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on Labor Markets - Supply, Demand, and Wages |
| By: | Andrew Garin; Filipe Silvério |
| Abstract: | How much do employees’ wages directly reflect their employer’s labor demand, rather than competition from other employers in the labor market? We test the wage incidence of product demand shocks by studying a quasi-experiment that idiosyncratically shocked individual firms’ export demand without systematically affecting similar firms’ product or labor demand. Our shocks measure how much Portuguese exporters’ sales were impacted by where—but not what—they had been selling before the recession of 2008. These shocks predict changes in output, payroll, and hiring at affected firms, but not at rival employers in the same labor market segment. An idiosyncratic shock that changes output by 10 percent in the medium-run causes wages of pre-2008 employees to change proportionally by 1.5 percent, relative to trend. Consistent with a simple framework, we find that these pass-through effects are larger in industries with lower employee turnover rates and in firms with higher pay premiums. These findings offer evidence that heterogeneous firm dynamics can plausibly generate substantial cross-sectional wage dispersion, but only in less-fluid labor markets. |
| JEL: | F16 J23 J31 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w201902&r=all |
| By: | Victor Rudakov (National Research University Higher School of Economics); Ilya Prakhov (National Research University Higher School of Economics) |
| Abstract: | For several years, the Russian system of higher education had been undergoing massive transformations related to the enhancement of the global competitiveness of the national academic sector. The introduction of research-oriented universities and the transition to incentive contracts are the main elements of the reform. In this article we show how these institutional changes contribute to reducing the problem of gender inequality in academia. Based on comprehensive data from a Russian faculty survey (MEMO), it is found that there are considerable differences in gender wage inequality by university status: female faculty earn significantly lower salaries in ordinary universities, but there are no gender differences in pay in research-oriented universities, which are most actively transitioning to incentive remuneration schemes. Female faculty experience vertical segregation: women are less likely to achieve senior positions in university hierarchies. We also found indirect evidence of women’s self-selection for lower-paid positions: female faculty are less likely to achieve advanced degrees and to have research publications. Overall, the study shows that male faculty earns 8.7% higher salaries than female counterparts after controlling for all observable characteristics. Oaxaca decomposition showed that 53% of the gender wage gap can be explained by observable characteristics, while the rest can be attributed to discrimination, self-selection or unobservable factors. In the absence of discrimination, male faculty should earn 10% higher salaries, but due to discrimination and unobservable factors, male faculty, on average, earn 18.7% more. However, the gender wage gap in academia is considerably below the national average: women earned on average around 80% of male salaries in academic sector, while in the whole Russian economy women earned around 70% of men’s wages |
| Keywords: | gender wage gap, economics of gender, gender inequalities in academia, faculty pay, incentive contract, project “5-100” |
| JEL: | J16 J30 J31 J41 J78 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:208/ec/2019&r=all |
| By: | Caliendo, Marco (University of Potsdam); Schröder, Carsten (DIW Berlin); Wittbrodt, Linda (University of Potsdam) |
| Abstract: | In 2015, Germany introduced a statutory hourly minimum wage that was not only universally binding but also set at a relatively high level. We discuss the short-run effects of this new minimum wage on a wide set of socio-economic outcomes, such as employment and working hours, earnings and wage inequality, dependent and self-employment, as well as reservation wages and satisfaction. We also discuss difficulties in the implementation of the minimum wage and the measurement of its effects related to non-compliance and suitability of data sources. Two years after the minimum wage introduction, the following conclusions can be drawn: while hourly wages increased for low-wage earners, some small negative employment effects are also identifiable. The effects on aspired goals, such as poverty and inequality reduction, have not materialized in the short run. Instead, a tendency to reduce working hours is found, which alleviates the desired positive impact on monthly income. Additionally, the level of non-compliance was substantial in the short run, thus drawing attention to problems when implementing such a wide reaching policy. |
| Keywords: | minimum wage, evaluation, earnings, working hours, employment |
| JEL: | J22 J23 J31 J38 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12043&r=all |
| By: | Engdahl, Mattias (IFAU - Institute for Evaluation of Labour Market and Education Policy); Godard, Mathilde (University of Lyon, CNRS, GATE-LSE); Nordström Skans, Oskar (Uppsala Universitets centrum för arbetslivsforskning (UCLS)) |
