nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2018‒05‒21
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. The Political Economy of Automation: Occupational Automatability and Preferences for Redistribution By van Hoorn, Andre
  2. The greening of jobs in Germany : First evidence from a text mining based index and employment register data By Janser, Markus
  3. Below the Aggregate: A Sectoral Account of the UK Productivity Puzzle By Rebecca Riley; Ana Rincon-Aznar; Lea Samek
  4. The Impact of Minimum Wages on Well-Being: Evidence from a Quasi-Experiment in Germany By Filiz Gülal; Adam Ayaita
  5. Specialization Matters in the Firm Size-Wage Gap By Maria Molina-Domene
  6. Countercyclical School Attainment and Intergenerational Mobility By Andreu Arenas, Clément Malgouyres
  7. Women Leaving the Playpen: The Emancipating Role of Female Suffrage By Michaela Slotwinski; Alois Stutzer
  8. The Impact of Sickness Absenteeism on Productivity: New Evidence from Belgian Matched Panel Data By Elena Grinza; Francois Rycx
  9. Asymmetric Business-Cycle Risk and Social Insurance By Christopher Busch; David Domeij; Fatih Guvenen; Rocio Madera
  10. Jobs for the Heartland: Place-Based Policies in 21st Century America By Benjamin A. Austin; Edward L. Glaeser; Lawrence H. Summers
  11. Understanding the long run dynamics of French unemployment and wages By Michel-Pierre Chélini; Georges Prat
  12. Seasonal Liquidity, Rural Labor Markets and Agricultural Production By Günther Fink; B. Kelsey Jack; Felix Masiye
  13. Do Opioids Help Injured Workers Recover and Get Back to Work? The Impact of Opioid Prescriptions on Duration of Temporary Disability By Bogdan Savych; David Neumark; Randall Lea

  1. By: van Hoorn, Andre
    Abstract: Although the importance of technological change for increasing prosperity is undisputed and economists typically deem it unlikely that labor-saving technology causes long-term employment losses, people’s anxiety about automation and its distributive consequences can be an important shaper of economic and social policies. This paper considers the political economy of automation, proposing that individuals in occupations that are more at risk of losing their job to automation have stronger preferences for government redistribution. Analysis of cross-national individual-level survey data from three different sources confirms the effect of occupational automation risk on redistribution preferences. The same effect is found when considering indirect exposure to automation risk through the occupation of one’s spouse or partner and using the automatability of individuals’ own occupation as a generic control variable. In addition, the effect is not limited to the preference for redistribution in general but extends to a preference for a specific policy with redistributive consequences, namely the preference for government support of declining industries.
    Keywords: Preferences for redistribution; automation; social insurance; robotization; task content; welfare state; routineness
    JEL: J23 J24 J31 O14
    Date: 2018–05–02
  2. By: Janser, Markus (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "The transition towards a greener, less carbon-intensive economy leads to a growing demand for green products, services and business processes. In theory, this trend should lead to a greening of jobs, i.e. to an increasing share of environmentally friendly requirements within occupations (greening of occupations) and to a rising labor demand for employees in these occupations (greening of employment). Due to a lack of measures, there is no empirical evidence on the relationship between the greening of jobs and the real labor market development so far. To fill this gap, the paper measures, describes and analyzes the greening of jobs and its associations with employment and wage growth. The cornerstone of this paper is the new task-based 'greenness-of-jobs index' (goji). The goji is derived by performing text mining algorithms on yearly data from 2006 and 2011 to 2016 of BERUFENET, an occupational data base provided by the German Federal Employment Agency. The descriptive results of the paper show that there is a notable greening of jobs which varies strongly between sectors and regions. The econometric analysis is based on employment register data from 2011 to 2016. The estimation results reveal that the overall level of greenness of occupations is positively correlated with employment growth. Furthermore, the increase of greenness is related to a slight increase in wage growth." (Author's abstract, IAB-Doku) ((en)) Additional Information Text mining and descriptives
    JEL: J23 J24 O33 Q55 R23
    Date: 2018–05–15
  3. By: Rebecca Riley; Ana Rincon-Aznar; Lea Samek
