nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2016‒12‒18
nineteen papers chosen by
Joseph Marchand
University of Alberta

  1. Elections, Ideology, and Turnover in the U.S. Federal Government By Alexander Bolton; John M. de Figueiredo; David E. Lewis
  2. The growth and human capital structure of new firms over the business cycle By Brixy, Udo; Murmann, Martin
  3. Revitalizing Indonesia’s manufacturing: the productivity conundrum By Mohammad Zulfan Tadjoeddin; Ilmiawan Auwalin; Anis Chowdhury
  4. Import penetration and manufacturing employment growth: Evidence from 12 OECD countries By Köllner, Sebastian
  5. Self-Regulation Training, Labor Market Reintegration of Unemployed Individuals, and Locus of Control Evidence from a Natural Field Experiment By Eva M. Berger; Guenther Koenig; Henning Mueller; Felix Schmidt; Daniel Schunk
  6. The Changing Contours of Intergroup Disparities and the Role of Preferential Policies in a Globalizing World- Evidence from India By Ashwini Deshpande; Rajesh Ramachandran
  7. Offshoring Medium-Skill Tasks, Low-Skill Unemployment and the Skill-Wage Structure By Vallizadeh, Ehsan; Muysken, Joan; Ziesemer, Thomas
  8. Picking up speed: Does ultrafast broadband increase firm productivity? By Richard Fabling; Arthur Grimes
  9. High-Skilled Migration and Agglomeration By Sari Pekkala Kerr; William Kerr; Çaǧlar Özden; Christopher Parsons
  10. The Role of Time Preferences in Educational Decision Making By Daniel Kemptner; Songül Tolan
  11. Gender differences in tournament choices: Risk preferences, overconfidence or competitiveness? By van Veldhuizen, Roel
  12. Serving the Public Interest in Several Ways: Theory and Empirics By Robert Dur; Max van Lent
  13. Why has income inequality in Germany increased from 2002 to 2011? A behavioral microsimulation decomposition By Jessen, Robin
  14. Improving or Disappearing: Firm-Level Adjustments to Minimum Wages in China By Florian Mayneris; Sandra Poncet; Tao Zhang
  15. Promotion Incentives in the Public Sector: Evidence from Chinese Schools By Karachiwalla, Naureen; Park, Albert
  16. Dominant or Backward? Political Economy of the Demand for Quotas by Jats, Patels and Marathas By Ashwini Deshpande; Rajesh Ramachandran
  17. Trust the Police? Self-Selection of Motivated Agents into the German Police Force By Friebel, Guido; Kosfeld, Michael; Thielmann, Gerd
  18. The Diffusion of Knowledge via Managers' Mobility By Mion, Giordano; Opromolla, Luca David; Sforza, Alessandro
  19. Services Policy Reform and Manufacturing Employment: Evidence from Transition Economies By Fiorini, Matteo; Hoekman, Bernard; Malgouyres, Clément

  1. By: Alexander Bolton; John M. de Figueiredo; David E. Lewis
    Abstract: A defining feature of public sector employment is the regular change in elected leadership. Yet, we know little about how elections influence public sector careers. We describe how elections alter policy outputs and disrupt the influence of civil servants over agency decisions. These changes shape the career choices of employees motivated by policy, influence, and wages. Using new Office of Personnel Management data on the careers of millions of federal employees between 1988 and 2011, we evaluate how elections influence employee turnover decisions. We find that presidential elections increase departure rates of career senior employees, particularly in agencies with divergent views relative to the new president and at the start of presidential terms. We also find suggestive evidence that vacancies in high-level positions after elections may induce lower-level executives to stay longer in hopes of advancing. We conclude with implications of our findings for public policy, presidential politics, and public management.
    JEL: H11 H83 J45 J63 K29
    Date: 2016–12
  2. By: Brixy, Udo; Murmann, Martin
    Abstract: Recent research suggests that employment in young firms is more negatively impacted during economic downturns than employment in incumbent firms. This questions the effectiveness of policies that promote entrepreneurship to fight crises. We complement prior research that is mostly based on aggregate data by analyzing cyclical effects at the firm level. Using new linked employer-employee data on German start-ups we show that under constant human capital of the firms' founders, employment growth in less than 11=2-year-old start-ups reacts countercyclically and employment growth in older start-ups reacts procyclically. The young start-ups realize their countercyclical growth by hiring qualified labor market entrants who might be unable to find employment in incumbent firms during crises. This mechanism is highly important in economic and management terms and has not been revealed by prior research.
