nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2018‒08‒13
eighteen papers chosen by
Joseph Marchand
University of Alberta

  1. How Do Firms Respond to Place-Based Tax Incentives? By Hyejin Ku; Uta Schönberg; Ragnhild C. Schreiner
  2. Family, Firms and the Gender Wage Gap in France By Elise Coudin; Sophie Maillard; Maxime Tô
  3. State Merit Aid Programs and Youth Labor Market Attachment By Frisvold, David; Pitts, M. Melinda
  4. Job Market Signaling through Occupational Licensing By Peter Q. Blair; Bobby W. Chung
  5. Caught in the Cycle: Economic Conditions at Enrollment and Labor Market Outcomes of College Graduates By Alena Bicakova; Guido Matias Cortes; Jacopo Mazza
  6. Climate policies and Skill-biased employment dynamics : evidence from EU countries By Giovanni Marin; Francesco Vona
  7. Selective matching: gender gap and network formation in research By Stéphanie Combes; Pauline Givord
  8. Behavioral Public Economics By B. Douglas Bernheim; Dmitry Taubinsky
  9. Are Bureaucrats Really Paid Like Bureaucrats? By Enikolopov, Ruben
  10. The Effectiveness of Promotion Incentives for Public Employees: Evidence from Italian Academia By Marco G. Nieddu; Lorenzo Pandolfi
  11. Attitudes towards Euro Area Reforms: Evidence from a Randomized Survey Experiment By Mathias Dolls; Nils Wehrhöfer
  12. Digital technology diffusion: A matter of capabilities, incentives or both? By Dan Andrews; Giuseppe Nicoletti; Christina Timiliotis
  13. Unemployment resistance across EU regions: the role of technological and human capital By Riccardo Cappelli; Fabio Montobbio; Andrea Morrison
  14. Crowdsourced Innovation: How Community Managers Affect Crowd Activities By Lars Hornuf; Sabrina Jeworrek
  15. Are professors worth it? The value-added and costs of tutorial instructors By Jan Feld; Nicolás Salamanca; Ulf Zölitz
  16. Education and wage inequality before and during the fiscal crisis: A quantile regression analysis for Greece 2006-2016 By Chletsos, Michael; Roupakias, Stelios
  17. Labor Market Dynamics in Developing Economies: the Role of Subsistence Consumption By SANGYUP CHOI; MYUNGKYU SHIM
  18. Including unpaid household activities: An estimate of its impact on macro-economic indicators in the G7 economies and the way forward By Peter van de Ven; Jorrit Zwijnenburg; Matthew De Queljoe

  1. By: Hyejin Ku (University College London, Department of Economics and CReAM); Uta Schönberg (University College London, Department of Economics, CReAM, and Institute for Employment Research (IAB)); Ragnhild C. Schreiner (University College London, Department of Economics, CReAM, and Ragnar Frisch Centre for Economic Research)
    Abstract: In this paper, we evaluate the effects of payroll tax changes on firm behavior, by exploiting a unique policy setting in Norway, where a system of geographically differentiated payroll taxes was suddenly abolished due to an EU regulation. We find that firms are only partially able to shift the increased costs from higher payroll tax rates onto workers’ wages. Instead, firms respond to the tax increase primarily by reducing employment. The drop in employment following the tax reform is particularly pronounced in labor intensive firms—which experience a larger windfall loss due to the tax reform than non-labor intensive firms—and in multi-establishment firms—which respond to the payroll tax increase in part by reducing the number of establishments per firm. Overall, our findings point to liquidity effects whereby a sudden and largely unexpected payroll tax increase aggravates firms’ liquidity constraints, forcing them to cut employment to bring down costs.
