nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒07‒09
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. Firms and Labor Market Inequality: Evidence and Some Theory By David Card; Ana Rute Cardoso; Jörg Heining; Patrick Kline
  2. Pathways to Retirement through Self-Employment By Shanthi Ramnath; John B. Shoven; Sita Nataraj Slavov
  3. The Impact of MGNREGA on Agricultural Outcomes and the Rural Labour Market- A Matched DID Approach By Deepak Varshney, Deepti Goel and J.V. Meenakshi
  4. War, Migration and the Origins of the Thai Sex Industry By Abel Brodeur; Warn N. Lekfuangfu; Yanos Zylberberg
  5. Occupational Licensing Reduces Racial and Gender Wage Gaps: Evidence from the Survey of Income and Program Participation By Peter Blair; Bobby Chung
  6. Clearing the Fog: The Predictive Power of Weather for Employment Reports and their Asset Price Responses By Wilson, Daniel J.
  7. Time use surveys and experienced well-being in France and the United States By Sarah Flèche; Conal Smith
  8. New Evidence on State Fiscal Multipliers: Implications for State Policies By Timothy J. Bartik
  9. Who are the ‘ghost’ MPs? Evidence from the French Parliament By Nicolas Gavoille
  10. Dynamic Responses to Labor Demand Shocks: Evidence from the Financial Industry in Delaware By Russell Weinstein
  11. Leisure Luxuries and the Labor Supply of Young Men By Mark Aguiar; Mark Bils; Kerwin Kofi Charles; Erik Hurst
  12. Do discriminatory pay regimes unleash antisocial behavior? By Grosch, Kerstin; Rau, Holger A.
  13. Minimum wages in the presence of in-kind redistribution By Economides, George; Moutos, Thomas

  1. By: David Card; Ana Rute Cardoso; Jörg Heining; Patrick Kline
    Abstract: We synthesize two related literatures on firm-level drivers of wage inequality. Studies of rent sharing that use matched worker-firm data find elasticities of wages with respect to value added per worker in the range of 0.05 to 0.15. Studies of wage determination with worker and firm fixed effects typically find that firm-specific premiums explain 20% of overall wage variation. To interpret these findings we develop a model of wage setting in which workers have idiosyncratic tastes for different workplaces. Simple versions of this model can rationalize standard fixed effects specifications and also match the typical rent-sharing elasticities in the literature.
    Keywords: Rent sharing, two-way fixed effects, Monopsony
    JEL: D22 J31 J42
    Date: 2017–06
  2. By: Shanthi Ramnath; John B. Shoven; Sita Nataraj Slavov
    Abstract: We examine the role of self-employment in retirement transitions using a panel of administrative tax data. We find that the hazard of self-employment increases at popular retirement ages associated with Social Security eligibility, particularly for those with greater retirement wealth. Late-career transitions to self-employment are associated with a larger drop in income than similar mid-career transitions. Data from the Health and Retirement Study suggest that hours worked also fall upon switching to self-employment. These results suggest that self-employment at older ages may serve as a “bridge job,” allowing workers to gradually reduce hours and earnings along the pathway to retirement.
    JEL: H55 J26 J29
    Date: 2017–06
  3. By: Deepak Varshney, Deepti Goel and J.V. Meenakshi (Department of Economics, Delhi School of Economics, University of Delhi)
    Abstract: This paper attempts to address the impact of the MGNREGA on the rural agricultural sector, focusing on cropping patterns, irrigated area, crop yields, wages and rural employment. The analysis is based on two data sources- the first is a unique district-season level panel dataset that we construct using multiple sources- and the second is unit-record data from the NSS Employment Unemployment Surveys. To identify causal effects, we employ a difference-indifference matching (DIDM) procedure, where districts are matched based on propensity scores- the use of propensity scores represents a novel aspect of this paper. We also examine pre-programme trends for each outcome variable to provide a check on the validity of our estimates. Our results indicate modest changes in cropping patterns that are state- and period-specific- however they do not indicate any improvements in crop yields that were expected given the MGNREGA’s focus on investments in irrigation, although there is some evidence that irrigated area may have expanded after a lag. We also find that there is no systematic evidence of impact on wages, and therefore no evidence that public works employment in MGNREGA crowded out casual labour in agriculture.
