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on Labor Markets - Supply, Demand, and Wages |
| By: | Robertson, Raymond (Texas A&M University); Lopez-Acevedo, Gladys (World Bank); Savchenko, Yevgeniya (Georgetown University) |
| Abstract: | This paper focuses on how the forces of globalisation, specifically the Multi-Fibre Arrangement (MFA), have affected women's wages in the apparel sector in developing countries. Using household and labour force surveys from Cambodia and Sri Lanka, we find large positive wage premiums and a closing of the male-female wage gap during the MFA period, but smaller premiums and a widening wage gap after the end of the MFA. Our results suggest that apparel exports continued to benefit women in developing countries post-MFA. |
| Keywords: | apparel, Multi-Fibre Arrangement, textile, wages, women, working conditions |
| JEL: | F16 J21 J24 J30 J31 J81 L67 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11821&r=lma |
| By: | Bayer, Christian (University of Bonn); Kuhn, Moritz (University of Bonn) |
| 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: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11827&r=lma |
| By: | Hannes Schwandt; Till M. von Wachter |
| Abstract: | This paper studies the differential persistent effects of initial economic conditions for labor market entrants in the United States from 1976 to 2015 by education, gender, and race using labor force survey data. We find persistent earnings and wage reductions especially for less advantaged entrants that increases in government support only partly offset. We confirm the results are unaffected by selective migration and labor market entry by also using a double-weighted average unemployment rate at labor market entry for each birth cohort and state-of-birth cell based on average state migration rates and average cohort education rates from Census data. |
| JEL: | E32 J21 J31 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25141&r=lma |
| By: | Djajic, Slobodan (Graduate Institute of International and Development Studies, Geneva); Docquier, Frédéric (Université catholique de Louvain); Michael, Michael S. (University of Cyprus) |
| Abstract: | This paper revisits the question of how brain drain affects the optimal education policy of a developing economy. Our framework of analysis highlights the complementarity between public spending on education and students' efforts to acquire human capital in response to career opportunities at home and abroad. Given this complementarity, we find that brain drain has conflicting effects on the optimal provision of public education. A positive response is called for when the international earning differential with destination countries is large, and when the emigration rate is relatively low. In contrast with the findings in the existing literature, our numerical experiments show that these required conditions are in fact present in a large number of developing countries; they are equivalent to those under which an increase in emigration induces a net brain gain. As a further contribution, we study the interaction between the optimal immigration policy of the host country and education policy of the source country in a game-theoretic framework. |
| Keywords: | migration of skilled workers, immigration policy, education policy |
| JEL: | F22 J24 O15 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11806&r=lma |
| By: | Truong, N. T. Khuong (McMaster University); Sweetman, Arthur (McMaster University) |
| Abstract: | Male immigrants are observed to be disproportionately employed in ICT information and communication technology (ICT) industries and occupations. A measure of basic ICT skills is employed to document differences in skill levels and labour market earnings across immigration classes and categories of Canadians at birth. Adult immigrants, including those assessed by the points system, are found to have lower average ICT scores than Canadians at birth, although the rate of return to ICT skills is not statistically different between them. Immigrants who arrive as children, and the Canadian-born children of immigrants, have similar outcomes to the Canadian-born children of Canadian-born parents. |
| Keywords: | information and communication technologies (ICT), skills, immigration, PIAAC, problem-solving in technology-rich environments (PSTRE), digital literacy, problem-solving, skill shortage |
| JEL: | J24 J31 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11801&r=lma |
| By: | David A. Matsa |
| Abstract: | While businesses require funding to start and grow, they also rely on human capital, which affects how they raise funds. Labor market frictions make financing labor different than financing capital. Unlike capital, labor cannot be owned and can act strategically. Workers face unemployment costs, can negotiate for higher wages, are protected by employment regulations, and face retirement risk. I propose using these frictions as a framework for understanding the unique impact of a firm’s workforce on its capital structure. For instance, high leverage often makes managing labor more difficult by undermining employees’ job security and increasing the need for costly workforce reductions. But firms can also use leverage to their advantage, such as in labor negotiations and defined benefit pensions. This research can help firms account for the needs and management of their workforce when making financing decisions. |
| JEL: | G32 J31 J32 J33 J38 J51 J52 J63 J65 J68 M51 M52 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25125&r=lma |
