nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2016‒05‒14
sixteen papers chosen by
Joseph Marchand
University of Alberta

  1. Particulate matter and labor supply: the role of caregiving and non-linearities By Fernando M. Aragón; Juan Jose Miranda; Paulina Oliva
  2. Minimum Wages and Firm Value By Bell, Brian; Machin, Stephen
  3. Cognitive Skills, Non-Cognitive Skills, and Family Background: Evidence from Sibling Correlations By Anger, Silke; Schnitzlein, Daniel D.
  4. Do Financial Incentives Influence GPs' Decisions to Do After-Hours Work? A Discrete Choice Labour Supply Model By Broadway, Barbara; Kalb, Guyonne; Li, Jinhu; Scott, Anthony
  5. The Requirements of Jobs: Evidence from a Nationally Representative Survey By Maury Gittleman; Kristen Monaco; Nicole Nestoriak
  6. Labour turnover, employment density and employer provided training: Evidence from Vienna By Francisca Bremberger; Rudolf Hochholzer; Petr Huber
  7. Politics in the Family: Nepotism and the Hiring Decisions of Italian Firms By Stefano Gagliarducci; Marco Manacorda
  8. The Effect of Weight on Labor Market Outcomes: an Application of Genetic Instrumental Variables By Petri Böckerman; John Cawley; Jutta Viinikainen; Terho Lehtimäki; Suvi Rovio; Ilkka Seppälä; Jaakko Pehkonen; Olli Raitakari
  9. Enabled to Work: The Impact of Government Housing on Slum Dwellers in South Africa By Simon Franklin
  10. Incentivizing Creativity: A Large-Scale Experiment with Tournaments and Gifts By Christiane Bradler; Susanne Neckermann; Arne Warnke
  11. The Elusive Employment Effect of the Minimum Wage By Alan Manning
  12. Testing for Statistical Discrimination based on Gender By Rune V. Lesner
  13. "Measuring Poverty in the Case of Buenos Aires: Why Time Deficits Matter" By Rania Antonopoulos; Valeria Esquivel; Thomas Masterson; Ajit Zacharias
  14. Entrepreneurs and Freelancers: Are They Time and Income Multidimensional Poor? The German Case By Merz, Joachim; Rathjen, Tim
  15. Achievement Effects from New Peers: Who Matters to Whom? By Duncan McVicar; Julie Moschion; Chris Ryan
  16. Macroeconomics of Persistent Slumps By Robert E. Hall

  1. By: Fernando M. Aragón (Simon Fraser University); Juan Jose Miranda (World Bank); Paulina Oliva (University of California, Santa Barbara and NBER)
    Abstract: This paper examines the effect of air pollution on labor supply in Lima, Peru. We focus on fine particulate matter (PM2.5), an important pollutant for health according to the medical literature, and show that moderate levels of pollution reduce hours worked for working adults. Our research design takes advantage of rich household panel data in labor outcomes to address omitted variables. This research design allows us to investigate whether the response to air pollution is non-linear. We find that the effect of moderate pollution levels on hours worked is concentrated among households with susceptible dependents, i.e., small children and elderly adults; while the highest concentrations affect all households. This suggests that caregiving is likely a mechanism linking air pollution to labor supply at moderate levels. We provide further evidence of this mechanism using DHS data on children morbidity for the same time period. Finally, we find no evidence of intra-household attenuation behavior. For instance, there is no re-allocation of labor across household members, and earnings decrease with air pollution.
    Date: 2016–05
  2. By: Bell, Brian (University of Oxford); Machin, Stephen (University College London)
    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: 2016–04
  3. By: Anger, Silke (Institute for Employment Research (IAB), Nuremberg); Schnitzlein, Daniel D. (DIW Berlin)
    Abstract: This paper estimates sibling correlations in cognitive and non-cognitive skills to evaluate the importance of family background for skill formation. Based on a large representative German dataset including IQ test scores and measures of non-cognitive skills, a restricted maximum likelihood model indicates a strong relationship between family background and skill formation. Sibling correlations in non-cognitive skills range from 0.22 to 0.46; therefore, at least one-fifth of the variance in these skills results from shared sibling-related factors. Sibling correlations in cognitive skills are higher than 0.50; therefore, more than half of the inequality in cognition can be explained by shared family background. Comparing these findings with those in the intergenerational skill transmission literature suggests that intergenerational correlations capture only part of the influence of family on children's cognitive and non-cognitive skills, as confirmed by decomposition analyses and in line with previous findings on educational and income mobility.
