nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2018‒02‒26
thirty-six papers chosen by
Joseph Marchand
University of Alberta

  1. The Effects of an Education-Leave Program on Educational Attainment and Labor-Market Outcomes By Kauhanen, Antti
  2. Strong Employers and Weak Employees: How Does Employer Concentration Affect Wages? By Efraim Benmelech; Nittai Bergman; Hyunseob Kim
  3. The Effect of Computer Use on Job Quality: Evidence from Europe By Menon, Seetha; Salvatori, Andrea; Zwysen, Wouter
  4. The Short-Term Distributional Effects of the German Minimum Wage Reform By Caliendo, Marco; Fedorets, Alexandra; Preuß, Malte; Schröder, Carsten; Wittbrodt, Linda
  5. The Origins of the Division of Labor in Pre-modern Times By Emilio Depetris-Chauvin; Ömer Özak
  6. The Impact of Public Employment: Evidence from Bonn By Becker, Sascha O.; Heblich, Stephan; Sturm, Daniel M.
  7. The Impact of Health on Labor Market Outcomes: Experimental Evidence from MRFIT By Melvin Stephens, Jr.; Desmond J. Toohey
  8. The long-term effects of long terms: Compulsory schooling reforms in Sweden By Fischer, Martin; Karlsson, Martin; Nilsson, Therese; Schwarz, Nina
  9. Political Change and Informality: Evidence from the Arab Spring By Elsayed, Ahmed; Wahba, Jackline
  10. Changes across Cohorts in Wage Returns to Schooling and Early Work Experiences By Ashworth, Jared; Hotz, V. Joseph; Maurel, Arnaud; Ransom, Tyler
  11. Does Labor Market Tightness Affect Ethnic Discrimination in Hiring? By Carlsson, Magnus; Fumarco, Luca; Rooth, Dan-Olof
  12. People versus Machines: The Impact of Minimum Wages on Automatable Jobs By Lordan, Grace; Neumark, David
  13. Long-Term Effects of Childhood Nutrition: Evidence from a School Lunch Reform By Alex-Petersen, Jesper; Lundborg, Petter; Rooth, Dan-Olof
  14. Children, Time Allocation and Consumption Insurance By Blundell, Richard; Pistaferri, Luigi; Saporta-Eksten, Itay
  15. Disentangling Occupation- and Sector-specific Technological Change By Barany, Zsofia; Siegel, Christian
  16. Skills, Signals, and Employability: An Experimental Investigation By Piopiunik, Marc; Schwerdt, Guido; Simon, Lisa; Woessmann, Ludger
  17. Dinner Table Human Capital and Entrepreneurship By Hvide, Hans K.; Oyer, Paul
  18. Empowering Women under Social Constraints: Evidence from a Field Intervention in Rural Egypt By Elsayed, Ahmed; Roushdy, Rania
  19. Labor Market Concentration By Azar, José; Marinescu, Ioana E.; Steinbaum, Marshall
  20. Skilled Migration Policy and the Labour Market Performance of Immigrants By Tani, Massimiliano
  21. Adjusting to Globalization in Germany By Dauth, Wolfgang; Findeisen, Sebastian; Suedekum, Jens
  22. Telework, the Timing of Work, and Instantaneous Well-Being: Evidence from Time Use Data By Gimenez-Nadal, J. Ignacio; Molina, José Alberto; Velilla, Jorge
  23. New Evidence on Cyclical Variation in Labor Costs in the U.S. By Gu, Grace Weishi; Prasad, Eswar
  24. The Contribution of Multinational Enterprises to Labor Productivity: The Case of Israel By OECD; Tatiana Slobodnitsky; Lev Drucker; Assaf Geva
  25. The "End of Men" and Rise of Women in the High-Skilled Labor Market By Guido Matias Cortes; Nir Jaimovich; Henry E. Siu
  26. Do Conditional Cash Transfers Improve Economic Outcomes in the Next Generation? Evidence from Mexico By Susan W. Parker; Tom Vogl
  27. Can Quotas Increase the Supply of Candidates for Higher-Level Positions? Evidence from Local Government in India By O'Connell, Stephen D.
