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on Labor Markets - Supply, Demand, and Wages |
| By: | Dobbelaere, Sabien (Vrije Universiteit Amsterdam); Mairesse, Jacques (CREST-INSEE) |
| 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: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11156&r=lma |
| By: | Sascha O. Becker; Stephan Heblich; Daniel M. Sturm |
| Abstract: | This paper evaluates the impact of public employment on private sector activity using the relocation of the German federal government from Berlin to Bonn in the wake of the Second World War as a source of exogenous variation. To guide our empirical analysis, we develop a simple economic geography model in which public sector employment in a city can crowd out private employment through higher wages and house prices, but also generates potential productivity and amenity spillovers. We find that relative to a control group of cities, Bonn experiences a substantial increase in public employment. However, this results in only modest increases in private sector employment with each additional public sector job destroying around 0.2 jobs in industries and creating just over one additional job in other parts of the private sector. We show how this finding can be explained by our model and provide several pieces of evidence for the mechanisms emphasised by the model. |
| Keywords: | economic geography, public employment, place-based policies, German division |
| JEL: | F15 J45 N44 R12 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0228&r=lma |
| By: | Boyd-Swan, Casey (Kent State University); Herbst, Chris M. (Arizona State University) |
| Abstract: | This paper examines racial and ethnic discrimination in the labor market for center-based child care teachers. We assemble a novel dataset that combines a resume audit study of child care centers in several large U.S. cities with a follow-up survey of the providers in the original audit sample. The provider survey was administered to obtain detailed information about the children, teachers, and administrators within the center. Together, these data provide three insights about the influence of applicant race and ethnicity on teacher hiring. First, we uncover robust evidence of discrimination: black and Hispanic applicants receive significantly fewer interview requests than observationally equivalent whites. Nevertheless, we show that program directors exhibit strong own-race preferences: white directors favor white applicants, while minority directors favor those from their own racial and ethnic background. Second, our results suggest that teacher hiring is consistent with a model of customer discrimination. In particular, the racial and ethnic composition of children attending the center is strongly correlated with the characteristics of job-seekers receiving an interview request. Finally, we show that states' child care regulations and quality certification programs mitigate or eliminate entirely the racial and ethnic gap in interview requests. These benefits accrue disproportionately to high-skilled minorities, and to those applying to child care centers located in high-income communities. We posit that these firm-level licensing requirements increase the cost to employers of using race and ethnicity as signals of teacher productivity. |
| Keywords: | customer discrimination, racial/ethnic labor market discrimination, child care market, child care regulations |
| JEL: | J71 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11140&r=lma |
| By: | Grimpe, Christoph; Murmann, Martin (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Sofka, Wolfgang |
| Abstract: | "We investigate whether appointing a middle management level affects startups' innovation performance. Additional hierarchical levels are often suspected to restrict innovative activities. However, founders' capacities for information processing and resource allocation are usually strongly limited while, at the same time, R&D decisions are among the most consequential choices of startups. We argue that middle management is positively related to introducing product innovations because it improves the success rates from recombining existing knowledge as well as managing R&D personnel. In addition, we suggest that the effectiveness of these mechanisms depends on the riskiness of a startup's business opportunity. Based on a sample of German high-tech startups, we find support for our conjectures." (Author's abstract, IAB-Doku) ((en)) |
| JEL: | L26 M13 M12 M51 L22 L23 J21 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:201801&r=lma |
| By: | Almeida, Rita K. (World Bank); Corseuil, Carlos Henrique (Institute for Applied Economic Research (IPEA), Brazil); Poole, Jennifer P. (American University) |
| Abstract: | Between 1999 and 2006, Brazilian cities experienced strong growth in the provision of internet services, driven in part by the privatization of the telecommunications industry. A main concern of policymakers is that digital technology replaces routine, manual tasks, displacing lower-skilled workers. In Brazil, stringent labor market institutions exist to protect workers from such shocks, but by increasing labor costs, labor policy may also constrain firms from adjusting the workforce and fully benefiting from technology adoption. We show that digital technology adoption shifted the demand for skills toward an increased use of non-routine and cognitive tasks. Furthermore, and in contrast with labor policy intentions, we show that de facto labor market regulations differentially benefit the most skilled workers, particularly those workers employed in non-routine and cognitive tasks. Our results point to important changes in the future of labor markets in middle-income settings and warn for distortive and unintended consequences of labor market policies. |
