nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2019‒03‒25
29 papers chosen by
Joseph Marchand
University of Alberta

  1. Do Minimum Wage Increases Reduce Crime? By Zachary S. Fone; Joseph J. Sabia; Resul Cesur
  2. Reconsidering the returns to entrepreneurship: Applying a modified version of Lazear’s occupational choice model By Hårsman, Björn; Mattsson, Lars-Göran
  3. Wages and employment: The role of occupational skills By Esther Mirjam Girsberger; Matthias Krapf; Miriam Rinawi
  4. Taxation and the future of work: How tax systems influence choice of employment form By Anna Milanez; Barbara Bratta
  5. Transitioning from Solo Self-Employed to Microbusiness Employer: Local Economic Environment or Owner Characteristics? By Henley, Andrew
  6. Offshoring of services functions and labour market adjustments By Hildegunn Kyvik Nordås
  7. Student Internships and Employment Opportunities after Graduation: A Field Experiment By Baert, Stijn; Neyt, Brecht; Siedler, Thomas; Tobback, Ilse; Verhaest, Dieter
  8. Rent Sharing in China: Magnitude, Heterogeneity and Drivers By Duan, Wenjing; Martins, Pedro S.
  9. Opioids and the Labor Market By Aliprantis, Dionissi; Fee, Kyle; Schweitzer, Mark E.
  10. The Lost Ones: the Opportunities and Outcomes of Non-College Educated Americans Born in the 1960s By Margherita Borella; Mariacristina De Nardi; Fang Yang
  11. Changing Business Cycles: The Role of Women's Employment By Stefania Albanesi
  12. Firms and wage inequality in Central and Eastern Europe By Iga Magda; Jan Gromadzki; Simone Moriconi;
  13. Who Creates and Destroys Jobs over the Business Cycle? By Andrea Colciago; Volker Lindenthal; Antonella Trigari
  14. Export destinations and skill premium: Evidence from chinese manufacturing industries By Feicheng Wang; Chris Milner; Juliane Scheffel
  15. Family-Oriented Job Benefits and the Returns to Graduate Education By Gicheva, Dora; Mikkelsen, Ian
  16. Labor Market Returns to Vocational Secondary Education By Silliman, Mikko; Virtanen, Hanna
  17. Incentives, Search Engines, and the Elicitation of Subjective Beliefs: Evidence From Representative Online Survey Experiments By Grewenig, Elisabeth; Lergetporer, Philipp; Werner, Katharina; Woessmann, Ludger
  18. Understanding "Wage Theft": Evasion and Avoidance Responses to Minimum Wage Increases By Clemens, Jeffrey; Strain, Michael R.
  19. Job characteristics, job transitions and services trade: Evidence from the EU labour force survey By Sebastian Benz; Louise Johannesson
  20. Labour Supply Responses to Financial Wealth Shocks: Evidence from in Italy By Renata Bottazzi; Serena Trucchi; Matthew Wakefield
  21. Upward pressure on wages and the interregional trade spillover effects under demand-side shocks By Patrizio Lecca; Martin Christensen; Andrea Conte; Giovanni Mandras; Simone Salotti
  22. The Unintended Consequences of Employer Credit Check Bans for Labor Markets By Cortes, Kristle Romero; Glover, Andrew; Tasci, Murat
  23. All That Glitters Is Not Gold: Wages and Education for US Immigrants By Bertoli, Simone; Stillman, Steven
  24. Human Capital Investment under Exit Options: Evidence from a Natural Quasi-Experiment By Chand, Satish; Clemens, Michael A.
