nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2019‒07‒15
thirty papers chosen by
Joseph Marchand
University of Alberta

  1. Labor Income Share Dynamics with Variable Elasticity of Substitution By Paul, Saumik
  2. Low-Skilled Workers and the Effects of Minimum Wage: New Evidence Based on a Density-Discontinuity Approach By Sharon Katzkowicz; Gabriela Pedetti; Martina Querejeta; Marcelo Bérgolo
  3. CEO-Board Dynamics By John R. Graham; Hyunseob Kim; Mark T. Leary
  4. Trade and Worker Deskilling By Rui Costa; Swati Dhingra; Stephen Machin
  5. The Marginal Labor Supply Disincentives of Welfare Reforms By Robert A. Moffitt
  6. What Skills Lead to Entrepreneurial Success? Evidence from Non-Farm-Household Enterprises in Indonesia By Niken Kusumawardhani; Daniel Suryadarma; Luca Tiberti; Veto Tyas
  7. The Long-Term Impact of Children's Disabilities on Families By Gunnsteinsson , Snaebjorn; Steingrimsdottir , Herdis
  8. Who Is afraid of machines? By Satiris Blanas; Gino Gancia; Sang Yoon (Tim) Lee
  9. The Long-Run Effects of Reducing Early School Tracking By Canaan, Serena
  10. Demand-Driven Youth Training Programs: Experimental Evidence from Mongolia By Maria Laura Alzua; Soyolmaa Batbekh; Altantsetseg Batchuluun; Bayarmaa Dalkhjav; Jose Galdo
  11. Local Rates of New Firm Formation: An Empirical Exploration using Swedish Data By Andersson, Martin; Lavesson, Niclas; Partridge, Mark D.
  12. Industrial clusters in the long run: evidence from Million-Rouble plants in China By Stephan Heblich; Marlon Seror; Hao Xu; Yanos Zylberberg
  13. Equity and Efficiency in the Organization of Firms By Tanjim Hossain; Elizabeth Lyons; Aloysius Siow
  14. Technological change and occupation mobility: A task-based approach to horizontal mismatch By Aepli, Manuel
  15. Jobs multipliers: evidence from a large fiscal stimulus in Spain By Mario Alloza; Carlos Sanz
  16. School Desegregation and Black Teacher Employment By Owen Thompson
  17. Parental Leave, Household Specialization and Children's Well-Being By Canaan, Serena
  18. Is There a Business Cycle Effect on the Incidence of Dual Job Holding? By Choe, Chung; Oaxaca, Ronald L.; Renna, Francesco
  19. Commodity Booms, Human Capital, and Economic Growth: An Application to Colombia By Iader Giraldo; Ricardo Arguello; Nataly Herrera
  20. Trading Up and the Skill Premium By Nir Jaimovich; Sergio Rebelo; Arlene Wong; Miao Ben Zhang
  21. The gender gap in informal child care: theory and some evidence from Italy By Barigozzi, Francesca; Cremer, Helmuth; Monfardini, Chiara
  22. Scientific Education and Innovation: From Technical Diplomas to University STEM Degrees By Nicola Bianchi; Michela Giorcelli
  23. Inaccurate Statistical Discrimination By J. Aislinn Bohren; Kareem Haggag; Alex Imas; Devin G. Pope
  24. What Do Employee Referral Programs Do? By Guido Friebel; Matthias Heinz; Mitchell Hoffman; Nick Zubanov
  25. The Long-Run Effects of Recessions on Education and Income By Stuart, Bryan
  26. Testing preferences for basic income By Palermo Kuss, Ana Helena
  27. Work incentives and the cost of redistribution via tax-transfer reforms under constrained labor supply By Fischer, Benjamin; Jessen, Robin; Steiner, Viktor
  28. The Gender Pay Gap in the US: A Matching Study By Meara, Katie; Pastore, Francesco; Webster, Allan
  29. Why Unions Survive: Understanding How Unions Overcome The Free-Rider Problem By Richard Murphy
  30. Declining Worker Turnover: the Role of Short Duration Employment Spells By Michael J. Pries; Richard Rogerson

  1. By: Paul, Saumik (Osaka University)
    Abstract: The accumulation principle suggests that complementarity between capital and labor forces the labor income share to rise in the presence of capital accumulation. The CES model estimates using data from 20 Japanese industries between 1970 and 2012 explain the same outcome but with substitutable factor inputs. To resolve this puzzle, this paper proposes a variable elasticity of substitution (VES-W) framework that embodies a variable elasticity of substitution and a share parameter as a non-linear function of the Weibull distribution of capital-labor ratio. Empirical findings support the choice of a variable elasticity of substitution. While the estimated structural parameters calibrate the actual output level and the movements in factor income shares reasonably well in both the CES and VES-W models, the VES-W model outcomes support the accumulation principle by achieving the same result but with complementary factor inputs.
