nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒05‒14
eighteen papers chosen by
Joseph Marchand
University of Alberta

  1. Routine and Ageing? The Intergenerational Divide in the Deroutinisation of Jobs in Europe By Lewandowski, Piotr; Keister, Roma; Hardy, Wojciech; Górka, Szymon
  2. The Demand for Teacher Characteristics in the Market for Child Care: Evidence from a Field Experiment By Boyd-Swan, Casey; Herbst, Chris M.
  3. Skill Premium, Labor Supply and Changes in the Structure of Wages in Latin America By Manuel Fernández; Julián Messina
  4. Earnings Inequality and the Global Division of Labor: Evidence from the Executive Labor Market By Schymik, Jan
  5. Does Delayed Retirement Affect Youth Employment? Evidence from Italian Local Labour Markets By Bertoni, Marco; Brunello, Giorgio
  6. Early and Late Human Capital Investments, Borrowing Constraints, and the Family By Elizabeth Caucutt; Lance Lochner
  7. Parental Work Hours and Childhood Obesity: Evidence Using Instrumental Variables Related to Sibling School Eligibility By Courtemanche, Charles; Tchernis, Rusty; Zhou, Xilin
  8. The Allocation and Valuation of Time By Diewert, Erwin; FOX, Kevin J.; Paul Schreyer
  9. Patterns, Trends and Policy Implications of Private Spending on Skills Development in Mexico and the United States By Miguel Székely; Pamela Mendoza
  10. Supervisors and Performance Management Systems By Frederiksen, Anders; Kahn, Lisa B.; Lange, Fabian
  11. Ageing Poorly?: Accounting for the Decline in Earnings Inequality in Brazil, 1995-2012 By Francisco H. G. Ferreira; Sergio P. Firpo; Julián Messina
  12. Differences in Positions along a Hierarchy: Counterfactuals Based on an Assignment Model By Gobillon, Laurent; Meurs, Dominique; Roux, Sébastien
  13. Globalization and Executive Compensation By Wolfgang Keller; William W. Olney
  14. Fathers, Parental Leave and Gender Norms By Unterhofer, Ulrike; Wrohlich, Katharina
  15. The ‘local economy’ effect of social transfers: A municipality-level analysis of the local growth impact of the Bolsa Familia Programme in the Brazilian Nordeste By Eric ROUGIER; François COMBARNOUS; Yves-André FAURE
  16. Policy Shocks and Wage Rigidities: Empirical Evidence from Regional Effects of National Shocks By de Ridder, M.; Pfajfar, D.
  17. The Fall of the Labor Share and the Rise of Superstar Firms By David Autor; David Dorn; Lawrence F. Katz; Christina Patterson; John Van Reenen
  18. In-Firm Training, Innovation and Productivity: The Case of Caribbean Small Island Developing States By Preeya Mohan; Eric Strobl; Patrick Watson

  1. By: Lewandowski, Piotr (Institute for Structural Research (IBS)); Keister, Roma (Institute for Structural Research (IBS)); Hardy, Wojciech (Institute for Structural Research (IBS)); Górka, Szymon (Institute for Structural Research (IBS))
    Abstract: This paper analyses the age dimension of changes in the task composition of jobs in 12 European countries between 1998 and 2014. We use the approach proposed by Autor et al. (2003) and Acemoglu & Autor (2011), and combine O*NET occupation content data with EU-LFS individual data to construct five task content measures: non-routine cognitive analytical, non-routine cognitive interpersonal, routine cognitive, routine manual, and nonroutine manual physical. We estimate occupation-level and worker-level regressions and find that the shift away from routine work and toward non-routine work occurred much faster among workers born between 1970 and 1989 than among workers born between 1950 and 1969. In the majority of countries, the ageing of the workforce occurred more quickly in occupations that were initially more routine-intensive, as the share of young workers in these occupations was declining. Individuals in these occupations were increasingly likely to be unemployed, especially if they were between the ages of 15 and 34.
