nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2018‒10‒15
25 papers chosen by
Joseph Marchand
University of Alberta

  1. Peer influence in the workplace: Evidence from an enterprise digital platform By Haoyuan Liu; Wen Wen; Andrew B. Whinston
  2. How Do Firms Respond To Place-Based Tax Incentives? By Hyejin Ku; Uta Schönberg; Ragnhild C. Schreiner
  3. Understanding Joint Retirement By Pierre-Carl Michaud; Arthur van Soest; Luc Bissonnette
  4. Collateral Damage? Labour Market Effects of Competing with China – at Home and Abroad By Cabral, Sónia; Martins, Pedro S.; Pereira dos Santos, João; Tavares, Mariana
  5. Which Ladder to Climb? Wages of Workers by Job, Plant, and Education By Christian Bayer; Moritz Kuhn
  6. Do minimum wages increase search effort? By Laws, A.
  7. STEM Careers and Technological Change By David J. Deming; Kadeem L. Noray
  8. Labor Market Effects of Reducing the Gender Gap in Parental Leave Entitlements By Elena Del Rey; Maria Racionero; Jose I. Silva
  9. The Consequences of Academic Match between Students and Colleges By Eleanor Wiske Dillon; Jeffrey A. Smith
  10. Parental Leave Policies and Socio-Economic Gaps in Child Development: Evidence from a Substantial Benefit Reform Using Administrative Data By Huebener, Mathias; Kühnle, Daniel; Spieß, C. Katharina
  11. Publishing and Promotion in Economics: The Tyranny of the Top Five By James J. Heckman; Sidharth Moktan
  12. Who Creates New Firms When Local Opportunities Arise? By Shai Bernstein; Emanuele Colonnelli; Davide Malacrino; Timothy McQuade
  13. The Minimum Wage, EITC, and Criminal Recidivism By Amanda Y. Agan; Michael D. Makowsky
  14. Behind Every High Earning Man Is a Conscientious Woman: A Study of the Impact of Spousal Personality on Wages By Averett, Susan L.; Bansak, Cynthia; Smith, Julie K.
  15. The end of the flat tax experiment in Slovakia: An evaluation using behavioural microsimulation linked with a dynamic macroeconomic framework By Norbert Švarda
  16. How Does For-profit College Attendance Affect Student Loans, Defaults and Labor Market Outcomes? By Luis Armona; Rajashri Chakrabarti; Michael F. Lovenheim
  17. Refugee immigrants, occupational sorting and wage gaps By Christopher F. Baum; Hans Lööf; Andreas Stephan
  18. Racing With or Against the Machine? Evidence from Europe By Terry Gregory; Anna Salomons; Ulrich Zierahn
  19. The Effects of Medicaid Expansion on Labor Market Outcomes: Evidence from Border Counties By Lizhong Peng; Xiaohui (Ronnie) Guo; Chad D. Meyerhoefer
  20. Gender Wage Gap in Online Gig Economy and Gender Differences in Job Preferences By Chen Liang; Yili Hong; Bin Gu; Jing Peng
  21. The Impact of Compulsory Schooling on Earnings. Evidence from the 1999 Education Reform in Poland By Liwiński, Jacek
  22. A General Equilibrium Theory of Occupational Choice under Optimistic Beliefs about Entrepreneurial Ability By Michelle Dell’Era; Luca David Opromolla; Luís Santos-Pinto
  23. A Model of Tournament Incentives with Corruption By Bin Wang; Yu Zheng
  24. Combat, Casualties, and Compensation: Evidence from Iraq and Afghanistan By Armey, Laura; Kniesner, Thomas J.; Leeth, John D.; Sullivan, Ryan
  25. Why do young people make atypical gender-related study choices? An analysis of French master’s graduates By Magali Jaoul-Grammare

  1. By: Haoyuan Liu (McCombs School of Business, University of Texas at Austin, 2110 Speedway Stop B6500, Austin, TX 78712); Wen Wen (McCombs School of Business, University of Texas at Austin, 2110 Speedway Stop B6500, Austin, TX 78712); Andrew B. Whinston (McCombs School of Business, University of Texas at Austin, 2110 Speedway Stop B6500, Austin, TX 78712)
    Abstract: We study how the broadcasting of peer success on an enterprise digital platform affects worker productivity. Using sales workers in an IT service company as our research context, we leverage the unexpected resignation of several HR staff members as an exogenous shock to the sharing of peer success and implement a difference-in-differences estimation. The empirical evidence shows that sales workers exert less effort when peer success messages are absent. We next investigate how the framing of peer success messages may generate different forms of peer influence, and particularly explore two ways of framing—messages that highlight peer’s ability (i.e., ability-based messages) and messages that highlight peer’s effort (i.e., effort-based messages). We find that although both types of peer success messages have a positive influence on worker productivity, there exists important heterogeneity. For ability-based messages, workers respond most strongly if their peers are socially close or have worse historical performance. By contrast, the effect of effort-based messages does not vary by peer characteristics.
