nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2018‒05‒07
fourteen papers chosen by
Joseph Marchand
University of Alberta

  1. The Transformation of Manufacturing and the Decline in U.S. Employment By Kerwin Kofi Charles; Erik Hurst; Mariel Schwartz
  2. Short-term and long-term employment effects of minimum wage: evidence from Poland By Albinowski, Maciej
  3. Can public and private sanctions discipline politicians? Evidence from the French Parliament By Maxime Le Bihan; Benjamin Monnery
  4. The Farmer, the Blue-collar, and the Monk: Understanding Economic Development through Saturations of Demands and Non-Homothetic Productivity Gains By Elie Gray; André Grimaud; David Le Bris
  5. New Perspectives on the Decline of US Manufacturing Employment By Teresa C. Fort; Justin R. Pierce; Peter K. Schott
  6. Exposure to more female peers widens the gender gap in STEM participation By Anne Ardila Brenøe; Ulf Zölitz
  7. Trade and Minimum Wages in General Equilibrium: Theory and Evidence By Xue Bai; Arpita Chatterjee; Kala Krishna; Hong Ma
  8. Trust-based work time and the productivity effects of mobile information technologies in the workplace By Viete, Steffen; Erdsiek, Daniel
  9. Graded Return-to-Work as a Stepping Stone to Full Work Resumption By Lieke Kools; Pierre Koning
  10. Age and High-Growth Entrepreneurship By Pierre Azoulay; Benjamin Jones; J. Daniel Kim; Javier Miranda
  11. Capital-Skill Complementarity and the Emergence of Labor Emancipation By Ashraf, Quamrul; Cinnirella, Francesco; Galor, Oded; Gershman, Boris; Hornung, Erik
  12. Tax Enforcement and Tax Policy: Evidence on Taxpayer Responses to EITC Correspondence Audits By John Guyton; Kara Leibel; Dayanand S. Manoli; Ankur Patel; Mark Payne; Brenda Schafer
  13. Inward Greenfield FDI and Patterns of Job Polarisation By Sara Amoroso; Pietro Moncada-Paterno-Castello
  14. The effects of educational mismatch on inventor productivity. Evidence from Sweden, 2003-2010 By Igna, Ioana A.

  1. By: Kerwin Kofi Charles; Erik Hurst; Mariel Schwartz
    Abstract: Using data from a variety of sources, this paper comprehensively documents the dramatic changes in the manufacturing sector and the large decline in employment rates and hours worked among prime-aged Americans since 2000. We use cross-region variation to explore the link between declining manufacturing employment and labor market outcomes. We find that manufacturing decline in a local area in the 2000s had large and persistent negative effects on local employment rates, hours worked and wages. We also show that declining local manufacturing employment is related to rising local opioid use and deaths. These results suggest that some of the recent opioid epidemic is driven by demand factors in addition to increased opioid supply. We conclude the paper with a discussion of potential mediating factors associated with declining manufacturing labor demand including public and private transfer receipt, sectoral switching, and inter-region mobility. Overall, we conclude that the decline in manufacturing employment was a substantial cause of the decline in employment rates during the 2000s particularly for less educated prime age workers. Given the trends in both capital and skill deepening within this sector, we further conclude that many policies currently being discussed to promote the manufacturing sector will have only a modest labor market impact for less educated individuals.
    JEL: E24 J21 J23 R23
    Date: 2018–03
  2. By: Albinowski, Maciej (Ministry of Finance)
    Abstract: I use the Polish anonymized tax data for 24 million individuals observed in the period 2004-2016 to analyse the employment effects of minimum wage. In contrast to most studies, the longitudinal dimension of the dataset allows me to control for unobserved characteristics of employees and to assess the long-term effects of minimum wage hikes. I find that minimum wage has a moderate impact on job separations in the long-run, while the short-term effects are negligible. Another important result is that young workers earning around the level of minimum wage have a significantly lower probability of returning to employment after a job loss than their peers from higher part of the income distribution. This effect has been in place since 2008, when there was a substantial increase in the minimum wage.
    Keywords: minimum wage; unemployment; social exclusion
    JEL: J21 J38 J63
    Date: 2018–04–27
  3. By: Maxime Le Bihan (Univ Lyon, Université Lyon 2, GATE UMR 5824, F-69130 Ecully, France); Benjamin Monnery (EconomiX-CNRS, University Paris Nanterre)
    Abstract: This paper investigates the effects of sanctions on the behavior of deputies in the French National Assembly. In 2009, the Assembly introduced small monetary sanctions to prevent absenteeism in weekly standing committee meetings (held on wednesday mornings). Using a rich monthly panel dataset of parliamentary activity for the full 2007-2012 legislature, we study the reactions of deputies to (i) the mere eligibility to new sanctions, (ii) the actual experience of a salary cut, and (iii) the public exposure of sanctioned deputies in the media. First, our diff-in-diff estimates show very large disciplining effects of the policy in terms of committee attendance, and positive or null effects on other dimensions of parliamentary work. Second, exploiting the timing of exposure to actual sanctions (monthly salary cuts versus staggered media exposure), we find that deputies strongly increase their committee attendance both after the private experience of sanctions and after their public exposure. These results suggest that monetary and reputational incentives can effectively discipline politicians without crowding out intrinsic motivation.