  28. Minimum Wage Policy with Optimal Taxes and Unemployment By Adam M. Lavecchia
  29. Employment effects of introducing a minimum wage: The case of Germany By Holtemöller, Oliver; Pohle, Felix
  30. Nature of the Relationship between Minimum Wage and the Shadow Economy Size: An Empirical Analysis for the Case of Romania By Davidescu, Adriana Anamaria; Schneider, Friedrich
  31. Job Market Outcomes of IDPs: The Case of Georgia By Torosyan, Karine; Pignatti, Norberto; Obrizan, Maksym
  32. Firm Wage Premia, Industrial Relations, and Rent Sharing in Germany By Hirsch, Boris; Müller, Steffen
  33. AI and Jobs: the role of demand By James Bessen
  34. World Commodity Prices, Job Security and Health: Evidence from the Mining Industry By Johnston, David W.; Shields, Michael A.; Suziedelyte, Agne
  35. Supply Shocks in the Market for Apprenticeships: Evidence from a German High School Reform By Dietrich, Hans; Muehlemann, Samuel; Pfann, Gerard Antonie; Pfeifer, Harald
  36. Intertemporal Labor Supply: A Household Collective Approach By Molina, José Alberto; Gimenez-Nadal, J. Ignacio; Velilla, Jorge

  1. By: Kauhanen, Antti
    Abstract: I study the effect of an education leave subsidy for the employed on labor-market outcomes and educational attainment using Finnish administrative linked employer-employee panel data and matching methods. The adult education allowance is available to employees with at least eight years of work experience and allows them to take a leave for 2–18 months to participate in an education program while being compensated for a substantial part of their forgone earnings. I find large positive treatment effects on educational attainment and changing occupation. The treatment effects on earnings and employment are negative during the lock-in period and close to zero afterward. Treatment effects on pseudo-outcomes are small and with one exception not statistically significant, which supports the credibility of the identification strategy. Sensitivity analyses show that unobserved variables should have a fairly large effect on treatment assignment to change the results.
    Keywords: Adult education, education leave, linked employer‐employee data, program evaluation
    JEL: I22 J24 H43 C21 M53
    Date: 2018–02–14
  2. By: Efraim Benmelech; Nittai Bergman; Hyunseob Kim
    Abstract: We analyze the effect of local-level labor market concentration on wages. Using Census data over the period 1977–2009, we find that: (1) local-level employer concentration exhibits substantial cross-sectional and time-series variation and increases over time; (2) consistent with labor market monopsony power, there is a negative relation between local-level employer concentration and wages that is more pronounced at high levels of concentration and increases over time; (3) the negative relation between labor market concentration and wages is stronger when unionization rates are low; (4) the link between productivity growth and wage growth is stronger when labor markets are less concentrated; and (5) exposure to greater import competition from China (the “China Shock”) is associated with more concentrated labor markets. These five results emphasize the role of local-level labor market monopsonies in influencing firm wage-setting behavior and can potentially explain some of the stagnation of wages in the United States over the past several decades.
    JEL: E24 J21 J23 J31 J42
    Date: 2018–02
  3. By: Menon, Seetha (European University Institute); Salvatori, Andrea (OECD); Zwysen, Wouter (ISER, University of Essex)
    Abstract: This paper studies changes in computer use and job quality in the EU-15 between 1995 and 2015. We document that while the proportion of workers using computers has increased from 40% to more than 60% over twenty years, there remain significant differences between countries even within the same occupations. Several countries have seen a significant increase in computer use even in low-skilled occupations generally assumed to be less affected by technology. Overall, the great increase in computer use between 1995 and 2015 has coincided with a period of modest deterioration of job quality in the EU-15 as whole, as discretion declined for most occupational and educational groups while intensity increased slightly for most of them. Our OLS results that exploit variation within country-occupation cells point to a sizeable positive effect of computer use on discretion, but to small or no effect on intensity at work. Our instrumental variable estimates point to an even more benign effect of computer use on job quality. Hence, the results suggest that the (moderate) deterioration in the quality of work observed in the EU-15 between 1995 and 2015 has occurred despite the spread of computers, rather than because of them.
    Keywords: job polarisation, job quality, tasks, discretion, intensity
    JEL: J21 J23 J24 O33
    Date: 2018–01
  4. By: Caliendo, Marco (University of Potsdam); Fedorets, Alexandra (DIW Berlin); Preuß, Malte (Freie Universität Berlin); Schröder, Carsten (DIW Berlin); Wittbrodt, Linda (University of Potsdam)
    Abstract: This study quantifies the short-term distributional effects of the new statutory minimum wage in Germany. Using detailed survey data (German Socio-Economic Panel), we assess changes in the distributions of hourly wages, contractual and actual working hours, and monthly earnings. Our descriptive results indicate growth at the bottom of the hourly wage distribution in the post-reform year, but also considerable noncompliance among eligible employees. In a second step, we employ a difference-in-differences analysis and exploit regional variation in the "bite" of the intervention, measured by the share of employees in a geographical region with wages below the minimum wage prior to the reform. We document the reform's positive effect at the bottom of the wage distribution. However, we find a negative effect of the reform on contractual hours worked, which explains why there is no effect on monthly earnings. Given that actual hours worked decrease less than contractual hours, our evidence suggests an increase in unpaid overtime.