    Keywords: Payroll taxes, regional tax incentive, firm behavior, labor demand
    JEL: D22 H25 H32 J18 J23
    Date: 2018–08
  2. By: Elise Coudin (CREST; INSEE); Sophie Maillard (INSEE); Maxime Tô (Institut des Politiques Publiques; University College London; Institute for Fiscal Studies)
    Abstract: This paper explores how two main channels explaining the gender wage gap, namely the heterogeneity of firm pay policies and sex-specific wage consequences of parenthood, interact. We explore the firm heterogeneity channel by applying the model proposed by Card, Cardoso, and Kline 2016. After controlling for individual and firm heterogeneity, we show that the sorting of women into lower-paying firms accounts for 11 % of the average gender wage gap in the French private sector, whereas within-firm gender inequality does not contribute to the gap. Performing these decompositions all along workers’ life cycle, we find evidence that this sorting mechanism activates shortly after birth. These gender-specific and dynamic firm choices generate wage losses all along mothers’ careers, in addition to direct child wage penalties. After birth, mothers tend to favor firms with more flexible work hours and home proximity, which may be detrimental to their labor market opportunities, as, within these contexts, firms may gain relative monopsonic power.
    Keywords: gender wage gap, gender inequalities, linked employer-employee, data, two-way fixed effect models, discrimination
    JEL: J31 J71 J16
    Date: 2018–06–01
  3. By: Frisvold, David (University of Iowa); Pitts, M. Melinda (Federal Reserve Bank of Atlanta)
    Abstract: This paper examines the impact of state merit-aid programs on the labor market attachment of high school-aged youths. The labor force participation rate of teenagers has fallen substantially in recent decades, coinciding with the introduction of merit-aid programs. These programs reduce the price of attending an in-state public college or university for high-achieving students and have the potential to influence students' allocation of time and effort between labor market activities, human capital development, and other forms of leisure. We examine the influence of these programs based on their generosity, both in the amount of aid provided to a recipient and the percent of students who are recipients of aid, and in their selectivity. Our results suggest that programs that are more selective reduce labor force participation, but are not a significant cause in the decline in teenage labor force participation in recent decades.
    Keywords: merit aid; labor force participation; education; financial aid
    JEL: I2 J2
    Date: 2018–07–01
  4. By: Peter Q. Blair; Bobby W. Chung
    Abstract: A large literature demonstrates that occupational licensing is a labor market friction that distorts labor supply allocation and prices. We show that an occupational license serves as a job market signal, similar to education. In the presence of occupational licensing, we find evidence that firms rely less on observable characteristics such as race and gender in determining employee wages. As a result, licensed minorities and women experience smaller wage gaps than their unlicensed peers.
    JEL: D21 D82 D86 J24 J31 J70 K23 K31 L51
    Date: 2018–07
  5. By: Alena Bicakova (CERGE-EI, Czech Republic); Guido Matias Cortes (York University, Canada; Rimini Centre for Economic Analysis); Jacopo Mazza (University of Essex, UK)
    Abstract: We find robust evidence that cohorts of graduates who enter college during worse economic times earn higher average wages than those who enter during better times. This difference is not explained by differences in economic conditions at the time of college graduation, changes in field of study composition, or changes in selection into occupations or industries. Cohorts who start college in bad times are not more positively selected based on their high-school outcomes, but they graduate with higher college grades, and earn higher wages conditional on their grades. Our results suggest that these cohorts exert more effort during their studies.
    Keywords: Business Cycle, Higher Education, Cohort Effects
    JEL: I23 J24 J31 E32
    Date: 2018–07
  6. By: Giovanni Marin (Scuola Superiore Sant'Anna); Francesco Vona (Observatoire français des conjonctures économiques)
    Abstract: The political acceptability of climate policies is undermined by job-killing arguments, especially for the least-skilled workers. However, evidence for distributional impacts for different workers remains scant. We examine the associations between climate policies, proxied by energy prices and a stringency index, and workforce skills for 14 European countries and 15 industrial sectors over the period of 1995-2011. We find that, while the long-term decline in employment in most carbon-intensive sectors is unrelated to policy stringency, climate policies have been skill biased against manual workers and have favoured technicians and professionals. This skill bias is confirmed using a shift-share instrumental variable estimator
    Keywords: Climate policies; Workforce skills; Cluster analysis; Multiple exposure to structural shocks
    JEL: J24 Q52
    Date: 2018–07
  7. By: Stéphanie Combes (CREST; INSEE); Pauline Givord (CREST; INSEE)
    Abstract: This paper explores how the academic network extends and its consequences on research outcomes. Using a large academic bibliographic database in research in economics (RePEc), we model first the probability that two researchers collaborate, and secondly the impact of network indicators on the citation rate of research articles. Our results show the existence of a gender-based bias in the researcher matching process. Researchers are more likely to coauthor together when they are of the same gender, even when we control for productivity and proximity in the academic network before they match, as well as unobservable fixed effects of the pair of researcher. This effect is observed mostly at the beginning of the career and fades with the seniority. We also observe that network indicators have a positive impact on the citation index of research articles, suggesting that these selective matching mechanisms may have cumulative effects.