    Keywords: sibling correlations, family background, non-cognitive skills, cognitive skills, intergenerational mobility
    JEL: J24 J62
    Date: 2016–04
  4. By: Broadway, Barbara (Melbourne Institute of Applied Economic and Social Research); Kalb, Guyonne (Melbourne Institute of Applied Economic and Social Research); Li, Jinhu (Melbourne Institute of Applied Economic and Social Research); Scott, Anthony (Melbourne Institute of Applied Economic and Social Research)
    Abstract: This paper analyses doctors' supply of after-hours care, and how it is affected by personal and family circumstances as well as the earnings structure. We use detailed survey data from a large sample of Australian General Practitioners to estimate a structural, discrete-choice model of labour supply and after-hours care. This allows us to jointly model how many daytime-weekday hours a doctor works, and his or her probability of providing after-hours care. The underlying utility function varies across individual and family characteristics. We simulate labour supply responses to an increase in doctors' hourly earnings, both in a daytime-weekday setting and for after-hours care. Among doctors overall, men and women increase their daytime-weekday working hours if their hourly earnings in this setting increases, but only to a very small extent. Men's labour supply elasticities do not change if their family circumstances change, but for women the small behavioural response disappears completely if they have preschool-aged children. Doctors are somewhat more likely to provide after-hours care if their hourly earnings in that setting increases, but again the effect is very small and is only evident in some sub-groups. Moreover, higher earnings in weekday-daytime practice reduces the probability of providing after-hours care, particularly for men. Increasing doctors' earnings appears to be at best relatively ineffective in encouraging increased provision of after-hours care, and may even prove harmful if incentives are not well-targeted.
    Keywords: labour supply, after-hours care, wage elasticity, health workforce, MABEL
    JEL: I11 J22 J44 J21
    Date: 2016–04
  5. By: Maury Gittleman; Kristen Monaco; Nicole Nestoriak
    Abstract: The Occupational Requirements Survey (ORS) is a new survey at the Bureau of Labor Statistics which collects data on the educational, cognitive, and physical requirements of jobs, as well as the environmental conditions in which the work is performed. Using pre-production data, we provide estimates of a subset of elements by broad industry and occupation and examine the relationship between the cognitive elements and measures of education and training. We exploit the overlap between ORS and the National Compensation Survey to estimate models of the returns to different occupational requirements. Finally, we examine the relationship between occupational requirements and occupational safety measures and outline potential research uses of the Occupational Requirements Survey.
    JEL: J24 J28 J31
    Date: 2016–05
  6. By: Francisca Bremberger (Vienna University of Economics and Business (WU), Welthandelsplatz 1, 1020 Vienna); Rudolf Hochholzer (Wiener ArbeitnehmerInnen Förderungsfonds, Nordbahnstr. 36, 1020 Wien); Petr Huber (Austrian Institute for Economic Research (WIFO), Arsenal, Objekt 20, 1030 Wien and Faculty of Business and Economics, Mendel University in Brno.)
    Abstract: We analyse the impact of regional and sectoral labour market characteristics as determinants of the supply of employer financed training using a unique data set on employer provided training in Vienna. According to the results labour turnover has a robust negative impact and employment density a slightly less robust but also negative impact on the probability of a firm to provide employer financed training. Policies directed at increasing employer provided training may therefore face substantial challenges in sectors and regions with high labour turnover and employment densities. These challenges are likely to be even larger when it comes to providing employer financed training for less skilled workers.
    Keywords: employer financed training, urban labour markets, density
    JEL: R12 J24
    Date: 2016–05
  7. By: Stefano Gagliarducci; Marco Manacorda
    Abstract: In this paper we investigate the effect of family connections to politicians on individuals' labor market outcomes. We combine data for Italy over almost three decades from longitudinal social security records on a random sample of around 1 million private sector employees with the universe of around 500,000 individuals ever holding political office, and we exploit information available in both datasets on a substring of each individual's last name and municipality of birth in order to identify family ties. Using a diff-in-diff analysis that follows individuals as their family members enter and leave office, and correcting for the measurement error induced by our fuzzy matching method, we estimate that the monetary return to having a politician in the family is around 3.5 percent worth of private sector earnings and that each politician is able to extract rents for his family worth between one fourth and one full private sector job per year. The effect of nepotism is long lasting, extending well beyond the period in office. Consistent with the view that this is a technology of rent appropriation on the part of politicians, the effect increases with politicians' clout and with the resources available in the administration where they serve.