  25. Exploitation of Labor? Classical Monopsony Power and Labor's Share By Wyatt J. Brooks; Joseph P. Kaboski; Yao Amber Li; Wei Qian
  26. A Principled Approach to Assessing Missing-Wage Induced Selection Bias By Duo Qin, Sophie van Huellen, Raghda Elshafie, Yimeng Liu and Thanos Moraitis
  27. High school dropout for marginal students. Evidence from randomized exam form By Martin Eckhoff Andresen; Sturla A. Løkken
  28. Breaking down barriers to women’s economic empowerment: Policy approaches to unpaid care work By OECD
  29. The Unwavering SES Achievement Gap: Trends in U.S. Student Performance By Eric A. Hanushek; Paul E. Peterson; Laura M. Talpey; Ludger Woessmann

  1. By: Zachary S. Fone; Joseph J. Sabia; Resul Cesur
    Abstract: An April 2016 Council of Economic Advisers (CEA) report advocated raising the minimum wage to deter crime. This recommendation rests on the assumption that minimum wage hikes increase the returns to legitimate labor market work while generating minimal adverse employment effects. This study comprehensively assesses the impact of minimum wages on crime using data from the 1998-2016 Uniform Crime Reports (UCR), National Incident-Based Reporting System (NIBRS), and National Longitudinal Study of Youth (NLSY). Our results provide no evidence that minimum wage increases reduce crime. Instead, we find that raising the minimum wage increases property crime arrests among those ages 16-to-24, with an estimated elasticity of 0.2. This result is strongest in counties with over 100,000 residents and persists when we use longitudinal data to isolate workers for whom minimum wages bind. Our estimates suggest that a $15 Federal minimum wage could generate criminal externality costs of nearly $2.4 billion.
    JEL: J01 J3
    Date: 2019–03
  2. By: Hårsman, Björn (Department of Industrial Economics and Management, KTH Royal Institute of Technology); Mattsson, Lars-Göran (Department of Civil and Architectural Engineering, KTH Royal Institute of Technology)
    Abstract: The paper analyzes a modified version of Lazear’s (2004, 2005) model for occupational choice that includes a utility adjustment factor reflecting non-pecuniary net benefits associated with entrepreneurship. The model is used to derive analytical expressions for the relative income returns to entrepreneurship defined in two ways: in relation to the incomes of observationally similar wage employed and in relation to the counterfactual incomes of entrepreneurs as wage employed. The analysis shows that the upper bound on the income returns defined in counterfactual terms increases with the market value of entrepreneurial talent and that the lower bound decreases with increasing non-pecuniary benefits. If the entrepreneurial incomes are instead related to the incomes of observationally similar wage employed, and if the skill profiles in the population are assumed to follow a Fréchet distribution, then the upper bound on the relative expected returns will decrease with increasing non-pecuniary benefits. We also show that entrepreneurs on average will earn less than observationally similar wage employed even if there are no net benefits and that the associated self-selection bias will increase the higher the fraction of entrepreneurs. Individual-based data from the Swedish employment register is used to calibrate the parameters of the modified Lazear model and to compute the income returns to entrepreneurship. The model-based income distributions for entrepreneurs and wage employed are consistent with the observed distributions.
    Keywords: entrepreneurship; occupational choice; self-employment; self-selection bias; skill distribution; Fréchet distribution; entrepreneurship puzzle; returns to entrepreneurship
    JEL: J24 J30 L26 M13
    Date: 2019–03–13
  3. By: Esther Mirjam Girsberger (Economics Discipline Group, University of Technology Sydney); Matthias Krapf (University of Basel, Switzerland); Miriam Rinawi (Swiss National Bank, Switzerland)
    Abstract: We study how skills acquired in vocational education and training (VET) affect wages and employment dynamics in Switzerland. We present and estimate a search and matching model for workers with a VET degree who differ in their interpersonal, cognitive and manual skills. Assuming a match productivity which exhibits worker-job complementarity, we estimate how workers’ skills map into job offers, wages and unemployment. Firms value cognitive skills on average almost twice as much as interpersonal and manual skills. Moreover, they prize complementarity in cognitive and interpersonal skills. We estimate average returns to VET skills in hourly wages of 9%. Furthermore, VET improves labour market opportunities through higher job arrival rate and lower job destruction. Workers thus have large benefits from getting a VET degree.
    Keywords: Occupational training; labour market search; multidimensional skills.