    Keywords: substitution elasticity, labor income share, production function parameters
    JEL: E21 E22 E25
    Date: 2019–06
  2. By: Sharon Katzkowicz; Gabriela Pedetti; Martina Querejeta; Marcelo Bérgolo
    Abstract: We estimated the impact of the minimum wage on wages, unemployment, and formal-informal sector mobility for women in the domestic-work sector in Uruguay. Applying the dual-economy, density-discontinuity design developed by Jales (2017), we used cross-sectional data for 2006-2016 from the National Household Survey and found that the minimum wage had significant effects on labor outcomes, with almost 20% of women increasing their wages to reach the minimum. This effect was observed in both the formal and informal sector, though the latter was not covered by the policy. Our results showed a drop in employment as well as a significant effect on sector mobility with negative impacts on formality. Nevertheless, these undesired effects were offset by other labour policies undertaken in the period, by sustained economic growth, and by improvement in labor- market conditions. A novel identification strategy that is particularly suited to developing countries provides empirical evidence regarding the effects of a minimum wage on women workers in the informal sector.
    Keywords: Minimum wage, labour market, gender, informal sector, developing countries
    JEL: J08 J16 J21 J31
    Date: 2019
  3. By: John R. Graham; Hyunseob Kim; Mark T. Leary
    Abstract: We examine CEO-board dynamics using a new panel dataset that spans 1920 to 2011. The long sample allows us to perform within-firm and within-CEO tests over a long horizon, many for the first time in the governance literature. Consistent with theories of bargaining or dynamic contracting, we find board independence increases at CEO turnover and falls with CEO tenure, with the decline stronger following superior performance. CEOs are also more likely to be appointed board chair as tenure increases, and we find evidence consistent with a substitution between board independence and chair duality. Other results suggest that these classes of models fail to capture important elements of board dynamics. First, the magnitude of the CEO tenure effect is economically small, much smaller for example than the strong persistence in board structure that we document. Second, when external CEOs are hired, board independence falls and subsequently increases. Third, event studies document a positive market reaction when powerful CEOs die in office, consistent with powerful CEOs becoming entrenched.
    JEL: B26 G3 J3 M12
    Date: 2019–06
  4. 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.
    JEL: F14 F31 J24 J31
    Date: 2019–06
  5. By: Robert A. Moffitt
    Abstract: Existing research on the static effects of the manipulation of welfare program benefit parameters on labor supply has allowed only restrictive forms of heterogeneity in preferences. Yet preference heterogeneity implies that the marginal effects of welfare reforms on labor supply may differ in different time periods with different populations and which sweep out different portions of the marginal distribution of preferences. A new examination of the heavily studied AFDC program examines changes in its tax rates in 1967, 1981, and 1996 and estimates the marginal effects on labor supply of a change in participation in each of those reform years. The estimates are based on a theory-consistent reduced form model which allows for a nonparametric specification of how changes in welfare program participation affect labor supply on the margin. Estimates of the model using a form of local instrumental variables show that the marginal treatment effects are quadratic, rising and then falling as participation rates rise. Applying the estimates to the three historical reform periods shows that marginal responses differed in each period because of differences in the composition of who was on the program and who was not.
