nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2016‒05‒21
twelve papers chosen by
Joseph Marchand
University of Alberta

  1. Who Gets Hired? The Importance of Finding an Open Slot By Edward P. Lazear; Kathryn L. Shaw; Christopher T. Stanton
  2. Management practices, workforce selection, and productivity By Bender, Stefan; Bloom, Nicholas; Card, David; van Reenen, John; Wolter, Stefanie
  3. Are There Returns to Experience at Low-Skill Jobs? Evidence from Single Mothers in the United States over the 1990s By Adam Looney; Day Manoli
  4. Theory and Measurement: Emergence, Consolidation and Erosion of a Consensus By Jeff E. Biddle; Daniel S. Hamermesh
  5. Development and Exclusion: Intergenerational Stickiness in India By Majumder, Rajarshi; Ray, Jhilam
  6. The Effect of the Health Insurance Mandate on Labor Market Activity and Time Allocation: Evidence from the Federal Dependent Coverage Provision By Otto Lenhart; Vinish Shrestha
  7. Maternal Education, Parental Investment and Non-Cognitive Skills in Rural China By Jessica Leight; Elaine M. Liu
  8. Correcting External Imbalances in the European Economy By Doris Hanzl-Weiss; Michael Landesmann
  9. The social pay gap across occupations: Survey and experimental evidence By Bublitz, Elisabeth; Regner, Tobias
  10. The Risk of Automation for Jobs in OECD Countries: A Comparative Analysis By Melanie Arntz; Terry Gregory; Ulrich Zierahn
  11. Heterogeneous Structural Transformation and Growth Incidence across the Income Distribution: the Kuznets Curve Revisited By Paul, Saumik
  12. Benefits of dense labour markets: Evidence from transitions to employment in Germany By Hamann, Silke; Niebuhr, Annekatrin; Peters, Jan Cornelius

  1. By: Edward P. Lazear; Kathryn L. Shaw; Christopher T. Stanton
    Abstract: A model of hiring into posted job slots suggests hiring is based on comparative advantage: being hired depends not only on one’s own skill but also on the skills of other applicants. The model has numerous implications. First, bumping of applicants occurs when one job-seeker is slotted into a lower paying job by another applicant who is more skilled. Second, less able workers are more likely to be unemployed because they are bumped. Third, vacancies are higher for harder to fill skilled jobs. Fourth, some workers are over-qualified for their jobs whereas others are under-qualified. These implications are borne out using four different data sets.
    JEL: D83 J01 J2 J21 J23 J24 J6 J62 J64 M5 M51
    Date: 2016–04
  2. By: Bender, Stefan; Bloom, Nicholas; Card, David; van Reenen, John; Wolter, Stefanie (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    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 establishments 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 highestpaid 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." (Author's abstract, IAB-Doku) ((en))
    JEL: L2 M2 O32 O33
    Date: 2016–04–28
  3. By: Adam Looney (The Brookings Institution); Day Manoli (University of Texas at Austin)
    Abstract: Policy changes in the United States in the 1990s resulted in sizable increases in employment rates of single mothers. We show that this increase led to a large and abrupt increase in work experience for single mothers with young children. We then examine the economic return to this increase in experience for affected single mothers. Despite the increases in experience, single mothers’ real wages and employment have remained relatively unchanged. The empirical analysis suggests that an additional year of experience increases single mothers’ wage rates by less than 2 percent, a percentage lower than previous estimates in the literature.
    Keywords: Wage returns to experience, Welfare reform, Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, Single mothers, Low-skill labor, Current Population Survey, Synthetic cohorts
    JEL: J31 I38 J12 J24
    Date: 2016–04
  4. By: Jeff E. Biddle; Daniel S. Hamermesh
    Abstract: We identify three separate stages in the post-World War II history of applied microeconomic research: A generally non-mathematical period; a period of consensus (from the 1960s through the early 1990s) characterized by the use of mathematical models, optimization and equilibrium to generate and test hypotheses about economic behavior; and (from the late 1990s) a partial abandonment of economic theory in applied work in the “experimentalist paradigm.” We document the changes implied by the changing paradigms in the profession by coding the content of all applied micro articles published in the “Top 5 journals” in 1951-55, 1974-75 and 2007-08. We also show that, despite the partial abandonment of theory by applied microeconomists, the labor market for economists still pays a wage premium to theorists.
