nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2019‒06‒24
twenty-one papers chosen by
Joseph Marchand
University of Alberta

  1. Questioning the Stereotype of the "Malingering Bureaucrat": Absence from Work in the Public and Private Sector in Germany By Prümer, Stephanie; Schnabel, Claus
  2. What do student jobs on graduate CVs signal to employers? By Van Belle, Eva; Caers, Ralf; Cuypers, Laure; De Couck, Marijke; Neyt, Brecht; Van Borm, Hannah; Baert, Stijn
  3. Who Benefits from Local Oil and Gas Employment? Labor Market Composition in the Oil and Gas Industry in Texas By Cai, Zhengyu; Maguire, Karen; Winters, John V.
  4. Efficiency Wages in Cournot-Oligopoly By de Pinto, Marco; Goerke, Laszlo
  5. Trade and Worker Deskilling By Rui Costa; Swati Dhingra; Stephen Machin
  6. Training, Soft Skills and Productivity: Evidence from a Field Experiment in Retail By Prada, María Fernanda; Rucci, Graciana; Urzúa, Sergio
  7. Impact of Increased Long-Term Care Insurance Payments on Employment and Wages in Formal Long-Term Care By Kondo, Ayako
  8. Minimum Wages and Housing Rents: Theory and Evidence from Two Countries By Yamagishi, Atsushi
  9. Trade Attitudes in Latin America: Evidence from a Multi-Country Survey Experiment By Rodríguez, Marisol; Stein, Ernesto H.; Vlaicu, Razvan
  10. Individual Consequences of Occupational Decline By Per-Anders Edin; Tiernan Evans; Georg Graetz; Sofia Hernnäs; Guy Michaels
  11. Accumulation of Human and Market Capital in the United States, 1975-2012: An Analysis by Gender By Fraumeni, Barbara M.; Christian, Michael S.
  12. The employment impact of product innovations in sub-Saharan Africa: Firm-level evidence By Avenyo, Elvis; Konte, Maty; Mohnen, Pierre
  13. The impact of WTO accession on Chinese firms' product and labor market power. By Quint Wiersma
  14. The gender gap in informal child care: theory and some evidence from Italy By Barigozzi, Francesca; Cremer, Helmuth; Monfardini, Chiara
  15. Using Social Connections and Financial Incentives to Solve Coordination Failure: A Quasi-Field Experiment in India’s Manufacturing Sector By Afridi, Farzana; Dhillon, Amrita; Li, Sherry Xin; Sharma, Swati
  16. Between Communism and Capitalism: Long-Term Inequality in Poland, 1892-2015 By Pawel Bukowski; Filip Novokmet
  17. Intertemporal Labor Supply and Intra-Household Commitment By Chiappori, Pierre-André; Molina, José Alberto; Gimenez-Nadal, J. Ignacio; Velilla, Jorge
  18. Minimum Wage Analysis Using a Pre-Committed Research Design: Evidence through 2017 By Clemens, Jeffrey; Strain, Michael R.
  19. What Do We Really Know about the Employment Effects of the UK's National Minimum Wage? By Brewer, Mike; Crossley, Thomas F.; Zilio, Federico
  20. Why Unions: Understanding How Unions Overcome the Free-Rider Problem By Richard Murphy
  21. Employee referral, social proximity and worker discipline: theory and suggestive evidence from India By Dhillon, Amrita; Iversen, Vegard; Torsvik, Gaute

  1. By: Prümer, Stephanie (University of Erlangen-Nuremberg); Schnabel, Claus (University of Erlangen-Nuremberg)
    Abstract: Public sector employees are often said to have excessive rates of absence from work. Using representative survey data for Germany, we indeed find absenteeism of employees to be higher in the public than the private sector. The differences in the incidence and days of absence showing up in descriptive statistics are substantially reduced and partly disappear in our estimates of hurdle regression models controlling for individuals' socio-demographic characteristics, health status, professional activities, and for many workplace-related factors. Nevertheless, the probability of staying home sick at least once a year is still 5.6 percentage points higher in the public sector, ceteris paribus. This finding refutes popular assertions that differences in absence rates between the sectors are mainly due to structural factors like different compositions of the workforce. We show that the same observable factors play a role for absenteeism in the public and private sector, but we cannot rule out that shirking may play a more important role in the public sector. Nevertheless, we conclude that the stereotype of the "malingering bureaucrat" seems to be an exaggeration, at least for Germany.
