nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2019‒06‒10
twenty-one papers chosen by
Joseph Marchand
University of Alberta

  1. Comparative Advantage and Moonlighting By Auray, Stéphane; Fuller, David L.; Vandenbroucke, Guillaume
  2. Family and Government Insurance: Wage, Earnings, and Income Risks in the Netherlands and the U.S. By Mariacristina De Nardi; Giulio Fella; Marike Knoef; Gonzalo Paz-Pardo; Raun Van Ooijen
  3. Size and persistence matter: Wage and employment insurance at the micro level By Kerndler, Martin
  4. The Effects of Work-Life Benefits on Employment Outcomes in Canada: A Multivariate Analysis By Fang, Tony; Lee, Byron; Timming, Andrew R.; Fan, Di
  5. Automation and New Tasks: How Technology Displaces and Reinstates Labor By Daron Acemoglu; Pascual Restrepo
  6. Workers in the Crowd: The Labour Market Impact of the Online Platform Economy By Cantarella, Michele; Strozzi, Chiara
  7. Scabs: The Social Suppression of Labor Supply By Emily Breza; Supreet Kaur; Nandita Krishnaswamy
  8. Aggregate Implications of Changing Sectoral Trends By Foerster, Andrew; Hornstein, Andreas; Sarte, Pierre-Daniel G.; Watson, Mark W.
  9. Expectations, Wage Hikes, and Worker Voice: Evidence from a Field Experiment By Achyuta Adhvaryu; Teresa Molina; Anant Nyshadham
  10. Productivity, structural change and skills dynamics: Evidence from a half century analysis in Tunisia and Turkey By Gunes Asik; Ulas Karakoc; Mohamed Ali Marouani; Michelle Marshalian
  11. Incentivizing Learning-By-Doing: The Role of Compensation Schemes By Graff Zivin, Joshua; Kahn, Lisa B.; Neidell, Matthew
  12. Accumulation of Human and Market Capital in the United States, 1975-2012: An Analysis by Gender By Barbara M. Fraumeni; Michael S. Christian
  13. Birds, Birds, Birds: Co-Worker Similarity, Workplace Diversity, and Voluntary Turnover By Hirsch, Boris; Jahn, Elke J.; Zwick, Thomas
  14. Do Minimum Wages Make Wages More Rigid? Evidence from French Micro Data By Erwan Gautier; Sebastien Roux; Milena Suarez-Castillo
  15. Routinization, within-occupation task changes and longrun employment dynamics By Davide Consoli; Giovanni Marin; Francesco Rentocchini; Francesco Vona
  16. On the road to integration? Immigrants’ demand for informal (& formal) education By Nicola Daniele Coniglio; Rezart Hoxhaj; Hubert Jayet
  17. The Impact of Soft-Skills Training for Entrepreneurs in Jamaica By Ubfal, Diego; Arraiz, Irani; Beuermann, Diether; Frese, Michael; Maffioli, Alessandro; Verch, Daniel
  18. New Evidence on the Historical Growth of Government in Europe: The Role of Labor Costs By Mickael Melki; Andrew Pickering
  19. The Gift of Global Talent: Innovation Policy and the Economy By William R. Kerr
  20. Skill Shortages and Skill Mismatch in Europe: A Review of the Literature By Brunello, Giorgio; Wruuck, Patricia
  21. Mission, motivation, and the active decision to work for a social cause By Jeworrek, Sabrina; Mertins, Vanessa

  1. By: Auray, Stéphane (CREST-Ensai; ULCO); Fuller, David L. (University of Wisconsin-Oshkosh); Vandenbroucke, Guillaume (Federal Reserve Bank of St. Louis)
    Abstract: The proportion of multiple jobholders (moonlighters) is negatively correlated with productivity (wages) in cross-sectional and time series data, but positively correlated with education. We develop a model of the labor market to understand these seemingly contradictory facts. An income effect explains the negative correlation with productivity while a comparative advantage of skilled workers explains the positive correlation with education. We provide empirical evidence of the comparative advantage in CPS data. We calibrate the model to 1994 data on multiple jobholdings, and assess its ability to reproduce the 2017 data. There are three exogenous driving forces: productivity, number of children and the proportion of skilled workers. The model accounts for 68.7% of the moonlithing trend for college-educated workers, and overpredicts it by 33.7 percent for high school-educated workers. Counterfactual experiments reveal the contribution of each exogenous variable.