    Keywords: network analysis, selective matching, gender gap, Probit regression with fixed effects, quantile regression
    JEL: J24 O31 J45
    Date: 2018–06–16
  8. By: B. Douglas Bernheim; Dmitry Taubinsky
    Abstract: This chapter surveys work in behavioral public economics, emphasizing the normative implications of non-standard decision making for the design of welfare-improving and/or optimal policies. We highlight combinations of theoretical and empirical approaches that together can produce robust qualitative and quantitative prescriptions for optimal policy under a range of assumptions concerning consumer behavior. The chapter proceeds in four parts. First, we discuss the foundations and methods of behavioral welfare economics, focusing on choice-oriented approaches and the measurement of self-reported well-being. Second, we examine commodity taxes and related policies: we summarize research on optimal corrective taxes, the efficiency costs of sales taxes that are not fully salient, the distributional effects of sin taxes, the use of non-price policies such as nudges, the tax treatment of giving, and luxury taxes. Third, we examine policies affecting saving, including capital income taxation, commitment opportunities, default contribution provisions for pension plans, financial education, and mandatory saving programs. Fourth, we detail the manner in which under-provision of labor supply and misunderstandings of policy instruments impact optimal labor income taxation and social insurance. We close with some recommendations for future work in behavioral public economics.
    JEL: H0
    Date: 2018–07
  9. By: Enikolopov, Ruben
    Abstract: Abstract Traditionally, bureaucrats are viewed as a stereotypical example of employees with flat pay schedules and low-powered incentive schemes. This paper provides evidence that the wages of a particular group of senior bureaucrats - city managers in US cities - are tightly connected to city outcomes. City outcomes affect city managers' wages not only in the city in which they are currently employed, but also in the city in which they work afterwards. At the same time, the salaries of city managers do not react to observable exogenous shocks to city outcomes. These results suggest that the relationship between city outcomes and the wages of city managers reflects a reward for performance, rather than rent extraction, and that the power of these incentives is sufficiently strong.
    Keywords: bureaucrats; city managers; incentives of politicians; pay for performance
    JEL: H7 J3
    Date: 2018–07
  10. By: Marco G. Nieddu (Università di Cagliari e CRENoS); Lorenzo Pandolfi (Università di Napoli Federico II and CSEF)
    Abstract: This paper investigates how promotion incentives affect the productivity of high-skilled public employees. In a fuzzy regression discontinuity design, we exploit the three bibliometric thresholds of the 2012 National Scientific Qualification (NSQ), the centralized evaluation procedure awarding the eligibility for career advancements in Italian universities. Specifically, we compare the 2013-2016 research productivity of assistant professors who barely achieve the qualification for associate professor with the productivity of candidates who barely miss it. The former have the incentive to enrich their publication records in order to meet the higher requirements for the full professor qualification by the following round of the NSQ. Conversely, the latter first need to re-apply for the associate professor qualification, thus facing lower promotion thresholds. We find that barely qualified scholars publish significantly more papers – and in journals of comparable quality – than their unsuccessful colleagues. The relationship between the increase in publications and the distance from the expected thresholds for the full professor qualification is inverted-U shaped: promotion incentives are mostly effective when the promotion threshold is neither too difficult nor too easy to meet. Our results emphasize the importance of promotion incentives as an effective tool for public management to enhance the productivity of state personnel. They also provide novel evidence on the responsiveness of scholars to publication-based hiring and promotion schemes.
    Keywords: promotion incentives; public sector; academia; Italy; scientific productivity.
