nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒10‒15
fifteen papers chosen by
Joseph Marchand
University of Alberta

  1. The Employment Effects of Mexican Repatriations: Evidence from the 1930's By Jongkwan Lee; Giovanni Peri; Vasil Yasenov
  2. Analyzing Wage Differentials by Fields of Study: Evidence from Turkey By Antonio Di Paolo; Aysit Tansel
  3. Intergenerational effect of education reform: mother's education and children's human capital in Nepal By Vinish Shrestha; Rashesh Shrestha
  4. UK national minimum wage and labor market outcomes of young workers By Fidrmuc, Jan; Tena, Juan de Dios
  5. The Effects of Cognitive and Noncognitive Skills on Migration Decisions By Aline Bütikofer; Giovanni Peri
  6. German robots - the impact of industrial robots on workers By Dauth, Wolfgang; Findeisen, Sebastian; Südekum, Jens; Wößner, Nicole
  7. Occupational choice of return migrants: Is there a 'Jack-of-all-trades' effect? By Mahe, Clotilde
  8. The Effect of Job Readiness Programs on Criminal Behavior By Jones, Michael
  9. The Impact of Trade on Inequality in Developing Countries By Nina Pavcnik
  10. Family Welfare and the Cost of Unemployment By Hotchkiss, Julie L.; Moore, Robert E.; Rios-Avila, Fernando
  11. Different Strokes for Different Folks: Experimental Evidence on the Effectiveness of Input and Output Incentive Contracts for Health Care Providers with Different Levels of Skills By Manoj Mohanan; Grant Miller; Katherine Donato; Yulya Truskinovsky; Marcos Vera-Hernández
  12. Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany By Clemens Fuest; Andreas Peichl; Sebastian Siegloch
  13. Taxes and Market Hours: The Role of Gender and Skill By Duval-Hernandez, Robert; Fang, Lei; Ngai, L. Rachel
  14. Will a Shrink Make you Richer? Gender Differences in the Effects of Psychotherapy on Labour Efficiency By Cozzi, Guido; Galli, Silvia; Mantovan, Noemi
  15. Decomposing the structure of wages into firm and worker effects: some insights from a high unemployment economy By Yolanda F. Rebollo-Sanz

  1. By: Jongkwan Lee; Giovanni Peri; Vasil Yasenov
    Abstract: During the period 1929-34 a campaign forcing the repatriation of Mexicans and Mexican Americans was carried out in the U.S. by states and local authorities. The claim of politicians at the time was that repatriations would reduce local unemployment and give jobs to Americans, alleviating the local effects of the Great Depression. This paper uses this episode to examine the consequences of Mexican repatriations on labor market outcomes of natives. Analyzing 893 cities using full count decennial Census data in the period 1930-40, we find that repatriation of Mexicans was associated with small decreases in native employment and increases in native unemployment. These results are robust to the inclusion of many controls. We then apply an instrumental variable strategy based on the differential size of Mexican communities in 1930, as well as a matching method, to estimate a causal "average treatment effect." Confirming the OLS regressions, the causal estimates do not support the claim that repatriations had any expansionary effects on native employment, but suggest instead that they had no effect on, or possibly depressed, their employment and wages.
    JEL: J15 J21 J61 N32
    Date: 2017–09
  2. By: Antonio Di Paolo (AQR-IREA, University of Barcelona. Diagonal Av. 690, 08034, Barcelona, Spain.); Aysit Tansel (Department of Economics, Middle East Technical University, 06800 Ankara, Turkey.)
    Abstract: This paper analyzes the drivers of wage differences among college graduates who hold a degree in a different field of study. We focus on Turkey, an emerging country that is characterized by a sustained expansion of higher education. We estimate conditional wage gaps by field of study using OLS regressions. Average differentials are subsequently decomposed into the contribution of observable characteristics (endowment) and unobservable characteristics (returns). To shed light on distributional wage disparities by field of study, we provide estimates along the unconditional wage distribution by means of RIF-Regressions. Finally, we also decompose the contribution of explained and unexplained factors in accounting for wage gaps along the whole distribution. As such, this is the first work providing evidence on distributional wage differences by college major for a developing country. The results indicate the existence of important wage differences by field of study, which are partly accounted by differences in observable characteristics (especially occupation and, to a lesser extent, employment sector). These pay gaps are also heterogeneous over the unconditional distribution of wages, as is the share of wage differentials that can be attributed to differences in observable characteristics across workers with degrees in different fields of study.