| Keywords: | labor regulations, skills, digital technology |
| JEL: | J24 J48 O3 O15 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11151&r=lma |
| By: | Neumark, David (University of California, Irvine); Young, Timothy (University of California, Irvine) |
| Abstract: | Research on the effects of enterprise zones – especially state programs – has generally failed to find evidence of beneficial effects such job growth or poverty reduction. In contrast, Ham, Swenson, Imrohoroğlu, and Song (2011, hereafter HSIS) present evidence that state and federal enterprise zones (EZs) established in the 1990s substantially reduced poverty. However, their estimates of the effects of EZs in reducing poverty are badly overstated for two reasons. First, HSIS have a substantial error in their data on poverty rates by Census tract, which accounts for most of the estimated impact of state EZs that they find. Second, their estimates of the effects of federal Empowerment Zones (EMPZs) and Enterprise Communities (ENTCs) appear to be strongly influenced by selection of areas that experienced negative shocks. An estimator based on comparing federally designated zones to more-comparable areas that applied for and were rejected as zones, or became zones in the future, yields much smaller estimates than those in HSIS. And the large poverty-reduction effects of ENTCs that HSIS found are largely spurious – not surprisingly, given that ENTCs received meager benefits and had no hiring credits. |
| Keywords: | enterprise zones, poverty |
| JEL: | J23 J38 R12 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11168&r=lma |
| By: | Cerulli-Harms, Annette (London Economics) |
| Abstract: | Many university graduates conduct internships before starting to work in a direct-hire job. I analyse the effects of internships on early labour market performance to evaluate whether they enhance or hinder the university-to-work transition. I use propensity score matching to identify graduates that resemble each other in important characteristics such as cognitive ability, and only differ with respect to the internship experience. This allows comparison between interns and non-interns in key dimensions of job market performance: monthly earnings, employment status, and job satisfaction. The results suggest that internships have detrimental effects across dimensions. Graduates with an internship experience are significantly less likely to be employed one year after graduation, and, if employed, earn significantly less than their non-intern peers. However, the negative effects are short-lived and vanish within five years. Due to this catching up, I can rule out that interns are a negative selection of all graduates. Instead it seems that the internship sends a negative signal to prospective employers and is thus causing the underperformance at job entry. The measured effects are less pronounced for female interns. |
| Keywords: | internships, temporary work, propensity score matching, youth employment, job-shopping |
| JEL: | J31 J24 J28 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11163&r=lma |
| By: | Alessandro Fedele (Free University of Bolzano‐Bozen, Faculty of Economics and Management); Pierpaolo Giannoccolo (University of Bologna, Department of Economics) |
| Abstract: | How does pay affect the quality of politicians? This paper tackles the question by considering a three-period citizen candidate model where potential candidates vary in skills and in public service motivation. First, potential candidates observe the level of pay in politics and then simultaneously decide whether or not to run for office. Second, an election takes place and only one candidate is elected. Finally, the successful candidate provides a public good, while all the others work in the market sector. In a benchmark model where potential candidates differ only in skills, the quality of the elected politician is shown to increase with pay. If public service motivation is also considered, an inverted U-shaped relationship is found. The latter result is compatible with empirical evidence. |
| Keywords: | Pay; Selection and Quality of Politicians; Skills; Public Service Motivation |
| JEL: | D72 P16 J24 J3 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:bzn:wpaper:bemps47&r=lma |
| By: | Andreas Irmen (CREA, Université du Luxembourg) |
| Abstract: | At least since 1870 hours worked per worker declined and real wages increased in many of today’s industrialized countries. The dual nature of technological progress in conjunction with a consumption-leisure complementarity explains these stylized facts. Technological progress drives real wages up and expands the amount of available consumption goods. Enjoying consumption goods increases the value of leisure. Therefore, individuals demand more leisure and supply less labor. This mechanism appears in an OLG-model with two-period lived individuals equipped with per-period utility functions of the generalized log-log type proposed by Boppart-Krusell (2016). The optimal plan is piecewise defined and hinges on the wage level. Technological progress moves a poor economy out of a regime with low wages and an inelastic supply of hours worked into a regime where wages increase further and hours worked continuously decline. |
