nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2017‒12‒11
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. U.S. Job Flows and the China Shock By Brian J. Asquith; Sanjana Goswami; David Neumark; Antonio Rodriguez-Lopez
  2. Comparing micro-evidence on rent sharing from two different econometric models By Sabien (S.) Dobbelaere; Jacques Mairesse
  3. Can social safety nets protect public health? The effect of India's workfare and foodgrain subsidy programmes on anaemia By Sudha Narayanan; Nicolas Gerber; Udayan Rathore; Karthikeya Naraparaju
  4. Affordable Care Act Medicaid Expansions and the Impact on Nurses By Michael DiNardi
  5. To the Victor Belongs the Spoils? Party Membership and Public Sector Employment in Brazil By Fernanda Brollo, Fernanda; Forquesato, Pedro; Gozzi, Juan Carlos
  6. A Real-Business-Cycle model with reciprocity in labor relations and a government sector By Aleksandar Vasilev
  7. Heterogeneous Workers and Federal Income Taxes in a Spatial Equilibrium By Colas, Mark; Hutchinson, Kevin
  8. Wages and Employment: The Canonical Model Revisited By Audra Bowlus; Eda Bozkurt; Lance Lochner; Chris Robinson
  9. The long-run real effects of banking crises: Firm-level investment dynamics and the role of wage rigidity By Wix, Carlo
  10. Wealthier, Happier and More Self-Sufficient: When Anti-Poverty Programs Improve Economic and Subjective Wellbeing at a Reduced Cost to Taxpayers By Titus J. Galama; Robson Morgan; Juan E. Saavedra
  11. Local labor market size and qualification mismatch By Berlingieri, Francesco
  12. The Impact of Bank Credit on Labor Reallocation and Aggregate Industry Productivity By John (Jianqiu) Bai; Daniel Carvalho; Gordon M. Phillips
  13. Job Tasks, Time Allocation, and Wages By Ralph Stinebrickner; Todd R. Stinebrickner; Paul J. Sullivan

  1. By: Brian J. Asquith; Sanjana Goswami; David Neumark; Antonio Rodriguez-Lopez
    Abstract: International trade exposure affects job creation and destruction along the intensive margin (job flows due to expansions and contractions of firms' employment) as well as along the extensive margin (job flows due to births and deaths of firms). This paper uses 1992-2011 employment data from the {universe} of U.S. establishments to construct job flows at both the industry and commuting-zone levels, and then estimates the impact of the `China shock' on each job-flow type. The China shock is accounted for by either the increase in Chinese import penetration in the U.S., or by the U.S. policy change that granted Permanent Normal Trade Relations (PNTR) status to China. We find that the China shock affects U.S. employment mainly through deaths of establishments. At the commuting-zone level, we find evidence of large job reallocation from the Chinese-competition exposed sector to the nonexposed sector, and establish that the gross employment effects of the China shock are fundamentally different from those of a more general adverse shock affecting the U.S. demand for domestic labor.
    JEL: F14 F16 J2 J65
    Date: 2017–11
  2. By: Sabien (S.) Dobbelaere (Vrije Universiteit Amsterdam, The Netherlands; Institute of Labor Economics (IZA), Germany; Tinbergen Institute, The Netherlands); Jacques Mairesse (Center for Research in Economics and Statistics (CREST), France; United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (UNU-MERIT), The Netherlands; National Bureau of Economic Research (NBER), United S)
    Abstract: Researchers contributing to the empirical rent-sharing literature have typically resorted to estimating the responsiveness of workers' wages on firms' ability to pay in order to assess the extent to which employers share rents with their employees. This paper compares rent-sharing estimates using such a wage determination regression with estimates based on a productivity regression that relies on standard firm-level input and output data. We view these two regressions as reduced-form equations stemming from, or at least compatible with, a variety of underlying theoretical structural models. Using a large matched firm-worker panel data sample for French manufacturing, we find that the industry distributions of the rent-sharing estimates based on them are significantly different on average, even if they slightly overlap and are correlated. Precisely, if we only rely on the firm-level information, we find that the median of the relative and absolute extent of rent-sharing parameters amount roughly to 0.40 and 0.30 for the productivity regression and to 0.20 and 0.16 for the wage determination regression. When we also take advantage of the worker-level information to control for unobserved worker ability in the model of wage determination, we find that these parameters further reduce as expected and have a median value of only about 0.10.