    Keywords: Fields of Study, Wage Differentials, Decomposition, Unconditional Wage Distribution, Turkey
    JEL: J31 J24 I23
    Date: 2017–10
  3. By: Vinish Shrestha (Department of Economics, Towson University); Rashesh Shrestha (Research Institute for ASEAN and East Asia (ERIA))
    Abstract: We examine a potential intergenerational transfer of human capital by investigating the effect of maternal education on children's educational and labor outcomes in the context of a developing country Nepal. To account for endogeneity of mother's education, we use education reform in the 1970s that had differential impact on women due to their year and district of birth. We also account for birth order effects by implementing a triple-difference strategy. The education reform increased schooling of females that were most affected by the reform. Furthermore, an increase in mother's highest level of schooling increased the child's probability of finishing 5th grade only among mothers from a higher caste households. We find modest effects of mother’s education on child labor outcomes, with the IV estimate indicating that a year increase in mother's education reduces a child's weekly work by approximately an hour. A lack of intergenerational impact among relatively lower caste households suggests that exclusionary social structure should be considered when promoting maternal education as a medium to improve children's well-being.
    Keywords: : Intergenerational effect, maternal education, children human capital, schooling.
    JEL: I10 I15
    Date: 2017–10
  4. By: Fidrmuc, Jan; Tena, Juan de Dios
    Abstract: The UK national minimum wage (NMW) is age-specific with the most important threshold at the age of 22 (lowered to 21 from 2010 onwards) when workers become eligible for the adult rate. The authors estimate the impact of this threshold on employment by means of a regression discontinuity analysis. Because this threshold is known in advance, they investigate the presence of discontinuities in both the level and the slope of employment probabilities at different ages around the threshold. Their results indicate that turning 22 does not significantly change the employment probability. However, they find a significant change in the slope of the probability of being employed around one year before, suggesting a smooth deterioration of employment probability before turning 22 rather than a sudden change at a particular age. This finding is confirmed by a differencein- difference analysis. However, no such effect can be found during the period preceding the introduction of the NMW.
    Keywords: Minimum wage,employment,young workers,regression discontinuity design
    JEL: J21 J23
    Date: 2017
  5. By: Aline Bütikofer; Giovanni Peri
    Abstract: There is growing evidence that cognitive and noncognitive skills affect the economic and social outcomes of individuals. In this paper, we analyze how they affect the migration decisions of individuals during their lifetimes. We use data that combine military enlistment and administrative records for the male population born in 1932 and 1933 in Norway. Records of interviews with a psychologist at age 18 allow us to construct an index of `sociability' and `adaptability' for each individual, as well as an index of cognitive ability, the intelligence quotient. We find that adaptability and cognitive ability have significant and positive impacts on the probability of an individual migrating out of his area, whether this involves rural--urban, long distance, or international migration. Adaptability has a particularly strong impact on migration for individuals with low cognitive skills, implying a strong positive selection of less educated migrants with respect to the (previously unobserved) adaptability skill. We also show that cognitive skills have a strong positive effect on the pre- and post-migration wage differential, whereas adaptability has no significant effect. Moreover, individuals with high cognitive ability migrate to areas with large wage returns to cognitive abilities, whereas this is not true for individuals with high adaptability. This evidence suggests that adaptability reduces the psychological cost of migrating, whereas cognitive skills increase the monetary returns associated with migration.
