nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2016‒11‒13
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. Upward Mobility and Discrimination: The Case of Asian Americans By Nathaniel Hilger
  2. Misalignment of Productivity and Wages Across Regions ?Evidence from Belgian Matched Panel Data By François Rycx; Yves Saks; Ilan Tojerow
  3. The effect of teenage employment on character skills, expectations and occupational choice strategies By Fuchs, Benjamin
  4. Long-run Consequences of Exposure to Natural Disasters By KARBOWNIK, Krzysztof; WRAY, Anthony
  5. The Sum of Its Parts? Assessing Variation and Trends in Family Income Support Across the 48 Contiguous United States By Zachary Parolin
  6. The importance of institutional and organizational characteristics for the use of fixed-term and agency work contracts in Russia By Smirnych, L. I.; Wörgötter, Andreas
  7. Ex-Ante Labor Market Effects of Compulsory Military Service By Huzeyfe Torun
  8. Does corporate social responsibility make over-educated workers more productive? By Romina R. Giuliano; Benoît Mahy; François Rycx; Guillaume Vermeylen
  9. Uncertain pension income and household saving By van Santen, Peter
  10. Unreal Wages? A New Empirical Foundation for the Study of Living Standards and Economic Growth in England, 1260‐1860 By Humphries, Jane; Weisdorf, Jacob
  11. The return to education in terms of wealth and health By Strulik, Holger
  12. The Compositional Effect of Rigorous Teacher Evaluation on Workforce Quality By Julie Berry Cullen; Cory Koedel; Eric Parsons
  13. The impact of lowering the payroll tax on informality in Colombia By Cristina Fernández; Leonardo Villar

  1. By: Nathaniel Hilger
    Abstract: Asian Americans are the only non-white US racial group to experience long-term, institutional discrimination yet today exhibit high income. I reexamine this puzzle. I focus on California, where most Asians settled historically. Asians achieved extraordinary upward mobility relative to both blacks and whites for every cohort born in California since 1920. This mobility stemmed primarily from gains in earnings conditional on education, rather than unusual educational attainment. Historical test score data suggest that low initial earnings for Asians—unlike blacks—primarily reflected prejudice rather than skills. Asian history is consistent with the view that racial earnings gaps driven by contemporary prejudice do not persist in sufficiently competitive labor markets.
    JEL: J15 J31 J62 J7
    Date: 2016–10
  2. By: François Rycx; Yves Saks; Ilan Tojerow
    Abstract: This paper is one of the first to estimate how the region in which an establishment is located affects its productivity, wage cost and costcompetitiveness (i.e. its productivity-wage gap). To do so, we use detailed linked employer-employee panel data for Belgium and rely on methodological approaches from both Hellerstein and Neumark (1995) and Bartolucci (2014) to estimate dynamic panel data models at the establishment level. Our findings show that inter-regional differences in productivity and wages are significant but vanish almost totally, both in industry and services, when controlling for a wide range of covariates, establishment fixed effects and endogeneity. Thus, our results suggest that wage cost and productivity differentials are ceteris paribus relatively well aligned across regions.
    Keywords: Regions; productivity; labour costs; linked panel data
    JEL: C33 J24 J31 R30
    Date: 2016–11–08
  3. By: Fuchs, Benjamin
    Abstract: A growing body of research suggests that, even after controlling for cognitive abilities, personality predicts economic success in later life. The learning environment at school focuses on knowledge and cognitive skills. The transmission of character skills, however, is not at the center of attention. Leisure activities as informal learning activities outside of school may affect the formation of skills. By providing valuable opportunities, working part-time while attending full-time secondary schooling can be seen as a stepping stone toward independence and adulthood. The channel of the positive influence, however has not been identified empirically. I suggest that employment during adolescence promotes the formation of character skills that are known to have a positive effect on labor market outcomes and educational achievement. Employing a exible strategy combining propensity score matching and regression techniques to account for self-selection, I find beneficial e ects on character skills. Further, it improves future expectations, the knowledge on which skills and talents school students have and reduces the importance of parents advice with respect to their childs future career. The results are robust to several model specifications and varying samples and robust to including family-fixed effects.
    Keywords: human capital,teenage employment,non-cognitive skills,time use,treatment effect
    JEL: I21 J13 J24
    Date: 2016
  4. By: KARBOWNIK, Krzysztof; WRAY, Anthony
    Abstract: We utilize the individual-level World War I Draft Registration Cards matched to late-nineteenth century hurricane paths and the 1940 U.S. Census to explore whether fetal and early childhood exposure to stress caused by hurricanes affects human capital development and labor market outcomes in adulthood. Difference-in-differences estimates indicate that white males who were born in the South and experienced a hurricane either in utero or as infants had lower income at ages 42 to 53. They are robust to alternate specifications of either the treatment or outcome variables, as well as changes in the tolerance for imperfectly matched historical data.