    Keywords: Macroeconomics; labor supply; multiple jobholders; productivity; full-time job; part-time job; comparative advantage; income effect
    JEL: E1 J2 J22 J24 O4
    Date: 2019–05–24
  2. By: Mariacristina De Nardi (University College London / Federal Reserve Bank of Chicago / IFS / NBER); Giulio Fella (Queen Mary University of London); Marike Knoef (Leiden University); Gonzalo Paz-Pardo (University College London); Raun Van Ooijen (University of Groningen)
    Abstract: We document new facts on the distributions of male wages, male earnings, and household earnings and income (before and after taxes) in the Netherlands and the United States. We find that, in both countries, wages display rich dynamics, including substantial asymmetries and nonlinearities by age and previous earnings levels. Individual-level male wage and earnings risk is relatively high for younger and older people, and for those in the lower and upper parts of the income distribution. In the Netherlands, the behavior of hours and family labor supply have noticeable effects on earnings persistence and on the skewness and kurtosis of wage changes, but government transfers are a major source of insurance. Instead, the role of family insurance is much larger in the U.S. and also affects the standard deviation of wage changes, in addition to its skewness and kurtosis, and wage persistence. Family and government insurance reduce, but do not eliminate these non-linearities in household disposable income by age and previous earnings in both countries.
    Keywords: wage risk, self-insurance, social insurance, progressive taxation, redistribution, life cycle
    JEL: D31 E24 J31 H31
    Date: 2019–05
  3. By: Kerndler, Martin
    Abstract: Firms provide substantial insurance against wage fl uctuations and job loss. This paper studies how the interaction between shock size and persistence affects the firm's ability to insure workers against idiosyncratic firm-level shocks. Using linked employer-employee data from Germany, I find that wages respond largely symmetrically to positive and negative permanent shocks. Whereas transitory shocks lead to upward wage rigidity. Individual layoff probabilities only increase in response to negative permanent shocks. Interestingly, wage cuts and job loss after negative shocks are limited to blue-collar workers. Whereas white-collar workers are fully insured against negative shocks both in terms of wages and employment.
    Keywords: wage insurance,layoffs,linked employer-employee data,Kalman filter
    JEL: C33 D22 J33 J41
    Date: 2019
  4. By: Fang, Tony (Memorial University of Newfoundland); Lee, Byron (China Europe International Business School); Timming, Andrew R. (University of Western Australia); Fan, Di (University of Western Australia)
    Abstract: Using the longitudinal Workplace and Employee Survey of Canada, we examine the association between the provision of work-life benefits and various employment outcomes in the Canadian labour market. Whilst the theory of compensating wage differentials hypothesizes an inevitable trade-off between higher wages and non-wage benefits, the efficiency wage theory suggests otherwise. The empirical evidence broadly supports the efficiency wage theory, thus rejecting the compensating wage differentials theory. If bundled appropriately, it appears that work-life benefits are positively associated with increased wages, in addition to a greater number of promotions, enhanced employee morale in the form of job satisfaction, and improved employee retention. The study concludes that organizations and employees can both profit when work-life benefits are offered.
    Keywords: compensating wage differentials, efficiency wage theory, job satisfaction, promotion, wages, work-life benefits
    JEL: J32 J33 J38
    Date: 2019–04
  5. By: Daron Acemoglu (MIT and NBER); Pascual Restrepo (Boston University)
    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.
    Keywords: automation, displacement effect, labor demand, inequality, productivity, reinstatement effect, tasks, technology, wages.