    Keywords: task content of jobs, routinisation, ageing, occupational change, O*NET
    JEL: J21 J23 J24
    Date: 2017–04
  2. By: Boyd-Swan, Casey (Kent State University); Herbst, Chris M. (Arizona State University)
    Abstract: Many preschool-age children in the U.S. attend center-based child care programs that are of low quality. This paper examines the extent to which teacher qualifications – widely considered important inputs to classroom quality – are valued by providers during the hiring process. To do so, we administered a resume audit study in which job-seeker characteristics were randomly assigned to a large number of resumes that were submitted in response to real child care job postings in 14 cities. Our results indicate that center-based providers may not hire the most qualified applicants. For example, we find that although providers have a strong preference for individuals with previous work experience in early childhood education (ECE), those with more ECE experience are less likely to receive an interview than those with less experience. We also find that individuals with bachelor's degrees in ECE are no more likely to receive an interview than their counterparts at the associate's level, even in the market for lead preschool-age teachers. Furthermore, those revealing high levels of academic performance, as measured by grade point average, are generally not preferred by child care providers. Finally, it appears that some non-quality attributes do not influence hiring decisions (e.g., signaling car ownership), while others have large effects on teacher hiring (e.g., applicant race/ethnicity). Together, our findings shed light on the complex trade-offs made by center-based providers attempting to offer high-quality programs while earning sufficient revenue to stay in business.
    Keywords: child care quality, teacher qualifications, resume audit study, field experiment
    JEL: I20 J23 J24 J71
    Date: 2017–04
  3. By: Manuel Fernández; Julián Messina
    Abstract: Earnings inequality declined rapidly in Argentina, Brazil and Chile during the 2000s. A reduction in the experience premium is a fundamental driver of declines in upper-tail (90/50) inequality, while a decline in the education premium is the primary determinant of the evolution of lower-tail (50/10) inequality. Relative labor supply is important for explaining changes in the skill premiums. Relative demand trends favored high-skilled workers during the 1990s, shifting in favor of low-skilled workers during the 2000s. Changes in the minimum wage, and more importantly, commodity-led terms of trade improvements are key factors behind these relative skill demand trends.
    Keywords: Wage Gap, Income Inequality, Minimun wage, Labor Productivity Growth, Labor supply, Labor Force, Unemployment Rate, Commodity Prices, Human Capital, Female Labor Force Participation, Unemployment, labor supply, Wage Gap, Minimun wage
    JEL: J31 J20
    Date: 2017–03
  4. By: Schymik, Jan
    Abstract: Many industrialized economies have seen a rapid rise in top income inequality and in the globalization of production since the 1980s. In this paper I propose an open economy model of executive pay to study how offshoring affects the pay level and incentives of top earners. The model introduces a simple principal-agent problem into a heterogeneous firm talent assignment model and endogenizes pay levels and the sensitivity of pay to performance in general equilibrium. Using unique data of manager-firm matches including executives from stock market listed firms across the U.S. and Europe, I quantify the model predictions empirically. Overall, I find that between 2000 and 2014 offshoring has increased executive pay levels, raised earnings inequality across executives and increased the sensitivity of pay to firm performance.
    Keywords: Offshoring; Earnings Structure; Inequality; Incentives; Executive Compensation
    JEL: D2 F1 F2 J3 L2
    Date: 2017–05
  5. By: Bertoni, Marco (University of Padova); Brunello, Giorgio (University of Padova)
    Abstract: Pension reforms that raise minimum retirement age increase the pool of senior individuals aged 50+ who are not eligible to retire from the labour market. Using data from Italian provinces and regions and an instrumental variable strategy, we estimate the effects of local changes in the supply of workers aged between 50 and minimum retirement age on youth, prime age and senior employment. Results based on provincial data from 2004 to 2015, a period characterized by declining real GDP, indicate that adding one thousand additional senior individuals to the local labour supply reduces employment in the age group 16-34 by 189 units. Estimates based on longer regional data covering the period 1996 to 2015, that includes also a period of growing real GDP, show smaller negative effects for young workers, suggesting that the employment costs of pension reforms may be lower when the economy is growing.
    Keywords: pension reforms, lump of labour, youth employment, local labour markets
    JEL: J26 H55 J21 J14 J11
    Date: 2017–04
  6. By: Elizabeth Caucutt (Western University Canada); Lance Lochner (University of Western Ontario)
    Abstract: We develop a dynastic human capital investment framework to study the importance of potential market failures--family borrowing constraints and uninsured labor market risk--as well as the process of intergenerational ability transmission in determining human capital investments in children at different ages. We explore the extent to which policies targeted to different ages can address these market failures, potentially improving economic efficiency and equity. We show that dynamic complementarity in investment and the timing of borrowing constraints are critical for the qualitative nature of investment responses to income and policy changes. Based on these analytical results, we use data from the Children of the NLSY (CNLSY) to establish that borrowing constraints bind for at least some families with young and old children. Calibrating our model to fit data from the CNLSY, we find a moderate degree of dynamic complementarity in investment and that 12% of young and 14% of old parents borrow up to their limits. While the effects of relaxing any borrowing limit at a single stage of development are modest, completely eliminating all lifecycle borrowing limits dramatically increases investments, earnings, and intergenerational mobility. Additionally, the impacts of policy or family income changes at college-going ages are substantially greater when anticipated earlier, allowing early investments to adjust. Finally, we show that shifting the emphasis of investment subsidies from college-going ages to earlier ages increases aggregate welfare and human capital.