    Keywords: minimum wage, wage distribution, hourly wages, inequality
    JEL: J31 J38 J22
    Date: 2017–12
  5. By: Emilio Depetris-Chauvin (Pontificia Universidad Católica de Chile); Ömer Özak (Southern Methodist University)
    Abstract: This research explores the historical roots of the division of labor in pre-modern societies. It advances the hypothesis and establishes empirically that intra-ethnic diversity had a positive effect on the division of labor across ethnicities in the pre-modern era. Exploiting a variety of identification strategies and a novel ethnic level dataset combining geocoded ethnographic, linguistic and genetic data, it establishes that higher levels of intra-ethnic diversity were conducive to economic specialization in the pre-modern era. The findings are robust to a host of geographical, institutional, cultural and historical confounders, and suggest that variation in intra-ethnic diversity is the main predictor of the division of labor in pre-modern times.
    Keywords: Economic Comparative Development, Division of Labor, Economic Specialization, Intra-Ethnic Diversity, Cultural Diversity, Population Diversity, Genetic Diversity, Linguistic Diversity, Serial Founder Effect
    JEL: D74 F10 F14 J24 N10 O10 O11 O12 O40 O43 O44 Z10 Z13
    Date: 2018–02
  6. By: Becker, Sascha O. (University of Warwick); Heblich, Stephan (University of Bristol); Sturm, Daniel M. (London School of Economics)
    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
  7. By: Melvin Stephens, Jr.; Desmond J. Toohey
    Abstract: While economists have posited that health investments increase earnings, isolating the causal effect of health is challenging due both to reverse causality and unobserved heterogeneity. We examine the labor market effects of a randomized controlled trial, the Multiple Risk Factor Intervention Trial (MRFIT), which monitored nearly 13,000 men for over six years. We find that this intervention, which provided a bundle of treatments to reduce coronary heart disease mortality, increased earnings and family income. We find few differences in estimated gains by baseline health and occupation characteristics. Reductions in serious illnesses and work-limiting disabilities likely contributed to the observed gains.
    JEL: I12 J24
    Date: 2018–01
  8. By: Fischer, Martin; Karlsson, Martin; Nilsson, Therese; Schwarz, Nina
    Abstract: We evaluate the impact on earnings, pensions, and further labor market outcomes of two parallel educational reforms increasing instructional time in Swedish primary school. The reforms extended the annual term length and compulsory schooling by comparable amounts. We find striking differences in the effects of the two reforms: at 5%, the returns to the term length extension were at least half as high as OLS returns to education and benefited broad ranges of the population. The compulsory schooling extension had small (2%) albeit significant effects, which were possibly driven by an increase in post-compulsory schooling. Both reforms led to increased sorting into occupations with heavy reliance on basic skills.
    Keywords: educational reforms,compulsory schooling,term length,returns to education
    JEL: J24 J31 I28
    Date: 2017
  9. By: Elsayed, Ahmed (IZA); Wahba, Jackline (University of Southampton)
    Abstract: This paper examines informality during the political and economic turmoil that accompanied the Arab Spring revolution in Egypt. The paper focuses on unprotected employment and the extent to which it changed by educational level right after the January Uprising of 2011. We find that over time and particularly after the revolution, informal employment has increased for both high- and low-educated workers however, through different paths: high educated were more likely to be stuck in informality, whilst low-educated formal workers were more likely to lose their contracts. The results suggest a high level of rigidity in the Egyptian labor market even in the wake of the Arab Spring.
    Keywords: informal employment, job contracts, Arab Spring
    JEL: J21 J23 J24 J31 O17
    Date: 2017–12
  10. By: Ashworth, Jared (Pepperdine University); Hotz, V. Joseph (Duke University); Maurel, Arnaud (Duke University); Ransom, Tyler (University of Oklahoma)
    Abstract: This paper investigates the wage returns to schooling and actual early work experiences, and how these returns have changed over the past twenty years. Using the NLSY surveys, we develop and estimate a dynamic model of the joint schooling and work decisions that young men make in early adulthood, and quantify how they affect wages using a generalized Mincerian specification. Our results highlight the need to account for dynamic selection and changes in composition when analyzing changes in wage returns. In particular, we find that ignoring the selectivity of accumulated work experiences results in overstatement of the returns to education.
    Keywords: schooling, human capital, wage returns, selection
    JEL: C33 J22 J24 I21
    Date: 2017–12
  11. By: Carlsson, Magnus (Linnaeus University); Fumarco, Luca (Linnaeus University); Rooth, Dan-Olof (Stockholm University)
    Abstract: Several studies using observational data suggest that ethnic discrimination increases in downturns of the economy. We investigate whether ethnic discrimination depends on labor market tightness using data from correspondence studies. We utilize three correspondence studies of the Swedish labor market and two different measures of labor market tightness. These two measures produce qualitatively similar results, and, opposite to the observational studies, suggests that ethnic discrimination in hiring decreases in downturns of the economy.