    Keywords: absenteeism, public sector, sick leave, Germany
    JEL: I19 J22 H8
    Date: 2019–05
  2. By: Van Belle, Eva; Caers, Ralf; Cuypers, Laure; De Couck, Marijke; Neyt, Brecht; Van Borm, Hannah; Baert, Stijn
    Abstract: Due to the prevalence and important consequences of student work, the topic has seen an increased interest in the literature. However, to date the focus has been solely on measuring the effect of student employment on later labour market outcomes, relying on signalling theory to explain the observed effects. In the current study, we go beyond measuring the effect of student work and we examine for the first time what exactly is being signalled by student employment. We do this by means of a vignette experiment in which we ask 242 human resource professionals to evaluate a set of five fictitious profiles. Whereas all types of student work signal a better work attitude, a larger social network, a greater sense of responsibility, an increased motivation, and more maturity, only student employment in line with a job candidate’s field of study is a signal of increased human capital and increased trainability.
    Keywords: Student employment,signalling,hiring chances,vignette study
    JEL: C91 I21 J22 J24
    Date: 2019
  3. By: Cai, Zhengyu (Southwestern University of Finance and Economics); Maguire, Karen (Oklahoma State University); Winters, John V. (Iowa State University)
    Abstract: This paper examines local labor market outcomes from an oil and gas boom in Texas. We examine two main outcomes across gender, race, and ethnicity: the probability of employment in the oil and gas industry and the log wages of workers employed outside the oil and gas industry. We find that men and women both gain employment in the oil and gas industry during booms, but such gains are much larger for men and are largest for black and Hispanic men. We also find positive income spillovers for workers in other industries that are similar in magnitude across demographic groups.
    Keywords: oil, natural gas, employment, gender, race, energy
    JEL: J20 Q33 Q40 R10
    Date: 2019–05
  4. By: de Pinto, Marco (IAAEU, University of Trier); Goerke, Laszlo (IAAEU, University of Trier)
    Abstract: In a Cournot-oligopoly with free but costly entry and business stealing, output per firm is too low and the number of competitors excessive, assuming labor productivity to depend on the number of employees only or to be constant. However, a firm can raise the productivity of its workforce by paying higher wages. We show that such efficiency wages accentuate the distortions occurring in oligopoly. Specifically, excessive entry is aggravated and the welfare loss due to market power rises.
    Keywords: oligopoly, efficiency wages, excessive entry, welfare
    JEL: D43 J31 L13
    Date: 2019–05
  5. By: Rui Costa; Swati Dhingra; Stephen Machin
    Abstract: This paper presents new evidence on international trade and worker outcomes. It examines a big world event that produced an unprecedentedly large shock to the UK exchange rate. In the 24 hours in June 2016 during which the UK electorate unexpectedly voted to leave the European Union, the value of sterling plummeted. It recorded the biggest depreciation that has occurred in any of the world's four major currencies since the collapse of Bretton Woods. Exploiting this variation, the paper studies the impact of trade on wages and worker training. Wages and training fell for workers employed in sectors where the intermediate import price rose by more as a consequence of the sterling depreciation. Calibrating the estimated wage elasticity with respect to intermediate import prices to theory uncovers evidence of a production complementarity between workers and intermediate imports. This provides new direct evidence that, in the modern world of global value chains, it is changes in the cost of intermediate imports that act as a driver of the impact of globalization on worker welfare. The episode studied and the findings add to widely expressed, growing concerns about poor productivity performance relating to skills and to patterns of real wage stagnation that are plaguing contemporary labour markets.
