nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2016‒06‒09
fourteen papers chosen by
Joseph Marchand
University of Alberta

  1. Trade Shocks, Taxes, and Inequality By Douglas L. Campbell; Lester Lusher
  2. Gainfully Employed? Assessing the Employment and Earnings of For-Profit College Students Using Administrative Data By Stephanie Riegg Cellini; Nicholas Turner
  3. Height and Cognition at Work: Labor Market Productivity in a Low Income Setting By Daniel LaFave; Duncan Thomas
  4. From Dual to Unified Employment Protection: Transition and Steady State By Dolado, Juan J.; Lalé, Etienne; Siassi, Nawid
  5. The causal effects of an intensified curriculum on cognitive skills: Evidence from a natural experiment By Andrietti, Vincenzo
  6. Knowledge shocks diffusion and the resilience of regional inequality By Lopez-Cermeño, Alexandra
  7. Impacts of Dengue Epidemics on Household Labor Market Outcomes By Walsh, Amanda
  8. Do Rising Top Incomes Lead to Increased Borrowing in the Rest of the Distribution? By Thompson, Jeffrey P.
  9. Conditional Cash Transfers in Developing Economy: The Case of Muslim Countries By Zulkhibri, Muhamed
  10. What Are the Macroeconomic Effects of High-Frequency Uncertainty Shocks By Laurent Ferrara; Pierre Guérin
  11. LATE for the Meeting: Gender, Peer Advising, and College Success By Ellis, Jimmy R.; Gershenson, Seth
  12. The impact of gender equality policies on economic growth By Jinyoung Kim; Jong-Wha Lee; Kwanho Shin
  13. The heterogeneity of ethnic employment gaps By Romain Aeberhardt; Elise Coudin; Roland Rathelot
  14. Is GDP a Relevant Social Welfare Indicator? A Savers-Spenders Theory Approach By Thibault, Emmanuel

  1. By: Douglas L. Campbell (New Economic School (NES)); Lester Lusher (UC Davis)
    Abstract: We study the impact of trade shocks on inequality using newly constructed micro and macro data. First, we use the Current Population Survey’s (CPS) Merged Outgoing Rotation Group (MORG) from 1979 to 2010 combined with new annual measures of imported inputs, a proxy for offshoring. We find that in periods when US relative prices are high, and imports surge relative to exports, workers in sectors with greater initial exposure to international trade were more likely to be unemployed a year later, but did not experience significant declines in wages conditional on being employed. Contrary to the usual narrative, we find negative wage effects for higher-wage, but not lower-wage workers, particularly for those who are less-educated. Second, sectors most exposed to trade shocks do not experience relative increases in inequality. Third, using aggregate international data for 31 countries, we find that various trade shocks, such as increases in trade with China, are not generally correlated with changes in the income distribution. Instead, using new historical data, we confirm a close connection between top marginal tax rates and top income shares, and find that the level of top marginal tax rates impacts changes in the top 1% share of income, implying that top income shares are a function of historical marginal tax rates.
    Keywords: Inequality, Globalization, Skill-Biased Technological Change, American Manufacturings
    JEL: F10 F16 F41 N60 L60
    Date: 2016–05
  2. By: Stephanie Riegg Cellini; Nicholas Turner
    Abstract: We draw on population-level administrative data from the U.S. Department of Education and the Internal Revenue Service to quantify the impact of for-profit college attendance on the employment and earnings of over 1.4 million students. We characterize both the within-student earnings effects and joint distributions of earnings effects and increases in student debt. Our descriptive analysis of degree-seeking students suggests that on average associate’s and bachelor’s degree students experience a decline in earnings after attendance, relative to their own earnings in years prior to attendance. Master’s degree students and students who complete their degrees appear to experience better outcomes, with positive earnings effects. Our difference-in-difference analysis of certificate students suggests that despite the much higher costs of attendance, earnings effects are smaller in the for-profit sector relative to the effects for comparable students in public community colleges—a result that holds for all but one of the top ten fields of study. In absolute terms, we find no evidence of improved earnings post-enrollment for students in any of the top ten for-profit fields and we can rule out that average effects are driven by a few low-performing institutions.