    Keywords: hiring discrimination, ethnic discrimination, labor market tightness, the business cycle, correspondence studies, field experiments, ranking models, screening models
    JEL: C93 J15 J21 J71
    Date: 2018–01
  12. By: Lordan, Grace (London School of Economics); Neumark, David (University of California, Irvine)
    Abstract: We study the effect of minimum wage increases on employment in automatable jobs – jobs in which employers may find it easier to substitute machines for people – focusing on low-skilled workers for whom such substitution may be spurred by minimum wage increases. Based on CPS data from 1980–2015, we find that increasing the minimum wage decreases significantly the share of automatable employment held by low-skilled workers, and increases the likelihood that low-skilled workers in automatable jobs become nonemployed or employed in worse jobs. The average effects mask significant heterogeneity by industry and demographic group, including substantive adverse effects for older, low-skilled workers in manufacturing. We also find some evidence that the same changes improve job opportunities for higher-skilled workers. The findings imply that groups often ignored in the minimum wage literature are in fact quite vulnerable to employment changes and job loss because of automation following a minimum wage increase.
    Keywords: minimum wage, employment, automation
    JEL: J23 J38
    Date: 2018–01
  13. By: Alex-Petersen, Jesper (Lund University); Lundborg, Petter (Lund University); Rooth, Dan-Olof (Stockholm University)
    Abstract: We examine the long-term impact of a policy that introduced free and nutritious school lunches in Swedish primary schools. For this purpose, we use historical data on the gradual implementation of the policy across municipalities and employ a difference- in-differences design to estimate the impact of this lunch policy on a broad range of medium and long-term outcomes, including lifetime income, health, cognitive skills, and education. Our results show that the school lunch program generated substantial long-term benefits, where pupils exposed to the program during their entire primary school period have 3 percent greater life-time earnings. In addition, we find the effect to be greater for pupils that were exposed at earlier ages and for pupils from poor households. Finally, exposure to the school lunch program had substantial effects on educational attainment and health and these effects can explain a large part of the return to school lunches.
    Keywords: nutrition, early life, childhood, long-term, income, causal
    JEL: I12 I38 J24
    Date: 2017–12
  14. By: Blundell, Richard (University College London); Pistaferri, Luigi (Stanford University); Saporta-Eksten, Itay (Tel Aviv University)
    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.
    Keywords: family labor supply, time use, consumption smoothing
    JEL: J22
    Date: 2017–12
  15. By: Barany, Zsofia; Siegel, Christian
    Abstract: To study the drivers of the employment reallocation across sectors and occupations between 1960 and 2010 in the US we propose a model where technology evolves at the sector-occupation cell level. Since the framework does not a priori impose a specific form of technological change, it allows us to quantify the respective role of sector-specific and of occupation-specific technological change. We implement a novel method to extract changes in sector-occupation cell productivities from the data. Using a factor model we find that occupation and sector factors jointly explain 74-87 percent of cell productivity changes, with the occupation component being by far the most important. While in our general equilibrium model both factors imply similar reallocations of labor across sectors and occupations, quantitatively the bias in technological change across occupations is much more important than the bias across sectors.
    Keywords: biased technological change; employment polarization; structural change
    JEL: J24 O33 O41
    Date: 2018–01
  16. By: Piopiunik, Marc (Ifo Institute for Economic Research); Schwerdt, Guido (University of Konstanz); Simon, Lisa (CESifo); Woessmann, Ludger (Ifo Institute for Economic Research)
    Abstract: As skills of labor-market entrants are usually not directly observed by employers, individuals acquire skill signals. To study which signals are valued by employers, we simultaneously and independently randomize a broad range of skill signals on pairs of resumes of fictitious applicants among which we ask a large representative sample of German human-resource managers to choose. We find that signals in all three studied domains – cognitive skills, social skills, and maturity – have a significant effect on being invited for a job interview. Consistent with the relevance, expectedness, and credibility of different signals, the specific signal that is effective in each domain differs between apprenticeship applicants and college graduates. While GPAs and social skills are significant for both genders, males are particularly rewarded for maturity and females for IT and language skills. Older HR managers value school grades less and other signals more, whereas HR managers in larger firms value college grades more.