    Abstract: We analyse new industry-level data to re-examine the UK productivity puzzle. We carry out an accounting exercise that allows us to distinguish general macroeconomic patterns from sector trends and idiosyncrasies, providing a roadmap for anyone interested in explaining the puzzle. We focus on the UK market sector. Average annual labour productivity growth was 2.5 percentage points lower during the period 2011-2015 than in the decade before the financial crisis that began in 2007. We find that several years on from the financial crisis stagnation remains widespread across detailed industry divisions, pointing to economy-wide explanations for the puzzle. With some exceptions, labour productivity growth lost most momentum in those industries that experienced strong growth before the crisis. Three fifths of the gap is accounted for by a few industries that together account for less than one fifth of market sector value added. In terms of why we observe continued stagnation, we find that capital shallowing has become increasingly important in explaining the labour productivity growth gap in service sectors, as the buoyancy of the UK labour market has not been sufficiently matched by investment, although our figures suggest that the majority of the productivity gap is accounted for by a TFP gap. The collapse in labour productivity growth has been more pronounced in the UK than elsewhere, but the broad sector patterns of productivity stagnation are in many respects similar across other advanced economies, emphasising the importance of global explanations for the puzzle. UK industries that saw the biggest reductions in productivity growth tended to be internationally competitive and more dependent on global demand than other industries. They were also industries where productivity is difficult to measure.
    Keywords: productivity, competitiveness, sector studies
    JEL: E22 E23 L60 L70 L80 L90 O47
    Date: 2018–05
  4. By: Filiz Gülal; Adam Ayaita
    Abstract: To analyze well-being effects of minimum wages, the introduction of a minimum wage in Germany in 2015 is used as a quasi-experiment. Based on the representative SOEP data, a difference-in-differences design compares the development of life, job, and pay satisfaction between those who are affected by the reform according to their pre-intervention wages and those who already have marginally higher wages so that they are not directly affected. The results show that the minimum wage has significantly positive effects on all considered dimensions of well-being, on average, with an increase in life satisfaction by 0.10 standard deviations (0.15 points on a ten-point Likert scale). Positive effects last at least until one year after the reform. Life satisfaction tends to increase particularly in the region that is overall economically less developed (East Germany). The results hold if those who are not employed anymore after the reform are included in the analysis.
    Keywords: Minimum wage, natural experiments, well-being, satisfaction
    JEL: I31 J28 J30 J31 J38 J60
    Date: 2018
  5. By: Maria Molina-Domene
    Abstract: This study applies the O-ring theory to explain the firm-size wage premium. It focuses on the joint role of the division of labor and employee characteristics. Including the firm heterogeneity of occupations in a standard wage regression with individual fixed effect shrinks the size coefficient by a third. Labor productivity follows a similar pattern as wages. The intuition is that individuals who work for large firms focus on a limited number of tasks become more efficient and productive, and earn higher wages. Additional predictions originating from the labor specialization hypothesis receive support from the data.
    Keywords: firm size-wage gap, specialization, division of labor
    JEL: J31 L23
    Date: 2018–05
  6. By: Andreu Arenas, Clément Malgouyres
    Abstract: We study how economic conditions at the time of choosing post-compulsory education affect intergenerational mobility. Exploiting local variation in birthplace unemployment rate at age 16 across 23 cohorts in France, we find that cohorts deciding on post-compulsory education in bad economic times are more educationally intergenerationally mobile – their level of educational attainment is less related to having a white-collar father. These cohorts are also more occupationally intergenerationally mobile; and a large fraction of this effect is explained by business cycle-induced differences in educational attainment. Results are robust to accounting for differential spatial mobility between birth and age 16 by parental occupation. Finally, we provide additional evidence that high local unemployment at age 16 increases the relative school enrollment rate of children of blue collar workers the year after – at age 17.