| By: | Ekaterina Jardim; Mark C. Long; Robert Plotnick; Emma van Inwegen; Jacob Vigdor; Hilary Wething |
| Abstract: | Using administrative employment data from the state of Washington, we use short-duration longitudinal panels to study the impact of Seattle’s minimum wage ordinance on individuals employed in low-wage jobs immediately before a wage increase. We draw counterfactual observations using nearest-neighbor matching and derive effect estimates by comparing the “treated” cohort to a placebo cohort drawn from earlier data. We attribute significant hourly wage increases and hours reductions to the policy. On net, the minimum wage increase from $9.47 to as much as $13 per hour raised earnings by an average of $8-$12 per week. The entirety of these gains accrued to workers with above-median experience at baseline; less-experienced workers saw no significant change to weekly pay. Approximately one-quarter of the earnings gains can be attributed to experienced workers making up for lost hours in Seattle with work outside the city limits. We associate the minimum wage ordinance with an 8% reduction in job turnover rates as well as a significant reduction in the rate of new entries into the workforce. |
| JEL: | J38 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25182&r=lma |
| By: | Guarascio, Dario; Gualtieri, Valentina; Quaranta, Roberto |
| Abstract: | Taking advantage of a dataset providing O*Net-type information on the task content of Italian occupations, this work analyses empirically if and to what extent employment patterns are affected by task characteristics in terms of ‘relative routinarity’. The investigation focuses on the 2005-2016 period relying on a panel including all Italian 4-digit occupations. Occupations characterized by relatively large shares of routinary tasks are penalized in terms of employment dynamics. This result proves to be robust despite the inclusion of a large number of worker, occupation and industry-level controls. A considerable heterogeneity between manufacturing and services is highlighted. While in services the negative relationship between routine task and employment is verified, in manufacturing the same relationship becomes statistically weak. Moreover, Italian occupations with high level of routinary tasks seems to get ‘younger’ rather than ‘older’. According to our empirical results, in highly routinary occupations youth employment tends to grow rather than shrink. Finally, being in highly routinary occupations seems to be less an issue for workers with college degree given the weaker significance of the RTI coefficient as compared to the whole sample model. |
| Keywords: | polarisation, technological change, occupations |
| JEL: | J24 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:89585&r=lma |
| By: | Jason Sandvik; Richard Saouma; Nathan Seegert; Christopher Stanton |
| Abstract: | Firms rarely cut compensation, so little is known about the after-effects when compensation reductions do occur. We use commission reductions at a sales firm to estimate how work effort and turnover change. In response to an 18% decline in sales commissions, corresponding to a 7% decline in median take-home pay, we find turnover increases for the most productive workers. We detect limited effort responses. Turnover and effort responses do not differ based on workers' survey replies regarding expectations of firm fairness or future promotion. The findings indicate that adverse selection concerns on the extensive margin of retaining workers drive the empirical regularity that firms rarely reduce compensation. |
| JEL: | J3 J30 J41 J42 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25135&r=lma |
| By: | Robert L. Clark; Robert G. Hammond; David Vanderweide |
| Abstract: | Choices regarding the disposition of wealth at retirement can have substantial implications for retirement income security. We analyze the factors determining annuity option choices offered by a public sector defined pension plan with no default annuity option. Using combined administrative records and survey data, we explore the role of individual and household characteristics as well as risk preferences, time preferences, and financial literacy. The evidence is consistent with predictions over which households might benefit most from each annuity option. Comparing retirees who chose different annuities, we find that these groups of retirees report very different levels of well-being in retirement. |
| JEL: | G2 H55 H7 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25129&r=lma |
| By: | Pedro S. Martins |
| Abstract: | The subdued wage growth observed over the last years in many countries has spurred renewed interest in monopsony views of the labour market. This paper is the first to measure the extent and robustness of employer labour-market power and its wage implications exploiting comprehensive matched employer-employee data. We find average (employment-weighted) Herfindhal indices of 800 to 1,100; and that less than 9% of workers are exposed to concentration levels thought to raise market power concerns. However, these figures can increase significantly with different methodological choices. Finally, when holding worker composition constant and instrumenting concentration, wages are found to be negatively affected by employer concentration, with elasticities of between -1.5% and -3%. |
| Keywords: | Oligopsony, Wages, Portugal |
| JEL: | J42 J31 J63 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cgs:wpaper:95&r=lma |
| By: | Andreas Kettemann; Andreas I. Mueller; Josef Zweimüller |
