nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒10‒22
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. Adapting to the changing labour market in New Zealand By David Carey
  2. Luxembourg: harnessing skills for more inclusive growth By Jan Stráský
  3. Labor Supply and the Value of Non-Work Time: Experimental Estimates from the Field By Alexandre Mas; Amanda Pallais
  4. Dual Practice by Health Workers: Theory and Evidence from Indonesia By Gonzalez, Paula; Montes-Rojas, Gabriel V.; Pal, Sarmistha
  5. The Gender Wage Gap among College Graduates in Italy By Piazzalunga, Daniela
  6. Active Labour Market Programmes in Latin America and the Caribbean: Evidence from a Meta Analysis By Escudero, Veronica; Kluve, Jochen; Mourelo, Elva López; Pignatti, Clemente
  7. Home Bias in Global Employment By Chen Liang; Yili Hong; Bin Gu
  8. The recent rise of labor force participation of older workers in Sweden By Laun, Lisa; Palme, Mårten
  9. Earnings, Savings, and Job Satisfaction in a Labor-intensive Export Sector: Evidence from the Cut Flower Industry in Ethiopia By SUZUKI, Aya; MANO, Yukichi; ABEBE, Girum
  10. Retirement and Informal Care-giving: Behavioral Patterns among Older Workers By Raab, Roman
  11. Catalonia; Independence and Pensions By Javier Diaz Gimenez; Javier Diaz Jimenez
  12. The ambiguous causal relationship between body-mass and labour income in emerging economies: The case of Mexico. By Levasseur, Pierre
  13. Elderly Care Service in an Aging Society By Masaya Yasuoka

  1. By: David Carey
    Abstract: Technological change is increasing the productivity of highly skilled workers but creating more challenging labour-market conditions for their low-skilled counterparts. These pressures are likely to grow, especially in light of progress being made in Artificial Intelligence. The NZ labour force is upskilling to meet these challenges, but more progress will be needed to keep ahead of the race with technology. Young New Zealanders will need to continue their education to higher levels than in the past and acquire skills that are more highly valued in the labour market. To maintain valuable skills, workers of all ages will need to engage more in lifelong learning. Some will need to retrain when their occupation becomes obsolete. Getting the most out of skills will also depend on allocating skills to their most productive uses. Reducing New Zealand’s high rates of qualification and skills mismatches would boost both wages and productivity. With the possibility of more workers being displaced than in the past, greater efforts may need to be considered to help them get back into jobs. This Working Paper relates to the 2017 OECD Economic Survey of New Zealand ( y-new-zealand.htm).
    Keywords: displaced workers, labour mobility, lifelong learning, qualification and skills mismatches, skill-biased technical change, upskilling
    JEL: I25 J24 J31 J62 J65
    Date: 2017–10–11
  2. By: Jan Stráský
    Abstract: Digitalisation, automation and future technological changes are changing the world of work, affecting the skills needed to perform them. The future of jobs will not look like the present situation: increasingly, workers will have to adapt to fast technological change, accept more mobility during their career, and regularly upgrade their skills to remain employable. Luxembourg’s workforce is highly skilled, reflecting the concentration in the country of sophisticated firms in the financial sector and other top-end international services. However, some middle- skilled routine jobs – especially back office, custodian and legal services in the financial sector – may disappear as a result of automation. Workers with strong and adaptable skills will be well prepared to thrive in this new environment. While many individuals working in Luxembourg already possess such characteristics, many others do not, resulting in a relatively high level of skills mismatch. Further improvements in the education system are needed to address this challenge, provide the young with learning-to-learn as well as technical capabilities and avoid that large groups of people are left behind. As skill sets will need to be updated during working careers, the system of initial education must be complemented by a flexible system of lifelong learning, tailored to the special needs of individuals with limited education attainment and older workers. Better use of existing skills would entail reorienting labour market policies from supporting job creation towards high-quality training programmes with substantial on-the-job learning component and reflecting future labour market needs. The tax and benefit system needs to be adjusted to increase incentives to work for low-skilled youth, older workers and second earners. Fully individualised taxation would increase incentives to work of second earners and make the tax system more gender neutral, while an additional parental leave entitlement for fathers may result in more gender-balanced use of part-time work. This Working Paper relates to the 2017 OECD Economic Survey of Luxembourg ( y-luxembourg.htm).