    Keywords: Intergenerational mobility, business cycle, human capital, occupational choice
    JEL: J24 I21 E24
    Date: 2018
  7. By: Michaela Slotwinski; Alois Stutzer
    Abstract: The role of women in Western societies changed dramatically in the 20th century. We study how political empowerment affected women’s emancipation as reflected in their life choices like marital decisions and labor market participation. The staggered introduction of female suffrage in Swiss states allows us to exploit the variation in the age women experienced enfranchisement to estimate the differences in life choices between women who were socialized in a world where women had a formal say in politics and those who were mainly socialized before. Our empirical findings document that political empowerment strongly increased female labor force participation, weakened marital bonds and motivated human capital investment. Moreover, being socialized with female suffrage increased long-term voting participation and perceptions of control. Our evidence suggests that changes in formal political institutions hold the power to change norms.
    Keywords: female suffrage, voting rights, institutions, norms, female labor force participation, marital choices, voting participation, efficacy
    JEL: D02 D72 J12 J16 J22 J24 Z13
    Date: 2018
  8. By: Elena Grinza (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Francois Rycx (Université Libre de Bruxelles, Belgium)
    Abstract: We investigate the impact of sickness absenteeism on productivity by using rich longitudinal matched employer-employee data on Belgian private firms. We deal with endogeneity, which arises from unobserved firm heterogeneity and reverse causality, by applying a modified version of the Ackerberg et al's (2015) control function method, which explicitly removes firm fixed effects. Our main finding is that, in general, sickness absenteeism substantially dampens firm productivity. An increase of 1 percentage point in the rate of sickness absenteeism entails a productivity loss of 0.24%. Yet, we find that the impact is much diversified depending on the categories of workers who are absent and across different types of firms. Our results show that sickness absenteeism is detrimental mainly when absent workers are high-tenure or blue-collar workers. Moreover, they show that sickness absenteeism is harmful mostly to industrial firms, high capital-intensive companies, and small- and medium-sized enterprises. This overall picture is coherent with the idea that sickness absenteeism is problematic when absent workers embed high levels of firm/task-specific (tacit) knowledge, when the work of absent employees is highly interconnected with the work of other employees (e.g., along the assembly line), and when firms face more limitations in substituting temporarily absent workers.
    Keywords: Sickness absenteeism, firm productivity, semiparametric methods for estimating production functions, longitudinal matched employer-employee data.
    JEL: D24 M59 I15
    Date: 2018–05
  9. By: Christopher Busch; David Domeij; Fatih Guvenen; Rocio Madera
    Abstract: This paper studies the business-cycle variation in higher-order (labor) income risk—that is, risks that are captured by moments higher than the variance. We examine the extent to which such risks can be smoothed within households or with government social insurance and tax policies. We use panel data from three countries that differ in many aspects relevant for our analysis: the United States, Germany, and Sweden. Our analysis has three main results. First, using individual gross income, we document that skewness is procyclical and dispersion (variance) is flat and acyclical in Germany and Sweden, as was previously documented for the United States. The same patterns hold true for groups defined by education, gender, public- versus private-sector jobs, among others. Second, household-level income displays cyclical patterns that are very similar to individual income, indicating that within-household smoothing is not very effective at mitigating business cycle fluctuations in skewness. Third, government tax and transfer programs blunt some of the largest declines in incomes, reducing procyclical fluctuations in skewness, especially in Germany and Sweden. The resulting welfare gain—through the lens of a structural model—amounts to 1.3% in consumption-equivalent terms for Sweden (for which we are able to perform this calculation). However, the remaining risk (in household disposable income) is still substantial: households are willing to pay 4.6% of their consumption to completely eliminate procyclical fluctuations in skewness.