    JEL: E23 J23 J24 J64
    Date: 2019–01–29
  4. By: Anna Milanez; Barbara Bratta
    Abstract: Recent policy discussion has highlighted the variety of ways in which the world of work is changing. One development prevalent in some countries has been an increase certain forms of non-standard work. Is this beneficial, representing increased flexibility in the workforce, or detrimental, representing a deterioration in job quality driven by automation, globalisation and the market power of large employers? These changes also raise crucial issues for tax systems. Differences in tax treatment across employment forms may create tax arbitrage opportunities. This paper investigates the potential for such opportunities for eight countries. It models the labour income taxation, inclusive of social contributions, of standard employees and then of self-employed workers (with applicable tax rules detailed in the paper’s annex). The aim is to understand whether countries’ tax systems treat different employment forms differently, before approaching the broader question of whether differential treatment has merit when evaluated against tax design principles.
    Keywords: future of work, gig economy, gig work, labour tax, labour taxation, non-standard work, self-employment, tax, taxation
    JEL: H2 H24 J2 J21 J08
    Date: 2019–03–21
  5. By: Henley, Andrew (Cardiff University)
    Abstract: Only a minority of micro-businesses create jobs for others. This paper addresses whether personal characteristics and resources of the microbusiness owner or the local external economic environment are drivers of job creation. In the UK context of significant growth in self-employment but a declining proportion who create jobs, an investigation using longitudinal data is provided. Individual demographic and resource characteristics are found to be more important, but place effects are relatively weak. Entrepreneurship policy needs to target particular groups, including women and less experienced business owners in their localities.
    Keywords: self-employment, micro-business, job creation, local environment, longitudinal analysis
    JEL: J23 L26 M13 R12
    Date: 2019–02
  6. By: Hildegunn Kyvik Nordås (OECD)
    Abstract: About 40% of employment in manufacturing is in services functions. This paper develops a measure of narrow outsourcing, matching services functions performed by workers inside manufacturing firms to the same services functions provided by outside suppliers. The measure allows us to analyse the competition that, say, workers at the IT services desk in manufacturing firms face from outside IT suppliers. Narrow outsourcing is entered into labour demand functions where labour is broken down on business functions using OECD data combined with the 2016 releases of the World Input Output Database (WIOD). On average, a one percentage point increase in narrow local outsourcing of services reduces manufacturing employment in the same services function by between 1.5% (R&D) and 3% (transport). The impact of offshoring on manufacturing labour demand is small on average, but depends strongly on the complexity of the value chain, the policy environment and technology. Manufacturing employment is more services intensive the longer the value chain. In-house IT functions complement and support offshored IT functions, while offshored R&D functions tend to replace in-house R&D. Tentatively, technology as measured by IT maturity and the length of the value chain is more important for employment in services functions in manufacturing than is offshoring.
    Keywords: labour demand, offshoring, outsourcing, regulation, structural changes, technology
    JEL: F16
    Date: 2019–03–20
  7. By: Baert, Stijn (Ghent University); Neyt, Brecht (Ghent University); Siedler, Thomas (University of Hamburg); Tobback, Ilse (KU Leuven); Verhaest, Dieter (KU Leuven)
    Abstract: Internships during tertiary education have become substantially more common over the past decades in many industrialised countries. This study examines the impact of a voluntary intra-curricular internship experience during university studies on the probability of being invited to a job interview. To estimate a causal relationship, we conducted a randomised field experiment in which we sent 1,248 fictitious, but realistic, resumes to real job openings. We find that applicants with internship experience have, on average, a 12.6% higher probability of being invited to a job interview.
