nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2019‒06‒17
thirteen papers chosen by
Joseph Marchand
University of Alberta

  1. The Economic Consequences of Hospitalizations for Older Workers across Countries By Mommaerts, Corina; Raza, Syed Hassan; Zheng, Yu
  2. Economic incentives, home production and gender identity norms By Ichino, Andrea; Olsson, Martin; Petrongolo, Barbara; Skogman Thoursie, Peter
  3. Individual Labor Market Effects of Local Public Expenditures on Sports By Tim Pawlowski; Carina Steckenleiter; Tim Wallrafen; Michael Lechner
  4. The Industry Anatomy of the Transatlantic Productivity Growth Slowdown By Gordon, Robert J; Sayed, Hassan
  5. Firm export diversification and change in workforce composition By Sarah Guillou; Tania Treibich
  6. What is happening to middle skill workers? By Andrew Green
  7. Labour supply of older people in advance economies: the impact of changes to statutory retirement ages By Christian Geppert; Yvan Guillemette; Hermes Morgavi; David Turner
  8. Demographic change, human capital, and economic growth in Korea By Jong-Suk Han; Jong-Wha Lee
  9. Inaccurate Statistical Discrimination By J. Aislinn Bohren,; Kareem Haggag; Alex Imas; Devin G. Pope
  10. Building Workers in Madrid (1737-1805). New Wage Series and Working Lives By Mario García-Zúñiga; Ernesto López-Losa
  11. The Employment Effects of Collective Bargaining By Bernardo Fanfani
  12. Earnings gaps among higher-educated workers withinmain cities insemi-industrializedandnewly industrialized Asian countries By Mamiko Takeuchi
  13. Sources of Labor Productivity Growth in the German Brewing Industry By Giannis Karagiannis; Magnus Kellermann; Klaus Salhofer

  1. By: Mommaerts, Corina; Raza, Syed Hassan; Zheng, Yu
    Abstract: This paper estimates the effect of hospital admissions among older workers on economic outcomes across countries. We use harmonized longitudinal survey data from the United States, China, and 13 countries in Europe, and follow the event study design of Dobkin, Finkelstein, Kluender and Notowidigdo (2018) to estimate dynamic effects of a hospitalization on out-of-pocket health expenditures, labor market outcomes, social insurance payments, and household income. We find distinctly different patterns across countries. In contrast to the United States, where hospitalizations lead to large health expenditures and decreases in earnings, individuals in Northern and Southern Europe are largely protected from negative economic outcomes. Hospitalizations in China lead to even larger out-of-pocket expenditures as a percent of prior income, but do not negatively affect labor market outcomes. Our results largely align with the differences in generosity across countries in social protection institutions that include health systems, social security programs and labor market regulations.
    Keywords: cross-country differences; Health shocks; healthcare system; labor market protection; medical spending; social insurance program
    JEL: E21 H53 I13 I18
    Date: 2019–05
  2. By: Ichino, Andrea (European University Institute, U. Bologna and CEPR); Olsson, Martin (Research Institute of Industrial Economics (IFN, Stockholm) and IFAU); Petrongolo, Barbara (Queen Mary University London, CEP (LSE) and CEPR); Skogman Thoursie, Peter (Stockholm University and IFAU)
    Abstract: We infer the role of gender identity norms from the reallocation of childcare across parents, following changes in their relative wages. By exploiting variation from a Swedish tax reform, we estimate the elasticity of substitution in parental childcare for the whole population and for demographic groups potentially adhering to differently binding norms. We find that immigrant, married and male breadwinner couples, as well as couples with a male first-born, react more strongly to tax changes that induce a more traditional allocation of spouses' time, while the respective counterpart couples react more strongly to tax changes that induce a more egalitarian division of labor.
    Keywords: Home production; taxes; gender identity; gender gaps.
