nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2018‒08‒27
28 papers chosen by
Joseph Marchand
University of Alberta

  1. The UK productivity puzzle through the magnifying glass: A sectoral perspective By Rafał Kierzenkowski; Gabriel Machlica; Gabor Fulop
  2. Estimating the Effect of an Increase in the Minimum Wage on Hours Worked and Employment in Ireland By McGuinness, Seamus; Redmond, Paul
  3. Health Shocks, Human Capital, and Labor Market Outcomes. By Francisco Parro; R. Vincent Pohl
  4. The Role of Industry, Occupation, and Location-Specific Knowledge in the Survival of New Firms By C. Jara Figueroa; Bogang Jun; Edward L. Glaeser; César Hidalgo
  5. Pension Reform: Disentangling Retirement and Savings Responses By Lindeboom, Maarten; Montizaan, Raymond
  6. Child care, parental labor supply and tax revenue By Martin Eckhoff Andresen; Tarjei Havnes
  7. The Role of Hours Changes for the Increase in German Earnings Inequality By Biewen, Martin; Plötze, Daniela
  8. Crowdsourced innovation: How community managers affect crowd activities By Hornuf, Lars; Jeworrek, Sabrina
  9. Labor Demand Shocks and Housing Prices across the US: Does One Size Fit All? By Osei, Michael J.; Winters, John V.
  10. The Determinants of Teachers' Occupational Choice By Kevin Lang; Maria Dolores Palacios
  11. Unintended Consequences of China’s New Labor Contract Law on Unemployment and Welfare Loss of the Workers By Akee, Randall; Zhao, Liqiu; Zhao, Zhong
  12. The Distribution of the Gender Wage Gap By Bhalotra, Sonia R.; Fernandez Sierra, Manuel
  13. The Returns from Training in Colombia: Evidence from a Longitudinal Survey By Luz Adriana Florez; Lina Cardona-Sosa; Leonardo Fabio Morales; Julian Londoño
  14. Re-examining the Effects of Trading with China on Local Labor Markets: A Supply Chain Perspective By Zhi Wang; Shang-Jin Wei; Xinding Yu; Kunfu Zhu
  15. Parental Support, Savings and Student Loan Repayment By Lance Lochner; Todd Stinebrickner; Utku Suleymanoglu
  16. Sectoral and regional distribution of export shocks: What do two hundred thousand UK firm observations say? By Rafal Kierzenkowski; Peter Gal; Gabor Fulop; Dorothee Flaig; Frank van Tongeren
  17. The State of the Economy at Graduation, Wages, and Catch-up Paths: Evidence from Switzerland By Shvartsman, Elena
  18. Using online job vacancies to understand the UK labour market from the bottom-up By Turrell, Arthur; Thurgood, James; Djumalieva, Jyldyz; Copple, David; Speigner, Bradley
  19. The Short-Run and Long-Run Effects of Resources on Economic Outcomes: Evidence From the United States 1936-2015 By Karen Clay; Margarita Portnykh
  20. Government Decentralization Under Changing State Capacity: Experimental Evidence From Paraguay By Ernesto Dal Bó; Frederico Finan; Nicholas Y. Li; Laura Schechter
  21. The Role of Institutions and Networks in Firms' Offshoring Decisions By Moriconi, Simone; Peri, Giovanni; Pozzoli, Dario
  22. Barriers to Reallocation and Economic Growth: the Effects of Firing Costs By Toshihiko Mukoyama; Sophie Osotimehin
  23. The Effect of Disenrollment from Medicaid on Employment, Insurance Coverage, Health and Health Care Utilization By Thomas DeLeire
  24. Discrimination without taste : How discrimination can spillover and persist By RAMACHANDRAN, Rajesh; RAUH, Christopher
  25. Childhood Health Shocks, Comparative Advantage, and Long-Term Outcomes: Evidence from the Last Danish Polio Epidemic By Miriam Gensowski; Torben Heien Nielsen; Nete Munk Nielsen; Maya Rossin-Slater; Miriam Wüst
  26. Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share By David Autor; Anna Salomons
  27. Skills, Scope, and Success: An Empirical Look at the Start-up Process in Creative Industries in Germany By Kohn, Karsten; Wewel, Solvejg A.
