nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒05‒28
eighteen papers chosen by
Joseph Marchand
University of Alberta

  1. Parental Work Hours and Childhood Obesity: Evidence using Instrumental Variables Related to Sibling School Eligibility By Charles Courtemanche; Rusty Tchernis; Xilin Zhou
  2. The Dynamics of Gender Earnings Differentials: Evidence from Establishment Data By Erling Barth; Sari Pekkala Kerr; Claudia Olivetti
  3. The Fall of the Labor Share and the Rise of Superstar Firms By Autor, David; Dorn, David; Katz, Lawrence; Patterson, Christina; Van Reenen, John
  4. The Effects of Youth Labor Market Reforms: Evidence from Italian Apprenticeships By Albanese, Andrea; Cappellari, Lorenzo; Leonardi, Marco
  5. Quantile regression and the gender wage gap: Is there a glass ceiling in the Turkish labor market? By Kaya, Ezgi
  6. Push and Pull: Disability Insurance, Regional Labor Markets, and Benefit Generosity in Canada and the United States By Kevin Milligan; Tammy Schirle
  7. Interactions Between Financial Incentives and Health in the Early Retirement Decision By Pilar Garcia-Gomez; Titus J. Galama; Eddy van Doorslaer; Angel Lopez-Nicolas
  8. Moving Closer or Drifting Apart: Distributional Effects of Monetary Policy By Lucas Hafemann; Paul Rudel; Joerg Schmidt
  9. Education as Protection? The Effect of Schooling on Non-Wage Compensation in a Developing Country By Dang, Thang
  10. How do the U.S and Canadian Social Safety Nets Compare for Women and Children? By Hilary Hoynes; Mark Stabile
  11. Changes in the German Wage Structure: Unions, Internationalization, Tasks, Firms, and Worker Characteristics By Biewen, Martin; Seckler, Matthias
  12. Microfinance beyond self-employment: Evidence for firms in Bulgaria By Erhardt, Eva
  13. Early lead exposure and outcomes in adulthood By Grönqvist, Hans; Nilsson, J Peter; Robling, Per-Olof
  14. Intergenerational Effect of Education Reform Program and Maternal Education on Children's Educational and Labor Outcomes: Evidence from Nepal By Vinish Shrestha; Rashesh Shrestha
  15. Displacement and Debt: The Role of Debt in Returning to Work in the Period Following the Great Recession By Bednarzik, Robert W.; Kern, Andreas; Hisnanick, John J.
  16. The Consumption Response to Minimum Wages: Evidence from Chinese Households By Dautovic, Ernest; Hau, Harald; Huang, Yi
  17. Contingent Employment and Labour Market Pathways: Bridge or Trap? By McVicar, Duncan; Wooden, Mark; Fok, Yin King
  18. Reallocation and Secularization: The Economic Consequences of the Protestant Reformation By Davide Cantoni; Jeremiah Dittmar; Noam Yuchtman

  1. By: Charles Courtemanche; Rusty Tchernis; Xilin Zhou
    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.
    JEL: I12 J22
    Date: 2017–05
  2. By: Erling Barth; Sari Pekkala Kerr; Claudia Olivetti
    Abstract: We use a unique match between the 2000 Decennial Census of the United States and the Longitudinal Employer Household Dynamics (LEHD) data to analyze how much of the increase in the gender earnings gap over the lifecycle comes from shifts in the sorting of men and women across high- and low-pay establishments and how much is due to differential earnings growth within establishments. We find that for the college educated the increase is substantial and, for the most part, due to differential earnings growth within establishment by gender. The between component is also important. Differential mobility between establishments by gender can explain 27 percent of the widening of the pay gap for this group. For those with no college, the, relatively small, increase of the gender gap over the lifecycle can be fully explained by differential moves by gender across establishments. The evidence suggests that, for both education groups, the between-establishment component of the increasing wage gap is due almost entirely to those who are married.
