nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2018‒04‒02
fourteen papers chosen by
Joseph Marchand
University of Alberta

  1. Incentives Can Reduce Bias in Online Reviews By Ioana Marinescu; Nadav Klein; Andrew Chamberlain; Morgan Smart
  2. The Origins of the Division of Labor in Pre-modern Times By Depetris-Chauvin, Emilio; Özak, Ömer
  3. Distributional Effects of Welfare Reform for Young Adults: An Unconditional Quantile Regression Approach By Hernaes, Øystein
  4. Money vs. Time: Family Income, Maternal Labor Supply, and Child Development By Francesco Agostinelli; Giuseppe Sorrenti
  5. Migration in China: To Work or to Wed? By Dupuy, Arnaud
  6. Social Subsidies and Marketization – the Role of Gender and Skill By Robert Duval-Hernández; Lei Fang; L. Rachel Ngai
  7. Changing the Structure of Minimum Wages: Firm Adjustment and Wage Spillovers By Giulia Giupponi; Stephen Machin
  8. Investment in human capital in post-Soviet countries: Why are firms not training more? By Kupets, Olga
  9. The Effect of R&D Growth on Employment and Self-Employment in Local Labour Markets By Tommaso Ciarli; Alberto Marzucchi; Edgar Salgado; Maria Savona
  10. Pension Shocks and Wages By Pawel Adrjan; Brian Bell
  11. Fertility and the Puzzle of Female Employment in the Middle East By Majbouri, Mahdi
  12. Working Hours, Work Identity and Subjective Wellbeing By Mark L. Bryan; Alita Nandi
  13. Gender & Collaboration By Ductor, L; Goyal, S.; Prummer, A.
  14. The Long-Run Dynamics of the Labour Share in Japan By Fukao, Kyoji; Perugini, Cristiano

  1. By: Ioana Marinescu; Nadav Klein; Andrew Chamberlain; Morgan Smart
    Abstract: Online reviews are a powerful means of propagating the reputations of products, services, and even employers. However, existing research suggests that online reviews often suffer from selection bias—people with extreme opinions are more motivated to share them than people with moderate opinions, resulting in biased distributions of reviews. Providing incentives for reviewing has the potential to reduce this selection bias, because incentives can mitigate the motivational deficit of people who hold moderate opinions. Using data from one of the leading employer review companies, Glassdoor, we show that voluntary reviews have a different distribution from incentivized reviews. The likely bias in the distribution of voluntary reviews can affect workers’ choice of employers, because it changes the ranking of industries by average employee satisfaction. Because observational data from Glassdoor are not able to provide a measure of the true distribution of employer reviews, we complement our investigation with a randomized controlled experiment on MTurk. We find that when participants’ decision to review their employer is voluntary, the resulting distribution of reviews differs from the distribution of forced reviews. Moreover, providing relatively high monetary rewards or a pro-social cue as incentives for reviewing reduces this bias. We conclude that while voluntary employer reviews often suffer from selection bias, incentives can significantly reduce bias and help workers make more informed employer choices.
    JEL: J2 J28 L14 L86
    Date: 2018–03
  2. By: Depetris-Chauvin, Emilio; Özak, Ömer
    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: Comparative Development; Division of Labor; Economic Specialization; Intra-Ethnic Diversity; Cultural Diversity; Population Diversity; Genetic Diversity; Linguistic Diversity
    JEL: D29 D74 E40 F10 F14 J24 N10 O10 O11 O12 O40 O43 O44 Z10 Z13
    Date: 2018–02–14
  3. By: Hernaes, Øystein (Ragnar Frisch Centre for Economic Research)
    Abstract: The paper evaluates the distributional effects on earnings and income of requiring young welfare recipients to fulfill conditions related to work and activation. It exploits within-social insurance office variation in policy arising from a geographically staggered reform in Norway. The reform reduced welfare uptake and for women had large, positive effects in the lower part of the earnings distribution. The effect on the distribution of total income is also positive, thus gains in earnings more than offset reduced welfare benefits. Fewer welfare payments and smaller caseloads make the policy highly cost-effective.
    Keywords: social assistance, activation, conditionality, welfare reform, labor supply, quantile treatment effects
    JEL: C21 D31 H55 I38 J18 J22
    Date: 2018–02
  4. By: Francesco Agostinelli (Arizona State University); Giuseppe Sorrenti (University of Zurich)
    Abstract: We study the effect of family income and maternal hours worked on child development. Our instrumental variable analysis suggests different results for cognitive and behavioral development. An additional $1,000 in family income improves cognitive development by 4.4 percent of a standard deviation but has no effect on behavioral development. A yearly increase of 100 work hours negatively affects both outcomes by approximately 6 percent of a standard deviation. The quality of parental investment matters and the substitution effect (less parental time) dominates the income effect (higher earnings) when the after-tax hourly wage is below $13.50. Results call for consideration of child care and minimum wage policies that foster both maternal employment and child development.
