nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒04‒02
ten papers chosen by
Joseph Marchand
University of Alberta

  1. Americans’ Responses to Terrorism and Mass-Shooting: Evidence from the American Time Use Survey and Well-Being Module By Clark, Andrew; Stancanelli, Elena
  2. The Role of Aggregate Preferences for Labor Supply: Evidence from Low-Paid Employment By Luke Haywood; Michael Neumann
  3. Productivity and the Allocation of Skills By David C Maré; Trinh Le; Richard Fabling; Nathan Chappell
  4. War, Migration and the Origins of the Thai Sex Industry By Abel Brodeur; Warn N. Lekfuangfu; Yanos Zylberberg
  5. When Harry Fired Sally: The Double Standard in Punishing Misconduct By Mark L. Egan; Gregor Matvos; Amit Seru
  6. Skill Premium and Technological Change in the Very Long Run: 1300-1914 By Rui Luo
  7. Closing Routes to Retirement: How Do People Respond? By Johannes Geyer; Clara Welteke
  8. Capital-Skill Complementarity and the Emergence of Labor Emancipation By Boris Gershman; Quamrul H. Ashraf; Francesco Cinnirella; Oded Galor; Erik Hornung
  9. The relation between public manager compensation and members of parliament’s salary across OECD countries: explorative analysis and possible determinants with public policy implications By Benati Igor; Coccia Mario
  10. Toothless reforms: The remarkable stability of female labor force participation in a top-reforming country By Norberto Pignatti; Karine Torosyan; Maka Chitanava

  1. By: Clark, Andrew; Stancanelli, Elena
    Abstract: A small but significant literature concludes that terrorism impacts the economy, although the impact of mass-shooting has not yet been addressed by economists. We compare the economic effects of two tragedies: the 2013 Boston Marathon Bombing and the 2012 Sandy Hook School Shooting. Fatal attacks are rare on any given day, and to estimate their effects we combine RDD with differences-in-differences. Using diaries of daily activities for a representative, random sample of Americans, we find a decline of over half an hour per day in average hours worked, while time spent accessing the media increased slightly. Active leisure fell after the BMB but increased after the SHSS. Daily data on emotional feelings reveal that subjective well-being fell dramatically after the BMB, and especially so for women, who are likely more averse to risk; but the findings are mixed for the SHSS. The latter induced a significant increase in meaningfulness, which was greatest for respondents with college education. We discuss these differences against economic, a priori, and drive conclusions that may be relevant for policy.
    Keywords: Well-being,Time Use,Terrorism
    JEL: I31 J21 J22 F52
    Date: 2017
  2. By: Luke Haywood; Michael Neumann
    Abstract: Labor supply in the market for low-paid jobs in Germany is strongly influenced by tax exemptions - even for individuals to whom these exemptions do not apply. We present compelling evidence that an individual's choice set depends on other workers' preferences because firms cater their job offers to aggregate preferences in the market. We estimate an equilibrium job search model which rationalizes the strong earnings bunching at the tax exemption threshold using German administrative data. We then simulate modifications to the tax schedule that remove the discontinuity and thus the bunching at the threshold. Results highlight the indirect costs of (discontinuous) tax policies which are shown to be reinforced by firm responses: Workers who would work anyway are hurt by subsidies benefiting groups who enter the market as a result of tax incentives.
    Keywords: Tax exemptions, welfare-to-work, labor supply elasticities, minijobs, job search, firm responses, bunching
    JEL: J64 J31 J22 J23
    Date: 2017
  3. By: David C Maré (Motu Economic and Public Policy Research); Trinh Le (Motu Economic and Public Policy Research); Richard Fabling (Independent Researcher); Nathan Chappell (Motu Economic and Public Policy Research)
    Abstract: We use linked employer-employee data from 2004–2012, combined with individual qualifications data from 1994–2012, to study how graduates with different skills fare in the labour market in the six years after studying. We find that graduates experience improvements in earnings, and that they systematically move between jobs, industries and locations in a pattern that is consistent with their securing better job matches, particularly for high level STEM graduates. We then estimate joint production function and wage equations to see how the skill composition of a firm’s employees correlates with productivity, and compare this with how the skill composition correlates with its wage bill. Our results suggest that degree graduates make a growing positive contribution to production in the six years after graduation, with associated wage growth. There is variation in relative productivity and wages across groups of graduates that differ by field of study and level of qualification.
