nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2016‒12‒11
seventeen papers chosen by
Joseph Marchand
University of Alberta

  1. The Impact of Quality Rating and Improvement Systems on Families' Child Care Choices and the Supply of Child Care Labor By Herbst, Chris M.
  2. Performance Information and Personnel Decisions in the Public Sector: The Case of School Principals By Julie Berry Cullen; Eric A. Hanushek; Gregory Phelan; Steven G. Rivkin
  3. The Spillover Effects of Affirmative Action on Competitiveness and Unethical Behavior By Banerjee, Ritwik; Datta Gupta, Nabanita; Villeval, Marie Claire
  4. Who Is Your Perfect Match? Educational Norms, Educational Mismatch and Firm Profitability By Kampelmann, Stephan; Mahy, Benoît; Rycx, Francois; Vermeylen, Guillaume
  5. Luck and Effort: Learning about Income from Friends and Neighbors By Gustavo Adolfo Caballero Orozco
  6. Do Female Executives Make a Difference? The Impact of Female Leadership on Gender Gaps and Firm Performance By Luca Flabbi; Mario Macis; Andrea Moro; Fabiano Schivardi
  7. Behavior Change for Early Childhood Nutrition: Effectiveness of Health Worker Training Depends on Maternal Information in a Randomized Control Trial By Singh, Prakarsh; Masters, William A.
  8. Geographical Origins and Economic Consequences of Language Structures By Galor, Oded; Özak, Ömer; Sarid, Assaf
  9. Health, Human Capital and Domestic Violence By Nicholas W. Papageorge; Gwyn C. Pauley; Mardge Cohen; Tracey E. Wilson; Barton H. Hamilton; Robert A. Pollak
  10. Partner Choice, Investment in Children, and the Marital College Premium By Pierre-André Chiappori; Bernard Salanié; Yoram Weiss
  11. The 'Informality Gap': Can Education Help Minorities Escape Informal Employment? Evidence from Peru By Delgado Montes, Juan Gabriel; Corrales, Javier; Singh, Prakarsh
  12. Heterogeneity of the Carnegie Effect By Erlend E. Bø; Elin Halvorsen; Thor O. Thoresen
  13. The path of labor supply adjustment. Sources of lagged responses to tax-benefit reforms By Zhiyang Jia; Trine E. Vattø
  14. Employer Screening, Unemployment Stigma and Optimal Unemployment Insurance By Meier, Mario; Obermeier, Tim
  15. A Guide and Advice for Economists on the U.S. Junior Academic Job Market: 2016–2017 Edition By Cawley, John
  16. SNAP Expansions and Participation in Government Safety Net Programs By Jeehoon Han
  17. Portfolio Choices, Firm Shocks and Uninsurable Wage Risk By Andreas Fagereng; Luigi Guiso; Luigi Pistaferri

  1. By: Herbst, Chris M. (Arizona State University)
    Abstract: Quality Rating and Improvement Systems (QRIS) are increasingly deployed by states to monitor and improve the quality of non-parental child care settings. By making information on program quality accessible to the public, QRIS attempts to alter parental preferences for quality-related attributes and encourage competition between providers. This paper draws on a variety of datasets to empirically characterize the way in which families and providers respond to the enactment of QRIS. Specifically, it exploits the differential timing in states' QRIS roll-out to examine two sets of outcomes: (i) families' child care choices and maternal employment and (ii) the supply and compensation of child care labor. Estimates from difference-in-differences models reveal several noteworthy findings. First, although QRIS induces families to shift from parental to non-parental care, economically disadvantaged families are more likely to use informal care, while their advantaged counterparts are more likely to use formal care. Second, QRIS increases the supply of high-skilled labor, particularly within the center-based sector. Third, all but the most highly-skilled child care workers experience rising compensation levels but also greater turnover. Finally, states that administer a wage compensation program alongside their QRIS experience larger increases in child care supply and compensation as well as lower turnover rates than states operating a QRIS in isolation.
