nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2016‒04‒30
eleven papers chosen by
Joseph Marchand
University of Alberta

  1. Individual Well-Being and the Allocation of Time Before and After the Boston Marathon Terrorist Bombing By Clark, Andrew E.; Stancanelli, Elena G. F.
  2. Learning, Career Paths, and the Distribution of Wages By Santiago Caicedo; Robert E. Lucas, Jr.; Esteban Rossi-Hansberg
  3. The Adverse Consequences of Tournaments: Evidence from a Field Experiment By De Paola, Maria; Gioia, Francesca; Scoppa, Vincenzo
  4. The Routine Content of Occupations: New Cross-country Measures Based on PIAAC By Luca Marcolin; Sébastien Miroudot; Mariagrazia Squicciarini
  5. Foreign Firm Ownership and Productivity Spillovers in the Southern African Development Community (SADC) Region By Paul J Dunne and Nicholas Masiyandima
  6. The Educational Consequences of Language Proficiency for Young Children By Ohinata, Asako; van Ours, Jan C.; Yao, Yuxin
  7. Mental Health and Productivity at Work: Does What You Do Matter? By Melisa Bubonya; Deborah Cobb-Clark; Mark Wooden
  8. The Value of Social Security: Are Formal Jobs Better? By Madrigal, Lucia; Pagés, Carmen; Suaya, Agustina
  9. The Evolution of Awareness and Belief Ambiguity During the Process of High School Track Choice By Pamela Giustinelli; Nicola Pavoni
  10. Canary in a Coal Mine: Infant Mortality, Property Values, and Tradeoffs Associated with Mid-20th Century Air Pollution By Clay, Karen; Lewis, Joshua; Severnini, Edson R.
  11. Funding Mechanisms for Financing Vocational Training: An Analytical Framework By Ziderman, Adrian

  1. By: Clark, Andrew E. (Paris School of Economics); Stancanelli, Elena G. F. (CNRS, Sorbonne Economics Research Center (CES))
    Abstract: There is a small literature on the economic costs of terrorism. We consider the effects of the Boston marathon bombing on Americans' well-being and time allocation. We exploit data from the American Time Use Survey and Well-Being Module in the days around the terrorist attack to implement a regression-discontinuity design. The bombing led to a significant and large drop of about 1.5 points in well-being, on a scale of one to six, for residents of the States close to Boston. The happiness of American women also dropped significantly, by almost a point, regardless of the State of residence. Labor supply and other time use were not significantly affected. We find no well-being effect of the Sandy Hook shootings, suggesting that terrorism is different in nature from other violent deaths.
    Keywords: well-being, time use, Terrorism
    JEL: I31 J21 J22 F52
    Date: 2016–04
  2. By: Santiago Caicedo; Robert E. Lucas, Jr.; Esteban Rossi-Hansberg
    Abstract: We develop a theory of career paths and earnings in an economy in which agents organize in production hierarchies. Agents climb these organizational hierarchies as they learn stochastically from other individuals. Earnings grow over time as agents acquire knowledge and occupy positions with larger numbers of subordinates. We contrast these and other implications of the theory with U.S. census data for the period 1990 to 2010. The model matches well the Lorenz curve of earnings as well as the observed mean experience-earnings profiles. We show that the increase in wage inequality over this period can be rationalized with a shift in the distribution of the complexity and profitability of technologies relative to the distribution of knowledge in the population.
    JEL: E25 J24 J31 O3 O4
    Date: 2016–04
  3. By: De Paola, Maria (University of Calabria); Gioia, Francesca (University of Edinburgh); Scoppa, Vincenzo (University of Calabria)
    Abstract: We run a field experiment to investigate whether competing in rank-order tournaments with different prize spreads affects individual performance. Our experiment involved students from an Italian University who took an intermediate exam in which one part was awarded on the basis of their relative performance. Students were matched in pairs on the basis of their high school grades and each pair was randomly assigned to one of three different tournaments. Random assignment neutralizes selection effects and allows us to investigate if larger prize spreads increase individual effort. We do not find any positive effect of larger prizes on students' performance and in several specifications we do find a negative effect. Furthermore, we show that the effect of prize spreads on students' performance depends on their degree of risk-aversion: competing in tournaments with large spreads negatively affects the performance of risk-averse students, while it does not produce any effect on students who are more prone to take risks.