| Abstract: | We use quasi-random variation in graduation years during the onset of a very deep national recession to study the relationship between early labor market conditions and young females’ family formation outcomes. A policy-pilot affecting the length of upper-secondary education in Swedish vocational schools allows us to compare females who graduated into the onset of the Swedish financial crisis of the 1990s to those graduating during the final phase of the preceding economic boom while netting out the main effect of the policy. We find that graduating straight into the recession had negative labor market consequences during the first few years but we find no evidence of permanent labor market scars. In contrast, graduating into the crisis had lasting effects on family formation outcomes of low-grade students in particular. Those who graduated into the recession because of the policy-pilot formed their first stable partnerships earlier and had their first children earlier. Their partners had lower grades, which we show to be a strong predictor of divorce, and worse labor market performance. Divorces were more prevalent and the ensuing increase in single motherhood was long-lasting. These negative effects on marital stability generated persistent increases in the use of welfare benefits despite the short-lived impact on labor market outcomes. The results suggest that young women respond to early labor market prospects by changing the quality threshold for entering into family formation, a process which affects the frequency of welfare-dependent single mothers during more than a decade thereafter. |
| Keywords: | Family formation; female labor supply; cost of recessions |
| JEL: | E32 J12 J13 J22 J31 |
| Date: | 2018–12–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2018_025&r=all |
| By: | Labanca, Claudio (Monash University); Pozzoli, Dario (Copenhagen Business School) |
| Abstract: | Although coworkers are spending an increasing share of their working time interacting with one another, little is known about how the coordination of hours among heterogenous coworkers affects pay, productivity and labor supply. In this paper, we use linked employer-employee data on hours worked in Denmark to first document evidence of positive correlations between wages, productivity and the degree of hours coordination – measured as the dispersion of hours – within firms. We then estimate labor supply elasticities by exploiting changes made to the personal income tax schedule in 2010. We find that hours coordination is associated with attenuated labor supply elasticity and spillovers on coworkers not directly affected by the tax change. These spillovers lead to a 3.3% decrease in tax revenues from the 2010 tax reform, and if ignored, they induce substantial downward bias in estimates of the labor supply elasticity. We explain these findings in a framework in which differently productive firms choose whether to coordinate hours in exchange for productivity gains, leading more productive firms to select into coordinating hours and to pay compensating wage differentials. |
| Keywords: | coordination, working hours, labor supply elasticity, productivity |
| JEL: | J31 H20 J20 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12062&r=all |
| By: | Aksu, Ege (CUNY Graduate Center); Erzan, Refik (Bogazici University); Kirdar, Murat G. (Bogazici University) |
| Abstract: | We estimate the effects of the arrival of 2.5 million Syrian migrants in Turkey by the end of 2015 on the labor market outcomes of natives, using a difference-in-differences IV methodology. We show that relaxing the common-trend assumption of this methodology - unlike recent papers in the same setting - makes a substantial difference in several key outcomes. Despite the massive size of the migrant influx, no adverse effects on the average wages of men or women or on total employment of men are observed. For women, however, total employment falls - which results mainly from the elimination of part-time jobs. While the migrant influx has adverse effects on competing native workers in the informal sector, it has favorable effects on complementary workers in the formal sector. We estimate about one-to-one replacement in employment for native men in the informal sector, whereas both wage employment and wages of men in the formal sector increase. Our findings, including those on the heterogeneity of effects by age and education, are consistent with the implications of the canonical migration model. In addition, increases in prices in the product market and in capital flow to the treatment regions contribute to the rise in labor demand in the formal sector. |
| Keywords: | labor force and employment, wages, immigrant workers, formal and informal sectors, Syrian refugees, Turkey, difference-in-differences, instrumental variables |
| JEL: | J21 J31 J61 C26 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12050&r=all |
| By: | Bell, Brian (King's College London); Bukowski, Pawel (Central European University); Machin, Stephen (London School of Economics) |
