nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒01‒29
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. Locus of Control and Investment in Training By Marco Caliendo; Deborah A. Cobb-Clark; Helke Seitz; Arne Uhlendorff
  2. Retirement and Cognitive Decline: Evidence from Global Aging Data By Motegi, Hiroyuki; Nishimura, Yoshinori; Oikawa, Masato
  3. Fertility and Mothers' Labor Supply: New Evidence Using Time-to-Conception By Claudia Hupkau; Marion Leturcq
  4. Effects of Maternal Work Incentives on Youth Crime By Hope Corman; Dhaval Dave; Ariel Kalil; Nancy E. Reichman
  5. Upward nominal wage rigidity By Paulo Guimarães; Fernando Martins; Pedro Portugal
  6. Assessing the impacts of a training program for women in Peru: Are There social networking effects? By Eduardo Zegarra; Angie Higuchi; Ricardo Vargas
  7. Subjective Appraisals of Employee Potential: Do Gender and Managerial Level Matter? By Anica Rose
  8. How do wage earners respond to a large kink? Evidence on earnings and deduction behavior from Austria By Paetzold, Jörg
  9. Dependence or Constraints? Cash transfers, labor supply and the process of development By Diego A. Vera-Cossio
  10. Wage Dynamics and Peer Referrals By Vincent Boucher; Marion Goussé
  11. Rage Against the Machines: Labour-Saving Technology and Unrest in England, 1830-32 By Caprettini, Bruno; Voth, Hans-Joachim
  12. The Difusion of Knowledge via Managers' Mobility By Giordano Mion; Luca David Opromolla; Alessandro Sforza
  13. Labour market segmentation and the financial situation of the pension system in Poland By Piotr Lewandowski; Jakub Sawulski; Kamil Stronski

  1. By: Marco Caliendo; Deborah A. Cobb-Clark; Helke Seitz; Arne Uhlendorff
    Abstract: This paper extends standard models of work-related training by explicitly incorporating workers' locus of control into the investment decision. Our model both differentiates between general and specific training and accounts for the role of workers and firms in training decisions. Workers with an internal locus of control are predicted to engage in more general training than are their external co-workers because their subjective expected investment returns are higher. In contrast, we expect little relationship between specific training and locus of control because training returns largely accrue to firms rather than workers. We then empirically test the predictions of our model using data from the German Socioeconomic Panel (SOEP). We find that, consistent with our model, locus of control is related to participation in general but not specific training. Moreover, we provide evidence that locus of control influences participation in general training through its effect on workers' expectations about future wage increases. Specifically, general training is associated with a much larger increase in the expected likelihood of receiving a future pay raise for those with an internal rather than external locus of control, while we do not find any relationship in the case of specific training. Actual post-training wages for those who receive general or specific training do not depend on locus of control.
    Keywords: Human Capital Investment, On-the-job Training, Locus of Control, Wage Expectations
    JEL: J24 C23 D84
    Date: 2016
  2. By: Motegi, Hiroyuki; Nishimura, Yoshinori; Oikawa, Masato
    Abstract: This study analyzes the effect of retirement on cognitive function. According to the human capital theory, we can hypothesize that workers invest in their cognitive ability more than retirees because cognitive investment increases a worker’s wage. As a result, it is possible that the cognitive ability decreases after retirement, a hypothesis analyzed in this study. In health economics, this hypothesis has been examined especially after 2000. First, we show that an analysis method used in some related studies is not valid for estimating this effect. Furthermore, we analyze this effect by using our method. Our estimates indicate that the workers’ mathematical scores decrease after retirement in a wide range of analyzed countries and heterogeneous groups. However, retirement has a weak effect on cognitive ability. Additionally, we investigate the heterogeneity of this effect. For example, we find that the elderly with higher body mass indexs and fat intake experience a negative effect of retirement on cognitive function.
    Keywords: mental retirement, cognitive function, social security, pension eligibility age, cross- country instruments, global aging data
    JEL: I12 I18 J24 J26
    Date: 2017–01–26
  3. By: Claudia Hupkau; Marion Leturcq
    Abstract: We analyze the impact of children on their mothers' labor market outcomes in the UK. We use time-to-conception of the first child as an exogenous variation in the probability of having more children. We find that having more children decreases the propensity to work in long part-time jobs but does not reduce participation for high- and intermediate-skilled mothers. For low skilled women, the impact on participation is large and negative. We show that the selection into having a second child is positive for for low-skilled mothers and negative for high-skilled and intermediate-skilled mothers. Women most attached to the labor market are also those that tend to have only one child among high- and intermediate-skilled women. The reverse is true for low-skilled women: those least attached to the labor market are also less likely to have a second child. This appears to be driven by unobserved attributes that negatively affect both labor market outcomes and the likelihood to remain in a relationship with the father of the first child, which in turn negatively affects the probability to have a second child.