    Keywords: signals, cognitive skills, social skills, resume, hiring, labor market
    JEL: J24 J21
    Date: 2018–01
  17. By: Hvide, Hans K. (University of Bergen); Oyer, Paul (Stanford University)
    Abstract: We document three new facts about entrepreneurship. First, a majority of male entrepreneurs start a firm in the same or a closely related industry as their fathers' industry of employment. Second, this tendency is correlated with intelligence: higher-IQ entrepreneurs are less likely to follow their fathers. Third, an entrepreneur that starts a firm in the same 5-digit industry as where his father was employed tends to outperform entrepreneurs in the same industry whose fathers did not work in that industry. We consider various explanations for these facts and conclude that "dinner table human capital", where children obtain industry knowledge through their parents, is an important factor behind what type of firm is started and how well it performs.
    Keywords: entrepreneurship, human capital, IQ
    JEL: J24 L26
    Date: 2018–01
  18. By: Elsayed, Ahmed (IZA); Roushdy, Rania (American University of Cairo)
    Abstract: Women in the MENA region are economically and socially disempowered. High youth unemployment rates together with discriminatory social norms drive them to limit their investment in human capital. We evaluate a large-scale intervention attempting to relax human capital constraints for women by offering vocational, business and life skills training in 30 villages in rural Egypt. Relative to women in the control villages, the intervention increased the likelihood of treated women engaging in income-generating activities, driven by an increase in self-employment. Treated women also became more likely to have future business aspirations. However, their intra-household decision-making and gender equality attitudes were not affected by the intervention. We show that these results mask heterogeneous effects in terms of background characteristics and initial levels of social empowerment. We find no evidence of positive spillover effects for the program within treated villages and, more importantly, no evidence of different pre-trends in employment between the treated and control groups prior to the intervention.
    Keywords: empowerment of women, field intervention, Egypt
    JEL: I25 J24 O12
    Date: 2017–12
  19. By: Azar, José (IESE Business School); Marinescu, Ioana E. (University of Pennsylvania); Steinbaum, Marshall (Roosevelt Institute)
    Abstract: A product market is concentrated when a few firms dominate the market. Similarly, a labor market is concentrated when a few firms dominate hiring in the market. Using data from the leading employment website, we calculate labor market concentration for over 8,000 geographic-occupational labor markets in the US. Based on the DOJ-FTC horizontal merger guidelines, the average market is highly concentrated. Using a panel IV regression, we show that going from the 25th percentile to the 75th percentile in concentration is associated with a 17% decline in posted wages, suggesting that concentration increases labor market power.
    Keywords: monopsony, oligopsony, labor markets, competition policy
    JEL: J30 J42 L40
    Date: 2017–12
  20. By: Tani, Massimiliano (University of New South Wales)
    Abstract: This paper studies whether migration policy, besides managing a country's population size, is a suitable tool to influence immigrants' labour market outcomes. To do so, it uses a migration policy change that occurred in Australia in the late 1990s and data collected by the Longitudinal Survey of Migrants to Australia. The statistical techniques employed in the empirical analysis consistently reveal that the policy change has no detectable impact on the employment rate, wages, over-education, occupational downgrading, and (self-reported) use of skills for male immigrants, who account for about 75% of the sample, while they have a modest short-term positive impact on female immigrants. These results support the view that migration policy is an ineffective policy tool to influence migrants' labour market outcomes. However, the economic relevance of making an effective use of migrants' skills provides scope for close coordination between immigration and employment policy to ensure that efforts in attracting foreign talent are not dissipated by labour market frictions and other inefficiencies.
    Keywords: skilled immigration, labour market, over-education, immigration policy
    JEL: J15 J24
    Date: 2017–12
  21. By: Dauth, Wolfgang (University of Würzburg); Findeisen, Sebastian (University of Mannheim); Suedekum, Jens (Heinrich Heine University Düsseldorf)
    Abstract: We study the impact of trade exposure in the job biographies, measured with daily accuracy, of 2.4 million workers in Germany. To profit from export opportunities, workers adjust through increased employer switching. Highly skilled workers benefit the most, consistent with an increase in skill demand. The incidence of import shocks falls mostly on low-skilled workers, as they are not able to adjust as well as medium- and high-skilled workers. Imports also destroy rents by workers at high-wage plants who separate from their original firm. We connect our results to the growing theoretical literature on the labor market effects of trade.
    Keywords: work biographies, individual labor market responses, international trade, worker mobility, Germany
    JEL: F16 J31 R11
    Date: 2018–01
  22. By: Gimenez-Nadal, J. Ignacio (University of Zaragoza); Molina, José Alberto (University of Zaragoza); Velilla, Jorge (University of Zaragoza)
    Abstract: In this paper, we analyze the time allocation decisions of teleworkers, and compare them with their commuter counterparts. Using data from the American Time Use Survey for the years 2003 to 2015, we analyze the time spent working, the timing of work, and the instant enjoyment experienced while working, of teleworkers and commuters. Results show that teleworkers devote 40% less time to market work activities than do commuters, and less than 60% of both male and female teleworkers work at 'regular hours', vs around 80% of similar commuters. A higher percentage of teleworkers than commuters are engaged in leisure and non-market work at the central hours of the day. Using additional information from the Well-being Module for the years 2012 and 2013, we find that male teleworkers experience higher levels of satisfaction while working than do commuters, net of differences in socio-demographic and job characteristics. Our results point towards male telecommuters being happier in their job tasks than commuters, which may lead to a higher productivity of the former, and explains why teleworkers are able to work fewer hours per day.