    Keywords: rent sharing; wage equation; production function; matched employer-employee data
    JEL: C23 D21 J31 J51
    Date: 2017–12–01
  3. By: Sudha Narayanan (Indira Gandhi Institute of Development Research); Nicolas Gerber (Center for Development Research, University of Bonn); Udayan Rathore (Indira Gandhi Institute of Development Research); Karthikeya Naraparaju (Indian Institute of Management, Indore)
    Abstract: Can large-scale social safety nets be nutrition sensitive even if they do not explicitly incorporate health and nutrition as programmatic goals? This paper focuses on the consequences of a countrywide guaranteed workfare programme (MGNREGA) and subsidised food distribution scheme (PDS) in India for the prevalence of anaemia, examining whether individuals in districts with a broader reach of these mega-programmes are less likely to be anaemic. Using an Instrumental Variable (IV) approach to address the endogeneity of programme scale, we find that an individual residing in a district where the programmes have broader reach is less likely to suffer from all forms of anaemia and has a lower haemoglobin deficit from the benchmark suggested by the World Health Organisation (WHO) - ranging between 0.91 to 6.2 percentage points for a 10 percentage point expansion in programme scale. While the PDS seems to be more effective in reducing the incidence of mild anaemia than moderate or severe anaemia, while the strength of effects for MGNREGA seem to be the least for mild. These are catch-all effects that represent partial and general equilibrium impacts through multiple pathways. Programme interaction effects suggest the MGNREGA and PDS may be substitutes - associated improvements in anaemia for regions with higher PDS access (MGNREGA participation) are more pronounced when the scale of MGNREGA participation (PDS access) is low. There exist nonlinearities in these relationships with the efficacy of both programmes varying across scales of implementation.
    Keywords: safety nets, PDS, MGNREGA, India, anaemia
    JEL: I18 J08 J48 H55
    Date: 2017–10
  4. By: Michael DiNardi
    Abstract: Shortages in healthcare labor markets and decreases in quality of care were major concerns voiced by critics of the 2010 Patient Protection and Affordable Care Act. I use the 2014 expansions in Medicaid coverage as a plausibly exogenous increase in the demand for nurses to estimate the effects on nurse labor market outcomes and quality of care measures. Using a difference-in-differences strategy, I find the 2014 Medicaid expansions increased nursesâ weekly hours worked by 1.5 percent (0.55 hours). Increases in hours worked are larger for rural nurses, likely due to larger increases in insurance coverage in rural areas from the Medicaid expansions. In disaggregated analyses, employment of licensed practical nurses increased by 15 percent, but I do not find any statistically significant effects on registered nurse employment. Weekly hours worked increased by 2.4 percent (0.89 hours) for licensed practical nurses and by 1.2 percent for registered nurses (0.46 hours). I do not find any consistent negative effects on quality of care as measured by patient ratings of nursing care and hospital-acquired infection rates.
    JEL: I13 I18 J23
    Date: 2017–11–30
  5. By: Fernanda Brollo, Fernanda (University of Warwick, CAGE, and CEPR); Forquesato, Pedro (PUC-Rio); Gozzi, Juan Carlos (University of Warwick)
    Abstract: We analyze how political discretion a.ects the selection of government workers, using individual-level data on political party membership and matched employer-employee data on the universe of formal workers in Brazil. Exploiting close mayoral races, we find that winning an election leads to an increase of over 40% in the number of members of the winning party working in the municipal bureaucracy. Employment of members of the ruling party increases relatively more in senior positions, but also expands in lower-ranked jobs, suggesting that discretionary appointments are used both to influence policymaking and to reward supporters. We find that party members hired after their party is elected tend be of similar or even higher quality than members of the runner-up party, contrary to common perceptions that political appointees are less qualified. Moreover, the increased public employment of members of the ruling party is long-lasting, extending beyond the end of the mayoral term.
