nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2018‒04‒09
twenty-one 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 Jones, Damon; Marinescu, Ioana E.
  2. Income Volatility and the PSID: Past Research and New Results By Robert A. Moffitt; Sisi Zhang
  3. Do Dutch Dentists Extract Monopoly Rents? By Ketel, Nadine; Leuven, Edwin; Oosterbeek, Hessel; van der Klaauw, Bas
  4. Incentives Can Reduce Bias in Online Reviews By Marinescu, Ioana E.; Klein, Nadav; Chamberlain, Andrew; Smart, Morgan
  5. Concentration in US Labor Markets: Evidence From Online Vacancy Data By José A. Azar; Ioana Marinescu; Marshall I. Steinbaum; Bledi Taska
  6. How Do Gender Quotas Affect Hierarchical Relationships? Complementary Evidence from a Respresentative Survey and Labor Market Experiments By Edwin Ip; Andreas Leibbrandt; Joseph Vecci
  7. Is bilingual education desirable in multilingual countries? By Yuki, Kazuhiro
  8. Workers, Firms and Life-Cycle Wage Dynamics. By Paul Bingley; Massimiliano Gaetano Onorato
  9. Costs and Benets of Seasonal Migration : Evidence from India By Imbert, Clément; Papp, John
  10. How Much Does Others' Protection Matter? Employment Protection, Future Labour Market Prospects and Well-Being By Christine Lücke; Andreas Knabe
  11. Welfare Reform and the Labor Market By Marc K. Chan; Robert A. Moffitt
  12. The UK (and Western) Productivity Puzzle: Does Arthur Lewis Hold the Key? By Nicholas Oulton
  13. The Impact of Self-Selection on Performance By Kießling, Lukas; Radbruch, Jonas; Schaube, Sebastian
  14. Does Marital Status Affect How Firms Interpret Job Applicants' Un/Employment Histories? By Maurer-Fazio, Margaret; Wang, Sili
  15. Drivers of Participation Elasticities across Europe: Gender or Earner Role within the Household? By Bartels, Charlotte; Shupe, Cortnie
  16. Combinations of Different Length Contracts in a Multiperiod Model: Short, Medium and Long-term Contracts By Meg Adachi-Sato; Kazuya Kamiya
  17. "The Job Guarantee: Design, Jobs, and Implementation" By Pavlina R. Tcherneva
  18. Non-standard Employment in Sweden By Skedinger, Per
  19. Difference-in-Differences with Multiple Time Periods and an Application on the Minimum Wage and Employment By Brantly Callaway; Pedro H. C. Sant'Anna
  20. Using a Kinked Policy Rule to Estimate the Effect of Experience Rating on Disability Inflow By Kyyrä, Tomi; Paukkeri, Tuuli
  21. Agriculture, Food and Jobs in West Africa By Thomas Allen; Philipp Heinrigs; Inhoi Heo

  1. By: Jones, Damon (University of Chicago); Marinescu, Ioana E. (University of Pennsylvania)
    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.
    Keywords: unconditional cash transfer, universal basic income, labor supply, employment
    JEL: H24 I38 J21 J22
    Date: 2018–02
  2. By: Robert A. Moffitt; Sisi Zhang
    Abstract: The Panel Study of Income Dynamics (PSID) has made more contributions to the study of income volatility than any other data set in the U.S. Its record of research is truly seminal. In this paper we first present the reasons that the PSID has made such major contributions to research on the topic. Then we review the major papers that have used the PSID to study income volatility and we compare their results to those using other data sets. Lastly, we present new results for male earnings volatility through 2014. We find that both gross volatility and the component consisting of only the variance of transitory shocks have experienced a large increase during the Great Recession after following similar trends to those previously established showing upward trends from the 1970s to the 1980s followed by a stable period until the Recession.
    JEL: C23 J3
    Date: 2018–03
  3. By: Ketel, Nadine (University of Gothenburg); Leuven, Edwin (University of Oslo); Oosterbeek, Hessel (University of Amsterdam); van der Klaauw, Bas (Vrije Universiteit 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: J44 I18 I23 C36
    Date: 2018–02
  4. By: Marinescu, Ioana E. (University of Pennsylvania); Klein, Nadav (University of Chicago); Chamberlain, Andrew (Glassdoor, Inc.); Smart, Morgan (Glassdoor, Inc.)