    Keywords: internship, hiring, human capital, signalling, field experiment
    JEL: C93 I21 J23 J24
    Date: 2019–02
  8. By: Duan, Wenjing (Hunan University); Martins, Pedro S. (Queen Mary, University of London)
    Abstract: Do firms in China share rents with their workers? We address this question by examining firm-level panel data covering virtually all manufacturing firms over the period 2000-2007, representing an average of 200,000 firms and 54 million workers per year. We find robust evidence of rent sharing (RS): workers that would move from low- to high-profit firms would see their wages increase by about 45%. The results are based on multiple instrumental variables, including firm-specific international trade shocks. We also present a number of complementary findings that allow us to understand better the nature of RS in the country: RS is weaker in firms with more women and less educated workers; RS involves an element of risk sharing, as wages also decrease when profits fall; RS is lower in regions with more latent competition from rural workers; higher minimum wages tend to reduce RS; and, while employer labour market power reduces wages, it increases RS. Overall, despite its importance, RS in China is smaller and more symmetric than in developed economies, which reflects the weaker bargaining power of its workers and the different scope of its labour market institutions.
    Keywords: wages, bargaining, monopsony
    JEL: J31 J41 J50
    Date: 2019–02
  9. By: Aliprantis, Dionissi (Federal Reserve Bank of Cleveland); Fee, Kyle (Federal Reserve Bank of Cleveland); Schweitzer, Mark E. (Federal Reserve Bank of Cleveland)
    Abstract: This paper studies the relationship between local opioid prescription rates and labor market outcomes. We improve the joint measurement of labor market outcomes and prescription rates in the rural areas where nearly 30 percent of the US population lives. We find that increasing the local prescription rate by 10 percent decreases the prime-age employment rate by 0.50 percentage points for men and 0.17 percentage points for women. This effect is larger for white men with less than a BA (0.70 percentage points) and largest for minority men with less than a BA (1.01 percentage points). Geography is an obstacle to giving a causal interpretation to these results, especially since they were estimated in the midst of a large recession and recovery that generated considerable cross-sectional variation in local economic performance. We show that our results are not sensitive to most approaches to controlling for places experiencing either contemporaneous labor market shocks or persistently weak labor market conditions. We also present evidence on reverse causality, finding that a short-term unemployment shock did not increase the share of people abusing prescription opioids. Our estimates imply that prescription opioids can account for 44 percent of the realized national decrease in men's labor force participation between 2001 and 2015
    Keywords: Opioid Prescription Rate; Labor Force Participation; Great Recession; Opioid Abuse;
    JEL: I10 J22 J28 R12
    Date: 2019–03–01
  10. By: Margherita Borella; Mariacristina De Nardi; Fang Yang
    Abstract: White, non-college-educated Americans born in the 1960s face shorter life expectancies, higher medical expenses, and lower wages per unit of human capital compared with those born in the 1940s, and men's wages declined more than women's. After documenting these changes, we use a life-cycle model of couples and singles to evaluate their effects. The drop in wages depressed the labor supply of men and increased that of women, especially in married couples. Their shorter life expectancy reduced their retirement savings but the increase in out-of-pocket medical expenses increased them by more. Welfare losses, measured a one-time asset compensation are 12.5%, 8%, and 7.2% of the present discounted value of earnings for single men, couples, and single women, respectively. Lower wages explain 47-58% of these losses, shorter life expectancies 25-34%, and higher medical expenses account for the rest.
    JEL: E21 H31
    Date: 2019–03
  11. By: Stefania Albanesi
    Abstract: This paper studies the impact of changing trends in female labor supply on productivity, TFP growth and aggregate business cycles. We find that the growth in women’s labor supply and relative productivity added substantially to TFP growth from the early 1980s, even if it depressed average labor productivity growth, contributing to the 1970s productivity slowdown. We also show that the lower cyclicality of female hours and their growing share can account for a large fraction of the reduced cyclicality of aggregate hours during the great moderation, as well as the decline in the correlation between average labor productivity and hours. Finally, we show that the discontinued growth in female labor supply starting in the 1990s played a substantial role in the jobless recoveries following the 1990-1991, 2001 and 2007-2009 recessions. Moreover, it depressed aggregate hours, output growth and male wages during the late 1990s and mid 2000s expansions. These results suggest that continued growth in female employment since the early 1990s would have significantly improved economic performance in the United States.
