nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2019‒04‒01
twelve papers chosen by
Joseph Marchand
University of Alberta

  1. Decomposition of Labor Earnings Growth: Recovering Gaussianity? By Pierre Pora; Lionel Wilner
  2. Improving Educational Pathways to Social Mobility: Evidence from Norway’s “Reform 94” By Marianne Bertrand; Magne Mogstad; Jack Mountjoy
  3. Do Greasy Wheels Curb Inequality? By Cynthia L. Doniger
  4. The lost ones: the opportunities and outcomes of non-college-educated Americans born in the 1960s By Margherita Borella; Mariacristina De Nardi; Fang Yang
  5. Automation and New Tasks: How Technology Displaces and Reinstates Labor By Daron Acemoglu; Pascual Restrepo
  6. Informal employment and work health risks: Evidence from Cambodia By Dike, Onyemaechi
  7. The Causal Effects of Adolescent School Bullying Victimisation on Later Life Outcomes By Emma Gorman; Colm Harmon; Silvia Mendolia; Anita Staneva; Ian Walker
  8. Labor share and growth in the long run By McAdam, Peter; Bridji, Slim; Charpe, Matthieu
  9. The Urban Wage Premium in Imperfect Labour Markets By Boris Hirsch; Elke J. Jahn; Alan Manning; Michael Oberfichtner
  10. Recession CEOs and bank risk taking By Min Hua; Wei Song; Oleksandr Talavera
  11. The human capital stock: a generalized approach: comment By Caselli, Francesco; Ciccone, Antonio
  12. Hiring from a pool of workers By Abizada, Azar; Bó, Inácio Guerberoff Lanari

  1. By: Pierre Pora (CREST; INSEE.); Lionel Wilner (CREST; INSEE.)
    Abstract: Recent works have concluded to non-Gaussian features of labor earnings growth. We argue in this paper that it is mainly due to working hours'volatility. Using the non-parametric approach developed by Guvenen et al. (2016), we find on French data that labor earnings changes exhibit strong asymmetry as well as high peakedness. However, after decomposing labor earnings growth into wage and working time growth, the log-normality of hourly wages remains a quite plausible assumption since deviations from Gaussianity stem mainly from working time changes. The joint dynamics of hourly wages and working time help explain those deviations which relate most likely to labor supply decisions at the extensive margin.
    Keywords: Labor earnings growth; non-Gaussian distributions; skewness; kurtosis.
    JEL: E24 J22 J31
    Date: 2019–02–15
  2. By: Marianne Bertrand; Magne Mogstad; Jack Mountjoy
    Abstract: High school vocational education has a controversial history in the United States, largely due to a perceived tradeoff between teaching readily deployable occupational skills versus shunting mostly disadvantaged students away from the educational and career flexibility afforded by general academic courses. We study the effects of a nationwide high school reform in Norway that aimed to move beyond this tradeoff. Reform 94, implemented in one step in the fall of 1994, integrated more general education into the vocational track, offered vocational students a pathway to college through a supplementary semester of academic courses, and sought to improve the quality of the vocational track through greater access to apprenticeships. We identify the impacts of the reform through a difference-in-discontinuity research design, comparing students born just before and after the reform’s birthdate eligibility cutoff to students born around the same cutoff in placebo years. Linking multiple administrative registries covering the entire Norwegian population, we find that the reform substantially increased initial enrollment in the vocational track, but with different subsequent outcomes for different groups. More men complete the vocational track at the expense of academic diplomas, but this has no detectable impact on college-going and leads to reduced criminal activity and higher earnings in adulthood, especially among disadvantaged men. For disadvantaged women, the initial surge in vocational enrollment leads to fewer high school dropouts and more vocational degrees with the college-prep supplement, and hence an increase in the share of college-eligible women; however, this translates into only small and insignificant increases in college completion and adult earnings. We show that men overwhelmingly pursue vocational education in higher-paying skilled trade fields, while women almost exclusively pursue vocational education in lower-paying service-based fields, which helps in interpreting some of these results. Overall, the reform succeeded at improving social mobility, particularly among men, but it somewhat exacerbated the gender gap in adult earnings.