    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.
    Keywords: employer reviews, bias, incentives
    JEL: J2 J28 L14 L86
    Date: 2018–02
  5. By: José A. Azar; Ioana Marinescu; Marshall I. Steinbaum; Bledi Taska
    Abstract: Using data on the near-universe of online US job vacancies collected by Burning Glass Technologies in 2016, we calculate labor market concentration using the Herfindahl-Hirschman index (HHI) for each commuting zone by 6-digit SOC occupation. The average market has an HHI of 3,953, or the equivalent of 2.5 recruiting employers. 54% of labor markets are highly concentrated (above 2,500 HHI) according to the DOJ/FTC guidelines. Highly concentrated markets account for 17% of employment. All plausible alternative market definitions show that more than 33% of markets are highly concentrated, suggesting that employers have market power in many US labor markets.
    JEL: J21 J42 K21
    Date: 2018–03
  6. By: Edwin Ip; Andreas Leibbrandt; Joseph Vecci
    Abstract: Gender quotas are frequently proposed to address persistent gender imbalances in managerial roles. However, it is unclear how quotas for female managers affect organizations and whether quotas improve or damage relationships between managers and their subordinates. We conduct a representative survey to study opinions on quotas for female managers and based upon design a novel set of experiments to investigate how quotas influence wage setting and effort provision. Our findings reveal that both opinions about gender quotas and workplace behavior crucially depend on the workplace environment. In our survey, we observe that approval for gender quotas is low if women are not disadvantaged in the manager selection process, regardless of whether there are gender differences in performance. Complementing this evidence, we observe in our experiments that quotas lead to lower effort levels and lower wages in such environments. By contrast, in environments in which women are disadvantaged in the selection process, we observe a higher approval of quotas as well as higher effort levels and higher wages. These findings are consistent with the concept of meritocracy and suggest that it is important to evaluate the existence of gender disadvantages in the workplace environment before implementing quotas.
    Keywords: gender quota, hierarchical relationships, fairness, meritocracy
    JEL: C92 J71 J30
    Date: 2018
  7. By: Yuki, Kazuhiro
    Abstract: Many developing countries are populated by multiple ethnic groups who use their own language in daily life and in local business, but have to use a common language in national business and in communications with other groups. In these countries, how much weights should be placed on teaching a local ethnic language and teaching a common language is a critical issue. A similar conflict arises in low-income countries in general between teaching skills that are "practical" and directly useful in local jobs, and teaching academic skills that are important in modern sector jobs. This paper develops a model to examine these questions theoretically. It is shown that balanced education of the two languages/skills is critical for skill development of those with limited wealth for education. It is also found that the balanced education brings higher earnings net of educational expenditure, only when a country has favorable conditions (TFP is reasonably high, and education, in particular, common language education [academic education] is reasonably e¤ective) and only for those with adequate wealth. Common-language-only (academic-only) education maximizes net earnings of those with little wealth, and, when the country's conditions are not good, maximizes net earnings of all. This implies that there exists a trade-off between educational and economic outcomes for those with little wealth, and, when the conditions are not good, the trade-off exists for everyone without adequate wealth. Policy implications derived from the results too are discussed.
    Keywords: language policy, bilingual education, vocational education, human capital, economic development
    JEL: I25 I28 J24 O15 O17
    Date: 2018–03–07
  8. By: Paul Bingley; Massimiliano Gaetano Onorato (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)
    Abstract: Studies of individual wage dynamics typically ignore firm heterogeneity, whereas decompositions of earnings into worker and firm effects abstract from life-cycle considerations. We study firm effects in individual wage dynamics using administrative data on the population of Italian employers and employees. We propose a novel identification strategy for firm-related wage components exploiting the informative content of the wage covariance structure of coworkers. Wage inequality increases three-fold over the working life; firm effects are predominant while young, but sorting of workers into firms becomes increasingly important, explaining the largest share of lifetime inequality. Static models that do not allow for life-cycle dynamics underestimate the importance of sorting and overstate match and firm effects.
    Keywords: Wage inequality, Wage dynamics, Co-workers’ covariance.