    Keywords: active labour market policies, education system, labour markets, lifelong learning, long-term unemployment, vocational education and training
    JEL: I24 I25 I28 J21 J22 J24 J48
    Date: 2017–10–11
  3. By: Alexandre Mas; Amanda Pallais
    Abstract: We use a field experiment to estimate the marginal value of non-work time (MVT). During a national application process for phone survey and data entry positions, we randomly offered applicants alternative wage-hour bundles. Jobseeker choices over these bundles yield estimates for the MVT as a function of hours worked. These quantities trace out a labor supply relationship. As predicted by the conventional model of the allocation of time, the substitution effect is positive. Individual labor supply is highly elastic at low hours and becomes more inelastic at higher hours. For unemployed job applicants, the opportunity cost of a full-time job due to lost leisure, household production, and other non-work activities is approximately 60% of their estimated market wage. A similar estimate is found when we reproduce elements of this experiment in a nationally-representative survey.
    JEL: C93 J22 J64
    Date: 2017–10
  4. By: Gonzalez, Paula (Universidad Pablo de Olavide); Montes-Rojas, Gabriel V. (City University London); Pal, Sarmistha (University of Surrey)
    Abstract: Using a simple theoretical model we conjecture that dual practice may increase the number of patients seen but reduce hours spent at public facilities, if public physicians lack motivation and/or if their opportunity costs are very large. Using data from Indonesia, we then test these theoretical conjectures. Our identification strategy relies on a 1997 legislation necessitating health professionals to apply for license for private practice only after three years of graduation. Results using a difference-in-difference regression discontinuity design provides support to our conjectures, identifying the role of weak work discipline, lack of motivation and opportunity costs of public service provision.
    Keywords: dual practice of health professionals, Ministry of Health Regulation, weak monitoring, motivation, opportunity costs of public service, Indonesia
    JEL: I18 J2 J44 J45 O1
    Date: 2017–09
  5. By: Piazzalunga, Daniela (IRVAPP)
    Abstract: The paper investigates the gender wage gap among recently graduated people, controlling for job and academic variables and for the field of study, as women lag in highly remunerative majors. The raw gender gap in hourly wages is 5.6%. Although including academic variables and the field of study, on top of job-related variables, slightly reduces the unexplained gap, the latter still accounts for most of the total difference. Using quantile decomposition, the paper shows that the unexplained gap increases along the wage distribution, indicating a glass ceiling effect. Heterogeneities arise across fields of study: the largest total gap emerges in Law, Political-Social sciences, and Economics-Statistics. In most disciplines, there is a significant unexplained gap – from 3.3% (Medicine), to 8.7% (Law), up to 9.6% (Agriculture) – which constitutes the largest share of the difference, confirming that most of the wage gap remains unexplained also by major. Finally, I use geographical differences to explore the influence of institutional and macro-economic variables, as well as of attitudes towards gender norms. Results indicate that childcare and part-time availability are correlated with lower gender wage gaps, while traditional gender norms are associated with higher gaps.