    Keywords: peer success, work effort, productivity, peer influence, online organizational communication, peer pressure, difference-in-differences
    JEL: J24 L86 M54
    Date: 2018–09
  2. By: Hyejin Ku; Uta Schönberg; Ragnhild C. Schreiner
    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.
    JEL: D22 H25 H32 J18 J23
    Date: 2018–09
  3. By: Pierre-Carl Michaud; Arthur van Soest; Luc Bissonnette
    Abstract: Evidence from different sources shows that spouses' retirement decisions are correlated. Retirement policies affecting individuals in couples are therefore also likely to affect behavior of their spouses. It is therefore important to account for joint features in modeling retirement. This paper studies a structural collective model of labor supply and retirement of both partners in a couple with interdependent preferences, imperfect knowledge of preferences of the spouse, and subjective expectations about the future. We propose a novel method to estimate preferences and the intra-household bargaining process, which relies on stated preferences data collected in the Health and Retirement Study. Respondents were asked to choose between hypothetical retirement trajectories describing the retirement ages and replacement rates of both spouses from three perspectives: considering their own preferences only, the preferences of their spouse only, or the most likely decision for the household. With these data, all model parameters are identified and potential sources of joint retirement can be disentangled. We find that males misperceive their wives' preferences, overestimating their disutility of work. Our estimates correct for this bias. They suggest that correlation in unobserved heterogeneity components of the partners' marginal utility of leisure explains a large share of joint retirement decisions. We also find significant positive complementarities in leisure, but this explains a much smaller part of joint retirement.
    JEL: C81 D13 J26
    Date: 2018–09
  4. By: Cabral, Sónia (Banco de Portugal); Martins, Pedro S. (Queen Mary, University of London); Pereira dos Santos, João (Nova School of Business and Economics); Tavares, Mariana (Maastricht University)
    Abstract: The increased range and quality of China's exports is a major ongoing development in the international economy with potentially far-reaching effects. In this paper, on top of the direct effects of increased imports from China studied in previous research, we also measure the indirect labour market effects stemming from increased export competition in third markets. Our findings, based on matched employer-employee data of Portugal covering the 1991-2008 period, indicate that workers' earnings and employment are significantly negatively affected by China's competition, but only through the indirect 'market-stealing' channel. In contrast to evidence for other countries, the direct effects of Chinese import competition are mostly non-significant. The results are robust to a number of checks and also highlight particular groups more affected by indirect competition, including women, older and less educated workers, and workers in domestic firms.
    Keywords: international trade, labour market, matched employer-employee data, China, import competition
    JEL: F14 F16 J31
    Date: 2018–08
  5. By: Christian Bayer; Moritz Kuhn
    Abstract: Wages grow but also become more unequal as workers age. Using German administrative data, we largely attribute both life-cycle facts to one driving force: some workers progress in hierarchy to jobs with more responsibility, complexity, and independence. In short, they climb the career ladder. Climbing the career ladder explains 50% of wage growth and virtually all of rising wage dispersion. The increasing gender wage gap by age parallels a rising hierarchy gap. Our findings suggest that wage dynamics are shaped by the organization of production, which itself likely depends on technology, the skill set of the workforce, and labor market institutions.