    Keywords: child care, quality rating and improvement systems
    JEL: J13 J21 J22 J24 J3
    Date: 2016–11
  2. By: Julie Berry Cullen; Eric A. Hanushek; Gregory Phelan; Steven G. Rivkin
    Abstract: Firms and other organizations establish the criteria under which employees will be judged and the performance measures made available to supervisors, the board of directors and other stakeholders, and these structures almost certainly influence behavior and organization outcomes. Any divergence of the chosen performance metric from an ideal measurement of productivity may lead to suboptimal outcomes, particularly in the public sector where outside interest groups may rely more heavily on easily accessible ratings than better-informed insiders. In the case of public education, federal and state accountability systems provide considerable information about student outcomes and rate schools on that basis. However, the No Child Left Behind accountability legislation’s focus on pass rates rather than learning and achievement growth introduces the possibility that inadequate information and a flawed structure each compromise public school quality. This study of school principal labor market outcomes investigates the relationship between principal labor market success and a set of performance measures that differ on the basis of accessibility to stakeholders and link with true principal productivity. The results from the empirical analysis provide evidence that information and design deficiencies introduce a lack of alignment between incentives and principal productivity and adversely affect the quality of education in Texas public schools.
    JEL: H75 I20 I21 I28 J18 J45
    Date: 2016–12
  3. By: Banerjee, Ritwik (Indian Institute of Management); Datta Gupta, Nabanita (Aarhus University); Villeval, Marie Claire (CNRS, GATE)
    Abstract: We conduct an artefactual field experiment to examine various spillover effects of Affirmative Action policies in the context of castes in India. We test a) if individuals who compete in the presence of Affirmative Action policies remain competitive in the same proportion after the policy has been removed, and b) whether having been exposed to the policy generates unethical behavior and spite against subjects from the category who has benefited from the policy. We find that these policies increase substantially the confidence of the lower caste members and motivate them to choose significantly more frequently a tournament payment scheme. However, we find no spillover effect on confidence and competitiveness once Affirmative Action is withdrawn: any lower caste's gain in competitiveness due to the policy is then entirely wiped out. Furthermore, the strong existing bias of the dominant caste against the lower caste is not significantly aggravated by Affirmative Action.
    Keywords: affirmative action, castes, competitiveness, unethical behavior, field experiment
    JEL: C70 C91 J16 J24 J31 M52
    Date: 2016–11
  4. By: Kampelmann, Stephan (Free University of Brussels); Mahy, Benoît (University of Mons); Rycx, Francois (Free University of Brussels); Vermeylen, Guillaume (University of Mons)
    Abstract: We provide first evidence regarding the direct effect of educational norms and educational mismatch on the bottom line of firms across work environments. To do so, we use rich Belgian linked employer-employee panel data, rely on the methodological approach pioneered by Hellerstein et al. (1999), and estimate dynamic panel data models at the firm level. Our findings show an 'inverted L' profitability profile: undereducation is associated with lower profits, whereas higher levels of normal and overeducation are correlated with positive economic rents of roughly the same magnitude. The size of these effects is amplified in firms experiencing economic uncertainty or operating in high-tech sectors.
    Keywords: educational mismatch, productivity-wage gaps, linked panel data
    JEL: J21 J24
    Date: 2016–11
  5. By: Gustavo Adolfo Caballero Orozco
    Abstract: Can social segregation explain differences in beliefs regarding the role of effort in determining high incomes? I develop a model of lineages of agents learning about the effect of effort on the probability of receiving a high income based on their own experience (effort chosen and income received) and the experiences of agents in their networks. Simulating economies of these agents, only two conditions are needed for the existence of long-run differences in beliefs: (i) agents assume their networks are representative of the whole economy, and (ii) they are more likely to meet others with similar life experiencesâas under social segregation. For my analysis, I also consider (iii) imperfect intergenerational transmission of beliefs, in the form of partial confidence about parentâs beliefs, to account for sizable changes in beliefs due to single mobility experiences. I find a positive relationship between the degree of social segregation and the level of long-run differences in beliefs. Moreover, high levels of social segregation can lead agents to make inefficient effort choices while average beliefs drift away from real parameters. High levels of social segregation generate groups of agents who persistently exert (no) effort coexisting with agents choosing depending on their cost of effort. And, mobility experiences resulting from luck decrease the belief about the role of effort.