    JEL: C21 I3 J2
    Date: 2019–06
  6. By: Niken Kusumawardhani; Daniel Suryadarma; Luca Tiberti; Veto Tyas
    Abstract: The abundance of small enterprises in developing countries has led to debates regarding the role that of entrepreneurial skill in business performance. Analyses of the skills and characteristics important for success can inform entrepreneurship training programs or educational curricula designed to increase the number of successful entrepreneurs. We addressed these issues in the context of Indonesia, a low-middle-income country in which almost half of workers are self-employed. After developing a conceptual framework linking fluid intelligence, crystallized intelligence, and educational attainment, we estimated the effect of these different types of intelligence on the profit and value of non-farm-household businesses. We found that fluid intelligence had sizeable and positive returns on business. On the other hand, crystallized intelligence had a positive and large effect only in sectors that required intense concentration or computers. Some heterogeneous effects regarding business size were also found. Our results were robust when we controlled for possible selection into non- farm entrepreneurship.
    Keywords: cognitive skills, human capital, entrepreneurship, household firm, farm business, non-farm business
    JEL: J24 O15 L26
    Date: 2019
  7. By: Gunnsteinsson , Snaebjorn; Steingrimsdottir , Herdis (Department of Economics, Copenhagen Business School)
    Abstract: Childhood disability is a major health shock that affects parents early in their working life. We estimate its impact on parents’ career trajectories, their balance sheets, and major life decisions using detailed register data from Denmark. To identify the causal effect of childhood disability we use an event study approach, where we control for a rich set of pre-birth variables and focus on conditions that have no or weak associations with socioeconomic determinants. We find that having a child with a disability has strong negative impact on mothers’ earnings. The effect is persistent and the wage penalty appears to grow over time. Fathers’ earnings are also affected but the impact is notably smaller. We find that both parents are less likely to be employed in the long run and are less likely to ascend to top executive positions. The long-term structure of the household is also affected as subsequent fertility is lower and partnership dissolution is more common. Finally, despite this financial shock, long term net worth of families is not affected or may be positively affected, potentially due to help from government transfers and lower cost associated with having fewer other children, or due to a stronger savings motive for the long term care of the disabled child.
    Keywords: disability; children; child; insurance; earnings; income; labor force participation; fertility
    JEL: E24 I14 J13 J31
    Date: 2019–06–18
  8. By: Satiris Blanas; Gino Gancia; Sang Yoon (Tim) Lee
    Abstract: We study how various types of machines, namely, information and communication technologies, software, and especially industrial robots, affect the demand for workers of different education, age, and gender. We do so by exploiting differences in the composition of workers across countries, industries and time. Our dataset comprises 10 high-income countries and 30 industries, which span roughly their entire economies, with annual observations over the period 1982–2005. The results suggest that software and robots reduced the demand for low and medium-skill workers, the young, and women — especially in manufacturing industries; but raised the demand for high-skill workers, older workers and men —especially in service industries. These findings are consistent with the hypothesis that automation technologies, contrary to other types of capital, replace humans performing routine tasks. We also find evidence for some types of workers, especially women, having shifted away from such tasks.
    Keywords: Automation, robots, employment, labor demand, labor income share.
    JEL: J21 J23 O33
    Date: 2019–06
  9. By: Canaan, Serena (American University of Beirut)
    Abstract: Grouping students by ability is a controversial issue, and its impacts are likely to depend on the type of tracking students are exposed to. This paper studies a reform that moved French schools from a rigorous tracking system, which assigned students to tracks with significantly different learning environments and career options, to a milder form of ability-tracking that only grouped students into different classrooms. Using a regression discontinuity design, I find that the reform raised individuals’ level of education and increased their wages by 4.7 percent at ages 40 to 45, with the strongest effects occurring among individuals from low socioeconomic backgrounds.
    Keywords: tracking, returns to education, school quality
    JEL: I21 I28 J24
    Date: 2019–06
  10. By: Maria Laura Alzua; Soyolmaa Batbekh; Altantsetseg Batchuluun; Bayarmaa Dalkhjav; Jose Galdo
    Abstract: Because of its high incidence and potential threat to social cohesion, youth unemployment is a global concern. This study uses a randomized controlled trial to analyze the effectiveness of a demand-driven vocational training program for disadvantaged youth in Mongolia. Mongolia, a transitional country whose economic structure shifted from a communist, centrally planned economy to a free-market economy over a relatively short period, offers a new setting in which to test the effectiveness of standard active labor market policies. This study reports positive and statistically significant short-term effects of vocational training on monthly earnings, skills matching, and self-employment. Substantial heterogeneity emerges as relatively older, richer, and better-educated individuals drive these positive effects. A second intervention that randomly assigns participants to receive repetitive weekly newsletters with information on market returns to vocational training shows positive impacts on the length of exposure to and successful completion of the program. These positive effects, however, are only observed at the intensive margin and do not lead to higher employment or earnings outcomes.