    JEL: J24 J61 R23
    Date: 2017–09
  6. By: Dauth, Wolfgang (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Findeisen, Sebastian; Südekum, Jens; Wößner, Nicole
    Abstract: "We study the impact of rising robot exposure on the careers of individual manufacturing workers, and the equilibrium impact across industries and local labor markets in Germany. We find no evidence that robots cause total job losses, but they do affect the composition of aggregate employment. Every robot destroys two manufacturing jobs. This accounts for almost 23 percent of the overall decline of manufacturing employment in Germany over the period 1994 - 2014, roughly 275,000 jobs. But this loss was fully offset by additional jobs in the service sector. Moreover, robots have not raised the displacement risk for incumbent manufacturing workers. Quite in contrast, more robot exposed workers are even more likely to remain employed in their original workplace, though not necessarily performing the same tasks, and the aggregate manufacturing decline is solely driven by fewer new jobs for young labor market entrants. This enhanced job stability for insiders comes at the cost of lower wages. The negative impact of robots on individual earnings arises mainly for mediumskilled workers in machine-operating occupations, while high-skilled managers gain. In the aggregate, robots raise labor productivity but not wages. Thereby they contribute to the decline of the labor income share." (Author's abstract, IAB-Doku) ((en))
    JEL: J24 O33 F16 R11
    Date: 2017–09–19
  7. By: Mahe, Clotilde (UNU-MERIT, Maastricht University)
    Abstract: Although it has been found that return migrants are more likely to be self-employed than non-migrants, the role of migration episodes per se remains unclear. With reference to Lazear's Jack-of-all-trades hypothesis, this paper examines whether migrants are more likely to choose self-employment upon return because of the diverse work experience they gained abroad. Using the 2012 Egypt Labour Market Panel Survey, seemingly unrelated regression model estimates show that return migrants' greater propensity to be self-employed, to survive or to generate jobs as self-employed might proceed from participating in significantly more occupations, sectors and jobs over their work history than non-migrants. Results hold for non-agricultural activities, rural areas, and controlling for financial resources. In line with Lazear's framework, they confirm that entrepreneurship can be learnt, and that exposure to multiple occupations and industries matters for entering into and persisting in self-employment.
    Keywords: International migration, Return migration, Entrepreneurship, Human capital, North Africa, Egypt
    JEL: F22 J24 L26 O12 O15
    Date: 2017–09–18
  8. By: Jones, Michael
    Abstract: In this paper, I find that participants in a job-readiness program, Cincinnati Works, in Cincinnati, Ohio are nine percentage points less likely to be charged with a felony compared to non-members. Given that 18 percent of non-members are charged with a felony sometime in the five years after their applications, Cincinnati Works decreases the probability of criminal charges by 50 percent. Moreover, the reduction in crime is driven by those individuals who were not previously felons. Cincinnati Works appears to be more effective at keeping individuals out of the criminal justice system for the first time, compared to reducing the recidivism rate. I find that the taxpayer benefit per Cincinnati Works participant is between $486 and $1,584 a year, depending on whether or not the marginal costs of a prison system include employee compensation. However, because the average cost per participant is $4,669, the program is unlikely to pay for itself based only on a reduction in criminal recidivism.
    Keywords: benefit-cost analysis, labor market, crime, program evaluation
    JEL: J01 J08 J2 J24
    Date: 2017–10–11
  9. By: Nina Pavcnik
    Abstract: This paper assesses the current state of evidence on how international trade shapes inequality and poverty through its influence on earnings and employment opportunities. While the focus is mainly on developing countries, in part because we have more evidence in that context, the discussion draws parallels to the empirical evidence from developed countries. The paper also discusses perceptions about international trade in over 40 countries at different levels of development, including perceptions on trade’s overall benefits for the economy, trade’s effect on the livelihood of workers through wages and jobs, and trade’s contribution to inequality. The paper concludes with a survey of evidence on several policies that could mitigate the adverse effects of import competition.
    JEL: F1 F13 F14 F16 J2 O17 O24
    Date: 2017–09
  10. By: Hotchkiss, Julie L. (Federal Reserve Bank of Atlanta); Moore, Robert E. (Georgia State University); Rios-Avila, Fernando (Bard College)
    Abstract: This paper calculates the cost of an unemployment shock in terms of family welfare for married and single families separately and by education level. We find that, overall, families face an average annualized expected dollar equivalent welfare loss of $1,156 when the unemployment rate rises by 1 percentage point. The average welfare loss for married families is greater than the average loss for single families and increases in education. We then estimate that a price level increase of 1.8 percent generates the same amount of welfare loss. We also find that the average welfare loss from a shock to prices versus a shock to unemployment rises with income.