    JEL: J23 J24
    Date: 2019–04
  6. By: Cantarella, Michele (University of Modena and Reggio Emilia); Strozzi, Chiara (University of Modena and Reggio Emilia)
    Abstract: In this paper, we compare wages and labor market conditions of individuals engaged in online platform work and in traditional occupations by exploiting individual-level survey data on crowdworkers belonging to the largest micro-task marketplaces, focusing on evidence from the United States and Europe. To match similar individuals, survey responses of crowdworkers from the US and EU have been harmonised with the American Working Conditions Survey (AWCS) and the European Working Conditions Survey (EWCS). Our findings indicate that traditional workers retain a significant premium in their earnings with respect to online platform workers, and that those differences are not affected by the observed and unobserved ability of individuals. This holds true also taking into account similar levels of routine intensity and abstractness in their jobs, as well as the time spent working. Moreover, labour force in crowdworking arrangements appears to suffer from high levels of under-utilisation, with crowdworkers being more likely to be left wanting for more work than comparable individuals.
    Keywords: crowdwork, online platform economy, micro-tasks, routine intensity, labour market conditions
    JEL: J31 J42
    Date: 2019–05
  7. By: Emily Breza; Supreet Kaur; Nandita Krishnaswamy
    Abstract: Social norms have the potential to alter the functioning of economic markets. We test whether norms shape the aggregate labor supply curve by preventing workers from supplying labor at wage cuts—leading decentralized individuals to implicitly behave as a cartel to maintain wage floors in their local labor markets. We partner with 183 existing employers, who offer jobs to 502 workers in informal spot labor markets in India. Unemployed workers are privately willing to accept jobs below the prevailing wage, but rarely do so when this choice is observable to other workers. In contrast, social observability does not affect labor supply at the prevailing wage. Workers give up 49% of average weekly earnings to avoid being seen as breaking the social norm. In addition, workers pay to punish anonymous laborers who have accepted wage cuts—indicating that cartel behavior is reinforced through the threat of social sanctions. Punishment occurs for workers in one’s own labor market and for those in distant regions, suggesting the internalization of norms in moral terms. Finally, consistent with the idea that norms could have aggregate implications, measures of social cohesion correlate with downward wage rigidity and business cycle volatility across India.
    JEL: D71 E24 J22 J31 J43 J50 O15 O17
    Date: 2019–05
  8. By: Foerster, Andrew (Federal Reserve Bank of San Francisco); Hornstein, Andreas (Federal Reserve Bank of Richmond); Sarte, Pierre-Daniel G. (Federal Reserve Bank of Richmond); Watson, Mark W. (Princeton University)
    Abstract: We find disparate trend variation in TFP and labor growth across major U.S. production sectors over the post-WWII period. When aggregated, these sector-specific trends imply secular declines in the growth rate of aggregate labor and TFP. We embed this sectoral trend variation into a dynamic multi-sector framework in which materials and capital used in each sector are produced by other sectors. The presence of capital induces important network effects from production linkages that amplify the consequences of changing sectoral trends on GDP growth. Thus, in some sectors, changes in TFP and labor growth lead to changes in GDP growth that may be as large as three times these sectors' share in the economy. We find that trend GDP growth has declined by more than 2 percentage points since 1950, and that this decline has been primarily shaped by sector-specific rather than aggregate factors. Sustained contractions in growth specific to Construction, Nondurable Goods, and Professional and Business and Services make up close to sixty percent of the estimated trend decrease in GDP growth. In addition, the slow process of capital accumulation means that structural changes have endogenously persistent effects. We estimate that trend GDP growth will continue to decline for the next 10 years absent persistent increases in TFP and labor growth.