    Keywords: Exchange rate depreciation, trade, wages, training, deskilling, Brexit
    JEL: F14 F31 J24 J31
    Date: 2019–05
  6. By: Prada, María Fernanda; Rucci, Graciana; Urzúa, Sergio
    Abstract: Understanding the causal association between skills and productivity is essential for designing effective training programs. This paper evaluates an intervention aimed at boosting leadership and communication skills among store managers and sales associates from a large Latin American retailer. The empirical analysis is carried out using longitudinal information gathered by the firm and through two skills surveys. The Identification exploits the experimental design in the context of a difference-in-difference strategy. The results indicate large positive effects of the training program on store-level productivity. We further link these Findings to individual-level performance measures. In particular, we document positive effects on total sales and numbers of transactions for all workers. Regarding the mechanisms, we provide evidence suggesting that the intervention was more effective in boosting leadership skills than communication skills. Spillovers from trained managers to untrained sales representatives also contribute to the main effects. Our findings point towards the possibility of increasing productivity through training programs targeting critical skills.
    JEL: J24 C93 O15 M53
    Date: 2019–06
  7. By: Kondo, Ayako (University of Tokyo)
    Abstract: This paper examines the effect of raising Long-term Care Insurance (LTCI) payments on employment and wages of workers in the long-term care (LTC) industry. Specifically, I use the change in the regional premium in 2012 as an exogenous shock to the insurance fee schedule: the change in the unit price of LTCI service ranges from a decrease of 2.8% to an increase of 4.2%. I find no increase in the number of employees in the establishments, registered under the LTCI scheme, in municipalities where the regional premium increased. The earnings and working hours of LTC workers did not increase, either.
    Keywords: long-term care insurance, care workers
    JEL: I11 J30 J48
    Date: 2019–05
  8. By: Yamagishi, Atsushi
    Abstract: Whether the minimum wage is an effective redistributive policy is still controversial. I investigate this issue from a new perspective by focusing on the effect of minimum wage hikes on housing rents. It is informative for two reasons. First, if minimum wage hikes increase housing rents, some of the benefits accidentally fall on homeowners rather than workers. Second, housing rents serve as an indicator as to whether and how much minimum wages are beneficial for workers, which I show by developing a spatial equilibrium model. I empirically analyze the causal impact of the minimum wage increase on housing rents in the United States and Japan. In both countries, minimum wages hikes increase housing rents in urban areas: 10% minimum wage increase induces 1%-2% increase in the United States and 2.5%-5% increase in Japan. While the unintended incidence on homeowners is arguably moderate, it is non-negligible. Moreover, it may be more salient if minimum wages induce unemployment. I also suggest the importance of heterogeneous welfare impacts on different groups of minimum wage workers.
    Keywords: Minimum Wages, Housing Rents, Incidence, Capitalization, Heterogeneous Workers
    JEL: J21 J38 J61 R23 R38
    Date: 2019–06–01
  9. By: Rodríguez, Marisol; Stein, Ernesto H.; Vlaicu, Razvan
    Abstract: This paper examines individual-level support for trade liberalization, relates it to beliefs about trade, and measures its sensitivity to positive and negative framing. The data come from the 2018 Latinobarometro survey of eighteen countries, in which the authors embedded a survey experiment to study framing effects. It is found that respondents are generally favorable to increased trade with other countries, based on perceived trade benefits to employment, prices, and product variety. Support for trade is unaffected by positive framing but is highly sensitive downward to employment loss framing. Positive framing does shift upward respondent beliefs that trade increases product variety and reduces prices, but also raises concerns about low wages. Negative framing substantially reduces the prevailing beliefs that trade is associated with high employment, and there is no offsetting effect on the consumption side. Trade support levels and sensitivity display heterogeneity across education levels consistent with skill-based theories of trade, as well as interesting country, age, gender, and income heterogeneity.