    Keywords: political economy, political accountability, sanctions, reputation
    JEL: D72 D78 K42
    Date: 2018
  4. By: Elie Gray; André Grimaud; David Le Bris
    Abstract: To explain the process of development historically documented, we consider a model with three economic sectors (agriculture, manufacturing and services) characterized by different productivity gains and by saturation levels in the demands of agricultural and manufactured goods. Our parsimonious model captures within a single framework the process of development which is characterized by the structural changes in the workforce across sectors, variable growth rates (an initial “Malthusian regime” exhibiting slow growth, a fast growth regime after a takeoff, and a gradual slow down leading to a possible new stagnation) and the relative evolutions of prices across sectors. Reasonable calibration generates results quantitatively close to the observed empirical facts.
    Keywords: growth mode, structural change, unified growth, economic development, saturation of demands
    JEL: O10 O40 N10
    Date: 2018
  5. By: Teresa C. Fort; Justin R. Pierce; Peter K. Schott
    Abstract: We use relatively unexplored dimensions of US microdata to examine how US manufacturing employment has evolved across industries, firms, establishments, and regions. We show that these data provide support for both trade- and technology-based explanations of the overall decline of employment over this period, while also highlighting the difficulties of estimating an overall contribution for each mechanism. Toward that end, we discuss how further analysis of these trends might yield sharper insights.
    JEL: F1 J2 J6 O33
    Date: 2018–04
  6. By: Anne Ardila Brenøe; Ulf Zölitz
    Abstract: This paper investigates how high school gender composition affects students’ participation in STEM college studies. Using Danish administrative data, we exploit idiosyncratic within-school variation in gender composition. We find that having a larger proportion of female peers reduces women’s probability of enrolling in and graduating from STEM programs. Men’s STEM participation increases with more female peers present. In the long run, women exposed to more female peers earn less because they (1) are less likely to work in STEM occupations, and (2) have more children. Our findings show that the school peer environment has lasting effects on occupational sorting and the gender wage gap.
    Keywords: Gender, peer effects, STEM studies
    JEL: I21 J16 J31
    Date: 2018–04
  7. By: Xue Bai; Arpita Chatterjee; Kala Krishna; Hong Ma
    Abstract: Do minimum wages affect economic outcomes beyond low-skill employment? This paper develops a new model with heterogeneous firms under perfect competition in a Heckscher-Ohlin setting to show that a binding minimum wage raises product prices, encourages substitution away from labor, and creates unemployment. It reduces output and exports of the labor intensive good, despite higher prices and, less obviously, selection in the labor (capital) intensive sector becomes stricter (weaker). Exploiting rich regional variation in minimum wages across Chinese prefectures and using Chinese Customs data matched with firm level production data, we find robust evidence in support of causal effects of minimum wage consistent with our theoretical predictions.
    JEL: H0
    Date: 2018–03
  8. By: Viete, Steffen; Erdsiek, Daniel
    Abstract: We investigate whether the returns to mobile information and communication technology (ICT) in the workplace are contingent on granting employees autonomy over the structure of their workday through trust-based work time arrangements (TBW). Our regression analysis is based on a production function framework and exploits fine-grained firm survey data on ICT use and organisational practices for 1,045 service firms in Germany. We find empirical support for the argument that the returns to mobile ICT are higher when TBW allows for discretion over when, where and how to perform work-related tasks. The finding holds when we account for more limited forms of workplace flexibility, suggesting that the high degree of formal employee autonomy under TBW drives the complementarity between mobile ICT and organisational practices.
    Keywords: mobile information and communication technologies,ICT,trust-based work time,work organisation,complementarity,productivity,firm performance
    JEL: D22 L22 M10 O33
    Date: 2018
  9. By: Lieke Kools (Leiden University, Netspar); Pierre Koning (VU Amsterdam, IZA)
    Abstract: There is increasing evidence that graded return-to-work is an effective tool for the rehabilitation of sick-listed workers. Still, little is known on the optimal timing and level of grading in return-to-work trajectories, as well as the allocation of trajectories across worker types. To fill this gap, we analyze whether the effectiveness of graded return-to-work depends on the starting moment of the trajectory and the initial level of graded work resumption. We use administrative data from a Dutch private workplace reintegration provider. In order to correct for the selection bias inherent to the evaluation of activation strategies, we exploit the discretionary room of the case managers in setting up treatment plans. In correspondence with previous literature we find that graded return-to-work reduces sick spells with eighteen weeks within the first two years after reporting sick. However, the probability of work resumption after two years remains unchanged. Work resumption can be achieved faster when graded return-to-work is started earlier or at a higher rate of initial work resumption. These findings however do not hold for individuals who have problems related to mental health.