| Keywords: | Technological Change, Capital Accumulation, Endogenous Labor Supply, OLG-model. |
| JEL: | D91 J22 O33 O41 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:17-23&r=lma |
| By: | Anna M. Stansbury; Lawrence H. Summers |
| Abstract: | Since 1973 median compensation has diverged starkly from average labor productivity. Since 2000, average compensation has also begun to diverge from labor productivity. These divergences lead to the question: to what extent does productivity growth translate into compensation growth for typical American workers? We investigate this, regressing median, average and production/nonsupervisory compensation growth on productivity growth in various specifications. We find substantial evidence of linkage between productivity and compensation: over 1973-2016, one percentage point higher productivity growth has been associated with 0.7 to 1 percentage points higher median and average compensation growth and with 0.4 to 0.7 percentage points higher production/nonsupervisory compensation growth. These results suggest that other factors orthogonal to productivity have been acting to suppress typical compensation even as productivity growth has been acting to raise it. Several theories of the cause of the productivity-compensation divergence focus on technological progress. These theories have a testable implication: periods of higher productivity growth should be associated with periods of faster productivity-pay divergence. We do not find substantial evidence of co-movement between productivity growth and the labor share or mean/median compensation ratio. This tends not to provide strong support for pure technology-based theories of the productivity-compensation divergence. |
| JEL: | E24 J24 J3 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24165&r=lma |
| By: | Daniel Schaefer; Carl Singleton |
| Abstract: | Using employer-employee panel data, we provide novel facts on how real wages and working hours within jobs responded to the UK’s Great Recession. In contrast to previous studies, our data enables us to address the cyclical composition of jobs. We show that firms were able to respond to the Great Recession with substantial real wage cuts and by recruiting more part-time workers. A one percentage point increase in the unemployment rate led to an average decline in real hourly wages of 2.8 per cent for new hires and 2.6 per cent for job stayers. Hours of new hires in entry-level jobs were also substantially procyclical, while job-stayer hours were nearly constant. Our findings suggest that models assuming rigid labour costs of new hires are not helpful for understanding the behaviour of unemployment over the business cycle. |
| Keywords: | wage rigidity, Great Recession, hours worked, job-level analysis |
| JEL: | E24 E32 J31 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6766&r=lma |
| By: | Gimpelson, Vladimir (CLMS, Higher School of Economics, Moscow); Kapeliushnikov, Rostislav (CLMS, Higher School of Economics, Moscow) |
| Abstract: | This paper deals with age and educational dimensions of the labour supply in Russia and explores two time periods: from 2000 to 2015 (retrospective), and the next 15 years (prospective). For our analysis we exploit the micro-census (2015) data and all LFS waves covering the retrospective period. Combining demographic projections with expected employment rates and data on educational achievement we forecast the employment composition up to 2030. If recent past changes in both age and education have contributed to economic growth, their effect is likely to be negative in the next 15 years. These two dimensions are directly associated with such challenges as ageing and over-education of the labour force. Russia is not unique here, but it is more exposed to both dimensions than are many other countries due to its demographic and educational developments. The paper concludes with several tentative policies that could ease, although not cure, the problem. |
| Keywords: | over-education, employment, education, age, aging, Russia |
| JEL: | J11 J21 J24 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11126&r=lma |
| By: | Baert, Stijn (Ghent University); Neyt, Brecht (Ghent University); Omey, Eddy (Ghent University); Verhaest, Dieter (KU Leuven) |
| Abstract: | This study examines the direct and indirect impact (via educational achievement) of student work during secondary education on later employment outcomes. To this end, we jointly model student work and later schooling and employment outcomes as a chain of discrete choices. To tackle their endogeneity, we correct for these outcomes' unobserved determinants. Using unique longitudinal Belgian data, we find that pupils who work during the summer holidays of secondary education are 15.3% more likely to have a job three months after leaving school. This premium to student work experience is higher when pupils also work during the academic year and diminishes for later employment outcomes. When decomposing this total effect, it turns out that the direct returns to student work overcompensate its non-positive indirect effect via tertiary education enrolment. |
| Keywords: | education, transitions in youth, student employment, labour, dynamic treatment |
| JEL: | I21 J24 C35 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11127&r=lma |