    Keywords: labor force supply of women, infertility shocks, time-to-conception, causal impact
    JEL: J13 J21 J22
    Date: 2017–01
  4. By: Hope Corman; Dhaval Dave; Ariel Kalil; Nancy E. Reichman
    Abstract: This study exploits differences in the implementation of welfare reform across states and over time to identify causal effects of maternal work incentives, and by inference employment, on youth arrests between 1990 and 2005, the period during which welfare reform unfolded. We consider both serious and minor crimes as classified by the FBI, investigate the extent to which effects were stronger in states with more stringent work incentive policies and larger welfare caseload declines, and use a number of different model specifications to assess robustness and patterns. We find that welfare reform led to reduced youth arrests for minor crimes, by 7-9 %, with similar estimates for males and females, but that it did not affect youth arrests for serious crimes. The results from this study add to the scant literature on the effects of maternal employment on adolescent behavior by exploiting a large-scale social experiment that is still in effect to this day, and provide some support for the widely-embraced argument that welfare reform would discourage undesirable social behavior, not only of mothers, but also of the next generation.
    JEL: I3 J22 J48 K4
    Date: 2017–01
  5. By: Paulo Guimarães; Fernando Martins; Pedro Portugal
    Abstract: In Portugal, as in many other countries in continental Europe, the collective wage agreements between trade unions and employer associations that define wage floors for specific job titles are systematically extended to the whole industry. This means that many firms are obliged to increase the wages of their workforce in order to comply with the newly-agreed bargained wages. With some trepidation, we call this phenomenon upward nominal wage rigidity, in close symmetry with the Keynesian notion of downward nominal wage rigidity. In this paper we provide evidence that firms that are more heavily afected by the change in the bargained wage floors decrease their hiring rates and, more importantly, significantly increase their separation rates. As a complement to our analysis, we suggest the estimation of a measure that attempts to disentangle the strength of internal and external wage conditions. Based on this measure we show that firms whose wages are more influenced by external wages exhibit much lower net job creation rates.
    JEL: J31 J52 J23
    Date: 2017
  6. By: Eduardo Zegarra; Angie Higuchi; Ricardo Vargas
    Abstract: The general goal of this study is to assess the impacts on women’s economic and social participation of a peer-to-peer training program in Cañete Province, Peru. We use a quasi-experimental methodology applied to treatment and control groups. The study evaluates three areas of potential effects: (i) participation and returns from economic activities (use of time, labour market participation, family business, savings); (ii) indicators of women’s autonomy, family cohesion and social participation; and (iii) living standards. The impacts we found are mixed. We only detected robust impacts on the propensity to engage in savings and participate in local social organizations by treated women. The channels behind these impacts require more specific research, but we hypothesize that it may be related to expanded social networking. We observe a few specific impacts related to autonomy (negative) and family cohesion (positive), which can be linked to the religious nature of the program. We evaluate differentiated effects by some features of the treatment group as self-assessment of economic usefulness by women as well as trainers’ education and age. In terms of policy, we consider that peer-to-peer programs of this type may have limited impacts in terms of broad development goals like increased income, labour participation and business activity by women, but these can also show some advantages for expanding women’s social networking and access to savings and local organizations. Improved peer-to-peer programs more clearly linked to the economic advancement of women may be more efficient in achieving broader development goals.
    Keywords: Human Capital, Human Development, Human Resources, Formal Training Programs, Training, Skill Building, Specific Human Capital, Training, Occupational Choice; Labor Productivity
    JEL: O15 J24
    Date: 2017
  7. By: Anica Rose (Paderborn University)
    Abstract: While a growing number of empirical studies have analyzed gender differences at various career stages, there is a dearth of studies about formal appraisals of men’s and women’s career potential, i.e., their promotability. In this paper, I will empirically analyze whether female employees’ promotability assessments are systematically inferior to their equally qualified male colleagues. In doing so, I use detailed personnel data of a large global German company that has a formal promotability evaluation process in place. I consider a wide range of contextual variables that have been neglected in the past, such as information on employees’ demographic (i.e., gender, age, tenure) and job-related characteristics (i.e., pay grade, working hours, performance assessments), additional information on the employees’ direct supervisors, and the composition of the department. I find women’s likelihood of receiving an evaluation that qualifies them as promotable to be around 5 percentage points lower than for their male counterparts – the probability of receiving an outstanding assessment being only 20 percent per se. The gap is even more pronounced at around the age of 30, i.e., the average childbearing age in Germany. Furthermore, gender gaps persist at managerial levels, which points to the existence of systematic gender differences in formal promotability evaluation processes.
    Keywords: Gender, discrimination, promotion, promotability rating, field study
    JEL: J16 J71 M51
    Date: 2017–01
  8. By: Paetzold, Jörg (University of Salzburg)
    Abstract: This paper contributes to recent literature emphasizing the importance to identify the different channels along which taxable income responses occur. Using bunching techniques and exploiting a large first kink point where marginal tax rates increase by as much as 38 percentage points, we recover modest gross wage earnings responses of Austrian employees. Next, we show that when accounting for deduction behavior, the additional mass of wage earners at the kink increases by around 50%. We find direct evidence for wage earners targeting the kink with their deduction claiming. Finally, we use a novel estimation strategy to show evidence that the probability of claiming a deduction depends on its (net-of-tax) cash value, and we provide a new estimate for the deduction elasticity. In sum, our results suggest that distinguishing between earnings and deduction responses matters even for taxpayers with only limited possibilities to shelter taxable income.
