nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒01‒15
eleven papers chosen by
Joseph Marchand
University of Alberta

  1. Partial versus Total Factor Productivity: Assessing Resource Use in Natural Resource Industries in Canada By Alexander Murray
  2. Redistribution of Local Labor Market Shocks through Firms’ Internal Networks By Xavier Giroud; Holger M. Mueller
  3. Does Job Support Make Workers Happy? By Petri Böckerman; Alex Bryson; Antti Kauhanen; Mari Kangasniemi
  4. Do women respond less to performance pay? Building evidence from multiple experiments By Bandiera, Oriana; Fischer, Greg; Prat, Andrea; Ytsma, Erina
  5. Firm Leverage, Consumer Demand, and Employment Losses during the Great Recession By Xavier Giroud; Holger M. Mueller
  6. Gender Differences in the Union Wage Premium? A Comparative Case Study By Alex Bryson; Harald Dale-Olsen; Kristine Nergaard
  7. Active labour market policies: Challenge for the Macedonian labour market By Petreski, Blagica; Tumanoska, Despina
  8. Prison Work Programs in a Model of Deterrence By A. Mitchell Polinsky
  9. Killer Incentives: Status Competition and Pilot Performance during World War II By Ager, Philipp; Bursztyn, Leonardo; Voth, Hans-Joachim
  10. The Costs of and Net Returns to College Major By Joseph G. Altonji; Seth D. Zimmerman
  11. Downward Wage Rigidities in the Mexican Labor Market 1996-2011 By Juárez González Laura; Casarín de la Cabada Daniel

  1. By: Alexander Murray
    Abstract: A partial productivity measure relates output to a single input. Total factor productivity (or TFP) relates an index of output to a composite index of all inputs. This report discusses the strengths and weaknesses of each type of productivity measure from theoretical and methodological perspectives. Different productivity measures may be useful for different analytical purposes, and no single measure provides a complete picture of an industry's productivity performance. The report then presents estimates of TFP and a suite of partial productivity measures for a set of natural resource-related industries in Canada. The three forestry products industries and the crop and animal production industry exhibited the best productivity performance over the 1990-2012 period across a variety of productivity measures, while oil and gas extraction and mining experienced the worst productivity performance.
    Keywords: Productivity, Total Factor Productivity, Multifactor Productivity, Labour Productivity, Natural Resources, Measurement, Canada, Agriculture
    JEL: D24 J24 O47 Q3 O51
    Date: 2016–12
  2. By: Xavier Giroud; Holger M. Mueller
    Abstract: Local labor market shocks are difficult to insure against. Using confidential micro data from the U.S. Census Bureau’s Longitudinal Business Database, we document that firms redistribute the employment impacts of local demand shocks across regions through their internal networks of establishments. During the Great Recession, the massive decline in house prices caused a sharp drop in consumer demand, leading to large employment losses in the non-tradable sector. Consistent with firms smoothing out the impacts of these shocks across regions, we find large elasticities of non-tradable establishment-level employment with respect to house prices in other counties in which the firm has establishments. At the same time, establishments of firms with larger regional networks exhibit lower employment elasticities with respect to local house prices in the establishment’s own county. To account for general equilibrium adjustments, we aggregate non-tradable employment at the county level. Similar to what we found at the establishment level, we find that non-tradable county-level employment responds strongly to local demand shocks in other counties linked through firms’ internal networks. These results are not driven by direct demand spillovers from nearby counties, common shocks to house prices, or local demand shocks affecting non-tradable employment in distant counties indirectly via the trade channel. Our results suggest that firms play an important role in the extent to which local labor market risks areshared across regions.
    Date: 2017–01
  3. By: Petri Böckerman (Turku School of Economics, Labour Institute for Economic Research and IZA); Alex Bryson (University College London, National Institute of Social and Economic Research and Institute for the Study of Labor); Antti Kauhanen (The Research Institute of the Finnish Economy); Mari Kangasniemi (Labour Institute for Economic Research)
    Abstract: Using linked employer-employee data for Finland we examine associations between job design and ten measures of worker wellbeing. In accordance with Karasek's (1979) model we find positive correlations between many aspects of worker wellbeing and job control. However, contrary to the model, job demands have no adverse effects on worker wellbeing. We find a strong positive correlation between job support and all aspects of worker wellbeing that is independent of job controls and job demands, a finding that has not been emphasized in the literature. The effects are most pronounced in relation to supervisor support. We also find evidence of unemployment scarring effects: substantial experience of unemployment has long-term consequences for the wellbeing workers experience in their current jobs, even controlling for the quality of those jobs.