    JEL: E17 E27 E32 E37 J21 J3 J82
    Date: 2019–03
  12. By: Iga Magda (Warsaw School of Economics; Institute for Structural Research (IBS)); Jan Gromadzki (Warsaw School of Economics; Institute for Structural Research (IBS)); Simone Moriconi (IÉSEG School of Management and LEM-CNRS (UMR 9221));
    Abstract: Recent studies show that firms are playing an increasingly important role in shaping wage inequality in advanced economies. We contribute to this literature by analysing wage inequality patterns and their firm dimension in Central and Eastern European countries. We use large, linked employer-employee datasets with data from the 2002-2014 period. We find that unlike in many other advanced economies, wage inequality levels have decreased in CEE countries, and particularly in those countries that previously had the highest wage inequality levels. The relative size of the between-firm component varied substantially across countries, and was largest in countries with the highest wage inequality levels. We further estimate the recentered influence function (RIF) regression and the Blinder-Oaxaca decomposition in order to investigate the micro-level determinants of wage inequality. Our findings indicate that the changes in wage inequality levels were mainly attributable to returns to workplace characteristics.
    Keywords: : : wages, wage inequality, RIF regression, linked employer-employee data
    JEL: D22 J31 J40
    Date: 2019–03
  13. By: Andrea Colciago; Volker Lindenthal; Antonella Trigari
    Abstract: Using US annual data spanning four decades and several business cycles, we show that that job flow rates of young firms are more cyclical than those of mature firms and detect no difference between the cyclicality of job flow rates of small and large firms. Further, we find that job flow rates due to contractions and expansions of continuing establishments are more cyclical than those due to entry and exit. At the same time the job flow rates of mature firms provide a larger contribution to the overall variability of aggregate job flow rates with respect to those of young firms. The reason is that mature firms employ the vast majority of US workers, and the fraction of aggregate variability of aggregate job flows explained by the job flow of firms belonging to a specific category is proportional to the category's employment share. On the contrary, there is no relevant difference in the contribution to aggregate fluctuations between the job flow rates of firms of different sizes. Our findings hold independently of whether we focus simply on the Great Recession period or on the full sample.
    Keywords: Job Creation; Job Destruction; Business Cycle; Small Firms; Large Firms; Young Firms; Mature Firms
    JEL: D22 E23 E32 J23 L25
    Date: 2019–03
  14. By: Feicheng Wang; Chris Milner; Juliane Scheffel
    Abstract: This paper examines the relationship between average income of export destinations and skill premium using data of Chinese manufacturing industries from 1995 to 2008. To do so, we construct weighted average GDP per capita across destinations employing within-industry export share to each destination as weight, and then link it with industry-level wages and skill premium. We find that industries that export more to high-income destinations tend to pay a higher skill premium, suggesting that on average, skilled workers benefit more from high-income exports than unskilled workers. Our IV estimates confirm a causal relationship and the results are robust to various specifications. Our paper contributes to the understanding of the influence of export destinations on the uneven distributional effects of globalisation for different types of workers.
    Keywords: Export destinations; Skill premium; Manufacturing industries; China JEL Classification: F14; F16; F66; J24; J31
    Date: 2019
  15. By: Gicheva, Dora (University of North Carolina at Greensboro, Department of Economics); Mikkelsen, Ian (University of North Carolina at Greensboro, Department of Economics)
    Abstract: We investigate how the choice of flexible working schedules and family-friendly benefits interacts with the education investment decisions and career trajectories of young professionals. We show that workers in white-collar professional occupations are less likely to choose family-friendly jobs when they have invested more in graduate business education. Our results indicate further that family-friendly employment is costly for all men in the sample, while for women the wage penalty is pronounced among MBA graduates. We also show evidence that self-employment is one channel through which workers attain balance between career and family demands.
    Keywords: Gender differences; non-wage benefits; work-life balance; MBA education;
    JEL: J16 J31 J32 J44
    Date: 2019–02–28
  16. By: Silliman, Mikko; Virtanen, Hanna
    Abstract: Abstract We study labor-market returns to vocational versus general secondary education using a regression discontinuity design created by the centralized admissions process in Finland. Admission to the vocational track increases annual income by 7 percent at age 31, and the benefits show no signs of diminishing with time. Moreover, admission to the vocational track does not increase the likelihood of working in jobs at risk of replacement by automation or offshoring. Consistent with the notion of comparative advantage, we observe significantly larger returns for people who express a preference for vocational education in their applications to secondary school.
