nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2016‒08‒21
nineteen papers chosen by
Joseph Marchand
University of Alberta

  1. Charter Schools and Labor Market Outcomes By Will S. Dobbie; Roland G. Fryer, Jr
  2. Understanding the Dynamics of Labor Income Inequality in Latin America By Carlos Rodríguez-Castelán; Luis F. López-Calva; Nora Lustig; Daniel Valderrama
  3. The Intensity of Job Search and Search Duration By Faberman, R. Jason; Kudlyak, Marianna
  4. Local Labor Markets and Natural Resources: A Synthesis of the Literature By Marchand, Joseph; Weber, Jeremy
  5. The Outlook for U.S. Labor-quality Growth By Bosler, Canyon; Daly, Mary C.; Fernald, John G.; Hobijn, Bart
  6. The Effects of Pre-Trial Detention on Conviction, Future Crime, and Employment: Evidence from Randomly Assigned Judges By Will Dobbie; Jacob Goldin; Crystal Yang
  7. Gender Wage Gaps and Risky vs. Secure Employment: An Experimental Analysis By Jung, Seeun; Choe, Chung; Oaxaca, Ronald L.
  8. Informality as a Stepping Stone: A Search-Theoretical Assessment of Informal Sector and Government Policy By Tumen, Semih
  9. Temporary Jobs and the Severity of Workplace Accidents By Picchio, Matteo; van Ours, Jan C.
  10. The Impact of Diabetes on Labor Market Outcomes in Mexico: A Panel Data and Biomarker Analysis By Seuring, Till; Serneels, Pieter; Suhrcke, Marc
  11. Is There a Role for Higher Education Institutions in Improving the Quality of First Employment? By McGuinness, Seamus; Whelan, Adele; Bergin, Adele
  12. Does Private Schooling Increase Adult Earnings? Cohort-Level Evidence for U.S. States By Berger, Reilee L.; Winters, John V.
  13. Delving into the Demand Side: Changes in Workplace Specialization and Job Polarization By Cortes, Guido Matias; Salvatori, Andrea
  14. Wage growth, urbanization, and firm characteristics: Evidence for Germany By Kelle, Markus
  15. The effect of military service on earnings in Britain By Vincent Aidan O'Sullivan
  16. Labor adaptation to climate variability in Eastern Africa By Dou, Xiaoya; Gray, Clark; Mueller, Valerie; Sheriff, Glen
  17. Quantifying the effect of labor market size on learning externalities By Peters, Jan Cornelius
  18. Does female labor scarcity encourage innovation?: Evidence from China’s gender imbalance By Tan, Zhibo; Zhang, Xiaobo
  19. Estimating earnings assimilation of immigrants to Germany: Evidence from a double cohort model By Okoampah, Sarah

  1. By: Will S. Dobbie; Roland G. Fryer, Jr
    Abstract: We estimate the impact of charter schools on early-life labor market outcomes using administrative data from Texas. We find that, at the mean, charter schools have no impact on test scores and a negative impact on earnings. No Excuses charter schools increase test scores and four-year college enrollment, but have a small and statistically insignificant impact on earnings, while other types of charter schools decrease test scores, four-year college enrollment, and earnings. Moving to school-level estimates, we find that charter schools that decrease test scores also tend to decrease earnings, while charter schools that increase test scores have no discernible impact on earnings. In contrast, high school graduation effects are predictive of earnings effects throughout the distribution of school quality. The paper concludes with a speculative discussion of what might explain our set of facts.
