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on Labor Markets - Supply, Demand, and Wages |
| By: | Jansen, Anika; Pfeifer, Harald; Raecke, Julia |
| Abstract: | In this paper, we study the relation between decision makers’ preferences and training investments of their firms. First, we develop a theoretical framework, which takes the possibility into account that individual preferences of decision makers may influence firm behavior with respect to training. We then develop and test the hypothesis that the willingness to take risks or the preference for future profits of decision makers is positively related and procrastination negatively related to firms’ investment in worker training. Using unique firm-level data, including both person-level preference measures and firm-level information about training costs, we find empirical support for our hypothesis. Training investment is higher in firms with risk-inclined decision makers and lower in firms with procrastinating decision makers. The preference for future profits is relevant for training participation and the number of trained workers, but not for the training investment per worker. The results imply that firms have scope to adjust their profit-maximizing strategies by taking the individual preferences of their decision makers into account. |
| Keywords: | risk and time preferences, training investment, profit maximization |
| JEL: | J24 J31 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umaror:2017002&r=lma |
| By: | Guney, Ibrahim Ethem (Central Bank of Turkey); Hacihasanoglu, Yavuz Selim (Central Bank of Turkey); Tumen, Semih (Central Bank of Turkey) |
| Abstract: | We investigate the impact of a substantial minimum wage increase, which became effective in January 2016, on consumer loans in Turkey. Using bank-level data and designing an original identification strategy, we ask whether the loans provided by banks with a historically high share of low-wage loan customers have increased relative to those provided by banks with a historically low share of low-wage loan customers after January 2016. Our results suggest that consumer loan flows have displayed a limited but statistically and economically meaningful increase following the minimum wage hike. This increase mostly comes from the increase in long-term general-purpose loans. Vehicle loans have also increased, while there is no change in housing loans. In the overall, the minimum wage hike has generated a moderate and transitory increase in the flow of consumer loans extended to low-wage earners in Turkey – perhaps due to delayed consumption effect. Consumption of durables, which can further increase household borrowing capacity through collateralized debt channel, has only slightly and temporarily increased. The underlying long-term trends in the stock of consumer loans have hardly changed. |
| Keywords: | consumer loans, labor income shocks, minimum wages, triple difference |
| JEL: | D14 E24 G21 J31 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10751&r=lma |
| By: | Alexander M. Gelber; Damon Jones; Daniel W. Sacks; Jae Song |
| Abstract: | We develop a method for estimating the effect of a kinked budget set on workers' employment decisions, and we use it to estimate the impact of the Social Security Old-Age and Survivors Insurance (OASI) Annual Earnings Test (AET). The AET reduces OASI claimants' current OASI benefits in proportion to their earnings in excess of an exempt amount. Using a Regression Kink Design and Social Security Administration data, we document that the discontinuous change in the benefit reduction rate at the exempt amount causes a corresponding change in the employment rate. We develop conditions in a general setting under which we can use such patterns to estimate the elasticity of the employment rate with respect to the effective average net-of-tax rate. Our resulting elasticity point estimate for the AET is at least 0.49, suggesting that the AET reduces employment by more than one percentage point in the group we study. |
| JEL: | H24 H31 H55 J14 J22 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23362&r=lma |
| By: | Dolado, Juan J. (European University Institute); García-Peñalosa, Cecilia (CNRS); Tarasonis, Linas (Bank of Lithuania) |
| Abstract: | The aim of this paper is to evaluate the role played by selectivity issues induced by nonemployment in explaining gender wage gap patterns in the EU since the onset of the Great Recession. We show that male selection into the labour market, traditionally disregarded, has increased. This is particularly the case in peripheral EU countries, where dramatic drops in male unskilled jobs have taken place during the crisis. As regards female selection, traditionally positive, we document mixed findings. While it has declined in some countries, as a result of increasing female LFP due to an added-worker effect, it has become even more positive in other countries. This is due to adverse labour demand shifts in industries which are intensive in temporary work where women are over-represented. These adverse shifts may have more than offset the rise in unskilled female labour supply. |
| Keywords: | sample selection, gender wage gaps, gender employment gaps |
| JEL: | J31 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10729&r=lma |