    JEL: I2 I23 I26 J01 J24
    Date: 2016–05
  3. By: Daniel LaFave; Duncan Thomas
    Abstract: Taller workers earn more, particularly in lower income settings. It has been argued that adult height is a marker of strength which is rewarded in the labor market, a proxy for cognitive performance or other dimensions of human capital such as school quality, a proxy for health status or a proxy for family background characteristics. As a result, the argument goes, height is rewarded in the labor market because it is an informative signal of worker quality to an employer. It has also been argued that the height premium in the labor market is driven by occupational and sectoral choice. This paper evaluates the relative importance of these mechanisms that potentially underly the link between adult stature and labor market productivity. Drawing on twelve waves of longitudinal survey data collected in rural Central Java, Indonesia, we establish that height predicts hourly earnings after controlling education, multiple indicators of cognitive performance and physical health status, measures of family background, and sectoral and occupational choice. The height premium is large and significant in both the wage and self-empoyed sectors indicating height is not only a signal of worker quality. Since adult stature is largely determined in the first few years of life, we conclude that exposures during this critical period have an enduring impact on labor market productivity.
    JEL: I15 J24 O15
    Date: 2016–05
  4. By: Dolado, Juan J. (European University Institute); Lalé, Etienne (University of Bristol); Siassi, Nawid (University of Konstanz)
    Abstract: This paper analyses the optimal design of a single open-ended contract (SOEC) and studies the political economy of moving towards such a SOEC in a labour market where employment protection is highly discontinuous. We develop a computationally tractable approach to compare two economic environments: one with a large employment protection gap after a short tenure, and another one with a SOEC featuring a smooth tenure profile. For illustrative purposes, we specialise the discussion of such choices to Spain, a country often considered as an epitome of a labour market with dual employment protection. We show that a SOEC has the potential of bringing substantial improvements in equilibrium allocations and welfare. We provide estimates for the eligibility rule and tenure profile of the optimal SOEC, defined as the contract maximising the steady-state lifetime utility of new labour-market entrants. Finally, we use the model to identify winners and losers among younger and older workers in the transitional path of such a reform, and evaluate its political support.
    Keywords: single contract, employment protection, dualism, labour market reform
    JEL: H29 J33 J65
    Date: 2016–05
  5. By: Andrietti, Vincenzo
    Abstract: This paper exploits a unique universal educational policy - implemented in most German states between 2001 and 2008 - that compressed the academic-track high school curriculum into a (one year) shorter time span, thereby increasing time of instruction and share of curriculum taught per grade. Using 2000-2012 PISA data and a quasi-experimental approach, I estimate the impacts of this intensified curriculum on cognitive skills. I find robust evidence that the reform improved, on average, the reading, mathematical, and scientific literacy skills acquired by academic-track ninth graders upon treatment. However, I also provide evidence that the reform widened the gap in student performance with respect to parental migration background and student ability. Finally, although the reform did not affect, on average, high school grade retention, I find that the latter increased for students with parental migration background. Taken together, these findings suggest that moving to a compressed high-school curriculum did not compromise and benefited, on average, students' cognitive skills. However, they also raise equity concerns that policy-makers should be aware of.
    Keywords: G8 reform,Intensified curriculum,Instruction time,Learning intensity,Cognitive skills,Academic-track high school,Grade retention,Remedial education
    JEL: I21 I28 D04
    Date: 2016–04–01
  6. By: Lopez-Cermeño, Alexandra
    Abstract: This paper provides a simplified method of exploring the geographical limits of a knowledge shock over the long run. Using a geographically decomposable distance weighed sum of world GDPs by county, differences in differences regression analysis shows that a new university will not only have a positive impact on the local economy, but also on the GDP of nearby counties. Furthermore, challenging the conventional wisdom that knowledge spillovers affect the local economy, this study provides evidence that the effect expands to the whole national though its strength dilutes with distance. Consistent with the education literature, this investigation provides evidence that the shock will make the relative GDP of foreign competitors worse-off. Results are persistent in the long run, although the effect of time is also decreasing. Resultsare robust to potential endogeneity related to the self-selection of prosperous allocations for new academic institutions.