    JEL: J16 J31
    Date: 2017–05
  3. By: Autor, David (MIT); Dorn, David (University of Zurich); Katz, Lawrence (Harvard University); Patterson, Christina (Massachusetts Institute of Technology); Van Reenen, John (MIT Sloan School of Management)
    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: labor share, sales concentration, firms
    JEL: E24 J31 L11
    Date: 2017–05
  4. By: Albanese, Andrea (Ghent University); Cappellari, Lorenzo (Università Cattolica del Sacro Cuore); Leonardi, Marco (University of Milan)
    Abstract: This paper estimates the causal effects of the 2003 reform of the Italian apprenticeship contract which aimed at introducing the "dual system" in Italy by allowing on-the-job training. The reform also increased the age eligibility of the apprenticeship contract and introduced a minimum floor to apprentices' wages. Using administrative data and balancing techniques we find that five years after hiring, the new contract improves the chances of moving to a permanent job in the same firm, yet this happens mostly in large firms. There are also sizeable long-run wage effects of the reform, well beyond the legal duration of apprenticeships, compatible with increased human capital accumulation probably due to the training provisions of the reform.
    Keywords: apprenticeship, permanent work, youth employment, covariate balancing, propensity score
    JEL: J24 J41 C21
    Date: 2017–05
  5. By: Kaya, Ezgi (Cardiff Business School)
    Abstract: Recent studies from different countries suggest that the gender gap is not constant across the wage distribution and the average wage gap provides limited information on women’s relative position in the labour market. Using micro level data from official statistics, this study explores the gender wage-gap in Turkey across the wage distribution. The quantile regression and counterfactual decomposition analysis results reveal three striking features of the Turkish labour market. The first is that the gender wage gap is more pronounced at the upper tail of the wage distribution, implying the existence of a glass ceiling effect for women in the Turkish labour market. The second is that, the glass ceiling effect in Turkey is not observed in the raw gender wage gap and only revealed after controlling for workers’ labour market qualifications implying that women are better qualified and better educated than their male counterparts’ at the upper tail of the wage distribution. The third finding is that despite the narrowing effect of the women’s relative labour market qualifications, the glass ceiling effect in the Turkish labour market exists due to unequal treatment of men and women and the increasing labour market discrimination toward women as we move up the wage distribution.
    Keywords: Gender wage gap, quantile regression, decomposition
    JEL: C21 J31 J71
    Date: 2017–05
  6. By: Kevin Milligan; Tammy Schirle
    Abstract: Disability insurance take-up has expanded substantially in the past twenty years in the United States while shrinking in Canada. We empirically assess these trends by measuring the strength of the ‘push’ from weak labor markets versus the ‘pull’ of more generous benefits. Using an instrumental variables strategy comparing benefit changes across country, age, and year, we find that both benefits and regional wages matter. Simulations suggest that the upswing in disability insurance take-up in the United States would be reversed, dropping the caseload by one third, if benefits and wages had followed the growth path observed in Canada.
    JEL: H53 I38 J21
    Date: 2017–05
  7. By: Pilar Garcia-Gomez (Erasmus University Rotterdam, the Netherlands); Titus J. Galama (University of Southern California, US); Eddy van Doorslaer (Erasmus University Rotterdam, the Netherlands); Angel Lopez-Nicolas (Universidad Politecnica de Cartagena, Spain)
    Abstract: We present a theory of the relation between health and retirement that generates testable predictions regarding the interaction of health, wealth and financial incentives in retirement decisions. The theory predicts (i) that wealthier individuals (compared to poorer individuals) are more likely to retire for health reasons(affordability proposition), and (ii) that health problems make older workers more responsive to financial incentives encouraging retirement (reinforcement proposition). We test these predictions using administrative data on older employees in the Dutch healthcare sector for whom we link adverse health events, proxied by unanticipated hospitalizations, to information on retirement decisions and actual incentives from administrative records of the pension funds. Exploiting unexpected health shocks and quasi-exogenous variation in nancial incentives for retirement due to reforms, we account for the endogeneity of health and financial incentives. Making use of the actual individual pension rights diminishes downward bias in estimates of the effect of pension incentives. We find support for our affordability and reinforcement propositions. Both propositions require the benefits function to be convex, as in our data. Our theory and empirical findings highlight the importance of assessing financial incentives for their potential reinforcement of health shocks and point to the possibility that differences in responses to financial incentives and health shocks across countries may relate to whether the benefit function is concave or convex.