  28. Where Does Profit Sharing Work Best? A Meta-Analysis on the Role of Unions, Culture, and Values By Doucouliagos, Chris; Laroche, Patrice; Kruse, Douglas L.; Stanley, T. D.

  1. By: Rafał Kierzenkowski; Gabriel Machlica; Gabor Fulop
    Abstract: Since the start of the Great Recession, labour productivity growth has been weak in the United Kingdom, weaker than in many other OECD countries. The productivity shortfall, defined as the gap between actual productivity and the level implied by its pre-crisis trend growth rate, was nearly 20% for output per hour at the end of 2016. This study assesses the UK productivity puzzle and discusses its possible determinants at the sectoral level. Most of the UK productivity underperformance is structural rather than cyclical. Half of the productivity shortfall is explained by non-financial services (with information and communication being the largest contributor), a fourth by financial services, and another fourth by manufacturing, other production and construction. All but non-financial services and the construction sectors contribute disproportionately to the productivity shortfall compared to their shares in overall output and hours worked of the UK economy. In non-financial services, large increases in self-employed with no employees, reduced matching of skills to jobs and a lower capital-output ratio may have been a drag on productivity. Stagnant productivity in the financial sector is mainly linked to reduced risk-taking and leverage, as reflected by declining total factor productivity following its steep increases in the run-up to the crisis. Greater substitution of labour for capital and weak corporate restructuring have both held back productivity improvements in the manufacturing sector. Some causes of the productivity puzzle pre-date the crisis, including low tangible investment, too rapid expansion of financial services, weak innovation in the manufacturing sector, and a secular decline of oil and gas industries.This Working Paper relates to the 2018 OECD Economic Survey of the United-Kingdom ( y-united-kingdom.htm).
    Keywords: capital, employment, growth, hours, investment, output, productivity, sectors, United Kingdom
    JEL: D24 L6 L7 L8
    Date: 2018–08–08
  2. By: McGuinness, Seamus (Economic and Social Research Institute, Dublin); Redmond, Paul (ESRI, Dublin)
    Abstract: On the 1st of January 2016 the Irish National Minimum Wage increased from €8.65 to €9.15 per hour, an increase of approximately six percent. We use a difference-in-differences estimator to evaluate whether the change in the minimum wage affected the hours worked and likelihood of job loss of minimum wage workers. The results indicate that the increase in the minimum wage had a negative and statistically significant effect on the hours worked of minimum wage workers, with an average reduction of approximately 0.5 hours per week. The effect on minimum wage workers on temporary contracts was higher at 3 hours per week. We found a corresponding increase in part-time employment of 2 percentage points for all minimum wage workers and 10 percentage points for those on temporary contracts. We find no clear evidence that the increase in the minimum wage led to an in-creased probability of becoming unemployed or inactive in the six-month period following the rate change.
    Keywords: minimum wage, hours of work, employment, unemployment
    JEL: E24 J22 J23 J31 J42
    Date: 2018–06
  3. By: Francisco Parro (Universidad Adolfo Ibáñez); R. Vincent Pohl (University of Georgia)
    Abstract: Health, human capital, and labor market outcomes are linked though complex connections that are not fully understood. We explore these links by estimating a flexible yet tractable dynamic model of human capital accumulation in the presence of health shocks using administrative data from Chile. We find that (i) human capital mitigates the negative labor market effects of health events, (ii) these alleviating effects operate through channels involving occupational choice, the frequency of exposure to health events, and access to health care, and (iii) the effect of health shocks on labor market outcomes is heterogeneous across industries and types of diagnoses.
