nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒04‒30
sixteen papers chosen by
Joseph Marchand
University of Alberta

  1. Robots and Jobs: Evidence from US Labor Markets By Daron Acemoglu; Pascual Restrepo
  2. Effects of Subsidized Childcare on Mothers' Labor Supply Under a Rationing Mechanism* By Shintaro Yamaguchi; Yukiko Asai; Ryo Kambayashi
  3. Working time regulation, unequal lifetimes and fairness By LEROUX Marie-Louise; PONTHIERE Gregory
  4. Living Up to Expectations: How Job Training Made Women Better Off and Men Worse Off By Paloma Acevedo; Guillermo Cruces; Paul Gertler; Sebastian Martinez
  5. Sources of Knowledge Used by Entrepreneurial Firms in the European High-Tech Sector By Amoroso, Sara; Audretsch, David; Link, Albert
  6. Students in Distress: Labor Market Shocks, Student Loan Default, and Federal Insurance Programs By Holger M. Mueller; Constantine Yannelis
  7. A Model of Managerial Talent: Addressing Some Puzzles in CEO Compensation By Stanimir Morfov; Manuel Santos
  8. Gender Differences in Careers By SATO Kaori; HASHIMOTO Yuki; OWAN Hideo
  9. Horizontal and Vertical Polarization: Task-Specific Technological Change in a Multi-Sector Economy By Sang Yoon Lee; Yongseok Shin
  10. Long-Term Employment Relations when Agents Are Present Biased By Fahn, Matthias; Schwarz, Marco A.
  11. Why Bother? Understanding the Impact of Financial Obligations on Wage Selectivity By Gibson, John; Johnson, David
  12. Towards an equitable and sustainable points system By SCHOKKAERT Erik; DEVOLDER Pierre; HINDRIKS Jean; VANDENBROUCKE Frank
  13. Fathers, Parental Leave and Gender Norms By Ulrike Unterhofer; Katharina Wrohlich
  14. Regional labour market mobility. A network analysis of inter-firm relatedness By Shamnaaz B. Sufrauj; Giancarlo Corò; Mario Volpe
  15. Dynamics of overqualification: Evidence from the early career of graduates By Erdsiek, Daniel
  16. The Nordic model of economic development: Shocks, reforms and future prospects By Iacono, Roberto

  1. By: Daron Acemoglu; Pascual Restrepo
    Abstract: As robots and other computer-assisted technologies take over tasks previously performed by labor, there is increasing concern about the future of jobs and wages. We analyze the effect of the increase in industrial robot usage between 1990 and 2007 on US local labor markets. Using a model in which robots compete against human labor in the production of different tasks, we show that robots may reduce employment and wages, and that the local labor market effects of robots can be estimated by regressing the change in employment and wages on the exposure to robots in each local labor market—defined from the national penetration of robots into each industry and the local distribution of employment across industries. Using this approach, we estimate large and robust negative effects of robots on employment and wages across commuting zones. We bolster this evidence by showing that the commuting zones most exposed to robots in the post-1990 era do not exhibit any differential trends before 1990. The impact of robots is distinct from the impact of imports from China and Mexico, the decline of routine jobs, offshoring, other types of IT capital, and the total capital stock (in fact, exposure to robots is only weakly correlated with these other variables). According to our estimates, one more robot per thousand workers reduces the employment to population ratio by about 0.18-0.34 percentage points and wages by 0.25-0.5 percent.
    JEL: J23 J24
    Date: 2017–03
  2. By: Shintaro Yamaguchi; Yukiko Asai; Ryo Kambayashi
    Abstract: We estimate the marginal treatment effect of childcare use on mothers' labor market outcomes by exploiting a staggered childcare expansion across regions in Japan. The estimates show that the treatment effect is negatively associated with propensity to use childcare, which implies that mothers who increase their labor supply more are less likely to use childcare. Negative selection into treatment arises, because the childcare rationing rule gives preferential treatment to mothers working full-time before childcare application. These mothers are strongly attached to the labor market and likely to work regardless of the availability of subsidized childcare.
    JEL: H4 J2
    Date: 2017–04–18
  3. By: LEROUX Marie-Louise (UQAM, CIRPEE, CORE and CESifo); PONTHIERE Gregory (Université Paris Est, Paris School of Ecoomics and Institut Universitaire de France)
    Abstract: We examine the redistributive impact of working time regulations in an economy with unequal lifetimes. It is shown that uniform working time reductions, when uncompensated (i.e. constant hourly wage), can reduce inequalities in realized lifetime well-being between short-lived and long-lived persons with respect to the laissez-faire but at the cost of making the short-lived worse off. When compensated (i.e. constant labour earnings), uniform working time reductions make the short-lived better off, but at the cost of raising inequalities between short-lived and long-lived. Then, we characterize the ex post egalitarian optimum, where the realized lifetime well-being of the worst off is maximized, and show that this social optimum involves an increasing age profile in terms of worked hours. We examine the decentralization of that social optimum, and we provide a second-best egalitarian argument for age-dependent working time regulation, which can make the short-lived better off and reduce inequalities in realized lifetime well-being.