    Keywords: trend growth; multi-sector model; production linkages
    JEL: C32 E23 O41
    Date: 2019–05–28
  9. By: Achyuta Adhvaryu; Teresa Molina; Anant Nyshadham
    Abstract: Hirschman's (1970) seminal thesis that enabling worker “voice” prevents exit from the employment relationship has played a foundational role in labor economics. We provide the first experimental test of this hypothesis in a real-world setting via a randomized controlled trial in Indian garment factories. Just after what proved to be a disappointing wage hike, workers were chosen at random to participate in an anonymous survey in which they were asked for feedback on job conditions, supervisor performance, and overall job satisfaction. Enabling voice in this manner reduced turnover and absenteeism after the hike, particularly for the most disappointed workers.
    JEL: C93 J20 J30 M50
    Date: 2019–05
  10. By: Gunes Asik (Tobb Economics and Technology University, Turkey); Ulas Karakoc (Humboldt University Berlin, Germany); Mohamed Ali Marouani (UMR « Développement et Société », IEDES / Université Paris1-Panthéon-Sorbonne, PSL, Université Paris-Dauphine, LEDa, IRD UMR DIAL); Michelle Marshalian (University of Paris, Dauphine (PSL) and DIAL, France)
    Abstract: This article explores the contribution of structural change and the skill upgrading of the labor force to productivity in Tunisia and Turkey in the institutional context of the post-World War II period. Our growth decomposition shows that productivity is mainly explained by intra-industry changes for both countries during the import substitution period. Structural change played an important role in Turkey for a longer period of time than in Tunisia. Based on an instrumental variable regression setting, we find evidence that overall, the change in the share of high-educated workers had a causal impact on productivity levels in Turkey, but no such relation was found in Tunisia. Secondly, we show that this productivity increase has mainly been driven by the reallocation of higher educated labor between sectors rather than the absorption of highly educated workers within sectors. In Tunisia we do not find evidence of links between education demand and productivity. Moreover, the evidence from the instrumental variable regressions show that when we exclude the government sector in Tunisia, the overall skills upgrading is negatively associated with productivity growth, suggesting a downward return to educated labor demand over time.
    Keywords: Productivity, Skills, Structural change, Tunisia, Turkey, MENA.
    JEL: J24 L16 N15 N17
    Date: 2019–05
  11. By: Graff Zivin, Joshua (University of California, San Diego); Kahn, Lisa B. (Yale University); Neidell, Matthew (Columbia University)
    Abstract: In this paper, we examine the impact of pay-for-performance incentives on learning-by-doing. We exploit personnel data on fruit pickers paid under two distinct compensation contracts: a standard piece rate plan and a piece rate plan with an extra one-time bonus tied to output. Under the bonus contract, we observe bunching of performance just above the bonus threshold, suggesting workers distort their behavior in response to the discrete bonus. Such bunching behavior increases as workers gain experience. At the same time, the bonus contract induces considerable learning-by-doing for workers throughout the productivity distribution, and these improvements significantly outweigh the losses to the firm from the distortionary bunching. In contrast, under the standard piece rate contract, we find minimal evidence of bunching and only small performance improvements at the bottom of the productivity distribution. Our results suggest that contract design can help foster learning on the job. This underscores the importance of dynamic considerations in principal-agent models.
    Keywords: contracts, learning-by-doing
    JEL: J33 J43
    Date: 2019–04
  12. By: Barbara M. Fraumeni; Michael S. Christian
    Abstract: This paper covers a continuous and longer time period than previously possible to examine human and market capital because of research by Christian (2017). This paper focuses on the presentation and analysis of trends in human capital by gender. During 1975-2012 there were significant changes in participation by women, the wage gender gap, and educational attainment and time in household production by both women and men. Both the market and nonmarket sectors will be covered as well as multifactor productivity with and without human capital. (A previous paper (Fraumeni, et al. 2017) described the national income accounting system which underlies both this paper and the much earlier paper by Jorgenson and Fraumeni (1989).) New insights will be gained by looking in detail at the 1975-2012 time period.