    Keywords: nepotism, family connections, politics, rent appropriation
    JEL: D72 D73 H72 J24 J30 M51
    Date: 2016–04
  8. By: Petri Böckerman; John Cawley; Jutta Viinikainen; Terho Lehtimäki; Suvi Rovio; Ilkka Seppälä; Jaakko Pehkonen; Olli Raitakari
    Abstract: The increase in the prevalence of obesity worldwide has led to great interest in the economic consequences of obesity, but valid and powerful instruments for obesity, which are needed to estimate its causal effects, are rare. This paper contributes to the literature by using a novel instrument: genetic risk score, which reflects the predisposition to higher body mass index across many genetic loci. We estimate IV models of the effect of BMI on labor market outcomes using Finnish data that have many strengths: genetic information, measured body mass index, and administrative earnings records that are free of the problems associated with non-response, self-reporting error or top-coding. The first stage of the IV models indicate that genetic risk score is a powerful instrument, and the available evidence from the genetics literature is consistent with instrument validity. The results of the IV models indicate weight reduces earnings and employment and increases social income transfers, although we caution that the results are based on small samples, and are sensitive to specification and subsample.
    JEL: D62 I1 I12 J01 J24 J3 J7
    Date: 2016–04
  9. By: Simon Franklin
    Abstract: This paper looks at the link between housing conditions and household income and labour market participation in South Africa. I use four waves of panel data from 2002-2009 on households that were originally living in informal dwellings. I find that those households that received free government housing later experienced large increases in their incomes. This effect is driven by increased employment rates among female members of these households, rather than other sources of income. I take advantage of a natural experiment created by a policy of allocating housing to households that lived in close proximity to new housing developments. Using rich spatial data on the roll out of government housing projects, I generate geographic instruments to predict selection into receiving housing. I then use housing projects that were planned and approved but never actually built to allay concerns about non-random placement of housing projects. The fixed effects results are robust to the use of these instruments and placebo tests. I present suggestive evidence that formal housing alleviates the demands of work at home for women, which leads to increases in labour supply to wage paying jobs.
    Keywords: housing, labour supply, time allocation, home production
    JEL: P14 J22 O18 D13
    Date: 2016–05
  10. By: Christiane Bradler (ZEW Centre for European Economic Research, Mannheim, Germany); Susanne Neckermann (Erasmus University Rotterdam, the Netherlands, and ZEW Centre for European Economic Research, Mannheim, Germany); Arne Warnke (ZEW Centre for European Economic Research, Mannheim, Germany)
    Abstract: This paper reports the results from a large-scale laboratory experiment investigating the impact of tournament incentives and wage gifts on creativity. We find that tournaments substantially increase creative output, with no evidence for crowding out of intrinsic motivation. By comparison, wage gifts are ineffective. Additional treatments show that it is the uncertain mapping between effort and output that inhibits reciprocity. This uncertainty is prevalent in creative and other complex tasks. Our findings provide a rationale for the frequent use of tournaments when seeking to motivate creative output.
    Keywords: creativity; incentives; tournament; reciprocity; experiment; crowding-out
    JEL: C91 D03 J33 M52
    Date: 2016–05–03
  11. By: Alan Manning
    Abstract: There is a huge body of empirical research on the employment effect of the minimum wage that has failed to clearly demonstrate the negative effect that so many economists strongly believe to find. This paper reviews the reasons for this and argues that the literature needs to re-focus to further our knowledge on the topic.
    Keywords: minimum wage, employment
    JEL: J3
    Date: 2016–05
  12. By: Rune V. Lesner (Department of Economics and Business Economics, Aarhus University, Denmark)
    Abstract: This paper develops a model which incorporates the two most commonly cited strands of the literature on statistical discrimination, namely screening discrimination and stereotyping. The model is used to provide empirical evidence of statistical discrimination based on gender in the labour market. It is shown that the implications of both screening discrimination and stereotyping are consistent with observable wage dynamics. In addition, it is found that the gender wage gap decreases in tenure but increases in job transitions and that the fraction of women in high-ranking positions within a firm does not affect the level of statistical discrimination by gender.
    Keywords: Statistical discrimination, Wage differentials, Gender gap, Employer learning
    JEL: J7 J31 D83
    Date: 2016–09–04
  13. By: Rania Antonopoulos; Valeria Esquivel; Thomas Masterson; Ajit Zacharias
    Abstract: We describe the production of estimates of the Levy Institute Measure of Time and Income Poverty (LIMTIP) for Buenos Aires, Argentina, and use it to analyze the incidence of time and income poverty. We find high numbers of hidden poor--those who are not poor according to the official measure but are found to be poor when using our time-adjusted poverty line. Large time deficits for those living just above the official poverty line are the reason for this hidden poverty. Time deficits are unevenly distributed by employment status, family type, and especially gender. Simulations of the impact of full-time employment on those households with nonworking (for pay) adults indicate that reductions in income poverty can be achieved, but at the cost of increased time poverty. Policy interventions that address the lack of both income and time are discussed.