    JEL: D83 J24 Z18 D63
    Date: 2016–12–05
  6. By: Luca Flabbi; Mario Macis; Andrea Moro; Fabiano Schivardi
    Abstract: We investigate the effects of female executives on gender-specific wage distributions and firm performance. We find that female leadership has a positive impact at the top of the female wage distribution and a negative impact at the bottom. Moreover, the impact of female leadership on firm performance increases with the share of female workers. Our empirical strategy accounts for the endogeneity induced by the non-random assignment of executives to firms by including in the regressions firm fixed effects, by generating controls from a two-way fixed effects regression, and by building instruments based on regional trends. The empirical findings are consistent with a model of statistical discrimination where female executives are better equipped at interpreting signals of productivity from female workers. The evidence suggests substantial costs of under-representation of women at the top of the corporate hierarchy
    JEL: J7 M12 M5
    Date: 2016–12
  7. By: Singh, Prakarsh (Amherst College); Masters, William A. (Tufts University)
    Abstract: We carry out a randomized control trial to test for interaction effects between training state-employed caregivers and providing mothers information to improve nutrition of preschool children aged 2-6 in rural India. Salaried caregivers are supposed to provide a mid-day meal and also advise mothers on health and nutrition for their child. Our one-day caregiver training covered basic health and nutrition facts with advice on how to communicate with mothers for behavior change at home. We find that this training was effective only when we provided the mothers with an independent source of nutrition information, and that the combined treatment was effective only among younger caregivers. Results are consistent with behavior change as a costly investment that is more attractive when done earlier in life, and greater response to information that is confirmed and reinforced from multiple sources.
    Keywords: child underweight, child malnutrition, child health, ICDS, Punjab, South Asia
    JEL: M53 I12 I38 J38
    Date: 2016–11
  8. By: Galor, Oded (Brown University); Özak, Ömer (Southern Methodist University); Sarid, Assaf (University of Haifa)
    Abstract: This research explores the economic causes and consequences of language structures. It advances the hypothesis and establishes empirically that variations in pre-industrial geographical characteristics that were conducive to higher return to agricultural investment, larger gender gap in agricultural productivity, and more hierarchical society, are at the root of existing cross-language variations in the presence of the future tense, grammatical gender, and politeness distinctions. Moreover, the research suggests that while language structures have largely reflected the coding of past human experience and in particular the range of ancestral cultural traits in society, they independently affected human behavior and economic outcomes.
    Keywords: comparative development, cultural evolution, language structure, future tense, politeness distinctions, grammatical gender, human capital, education
    JEL: I25 J24 O1 O10 O11 O12 O40 O43 O44 Z10
    Date: 2016–11
  9. By: Nicholas W. Papageorge; Gwyn C. Pauley; Mardge Cohen; Tracey E. Wilson; Barton H. Hamilton; Robert A. Pollak
    Abstract: We study the impact of health shocks on domestic violence and illicit drug use. We argue that health is a form of human capital that shifts incentives for risky behaviors, such as drug use, and also changes options outside of violent relationships. To estimate causal effects, we examine chronically ill women before and after a medical breakthrough and exploit differences in these women's health prior to the breakthrough. We show evidence that health improvements induced by the breakthrough reduced domestic violence and illicit drug use. Our findings provide support for the idea that health improvements can have far-reaching implications for costly social problems. The policy relevance of our findings is compounded by the fact that both domestic violence and illicit drug use are social problems often seen as frustratingly impervious to interventions. One possible reason is that the common factors that drive them, such underlying health or labor market human capital, are themselves very persistent over time. Our study provides a unique test of this hypothesis by examining what happens when factors underlying violence or drug use exogenously shift due to a medical technological advancement. Our findings suggest that both violence and drug use could be reduced by improving women's access to better healthcare.
