nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2019‒05‒27
fifteen papers chosen by
Joseph Marchand
University of Alberta

  1. Regional employment effects of MNE offshoring By Eliasson, Kent; Hansson, Pär; Lindvert, Markus
  2. Technology, Skills, and Globalization: Explaining International Differences in Routine and Nonroutine Work Using Survey Data By Lewandowski, Piotr; Park, Albert; Hardy, Wojciech; Yang, Du
  3. The US Labor Market in 2050: Supply, Demand and Policies to Improve Outcomes By Holzer, Harry J.
  4. The Effect of Employer Tenure on Wages in Japan By Ayaka Nakamura
  5. Premature Deindustrialization through the Lens of Occupations: Which Jobs, Why, and Where? By Francisco David Kunst
  6. Optimal Stopping Time, Consumption, Labour, and Portfolio Decision for a Pension Scheme By Francesco Menoncin; Sergio Vergalli
  7. Heat Stress: Ambient Temperature and Workplace Accidents in the US By Lucy Page; Stephen Sheppard
  8. Intermediate Goods-Skill Complementarity By Kozo Kiyota; Yoshinori Kurokawa
  9. Population Aging, Age Discrimination, and Age Discrimination Protections at the 50th Anniversary of the Age Discrimination in Employment Act By Patrick Button
  10. The turnaround of the Swedish economy: lessons from large business sector reforms By Fredrik Heyman; Pehr-Johan Norbäck; Lars Persson
  11. Present Bias and Underinvestment in Education? Long-run Effects of Childhood Exposure to Booms in Colombia By Bladimir Carrillo
  12. Measuring the Routine and Non-Routine Task Content of 427 Four-Digit ISCO-08 Occupations By Emil Mihaylov; Kea Tijdens
  13. "A Semi-Parametric Approach to the Oaxaca-Blinder Decomposition with Continuous Group Variable and Self-Selection" By Fernando Rios-Avila
  14. Immigration, Social Networks, and Occupational Mismatch By Sevak Alaverdyan; Anna Zaharieva
  15. Nursing without caring? A discrete choice experiment about job characteristics of German surgical technologist trainees By Katharina Saunders; Christian Hagist; Alistair McGuire; Christian Schlereth

  1. By: Eliasson, Kent (Swedish Agency for Growth Policy Analysis); Hansson, Pär (Örebro University School of Business); Lindvert, Markus (Swedish Agency for Growth Policy Analysis)
    Abstract: The employment in Sweden has become more concentrated to the larger cities in Sweden (Stockholm, Göteborg and Malmö). This paper investigates whether Swedish multinational enterprises (MNEs) have contributed to that development. We examine the association between offshoring within Swedish MNEs and changes their parent employment at regional level (in local labor market regions, LA-regions). The relation may vary depending on: (i) the characteristics of the region (large city, regional center or other region) or (ii) the type of labor (skilled or less-skilled) or the type of job (routine or non-routine) in the parent. Our results reveal large spatial heterogeneities in the relationships between MNE offshoring and onshore employment in various regions. The results suggest that MNE offshoring might be a factor contributing to diverging onshore employment among Swedish regions; increased (unchanged) employment in larger cities and unchanged (decreased) employment in regional centers and other regions. Moreover, MNE offshoring seems to contribute to increased localization of skilled activities and non-routine tasks to larger cities. We use enterprise data on employment in the parents and the affiliates overseas in Swedish controlled enterprise groups with affiliates abroad (Swedish MNEs). Parent employment data are available for different regions in Sweden, skilled and less-skilled labor, as well as for various occupations.