    Keywords: pensions; health; retirement; disability; health investment; lifecycle model; health capital
    JEL: C33 D91 H55 I10 I12 J00 J24 J26 J45 D91
    Date: 2017–04–27
  8. By: Lucas Hafemann (Justus-Liebig-University Giessen); Paul Rudel (Justus-Liebig-University Giessen); Joerg Schmidt (Justus-Liebig-University Giessen)
    Abstract: Our paper picks up the current controversial debate about increasing (income) inequality due to recent monetary policy measures in major advanced economies. We use a VAR framework identified with sign restrictions to figure out how income inequality related measures react to monetary policy shocks in three different advanced economies with an independent monetary policy regime. We choose the U.S., Canada and Norway. While all economies experience an increase in Gini coecients of market income in the presence of an expansionary monetary policy shock, only the U.S. and Canada show a significant response in the Gini coefficient of disposable income when facing such shocks. To figure out how the transmission of monetary policy to overall income inequality works we pick up two major channels dominant in literature: The employment channel and the income composition channel. The latter is analyzed by data from national accounts concerning two different kinds of income households receive: Labor related income and capital payments, both net. We find that while in the U.S. as well as in Canada capital income recipients profit disproportionately from expansionary monetary policy, in Norway both types of (net) income benefit similarly from expansionary monetary policy shocks. We conclude that fiscal policy makers can successfully address and mitigate harmful effects of increased market income inequality.
    Keywords: Income Inequality, Factor Income Distribution, Monetary Policy, VAR, Sign-Restrictions
    JEL: D31 D33 E24 E25 E52 E64
    Date: 2017
  9. By: Dang, Thang
    Abstract: This is the first paper identifying the causal effect of schooling on non-wage compensation using data from Vietnam. The paper takes an advantage of the establishment of the compulsory primary schooling reform that was introduced in Vietnam in 1991 to instrument for exogenous variations in years of schooling to surmount the endogeneity problem as a primary threat to idenfication facing the causal effect estimation. The paper finds that education is positively associated with non-wage benefits. In particular, the baseline 2SLS estimates indicates that one additional year of schooling is causally linked to a 6 percentage point increase in the likelihood of receiving monetary payments for public holidays, a 4.6 percentage point increase in the likelihood of receiving monetary employee benefits, a 7.3 percentage point increase in the likelihood of having annual paid leave and a 6.8 percentage point increase in the likelihood of having firm-provided social insurance. The baseline estimates are strongly robust to the estimates from some robustness checks. The paper also inspects that the causal associations between schooling and formal employment, skilled occupation and employee-friendly firm are three potential mechanisms through which schooling causally affects non-wage compensation.
    Keywords: Returns to schooling; Non-wage compensation; Developing countries
    JEL: I26 J24 J32 J33
    Date: 2017–05–19
  10. By: Hilary Hoynes; Mark Stabile
    Abstract: The past 25 years has seen substantial change in the social safety nets for families with children in the US and Canada. Both countries have moved away from cash welfare but the US has done so relying more exclusively on inwork benefits with work requirements. This paper examines this evolution across the two countries and examines the effects on employment and poverty. In particular, we focus on the two largest programs over this period: the U.S. EITC and the Canadian NCB/CCTB. In light of these policy changes, we examine trends in employment and poverty of the most affected families -- single mothers with less than a college degree -- across the two countries. We find that employment improved substantially in both countries, absolutely and relative to a control group of single women without children. The cross-country differences in relative trends are mainly explained by differences in the labor market conditions. Poverty rates for single mothers also declined in both countries with more of the decline coming through market income in the U.S. and benefit income in Canada.
