nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2018‒09‒03
nineteen papers chosen by
Joseph Marchand
University of Alberta

  1. High-Growth Entrepreneurship By Brown, J. David; Earle, John S.; Kim, Mee Jung; Lee, Kyung Min
  2. Working Hours and Top Management Appointments: Evidence from Linked Employer-Employee Data By Frederiksen, Anders; Kato, Takao; Smith, Nina
  3. Probing for Informal Work Activity By Katharine G. Abraham; Ashley Amaya
  4. Paying for What Kind of Performance? Performance Pay and Multitasking in Mission-Oriented Jobs By Jones, Daniel; Tonin, Mirco; Vlassopoulos, Michael
  5. From Engineer to Taxi Driver? Language Proficiency and the Occupational Skills of Immigrants By Imai, Susumu; Stacey, Derek; Warman, Casey
  6. The Changing Structure of Immigration to the OECD: What Welfare Effects on Member Countries? By Michal Burzynski; Fre´de´ric Docquier; Hillel Rapoport
  7. Consequences of Immigrating During a Recession: Evidence from the US Refugee Resettlement Program By Mask, Joshua
  8. The Role of Self-Employment in Ireland's Older Workforce By Nolan, Anne; Barrett, Alan
  9. Export boom, employment bust? The paradox of Indonesia's displaced workers, 2000-14 By Shrestha, Rashesh; Coxhead, Ian
  10. Coordination of Hours within the Firm By Labanca, Claudio; Pozzoli, Dario
  11. The Changing (Dis-)Utility of Work By Greg Kaplan; Sam Schulhofer-Wohl
  12. Historic Sex-Ratio Imbalances Predict Female Participation in the Market for Politicians By Grant, Iris; Kesternich, Iris; Steckenleiter, Carina; Winter, Joachim
  13. Structural change, productivity growth and labour market turbulence in Africa By Mensah, Emmanuel; Owusu, Solomon; Foster-McGregor, Neil; Szirmai, Adam
  14. Educator Incentives and Educational Triage in Rural Primary Schools By Daniel O. Gilligan; Naureen Karachiwalla; Ibrahim Kasiirye; Adrienne M. Lucas; Derek Neal
  15. Knowledge intensive business services and urban areas: an analysis of localization and productivity on Italian data By valter di Giacinto; Giacinto Micucci; Alessandro Tosoni
  16. Teacher Performance and Accountability Incentives By Hugh Macartney; Robert McMillan; Uros Petronijevic
  17. Labour policy and multinational firms: the "race to the bottom" revisited By Bhattacharya, Anindya; Sen, Debapriya
  18. The Effect of Labour Cost Reduction on Employment of Vulnerable Groups — Evaluation of the Hungarian Job Protection Act By Svraka, András
  19. Strategies to Productively Reincorporate the Formerly-Incarcerated into Communities: A Review of the Literature By Doleac, Jennifer

  1. By: Brown, J. David (U.S. Census Bureau); Earle, John S. (George Mason University); Kim, Mee Jung (George Mason University); Lee, Kyung Min (George Mason University)
    Abstract: Analyzing data on all U.S. employers in a cohort of entering firms, we document a highly skewed size distribution, such that the largest 5% account for over half of cohort employment at firm birth and more than two-thirds at firm age 7. Little of the size variation is accounted for by industry or amount of finance, but relative size is strongly persistent over time: at age 7, the probability of 20+ employees is about 40 times larger for those entering with 20+ than for those entering with one. We link administrative and survey data to study the role of founder characteristics in high growth, defined as the largest 5% of the cohort at ages 0 and 7. Female-founded firms are 50% less likely to be in this ventile at both ages, and 34% less likely when controlling for detailed demographic and human capital variables. A similar initial gap for African-Americans, however, disappears by age 7. Founder age is positively associated with high growth at entry, but the profile flattens and turns negative as the firm ages. The education profile is initially concave, with graduate degree recipients no more likely than high school graduates to found high growth firms, but the former nearly catch up to those with bachelor's degrees by firm age 7, while the latter do not. Most other relationships of high growth with founder characteristics are highly persistent over time. Prior business ownership is strongly positively associated, and veteran experience negatively associated, with high growth. A larger founding team raises the probability of high growth, while, controlling for team size, diversity (by gender, age, race/ethnicity, or nativity) either lowers the probability or has little effect. Controlling for start-up capital raises the high-growth probability of firms founded by women, minorities, immigrants, veterans, smaller founding teams, and novice, younger, and less educated entrepreneurs. Perhaps surprisingly, female, minority, and less-educated entrepreneurs tend to choose high-growth industries, but fewer of them achieve high growth relative to their industry peers.