    Keywords: human capital, life-cycle wage growth, wage inequality, careers
    JEL: D33 E24 J31
    Date: 2018
  6. By: Laws, A.
    Abstract: Minimum wages often generate a perplexing set of empirical impacts, including little to no employment consequences but large wage consequences. This paper tests arguably the most promising explanation - search models of minimum wages - in a more direct manner than has been possible to date. The analysis combines extensive data on UK workers' search behaviour with quasi-experimental analysis of the UK minimum wage policy structure, including the 2016 introduction of the National Living Wage. I find robust evidence of increased labour force participation and extensive margin search in response to higher minimum wages with no corresponding change in employment rates. Evidence of decreased average search intensity is uncovered and the duration of unemployed search increases. Taken together, the unemployed search results suggest that minimum wages do impact on labour flow frictions in important ways. In contrast, no significant estimates are found for any on-the-job search moments, i.e. I find no evidence for potential concerns that higher minimum wages provide a disincentive for workers to progress up job ladders.
    Keywords: Equilibrium search models, Minimum wages, Quasi-experimental analysis
    JEL: E24 J21 J64
    Date: 2018–10–11
  7. By: David J. Deming; Kadeem L. Noray
    Abstract: Science, Technology, Engineering, and Math (STEM) jobs are a key contributor to economic growth and national competitiveness. Yet STEM workers are perceived to be in short supply. This paper shows that the “STEM shortage” phenomenon is explained by technological change, which introduces new job tasks and makes old ones obsolete. We find that the initially high economic return to applied STEM degrees declines by more than 50 percent in the first decade of working life. This coincides with a rapid exit of college graduates from STEM occupations. Using detailed job vacancy data, we show that STEM jobs changed especially quickly over the last decade, leading to flatter age-earnings profiles as the skills of older cohorts became obsolete. Our findings highlight the importance of technology-specific skills in explaining life-cycle returns to education, and show that STEM jobs are the leading edge of technology diffusion in the labor market.
    JEL: J24
    Date: 2018–09
  8. By: Elena Del Rey; Maria Racionero; Jose I. Silva
    Abstract: We explore the effect of parental leave entitlements for mothers and fathers on wages and unemployment rates. To do so we extend the labour search and matching model in Del Rey, Racionero and Silva (2017) to include two types of workers, males and females, who compete for the same jobs. We show that an increase in leave duration has an ambiguous effect both on job creation and wages. We identify the mechanisms underlying this ambiguity. Given the variety of possible final effects we calibrate the model for several countries (Denmark, France, Italy and Portugal) and simulate policy changes. In all countries considered an increase in the duration of either leave negatively affects job creation and the wage of the directly affected worker. As a result, both wages fall while unemployment rates increase in equilibrium. Finally, we explore the effect of closing the gender gap in leave duration and show that, since fathers tend to take the leave less often, increasing the duration of the male-specifc leave is less effective in closing the wage and unemployment gaps than decreasing the female-specific one.
    JEL: E24 J38
    Date: 2018–09
  9. By: Eleanor Wiske Dillon; Jeffrey A. Smith
    Abstract: We consider the effects of student ability, college quality, and the interaction between the two on academic outcomes and earnings using data on two cohorts of college enrollees. Student ability and college quality strongly improve degree completion and earnings for all students. We find evidence of meaningful complementarity between student ability and college quality in degree completion at four years and long-term earnings, but not in degree completion at six years or STEM degree completion. This complementarity implies some tradeoff between equity and efficiency for policies that move lower ability students to higher quality colleges.
    JEL: I23 J24
    Date: 2018–09
  10. By: Huebener, Mathias (DIW Berlin); Kühnle, Daniel (University of Erlangen-Nuremberg); Spieß, C. Katharina (DIW Berlin)
    Abstract: This paper examines the effects of substantial changes in paid parental leave on child development and socio-economic development gaps. We exploit a German reform from 2007 that both expanded paid leave in the first year and removed paid leave in the second year following childbirth. Higher-income households benefited relatively more from the reform than low-income households. We use administrative data from mandatory school entrance examinations containing detailed child development assessments at age six within a difference-in-differences approach. Our precise and robust estimates reveal no effects of the changes in parental leave benefits on child development across various socio-economic groups, and consequently no effects on socio-economic development gaps.
