanding whether labor market discrimination explains inferior labor market outcomes for many groups has drawn the attention of labor economists for decades – at least since the publication of Gary Becker’s The Economics of Discrimination in 1957. The decades of research on discrimination in labor markets began with a regression-based “decomposition” approach, asking whether raw wage or earnings differences between groups – which might constitute prima facie evidence of discrimination – were in fact attributable to other productivity-related factors. Subsequent research – responding in large part to limitations of the regression-based approach – moved on to other approaches, such as testing direct predictions of the Becker model using data on discriminatory tastes, or using firm-level data to estimate both marginal productivity and wage differentials. In recent years, however, there has been substantial growth in experimental research on labor market discrimination – even though the earliest experiments were done decades ago. Some experimental research on labor market discrimination takes place in the lab. But far more of it is done in the field, which makes this particular area of experimental research unique relative to the explosion of experimental economic research more generally. This paper surveys the full range of experimental literature on labor market discrimination, places it in the context of the broader research literature on labor market discrimination, discusses the experimental literature from many different perspectives (empirical, theoretical, policy, and legal), and reviews what this literature has taught us thus far, and what remains to be done. |
| JEL: | J1 J7 K31 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22022&r=lma |
| By: | Lalanne, Marie; Seabright, Paul |
| Abstract: | We investigate the impact of social networks on earnings using a dataset of over 20,000 senior executives of European and US firms. The size of an individual's network of influential former colleagues has a large positive association with current remuneration. An individual at the 75th percentile in the distribution of connections could expect to have a salary nearly 20 per cent higher than an otherwise identical individual at the median. We use a placebo technique to show that our estimates reflect the causal impact of connections and not merely unobserved individual characteristics. Networks are more weakly associated with women's remuneration than with men's. This mainly reflects an interaction between unobserved individual characteristics and firm recruitment policies. The kinds of firm that best identify and advance talented women are less likely to give them access to influential networks than are firms that do the same for the most talented men. |
| Keywords: | professional networks,gender wage gap,executive compensation,placebo technique |
| JEL: | A14 J16 J31 J33 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:123&r=lma |
| By: | Russell Cooper; Huacong Liu |
| Abstract: | This paper studies the allocation of heterogeneous agents to levels of educational attainment. The goal is to understand the magnitudes and sources of mismatch in this assignment, both in theory and in the data. The paper presents evidence of substantial mismatch between ability and educational attainment across 21 OECD countries, with a focus on Germany, Italy, Japan and the US. In the model, mismatch originates from: (i) taste shocks, (ii) binding borrowing constraints and (iii) noisy measures of ability in test scores. The model is estimated using a simulated method of moments approach. The main finding is that measured mismatch arises largely from noise in test scores and does not reflect borrowing constraints. Differences in tastes for education across households play a minor role in explaining mismatch. Further, the estimation allows us to decompose the college wage premium, isolating cross-country differences in selection effects from the return to education. |
| JEL: | E24 J24 O43 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22010&r=lma |
| By: | Jasmin Thomas |
| Abstract: | In the past, attention has been focused on the aggregate ICT investment per worker gap, but 49.8 per cent of lower business sector IT investment per worker in Canada relative to the United States in 2013 was explained by two industries: information and cultural industries and professional, scientific and technical services. The main objective of this report is to shed light on the possible reasons for the gap in these sectors, including data measurement and comparability issues stemming from methodological differences between statistical agencies in Canada and the United States, and differences in potential explanatory variables of IT investment, such as human capital, taxation, profits, firm creation rates, industrial structure, and regulation, among others. |
| Keywords: | Investment, Information and Communication Technology, Information Technology, ICT, IT, Productivity, Industries, Professional Services, Cultural Industries |
| JEL: | E22 O16 D24 L60 L70 L80 L90 N72 N32 N12 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:sls:resrep:1601&r=lma |
| By: | Hitoshi Shigeoka; Katsunori Yamada |
| Abstract: | Economists have long been aware of utility externalities such as a tendency to compare own income with others'. If welfare losses from income comparisons are significant, any governmental interventions that alter such attitudes may have large welfare consequences. We conduct an original online survey of discrete-choice questions to estimate such attitudes in the US and the UK. We find that the UK respondents compare incomes more than US respondents do. We then manipulate our respondents with simple information to examine whether the attitudes can be altered. Our information treatment suggesting that comparing income with others may diminish welfare even when income levels increase makes UK respondents compare incomes more rather than less. Interestingly, US respondents are not affected at all. The mechanism behind the UK results seems to be that our treatment gives moral license to make income comparisons by providing information that others do so. |
| JEL: | C9 D1 D3 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21998&r=lma |
| By: | Chad Syverson |
| Abstract: | The U.S. has been experiencing a slowdown in measured labor productivity growth since 2004. A number of commentators and researchers have suggested that this slowdown is at least in part illusory, because real output data have failed to capture the new and better products of the past decade. I conduct four disparate analyses, each of which offers empirical challenges to this “mismeasurement hypothesis.” First, the productivity slowdown has occurred in dozens of countries, and its size is unrelated to measures of the countries’ consumption or production intensities of information and communication technologies (ICTs, the type of goods most often cited as sources of mismeasurement). Second, estimates from the existing research literature of the surplus created by internet-linked digital technologies fall far short of the $2.7 trillion or more of “missing output” resulting from the productivity growth slowdown. The largest—by some distance—is less than one-third of the purportedly mismeasured GDP. Third, if measurement problems were to account for even a modest share of this missing output, the properly measured output and productivity growth rates of industries that produce and service ICTs would have to have been multiples of their measured growth in the data. Fourth, while measured gross domestic income has been on average higher than measured gross domestic product since 2004—perhaps indicating workers are being paid to make products that are given away for free or at highly discounted prices—this trend actually began before the productivity slowdown and moreover reflects unusually high capital income rather than labor income (i.e., profits are unusually high). In combination, these complementary facets of evidence suggest that the reasonable prima facie case for the mismeasurement hypothesis faces real hurdles when confronted with the data. |
