nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2018‒10‒22
twelve papers chosen by
Joseph Marchand
University of Alberta

  1. The Econometrics and Economics of the Employment Effects of Minimum Wages: Getting from Known Unknowns to Known Knowns By David Neumark
  2. Child Sleep and Maternal Labour Market Outcomes By Costa-Font, Joan; Flèche, Sarah
  3. Employment adjustments following rises and reductions in minimum wages: New insights from a survey experiment By Bossler, Mario; Oberfichtner, Michael; Schnabel, Claus
  4. Why did Rich Families Increase their Fertility? Inequality and Marketization of Child Care By Bar, Michael; Hazan, Moshe; Leukhina, Oksana; Weiss, David; Zoabi, Hosny
  5. Related variety, unrelated variety and the novelty content of firm innovation in urban and non-urban locations By Marte C.W. Solheim; Ron Boschma; Sverre Herstad
  6. Enforcement of Labor Regulation and the Labor Market Effects of Trade: Evidence from Brazil By Ulyssea, Gabriel; Ponczek, Vladimir
  7. Public versus Private Sector Wage Gap in Egypt: Evidence from Quantile Regression on Panel Data By Aysit Tansel; Halil Ibrahim Keskin; Abidin Ozdemir
  8. A Workers’ Revolution in Sweden? Exploring Economic Growth and Distributional Change with Detailed Data on Construction Workers’ Wages, 1831–1900 By Ericsson, Johan; Molinder, Jakob
  9. Creativity Under Fire: The Effects of Competition on Creative Production By Daniel P. Gross
  10. Social Security Incentives in Belgium: An Analysis of Four Decades of Change By Fraikin, Anne-Lore; Jousten, Alain; Lefèbvre, Mathieu
  11. An up-to-date joint labor supply and child care choice model By Thor O. Thoresen; Trine E. Vattø
  12. Does regulation trade-off quality against inequality? The case of German architects and construction engineers By Rostam-Afschar, Davud; Strohmaier, Kristina

  1. By: David Neumark
    Abstract: I discuss the econometrics and the economics of past research on the effects of minimum wages on employment in the United States. My intent is to try to identify key questions raised in the recent literature, and some from the earlier literature, that I think hold the most promise for understanding the conflicting evidence and arriving at a more definitive answer about the employment effects of minimum wages. My secondary goal is to discuss how we can narrow the range of uncertainty about the likely effects of the large minimum wage increases becoming more prevalent in the United States. I discuss some insights from both theory and past evidence that may be informative about the effects of high minimum wages, although one might argue that we first need to do more to settle the question of the effects of past, smaller increases on which we have more evidence (hence my first goal). But I also try to emphasize what research can be done now and in the near future to provide useful evidence to policymakers on the results of the coming high minimum wage experiment, whether in the United States or in other countries.
    JEL: J23 J38
    Date: 2018–09
  2. By: Costa-Font, Joan (London School of Economics); Flèche, Sarah (CEP, London School of Economics)
    Abstract: We show that sleep deprivation exerts strong negative effects on mothers' labour market performance. To isolate exogenous variations in maternal sleep, we exploit unique variations in child sleep disruption using a UK panel dataset that follows mother-child pairs through time. We find that sleeping one hour less per night on average significantly decreases maternal labour force participation, the number of hours worked, and household income. We identify one mechanism driving the effects, namely the influence of maternal sleep on selection into full-time versus part-time work. Increased schedule flexibility for mothers with sufficient tenure mitigates the negative effects of sleep deprivation.
    Keywords: child sleep, sleep, maternal employment, working hours, workplace flexibility, ALSPAC
    JEL: J13 J22 I18 J28
    Date: 2018–08
  3. By: Bossler, Mario; Oberfichtner, Michael; Schnabel, Claus
    Abstract: The effects of large minimum wage increases, like those planned in the UK and in some US states, are still unknown. We conduct a survey experiment that randomly assigns increases or decreases in minimum wages to about 6,000 plants in Germany and asks the personnel managers about their expectations concerning employment adjustments. We find that employment reacts asymmetrically to positive and negative changes in minimum wages. The larger the increase in the minimum wage is, the larger the expected reduction in employment. Employment adjustments are more pronounced in those industries and plants which are more strongly affected by the current minimum wage and in those plants that have neither collective agreements nor a works council. In contrast, employment is not found to increase if the minimum wage is reduced by about 10 percent. This mainly reflects that plants with works councils and collective agreements would not cut wages.