    Keywords: market failure, Life-cycle dynastic models, risk, NLSY, CNLSY, borrowing limits, human capital investment
    JEL: J24 D19 D81 D47 D63
    Date: 2017–05
  7. By: Courtemanche, Charles (Georgia State University); Tchernis, Rusty (Georgia State University); Zhou, Xilin (Georgia State University)
    Abstract: This study exploits plausibly exogenous variation from the youngest sibling's school eligibility to estimate the effects of parental work on the weight outcomes of older children in the household. Data come from the 1979 cohort of the National Longitudinal Survey of Youth linked to the Child and Young Adult Supplement. We first show that mothers' work hours increase gradually as the age of the youngest child rises, whereas mothers' spouses' work hours exhibit a discontinuous jump at kindergarten eligibility. Leveraging these insights, we develop an instrumental variables model that shows that parents' work hours lead to larger increases in children's BMI z-scores and probabilities of being overweight and obese than those identified in previous studies. We find no evidence that the impacts of maternal and paternal work are different. Subsample analyses find that the effects are concentrated among advantaged households, as measured by an index involving education, race, and mother's marital status.
    Keywords: childhood obesity, maternal employment, women's labor supply
    JEL: I12 J22
    Date: 2017–04
  8. By: Diewert, Erwin; FOX, Kevin J.; Paul Schreyer
    Abstract: We provide a generalization of Becker's theory of the allocation of time. We assume that household time plays three roles: as leisure, household work and household labour supply, with separate utility valuations for each use of time. A case not considered by Becker, nor by Pollak and Wachter, is addressed; the case where the household does not provide external market labour. Various corner solutions to the household's time allocation problem are considered in detail, and we consider the econometric problems that these corner solutions create. We relate the analysis to the difficult problems associated with the valuation of household work at home.
    Keywords: Valuation of household time, replacement cost valuation of time, opportunity cost valuation of time, household production
    JEL: J22 E21 E01
    Date: 2017–05–04
  9. By: Miguel Székely; Pamela Mendoza
    Abstract: This paper explores families' investment in skills development through education in a high-inequality, low-education quality country such as Mexico, comparing it to a lower-inequality, higher-quality education country such as the United States. The paper uses a series of high-quality Household Income and Expenditure Surveys for both countries spanning around 20 years and different methodological approaches. Of particular interest is the analysis of education expenditure patterns along the income distribution. Policy implications for both cases are discussed. While in Mexico stimulating private spending in education through public resources might be regressive, the opposite might be the case in the United States.
    Keywords: Education Expenditure, Household Expenditure, School Attendance, Children, Private Investment, High School, Household Income, Labor markets, Higher Education, Human Capital Investment, School Enrollment, Private Investment, Household Expenditure, Household Income
    JEL: D11 J21 I2
    Date: 2017–03
  10. By: Frederiksen, Anders (Aarhus University); Kahn, Lisa B. (Yale University); Lange, Fabian (McGill University)
    Abstract: Supervisors occupy central roles in production and performance monitoring. We study how heterogeneity in performance evaluations across supervisors affects employee and supervisor careers and firm outcomes using data on the performance system of a Scandinavian service sector firm. We show that supervisors vary widely in how they rate subordinates of similar quality. To understand the nature of this heterogeneity, we propose a principal-agent model according to which supervisors can differ in their ability to elicit output from subordinates or in their taste for leniency when rating subordinates. The model also allows for variation in how informed firms are about this heterogeneity. Within the context of this model, we can discern the nature of the heterogeneity across supervisors and how informed firms are about this heterogeneity by relating observed supervisor heterogeneity in ratings to worker, supervisor, and firm outcomes. We find that subordinates are paid significantly more, and their pay is more closely aligned with performance, when they are matched to a highrating supervisor. We also find that higher raters themselves are paid more and that the teams managed by higher raters perform better on objective performance measures. This evidence suggests that supervisor heterogeneity stems, at least in part, from real differences in managerial ability and that firms are at least partially informed about these differences. We conclude by quantifying how important heterogeneity in supervisor type is for workers' careers. For a typical worker, matching to a high rater (90th percentile) relative to a low rater (10th percentile) for just one year results in an increase in the present discounted value of earnings equivalent to 7–14% of an annual salary.