    JEL: I20 I26
    Date: 2016–08
  2. By: Carlos Rodríguez-Castelán (Poverty and Equity Global Practice, World Bank); Luis F. López-Calva (Poverty and Equity Global Practice, World Bank); Nora Lustig (Department of Economics, Tulane University); Daniel Valderrama (Poverty and Equity Global Practice, World Bank)
    Abstract: Since the early 2000s, after a long period of wide and persistent gaps, Latin America has experienced a steady decline in income inequality. This paper presents evidence of a trend reversal in labor income inequality, which is considered the main factor behind such a decline in income inequality across the region. Our analysis shows that, while labor income inequality increased during the 1990s, with heterogeneous experiences across countries, it fell in a synchronized way across countries beginning in the early 2000s. This systematic decline was supported by an expansion in real hourly earnings among the bottom of the wage distribution and, to a lesser extent, the middle part of the earnings distribution, thus reducing both upper and lower tail inequality. This trend reversal is explained by a lower dispersion of earnings among workers with observable different attributes and by a much less extensive dispersion of residual labor inequality. Regarding the earnings differentials among workers with observable different attributes, our analysis concludes that the decline in labor inequality in Latin America has been closely associated with a reduction in the college/primary education premium and in the urban-rural earnings gap, coupled with a steady drop in the high school/primary education premium, which accelerated markedly since the 2000s, as well as a reduction in the experience premium across all age-groups.
    Keywords: Inequality, Labor Incomes, Education Premium, Experience Premium, Latin America.
    JEL: D63 E24 J21 J31 O54
    Date: 2016–08
  3. By: Faberman, R. Jason (Federal Reserve Bank of Chicago); Kudlyak, Marianna (Federal Reserve Bank of San Francisco)
    Abstract: We use panel data on individual applications to job openings on a job search website to study search intensity and search duration. Our data allow us to control for the composition of job seekers and changes in the number of available job openings over the duration of search. We find that (1) the number of applications sent by a job seeker declines over the duration of search, and (2) longer-duration job seekers send relatively more applications per week throughout their entire search. The latter finding contradicts the implications of standard labor search models. We argue that these models fail to capture an income effect in search effort that causes job seekers with the lowest returns to search to exert the highest effort. We present evidence in support of this idea.
    JEL: E24 J24 J31
    Date: 2016–07–23
  4. By: Marchand, Joseph (University of Alberta, Department of Economics); Weber, Jeremy (University of Pittsburgh)
    Abstract: A primary way that natural resources affect a locality is through the demand for labor, with greater extraction requiring more workers. Shifts in labor demand can be measured through changes in employment and earnings, the main labor market outcomes, or through changes in the population and income, more generally. These changes may spillover to the non-resource economy, and their effects may be felt unequally across the population, thereby altering the distribution of income and the poverty rate. Educational attainment might also be influenced, as people choose between additional schooling and work. We synthesize the literature on the local labor market effects of natural resources by organizing the existing studies according to their measurement of resources and the outcomes that they consider. This synthesis provides an accessible guide to a literature that has boomed in recent years. It also identifies promising avenues for future research and lays a foundation to further generalize these results through an eventual meta-analysis.
    Keywords: local labor markets; natural resources; resource booms
    JEL: J20 J40 Q23 Q33 R23
    Date: 2016–08–05
  5. By: Bosler, Canyon (Federal Reserve Bank of San Francisco); Daly, Mary C. (Federal Reserve Bank of San Francisco); Fernald, John G. (Federal Reserve Bank of San Francisco); Hobijn, Bart (Arizona State University)
    Abstract: Over the past 15 years, labor-quality growth has been very strong—defying nearly all earlier projections—and has added around 0.5 percentage points to an otherwise modest U.S. productivity picture. Going forward, labor quality is likely to add considerably less and may even be a drag on productivity growth in the medium term. Using a variety of methods, we project that potential labor-quality growth in the longer run (7 to 10 years out) is likely to fall in the range of 0.1 to 0.25 percent per year. In the medium term, labor-quality growth could be lower or even negative, should employment rates of low-skilled workers make a cyclical rebound towards pre-recession levels. The main uncertainties in the longer run are whether the secular decline in employment of low-skilled workers continues and whether the Great Recession pickup in educational attainment represents the start of a new boom or is simply a transitory reaction to a poor economy.
    JEL: J24 O47 O51
    Date: 2016–08–09
  6. By: Will Dobbie; Jacob Goldin; Crystal Yang
    Abstract: Over 20 percent of prison and jail inmates in the United States are currently awaiting trial, but little is known about the impact of pre-trial detention on defendants. This paper uses the detention tendencies of quasi-randomly assigned bail judges to estimate the causal effects of pre-trial detention on subsequent defendant outcomes. Using data from administrative court and tax records, we find that being detained before trial significantly increases the probability of a conviction, primarily through an increase in guilty pleas. Pre-trial detention has no detectable effect on future crime, but decreases pre-trial crime and failures to appear in court. We also find suggestive evidence that pre-trial detention decreases formal sector employment and the receipt of employment- and tax-related government benefits. We argue that these results are consistent with (i) pre-trial detention weakening defendants' bargaining position during plea negotiations, and (ii) a criminal conviction lowering defendants' prospects in the formal labor market.