    Keywords: MGNREGA, Public Works, Agriculture
    JEL: J31 J46 J48 Q15
    Date: 2017–06
  4. By: Abel Brodeur; Warn N. Lekfuangfu; Yanos Zylberberg
    Abstract: This paper analyzes the determinants behind the spatial distribution of the sex industry in Thailand. We relate the development of the sex industry to an early temporary demand shock, i.e., U.S. military presence during the Vietnam War. Comparing the surroundings of Thai military bases used by the U.S. army to districts close to unused Thai bases, we find that there are currently 5 times more commercial sex workers in districts near former U.S. bases. The development of the sex industry is also explained by a high price elasticity of supply due to female migration from regions affected by an agricultural crisis. We then quantify the contribution of the sex industry's geographic distribution on the HIV outbreak. We show that the clustering of sex workers, because of non-linearities in HIV propagation, induces high transmission rates and thus more infections. Last, we conclude by documenting benefits to concentration, e.g., when designing infection control.
    Keywords: persistence, industry location, sex industry, HIV/AIDS
    JEL: O17 O18 N15 J46 J47 I28
    Date: 2017–07
  5. By: Peter Blair (Clemson University); Bobby Chung (Clemson University)
    Abstract: In order to work legally, 29% of U.S. workers require an occupational license. We show that occupational licensing reduces the racial wage gap between white and black men by 43%, and the gender wage gap between women and white men by 36%-40%. For black men, a license is a positive indicator of non-felony status that aids in firm screening of workers, whereas women experience differentially higher returns to the human capital that is bundled with occupational licenses. The information and human capital content of licenses enable firms to rely less on race and gender as predictors of worker productivity.
    Keywords: wage inequality, statistical discrimination, occupational licensing, screening, signaling, optimal regulation
    JEL: D21 D84 J24 J31 J41 J70 K23 K31 L51
    Date: 2017–06
  6. By: Wilson, Daniel J. (Federal Reserve Bank of San Francisco)
    Abstract: This paper exploits vast granular data – with over one million county-month observations – to estimate a dynamic panel data model of weather’s local employment effects. The fitted county model is then aggregated and used to generate in-sample and rolling out-of-sample (“nowcast”) estimates of the weather effect on national monthly employment. These nowcasts, which use only employment and weather data available prior to a given employment report, are significantly predictive not only of the surprise component of employment reports but also of stock and bond market returns on the days of employment reports.
    JEL: G17 J21 Q52 R11
    Date: 2017–06–14
  7. By: Sarah Flèche; Conal Smith
    Abstract: The last decade has seen a sustained surge of interest in measures of subjective well-being on the part of economists and other social scientists. The vast majority of the academic literature on subjective well-being focuses on measures of life evaluation, as does most discussion of how measures of subjective well-being can be applied to policy. However, measures of life evaluation have well-known limitations, and other measures of subjective well-being, including experienced well-being (i.e. people’s time use and emotional state over time), can be an important complement to measures of life evaluation. As of 2016, however, few countries have included experienced well-being in their official time use surveys, and there is relatively little understanding of how different methodological approaches to measuring experienced well-being affect the results obtained. This paper presents results using data from the US and the French time use surveys, showing that the different approaches adopted by these two countries have quite different implications for the data collected. Results highlight the sensitivity of experienced well-being measures – particularly the U-index – to the choice of affective states included, and shed light on the differing results found in the literature on how unemployment impacts upon experienced well-being.
    Keywords: experienced well-being, measurement, time use survey, U-index
    JEL: C8 I31 J22
    Date: 2017–07–06
  8. By: Timothy J. Bartik (W.E. Upjohn Institute for Employment Research)
    Abstract: When state and local governments engage in balanced budget changes in taxes and spending, what fiscal multiplier effects do such policies have on creating local jobs? Traditionally, the view has been that possible job-creation effects of such state and local "demand-side” policies are smaller, second-order effects. Such effects might be worthwhile to take into consideration when a state or local government balances its budget during a recession, but the effects were believed to be of modest magnitude, and not of major importance for more general state and local public policies. However, recent estimates of fiscal multiplier effects of state and local spending and tax policies suggest much larger demand-side effects of such policies on local jobs. These fiscal multiplier effects are large enough to suggest relatively low costs per job created of some tax and spending policy combinations, sufficient to alter the net benefits of many public policies. In particular, this recent research suggests that policies that use tax increases on the top 10 percent of the income distribution to finance either public spending expansions or tax relief for the bottom 90 percent of the income distribution may offer some job creation benefits that are large enough to alter state and local policy decisions. Furthermore, the cost per job created of state business tax incentive policies or business tax cuts may be significantly altered after taking into account the opportunity costs of financing such policies by cutting public spending or raising taxes on the bottom 90 percent.