    Keywords: family welfare; joint labor supply; microsimulation dual mandate; monetary policy
    JEL: D19 E52 I30 J22
    Date: 2017–09–01
  11. By: Manoj Mohanan (Duke University); Grant Miller (Stanford University & NBER); Katherine Donato (Harvard University); Yulya Truskinovsky (Harvard T.H. Chan School of Public Health); Marcos Vera-Hernández (University College London & IFS)
    Abstract: A central issue in designing performance incentive contracts is whether to reward the production of outputs versus use of inputs: the former rewards efficiency and innovation in production, while the latter imposes less risk on agents. Agents with varying levels of skill may perform better under different contractual bases as well—more skilled workers may be better able to innovate, for example. We study these issues empirically through an experiment enabling us to observe and verify outputs (health outcomes) and inputs (guideline adherence) in Indian maternity care. We find that both output and input incentive contracts achieved comparable reductions in post-partum hemorrhage (PPH) rates, the dimension of maternity care most sensitive to provider behavior and the largest cause of maternal mortality. Interestingly, and in line with the theory, providers with advanced qualifications performed better and used new health delivery strategies under output incentives, while providers with and without advanced qualifications performed equally under input incentives.
    JEL: D86 J41 O15
  12. By: Clemens Fuest; Andreas Peichl; Sebastian Siegloch
    Abstract: This paper estimates the incidence of corporate taxes on wages using a 20-year panel of German municipalities exploiting 6,800 tax changes for identication. Using event study designs and differences-in-differences models, we find that workers bear about half of the total tax burden. Administrative linked employer-employee data allow us to estimate heterogeneous firm and worker effects. Our findings highlight the importace of labor market institutions and profit-shifting opportunities for the incidence of corporate taxes on wages. Moreover, we show that low-skilled, young and female employees bear a larger share of the tax burden. This has important distributive implications.
    Keywords: business taxation, incidence, administrative data, local taxation
    JEL: H20 H70 J30
    Date: 2017
  13. By: Duval-Hernandez, Robert (University of Cyprus); Fang, Lei (Federal Reserve Bank of Atlanta); Ngai, L. Rachel (London School of Economics)
    Abstract: Cross-country differences of market hours in 17 countries belonging to the Organisation for Economic Co-operation and Development are mainly due to the hours of women, especially low-skilled women. This paper develops a model to account for the gender-skill differences in market hours across countries. The model explains a substantial fraction of the differences in hours by taxes, which reduce market hours in favor of leisure and home production, and by subsidized care, which frees (mostly) women from home care in favor of their market hours. Low-skilled women are more responsive to policy because of their low market returns and their comparative advantage in home activities.
    Keywords: Cross-country differences in market hours; home production; subsidies on family care
    JEL: E24 E62 J22
    Date: 2017–09–01
  14. By: Cozzi, Guido; Galli, Silvia; Mantovan, Noemi
    Abstract: This paper provides a first theoretical and empirical analysis of the effects of psychotherapy on individual productivity. We build a simple model in which a deterioration of mental health endogenously causes a decrease in productivity, which is counterbalanced by psychotherapy. We test our hypotheses on the British Household Panel Survey data. We find that individuals suffering from mental health problems benefit economically from consulting a psychotherapist. Moreover, we find that the returns are higher for men than for women, even though women are more likely to seek help.
    Keywords: Gender Differences; Mental Health; Wage Gap.
    JEL: I12 J16 J31
    Date: 2017
  15. By: Yolanda F. Rebollo-Sanz (Department of Economics, Universidad Pablo de Olavide)
    Abstract: This paper estimates an individual wage equation where firm and workers effects are considered and the estimation process controls for censored wages. This exercise is performed for the Spanish economy over the course of a whole business cycle (2000-2015). It is acknowledged that Spain is a country where firm wage setting policies are at least as important as they are in to other European countries with apparently less rigid labour market. Spanish firms explain around 27% of the individual wage heterogeneity but more importantly around 74% of inter-industry wage differentials and these numbers increased over the current Big Recession. It is found evidence of an important sorting process of individual and firms across industries. Finally, it is also demonstrated that, for some key topics in labour economics such as the effect job mobility on wages, it is important to explicitly consider firm fixed effects.
    Keywords: high-dimensional fixed effects, individual wage decomposition, assortative matching, employer-employee dataset, inter-industry wage differentials, firm wage policies
    JEL: C24 C51 D30 J30
    Date: 2017–09

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