    Keywords: Prenatal stress, natural disasters, labor market outcomes
    JEL: I10 J24 Q54
    Date: 2016–11
  5. By: Zachary Parolin
    Abstract: Against the backdrop of increasing signs of state-level divergence in social and labor market policies, this study sets out to capture the extent of variation of family income support across the 48 contiguous United States (all but Alaska and Hawaii), as well as how states’ income protections have evolved since the ‘devolution revolution’ of the mid-1990s. To achieve this, simulations of family income support are calculated for working and jobless lone-parent families in each state in 1994 and 2014. The findings point to a common trend across states of declining income support for jobless families, but increasing net incomes for lone parents who work full-time at minimum wage. The simulations also reveal significant differences in the adequacy of protections offered to loneparent families across the American states; moreover, the evidence suggests that states have increasingly diverged with respect to certain instruments of family income support between 1994 and 2014. As the study details, these trends emphasize a potential need for more dissected analyses of the United States when the country is embedded into comparative social policy research. Shifting the unit of analysis from the federal to state level challenges unitary conceptualizations of the nature of U.S. family policy institutions.
    Keywords: child poverty, family income support, family policy, minimum income protections, welfare reform
    JEL: I38 I32 J38
    Date: 2016–11
  6. By: Smirnych, L. I.; Wörgötter, Andreas
    Abstract: Non-renewable fixed-term and agency work contracts are becoming more used instead of the traditional Russian model of open-ended employment. The authors examine the influence of institutional and organizational factors on the use of two forms of non-standard work contracts in Russia with data from a Survey covering 3313 enterprises for the years 2009 to 2011. Probit and Tobit regressions are used to test several hypotheses about the use of non-standard work contracts derived from the literature. The results indicate that state-owned and unionized enterprises are more likely to use fixed-term contracts; and a high level of perceived dismissal protection for permanent workers is positively associated with fixed-term contracts use. The incidence and intensity of fixed-term and agency work contracts are lower at enterprises with flexible wages. A significant impact of organizational factors is confirmed only for fixed-term contracts. Enterprises use less fixed-term contracts, if they have workers with tenure from 5 to 10 years and high job complexity.
    Keywords: fixed-term contracts,agency work,non-standard employment,labor flexibility,Russia
    JEL: J41 J21 J63 J23
    Date: 2016
  7. By: Huzeyfe Torun
    Abstract: Previous research on military conscription exclusively focuses on the effect of military service on subsequent labor market outcomes. I examine the effect of peacetime conscription on early labor market outcomes of potential conscripts before they are called up for service. In a simple theoretical framework with costly job search and no job security, I show that an expected interruption in civilian life reduces the incentive of teenagers to search for a job. Using micro-data from Turkey, Argentina, Peru and Spain, I present evidence that the anticipation of compulsory conscription reduces the labor force participation of teenage men by 6.7 percent compared to men in their twenties, and employment by 11 percent, while raising unemployment in this group by 9 percent. Interestingly, I find mirroring effects on teenage women who are not subject to conscription. Women experience a 7.5 percent decrease in the labor force participation and a 10-13 percent decrease in employment after the abolition of conscription, suggesting a high degree of substitutability between men and women.
    Keywords: Military service, Labor force participation, Youth unemployment, Difference-in-Differences
    JEL: J21 J24 H56
    Date: 2016
  8. By: Romina R. Giuliano; Benoît Mahy; François Rycx; Guillaume Vermeylen
    Abstract: This article provides first evidence on whether corporate social responsibility (CSR) influences the productivity effects of overeducation. By relying on detailed Belgian linked employer-employee panel data covering the period 1999-2010, our empirical results exhibit a positive and significant impact of over-education on firm productivity. Moreover, they suggest that the effect of over-education is positively enhanced when the firm implements a corporate social responsibility process, especially when it aims to have: i) a good match between job requirements and workers’ educational level, ii) a diverse workforce in terms of gender and age, and iii) a long-term relationship with its workers. Whenfocussing on required and over-education, the results suggest that CSR, besides representing an innovative and proactive approach for the firms’ stakeholders, may also be beneficial for the firm itself through a bigger increase in productivity for each additional year of required or over-education.
    Keywords: Educational mismatch; Productivity; CSR; Linked panel data
    JEL: J28 I20 J24 M50
    Date: 2016–11–08
  9. By: van Santen, Peter (Research Department, Central Bank of Sweden)
    Abstract: This paper investigates the relationship between household saving and pensions, and estimates both the displacement effect of pensions on private saving and the precautionary saving effect due to uncertainty in pension income. I estimate the savings equation derived from a lifecycle model featuring income uncertainty using survey data for Dutch households, with subjective expectations on pension benefits and uncertainty. Exploiting exogenous variation due to pension fund performance, I find that households save significantly more due to uncertainty in pension income. Not controlling for uncertainty biases the estimated displacement effect of pensions on private savings towards zero.