    Keywords: parental leave benefit, child development, school readiness, motor skills, language skills, socio-emotional stability
    JEL: J13 J18 J22 J24
    Date: 2018–08
  11. By: James J. Heckman (The University of Chicago); Sidharth Moktan (Center for the Economics of Human Development, University of Chicago)
    Abstract: This paper examines the relationship between placement of publications in Top Five (T5) journals and receipt of tenure in academic economics departments. Analyzing the job histories of tenure-track economists hired by the top 35 U.S. economics departments, we find that T5 publications have a powerful influence on tenure decisions and rates of transition to tenure. A survey of the perceptions of young economists supports the formal statistical analysis. Pursuit of T5 publications has become the obsession of the next generation of economists. However, the T5 screen is far from reliable. A substantial share of influential publications appear in non-T5 outlets. Reliance on the T5 to screen talent incentivizes careerism over creativity.
    Keywords: tenure and promotion practices, career concerns, economics publishing, citations
    JEL: A14 I23 J44 O31
    Date: 2018–09
  12. By: Shai Bernstein; Emanuele Colonnelli; Davide Malacrino; Timothy McQuade
    Abstract: New firm formation is a critical driver of job creation, and an important contributor to the responsiveness of the economy to aggregate shocks. In this paper we examine the characteristics of the individuals who become entrepreneurs when local opportunities arise due to an increase in local demand. We identify local demand shocks by linking fluctuations in global commodity prices to municipality level agricultural endowments in Brazil. We find that the firm creation response is almost entirely driven by young and skilled individuals, as measured by their level of experience, education, and past occupations involving creativity, problem-solving and managerial roles. In contrast, we find no such response within the same municipalities among skilled, yet older individuals, highlighting the importance of lifecycle considerations. These responsive individuals are younger and more skilled than the average entrepreneur in the population. The entrepreneurial response of young individuals is larger in municipalities with better access to finance, and in municipalities with more skilled human capital. These results highlight how the characteristics of the local population can have a significant impact on the entrepreneurial responsiveness of the economy.
    JEL: E26 J24 L26 O12 O13 O17 O20
    Date: 2018–09
  13. By: Amanda Y. Agan; Michael D. Makowsky
    Abstract: For recently released prisoners, the minimum wage and the availability of state Earned Income Tax Credits (EITCs) can influence both their ability to find employment and their potential legal wages relative to illegal sources of income, in turn affecting the probability they return to prison. Using administrative prison release records from nearly six million offenders released between 2000 and 2014, we use a difference-in-differences strategy to identify the effect of over two hundred state and federal minimum wage increases, as well as 21 state EITC programs, on recidivism. We find that the average minimum wage increase of $0.50 reduces the probability that men and women return to prison within 1 year by 2.8%. This implies that on average the effect of higher wages, drawing at least some released prisoners into the legal labor market, dominates any reduced employment in this population due to the minimum wage. These reductions in returns to incarcerations are observed for the potentially revenue generating crime categories of property and drug crimes; prison reentry for violent crimes are unchanged, supporting our framing that minimum wages affect crime that serves as a source of income. The availability of state EITCs also reduces recidivism, but only for women.
    JEL: J08 J2 K31 K42
    Date: 2018–09
  14. By: Averett, Susan L. (Lafayette College); Bansak, Cynthia (St. Lawrence University); Smith, Julie K. (Lafayette College)
    Abstract: This paper explores the effects of a spouse's personality on earnings. We build on the growing literature spanning economics and psychology that investigates how personality traits affect one's own individual earnings. In particular, several of the big five personality characteristics (extraversion, agreeableness, conscientiousness, neuroticism and openness) have been shown to be predictors of own earnings. To our knowledge only one paper studies the relationship between spousal personality and labor market outcomes finding a strong correlation between the two. We extend this work to assess the linkage between spousal personality and earnings while accounting for the potential endogeneity of the selection into marriage. Using the Household, Income and Labor Dynamics in Australia Survey from 2001‐2013, we test which spousal personality characteristics affect earnings. Our results indicate that for men, having a conscientious wife raises his earnings while there is little consistent effect of husband's personality on his wife's earnings.