| Abstract: | The long-run evolution of rent sharing is empirically studied. Based upon a comprehensive and harmonized panel of the top 300 publicly quoted British companies over thirty five years, the paper reports evidence of a significant fall over time in the extent to which firms share rents with workers. It confirms that companies do share their profits with employees, but at much smaller scale today than they did during the 1980s and 1990s. This is a robust finding, corroborated with industry-level analysis for the US and EU. The decline in rent sharing is coincident with the rise of product market power that has occurred as worker bargaining power has dropped. Although firms with more market power previously shared more of their profits, they experienced a stronger fall in rent sharing after 2000. |
| Keywords: | rent sharing, inclusive growth |
| JEL: | J30 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12060&r=all |
| By: | Barron, Kai; Gravert, Christina |
| Abstract: | Confidence is often seen as the key to success. Empirical evidence about how such beliefs about one’s abilities causally map into actions is, however, sparse. In this paper, we experimentally investigate the causal effect of an increase in confi-dence about one’s own ability on two central choices made by workers in the la-bor market: choosing between jobs with different incentive schemes, and the sub-sequent choice of how much effort to exert within the job. An exogenous increase in confidence leads to an increase in subjects’ propensity to choose payment schemes that depend heavily on ability. This is detrimental for low ability workers. Policy implications are discussed. |
| Keywords: | overconfidence,experiment,beliefs,real-effort,grade inflation |
| JEL: | C91 D03 M50 J24 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbeoc:spii2018301r&r=all |
| By: | Dora Costa; Noelle Yetter; Heather DeSomer |
| Abstract: | We investigate when and how health shocks reverberate across the life cycle and down to descendants by examining the impact of war wounds on the socioeconomic status and older age mortality of US Civil War (1861-5) veterans and of their adult children. Younger veterans who had been wounded in the war left the farm sector, becoming laborers. Consistent with human capital and job matching models, older wounded men were unlikely to switch sectors and experienced wealth declines. Fathers' severe wartime wounds affected daughters', but not sons', socioeconomic status. Daughters were shorter-lived if their fathers were older at the end of the war and had been severely wounded compared to daughters of fathers not severely wounded or younger when severely wounded. We suspect that early life conditions disproportionately affected daughters. Our findings illuminate the long reach of disability in a manual labor economy. |
| JEL: | I12 J24 N12 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25480&r=all |
| By: | Bentsen, Kristian Hedeager (University of Copenhagen); Munch, Jakob R. (University of Copenhagen); Schaur, Georg (University of Tennessee) |
| Abstract: | Education policies depend in part on the presence of externalities, but very little evidence exists to confirm the existence of such externalities. In this paper we investigate if there are spillover effects from education within peer groups at the workplace. We estimate the effect of increasing the share of higher educated workers in close peer groups on wages, using a rich data source linking workers to workplaces and specific occupations. Our empirical approach accounts for the endogenous sorting of workers into peer groups and workplaces, and, at the same time avoids the reflection problem. In our main specification we find statistically significant but economically small peer effects across all occupations. The magnitude of the effect differs across length and type of education, as well as across occupations and peer group- and workplace size. |
| Keywords: | education externality, peer effects, match worker-firm data |
| JEL: | E20 J24 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12054&r=all |
| By: | Joop Hartog; Pedro Raposo; Hugo Reis |
| Abstract: | Comparing cohorts born between 1951 and 1994, we document and interpret changes in the wage differential among graduates from secondary education with a vocational and a general curriculum. The wage gap initially increased and then decreased. We find that these changes cannot be attributed to simple compositional shifts in the economy, but instead relate to important changes in worker allocation to firms that are heterogeneous in wage policies: the demise of assortative matching between workers and firms that worked out favourably for vocational graduates. Our results suggest that reforms of vocational education initiated in the late 1980’s have been a successful policy intervention. |
| JEL: | I2 J31 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w201903&r=all |
| By: | Bobba, Matteo (Toulouse School of Economics); Flabbi, Luca (University of North Carolina, Chapel Hill); Levy Algazi, Santiago (Inter-American Development Bank); Tejada, Mauricio (Universidad Alberto Hurtado) |