    Keywords: minimum wage,wage cuts,establishment survey,Germany
    JEL: J31 J23 D22
    Date: 2018
  4. By: Bar, Michael (San Francisco State University); Hazan, Moshe (Tel-Aviv University; CEPR); Leukhina, Oksana (Federal Reserve Bank of St. Louis); Weiss, David (Tel Aviv University); Zoabi, Hosny (New Economic School)
    Abstract: A negative relationship between income and fertility has persisted for so long that its existence is often taken for granted. One economic theory builds on this relationship and argues that rising inequality leads to greater differential fertility between rich and poor. We show that the relationship between income and fertility has flattened between 1980 and 2010 in the US, a time of increasing inequality, as high income families increased their fertility. These facts challenge the standard theory. We propose that marketization of parental time costs can explain the changing relationship between income and fertility. We show this result both theoretically and quantitatively, after disciplining the model on US data. We explore implications of changing differential fertility for aggregate human capital. Additionally, policies, such as the minimum wage, that affect the cost of marketization, have a negative effect on the fertility and labor supply of high income women. We end by discussing the insights of this theory to the economics of marital sorting.
    Keywords: Income Inequality; Marketization; Differential Fertility; Human Capital; Minimum Wage
    JEL: E24 J13 J24 J31 J38
    Date: 2018–09–25
  5. By: Marte C.W. Solheim; Ron Boschma; Sverre Herstad
    Abstract: In this paper, we investigate whether the composition of experience-based knowledge accumulated by firms in urban and rural locations is reflected in the novelty content of their innovations. Looking at the manufacturing industry, and using Norwegian Linked Employer- Employee register data (LEED) merged with Community Innovation Survey (CIS) data, we find that unrelated experience variety within firms increases the probability of radical innovation, independently of firms' location, whereas related variety increases the probability of incremental innovation in large-city regions. These results demonstrate that innovation capacity cannot be understood from the single perspective of R&D efforts and strategy as it also depends on experiences accumulated in 'entire organizations' and the locations in which accumulation occurs. Moreover, they suggest that for manufacturing firms, urban locations are not hot spot for radical change. Instead, they support incremental innovative activities by facilitating effective sharing of knowledge between related sectors.
    Keywords: immigration, Diversity, Innovation, Related Variety, Unrelated Variety, Urban, Rural
    JEL: O31 P25 O15 O14 J24
    Date: 2018–10
  6. By: Ulyssea, Gabriel (University of Oxford); Ponczek, Vladimir (Sao Paulo School of Economics)
    Abstract: How does enforcement of labor regulations shape the labor market effects of trade? To tackle this question, we exploit the Brazilian trade liberalization episode and exogenous variation in the intensity of both the trade shock and enforcement across local labor markets. Regions with stricter enforcement observed no increase in informal employment but large disemployment effects. Regions with weaker enforcement had no employment losses but substantial increases in informality. All effects are concentrated on unskilled workers, with no effects on skilled workers. The results indicate that informality acts as a buffer that reduces trade-induced adjustment costs in the labor market.
    Keywords: trade, enforcement of labor regulations, informality
    JEL: F16 K31
    Date: 2018–08
  7. By: Aysit Tansel (Department of Economics, Middle East Technical University); Halil Ibrahim Keskin (Department of Econometrics, Cukurova University); Abidin Ozdemir (Department of Economics, Gazi University)
    Abstract: This paper considers the public and private sector wage earners in Egypt and examines their wage distribution during 1998-2012 using Egyptian Labor Market Panel Survey. We estimate the public-private sector wage gap with Mincer wage equations both at the mean and at different quantiles of the wage distribution. In this process we take into account observable and unobservable characteristics of the individuals using the panel feature of the data with a fixed effects model. We address sector of employment selection issue for both males and females. We find that there is very little evidence of sample selection in our data. Therefore, we present both the selection corrected results and the results with no selection correction. We find a persistent public sector wage penalty for males and public sector wage premium for females in the face of extensive sensitivity checks. They are larger when unobserved heterogeneity is taken into account for males but insignificant for females. They are similar across the quantiles for males but, smaller at the top than at the bottom of the conditional wage distribution for females. We further examine the public sector wage gap over time and in different sub-groups according to age and education. The public sector wage penalty for males has decreased recently over time and is larger for the better educated and younger. We also find substantial regional differences in public sector wage gap for males.