    Keywords: marriage, personality, earnings, HILDA, Five Factor Model, conscientiousness, assortative mating
    JEL: J12 J24 J31
    Date: 2018–08
  15. By: Norbert Švarda
    Abstract: The paper introduces a new way of linking microsimulation models with dynamic general equilibrium frameworks to obtain an evaluation of the impact of detailed tax and benefit measures on the aggregate economy. In the approach presented in this paper, income heterogeneity interacts with the macro-economy via aggregated individual labour supply decisions which influence, and are influenced by, the dynamic evolution of the real wage rate. The method involves a reduced-form representation of the information flow between the macroeconomic and microeconomic blocks. The practical usefulness of the approach is demonstrated by evaluating actual and hypothetical tax reforms that involve abandoning the flat tax system in Slovakia. A hypothetical move to a highly progressive tax structure is shown to generate some employment gains but is associated with a drop in aggregate income and tax revenue.
    Keywords: microsimulation, dynamic general equilibrium, unemployment, labour supply elasticity, tax reform, flat tax
    JEL: E24 H24 H31 J22
    Date: 2018–10–04
  16. By: Luis Armona; Rajashri Chakrabarti; Michael F. Lovenheim
    Abstract: For-profit providers are becoming an increasingly important fixture of US higher education markets. Students who attend for-profit institutions take on more educational debt, have worse labor market outcomes, and are more likely to default than students attending similarly-selective public schools. Because for-profits tend to serve students from more disadvantaged backgrounds, it is important to isolate the causal effect of for-profit enrollment on educational and labor market outcomes. We approach this problem using a novel instrument combined with more comprehensive data on student outcomes than has been employed in prior research. Our instrument leverages the interaction between changes in the demand for college due to labor demand shocks and the local supply of for-profit schools. We compare enrollment and postsecondary outcome changes across areas that experience similar labor demand shocks but that have different latent supply of for-profit institutions. The first-stage estimates show that students are much more likely to enroll in a for-profit institution for a given labor demand change when there is a higher supply of such schools in the base period. Among four-year students, for-profit enrollment leads to more loans, higher loan amounts, an increased likelihood of borrowing, an increased risk of default and worse labor market outcomes. Two-year for-profit students also take out more loans, have higher default rates and lower earnings. But, they are more likely to graduate and to earn over $25,000 per year (the median earnings of high school graduates). Finally, we show that for-profit entry and exit decisions are at most weakly responsive to labor demand shocks. Our results point to low returns to for-profit enrollment that have important implications for public investments in higher education as well as how students make postsecondary choices.
    JEL: I23 J24
    Date: 2018–09
  17. By: Christopher F. Baum (Boston College; DIW Berlin; CESIS, KTH Royal Institute of Technology); Hans Lööf (CESIS, KTH Royal Institute of Technology); Andreas Stephan (Jönköping International Business School; DIW Berlin)
    Abstract: This paper analyzes wage income differences between native born workers and refugee immigrants in Sweden within occupations delineated in accordance with the augmented canonical model of occupational assignment. The identification strategy is based on a control group of matched native born persons with similar characteristics as the refugees and by using panel data methods capturing unobserved heterogeneity. The econometric results from a Swedish employer-employee panel data set document a narrowed wage gap over time, showing that the remaining difference can be explained to a large extent by the sorting into different types of occupations. Based on an Blinder–Oaxaca decomposition, we find a persistent wage gap in cognitive non-routine occupations but also, surprisingly, task categories where refugees have higher earning than natives.