    Keywords: multinational enterprises (MNEs); offshoring; local labor markets; skilled and lessskilled employment; routine and non-routine and jobs
    JEL: F14 F16 F23 J23 J24
    Date: 2019–05–09
  2. By: Lewandowski, Piotr (Institute for Structural Research (IBS)); Park, Albert (Hong Kong University of Science & Technology); Hardy, Wojciech (Institute for Structural Research (IBS)); Yang, Du (Chinese Academy of Social Sciences)
    Abstract: The shift away from manual and routine cognitive work, and towards non-routine cognitive work is a key feature of labor markets. There is no evidence, however, if the relative importance of various tasks differs between workers performing seemingly similar jobs in different countries. We develop worker-level, survey-based measures of task content of jobs – non-routine cognitive analytical and personal, routine cognitive and manual – that are consistent with widely-used occupation-specific measures based on O*NET database. We apply them to representative surveys conducted in 42 countries at different stages of development. We find substantial crosscountry differences in the content of work within occupations. Routine task intensity (RTI) of jobs decreases significantly with GDP per capita for high-skill occupations but not for middle- and low-skill occupations. We estimate the determinants of workers’ RTI as a function of technology (computer use), globalization (specialization in global value chains), structural change, and supply of skills, and decompose their role in accounting for the variation in RTI across countries. Computer use, better education, and higher literacy skills are related to lower RTI. Globalization (as measured by sector foreign value-added share) increases RTI in poorer countries but reduces RTI in richer countries. Differences in technology endowments and in skills’ supply matter most for cross-country differences in RTI, with globalization also important. Technology contributes the most to the differences in RTI among workers in high-skilled occupations and non-off-shorable occupations; globalization contributes the most to differences among workers in low-skilled occupations and offshorable occupations.
    Keywords: task content of jobs, deroutinisation, global division of labor, PIAAC, STEP, CULS
    JEL: J21 J23 J24
    Date: 2019–05
  3. By: Holzer, Harry J. (Georgetown University)
    Abstract: Current estimates suggest that over the coming decades, slower population growth and lower labor force participation will constrain the supply of labor in the U.S. The U.S. labor force will also become more diverse as immigration and fertility trends increase the size of minority populations. New forms of automation will likely require workers to adapt to keep their old jobs, while many will be displaced or face less demand for their work (while others benefit). Firms will continue to implement alternative staffing arrangements, like turning workers into independent contractors or outsourcing their human resource management to other firms; and many will adopt "low-road" employment practices to keep labor costs low. Exactly whom these changes will benefit or harm remains unclear, though non-college workers will likely fare the worst; higher productivity from new technologies and reduced labor supply could raise average wages, but many workers will clearly be worse off. Policy makers should provide incentives for firms to train current employees, rather than replace them, and should encourage schools and colleges to teach flexible, transferable skills, as the future workforce will likely need to adapt quickly to new and changing job requirements. Lifelong learning accounts for workers could help. Expanding wage insurance and improving unemployment insurance and workforce services could help workers adapt after suffering job displacement. Policies that make work pay, like the EITC, and others designed to increase labor force attachment, like paid family leave, could help mitigate declines in the labor force. Reforms in immigration and retirement policy will help as well, as would policy experimentation at the state and local level (with federal support).
    Keywords: labor market, labor supply, labor demand, employment outcomes, automation
    JEL: J2 J3
    Date: 2019–05
  4. By: Ayaka Nakamura (PhD. Student, Graduate School of Economics, Osaka University Research Fellow of Japan Society for the Promotion of Science)
    Abstract: We estimate the effects of employer tenure on wages based on the instrumental variable method and by using the Japan Household Panel Survey (JHPS/KHPS) from 2004 to 2014. We cannot reject the hypothesis that employer tenure significantly contributes to the wage growth after correcting for the omitted variable biases due to individuals' unobserved abilities and unobserved matching qualities, while the ordinary least squares estimators imply substantial returns to employer tenure. These results are robust across subsamples and do not depend on the estimation method. We conclude that the return to employer tenure may be less important in Japan than has been specified in previous studies.