    Keywords: gender wage gap, Oaxaca-Blinder decomposition, college graduates, quantile decomposition, field of study, regional differences
    JEL: J16 J31 J71
    Date: 2017–09
  6. By: Escudero, Veronica (ILO International Labour Organization); Kluve, Jochen (Humboldt University Berlin, RWI); Mourelo, Elva López (ILO International Labour Organization); Pignatti, Clemente (ILO International Labour Organization)
    Abstract: We present a systematic collection and assessment of impact evaluations of active labour market programmes (ALMP) in Latin America and the Caribbean (LAC). The paper delineates the strategy to compile a novel meta database and provides a narrative review of 51 studies. Based on these studies, the quantitative analysis extracts a sample of 296 impact estimates, and uses meta regression models to analyse systematic patterns in the data. In addition to analysing earnings and employment outcomes as in previous meta analyses, we also code and investigate measures of job quality, such as the effects on hours worked and formality. We find that ALMPs in LAC are particularly effective in increasing the probability of having a formal job, compared to other outcomes. Our results also show that training programmes are slightly more effective than other types of interventions. Moreover, when looking at the sample of training programmes alone, we observe that formal employment is also the outcome category that is most likely to be impacted positively by these programmes. In terms of targeting, we find that ALMPs in the region work better for women than for men, and for youth compared to prime-age workers. Finally, medium-run estimates are not more likely to be positive than short-run estimates, while programmes of short duration (4 months or less) are significantly less likely to produce positive effects compared to longer interventions.
    Keywords: active labour market program, Latin America and the Caribbean, employment, informality, impact evaluation, meta analysis
    JEL: J08 J24 O54
    Date: 2017–09
  7. By: Chen Liang (Department of Information Systems, W.P. Carey School of Business, Arizona State University, USA); Yili Hong (Department of Information Systems, W.P. Carey School of Business, Arizona State University, USA); Bin Gu (Department of Information Systems, W.P. Carey School of Business, Arizona State University, USA)
    Abstract: We study the nature of home bias in online employment, wherein the employers prefer workers from their own home countries. Using a unique large-scale dataset from a major online labor platform, we identify employers’ home bias in their online employment decisions. Moreover, we find that employers from countries with high traditional values, lower diversity, and smaller (user) population size, tend to have a stronger home bias. Further, we investigate the nature of employers’ home bias using a quasi-natural experiment wherein the platform introduces a monitoring system to facilitate employers to keep track of workers’ progress in time-based projects. After matching comparable fixed-price projects as a control group using propensity score matching, our difference-in-difference estimations show that the home bias does exist in online employment, and at least 40.93% of home bias is driven by statistical discrimination.
    Keywords: home bias; global employment; statistical discrimination; taste-based discrimination; quasi-natural experiment; Gig economy
    JEL: J71 J78 J23 J82
    Date: 2017–09
  8. By: Laun, Lisa (IFAU - Institute for Evaluation of Labour Market and Education Policy); Palme, Mårten (Department of economics, Stockholm University)
    Abstract: This paper studies the background to the increase in labor force participation of older workers in Sweden since 2000. In the first part, we study how the characteristics of the elderly have changed with respect to health, education level and work environment, as well as the impact of joint decision-making within the household. In the second part, we study the importance of institutional changes, including a major reform of the old-age pension system, introduction of tax credits for older workers, changes of the mandatory retirement age and stricter eligibility criteria in the disability insurance program. We find that the rise in labor force participation has coincided with improvements in health and educational attainment across birth cohorts as well as increased screening stringency in the disability insurance program.
    Keywords: retirement; NDC pension plans; disability insurance
    JEL: I10 J26
    Date: 2017–09–19
  9. By: SUZUKI, Aya; MANO, Yukichi; ABEBE, Girum
    Abstract: While labor-intensive export-oriented industries typically bring positive economic benefits to countries through employment generation, the effects of these industries on various aspects of workers’ welfare have not been formally studied very well. This paper considers the case of the cut flower industry in Ethiopia to provide such quantitative evidences. Based on the propensity-score matching and doubly robust estimations to facilitate rigorous comparisons, we find that production workers in the cut flower sector earn significantly more than similar workers in other sectors, most probably due to the flower farms’ interest to reduce costly worker turnovers. In addition, the cut flower industry workers save more regularly than workers in other sectors who have similar characteristics, and the amount saved relative to the income level is also higher, after controlling for the frequency of wage payment and employment status. The subjective valuation of their jobs is also higher in the cut flower sector, particularly in terms of the income level, stability, and future prospect, but they are not necessarily more satisfied with the type of work they do. Risk-averse individuals are more satisfied in the cut flower sector and age is rewarded more, while work experience and math skills tend to reduce satisfaction levels more in the sector at this level of unskilled production workers.
