nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒06‒04
seven papers chosen by
Joseph Marchand
University of Alberta

  1. Labor Market Returns to College Major Specificity By Margaret Leighton; Jamin Speer
  2. Has Uber Made It Easier to Get a Ride in the Rain? By Abel Brodeur; Kerry Nield
  3. The Effects of Youth Labor Market Reforms: Evidence from Italian Apprenticeships. By Andrea Albanese; Lorenzo Cappellari; Marco Leonardi
  4. Earning your CAP: A Comprehensive Analysis of The University of Texas System's Coordinated Admissions Program By Rodney J. Andrews; John Thompson
  5. Optimal income taxation with labor supply responses at two margins: When is an Earned Income Tax Credit optimal? By Emanuel Hansen
  6. Rethinking the Benefits of Youth Employment Programs: The Heterogeneous Effects of Summer Jobs By Jonathan M.V. Davis; Sara B. Heller
  7. Labour Market Policies and the Informal Sector: A Segmented Labour Markets Analysis By Dürdane Şirin Saracoğlu

  1. By: Margaret Leighton (University of St Andrews); Jamin Speer (University of Memphis)
    Abstract: This paper explores the definition and measurement of college major specificity and estimates its labor market return over a worker’s life cycle. After reviewing the variety of measures which have been used to measure specialization, we propose a new approach: a Theil measure based on the transferability of skills across occupations. We calculate and compare representative measures using data from the American Community Survey, National Longitudinal Survey of Youth, and the Baccalaureate and Beyond. We then use these measures to estimate the return to specialized higher education. Our consistent finding is that the most "general" majors are the ones that pay off the most over time. While there is an initial earnings premium to majors with a tight connection to the labor market and to those classified as "vocational", this fades by age 30. Meanwhile, majors that teach versatile, transferable skills earn the most at every age. Employment returns are largely consistent with these earnings estimates. While vocational majors display a persistent employment premium over the life cycle, most other measures suggest that graduates from general majors work more hours, are more likely to be employed, and are more likely to be employed full time. Overall, major specificity explains 22% of the variation across majors in earnings and 28% of the variation in work hours.
    Keywords: human capital; general education; vocational education; higher education; specificity; specific human capital
    JEL: I26 J24 J31 I23
    Date: 2017–05–16
  2. By: Abel Brodeur (University of Ottawa, Ottawa, ON); Kerry Nield (Bank of Canada, Ottawa, ON)
    Abstract: In New York City (NYC), it has been a common complaint that it is difficult to find a taxi in the rain. Using all Uber rides in NYC from April to September 2014 and January 2015 to December 2016, we show that the number of Uber rides is significantly correlated with whether it rained. The number of Uber rides per hour is about 18 percent higher when it is raining, suggesting that surge pricing encourages an increase in supply. During the same time period, the number of taxi rides per hour increases by only 5 percent in rainy hours. We then show that the number of taxi rides, passengers and fare income all significantly decreased after Uber entered the New York market in May 2011, suggesting that Uber is depressing taxi demand. Last, we test whether the total (Uber plus taxi) number of rides in rainy hours increased since May 2011. Our estimates suggest that it is relatively easier to get a ride in rainy than in non-rainy hours in post-Uber years.
    Keywords: Persistence, Rain, Uber, Taxi, Dynamic Pricing
    JEL: D01 D03 L92 J22
    Date: 2017
  3. By: Andrea Albanese; Lorenzo Cappellari (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Marco Leonardi
    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
  4. By: Rodney J. Andrews; John Thompson
    Abstract: The competitive application process is the traditional path to gain access to selective public universities. There is little research on alternative pathways to gain access to selective public universities. In this manuscript, we use the fuzzy regression discontinuity design to study the impact of transferring to the University of Texas at Austin. We find that gaining access via this path has an impact on choice of major, financial aid, and earnings.
    JEL: I21 I22 I26 J24
    Date: 2017–05
  5. By: Emanuel Hansen (University of Cologne)
    Abstract: This paper studies optimal non-linear income taxation in an empirically plausible model with labor supply responses at the intensive (hours, effort) and the extensive (participation) margin. In this model, redistributive taxation gives rise to a previously neglected trade-off between two aspects of effciency: To reduce the deadweight loss from distortions at the extensive margin, the social planner has to increase distortions at the intensive margin and vice versa. Due to this trade-off, minimizing the overall deadweight loss requires to distort labor supply by low-skill workers upwards at both margins. Building on these insights, the paper is the first to provide conditions under which social welfare is maximized by an Earned Income Tax Credit with negative marginal taxes and negative participation taxes at low income levels.
    Keywords: Optimal income taxation, Extensive margin, Intensive margin
    JEL: H21 H23 D82
    Date: 2017–05
  6. By: Jonathan M.V. Davis; Sara B. Heller
    Abstract: This paper reports the results of two randomized field experiments, each offering different populations of youth a supported summer job in Chicago. In both experiments, the program dramatically reduces violent-crime arrests, even after the summer. It does so without improving employment, schooling, or other types of crime; if anything, property crime increases over 2-3 post-program years. To explore mechanisms, we implement a machine learning method that predicts treatment heterogeneity using observables. The method identifies a subgroup of youth with positive employment impacts, whose characteristics differ from the disconnected youth served in most employment programs. We find that employment benefiters commit more property crime than their control counterparts, and non-benefiters also show a decline in violent crime. These results do not seem consistent with typical theory about improved human capital and better labor market opportunities creating a higher opportunity cost of crime, or even with the idea that these programs just keep youth busy. We discuss several alternative mechanisms, concluding that brief youth employment programs can generate substantively important behavioral change, but for different outcomes, different youth, and different reasons than those most often considered in the literature.
    JEL: C53 C54 C93 I28 J24 J48 K42
    Date: 2017–05
  7. By: Dürdane Şirin Saracoğlu (Department of Economics, METU)
    Abstract: In this paper we develop a dynamic model of a multi-sector economy with an informal sector and segmented labour markets first to demonstrate how informal production and employment decline in transition towards the steady state, and second to analyse the impact of various labour market policies at the steady state. Our results primarily indicate that informal employment share increases with minimum wage, and decreases with reductions in the payroll taxes, moreover, reducing the tax imposed on employer is more effective in reducing the informal employment share, while reducing the tax imposed on employee is more effective in increasing consumer felicity.
    Keywords: Segmented labour markets, informal employment, payroll taxes, minimum wage, dynamic modelling
    JEL: C61 J42 O17 O41
    Date: 2017–05

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