    Keywords: telework, market work time, instantaneous well-being, American Time Use Survey
    JEL: D13 J22
    Date: 2018–01
  23. By: Gu, Grace Weishi (University of California, Santa Cruz); Prasad, Eswar (Cornell University)
    Abstract: Employer-provided nonwage benefit expenditures now account for one-third of U.S. firms' labor costs. We show that a broad measure of real labor costs including such benefit expenditures has become countercyclical during 1982-2014, contrary to the conventional view that labor costs are procyclical. Using BLS establishment-job data, we find that even real wages, the main focus of prior literature, have become countercyclical. Benefit expenditures are less rigid than nominal wages, although both components of labor costs have become more rigid. These rigidities, along with the rising relative importance of aggregate demand shocks (including the financial crisis), help explain countercyclical labor costs.
    Keywords: wages, benefits, compensation, economic fluctuations, cyclicality
    JEL: E24 J32 E32
    Date: 2018–01
  24. By: OECD; Tatiana Slobodnitsky; Lev Drucker; Assaf Geva
    Abstract: We examine the impact of multinational enterprises (MNEs) on labor productivity in two ways: 1) creating high-paying jobs; and 2) improving employees’ human capital. Our analysis is based on a unique database that matches workers to companies, for the 450 largest companies in Israel, during the years 2005-2010. The main challenge in dentifying the impact of MNEs on labor productivity stems from their tendency to cherry-pick workers. This study offers an innovative solution to this selection bias by constructing a sample of employees who have all worked at MNEs at some point. We find that, on average, current employment at a MNE is associated with a wage premium of 8.3%. Moreover, past work experience at a MNE has a positive 1.6% impact on wages. Although economically significant, the results are relatively modest compared to those reported in the literature. In addition, we differentiate MNEs according to size and brand recognition, and find that the impact on wages is larger for leading MNEs. These results were found to be stable with respect to changes in the sample and in specifications.
    Keywords: human capital, labor productivity, Multinational enterprises
    JEL: F23 J24
    Date: 2018–02–16
  25. By: Guido Matias Cortes; Nir Jaimovich; Henry E. Siu
    Abstract: We document a new finding regarding changes in labor market outcomes for men and women in the US. Since 1980, conditional on being a college-educated man, the probability of working in a cognitive/high-wage occupation has fallen. This contrasts starkly with the experience for college-educated women: their probability of working in these occupations rose, despite a much larger increase in the supply of educated women relative to men. We consider these facts in light of a general neoclassical model of the labor market. One key channel capable of rationalizing these findings is a greater increase in the demand for female-oriented skills in cognitive/high-wage occupations relative to other occupations. Using occupation-level data, we find evidence that this relative increase in the demand for female skills is due to an increasing importance of social skills within such occupations. Evidence from both male and female wages is also indicative of an increase in the demand for social skills.
    JEL: E24 J16 J23
    Date: 2018–02
  26. By: Susan W. Parker; Tom Vogl
    Abstract: Conditional cash transfer programs have spread to over 80 countries in the past two decades, but little is known about their long-term effects on the youth they target. This paper estimates the impact of childhood exposure to the Mexican program Progresa on economic outcomes in early adulthood by leveraging the age structure of program benefits and geographic variation in early program penetration nationwide. The study design avoids the representativeness and attrition issues that have plagued efforts to estimate longer-run impacts of Progresa and other similar programs. Childhood exposure to the program improves educational attainment, geographic mobility, labor market outcomes, and household economic outcomes in early adulthood. Schooling impacts are similar for men and women, at roughly 1.5 years, while labor market impacts are more pronounced for women, amounting to 30-40% of mean labor force participation and 50% of mean labor income in pre-program cohorts. Indexes capturing household economic impacts increase on the order of 0.2 standard deviations.
    JEL: I25 I38 J24 O15
    Date: 2018–02
  27. By: O'Connell, Stephen D. (Massachusetts Institute of Technology)
    Abstract: A common argument for quota policies is that they can increase the participation of targeted groups in positions that are not directly subjected to quotas or after quotas are no longer in place. I investigate this hypothesis empirically in the context of India, where one third of local political leadership seats are randomly assigned to be held by a woman in each election cycle. Quotas increase the number of female candidates who later contest seats in state and national legislatures, where such policies do not exist. This effect arises from the candidacy of beneficiaries who gained experience in local government due to the quotas and career politicians who continue contesting in longer-exposed areas. Effect magnitudes imply that the policy accounts for a substantial portion of the increase in female candidates for these bodies since the start of the policy. The new candidates have a higher probability of a top finish when they run on major party tickets or contest in areas where the local constituency overlaps closely with that of the contested seat.