    Keywords: Trade liberalization; Trade preferences; Trade beliefs; Survey experiment; Framing
    JEL: D72 F13
    Date: 2019–06
  10. By: Per-Anders Edin; Tiernan Evans; Georg Graetz; Sofia Hernnäs; Guy Michaels
    Abstract: What are the earnings and employment losses that workers suffer when demand for their occupations declines? To answer this question we combine forecasts on occupational employment changes, which allow us to identify unanticipated declines; administrative data on the population of Swedish workers, spanning several decades; and a highly detailed occupational classification. We find that, compared to similar workers, those facing occupational decline lost about 2-5 percent of mean cumulative earnings from 1986-2013. But workers at the bottom of their occupations' initial earnings distributions suffered considerably larger losses. These earnings losses are partly accounted for by reduced employment, and increased unemployment and retraining.
    Keywords: technological change, occupations, inequality
    JEL: O33 J24 J62
    Date: 2019–06
  11. By: Fraumeni, Barbara M. (Central University of Finance and Economics); Christian, Michael S. (Education Analytics, Madison)
    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.
    Keywords: human capital, differences by gender, production, multifactor productivity
    JEL: J24 J16 O47 J22
    Date: 2019–05
  12. By: Avenyo, Elvis (UNU-MERIT); Konte, Maty (UNU-MERIT); Mohnen, Pierre (UNU-MERIT)
    Abstract: Innovation has become a key interest in sub-Saharan Africa (SSA), as it is argued to be pervasive, and play eminent role in generating employment. There is, however, a dearth of empirical evidence assessing the impact of innovation on firm employment for SSA. This paper investigates the impact of product innovations on job creation using data from the recent waves of the Enterprise Survey merged with Innovation Follow-Up Survey for SSA countries for which both surveys are available. We apply the Dose Response Model under continuous and heterogeneous responses to treatment. The results reveal a positive impact of product innovations on total employment. This result is, however, found to hold only at specific intervals of product innovation intensities. Our analyses also show that product innovations tend to create both temporary and permanent jobs as well as skilled and unskilled jobs. However, the positive impact of product innovations on temporary and unskilled employment tends to outweigh that of permanent and skilled employment, raising questions about the security and quality of the new jobs generated by product innovations.
    Keywords: Employment, Product Innovations, Dose Response Model, sub-Saharan Africa
    JEL: J23 J3 O31 O33 L10
    Date: 2019–06–04
  13. By: Quint Wiersma (Vrije Universiteit Amsterdam, The Author-Name: Sabien Dobbelaere; Vrije Universiteit Amsterdam, The Netherlands)
    Abstract: This paper examines the impact of WTO membership on the extensive and intensive margins of product and labor market power of Chinese manufacturing firms during the period 1999--2006. We first identify a firm's regime of competitiveness, corresponding to a combination of a product market setting and a labor market setting, at any point in time through implementing the testing procedure of Kodde and Palm (1986), the distance test. Our descriptive differences-in-differences analysis shows that an industry's dominant regime of competitiveness is stable over time. Exploiting variation in input and output tariff reductions after WTO accession across industries, we then show that on the extensive margin, reducing tariffs on intermediate inputs decreases the likelihood of shifting firms away from an imperfectly competitive labor market setting where the marginal employee is paid a real wage either above or below her marginal product (i.e.\ wage markup or markdown). In contrast, falling tariffs on final goods increases the likelihood of switching firms away from setting wage markdowns. On the intensive margin, trade liberalization via input tariff reductions is found to increase a firm's price-cost markup but to decrease the degree of wage-setting power that a firm possesses. Such joint responses of firms' pricing behavior to trade policy changes are important for understanding increased inter-firm wage disparities.
    Keywords: Rent sharing, monopsony, price-cost markups, trade liberalization, firm panel data, hypothesis testing, inequality restrictions
    JEL: L20 C12 J30
    Date: 2019–06–02
  14. By: Barigozzi, Francesca; Cremer, Helmuth; Monfardini, Chiara
    Abstract: Our model studies couples' time allocation and career choices, which are affected by a social norm on gender roles in the family. Parents can provide two types of informal child care: basic care (feeding, changing children, baby-sitting) and quality care (activities that stimulate children's social and cognitive skills). We obtain the following main results. Traditional mothers provide some informal basic care, whereas career mothers purchase full time formal basic care in the market. Informal basic care is too large and the group of career mothers is too small because of the social norm. Informal quality care is increasing in the couple's income and is provided in larger amount by mothers. We test the model's predictions for Italy using the most recent ISTAT 'Use of Time' survey. In line with the model, mothers devote more time than fathers to both basic and quality informal care; more educated parents devote more time to quality informal care than less educated parents; more educated mothers spend more time in the labor market than less educated mothers.