    Keywords: Labor-intensive sector, Wage differential, Savings, Job satisfaction, Ethiopia
    JEL: J31 O12 O14 O19
    Date: 2017–10
  10. By: Raab, Roman (European Commission – JRC)
    Abstract: This paper uses panel data from the Survey of Health, Aging and Retirement in Europe (SHARE) to study the effect of care-giving on retirement. The findings suggest that care- and support-giving contributes to the retirement decision, in particular for men. While the frequency of care activities is more influential in the male retirement decision, the most important factor for both genders turns out to be out-of-household care.
    Keywords: informal care-giving, retirement, economics of aging, panel data
    JEL: I19 J26 J22
    Date: 2017–10
  11. By: Javier Diaz Gimenez (IESE Business School); Javier Diaz Jimenez (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: This article con rms and quanti es the intuition that the consequences of independence for Catalonian residents will depend crucially on the long term growth rate of the new republic. It also shows that the demographic, educational, and productivity advantages of Catalonian residents, when compared with those of the rest of Spain, are not enough to ensure a more prosperous economic future for Catalonians or a more sustainable pension system.
    Keywords: Computable general equilibrium, social security reform, retirement.
    JEL: C68 H55 J26
    Date: 2017–10–10
  12. By: Levasseur, Pierre
    Abstract: The effect of body-mass on labour outcomes seems to be closely linked to the level of development of the country concerned. In rich countries, excess weight is penalised at work, whereas in the poorest societies overweight is rewarded. These divergences indicate that this effect depends on sociocultural factors related to weight perception and stigmatisation. In the case of emerging economies, weight perception appears to be unclear given a hybrid nutritional panorama: hunger and obesity coexist. Although the literature suggests a quadratic causal relationship between body-mass and earnings in middle-income countries, these economies are quite heterogeneous in terms of the body-mass distribution. The main objective of this study is therefore to explore the impact of body-mass index (BMI) on hourly income in an emerging country with high obesity prevalence, such as Mexico. We use panel data from the Mexican Family Life Survey and perform a bootstrapped three-step parametric model, based on an expanded Mincer earning function to control for potential sample selection bias and endogeneity problems. Then, we test the robustness of results implementing a bootstrapped three-step semiparametric model. For employees, our results show a right-leaning U-inverted causal relationship between BMI and hourly wage in Mexico. In other words, while overweight is rewarded at work, obesity is significantly penalised. By contrast, for self-employed workers, we observe a linear and positive effect of BMI on earnings, at least up to a BMI of 32 kg/m². The source of stigmatisation, as well as sociocultural heterogeneity, can explain why earning penalties are higher for employers than self-employed workers. To conclude, our findings suggest that two paradoxical phenomena are occurring in emerging countries such as Mexico: (i) a social acceptance of overweight, due to past nutritional deprivations and to the growing normalisation of obesity; (ii) a social reject of obesity, due to the large diffusion and adoption of thinness ideals from Western culture.
    Keywords: Mexico; emerging countries; labour income; obesity; weight stigma.
    JEL: I15 J31
    Date: 2017–10
  13. By: Masaya Yasuoka (School of Economics, Kwansei Gakuin University)
    Abstract: An increase in life expectancy brings about an aging society, necessitating increasing demand for elderly care services. This paper presents an examination of how an aging society affects the demand for elderly care services and the labor market for elderly care services. Related reports of the literature describe that an aging society raises the share of labor dedicated to elderly care services. However, considering a closed economy in which saving affects the capital stock, an aging society does not always raise the share of labor allocated for elderly care services as derived by the related literature. This paper presents an examination of how the labor share and wage inequality between the final goods sector and elderly care sector are determined. In addition, this paper presents an examination of whether the subsidy for elderly care service increases demand for elderly care services, or not.
    Keywords: Aging society, Elderly care service, Labor mobility, Two-sector model
    JEL: J21 H20
    Date: 2017–10

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