    Keywords: Returns to education, Vocational education, Technological change, Application preferences, Regression discontinuity, Field of study
    JEL: J24 J31 C31 J23 I24
    Date: 2019–03–13
  17. By: Grewenig, Elisabeth (ifo Institute); Lergetporer, Philipp (ifo Institute); Werner, Katharina (ifo Institute); Woessmann, Ludger (ifo Institute and LMU Munich)
    Abstract: A large literature studies subjective beliefs about economic facts using unincentivized survey questions. We devise randomized experiments in a representative online survey to investigate whether incentivizing belief accuracy affects stated beliefs about average earnings by professional degree and average public school spending. Incentive provision does not impact earnings beliefs, but improves school-spending beliefs. Response patterns suggest that the latter effect likely reflects increased online-search activity. Consistently, an experiment that just encourages search-engine usage produces very similar results. Another experiment provides no evidence of experimenter-demand effects. Overall, results suggest that incentive provision does not reduce bias in our survey-based belief measures.
    Keywords: beliefs; incentives; online search; survey experiment;
    JEL: D83 C83 C90
    Date: 2019–03–11
  18. By: Clemens, Jeffrey (University of California, San Diego); Strain, Michael R. (American Enterprise Institute for Public Policy Research)
    Abstract: A holistic assessment of the labor market effects of minimum wage regulation requires understanding employer compliance. The economics literature has paid little attention to this issue. We investigate how minimum wage increases and the strength of enforcement regimes affect the prevalence of subminimum wage payments. We find strong evidence that higher minimum wages lead to a greater prevalence of subminimum wage payments. We consistently estimate that increases in measured underpayment following minimum wage increases average between 10 and 25 percent of realized wage gains. We interpret this as evidence that minimum wage evasion and avoidance are an important reality in the low-wage labor market. Finally, we find that enforcement regimes play an important role in shaping both baseline compliance rates and the response of compliance to increases in minimum wages.
    Keywords: minimum wage, subminimum wage, compliance, noncompliance, enforcement
    JEL: J08 J38 K42
    Date: 2019–02
  19. By: Sebastian Benz (OECD); Louise Johannesson (OECD)
    Abstract: This report presents new cross-country evidence on labour market transitions in sectors exposed to growing volumes of international trade, and the job characteristics of workers employed in these sectors. It shows that export growth is significantly associated with lower job loss risk. In commercial services sectors, exports offer over-proportional employment opportunities to those currently outside the workforce. Men and women are not always impacted identically. For example, involuntary part time employment amongst women falls with growing export volumes, while there is no such effect for men. These results show that the distributional effects of international trade are not limited to wage effects or net changes in employment numbers and highlight the need for a comprehensive assessment of trade implications for individual workers.
    Keywords: fixed-term contracts, labour market transitions, non-standard employment, part-time work, services, Trade, worker heterogeneity
    JEL: F14 F16 J21 J63
    Date: 2019–03–18
  20. By: Renata Bottazzi (University of Bologna and Institute for Fiscal Studies, London); Serena Trucchi (Department of Economics, University Of Venice Cà Foscari); Matthew Wakefield (University of Bologna and Institute for Fiscal Studies, London)
    Abstract: We look at how strongly shocks to wealth affect labour supply, using Italian data. We use asset price shocks to provide a measure of wealth changes that is exogenous to the household’s saving and labour supply. Results point to significant effects of wealth on: hours of work; whether agents leave their jobs; and, labour earnings. The magnitude of these effects can be substantial, for example for individuals who suffered larger wealth losses during the financial crisis. Responses are similar for men and women on average, but older working‐age individuals have relatively strong responses that drive the population results. Short‐run effects are somewhat persistent
    Keywords: Labour Supply, Financial wealth shocks, Wealth effects
    JEL: J22
    Date: 2019
  21. By: Patrizio Lecca (European Commission - JRC); Martin Christensen (European Commission - JRC); Andrea Conte (European Commission - JRC); Giovanni Mandras (European Commission - JRC); Simone Salotti (European Commission - JRC)
    Abstract: The paper illustrates the effect of a permanent demand-side shock in the perturbed regions and the associated spillover effects in the non-perturbed regions using the RHOMOLO spatial-numerical general equilibrium model of the EU economy. We test to what extent gradual upward pressure on wages generated by a domestic increase in demand alters the magnitude of the economic impacts in the long-run and the degree to which this could result in changes in trade patterns. We also assess the size and the direction of the effects with varying trade substitution elasticities and under both perfectly and imperfectly competitive product markets.