| Abstract: | This paper explores the relationship between the duration of a vacancy and the starting wage of a new job, using unusually informative data comprising detailed information on vacancies, the establishments posting the vacancies and the workers eventually filling the vacancies. We find that vacancy durations are negatively correlated with the starting wage and that this negative association is particularly strong with the establishment component of the starting wage. We also confirm previous findings that growing establishments fill their vacancies faster. To understand the relationship between establishment growth, vacancy filling and entry wages, we calibrate a model with directed search and ex-ante heterogeneous workers and firms. We find a strong tension between matching the sharp increase in vacancy filling for growing firms and the response of vacancy filling to firm-level wages. We discuss the implications of this finding as well as potential resolutions. |
| JEL: | E24 J31 J63 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25118&r=lma |
| By: | Lasierra, Jose Manuel |
| Abstract: | We investigate the degree of satisfaction with life carried by individuals for the Spanish case and which are some of the most influential work and personal factors, all according to their family structure: single, single parent, couples with children and childless couples, and two periods in the recent economic cycle. In this paper, the subjective individual well-being level is analyzed as an indicator of inequality. We use factors from two of the areas in which the individual develops most part of his life: work and family. It is an empirical analysis with not too many precedents in the literature, using these family models and incorporating only labour and personal factors and not considering other variables such as health, to better highlight the relevance of labor considerations. The results indicate substantial differences in the degree of individual well-being depending on family type and cycle. Furthermore, of the explanatory variables, job satisfaction, and good labour relations and social relations on the job were found to be the most important and significant in relation to well-being. The research could serve to orient human resource policies in companies and also public policies to improve the plight of those least satisfied with the lives they lead, here single parents and couples with children. |
| Keywords: | Individual well-being; Family structure; Job satisfaction; Public policy; Social inequality |
| JEL: | J12 J13 J18 J22 J28 |
| Date: | 2018–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:89404&r=lma |
| By: | Niklas Potrafke |
| Abstract: | I examine the extent to which public sector outsourcing relates to public employment in OECD countries. I use new panel data on public sector outsourcing. The sample includes 26 countries over the period 2009-2015. Contrary to common expectations, the results do not suggest that public sector outsourcing expenditure was negatively related to public employment in the full sample. The relation between public sector outsourcing and public employment, however, does vary across countries. If anything, the growth in public sector outsourcing in period t-1 was positively correlated with the growth in public employment in period t. When public sector outsourcing gives rise to regrouping public employees but not reducing public employment, outsourcing may even increase inefficiencies in the public sector. |
| Keywords: | Public employment, public sector outsourcing, OECD countries, economic policymaking, panel data |
| JEL: | L33 J45 P16 C23 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ifowps:_267&r=lma |
| By: | Asadullah, Niaz (University of Malaya); Xiao, Saizi (University of Malaya) |
| Abstract: | We re-examine the economic returns to education in the People's Republic of China (PRC) using data from the China General Social Survey 2010. We find that the conventional ordinary least squares estimate of returns to schooling is 7.8%, while the instrumental variable estimate is 20.9%. The gains from schooling rise sharply with higher levels of education. The estimated returns are 12.2% in urban provinces and 10.7% in coastal provinces, higher than in rural and inland areas. In addition, the wage premium for workers with good English skills (speaking and listening) is 30%. These results are robust to controls for height, body weight, and English language skills, and to corrections for sample-selection bias. Our findings, together with a critical review of existing studies, confirm the growing significance of human capital as a determinant of labor market performance in post-reform PRC. |
| Keywords: | endogeneity bias, language skills, schooling, health |
| JEL: | J30 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11809&r=lma |
| By: | John F. Helliwell; Max B. Norton; Haifang Huang; Shun Wang |
| Abstract: | This paper uses a variety of individual-level survey data from several countries to test for interactions between subjective well-being at different ages and variables measuring the nature and quality of the social context at work, at home, and in the community. While earlier studies have found important age patterns (often U-shaped) and social context effects, these two sets of variables have generally been treated as mutually independent. We test for and find several large and highly significant interactions. Results are presented for life evaluations and (in some surveys) for happiness yesterday, in models with and without other control variables. The U-shape in age is found to be significantly flatter, and well-being in the middle of the age range higher, for those who are in workplaces with partner-like superiors, for those living as couples, and for those who have lived for longer in their communities. A strong sense of community belonging is associated with greater life satisfaction at all ages, but especially so at ages 60 and above, in some samples deepening the U-shape in age by increasing the size of the life satisfaction gains following the mid-life low. |