    Keywords: health shocks, hospitalizations, labor market outcomes, earnings, human capital
    JEL: I10 J22 J24
    Date: 2018–06
  4. By: C. Jara Figueroa; Bogang Jun; Edward L. Glaeser; César Hidalgo
    Abstract: How do regions acquire the knowledge they need to diversify their economic activities? How does the migration of workers among firms and industries contribute to the diffusion of that knowledge? Here we measure the industry, occupation, and location specific knowledge carried by workers from one establishment to the next using a dataset summarizing the individual work history for an entire country. We study pioneer firms–firms operating in an industry that was not present in a region–because the success of pioneers is the basic unit of regional economic diversification. We find that the growth and survival of pioneers increase significantly when their first hires are workers with experience in a related industry, and with work experience in the same location, but not with past experience in a related occupation. We compare these results with new firms that are not pioneers and find that industry specific knowledge is significantly more important for pioneer than non-pioneer firms. To address endogeneity we use Bartik instruments, which leverage national fluctuations in the demand for an activity as shocks for local labor supply. The instrumental variable estimates support the finding that industry related knowledge is a predictor of the survival and growth of pioneer firms. These findings expand our understanding of the micro-mechanisms underlying regional economic diversification events.
    JEL: D22 J24 N1 N16 O1 O14 O15 O5 O54 R12
    Date: 2018–07
  5. By: Lindeboom, Maarten (Vrije Universiteit Amsterdam); Montizaan, Raymond (ROA, Maastricht University)
    Abstract: In January 2006, the Dutch government implemented a pension reform that substantially reduced the public pension wealth of workers born in 1950 or later. At the same time, a tax-facilitated savings plan was introduced that substantially reduced the saving costs of all workers, irrespective of birth year. This paper uses linked administrative and survey data to assess the effect of the reform on the savings and retirement expectations and realizations of two virtually identical male cohorts that differ only in treatment status, the treated having been born in 1950 and the controls having been born in 1949. We show that retirement expectations are in line with realizations and that the reform had the intended effect on the labor supply for the larger part of the workers, namely, those without sufficient means to substantially increase private savings to counter the effect of the reform. These workers, who are generally in worse health, have zero substitution rates between private and public wealth. On the other hand, there is a group of mostly high-wage workers who participate in the tax-facilitated Life Course Savings Scheme and who increase private savings to fully counter the impact of the drop in public wealth. A further, unintended side effect of the introduction of the tax-facilitated savings plan is that high wage earners who are not affected by the drop in pension wealth retire even sooner than initially planned.
    Keywords: natural experiment, regression discontinuity, retirement, private wealth, public wealth, crowding out, substitution rate
    JEL: J26 H55 J14
    Date: 2018–06
  6. By: Martin Eckhoff Andresen; Tarjei Havnes (Statistics Norway)
    Abstract: We study the impact of child care for toddlers on the labor supply of mothers and fathers in Norway. For identification, we exploit the staggered expansion across municipalities following a large reform from 2002. Our IV-estimates indicate that child care use causes an increase in the labor supply of mothers. Results suggest that cohabiting mothers move towards full time employment, while single mothers move to part time. Meanwhile, we find no impact for fathers or grandparents. We also find an increase in the taxes paid from cohabiting mothers, lending some support to the argument that parts of the cost of child care is offset by increased taxes.
    Keywords: Child care; female labor supply; tax revenue; instrumental variables
    JEL: H24 H52 J13 J22
    Date: 2018–08
  7. By: Biewen, Martin (University of Tuebingen); Plötze, Daniela (Wüstenrot & Württembergische)
    Abstract: Using data from the German Structure of Earnings Survey (GSES), this paper studies the role of changes in working hours for the increase in male and female earnings inequality between 2001 and 2010. We provide both classic decompositions of the variance of log earnings into the variances of hours, wage rates and their covariance, and decompositions based on reweighting the conditional hours distribution. Depending on the inequality measure considered, our results suggest that between 10 and 30 percent of the increase in male earnings inequality and 37 to 47 percent of the increase in female earnings inequality can be explained by changes in working hours. In addition, a large part of the inequality increase can be accounted for by changes in the composition of person and firm characteristics.