    JEL: J24 J70 K14 K42
    Date: 2016–08
  7. By: Jung, Seeun (Inha University); Choe, Chung (Hanyang University); Oaxaca, Ronald L. (University of Arizona)
    Abstract: In addition to discrimination, market power, and human capital, gender differences in risk preferences might also contribute to observed gender wage gaps. We conduct laboratory experiments in which subjects choose between a risky (in terms of exposure to unemployment) and a secure job after being assigned in early rounds to both types of jobs. Both jobs involve the same typing task. The risky job adds the element of a known probability that the typing opportunity will not be available in any given period. Subjects were informed of the exogenous risk premium being offered for the risky job. Women were more likely than men to select the secure job, and these job choices accounted for between 40% and 77% of the gender wage gap in the experiments. That women were more risk averse than men was also manifest in the Pratt-Arrow Constant Absolute Risk Aversion parameters estimated from a random utility model adaptation of the mean-variance portfolio model.
    Keywords: occupational choice, gender wage differentials, risk aversion, lab experiment
    JEL: J16 J24 J31 C91 D81
    Date: 2016–08
  8. By: Tumen, Semih (Central Bank of Turkey)
    Abstract: This paper develops a model of sequential job search to understand the factors determining the effect of tax and enforcement policies on the size (i.e., employment share) of the informal sector. The focus is on the role of informal sector as a stepping stone to formal jobs. I argue that the stepping-stone role of informal jobs is an important concept determining how strongly government policies affect the size of informal sector. I measure the extent of the stepping-stone role with the intensity of skill accumulation in the informal sector. If informal jobs help workers acquire skills, gain expertise, and build professional networks for boosting the chances to switch to a formal job, then the size of the informal sector is less sensitive to government policy. In this case, the option value of a job in the informal sector will be high and a worker with an informal job will not rush to switch to a formal job when a policy encouraging formal employment is in effect. If, on the other hand, the informal sector does not provide satisfactory training opportunities, then the size of the informal sector becomes more sensitive to government policy. Calibrating the model to the Brazilian data, I perform numerical exercises confirming that the effect of government policy on the size of the informal sector is a decreasing function of the intensity of skill acquisition in the informal sector.
    Keywords: informal sector, stepping stone, government policy, job search, human capital, option value
    JEL: E26 J24 J38 J64
    Date: 2016–08
  9. By: Picchio, Matteo (Università Politecnica delle Marche, Ancona); van Ours, Jan C. (Tilburg University)
    Abstract: From the point of view of workplace safety, it is important to know whether having a temporary job has an effect on the severity of workplace accidents. We present an empirical analysis on the severity of workplace accidents by type of contract. We used micro data collected by the Italian national institute managing the mandatory insurance against work related accidents. We estimated linear models for a measure of the severity of the workplace accident. We controlled for time-invariant fixed effects at worker and firm levels to disentangle the impact of the type of contract from the spurious one induced by unobservables at worker and firm levels. We found that workers with a temporary contract, if subject to a workplace accident, were more likely to be confronted with severe injuries than permanent workers. When correcting the statistical analysis for injury under-reporting of temporary workers, we found that most of, but not all, the effect is driven by the under-reporting bias. The effect of temporary contracts on the injury severity survived the inclusion of worker and firm fixed effects and the correction for temporary workers' injury under-reporting. This however does not exclude the possibility that, within firms, the nature of the work may vary between different categories of workers. For example, temporary workers might be more likely to be assigned by the employer dangerous tasks because they might have less bargaining power. The findings will be of help in designing public policy effective in increasing temporary workers' safety at work and limiting their injury under-reporting.
