nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2019‒01‒14
fourteen papers chosen by
Joseph Marchand
University of Alberta

  1. A Very Uneven Playing Field: Economic Mobility in the United States By Pablo Mitnik; Victoria Bryant; David Grusky
  2. Do State Laws Protecting Older Workers from Discrimination Reduce Age Discrimination in Hiring? Evidence from a Field Experiment By David Neumark; Ian Burn; Patrick Button; Nanneh Chehras
  3. Financial Frictions, Cyclical Fluctuations, and the Growth Potential of New Firms By Christoph Albert; Andrea Caggese
  4. Rainfall, Internal Migration and Local labor Markets in Brazil By Raphael Corbi; Tiago Ferraz
  5. Racing With or Against the Machine? Evidence from Europe By Gregory, Terry; Salomons, Anna; Zierahn, Ulrich
  6. The introduction of serfdom and labor markets By Jensen, Peter Sandholt; Radu, Cristina Victoria; Severgnini, Battista; Sharp, Paul
  7. How Much of Barrier to Entry is Occupational Licensing? By Peter Blair; Bobby Chung
  8. On the political economy of income taxation By Berliant, Marcus; Gouveia, Miguel
  9. The Impact of a Conditional Cash Transfer Program on Households' Well-Being By Daniela Del Boca; Chiara Pronzato; Giuseppe Sorrenti
  10. Learning from Coworkers By Gregor Jarosch; Ezra Oberfield; Esteban Rossi-Hansberg
  11. Intergenerational Mobility in Education: Variation in Geography and Time By Jason Fletcher; Joel Han
  12. Discrimination at the Intersection of Age, Race, and Gender: Evidence from a Lab-in-the-field Experiment By Joanna N. Lahey; Douglas R. Oxley
  13. Trends in Employment and Social Security Incentives in the Spanish Pension System: 1980-2016 By Pilar García-Gómez; Silvia Garcia-Mandicó; Sergi Jimenez-Martin; Judit Vall Castelló
  14. The Ins and Outs of Involuntary Part-time Employment By Daniel Borowczyk-Martins; Etienne Lalé

  1. By: Pablo Mitnik (Stanford University); Victoria Bryant (George Mason University; IRS); David Grusky (Stanford University)
    Abstract: We present results from a new data set, the Statistics of Income Mobility Panel, that has been assembled from tax and other administrative sources to provide evidence on economic mobility and persistence in the United States. This data set allows us to take on the methodological problems that have complicated previous efforts to estimate intergenerational earnings and income elasticities. We find that the elasticities for women’s income, men’s income, and men’s earnings are as high as all but the highest of the previously reported survey-based estimates. Because the intergenerational curves are especially steep within the parental-income region defined by the 50th to 90th percentiles, approximately two-thirds of the inequality between poor and well-off families is passed on to the next generation. This extreme persistence cannot be attributed to any single factor. Instead, the U.S. is exceptional with respect to virtually all factors governing economic persistence, including the returns to human capital, the amount of public investment in the human capital of low-income children, the amount of socioeconomic segregation, and the progressiveness of the tax-and-transfer system. For each of these four factors, the U.S. has opted for policies that are mobility-reducing, with the implication that any substantial increase in mobility will likely require a wide-ranging package of reforms that cut across many institutions.
    Keywords: income mobility, intergenerational mobility, Inequality, human capital
    JEL: J62 E24 J24
    Date: 2018–12
  2. By: David Neumark; Ian Burn; Patrick Button; Nanneh Chehras
    Abstract: We provide evidence from a field experiment in all 50 states on age discrimination in hiring for retail sales jobs. We relate measured age discrimination – the difference in callback rates between old and young applicants – to state variation in anti-discrimination laws protecting older workers. Anti-discrimination laws could boost hiring, although they could have the unintended consequence of deterring hiring if their main effect is to increase termination costs. We find some evidence that there is less discrimination against older men and women in states where age discrimination law allows larger damages, and some evidence that there is lower discrimination against older women in states where disability discrimination law allows larger damages. But this evidence is not robust to all of the estimations we consider. However, we reach a robust conclusion that stronger or broader laws protecting older workers from discrimination do not have the unintended consequence of deterring their hiring.
    JEL: J23 J26 J7 J78 K31
    Date: 2018–12
  3. By: Christoph Albert; Andrea Caggese
    Abstract: We develop a model in which entrepreneurs choose between startup types with heterogeneous short- and long-run growth potential, and we generate testable predictions on the differential effects of financial factors and cyclical fluctuations on these startups. Using a multi-country entrepreneurship survey, we find that, consistent with the model, higher borrowing costs during financial crises negatively affect high-growth startups considerably more than low-growth startups, especially during severe downturns. Our results, supported by additional tests using sector-level financial frictions indicators, uncover a new channel that is potentially important to explain slow recoveries after financial crises.
