nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒08‒20
six papers chosen by
Joseph Marchand
University of Alberta

  1. People Versus Machines: The Impact of Minimum Wages on Automatable Jobs By Grace Lordan; David Neumark
  2. The effects of Germany's new minimum wage on employment and welfare dependency By Schmitz, Sebastian
  3. Self-worth versus net worth: Image motivation and the quantity-quality trade-off By Brock, Michelle
  4. The Returns to Personality Traits across the Wage Distribution By Matthias Collischon
  5. Firm Leverage, Labor Market Size, and Employee Pay By Timothy E Dore; Rebecca Zarutskie
  6. Human Capital in a Credit Cycle Model By Ingrid Kubin; Thomas O. Zörner

  1. By: Grace Lordan; David Neumark
    Abstract: We study the effect of minimum wage increases on employment in automatable jobs – jobs in which employers may find it easier to substitute machines for people – focusing on low-skilled workers from whom such substitution may be spurred by minimum wage increases. Based on CPS data from 1980-2015, we find that increasing the minimum wage decreases significantly the share of automatable employment held by low-skilled workers, and increases the likelihood that low-skilled workers in automatable jobs become unemployed. The average effects mask significant heterogeneity by industry and demographic group, including substantive adverse effects for older, low-skilled workers in manufacturing. The findings imply that groups often ignored in the minimum wage literature are in fact quite vulnerable to employment changes and job loss because of automation following a minimum wage increase.
    JEL: J23 J38
    Date: 2017–08
  2. By: Schmitz, Sebastian
    Abstract: In January 2015, Germany introduced a federal, statutory minimum wage of 8.50 € per hour. This study evaluates the effects of this policy on regular and marginal employment and on welfare dependency. Based on county-level administrative data, this study uses the difference-in-differences technique, exploiting regional variation in the bite of the minimum wage, i.e. the county-specific share of employees paid less than 8.50 € before the introduction of the minimum wage. The minimum wage had a considerable negative effect on marginal employment. There is also some indication that regular employment was slightly reduced. Concerning welfare dependency, the minimum wage reduced the number of working welfare recipients, with some indication that about one half of them left welfare receipt due to the minimum wage.
    Keywords: minimum wages,welfare dependency,labor supply,Germany
    JEL: I38 J22 J30
    Date: 2017
  3. By: Brock, Michelle
    Abstract: Self-image concerns can motivate behaviour over which it is difficult to contract. We investigate how self-image concerns impact the quantity-quality trade-off of professionals, independent of external reputation. To do so, we use a framed field experiment with judges. The experiment measures the effect of self-image concerns compared to that of a bonus and to that of combing both incentives. We find that while both incentives increase the quantity of work, bonuses generate much worse quality. Subjects are less willing to engage in opportunistic behaviour to earn the bonus, however, if a peer might see their work, albeit anonymously.
    Keywords: intrinsic incentives; judges; professionalism; real-effort task; Self-image; Tajikistan
    JEL: D91 J33 M52
    Date: 2017–08
  4. By: Matthias Collischon
    Abstract: This paper investigates heterogeneous wage effects of non-cognitive skills across the wage distribution. I develop a model of wage determination under uncertainty with respect to individual productivity based on three components (minimum wages, productivity premiums, bargaining premiums). Based on this model, I expect (i) a larger importance and (ii) larger effects of non-cognitive skills for high-wage employees compared to their low-wage counterparts. I test these hypotheses with unconditional quantile regressions using large-scale survey data from Germany, the UK, and Australia. To test the joint explanatory contribution of multiple variables within a quantile-regression framework, I propose a new statistic that quantifies the rise in explanatory power generated by additional explanatory variables. The findings indicate a rising importance as well as increasing effects of certain personality traits (agreeableness, neuroticism and risk taking) across the wage distribution for full-time employed males and females.
    Keywords: non-cognitive skills, personality traits, unconditional quantile regression
    JEL: C21 J24 J31
    Date: 2017
  5. By: Timothy E Dore; Rebecca Zarutskie
    Abstract: We provide new estimates of the wage costs of firms' debt. Our empirical approach exploits within-firm geographical variation in workers' expected unemployment costs due to variation in local labor market size and uses a large representative sample of public firms. We find that, following an increase in firm leverage, workers with higher unemployment costs experience higher wage growth relative to workers at the same firm with lower unemployment costs. Overall, our estimates suggest that a 10 percentage point increase in leverage increases wage compensation for the median worker by 1.9% and total firm wage costs by 17 basis points of firm value.
    Keywords: Capital structure ; Costs of financial distress ; Wages and compensation
    JEL: G32 J31
    Date: 2017–08–08
  6. By: Ingrid Kubin (Department of Economics, Vienna University of Economics and Business); Thomas O. Zörner (Department of Economics, Vienna University of Economics and Business)
    Abstract: We augment a model of endogenous credit cycles by Matsuyama et al.(2016) with human capital to study the impact of human capital on the stability of central economic aggregates. Thus we offer a linkage between human capital formation and credit market instability on a macrolevel combined with an analysis of functional income distribution. Human capital is modelled as pure external effect of production following a learning-by-producing approach. Agents have access to two different investment projects, which differ substantially in their next generations spillover effects. Some generate pecuniary externalities and technological spillovers through human capital formation whereas others fail to do so and are subject to financial frictions. Due to this endogenous credit cycles occur and a pattern of boom and bust cycles can be observed. We explore the impact of human capital on the stability of the system by numerical simulations which indicate that human capital has an ambiguous effect on the evolution of the output. Depending on the strength of the financial friction and the output share of human capital it either amplifies or mitigates output fluctuations. This analysis shows that human capital is an essential factor for economic stability and sustainable growth as a high human capital share tends to make the system's stability robust against shocks.
    Keywords: Human capital, Learning-by-producing, Credit cycles, Financial instability
    JEL: C61 E32 E24 J24
    Date: 2017–08

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