    Keywords: rhomolo, region, growth, regional development policies, Regional policy spillovers, spatial general equilibrium
    JEL: J31 R12 R23 R58
    Date: 2019–03
  22. By: Cortes, Kristle Romero (University New South Wales); Glover, Andrew (University of Texas at Austin); Tasci, Murat (Federal Reserve Bank of Cleveland)
    Abstract: Over the last decade, 11 states have restricted employers’ access to the credit reports of job applicants. We document a significant decline in county-level vacancies after these laws were enacted: Job postings fall by 5.5 percent in affected occupations relative to exempt occupations in the same county and the same occupation nationwide. Cross-sectional heterogeneity in the estimated effects suggests that employers use credit reports as signals: Vacancies fall more in counties with a large share of subprime residents, while they fall less in occupations with other commonly available signals.
    Keywords: vacancies; credit score; credit check;
    JEL: J08 J23 J63 J78
    Date: 2019–02–25
  23. By: Bertoli, Simone (CERDI, University of Auvergne); Stillman, Steven (Free University of Bozen/Bolzano)
    Abstract: Many destination countries consider implementing points-based migration systems as a way to improve migrants' quality, but our understanding of the actual effects of selective policies is limited. We use data from the ACS 2001-2017 to analyze the overlap in the wage distribution of low- and high-educated recent migrants from different origins after controlling for other observable characteristics. When we randomly match a high- with a low-educated immigrant from the same country, more than one-quarter of time the low-educated immigrant has a higher hourly wage, notwithstanding a statistically significant difference in the mean wage of the two groups for most origins. For 98 out of 114 countries, this synthetic measure of the overlap in the two wage distributions stands above the corresponding figure for natives. We also find that at least 82 percent of the variance in log wages for migrants with a given number of years of schooling is due to differences within rather than across countries. This suggests that heavily relying on education to select immigrants might fail to markedly improve their quality.
    Keywords: migration, selection, wages, point-system, United States
    JEL: F22 J24
    Date: 2019–02
  24. By: Chand, Satish (University of New South Wales); Clemens, Michael A. (Center for Global Development)
    Abstract: Theory suggests that groups historically subject to discrimination, such as Jews, could exhibit traditionally high investment in education because discrimination spurred exit facilitated by human capital. Theory moreover suggests that if exit is uncertain, it could induce investment in skill that more-than-offsets the mechanical reduction in skill stocks at the origin. Tests of such theories are difficult and few. We examine a unique natural quasiexperiment in the Republic of Fiji, in which a sharp increase in discrimination induced mass exit by one ethnic group and mass skill investment by the same group. We show that the induced investment more than offset the loss from exit, producing a net increase in skill stocks. We argue with theory and a range of nonexperimental falsification tests that exit by skilled workers was a necessary causal mechanism of the offsetting skill investment.