    Keywords: U.S. Counties; Spillovers; New Economic Geography
    JEL: O18 R11 N72 L8
    Date: 2016–04
  7. By: Walsh, Amanda
    Abstract: Existing research on the economic impact of dengue among households focuses on individuals with clinically confirmed disease and their families. However, caregiving activities, avoidance behaviors, and changes in labor demand may cause the potential labor market impacts of an epidemic to extend beyond households that directly experience illness. I exploit exogenous fluctuations in the timing and scale of dengue epidemics in the Amazonian city of Iquitos, Peru from July 2005 to June 2010 to isolate changes in the work hours of all primary male and female residents in the region. I find that dengue epidemics are associated with large, statistically significant decreases in work hours for those who work positive hours. In aggregate, females reduce work hours more than males, both in levels of the point estimates and relative to mean hours. Furthermore, the decrease in female work hours during epidemics extends beyond households experiencing illness. This research contributes to the infectious disease literature by assessing the impact of epidemics on the labor market outcomes of all households in an affected region and by assessing the differential impacts on the outcomes of male and female residents.
    Keywords: dengue, household labor, global health, development, vector-borne disease, Consumer/Household Economics, Health Economics and Policy, International Development, Labor and Human Capital,
    Date: 2016
  8. By: Thompson, Jeffrey P.
    Abstract: One potential consequence of rising concentration of income at the top of the distribution is increased borrowing, as less affluent households attempt to maintain standards of living with less income. This paper explores the “keeping up with the Joneses” phenomenon using data from the Survey of Consumer Finances. Specifically, it examines the responsiveness of payment-to-income ratios for different debt types at different parts of the income distribution to changes in the income thresholds at the 95th and 99th percentiles. The analysis provides some evidence indicating that household debt payments are responsive to rising top incomes. Middle and upper-middle income households take on more housing-related debt and have higher housing debt payment to income ratios in places with higher top income levels. Among households at the bottom of the income distribution there is a decline in non-mortgage borrowing and debt payments in areas with rising top-income levels, consistent with restrictions in the supply of credit. The analysis also consistently shows that 95th percentile income has a greater influence on borrowing and debt payment across in the rest of the distribution than the more affluent 99th percentile level.
    Keywords: Inequality ; Debt ; Consumption
    JEL: D63 D14
    Date: 2016–05–02
  9. By: Zulkhibri, Muhamed (The Islamic Research and Teaching Institute (IRTI))
    Abstract: This paper critically analyses the relevance of directly targeted poverty reduction programmes in Muslim countries by means of conditional cash transfers (CCTs). CCTs is one of the effective tools used by governments, multinational development institutions and non-profit organisations to tackling poverty. The findings in Muslim countries suggest that CCTs programmes has been positive and that the costs are relatively affordable if implemented with appropriate programme design. In many cases, there have been positive secondary effects over and above the primary goal of poverty reduction. The paper also argues that the concept of CCT is line with the underlying principle of Islam to eradicate poverty via redistribution approach. However, none of CCT programme in Muslim countries explores and integrates the potential of Islamic solidarity-based instruments for through Zakah, Sadaqat, Awqaf and Qard Al-Hassan.
    Keywords: Conditional Cash Transfer Programme; Redistribution Instruments; Muslim Countries
    JEL: H31 I38 J22
    Date: 2016–05–01
  10. By: Laurent Ferrara; Pierre Guérin
    Abstract: This paper evaluates the effects of high-frequency uncertainty shocks on a set of low-frequency macroeconomic variables that are representative of the U.S. economy. Rather than estimating models at the same common low-frequency, we use recently developed econometric models, which allows us to deal with data of different sampling frequencies. We find that credit and labor market variables react the most to uncertainty shocks in that they exhibit a prolonged negative response to such shocks. When examining detailed investment sub-categories, our estimates suggest that the most irreversible investment projects are the most affected by uncertainty shocks. We also find that the responses of macroeconomic variables to uncertainty shocks are relatively similar across single- and mixed-frequency data models, suggesting that the temporal aggregation bias is not acute in this context.