    Keywords: Firm productivity, linked employer-employee data, skill matching, STEM
    JEL: D29 J24
    Date: 2017–04
  4. By: Abel Brodeur (University of Ottawa, Ottawa, ON); Warn N. Lekfuangfu (Chulalongkorn University, Bangkok); Yanos Zylberberg (Bristol University, Bristol)
    Abstract: This paper analyzes the determinants behind the spatial distribution of the sex industry in Thailand. We relate the development of the sex industry to an early temporary demand shock, i.e., U.S. military presence during the Vietnam War. Comparing the surroundings of Thai military bases used by the U.S. army to districts close to unused Thai bases, we find that there are currently 5 times more commercial sex workers in districts near former U.S. bases. The development of the sex industry is also explained by a high price elasticity of supply due to female migration from regions affected by an agricultural crisis. Finally, we study a consequence induced by the large numbers of sex workers in few red-light districts: the HIV outbreak in the early 1990s.
    Keywords: Persistence, Industry Location, Sex Industry, HIV/AIDS
    JEL: O17 O18 N15 J46 J47 I28
    Date: 2017
  5. By: Mark L. Egan; Gregor Matvos; Amit Seru
    Abstract: We examine gender discrimination in the financial advisory industry. We study a less salient mechanism for discrimination, firm discipline following missteps. There are substantial differences in the punishment of misconduct across genders. Although both female and male advisers are disciplined for misconduct, female advisers are punished more severely. Following an incidence of misconduct, female advisers are 20% more likely to lose their jobs, and 30% less likely to find new jobs relative to male advisers. Females face harsher punishment despite engaging in less costly misconduct and despite a lower propensity towards repeat offenses. Evidence suggests that the observed behavior is not driven by productivity differences across advisers. Rather, we find supporting evidence for taste-based discrimination. For females, a disproportionate share of misconduct complaints is initiated by the firm, instead of customers or regulators. Moreover, there is significant heterogeneity among firms. Firms with a greater percentage of male executives/owners at a given branch, tend to punish female advisers more severely following misconduct, and also tend to hire fewer female advisers with past record of misconduct.
    JEL: D18 G24 G28 J71
    Date: 2017–03
  6. By: Rui Luo
    Abstract: This paper sets out to explain the historical development of the skill premium in western Europe over a period ranging from the pre-modern era to the modern era (circa 1300 to 1914). We develop a model of the skill premium and technological change over the very long run which endogenously accounts for the transition across different growth regimes in this period. The model integrates two key elements in long-run growth, the human capital investment and the capital-human capital ratio, into the analysis and successfully explains the declining skill premium from 1300 to 1600 and the stable skill premium from 1600 to 1914. The explanation elucidates a number of well-known historical facts that have not been previously examined in the study of the skill premium.
    Keywords: skill premium; technological change; human capital investment; capital-human capital ratio; growth regimes
    JEL: J31 O41 O11
    Date: 2017–03
  7. By: Johannes Geyer; Clara Welteke
    Abstract: We present quasi-experimental evidence on the employment effects of an unprecedented large increase in the early retirement age (ERA). Raising the ERA has the potential to extend contribution periods and to reduce the number of pension beneficiaries at the same time, if employment exits are successfully delayed. However, workers may not be able to work longer or may choose other social support programs as exit routes from employment. We study the effects of the ERA increase on employment and potential program substitution in a regression-discontinuity framework. Germany abolished an important early retirement program for women born after 1951, effectively raising the ERA for women by three years. We analyze the effects of this huge increase on employment, unemployment, disability pensions, and inactivity rates. Our results suggest that the reform increased both employment and unemployment rates of women age 60 and over. However, we do not find evidence for active program substitution from employment into alternative social support programs. Instead employed women remained employed and unemployed women remained unemployed. The results suggest an increase in inequality within the affected cohorts.