    Keywords: inequality, working hours, earnings, female labor market participation
    JEL: C14 J22 J31
    Date: 2018–06
  8. By: Hornuf, Lars; Jeworrek, Sabrina
    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 U-shaped 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
  9. By: Osei, Michael J. (Oklahoma State University); Winters, John V. (Iowa State University)
    Abstract: This paper examines whether effects of labor demand shocks on housing prices vary across time and space. Using data on 321 US metropolitan statistical areas, we estimate the medium- and long-run effects of increases in metropolitan statistical area-level employment and total labor income on housing prices. Instrumental variable estimates for different time periods, and also for coastal, non-coastal, large, and small metropolitan statistical areas are obtained using the shift-share instrument. Results suggest that labor demand shocks have positive effects on housing prices. However, these effects appear to vary across time periods and across different types of metropolitan statistical areas.
    Keywords: housing prices, labor demand shocks, labor market, housing market
    JEL: J23 O18 R12 R23 R31
    Date: 2018–06
  10. By: Kevin Lang; Maria Dolores Palacios
    Abstract: Among college graduates, teachers have both low average AFQT and high average risk aversion, perhaps because the compression of earnings within teaching attracts relatively risk-averse individuals. Using a dynamic optimization model with unobserved heterogeneity, we show that were it possible to make teacher compensation mimic the return to skills and riskiness of the non-teaching sector, overall compensation in teaching would increase. Moreover, this would make many current teachers substantially worse off, making reform challenging. Importantly, our conclusions are sensitive to the degree of heterogeneity for which we allow. Since even a model with no unobserved heterogeneity fits well within sample, one could easily conclude that allowing for two or three types fits the data adequately. Formal methods reject this conclusion. The BIC favors seven types. Ranking models using cross-validation, nine types is better although the improvements of going from six to seven, from seven to eight and from eight to nine types are noticeably smaller than those from adding an additional type to a lower base.
    JEL: C52 I20 J2 J3 J45
    Date: 2018–08
  11. By: Akee, Randall; Zhao, Liqiu; Zhao, Zhong
    Abstract: China's new Labor Contract Law, which intended to strengthen the labor protection for workers, went into effect on January 1, 2008. The law stipulated that the maximum cumulative duration of successive fixed-term (temporary) labor contracts is 10 years, and employees working for the same employer for more than 10 consecutive years are able to secure an open-ended (permanent) labor contract under the new law, which is highly desirable to employees. However, in order to circumvent the new Labor Contract Law, some employers may have dismissed workers, after the passage of the new law, who had worked in the same firm for more than 10 years. Using data from the 2008 China General Social Survey, we find strong evidence that firms did in fact dismiss their formal-contract employees who have been employed for more than 10 years. Additionally, using a regression discontinuity design based on this exogenous change in unemployment status for this particular group of workers, we show that the dismissed workers suffered significant welfare loss in terms of happiness. Our results are robust to various specifications and placebo tests.
    Keywords: Labor Contract Law,Unemployment,Happiness,Regression Discontinuity Design,China
    JEL: J41 J64 I31
    Date: 2018
  12. By: Bhalotra, Sonia R. (University of Essex); Fernandez Sierra, Manuel (University of Essex)
    Abstract: We analyse impacts of the rising labor force participation of women on the gender wage gap. We formulate and structurally estimate an equilibrium model of the labor market in which the elasticity of substitution between male and female labor is allowed to vary depending on the task content of occupations. We find that the elasticity of substitution is higher in high- paying occupations that are intensive in abstract and analytical tasks than in low-paying manual and routine occupations. Consistent with this we find a narrowing of the gender wage gap towards the upper end of the wage distribution and an increase in the gender wage gap at the low end. Demand side trends favoured women and this attenuated the supply-driven downward pressure on women's wages in low-paying occupations, and fully counteracted it in high-paying occupations. The paper contributes new evidence on the distribution of the gender wage gaps, and contributes to a wider literature on technological change, occupational sorting, wage inequality and polarization.
