nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2018‒03‒05
twenty papers chosen by
Joseph Marchand
University of Alberta

  1. The Labor Market Impacts of Universal and Permanent Cash Transfers: Evidence from the Alaska Permanent Fund By Damon Jones; Ioana Marinescu
  2. Social Welfare Losses Due to Occupational Segregation by Gender and Race/Ethnicity in the U.S.: Are There Differences across Regions? By Coral del Río; Olga Alonso-Villar
  3. The Effect of Minimum Wages on Low-Wage Jobs: Evidence from the United States Using a Bunching Estimator By Doruk Cengiz; Arindrajit Dube; Attila Lindner; Ben Zipperer
  4. The Skills to Pay the Bills: Returns to On-the-job Soft Skills Training By Achyuta Adhvaryu; Namrata Kala; Anant Nyshadham
  5. Polarization, employment, participation and minimum wage : Evidence from European local labor markets By Paul Maarek; Elliot Moiteaux
  6. Confidence and Career Choices: An Experiment By Barron, Kai; Gravert, Christina
  7. Heterogeneous Effects of Credit Constraints on SMEs’ Employment: Evidence from the Great Recession By Cornille, David; Rycx, François; Tojerow, Ilan
  8. Still a long way to go: decomposing income inequality across Italy’s regions, 1871 – 2011 By Gabriele Cappelli; Emanuele Felice; Julio Martínez-Galarraga; Daniel Tirado
  9. Agglomeration Economies in the Presence of an Informal Sector The Colombian Case By García, Gustavo A.
  10. Do Dutch dentists extract monopoly rents? By Ketel, Nadine; Leuven, Edwin; Oosterbeek, Hessel; van der Klaauw, Bas
  11. The Signal of Applying for a Job Under a Vacancy Referral Scheme By Van Belle, Eva; Caers, Ralf; De Couck, Marijke; Di Stasio, Valentina; Baert, Stijn
  12. Do Retirement Savings Increase in Response to Information About Retirement and Expected Pensions? By Mathias Dolls; Philipp Dörrenberg; Andreas Peichl; Holger Stichnoth
  13. Biased Technological Change and Employment Reallocation By Zsófia L. Bárány; Christian Siegel
  14. If not now, when? The timing of childbirth and labour market outcomes By Picchio, Matteo; Pigini, Claudia; Staffolani, Stefano; Verashchagina, Alina
  15. Avoiding the Housewife Stigma: Self-Employment as a Female Career Choice By Bjuggren, Carl Magnus; Henrekson, Magnus
  16. German FDI in the Czech Republic - Employment effects in the home country By Schäffler, Johannes; Moritz, Michael
  17. The Light and the Heat: Productivity Co-benefits of Energy-saving Technology By Achyuta Adhvaryu; Namrata Kala; Anant Nyshadham
  18. Changing Business Dynamism and Productivity : Shocks vs. Responsiveness By Ryan Decker; John Haltiwanger; Ron S. Jarmin; Javier Miranda
  19. Wages and Family Time Allocation By THELOUDIS Alexandros
  20. Female Work Participation in Villages of India By Chaurasia, Aalok Ranjan

  1. By: Damon Jones; Ioana Marinescu
    Abstract: What are the effects of universal and permanent cash transfers on the labor market? Since 1982, all Alaskan residents have been entitled to a yearly cash dividend from the Alaska Permanent Fund. Using data from the Current Population Survey and a synthetic control method, we show that the dividend had no effect on employment, and increased part-time work by 1.8 percentage points (17 percent). Although theory and prior empirical research suggests that individual cash transfers decrease household labor supply, we interpret our results as evidence that general equilibrium effects of widespread and permanent transfers tend to offset this effect, at least on the extensive margin. Consistent with this story, we show suggestive evidence that tradable sectors experience employment reductions, while non-tradable sectors do not. Overall, our results suggest that a universal and permanent cash transfer does not significantly decrease aggregate employment.
    JEL: H24 I38 J21 J22
    Date: 2018–02
  2. By: Coral del Río; Olga Alonso-Villar
    Abstract: Taking into account the well-being losses or gains that each gender-race/ethnicity group has associated with its occupational sorting, this paper explores the social welfare loss that each U.S. large region experiences due to the different circumstances faced by these groups in each regional labor market. To analyze the period 1980–2012 in those terms, we use novel measures that aggregate the well-being losses or gains of the groups consistently with the literature on deprivation. To take into account that disparities among regions may arise from differences in characteristics, this papers uses a propensity score procedure that allows controlling for gender and racial/ethnic composition, immigration profile, educational level, and industrial structure.
