nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2016‒06‒04
fourteen papers chosen by
Joseph Marchand
University of Alberta

  1. Overeducation - new evidence for 25 European countries By Boll, Christina; Leppin, Julian Sebstian; Rossen, Anja; Wolf, André
  2. Entrepreneurial Choices of Initial Human Capital Endowments and New Venture Success By Rocha, Vera; van Praag, Mirjam C.; Folta, Timothy B.; Carneiro, Anabela
  3. The Increase of the Gender Wage Gap in Italy during the 2008-2012 Economic Crisis By Piazzalunga, Daniela; Tommaso, Maria Laura di
  4. Labor Market Risk in Germany By Krebs, Tom; Yao, Yao
  5. Optimal Taxation, Marriage, Home Production, and Family Labor Supply By Gayle, George-Levi; Shephard, Andrew
  6. Including excluded groups: The slow racial transformation of the South African university system By Barnard, Helena; Cowan, Robin A.; Kirman, Alan P.; Müller, Moritz
  7. Economic growth and income inequality: asymmetric response of top income shares to growth volatility By Ariun-Erdene Bayarjargal
  8. A Tepid Recovery: The Index of Economic Well-Being for Canada and the Provinces, 1981-2014 By Jasmin Thomas; James Uguccioni
  9. Natural Groups and Economic Characteristics as Driving Forces of Wage Discrimination By Thorsten Chmura; Sebastian J. Goerg; Pia Weiss
  10. The Economics of "Radiator Springs:" Industry Dynamics, Sunk Costs, and Spatial Demand Shifts By Jeffrey R. Campbell; Thomas Hubbard
  11. Employment Guarantee Schemes and Wages in India By Girish Bahal
  12. How Do Nuclear and Extended-Family Households Differ in Labor Allocation Decisions due to Agricultural Technology Adoption? Evidence from Burkina Faso By Ouedraogo, Aissatou; Dillon, Andrew; Porter, Maria
  13. Occupation coding during the interview By Schierholz, Malte; Gensicke, Miriam; Tschersich, Nikolai
  14. Profit Sharing and Peer Reporting By Carpenter, Jeffrey P.; Robbett, Andrea; Akbar, Prottoy

  1. By: Boll, Christina; Leppin, Julian Sebstian; Rossen, Anja; Wolf, André
    Abstract: This study investigates the incidence of overeducation among workers in the EU and its underlying factors based on the most recent wave of the European Labor Force Survey (EU-LFS 2013). Its main purpose is to shed light on the interplay of so far neglected explanatory factors such as household characteristics and field of study as well as to reveal country differences in the impact of these factors on vertical mismatch. Therefore, our innovative features are the large number of determinants as well as the considerable amount of European countries simultaneously analyzed. Moreover, we differentiate in our analysis between high- and medium-skilled workers. Our findings point to a considerable variation in the potential determinants of overeducation across countries as well as across skill levels. This variation is not restricted to job-related characteristics, but interestingly also concerns household variables. Among those determinants showing a largely uniform influence are nationality, job tenure, temporary employment and presence of unemployed household members.
    Keywords: Overeducation,Realized Matches,European Labour Force,Economics of the Household
    JEL: J24 J21 J22
    Date: 2016
  2. By: Rocha, Vera (Copenhagen Business School); van Praag, Mirjam C. (Copenhagen Business School); Folta, Timothy B. (University of Connecticut); Carneiro, Anabela (University of Porto)
    Abstract: The founder (team)'s human capital is a vital determinant of future firm performance. This is a stylized fact. Less is known about the effect of the human capital of the initial workforce hired by the founder(s). We study the performance consequences of a founder's choice of the initial workforce's human capital (quantity and quality), besides the human capital of the founder(s). The analysis is based on matched employer-employee data and covers about 5,300 startups in manufacturing industries founded by individuals coming from employment between 1992 and 2007. We acknowledge that initial hiring decisions are endogenous and correlated with the human capital of the founders and the ownership structure of startups (single founder versus team of founders). Given the stickiness of initial choices, human capital decisions at entry turn out to be a close to irreversible matter with significant implications for post-entry survival and growth of the firm.