    Keywords: workplace accidents, injury severity, temporary jobs, contract type, injury under-reporting
    JEL: C23 J41 J81
    Date: 2016–08
  10. By: Seuring, Till (University of East Anglia); Serneels, Pieter (University of East Anglia); Suhrcke, Marc (University of York)
    Abstract: There is limited evidence on the labor market impact of diabetes, and existing evidence tends to be weakly identified. Making use of Mexican panel data to estimate individual fixed effects models, we find evidence for adverse effects of self-reported diabetes on employment probabilities, but not on wages or hours worked. Complementary biomarker information for a cross section indicates a large diabetes population unaware of the disease. When accounting for this, the negative relationship of self-reported diabetes with employment remains, but does not extend to those unaware. This difference cannot be explained by more severe diabetes among the self-reports, but rather worse general health.
    Keywords: diabetes, labor market, Mexico, biomarker, panel data
    JEL: J22 I15 D83
    Date: 2016–08
  11. By: McGuinness, Seamus (Economic and Social Research Institute, Dublin); Whelan, Adele (ESRI, Dublin); Bergin, Adele (ESRI, Dublin)
    Abstract: This paper examines the potential role of higher education institutions in reducing labour market mismatch amongst new graduates. The research suggests that increasing the practical aspects of degree programmes, irrespective of the field of study, will reduce the incidence of initial mismatch. In terms of routes into the labour market, higher education work placements with the potential to develop into permanent posts and the provision of higher education job placement assistance were found to have substantial impacts in reducing the incidence of graduate mismatch. The use of private employment agencies was found to significantly heighten the risk of subsequent mismatch.
    Keywords: graduate labour market, overeducation, over-skilling, recruitment, course composition
    JEL: J24 J31
    Date: 2016–08
  12. By: Berger, Reilee L. (Oklahoma State University); Winters, John V. (Oklahoma State University)
    Abstract: Public schooling in the U.S. has numerous critics, many of whom suggest that alternatives such as providing vouchers for private schools may be more effective. This paper combines decennial census and American Community Survey data for various years to examine the relationship between cohort-level private schooling rates and later earnings during adulthood. We also explore differences by sex and examine the role played by the quantity of education completed and occupational attainment. We find a significant positive relationship between private schooling rates and adult earnings for women but a small relationship for men.
    Keywords: private schooling, school choice, K-12 education, earnings, wages
    JEL: I20 J24 R50
    Date: 2016–08
  13. By: Cortes, Guido Matias (University of Manchester); Salvatori, Andrea (ISER, University of Essex)
    Abstract: This paper offers the first study of job polarization in Great Britain using workplace level data. We document widespread and increasing occupational specialization within establishments, along with substantial heterogeneity in specialization within industries. Changes in the specialization profiles of workplaces account for most of the changes in the aggregate occupational shares between 1998 and 2011. The sharp rise in the fraction of workplaces specializing in non-routine tasks is associated with a large increase in the concentration of non-routine workers in workplaces that specialize in such occupations. We find no evidence of a decline in routine employment among establishments that report the adoption of new technologies, as would be expected from the standard routine-biased technological change hypothesis. Instead, we uncover new evidence that suggests that the increase in non-routine cognitive workplaces is linked to the growth in outsourcing of cognitive tasks.
    Keywords: job polarization, technology, firm-level data, outsourcing
    JEL: J21 J23
    Date: 2016–08
  14. By: Kelle, Markus
    Abstract: I use German administrative data for 2001-2010 to analyse the impact of urbanization and firm characteristics on wage growth of workers. I find a statistically highly significant higher within-job wage growth rate for workers in counties with a higher population density. This provides evidence that workers' productivity growth is higher in denser regions, which could be explained by faster learning or human capital accumulation of workers. However, this effect turns insignificant once I account for the number of employees of the workers' firms, the share of highly educated workers in the firm and wagelevel firm fixed effects. This indicates that such a learning effect may occur rather within firms than between workers in a region. Beyond this, the paper presents evidence that workers in denser areas also benefit more from job changes within counties. One reason for that is that workers in denser regions match more often with high-wage firms. Furthermore, I find evidence that also the efficiency of the worker-firm matches is higher in denser areas.