    Keywords: entrepreneurship, business entry, firm growth, firm dynamics, founder, employment, firm size distribution, firm performance
    JEL: D22 J24 L25 L26
    Date: 2018–07
  2. By: Frederiksen, Anders (Aarhus University); Kato, Takao (Colgate University); Smith, Nina (Aarhus University)
    Abstract: By combining Danish registry data covering the population of Danish workers with the Danish Labor Force Survey (DLFS) which provides detailed data on working hours, we provide fresh evidence and insights on a potentially important role that career concerns/considerations play in accounting for the incidence of long working hours. First, we obtain new and robust evidence with external validity on a positive association between working hours and career success (measured by top management appointments). Second, we illuminate that the observed positive association between working hours and career success is consistent with three distinct theories: (i) human capital; (ii) rat race; and (iii) tournament. Third, guided by each theory, we go beyond a simple association between the quantity of working hours and career success, and explore what kinds of working hours are more beneficial for career advancement. Specifically we find: (i) for managers, working long hours will help them increase their odds of top management appointments in the same firm, while not in a different firm, while for non-managerial professionals and other workers, both internal and external hours will help them raise their odds of career success; (ii) the odds of top management appointments will rise significantly by becoming the longest working hour person among the peers; (iii) working nonstandard hours (evening/night) will be beneficial for career advancement; and (iv) workers with high desired hours will enjoy greater odds of top management appointments even after controlling for actual hours. We interpret each finding from the three theoretical perspectives.
    Keywords: working hours, top management appointments, promotions, human capital, job assignment, rat race, adverse selection, tournament
    JEL: M5
    Date: 2018–07
  3. By: Katharine G. Abraham; Ashley Amaya
    Abstract: The Current Population Survey (CPS) is the source of official U.S. labor force statistics. The wording of the CPS employment questions may not always cue respondents to include informal work in their responses, especially when providing proxy reports about other household members. In a survey experiment conducted using a sample of Mechanical Turk respondents, additional probing identified a substantial amount of informal work activity not captured by the CPS employment questions, both among those with no employment and among those categorized as employed based on answers to the CPS questions. Among respondents providing a proxy report for another household member, the share identifying additional work was systematically greater among those receiving a detailed probe that offered examples of types of informal work than among those receiving a simpler global probe. Similar differences between the effects of the detailed and the global probe were observed when respondents answered for themselves only among those who had already reported multiple jobs. The findings suggest that additional probing could improve estimates of employment and multiple job holding in the CPS and other household surveys, but that how the probe is worded is likely to be important.
    JEL: J21
    Date: 2018–08
  4. By: Jones, Daniel (University of Pittsburgh); Tonin, Mirco (Free University of Bozen/Bolzano); Vlassopoulos, Michael (University of Southampton)
    Abstract: How does pay-for-performance (P4P) impact productivity, multitasking, and the composition of workers in mission-oriented jobs? These are central issues in sectors like education or healthcare. We conduct a laboratory experiment, manipulating compensation and mission, to answer these questions. We find that P4P has positive effects on productivity on the incentivized dimension of effort and negative effects on the non-incentivized dimension for workers in non-mission-oriented treatments. In mission-oriented treatments, P4P generates minimal change on either dimension. Participants in the non-mission sector – but not in the mission-oriented treatments – sort on ability, with lower ability workers opting out of the P4P scheme.