    Keywords: job creation, fiscal multipliers, state and local taxation, state and local expenditures, local labor demand, income distribution, business tax incentives, state and local business taxes
    JEL: H71 H72 J23 R12
    Date: 2017–07
  9. By: Nicolas Gavoille (Stockholm School of Economics in Riga, Latvia - Condorcet Center for Political Economy, CREM CNRS UMR6211, University Rennes 1, France)
    Abstract: This paper studies the characteristics of the ghost deputies of the French National Assembly, i.e. deputies who do not have any official recorded activity over a whole year. Using a rich dataset providing various information about all deputies from 1959 to 2012, the results indicate that the typical ghost deputy is an old man with a low level of schooling, member of a large party which does not support the government and who is elected in jurisdiction with a low level of political competition. However, personal characteristics are less and less correlated with performance over the years. Finally, ghost deputies face more difficulties to achieve reelection, but are penalized only at the first round, voters exclusively considering national factors at the second round.
    Keywords: Bad politicians, Legislative activity, French politicians, Leg-islative elections, Vote-Popularity function
    JEL: D72 J45
    Date: 2017–06
  10. By: Russell Weinstein (Rensselaer Polytechnic Institute)
    Abstract: This paper analyzes an important shock to local labor demand in the financial services sector: firm relocation to Delaware following a Supreme Court ruling and state legislation in the 1908s. Using synthetic controls and bordering states, I find significant effects on employment growth, the unemployment rate, and participation in the first decade. Employment spillovers to the nontradable sector and migration appear larger than estimates from shocks to the tradable sector. Effects persist for 10 to 20 years after Delaware loses its original policy-induced advantage. The shift towards a low unemployment sector explains this persistence, rather than direct productivity effects or agglomeration.
    Keywords: Labor demand shocks, regulatory competition, migration, local labor markets
    JEL: R10 J20 G20
    Date: 2017–05
  11. By: Mark Aguiar; Mark Bils; Kerwin Kofi Charles; Erik Hurst
    Abstract: Younger men, ages 21 to 30, exhibited a larger decline in work hours over the last fifteen years than older men or women. Since 2004, time-use data show that younger men distinctly shifted their leisure to video gaming and other recreational computer activities. We propose a framework to answer whether improved leisure technology played a role in reducing younger men's labor supply. The starting point is a leisure demand system that parallels that often estimated for consumption expenditures. We show that total leisure demand is especially sensitive to innovations in leisure luxuries, that is, activities that display a disproportionate response to changes in total leisure time. We estimate that gaming/recreational computer use is distinctly a leisure luxury for younger men. Moreover, we calculate that innovations to gaming/recreational computing since 2004 explain on the order of half the increase in leisure for younger men, and predict a decline in market hours of 1.5 to 3.0 percent, which is 38 and 79 percent of the differential decline relative to older men.
    JEL: D1 E24 J01 J2
    Date: 2017–06
  12. By: Grosch, Kerstin; Rau, Holger A.
    Abstract: In this paper, we analyze how pay-regime procedures affect antisocial behavior at the workplace. In a real-effort experiment we vary two determinants of pay regimes: discrimination and justification of payments by performance. In our Discrimination treatment half of the workforce is randomly selected and promoted and participate in a tournament (high-income workers) whereas the other half receives no payment (lowincome workers). Afterwards, antisocial behavior is measured by a Joy-of-Destruction game where participants can destroy canteen vouchers. The data show that low-income workers destroy significantly more vouchers than high-income workers. Destruction behavior is driven by workers who receive payments that are not justified by performance. When all payments are justified, that is in our Competition treatment where all workers participate in a tournament, the difference vanishes. By using a treatment with random payments, we show that unjustifiably-paid workers destroy less when they had equal opportunities to receive a high payment, i.e., when they were not discriminated by the pay regime.
    Keywords: antisocial behavior,discrimination,experiment,joy of destruction
    JEL: C91 D03 J33 J70 M52
    Date: 2017
  13. By: Economides, George; Moutos, Thomas
    Abstract: To many economists the public's support for the minimum wage (MW) institution is puzzling, since the MW is considered a "blunt instrument" for redistribution. To delve deeper in this issue we build models in which workers are heterogeneous in ability. In the first model, the government does not engage in any type of redistributive policies - except for the payment of unemployment benefits; we find that the MW is preferred by the majority of workers (even when the unemployed receive very generous unemployment benefits). In the second model, the government engages in redistribution through the public provision of private goods. We show that (i) the introduction of a MW can be preferred by a majority of workers only if the unemployed receive benefits which are substantially below the after-tax earnings they would have had in the perfectly competitive case, (ii) for a given generosity of the unemployment benefit scheme, the maximum, politically viable, MW is lower than in the absence of in-kind redistribution, and (iii) the MW institution is politically viable only when there is a limited degree of in-kind redistribution. These findings can possibly explain why a well-developed social safety net in Scandinavia tends to co-exist with the absence of a national MW, whereas in Southern Europe the MW institution "complements" the absence of a well-developed social safety net.
    Keywords: minimum wage,in-kind redistribution,heterogeneity,unemployment
    JEL: E21 E24 H23 J23
    Date: 2017

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