| By: | Emanuele Ciani (Bank of Italy); Francesco David (Bank of Italy); Guido de Blasio (Bank of Italy) |
| Abstract: | Using different data sources from local labour markets (LLMs) in Italy between 1971 and 2011, we document a number of stylized facts: a) local differences in the ratios of private employment to population are highly persistent; b) the population has a limited reaction to labour demand shocks, consistent with the high rigidity of nominal wages and pro-cyclical variations in rents, which absorb the gains (losses) from higher (lower) employment rates; c) labour demand shocks are fairly persistent and unevenly distributed, to the detriment of those areas that were already lagging behind and boosting the more advanced ones; d) shocks are amplified by the non-linear employment adjustment, which reacts more to negative shocks than to positive ones. The estimated reactions to shocks are then used to perform policy-motivated simulations. We find that allowing greater population reactions is a superior policy option. Had Italy experienced the population reactivity of the US, local disparities would have been significantly less, to the same extent as with a sizeable public intervention in areas lagging behind. |
| Keywords: | local labour markets, labour demand, shocks. |
| JEL: | J23 J61 R23 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1112_17&r=lma |
| By: | John Horton; William R. Kerr; Christopher Stanton |
| Abstract: | Digital labor markets are rapidly expanding and connecting companies and contractors on a global basis. We review the environment in which these markets take root, the micro- and macro-level studies of their operations, their ongoing evolution and recent trends, and perspectives for undertaking research with micro-data from these labor platforms. We undertake new empirical analyses of Upwork data regarding 1) the alignment of micro- and macro-level approaches to disproportionate ethnic-connected exchanges on digital platforms, 2) gravity model analyses of global outsourcing contract flows and their determinants for digital labor markets, and 3) quantification of own- and cross-country elasticities for contract work by wage rate. Digital labor markets are an exciting frontier for global talent flows and growing rapidly in importance. |
| JEL: | F15 F22 F23 J15 J31 J44 L14 L24 L26 L84 M55 O31 O32 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23398&r=lma |
| By: | Collewet, Marion (CORE, Université catholique de Louvain); Sauermann, Jan (SOFI, Stockholm University) |
| Abstract: | This paper studies the link between working hours and productivity using daily information on working hours and performance of a sample of call centre agents. We exploit variation in the number of hours worked by the same employee across days and weeks due to central scheduling, enabling us to estimate the effect of working hours on productivity. We find that as the number of hours worked increases, the average handling time for a call increases, meaning that agents become less productive. This result suggests that fatigue can play an important role, even in jobs with mostly part-time workers. |
| Keywords: | working hours, productivity, output, labour demand |
| JEL: | J23 J22 M12 M54 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10722&r=lma |
| By: | Moro, Andrea; Maresch, Daniela; Ferrando, Annalisa; Udell, Gregory F. |
| Abstract: | We investigate the impact of employment protection on firms credit access by looking at both credit obtained from banks and firms’ decision to apply for a loan. We find that greater flexibility in structuring the employees’ working hours and in dismissing employees increases the probability that firms obtain credit and that greater flexibility in dismissing employees decreases the probability that firms are discouraged from applying for credit. However, our findings also reveal that firms perceive regulations providing flexibility with regard to the employees’ working hours differently from banks, leading to a situation in which firms are more likely to be discouraged from applying for a loan, even though the probability to obtain a loan increases. Our results are robust to confounding, endogeneity, selection bias as well as to alternative specifications. JEL Classification: D22, G21, G32, J41 |
| Keywords: | credit access, discouraged borrower, employment protection legislation, labour market |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20172063&r=lma |
| By: | Gerst, Benedikt (RWTH Aachen University); Grund, Christian (RWTH Aachen University) |
| Abstract: | This study examines how career interruptions and subsequent wages of employees are related. Using individual panel data of middle managers from the German chemical sector, we are able to differentiate between different reasons for interruptions as well as between various compensation components. We show that career interruptions are more related to lower subsequent bonus payments than they are to fixed salaries and that interruptions caused by unemployment are associated with higher interruption pay gaps than those resulting from other reasons. In addition, the pay gap after career interruptions is more pronounced for male employees than it is for females. |
| Keywords: | career interruptions, gender pay gap, stigma effects, bonus payments, fixed salaries, total compensation |