    Keywords: Working time regulations; longevity; inequalities; labor supply; pramature deaths
    JEL: J10 J18 J22
    Date: 2017–02–27
  4. By: Paloma Acevedo; Guillermo Cruces; Paul Gertler; Sebastian Martinez
    Abstract: We study the interaction between job and soft skills training on expectations and labor market outcomes in the context of a youth training program in the Dominican Republic. Program applicants were randomly assigned to one of 3 modalities: a full treatment consisting of hard and soft skills training plus an internship, a partial treatment consisting of soft skills training plus an internship, or a control group. We find strong and lasting effects of the program on personal skills acquisition and expectations, but these results are markedly different for young men and young women. Shortly after completing the program, both male and female participants report increased expectations for improved employment and livelihoods. This result is reversed for male participants in the long run, a result that can be attributed to the program’s negative short-run effects on labor market outcomes for males. While these effects seem to dissipate in the long run, employed men are substantially more likely to be searching for another job. On the other hand, women experience improved labor market outcomes in the short run and exhibit substantially higher levels of personal skills in the long run. These results translate into women being more optimistic, having higher self-esteem and lower fertility in the long run. Our results suggest that job-training programs of this type can be transformative – for women, life skills mattered and made a difference, but they can also have a downside if, like in this case for men, training creates expectations that are not met.
    JEL: J08 J24 J31 J68
    Date: 2017–03
  5. By: Amoroso, Sara (European Commission); Audretsch, David (Indiana University); Link, Albert (University of North Carolina at Greensboro, Department of Economics)
    Abstract: The purpose of this paper is to explore the relationship between an entrepreneur’s experience and education and his/her reliance on alternative sources of knowledge for exploring new business opportunities. The extant literature that is at the crossroads between sources of knowledge and the experiential and intellectual base of an entrepreneur (i.e., dimensions of his/her human capital) suggests that it is through experience and through education that an entrepreneur obtains knowledge. Using information on a sample of high-tech manufacturing firms across 10 European countries, we explore heterogeneities in the influence of experience, age, and education of the firm’s primary founder on the perceived importance of (i.e., use of) alternative sources of knowledge. We find that the association of these characteristics differs significantly across sources of knowledge, and across European regions. Education is positively related to the importance of knowledge from research institutes and internal know-how, while age is negatively related to the importance of research institutes and positively related to publications and conferences. On the one hand, in South/East European countries, the importance of internal know-how is positively associated with age and education, but negatively associated with experience. On the other hand, the characteristics of primary founders of North/West European firms are more linked to the importance of the participation to funded research programmes. This source of knowledge is related positively with age and education and negatively with experience.
    Keywords: Entrepreneurship; Knowledge; Experience; Education; Human Capital
    JEL: D83 J24 L26
    Date: 2017–04–25
  6. By: Holger M. Mueller; Constantine Yannelis
    Abstract: The collapse in home prices during the Great Recession triggered a sharp drop in consumer demand by households, leading to massive employment losses. This paper examines the implications of these labor market shocks for the dramatic rise in student loan defaults, which originated during this time period. Linking administrative student loan data at the individual borrower level to de-identified tax records and exploiting Zip code level variation in home price changes, we show that the drop in home prices during the Great Recession accounts for approximately 24 to 32 percent of the increase in student loan defaults. Consistent with a labor market channel, we find a strong relationship between home prices, employment losses, and student loan defaults at the individual borrower level, which is concentrated among low income jobs. Comparing the default responses of home owners and renters, we find no evidence of a direct liquidity effect of home prices on student loan defaults. Lastly, we show that the Income Based Repayment (IBR) program introduced by the federal government in the wake of the Great Recession reduced both student loan defaults and their sensitivity to home price fluctuations, thus providing student loan borrowers with valuable insurance against adverse income shocks.
    JEL: H81 I22 I26 J24
    Date: 2017–03
  7. By: Stanimir Morfov (University of Miami); Manuel Santos (University of Miami)
    Abstract: In this paper we present an adverse selection model of managerial talent. The model can account for some empirical regularities in executive compensation such as the higher level of CEO pay and the prominence of incentive pay in large and high-volatility firms as well as the controversial evidence on career concerns. Relative performance evaluation (RPE) is only obtained if the performance function is weakly separable on managerial talent and internal productivity factors. These predictions stand in sharp contrast to those of competing theories based upon moral hazard, managerial talent, and rent extraction.