    JEL: B21 B23
    Date: 2016–05
  5. By: Majumder, Rajarshi; Ray, Jhilam
    Abstract: The concept of development has matured from being indicative of aggregative progress to being sensitive to inequality and exclusion within the whole, giving rise to the coinage Inclusive Development. This notion speaks of bridging gap between ethnic/social groups within a nation in domains like livelihood, social status, political empowerment, cultural freedom, among others. This would depend on temporal movement of different groups and intergenerational mobility can act as a mechanism to achieve social fluidity and greater inclusion. Present paper explores the role of intergenerational stickiness in perpetuating such disparity across social groups in India. We argue that economic status is intricately linked to what a person does for livelihood, i.e. her occupation, and what remuneration she receives for it, i.e. her wages. In present world system, occupation and wages are also critically determined by the human capital quotient of the individual, marked generally by her educational level. Therefore, the socioeconomic structure of a country and its temporal movement would be shaped by intergenerational mobility in education, occupation and income for different social groups. Higher (upward) mobility for the lagging classes would lead to catching up and convergence while lower mobility for them would lead to widening gaps. It is our contention that persistence of economic inequality across social groups in India is associated with high parental impact and low intergenerational mobility for the historically lagging and excluded social groups. Technically both Transitional Matrix and Regression based econometric techniques are used to estimate parental impact on respondent’s status as well as the role of social background in influencing the magnitude of the parental impact itself in Indian context during the last two decades. Relative strength of Structural and Exchange Mobility have also been estimated. Interlinkage between the three types of mobility and that between mobility and other socioeconomic parameters have been explored.
    Keywords: Intergenerational Mobility; Social Exclusion; Transition Matrix; Poverty; India
    JEL: I24 I25 I28 I30 J24 J31 J62 J71
    Date: 2016–05–01
  6. By: Otto Lenhart (Department of Economics, Emory University); Vinish Shrestha (Department of Economics, Towson University)
    Abstract: The primary goal of the federal dependent coverage mandate was to increase health insurance coverage among young adults, the group with the lowest prevalence of health insurance coverage. To understand the full impacts of the federal dependent coverage mandate, it is important to evaluate how the mandate affects labor market activities and time spent away from work among young adults. Using data from the Consumer Population Survey (CPS) and the American Time Use Survey (ATUS) and implementing a difference-in-differences framework, we find: 1) Young adults substitute employer sponsored insurance for dependent coverage, 2) Affected individuals reduce their work time and switch from full- to part-time employment, and 3) The additional time from reduced labor market activity is reallocated towards more time spent on leisure activities. The effects of the mandate on labor market activities are stronger in later years. Furthermore, we show that young adults do not increase the time they spend on activities that could enhance their human capital such as education and health, which reemphasizes potential unintended consequences of the mandate. These findings suggest that future work is necessary to fully understand the overall welfare effects of the policy.
    Keywords: Dependent coverage mandate, labor market outcomes, time use.
    JEL: I13 J22 I12
    Date: 2016–04
  7. By: Jessica Leight; Elaine M. Liu
    Abstract: The importance of non-cognitive skills in determining long-term human capital and labor market outcomes is widely acknowledged, but relatively little is known about how educational investments by parents may respond to non-cognitive skills early in life. This paper evaluates the parental response to variation in non-cognitive skills among their children in rural Gansu province, China, employing a household fixed effects specification; non-cognitive skills are defined as the inverse of both externalizing challenges (behavioral problems and aggression) and internalizing challenges (anxiety and withdrawal). The results suggest that on average, parents invest no more in terms of educational expenditure in children who have better non-cognitive skills relative to their siblings. However, there is significant heterogeneity with respect to maternal education; less educated mothers appear to reinforce differences in non-cognitive skills between their children, while more educated mothers compensate for these differences. Most importantly, there is evidence that these compensatory investments lead to catch-up in non-cognitive skills over time for children of more educated mothers.
    JEL: D13 I24 O15
    Date: 2016–05
  8. By: Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Summary This paper examines current account developments in different country groups amongst the lower- and medium-income European economies (LMIEs) both prior to the crisis and following it. The Baltic countries, the Western Balkan as well as the Southern EU countries (Greece, Portugal and Spain) showed rather dramatic deteriorations in their current accounts prior to the outbreak of the financial crisis in 2008/2009, while in the Central and Eastern European countries current account deficits never exploded. What drove current account developments before the crisis and have external imbalances been sustainably corrected? We investigate whether and to which extent adjustments took place in terms of trade performance, real effective exchange rates and components of unit labour costs. Finally, we look at developments of the tradable and non-tradable sectors of the economy and find that ‘structural’ current account problems are grounded in persistent weaknesses of the tradable sector. As such, policy implications would entail that countries which suffer from longer-term ‘structural’ external imbalances have to strongly focus their policy attention on a recovery of the tradable sector.
    Keywords: trade and current account imbalances, real effective exchange rates, unit labour costs, structural developments, tradable sector, non-tradable sector, lower- and medium-income European economies (LMIEs), Central and Eastern European countries, Western Balkan countries, Southern EU countries
    JEL: O10 F14 J3
    Date: 2016–04
  9. By: Bublitz, Elisabeth; Regner, Tobias
    Abstract: Receiving equal wages for work of equal value is a legal right in many countries. However, it remains unknown to what degree the neglect of this principle yields differences in pay between social and other occupations. The results of a task-based analysis with survey data confirm a notable wage penalty of 0.5 standard deviations for social occupations (e.g., health care, education). Based on these results, we design a laboratory experiment that mimics actual income distributions (Germany, USA), incorporates social occupations in the lab society, and allows for (voluntary) redistribution among subjects. The results show that, regardless of (non-)random assignment to social jobs and the level of income inequality, individuals in social jobs are only partly compensated for their social effort. A downward spiral, induced by emotional reactions, results as social effort and donations converge to a 'low' equilibrium. This suggests that a market approach fails to eliminate the social pay gap.