    Keywords: labor, personnel economics, principal-agent, performance management systems, supervisors, organizational economics
    JEL: M5
    Date: 2017–04
  11. By: Francisco H. G. Ferreira; Sergio P. Firpo; Julián Messina
    Abstract: The Gini coefficient of labor earnings in Brazil fell by nearly a fifth between 1995 and 2012, from 0.50 to 0.41. The decline in earnings inequality was even larger by other measures, with the 90-10 percentile ratio falling by almost 40 percent. Although the conventional explanation of a falling education premium did play a role, an RIF regression-based decomposition analysis suggests that the decline in returns to potential experience was the main factor behind lower wage disparities during the period. Substantial reductions in the gender, race, informality and urbanrural wage gaps, conditional on human capital and institutional variables, also contributed to the decline. Although rising minimum wages were equalizing during 2003-2012, they had the opposite effects during 1995-2003, because of declining compliance. Over the entire period, the direct effect of minimum wages on inequality was muted.
    Keywords: Wage Gap, Household Income, Human Capital, Income Inequality, Wage Disparity, Wage Growth, Wage Premium, Informal Employment, Formal Employment, income inequality, household income, human capital, wage gaps
    JEL: J31 D31
    Date: 2017–03
  12. By: Gobillon, Laurent (Paris School of Economics); Meurs, Dominique (University Paris Ouest-Nanterre); Roux, Sébastien (CREST-INSEE)
    Abstract: We propose an assignment model in which positions along a hierarchy are attributed to individuals depending on their characteristics. Our theoretical framework can be used to study differences in assignment and outcomes across groups and we show how it can motivate decomposition and counterfactual exercises. It constitutes an alternative to more descriptive methods such as Oaxaca decompositions and quantile counterfactual approaches. In an application, we study gender disparities in the public and private sectors with a French exhaustive administrative dataset. Whereas females are believed to be treated more fairly in the public sector, we find that the gender gap in propensity to get job positions along the wage distribution is rather similar in the two sectors. The gender wage gap in the public sector is 13% and it increases by only 0.7 percentage points when workers are assigned to job positions according to the rules of the private sector. Nevertheless, the gender gap at the last decile in the public sector increases by as much as 3.6 percentage points when using the assignment rules of the private sector.
    Keywords: gender, wages, counterfactuals, distributions, assignment, public sector
    JEL: C51 J31 J45
    Date: 2017–04
  13. By: Wolfgang Keller (University of Colorado); William W. Olney (Williams College)
    Abstract: This paper examines the role of globalization in the rapid increase in top incomes. Using a com- prehensive data set of thousands of executives at U.S. firms from 1993-2013, we find that exports, along with technology and firm size, have contributed to rising executive compensation. Isolating changes in exports that are unrelated to the executive’s talent and actions, we show that global- ization has affected executive pay not only through market channels but also through non-market channels. Furthermore, exogenous export shocks raise executive compensation mostly through bonus payments in poor-governance settings, in line with the hypothesis that globalization has en- hanced the executive’s rent capture opportunities. Overall, these results indicate that globalization has played a more central role in the rapid growth of executive compensation and U.S. inequality than previously thought, and that rent capture is an important part of this story.
    Keywords: Inequality, Executive Compensation, Globalization, Exports
    JEL: F16 F14 F66 M12 J31
    Date: 2017–04
  14. By: Unterhofer, Ulrike (DIW Berlin); Wrohlich, Katharina (DIW Berlin)
    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 H31 J18 D13 J22
    Date: 2017–04
  15. By: Eric ROUGIER; François COMBARNOUS; Yves-André FAURE
    Abstract: This paper analyses the various impacts of Conditional social transfers (CCTs) on the structure of production and economic growth at municipal level. CCTs impacts on local productive structures have seldom been analysed, although they condition prospects of future economic growth and income generation. We first develop a simple illustrative demand multiplier model with two types of municipalities to illustrate that social transfers’ local growth impact may vary with the pattern of local productive structure change, some patterns eventually driving the formation of a redistribution trap for the least productive local economies which could well threaten the economic inclusion long-term outlook of the programme. By using an original dataset mixing up information on productive structures, growth determinants and Bolsa Familia (BFP) transfers for the 184 municipalities of the Brazilian state of Ceará between 2003 and 2010, we then find that although transfers had an overall positive effect on municipalities’ local economic growth, they also exerted a negative indirect growth impact by orienting local production toward services and informality. Although we could not find support for the hypothesis of a redistribution trap, since we find a positive effect of transfers on the development of transformation industries in municipalities with limited initial industrial capacities, our estimations indicate that, on average, the growth impact of the Bolsa Familia programme could have been two times bigger, absent the adverse impact of social transfers on structural transformation. In addition, we explain that, by promoting services and informal occupations, including in light manufacturing industries, the BFP might cause a possible problem of quality of jobs in the future if additional policies promoting local productive development are not associated to social transfers.