    Keywords: Firm growth,Entrepreneurship,Business cycle,Crisis
    JEL: E32 J23 L26 M13 L25 L11 D22
    Date: 2016
  3. By: Mohammad Zulfan Tadjoeddin; Ilmiawan Auwalin; Anis Chowdhury
    Abstract: In light of continuing importance of the manufacturing sector, but declining dynamism, this paper investigates trends in productivity at firm levels. It finds that labour productivity has been either stagnant or falling in labour intensive manufacturing. The paper uses firm level cross-sectional and time series data and employs GMM techniques to estimate determinants of productivity. It finds that real wage is the most important variable that influences firm level productivity, followed by capital intensity. Contrary to the common perception, foreign ownership and export-orientation are not found to have statistically significant influence on firm level productivity. This finding is consistent for firms of all sizes – large, medium, small and micro. This implies that Indonesia can use wages policy, as Singapore did during the late 1970s-mid 1980s, to upgrade its manufacturing to higher value added activities.
    Keywords: manufacturing, productivity, firm-size, real wage, GMM
    JEL: E24 J24 J38 O14 O53
    Date: 2016
  4. By: Köllner, Sebastian
    Abstract: This paper investigates the relationship between growing import penetration and manufacturing employment growth in 12 OECD countries between 1995 and 2011, accounting for various model specifications, different measures of import penetration and alternate estimation strategies. The application of the latest version of the World Input-Output Database (WIOD) that has become available only recently allows to measure the effect of increasing imported intermediates according to their country of origin. The findings emphasize a weak positive overall impact of growing trade on manufacturing employment. However, intermediate inputs from China and the new EU members are substitutes to manufacturing employment in highly developed countries while imports from the EU-27 act as complements to domestic manufacturing production. A three-level mixed model implies that the hierarchical structure of the data only plays a minor role, while controlling for endogeneity leaves the results unchanged.
    Keywords: Import Penetration,Manufacturing,Labor Markets,Hierarchical Mixed Model
    JEL: E24 F16 J23 L60
    Date: 2016
  5. By: Eva M. Berger (Johannes Gutenberg University Mainz); Guenther Koenig; Henning Mueller (Johannes Gutenberg University Mainz); Felix Schmidt (Johannes Gutenberg University Mainz); Daniel Schunk (Johannes Gutenberg University Mainz)
    Abstract: Recent evidence suggests that self-regulation plays an important role for labor market success. We conduct a randomized ?eld experiment embedded in an existing labor market reactivation program to examine the effect of a self-regulation training on long-term unemployed individuals. First, we ?nd a positive treatment effect on the quality of submitted CVs. Second,there is no overall treatment effect on (short-term) labor market reintegration, but heterogeneous effects with respect to participants’ Locus of Control that are consistent with psychological theory. The low costs of our intervention suggest high individual and social rates of return from a roll-out to other programs.
    Keywords: Active Labor Market Policy, Natural Field Experiment, Germany, Labor Market Reintegration, Unemployment, Reemployment, Self-Regulation, Locus of Control, Non-Cognitive Skills
    JEL: C93 J24 J64
    Date: 2016
  6. By: Ashwini Deshpande (Department of Economics, Delhi School of Economics); Rajesh Ramachandran (Faculty of Economics and Business Administration, Goethe University, Frankfurt)
    Abstract: How persistent are traditional socioeconomic hierarchies in the face of marketization, significant structural shifts in the economy, and increased political representation of lower-ranked groups, and do preferential policies have a role in addressing these inequities among social groups? We answer these questions in the context of India by comparing successive age cohorts of three broad social groups - Scheduled Castes and Tribes (SC-STs), Other Backward Classes (OBCs) and "Others" (proxy for upper castes) - and provide the first disaggregated picture of the evolution of inter-caste disparities since Indian independence in 1947. Based on data from the National Sample Survey (NSS), our results show convergence in terms of literacy and primary education. However, in terms of access to higher education, white-collar jobs, average household expenditure and daily wages, we find evidence of divergence over time. As the NSS does not directly contain data on beneficiaries of affirmative action, we implement an identification strategy that exploits the fact that access to preferential policies are jointly determined by both the age and the social group of the individual. The first- and second-order effects of affirmative action show that extending job quotas to OBCs in 1993 had direct positive effects on access to government jobs, as well as indirect effects on secondary school attainment.
