nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒10‒08
eight papers chosen by
Joseph Marchand
University of Alberta

  1. Connections and Applicants' Self-Selection: Evidence from a Natural Randomized Experiment By Bagues, Manuel; Sylos-Labini, Mauro; Zinovyeva, Natalia
  2. Rising inequality and trends in leisure By Boppart, Timo; Ngai, Liwa Rachel
  3. Enhancing advanced skills to better meet labour market demand in the Slovak Republic By Gabriel Machlica; Ján Toman; Martin Haluš; Dávid Martinák
  4. Cross-Border Acquisitions and Employee-Engagement By Liang, Hao; Renneboog, Luc; Vansteenkiste, Cara
  5. Graduating into a recession By Reggio Ojeda, Iliana Gabriela; Alba Ramírez, Alfonso
  6. Why High-level Executives Earn Less in the Government Than in the Private Sector By Amihai Glazer; Hideki Konishi
  7. Wage Dynamics in Bulgaria: Co-movement and Causality By Hristina Manolova; Aleksandar Vasilev
  8. Boosting productivity for inclusive growth in Japan By Randall Jones; Yosuke Jin

  1. By: Bagues, Manuel; Sylos-Labini, Mauro; Zinovyeva, Natalia
    Abstract: Prospective candidates with connections in committees may have access to more accurate information about evaluation standards. When applications are costly, this informational advantage may reduce the application rate of connected individuals, leading to a positive selection among applicants. We document the relevance of this phenomenon using data from national evaluations in Italian academia. Researchers are significantly less likely to apply when the committee includes, through the luck of the draw, a colleague or a coauthor. At the same time, they tend to receive more favorable evaluations from their connections. Our analysis indicates that self-selection may bias in a non-trivial way estimates of evaluation biases that rely on observational data.
    Keywords: academic labor markets; connections; Self-selection
    JEL: I23 J71
    Date: 2017–09
  2. By: Boppart, Timo; Ngai, Liwa Rachel
    Abstract: This paper develops a model that generates rising average leisure time and increasing leisure inequality along a path of balanced growth. Households derive utility from three sources: market goods, home goods and leisure. Home production and leisure are both activities that require time and capital. Households allocate time and capital to these non-market activities, work and rent capital out to the market place. The dynamics are driven by activity-specific TFP growth and a spread in the distribution of household-specific labor market efficiencies. When the spread is set to match the increase in wage inequality across education groups, the model can account for the observed average time series and cross-sectional dynamics of leisure time in the U.S. over the last five decades.
    Keywords: balanced growth path; Home Production; inequality; Labor Supply; leisure
    JEL: E24 J22 O41
    Date: 2017–09
  3. By: Gabriel Machlica (OECD); Ján Toman (OECD); Martin Haluš (OECD); Dávid Martinák (OECD)
    Abstract: Changing labour market demand and moving up the global value chain requires high-skilled workers. However, the share of adults with high skill levels in the Slovak Republic is one of the lowest in the OECD. Improving the education system would raise quality and better align students’ skills with new labour market needs and help them face further changes in the work environment. The contribution of the tertiary education system to skills improvement is one of the lowest in the OECD. It has to open itself more to the outside world: by easing the conditions for foreign professors and researchers to teach at Slovak universities, promoting internationally respected research and intensifying the cooperation with the business sector. Another challenge is to secure an adequate supply of skilled workers in the face of rapid population ageing and increasing emigration of young high-skilled workers. Ageing of the population will not only lead to shrinking labour supply, but a growing part of the workforce will need to be retrained. Bolstering the supply of skills requires lifelong learning and attracting skilled migrants, including returning Slovaks. This Working Paper relates to the 2017 OECD Economic Survey of the Slovak Republic ( y-slovak-republic.htm).
    Keywords: brain drain, Skills, tertiary education, vocational education
    JEL: F22 I23 I25 I28 J48
    Date: 2017–10–04
  4. By: Liang, Hao (Tilburg University, Center For Economic Research); Renneboog, Luc (Tilburg University, Center For Economic Research); Vansteenkiste, Cara (Tilburg University, Center For Economic Research)
    Abstract: We provide novel evidence that a firm’s engagement in employee-related issues explains part of the value difference between its domestic and cross-border takeovers. An acquirer’s investment in employee relations is positively related to the firm’s performance when acquiring domestically, but labor-related frictions reverse this effect when acquiring a foreign target. The results cannot be explained by country-level labor regulation but are consistent with the notion that labor-related frictions exist that prohibit firms from efficiently transforming monetary incentives in higher shareholder value when acquiring a foreign target firm.