    Keywords: Child Development, family income, maternal labor supply
    JEL: H24 H31 I21 I38 J13 J22
    Date: 2018–03
  5. By: Dupuy, Arnaud (University of Luxembourg)
    Abstract: This paper develops a model encompassing both Becker's matching model, and Tinbergen-Rosen's hedonic model. We study its properties and provide identification and estimation strategies. Using data on internal migration in China, we estimate the model and compute equilibrium under counter-factual alternatives to decompose the migration surplus. Our findings reveal that about 1/5 of the migration surplus of migrant women is generated in the marriage market and 3/5 in the labor market. We also find that the welfare of urban men married with a migrant wife would have been 10% lower had their migrant wives not entered the urban marriage market.
    Keywords: sorting in many local markets, marriage market, hedonic and matching models
    JEL: D3 J21 J23 J31
    Date: 2018–02
  6. By: Robert Duval-Hernández; Lei Fang; L. Rachel Ngai
    Abstract: This paper decomposes the differences in aggregate market hours between US and Europe across gender-skill groups and finds that low-skilled women are the biggest contributors to aggregate differences, with the exception of Nordic countries. We develop a model to account for the gender-skill differences in market hours across countries. Taxes, which reduce market hours in favor of leisure and home production, explain a substantial fraction of the differences in hours for Southern and Central European countries. Subsidized family care, which reduces home hours of women in favor of market hours, explains the different pattern of hours in Nordic countries. Low-skilled women are more responsive to policy because of their comparative advantage in producing home services and the corresponding market substitutes.
    Keywords: Cross-country Differences in Market Hours, Home Production, Subsidies on Family Care
    JEL: E24 E62 J22
    Date: 2018
  7. By: Giulia Giupponi; Stephen Machin
    Abstract: This paper analyses the economic impact of a significant change to the structure of a minimum wage setting policy. The context is the United Kingdom where government mandated an unexpected change in the structure of minimum wages and their setting in 2016 by introducing a new minimum wage - the National Living Wage (NLW) - for workers aged 25 and over. The new NLW rate was significantly higher than the minimum wage for those under age 25. The analysis studies the consequences of this change in a sector containing many low wage workers, the care homes industry. The new minimum wage structure and associated higher minimum wage for those aged 25 and above significantly affected wages, but at the same time with little evidence of adverse employment effects, nor firm closure. Rather the margin of adjustment used to offset the sizable wage cost shock was a significant deterioration of the quality of care services. There is also strong evidence of wage spillovers as younger workers wages rose in tandem with the higher adult minimum wage, but with no impact on their employment. Based on further empirical tests, employer preference for fairness seems to offer the most plausible explanation for these results.
    Keywords: minimum wage structure, employment, wage spillovers
    JEL: J23 J31
    Date: 2018–03
  8. By: Kupets, Olga
    Abstract: Using STEP employer surveys data in Armenia, Azerbaijan, Georgia and Ukraine, this paper investigates how innovation, openness to international business contacts, use of computer at work and skills shortages affect employer-provided training in post-Soviet countries. It examines different types of training (less formal on-the-job training along with more formal in-house and external training) provided to white-collar or blue-collar workers. After controlling for a range of firm characteristics, we find a positive link between technological innovation and intensity of training of all types provided to white-collar workers that points to the technology-skills complementarity. Besides, the level of computer use at work is a significant determinant of the incidence and intensity of external training provided to white-collar and blue-collar workers.
    Keywords: employer-provided training, innovation, computerization, STEP employer survey, transition countries
    JEL: J24 M53 P36
    Date: 2018–03
  9. By: Tommaso Ciarli (SPRU, University of Sussex); Alberto Marzucchi (SPRU, University of Sussex); Edgar Salgado (SPRU, University of Sussex); Maria Savona (SPRU, University of Sussex)
    Abstract: The paper investigates the effects of firms’ investment in Research and Development (R&D) on employment dynamics in the British local labour markets (Travel to Work Areas). We distinguish between local areas characterised by the initial level of routinised employment of the workforce. We implement a instrumenting strategy to address endogeneity issues in the relation between innovation and employment. Our results suggest that increases in R&D investments mainly affect routinised areas, where the employment created is low skilled, concentrated in non-tradable sectors (like transport, construction) and services. A significant share of the jobs created is self-employment, concentrated in the 25-34 age cohort. We qualify the effect of R&D on self-employment by looking at local firms’ dynamics, which suggest that the increase in self-employment is reflected in a higher number of micro-firms. Rather, in non-routinized areas, R&D results in the expected increase in the demand of high-skilled workers and a reduced demand of low-skill employment.