| JEL: | E2 O3 O4 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21974&r=lma |
| By: | Sun Youn Lee; Fumio Ohtake |
| Abstract: | The main purpose of this paper is to study how the individual differences in non-cognitive skills, as measured by Big-Five personality traits, explain the variation in labor market outcomes. By analyzing the Japanese and US survey data, this study attempts to analyze how personality traits are associated with labor market outcomes in these two countries. We focus on the existence of country-specific non-cognitive determinants of later outcomes, which is found in agreeableness in relation to male schooling and earnings. With respect to years of schooling and annual income, agreeableness seems to contribute to the later outcomes of Japanese men, while it acts as a penalty for American men. However, in both countries, we found that higher agreeableness is likely to be translated into higher earnings for those who work for large-sized companies with more than 1000 employees in comparison to small-sized companies. Agreeableness is rewarded through earnings but it does not necessarily lead to a career promotion. Furthermore, the premium of agreeableness still exists when labor-related variables such as occupation choice and labor hours are controlled for. This suggests that agreeableness might act as part of skill-sets that directly improve job performance and productivity in large-sized companies. |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:0960&r=lma |
| By: | Luis E. Arango (Banco de la República de Colombia); Francesca Castellani (Inter-American Development Bank); Nataly Obando (Inter-American Development Bank) |
| Abstract: | Using the Colombian Annual Manufacturing Survey (EAM) between 2000 and 2013, this paper investigates the existence of heterogeneity in the labor demand within the industrial sector. Long run own-price, output and TFP elasticities vary across a variety of dimensions such as regions, sectors and plant sizes depending on workers’ skills and contract modalities (open-ended or temporary). Hence, it matters where one works. Such disparities should be taken into account in the design of policies that promote labor market performance, as outcomes, beyond intentions, are unlikely to be homogenous. Classification JEL:J23, R32. |
| Keywords: | labor demand, skilled workers, unskilled workers, regional disparities, sector disparities. |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:933&r=lma |
| By: | Steffen Otterbach (Institute for Health Care & Public Management, University of Hoehenheim); Mark Wooden (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Yin King Fok (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | Nationally representative panel survey data for Australia and Germany are used to investigate the impact of working-time mismatches (i.e., differences between actual and desired work hours) on mental health, as measured by the Mental Component Summary Score from the SF-12. Fixed effects and dynamic linear models are estimated, which, together with the longitudinal nature of the data, enable person-specific traits that are time invariant to be controlled for. The incorporation of dynamics also reduces concerns about the potential effects of reverse causation. The results suggest that overemployment (working more hours than desired) has adverse consequences for the mental health of workers in both countries, though the magnitude of such effects are larger in Germany. Underemployment (working fewer hours than desired), however, seems to only be of significance in Australia. Classification-I12, J22 |
| Keywords: | Australia, Germany, mental health, Mental Component Summary Score (SF-12), longitudinal data, work hours, working-time mismatch |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2016n11&r=lma |
| By: | Marianne Bertrand; Esther Duflo |
| Abstract: | This article reviews the existing field experimentation literature on the prevalence of discrimination, the consequences of such discrimination, and possible approaches to undermine it. We highlight key gaps in the literature and ripe opportunities for future field work. Section 1 reviews the various experimental methods that have been employed to measure the prevalence of discrimination, most notably audit and correspondence studies; it also describes several other measurement tools commonly used in lab-based work that deserve greater consideration in field research. Section 2 provides an overview of the literature on the costs of being stereotyped or discriminated against, with a focus on self-expectancy effects and self-fulfilling prophecies; section 2 also discusses the thin field-based literature on the consequences of limited diversity in organizations and groups. The final section of the paper, Section 3, reviews the evidence for policies and interventions aimed at weakening discrimination, covering role model and intergroup contact effects, as well as socio-cognitive and technological de-biasing strategies. |
| JEL: | J0 J01 J1 J15 J16 J7 J71 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22014&r=lma |
| By: | Francesco Nucci (Bank of Italy); Marianna Riggi (Bank of Italy) |
| Abstract: | The fall in US labor force participation during the Great Recession stands in sharp contrast with its parallel increase in the euro area. In addition to structural forces, cyclical factors are shown to account for this phenomenon, with the participation rate being procyclical in the US from the inception of the crisis and countercyclical in the euro area. We rationalize these diverging dynamics by using a general equilibrium business cycle model, which nests the endogenous participation decisions into a search and matching model. We show that the "added worker" effect might outweigh the "discouragement effect" if real wage rigidities are allowed for and/or habit in consumer preferences is sufficiently strong. We then draw the implications of variable labor force participation rates for inflation and establish the following result: if endogenous movements in labor market participation are envisaged, then the degree of real wage rigidities becomes almost irrelevant for price dynamics. Indeed, during recessions, the upward pressures on inflation stemming from the lack of a downward adjustment in real wages are offset by an opposite influence from the additional looseness in the labor market, due to the higher participation rate associated with wage rigidities. |
| Keywords: | labor force participation, real wage rigidities, habit, inflation, discouragement effect, added worker effect |
| JEL: | E31 E32 E24 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1054_16&r=lma |