nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒11‒26
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. Older Americans Would Work Longer If Jobs Were Flexible By John Ameriks; Joseph S. Briggs; Andrew Caplin; Minjoon Lee; Matthew D. Shapiro; Christopher Tonetti
  2. Productivity and Health: Alternative Productivity Estimates Using Physical Activity By Akogun, Oladele; Dillon, Andrew; Friedman, Jed; Prasann, Ashesh; Serneels, Pieter
  3. Children, Time Allocation and Consumption Insurance By Richard Blundell; Luigi Pistaferri; Itay Saporta-Eksten
  4. Mutual Gains? Is There a Role for Employee Engagement in the Modern Workplace? By Bryson, Alex
  5. Do High School Sports Build or Reveal Character? By Ransom, Michael R.; Ransom, Tyler
  6. Premium or Penalty? Labor Market Returns to Novice Public Sector Teachers By Juan Saavedra; Dario Maldonado; Lucrecia Santibanez; Luis Omar Herrera Prada
  7. Minimum age regulation and child labor: New evidence from Brazil By Olivier BARGAIN; Delphine BOUTIN
  8. Does Economic Insecurity Affect Employee Innovation? By Shai Bernstein; Timothy McQuade; Richard R. Townsend
  9. Optimal Design and Quantitative Evaluation of the Minimum Wage By Pau S. Pujolas; Zachary L. Mahone
  10. Foreign Direct Investment and Urban Inequality: Evidence from Chinese Cities By Johansson, Anders C.; Liu, Dan; Zhen, Maosheng
  11. On the Economics of Audit Partner Tenure and Rotation: Evidence from PCAOB Data By Brandon Gipper; Luzi Hail; Christian Leuz
  12. Not for the Profit, but for the Training? Gender Differences in Training in the For-Profit and Non-Profit Sectors By Dostie, Benoit; Javdani, Mohsen
  13. The Careers of Teachers in Australia: A Descriptive Study By Nikhil Jha; Chris Ryan

  1. By: John Ameriks; Joseph S. Briggs; Andrew Caplin; Minjoon Lee; Matthew D. Shapiro; Christopher Tonetti
    Abstract: Older Americans, even those who are long retired, have strong willingness to work, especially in jobs with flexible schedules. For many, labor force participation near or after normal retirement age is limited more by a lack of acceptable job opportunities or low expectations about finding them than by unwillingness to work longer. This paper establishes these findings using an approach to identification based on strategic survey questions (SSQs) purpose-designed to complement behavioral data. These findings suggest that demand-side factors are important in explaining late-in-life labor market behavior and may be the most appropriate target for policy aimed at promoting working longer.
    JEL: E24 J22 J26
    Date: 2017–11
  2. By: Akogun, Oladele (Modibbo Adama University of Technology); Dillon, Andrew (Michigan State University); Friedman, Jed (World Bank); Prasann, Ashesh (World Bank); Serneels, Pieter (University of East Anglia)
    Abstract: This paper investigates an alternative proxy for individual worker productivity in physical work settings: a direct measure of physical activity using an accelerometer. First, the paper compares worker labor outcomes, such as labor supply and daily productivity obtained from firm personnel data, with physical activity; they are strongly related. Second, the paper investigates the effect of a health intervention on physical activity, using a temporally randomized offer of malaria testing and treatment. Workers who are offered this program reallocate time from lower intensity activities in favor of higher intensity activities when they work.
    Keywords: labor productivity, productivity measurement, malaria, field experiment
    JEL: I12 J22 J24 O12
    Date: 2017–10
  3. By: Richard Blundell; Luigi Pistaferri; Itay Saporta-Eksten
    Abstract: We consider the life cycle choices of a household that in each period decides how much to consume and how to allocate spouses' time to work, leisure, and childcare. In an environment with uncertainty, the allocation of goods and time over the life cycle also serves the purpose of smoothing marginal utility in response to shocks. We combine data on consumption, spouses' wages, hours of work, and time spent with children to estimate the sensitivity of consumption and time allocation to transitory and permanent wage shocks. These structural parameters describe the ability of household to self-insure in response to shocks. We find that behavioral responses to wage shocks depend on the presence of young children. We also find that labor supply cross-responses depend on three counteracting forces: complementarity of leisure time, substitutability of time in the production of child services, and added worker effects.
    JEL: J13 J22
    Date: 2017–11
  4. By: Bryson, Alex (University College London)
    Abstract: I examine the history of employee engagement and how it has been characterised by thinkers in sociology, psychology, management and economics. I suggest that, while employers may choose to invest in employee engagement, there are alternative management strategies that may be profit-maximising. I identify four elements of employee engagement – job 'flow', autonomous working, involvement in decision-making at workplace or firm level, and financial participation – and present empirical evidence on their incidence and employee perceptions of engagement, drawing primarily from evidence in Britain. I consider the evidence regarding the existence of mutual gains and present new evidence on the issue. I find a non-linear relationship between human resource management (HRM) intensity and various employee job attitudes. I also find the intensity of HRM use and employee engagement are independently associated with improvements in workplace performance. I consider the implications of the findings for policy and employment practice in the future.
