nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒09‒24
eleven papers chosen by
Joseph Marchand
University of Alberta

  1. Promotion through Connections: Favors or Information? By Yann Bramoullé; Kenan Huremovic
  2. Poverty and Material Deprivation among the Self-Employed in Europe: An Exploration of a Relatively Uncharted Landscape By Horemans, Jeroen; Marx, Ive
  3. Motivating Workers through Task Assignment: A Dynamic Model of Up-and-Down Competition for Status By Julianna M. Butler; Scott M. Gilpatric; Christian A. Vossler
  4. The measurement of labour content: a general approach By Naoki Yoshihara; Roberto Veneziani
  5. Inequality and Poverty in Greece: Changes in Times of Crisis By Andriopoulou, Eirini; Karakitsios, Alexandros; Tsakloglou, Panos
  6. The Impact of Taxes and Transfers on Skill Premium By Shuhei Takahashi; Ken Yamada
  7. Generalized Glass Ceilings in the United States – A Stochastic Metafrontier Approach By Khalid Maman Waziri
  8. Tertiary Education for All and Wage Inequality: Policy Insights from Quantile Regression By Andini, Corrado
  9. Up in STEM, Down in Business: Changing College Major Decisions with the Great Recession By Liu, Shimeng; Sun, Weizeng; Winters, John V.
  10. Political participation and party capture in a dualized economy: A game theory approach By Kellermann, Kim Leonie
  11. Adjustment Costs and Factor Demand: New Evidence From Firms’ Real Estate By A. Bergeaud; S.Ray

  1. By: Yann Bramoullé (Aix-Marseille Univ. (Aix-Marseille School of Economics), CNRS, EHESS and Centrale Marseille); Kenan Huremovic (IMT, School for Advanced Studies)
    Abstract: Connections appear to be helpful in many contexts such as obtaining a job, a promotion, a grant, a loan or publishing a paper. This may be due to favoritism or to information conveyed by connections. Attempts at identifying both effects have relied on measures of true quality, generally built from data collected long after promotion. This empirical strategy faces important limitations. Building on earlier work on discrimination, we propose a new method to identify favors and information from classical data collected at time of promotion. Under natural assumptions, we show that promotion decisions look more random for connected candidates, due to the information channel. We obtain new identification results and show how probit models with heteroscedasticity can be used to estimate the strength of the two effects. We apply our method to the data on academic promotions in Spain studied in Zinovyeva & Bagues (2015). We find evidence of both favors and information effects at work. Empirical results are consistent with evidence obtained from quality measures collected five years after promotion.
    Keywords: promotion, connections, social networks, favoritism, Information
    JEL: C3 I23 M51
    Date: 2017–08
  2. By: Horemans, Jeroen (University of Antwerp); Marx, Ive (University of Antwerp)
    Abstract: In work-poverty has become a pressing social issue in Europe. The self-employed remain relatively uncharted terrain in this context. With about 15 percent of European workers in self-employment this group can no longer be ignored, especially since self-employment is on the rise in many countries, particularly own-account self-employment. Drawing on EU-SILC data this paper provides a systematic mapping exercise of poverty and living standards among the self-employed in the European Union. We find that the self-employed in Europe generally face significantly higher income poverty risks than contracted workers. Looking in more detail at the drivers of income poverty among the self-employed we find that in addition to lower reported earnings, lower overall work-intensity at the household level appears to be an important driver. However, while income poverty levels are quite significant among the self-employed, material deprivation rates are generally much lower. The discrepancy between income poverty measures and material deprivation measures is much larger for the self-employed than it is for employees. One possible explanation is that the self-employed can more often draw on assets accumulated over the life cycle or on business assets they control. The self-employed constitute a very mixed segment of the workforce and within-group inequality is quite significant. One group emerges as being particularly at-risk of poverty are own-account workers, substantiating worries about the rise of this form of self-employment. While the paper offers extensive descriptive analysis and some tentative explanations, an important and sizable research agenda remains.