    Keywords: affirmative action, quotas, caste, India, education, occupation
    JEL: I24 O15 J45 J78
    Date: 2016–12
  7. By: Vallizadeh, Ehsan; Muysken, Joan; Ziesemer, Thomas
    Abstract: This paper studies the direct and indirect channels through which offshoring affects the domestic skillwage structure and employment opportunities. To identify these channels, we develop a task-based model with unemployment that accounts for skill heterogeneity and endogenous allocation of domestic tasks to skill groups and abroad. A decline in offshoring costs of medium skill-intensive tasks induces i) a specialization effect towards low and high skill-intensive tasks, explaining one source of wage polarization, ii) an internal skill-task reallocation effect, and iii) a productivity effect due to production cost reductions. The key determinants of these channels are the elasticity of substitution between domestic and offshore tasks and the elasticity of task productivity schedules between domestic skill groups and between domestic and offshore workers across tasks.
    Keywords: Skill-Task Assignment; Offshoring; Productivity Effect; Equilibrium Unemployment; Skill-Wage Structure
    JEL: F1 F16 F66 J21 J24
    Date: 2016–12–14
  8. By: Richard Fabling (Independent Researcher); Arthur Grimes (Motu Economic and Public Policy Research)
    Abstract: We estimate whether there are productivity gains from ultrafast broadband (UFB) adoption and whether any gains are higher when firms undertake complementary organisational investments. Using an IV strategy based on proximity to schools (that were targeted in the UFB roll-out), we find that the average effect of UFB adoption on employment and (labour and multifactor) productivity is insignificantly different from zero, even for firms in industries where we might expect the returns to UFB to be relatively high. Conversely, we find that firms making concurrent investments in organisational capital specifically for the purpose of getting more from their ICTs appear to experience higher productivity growth, at least in first-difference specifications. Firms making these joint (UFB-organisational) investment decisions are significantly more likely to report other positive outcomes from their ICT investments, consistent with the identified relationship with productivity being causal.
    Keywords: Ultrafast broadband adoption, fibre-to-the-door, productivity, organisational change, complementary investments
    JEL: D22 L23 O33
    Date: 2016–12
  9. By: Sari Pekkala Kerr; William Kerr; Çaǧlar Özden; Christopher Parsons
    Abstract: This paper reviews recent research regarding high-skilled migration. We adopt a data-driven perspective, bringing together and describing several ongoing research streams that range from the construction of global migration databases, to the legal codification of national policies regarding high-skilled migration, to the analysis of patent data regarding cross-border inventor movements. A common theme throughout this research is the importance of agglomeration economies for explaining high-skilled migration. We highlight some key recent findings and outline major gaps that we hope will be tackled in the near future.
    JEL: F15 F22 J15 J31 J44 L14 L26 O31 O32 O33
    Date: 2016–12
  10. By: Daniel Kemptner; Songül Tolan
    Abstract: We analyze the implication of time-inconsistent preferences in educational decision making and corresponding policies using a structural dynamic choice model. Based on a novel identification approach, we exploit variation in average years invested in degree attainment through various educational reforms to identify the discount factor of hyperbolic time preferences. We make two important research contributions. First, we estimate our model using data from the German Socioeconomic Panel (soep) and provide quantitative evidence for time-inconsistent behavior in educational decision making. Second, we evaluate the relevance of time-inconsistent behavior for the effectiveness of education policies. For this purpose, we simulate policies where time preferences may play an important role: (1) an increase in the state grant for students as a way to affect short-term costs while at school and (2) an increase in the state grant as a loan that must be paid back after education is completed. We find substantial differences in the educational outcomes when comparing them to the outcomes based on a model specification with exponential discounting. Hence, the common assumption of exponential discounting in educational decisions may be too restrictive.