    Keywords: human capital, entrepreneurship, startups, firm performance
    JEL: J24 L26 M13
    Date: 2016–04
  3. By: Piazzalunga, Daniela (University of Turin); Tommaso, Maria Laura di (University of Turin)
    Abstract: The paper examines the gender wage gap in Italy during the 2008-2012 economic crisis, using cross-sectional EU-SILC data. The gender wage gap increased from 4% in 2008 to 8% in 2012, when for most European countries the gap decreased. After 2010 the growth of the Italian gender wage gap (and its unexplained component) was particularly high in the upper part of the wage distribution. In 2010-11 a wage freeze in the public sector was introduced as an austerity measure: the average public sector premium dropped from 15% to 11%. Using counterfactual analyses, we show that the wage freeze has been one of the major causes of the growth of the gap, disproportionately affecting women, who are more likely to be employed in the public sector. This 'policy effect' accounts for more than 100% of the increase between 2009 and 2011, while other changes, if anything, would have reduced the gap.
    Keywords: gender wage gap, Great Recession, public sector premium, decomposition, counterfactual analysis
    JEL: J31 J71 J16 J45
    Date: 2016–05
  4. By: Krebs, Tom (University of Mannheim); Yao, Yao (University of Birmingham)
    Abstract: This paper uses annual data drawn from the GSOEP to estimate individual earnings risk (labor market risk) in Germany for the period 1983-2012. The econometric specification of the earnings process allows for transitory shocks and permanent shocks to individual earnings. We find that both the transitory component and the permanent component of earnings risk have been rising in West Germany in the 1990s and have remained at elevated levels in the 2000s. In contrast, labor market risk in East Germany did not rise. These findings are robust to different sample selection criteria and changes in the specification of the earnings process. We provide a simple welfare calculation that suggests that the negative welfare consequences of the observed rise in the permanent component of earnings risk in West Germany are substantial. We argue that the time series evidence is not consistent with the view that international trade integration has been a main driver of the observed rise in labor market risk in West Germany.
    Keywords: labor market risk, Germany
    JEL: J31 D52
    Date: 2016–04
  5. By: Gayle, George-Levi (Federal Reserve Bank of St. Louis); Shephard, Andrew (University of Pennsylvania)
    Abstract: This paper develops an empirical approach to optimal income taxation design within an equilibrium collective marriage market model with imperfectly transferable utility. Taxes distort labour supply and time allocation decisions, as well as marriage market outcomes, and the within household decision process. Using data from the American Community Survey and American Time Use Survey we structurally estimate our model and explore empirical design problems. We consider the optimal design problem when the planner is able to condition taxes on marital status, as in the U.S. tax code, but for married couples we allow for an arbitrary form of tax jointness. Our results suggest that the optimal tax system for married couples is characterized by negative jointness, although the welfare gains from this jointness are shown to be quite modest.
    JEL: C14 C71 D13 H21 J12 J22
    Date: 2016–05–23
  6. By: Barnard, Helena; Cowan, Robin A.; Kirman, Alan P.; Müller, Moritz
    Abstract: This paper looks at the inclusion of excluded groups, notably the racial transformation of the South African university system. Both demand-side factors - are qualified black people hired as faculty? - and supply-side factors - are there enough qualified black people who can be hired as faculty? | need to be aligned. Prior evidence suggests that demand and supply both have both a psychological and a structural dimension. Affrmative action-type regulations address the structural dimension of demand, but homophily (a "love for the own") can nonetheless limit the hiring of faculty in white-dominated hiring committees. On the supply side, the weak education system limits the structural supply of quality black potential academics. But the limited hiring of black academics and resulting limited role models mean that few black people even consider an academic career. This paper presents a model of hiring (either randomly or on a homophilic basis), calibrated with data from the South African university system from the end of Apartheid. Our evidence suggests that even a relatively small reduction of homophily increases the rate at which the excluded group enters the workforce, and also that the effects of homophily and feedback from previous hires are of a similar magnitude. Nonetheless, the conclusions from the model suggest that the relatively long duration of a research career and slow growth of the national university system will result in a slow process of racial transformation.