    Keywords: female labour force participation, gender wage gap, technological change, supply-demand framework, task-based approach, wage distribution
    JEL: J16 J21 J24 J31 O33
    Date: 2018–06
  13. By: Luz Adriana Florez (Banco de la República de Colombia); Lina Cardona-Sosa (Banco de la República de Colombia); Leonardo Fabio Morales (Banco de la República de Colombia); Julian Londoño (Banco de la República de Colombia)
    Abstract: In this paper we explore the wage returns from training in Colombia, using data from the “The Social Longitudinal Survey” between 2009 and 2010. Using the longitudinal component of the data, we control for time invariant individuals’ unobserved heterogeneity and, following Wooldridge (1995), we correct for sample selection in panel data. Our results suggest that there is a positive return from training. The magnitude of the estimates suggests an increase in wages between 7% and 9%. We find that OLS overestimate the effects of receiving training. This suggests that individuals who receive training are the ones with high unobserved skills. We also find that trainees increase their probability of being continuously employed, suggesting an improvement in individuals’ working conditions. **** RESUMEN: Este documento explora los retornos de la capacitación para el trabajo en Colombia usando los datos de la Encuesta Longitudinal de Fedesarrollo entre 2009 y 2010. Los datos panel nos permite controlar por la heterogeneidad no observada de los individuos, que no cambia en el tiempo. Para controlar por el sesgo de selección, utilizamos la metodología de corrección propuesta en Wooldridge (1995). Los resultados sugieren que los retornos a la capacitación para el trabajo son positivos y significativos, entre el 7% y 9%. Adicionalmente, los resultados indican que la mayor capacitación incrementa la probabilidad de continuar empleado, sugiriendo una mejora en las condiciones laborales de los individuos.
    Keywords: Education, returns from training, unobserved heterogeneity, sample selection bias and panel data, Educación, retornos de la capacitación, heterogeneidad no observada, sesgo de selección, datos panel
    JEL: C23 J31 P36
    Date: 2018–08
  14. By: Zhi Wang; Shang-Jin Wei; Xinding Yu; Kunfu Zhu
    Abstract: The United States imports intermediate inputs from China, helping downstream US firms to expand employment. Using a cross-regional reduced-form specification but differing from the existing literature, this paper (a) incorporates a supply chain perspective, (b) uses intermediate input imports rather than total imports in computing the downstream exposure, and (c) uses exporter-specific information to allocate imported inputs across US sectors. We find robust evidence that the total impact of trading with China is a positive boost to local employment and real wages. The most important factor is employment stimulation outside the manufacturing sector through the downstream channel. This overturns the received wisdom from the reduced-form literature and provides statistical support for a key mechanism hypothesized in general equilibrium spatial models.
    JEL: F16
    Date: 2018–08
  15. By: Lance Lochner; Todd Stinebrickner; Utku Suleymanoglu
    Abstract: Using unique survey and administrative data from the Canada Student Loans Program, we document that parental support and personal savings substantially lower student loan repayment problems. We develop a theoretical model for studying student borrowing and repayment in the presence of risky labor market outcomes, moral hazard, and costly earnings verification. This framework demonstrates that non-monetary costs of applying for income-based repayment assistance are critical to understanding why resources other than earnings lead to greater repayment. We further show that eliminating these non-monetary costs may be inefficient and lead to undesirable redistribution. Empirically, we demonstrate that expanding Canada’s income-based Repayment Assistance Plan to automatically cover all borrowers would likely reduce program revenue by nearly one-half over early years of repayment. Finally, we show how student loan programs can be more efficiently designed to address heterogeneity in parental transfers in the presence of non-monetary earnings verification costs and moral hazard.
    JEL: D14 D82 H21 H52 I22 I24 I28 J24
    Date: 2018–07
  16. By: Rafal Kierzenkowski; Peter Gal; Gabor Fulop; Dorothee Flaig; Frank van Tongeren
    Abstract: This study explores the impact of export shocks on firms and re-aggregates results to derive distributional effects on sectors and regions. In a first step, firm level data are used to assess the empirical relationship between exports and three outcome variables – labour productivity, employment and wages. In a second step, an illustrative set of changes in trading relationships generate sectoral export shocks, which are simulated with the OECD METRO model of trade and subsequently fed into micro-level estimates. The method developed in this study can be applied to other countries, conditional on the availability of data. As an initial case study, the analysis is for the United Kingdom which has weak regional productivity outside London, partly related to sectoral and trade specialisation. In particular, the most productive regions are specialised in knowledge-intensive services and are more intensive in tradable services. The results suggest limited impacts of export shocks on sectoral employment, except for car and truck manufacturing, consistent with a high integration of the sector with European value chains. Labour productivity and wages are negatively affected across most sectors, but the effects are smaller on the services sector relative to the goods sector. Given that services activities are concentrated in more productive regions, these regions are more resilient to shocks. The United Kingdom has a strong comparative advantage in services sectors and promoting the opening of global services markets would be an important way to offset potential negative impacts of export shocks on the other sectors of the economy.