| Abstract: | We develop a search and matching model where firms and workers produce output that depends both on match-specific productivity and on worker-specific human capital. The human capital is accumulated while working but depreciates while searching for a job. Jobs can be formal or informal and firms post the formality status. The equilibrium is characterized by an endogenous steady state distribution of human capital and by an endogenous formality rate. The model is estimated on longitudinal labor market data for Mexico. Human capital accumulation on-the-job is responsible for more than half of the overall value of production and upgrades more quickly while working formally than informally. Policy experiments reveal that the dynamics of human capital accumulation magnifies the negative impact on productivity of the labor market institutions that give raise to informality. |
| Keywords: | labor market frictions, search and matching, Nash bargaining, informality, on-the-job human capital accumulation |
| JEL: | J24 J3 J64 O17 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12091&r=all |
| By: | Hugh Rockoff |
| Abstract: | Although attempts to measure trends in prices, output, and employment can be traced back for centuries, in the main the origins of the U.S. federal statistics are to be found in bitter debates over economic policy, ultimately debates over the distribution of income, at the end of the nineteenth century and during the world wars and Great Depression. Participants in those debates hoped that statistics that were widely accepted as nonpolitical and accurate would prove that their grievances were just and provide support for the policies they advocated. Economists – including luminaries such as Irving Fisher, Wesley C. Mitchell, and Simon Kuznets – responded by developing the methodology for computing index numbers and estimates of national income. Initially, individuals and private organizations provided these statistics, but by the end of WWII the federal government had taken over the role. Here I briefly describe the cases of prices, GDP, and unemployment. |
| JEL: | A30 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25431&r=all |
| By: | Pieroni, Luca; d'Agostino, Giorgio; Lanari, Donatella |
| Abstract: | In this paper, we examine how the Italian language problems of immigrants affect their labour market performance using two hitherto unexploited immigration surveys recently published by the Italian Institute of Statistics. With respect to immigrants with good Italian proficiency, our empirical findings suggest that language problems reduce the employment rate by about 30%, and point estimates are even larger when evaluating job discrimination. Italian language skills also significantly affect the wages of immigrants. The point estimates suggest a wage gap of about 20% between immigrants with Italian proficiency and those without Italian proficiency, a magnitude that increases to 25% for male immigrants. Robustness checks confirmed our estimates. |
| Keywords: | Immigrants, Language skills, Employment, Wages |
| JEL: | J15 J20 J31 |
| Date: | 2019–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:91725&r=all |
| By: | Ekaterina S. Jardim; Gary Solon; Jacob L. Vigdor |
| Abstract: | For more than 80 years, many macroeconomic analyses have been premised on the assumption that workers’ nominal wage rates cannot be cut. The U.S. evidence on this assumption has been inconclusive because of distortions from reporting error in household surveys. Following a British literature, we reconsider the issue with more accurate wage data from the payroll records of most employers in the State of Washington over the period 2005-2015. For every one of the 40 four-quarters-apart periods for which we observe year-to-year wage changes, we find that at least 20 percent of job stayers experience nominal wage reductions. |
| JEL: | E24 J3 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25470&r=all |
| By: | Colin Green (Department of Economics, Norwegian University of Science and Technology); John Heywood (Department of Economics, University of Wisconsin-Milwaukee) |
| Abstract: | Using a panel of young workers, we show cross-sectional evidence of greater alcohol and illicit drug use among those paid performance pay. Recognizing that this likely reflects worker sorting, we first control for risk and ability proxies. We then control for worker fixed effects and finally for worker-employer match fixed effects. These estimates continue to indicate that the risk of substance use increases when workers are moved to performance pay. While robustness tests examine heterogeneous responses, our evidence fits conjectures that stress and effort increase with performance pay as does the spillover coping mechanism of alcohol and drug use. |
| Keywords: | Performance Pay; Alcohol; Drugs; Sorting |
| JEL: | I12 J33 |
| Date: | 2018–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:nst:samfok:17618&r=all |
| By: | Yifan Gong; Ralph Stinebrickner; Todd R. Stinebrickner |