    Keywords: Worker wellbeing; Job control; Job demands; Job support; Job design; Supervisors; Job satisfaction; Stress; HRM; Unemployment; Scarring effects
    JEL: J28 J8 L23 M54
    Date: 2016–12–29
  4. By: Bandiera, Oriana; Fischer, Greg; Prat, Andrea; Ytsma, Erina
    Abstract: Performance pay increases productivity but also earnings inequality. Can it widen the gender gap because women are less responsive? We provide answers by aggregating evidence from existing experiments on performance pay that have both male and female subjects, regardless of whether they test for gender differences. We develop a Bayesian hierarchical model (BHM) that allows us to estimate both the average effect and the heterogeneity across studies. We find that the gender response difference is close to zero and heterogeneity across studies is small. We also find that the average effect of performance pay is positive, increasing output by 0.28 standard deviations. The data are thus strongly supportive of agency theory for men and women alike.
    Keywords: econometrics; Gender; meta-analysis; wage differentials
    JEL: C11 J16 J31
    Date: 2016–12
  5. By: Xavier Giroud; Holger M. Mueller
    Abstract: We argue that firms’ balance sheets were instrumental in the propagation of consumer demand shocks during the Great Recession. Using establishment-level data, we show that establishments of more highly levered firms exhibit a significantly larger decline in employment in response to a drop in consumer demand. These results are not driven by firms being less productive, having expanded too much prior to the Great Recession, or being generally more sensitive to fluctuations in either aggregate employment or house prices. At the county level, we find that counties with more highly levered firms experience significantly larger job losses in response to county-wide consumer demand shocks. Thus, firms’ balance sheets also matter for aggregate employment. Our research suggests a possible role for employment policies that target firms directly besides conventional stimulus.
    Date: 2017–01
  6. By: Alex Bryson (University College London, National Institute of Social and Economic Research and Institute for the Study of Labor); Harald Dale-Olsen (Institute for Social Research); Kristine Nergaard (Fafo)
    Abstract: Trade unions have transformed from male-dominated organisations rooted in manufacturing to majority-female organisations serving predominantly white-collar workers, often in the public sector. Adopting a comparative case study approach using nationally representative linked employer-employee surveys for Norway and Britain we examine whether, in keeping with a median voter model, the gender shift in union membership has resulted in differential wage returns to unionisation among men and women. In Britain, while only women receive a union wage premium, only men benefit from the increased bargaining power of their union as indicated by workplace union density. In Norway, on the other hand, although a union wage premium arises from individual union membership for men and women in male-dominated unions, in workplaces where the union is female-dominated women benefit more than men from the increased bargaining power of the union as union density rises. The findings suggest British unions continue to adopt a paternalistic attitude to representing their membership, in contrast to their more progressive counterparts in Norway.
    Keywords: Trade unions; Collective bargaining; Union density; Wage premium; Gender
    JEL: J28 J51 J81 L23
    Date: 2016–12–12
  7. By: Petreski, Blagica; Tumanoska, Despina
    Abstract: Labor market outcomes in Macedonia have been improving in the past eight years, despite the lingering effects of the Global economic crisis. The unemployment rate has been declining, albeit still remains high at 26.1% at the end of 2015. At the same time, the employment rate increased from 36.2% in 2007 to 42.1% in 2015. In spite the favorable developments related to the employment and unemployment rates, the activity rate continued to be the main challenge. Activity rate improved moderately, from 55.7% in 2007 to 57% in 2015, being still much lower than the EU-28 average of 72.4%. In order to tackle the high unemployment and inactivity, the government introduced ALMPs in 2017, with key objectives: 1) social inclusion of vulnerable groups on the labour market, 2) reducing unemployment, 3) increasing employability of the long-term unemployed people, and 4) fostering competitiveness of the economy. The ALMPs include four main categories: 1) direct job creations; 2) employment incentives; 3) traineeship; and 4) community work. The main objective of this research is to investigate the success of the ALMPs and its impact to the unemployment rate in the country.