    Abstract: Ich verwende deutsche administrative Arbeitsmarktdaten für die Jahre 2001 bis 2010, um den Einfluss von Urbanisierung und Firmeneigenschaften auf das Lohnwachstum von Arbeitern zu analysieren. Hierbei identifiziere ich ein signifikant höheres Lohnwachstum innerhalb des gleichen Jobs für Arbeiter in Regionen mit einer höheren Bevölkerungsdichte. Dies stellt Evidenz dafür dar, dass das Produktivitätswachstum für Arbeiter in dichter besiedelten Gebieten höher ist, was durch ein schnelleres Lernen oder Akkumulieren von Humankapital erklärt werden kann. Jedoch wird dieser Effekt insignifikant, wenn ich die Anzahl der Arbeitnehmer pro Firma, den Anteil der Arbeiter mit hohem Bildungsgrad in der Firma und "Fixed Effects" für das Lohnniveau der Firma berücksichtige. Dies deutet daraufhin, dass ein solcher Lerneffekt eher innerhalb von Firmen auftritt anstatt zwischen Arbeitern innerhalb einer Region. Darüber hinaus zeigt das Papier Evidenz dafür, dass Arbeiter in dichter besiedelten Gebieten ebenso mehr von Jobwechseln innerhalb eines Kreises profitieren. Ein Grund hierfür ist, dass Arbeiter in urbaneren Regionen häufiger zu Hochlohnfirmen wechseln. Des Weiteren finde ich Evidenz dafür, dass die Effizienz der Arbeiter-Firma-Paare in dichter besiedelten Gebieten höher ist.
    Keywords: wage growth,learning,urbanization,firm characteristics
    JEL: R11 R23 J24
    Date: 2016
  15. By: Vincent Aidan O'Sullivan
    Abstract: I found no effect of military service on earnings in Britain using OLS. Using the abolition of conscription as an IV, I found that ex-military personnel earn about 20% less than comparable non-veterans. Men from wealthier backgrounds were penalized the most. Using OLS, there was no difference in earnings between former soldiers and those who never served. However, former air force and navy personnel earned more compared to those who did not serve in the military. Using IV to model for selection into the different military branches, there were no statistically significant effects on earnings
    Keywords: Conscription, Military Service
    JEL: J3
    Date: 2016
  16. By: Dou, Xiaoya; Gray, Clark; Mueller, Valerie; Sheriff, Glen
    Abstract: As countries design climate change adaptation policies, it is important to understand how workers alter behavior in response to changes in temperature. Nonetheless, the impact of temperature on labor markets is poorly documented, especially in Africa. We address this gap by analyzing panel surveys of labor choices by sector, contractual arrangement, and migration status in four East African countries. Merging survey information with high-resolution climate data, we assess how workers shift employment in response to temperature anomalies. Results suggest important distinctions between rural and urban areas. In urban areas, only agricultural self-employment and migration are responsive to temperature, with participation in both activities decreasing at high extremes. Urban out-migration is used as a tool to increase incomes in “good” years rather than an adaptation mechanism during bad years. In contrast, out-migration appears to be a means of adapting to high temperatures in rural areas, especially among households with relatively little agricultural land. The combined impact of these forces suggests that a 2 standard deviation increase in temperature results in a 7 percent increase in urban unemployment and no significant impact on rural unemployment.
    Keywords: EAST AFRICA, AFRICA SOUTH OF SAHARA, AFRICA, migration, labor, climate change, economic development, natural resources management, rural areas, urban areas, time allocation, climate adaptation, J22 Time Allocation and Labor Supply, O13 Economic Development: Agriculture, Natural Resources, Energy, Environment, Other Primary Product, O15 Economic Development: Human Resources, Human Development, Income Distribution, Migration, Q54 Climate, Natural Disasters, Global Warming, Q56 Environment and Development,
    Date: 2016
  17. By: Peters, Jan Cornelius
    Abstract: This paper provides empirical evidence that individual labor productivity significantly depends on the size of the local labor market in which a worker previously acquired work experience. The analysis uses German micro data from the Institute for Employment Research (IAB) on transitions to employment within the period 2005 to 2011 and individual employment biographies from 1975 onwards. Analyzing the wages associated with the newly established employment relationships, suggests that dynamic agglomeration economies in general, and learning externalities in particular, play an important role in explaining individual labor productivity. Workers receive a significantly higher wage after acquiring experience in urban than in non-urban labor markets. Doubling local employment in all labor markets where experience was acquired, increases the productivity of a worker with two years of work experience by more than 0.7 percent. After 10 years of experience the corresponding gain amounts to about three percent, after 30 years to about four to five percent. A key factor seems to be an above average share of high-skilled labor within large urban labor markets which is supposed to enhance local learning opportunities.