| By: | Livia Alfonsi; Oriana Bandiera; Vittorio Bassi; Robin Burgess; Imran Rasul; Munshi Sulaiman; Anna Vitali |
| Abstract: | We design a labour market experiment to compare demand-side and supply-side policies to tackle youth unemployment, a key issue in low-income countries. The experiment tracks 1700 workers and 1500 firms over four years to contrast the effects of offering workers vocational training (VT) to offering firms wage subsidies to train workers on-the-job (FT). Both treatments lead to skill accumulation but whilst VT workers learn sector-specific skills, FT workers learn more firm-specific skills. This is associated with higher employment rates for each type of worker but the effect is 50% larger for VT (21% vs 14%) and their total earnings increase by more (34% vs 20%). Structurally estimating a job ladder model reveals the mechanisms: VT workers receive higher rates of unemployment-to-job offers and higher rates of job-to-job offers. This greater labour market mobility stems from the certifiability and transferability of their skills, and causes the wage pro…les of VT workers to diverge away from FT workers. Evidence from the firm-side of the experiment complements these findings: we find that some of the higher returns to VT are driven by workers matching to higher productivity firms. Our evidence shows both …rms and workers are constrained in this setting and that subsidies to either side of the labour market would increase workers' employment and earnings. However, VT workers are better o¤ than FT workers as the greater certifiability and transferability of their skills allows them to climb the job ladder more quickly. |
| JEL: | J2 M5 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:stidep:eopp64&r=lma |
| By: | Bohacek, Radim (CERGE-EI); Myck, Michal (Centre for Economic Analysis, CenEA) |
| Abstract: | We analyze the effects of persecution and labor market discrimination during the communist regime in the former Czechoslovakia using a representative life history sample from the Survey of Health, Ageing and Retirement in Europe. We find strong effects of persecution and dispossession on subsequent earnings, with most severe implications of job loss due to persecution on earnings in subsequent jobs and on career degradation. Accumulated long-term effects in the form of initial retirement pensions paid during the communist regime are even greater. These pension penalties disappear by 2006 largely as a result of compensation schemes implemented by democratic governments after 1989. We use unique administrative data on political rehabilitation and prosecution to instrument for the endogenous variables. Finally, we survey transitional justice theory and document reparations programs in other countries. |
| Keywords: | life histories, wage differentials, persecution, labor discrimination, economic history, treatment effect models |
| JEL: | N34 J70 J31 C21 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11136&r=lma |
| By: | Joensen, Juanna Schrøter (University of Chicago); Nielsen, Helena Skyt (Aarhus University) |
| Abstract: | This paper examines how skills are shaped by social interactions in families. We show that older siblings causally affect younger sibling's education choices and early career earnings. We focus on critical course choices in high school and overcome the identification challenges of estimating spillover effects in education by exploiting exogenous variation in choice sets stemming from a pilot program. The pilot induced an essentially random subset of older siblings to choose advanced math-science at a lower cost, while not directly affecting the course choices of younger siblings. We find that younger siblings are 2-3 percentage points more likely to choose math-science if their older sibling unexpectedly could choose math-science at a lower cost. We argue that the main influence of the pilot program on the younger siblings may be attributed to the social influence of the older sibling. Spillovers are strongest among closely spaced siblings, in particular brothers, and they have a lasting impact on the career out-comes of younger brothers. We argue that competition is likely one of the driving forces behind younger siblings conforming to their older siblings' choices. |
| Keywords: | high school curriculum, siblings, social interaction, skill formation |
| JEL: | I21 I24 J24 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11141&r=lma |
| By: | Luca Favero; Andreina Fucci |
| Abstract: | This article examines the impact on salaries of Erasmus participation for graduates from the University of Siena. Specifically, it investigates whether mobile alumni experience an increase in terms of net monthly salaries. We use AlmaLaurea panel data for 2010 graduates from the University of Siena who were interviewed again in 2011, 2013 and 2015, making this study one of the very first to use panel data to track the Erasmus impact. Our results show the existence of a wage premium of around 7-9%. We employ a variety of techniques in order to address the endogeneity of the decision to participate in the programme including random effect estimation, instrumental variable estimation and propensity score matching. |
| Keywords: | Erasmus program, graduates, wage premium, panel data, Almlaurea, pscore, instrumental variables |
| JEL: | I2 J24 J31 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:762&r=lma |
| By: | Priit Vahter, Jaan Masso |