    Keywords: prosocial motivation, performance pay, multitasking, sorting
    JEL: C91 M52 J45
    Date: 2018–07
  5. By: Imai, Susumu; Stacey, Derek; Warman, Casey
    Abstract: We examine the ability of immigrants to transfer the occupational human capital they acquired prior to immigration. We first augment a model of occupational choice to study the implications of language proficiency on the cross-border transferability of occupational human capital. We then explore the empirical predictions using information about the skill requirements from the O*NET and a unique dataset that includes both the last source country occupation and the first four years of occupations in Canada. We supplement the analysis using Census estimates for the same cohort with source country occupational skill requirements predicted using detailed human capital related information such as field of study. We find that male immigrants to Canada were employed in source country occupations that typically require high levels of cognitive skills, but rely less intently on manual skills. Following immigration, they find initial employment in occupations that require the opposite. Consistent with the hypothesized asymmetric role of language in the transferability of previously acquired cognitive and manual skills, these discrepancies are larger among immigrants with limited language fluency.
    Keywords: occupational mobility,language proficiency,skills,tasks,human capital,immigration,field of study,Canada,point system,economic immigrants,entry class
    JEL: J24 J31 J61 J62 J71 J80
    Date: 2018
  6. By: Michal Burzynski (University of Luxembourg); Fre´de´ric Docquier (Universite Catholique de Louvain); Hillel Rapoport (Paris School of Economics)
    Abstract: We investigate the welfare implications of two pre-crisis immigration waves (1991– 2000 and 2001–2010) and of the post-crisis wave (2011–2015) for OECD native citizens. To do so, we develop a general equilibrium model that accounts for the main channels of transmission of immigration shocks – the employment and wage effects, the fiscal effect, and the market size effect – and for the interactions between them. We parameterize our model for 20 selected OECD member states. We find that the three waves induce positive effects on the real income of natives, however the size of these gains varies considerably across countries and across skill groups. In relative terms, the post-crisis wave induces smaller welfare gains compared to the previous ones. This is due to the changing origin mix of immigrants, which translates into lower levels of human capital and smaller fiscal gains. However, differences across cohorts explain a tiny fraction of the highly persistent, cross-country heterogeneity in the economic benefits from immigration.
    Keywords: immigration, welfare, crisis, Inequality, general equilibrium
    JEL: C68 F22 J24
    Date: 2018–08
  7. By: Mask, Joshua
    Abstract: I examine long-term employment and wage consequences for refugees who immigrate to the United States under different business cycle conditions. It is difficult to causally identify the relationship between initial economic conditions and subsequent outcomes for most immigrants because they can choose when and where they immigrate. However, refugees offer a unique opportunity to empirically measure these outcomes because their dates of arrival and states of placement are exogenously chosen through the US Refugee Resettlement Program. For every one percentage point increase in the national unemployment rate at arrival, refugees on average experience a 2.99% reduction in wages five years later and a 1.8 percentage point reduction in employment four years later. Estimates using state unemployment rate at arrival show less persistence suggesting mobility or differential economic improvement across states may be important in mitigating these effects. I also divide the sample across gender and educational attainment. I find no evidence of wage scarring for uneducated males but observe a 4.85% reduction in wages five years later for high school-educated males and a 5.29% reduction in wages four years later for college-educated.