    JEL: I23 J45 M51 O31
  11. By: Mathias Dolls; Nils Wehrhöfer
    Abstract: We present the first evidence on public attitudes towards two prominent euro area reform proposals (European Unemployment Benefit Scheme and Sovereign Insolvency Procedure) and assess potential impediments to their implementation by means of a randomized survey experiment in Germany. We find that there is a low willingness among German voters to accept fiscal risk-sharing through common unemployment insurance, while a sovereign insolvency procedure aimed at strengthening market discipline is supported by a majority of the electorate. Our randomized treatments confronting survey participants with potential adverse effects of the reforms lead to significant downward shifts in approval rates. Altruism, cosmopolitanism, political preferences and income are important predictors of support for the reform proposals. We also show that there is a striking contrast between the low level of support for transfers to other euro area member states and a broad acceptance of inner German transfers.
    Keywords: public attitudes, euro area reforms, European unemployment insurance, sovereign insolvency procedure
    JEL: H55 H24 J26 D14
    Date: 2018
  12. By: Dan Andrews; Giuseppe Nicoletti; Christina Timiliotis
    Abstract: Insufficient diffusion of new technologies has been quoted as one possible reason for weak productivity performance over the past two decades (Andrews et al., 2016). This paper uses a novel data set of digital technology usage covering 25 industries in 25 European countries over the 2010-16 period to explore the drivers of digital adoption across two broad sets of digital technologies by firms, cloud computing and back or front office integration. The focus is on structural and policy factors affecting firms’ capabilities and incentives to adopt -- including the availability of enabling infrastructures (such as high-speed broadband internet), managerial quality and workers skills, and product, labour and financial market settings. We identify the effects of structural and policy factors based on the difference-in-difference approach pioneered by Rajan and Zingales (1998) and show that a number of these factors are statistically and economically significant for technology adoption. Specifically, we find strong support for the hypothesis that low managerial quality, lack of ICT skills and poor matching of workers to jobs curb digital technology adoption and hence the rate of diffusion. Similarly our evidence suggests that policies affecting market incentives are important for adoption, especially those relevant for market access, competition and efficient reallocation of labour and capital. Finally, we show that there are important complementarities between the two sets of factors, with market incentives reinforcing the positive effects of enhancements in firm capabilities on adoption of digital technologies
    Keywords: diffusion, digital skills, Digital technologies, productivity
    JEL: D24 J24 O32 O33
    Date: 2018–07–30
  13. By: Riccardo Cappelli; Fabio Montobbio; Andrea Morrison
    Abstract: We investigate the impact of the 2008 crisis to study the relationship between economic and technological resilience in 248 European Union regions. For economic resilience we measure the difference between the level of unemployment rate before crisis and the level of unemployment rate at its peak after the crisis - i.e., the unemployment resistance. Using European Patent Office patents, we look at all technological crises in each region since 1978 and build a variable of technological resilience measuring the historical ability of a region to maintain its level of knowledge creation in face of adverse shocks - i.e., the technological resistance. We find that technological resistance is a good predictor of economic resistance. In particular, our results show that (1) important interaction effects exist between technological resistance and human capital, (2) technological resistance and the level of human capital are less effective in protecting female and elder adult workers in an economic crisis and (3) important country level effects are present.
    Keywords: Economic resilience, technological resilience, unemployment, recession, human capital
    JEL: R11 J64 J24
    Date: 2018–07
  14. By: Lars Hornuf; Sabrina Jeworrek
    Abstract: In this study, we investigate whether and to what extent community managers in online collaborative communities can stimulate crowd activities through their engagement. Using a novel data set of 22 large online idea crowdsourcing campaigns, we find that active engagement of community managers positively affects crowd activities in an inverted Ushaped manner. Moreover, we evidence that intellectual stimulation by managers increases community participation, while individual consideration of users has no impact on user activities. Finally, the data reveal that community manager activities that require more effort, such as media file uploads instead of simple written comments, have a larger effect on crowd participation.
    Keywords: crowdsourcing, open innovation, crowdsourced innovation, crowdworking, ideation, managerial attention
    JEL: J21 J22 L86 M21 M54 O31
    Date: 2018
  15. By: Jan Feld; Nicolás Salamanca; Ulf Zölitz
    Abstract: A substantial share of university instruction happens in tutorial sessions—small group instruction given parallel to lectures. In this paper, we study whether instructors with a higher academic rank teach tutorials more effectively in a setting where students are randomly assigned to tutorial groups. We find this to be largely not the case. Academic rank is unrelated to students’ current and future performance and only weakly positively related to students’ course evaluations. Building on these results, we discuss different staffing scenarios that show that universities can substantially reduce costs by increasingly relying on lower-ranked instructors for tutorial teaching.