    Keywords: quotas, affirmative action, political candidacy, India
    JEL: J15 J45
    Date: 2018–01
  28. By: Adam M. Lavecchia (Department of Economics, University of Ottawa, Ottawa, ON)
    Abstract: This paper sheds new light on the desirability of the minimum wage in the presence of an optimal non-linear income tax. Using a search-and-matching framework, I derive a novel condition that links the desirability of the minimum wage to three sufficient statistics: (1) the macro or general equilibrium labor force participation response to the minimum wage by low-skilled individuals; (2) the macro employment response to the minimum wage for low-skilled individuals; and (3) the welfare weight on low-skilled workers. This condition shows that the minimum wage is welfare improving if it pushes the labor market tightness – the ratio of the aggregate number of vacancies to low-skilled job seekers – closer to its efficient level. Guided by the theory, I estimate the first two sufficient statistics using an event study design, as well as state and federal minimum wage variation between 1979-2014. I estimate a macro participation elasticity of -0.24 and a macro employment elasticity of -0.32. The former represents new evidence on a previously overlooked margin of the minimum wage. With these estimates in hand, I simulate the total welfare gains from introducing a minimum wage beginning from the optimal income tax allocation. The simulations show that the minimum wage is welfare improving only if the government has very strong redistributive tastes.
    Keywords: Minimum wage; Sufficient statistics; Optimal policy; Labor force participation
    JEL: H21 H23 J21 J38 J64
    Date: 2018
  29. By: Holtemöller, Oliver; Pohle, Felix
    Abstract: This paper contributes to the empirical literature on the employment effects of minimum wages. We analysed the introduction of a statutory minimum wage in Germany in 2015 exploiting cross-sectional variation of the minimum wage affectedness. We construct two variables that measure the affectedness for approximately 300 state-industry combinations based on aggregate monthly income data. The estimation strategy consists of two steps. We test for (unidentified) structural breaks in a model with cross-section specific trends to control for state-industry specific developments prior to 2015. In a second step, we test whether the trend deviations are correlated with the minimum wage affectedness. To identify the minimum wage effect on employment, we assume that the minimum wage introduction is exogenous. Our results point towards a negative effect on marginal employment and a positive effect on socially insured employment. Furthermore, we analyse if the increase in socially insured employment is systematically related to the reduction of marginal employment but do not detect evidence.
    Keywords: minimum wage,employment effects,minimum wage affectedness,structural break model
    JEL: C21 E24 J38
    Date: 2017
  30. By: Davidescu, Adriana Anamaria (Bucharest University of Economic Studies); Schneider, Friedrich (University of Linz)
    Abstract: The recent increase in the minimum wage in Romania in early May 2016 represented a popular topic at the national level, which indicated that aggressive increases in the minimum wage could create a competitiveness problem in the context of a relatively high level of informal economic activities. The objective of this paper is to analyse the nature of the relationship between the minimum wage and the size of the Romanian shadow economy using quarterly data for the period 2000-2015. The MIMIC model has been used to estimate the dimension of the shadow economy, and the empirical results revealed that unemployment, self-employment, indirect taxation and a lack of trust in the government are considered the main causes of Romanian informality. The results also indicated that the Romanian shadow economy decreased until 2008 to a value of approximately 27.8% of the official GDP. During the economic crisis, a slow increase in the shadow economy occurred, whereas in recent quarters, a slow decrease was observed. The potential effect of an increase in the minimum wage on the size of the shadow economy has been analysed using the Granger causality approach with vector error correction models. The empirical results indicated that an increase in the minimum wage can be considered a long-term supporting factor for the shadow economy because it increases informal economic activities, as firms will seek alternative methods of circumventing authorities. However, the empirical results do not support any effects of an increase in the minimum wage in the short run.