    Keywords: Agglomeration economies,Human capital externalities,Learning,Urban wage growth premium,Transition to employment
    JEL: R10 R23 J31
    Date: 2016
  18. By: Tan, Zhibo; Zhang, Xiaobo
    Abstract: Facing scarcity of a production factor, a firm can develop technologies to either substitute the scarce factor (price effect) or complement the more abundant factors (market size effect). Whether the market size effect or the price effect dominates largely depends on the elasticity of substitution among factors according to the theory of directed technical change. However, it is a great challenge to empirically test the theory because factor prices are often endogenously determined. In this paper, we use imbalanced sex ratios across Chinese provinces as a source of identification strategy to test how female labor scarcity affects corporate innovation based on the matched dataset of annual surveys of industrial firms in China and the national patent database. In regions with a large male population, female-intensive industries face more serious problems finding female workers than their male-intensive counterparts. We find that such female shortages have spurred firms in female-intensive industries to innovate more. The pattern is much more evident in industries with low substitution between female and male workers than in those with high substitution, consistent with the predictions of directed technical change theory.
    Keywords: CHINA, EAST ASIA, ASIA, prices, markets, labor, technology, innovation, gender, factor endowment, directed technical change, price effect, market size effect, elasticity of substitution, O31 Innovation and Invention: Processes and Incentives, O32 Management of Technological Innovation and R&, D, J21 Labor Force and Employment, Size, and Structure,
    Date: 2016
  19. By: Okoampah, Sarah
    Abstract: Following the seminal work of Chiswick (1978), many studies have examined the extent to which earnings of immigrants vary over the settlement process. While these studies usually find that the initial earnings gap between native and immigrant workers in traditional immigration countries disappears as the duration of residence in the host country increases, empirical evidence mostly suggests that immigrants to Germany experience persistent earnings disadvantages and, if at all, only a moderate earnings assimilation process for some immigrant groups. However, due to variations in the economic performance of different immigration cohorts, estimates derived from crosssectional models may be biased (Borjas, 1985). Against this background, this paper employs a double cohort model to revisit the existing evidence on earnings assimilation processes of immigrants to Germany. In line with this literature, no evidence for a robust assimilation process for immigrants is found, even after accounting for potential cohort effects.
    Abstract: Der richtungsweisenden Studie von Chiswick (1978) folgend haben zahlreiche Studien das Ausmaß untersucht, mit welchem die Löhne von Einwanderern während des Ansiedlungsprozesses variieren. Während diese Studien für traditionelle Einwanderungsländer typischerweise feststellen, dass der anfängliche Lohnnachteil von Einwanderern gegenüber Einheimischen mit zunehmender Aufenthaltsdauer im Gastland verschwindet, deutet die Evidenz für Deutschland hauptsächlich auf persistente Lohnnachteile für Einwanderer hin und impliziert, wenn überhaupt, nur einen moderaten Einkommensassimilationsprozess für einige Einwanderergruppen. Aufgrund von Unterschieden im ökonomischen Erfolg verschiedener Einwanderungskohorten könnten Ergebnisse, die auf Querschnittsmodellen beruhen, jedoch verzerrt sein (Borjas, 1985). Vor diesem Hintergrund schätzt die vorliegende Studie ein Doppelkohortenmodell zur Überprüfung der bestehenden Evidenz zu Einkommensassimilationsprozessen von Einwanderern nach Deutschland. Die Literatur bestätigend, kann auch nach Kontrolle für potentielle Kohorteneffekte kein robuster Einkommensassimilationsprozess nachgewiesen werden.
    Keywords: earnings assimilation,cohort effects,international migration
    JEL: F22 F15 J31
    Date: 2016

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