    Keywords: Precautionary saving; Displacement effect; Subjective expectations
    JEL: D91 H55 J26
    Date: 2016–10–01
  10. By: Humphries, Jane (University of Oxford); Weisdorf, Jacob (University of Southern Denmark)
    Abstract: Existing measures of historical real wages suffer from the fundamental problem that workers’ annual incomes are estimated on the basis of day wages without knowing the length of the working year. We circumvent this problem by presenting a novel wage series of male workers employed on annual contracts. We use evidence of labour market arbitrage to argue that existing real wage estimates are badly off target, because they overestimate the medieval working year but underestimate the industrial one. Our data suggests that modern economic growth began two centuries earlier than hitherto thought and was driven by an ‘Industrious Revolution’.
    Keywords: England; industrial revolution; industrious revolution; labour input; living standards; wages; Malthusian model. JEL Classification: J3, J4, J5, J6, J7, J8, N33
    Date: 2016
  11. By: Strulik, Holger
    Abstract: This study presents a new view on the association between education and longevity. In contrast to the earlier literature, which focused on inefficient health behavior of the less educated, we investigate the extent to which the education gradient can be explained by fully rational and efficient behavior of all social strata. Specifically, we consider a life-cycle model in which the loss of body functionality, which eventually leads to death, can be accelerated by unhealthy behavior and delayed through health expenditure. Individuals are heterogeneous with respect to their return to education. The proposed theory rationalizes why individuals equipped with a higher return to education chose more education as well as a healthier lifestyle. When calibrated for the average male US citizen, the model motivates about 50% percent of the observable education gradient by idiosyncratic returns to education, with causality running from education to longevity. The theory also explains why compulsory schooling has comparatively small effects on longevity and why the gradient gets larger over time through improvements in medical technology.
    Keywords: health inequality,schooling,aging,longevity,health expenditure,unhealthy behavior,smoking,value of life
    JEL: D91 I10 I20 J24
    Date: 2016
  12. By: Julie Berry Cullen; Cory Koedel; Eric Parsons
    Abstract: Improving public sector workforce quality is challenging in sectors such as education where worker productivity is difficult to assess and manager incentives are muted by political and bureaucratic constraints. In this paper, we study how providing information to principals about teacher effectiveness and encouraging them to use the information in personnel decisions affects the composition of teacher turnovers. Our setting is the Houston Independent School District, which recently implemented a rigorous teacher evaluation system. Prior to the new system teacher effectiveness was negatively correlated with district exit and we show that the policy significantly strengthened this relationship, primarily by increasing the relative likelihood of exit for teachers in the bottom quintile of the quality distribution. Low-performing teachers working in low-achieving schools were especially likely to leave. However, despite the success, the implied change to the quality of the workforce overall is too small to have a detectable impact on student achievement.
    JEL: H75 I28 J45
    Date: 2016–11
  13. By: Cristina Fernández; Leonardo Villar
    Abstract: El gobierno colombiano reformó recientemente el código tributario, reduciendo las contribuciones sobre la nómina del 29,5% al 16%, y sustituyéndolas con un impuesto sobre los beneficios. La ley fue aprobada en diciembre de 2012, y dos años más tarde, la tasa de informalidad en las 13 principales áreas metropolitanas disminuyó del 56% al 51%, en diciembre de 2014 (usando la definición legal de la informalidad). En la encuesta, la reducción fue un poco menos pronunciada, pasando del 68% a 64%. Este período también se caracterizó por altas, y a la vez con tendencia a la baja, tasas de crecimiento, cambios en las tasas de impuestos, y aumento de los salarios mínimos reales. Es del mayor interés saber qué parte de esta reducción se debió a la reforma fiscal. En este trabajo se lleva a cabo esta tarea usando “matching”, y un modelo de diferencias en diferencias. De acuerdo con los resultados, la reforma fiscal redujo la tasa de informalidad de los trabajadores afectados por la reforma en las 13 principales áreas metropolitanas, entre 4,3 y 6,8 P.P., lo que se tradujo en una reducción de la tasa de informalidad entre 2,0 y 3,1 P.P. dado que la población tratada fue de sólo el 45% de la población activa del país en 2012. El impacto sobre toda la encuesta fue de entre 4,1 y 6,7, lo que se traduce en 1,2 a 2,2 P.P. de impacto en la tasa de informalidad de todo el país. Resultados similares fueron encontrados utilizando la definición estricta de informalidad. La reforma afectó en su mayoría a trabajadores asalariados y empleadores varones entre 25 y 50 años de edad, y trabajadores con bajos niveles de educación.
    JEL: J32 J68 C40
    Date: 2016–10–31

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