    Keywords: Public Sector, Private Sector, Wage Gap, Gender, Sample Selection, Quantile Regression, Panel Data, Egypt.
    JEL: C21 C23 J16 J31 J45
    Date: 2018–10
  8. By: Ericsson, Johan (Department of History, Uppsala University); Molinder, Jakob (Department of Economic History, Uppsala University)
    Abstract: The impact of the transition to modern economic growth on the distribution of income is widely debated. The experience of early industrializers like Britain and the US has informed much of the debate, lending support to the idea embedded in the models of Kuznets and Lewis that real wages of laborers tend to lag behind the growth of GDP per capita in the early stages of economic development. We examine the impact growth on workers in Sweden using a new dataset on daily wages for helpers, carpenters, masons, and teamsters over the 1831–1900 period. The data has a uniquely detailed geographical coverage, including a broad set of places in the countryside as well as towns. Our new series shows that real wage growth began in the mid-1850s, that the average yearly increase was substantial and superseding GDP per capita growth after 1880, that it was larger for unskilled helpers than higher-skilled groups, and was present in the countryside and urban areas alike. A comparison with Northern Europe shows that unskilled workers in Sweden benefited to a much greater extent from economic growth, highlighting the importance of paying careful attention to distributional issues when comparing living standards across countries.
    Keywords: wages; inequality; distribution; economic development; growth; living standards; Kuznets-curve; Lewis
    JEL: J31 N00 N13 N33 O14
    Date: 2018–10–12
  9. By: Daniel P. Gross
    Abstract: Though fundamental to innovation and essential to many industries and occupations, individual creativity has received limited attention as an economic behavior and has historically proven difficult to study. This paper studies the incentive effects of competition on individuals' creative production. Using a sample of commercial logo design competitions, and a novel, content-based measure of originality, I find that intensifying competition induces agents to produce original, untested ideas over tweaking their earlier work, but heavy competition drives them to stop investing altogether. The results yield lessons for the management of creative workers and for the implementation of competitive procurement mechanisms for innovation.
    JEL: D81 M52 M55 O31 O32
    Date: 2018–09
  10. By: Fraikin, Anne-Lore (University of Liège); Jousten, Alain (University of Liège); Lefèbvre, Mathieu (Université de Strasbourg)
    Abstract: The paper traces labor market reforms over the last four decades. It provides estimates of retirement incentives for a selected set of typical worker profiles across time and socio-economic groups and links these series to the labor market performance in Belgium. The results show that the numerous retirement and social security program reforms have had a marked impact on incentives at the micro level. At the aggregate level, results are less clear-cut given the extreme diversity of programs and features in the Belgian institutional context.
    Keywords: retirement, social security, pension, labor supply
    JEL: J21 J26 H31 I38
    Date: 2018–08
  11. By: Thor O. Thoresen; Trine E. Vattø (Statistics Norway)
    Abstract: Norwegian parents of preschool children base their care choices on a completely different choice set from their predecessor. Now there is essentially only one type of nonparental care – center-based care – and on the parental side fathers take a more pivotal role in early childhood care. In the present paper we develop and estimate a joint labor supply and child care choice model that takes account of these new characteristics, on the assumption that this model points to current and future modeling directions for several other economies too. Estimations suggest that the average wage elasticity for mothers is 0.25–0.30.
    Keywords: family policy; child care; structural labor supply model
    JEL: J13 J22 C25
    Date: 2018–10
  12. By: Rostam-Afschar, Davud; Strohmaier, Kristina
    Abstract: We exploit an exogenous price increase by about 10% for architectural services to answer the question how price regulation affects income inequality and service quality. Using individual-level data from the German microcensus for the years 2006 to 2012, we find a significant reform effect of 8% on personal net income for self-employed architects and construction engineers. This group moved from the second lowest to the highest quintile of the net income distribution. This increase in inequality is associated with a deterioration of service quality. The reform reduced average scores of a peer ranking for architects by 18%.
    Keywords: Regulation,Inequality,Wages,Service Quality,Entrepreneurship,Natural Experiment
    JEL: L5 L11 L74 J44 L26
    Date: 2018

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