    Keywords: refugee immigration, income gap, employer-employee data, Blinder–Oaxaca decomposition
    JEL: C23 F22 J24 J6 O15
    Date: 2018–10–10
  18. By: Terry Gregory; Anna Salomons; Ulrich Zierahn
    Abstract: A fast-growing literature shows that digital technologies are displacing labor from routine tasks, raising concerns that labor is racing against the machine. We develop a task-based framework to estimate the aggregate labor demand and employment effects of routine-replacing technological change (RRTC), along with the underlying mechanisms. We show that while RRTC has indeed had strong displacement effects in the European Union between 1999 and 2010, it has simultaneously created new jobs through increased product demand, outweighing displacement effects and resulting in net employment growth. However, we also show that this finding depends on the distribution of gains from technological progress.
    Keywords: labor demand, employment, routine-replacing technological change, tasks, local demand spillovers
    JEL: E24 J23 J24 O33
    Date: 2018
  19. By: Lizhong Peng; Xiaohui (Ronnie) Guo; Chad D. Meyerhoefer
    Abstract: This paper provides new empirical evidence on the employment and earning effects of the recent Medicaid expansion. Unlike most existing studies that use a conventional state and year fixed effects approach, our main identification strategy is based on the comparison of employment and wages in contiguous county-pairs in neighboring states (i.e. border counties) with different Medicaid expansion status. Using the 2008-2016 Quarterly Census of Employment and Wages, we estimate a set of distributed lag models in order to examine the dynamic effects of Medicaid expansion. Results from our preferred specification suggest a small but statistically significant decrease in employment of 1.3 percent one year after the Medicaid expansion. This disemployment effect is transitory and appears to primarily occur in low-wage sectors. In particular, employment returns to pre-expansion levels within two years. We also do not find any statistically significant effect of the Medicaid expansion on wages at any point.
    JEL: H51 I13 J20
    Date: 2018–09
  20. By: Chen Liang (Department of Information Systems, W.P. Carey School of Business, Arizona State University, USA); Yili Hong (Department of Information Systems, W.P. Carey School of Business, Arizona State University, USA); Bin Gu (Department of Information Systems, W.P. Carey School of Business, Arizona State University, USA); Jing Peng (Department of Operations and Information Management (OPIM), School of Business, University of Connecticut, USA)
    Abstract: We explore whether there is a gender wage gap in the gig economy and examine to what degree gender differences in job application strategy could account for the gap. With a large-scale dataset from a leading online labor market, we show that females only earn around 81.4% of the hourly wage of their male counterparts. We further investigate three main aspects of job application strategy, namely bid timing, job selection, and avoidance of monitoring. After matching males with females using the propensity score matching method, we find that females tend to bid later and prefer jobs with a lower budget. In particular, the observed gender difference in bid timing can explain 7.6% of the difference in hourly wage, which could account for 41% of the gender wage gap (i.e. 18.6%) observed by us. Moreover, taking advantage of a natural experiment wherein the platform rolled out the monitoring system, we find that females are less willing to bid for monitored jobs than males. To further quantify the economic value of the gender difference in avoidance of monitoring, we run a field experiment on Amazon Mechanical Turk (AMT), which suggests that females tend to have a higher willingness to pay (WTP) for the avoidance of monitoring. The gender difference in WTP for the avoidance of monitoring can explain 8.1% of the difference in hourly wage, namely, 44% of the observed gender wage gap. Overall, our study reveals the important role of job application strategies in the persistent gender wage gap.
    Keywords: gender wage gap; job application strategy; gig economy; quasi-natural experiment
    JEL: J16 J31 J24 D31
    Date: 2018–09
  21. By: Liwiński, Jacek
    Abstract: In 1999, a reform of education was implemented in Poland, which added one year to the shortest available educational path, leading to the acquisition of basic vocational education. In the new system, students choosing this path acquire one more year of general education, which, according to the authors of the reform, should improve the student's position in the labor market, as the inadequate general skills were identified as the main deficit of basic vocational education prior to the reform. Using the regression discontinuity design and data from the Polish LFS, we find that an additional year of general education has led to an increase in hourly wages of men, but not of women, who completed basic vocational schools.