    Keywords: Human capital, Matching
    JEL: J24 J31 R23
    Date: 2019–05
  5. By: Francisco David Kunst (Vrije Universiteit Amsterdam)
    Abstract: A recent literature documents that manufacturing employment growth in developing countries has been sluggish over the past decades, and that deindustrialization has often set in at historically low levels of income. However, there is little evidence on which kind of jobs are disappearing prematurely, and some debate on whether the phenomenon is structural or transitory. In this article, I use a new data set on manufacturing employment by occupation to document four stylized facts about `premature deindustrialization’: first, it is mostly unskilled jobs that have disappeared, and also the wage premium of workers with little formal education in manufacturing relative to other industries has declined. Second, the disappearing jobs have been among the most formal–both relative to other industries, and to the manufacturing average. Third, premature deindustrialization has been driven by occupations which are intensive in tasks that are vulnerable to an increasing adoption of ICT. Fourth, the phenomenon pertains most clearly to middle income countries, as low income countries have been spared from premature job losses. Overall, the employment patterns are consistent with a pervasive shift of the `automation frontier' separating tasks that are automated from those which are not, and suggest a structural decrease in the ability of manufacturing to employ unskilled labor productively.
    Keywords: premature deindustrialization, manufacturing, technological change, globalization
    JEL: O3 J2 O1
    Date: 2019–05–06
  6. By: Francesco Menoncin (Università degli Studi di Brescia); Sergio Vergalli (Università degli Studi di Brescia)
    Abstract: In this work we solve in a closed form the problem of an agent who wants to optimise the inter-temporal utility of both his consumption and leisure by choosing: (i) the optimal inter-temporal consumption, (ii) the optimal inter-temporal labour supply, (iii) the optimal share of wealth to invest in a risky asset, and (iv) the optimal retirement age. The wage of the agent is assumed to be stochastic and correlated with the risky asset on the financial market. The problem is split into two sub-problems: the optimal consumption, labour, and portfolio problem is solved first, and then the optimal stopping time is approached. The martingale method is used for the first problem, and it allows to solve it for any value of the stopping time which is just considered as a stochastic variable. The problem of the agent is solved by assuming that after retirement he received a utility that is proportional to the remaining human capital. Finally, a numerical simulation is presented for showing the behaviour over time of the optimal solution.
    Keywords: ptimal Stopping Time, Retirement Choice, Labour Supply, Asset Allocation, Mortality Risk
    JEL: C61 G11 J22
    Date: 2019–05
  7. By: Lucy Page (MIT Department of Economics); Stephen Sheppard (Williams College)
    Abstract: Combining records for 71,225 severe accidents from the Occupational Safety and Health Administration with a panel of county-level weather data for 1990 to 2010, we find that heat shocks significantly increase accident rates across the United States, while cold shocks significantly reduce them. We find that heat shocks increase accidents both in plausibly temperature-sensitive industries, like construction and agriculture, and among industries that are not obviously sensitive to weather. While we find suggestive evidence of short-term adaptation to heat shocks over summer months, we find no evidence that the impacts of heat shocks have fallen over our 21-year panel.
    JEL: Q54 I18
    Date: 2019–04–06
  8. By: Kozo Kiyota (Keio Economic Observatory, Keio University); Yoshinori Kurokawa (Faculty of Humanities and Social Sciences, University of Tsukuba)
    Abstract: With the growing importance of intermediate goods, recent studies begin to suggest intermediate goods-skill complementarity and its potential effect on inequality. However, this possible complementarity has not yet been formally tested. This paper conducts a formal test on whether intermediate goods are complements for skilled labor. Using the panel data of 40 countries over the period 1995-2009, we estimate a two-level CES production function. Our results indicate that, at the aggregated one-sector level, the elasticity of substitution between intermediate goods and unskilled labor is significantly greater than that between intermediate goods and skilled labor. This confirms intermediate goods-skill complementarity. At the more disaggregated level, such complementarity is observed mainly in the heavy manufacturing industries and the service sector, whereas substitutability is confirmed in the primary sector and in light manufacturing industries. Moreover, intermediate goods-skill complementarity tends to be higher for industries whose shares of imported intermediate goods are higher.
    Keywords: Intermediate goods-skill complementarity, Elasticity of substitution, CES, Skill-biased technological change, Imported intermediate goods
    JEL: E23 O47 J31
    Date: 2019–04–25
  9. By: Patrick Button
    Abstract: This paper discusses population aging, increased participation of seniors in the labor force in the United States (and reasons for this), and how these trends are making the struggles of older workers in the labor market increasingly relevant. Evidence examining whether age discrimination is a barrier for seniors as they try to increase their work lives through the common practice of “bridge” jobs is also presented. After discussing the evidence that measures age discrimination, economics and legal research that seeks to determine to what extent the federal Age Discrimination in Employment Act and state-level age discrimination laws prevent age discrimination is discussed. In summary, current evidence indicates that age discrimination exists, but more so for older women. While evidence suggests that age discrimination laws may help, they cannot resolve all the challenges imposed by population aging, especially for older women.
