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on Labor Markets - Supply, Demand, and Wages |
| By: | Cragun, Randy; Tamura, Robert; Jerzmanowski, Michal |
| Abstract: | We propose a new macroeconomic mechanism for generating patterns in age-earnings profiles based on directed technical change. The mechanism does not depend on changes in the human capital of the individual; rather differences in the human capital shares of age groups affect the profitability of developing age-specific technologies, biasing innovation toward improving the productivity of workers whose cohorts provide large shares of the labor force's human capital. The theory should be taken as supplemental to (rather than replacing) human-capital-based theories of age-earnings profiles. Using recently developed data and human capital estimates, we simulate reductions in wages due to age-biased directed technical change over workers' lives for most of the world's nations over two centuries. Our simulations indicate that age-specific directed technical change contributes to wage concavity for the average country by cohort group. Because younger workers make up a larger share of human capital in most years and countries, most cohorts in most countries experienced wage gains early in life and losses later in life from age-specific directed technology, making life-cycle earnings profiles flatter. The late-life losses are larger than the early-life gains, increasing concavity in life-cycle earnings profiles. We also calculate the present value of lifetime wage gains from age-specific endogenous technology, and find particularly large and economically-significant gains for baby boomers and losses for cohorts born during low population growth periods. |
| Keywords: | Directed technical change, directed technology, human capital, experience, wage profile, wage differential, age-earnings profile, endogenous technology |
| JEL: | J11 J24 J31 O31 O33 O4 |
| Date: | 2017–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:81830&r=lma |
| By: | Becker, Sascha O.; Heblich, Stephan; Sturm, Daniel M |
| 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; German Division; Place-Based Policies; Public Employment |
| JEL: | F15 J45 N44 R12 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12565&r=lma |
| By: | Schwandt, Hannes |
| Abstract: | Pregnancy conditions have been shown to matter for later economic success, but many threats to fetal development that have been identified are difficult to prevent. In this paper I study seasonal influenza, a common and preventable illness that comes around every year and causes strong inflammatory responses in pregnant women. Using administrative data from Denmark, I identify the effects of maternal influenza on the exposed offspring via sibling comparison, exploiting both society-wide influenza spread and information on individual mothers who suffer strong infections during pregnancy. In the short term, maternal influenza leads to a doubling of prematurity and low birth weight, by triggering premature labor among women infected in the third trimester. Following exposed offspring into young adulthood, I observe a 9% earnings reduction and a 35% increase in welfare dependence. These long-term effects are strongest for influenza infections during the second trimester and they are partly explained by a decline in educational attainment, pointing to cognitive impairment. This effect pattern suggests that maternal influenza damages the fetus through multiple mechanisms, and much of the damage may not be visible at birth. Taken together, these results provide evidence that strong infections during pregnancy are an often overlooked prenatal threat with long-term consequences. |
| Keywords: | Fetal origins; labor market outcomes; seasonal influenza |
| JEL: | I10 J13 J24 J3 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12563&r=lma |
| By: | Daron Acemoglu; Pascual Restrepo |
| Abstract: | We present a task-based model in which high- and low-skill workers compete against machines in the production of tasks. Low-skill (high-skill) automation corresponds to tasks performed by low-skill (high-skill) labor being taken over by capital. Automation displaces the type of labor it directly affects, depressing its wage. Through ripple effects, automation also affects the real wage of other workers. Counteracting these forces, automation creates a positive productivity effect, pushing up the price of all factors. Because capital adjusts to keep the interest rate constant, the productivity effect dominates in the long run. Finally, low-skill (high-skill) automation increases (reduces) wage inequality. |
| JEL: | J23 J24 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24119&r=lma |
| By: | Peter Haan; Daniel Kemptner; Victoria Prowse |
| Abstract: | In this paper, we study how the tax-and-transfer system reduces the inequality of lifetime income by redistributing lifetime earnings between individuals with different skill endowments and by providing individuals with insurance against lifetime earnings risk. Based on a dynamic life-cycle model, we find that redistribution through the tax-and-transfer system offsets around half of the inequality in lifetime earnings that is due to differences in skill endowments. At the same time, taxes and transfers mitigate around 60% of the inequality in lifetime earnings that is attributable to employment and health risk. Progressive taxation of annual earnings provides little insurance against lifetime earnings risk. The lifetime insurance effects of taxation may be improved by moving to a progressive tax on lifetime earnings. Similarly, the lifetime insurance and redistributive effects of social assistance may be improved by requiring wealthy individuals to repay any social assistance received when younger. |
| Keywords: | Lifetime earnings; lifetime income; tax-and-transfer system; taxation; unemployment insurance; disability benefits; social assistance; inequality; redistribution; insurance; endowments; risk; dynamic life-cycle models |
| JEL: | D63 H23 I24 I38 J22 J31 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1716&r=lma |
| By: | Robert C. Feenstra; Hong Ma; Yuan Xu |
| Abstract: | We examine the employment responses to import competition from China and to global export expansion from the United States, both of which have been expanding strongly during the past decades. We find that although Chinese imports reduce jobs, at both the industry level and the local commuting zone level, the global export expansion of US products also creates a considerable number of jobs. On balance over the entire 1991-2007 period, job gains due to changes in US global exports were slightly less than job losses due to Chinese imports. Using data at both the industry level and the commuting zone level, we find a net loss of around 0.2-0.3 million jobs. When we extend the analysis to 1991-2011, we find the net job effect of import and export exposure is roughly balanced at the commuting zone level. |
| JEL: | F14 F16 J23 R23 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24056&r=lma |
| By: | Tomaz Cajner; Leland Crane; Ryan Decker; Adrian Hamins-Puertolas; Christopher J. Kurz; Tyler Radler |