    Keywords: universities,racial transformation,South Africa,transformation,higher education access,segregation
    JEL: O15 O30 I2
    Date: 2016
  7. By: Ariun-Erdene Bayarjargal
    Abstract: This paper provides new evidence on the relationship between economic growth and income inequality. The data covers the period between 1870 and 2011 for 26 countries. In contrast to the Kuznets hypothesis, there is evidence of a strong U-curve relationship between the top income shares and per capita income. This finding implies that income inequality measured by a ratio of the income shares of top earners to that of the rest of population increases as economy develops. The results also suggest that top income earners benefit when the economy grows at, or above the preceding year’s, 5-year Moving Average, and long-run trend growth rates, but do not significantly suffer during downturns in growth.
    Keywords: Top income shares, inequality, kuznets curve, economic growth
    JEL: D31 H23 N30 O15
    Date: 2016
  8. By: Jasmin Thomas; James Uguccioni
    Abstract: This report presents new estimates of the Index of Economic Well-being (IEWB) and its four domains (consumption flows, stocks of wealth, economic equality and economic security) for Canada and the provinces for the 1981-2014 period. We find that the IEWB grew at an average annual rate of 0.74 per cent per year over the period, notably below the 1.30 per cent growth of GDP per capita over the same time frame. Both the consumption and wealth domains steady advanced over the period, but their growth was offset by declines in the equality and economic security domains. Since 2008, reflecting the 2009 recession and the weak recovery, Canada’s IEWB has exhibited meager growth, advancing only 0.09 per cent per year. This reflects declines in all domains of the IEWB except consumption. Six of the ten provinces had lower levels for their respective IEWBs in 2014 than in 2008 (Newfoundland and Labrador, Prince Edward Island, Ontario, Saskatchewan, Alberta, and British Columbia).
    Keywords: Well-Being, Wealth, Consumption, Equality, Economic Security, Canada, Provinces
    JEL: I31 I32 C43 D63 N32
    Date: 2016–06
  9. By: Thorsten Chmura (Nottingham University, Business School); Sebastian J. Goerg (Department of Economics, Florida State University); Pia Weiss (Nottingham University, Business School)
    Abstract: We investigate whether the origin of an employee provides different motives for wage discrimination in gift-exchange experiments with students and migrant workers in China. In a lab and an internet experiment, subjects in the role of employers can condition their wages on the employees? home provinces. The resulting systematic differences in wages can be linked to natural groups and economic characteristics of the provinces. In-group favoritism increases wages for employees who share the same origin as the employer, while an increased probability of being matched with an employee with a different ethnicity reduces wages. Furthermore, wages in the laboratory increase with the actual wage level in the employees? home province. Nevertheless, employees? effort is not influenced by these variables; only the wage paid in the experiment influences effort.
    Keywords: wages, discrimination, social identity, natural groups, lab experiment, gift-exchange, migrant-workers, China
    JEL: C91 J31 J71 M52
    Date: 2016–04
  10. By: Jeffrey R. Campbell; Thomas Hubbard
    Abstract: Interstate Highway openings were permanent, anticipated demand shocks that increased gasoline demand and sometimes shifted it spatially. We investigate supply responses to these demand shocks, using county-level observations of service station counts and employment and data on highway openings' timing and locations. When the new highway was close to the old route, average producer size increased, beginning one year before it opened. If instead the interstate substantially displaced traffic, the number of producers increased, beginning only after it opened. These dynamics are consistent with Hotelling-style oligopolistic competition with free entry and sunk costs and inconsistent with textbook perfect competition.