| JEL: | I31 J12 J32 R13 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25121&r=lma |
| By: | Aleksandra Parteka (Gdansk University of Technology, Gdansk, Poland); Joanna Wolszczak-Derlacz (Gdansk University of Technology, Gdansk, Poland) |
| Abstract: | By using very rich individual-level data on workers from 28 European countries, we provide the first so extensive cross-country assessment of wage response to global production links within global value chains (GVCs) in the period 2005–2014. Unlike the other studies, we (i) address the importance of backward links in globally integrated production structures (capturing imports of goods and services required in any stage of the production of the final product); (ii) measure the occupational task profile of workers with new country-specific indices of routinisation; (iii) compare the impact of global production links on wages between workers from Western, Central–Eastern, and Southern Europe employed in manufacturing and non-manufacturing sectors; and (iv) account for direct and indirect dependence on GVC imports from developing and high-income countries. We consider the potential endogeneity problems. Our results suggest that global import intensity of production exhibits negative pressure on wages in Europe. This effect mainly concerns workers from Western Europe employed in manufacturing and is driven by production links with non-high-income countries. Our counterfactual estimates suggest that the effect for all of Europe is small, but the pressure of GVC imports on wages in Western Europe is not economically negligible, in particular when inputs are from less developed countries including China. |
| Keywords: | wages, global value chains, global import intensity of production, tasks, EU |
| JEL: | F14 F16 J31 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:gdk:wpaper:51&r=lma |
| By: | Pouliakas, Konstantinos (European Centre for the Development of Vocational Training (Cedefop)) |
| Abstract: | This paper focuses on identifying determinants of 'automatability risk', namely the propensity of EU employees being in jobs with high risk of substitutability by machines, robots or other algorithmic processes, and uncovers its impact on labour market outcomes. Using relevant data on tasks and skill needs in jobs, collected by the European skills and jobs survey (ESJS), jobs are bundled according to their estimated risk of automation. The paper builds on the methodology of previous studies that estimate the latent relationship between 'true' automatability and job tasks (Frey and Osborne, 2013, 2017; Arntz et al., 2016; Nedelkoska and Quintini, 2018) but utilises highly disaggregated job descriptions provided by a subsample of the ESJS, as well as information on jobs' skill requirements. About 14% of EU adult workers are found to face a very high risk of automation. The distribution of high automatability across industries and occupations is also found to be skewed towards routine jobs with low demand for transversal and social skills. The risk of job displacement by machines is higher among males and lower-skilled workers, with little evidence of polarisation. It is prevalent in private sector jobs that fail to provide remedial training to employees, accentuating the vulnerability of at-risk-workers and highlighting the need for stronger lifelong learning policies at EU level. |
| Keywords: | automation, skills, technology, digitalisation, future of work, skill needs |
| JEL: | J01 J21 J24 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11829&r=lma |
| By: | Cardoso, Ana Rute (IAE Barcelona (CSIC)); Morin, Louis-Philippe (University of Ottawa) |
| Abstract: | We investigate the potential channels that drive female labor force participation to rise in response to unbalanced sex ratios, in the presence of strong social norms against female employment. One such channel is women's desired labor supply, operating through the marriage market, and the other is employers' demand for female labor. If faced with a reduction in male workforce, do employers turn to women to fill in the gap? Do women enter traditionally male occupations and industries, so that segregation decreases? Does the gender pay gap decline? We exploit exogenous variation in sex ratios across cohorts and regions, by using instruments based on casualties from the Portuguese Colonial War and massive emigration in the 1960s combined with its historical regional patterns. We find that as the sex ratio declined, female participation increased, women entered traditionally male-dominated occupations and industries, and the gender pay gap declined. These findings are consistent with a demand shock. Our estimated impact of sex ratios on marriage market points to a muted supply channel. We complement the quantitative analysis with an archival case. Our findings help to explain an apparent puzzle, a decades-long high female participation in Portugal, as opposed to the other Southern European countries. |
| Keywords: | labor demand, labor force participation, gender segregation, pay gap |
| JEL: | J21 J23 N34 J22 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11822&r=lma |