    Keywords: employment, European Union, exports, firms, productivity, regions, sectors, United Kingdom, wages
    JEL: D24 F14 F16 J21 J3 R12
    Date: 2018–08–08
  17. By: Shvartsman, Elena (University of Basel)
    Abstract: This paper analyses whether the short- and mid-term labour market outcomes of Swiss university graduates are affected by the state of the domestic economy at the time of labour market entry, where the economic conditions are captured by the regional unemployment rate at the time of graduation. This analysis contributes to the question as to whether labour market outcomes are determined inter alia by luck even under fairly stable labour market conditions. The study provides empirical evidence demonstrating that less favourable economic conditions at the time of labour market entry have a negative impact on the individuals' wages one year after graduation. However, there appears to be a partial catchup towards luckier cohorts in the subsequent four years, which is primarily explained by higher job mobility with respect to the number of jobs an individual has held since his graduation as well as tenure with the first job. Finally, there is strong evidence in favour of heterogeneous effects with respect to, for instance, individuals employed in part-time, for whom the negative effects appear to be most pronounced, while at the same time it is found that the probability of part-time employment rises under less favourable entry conditions.
    Keywords: labour market entry conditions, wages, job mobility
    JEL: J31 J39
    Date: 2018–06
  18. By: Turrell, Arthur (Bank of England); Thurgood, James (Bank of England); Djumalieva, Jyldyz (Nesta); Copple, David (Bank of England); Speigner, Bradley (Bank of England)
    Abstract: What type of disaggregation should be used to analyse heterogeneous labour markets? How granular should that disaggregation be? Economic theory does not currently tell us; perhaps data can. Analyses typically split labour markets according to top-down classification schema such as sector or occupation. But these may be slow-moving or inaccurate relative to the structure of the labour market as perceived by firms and workers. Using a dataset of 15 million job adverts posted online between 2008 and 2016, we create an empirically driven, ‘bottom-up’ segmentation of the labour market which cuts across wage, sector, and occupation. Our segmentation is based upon applying machine learning techniques to the demand expressed in the text of job descriptions. This segmentation automatically identifies traditional job roles but also surfaces sub-markets not apparent in current classifications. We show that the segmentation has explanatory power for offered wages. The methodology developed could be deployed to create data-driven taxonomies in conditions of rapidly changing labour markets and demonstrates the potential of unsupervised machine learning in economics.
    Keywords: Vacancies; classification; disaggregation
    JEL: J42
    Date: 2018–07–27
  19. By: Karen Clay; Margarita Portnykh
    Abstract: This paper draws on a new state-level panel dataset and a model of domestic Dutch disease to examine the short-run and long-run effects of oil & natural gas, coal, and agricultural land endowments on state economies during 1936-2015. Using a flexible shift-share estimation approach, where the shift is national resource employment and the share is state resource endowment, we find that different resources had different short-run effects in different time periods, across increases and decreases in resource employment, and across different outcomes. Using long differences, we find that long-run population growth was an important margin of adjustment over 1936-2015. States with larger coal and agricultural endowments per square mile experienced significantly slower population growth than states with smaller endowments per square mile. Resource endowments had no effect on long-run growth in per capita income.