    Keywords: employee engagement, productivity, performance, human resource management, worker wellbeing
    JEL: J24 J28 L22 L23 M12 M54
    Date: 2017–10
  5. By: Ransom, Michael R. (Brigham Young University); Ransom, Tyler (University of Oklahoma)
    Abstract: We examine the extent to which participation in high school athletics has beneficial effects on future education, labor market, and health outcomes. Due to the absence of plausible instruments in observational data, we use recently developed methods that relate selection on observables with selection on unobservables to estimate bounds on the causal effect of athletics participation. We analyze these effects in the US separately for men and women using three different nationally representative longitudinal data sets that each link high school athletics participation with later-life outcomes. We do not find consistent evidence of individual benefits reported in many previous studies – once we have accounted for selection, high school athletes are no more likely to attend college, earn higher wages, or participate in the labor force. However, we do find that men (but not women) who participated in high school athletics are more likely to exercise regularly as adults. Nevertheless, athletes are no less likely to be obese.
    Keywords: human capital, high school sports
    JEL: I20 J24
    Date: 2017–10
  6. By: Juan Saavedra; Dario Maldonado; Lucrecia Santibanez; Luis Omar Herrera Prada
    Abstract: It is unclear whether public sector teachers are under or overpaid relative to other occupations due to lack of knowledge about teachers’ outside labor market options and other unobserved attributes related to compensation. We estimate causal labor market returns to novice public teachers in Colombia. Our approach takes advantage of a national, standardized, teacher-screening exam, scores on which determine eligibility for public teaching jobs. We use four nationwide administrative data sources in a regression discontinuity approach to show that applicants who marginally pass the teacher screening test have greater annual earnings during the first three years of tenure than applicants below the passing cutoff. The total earnings effect is a combination of higher daily wages and greater labor supply, part of which is in outside, predominantly non-teaching jobs for a substantial fraction of public teachers. For infra-marginal high-scoring applicants, we show that being a public teacher in Colombia is as attractive, if not more, as for those at the margin. On the whole, rather than a penalty, public teachers in Colombia across all ability levels earn a substantial labor market premium early in their careers.
    JEL: J22 J24 O15 O38
    Date: 2017–11
  7. By: Olivier BARGAIN; Delphine BOUTIN (Centre d'Etudes et de Recherches sur le Développement International(CERDI))
    Abstract: We suggest new evidence on minimum age regulations using a natural experiment. In 1998, a constitutional reform has changed the minimum working age from 14 to 16 in Brazil. The reform was the legislative counterpart of a broad set of measures taken by a government strongly committed to fighting child labor. We document the fact that enforcement and compliance may have been heterogeneous across regions and job types. The setting allows improving upon past approaches based on the comparison of employment rates of children below and above the minimum age. Precisely, we observe 14-year old children the year after the reform and exploit discontinuous treatment depending on their birthdate (only those who turned 14 after mid-December 1998 are banned). Regression discontinuity and difference-in-discontinuity designs show no effect of the ban overall, nor a reallocation towards less visible activities, or a substitution of labor within families. Importantly, however, we find a significant drop in child labor among those with highest chances of compliance, namely children in visible activities and in regions characterized with an above-average intensity of labor inspections. We provide power calculation and extensive sensitivity checks.
    Keywords: Child Labor, Ban, Minimum working age, Brazil, Regression discontinuity, Difference in discontinuity.
    JEL: J88 J23 J22 J08
    Date: 2017–11
  8. By: Shai Bernstein; Timothy McQuade; Richard R. Townsend
    Abstract: Do household wealth shocks affect employee productivity? We examine this question through the lens of technological innovation, by comparing employees that worked at the same firm and lived in the same metropolitan area, but experienced different housing wealth declines during the 2008 crisis. Following a housing wealth shock, employees are less likely to successfully pursue innovative projects, particularly ones that are high impact, complex, or exploratory in nature. Consistent with employee concerns about financial distress, the effects are more pronounced among those who had little equity in their house before the crisis and among those with fewer outside labor market opportunities. Moreover, run-ups in housing prices before the crisis did not affect employee innovation. The results highlight a “bottom-up” view of innovation, in which individual employees influence the quantity and nature of innovation produced within firms.
    JEL: G01 O3 O31 O32
    Date: 2017–11
  9. By: Pau S. Pujolas; Zachary L. Mahone
    Abstract: We study a labor market where firms have private information about their ex-ante heterogeneous productivities and search is random. In this environment, a binding minimum wage can be efficiency-enhancing - we show that setting it using a version of the Vickery-Clarke-Groves mechanism delivers full efficiency. In a dynamic, stochas-tic version of the model calibrated to the Routine Manual labor market in the U.S., our proposed mechanism generates sizeable welfare gains. The resulting minimum wage is procyclical, dampening the response of unemployment to aggregate shocks.