    Keywords: financial crisis, entrepreneurship
    JEL: E20 E32 D22 J23 M13
    Date: 2018–12
  4. By: Raphael Corbi; Tiago Ferraz
    Abstract: We investigate the labor market impacts of weather-induced internal migration in Brazil between 1987 and 2010. We instrument the number of migrants at the destination municipalities using a two-step approach. First, we exploit the variation of out-migration flows from the Brazilian Semiarid, driven by deviations from historical average rainfall, to predict the number of internal migrants leaving their hometowns. Then, we distribute this predicted flow according to the preexisting support network in each destination based on the migrant’s region of origin. Our results indicate that increasing in-migration rate by 1ð ‘ .ð ‘ . reduces native employment by 0.3ð ‘ .ð ‘ ., mostly in the formal sector, decreases wages in the informal sector by 0.2% and deepens earnings inequality.
    Keywords: Migration; labor supply; wage effects; rainfall
    JEL: J21 J22 J61 R23
    Date: 2018–12–20
  5. By: Gregory, Terry (IZA); Salomons, Anna (Utrecht University); Zierahn, Ulrich (ZEW Mannheim)
    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: 2019–01
  6. By: Jensen, Peter Sandholt (University of Southern Denmark); Radu, Cristina Victoria (University of Southern Denmark); Severgnini, Battista (Copenhagen Business School); Sharp, Paul (University of Southern Denmark, CAGE, CEPR)
    Abstract: We provide evidence of how restrictions on labor mobility, such as serfdom and other types of labor coercion, impact labor market outcomes. To do so, we estimate the impact of a large negative shock to labor mobility in the form of the reintroduction of serfdom in Denmark in 1733, which was targeted at limiting the mobility of farmhands. Using a unique data source based on the archives of estates from the eighteenth century, we test whether serfdom affected the wages of farmhands more strongly than other groups in the labor market, and results based on a differences-in-differences approach reveal evidence consistent with a strong negative effect following its introduction. We also investigate whether one mechanism was that boys with rural backgrounds were prevented from taking up apprenticeships in towns, and find suggestive evidence that this was indeed the case. Thus, our results suggest that serfdom was effectively reducing mobility.
    Keywords: Serfdom, labor mobility, coercion JEL Classification: J3, N33, P4
    Date: 2018
  7. By: Peter Blair (Clemson University); Bobby Chung (Clemson University)
    Abstract: We exploit state variation in licensing laws to study the effect of licensing on occupational choice using a boundary discontinuity design. We find that licensing reduces equilibrium labor supply by an average of 17%-27%. The negative labor supply effects of licensing appear to be strongest for white workers and comparatively weaker for black workers.
    Keywords: occupational licensing, Labor Supply, race, gender
    JEL: J21 K23 L51
    Date: 2018–12
  8. By: Berliant, Marcus; Gouveia, Miguel
    Abstract: The literatures dealing with voting, optimal income taxation, implementation, and pure public goods are integrated here to address the problem of voting over income taxes and public goods. In contrast with previous articles, general nonlinear income taxes that affect the labor-leisure decisions of consumers who work and vote are allowed. Uncertainty plays an important role in that the government does not know the true realizations of the abilities of consumers drawn from a known distribution, but must meet the realization-dependent budget. Even though the space of alternatives is infinite dimensional, conditions on primitives are found to assure existence of a majority rule equilibrium when agents vote over both a public good and income taxes to finance it.
    Keywords: Voting; Income taxation; Public good
    JEL: D72 D82 H21 H41
    Date: 2018–12–12
  9. By: Daniela Del Boca (University of Turin and Collegio Carlo Alberto); Chiara Pronzato (University of Turin, CHILD and Collegio Carlo Alberto); Giuseppe Sorrenti (University of Zurich)
    Abstract: We evaluate the impact of a conditional cash transfer (CCT) program that we designed on family well-being among low-income families with young children. Although most CCTs have been implemented in low-income countries, our research is in the context of a high-income country, Italy, where the recent economic crises have worsened the conditions of families with children, especially among immigrants. Our objective is to evaluate the introduction of conditionality (attendance of courses) into a pre-existing unconditional cash transfer program. Using a randomized controlled trial, we find that CCT families search more actively for work, and they work more hours and more regularity than the cash transfer and control groups. CCT families also are able to save more money and eat healthier foods. The CCT intervention appears to be more effective than cash transfer alone in changing households' behavior in several dimensions of well-being. Our findings add to the accumulating evidence on the impact of conditional cash transfers versus unconditional ones and to the literature concerning multidimensional incentive programs.