    Keywords: Immigration, Labor Market Outcomes, Settlement Policies, Recession
    JEL: J15 J24 J31 J41 J61
    Date: 2018–08–16
  8. By: Nolan, Anne (ESRI, Dublin); Barrett, Alan (ESRI, Dublin)
    Abstract: A feature of employment at older ages that has been observed in many countries, including Ireland, is the higher share of self-employment among older labour force participants. This pattern of higher self-employment rates at the end of the labour market career may reflect lower rates of retirement among the self-employed compared to employees, as well as transitions into self-employment at older ages. In this paper, we use data from four waves of the Irish Longitudinal Study on Ageing (TILDA), spanning the period 2010-2016, to examine both the characteristics of the older self-employed in Ireland and the determinants of transitions in employment states at older age. We find that the higher proportion of self-employed people at older ages in Ireland results from lower retirement rates among the self-employed and not from transitions from employment to self-employment. This is in contrast to other countries such as the US where transitions into self-employment are more prevalent. We find that the self-employed are older, more likely to be male, and significantly less likely to have any form of supplementary pension cover than the employed. These lower retirement rates and lower degrees of pension cover suggest that standard approaches to pension provision may be less effective in proving attractive to the self-employed in Ireland.
    Keywords: retirement, self-employment, older workers, Ireland
    JEL: D14 H55 J14 J26
    Date: 2018–07
  9. By: Shrestha, Rashesh; Coxhead, Ian
    Abstract: In Indonesia, an export boom and sustained, rapid GDP growth in the decade after 2000 was accompanied by real earnings that were flat on average, and even declining for many workers. Conventional models of growth and trade predict that labor productivity rises as an economy develops; that this should not be observed during a period of high GDP growth is a puzzle that merits careful investigation. In this paper we explore these seemingly paradoxical trends using several waves of a panel of individual employment data. Economic growth is rarely balanced in a sectoral sense, and the nature of the structural change experienced by Indonesia is also strongly associated with lower competitiveness in sectors where formal employment rates are high, causing some degree of involuntary labor movement from formal to informal modes of employment. We explore this econometrically and find that the earnings of workers displaced from formal to informal jobs are significantly lower relative to workers who remain in the formal market. The fact of this displacement, and its implications for individual earnings, undercuts conventional thinking about the welfare gains from a sustained growth experience. Our findings add, perhaps for the first time, a developing-country dimension to the existing job displacement literature. They also shed some light on the causes of Indonesia's unprecedented increase in inequality during the same growth epoch.
    Keywords: Displacement, Formal, Informal, Earnings, Indonesia
    JEL: E24 F16 J23 J63 O17
    Date: 2018–08
  10. By: Labanca, Claudio (Monash University); Pozzoli, Dario (Department of Economics, Copenhagen Business School)
    Abstract: Although coworkers are spending an increasing share of their working time interacting with one another, little is known about how the coordination of hours among heterogenous coworkers affects pay, productivity and labor supply. In this paper, we use new linked employer-employee dataon hours worked in Denmark to first document evidence of positive correlations between wages, productivity and the degree of hours coordination - measured as the dispersion of hours - within firms. We then estimate labor supply elasticities by exploiting changes made to the personal income tax schedule in 2010. We find that hours coordination is associated with attenuated labor supply elasticity and spillovers on coworkers not directly affected by the tax change. These spillovers led to a 15% increase in the marginal excess burden from the 2010 tax reform, and if ignored, they induce substantial downward bias in estimates of the labor supply elasticity. We explain these findings in a framework in which differently productive firms choose whether to coordinate hours in exchange for productivity gains, leading more productive firms to select into coordinating hours and to pay compensating wage differentials.
    Keywords: skill polarization; skill upgrading; trade integration and labor market frictions
    JEL: H20 J20 J31
    Date: 2018–06–09
  11. By: Greg Kaplan; Sam Schulhofer-Wohl
    Abstract: We study how changes in the distribution of occupations have affected the aggregate non-pecuniary costs and benefits of working. The physical toll of work is smaller now than in 1950, with workers shifting away from occupations in which people report experiencing tiredness and pain. The emotional consequences of the changing occupation distribution vary substantially across demographic groups. Work has become happier and more meaningful for women, but more stressful and less meaningful for men. These changes appear to be concentrated at lower education levels.