    Keywords: rank-order tournaments, incentives, prize spread, risk-aversion, randomized experiment
    JEL: J33 J31 J24 D81 D82 C93
    Date: 2016–03
  4. By: Luca Marcolin; Sébastien Miroudot; Mariagrazia Squicciarini
    Abstract: This work proposes a novel measure of the routine content of occupations, built on data from the OECD PIAAC survey of adult skills mirroring the extent to which workers can modify the type and sequence of tasks performed on the job. Based on median values of individuals’ responses in 3-digit occupations across 20 OECD countries, occupations are grouped into quartiles of routine intensity, namely high (HR), medium (MR), low (LR), and non-routine intensive (NR). On average, in 2012, 46% of employed persons worked in NR or LR occupations, with significant differences in the distribution between quartiles across countries. While more routine intensive occupations tend to be associated with lower skills, this relationship is not very strong. Applying the RII on employment data from Labour Force Surveys, MR and HR occupations are found to be less resilient to business cycles, with notable differences across quartiles between Europe and the United States.
    Keywords: labour force survey, adult skills
    Date: 2016–04–21
  5. By: Paul J Dunne and Nicholas Masiyandima
    Abstract: The study uses firm level data from the World Bank Enterprise Surveys and employs alternative techniques to identify and estimate the within and intra-industry productivity impact of firm foreign ownership in SADC. Using firm labour productivity and employing sector fixed effects to identify the impact of foreign firm ownership on productivity, we find results that strongly suggest the existence of positive within firm and intra-industry FDI productivity spillovers for both small and large firms in the region. The productivity gains are, however, larger for small firms than for large firms suggesting greater productivity spillover advantages for the relatively technologically backward small firms. Similarly, there is heterogeneity with regard to productivity spillovers across individual countries, with the relatively technologically advanced countries such as South Africa and Mauritius experiencing larger intra-industry spillovers while less technologically endowed countries enjoy larger within firm gains.
    Keywords: Growth; development; firm; technology; spillovers; productivity; FDI; SADC
    JEL: O33
    Date: 2016
  6. By: Ohinata, Asako; van Ours, Jan C.; Yao, Yuxin
    Abstract: This paper studies the educational consequences of language proficiency by investigating the relationship between dialect-speaking and academic performance of 5-6 year old children in the Netherlands. We find that dialect-speaking has a modestly negative effect on boys' language test scores. In addition, we study whether there are spillover effects of peers' dialect-speaking on test scores. We find no evidence for spillover effect of peers' dialect-speaking. The test scores of neither Dutch-speaking children nor dialect-speaking children are affected by the share of dialect-speaking peers in the classroom.
    JEL: I15 J24
    Date: 2016–03
  7. By: Melisa Bubonya (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Deborah Cobb-Clark (School of Economics, The University of Sydney; Institute for the Study of Labour (IZA); and ARC Centre of Excellence for Children and Families Over the Life Course); Mark Wooden (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; and Institute for the Study of Labour (IZA))
    Abstract: Much of the economic cost of mental illness stems from workers’ reduced productivity. We analyze the links between mental health and two alternative workplace productivity measures – absenteeism and presenteeism (i.e., lower productivity while attending work) – explicitly allowing these relationships to be moderated by the nature of the job itself. We find that absence rates are approximately five percent higher among workers who report being in poor mental health. Moreover, job conditions are related to both presenteeism and absenteeism even after accounting for workers’ self-reported mental health status. Job conditions are relatively more important in understanding diminished productivity at work if workers are in good rather than poor mental health. The effects of job complexity and stress on absenteeism do not depend on workers’ mental health, while job security and control moderate the effect of mental illness on absence days. Classification-I12, J22, J24
    Keywords: Mental health, presenteeism, absenteeism, work productivity
    Date: 2016–04
  8. By: Madrigal, Lucia (Inter-American Development Bank); Pagés, Carmen (Inter-American Development Bank); Suaya, Agustina (Inter-American Development Bank)
    Abstract: As the population ages, low and unequal social security coverage are among the most pressing challenges in the Latin American region. On average, only 45% of workers contribute to social security, and this figure is much lower for low-income and low-skilled individuals. There are many hypotheses for this limited and uneven coverage. This paper studies two of them: First, we test whether individuals do not contribute to social insurance because, due to myopia or limited information, they place little value in social insurance. Second, we test whether low-income, low-skilled individuals have a lower value of social insurance than higher-income or higher-skilled individuals. Using an indirect method to estimate individual social security valuation based on self-reported job satisfaction, we find that workers attain higher job satisfaction in formal than in informal jobs in Peru but not in the case of Mexico. In addition, we find little evidence that the value of social insurance increases with income or education. If anything, the opposite is the case, with lower-income or lower-education individuals deriving higher utility from having access to social insurance.
