nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒02‒26
nine papers chosen by
Joseph Marchand
University of Alberta

  1. Self-Employment Dynamics and the Returns to Entrepreneurship By Eleanor W. Dillon; Christopher T. Stanton
  2. Complex-Task Biased Technological Change and the Labor Market By Colin Caines; Florian Hoffmann; Gueorgui Kambourov
  3. High-skilled migration and agglomeration By Pekkala Kerr, Sari; Kerr, William; Özden, Çağlar; Parsons, Christopher
  4. When Work Disappears: Manufacturing Decline and the Falling Marriage-Market Value of Men By David Autor; David Dorn; Gordon Hanson
  5. Being your own boss: the many faces of self-employment By Pamela Lenton
  6. Firms' Internal Networks and Local Economic Shocks By Xavier Giroud; Holger M. Mueller
  7. Short notice, big difference? The effect of temporary employment on firm competitiveness across sectors By Romina R. Giuliano; Stephan Kampelmann; Benoît Mahy; François Rycx
  8. "The Extent of Rent Sharing along the Wage Distribution" By Alessia Matano; Paolo Naticchioni
  9. Poverty, employment and inequality in the SDGs: Heterodox discourse, orthodox policies? By Luebker, M.

  1. By: Eleanor W. Dillon; Christopher T. Stanton
    Abstract: Small business owners and others in self-employment have the option to transition to paid work. If there is initial uncertainty about entrepreneurial earnings, this option increases the expected lifetime value of self-employment relative to pay in a single year. This paper first documents that moves between paid work and self-employment are common and consistent with experimentation to learn about earnings. This pattern motivates estimating the expected returns to entrepreneurship within a dynamic lifecycle model that allows for non-random selection and gradual learning about the entrepreneurial earnings process. The model accurately fits entry patterns into self-employment by age. The option value of returning to paid work is found to constitute a substantial portion of the monetary value of entrepreneurship. The model is then used to evaluate policies that change incentives for entry into self-employment.
    JEL: J24 J31 J62 L26 M50
    Date: 2017–02
  2. By: Colin Caines; Florian Hoffmann; Gueorgui Kambourov
    Abstract: In this paper we study the relationship between task complexity and the occupational wage- and employment structure. Complex tasks are defined as those requiring higher-order skills, such as the ability to abstract, solve problems, make decisions, or communicate effectively. We measure the task complexity of an occupation by performing Principal Component Analysis on a broad set of occupational descriptors in the Occupational Information Network (O*NET) data.We establish four main empirical facts for the U.S. over the 1980-2005 time period that are robust to the inclusion of a detailed set of controls, subsamples, and levels of aggregation: (1) There is a positive relationship across occupations between task complexity and wages and wage growth; (2) Conditional on task complexity, routine-intensity of an occupation is not a significant predictor of wage growth and wage levels; (3) Labor has reallocated from less complex to more complex occupations over time; (4) Within groups of occupations with similar task complexity labor has reallocated to non-routine occupations over time. We then formulate a model of Complex-Task Biased Technological Change with heterogeneous skills and show analytically that it can rationalize these facts. We conclude that workers in non-routine occupations with low ability of solving complex tasks are not shielded from the labor market effects of automatization.
    Keywords: Occupational Task Content ; Complex Tasks ; Wage Polarization ; Skills
    JEL: E24 J21 J23 J24 J31
    Date: 2017–02
  3. By: Pekkala Kerr, Sari; Kerr, William; Özden, Çağlar; Parsons, Christopher
    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: 2017–02–13
  4. By: David Autor; David Dorn; Gordon Hanson
    Abstract: The structure of marriage and child-rearing in U.S. households has undergone two marked shifts in the last three decades: a steep decline in the prevalence of marriage among young adults, and a sharp rise in the fraction of children born to unmarried mothers or living in single-headed households. A potential contributor to both phenomena is the declining labor-market opportunities faced by males, which make them less valuable as marital partners. We exploit large scale, plausibly exogenous labor-demand shocks stemming from rising international manufacturing competition to test how shifts in the supply of young ‘marriageable’ males affect marriage, fertility and children's living circumstances. Trade shocks to manufacturing industries have differentially negative impacts on the labor market prospects of men and degrade their marriage-market value along multiple dimensions: diminishing their relative earnings—particularly at the lower segment of the distribution—reducing their physical availability in trade-impacted labor markets, and increasing their participation in risky and damaging behaviors. As predicted by a simple model of marital decision-making under uncertainty, we document that adverse shocks to the supply of `marriageable' men reduce the prevalence of marriage and lower fertility but raise the fraction of children born to young and unwed mothers and living in in poor single-parent households. The falling marriage-market value of young men appears to be a quantitatively important contributor to the rising rate of out-of-wedlock childbearing and single-headed childrearing in the United States.
    JEL: F16 J12 J13 J21 J23
    Date: 2017–02
  5. By: Pamela Lenton (Department of Economics, University of Sheffield)