    JEL: I31 J22 J24 J28 N32
    Date: 2018–06
  12. By: Grant, Iris (KU Leuven); Kesternich, Iris (KU Leuven); Steckenleiter, Carina (University of St. Gallen); Winter, Joachim (LMU Munich)
    Abstract: We analyze the long-term effects of gender imbalances on female labor force participation, in particular in the market for politicians. We exploit variation in sex ratios - the number of men divided by the number of women in a region - across Germany induced by WWII. In the 1990 elections, women were more likely to run for office in constituencies that had relatively fewer men in 1946. We do not find a significant effect of the sex ratio on the likelihood of a woman winning the election. These results suggest that while women were more likely to run for a seat in parliament in constituencies with lower historical sex ratios, voters were not more inclined to vote for them. Voter demand effects thus do not appear to be as strong as candidate supply effects.
    Keywords: female politicians; gender stereotypes; occupational choice; sex imbalance;
    JEL: J16 J24 N44
    Date: 2018–08–28
  13. By: Mensah, Emmanuel (UNU-MERIT); Owusu, Solomon (UNU-MERIT); Foster-McGregor, Neil (UNU-MERIT); Szirmai, Adam (UNU-MERIT)
    Abstract: This paper combines a standard decomposition of labour productivity with a decomposition of labour market turbulence to study the role of structural change and job reallocation in the economic growth performance of African countries over the past fifty years using an updated and expanded version of the Africa Sector Database (ASD) developed by the Groningen Growth and Development Centre (GGDC). The results show that productivity growth has been generally low since the 1960s with moderate contributions from structural change across the entire period. Although productivity growth from structural change is generally low, a regional comparison shows that structural change is more rapid in East Africa than in the other regions of sub-Saharan Africa (SSA). While structural change accounts for more than half of the labour productivity growth in East Africa, within-sector productivity growth accounts for more than half of the labour productivity growth in West Africa and Southern Africa. Structural change is characterised by a net reallocation of workers across different sectors. As such, we compute the labour market turbulence effect of structural change. The turbulence effect of structural change has been mostly felt in the Service Sector due to volatile demand and the high level of informality. The paper further makes the first attempt to estimate the effect of labour market flexibility on job reallocation in Africa. The results show that more rigid labour markets reduce job reallocation across sectors impeding structural change and productivity growth in Africa.
    Keywords: Labour Market Turbulence, Productivity Growth, Structural Change, Africa
    JEL: O11 O14 O41 O43 O57 J21
    Date: 2018–06–15
  14. By: Daniel O. Gilligan; Naureen Karachiwalla; Ibrahim Kasiirye; Adrienne M. Lucas; Derek Neal
    Abstract: In low-income countries, educators often encourage weak primary students to drop out before reaching the end of primary school in order to avoid the negative attention they receive when their students perform poorly on primary leaving exams. We conducted an experiment in rural Uganda that sought to reduce dropout rates in grade six and seven by rewarding teachers for the performance of each of their students. Teachers responded to this Pay for Percentile (PFP) incentive system in ways that raised attendance rates two school years later from .56 to .60. These attendance gains were driven primarily by outcomes in treatment schools that provide textbooks for grade six math students, where two-year attendance rates rose from .57 to .64. In these same schools, students whose initial skills levels prepared them to use grade six math texts enjoyed significant gains in math achievement. We find little evidence that PFP improved attendance or achievement in schools without books even though PFP had the same impact on reported teacher effort in schools with and without books. We document several results that are consistent with the hypothesis that teacher effort and books are complements in education production.