    JEL: D13 H24 J22
    Date: 2019–05–29
  3. By: Tim Pawlowski; Carina Steckenleiter; Tim Wallrafen; Michael Lechner
    Abstract: By merging administrative data on public finances of all municipalities in Germany with individual data from the German Socio-Economic Panel, we explore whether local public expenditures on sports facilities influences individual labor market outcomes. Our identification strategy follows a selection-on-observables approach and exploits the panel structure of the data covering 12 years between 2001 and 2012. The results of our matching estimations suggest that both women and men living in municipalities with high expenditure levels benefit, exhibiting approximately 7 percent of additional household net income on average. However, this income effect is fully captured by earning gains for men rather than women living in the household. Additional analysis suggests, that these gender differences, which can also be observed in terms of working time, hourly wage and employment status, appear plausible since women in the age cohort under consideration are less likely than men to engage in sports in general and in any of the publicly funded sports facilities in particular. Moreover, improved well-being and health are possible mechanisms that determine how the positive labor market effects for men may unfold.
    Keywords: Labor market effects, public expenditures, sports, health, well-being
    JEL: H72 H75 J31
    Date: 2019
  4. By: Gordon, Robert J; Sayed, Hassan
    Abstract: By merging KLEMS data sets and aggregating over the ten largest Western European nations (EU-10), we are able to compare and contrast productivity growth up through 2015 starting from 1950 in the U.S. and from 1972 in the EU-10. Data are provided at the aggregate level, as well as for 16 industry groups within the total economy and 11 manufacturing subindustries. The analysis focuses on outcomes over four time intervals: 1950-72, 1972-95, 1995- 2005, and 2005-15. We interpret the EU-10 performance as catching up to the U.S. in stages, with its rapid growth of 1950-72 representing a delayed adoption of the inventions that propelled U.S. productivity growth in the first half of the 20th century, and the next EU-10 stage for 1972-95 as imitating the U.S. outcome for 1950-72. A striking finding is that for the total economy the "early-to-late" productivity growth slowdown from 1972-95 to 2005-15 in the EU-10 (-1.68 percentage points) was almost identical to the U.S. slowdown from 1950-72 to 2005-15 (-1.67 percentage points). There is a very high EU-U.S. correlation in the magnitude of the early-to-late slowdown across industries. This supports our overall theme that the productivity growth slowdown from the early postwar years to the most recent decade was due to a retardation in technical change that affected the same industries by roughly the same magnitudes on both sides of the Atlantic.
    Keywords: industry decomposition; Productivity Growth; Technological change
    JEL: E01 E24 O33 O47 O51 O52
    Date: 2019–05
  5. By: Sarah Guillou (Observatoire français des conjonctures économiques); Tania Treibich (Observatoire français des conjonctures économiques)
    Abstract: The objective of this paper is to show that part of the fixed cost of a firm’s trade expansion is due to the acquisition of new internal capabilities (e.g., technology, production processes or skills), which implies a costly change in the firm’s internal labor organization. We investigate the relationship between a firm’s labor structure, in terms of the relative number of managers, and the scope of its export portfolio, in terms of its product-destination varieties. The empirical analysis is based on a matched employer-employee dataset covering the population of French firms from tradable sectors over the period 2009-2015. Our analysis suggests that market ex- pansion, both through export entry and export diversification, is associated with a change in the firm’s workforce composition, namely an increase in the number of managerial layers. These results are generally confirmed with the use of an instrumental variable approach to control for reverse causality. We show how these results are consistent with a simple model, where the complexity of a firm’s operations increases with the number of product-destination couples ex- ported and the manager’s role is to address the unsolved problems arising from such increased operational complexity.
    Keywords: Exports diversification; Managers; Occupations; Employer-employee data
    JEL: F16 E24 C14 D20
    Date: 2019–06
  6. By: Andrew Green
    Abstract: This report asks what is happening to middle-skill workers. Driven by mega trends such as automation, ageing and offshoring, the share of jobs whose wages placed them firmly in the middle of the wage distribution has been declining. Termed job polarisation, economists have observed the decline in the share of middle-skill jobs in the majority of OECD labour markets. One little explored question is where are these workers going? This report examines what workers are doing who in the past would have been employed in middle-skill jobs. The report first examines the traits of previous middle-skill workers to build a picture of the “typical” middle-skill worker. Using this profile, the report next examines what types of jobs a worker with the typical middle-skill profile is taking, and how likely such a worker is to be working. The study then analyses different metrics of job stability and compensation to put in perspective what shifts out of middle-skill work imply for labour market outcomes.