    Keywords: bureaucracy ; patronage ; political parties ; public sector employment
    JEL: D72 D73 H70 J45
    Date: 2017
  6. By: Aleksandar Vasilev
    Abstract: In this paper we introduce reciprocity in labor relations and government sector to in- vestigate how well the real wage rigidity that results out of that arrangement explains business cycle fluctuations in Bulgaria. The reciprocity mechanism described in this paper follows Danthine and Kurmann (2010) and is generally consistent with micro- studies, e.g. Lozev, Vladova, and Paskaleva (2011) and Paskaleva (2016). Rent-sharing considerations, and worker’s own past wages turn out to be the most important as- pects of how labor contracting happens. In contrast, aggregate economic conditions, as captured by the employment rate, are not found to be quantitatively important for wage dynamics. Overall, the model with reciprocity and fiscal policy performs well vis-a-vis data, especially along the labor market dimension.
    Keywords: General equilibrium, reciprocity, gift exchange, efficiency wages, unemployment, fiscal policy, Bulgaria.
    JEL: E24 E32 J41
    Date: 2017–11–09
  7. By: Colas, Mark (Federal Reserve Bank of Minneapolis); Hutchinson, Kevin (eBay Inc.)
    Abstract: This paper studies the incidence and efficiency of a progressive income tax in a spatial equilibrium. We use US census data to estimate an empirical spatial equilibrium with heterogeneous workers, landowners, and firms. The US income tax shifts skilled workers out of high-productivity cities, leading to a deadweight loss of 2% of tax revenue. Flattening the tax schedule significantly increases welfare inequality between skilled and unskilled workers and does not increase overall worker welfare, as the efficiency gains are captured by landowners. This suggests that progressive income taxes reduce welfare inequality without reducing total worker welfare.
    Keywords: Tax incidence; Worker heterogeneity; Local labor markets
    JEL: H22 J31 R13
    Date: 2017–11–14
  8. By: Audra Bowlus; Eda Bozkurt; Lance Lochner; Chris Robinson
    Abstract: The basic canonical model fails to predict the aggregate college premium outside of the original sample period (1963-1987) or to account for the observed deviations in college premia for younger vs. older workers. This paper documents that these failings are due to mis-measurement of the relevant prices and quantities when using composition adjustment methods to construct relative skill prices and supplies, which ignore cohort effects that are particularly important in the 1980s and 1990s. Re-estimating the model with prices and quantities that incorporate cohort effects produces a good fit for the out of sample prediction and explains the observed deviation in the college premium for younger vs. older workers even with perfect substitutability across age. Moreover, the estimated elasticity of substitution between high and low skill is higher and there is a much smaller role for skill-biased technical change in explaining the path of the college wage premium. The elasticity of substitution is also an important parameter for the broader literature on education and wages, especially in assessing general equilibrium responses to government policies. In the case of a tuition subsidy, price responses can undo most of the direct (partial equilibrium) effect of the subsidy on enrolment, so that general equilibrium enrolment responses are substantially weaker. The higher elasticity estimated in this paper, produces much weaker general equilibrium relative price changes and stronger enrolment effects.
    JEL: J24 J31
    Date: 2017–11
  9. By: Wix, Carlo
    Abstract: This paper studies the long-run effects of credit market disruptions on real firm outcomes and how these effects depend on nominal wage rigidities at the firm level. I trace out the long-run investment and growth trajectories of firms which are more adversely affected by a transitory shock to aggregate credit supply. Affected firms exhibit a temporary investment gap for two years following the shock, resulting in a persistent accumulated growth gap. I show that affected firms with a higher degree of wage rigidity exhibit a steeper drop in investment and grow more slowly than affected firms with more flexible wages.