    Keywords: brain drain, migration, immigration, emigration, skill, student, tertiary, postsecondary, college, university, training, human capital, education, Jewish, Asian, ethnic, discrimination, schooling, selection, commonwealth, Australia, New Zealand, Canada, Pacific, brain gain, natural experiment, Fiji
    JEL: F22 J24 O15
    Date: 2019–02
  25. By: Wyatt J. Brooks; Joseph P. Kaboski; Yao Amber Li; Wei Qian
    Abstract: How important is the exercise of classical monopsony power against labor for the level of wages and labor's share? We examine this in the context of China and India – two large, rapidly-growing developing economies. Using theory, we develop a novel screen to quantify how wages are affected by market power exerted in labor markets, either by a single firm or a group of cooperating firms. The theory guides the measurement of labor “markdowns”, i.e., the gap between wage and the value of the marginal product of labor, and the screen examines how they comove with local labor market share and the share of cooperating firms. Applying this test, we find that markdowns substantially lower the labor share: by up to 10 percentage points in China and 15 percentage points in India. This impact has fallen over time in both countries as firm concentration in these labor markets has decreased.
    JEL: E25 J42 O1 O15
    Date: 2019–03
  26. By: Duo Qin, Sophie van Huellen, Raghda Elshafie, Yimeng Liu and Thanos Moraitis (Department of Economics, SOAS University of London, UK)
    Abstract: Multiple imputation (MI) techniques are applied to simulate missing wage rates of non-working wives under the missing-at-random (MAR) condition. The assumed selection effect of the labour force participation decision is framed as deviations of the imputed wage rates from MAR. By varying the deviations, we assess the severity of subsequent selection bias in standard human capital models through sensitivity analyses (SA). Our experiments show that the bias remains largely insignificant. While similar findings are possibly attainable through the Heckman procedure, SA under the MI approach provides a more structured and principled approach to assessing selection bias.
    Keywords: wage, labour supply, selection, missing at random, multiple imputation
    JEL: C21 C52 J20 J24
    Date: 2019–01
  27. By: Martin Eckhoff Andresen; Sturla A. Løkken (Statistics Norway)
    Abstract: We exploit the assignment of exam form in a high-stakes Norwegian high school exam to estimate the impact of exam form on exam results, later school performance, graduation and longer run outcomes. Results indicate that written exams significantly reduce exam grades and reduce the probability of passing relative to the alternative oral exam, particularly for initially low-performing students. Because passing the exam is mandatory to obtain a high school diploma, this translates into reduced high school graduation rates that remain significant over time, permanently shifting a group of marginal students to drop out of high school entirely. IV estimates on labor market earnings are close to zero, but these results are too imprecise to draw firm conclusions.
    Keywords: Exam form; high school dropout; returns to education
    JEL: I21 J24
    Date: 2019–02
  28. By: OECD
    Abstract: As part of the OECD Policy Dialogue on Women’s Economic Empowerment, this report focuses on identifying what works to address unpaid care work – a situation that can prevent women’s full participation in the economy. At the same time, care needs are growing globally, requiring action by governments and development partners to meet the needs of families and communities. This report aims to shed light on how governments, donors the private sector and civil society actors – among others – can design policies to support both those who need care and those who provide care. The report brings together existing knowledge of policy options for unpaid care work across regions, in four policy areas: infrastructure, social protection, public services and promotion of shared responsibility within the household.
    Keywords: development co-operation, donors, Gender equality, unpaid care work, women’s economic empowerment
    JEL: J16 J18 J22
    Date: 2019–03–18
  29. By: Eric A. Hanushek; Paul E. Peterson; Laura M. Talpey; Ludger Woessmann
    Abstract: Concerns about the breadth of the U.S. income distribution and limited intergenerational mobility have led to a focus on educational achievement gaps by socio-economic status (SES). Using intertemporally linked assessments from NAEP, TIMSS, and PISA, we trace the achievement of U.S. student cohorts born between 1954 and 2001. Achievement gaps between the top and bottom deciles and the top and bottom quartiles of the SES distribution have been large and remarkably constant for a near half century. These unwavering gaps have not been offset by overall improvements in achievement levels, which have risen at age 14 but remained unchanged at age 17 for the most recent quarter century. The long-term failure of major educational policies to alter SES gaps suggests a need to reconsider standard approaches to mitigating disparities.
    JEL: H4 I2 J24
    Date: 2019–03

This nep-lma issue is ©2019 by Joseph Marchand. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.