    JEL: J24 J21 J62
    Date: 2019–06–04
  7. By: Christian Geppert; Yvan Guillemette; Hermes Morgavi; David Turner
    Abstract: A decomposition of changes to participation rates of 55-to-74 year-olds between 2002 and 2017 based on an estimated equation attributes more than two thirds of the median increase (of 10.9 percentage points) to rising life expectancy and educational attainment. About 1 percentage point is attributable to changes in statutory retirement ages, although part of the reason these effects are not larger is that in most countries, statutory retirement ages have not kept pace with life expectancy. Although difficult to incorporate in the empirical framework, evidence of falling disability pension rolls and reduced sensitivity of old-age participation to the level of unemployment suggests that the tightening of alternative early retirement pathways through unemployment or disability schemes has been a major factor in the turnaround in the participation rate of older workers. Projections indicate that participation rates for 55-to-74 year-olds should keep rising through 2030, by 3.4 percentage points for the median country. Rising life expectancy and educational attainment are projected to make the largest contributions, more than compensating for the negative contribution of population ageing in most countries.
    Keywords: labour supply, older workers, Participation, statutory retirement ages
    JEL: J21 J26
    Date: 2019–06–11
  8. By: Jong-Suk Han; Jong-Wha Lee
    Abstract: In this study, we construct a measure of human capital using micro datasets on labor composition of age, gender, education, and wage rate and analyze its role in economic growth for the Korean economy. Over the past three decades, human capital has grown steadily at about 1% per year, contrasting to a continuously declining trend of total work-hours. This growth has been driven by the rise of better-educated baby boom cohorts. A growth accounting exercise shows that human capital contributes significantly to economic growth; it accounted for 0.5% points of annual GDP growth over the period. Human capital is projected to remain a major growth factor over the next two decades as the increase in educational attainment continues. Increased employment rate of elderly or female workers reduces the aggregate human capital growth while increasing the available labor. Polices to improve human capital of less-productivity workers will help to support aggregate human capital and economic growth.
    Keywords: Aging, Demographic change, Education, Human capital, Growth, Training
    JEL: I25 J24 O47 O53
    Date: 2019–06
  9. By: J. Aislinn Bohren, (University of Pennsylvania and Carnegie Mellon University); Kareem Haggag (Carnegie Mellon University); Alex Imas (Carnegie Mellon University); Devin G. Pope (University of Chicago)
    Abstract: Discrimination has been widely studied in economics and other disciplines. In addition to identifying evidence of discrimination, economists often categorize the source of discrimination as either taste-based or statistical. Categorizing discrimination in this way can be valuable for policy design and welfare analysis. We argue that a further categorization is important and needed. Specically, in many situations economic agents may have inaccurate beliefs about the expected productivity or performance of a social group. This motivates our proposed distinction between accurate (based on correct beliefs) and inaccurate (based on incorrect beliefs) statistical discrimination. We do a thorough review of the discrimination literature and argue that this distinction is rarely discussed. Using an online experiment, we illustrate how to identify accurate versus inaccurate statistical discrimination. We show that ignoring this distinction {as is often the case in the discrimination literature { can lead to erroneous interpretations of the motives and implications of discriminatory behavior. In particular, when not explicitly accounted for, inaccurate statistical discrimination can be mistaken for taste-based discrimination, accurate statistical discrimination, or a combination of the two.