    Keywords: Business fluctuations and cycles, Econometric and statistical methods
    JEL: E32 E44 C32
    Date: 2016
  11. By: Ellis, Jimmy R. (American University); Gershenson, Seth (American University)
    Abstract: Many male and first-generation college goers struggle in their first year of postsecondary education. Mentoring programs have been touted as a potential solution to help such students acclimate to college life, yet causal evidence on the impact of such programs, and the factors that influence participation in them, is scant. This study leverages a natural experiment in which peer advisors (PA) were quasi-randomly assigned to first-year university students to show that: (i) male students were significantly more likely to voluntarily meet their assigned PA when the PA was also male and (ii) these compliers were significantly more likely to persist into the second year of postsecondary schooling. We find no effect of being assigned to a same-sex PA on female students' use of the PA program, nor do we find any evidence that the PA program affected subsequent academic performance (GPAs).
    Keywords: higher education, peer advising, mentoring, gender gap, retention, demographic mismatch
    JEL: I21 I23 I28
    Date: 2016–05
  12. By: Jinyoung Kim; Jong-Wha Lee; Kwanho Shin
    Abstract: This paper introduces a model of gender inequality and economic growth that focuses on the determination of women's time allocation among market production, home production, child rearing, and child education. The theoretical model is based on Agenor (2016), but differs in several important dimensions. The model is calibrated using microlevel data of Asian economies, and numerous policy experiments are conducted to investigate how various aspects of gender inequality are related to the growth performance of the economy. The analysis shows that improving gender equality can contribute significantly to economic growth by changing females' time allocation and promoting accumulation of human capital. We find that if gender inequality is completely removed, aggregate income will be about 6.6% and 14.5% higher than the benchmark economy after one and two generations respectively, while corresponding per capita income will be higher by 30.6% and 71.1% in the hypothetical gender-equality economy. This is because fertility and population decrease as women participate more in the labor market.
    Keywords: gender inequality, economic growth, overlapping generations model, labor market, human capital accumulation
    JEL: E24 E60 J13 J71
    Date: 2016–05
  13. By: Romain Aeberhardt (Centre de Recherche en Économie et Statistique (CREST)); Elise Coudin (Centre de Recherche en Économie et Statistique (CREST)); Roland Rathelot (University of Warwick)
    Abstract: This paper investigates the heterogeneity of ethnic employment gaps using a new single-index based approach. Instead of stratifying our sample by age or education, we study ethnic employment gaps along a continuous measure of employability, the employment probability minority workers would have if their characteristics were priced as in the majority group. We apply this method to French males, comparing those whose parents are North African immigrants and those with native parents. We find that both the raw and the unexplained ethnic employment differentials are larger for low-employability workers than for high-employability ones. We show in a theoretical framework that this heterogeneity can be accounted for by homogeneous underlying mechanisms and is not evidence for, say, heterogeneous discrimination. Finally, we discuss our main empirical findings in the light of simple taste-based vs. statistical discrimination models.
    Keywords: discrimination, employment differentials, decomposition
    JEL: C14 C25 J70 J71
    Date: 2016–05
  14. By: Thibault, Emmanuel
    Abstract: The use of GDP as the main index of progress and welfare of a country has been the subject of a long debate amongst economists. Using and extending the saversspenders theory recently popularized by Mankiw (2000, AER), we analyze the theoretical relationships between GDP and the welfare of a society. This analysis is undertaken using several different overlapping generations models which all take into account the great heterogeneity of consumer behavior observed in the data (different labor supply choices, different degrees of altruism and/or different degrees of impatience to consume). The results indicate that GDP (per capita) is often a relevant index and is always a decent social welfare indicator.
    Keywords: Growth models, Heterogeneity of preferences, Welfare, Product accounts and wealth.
    JEL: D64 D91 J22 O41
    Date: 2016–05

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