    Keywords: Managerial talent; adverse selection; optimal contract; firm’s size; volatility of company returns; CEO age; relative performance evaluation Publication Status: Ex. Under Review
    JEL: D82 G30 J33
    Date: 2017–03–28
  8. By: SATO Kaori; HASHIMOTO Yuki; OWAN Hideo
    Abstract: Past literature has shown that job segregation by gender is one major cause of the widely observed gender pay gap and that there is also a gender difference in developmental job assignments for broader job experience. This paper examines how gender differences in job assignments are associated with the gender gap in pay and promotion using the personnel records of a Japanese manufacturing company. One of the major findings is that broader work experience through job transfers across establishments are associated with a higher promotion probability and future wages for employees of both genders, but this relationship is especially strong for women, which is consistent with the existence of statistical discrimination against them. Furthermore, according to our fixed effects model estimation of wage function, broader work experience leads to higher wages for men but not for women, implying that women accept promotions without pay raises much more often than men.
    Date: 2017–03
  9. By: Sang Yoon Lee; Yongseok Shin
    Abstract: We analyze the effect of technological change in a novel framework that integrates an economy's skill distribution with its occupational and industrial structure. Individuals become managers or workers based on their managerial vs. worker skills, and workers further sort into a continuum of tasks (occupations) ranked by skill content. Our theory dictates that faster technological progress for middle-skill tasks not only raises the employment shares and relative wages of lower- and higher-skill occupations among workers (horizontal polarization), but also raises those of managers over workers as a whole (vertical polarization). Both dimensions of polarization are faster within sectors that depend more on middle-skill tasks and less on managers. This endogenously leads to faster TFP growth of such sectors, whose employment and value-added shares shrink if sectoral goods are complementary (structural change). We present several novel facts that support our model, followed by a quantitative analysis showing that task-specific technological progress--which was fastest for occupations embodying routine-manual tasks but not interpersonal skills--is important for understanding changes in the sectoral, occupational, and organizational structure of the U.S. economy since 1980.
    JEL: J24 J31 L16 O14 O33
    Date: 2017–03
  10. By: Fahn, Matthias (LMU Munich); Schwarz, Marco A. (LMU Munich)
    Abstract: We analyze how agents\' present bias affects optimal contracting in an infinite-horizon employment setting. The principal maximizes profits by offering a menu of contracts to naive agents: a virtual contract - which agents plan to choose in the future - and a real contract which they end up choosing. This virtual contract motivates the agent and allows the principal to keep the agent below his outside option. Moreover, under limited liability, implemented effort can be inefficiently high. With a finite time horizon, the degree of exploitation of agents decreases over the life-cycle. While the baseline model abstracts from moral hazard, we show that the result persists also when allowing for non-contractible effort.
    Keywords: Employment relations; dynamic contracting; present bias;
    JEL: D03 D21 J31 M52
    Date: 2017–03–25
  11. By: Gibson, John; Johnson, David
    Abstract: Approximately 80 percent of Americans have a significant financial obligation. A substantial fraction of these individuals rely almost solely on labor income to meet these needs. Using a two-period model we demonstrate that when agents are risk averse, increasing the level of financial obligation will have a differential effect on the likelihood a wage offer is accepted depending on the initial size of the obligation. Increasing financial obligations from low levels is found to reduce wage selectivity, while increasing it beyond a certain threshold reverses this effect. We test our theory using online experiments. We confirm our theoretical results in the form of a statistically significant "dip" in wage selectivity for risk averse subjects assigned moderate financial obligations. This non-monotonic effect suggests that heterogeneity in financial obligations may exacerbate income and wealth inequality through individuals' labor market decisions. Policy makers interested in distributional effects should consider this feedback mechanism when designing policies related to loan forgiveness or debt discharge.
    Keywords: Wage Selectivity; Debt; Unemployment; Online Experiment
    JEL: C90 C99 J22 J64
    Date: 2017–04
  12. By: SCHOKKAERT Erik (KU Leuven and CORE); DEVOLDER Pierre (Université catholique de Louvain, ISBA, Belgium); HINDRIKS Jean (Université catholique de Louvain, CORE, Belgium); VANDENBROUCKE Frank (Universiteit Amsterdam)
    Abstract: We describe the points system that has been proosed by the Belgian Commission for Pension Reform 2020-2040. Intragenerational equity can be realised in a flexible and transparent way through the allocation of points within a cohort. The intergenerational distribution is determined by fixing the value of a point for the newly retired and a sustainability parameter for the actual retirees. The value of the point links future pensions to the future average living standard of the populuation in employment. This implies that credible promises can be made to the younger contributing generations. To keep the system economically sustainable, we propose an automatic adjustment mechanism, in which a key role is played by the career length. This adjustment mechanism implements the Musgrave rule by stating that the ratio of pensions over labour earnings net of pension contributions should remain constant. This induces a balanced distribution of the burden of demographic and economic shocks oveor the different cohorts and canbe seen as a transparent mechanism of intergenerational risk sharing.