    Keywords: Occupational segregation; social welfare; gender; race, regions
    JEL: D63 D23 J15 J71
    Date: 2018–02
  3. By: Doruk Cengiz; Arindrajit Dube; Attila Lindner; Ben Zipperer
    Abstract: We propose a novel method that infers the employment effect of a minimum wage increase by comparing the number of excess jobs paying at or slightly above the new minimum wage to the missing jobs paying below it. Using state-level variation in U.S. minimum wages, we implement our method by providing new estimates on the effect of the minimum wage on the frequency distribution of hourly wages. First, we present a case study of a large, indexed minimum wage increase using administrative data on hourly wages from Washington state. Then we implement an event study analysis pooling 138 minimum wage increases between 1979 and 2016. In both cases, we find that the overall number of low-wage jobs remained essentially unchanged. At the same time, the direct effect of the minimum wage on average earnings was amplified by modest wage spillovers at the bottom of the wage distribution. Our estimates by detailed demographic groups show that the lack of job loss is not explained by labor-labor substitution at the bottom of the wage distribution. We also find no evidence of disemployment when we consider higher levels of minimum wages. However, we do find some evidence of reduced employment in tradable sectors. In contrast to our bunching-based estimates, we show that conventional studies can produce misleading inference due to spurious changes in employment higher up in the wage distribution.
    Keywords: minimum wage policy, bunching estimator, labor demand elasticity, wage distribution
    JEL: J31 J38 J88
    Date: 2018–02
  4. By: Achyuta Adhvaryu; Namrata Kala; Anant Nyshadham
    Abstract: We evaluate the causal impacts of on-the-job soft skills training on the productivity, wages, and retention of female garment workers in India. The program increased women’s extraversion and communication, and spurred technical skill upgrading. Treated workers were 20 percent more productive than controls post-program. Wages rise very modestly with treatment (by 0.5 percent), with no differential turnover, suggesting that although soft skills raise workers’ marginal products, labor market frictions are large enough to create a substantial wedge between productivity and wages. Consistent with this, the net return to the firm was large: 258 percent eight months after program completion.
    JEL: J24 M53 O15
    Date: 2018–02
  5. By: Paul Maarek; Elliot Moiteaux (Université de Cergy-Pontoise, THEMA)
    Abstract: Since 1980, labor markets became increasingly polarized: occupations in the middle of the wage distribution (routine occupations) tend to disappear, and are replaced by low-wage occupations (man- ual occupations) and high-wage occupations (abstract occupations). In the US exible labor market, the decrease of routine occupations has been compensated by massive creation of low-paying occupa- tions, and polarization only had a very limited impact on employment levels. This is not necessarily the case in rigid wage European countries in which the creation of such low-paying jobs is more dif- cult, given the institutional environment. We study the e ect of the reduction of the proportion of routine jobs on the employment rate and the participation rate, conditionally on the value of the min- imum wage, using local labor markets from the European Union Labor Force Survey on 8 countries which have a national minimum wage. Our OLS and IV estimates indicate that the disappearance of routine jobs has a negative impact on labor market outcomes in high-minimum wage countries due to an insucient creation of low-paid occupations. Impact on participation is positive for low minimum wage countries, as labor supply may increase in order to compensate the deterioration of labor market opportunities.
    Keywords: Polarization, employment, participation, minimum wage, ICT, routine occupations.
    JEL: J23 J24 J38
    Date: 2018
  6. By: Barron, Kai (University College London and WZB Berlin); Gravert, Christina (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Confidence is often seen as the key to success. Empirical evidence about whether such beliefs causally map into actions is, however, sparse. In this paper, we experimentally investigate the causal effect of an increase in confidence about one’s own ability on two central choices made by workers in the labor market: choosing between jobs with different incentive schemes, and the subsequent choice of how much effort to exert within the job. Using a hard-easy task manipulation to shift beliefs, we find that beliefs can be shifted, which in turn shifts decisions. In our setting, the beliefs of low ability individuals are more malleable than those of high ability individuals. Therefore, the treatment induces an increase in confidence and detrimental decision making by low ability workers but does not affect the outcomes of high ability workers. Men and women react similarly to the treatment. However, men hold higher baseline beliefs, implying that women make better incentive choice decisions. Policy implications regarding pre-labor market confidence development by means of feedback and grade inflation are discussed.