    Keywords: minimum wage, shadow economy, MIMIC model, Granger causality, Romania
    JEL: J31 C32 C52 O17 P48
    Date: 2017–12
  31. By: Torosyan, Karine (ISET, Tbilisi State University); Pignatti, Norberto (ISET, Tbilisi State University); Obrizan, Maksym (Kyiv School of Economics)
    Abstract: Internally displaced people (IDPs) constitute a serious economic, social and cultural problem for many countries, including countries in transition. Despite the importance of the problem, there are only a handful of previous studies investigating the issue of labor market outcomes of IDPs. We aim to fill this gap in the literature using 13 years of Integrated Household Surveys over 2004-2016 from Georgia, which experienced large flows of internal migrants from the early 1990s until now. Our analyses indicate that the labor market outcomes of IDPs are much worse than those of local residents. Specifically, IDPs are 3.9 to 11.2 percentage points less likely to be in the labor force, depending on the period and duration of IDP status. IDPs are also up to 11.6 percentage points more likely to be unemployed, sometimes even after 20 years of forced displacement. Finally, IDPs residing in a locality for more than 5 years receive persistently lower wages than local residents with similar characteristics, with the gap widening over time, reaching some 16 percentage points in the last period under analysis.
    Keywords: conflict, internally displaced people, IDPs, labor market outcomes, transition countries
    JEL: D74 J21 O15 P23 R23
    Date: 2018–01
  32. By: Hirsch, Boris (Leuphana University Lüneburg); Müller, Steffen (IWH Halle)
    Abstract: This paper investigates the influence of industrial relations on firm wage premia in Germany. OLS regressions for the firm effects from a two-way fixed effects decomposition of workers' wages by Card, Heining, and Kline (2013) document that average premia are larger in firms bound by collective agreements and in firms with a works council, holding constant firm performance. RIF regressions show that premia are less dispersed among covered firms but more dispersed among firms with a works council. Hence, deunionization is the only among the suspects investigated that contributes to explaining the marked rise in the premia dispersion over time.
    Keywords: firm wage premium, industrial relations, trade unions, works councils, bargaining power, rent sharing, wage inequality, Germany
    JEL: J31 J52 J53
    Date: 2018–01
  33. By: James Bessen
    Abstract: Artificial intelligence (AI) technologies will automate many jobs, but the effect on employment is not obvious. In manufacturing, technology has sharply reduced jobs in recent decades. But before that, for over a century, employment grew, even in industries experiencing rapid technological change. What changed? Demand was highly elastic at first and then became inelastic. The effect of artificial intelligence on jobs will similarly depend critically on the nature of demand. This paper presents a simple model of demand that accurately predicts the rise and fall of employment in the textile, steel and automotive industries. This model provides a useful framework for exploring how AI is likely to affect jobs over the next 10 or 20 years.
    JEL: J2 N10 O3
    Date: 2018–01
  34. By: Johnston, David W. (Monash University); Shields, Michael A. (Monash University); Suziedelyte, Agne (University of London)
    Abstract: A lack of job security is an increasingly prevalent characteristic of modern labour markets, and there is evidence that recent financial crises have exacerbated this issue. In this paper, we assess how exogenous changes in the macroeconomic environment affect workers' perceived job security, and the impact of job security on measures of mental and physical health. To identify these effects, we exploit variation in world commodity prices over the period 2001–15, and analyse 15 waves of individual-level panel data that includes unusually detailed classifications of mining workers. We find that commodity price movements drive changes in perceived job security, which in turn significantly and substantively affects the mental health of workers. In contrast, we find no effects on physical health. Our results imply that the estimated welfare costs of recessions are substantially larger when the effects of job insecurity on the health of workers is considered.
    Keywords: job security, health, macroeconomic conditions, panel data
    JEL: J11 J21 I31
    Date: 2017–12
  35. By: Dietrich, Hans; Muehlemann, Samuel; Pfann, Gerard Antonie; Pfeifer, Harald
    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 (Länder) 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; G8 reform; labor supply shock
    JEL: I21 J20
    Date: 2018–01
  36. By: Molina, José Alberto (University of Zaragoza); Gimenez-Nadal, J. Ignacio (University of Zaragoza); Velilla, Jorge (University of Zaragoza)
    Abstract: This paper proposes an extension of the collective model for labor supply developed by Chiappori, Fortin and Lacroix (2002) to an intertemporal setting. We first develop a theoretical model to analyze the intra-household distribution of wealth in a multi-period framework, with a focus on labor supply and marriage markets. The model allows us to derive a sharing rule for non-labor income under a set of testable conditions. Second, using data from the Panel Study of Income Dynamics from years 1997 to 2015, we estimate the model using a semi-log parametrization of labor supply. Our empirical results do not reject the restrictions of the model, and point to the validity of the collective framework in an intertemporal setting. We show that wages are positively related to household labor supply, although cross and lagged effects show negative correlates. Furthermore, the ability of wives to negotiate the intra-household allocation of non-labor income is mainly driven by wages, with wives behaving altruistically, and husbands egoistically. Sex ratios appear to be nonsignificant in this relationship, although counteracting effects between labor and marriage markets may influence estimates.
    Keywords: household labor supply, collective model, intra household behavior, sex ratios, panel study of income dynamics
    JEL: J22
    Date: 2018–01

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