    Keywords: Financial Crises,Bank Lending,Real Effects,Firm Investment,Wage Rigidity,Labor Hoarding
    JEL: E22 E24 E51 G01 G21 G31
    Date: 2017
  10. By: Titus J. Galama; Robson Morgan; Juan E. Saavedra
    Abstract: We document how an anti-poverty program improves economic and subjective wellbeing, and self-sufficiency. Familias en Accion Urbano, a conditional cash transfer program implemented at scale in the country of Colombia, uses a means-test cutoff score selection rule that provides exogenous variation in program participation. We reproduce the score assignment rule in a nationally representative living standards household survey that measures multiple dimensions of economic and evaluative wellbeing. Three years into the program, beneficiary households at the margin report greater income, consumption and formal employment participation for both the household head and partner. Household income increased by ten times the amount of the government transfer, likely because of gains in formal employment. Beneficiary households at the margin also report greater overall satisfaction with life, greater happiness and greater satisfaction with food. These results support the hypothesis that among households with basic unmet needs, policies that have a permanent impact on income and consumption may also have a lasting impact on subjective wellbeing and self-sufficiency. Moreover, relatively small subsidies, further offset by additional government tax receipt, may generate substantial benefits to poor families at a reduced cost to taxpayers.
    JEL: H53 I30 I32 I38 O38 O54
    Date: 2017–11
  11. By: Berlingieri, Francesco
    Abstract: This paper investigates the effect of the size of the local labor market on skill mismatch. Using survey data for Germany, I find that workers in large cities are both less likely to be overqualified for their job and to work in a different field than the one they are trained for. Different empirical strategies are employed to account for the potential sorting of talented workers into more urbanized areas. Results on individuals never moving from the place of childhood and fixed-effects estimates obtaining identification through regional migrants suggest that sorting does not fully explain the existing differences in qualification mismatch across areas. This provides evidence of the existence of agglomeration economies through better matches. However, lower qualification mismatch in larger cities is found to explain only a small part of the urban wage premium.
    Keywords: agglomeration,labor matching,qualification mismatch,urban wage
    JEL: I21 J24 J31 R23
    Date: 2017
  12. By: John (Jianqiu) Bai; Daniel Carvalho; Gordon M. Phillips
    Abstract: We provide evidence that the deregulation of U.S. state banking markets leads to a significant increase in the relative employment and capital growth of local firms with higher productivity and that this effect is concentrated among young firms. Using financial data for a broad range of firms, our analysis suggests that this effect is driven by a shift in the composition of local bank credit supply towards more productive firms. We estimate that this effect translates into economically important gains in aggregate industry productivity and that changes in the allocation of labor play a central role in driving these gains.
    JEL: G2 G21 G3 G31 G32 J01 J21 J24 L22 L23 L25 O11 O12
    Date: 2017–11
  13. By: Ralph Stinebrickner; Todd R. Stinebrickner; Paul J. Sullivan
    Abstract: While a burgeoning literature has extolled the conceptual virtues of directly measuring the underlying job tasks that define work activities, in practice task-based approaches have been hampered by well-known data limitations. We study wage determination using data collected specifically to address these limitations. Most fundamentally, we construct the first longitudinal dataset containing job-level task information for individual workers. New quantitative task measures take advantage of unique survey questions that ask respondents to detail the amount of time spent performing People, Information, and Objects tasks at different skill levels. These measures have clear interpretations, suggest natural proxies for on-the-job human capital accumulation, and provide methodological guidance for future data collection initiatives. A model of comparative advantage highlights the benefits of the unique data features, and guides the specification and interpretation of empirical models. We provide new findings about the effect of current and past tasks on wages. First, current job tasks are quantitatively important, with high skilled tasks being paid substantially more than low skilled tasks. Second, there is no evidence of learning-by-doing (i.e., effects of past tasks) for low skilled tasks, but strong evidence for high skilled tasks. Current and past high skilled information tasks are particularly valuable, although high skilled interpersonal tasks also play a significant role. Shifting 10 percent of work time from low skilled people tasks to high skilled information tasks increases a worker’s yearly wage by 22 percent after ten years. The accumulation of valuable task-specific experience accounts for 70 percent of this increase, and the direct current-period effect of performing different tasks accounts for the remainder.
    JEL: J24
    Date: 2017–11

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