    Keywords: Social norms; basic and quality child care; women's career choices; gender gaps
    JEL: D13 H23 J16 J22
    Date: 2019–06
  15. By: Afridi, Farzana (Indian Statistical Institute, Delhi); Dhillon, Amrita (King’s College London); Li, Sherry Xin (University of Arkansas); Sharma, Swati (Indian Statistical Institute, Delhi)
    Abstract: Production processes are often organized in teams, yet there is limited evidence on whether and how social connections and financial incentives affect productivity in tasks that require coordination among workers. We simulate assembly line production in a lab-in-the-field experiment in which workers exert real effort in a minimum-effort game in teams whose members are either socially connected or unconnected and are paid according to the group output. We find that group output increases by 18% and coordination improves by 30-39% when workers are socially connected with their co-workers. Connected groups also coordinate better when we introduce a lump sum bonus, suggesting that financial and social incentives can be complementary in this setting. These findings can plausibly be explained by trust between co-workers in socially connected teams.
    Keywords: caste-based networks, social incentives, financial incentives, minimum effort game, coordination, trust JEL Classification: C93, D20, D22, D24, J33
    Date: 2019
  16. By: Pawel Bukowski; Filip Novokmet
    Abstract: How has Polish inequality evolved between communism and capitalism to reach one of the highest levels in Europe today? To address this question, we construct the first series on the long-term distribution of income in Poland by combining tax, household survey and national accounts data. We document a U-shaped evolution of inequalities from the end of the 19th century until today: (i) inequality was high before WWII; (ii) abruptly fell after the introduction of communism in 1947 and stagnated at low levels during the whole communist period; (iii) experienced a sharp rise with the return to capitalism in 1989. Between 1989 and 2015 the top 10% income share increased from 23% to 35% and the top 1% income share from 4% to 13%. Frequently quoted Poland's transition success has largely benefited top income groups. We find that inequality was high in the first half of the 20th century due to strong concentration of capital income at the top of the distribution. The secular fall after WW2 was largely to a combination of capital income shocks from war destructions with communist policies both eliminating private ownership and forcing wage compression. The rise of inequality after the return to capitalism in the early 1990s was induced both by the rise of top labour and capital incomes. We attribute this to labour market liberalisation and privatisation. However, the strong rise in inequality in the 2000s was driven solely by the increase in top capital incomes, which is likely related to current globalization forces. Yet overall, the unique Polish inequality history speaks about the central role of policies and institutions in shaping inequality in the long run.
    Keywords: income inequality, transformation, Poland
    JEL: D31 E01 J3 N34
    Date: 2019–06
  17. By: Chiappori, Pierre-André (Columbia University); Molina, José Alberto (University of Zaragoza); Gimenez-Nadal, J. Ignacio (University of Zaragoza); Velilla, Jorge (University of Zaragoza)
    Abstract: This paper adopts an intertemporal labor supply perspective to propose a test that allows us to distinguish between intra-household non-commitment, limited commitment, and full commitment. It investigates whether, after controling for current and future (expected) wages, past wage shocks have a lasting and significant impact on present labor supply and public consumption. Using a semi-log parametrization of labor supply and data from the Panel Study of Income Dynamics for the US, the paper shows positive evidence in favor of the limited commitment model. Specifically, unexpected past wage shocks affect labor supply in exactly the way predicted by theory, as spouses' past wage deviations have a negative impact on their labor supply and a positive impact on their spouses'. In addition, wives' past wage shocks also impact negatively household public expenditure on housing.