    Keywords: ALMPs, active labor marker measures, employment, unemployment.
    JEL: J21 J8
    Date: 2016–12–29
  8. By: A. Mitchell Polinsky
    Abstract: This article considers the social desirability of prison work programs in a model in which the function of imprisonment is to deter crime. Two types of prison work programs are studied—voluntary ones and mandatory ones. A voluntary work program generates net social benefits: if prisoners are paid a wage that just compensates them for their disutility from work, the deterrent effect of the prison sentence is unaffected, but society obtains the product of the work program. But a mandatory work program yields even higher net social benefits: if prisoners are forced to work without compensation, the deterrent effect of the prison sentence rises, allowing society to restore deterrence and save resources by reducing the probability of detection or the sentence length, and also to obtain greater output than under the optimal voluntary work program. In an extension of the basic analysis, however, in which prisoners vary in their disutility from work, a voluntary work program may be superior to a mandatory work program because prisoners with relatively high disutility from work can elect not to work.
    JEL: H23 J41 J48 K14 K42
    Date: 2017–01
  9. By: Ager, Philipp; Bursztyn, Leonardo; Voth, Hans-Joachim
    Abstract: A growing theoretical and empirical literature shows that public recognition can lead to greater effort amongst employees. At the same time, status competition can be associated with excessive expenditure on status goods, higher risk of bankruptcy, and more risk taking amongst money managers. In this paper, we look at the effects of recognition and status competition jointly: We focus on the spillover effects of public recognition on the performance and risk taking of peers. Using newly collected data on monthly victory scores of over 5,000 German pilots during World War II, we find corrosive effects of status competition: When the daily bulletin of the German armed forces mentioned the accomplishments of a particular fighter pilot, his former peers perform markedly better. Outperformance is differential across skill groups. When a former squadron peer is mentioned, the best pilots try harder, score more, and die no more frequently; average pilots win only a few additional victories, but die at a markedly higher rate. Our results suggest that the overall efficiency effects of non-financial rewards can be ambiguous in settings where both risk and output affect aggregate performance.
    Keywords: Behavioral economics; Employee motivation; Nonfinancial incentives; Status competition; World War II
    JEL: J24 J32 M52 N44
    Date: 2017–01
  10. By: Joseph G. Altonji; Seth D. Zimmerman
    Abstract: This paper uses administrative student and expenditure data from Florida public universities to describe a) how the cost of producing graduates varies by major, b) how the inclusion of major-specific instructional costs alters the estimated net returns to different fields of study, and c) how major-specific instructional expenditures changed between 1999 and 2013. We find that the cost of producing graduates in the highest cost major (engineering) is roughly double that of producing graduates in low-cost majors, such as business. Cross-major comparisons of per graduate earnings returns net of costs differ from comparisons based on earnings outcomes alone in economically significant ways for a number of fields. Differences between net returns and earnings returns per dollar of instructional spending are even more pronounced. Our analysis of trends in instructional expenditures shows that per credit expenditures for undergraduate classes dropped by 16% in Florida universities between 1999 and 2013. The largest drops occurred in engineering and health, where per credit spending fell by more than 40%. Observed spending changes have little relationship with per credit costs or earnings outcomes.
    JEL: I23 I26 J24
    Date: 2017–01
  11. By: Juárez González Laura; Casarín de la Cabada Daniel
    Abstract: In this paper, we provide evidence on the existence and evolution of downward real and nominal wage rigidities in Mexico in the period 1996-2011, which was characterized by a reduction in the level and volatility of inflation. Our results suggest that, throughout the period, a larger fraction of private sector workers, who stayed in the same job from one year to another, were subject to downward real wage rigidities than to downward nominal wage rigidities. The relative importance of downward nominal wage rigidities seems to have increased slightly as inflation decreased, as found in studies for some other countries that achieved a lower and more stable inflation.
    Keywords: downward wage rigidities;wage indexation
    JEL: J30
    Date: 2016–12

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