    JEL: J16 J22 J24 O47
    Date: 2019–05
  13. By: Hirsch, Boris (Leuphana University Lüneburg); Jahn, Elke J. (University of Bayreuth); Zwick, Thomas (University of Würzburg)
    Abstract: We investigate how the demographic composition of the workforce along the sex, nationality, education, age, and tenure dimension affects voluntary turnover. Fitting duration models for workers' job-to-job moves that control for workplace fixed effects in a representative sample of large manufacturing plants in Germany during 1975–2016, we find that larger co-worker similarity in all five dimensions substantially depresses voluntary turnover whereas workplace diversity is of limited importance. In line with conventional wisdom, which has that birds of one feather flock together, our results suggest that workers prefer having co-workers of their kind and place less value on diverse workplaces.
    Keywords: workforce demography, co-worker similarity, workplace diversity, voluntary turnover
    JEL: J63 J62 J21 J19
    Date: 2019–05
  14. By: Erwan Gautier; Sebastien Roux; Milena Suarez-Castillo
    Abstract: How do minimum wages (MW) shape the aggregate wage dynamics when wage adjustment is lumpy? In this paper, we document new empirical findings on the effect of MW on wage rigidity using quarterly micro wage data matched with sectoral bargained MW. We estimate a micro empirical model of wage rigidity taking into account minimum wage dynamics and we use a simulation method to investigate implications of lumpy micro wage adjustment for the aggregate wage dynamics. Our main findings are the following. Both national and sectoral MW have a large effect on the timing and on the size of wage adjustments. At the aggregate level, MW contribute to amplify, by a factor of 1.7, the response of wages to past inflation. Ignoring MW leads to underestimate the speed of aggregate wage adjustment by about a year. The elasticities of wages with respect to past inflation, the national MW and industry-level MW are respectively 0.42, 0.17 and 0.16. Finally, there are significant spillover effects of the NMW on higher wages transiting through industry-level MW.
    Keywords: wage rigidity, minimum wage, collective bargaining.
    JEL: E24 E52 J31 J50
    Date: 2019
  15. By: Davide Consoli (Institute of Innovation and Knowledge Management); Giovanni Marin (Università degli Studi di Urbino Carlo Bo); Francesco Rentocchini; Francesco Vona (Observatoire français des conjonctures économiques)
    Abstract: This study contributes to the literature on routinization and employment by capturing within- occupation task changes over the period 1980-2010. The main contribution is the measurement of such changes combining two data sources on occupational task content for the United States: the Dictionary of Occupational Titles and the Occupational Information Network. We show that within-occupation task change: i) accounts for 1/3 of the decline in routine-task use; ii) accelerates in the 1990s, decelerates in the 2000s but with significant catching-up; iii) is associated with educational upgrading in several dimensions and iv) allows escaping the employment decline conditional on initial routine-task intensity.
    Keywords: Tasks; Routinization; Technological change; Employment dynamics; Race between technology and education
    JEL: J23 J24 O33
    Date: 2019–05
  16. By: Nicola Daniele Coniglio (Università degli Studi di Bari "Aldo Moro"); Rezart Hoxhaj (Migration Policy Centre, Robert Schuman Centre for Advanced Studies, EUI); Hubert Jayet (University of Lille, Faculté des Sciences économiques et sociales)
    Abstract: In this paper we study the allocation of time devoted to informal learning and education, i.e. those activities carried out during leisure time and outside formal education courses which boost individuals’ human and social capital. For immigrants the private investment in these activities is likely to have relevant external effects as informal learning and education enhances the likelihood of greater socio-economic integration in the host society. We first develop a simple theoretical framework, which allows us to highlight the different constrains/opportunity costs faced by immigrants as compared with natives. Then, we empirically investigate the determinants of participation in informal education using the American Time Use Data (ATUS; period 2003-2015) which contains detailed information on daily time budgets of a large sample of immigrants and natives in the US. Consistently with a theoretical model of time allocation we find evidence that immigrants are more likely to engage in informal education and, conditional on participation, they allocate more time to these activities. Over time, immigrants show a higher degree of assimilation into the host society. Our results also highlight heterogeneous patterns across gender.