    Keywords: Time preferences, hyperbolic discounting, structural estimation, dynamic discrete choice, education
    JEL: C61 D91 I21
    Date: 2016
  11. By: van Veldhuizen, Roel
    Abstract: A large number of recent experimental studies show that women are less likely to sort into competitive environments. While part of this effect may be explained by gender differences in risk attitudes and overconfidence, previous studies have attributed the majority of the gender gap to gender differences in a separate 'competitiveness' trait. We re-examine this result using a powerful novel experimental technique that allows us to separate competitiveness from alternative explanations by experimental design. In contrast to the literature, the results from our experiment imply that the whole gender gap is driven by risk attitudes and overconfidence. We show that our results are due to our experimental approach, which circumvents concerns raised against the regression-based method used by previous studies. Our results have important implications for policy and future research.
    Keywords: Tournament,Experimental Design,Gender,Competitiveness,Lab Experiment
    JEL: C90 J16 J24 J31
    Date: 2016
  12. By: Robert Dur (Erasmus University Rotterdam, The Netherlands); Max van Lent (Erasmus University Rotterdam, The Netherlands)
    Abstract: We develop a model where people differ in their altruistic preferences and can serve the public interest in two ways: by making donations to charity and by taking a public service job and exerting effort on the job. Our theory predicts that people who are more altruistic are more likely to take a public service job and, for a given job, make higher donations to charity. Comparing equally altruistic workers, those with a regular job make higher donations to charity than those with a public service job by a simple substitution argument. We subsequently test these predictions using the German Socio-Economic Panel Study, which contains data on self-reported altruism, sector of employment, and donations to charity for more than 7,500 workers. We find support for our predictions, though some results are sensitive to the exact definition of a public service job or the estimation method.
    Keywords: altruism; charitable donations; public service motivation; public sector employment; self-selection
    JEL: D64 H11 J45 M50
    Date: 2016–12–13
  13. By: Jessen, Robin
    Abstract: I propose a method to decompose changes in income inequality into the contributions of policy changes, wage rate changes, and population changes while considering labor supply reactions. Using data from the Socio-Economic Panel (SOEP), I apply this method to decompose the increase in income inequality in Germany from 2002 to 2011, a period that saw tax reductions and a controversial overhaul of the transfer system. The simulations show that tax and transfer reforms have had an inequality reducing effect as measured by the Mean Log Deviation and the Gini coefficient. For the Gini, these effects are offset by labor supply reactions. In contrast, policy changes explain part of the increase in the ratio between the 90th and the 50th income percentile. Changes in wage rates have led to a decrease in income inequality. Thus, the increase in inequality was mainly due to changes in the population.
    Keywords: Inequality,Decomposition,Labor Supply,Microsimulation,Policy Reform
    JEL: D31 H23 I38 J31
    Date: 2016
  14. By: Florian Mayneris (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Center for Operations Research and Econometrics (CORE)); Sandra Poncet (Paris School of Economics (University of Paris 1), CEPII and FERDI); Tao Zhang (Shanghai University of International Business and Economics)
    Abstract: We here consider how Chinese firms react to higher minimum wages, exploiting the 2004 minimum-wage Reform in China. After this reform, we find that the wage costs for surviving firms that were more exposed to minimum wage hikes rose, but their employment and profitability were not affected. This came about due to significant productivity gains among surviving exposed firms. Our results are robust to pre-trend analysis and an IV strategy. However, the survival probability of firms most exposed to minimum-wage hikes fell after the Reform. Firm-level productivity gains partly came from better inventory management and greater investment in capital, at the cost of a reduction in firm-level cash flow. We show that competing explanations are unlikely. In particular, there is no evidence of lower fringe benefits compensating for higher wages, the substitution of less-paid/less-protected migrants for incumbent workers, or firm-level adjustment through higher prices instead of higher productivity. This firm-level productivity adjustment to the minimum wage might be particularly relevant for developing countries where inefficiencies are still pervasive.
    Keywords: minimum wages, firm-level performance, productivity, China
    JEL: J38 O12 O14
    Date: 2016–11–30
  15. By: Karachiwalla, Naureen; Park, Albert
    Abstract: We provide evidence that promotion incentives influence the effort of public employees by studying China's system of promotions for teachers. Predictions from a tournament model of promotion are tested using retrospective panel data on primary and middle school teachers. Consistent with theory, promotions are associated with wage increases, higher wage increases are associated with better performance, and teachers increase effort in years leading up to promotion eligibility but reduce effort if they are repeatedly passed over for promotion. Evaluation scores are positively associated with teacher time use and with student test scores, diminishing concerns that evaluations are manipulated.