    Keywords: inequality,tasks data,redistribution,experiment,voluntary payments,social returns,externality
    JEL: C90 D62 D63 H23 J31
    Date: 2016
  10. By: Melanie Arntz; Terry Gregory; Ulrich Zierahn
    Abstract: In recent years, there has been a revival of concerns that automation and digitalisation might after all result in a jobless future. The debate has been fuelled by studies for the US and Europe arguing that a substantial share of jobs is at “risk of computerisation”. These studies follow an occupation-based approach proposed by Frey and Osborne (2013), i.e. they assume that whole occupations rather than single job-tasks are automated by technology. As we argue, this might lead to an overestimation of job automatibility, as occupations labelled as high-risk occupations often still contain a substantial share of tasks that are hard to automate. Our paper serves two purposes. Firstly, we estimate the job automatibility of jobs for 21 OECD countries based on a task-based approach. In contrast to other studies, we take into account the heterogeneity of workers’ tasks within occupations. Overall, we find that, on average across the 21 OECD countries, 9 % of jobs are automatable. The threat from technological advances thus seems much less pronounced compared to the occupation-based approach. We further find heterogeneities across OECD countries. For instance, while the share of automatable jobs is 6 % in Korea, the corresponding share is 12 % in Austria. Differences between countries may reflect general differences in workplace organisation, differences in previous investments into automation technologies as well as differences in the education of workers across countries. Ces dernières années, les craintes que l’automatisation et la numérisation aboutissent finalement à un futur sans emploi se sont réveillées. Le débat a été alimenté par des études sur les États-Unis et l’Europe arguant qu’une grande partie des emplois étaient en « risque d’informatisation ». Ces études utilisent une méthode basée sur les professions proposée par Frey et Osborne (2013), c’est-à-dire qu’elles supposent que les professions dans leur ensemble et non les tâches isolées sont automatisées. Comme nous l’avançons, cette hypothèse peut mener à la surestimation de l’automatisation des emplois, puisque les professions dites à haut risque comprennent souvent une part substantielle de tâches difficiles à automatiser. Notre article a un double objectif. D’une part, nous estimons par une approche basée sur les tâches la possibilité d’automatiser les emplois pour 21 pays de l’OCDE. A la différence d’autres études, nous prenons en compte l’hétérogénéité des tâches au sein des professions. Globalement, nous estimons que 9 % des emplois sont automatisables en moyenne dans les 21 pays de l’OCDE. La menace générée par les avancées technologiques semble donc bien moindre que celle donnée par la méthode basée sur les professions. Nous trouvons également que les pays de l’OCDE sont hétérogènes en la matière. Par exemple, alors que la part des emplois automatisables représente 6 % en Corée, elle s’élève à 12 % en Autriche. Les différences entre pays peuvent être le reflet des diversités concernant l’organisation du lieu de travail en général, des différences dans les investissements faits auparavant dans les technologies d’automatisation ou encore des variations dans les niveaux d’éducation des travailleurs.
    JEL: J20 J23 J24
    Date: 2016–05–14
  11. By: Paul, Saumik
    Abstract: In 1955, in an influential study Kuznets (1955) predicted an inverted-U relationship between development and inequality, mainly through structural transformation. Since then a large body of research has empirically tested the Kuznets hypothesis, but consensus is far less evident. In this paper, I argue that a heterogeneous process of structural transformation across the income distribution may explain such empirical irregularities. I specifically link the heterogeneity in growth incidence resulting from a shrinking agriculture sector across income quantiles to inequality measures. Empirical evidence drawn from the Cote d’Ivoire household survey data supports this theoretical prediction. However, the decomposition results indicate a relatively small contribution of structural transformation to total changes in inequality.
    Keywords: Structural Change, Inequality
    JEL: J3 J5
    Date: 2016–04
  12. By: Hamann, Silke; Niebuhr, Annekatrin; Peters, Jan Cornelius
    Abstract: We analyse whether the size of the local labour market allows for better matching between job seekers and vacancies, which is thought to enhance productivity. This analysis is based on a large data set providing detailed micro-level information on new employment relationships in Germany. Our results suggest rather small matching benefits. Doubling employment density increases the productivity of new employment relationships by 1.1% to 1.2%. Moreover, the findings indicate that the benefits accrue only to persons experiencing job-to-job transitions and short-term unemployed. We detect no important impact of agglomeration on transitions from long-term non-employed.
    Keywords: agglomeration economies,matching,urban wage premium,transitions to employment
    JEL: R23 J31
    Date: 2016

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