    Keywords: Conditional Cash Transfers; Bolsa Familia Programme ; Productive structure ; Municipalities ; Local economic growth ; Brazil
    JEL: H55 J46 O14 O17 O47
    Date: 2017
  16. By: de Ridder, M.; Pfajfar, D.
    Abstract: This paper studies the effect of wage rigidities on the transmission of fiscal and monetary policy shocks. We calculate downward wage rigidities across U.S. states using the Current Population Survey. These estimates are used to explain differences in the state-level economic effects of identical national shocks in interest rates and taxes. In line with the role of sticky wages in New Keynesian models, we find that contractionary monetary policy and tax shocks increase unemployment and decrease economic activity in rigid states considerably more than in flexible states. We also find larger and more persistent effects of monetary and tax policy shocks for states where the ratio between minimum and median wage is higher and for states that do not have right-to-work legislation.
    Keywords: Wage Rigidity, Monetary Policy, Tax Multipliers, U.S. states
    JEL: E52 E62 J30
    Date: 2017–04–26
  17. By: David Autor; David Dorn; Lawrence F. Katz; Christina Patterson; John Van Reenen
    Abstract: The fall of labor's share of GDP in the United States and many other countries in recent decades is well documented but its causes remain uncertain. Existing empirical assessments of trends in labor's share typically have relied on industry or macro data, obscuring heterogeneity among firms. In this paper, we analyze micro panel data from the U.S. Economic Census since 1982 and international sources and document empirical patterns to assess a new interpretation of the fall in the labor share based on the rise of \superstar firms." If globalization or technological changes advantage the most productive firms in each industry, product market concentration will rise as industries become increasingly dominated by superstar firms with high profits and a low share of labor in firm value-added and sales. As the importance of superstar firms increases, the aggregate labor share will tend to fall. Our hypothesis offers several testable predictions: industry sales will increasingly concentrate in a small number of firms; industries where concentration rises most will have the largest declines in the labor share; the fall in the labor share will be driven largely by between-firm reallocation rather than (primarily) a fall in the unweighted mean labor share within firms; the between-firm reallocation component of the fall in the labor share will be greatest in the sectors with the largest increases in market concentration; and finally, such patterns will be observed not only in U.S. firms, but also internationally. We find support for all of these predictions.
    Keywords: labour share, concentration, superstar firms
    JEL: J3
    Date: 2017–05
  18. By: Preeya Mohan; Eric Strobl; Patrick Watson
    Abstract: In-firm training is a crucial innovative activity in modern knowledge-based economies which face increasing global competition and rapidly changing technology. Nevertheless, there are few studies which look at in-firm training in the Caribbean. This study uses the World Bank Enterprise Survey (WBES) 2010 and Compete Caribbean's Productivity Technology Innovation Survey (PROTEqIN) 2014 to provide empirical evidence on in-firm training in the region. The results suggest that there is a relatively low incidence of training in the region, although there are significant differences across countries and this may be because of heterogeneities in public support and barriers to in-firm training. Also, various firm characteristics affect in-firm training, including size, ownership, whether the firm exports, whether the firm is part of a larger organization, innovative activity and workforce structure and educational level. Lastly, the findings suggest that in-firm training in the region may play a relatively small role and may not even matter for innovation and productivity.
    Keywords: Job Training Programs, Productivity Growth, Wage Growth, Exporting Firm, Labor Force, Firm innovation, Labor markets, Educational Level, New Technologies, Firm performance, Determinants of Innovation, Knowledge creation, on-the-job training, workforce, wages
    JEL: M53 J24 D22
    Date: 2017–03

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