| JEL: | M52 J31 J33 J71 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10713&r=lma |
| By: | Irina Merkurieva (University of St Andrews) |
| Abstract: | This paper explores the sources of retirement synchronisation in dual career households. Empirical evidence suggests that majority of the couples exit the labor force within a short period of time, too tight to be explained by the age differences alone. This retirement coordination is frequently attributed to the complementarity of the spouses’ leisure. Contrary to this view, my estimates suggest that in a household with CES preferences the quantities of leisure consumed by husbands and wives are gross substitutes. Looking for alternative explanations, I develop a dynamic programming model of optimal retirement and labor supply decisions with uncertainty about the household structure, survival, future health status and income. Apart from leisure complementarity, four other channels may generate coordinated retirement in the model: correlated shocks to the individual health and wages, joint response to the shocks received by the household, correlated tastes for leisure due to sorting on unobservables captured by the household fixed effects, and spousal benefits provided by the Social Security. The model generates a distribution of optimal retirement timing that closely mimics the outcomes observed in the data. A counterfactual designed to shut down the family based provisions of the Social Security Act shows that most of the observed coordination can be explained by the existing Social Security policy. |
| Keywords: | retirement, intertemporal household choice, leisure complementarity |
| JEL: | J26 J14 D91 |
| URL: | http://d.repec.org/n?u=RePEc:san:wpecon:1707&r=lma |
| By: | Keller, Wolfgang; Olney, Will |
| Abstract: | This paper examines the role of globalization in the rapid increase in top incomes. Using a comprehensive data set of thousands of executives at major 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 globalization 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 enhanced 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: | corporate governance; Distributional Effects; Executive compensation; Globalization; inequality |
| JEL: | F14 F16 F66 J31 M12 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12026&r=lma |
| By: | Fatih Guvenen; Greg Kaplan; Jae Song; Justin Weidner |
| Abstract: | Using panel data on individual labor income histories from 1957 to 2013, we document two empirical facts about the distribution of lifetime income in the United States. First, from the cohort that entered the labor market in 1967 to the cohort that entered in 1983, median lifetime income of men declined by 10%–19%. We find little-to-no rise in the lower three-quarters of the percentiles of the male lifetime income distribution during this period. Accounting for rising employer-provided health and pension benefits partly mitigates these findings but does not alter the substantive conclusions. For women, median lifetime income increased by 22%–33% from the 1957 to the 1983 cohort, but these gains were relative to very low lifetime income for the earliest cohort. Much of the difference between newer and older cohorts is attributed to differences in income during the early years in the labor market. Partial life-cycle profiles of income observed for cohorts that are currently in the labor market indicate that the stagnation of lifetime incomes is unlikely to reverse. Second, we find that inequality in lifetime incomes has increased significantly within each gender group. However, the closing lifetime gender gap has kept overall lifetime inequality virtually flat. The increase within gender groups is largely attributed to an increase in inequality at young ages, and partial life-cycle income data for younger cohorts indicate that the increase in inequality is likely to continue. Overall, our findings point to the substantial changes in labor market outcomes for younger workers as a critical driver of trends in both the level and inequality of lifetime income over the past 50 years. |
| JEL: | E24 J24 J31 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23371&r=lma |
| By: | Teresa Ghilarducci, Michael Papadopoulos, Siavash Radpour (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | As Baby Boomers remain in the work force, some due to inadequate retirement savings, the labor supply of older workers (ages 55 to 74 years old) could increase relative to the labor supply of prime-age and younger workers. Economic theory suggests an increase in the relative labor supply of older Americans could lower wages or slow wage growth for younger workers if older workers are used extensively as their substitutes rather than complements.The authors estimate the degree of complementarities between workers grouped by age and sex. The results imply that policies aimed to encourage older people to stay and enter the labor market, such as increasing Social Security’s full retirement age or raising Medicare eligibility to age 70, may have broad labor market effects by causing wage stagnation. |
| Keywords: | Planning, Transaction Matrix, Post-Keynesian, Monetary |
| JEL: | J31 J2 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepawp:2017-07&r=lma |
| By: | van der Velden, Rolf (General Economics 2 (Macro)); Bijlsma, Ineke (ROA / Dynamics of the labour market) |