    Keywords: Overconfidence; experiment; beliefs; real-effort; grade inflation
    JEL: C91 D03 J24 M50
    Date: 2018–01
  7. By: Cornille, David; Rycx, François; Tojerow, Ilan
    Abstract: This paper takes advantage of access to detailed matched bank-firm data to investigate whether and how employment decisions of SMEs have been affected by credit constraints in the wake of the Great Recession. Variability in banks’ financial health following the 2008 crisis is used as an exogenous determinant of firms’ access to credit. Findings, relative to the Belgian economy, clearly highlight that credit matters. They show that SMEs borrowing money from pre-crisis financially less healthy banks were significantly more likely to be affected by a credit constraint and, in turn, to adjust their labour input downwards than pre-crisis clients of more healthy banks. These results are robust across types of loan applications that were denied credit, i.e. applications to finance working capital, debt or new investments. Yet, estimates also show that credit constraints have been essentially detrimental for employment among SMEs experiencing a negative demand shock or facing strong product market competition. In terms of human resources management, credit constraints are not only found to foster employment adjustment at the extensive margin but also to increase the use of temporary layoff allowances for economic reasons. This outcome supports the hypothesis that short-time compensation programmes contribute to save jobs during recessions.
    Keywords: SMEs,banks’ financial health,credit constraints,employment,short-time compensation programmes,Great Recession,matched bank-firm data
    JEL: C35 C36 D22 G01 G21 J21 J23
    Date: 2018
  8. By: Gabriele Cappelli (Departament d'Economia i d'Història Econòmica, Universitat Autònoma de Barcelona); Emanuele Felice (Department of Philosophical, Pedagogical and Economic-Quantitative Sciences, Università “G. D’Annunzio” di Chieti-Pescara); Julio Martínez-Galarraga (Departament d’Anàlisi Econòmica, Universitat de València); Daniel Tirado (Departament d’Anàlisi Econòmica, Universitat de València)
    Abstract: This article is the first study to explore to what extent labour productivity, structural change, participation rates and the age structure of the population contributed to the pattern of Italy’s regional economic inequality over the long run (1871-2011). We provide brand new regional estimates of participation rates and age structures, as well as the most updated figures on per capita GDP, per worker GDP and the employment rate (at ten-year intervals spanning from 1871 to 2011). First, regional inequality in per capita GDP (Y/N) is split into labour productivity (Y/L) and labour-market features (L/N). Then, the Caselli-Tenreyro decomposition is used to explore whether labour-productivity convergence (or divergence) at the NUTS-1 level was determined within or between sectors, and by labour reallocation. While labour productivity was central to the pattern of Italy’s regional development until the 1970s, since then the key factor of North-South divergence has been the participation rate. The results confirm the central role of national and local policies, influencing per capita GDP via productivity, employment, and participation rates.
    Keywords: Regional disparities, Italy, convergence, divergence, Caselli-Tenreyro, economic history, productivity.
    JEL: R1 O11 O25 N9
    Date: 2018–01
  9. By: García, Gustavo A.
    Abstract: This paper analyzes the relationship between agglomeration economies and productivity in the context of a developing country while taking into account the marked presence of an informal sector. Using data from Colombia, we investigate the effect of agglomeration economies on formal and informal productivity. We examine whether the informal sector achieves benefits from agglomeration economies as well as whether there are differences between the formal and informal sectors in terms of agglomeration returns. We find that agglomeration economies, measured by the density of local employment, have a significantly positive effect on productivity in the informal sector, while there is little effect in the formal sector. We estimate an elasticity of wages with respect to employment density of approximately 2% for the informal sector, which implies that informal workers in denser areas will earn approximately 11% more than those in less dense areas.
    Keywords: Agglomeration economies, informal sector, Colombia
    JEL: R12 J31 R23
    Date: 2018–01–26
  10. By: Ketel, Nadine (Department of Economics, School of Business, Economics and Law, Göteborg University); Leuven, Edwin (Department of Economics, University of Oslo); Oosterbeek, Hessel (University of Amsterdam, School of Economics); van der Klaauw, Bas (Department of Economics, VU University, Amsterdam)
    Abstract: We exploit admission lotteries to estimate the payoffs to the dentistry study in the Netherlands. Using data from up to 22 years after the lottery, we find that in most years after graduation dentists earn around 50,000 Euros more than they would earn in their next-best profession. The payoff is larger for men than for women but does not vary with high school GPA. The large payoffs cannot be attributed to longer working hours, larger human capital investments or sacrifices in family outcomes. The natural explanation is that Dutch dentists extract a monopoly rent, which we attribute to the limited supply of dentists in the Netherlands. We discuss policies to curtail this rent.