    JEL: J24 J31
    Date: 2018–03
  9. By: Imbert, Clément (University of Warwick,DepartmentofEconomics); Papp, John (R.I.C.E)
    Abstract: This paper provides new evidence on rural-to-urban migration decisions in developing countries. Using original survey data from rural India, we show that employment provision on local public works signicantly reduces seasonal migration. Workers who choose to participate in the program forgo much higher earnings outside of the village. Structural estimates imply that the utility cost of one day away may be as high as 60% of migration earnings. Up to half of this cost can be explained by higher living costs and income risk. The other half likely reects high non-monetary costs from living and working in the city.
    Keywords: Internal Migration ; Workfare Programs ; India ; Urban ; Rural
    JEL: H53 J22 J61 O15 R23
    Date: 2018
  10. By: Christine Lücke; Andreas Knabe
    Abstract: Employment protection legislation (EPL) is an important determinant of workers’ perceived future labour market prospects as well as their subjective well-being. Recent studies indicate that it is not only a worker’s own level of protection, but also the employment protection of other workers that matters for individual prospects and well-being. We contribute to this literature by examining how such cross-effects on well-being are mediated by a workers’ perceived risk of job loss and future employability. We apply a structural model to data from the Third Wave of the European Quality of Life Survey, combined with summary indices from the OECD Employment Protection Database. Our results are indicative of cross-effects. Stricter protection for permanent workers (stricter regulation on the length and number of renewals of fixed-term contracts) is associated with lower (higher) perceived employability for both permanent workers and fixed-term workers. In addition, stricter protection for permanent workers is positively related to fixed-term workers’ perceived risk of job loss. We do find some evidence that EPL has significant indirect (cross-)effects on life satisfaction via the mediators. There are no indications for direct, non-mediated effects.
    Keywords: employment protection, employability, risk of job loss, life satisfaction
    JEL: J28 J68
    Date: 2018
  11. By: Marc K. Chan; Robert A. Moffitt
    Abstract: This paper reviews the basic theoretical models that are appropriate for analyzing different types of welfare reforms, and the related empirical literature. We first present the canonical labor supply model of a classical welfare program, and then extend this basic framework to include in-kind transfers, incomplete take-up, human capital, preference persistence, and borrowing and saving. The empirical literature on these models is presented. The negative income tax, earnings subsidies, US welfare reforms with features that differ from those in other countries, and child care reforms are then surveyed both in terms of the theoretical model and the empirical literature surrounding each.
    JEL: I3 J22
    Date: 2018–03
  12. By: Nicholas Oulton (Centre for Macroeconomics (CFM); National Institute of Economic and Social Research; Economic Statistics Centre of Excellence)
    Abstract: I propose a new explanation for the UK productivity puzzle. I graft the Lewis (1954) model onto a standard Solow growth model. What I call the neo-Lewis model is identical to the Solow model in good times. But in bad times foreign demand for a country’s exports is constrained below potential supply. This makes labour productivity growth depend negatively on the growth of labour input. I also argue that the neo-Lewis model can explain the fall in TFP growth, in the UK and elsewhere, after 2007. The predictions of the neo-Lewis model are tested on data for 23 advanced countries and also on a larger sample of 52 countries and find support.
    Keywords: Productivity, Slowdown, TFP, Capital, Lewis, Immigration
    JEL: E24 O41 O47 J24 F43 F44
    Date: 2018–03
  13. By: Kießling, Lukas (University of Bonn); Radbruch, Jonas (IZA); Schaube, Sebastian (University of Bonn)
    Abstract: In many natural environments, carefully chosen peers influence individual behavior. In this paper, we examine how self-selected peers affect performance in contrast to randomly assigned ones. We conduct a field experiment in physical education classes at secondary schools. Students participate in a running task twice: first, the students run alone, then with a peer. Before the second run,we elicit preferences for peers. We experimentally vary the matching in the second run and form pairs either randomly or based on elicited preferences. Self-selected peers improve individual performance by .14-.15 SD relative to randomly assigned peers. While self-selection leads to more social ties and lower performance differences within pairs, this altered peer composition does not explain performance improvements. Rather, we provide evidence that self-selection has a direct effect on performance and provide several markers that the social interaction has changed.