    Keywords: Activation; long-term sickness absence; graded return-to-work
    JEL: I18 C26
    Date: 2018–04–14
  10. By: Pierre Azoulay; Benjamin Jones; J. Daniel Kim; Javier Miranda
    Abstract: Many observers, and many investors, believe that young people are especially likely to produce the most successful new firms. We use administrative data at the U.S. Census Bureau to study the ages of founders of growth-oriented start-ups in the past decade. Our primary finding is that successful entrepreneurs are middle-aged, not young. The mean founder age for the 1 in 1,000 fastest growing new ventures is 45.0. The findings are broadly similar when considering high-technology sectors, entrepreneurial hubs, and successful firm exits. Prior experience in the specific industry predicts much greater rates of entrepreneurial success. These findings strongly reject common hypotheses that emphasize youth as a key trait of successful entrepreneurs.
    JEL: J24 L26 O51
    Date: 2018–04
  11. By: Ashraf, Quamrul; Cinnirella, Francesco; Galor, Oded; Gershman, Boris; Hornung, Erik
    Abstract: This paper advances a novel hypothesis regarding the historical roots of labor emancipation. It argues that the decline of coercive labor institutions in the industrial phase of development has been an inevitable by-product of the intensification of capital-skill complementarity in the production process. In light of the growing significance of skilled labor for fostering the return to physical capital, elites in society were induced to relinquish their historically profitable coercion of labor in favor of employing free skilled workers, thereby incentivizing the masses to engage in broad-based human capital acquisition, without fear of losing their skill premium to expropriation. In line with the proposed hypothesis, exploiting a plausibly exogenous source of variation in proto-industrialization across regions of nineteenth-century Prussia, the initial abundance of elite-owned physical capital that also came to be associated with skill-intensive industrialization is shown to have contributed to the subsequent intensity of de facto serf emancipation.
    Keywords: capital-skill complementarity; demand for human capital; emancipation; Industrialization; Labor coercion; nineteenth-century Prussia; physical capital accumulation; serfdom
    JEL: J24 J47 N13 N33 O14 O15 O43
    Date: 2018–03
  12. By: John Guyton; Kara Leibel; Dayanand S. Manoli; Ankur Patel; Mark Payne; Brenda Schafer
    Abstract: Each year, the United States Internal Revenue Service (IRS) sends notices to selected taxpayers who claim Earned Income Tax credit (EITC) benefits to request additional documentation to verify those claims. This paper uses administrative tax data to examine the impacts of these correspondence audits on taxpayer behavior. The quasi-experimental research design compares randomly-selected audited taxpayers to taxpayers with similar risk scores who were not selected for a correspondence audit. The results indicate that, in the years following an audit, there are decreases in the likelihoods of claiming EITC benefits and filing returns. Taxpayers with self-employment income at the time of audit appear likely to increase wage employment following a correspondence audit, while taxpayers with wage income at the time of audit appear likely to decrease labor force participation following disallowance of EITC benefits. The results for wage earners indicate labor force participation elasticities of roughly 0.03.
    JEL: H24 J20
    Date: 2018–03
  13. By: Sara Amoroso (European Commission - JRC); Pietro Moncada-Paterno-Castello (European Commission - JRC)
    Abstract: The unprecedented growth in FDI in the last decades has caused drastic changes in the labour markets of the host countries. The major part of FDI takes place in low tech industries, where the wages and skills are low, or in high tech, where they offer a wage premium for the highly skilled workers. This mechanism may increase the polarisation of employment into high-wage and low-wage jobs, at the expenses of middle-skill jobs. This paper looks at the effects of two types of FDI inflows, namely foreign investment in high-skill and low-skill activities, on skill polarization. We match data on greenfield FDI aggregated by country and sector with data on employment by occupational skill to investigate the extent to which differ types of greenfield FDI are responsible for skill polarisation.
    Keywords: Greenfield foreign direct investment, labour market, skills
    JEL: J21 J24
    Date: 2018–04
  14. By: Igna, Ioana A. (Department of Economics, University of Perugia)
    Abstract: This paper investigates the influence on inventor productivity of the imperfect occupational match, measured as the number of years of education in excess and in deficit to the required level (educational mismatch). The empirical model draws on a unique database that matches information about individual inventor characteristics, such as age, experience and gender, with patenting performance in Sweden over the period 2003-2010. The results suggest that over-educated (OE) inventors file a number of patents higher than inventors who are appropriately matched (RE), but perform poorly than well-matched inventors who hold a similar level of education. Conversely, under-educated (UE) inventors file a total number of patents lower than inventors who are well-matched (RE), but more than well-matched ones who hold the same level of education. These results conform to the hierarchical pattern of ORU model, well-documented in the literature relating the employees’ wages to educational mismatch (i.e. RE>OE>UE). We find that significant differences in returns to education across match and mismatch categories remain even after controlling for individual ability. Our findings are robust to controlling for differences between younger and older inventors, geographical areas and industry of work.
    Keywords: Inventor; Productivity; Educational mismatch; Patent
    JEL: J24
    Date: 2018–04–27

This nep-lma issue is ©2018 by Joseph Marchand. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.