| Abstract: | We show that high-frequency private payroll microdata can help forecast labor market conditions. Payroll employment is perhaps the most reliable real-time indicator of the business cycle and is therefore closely followed by policymakers, academia, and financial markets. Government statistical agencies have long served as the primary suppliers of information on the labor market and will continue to do so for the foreseeable future. That said, sources of “big data” are becoming increasingly available through collaborations with private businesses engaged in commercial activities that record economic activity on a granular, frequent, and timely basis. One such data source is generated by the firm ADP, which processes payrolls for about one fifth of the U.S. private sector workforce. We evaluate the efficacy of these data to create new statistics that complement existing measures. In particular, we develop a set of weekly aggregate employment indexes from 2000 to 2017, which allows us to measure employment at a higher frequency than is currently possible. The extensive coverage of the ADP data—similar in terms of private employment to the BLS CES sample—implies potentially high information value of these data, and our results confirm this conjecture. Indeed, the timeliness and frequency of the ADP payroll microdata substantially improves forecast accuracy for both current-month employment and revisions to the BLS CES data. |
| Keywords: | Consumption, saving, production, employment, and investment ; Labor supply and demand ; Forecasting |
| JEL: | J2 J11 C53 C81 |
| Date: | 2018–01–17 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2018-05&r=lma |
| By: | Dearden, Lorraine; Nagase, Nobuko |
| Abstract: | In this paper we take a detailed look at the Japanese university graduate labor market to understand more fully the problems with the current Japanese student loan system identified in Kobayashi and Armstrong (2017). We see that unlike most other countries with a large proportion of female university graduates, Japanese female graduates earn significantly less than male university graduates and this appears to be driven by significant wage falls when female graduates marry or have their first child. This means that understanding the repayment burden problems of the current student loan system and designing alternative income contingent loan systems needs to take into account the household income of graduates. We show that an affordable income contingent loan (ICL) system could be introduced in Japan, however the repayments would probably have to be based on household income. We illustrate this with a couple of example ICLs and highlight further work that needs to be done to come up with a feasible and fair student loan system in Japan for post high school education. |
| Keywords: | Student loans, student loan design, Japan |
| JEL: | I22 I28 J24 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hituec:668&r=lma |
| By: | Martin Kahanec |
| Abstract: | The economic literature starting with Borjas (2001) suggests that immigrants are more flexible than natives in responding to changing sectoral, occupational, and spatial shortages in the labor market. In this paper, we study the relative responsiveness to labor shortages by immigrants from various origins, skills and tenure in the country vis-à- vis the natives, and how it varied over the business cycle during the Great Recession. We show that immigrants in general have responded to changing labor shortages across EU member states, occupations and sectors more fluidly than natives. This effect is especially significant for low-skilled immigrants from the new member states or with the medium number of years since immigration, as well as with high-skilled immigrants with relatively few (1-5) or many (11+) years since migration. The relative responsiveness of some immigrant groups declined during the crisis years (those from Europe outside the EU or with eleven or more years since migration), whereas other groups of immigrants became particularly fluid during the Great Recession, such as those from new member states. Our results suggest immigrants may play an important role in labor adjustment during times of asymmetric economic shocks, and support the case for well-designed immigration policy and free movement of workers within the EU. Paper provides new insights into the functioning of the European Single Market and the roles various immigrant groups play for its stabilization through labor adjustment during times of uneven economic development across sectors, occupations, and countries. |
| Keywords: | immigrant worker, labor supply, skilled migration, labor shortage, wage regression, Great Recession |
| JEL: | J24 J61 J68 |
| Date: | 2018–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:cel:dpaper:48&r=lma |
| By: | H. Lehmann; N. Pignatti |
| Abstract: | One of the most important factors that determine individuals’ quality of life and wellbeing is their position in the labor market and the type of jobs that they hold. When workers are rationed out of the formal segment of the labor market against their will, i.e., the labor market is segmented, their quality of life is limited, and their wellbeing is reduced. When they can freely choose between a formal or informal employment relationship, i.e., the labor market is integrated, their wellbeing can reach high levels even in the presence of informal employment. We, therefore, test whether the Ukrainian labor market is segmented along the formal-informal divide, slicing the data by gender and age. The analysis that we perform consist in the analysis of short-term and medium-term transitions between five employment states, unemployment and inactivity. We also analyze wage gaps of mean hourly earnings and across the entire hourly earnings distribution, controlling for time-invariant unobserved heterogeneity. According to our results segmentation is present for dependent employees: for a large part of informal employees informal employment is used as a waiting stage to enter formal salaried employment and is not voluntarily chosen. As far as self-employment is concerned the evidence is mixed regarding in the Ukrainian labor market. This heterogeneity in outcomes implies that not all informal work is associated with a low quality of life and reduced wellbeing in post-transition economies. |
| JEL: | J31 J40 P23 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp1117&r=lma |
| By: | Martin, John P. (University College Dublin) |
| Abstract: | The OECD Survey of Adult Skills is the jewel in the crown of its Programme for the International Assessment of Adult Competencies (PIAAC). This paper argues that the findings and policy lessons from the project to date justify the high hopes which were placed in PIAAC when detailed planning for the project began in 2003. First, it presents a brief recap of PIAAC and its two predecessor international skills surveys. Second, it outlines the main themes which have been investigated to date using data from PIAAC. Third, the main findings and policy lessons drawn from PIAAC are highlighted. Finally, looking forward to the second cycle of PIAAC, for which planning is now underway, the paper suggests some priority areas for improvements to the survey design in order to add to its analytical usefulness and enhance its utility to policy makers. |
| Keywords: | PIAAC, skills, returns to skills, skills mismatch, skills use, lifelong learning |
| JEL: | I24 J24 J62 M53 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp138&r=lma |