    JEL: J2 N12 O4 Q24 Q43
    Date: 2018–06
  20. By: Ernesto Dal Bó; Frederico Finan; Nicholas Y. Li; Laura Schechter
    Abstract: Standard models of hierarchy assume that agents and middle managers are better informed than principals about how to implement a particular task. We estimate the value of the informational advantage held by supervisors (middle managers) when ministerial leadership (the principal) introduced a new monitoring technology aimed at improving the performance of agricultural extension agents (AEAs) in rural Paraguay. Our approach employs a novel experimental design that, before randomization of treatment, elicited from supervisors which AEAs they believed should be prioritized for treatment. We find that supervisors did have valuable information—they prioritized AEAs who would be more responsive to the monitoring treatment. We develop a model of monitoring under different allocation rules and rollout scales (i.e., the share of AEAs to receive treatment). We semi-parametrically estimate marginal treatment effects (MTEs) to demonstrate that the value of information and the benefits to decentralizing treatment decisions depend crucially on the sophistication of the principal and on the scale of rollout.
    JEL: D02 D04 D23 D61 D73 D78 D82 H11 H43 J45 O22 Q28
    Date: 2018–08
  21. By: Moriconi, Simone; Peri, Giovanni; Pozzoli, Dario (Department of Economics, Copenhagen Business School)
    Abstract: The offshoring of production by multinational firms has expanded dramatically in recent decades, increasing the potential for economic growth and technological transfers. What determines the location of such offshore production? How do the policies and characteristics of countries affect these decisions? Do firms choose specific countries because of their policies or because they are more familiar with them? In this paper, we use a very rich dataset on Danish firms to analyze how their decisions regarding offshore production depend on institutional characteristics and firm-specific bilateral connections with these countries. We find that institutions that enhance investor protections and reduce corruption increase the probability of offshoring, while those that introduce regulatory constraints in the labor market discourage it. We also show that offshoring activities are more likely for firms that have developed networks in the country of destination.
    Keywords: Offshoring; product market; labor regulations; network; fixed costs
    JEL: F16 J24 J38
    Date: 2018–08–06
  22. By: Toshihiko Mukoyama (Department of Economics, Georgetown University); Sophie Osotimehin (Department of Economics, University of Virginia)
    Abstract: We study how factors that hinder the reallocation of inputs across firms influence aggregate productivity growth. We extend Hopenhayn and Rogerson's (1993) general equilibrium firm dynamics model to allow for endogenous innovation. We calibrate the model using US data, and then evaluate the effects of firing taxes on reallocation, innovation, and aggregate productivity growth. In our baseline specification, we find that firing taxes reduce overall innovation and productivity growth. We also show that firing taxes can have opposite effects on the entrants' innovation and the incumbents' innovation, and thus the overall outcome depends on the relative strengths of these forces.
    Keywords: Innovation, R&D, Reallocation, Firing costs
    JEL: E24 J24 J62 O31 O47
    Date: 2018–08–13
  23. By: Thomas DeLeire
    Abstract: This study examines the effect of a Medicaid disenrollment on employment, sources of health insurance coverage, health, and health care utilization of childless adults using longitudinal data from the 2004 Panel of the Survey of Income and Program Participation. From July through September 2005, TennCare, the Tennessee Medicaid program, disenrolled approximately 170,000 adults following a change in eligibility rules. Following this eligibility change, the fraction of adults in Tennessee covered by Medicaid fell by over 5 percentage points while uninsured rates increased by almost 5 percentage points relative to adults in other Southern states. There is no evidence of an increase in employment rates in Tennessee following the disenrollment. Self-reported health and access to medical care worsened as hospitalization rates, doctor visits, and dentist visits all declined while the use of free or public clinics increased. The Tennessee experience suggests that undoing the expansion of Medicaid eligibility to adults that occurred under the Affordable Care Act likely would reduce health insurance coverage, reduce health care access, and worsen health but would not lead to increases in employment.
    JEL: I11 I13 I18 J22
    Date: 2018–08
  24. By: RAMACHANDRAN, Rajesh; RAUH, Christopher
    Abstract: We introduce coordination failures driven by beliefs regarding the presence of taste discriminators as a channel of discrimination in productive activities requiring the input of multiple agents. We show that discrimination can persist under perfectly observable ability, when taste for discrimination has died out, and under absence of discriminatory social norms. Empirically we analyze the market for self employment - an activity commonly requiring inputs from multiple agents. Consistent with the theoretical predictions, beliefs about discrimination are a significant correlate of self-employment rates, as well as the cost and success of establishing productive relations for blacks in the US.