    Keywords: retirement; pension reform, Musgrave rule; intergenerational risk sharing
    JEL: H55 I38 J18 J26
    Date: 2017–02–27
  13. By: Ulrike Unterhofer; Katharina Wrohlich
    Abstract: Social norms and attitudes towards gender roles have been shown to have a large effect on economic outcomes of men and women. Many countries have introduced policies that aim at changing gender stereotypes, for example fathers’ quota in parental leave schemes. In this paper, we analyze whether the introduction of the fathers’ quota in Germany in 2007, that caused a sharp increase in the take-up of parental leave by fathers, has changed the attitudes towards gender roles in the grandparents’ generation. To this end, we exploit the quasi-experimental setting of the 2007 reform and compare grandparents whose son had a child born before the 2007 reform to grandparents whose son had a child born after it. Our results suggest that such policy programs not only induce direct behavioral responses by the target group but also have indirect effects on non-treated individuals through social interaction and can thus change attitudes towards gender roles in a society as a whole.
    Keywords: Parental leave, gender equality, social norms, social interaction, policy evaluation
    JEL: J16 J18 J22 H31 D13
    Date: 2017
  14. By: Shamnaaz B. Sufrauj (Department of Economics, University Of Venice Cà Foscari); Giancarlo Corò (Economics, Languages and Entrepreneurship, University Of Venice Cà Foscari); Mario Volpe (Department of Economics, University Of Venice Cà Foscari)
    Abstract: Labour market rigidity is known to hamper the proper adjustment of an economy, thus, making it less resilient to shocks. This paper investigates the characteristics and resilience of the regional labour flow network in Veneto, a region famous for its industrial districts and the expertise of its workforce. A unique database of inter-firm worker mobility is used and the made-in-Italy relatedness to other industries is quantified. Descriptive results suggest that permanent-contract workers are more mobile within-sector than fixed-term contractors. The latter are more mobile across sectors. A finer disaggregation of the made-in-Italy industries shows that textile, food and woodwork are highly related to leisure-retail, logistics-wholesale and agriculture. These results can orient policy-making in getting faster labour reallocation. Network analysis establishes a number of stylised facts about labour flow networks, in particular, a hierarchical organisation of flows and a preference for workers to move from low-connected to high-connected firms and vice-versa, i.e. disassortativity. Unlike previous research, this paper identifies clusters of a non-spatial nature, that are, based on the intensity of labour flows. Regression analysis shows that labour mobility, both in and out, is beneficial for firms. However, being located inside labour clusters negatively affects firm performance. Interestingly, when these clusters include MNEs, they benefit. These results combined suggest that variety of connections prevails over standardisation.
    Keywords: Labour mobility, network analysis, skill-relatedness cross-industry linkages
    JEL: J24 J62 L14 R23 F23
    Date: 2017
  15. By: Erdsiek, Daniel
    Abstract: This study analyses the persistence and true state dependence of overqualification, i.e. a mismatch between workers' qualifications and their jobs' educational requirements. Employing individual-level panel data for Germany, I find that overqualification is highly persistent among tertiary graduates over the first ten years of their career cycle. Accounting for unobserved heterogeneity, results from dynamic random-effects probit models suggest that only a small share of the observed persistence can be attributed to a true state dependence effect. Unobserved factors are found to be the main driver of the high persistence of overqualification. In particular, selection into initial overqualification at the start of the career is of high importance. Furthermore, overqualification persistence is shown to be partly attributable to observed heterogeneity in terms of ability and study characteristics.
    Keywords: overqualification,overeducation,persistence,state dependence,dynamic random-effects probit
    JEL: I21 I23 J24
    Date: 2017
  16. By: Iacono, Roberto
    Abstract: The aim of this research is to provide novel evidence regarding the functioning of the Nordic model of economic development and the robustness of its institutions. At first, the paper defines a conceptual analytical framework identifying the key features of the model for the Nordic economies (Denmark, Finland, Norway, and Sweden), by synthesizing relevant background literature. Secondly, this framework is used to interpret a set of shocks, reforms and ongoing trends: the effect of resource revenues on the labor market and income inequality in Norway compared to the other Nordic countries; the design of a novel minimum income scheme in Finland and its effects on preferences for social insurance; and the implications of population ageing and increased automation for indicators of sustainability for the Nordic welfare states.
    Keywords: Nordic model,Income inequality,Welfare states,Ageing,Automation
    JEL: H53 I38 J31 P47 P51
    Date: 2017

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