    Keywords: Minimum Wage Determination, Business-cycle, Vickrey-Clarke-Groves Auction
    JEL: J2 J3 J5
    Date: 2017–11–09
  10. By: Johansson, Anders C. (Stockholm China Economic Research Institute); Liu, Dan (Shanghai University of Finance and Economics); Zhen, Maosheng (Shanghai University of Finance and Economics)
    Abstract: In this paper we examine the impact of foreign direct investment (FDI) on local urban wage inequality in China. We find that the within-city college premium is larger for cities characterized by a higher degree of FDI penetration. We then try to establish the causal impact of FDI penetration on city inequality using historical Christian influence as an instrumental variable. In addition, firm-level evidence shows that FDI has amplified both between-firm inequality and within-firm inequality. FDI firms do not only hire relatively more high-skilled workers but also provide relatively higher wages to high-skilled workers compared to domestic firms. Finally, an individual-level analysis shows that FDI has a spillover effect on low-skilled workers, but the magnitude of that effect is much smaller than the effect on high-skilled workers.
    Keywords: foreign direct investment; skill premium; inequality; China
    JEL: F21 I30 R11
    Date: 2017–11–15
  11. By: Brandon Gipper; Luzi Hail; Christian Leuz
    Abstract: This paper provides the first partner tenure and rotation analysis for a large cross-section of U.S. publicly listed firms over an extended period. We analyze the effects on audit quality as well as economic tradeoffs related to partner tenure and rotation with respect to audit hours and fees. On average, we find no evidence for audit quality declines over the tenure cycle and little support for fresh-look benefits after rotations. Nevertheless, partner rotations have significant economic consequences. We find increases in audit fees and decreases in audit hours over the tenure cycle, which differ by partner experience, client size, and competitiveness of the local audit market. More generally, our findings are consistent with efforts by the audit firms to minimize disruptions and audit failures around mandatory rotations. We also analyze special circumstances, such as audit firm switches and early partner rotations, and show that they are more disruptive than mandatory rotations, and also more likely to exhibit audit quality effects.
    JEL: G30 J44 J62 K22 L84 M21 M41 M42 M51 M54
    Date: 2017–11
  12. By: Dostie, Benoit (HEC Montreal); Javdani, Mohsen (University of British Columbia, Okanagan)
    Abstract: We use Canadian linked employer-employee data to examine gender differences in probability, duration, and intensity of firm-sponsored training. We find that women in the for-profit sector are less likely to receive classroom training, and receive shorter classroom training courses. However, we find the reverse in the non-profit sector, with women being more likely to receive both classroom and on-the-job training, and also receiving longer classroom training courses. Our results suggest that women's worse training opportunities in the for-profit sector mainly operate within workplaces. We find no evidence that gender gaps in training in the for-profit sector are driven by lower probabilities of accepting training offers, child or family commitments, weaker labour market attachment, or worker self-selection. We also find that gender differences in expected changes in wages and training opportunities between the two sectors can explain a large portion of women's higher probability of employment in the non-profit sector. Finally, decomposition results suggest that gender differences in training explain some of the gender wage gap in the for-profit sector, which is twice as large than in the non-profit sector.
    Keywords: gender, non-profit, firm-sponsored training, linked employer-employee data, gender wage gap
    JEL: J24 L22 M53 O32
    Date: 2017–10
  13. By: Nikhil Jha (ARC Centre of Excellence for Children and Famlies over the Life Course); Chris Ryan (Melbourne Institute: Applied Economic & Social Research, The University of Melbourne)
    Abstract: This study uses longitudinal data from the Household, Income and Labour Dynamics in Australia (HILDA) survey to provide a descriptive analysis of teacher careers in Australia, looking at transitions in and out of teaching, the length of spells spent teaching, remuneration and job satisfaction in both government and non-government school sectors. Each year, approximately 14 per cent of teachers leave teaching (becoming a principal is not counted as leaving teaching). Most who leave return to teaching at some stage, commonly after a gap of just one or two years. This absence from teaching is typically associated with starting a family. Overall, teachers are just as satisfied with their jobs as other professionals, and express aboveaverage levels of job satisfaction in relation to job security, but below average satisfaction in relation to job flexibility (i.e. work/life balance). Those who left teaching recorded substantially lower job satisfaction on all aspects of their job while teaching, which su gests they were no longer well suited to teaching. The starting wages of full-time teachers are similar to those of other full-time professions, but their wages grow much more slowly with experience than other professions, for both males and females.
    Keywords: Teacher careers, teacher job satisfaction, teacher remuneration
    JEL: J22 J28 J44
    Date: 2017–11

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