    Keywords: China; incentives; promotions; teachers
    JEL: J31 J33 J45 M51
    Date: 2016–12
  16. By: Ashwini Deshpande (Department of Economics, Delhi School of Economics); Rajesh Ramachandran (Faculty of Economics and Business Administration, Goethe University, Frankfurt)
    Abstract: Using data from the India Human Development Survey (IHDS), this paper examines the claims of three communities, viz., Jats in Haryana, Patels in Gujarat and Marathas in Maharashtra, to be classified as Other Backward Classes (OBC) in order to gain access to affirmative action. Comparing these three groups to the other major caste groups - Brahmins, Other Forward Castes, existing OBCs and Scheduled Castes and Tribes (SC and STs) in their respective states – on socio-economic indicators such as household consumption expenditure, poverty, access to infrastructure, self-declared practice of untouchability, education and occupational status, we find that that these three communities are closer to the dominant groups – Brahmins and Other Forward Castes - than to the existing disadvantaged groups - OBCs and SC-STs. Thus, their claim to backwardness is not justified by empirical data. We then examine the material basis of their anxieties in the context of structural changes in the Indian economy, particularly agriculture. We also investigate their networks and political connections that explain their success in mobilizing large numbers in support of their demands.
    Keywords: Affirmative Action, Caste, Quotas, Education, India,
    JEL: I24 O15 J45 J78
    Date: 2016–12
  17. By: Friebel, Guido; Kosfeld, Michael; Thielmann, Gerd
    Abstract: We conduct experimental games with police applicants in Germany to investigate whether intrinsically motivated agents self-select into public service. Our focus is on trustworthiness and the willingness to enforce norms as key dimensions of intrinsic motivation in the police context. We find that police applicants are more trustworthy than non-applicants, i.e., they return higher shares as second-movers in a trust game. Furthermore, they invest more in rewards and punishment when they can enforce cooperation as a third party. Our results provide clear evidence for advantageous self-selection into the German police force, documenting an important mechanism by which the match between jobs and agents in public service can be improved.
    Keywords: intrinsic motivation; norm enforcement; Public Service; Self-selection; trustworthiness
    JEL: C9 D64 D73 J45
    Date: 2016–12
  18. By: Mion, Giordano; Opromolla, Luca David; Sforza, Alessandro
    Abstract: Better managers and managerial practices lead to better firm performance. Yet, little is known about what happens when managers move across firms. Does a firm hiring a good manager improve its performance? If yes is there some valuable knowledge the manager has acquired and successfully diffused to the new firm? In order to answer these questions we use information related to specific activities the manager was involved in when working for previous firms. More specifically, we use information on whether the manager has worked in the past for firms exporting to a specific destination country or a specific product. Our data is rich enough to allow controlling for both manager and firm unobservables and wash out any time-invariant ability of the manager as well as overall firm performance. We find that the export experience gained by managers in previous firms leads their current firm towards higher export performance, and commands a sizable wage premium for the manager. We use several strategies to deal with endogeneity including an exogenous event study: the sudden end of the Angolan civil war in 2002. We further refine our analysis by looking at different types of managers (general, production, financial and sales) and show how specific export experience interacts with the degree of product differentiation and/or the financial vulnerability of a firm's products as well as with rising import competition from China.
    Keywords: export experience; firm performance; job mobility; knowledge diffusion; Managers
    JEL: F16 J31 L2 M2
    Date: 2016–12
  19. By: Fiorini, Matteo; Hoekman, Bernard; Malgouyres, Clément
    Abstract: Policy reforms targeting the services sectors influence the process of structural transformation and economic development. This paper used sector-level panel data for 24 transition economies for the 1990-2012 period to analyze the impacts of services policy reforms on employment in downstream manufacturing sectors. We find that negative effects on manufacturing employment are mitigated or disappear for countries with better economic governance and higher levels of human capital. The decline in manufacturing employment is observed only in the first decade of transition. The estimated negative effect of policy reforms is of a contemporaneous nature; it does not persist along the lag structure.
    Keywords: economic reform; employment; service-sector policies; structural transformation; transition economies
    JEL: F16 F66 J23 P21
    Date: 2016–12

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