    Keywords: Teacher value-added, teaching effectiveness, higher education
    JEL: I21 I24 J24
    Date: 2018–07
  16. By: Chletsos, Michael; Roupakias, Stelios
    Abstract: The Greek labour market has undergone dramatic changes during the last 10 years. Wage inequality, especially at the bottom end of the earnings distribution, increased sharply. At the same time, the past trend towards educational upgrading of the labour force has further been boosted. In this paper, we analyze the relationship between education and the dispersion of male earnings, using Labour Force Survey data for years 2006 and 2016. We address the issue of unobserved heterogeneity by employing a quantile regression approach. We also account for potential endogeneity by employing the IVQR approach introduced by Chernozhukov and Hansen (2008). Our best estimates suggest that education exerts a negative effect on earnings inequality in the pre-crisis period. However, during the recession, the returns to education appear to be significantly higher at the upper end of the wage spectrum, thereby contributing to increased inequality. We also find evidence that the impact of education on the dispersion of earnings is stronger in the private sector. Finally, we also account for the incidence of over-education. Interestingly, the penalty that overqualified workers suffer, declines across the conditional earnings distribution and disappears completely at the highest quantile in 2016.
    Keywords: Returns to education; Wage inequality; Quantile regression
    JEL: C29 I21 J31
    Date: 2018–06–28
  17. By: SANGYUP CHOI (Yonsei University); MYUNGKYU SHIM (Sogang University)
    Abstract: Motivated by the recent empirical evidence on a strong negative relationship between the income level and hours worked across countries (Bick, Fuchs-Schundeln, and Lagakos (2018)), this paper establishes new stylized facts on labor market dynamics in developing economies. First, the response of hours worked (and employment) to a permanent technology shock- identified by a structural VAR model with long-run restrictions- is smaller in developing economies than in advanced economies. Second, the level of income per capita is strongly and robustly associated with the relative variability of hours worked and consumption to output across countries. We build a simple RBC model augmented with subsistence consumption to explain the set of new empirical findings. The minimal departure from a standard RBC model allows us to account for the salient features of business cycle fluctuations in developing economies, including their distinct labor market dynamics.
    Keywords: Business cycles; Developing economies; Subsistence consumption; Labor market dynamics; Long-run restrictions
    JEL: E21 E32 F44 J20
    Date: 2018–08
  18. By: Peter van de Ven (OECD); Jorrit Zwijnenburg (OECD); Matthew De Queljoe (OECD)
    Abstract: The System of National Accounts, which provides information on important macroeconomic indicators such as Gross Domestic Product (GDP), household disposable income and final consumption, typically excludes the value of unpaid household activities. Exceptions are made for the production of goods for own final consumption (e.g. subsistence farming), the services from owner-occupied dwellings, and the production from employment of paid domestic staff, but the output from unpaid domestic and personal services, such as the preparation of meals, taking care of children, cleaning, repairs, volunteering, etc., is all excluded. This report deals with the impact of including unpaid household activities on macro-economic aggregates for G7-countries. It builds upon earlier work by Ahmad and Koh (2011) and van de Ven and Zwijnenburg (2016). The report starts off with discussing the pros and cons of including unpaid household activities, or more specifically, the reasons why these activities are currently excluded from the macro-economic aggregates that can be derived from the framework of national accounts. It then discusses how estimates can be compiled using statistics from time use surveys and other available information. Here, also some of the complexities related to the approximate valuation of unpaid household activities are being addressed. Subsequently, results are presented for the level estimates of GDP as well as for economic growth when including the value of unpaid household activities for the G7 economies. The report concludes with a number of recommendations on the way forward, also touching upon some of the (potential) policy implications of the work on valuing unpaid household activities.
    Keywords: households, national accounts, satellite accounts, time use, unpaid work
    JEL: C82 D13 E01 J22
    Date: 2018–07–28

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.