    JEL: I12 J24
    Date: 2016–12
  10. By: Pierre-André Chiappori (Columbia University); Bernard Salanié (Columbia University); Yoram Weiss (Tel Aviv University)
    Abstract: We construct a model of household decision-making in which agents consume a private and a public good, interpreted as children's welfare. Children's utility depends on their human capital, which is produced from parental time and human capital. We first show that as returns to human capital increase, couples at the top of the income distribution should spend more time on children. This in turn should reinforce assortative matching, in a sense we precisely define. We then embed the model into a Transferable Utility matching framework with random preferences a la Choo and Siow (2006) which we estimate on US marriage data for individuals born between 1943 and 1972. We find that the preference for assortative matching by education has significantly increased for the white population, particularly for highly educated individuals; but not for blacks. Moreover, in line with theoretical predictions, we find that the "marital college-plus premium" has increased for women but not for men.
    Keywords: human capital, college premium, assortative matching, transferable utility
    JEL: D13 J24 C78 I00
    Date: 2016–11
  11. By: Delgado Montes, Juan Gabriel (Amherst College); Corrales, Javier (Amherst College); Singh, Prakarsh (Amherst College)
    Abstract: Discrimination in formal labor markets can push discriminated groups into labor informality, where wages are lower and pensions scarce. In this paper, we explore whether education offsets discrimination by empowering discriminated groups to successfully compete for formal jobs. Specifically, we calculate the returns to education on formal employment for a discriminated group (indigenous Peruvians). We find that certain education levels –primary and tertiary–allow indigenous workers equal access to formal jobs. But, for indigenous workers with only secondary education, we find an "informality trap" where returns to secondary education are 6.7 percentage points lower, a difference larger than the net returns of primary education. We find that differences in education quality across districts, more than migration and industry-specific patterns, are the main drivers of this effect. These findings have policy implications suggesting improvements to quality are essential for secondary education to empower discriminated groups to successfully compete in labor markets.
    Keywords: exclusion, social security, informal labor markets, education, Latin America
    JEL: E26 J46 I26 H55 J71
    Date: 2016–11
  12. By: Erlend E. Bø; Elin Halvorsen; Thor O. Thoresen (Statistics Norway)
    Abstract: The Carnegie effect (Holtz-Eakin, Joualfaian and Rosen, 1993) refers to the idea that inherited wealth harms recipients work efforts, and possesses a key role in the discussion of taxation of intergenerational transfers. However, Carnegie effect estimates are few, reflecting that such effects are hard to trace in data. Most previous studies have relied on data from limited size sample surveys. Here we use information from a rich administrative data set covering the entire Norwegian population, which makes it possible to undertake a detailed examination of the Carnegie effect, including how it varies across groups of recipients. The estimation results show significant reductions in labor supply for recipients of large inheritances, in the range from 7 to 10 percent in the first six years after the transfer. Moreover, we find that the Carnegie effects differ according to the size of the transfer, the age of the recipients, the recipients eligibility to other transfer programs, and the existence of new heirs in the family chain.
    Keywords: inheritance; labor supply; heterogeneous responses
    JEL: D10 D80 D91 J22
    Date: 2016–12
  13. By: Zhiyang Jia; Trine E. Vattø (Statistics Norway)
    Abstract: The standard static labor supply model ignores that it takes time for individuals to adjust to a taxbenefit reform. A labor supply decision model is developed that allows for lagged responses in terms of state dependence, stemming from preferences, labor market constraints and adjustment costs. The parameters of the model are estimated using panel data on working hours for Norwegian females. We find evidence of all three sources of state dependence, with adjustment costs as the most dominant component. When using the model to simulate the path of adjustment to a general tax cut, we find that state dependence brings down responses to only one third of the estimated full effect in the first year. The females reach the proximity of the full effect after about seven years.