| Abstract: | While an abundance of studies exists documenting the significant wage premium of multinationals (MNE) and the effects of foreign direct investments (FDI) on wage inequality, much less is still known about how foreign ownership affects the gender wage gap of employees in firms. Based on employer-employee level data from Estonia – a country with the largest gender wage gap in the EU – this study highlights the regularity that foreign owned firms display on average a substantially larger gender wage gap than domestically owned firms. Among different occupation groups, this result is especially evident among managers. Furthermore, this difference is also evident if we focus on acquisitions of domestic firms by MNEs and estimate its effects based on propensity score matching. The resulting increase in gender wage gap is due to men capturing a higher wage premium from working at foreign owned firms than women, although both tend to gain in terms of wages from being employed at MNEs. We find evidence (albeit limited) suggesting that one of the explanations of the difference in the gender wage gap between foreign-owned and domestically-owned firms could potentially be that MNEs require more of a continuous commitment from their employees compared to other firms. |
| Keywords: | FDI, foreign ownership, wages, gender wage gap |
| JEL: | F10 F23 J16 J31 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:mtk:febawb:106&r=lma |
| By: | Samuel Muehlemann (LMU Munich, IZA Bonn); Gerard Pfann (Maastricht University, IZA Bonn); Harald Pfeifer (BIBB, ROA Maastricht); Hans Dietrich (IAB Nuremberg) |
| Abstract: | This paper studies the effects of the G8 high school reform in Germany. The reform reduced minimum duration to obtain a high school degree (Abitur) from 9 to 8 years. First, we present a simple model based on a CES technology with heterogeneous inputs to conjecture possible effects of a supply shock of high education apprenticeships. Implementation of the reform across states (Laender) has been realized in different years. A difference-in-differences estimation strategy is used to identify the effects of one-time supply shock in market for high-educated apprentices. Training firms almost fully and immediately absorbed the additional supply of high school graduates in the apprenticeship market. No evidence is found for substitution effects between low and high education apprenticeships. The model explains that these effects may be due to sticky and too low collectively bargained wages for high education apprenticeships relative to their productivity. This renders the market for apprenticeships inefficient. |
| Keywords: | Apprenticeship market, labor supply shock, G8 reform |
| JEL: | I21 J20 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:iso:educat:0143&r=lma |
| By: | Alexandron-Lavon, Anat (Ruppin Academic Center); Epstein, Gil S. (Bar-Ilan University); Lindner Pomerantz, Renana (Bar-Ilan University) |
| Abstract: | Reporters and editors may not have the same ideology. When an editor wants to employ a new reporter with a different ideology, they have to negotiate the price of moving from their own to the other's ideology. We focus on the job market for reporters, where the agents negotiate over the ideological position to be reported and wage. We adopt a spatial model in which each agent suffers a utility loss as the agreed-upon position moves away from his/her favored one. Equilibrium determines a threshold ideological gap for a match to be formed. Our analysis generates a natural separation between extreme, mildly extreme and moderate ideologies. Furthermore, we find that agents that hold extreme ideologies compromise less than moderates. This formulation may be applied to other situations in which agents involve monetary and non-monetary considerations, especially a preference for similarity. |
| Keywords: | ideological position, job market, media |
| JEL: | J32 J44 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11152&r=lma |
| By: | Barbosa, Klenio; Straub, Stéphane |
| Abstract: | This paper investigates the impact of revolving door movements on public procurement outcomes. We combine 10 years of procurement contracts in the Brazilian health sector with a comprehensive employer-employee dataset tracing individual job experience and characteristics to identify how movements of individuals between public administrations and private providers affect the total number of contracts, quantities, and acquisition prices. We analyze career changes in both directions between public bodies and private suppliers, and provide evidence of significant direct effects, spillovers to other firms and administrations, impact on workers’ remuneration, and on aggregate spending. We uncover positive and negative effects of revolving door on the efficiency of procurement, which are, respectively, consistent with reward for high-skill workers’ signaling competence and collusive behavior. In particular, we find that effects of administration-to-supplier connections are beneficial to public bodies, while effects of supplier-to-administration ones are detrimental. Their aggregate impacts on spending are, respectively, –3% and +2% of total procurement outlays. These results point to specific and unexpected policy implications related to the tolerance of revolving door practices. |
| Keywords: | Procurement; Revolving door; Public Officials Career Path; Personnel Economics |
| JEL: | D72 D73 H11 H57 J45 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:32283&r=lma |