    Keywords: Discrimination, Inaccurate Beliefs
    JEL: D90 J71
    Date: 2019–05–18
  10. By: Mario García-Zúñiga (University of the Basque Country UPV/EHU); Ernesto López-Losa (University of the Basque Country UPV/EHU)
    Abstract: This paper provides new series of building wages for 18th-century Madrid. At an international level, the usual point of reference for Spain during the 18th century is the wage series that Earl Hamilton compiled (and Robert Allen included in his database) using the payrolls from the construction of the Royal Palace of Madrid. However, Hamilton did not fully exploit the rich information that those data provide about wage rates, skills and labour force participation. Contrary to the simplicity of the labour categories in Hamilton’s series, our results show the existence of a complex world of skills and, consequently, of wage rates that only come to the surface when we reconstruct the working lives of the thousands of workers who participated in the building of the new palace. The new data presented in this paper provide some new insights into the functioning of labour markets and the complexity of wage (and even human capital) formation in pre-industrial Madrid.
    Keywords: Spain, building wages, pre-industrial labour market, 18th century, construction history
    JEL: J24 J31 J49 N33 N63
    Date: 2019–05
  11. By: Bernardo Fanfani (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)
    Abstract: This paper studies the wage and employment effects of Italian collective bargaining. For this purpose, it analyses monthly data derived from administrative archives on the population of private-sector employees, matched with extensive information on contractual pay levels settled in industry-wide agreements bargained by trade unions' and employers' representatives at the national level. The research design is based on a generalised differences-in-differences method, which exploits the numerous contrasts generated by the Italian wage setting rules and controls for space-specific sectoral unobserved time-varying disturbances in a fully non-parametric way. Results show that a growth in contractual wages produced sizeable increases in actual pay levels for all workers, determining at the same time strong and negative effects on employment. The resulting confidence interval of the implied own-price labour demand elasticity ranged between -0.4 and -1.2, and it was even slightly more negative among incorporated companies. Studying interactions of this parameter with firm-level outcomes –value added per worker, size, the labour share and capital intensity - we found associations broadly consistent with Hicks-Marshall laws and with traditional models of centralized wage bargaining. Further analyses carefully document the presence of dynamic employment adjustments to contractual wage levels and assess the overall robustness of the results.
    Keywords: Collective Bargaining, Labour Demand, Employment, Industrial Relations, Minimum Wage.
    JEL: J01 J08 J21 J23 J38 J52
    Date: 2019–06
  12. By: Mamiko Takeuchi (Kyushu University,)
    Abstract: This paper comparatively analyzes determinants of earningsand the gender earningsgapamong higher-educated workers in nine maincities inseven semi-industrializedandnewlyindustrializedAsian countries. Theanalysisfocuses on effects of specific qualificationsor skillsbeyonda bachelor fsdegree; such as a postgraduate degree, specific field of degree, or experience working or studying abroad. The results show some such attributespositivelyaffectearnings, although thesevaried by cityand gender.Adecomposition analysis also revealsthere isno gender gap among higher-educated workers in Delhi and Mumbai, whereas endowment or coefficient effects ongender gaps are detectedin othercities.
    Keywords: Asian countries, Higher-educated workers, Specific abilities, Comparative analysis, Genderearningsgap
    JEL: J24 J71
    Date: 2019–04
  13. By: Giannis Karagiannis (University of Macedonia, Department of Economics); Magnus Kellermann (The Bavarian State Research Center for Agriculture); Klaus Salhofer (University of Natural Resources and Life Sciences Vienna, Institute of Sustainable Economic Development)
    Abstract: We decompose aggregate industry labor productivity growth into seven distinct components: input deepening, technical change, technical efficiency, scale effect, between-firm reallocation, effects from exits and entry. The first four components measure the productivity growth within a firm. The latter three components capture industry dynamics. Applied to a sample of 118 small and medium sized breweries in Germany over 13 years, we found that within-firm effects, in particular technical change and the scale effect, clearly dominated the effects from industry restructuring.
    Keywords: labor productivity, productivity growth, structural change, brewing industry, Germany
    JEL: D24 J24 L16 O12
    Date: 2019–06

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