    Keywords: employee-engagement; labor protection; Monetary incentives; Cross-Border Mergers and Acquisitions
    JEL: G34 M14 J24
    Date: 2017
  5. By: Reggio Ojeda, Iliana Gabriela; Alba Ramírez, Alfonso
    Abstract: We investigate labour market outcomes among persons who graduated from college during a recession in Spain. We use administrative data that allow for longitudinal analysis for a large sample of workers. The main result is that men and women who enter the labor market in a period of rising unemployment experience a significant loss of earnings in comparison with cohorts entering just before or after the downturn. However, we find that earnings differentials become insignificant by the third year after graduation for men, and by the fifth year for women. Almost all earnings losses among unlucky college graduates appear to be caused by joblessness: the brunt of adjustment takes place through employment rather than wages.
    Keywords: earnings; recession; youth unemployment; college graduates
    JEL: J24 J23
    Date: 2017–08–01
  6. By: Amihai Glazer (Department of Economics, University of California, Irvine); Hideki Konishi (Faculty of Political Science and Economics, Waseda University)
    Abstract: Though governmental officials often have far greater responsibilities and make far more consequential decisions than do CEOs of private firms, government officials often earn far less. We offer explanations for the differences, considering Nash bargaining with the head of a governmental agency or with the CEO of a private firm. In the benchmark case, with a governmental agency providing consumer surplus in addition to profits, a governmental official earns more than a private CEO. But if for a governmental agency one official sets price and a different official negotiates pay, then under some conditions the head of a governmental agency will be paid less than the head of a for-profit firm. And in the plausible case where a governmental agency produces a non-excludable public good, and the agency is financed by a distortionary tax, then even if the consumer surplus generated at the governmental agency is greater than the profits of a for-profit firm, the head of the governmental agency may be paid less.
    Keywords: CEO pay, governmental officials, Nash bargaining, tax distortions, structure-induced equilibrium
    JEL: D23 H11 J31 J45
  7. By: Hristina Manolova (American University in Bulgaria); Aleksandar Vasilev (American University in Bulgaria)
    Abstract: Motivated by recent debates on the possible role of wages as an income policy tool, in this study we examine the dynamic inter-relationship between wages in Bulgaria, mainly in the context of its EU accession. Relative to the WDN studies on the other EU member states, the novelty in this paper is the inclusion of the minimum wage as a possible conditional determinant of the other two wages. We demonstrate that minimum wage increases do not cause changes in average wages in either the government or the private sector. Using variety of econometric tests, we also demonstrate the leadership of private sector wage over public compensation and recommend the implementation of policy measures aimed at labor productivity growth.
    Keywords: public sector wages, private sector wages, minimum wages, causality
    JEL: C32 E62 J3 J4
    Date: 2017–09
  8. By: Randall Jones; Yosuke Jin
    Abstract: Never in the past 30 years has productivity growth been lower than since the 2008 global financial crisis, and never has income inequality been higher than it is today in Japan, and in the OECD area. The two challenges have some common origins, including a widening productivity and wage gap between leading firms and those that are lagging. This creates scope for positive synergy between policies to promote productivity and inclusive growth. Exit policy should be improved to facilitate the closure of non-viable firms, whose survival hampers the growth of viable firms in Japan. This would also increase firm entry, along with policies to promote entrepreneurship. The growing gap between small and medium-sized enterprises and large firms also needs to be addressed. Breaking down labour market dualism, which limits human capital accumulation by non-regular workers and contributes to earnings and income inequality, is also a priority. Finally, ensuring appropriate skills, including those needed for digitalisation, would help support higher productivity and inclusive growth. This Working Paper relates to the 2017 OECD Economic Survey of Japan ( y-japan.htm)
    Keywords: Abenomics, bankruptcy law, corporate governance, entrepreneurship, firm exit, human capital, income inequality, innovation, labour market dualism, product market regulation, productivity, SMEs
    JEL: J4 K3 O3 O4
    Date: 2017–10–04

This nep-lma issue is ©2017 by Joseph Marchand. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.