    JEL: J14 J16 J26 J71 J78 K31
    Date: 2019–05
  10. By: Fredrik Heyman; Pehr-Johan Norbäck; Lars Persson
    Abstract: How can a country improve the productivity growth in its business sector and reach its growth potential? Sweden during the 1970–2010 period can serve as an example to help other countries understand how to efficiently reform a business sector. In the 1990s, Sweden implemented a reform package that ignited a successful reorganization of a business sector that had faltered for decades. To understand the economic forces behind this process, we first survey the industrial restructuring literature and then examine the reform package using Swedish matched plant-firm-worker data. The removal of barriers to growth for new and productive firms and increased rewards for investment in human capital were crucial to the success of Sweden’s reforms. We also discuss how the reform experience from a developed country such as Sweden can be useful for developing countries that are in the process of transforming their business sectors. We also discuss evidence from developing countries that have undergone similar micro-based business sector reform programs. Our findings suggest that policymakers have much to learn from country case studies and that the Swedish experience can be a valuable case study for developing countries that are attempting to promote growth by developing their business sectors.
    Keywords: regulations, allocative efficiency, productivity, job dynamics, matched employer-employee data, industrial structure and structural change
    JEL: D22 E23 J21 J23 K23 L11 L16 L51
    Date: 2019
  11. By: Bladimir Carrillo (Universidade Federal de Viçosa)
    Abstract: This paper examines the long-run impacts of income shocks by exploiting variation in coffee cultivation patterns within Colombia and world coffee prices during cohorts' school-going years in a differences-in-differences framework. The results indicate that cohorts who faced higher returns to coffee-related work during school-going years completed fewer years of schooling and have lower income in adulthood. These findings suggest that leaving school during temporary booms results in a significant loss of long-term income. This is consistent with the possibility that students may ignore or heavily discount the future consequences of dropout decisions when faced with immediate income gains.
    Keywords: Information Avoidance, Energy Efficiency, Moral Wiggle Roo
    JEL: J24 O12 O13
    Date: 2019–05
  12. By: Emil Mihaylov (Vrije Universiteit Amsterdam); Kea Tijdens (Universiteit van Amsterdam)
    Abstract: This paper develops new measures of the task content of occupations that are based on the International Standard Classification of Occupations 2008 (ISCO-08). Using a detailed set of 3,264 occupation-specific tasks, we construct five measures of non-routine analytic, non-routine interactive, routine cognitive, routine manual and non-routine manual tasks for 427 four-digit occupations. To generate these measures, first we assign each of the 3,264 tasks to one or more of the five task categories. The decision to classify tasks as routine or non-routine, and as cognitive or manual, depends on whether the tasks can be replaced by computer-controlled technology and whether the performance of the tasks requires cognitive or manual skills. We judge the automation potential of tasks on a case-by-case basis and classify tasks to one or more of the five task categories. Because the classification of 3,264 tasks can be prone to errors, we devote substantial attention to the possibility of misclassifying tasks. We discuss three particular types of task misclassifications and provide examples of tasks that could be potentially misclassified. In line with the previous literature, we find that non-routine analytic and interactive tasks are most prevalent in the work of Managers and Professionals, routine cognitive tasks are mainly concentrated in the work of Clerical Support Workers, and routine and non-routine manual tasks are most common in the work of Plant and Machine Operators and Assemblers and Elementary Occupations, respectively. We compare the newly developed task measures with three previous studies (Acemoglu and Autor, 2011; Dengler, Matthes and Paulus, 2014; Frey and Osborne, 2017) and demonstrate that our measures are moderately to strongly positively correlated with the previous papers’ indexes. Based on our task content measures, we provide an end of the envelop estimation of the number of occupations that might be at risk of automation. We find that approximately 16 percent of the 427 ISCO-08 occupations fall into the so-called high risk of automation category – they contain 70 percent or more routine tasks. The 16 percent of automatable occupations correspond roughly to 11 percent of total employment in the Netherlands.