    JEL: I24 I28 J24 J62
    Date: 2019–03
  3. By: Cynthia L. Doniger
    Abstract: I document a disparity in the cyclicality of the allocative wage-the labor costs considered when deciding to form or dissolve an employment relationship-across levels of educational attainment. Specifically, workers with a bachelors degree or more exhibit an allocative wage that is highly pro-cyclical while high school dropouts exhibit no statistically discernible cyclical pattern. I also assess the response to monetary policy shocks of both employment and allocative wages across education groups. The less educated respond to monetary policy shocks on the employment margin while the more educated respond on the wage margin. An important takeaway is that conventional monetary policy easing reduces employment inequality but increases wage inequality. I embed these findings in a New Keynesian framework that includes price and heterogeneous wage rigidity and show that heterogeneity results in welfare losses due to fluctuations that exceed those of the output-gap and p rice-level equivalent representative agent economy. The excess welfare loss is borne by the least educated.
    Keywords: Inequality ; Monetary policy ; Wage rigidity
    JEL: E24 E52 J41
    Date: 2019–03–27
  4. By: Margherita Borella (University of Torino); Mariacristina De Nardi (University College London / Federal Reserve Bank of Chicago / IFS / NBER); Fang Yang (Louisiana State University)
    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 as 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.
    Keywords: education, Health, wage gap, welfare losses, life expectancy
    JEL: E21 H31
    Date: 2019
  5. By: Daron Acemoglu; Pascual Restrepo
    Abstract: We present a framework for understanding the effects of automation and other types of technological changes on labor demand, and use it to interpret changes in US employment over the recent past. At the center of our framework is the allocation of tasks to capital and labor—the task content of production. Automation, which enables capital to replace labor in tasks it was previously engaged in, shifts the task content of production against labor because of a displacement effect. As a result, automation always reduces the labor share in value added and may reduce labor demand even as it raises productivity. The effects of automation are counterbalanced by the creation of new tasks in which labor has a comparative advantage. The introduction of new tasks changes the task content of production in favor of labor because of a reinstatement effect, and always raises the labor share and labor demand. We show how the role of changes in the task content of production—due to automation and new tasks—can be inferred from industry-level data. Our empirical decomposition suggests that the slower growth of employment over the last three decades is accounted for by an acceleration in the displacement effect, especially in manufacturing, a weaker reinstatement effect, and slower growth of productivity than in previous decades.
    JEL: J23 J24
    Date: 2019–03
  6. By: Dike, Onyemaechi
    Abstract: Workplace safety is a topical issue in public policy debates in industrializing countries like Cambodia where high economic growth rates have yet to translate into higher job quality. This paper studies the relationship between informal employment and occupational health using the 2012 Cambodia Labour Force Survey. I estimate probit models and find that informal employment on its own is associated with a significant increase in the probability of work injury/illness. However in the most complete specification with controls for personal, job and firm characteristics, the effect of informal employment turns out to be small in magnitide and statistically insignificant. I discuss possible explanations for this finding. Results from this analysis suggest that in a context of weak administrative capacity for the enforcement of labour regulations, as is the case in Cambodia, work health risks are a concern across the board, not just in the informal sector.
    Keywords: Informal employment, injury risk, working conditions
    JEL: J28 J3 J4
    Date: 2019–03–24
  7. By: Emma Gorman (Lancaster University Management School); Colm Harmon (University of Sydney); Silvia Mendolia (University of Wollongong); Anita Staneva (The University of Sydney); Ian Walker (Lancaster University Management School)
    Abstract: We use rich data on a cohort of English adolescents to analyse the long-term effects of experiencing bullying victimisation in junior high school. The data contain self-reports of five types of bullying and their frequency, for three waves of the data, when the pupils were aged 13 to 16 years. Using a variety of estimation strategies - least squares, matching, inverse probability weighting, and instrumental variables - we assess the effects of bullying victimisation on short- and long-term outcomes, including educational achievements, earnings, and mental ill-health at age 25 years. We handle potential measurement error in the child self-reports of bullying type and frequency by instrumenting with corresponding parental cross-reports. Using a detailed longitudinal survey linked to administrative data, we control for many of the determinants of bullying victimisation and child outcomes identified in previous literature, paired with comprehensive sensitivity analyses to assess the potential role of unobserved variables. The pattern of results strongly suggests that there are important long run effects on victims - stronger than correlation analysis would otherwise suggest. In particular, we find that both type of bullying and its intensity matters for long run outcomes.