    Keywords: Dentists; returns to education; monopoly rents; random assignment
    JEL: C36 I18 I23 J44
    Date: 2018–02
  11. By: Van Belle, Eva; Caers, Ralf; De Couck, Marijke; Di Stasio, Valentina; Baert, Stijn
    Abstract: Persistent unemployment across OECD countries has led to increasing investments in activation programmes and, as a consequence, rigorous evaluations of the effectiveness of these programmes. The results of these evaluations have been mixed at best. To improve the effectiveness of the activation programmes, it is important to know why we observe these unsatisfactory results. One possible explanation that has been largely underexplored is the signal these programmes send to prospective employers. We investigate this signalling effect in the context of a job-vacancy referral system. To this end, we conduct a state-of-the-art vignette experiment in which HR professionals make hiring decisions concerning fictitious job candidates who apply either under a job-vacancy referral system or directly (without referral). By analysing the experimental data, we provide first causal evidence for a substantial adverse effect of referral on the probability of being hired. In addition, our experimental design allows us to explore whether this effect is heterogeneous by job candidate and recruiter characteristics and what exactly is signalled by the job-vacancy referral. In particular, we find that employers perceive referred candidates as being less motivated than other candidates.
    Keywords: signalling,activation policies,job referral,policy evaluation,unemployment
    JEL: J68 J23 C91
    Date: 2018
  12. By: Mathias Dolls; Philipp Dörrenberg; Andreas Peichl; Holger Stichnoth
    Abstract: How can retirement savings be increased? We explore a unique policy change in the context of the German pension system to study this question. As of 2005 (with a phase-in period between 2002-04), the German pension administration started to send out annual letters providing detailed and comprehensible information about the pension system and individual expected public pension payments. This reform did not change the level of pensions, but only provided information to individuals about their expected pension payments. Using German tax return data, we exploit an age discontinuity to identify the effect of these letters on the behavior of individuals. We find an increase in tax-deductible private retirement savings and provide evidence that this is not due to a crowding-out of other forms of savings. We also show that labor earnings, i.e. the most direct way to increase public pensions, increase after receiving the letter.
    Keywords: pensions, savings, information letters, earnings
    JEL: H55 H24 D14
    Date: 2018
  13. By: Zsófia L. Bárány; Christian Siegel
    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. This framework allows us to quantify the bias of technology across sectors and across occupations. 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; structural change; employment polarization
    JEL: O41 O33 J24
    Date: 2018–02
  14. By: Picchio, Matteo; Pigini, Claudia; Staffolani, Stefano; Verashchagina, Alina
    Abstract: We study the effect of childbirth and its timing on female labour market outcomes in Italy. The impact on yearly labour earnings and fraction of time at work is traced up to 21 years since school completion by estimating a factor analytic model with dynamic selection into treatments. We find that childbearing, especially the first delivery, negatively affects female labour supply. Women having their first child soon after school completion are able to catch up with childless women after about 10 years. The timing matters, with minimal negative consequences on yearly earnings (fraction of days at work) observed if the first child is delayed up to 7-12 (10-12) years after exiting formal education.
    Keywords: Female labour supply,fertility,discrete choice models,dynamic treatment effect,factor analytic model
    JEL: C33 C35 J13 J22
    Date: 2018
  15. By: Bjuggren, Carl Magnus (Research Institute of Industrial Economics (IFN)); Henrekson, Magnus (Research Institute of Industrial Economics (IFN))
    Abstract: This paper investigates career choices of women who marry high-income men. We find that women married to men in the top of the income distribution are more likely to enter self-employment, which is also associated with a lower income. This can be interpreted as a career choice that produces a more flexible work schedule in return for lower income. In a Nordic welfare state where work is the norm for women, self-employment offers a way to avoid the stay-at-home stigma. It allows one to stay in the workforce while enjoying approval from society and being in control of one’s work schedule and personal demands.