    JEL: H24 I38
    Date: 2017–05
  11. By: Biewen, Martin (University of Tuebingen); Seckler, Matthias (University of Tübingen)
    Abstract: This paper provides a comprehensive assessment of the quantitative importance of the factors associated with the rise in male wage inequality in Germany over the period 1995–2010. In contrast to most previous contributions, we rely on the German Structure of Earnings Surveys (GSES) which allow us to focus on hourly wages (rather than daily earnings) uncensored by the social security contributions threshold. We consider a large number of covariates including personal characteristics, measures of internationalization, task composition, union coverage, industry, region, and firm characteristics. Our results suggest that recent changes in the distribution of hourly wages in Germany look different from the polarizing patterns found for the US, and that most of the observed rise in inequality was associated with compositional effects of de-unionization and personal characteristics. We also find some moderate effects linked to internationalization, firm heterogeneity and regional convergence, but these were much smaller.
    Keywords: RIF regression, reweighting, skill-biased technical change, de-unionization
    JEL: C14 J31 J51 F16
    Date: 2017–05
  12. By: Erhardt, Eva
    Abstract: This paper provides new evidence on the impact of microfinance on job creation beyond self-employment. We examine wage-employment effects for a typical program in Eastern Europe with average loan sizes that are considerably above what has been studied so far. We apply propensity score matching extended by a difference-in-differences estimator to panel data from an individual-lending program to firms in Bulgaria. Our results indicate that microcredit has very positive effects on job creation. Participating firms have on average 2.5 (or 33 percent) more employees two years after receiving a microcredit than matched non-participants. This strong effect seems to be related to a certain loan size threshold necessary for positive impacts to unfold. Effects are largest for the smallest firms, supporting findings from other studies that small firms are more constrained by credit than large firms. Investigating dynamic effects for up to six years after treatment, we furthermore show that effects are long lasting.
    Keywords: microfinance, wage employment, small firms, impact evaluation, Bulgaria
    JEL: C21 D22 G21 J23 P34
    Date: 2017–03
  13. By: Grönqvist, Hans (Department of economics, Uppsala university, IFAU, UCLS); Nilsson, J Peter (Institute for International Economic Studies, Stockholm University, IFAU, UCLS); Robling, Per-Olof (Institute for Social Research, Stockholm University,)
    Abstract: We exploit the phase-out of leaded gasoline to isolate the impact of early childhood lead exposure on outcomes in adulthood. By combining administrative data on school performance, high school graduation, crime, earnings, and cognitive and non-cognitive skills with a novel measure of lead exposure, we follow 800,000 children from birth into adulthood. We find that reduced lead exposure improves the adult outcomes, particularly among boys. Below certain thresholds, the relationship becomes much weaker. Non-cognitive traits (externalizing behavior, conscientiousness, and neuroti-cism) follow a similar non-linear dose response pattern and seem to be the key mediators between early lead exposure and adult outcomes.
    Keywords: environmental policy; human capital; crime; non-cognitive skills
    JEL: I18 K42 Q53
    Date: 2017–05–15
  14. By: Vinish Shrestha (Department of Economics, Towson University); Rashesh Shrestha (Crawford School of Public Policy, Australian National University)
    Abstract: We examine a potential intergenerational determinant of child labor by investigating the effect of maternal education on children0 s educational and labor outcomes. To account for endogeneity of mother's education, we use the Nepal Education System Plan (NESP) (1971), one of the first education reforms in the country, as an exogenous source of variation. We find that NESP increased educational outcomes among females that were most likely affected by the reform due to their birth year and district of birth. Furthermore, an increase in mother's highest level of schooling increases a child's probability of finishing 5th grade only among mothers from a higher caste households. We find modest effects of mother's education on child labor outcomes, with the IV estimate indicating that a year increase in mother's education reduces a child's weekly work by approximately an hour. The IV estimates are about two-fold larger than the OLS estimates in most cases. We caution that exclusion based on social hierarchy should be considered when promoting maternal education as a medium to improve children's well-being in developing nations like Nepal.
    Keywords: Returns to Education, Maternal Education, Child Labor, Schooling.