    JEL: L13 L22 L81
    Date: 2016–05
  11. By: Girish Bahal
    Abstract: Using a novel data-set of district-wise program expenditure, we estimate the impact of large employment schemes on agricultural wages in India. Depending on the underlying theoretical mechanism, private wages can either respond to contemporaneous fluctuations in program expenditure or be sensitive to the stock of expenditure incurred under such programs. We first find that although program expenditure varied substantially both across and within districts, every district was covered under employment guarantee during the 2001-2010 period. Next, we empirically contrast the “spot” versus the “stock” effect of employment schemes on wages. Identification of program impact is achieved by partialling out a host of district and year specific controls. Exploiting the fund allocation process of these schemes, we further check for potentially endogenous district-year fluctuations. We find a significant positive impact on wages through the stock effect. In contrast, we do not find an immediate jump in wages suggesting weak spot effects.
    Keywords: Public works, Workfare, NREGA, Public capital, Wages
    JEL: H53 I38 J31 J38
    Date: 2016–04–12
  12. By: Ouedraogo, Aissatou; Dillon, Andrew; Porter, Maria
    Abstract: Abstract: Households adopting new agricultural technologies often face labor constraints influencing the extent to which such technologies are productive and profitable. Such labor constraints differ for nuclear and extended-family households. In a randomized control trial, we estimate the heterogeneous treatment effect of an efficacious fertilization technique called microdosing by differences in household structure. The encouragement design which allocated starter packs and microdosing training to assigned households induced extended family households to reduce labor to agricultural activities, while nuclear households increased such labor activities. These differentiated effects are dominated by households who had previously used fertilizer. Thus, microdosing does not completely relieve the binding labor constraint for extended households who previously used broadcast fertilizer methods. Although nontrivial labor allocation is necessary for both broadcast and microdosing, for extended households, microdosing lowers total person-days to agricultural production by 18% relative to mean labor allocation at baseline, whereas nuclear households increase labor allocation to agricultural production by 36%.
    Keywords: Household Structure, Technology Adoption, Microdosing, Labor Allocation, Agricultural and Food Policy, International Development, JEL Keywords: O12, O13, Q12, J22, J12,
  13. By: Schierholz, Malte (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Gensicke, Miriam; Tschersich, Nikolai
    Abstract: "Currently, most surveys ask for occupation with open-ended questions. The verbatim responses are coded afterwards, which is error-prone and expensive. We describe an alternative approach that allows occupation coding during the interview. Our new technique utilizes a supervised learning algorithm to predict candidate job categories. These suggestions are presented to the respondent, who can in turn choose the most adequate occupation. 72.4% of the respondents selected an occupation when the new instrument was tested in a telephone survey, implicating potential cost savings. To aid further improvements, we identify a number of factors how to increase quality and reduce interview duration." (Author's abstract, IAB-Doku) ((en)) Additional Information Appendix A: Additional Results Appendix B: Questionnaire Appendix C: Description of the Algorithm Appendix D: Instructions for Validation Appendix E: Behavior Coding Manual
    Keywords: Beruf, Codierung, Interview, Datenqualität
    JEL: C83 J40
    Date: 2016–05–10
  14. By: Carpenter, Jeffrey P. (Middlebury College); Robbett, Andrea (Middlebury College); Akbar, Prottoy (University of Pittsburgh)
    Abstract: Despite the "1/N problem" associated with profit sharing, the empirical literature finds that sharing profits with workers has a positive impact on work team and firm performance. We examine one possible resolution to this puzzle by observing that, although the incentive to work harder under profit sharing is weak, it might be sufficient to motivate workers to report each other for shirking, especially if the workers are reciprocally-minded. Our model provides the rationale for this conjecture and we discuss the results of an experiment that confirms that profit sharing is most effective when peer reporting is possible.
    Keywords: team production, profit sharing, peer reporting, reciprocity, experiment
    JEL: C92 J30 D20 M52
    Date: 2016–05

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