    Keywords: labor supply; path of adjustment; state dependence; adjustment costs; discrete choice model; tax-benefit microsimulation
    JEL: C35 C51 H24 H31 J22
    Date: 2016–12
  14. By: Meier, Mario; Obermeier, Tim
    Abstract: This paper studies how firms’ screening behavior and crowding out among applicants affect the optimal design of unemployment policies. In our model, firms face a pool of applicants and observe unemployment duration and a signal about productivity. Firms screen the applicants with the highest expected productivity first. The probability of being hired declines with duration due to declining beliefs about productivity and competition by other job seekers. We estimate the model using German administrative employment records and information on job search behavior, vacancies and applications. The model matches the observed decline in search effort and job finding rates and the implied decline of callback rates is in line with recent evidence from audit studies. Optimal policy takes into account that unemployment benefits can affect hiring probabilities by making unemployment duration more or less informative and by changing the applications-per-vacancy ratio due to search effort or vacancy responses. The equilibrium elasticity of unemployment duration to benefits can be larger or smaller than the standard micro elasticity. Our findings suggest that benefit levels should be more generous, especially after the first year of unemployment. We also find that extended benefits do not increase the duration of unemployment as much as suggested by a model without employer screening.
    Keywords: Unemployment,Optimal Unemployment Insurance,Job Search,Employer Screening
    JEL: H20 J64 J65 J7
    Date: 2016
  15. By: Cawley, John (Cornell University)
    Abstract: This guide, updated for the 2016-17 job market season, describes the U.S. academic market for new Ph.D. economists and offers advice on conducting an academic job search. It provides data, reports findings from published papers, describes practical details, and includes links to online resources. Topics addressed include: preparing to go on the market; applying for academic jobs; the JOE Network, which is the AEA's electronic clearinghouse for the job market; signaling; interviewing at the ASSA meetings; campus visits; the secondary market scramble; offers and negotiating; getting off to a good start as an assistant professor; diversity; and dual job searches.
    Keywords: salaries, market for economists, academic labor market, benefits
    JEL: A11 J0 J44 A23
    Date: 2016–12
  16. By: Jeehoon Han
    Abstract: Gauging the efficacy of safety net programs requires a good understanding of how the interactions between them affect the total benefits and costs of any given policy change. This paper investigates the interactions between health and nutritional assistance programs such as Medicaid, SNAP, WIC, and school lunch programs. Since 1999, states have been given much more flexibility to operate SNAP, and many states have expanded eligibility to include households with income and resources above the existing federal limits for SNAP. Exploiting this variation in SNAP eligibility across states and over time, I find strong evidence of program interactions: when a state moves from the federal rule to the most extensive SNAP eligibility rule, enrollment in free school lunch increases by 4 percentage points. I estimate that the federal government spends an additional 37 cents on the school lunch program for each dollar spent on SNAP due to the expansion. However, expanded eligibility for SNAP leads to a significant decrease in private insurance coverage for both adults and children, which is not fully explained by an increase in Medicaid enrollment. Exploring potential channels through which SNAP expansions affect participation in other safety net programs, I find evidence that automatic eligibility, and a reduction in employment, play a role in program interactions.
    JEL: H75 I13 I38 J22
    Date: 2016–11–30
  17. By: Andreas Fagereng; Luigi Guiso; Luigi Pistaferri
    Abstract: Assessing the importance of uninsurable wage risk for individual financial choices faces two challenges. First, the identification of the marginal effect requires a measure of at least one component of risk that cannot be diversified or avoided. Moreover, measures of uninsurable wage risk must vary over time to eliminate unobserved heterogeneity. Second, evaluating the economic significance of risk requires knowledge of the size of all the wage risk actually faced. Existing estimates are problematic because measures of wage risk fail to satisfy the ”non-avoidability” requirement. This creates a downward bias which is at the root of the small estimated effect of wage risk on portfolio choices. To tackle this problem we match panel data of workers and firms and use the variability in the profitability of the firm that is passed over to workers to obtain a measure of uninsurable risk. Using this measure to instrument total variability in individual earnings, we find that the marginal effect of uninsurable wage risk is much larger than estimates that ignore endogeneity. We bound the economic impact of risk and find that its overall effect is contained, not because its marginal effect is small but because its size is small. And the size of uninsurable wage risk is small because firms provide substantial wage insurance.
    JEL: D14 D91 G11 J3
    Date: 2016–12

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