    Keywords: field experiment, self-selection, peer effects, social comparison, peer assignment
    JEL: C93 D01 I20 J24 L23
    Date: 2018–02
  14. By: Maurer-Fazio, Margaret (Bates College); Wang, Sili (Columbia University)
    Abstract: This field experiment explores whether single and married female job candidates' un/employment histories differentially affect their chances of obtaining interviews through China's Internet job boards. It also considers whether firms' discrimination against, and/or preference for, candidates who are un/employed vary with the duration of unemployment spells. Resumes of fictitious applicants are carefully crafted in terms of realistic work histories and educational backgrounds. Candidates' experiences of unemployment and declaration of marital status are carefully controlled. Over 7000 applications are submitted to real job postings. Callbacks are tracked and recorded. Linear probability models are employed to assess the effects of particular resume characteristics in terms of obtaining interviews. The marital status of female candidates affects how recruiters screen their applications. While current spells of unemployment, whether short- or long-term, significantly reduce married women's chances of obtaining job interviews in the Chinese context, they strongly increase the likelihood that single women will be invited for interviews. Chinese firms appear to "forgive" long-term gaps in women's employment histories as long as those gaps are followed by subsequent employment. This paper is the first to explore how marital status affects the ways that firms, when hiring, interpret spells of unemployment in candidates' work histories. It is also the first to explore the effects of both marital status and unemployment spells in hiring in the context of China's dynamic Internet job board labor market.
    Keywords: field experiments, unemployment, discrimination in employment, hiring, chinese labor markets, internet job boards, résumé correspondence audit study, marital status
    JEL: C93 J71 J23 O53
    Date: 2018–02
  15. By: Bartels, Charlotte (DIW Berlin); Shupe, Cortnie (DIW Berlin)
    Abstract: We compute participation tax rates across the EU and find that work disincentives inherent in tax-benefit systems largely depend on household composition and the individual's earner role within the household. We then estimate participation elasticities using an IV Group estimator that enables us to investigate the responsiveness of individuals to work incentives. We contribute to the literature on heterogeneous elasticities by providing estimates for different socioeconomic groups by country, gender and earner role within the household. Our results show an average elasticity of 0.08 for men and of 0.14 for women as well as a high degree of heterogeneity across countries. The commonly cited difference in elasticities between men and women stems predominantly from the earner role of the individual within the household and nearly disappears once we control for this factor.
    Keywords: participation elasticities, labor supply, taxation, cross-country comparisons
    JEL: H24 H31 J22 J65
    Date: 2018–02
  16. By: Meg Adachi-Sato (School of Economics, Finance and Marketing, Royal Melbourne Institute of Technology University); Kazuya Kamiya (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: This paper develops a dynamic contracting model with verifi able and unverifi able outputs. We prove the following properties of equilibrium wage contracts, which are new to the literature: (i) combinations of dfferent length contracts can become equilibria, (ii) medium-term contracts can be included in the combinations, and (iii) equilibrium wage pro le dffers by the way different length contracts are combined. We also investigate a general mechanism, which includes menu and option contracts, and show that no mechanism can perform better than simple wage contracts in our environment. In short, above properties remain valid under general mechanisms.
    Keywords: Dffering length contracts, Unverifi able outputs, Unveri fiable investments, Unveri fiable ability, Holdup problems
    JEL: D86 J41 J31
    Date: 2018–03
  17. By: Pavlina R. Tcherneva
    Abstract: The job guarantee (JG) is a public option for jobs. It is a permanent, federally funded, and locally administered program that supplies voluntary employment opportunities on demand for all who are ready and willing to work at a living wage. While it is first and foremost a jobs program, it has the potential to be transformative by advancing the public purpose and improving working conditions, people’s everyday lives, and the economy as a whole. This working paper provides a blueprint for operationalizing the proposal. It addresses frequently asked questions and common concerns. It begins by outlining some of the core propositions in the existing literature that have motivated the JG proposal. These propositions suggest specific design and implementation features. (Some questions are answered in greater detail in appendix III). The paper presents the core objectives and expected benefits of the program, and suggests an institutional structure, funding mechanism, and project design and administration.