    Keywords: bullying, victimization, long-term outcomes
    JEL: I21 I24 J24
    Date: 2019–03
  8. By: McAdam, Peter; Bridji, Slim; Charpe, Matthieu
    Abstract: This paper establishes some stylized facts of the long run relationship between growth and labor shares using historical data for the United States (1898-2010), the United Kingdom (1856-2010), and France (1896-2010). Performing individual country time-frequency analysis, we demonstrate the existence of long-term cycles in labor share of thirty to fifty years explaining a major part of the variance in the data. Further, the impact of labor share on growth changes sign with the frequency considered from negative at high frequencies to positive at low frequencies. Finally, the positive coefficient associated with the labor share at low frequencies increases over time. JEL Classification: E24, E25, N1
    Keywords: growth, income distribution, labor share, wavelet analysis
    Date: 2019–03
  9. By: Boris Hirsch; Elke J. Jahn; Alan Manning; Michael Oberfichtner
    Abstract: Using administrative data for West Germany, this paper investigates whether part of the urban wage premium stems from fierce competition in thick labour markets. We first establish that employers possess less wage-setting power in denser markets. Local differences in wage-setting power predict 1.8-2.1% higher wages from a 100 log points increase in population density. We further document that the observed urban wage premium from such an increase drops by 1.5-1.9pp once conditioning on local search frictions. Our results therefore suggest that a substantial part of the urban wage premium roots in differential imperfections across local labour markets.
    Keywords: urban wage premium, imperfect labour markets, monopsony, search frictions
    JEL: R23 J42 J31
    Date: 2019–03
  10. By: Min Hua (Swansea University); Wei Song (Swansea University); Oleksandr Talavera (University of Birmingham)
    Abstract: We extend the existing literature on the role of CEO personal characteristics in bank risktaking by showing that the economic conditions at the time when bank CEOs enter the labor market have a significant impact on risk-taking. Specifically, using a unique hand-collected dataset of bank CEOs’ career profiles and demographic characteristics, we find that banks managed by CEOs who started their careers during recessions (i.e., recession CEOs) take less risk than their non-recession counterparts. We also show that recession CEOs are more likely to implement conservative bank policies, have a traditional bank business model, and are negatively related to bank opaqueness. Furthermore, banks with recession CEOs produce superior performance during the recent financial crisis, while they do not outperform those with non-recession CEOs in general or over the pre-crisis period. The negative effect of recession CEOs on bank risk-taking persists after we attempt to address endogeneity concerns and is robust to the introduction of additional robustness checks. Overall, these findings highlight the empirical relevance of the association between the initial labor market conditions when a bank CEO starts her career and bank risk-taking.
    Keywords: banks, CEOs, labor market condition, risk-taking
    JEL: G01 G21 G32 G34 J24
    Date: 2019–03
  11. By: Caselli, Francesco; Ciccone, Antonio
    Abstract: Jones (2014) examines development accounting with imperfect substitutability between different types of skills in the production of output. He finds that human capital variation can account for the totality of the variation in income across countries. We show that this finding is entirely due to an assumption that the relative wage of skilled workers is solely determined by attributes of workers (once the supply of skilled workers is accounted for). If skill premia are predominantly determined by technology, institutions, and other features of the economic environment, human capital differences explain none of the variation in income per worker.
    JEL: E24 J24 J31
    Date: 2019–03–01
  12. By: Abizada, Azar; Bó, Inácio Guerberoff Lanari
    Abstract: We consider the hiring of public sector workers through legislated rules and exam-based rankings, as is done in many countries and institutions around the world. In them, workers take tests and are ranked based on scores in exams and other pre-determined criteria, and those who satisfy some eligibility criteria are made available for hiring in a "pool of workers." In each of an ex-ante unknown number of rounds, vacancies are announced and workers are then hired from that pool. We show that when the scores are the only criterion for selection, the procedure satisfies desired fairness and independence properties. We show, with the aid of details of procedures used in Brazil, France and Australia, that when compositional objectives are introduced, such as affirmative action policies, both the procedures used in the field and in the literature fail to satisfy those properties. We then present a new rule, which we show to be the unique rule that satisfies those properties. Finally, we show that if multiple institutions hire workers from a single pool, even minor consistency requirements are incompatible with compositional objectives.
    Keywords: public organizations,hiring,affirmative action
    JEL: C78 J45 L38 D73
    Date: 2019

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.
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