    Keywords: Technological change, Computerization, Occupations, Routine and non-routine tasks, International Standard Classification of Occupations 2008 (ISCO-08)
    JEL: O33 J24 J62
    Date: 2019–05–17
  13. By: Fernando Rios-Avila
    Abstract: This paper describes the application of a semiparametric approach, known as a varying coefficients model (Hastie and Tibshirani 1993), to implement a Oaxaca-Blinder type of decomposition in the presence of self-selection into treatment groups for a continuum of comparison groups. The flexibility of this methodology may allow for detecting heterogeneity of the role of endowment and coefficient effects when analyzing endogenous dose treatments. The methodology is then used to revisit the impact of obesity on wages (Cawley 2004), using body mass index (BMI) as the continuous group variable. The results suggest that body weight does have a negative impact on wages for white women, but the impact decreases for higher BMI levels. For white men, the impact is also negative and significant, but positive for low levels of BMI, which explains why they are not significant in the linear instrumental variables approach.
    Keywords: Oaxaca-Blinder Decomposition; Heckman Selection; Heckit; Semiparametric; Kernel; Nonlinear; Body Mass Index; Weight; Wages
    JEL: C14 I19 J31 J71
    Date: 2019–05
  14. By: Sevak Alaverdyan; Anna Zaharieva
    Abstract: In this study we investigate the link between the job search channels that workers use to find employment and the probability of occupational mismatch in the new job. Our specific focus is on differences between native and immigrant workers. We use data from the German Socio-Economic Panel (SOEP) over the period 2000-2014. First, we document that referral hiring via social networks is the most frequent single channel of generating jobs in Germany; in relative terms referrals are used more frequently by immigrant workers compared to natives. Second, our data reveals that referral hiring is associated with the highest rate of occupational mismatch among all channels in Germany. We combine these findings and use them to develop a theoretical search and matching model with two ethnic groups of workers (natives and immigrants), two search channels (formal and referral hiring) and two occupations. When modeling social networks we take into account ethnic and professional homophily in the link formation. Our model predicts that immigrant workers face stronger risk of unemployment and often rely on recommendations from their friends and relatives as a channel of last resort. Furthermore, higher rates of referral hiring produce more frequent occupational mismatch of the immigrant population compared to natives. We test this prediction empirically and confirm that more intensive network hiring contributes significantly to higher rates of occupational mismatch among immigrants. Finally, we document that the gaps in the incidence of referrals and mismatch rates are reduced among second generation immigrants indicating some degree of integration in the German labour market.
    Keywords: job search, referrals, social networks, occupational mismatch, immigration
    JEL: J23 J31 J38 J64
    Date: 2019
  15. By: Katharina Saunders; Christian Hagist; Alistair McGuire; Christian Schlereth
    Abstract: We know that existing professions in the health care sector value work environment and job conditions to a great extent. However, we are also witnessing an expansion of new roles into the health care sector, many of which substitutie the tasks of existing professions. This may be efficient, in that it releases professionals’ time. However, there is little understanding of what motivates these new professions in entering or remaining in these newly created roles. This study tries to evaluate the preference structure of one of these new staff groups, surgical technologist, through examining the preferences of trainees, defined over a number of attributes, in this group. The DCE study covers 80% of the target population. The results show a vigorous disfavour towards any perceived nursing job characteristics such as caring activities, hierarchical work environment or shift types. The results inform policy makers and hospital manager about the importance to focus not only on the nursing profession but also to take into account the existence of a group of people who is willing to work within the health care system however, associated with strong preferences against nursing activities, especially caring. Implementing and further development of new and specialised profession through reallocating former nursing tasks- should be considered while coping with labour shortage.
    Keywords: UDCE, labour shortage, specialised health care profession, job preferences
    JEL: I18 J08 J30 C93 C90
    Date: 2019–05–22

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