    Keywords: Discrimination; coordination failure; beliefs
    JEL: C73 D83 J71
    Date: 2018
  25. By: Miriam Gensowski; Torben Heien Nielsen; Nete Munk Nielsen; Maya Rossin-Slater; Miriam Wüst
    Abstract: A large literature documents that childhood health shocks have lasting negative consequences for adult outcomes. This paper demonstrates that the adversity of childhood physical disability can be mediated by individuals' educational and occupational choices, which reflect their comparative advantage. We merge records on children hospitalized with poliomyelitis during the 1952 Danish epidemic to census and administrative data, and exploit quasi-random variation in paralysis incidence. While childhood disability increases the likelihood of early retirement and disability pension receipt at age 50, paralytic polio survivors obtain higher education and are more likely to work in white-collar and computer-demanding jobs than their non-paralytic counterparts.
    JEL: I10 I14 I24 J24
    Date: 2018–06
  26. By: David Autor; Anna Salomons
    Abstract: Many technological innovations replace workers with machines, but this capital-labor substitution need not reduce aggregate labor demand because it simultaneously induces four countervailing responses: own-industry output effects; cross-industry input–output effects; between-industry shifts; and final demand effects. We quantify these channels using four decades of harmonized cross-country and industry data, where we measure automation as industry-level movements in total factor productivity (TFP) that are common across countries. We find that automation displaces employment and reduces labor's share of value-added in the industries in which it originates (a direct effect). In the case of employment, these own-industry losses are reversed by indirect gains in customer industries and induced increases in aggregate demand. By contrast, own-industry labor share losses are not recouped elsewhere. Our framework can account for a substantial fraction of the reallocation of employment across industries and the aggregate fall in the labor share over the last three decades. It does not, however, explain why the labor share fell more rapidly during the 2000s
    JEL: D33 J23 O33 O57
    Date: 2018–07
  27. By: Kohn, Karsten (KfW Bankengruppe); Wewel, Solvejg A. (Boston College)
    Abstract: Creative industries comprise enterprises focusing on the creation, production, and distribution of creative or cultural goods and services. Following an explorative empirical approach, we analyze start-ups in creative industries regarding three issues along the start-up process: (1) personal characteristics of creative entrepreneurs, (2) their use of labor and capital as input factors, and (3) start-up success as measured by start-up survival, degree of innovativeness, and change in household income. Based on individual-level data from the KfW Start-up Monitor, a large-scale survey on entrepreneurship in Germany, our regression results show that entrepreneurs in creative industries tend to be younger and better educated than entrepreneurs in other economic sectors. Businesses in creative industries are prevalently started on a small scale, as part-time occupations, and with less financial resources. Yet they show a higher persistence and an above-average degree of innovativeness.
    Keywords: creative industries, cultural industries, entrepreneurship, business start-ups, start-up decision, start-up success, innovation
    JEL: L26 M13 J21
    Date: 2018–06
  28. By: Doucouliagos, Chris (Deakin University); Laroche, Patrice (University of Lorraine); Kruse, Douglas L. (Rutgers University); Stanley, T. D. (Deakin University)
    Abstract: In this article we re-examine the relationship between group-based profit sharing and productivity. Our meta-regression analysis of 313 estimates from 56 studies controls for publication selection and misspecification biases and investigates the impact of firm level unionisation and national differences in values and culture. Profit sharing is positively related to productivity on average, with a stronger relationship where there is higher unionisation and in countries where honesty is less highly valued and there are higher levels of individualism. The latter two results suggest profit sharing works best in settings where cooperation does not naturally occur. The positive effect of profit sharing on productivity is larger in cooperative firms and in transition economies.
    Keywords: profit sharing, productivity, meta-regression analysis, unions, tax evasion, individualism
    JEL: J33 J51 J54 M52
    Date: 2018–06

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