    Keywords: in-work poverty, material deprivation, self-employment, Europe
    JEL: I32 I38 J21 J22 L26
    Date: 2017–09
  3. By: Julianna M. Butler (Department of Economics, University of Delaware); Scott M. Gilpatric (Department of Economics, University of Tennessee); Christian A. Vossler (Department of Economics, University of Tennessee)
    Abstract: We show how competition for status that conveys explicit benefits can motivate effort in organizations such as schools, public agencies, and unionized firms in the absence of monetary incentives or intrinsically motivated workers. We develop an indefinitely-repeated labor market tournament model in which high-status agents may be rewarded either monetarily or with favorable task assignment. If monetary incentives are unavailable and the principal relies on task assignment this entails an efficiency cost relative to the benchmark case with monetary incentives. Our model offers a new perspective on the value to an employer of flexibility over job assignments within labor contracts.
    Keywords: task assignment; status; dynamic tournament; non-wage compensation
    JEL: C73 J41 L20 M51 M52
    Date: 2017–09
  4. By: Naoki Yoshihara (Department of Economics, University of Massachusetts Amherst); Roberto Veneziani (School of Economics and Finance, Queen Mary University of London)
    Abstract: This paper analyses the theoretical issues related to the measurement of labour content for general technologies with heterogeneous labour. A novel axiomatic framework is used in order to formulate the key properties of the notion of labour content and analyse its theoretical foundations. The main measures of labour content used in various strands of the literature are then characterised. Quite surprisingly, a unique axiomatic structure can be identified which underlies measures of labour aggregates used in such diverse fields as neoclassical growth theory, input-output approaches, productivity analysis, and classical political economy.
    Keywords: Labour content, Labour productivity, Technical change, Axiomatic analysis
    JEL: D57 J24 O33 D46
    Date: 2017–09
  5. By: Andriopoulou, Eirini (Athens University of Economics and Business); Karakitsios, Alexandros (Athens University of Economics and Business); Tsakloglou, Panos (Athens University of Economics and Business)
    Abstract: The Greek crisis was the deepest and longest ever recorded in an OECD country in the postwar period. Output declined by over a quarter and disposable income by more than 40%, while the unemployment rate exceeded 27%. The paper explores the effects of the crisis on the level and the structure of aggregate inequality and poverty using the data of EU-SILC for the period 2007–2014. The results show that inequality rose but the magnitude of the change varies across indices. The recorded increases are larger when the indices used are relatively more sensitive to changes close to the bottom of the income distribution. Unlike claims often made in the public discourse, the elderly improved their relative position in the income distribution while there was substantial deterioration in the relative position of the enlarged group of the unemployed. The contribution of disparities between educational groups to aggregate inequality declined while that of disparities between socio-economic groups rose. All poverty indicators suggest that poverty increased substantially, especially when "anchored" poverty lines are used. Substantial changes are observed regarding the structure of poverty. Despite an increase in the population share of households headed by pensioners, their contribution to aggregate poverty declined considerably, with a corresponding increase in the contribution of households headed by unemployed persons. The changes are starker when distribution-sensitive poverty indices are utilized.
    Keywords: Greece, inequality, poverty, decomposition analysis
    JEL: D31 I31 I32
    Date: 2017–09
  6. By: Shuhei Takahashi (Institute of Economic Research, Kyoto University); Ken Yamada (Faculty of Economics,Kyoto University)
    Abstract: The level of wage inequality has varied across advanced industrial countries. One of the main reasons has been a significant difference in the skill wage premium. This study analyzes the impact of taxes and transfers on the skill wage premium and social welfare in the context of a heterogeneous-agents incomplete-markets model, in which the population consists of skilled workers and unskilled workers, and the production technology exhibits capital-skill complementarity. The analysis indicates that a significant fraction of the difference in the skill wage premium between the United States and Japan can be accounted for by differences in the tax system.
    Keywords: Skill premium, capital-skill complementarity, incomplete markets, capital income taxation, composition effect
    JEL: E13 E24 E62 H24 J31
    Date: 2017–08
  7. By: Khalid Maman Waziri (Aix-Marseille Univ. (Aix-Marseille School of Economics), CNRS, EHESS and Centrale Marseille)
    Abstract: This paper highlights the limitations inherent to the stochastic earnings frontier methodology to analyzing wage discrimination and introduces the use of the metafrontier approach as an important improvement. Using US data from the Current Population Survey, we find that white women’s and black men’s maximum attainable hourly earnings represent respectively 80% and 76% of those of white men on average. Furthermore, the metafrontier approach shows that male-female and white-black differences in maximum attainable earnings are observed at all levels of human capital. This innovative methodology permits the identification of a “generalized” glass ceilings against females and blacks in the US.