| Abstract: | We use unique data from the Berea Panel Study to characterize how much earnings uncertainty is present for students at college entrance and how quickly this uncertainty is resolved. We characterize uncertainty using survey questions that elicit the entire distribution describing one’s beliefs about future earnings. Taking advantage of the longitudinal nature of the expectations data, we find that roughly two-thirds of the income uncertainty present at the time of entrance remains at the end of college. Taking advantage of a variety of additional survey questions, we provide evidence about how the resolution of income uncertainty is influenced by factors such as college GPA and college major, and also examine why much income uncertainty remains unresolved at the end of college. This paper also contributes to a literature interested in understanding the relative importance of uncertainty and heterogeneity in determining observed earnings distributions. |
| JEL: | I21 J01 J3 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25485&r=all |
| By: | Rudanko, Leena (Federal Reserve Bank of Philadelphia) |
| Abstract: | This paper studies a labor market with directed search, where multi-worker firms follow a firm wage policy: They pay equally productive workers the same. The policy reduces wages, due to the influence of firms’ existing workers on their wage setting problem, increasing the profitability of hiring. It also introduces a time-inconsistency into the dynamic firm problem, because firms face a less elastic labor supply in the short run. To consider outcomes when firms reoptimize each period, I study Markov perfect equilibria, proposing a tractable solution approach based on standard Euler equations. In two applications, I first show that firm wages dampen wage variation over the business cycle, amplifying that in unemployment, with quantitatively significant effects. Second, I show that firm wage firms may find it profitable to fix wages for a period of time, and that an equilibrium with fixed wages can be good for worker welfare, despite added volatility in the labor market. |
| Keywords: | Labor Market Search; Business Cycles; Wage Rigidity; Competitive Search; Limited Commitment |
| JEL: | E24 E32 J41 J64 |
| Date: | 2019–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:19-5&r=all |
| By: | Heckman, James J. (University of Chicago) |
| Abstract: | Understanding inequality and devising policies to alleviate it was a central focus of Jan Tinbergen's lifetime research. He was far ahead of his time in many aspects of his work. This essay places his work in the perspective of research on inequality in his time and now, focusing on his studies on the pricing of skills and the evolution of skill prices. In his most fundamental contribution, Tinbergen developed the modern framework for hedonic models as part of his agenda for integrating demand and supply for skills to study determination of earnings and its distribution and the design of effective policy. His lifetime emphasis on social planning caused some economists to ignore his fundamental work. |
| Keywords: | income inequality, hedonic models, general equilibrium, models of inequality |
| JEL: | B31 D31 D33 D63 I24 J20 P21 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12046&r=all |
| By: | Kumar, Krishna B. (RAND); Mahmud, Minhaj (Bangladesh Institute of Development Studies (BIDS)); Nataraj, Shanthi (RAND); Cho, Yoon Y. (World Bank) |
| Abstract: | Informality is ubiquitous in the labor markets of developing countries, and requiring that firms formally register, pay taxes, and provide employee benefits stipulated in labor regulations to reduce such informality is challenging. However, a matched survey on employer-employee preferences suggests that mutually beneficial job benefits exist, and that encouraging their adoption might be feasible. Carefully designed discrete choice experiments on combinations of benefits related to compensation, leave and termination policies, working conditions, and accident insurance, along with incentives for employers, reveal the relative values that workers and employers attach to each benefit. The results show that workers tend to value advance notice for job termination and accident insurance, and that employers are not averse to providing these benefits. In contrast, workers find long working hours without overtime compensation to be highly undesirable, whereas many employers are generally unwilling to provide shorter hours or overtime pay unless they face the threat of fines or are offered substantial incentives for doing so. Our findings therefore suggest that encouraging the provision of termination notice and accident insurance may be relatively easy, but that increasing compliance with legal limits on working hours and overtime compensation is likely to require increased enforcement or substantial incentives. |
| Keywords: | informality, worker benefits, discrete choice experiments |
| JEL: | J32 J81 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12064&r=all |
| By: | Yu Chen (University of Calgary); Matthew Doyle (Department of Economics, University of Waterloo); Francisco Gonzalez (Department of Economics, University of Waterloo) |