| By: | M. Martin Boyer; Sébastien Box-Couillard; Pierre-Carl Michaud |
| Abstract: | The demand for voluntary individual lifetime annuities is low. To assess the rea-sons why, we designed a stated-preference experiment where we vary characteristics of annuity contracts to estimate individuals’ sensitivity to their value-to-cost ra-tio, a statistic also known as an annuity’s money’s worth. Using different measures of longevity risk and survival expectations, including individually tailored estimates from a micro-simulation model and subjective expectations, we investigate how knowledge of the product and mortality risk misperceptions affect the take-up as well as the sensitivity of the demand for annuities. We find that annuities are objectively not priced fairly, although they can appear to be fairly priced given an individual’s subjective mortality risk. We also find that demand is somewhat price-inelastic so that, given their current 10% take-up rate, lowering the price of annuities to fair actuarial levels could increase demand by at most 2 percentage points. Lack of knowledge of annuities explains another 1.2 percentage points. We find limited additional inter-est for deferred annuities compared to immediate ones although respondents are less price sensitive when evaluating deferred annuities. |
| Keywords: | Life annuities’ money’s worth,Stated preferences,Subjective survival probabilities, |
| JEL: | J26 D14 I13 |
| Date: | 2018–10–17 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2018s-33&r=lma |
| By: | Burzynski, Michal (LISER); Deuster, Christoph (IRES, Université catholique de Louvain); Docquier, Frédéric (Université catholique de Louvain) |
| Abstract: | This paper analyzes the factors underlying the evolution of the worldwide distribution of skills and their implications for global inequality. We develop and parameterize a two-sector, two-class, world economy model that endogenizes education and mobility decisions, population growth, and income disparities across and within countries. First, our static experiments reveal that the geography of skills matters for global inequality. Low access to education and sectoral misallocation of skills substantially impact income in poor countries. Second, we produce unified projections of population and income for the 21st century. Assuming the continuation of recent education and migration policies, we predict stable disparities in the world distribution of skills, slow-growing urbanization in developing countries and a rebound in income inequality. These prospects are sensitive to future education costs and to internal mobility frictions, which suggests that policies targeting access to all levels of education and sustainable urban development are vital to reduce demographic pressures and global inequality in the long term. |
| Keywords: | human capital, migration, urbanization, growth, inequality |
| JEL: | E24 J24 O15 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11804&r=lma |
| By: | Merz, Joachim (Leuphana University Lüneburg) |
| Abstract: | Quality of life and satisfaction with life are of particular importance for individuals as well as for society concerning the "demographic change" with now longer retirement periods. This study will contribute to the life satisfaction discussion and quantifies life satisfaction and pattern of explanation before and after such a prominent life cycle event, the entrance into retirement. In particular, with the individual longitudinal data and 33 waves of the Socio-Economic Panel (SOEP) and the appropriate microeconometric causal fixed effects robust panel methods we ask and quantify if actual life satisfaction indeed is decreasing before retirement, is increasing at the entrance into retirement, and is decreasing then after certain periods back to a foregoing level. Thus, we ask if such an anticipation and adaptation pattern – as known from other prominent events – is also to discover for life satisfaction before and after retirement in Germany. |
| Keywords: | retirement, life-satisfaction, happiness, retirement, anticipation and adaptation effects, fixed-effect regression, Socio-Economic Panel (SOEP), Germany |
| JEL: | I31 J26 J14 J17 A13 C23 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11832&r=lma |
| By: | Alberto Prati (Aix-Marseille Univ., CNRS, EHESS, Centrale Marseille, AMSE) |
| Abstract: | Although satisfaction measures strongly depend on personal history, the relationship between memory and current well-being is still unclear. This article is dedicated to empirically investigating if current wage satisfaction affects the ability to date past wage changes. We match answers from a French national survey with administrative records, to compare the recalled and actual wage history. Our data support and extend some previous findings from the psychology literature: relatively remote events are recalled as closer in time, while relatively recent events are recalled as further in time. An instrumental variable strategy shows that these effects – respectively known as “forward†and “backward telescoping†– are partially caused by current satisfaction, so that, ceteris paribus, people who are satisfied with their wage tend to date wage cuts as more remote than they actually are. We suggest that this pattern of imperfect recall, which we denote as hedonic telescoping, opens a new perspective in the understanding of the well-known phenomenon of hedonic adaptation. |
| Keywords: | recall bias, wage satisfaction, wage history, hedonic adaptation, hedonic telescoping |
| JEL: | D91 J28 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1822&r=lma |