    JEL: D52 E32 J31
    Date: 2018–05
  10. By: Benjamin A. Austin; Edward L. Glaeser; Lawrence H. Summers
    Abstract: The economic convergence of American regions has greatly slowed, and rates of long-term non-employment have even been diverging. Simultaneously, the rate of non-employment for working age men has nearly tripled over the last 50 years, generating a terrible social problem that is disproportionately centered in the eastern parts of the American heartland. Should more permanent economic divisions across space lead American economists to rethink their traditional skepticism about place-based policies? We document that increases in labor demand appear to have greater impacts on employment in areas where not working has been historically high, suggesting that subsidizing employment in such places could particularly reduce the not working rate. Pro-employment policies, such as a ramped up Earned Income Tax Credit, that are targeted towards regions with more elastic employment responses, however financed, could plausibly reduce suffering and materially improve economic performance.
    JEL: J01 J21 J38 R12 R23
    Date: 2018–04
  11. By: Michel-Pierre Chélini; Georges Prat
    Abstract: A standard specification of the WS-PS model based on wage bargaining between unions and firms makes it possible to understand the main features of long-term dynamics of unemployment and wages in France at the macroeconomic level. This result is conditional on auxiliary hypotheses made on the representations of the degree of rigidity in the labour market (depicted by a stochastic state variable), of the reservation wage (depending on the legal minimum wage), and on the nature of “other factors” pertaining to wages and prices that are not a priori specified in the WS-PS theoretical framework (summarized by the output gap). We find that the observed unemployment adjusts gradually to its equilibrium value, which is composed of three components: a “chronic” component due to the repartition in the added-value (real reservation wage, social contributions, productivity, profit margins of companies), a “cyclical” component depending on the output gap, and a “frictional” component due to the imperfect mobility of labour and technical progress. The observed wage also adjusts gradually to its negotiated value, the latter depending on the reservation wage, the social contributions, the price level, the labor productivity, the profit margins of companies, the unionization rate and on the unemployment rate whose influence is time-varying. Our results suggest that, in the average, the power of firms dominates that of unions during the negotiations, while, as predicted by the theory, change in employment intervenes effectively in the adjustment between wage desired by employees and wage offered by employers to achieve equilibrium.
    Keywords: equilibrium unemployment, wages, France
    JEL: E24 J2 J30
    Date: 2018
  12. By: Günther Fink; B. Kelsey Jack; Felix Masiye
    Abstract: Many rural households in low and middle income countries continue to rely on small-scale agriculture as their primary source of income. In the absence of irrigation, income arrives only once or twice per year, and has to cover consumption and input needs until the subsequent harvest. We develop a model to show that seasonal liquidity constraints not only undermine households’ ability to smooth consumption over the cropping cycle, but also affect labor markets if liquidity-constrained farmers sell family labor off-farm to meet short-run cash needs. To identify the impact of seasonal constraints on labor allocation and agricultural production, we conducted a two-year randomized controlled trial with small-scale farmers in rural Zambia. Our results indicate that lowering the cost of accessing liquidity at the time of the year when farmers are most constrained (the lean season) reduces aggregate labor supply, drives up wages and leads to a reallocation of labor from less to more liquidity-constrained farms. This reallocation reduces consumption and income inequality among treated farmers and increases average agricultural output.
    JEL: D14 J2 J43 O13
    Date: 2018–04
  13. By: Bogdan Savych; David Neumark; Randall Lea
    Abstract: We estimate the effect of opioid prescriptions on the duration of temporary disability benefits among workers with work-related low back injuries. We use local opioid prescribing patterns to construct an instrumental variable that generates variation in opioid prescriptions but is arguably unrelated to injury severity or other factors affecting disability duration. Local prescribing patterns have a strong relationship with whether injured workers receive opioid prescriptions, including longer-term prescriptions. We find that more longer-term opioid prescribing leads to considerably longer duration of temporary disability, but little effect of a small number of opioid prescriptions over a short period of time.
    JEL: I12 I18 J28 J38
    Date: 2018–04

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