| Abstract: | Mismatches between workers’ skills and job demands have large negative effects on productivity, job satisfaction, and other outcomes. Current approaches to measure skill mismatches have a number of weaknesses, both theoretically and empirically. One problem is that they fail to distinguish the effect of skill proficiency itself from the effect of using these skills on the job. In this paper, we develop a new perspective by integrating skill proficiency and skill use into a new concept called skill effort. Skill effort is defined as a multiplicative function of skill proficiency and skill use. The intuitive understanding of this concept is that a skill can have no effect if it is not used and, vice versa, use of a skill can have only a small impact if the proficiency level is low. The new concept is firmly rooted in use-it-or-lose-it, engagement, and self-efficacy theories and has a parallel in previous theories on performance. We apply this concept to develop a matching model based on integration of the realized matches and the job requirement approach using data from the Programme for the International Assessment of Adult Competencies. The results show that the newly developed model is superior to alternative specifications of the same variables or alternative models using other approaches to explain wage differences in different countries. We discuss remaining issues on the measurement of this concept and present different ways to address them. |
| Keywords: | skill proficiency, skill use, mismatch, wages |
| JEL: | J24 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umaror:2017005&r=lma |
| By: | Agnieszka Chlon-Dominczak; Andrzej Zurawski |
| Abstract: | Appropriate measuring of skills mismatches is necessary to create an adequate policy response. We analyse the existing evidence, in particular in large scale international surveys: Survey of Skills (PIAAC) and European Skills and Jobs Survey (ESJ). We find out that national, occupational and sectoral differences in the scale of the skills mismatch in Europe are equally important. We identified two main weaknesses of approaches to measuring skills mismatches: subjectivity of answers leading to incomparability of results from different data sets and heterogeneity in particular in sectoral and occupational characteristics, that appear to be more important than cross-national differences. We propose a potential methodological advancement in measuring skills based on defining core knowledge, skills and competencies at the sectoral level with the use of sectoral qualifications frameworks. We assess the usefulness of this approach in measuring the level of skills mismatch. |
| Keywords: | skills mismatch, skills need, sectoral qualifications frameworks |
| JEL: | J20 J24 J62 J68 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:ibt:wpaper:wp032017&r=lma |
| By: | Heyman, Fredrik (Research Institute of Industrial Economics (IFN)); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN)) |
| Abstract: | We show that increasing the intensity of product market competition can reduce discrimination against female managers, even in an environment in which all employers have a preference for discrimination. The reason is that due to the glass ceiling effect, female managers will, on average, be more skilled than male managers and will therefore, on average, be more beneficial for the firm when product market competition is intense. Using detailed matched employee-employer data, we find that (i) more intense competition leads to relatively higher wages for female managers and (ii) the share of female managers is higher in firms in more competitive industries. |
| Keywords: | Discrimination; Management; Competition; Gender |
| JEL: | J70 L20 M50 |
| Date: | 2017–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1169&r=lma |
| By: | Teresa Ghilarducci, Amanda Novello (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Income in retirement has become increasingly based on individual financial assets rather than from Social Security. Using OECD data, the authors show that the instability of financialized retirement systems is related to workers staying in the labor force longer than before, as well as higher rates of old age poverty. |
| Keywords: | Pension Policy, Government Expenditure, Retirement, Individual Assets |
| JEL: | H55 H3 J2 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepawp:2017-04&r=lma |
| By: | Borra, Cristina (University of Seville); Browning, Martin J. (University of Oxford); Sevilla, Almudena (Queen Mary, University of London) |
| Abstract: | This paper provides insights into the welfare gains of forming a couple by estimating how much of the difference in housework time between single and married individuals is causal and how much is due to selection. Using longitudinal data from Australia, UK and US, we find that selection into marriage by individuals with a higher taste for home-produced goods can explain about half of the observed differences in housework documented in the cross-sectional data. There remains a genuine two-hour increase in housework time for each partner upon marriage, with women specializing in routine, and men specializing in non-routine housework tasks. |
| Keywords: | marriage, time use, home production |
| JEL: | D13 J12 J22 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10740&r=lma |