    Abstract: The number of individuals registered as self-employed in the UK has grown considerablyover the past decade. The economics literature generally agrees that the self-employedwork longer hours than their counterparts who are in paid employment and earn less.However, most of the literature considers the self-employed as a homogeneous group ofindividuals, whereas in reality, the term now encompasses a variety of very differententrepreneurs, such as businesses or partnerships, sole traders, freelance workers andsub-contractors. Using UK panel data, this paper examines the differences in thecharacteristics of self-employed individuals by self-employment type to highlight thedifference between these groups and their employed counterparts. Random effect probitestimations that model the determinants of being in different self-employment groupshighlight the heterogeneous nature of self-employment and their different determinants.Wage estimations reveal different returns to separate classifications of self-employment.
    Keywords: Self-employment, Autonomy, Entrepreneurship
    JEL: J20 J21 J24 L26
    Date: 2017–01
  6. By: Xavier Giroud; Holger M. Mueller
    Abstract: This paper shows that firms spread the adverse impacts of local employment shocks across regions through their internal networks of establishments. Linking confidential micro data at the establishment level from the U.S. Census Bureau’s Longitudinal Business Database to ZIP code-level variation in house price changes during the Great Recession, we find that local establishment-level employment responds strongly to employment shocks in other regions in which the firm has establishments. Consistent with theory, the elasticity of establishment-level employment with respect to shocks in other regions is increasing with firms’ financial constraints. Moreover, establishments belonging to more expansive firm networks exhibit smaller employment elasticities with respect to their own local shocks. To account for the impacts of general equilibrium adjustments, we examine aggregate employment at the county level. Similar to what we found at the establishment level, we obtain large elasticities of county-level employment with respect to employment shocks in other counties linked through firms’ internal networks. Overall, our results suggest that firms play an important role in the provision of regional risk sharing and the propagation of local employment shocks across different U.S. regions.
    JEL: D24 D85 E24 E32 G31 J21 J63
    Date: 2017–02
  7. By: Romina R. Giuliano; Stephan Kampelmann; Benoît Mahy; François Rycx
    Abstract: This paper is one of the first to examine how the use of fixed-term employment contracts (FTCs) affects firm competitiveness (i.e. productivity, wages and profits) while controlling for key econometric issues such as time-invariant unobserved workplace characteristics, endogeneity and state dependence. We apply dynamic panel data estimation techniques to detailed Belgian linked employer-employee data covering all years from 1999 to 2010. Results show that the effects of FTCs on firm competitiveness vary across sectors: while temporary employment is found to enhance productivity and profits in (labour-intensive) services, this is not the case in manufacturing and construction.
    Keywords: Fixed-term contracts; productivity; wages; profits; linked panel data; sectors
    JEL: D24 J24 J31 M12
    Date: 2017–02–23
  8. By: Alessia Matano (Universitat de Barcelona, AQR-IREA and University of Rome “La Sapienza”, Dipartimento di Analisi Economiche e Sociali.); Paolo Naticchioni (Roma Tre University and IZA, Via Chiabrera 199 – 00145 Rome (IT).)
    Abstract: The relation between rent sharing and wages has generally been evaluated on average wages. This paper uses a unique employer-employee panel database to investigate the extent of rent sharing along the wage distribution in Italy. We apply quantile regression techniques and control for national level bargaining, unobserved worker and firm heterogeneity and endogeneity. Our findings show that the extent of rent-sharing decreases along the wage distribution, suggesting that unskilled workers benefit most from firms’ rents. By applying quantile regressions by occupational categories, we show that the decreasing pattern is mainly driven by blue collar workers, while estimates for white collars are higher and basically constant along the wage distribution. We also provide evidence that unions might represent one of the driver of our findings.
    Keywords: Rent Sharing, Wage Distribution, Quantile Regressions, IV Quantile regressions, Quantile fixed effects regressions. JEL classification: C33, J31, J41, L25.
    Date: 2017–02
  9. By: Luebker, M.
    Abstract: The Sustainable Development Goals (SDGs) put much emphasis on the employment and inequality, a noteworthy shift from the Millennium Development Goals (MDGs) and their focus on poverty eradication. To achieve ‘Sustained, inclusive and sustainable economic growth’, SDG Goal 8 contains targets on productivity-enhancing policies, employment and decent work, and makes reference to three out of the four fundamental labour rights. While these are necessary ingredients for a sustained increase in living standards and important elements of heterodox accounts of development, they are not sufficient conditions to create equitable growth. Drawing on examples from Asia, the paper makes this argument by addressing three orthodox conjectures: that workers benefit from productivity growth through higher wages; that factor shares in national income are roughly constant; and that policy interventions such as minimum wages are bound to fail. The paper concludes with two policy implications: (1) Countries need to adopt fiscal, wage and social protection policies that reduce inequalities of outcome and achieve faster income growth for the poorest – elements which can be found in Goal 10. (2) Effective labour markets governance needs to include the right to freedom of association and collective bargaining, the only fundamental labour right not explicitly mentioned in the SDGs.
    Keywords: SDGs, poverty, productivity, labour market institutions, income inequality, functional distribution of incomes
    JEL: D31 D33 I30 J31 J83
    Date: 2017–02–16

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