    Keywords: job satisfaction, informality, social insurance, Latin America
    JEL: J21 J28 O17
    Date: 2016–04
  9. By: Pamela Giustinelli; Nicola Pavoni
    Abstract: In this article, we provide novel survey evidence on mid schoolers’ awareness and ambiguity perceptions and on how such perceptions evolve during the process of high school track choice. Children in our study display partial awareness about the set of available tracks. Additionally, children report substantial belief ambiguity about their likelihood of a regular high school path, especially for lower-ranked tracks. Students start 8th grade with greater information about their favorite alternatives and continue to concentrate their search on the latter during the months before pre-enrollment. Children from less advantaged families display lower initial perceived knowledge and acquire information at a slower pace, particularly about college-preparatory schools. JEL Codes: D83, I24, J24. Keywords: Subjective Beliefs, Learning under Ambiguity and Limited Awareness, School Choice.
    Date: 2016
  10. By: Clay, Karen (Carnegie Mellon University); Lewis, Joshua (University of Montreal); Severnini, Edson R. (Carnegie Mellon University)
    Abstract: Pollution is a common byproduct of economic activity. Although policymakers should account for both the benefits and the negative externalities of polluting activities, it is difficult to identify those who are harmed and those who benefit from them. To overcome this challenge, our paper uses a novel dataset on the mid-20th century expansion of the U.S. power grid to study the costs and the benefits of coal-fired electricity generation. The empirical analysis exploits the timing of coal-fired power plant openings and annual variation in plant-level coal consumption from 1938 to 1962, when emissions were virtually unregulated. Pollution from the burning of coal for electricity generation is shown to have quantitatively important and nonlinear effects on county-level infant mortality rates. By 1962, it was responsible for 3,500 infant deaths per year, over one death per thousand live births. These effects are even larger at lower levels of coal consumption. We also find evidence of clear tradeoffs associated with coal-fired electricity generation. For counties with low access to electricity in the baseline, increases in local power plant coal consumption reduced infant mortality and increased housing values and rental prices. For counties with near universal access to electricity in the baseline, increases in coal consumption by power plants led to higher infant mortality rates, and lower housing values and rental prices. These results highlight the importance of considering both the costs and benefits of polluting activities, and suggest that demand for policy intervention may emerge only when the negative externalities are significantly larger than the perceived benefits.
    Keywords: mid-20th century air pollution, coal-fired electricity generation, infant mortality, housing values, tradeoffs
    JEL: N32 N52 N72 N92 Q40 Q48 Q53 Q56 I15 J24 J30 R11
    Date: 2016–04
  11. By: Ziderman, Adrian (Bar-Ilan University)
    Abstract: The paper provides an account of innovative financing mechanisms which have been adopted in many national training systems. These mechanisms aim at correcting shortcomings of conventional training finance systems in order to better meet labor market needs, improve both the quality and relevance of training provision and to contain training costs. Directions of change include a greater diversification of funding sources for skills development (including cost sharing and training levies, mainly based on company payrolls), budgeting public training centres through objective funding formulas, encouraging more and higher quality enterprise training, the development of private training markets, increased competition between public and private training providers and the establishment of independent national training funds. Autonomous national training authorities, with broad powers and sizeable stakeholder representation, can be effective in both coordinating and steering national training systems.
    Keywords: demand-driven training, funding training institutions, individual learning accounts, Levy-Grant Schemes, national training authorities, payroll levies, private training provision, training finance, training funds, training subsidies, training taxes
    JEL: I22 J08 J24
    Date: 2016–04

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