| Abstract: | We propose a definition of bad jobs and a competitive search model that addresses why workers seek such jobs, why employers create them and why market forces allow bad jobs to persist. The model features competitive search equilibria in which unemployed workers search for jobs that are unambiguously bad in a well defined sense. Concretely, these are jobs with suboptimal career prospects and jobs characterized by employers' underinvestment in labor. Our theory builds on the insight that when current employers can counter outside offers, potential employers who do not observe workers' productivity in their current jobs use wages as a signal of workers' willingness to switch jobs. In turn, this implies that the wage contracts that employers post in the market for unemployed workers not only direct job search but also signal career prospects. Bad jobs are a symptom of coordination failure stemming from a conflict between the signaling and allocative roles of wage contracts. Our analysis brings out potential difficulties inherent to the economics of bad jobs. |
| JEL: | D82 E24 J31 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:wat:wpaper:1902&r=all |
| By: | Sloczynski, Tymon (Brandeis University) |
| Abstract: | In this paper I demonstrate, both theoretically and empirically, that the interpretation of regression estimates of between-group differences in economic outcomes depends on the relative sizes of subpopulations under study. When the disadvantaged group is small, regression estimates are similar to its average loss. When this group is instead a numerical majority, regression estimates are similar to the average gain for advantaged individuals. I analyze black–white test score gaps using ECLS-K data and black–white wage gaps using CPS, NLSY79, and NSW data, documenting that the interpretation of regression estimates varies dramatically across applications. Methodologically, I also develop a new version of the Oaxaca–Blinder decomposition whose unexplained component recovers a parameter referred to as the average outcome gap. Under a particular conditional independence assumption, this estimand is equivalent to the average treatment effect (ATE). Finally, I provide treatment-effects reinterpretations of the Reimers, Cotton, and Fortin decompositions. |
| Keywords: | black-white gaps, decomposition methods, test scores, treatment effects, wages |
| JEL: | C21 I24 J15 J31 J71 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12041&r=all |
| By: | Della Giusta, Marina; Clot, Sophie; Razzu, Giovanni |
| Abstract: | We bridge the women entrepreneurship literature with the experimental economics literature on gender, with the aim to contribute a different perspective on the barriers and opportunities for women entrepreneurs, and one that we hope can help both fields by questioning some of the implicit assumptions that are often made (and used in policy) about the reasons for the differences observed between male and female headed businesses. In the course of the discussion we also revisit the definition of entrepreneur and the role of risk aversion in both neoclassical theory and in the identity perspective and draw implications in the context of the digital age and its potential to level the playing field between women and men in business venture. |
| Keywords: | women entrepreneurs, preferences, experiments |
| JEL: | D01 J24 J71 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:91483&r=all |
| By: | Suqin Ge (Department of Economics, Virginia Tech.); Andrea Moro (Department of Economics, University Of Venice Cà Foscari; Department of Economics, Vanderbilt University); Beibei Zhu (Slack) |
| Abstract: | We test the implications of a statistical discrimination model with asymmetric learning. Firms receive signals of productivity over time and may use race to infer worker’s productivity. Incumbent employers have more information about workers productivity than outside employers. Using data from the NLSY79, we find evidence of asymmetric learning. In addition, employers statistically discriminate against non-college educated black workers at time of hiring. We also find that employers directly observe most of the productivity of college graduates at hiring, and learn very little over time about these workers. |
| Keywords: | statistical discrimination, employer learning, asymmetric learning |
| JEL: | J71 D82 J31 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2018:27&r=all |
| By: | Ansala, Laura (Aalto University School of Business and Pellervo Economic Research); Åslund, Olof (IFAU - Institute for Evaluation of Labour Market and Education Policy); Sarvim¨aki, Matti (Aalto University School of Business and VATT Institute for Economic Research) |
| Abstract: | We examine how immigrants enter the labor market and whether their integration process varies by host country's immigration history. We focus on two countries - Finland and Sweden - that have similar formal institutions, but differ vastly in their past immigration experience. Nevertheless, in both countries, immigrants tend to find their first jobs in low-paying establishments where the manager and colleagues often share their ethnic background. Time to entry and entry job characteristics vary widely by region of origin. Furthermore, entry job characteristics predict earnings dynamics and job stability. The patterns and associations are remarkably similar in Finland and Sweden. These findings suggest strong regularities in labor market integration and ethnic segregation that are independent of immigration history and ethnic diversity. |
| Keywords: | Immigration; entry jobs; labor market integration; ethnic segregation |
| JEL: | J71 |
| Date: | 2018–11–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2018_020&r=all |