    Keywords: wage differentials, discrimination, glass ceiling, stochastic frontier, stochastic metafrontier approach, sample selection correction
    JEL: J31 J71 C13
    Date: 2017–08
  8. By: Andini, Corrado (University of Madeira)
    Abstract: Wage inequality is a highly debated topic in policy and academic circles. Policy makers typically consider that a policy promoting the equalization of education levels among the individuals of a society – pushing everybody towards tertiary education – is a good strategy to fight wage inequality. Academics are more pessimistic. This article stresses that a policy of "tertiary education for all" does not necessarily reduce the overall level of wage inequality. It may reduce wage inequality due to differences in education levels among individuals, but it may also increase wage inequality due to differences in unobserved abilities among individuals.
    Keywords: education policy, wage inequality, quantile regression
    JEL: I24 I28 J31 C21
    Date: 2017–09
  9. By: Liu, Shimeng; Sun, Weizeng; Winters, John V.
    Abstract: We use the American Community Survey (ACS) to investigate the extent to which college major decisions were affected during and after the Great Recession with special attention to business and STEM fields, as well as the heterogeneity by gender, race/ethnicity and combinations of race/ethnicity and gender. Several conclusions are reached. First, we see an overall increase in the frequency of STEM majors but a decrease in the frequency of business majors during and after the Great Recession. Second, the increase for STEM fields is spread across several detailed STEM fields, while the decrease in business majors is especially concentrated among finance and management. Third, we find strong heterogeneous effects by gender and race/ethnicity. Males are pushed away from business majors, while both males and females are pushed toward STEM majors; certain racial groups, such as white and Asian, seem to be affected more than others.
    Keywords: Great Recession,College Major,Business,Finance,STEM
    JEL: I20 J24
    Date: 2017
  10. By: Kellermann, Kim Leonie
    Abstract: This paper examines the link of political participation and employment status in a dualized labor market. Both insiders and outsiders can actively take part in political decision-making, e.g. by voting for a certain party. Insiders only have the resources to also provide financial donations to policy-makers. Future policy outcomes are determined in a dynamic two-stage game. First, individuals choose their optimal quantity of support depending on policy strategies. Second, parties determine their optimal policy platform anticipating the individual behavior. In order to collect donations, parties are incentivized to occupy an insider-friendly position. Thereby, insiders are encouraged to participate in politics while outsiders are discouraged. Labor market dualization opens up a gap in political involvement which induces a reinforcement of economic segmentation. However, party capture by insiders is weaker, the more strongly a party is originally tied to outsiders. With two parties competing for support and donations, political inequality becomes firmly established since both parties fully adopt the insiders' preferences.
    JEL: D71 D72 J42 P16
    Date: 2017
  11. By: A. Bergeaud; S.Ray
    Abstract: Adjustment costs impair the optimal allocation of production factor across firms. In this paper, we use the cost associated with corporate relocation to explore the effect of the adjustment costs of the premises size on factor demand. We rely on the tax on realized capital gains on real estate asset, which entails varying real estate adjustment costs across firms, to empirically study the effect of these frictions on firms' behaviour. We develop a general equilibrium model, with heterogeneous firms, that sheds light on the implication of the level of the fixed costs associated with the adjustment of real estate on the change in firms' labor demand following productivity shocks. This model predicts that employment growth of firms facing positive productivity shocks shrinks with the level of the frictions. Confronting these results using French firm-level data over the period 1994-2013, we find that higher adjustment costs constrain relocation and reduce job creation of the most dynamic firms. The highlighted frictions have noticeable macroeconomic effects.
    Keywords: Corporate real estate; Firms' relocation; Adjustment costs; Misallocation of resources.
    JEL: D21 D22 H25 J21 O52 R30
    Date: 2017

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