    Keywords: collective model, intertemporal labor supply, intra-household commitment, PSID
    JEL: J22
    Date: 2019–05
  18. By: Clemens, Jeffrey (University of California, San Diego); Strain, Michael R. (American Enterprise Institute for Public Policy Research)
    Abstract: This paper presents results from the third year of a multi-year, pre-committed research design for analyzing recent minimum wage changes. Using ACS and CPS data through 2017, we find that relatively large minimum wage increases reduced employment among low-skilled individuals by just over 2 percentage points. The effects of smaller increases are more variable and estimates for inflation-indexed increases tend toward moderately positive values. The effects of smaller increases are relatively more positive when we analyze the CPS. The most recently enacted minimum wage changes tend to be positively correlated with employment among low-skilled individuals, while relatively early and large increases are strongly negatively correlated with employment. Analysis of future data will be needed to determine whether this apparent difference between short- and medium-run effects is systematic.
    Keywords: minimum wages, employment, pre-commitment
    JEL: J08 J23 J38
    Date: 2019–05
  19. By: Brewer, Mike (ISER, University of Essex); Crossley, Thomas F. (University of Essex); Zilio, Federico (University of Melbourne)
    Abstract: A substantial body of research on the UK's National Minimum Wage (NMW) has concluded that the the NMW has not had a detrimental effect on employment. This research has directly influenced, through the Low Pay Commission, the conduct of policy, including the subsequent introduction of the National Living Wage (NLW). We revisit this literature and offer a reassessment, motivated by two concerns. First, much of this literature employs difference-in-difference designs, even though there are significant challenges in conducting appropriate inference in such designs, and they can have very low power when inference is conducted appropriately. Second, the literature has focused on the binary outcome of statistical rejection of the null hypothesis, without attention to the range of (positive or negative) impacts on employment that are consistent with the data. In our re-analysis of the data, we conduct inference using recent suggestions for best practice and consider what magnitude of employment effects the data can and cannot rule out. We find that the data are consistent with both large negative and small positive impacts of the UK National Minimum Wage on employment. We conclude that the existing data, combined with difference-in-difference designs, in fact offered very little guidance to policy makers.
    Keywords: power, difference-in-difference, minimum wage, minimum detectable effects
    JEL: C12 C18 J23 J38
    Date: 2019–05
  20. By: Richard Murphy
    Abstract: This paper provides evidence for why individuals join unions instead of free-riding. I model membership as legal insurance. To test the model, I use the incidence of news stories concerning allegations against teachers in the UK as a plausibly exogenous shock to demand for such insurance. I find that, for every five stories occurring in a region, teachers are 2.2 percentage points more likely to be members in the subsequent year. These effects are larger when teachers share characteristics with the news story and can explain 45 percent of the growth in teacher union membership between 1992 and 2010.
    Keywords: unions, teachers, media, insurance
    JEL: J51 J45 J32
    Date: 2019–06
  21. By: Dhillon, Amrita (King’s College, London); Iversen, Vegard (University of Greenwich); Torsvik, Gaute (University of Oslo)
    Abstract: We propose a new theory to explain why employers mobilize workplace insiders for the hiring of new staff. In settings with incomplete contracts, we show how workplace insiders can help employers tackle recruit discipline challenges at a lower cost. A key idea is that the employer can use sanctions against the referee to keep the new hire in line. Our model predicts that employers will use existing staff of stature and with accumulated goodwill within the firm as referees, since such staff have a personal stake in their choice of recruit. The model also predicts a strong social tie between the referee and the recruit to ensure that the recruit internalizes the costs to the referee of own misbehavior or underperformance. We use a small, in-depth dataset from India to scrutinize how well the predictions of our theory and of the main rival explanations for referral align with hiring patterns, wage and labor turnover observations. We find suggestive support for our theory and argue that these findings are hard to reconcile with rival referral explanations.
    Keywords: networks, low- and unskilled jobs, India, moral hazard, employee referrals, efficiency wages, referee incentives, strength of ties. JEL Classification: J41, J31, D82, D86, O12, O17
    Date: 2019

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