    Keywords: education,schooling,earnings,regression discontinuity design
    JEL: I21 J24
    Date: 2018
  22. By: Michelle Dell’Era; Luca David Opromolla; Luís Santos-Pinto
    Abstract: This paper studies the impact of optimism on occupational choice using a general equilibrium framework. The model shows that optimism has four main qualitative effects: it leads to a misallocation of talent, drives up input prices, raises the number of entrepreneurs, and makes entrepreneurs worse off. We calibrate the model to match U.S. manufacturing data. This allows us to make quantitative predictions regarding the impact of optimism on occupational choice, input prices, the returns to entrepreneurship, and output. The calibration shows that optimism can explain the empirical puzzle of the low mean returns to entrepreneurship compared to average wages.
    Keywords: General Equilibrium; Entrepreneurship; Optimism
    JEL: D50 H21 J24 L26
    Date: 2018–10
  23. By: Bin Wang (City University of Hong Kong); Yu Zheng (Queen Mary University of London)
    Abstract: We provide a theory of how growth, corruption, and a low-powered public-sector pay scale coexist in a stable equilibrium in the early stage of China's development. The regionally decentralized authoritarian regime of China features lower-level government officials competing for promotion to a higher level in the government by generating local economic growth, and calls for high-powered incentives to elicit effort from the the officials. However, this is at odds with the generally low-powered public-sector pay scale in China. We propose a principal-agent model, where the principal represents the Chinese people's desire to pursue economic growth and the agents are the government officials delegated with production tasks and organized in a tournament, to address how a low-powered pay scale can effectively elicit effort in a tournament infested with widespread corruption.
    Keywords: Institution; Tournament; Corruption; China
    JEL: D73 J45 O43 P26
    Date: 2018–10–01
  24. By: Armey, Laura (Naval Postgraduate School); Kniesner, Thomas J. (Claremont Graduate University); Leeth, John D. (Bentley University); Sullivan, Ryan (Naval Postgraduate School)
    Abstract: Our research examines the effect of combat deployments to Iraq and Afghanistan on casualties. We use restricted data from the Defense Manpower Data Center (DMDC) and Social Security Administration (SSA) to construct a panel of all U.S. Active Duty service members having served at some point during the years 2001-2012. Casualties disproportionately occur at higher rates among (i) young, white, males (ii) enlisted personnel (iii) less educated personnel (iv) and those in combat job types. Our estimates indicate that overall U.S. military personnel who deployed in an individual year to Iraq or Afghanistan had a 48 per 100,000 higher probability of death than non-deployed military personnel who remained stateside. The increased fatal injury risk of deployed U.S. military personnel is 15 times higher than the national average civilian workplace fatality rate, but roughly equal to the fatal injury risk faced in some of the most dangerous civilian occupations. Our estimates suggest a compensating wage differential equal to $808 per month would be appropriate, in comparison to the current status quo of $225 per month in danger pay (and additional tax benefits) provided to U.S. military personnel deployed into combat zones. The additional compensation should also be adjusted by service or job type.
    Keywords: military, deployment, VSL, casualties, danger pay
    JEL: H56 J17 J28 J31
    Date: 2018–08
  25. By: Magali Jaoul-Grammare
    Abstract: Despite laws and educational reforms in favour of gender equality, in France both training courses and professions remain highly gendered. The educational system and the labour market continue to conform to stereotypes, and both girls and boys continue to base their educational choices on what society assigns their genders as areas of competence. However, about 10% of master’s graduates make atypical study choices, in the sense that they chose an orientation standardly chosen by the opposite gender. This paper proposes an empirical analysis of these ‘atypical’ students. Our results show that these individuals do not have specific profiles, either in terms of schooling background or social origin. By estimating a logistic regression, we highlight the importance of the expected returns and of the professional project in the atypical study choice. We also underline that although the unconventional choice allows a more rapid integration on the labour market and appears as a cost-effective solution for girls, it does not erase the wage inequalities between men and women.
    Keywords: Educational return, Gender-related study choice, Labour market integration.
    JEL: C25 I24 J24
    Date: 2018

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