    Keywords: bunching; elasticity of wage earnings and deductions; tax expenditures; deduction behavior; administrative data
    JEL: H21 H24 J22
    Date: 2017–01–18
  9. By: Diego A. Vera-Cossio (University of California, San Diego)
    Abstract: In this study, I use the timing and eligibility criteria of a large-scale conditional cash transfer program in Bolivian public schools to identify the efect of the program on adults’ labor supply. I find that adult females increase their labor supply due to the program, mostly through self-employment. To understand these results, I sketch a simple theoretical framework of selection into employment that introduces fixed costs to work and imperfections in capital markets, two main features of the process of development. In this environment, households select into employment only if they are able to self-finance the fixed costs. I derive additional predictions that are empirically tested. First, the positive treatment efects should manifest at the extensive and not the intensive margin. Estimating treatment efects along the cumulative density function of work hours/week, I find that the efects on labor supply come exclusively from the extensive margin. Second, the efects of an income shock should be stronger when capital market frictions are more salient. Using baseline data for the supply of financial services at the municipality level as a third diference, I find that the efects on labor supply are higher for women in more credit-constrained areas. I compare these results with compelling alternative explanations such as in creases in local aggregate demand induced by the program and the relaxation of time constraints for mothers due to the condition component of the program. I find no evidence supporting these two alternative mechanisms. Overall, the results suggest that after considering the role of credit and labor market frictions, the first step in limbing the ladder of development is to cover come the barriers households face in simply starting to work.
    Keywords: Labor supply, poverty traps, gender, conditional cash transfers.
    JEL: D13 J46 J21 J22 O12 O18
  10. By: Vincent Boucher; Marion Goussé
    Abstract: We present a flexible model of wage dynamics where information about job openings is transmitted through social networks. The model is based on Calvò-Armengol & Jackson (2004, 2007) and extends their results outside the stationary distribution, and under observed and unobserved heterogeneity. We present an empirical application using the British Household Panel Survey by exploiting direct information about individual's social networks. We find that having more employed friends leads to more job offers but to lower wages due to higher mismatch. We also find that non-relative friends are more helpful than relatives, and that women benefit relatively more from their male friends.
    Keywords: Labour Market, Peer Referrals, Social Networks
    JEL: C33 J31 J46
    Date: 2016
  11. By: Caprettini, Bruno; Voth, Hans-Joachim
    Abstract: Can the adoption of labor-saving technology lead to social instability and unrest? We examine a canonical historical case, the so-called 'Captain Swing' riots in 1830s Britain. Variously attributed to the adverse consequences of weather shocks, the shortcomings of the Poor Law, or the after-effects of enclosure, we emphasize the importance of a new technology - the threshing machine. Invented in the 1780s, it spread during and after the Napoleonic Wars. Using farm advertisements from newspapers published in 66 English and Welsh towns, we compile a new measure of the technology's diffusion. Parishes with ads for threshing machines had much higher riot probabilities in 1830 - and the relationship was even stronger for machine-breaking attacks. Threshing machines were mainly useful in wheat-growing areas. To establish a causal role for labor-saving technology, we instrument technology adoption with the FAO measure of soil suitability for wheat, and show that this in turn predicts unrest.
    Keywords: Labor-saving technology; social instability; riots; welfare support; agricultural technology; factor prices and technological change.
    JEL: J21 J43 N33 P16
    Date: 2017–01
  12. By: Giordano Mion; Luca David Opromolla; Alessandro Sforza
    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 difused 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 diferent types of managers (general, production, financial and sales) and show how specific export experience interacts with the degree of product diferentiation and/or the financial vulnerability of a firm's products as well as with rising import competition from China.
    JEL: M2 L2 F16 J31
    Date: 2017
  13. By: Piotr Lewandowski; Jakub Sawulski; Kamil Stronski
    Abstract: Since 2014 Poland is the country with the highest share of temporary workers in the EU. Civil law contracts, a type of temporary contracts, allow payment of lower retirement pension contributions than implied by employment contracts. We use a cohort pension model to quantify the impact of civil law contract use on revenue from contributions and spending on pensions in Poland. Between 2005 and 2015, the rising incidence of civil law contracts reduced the revenue from contributions in the general pension system by PLN 2.4 billion per year on average. This widened the pension fund deficit by approx. 5%. In the future (2016-2050), the impact of civil law contracts on the revenue from contributions will wane because of demographic changes and rising educational attainment of the workforce. However, its impact on pension spending will increase with time, although it will be weaker than the effect on revenue from contributions. Hence, labour market segmentation will deteriorate the pension system balance. The obligation to pay contributions on all contracts of mandate from at least the minimum wage level, introduced in 2016, is not sufficient to balance out the impact of segmentation on the pension system balance.
    Keywords: labour market, pensions, public finance
    JEL: H55 H60 J26 J41 J42
    Date: 2016–12

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