    Keywords: Retirement age, early retirement, regression discontinuity, pension reform, unemployment, labor supply, disability pension
    JEL: J14 J18 J22 J26
    Date: 2017
  8. By: Boris Gershman; Quamrul H. Ashraf; Francesco Cinnirella; Oded Galor; Erik Hornung
    Abstract: This paper advances a novel hypothesis regarding the historical roots of labor emancipation. It argues that the decline of coercive labor institutions in the industrial phase of development has been an inevitable by-product of the intensification of capital-skill complementarity in the production process. In light of the growing significance of skilled labor for fostering the return to physical capital, elites in society were induced to relinquish their historically profitable coercion of labor in favor of employing free skilled workers, thereby incentivizing the masses to engage in broad-based human capital acquisition, without fear of losing their skill premium to expropriation. In line with the proposed hypothesis, exploiting a plausibly exogenous source of variation in early industrialization across regions of nineteenth-century Prussia, capital abundance is shown to have contributed to the subsequent intensity of de facto serf emancipation.
    Keywords: Labor coercion, serfdom, emancipation, industrialization, physical capital accumulation, capital-skill complementarity, demand for human capital, nineteenth-century Prussia
    JEL: J24 J47 N13 N33 O14 O15 O43
    Date: 2017
  9. By: Benati Igor (CNR - National Research Council of Italy, Turin, Italy); Coccia Mario (Arizona State University, Center for Social Dynamics and Complexity, Interdisciplinary Science and Technology Building 1 CNR - National Research Council of Italy, Turin, Italy)
    Abstract: The compensation for central government senior managers has been the focus of considerable attention from the public, media and academia in recent years. In several countries, the average compensation of public managers, especially top level ones, has risen in a way that public considers disproportionate and inequitable. In this context, there is a hot debate that the government senior managers are overpaid. A growing literature has analysed the possible determinants of com-pensation in public and private organizations. However, some political and institutional factors af-fecting public managers’ compensation are hardly known. Here, we show that the average compen-sation for central government senior managers seems to be positively associated to average salary of members of parliament (MPs), standardized with GDP per capita of countries. In addition, results show that higher levels of compensation for central government senior managers are mainly in countries based on Mixed Executive. We also show that higher public manager compensations are associated to countries with lower freedom of expression, freedom of association, free media, lower quality of contract enforcement, property rights and corruption control. These results can provide fruitful insights to support reforms and best practices that improve the efficiency of public administration, mainly in latecomer countries.
    Keywords: Compensation, Rewards, Wage for politicians, Pay for politicians, Bureaucracy, Public Managers; Executive, Public Administration, Public Policy.
    JEL: D72 H0 J3 J45
    Date: 2017–02
  10. By: Norberto Pignatti (International School of Economics - Tbilisi); Karine Torosyan (International School of Economics at Tbilisi State University); Maka Chitanava (ISET Policy Institute)
    Abstract: Low Female Labor Force Participation (FLFP) constitutes a foregone opportunity at both the macro and at the micro levels, potentially increasing the vulnerability of households and lowering the long-run development perspectives of a country. Most international organizations and national policy makers see low FLFP as a serious issue that needs to be addressed by adopting appropriate policies. We investigate the possible reasons of the remarkable stability of FLFP in a top-reforming upper-middle income country. Our goal is to disentangle the different forces at work and to draw useful lessons for the design of participation-enhancing policies. Using data from a nationally representative Household Survey covering the period 2003-2015, we employ Blinder-Oaxaca (Blinder, 1973 and Oaxaca, 1973) type decomposition to decompose changes over time in FLFP levels into parts that are due to changes in observable factors versus changes in the strength of impact of these factors. This allows us to identify possible shifters of the FLFP rate and proposing areas of special interest for policy making. We show that the stability of FLFP in Georgia during the period 2003-2013 is due to a number of relevant – but offsetting – socio-economic changes taking place in the country, and that the increase in the last period covered by our dataset – 2013-2015 – can be attributed to the emergence of new labor opportunities for women. We conclude that, while useful, supply-side economic reforms (and policies) are not sufficient to increase FLFP and need to be complemented by demand-side policies aiming at creating more and better work opportunities for women.
    Keywords: employment, female labor force participation, labor market, public policy, reforms, former soviet union, georgia
    JEL: J16 J18 J21 J24 P11 P21 P23
    Date: 2017–03

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