    Keywords: Job Guarantee; Unemployment; Full Employment; Living Wage; Policy Design
    JEL: D6 E2 E6 H1 H3 H4 H5 J2 J3 J4
    Date: 2018–03
  18. By: Skedinger, Per (Research Institute of Industrial Economics (IFN))
    Abstract: In Sweden, as in many other countries, marginal groups tend to be overrepresented in non-standard employment. A decomposition of the employment rate of full-time workers on permanent contracts reveals that non-standard employment contributes to a substantially weaker labour market attachment for females and the foreign born than suggested by conventional employment figures alone. Our econometric analysis shows that the negative wage premia associated with fixed-term employment are considerably smaller in Sweden, both for natives and foreign born, than those that have been found for other countries. This may be due to a highly compressed wage structure and extensive coverage of collective bargaining in Sweden. On the whole, the type of fixed-term contract seems not to matter for the estimated wage premia.
    Keywords: Fixed-term employment; Part-time employment; Labour market attachment; Wage differentials
    JEL: J21 J31
    Date: 2018–03–27
  19. By: Brantly Callaway (Department of Economics, Temple University); Pedro H. C. Sant'Anna (Department of Economics, Vanderbilt University)
    Abstract: Difference-in-Differences (DID) is one of the most important and popular designs for eval- uating causal effects of policy changes. In its standard format, there are two time periods and two groups: in the first period no one is treated, and in the second period a “treatment group†becomes treated, whereas a “control group†remains untreated. However, many em- pirical applications of the DID design have more than two periods and variation in treatment timing. In this article, we consider identification and estimation of treatment effect param- eters using DID with (i) multiple time periods, (ii) variation in treatment timing, and (iii) when the “parallel trends assumption†holds potentially only after conditioning on observed covariates. We propose a simple two-step estimation strategy, establish the asymptotic prop- erties of the proposed estimators, and prove the validity of a computationally convenient bootstrap procedure. Furthermore we propose a semiparametric data-driven testing proce- dure to assess the credibility of the DID design in our context. Finally, we analyze the effect of the minimum wage on teen employment from 2001-2007. By using our proposed methods we confront the challenges related to variation in the timing of the state-level minimum wage policy changes. Open-source software is available for implementing the proposed methods.
    Keywords: Difference-in-Differences, Multiple Periods, Variation in Treatment Timing, Pre- Testing, Minimum Wage
    JEL: C14 C21 C23 J23 J38
    Date: 2018–03
  20. By: Kyyrä, Tomi; Paukkeri, Tuuli
    Abstract: We study whether the experience rating of employers’ disability insurance premiums affects the inflow to disability benefits in Finland. To identify the causal effect of experience rating, we exploit “kinks†in the rule that specifies the degree of experience rating as a function of firm size. Using comprehensive matched employer-employee panel data, we estimate the effects of experience rating on the inflow to sickness and disability benefits. Our results suggest that experience rating has reduced the disability inflow among men under age 50. For other groups we find no significant effects, yet we cannot rule out relatively small effects.
    Keywords: experience rating, disability insurance, early retirement, Social security, taxation and inequality, J14, J26, H32,
    Date: 2018
  21. By: Thomas Allen; Philipp Heinrigs; Inhoi Heo
    Abstract: The food economy is the biggest employer in West Africa accounting for 66% of total employment. While the majority of food economy jobs are in agriculture, off-farm employment in food-related manufacturing and service activities is increasing as the food economy adapts to rapid population growth, urbanisation and rising incomes. Given the importance of the food economy in generating employment, its current structure and projected changes have major implications for the design of jobs strategies. This paper quantifies and describes the structure of employment in the food economy across four broad segments of activities: agriculture, processing, marketing and food-away-from home. It also examines some of the emerging spatial implications, in particular rural-urban linkages and rural employment diversification, which are related to the transformations that are reshaping this sector. Finally, it looks at policy considerations for designing targeted employment strategies that leverage the links between agricultural productivity, off-farm employment and rural-urban areas and ensure inclusiveness, particularly for youth and women.
    Keywords: employment, food system, value chains, women, youth
    JEL: J21 J43 O11 Q13 Q18
    Date: 2018–04–05

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