    Keywords: Income Poverty; Economic Well-Being; Employment Policy; Fiscal Policy; Gender Disparities; Household Production; Levy Institute Measure of Time and Income Poverty (LIMTIP); Time Deficits; Argentina; Unpaid Work
    JEL: C14 C40 D31 J22
    Date: 2016–05
  14. By: Merz, Joachim (Leuphana University Lüneburg); Rathjen, Tim (Leuphana University Lüneburg)
    Abstract: Entrepreneurs and freelancers, the self-employed, commonly are characterized as not only to be relatively rich in income but also as to be rich in time because of their time-sovereignty in principle. Our introducing study scrutinises these results and notions about the well-being situation of self-employed persons not only by asking about traditional single income poverty but also by considering time poverty within the framework of a new interdependent multidimensional (IMD) poverty concept. The German Socio-economic panel with satisfaction data serves as the data base for the population wide evaluation of the substitution/ compensation between genuine, personal leisure time and income. The available detailed Time Use Surveys of 1991/92 and 2001/2 of the Federal Statistics Office provide the data to quantify the multidimensional poverty in all the IMD poverty regimes. Important result: self-employed with regard to single income poverty, single time poverty and interdependent multidimensional time and income poverty in both years are much more affected by time and income poverty than all other active persons defining the working poor. A significant proportion of non-income-poor but time poor of the active population are not able to compensate their time deficit even by an above poverty income. These people are neglected so far within the poverty and well-being discussion, the discussion about the "working poor" and in the discussion about time squeeze and time pressure in general and in particular for the self-employed as entrepreneurs and freelancers.
    Keywords: liberal professions (Freie Berufe), entrepreneurs, self-employed, interdependent multidimensional time and income poverty, time and income substitution, extended economic well-being, satisfaction/happiness, CES welfare function estimation, working poor, German Socio-Economic Panel, German Time Use Surveys 1991/02 and 2001/02
    JEL: D31 D13 J22
    Date: 2016–04
  15. By: Duncan McVicar (Queen's Management School, Queen's University Belfast); Julie Moschion (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; EconomiX, University of Nanterre); Chris Ryan (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: This paper presents estimates of achievement-related peer effects on school pupils’ literacy using data from national test scores, across multiple literacy or language-related measures and student cohorts, for the population of public secondary school pupils in Years 7 and 9 (aged 12/13 and 14/15 years) in the Australian state of Victoria. Identification is achieved via individual fixed effects and by distinguishing between secondary school peers who attended the same primary school as the individual and those who did not. Estimates of peer effects are based on the new peers, whose primary school achievement could not have been affected by the individual. The results provide evidence for the existence of achievement-related peer effects, with small but positive and statistically significant effects from having higherachieving peers on average and from having a higher proportion of very high achieving peers (in the top 10% of the prior achievement distribution). We do not find a penalty from having ‘bad’ peers (from the bottom 10% of the prior achievement distribution). Further, it is low achievement individuals who benefit most from having high achievement peers. Classification-I21, I24, J24
    Keywords: Peer effects, school achievement, education, tracking
    Date: 2016–04
  16. By: Robert E. Hall
    Abstract: In modern economies, sharp increases in unemployment from major adverse shocks result in long periods of abnormal unemployment and low output. This chapter investigates the processes that account for these persistent slumps. The data are from the economy of the United States, and the discussion emphasizes the financial crisis of 2008 and the ensuing slump. The framework starts by discerning driving forces set in motion by the initial shock. These are higher discounts applied by decision makers (possibly related to a loss of confidence), withdrawal of potential workers from the labor market, diminished productivity growth, higher markups in product markets, and spending declines resulting from tighter lending standards at financial institutions. The next step is to study how driving forces influence general equilibrium, both at the time of the initial shock and later as its effects persist. Some of the effects propagate the effects of the shock---they contribute to poor performance even after the driving force itself has subsided. Depletion of the capital stock is the most important of these propagation mechanisms. I use a medium-frequency dynamic equilibrium model to gain some notions of the magnitudes of responses and propagation.
    JEL: E24 E32 J21
    Date: 2016–05

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