    JEL: I26 J20 I30
    Date: 2017–05
  15. By: Bednarzik, Robert W. (Georgetown University); Kern, Andreas (Georgetown University); Hisnanick, John J. (U.S. Census Bureau)
    Abstract: The onset of the housing and subsequent financial crisis in 2008 marked the steepest economic downturn in the United. States, since the Great Depression in the late 1920s and 1930s. This most recent financial crisis has been characterized by massive layoffs and displacement. Given the depth of the recent 'great' recession and its links to the finance and housing industries, both economists and policy analysts have speculated that the sticky jobless situation for many would-be workers is also related to their level of individual and/ or household debt. In contrast to a growing literature that links financial market conditions on employers' hiring capabilities, we focus on the question how household indebtedness renders households' incentives to search for and take up a new job after displacement? Using information on households' labor market and financial behavior from the Survey
    Keywords: unemployment, debt, dislocated workers
    JEL: J2 G1
    Date: 2017–05
  16. By: Dautovic, Ernest; Hau, Harald; Huang, Yi
    Abstract: This paper evaluates the Chinese minimum wage policy for the period 2002-2009 in terms of its impact on low income household consumption. Using a representative household panel, we find support for the permanent income hypothesis, whereby unanticipated and persistent income increases due to minimum wage policy change are fully spent. The impact is driven by households with at least one child. We infer significant positive welfare effects for low income households based on expenditure increases concentrated in health care and education, whereas a negative employment effect of higher minimum wage cannot be confirmed.
    Keywords: Household consumption; Labor income; minimum wage; Permanent income hypothesis
    JEL: C26 E24 J38
    Date: 2017–05
  17. By: McVicar, Duncan (Queen's University Belfast); Wooden, Mark (Melbourne Institute of Applied Economic and Social Research); Fok, Yin King (Melbourne Institute of Applied Economic and Social Research)
    Abstract: The debate over whether contingent (and typically more precarious) employment acts as a bridge to permanent employment, or as a trap, has tended to focus on transitions rather than longer-run pathways. This approach cannot accurately identify indirect pathways from contingent to permanent employment, and nor can it identify 'trap' pathways involving short spells in other states. It also fails to distinguish between those experiencing contingent employment as a 'blip' and those with longer spells. This article employs a different approach involving sequence analysis. Exploiting longitudinal data for Australian, evidence for the co-existence of pathways that correspond to 'bridge' and 'trap' characterisations of contingent employment is found. Further, in the case of casual employment these two types of labour market pathways are roughly equally prevalent, although for some groups – in particular women, those with low educational attainment, and those with a disability – 'traps' are more likely than 'bridges'.
    Keywords: casual employment, contingent employment, temporary employment, pathways, segmented labour markets, sequence analysis
    JEL: J41 C38
    Date: 2017–05
  18. By: Davide Cantoni; Jeremiah Dittmar; Noam Yuchtman
    Abstract: The Protestant Reformation, beginning in 1517, was both a shock to the market for religion and a first-order economic shock. We study its impact on the allocation of resources between the religious and secular sectors in Germany, collecting data on the allocation of human and physical capital. While Protestant reformers aimed to elevate the role of religion, we find that the Reformation produced rapid economic secularization. The interaction between religious competition and political economy explains the shift in investments in human and fixed capital away from the religious sector. Large numbers of monasteries were expropriated during the Reformation, particularly in Protestant regions. This transfer of resources shifted the demand for labor between religious and secular sectors: graduates from Protestant universities increasingly entered secular occupations. Consistent with forward-looking behavior, students at Protestant universities shifted from the study of theology toward secular degrees. The appropriation of resources by secular rulers is also reflected in construction: during the Reformation, religious construction declined, particularly in Protestant regions, while secular construction increased, especially for administrative purposes. Reallocation was not driven by pre-existing economic or cultural differences.
    Keywords: protestant reformation, secularization, sectoral allocation, human capital
    JEL: N13 N33 J24 E02
    Date: 2017–05

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