    Keywords: Innovation; R&D investments; Employment; Self-employment; Local Labour Markets; Routinisation; Skills
    JEL: O33 J24 D3
    Date: 2018–03
  10. By: Pawel Adrjan; Brian Bell
    Abstract: How do wages respond to firm-level idiosyncratic cost shocks? We create a unique dataset that links longitudinal data on workers' compensation to the unexpected costs that UK firms have been forced to pay to plug large deficits in their legacy defined benefit pension plans. We show that firms are able to share the burden of such costs when a significant share of their workers are current or former members of the plan. We also investigate how compensation responds to the closure of defined benefit plans to future benefit accrual. We find that firms are able to use such closures to effectively reduce total compensation of workers who are plan members. These results point to significant frictions in the labour market, which we show are a direct result of the pension arrangement that workers have. Closing schemes has an implicit cost for firms since it reduces the frictions that workers face.
    Keywords: wages, pensions, frictions
    JEL: J31 J32 G32
    Date: 2018–03
  11. By: Majbouri, Mahdi (Babson College)
    Abstract: Female labor force participation rates across the Middle East and North Africa (MENA) region have remained low for over four decades, despite the fact that in the same period, women's education rapidly increased and fertility rates substantially decreased. This surprising phenomenon has remained a puzzle. This study tries to provide a better understanding of this puzzle by testing whether there is a causal impact of the number of children on mother's labor supply. It uses twins at first birth as an instrumental variable to estimate the causal impact of fertility on participation of mothers in the labor market, free of bias. It finds that having more children does not reduce women's employment. The paper discusses the implications of this interesting result in understanding the puzzle of female participation in MENA and in designing policies to increase women's work.
    Keywords: female labor force participation, fertility, instrumental variable, Middle East and North Africa, twins
    JEL: J13 J22 O53
    Date: 2018–02
  12. By: Mark L. Bryan (Department of Economics, University of Sheffield); Alita Nandi (Institute for Social and Economic Research, University of Essex)
    Abstract: Following theories of social and economic identity, we use representative data containing measures of personal identity to investigate the interplay of work identity and hours of work in determining subjective wellbeing (job satisfaction, job-related anxiety and depression, and life satisfaction). We find that work identity helps to explain wellbeing in two ways. First, for a given level of hours, having a stronger work identity is associated with higher wellbeing on most measures. Second, a strong work identity reduces the adverse effects of long hours working on some measures, notably job satisfaction and anxiety (for women) and on life satisfaction (for men). The associations of working hours and wellbeing confirm that work is a source of disutility, but these relationships are generally strengthened when controlling for identity – implying that individuals sort into jobs with work hours that match their identities. The effects of both work hours and identity are substantial relative to benchmark effects of health on wellbeing. Our work helps to rationalise recent findings in the literature on the effects of work hours and work hour preferences on wellbeing.
    Keywords: identity, wellbeing, working hours, job satisfaction, anxiety, depression
    JEL: J22 J28 J29 I31
    Date: 2018–02
  13. By: Ductor, L; Goyal, S.; Prummer, A.
    Abstract: The fraction of women in economics has grown significantly over the last forty years. In spite of this, the differences in research output between men and women are large and persistent. These output differences are related to differences in the co-authorship networks of men and women: women have fewer collaborators, collaborate more often with the same co-authors, and a higher fraction of their co-authors are co-authors of each other. Moreover, women collaborate more and do so with more senior co-authors. Standard models of homophily and discrimination cannot account for these differences. We discuss how differences in risk aversion and an adverse environment for women can explain them.
    Keywords: Gender Inequality, Network Formation, Discrimination, Homophily, Risk Taking.
    JEL: D8 D85 J7 J16 O30
    Date: 2018–03–13
  14. By: Fukao, Kyoji; Perugini, Cristiano
    Abstract: In this paper we investigate the long-term drivers of the share of output accruing to labour in Japan. We contribute to this strand of literature by extending the theoretical SK schedule model proposed by Bentotila and Saint-Paul (2003) to multiple inputs and by providing new empirical evidence on Japan at detailed sector-level over the period 1970–2012. The econometric analysis is carried out by means of an error correction model (ECM) that allows testing the existence of long-run relationships while accounting for cross-sectional heterogeneities and dependence. Results indicate that the macro-sector of low-knowledge-intensive market services was mainly responsible for the decline in the labour share experienced by the Japanese economy in the four decades considered. This was related to technological change and, more importantly, to labour market factors - such as the role of unions and a high substitutability of regular with non-regular workers - and product market structural features. These drivers could have significantly contributed to reducing the bargaining power of labour vis-à-vis employers and, consequently, the labour share.
    Keywords: labour share, non-regular work, markup, Japan
    JEL: E25 J30 L11 O14
    Date: 2018–03

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