    Keywords: Career choice; Entrepreneurship; Marriage; Self-employment; Women
    JEL: J12 J13 J16 J22 L26
    Date: 2018–02–12
  16. By: Schäffler, Johannes; Moritz, Michael (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Do investments in the Czech Republic lead to employment growth or employment losses in the German firms involved? To address this question, a unique database about German firms with foreign direct investment (FDI) in the Czech Republic and firms without FDI in any country has been established within the IAB-ReLOC project. By developing a new method for linking firm-level data with establishment-level data of the Institute for Employment Research (IAB), this database is now linked with the IAB employment data. As the exact dates of the investments in the Czech Republic are known, the employment development of firms with Czech affiliates and firms without FDI is compared for the same time periods. The analysis shows that the two observation groups actually develop differently. In the years after the investment, the employment of multinational enterprises (MNEs) in the home country shrinks relative to the employment of the reference group (non-MNEs). The negative trend continues for up to five years. However, not all types of jobs are affected adversely. The downward trend refers to medium- and low-skilled workers only, whereby the demand for high-skilled workers even increases after the investment." (Author's abstract, IAB-Doku) ((en))
    JEL: J23 F23
    Date: 2018–02–20
  17. By: Achyuta Adhvaryu; Namrata Kala; Anant Nyshadham
    Abstract: Measurement of the full costs and benefits of energy-saving technologies is often difficult, confounding adoption decisions. We study consequences of the adoption of energy-efficient LED lighting in garment factories around Bangalore, India. We combine daily production line-level data with weather data and estimate a negative, nonlinear productivity-temperature gradient. We find that LED lighting, which emits less heat than conventional bulbs, decreases the temperature on factory floors, and thus raises productivity, particularly on hot days. Using the firm’s costing data, we estimate the pay-back period for LED adoption is nearly one-sixth the length after accounting for productivity co-benefits.
    JEL: J24 O14 Q56
    Date: 2018–02
  18. By: Ryan Decker; John Haltiwanger; Ron S. Jarmin; Javier Miranda
    Abstract: The pace of job reallocation has declined in all U.S. sectors since 2000. In standard models, aggregate job reallocation depends on (a) the dispersion of idiosyncratic productivity shocks faced by businesses and (b) the marginal responsiveness of businesses to those shocks. Using several novel empirical facts from business microdata, we infer that the pervasive post-2000 decline in reallocation reflects weaker responsiveness in a manner consistent with rising adjustment frictions and not lower dispersion of shocks. The within-industry dispersion of TFP and output per worker has risen, while the marginal responsiveness of employment growth to business-level productivity has weakened. The responsiveness in the post-2000 period for young firms in the high-tech sector is only about half (in manufacturing) to two thirds (economy wide) of the peak in the 1990s. Counterfactuals show that weakening productivity responsiveness since 2000 accounts for a significant drag on a ggregate productivity.
    Keywords: Dynamism ; Entrepreneurship ; Job reallocation ; Labor supply and demand ; Productivity
    JEL: J23 D22 O47 E24 D24 L26 M13
    Date: 2018–02–02
  19. By: THELOUDIS Alexandros
    Abstract: This paper examines changes in married people's allocation of time since 1980, a period in which female labor supply increased substantially, men's share of household work rose, and the gender wage gap narrowed down. I develop a life-cycle collective household model for market and non-market work, consumption and asset accumulation, which also features lack of commitment to lifetime marriage. Wages in the model shift intra-family bargaining power and induce bargaining effects on outcomes in addition to standard income and substitution effects. I estimate gender-specific preferences and how intra-family bargaining power changes with a narrowing gender gap using data from the PSID. The results suggest that a narrowing gender gap improved women's bargaining power in the family resulting in a shift of household work to their husbands. It also contributed to the increase in female labor market participation. If the gender gap is counterfactually eliminated, the proportion of women in full-time work rises throughout the lifecycle to match approximately that of men. The increase comes from women who cut down household chores and enter the labor market when they previously did not participate.
    Keywords: Life-cycle collective model; home production; lack of commitment; gender wage gap; bargaining effects; equal pay; simulated method of moments; PSID
    JEL: D12 D13 D91 J22
    Date: 2018–02
  20. By: Chaurasia, Aalok Ranjan
    Abstract: This paper attempts to identify patterns of female work participation in more than 578 thousand villages of India using the data mining approach. The analysis is based on an index of participation that has been developed for the purpose and takes into the consideration both the extent and the intensity of participation in productive activities. The analysis reveals that Indian villages can be grouped into 10 clusters with different level of female participation and with distinct village characteristics and there are distinct regional patterns. An interesting finding of the analysis is that participation of females in productive activities at the village level is relatively lower in villages higher level of female education as compared to villages with lower levels of female education. It appears that appropriate opportunities of participation for educate females are not available in the villages of India. Creating these opportunities at the village level is necessary not only for the transformation of village economy but also for women’s empowerment.
    Keywords: India, Villages, Females, Participation index, Data mining
    JEL: J21
    Date: 2018–01–20

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