    Keywords: immigrants; time use; education; human capital
    JEL: J15 J22 I20
    Date: 2019–05
  17. By: Ubfal, Diego (Bocconi University); Arraiz, Irani (Inter-American Development Bank); Beuermann, Diether (Inter-American Development Bank); Frese, Michael (Leuphana University Lüneburg); Maffioli, Alessandro (Inter-American Development Bank); Verch, Daniel (Leuphana University Lüneburg)
    Abstract: A randomized control trial with 945 entrepreneurs in Jamaica shows positive shortterm impacts of soft-skills training on business outcomes. The effects are concentrated among men, and disappear twelve months after the training. We argue that the main channel is increased adoption of recommended business practices, exclusively observed in the short run. We see persistent effects on an incentivized behavioral measure of perseverance after setbacks, a focus of this training. We compare a course focused only on soft-skills to one that combines soft-skills training with traditional business training. The effects of the combined training are never statistically significant.
    Keywords: business training, entrepreneurship, soft skills
    JEL: J24 L25 M13 O12
    Date: 2019–04
  18. By: Mickael Melki; Andrew Pickering
    Abstract: We document a robust positive correlation between the size of government and the labor share of income in data from European countries covering the period 1869-1975. Following Facchini et al (2017), we interpret this correlation as evidence that labor costs drive public spending. The long-term increase in the labor share observed over this period explains half of the overall growth of central government. The relationship holds when the labor share is instrumented with movements in technological change at the frontier. When decomposing public spending, transfers, not intensive in labor, are the only component not associated with the labor share.
    Keywords: Labor share, Public Spending, 20th Century Europe.
    JEL: N4 J3 E25
    Date: 2019–05
  19. By: William R. Kerr
    Abstract: Talent is the most precious resource for today’s knowledge-based economy, and a significant share of the U.S. skilled workforce in technology fields is foreign born. The United States has long held a leading position in attracting global talent, but the gap to other countries is weakening. Immigration policies like the H-1B visa program shape the admissions of foreign workers to the country and grant a particularly strong gatekeeping role to sponsoring firms and universities. This chapter explores the data around global talent flows and some of the economic implications of an employer-driven immigration approach.
    JEL: F22 F23 J24 O31 O33
    Date: 2019–05
  20. By: Brunello, Giorgio (University of Padova); Wruuck, Patricia (European Investment Bank)
    Abstract: Labour markets are currently in a phase of cyclical recovery and undergoing structural transformation due to globalisation, demographic trends, advancing digital technologies and automation and changes in labour market institutions. Against this background, businesses increasingly report that the limited availability of skills poses an impediment to corporate investment. Genuine skill constraints can negatively affect labour productivity and hamper the ability to innovate and adopt technological developments. For individual Europeans, not having "the right skills" limits employability prospects and access to quality jobs. For Europe at large, persistent skill gaps and mismatches come at economic and social costs. This paper reviews the recent economic literature on skill mismatch and skill shortages with a focus on Europe a focus on Europe.
    Keywords: skill, shortages, mismatch, Europe
    JEL: J24
    Date: 2019–05
  21. By: Jeworrek, Sabrina; Mertins, Vanessa
    Abstract: The mission of a job does not only affect the type of worker attracted to an organisation, but may also provide incentives to an existing workforce. We conducted a natural field experiment with 267 short-time workers and randomly allocated them to either a prosocial or a commercial job. Our data suggest that the mission of a job itself has a performance enhancing motivational impact on particular individuals only, i.e., workers with a prosocial attitude. However, the mission is very important if it has been actively selected. Those workers who have chosen to contribute to a social cause outperform the ones randomly assigned to the same job by about 15 percent. This effect seems to be a universal phenomenon which is not driven by information about the alternative job, the choice itself or a particular subgroup.
    Keywords: active decision,cognitive dissonance theory,field experiment,mission,performance,prosocial work
    JEL: C93 D64 J33 M52 M55
    Date: 2019

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