    JEL: I0 J3 O1
    Date: 2018–08
  15. By: valter di Giacinto (Bank of Italy); Giacinto Micucci (Bank of Italy); Alessandro Tosoni (Bank of Italy)
    Abstract: We analyse the geographic localization and the productivity of knowledge-intensive business services (KIBS) in Italy, using both census data and balance-sheet data at the firm level. We find that KIBS are generally agglomerated in urban areas where they attain significantly higher labour productivity levels. Urban productivity advantages are found to be strongly associated with the local availability of human capital and to standard proxies of Marshall-Arrow-Romer and Jacobs agglomeration economies. Forward demand linkages and some factors impacting on the thickness of the local labour market also appear to be relevant. On the whole, the set of explanatory factors considered could explain the entire urban productivity premium estimated for Italian KIBS firms.
    Keywords: knowledge-intensive business services (KIBS); urban areas; agglomeration economies.
    JEL: J24 L84 R30
    Date: 2018–07
  16. By: Hugh Macartney; Robert McMillan; Uros Petronijevic
    Abstract: This paper documents a new empirical regularity: teacher value-added increases within-teacher when accountability incentives are strengthened. That finding motivates a strategy to separate value-added into incentive-varying teacher effort and incentive-invariant teacher ability, combining rich longitudinal data with exogenous incentive-policy variation. Our estimates indicate that teacher effort and ability both raise current and future test scores, with ability having stronger effects. These estimates feed into a framework for comparing the cost-effectiveness of alternative education policies. For illustration, we show incentive-oriented reforms can outperform policies targeting teacher ability, given their potential to influence all teachers rather than a subset.
    JEL: I21 J24 M52
    Date: 2018–06
  17. By: Bhattacharya, Anindya; Sen, Debapriya
    Abstract: This paper revisits the "race to the bottom" phenomenon in a simple game theoretic framework. We consider two countries and one multinational firm, which requires two inputs that are imperfect substitutes. In the benchmark model the labour of each country specializes in a distinct input. Seeking to maximize their labour incomes, countries simultaneously announce wages following which the firm chooses its labour employment in each country. We show that "race to the bottom" (countries setting minimum possible wages) is never an equilibrium. Moreover there are equilibria with ``race to the top", that is, countries set maximum possible wages. This result is robust in an extended model where prior to competing in wages, each country can make input-specific investments to make its labour available for one or both inputs. Provided the production function of the firm is not asymmetrically intensive in either one of the two inputs, there are equilibria of the extended game with specialization (that is, countries invest in distinct inputs) as well as "race to the top".
    Keywords: race to the bottom; race to the top; labour policy; multinational; CES (constant elasticity of substitution)
    JEL: J42 O12
    Date: 2018–07–11
  18. By: Svraka, András
    Abstract: In 2013 Hungary introduced large scale targeted employers' social security contribution cuts for the young, old, low-skilled, and other marginally attached workforce, called the Job Protection Act (JPA). In this paper I estimate the employment effects of the programme for the main target groups using the discontinuities in the JPA's design in a differences in differences framework on administrative datasources. My estimates show robust and economically significant employment effects for the JPA, a total 1.2% point increase in employment rate three years after the introduction. The JPA was highly effective in the young and low-skilled target groups, with high self-financing ratios, while it was only marginally effective in the old target group. The results suggests that targeted tax incentives can be a cost-efficient way of increasing employment in vulnerable groups.
    Keywords: Job Protection Act, targeted tax incentives, differences in differences
    JEL: H24 J21 J23
    Date: 2018–08–02
  19. By: Doleac, Jennifer (Texas A&M University)
    Abstract: Two-thirds of those released from prison in the United States will be re-arrested within three years, creating an incarceration cycle that is detrimental to individuals, families, and communities. There is tremendous public interest in ending this cycle, and public policies can help or hinder the reintegration of those released from jail and prison. This review summarizes the rigorous evidence on the effectiveness of programs that aim to improve the reintegration and rehabilitation of the formerly-incarcerated. While there is a need for much more research on this topic, the existing evidence provides some useful guidance for decision-makers. The importance of evaluating existing and new strategies is also discussed.
    Keywords: prisoner reentry, employment, recidivism
    JEL: K42 J24 H76 I0
    Date: 2018–06

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