| By: | Anelli, Massimo (Bocconi University); Shih, Kevin Y. (Rensselaer Polytechnic Institute); Williams, Kevin (University of Utah) |
| Abstract: | Since the 1980s the United States has faced growing disinterest and high attrition from STEM majors. Over the same period, foreign-born enrollment in U.S. higher education has increased steadily. This paper examines whether foreign-born peers affect the likelihood American college students graduate with a STEM major. Using administrative student records from a large public university in California, we exploit idiosyncratic variation in the share of foreign peers across introductory math courses taught by the same professor over time. Results indicate that a 1 standard deviation increase in foreign peers reduces the likelihood native-born students graduate with STEM majors by 3 percentage points – equivalent to 3.7 native students displaced for 9 additional foreign students in an average course. STEM displacement is offset by an increased likelihood of choosing Social Science majors. However, the earnings prospects of displaced students are minimally affected as they appear to be choosing Social Science majors with equally high earning power. We demonstrate that comparative advantage and linguistic dissonance may operate as underlying mechanisms. |
| Keywords: | immigration, peer effects, higher education, college major, STEM |
| JEL: | I21 I23 I28 J21 J24 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10743&r=lma |
| By: | Maria Chiara Cavalleri; Yvan Guillemette |
| Abstract: | The paper describes revisions to the trend employment component of the production function underpinning long-term economic scenarios. Starting with historical age and sex-specific employment rates, a novel approach is developed to correct for cyclical effects using the country-level employment gap while allowing the different sex and age groups to exhibit different sensitivities to the economic cycle. From the resulting cyclically adjusted age/sex-specific employment rates, trend entry and exit rates into/out of employment are computed using the traditional cohort approach. The different employment propensities of existing cohorts are then used to project future employment rates, with entry and exit rates of new cohorts assumed to mimic the most recent ones. To construct scenarios, the model allows a number of policy settings to influence employment rate projections, notably the legal retirement age, tax wedges, family benefits, etc. The sizes of these effects are sourced from recent OECD work on the quantification of structural reforms, and are also specific to sex and age groups. The trend total employment projection is obtained by aggregating age/sex-specific employment rate projections using external demographic projections. |
| Keywords: | cohort model, cyclical adjustment, employment gap, long-term model, long-term scenarios, potential employment, projections, Trend employment |
| JEL: | C53 E24 E27 J21 |
| Date: | 2017–05–18 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1384-en&r=lma |
| By: | Markus Ibert; Ron Kaniel; Stijn Van Nieuwerburgh; Roine Vestman |
| Abstract: | Compensation of mutual fund managers is paramount to understanding agency frictions in asset delegation. We collect a unique registry-based dataset on the compensation of Swedish mutual fund managers. We find a concave relationship between pay and revenue, in contrast to how investors compensate the fund company (firm). We also find a surprisingly weak sensitivity of pay to performance, even after accounting for the indirect effects of performance on revenue. Firm-level revenues and profits add substantial explanatory power for compensation to manager-level revenue and performance, highlighting the importance of the mutual fund firm. |
| JEL: | G00 G11 G2 G23 G24 J3 J31 J33 J44 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23373&r=lma |
| By: | R. Tamara Konetzka; Karen B. Lasater; Edward C. Norton; Rachel M. Werner |
| Abstract: | The quality and cost of care in nursing homes depend critically on the number and types of nurses. Recent research suggests that the nursing supply adjusts to macroeconomic conditions. However, prior work has failed to consider the effect of macroeconomic conditions on demand for nurses through the effect on revenues. We test how county-level unemployment rates affect direct-care staffing rates in nursing homes using California data. We exploit the wide variation in the unemployment rates across counties and over time in 2005–2012. We also test whether there are heterogeneous effects of unemployment rates by facility size, staffing level, and profit status. We find that as unemployment rates increase, staffing by registered nurses (RNs) decreases but staffing by licensed practical nurses (LPNs) increases. The increase in LPNs is larger in large nursing homes, nursing homes with higher staffing levels, and in for-profit nursing homes. We also find that as unemployment rates increase, nursing home revenue decreases. While the effect of macroeconomic conditions on nursing supply may be important for cost and quality of care, the mechanism is not simple, direct, or homogeneous for all types of nurses and nursing homes. |
| JEL: | E32 I11 J44 L84 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23402&r=lma |