    Keywords: conditional cash transfers, poverty, use of money, Labor Supply, parenting
    JEL: I10 I20 J24 I31
    Date: 2018–12
  10. By: Gregor Jarosch; Ezra Oberfield; Esteban Rossi-Hansberg
    Abstract: We investigate learning at the workplace. To do so, we use German administrative data that contain information on the entire workforce of a sample of establishments. We document that having more highly paid coworkers is strongly associated with future wage growth, particularly if those workers earn more. Motivated by this fact, we propose a dynamic theory of a competitive labor market where firms produce using teams of heterogeneous workers that learn from each other. We develop a methodology to structurally estimate knowledge flows using the full-richness of the German employer-employee matched data. The methodology builds on the observation that a competitive labor market prices coworker learning. Our quantitative approach imposes minimal restrictions on firms' production functions, can be implemented on a very short panel, and allows for potentially rich and flexible coworker learning functions. In line with our reduced form results, learning from coworkers is significant, particularly from more knowledgeable coworkers. We show that between 4 and 9% of total worker compensation is in the form of learning and that inequality in total compensation is significantly lower than inequality in wages.
    JEL: E24 J31 O33
    Date: 2019–01
  11. By: Jason Fletcher; Joel Han
    Abstract: Although the measurement of intergenerational income mobility has seen a rapid increase in attention and policy discussions, similar examinations of educational mobility in the U.S. are lacking. This paper begins to fill this gap by documenting differences in educational mobility across time (1982-2004) and geography (U.S. states). The study complements recent estimates of intergenerational income mobility because educational mobility both contributes to income mobility and is a target for education policies. We both develop a method to compute intergenerational correlation coefficients which respects the unique properties of education attainment, as well as utilize standard measures in the literature. While naive intergenerational regressions of years attained suggest a slight increase in mobility over the sample period, we find that mobility fluctuated: decreasing over roughly the first decade and increasing in the second. In addition, there is also substantial geographic variation in education mobility. We identify local community and policy factors, such as the existence of high school exit exams, that are correlated with educational mobility as well as a lack of increase in mobility in the South.
    JEL: I2 I21 I24 J24 J48
    Date: 2018–12
  12. By: Joanna N. Lahey; Douglas R. Oxley
    Abstract: We use a laboratory experiment with randomized resumes and eyetracking to explore the effects of race on employment discrimination over the lifecycle. We show race discrimination against prime-age black job applicants that diminishes into middle age before re-emerging for older applicants. Screeners mechanically process black and white resumes similarly, but spend less time on younger black resumes, suggesting they use negative heuristics or taste-based discrimination. Screeners demonstrate levels-based statistical discrimination, believing that younger black applicants have worse computer skills and more gaps in their job histories. We find no evidence that screeners believe black applicants have worse previous experience. Screeners demonstrate variance-based statistical discrimination against black applicants of all ages, suggesting that screeners perceive the stronger history signals for white applicants, with this type of discrimination disproportionately affecting older applicants. We find suggestive evidence that the signal sent by high school attended is weaker for younger black applicants compared to younger white applicants, and we find no evidence that the signal strength of the applicant’s address varies by race. Evidence from the CPS and an additional study supports the external validity of our experiment, particularly for female job applicants. Results are robust to different controls and specification choices.
    JEL: J14 J15 J23 J7 J70 J71
    Date: 2018–12
  13. By: Pilar García-Gómez; Silvia Garcia-Mandicó; Sergi Jimenez-Martin; Judit Vall Castelló
    Abstract: In this paper, we analyze the association between financial incentives and retirement decisions using aggregate data for over four decades in Spain. We calculate an implicit tax rate on remaining in employment for an additional year and examine its correlation with employment rates for older workers. The results suggest that financial incentives play a role in explaining the retirement patterns of both employed and unemployed workers.
    JEL: H55 J26
    Date: 2018–12
  14. By: Daniel Borowczyk-Martins; Etienne Lalé
    Abstract: We develop an adjustment procedure to construct U.S. monthly time series of involuntary part-time employment stocks and flows from 1976 until today. Armed with these new data, we provide a comprehensive account of the dynamics of involuntary part-time work. Transitions from full-time to involuntary part-time employment dom-inate this dynamics, spiking up at recessions’ onsets and persisting well into recovery periods. Weaknesses in job creation, on the other hand, contribute little to these fluctuations. Our data and findings are relevant to inform a broader assessment of labor market performance and to develop models of cyclical labor adjustment.
    Keywords: Involuntary part-time employment,Unemployment,Labor market flows,Business Cycles,
    JEL: E24 E32 J21
    Date: 2018–12–20

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