    Keywords: vocational training programs, labor market, randomized controlled trial, employment, earnings, job quality
    JEL: J18 J08 J24 J38 C93
    Date: 2019
  11. By: Andersson, Martin (Department of Economics, Blekinge Institute of Technology); Lavesson, Niclas (CIRCLE, Lund University); Partridge, Mark D. (Ohio State University)
    Abstract: We assess the empirical literature on the determinants of spatial variations in new-firm formation rates by undertaking a systematic empirical analysis of the relative roles of different demand- and supply-side factors. Using instrumental variables to address endogeneity, we find that local growth drives local entrepreneurship exclusively in services industries. Average establishment size has a robust negative influence on local new-firm formation rates, but its effect varies across industries. Local industry diversity is only positive for new-firm formation in high-tech and knowledge-intensive activities. There is also some evidence of that longer distances to urban centers is associated with higher new-firm formation rates. The only local factor with a consistent positive effect on new-firm formation across industries is local density of skilled workers. We conclude that industry structure, geography and agglomeration matter, but in the end, new firms are started by people, so it is unsurprising that the main factor driving local entrepreneurship is the characteristics of the local residents.
    Keywords: Entrepreneurship; New firm formation; Geography; Human capital; Agglomeration; Local growth; Startups
    JEL: L26 M13 R11 R30
    Date: 2019–06–27
  12. By: Stephan Heblich; Marlon Seror; Hao Xu; Yanos Zylberberg
    Abstract: This paper exploits a short-lived cooperation program between the U.S.S.R. and China, which led to the construction of 156 “Million-Rouble plants” in the 1950s. We isolate exogenous variation in location decisions due to the relative position of allied and enemy airbases and study the long-run impact of these factories on local economic activity. While the “156” program accelerated industrialization in treated counties until the end of the command-economy era, this significant productivity advantage fully eroded in the subsequent period. We explore the nature of local spillovers responsible for this pattern, and provide evidence that treated counties are overspecialized and far less innovative. There is a large concentration of establishments along the production chain of the Million-Rouble plants, which limits technological spillovers across industries.
    Keywords: industrial clusters, agglomeration economies, specialization
    JEL: R11 R53 J24 N95
    Date: 2019
  13. By: Tanjim Hossain (University of Toronto); Elizabeth Lyons (University of California, San Diego); Aloysius Siow (University of Toronto)
    Abstract: Using a series of laboratory experiments, this paper shows that fairness concerns of potential co- founders may lead to failure to undertake profitable joint production opportunities. Inefficiency occurs more often when equal division of the firm’s profit would leave one co-founder worse- off relative to her outside option. We find that framing an opportunity as an employment relationship rather than a partnership significantly reduces these inefficiencies and increases subjects’ welfare. Evidence from division of profits and communication logs from free-form negotiations between subjects suggest that only some subjects incorporate outside options to define fairness. Based on this, we provide a theoretical model of how fairness concerns affect the formation of new firms.
    Keywords: Organizational Design, Firm Formation, Fairness Concerns, Cooperative Bargaining
    JEL: C92 D91 L14 D83
  14. By: Aepli, Manuel
    Abstract: Technological change and its impacts on labour markets are a much-discussed topic in economics. Economists generally assume that new technology penetrating the labour market shifts firms' task demand. Given individuals' acquired and supplied skills, these task demand shifts potentially foster horizontal skill mismatches, e.g. individuals not working in their learned occupations. In this paper, I first analyse the relation between task shifting technological change and individuals' horizontal mismatch incidence. Second, I estimate individuals' mismatch wage penalties triggered by this relation. The present paper proposes an instrumental variable (IV) approach to map this mechanism and to obtain causal estimates on mismatch wage penalties. Applying this empirical strategy yields a wage penalty of roughly 12% for horizontally mismatched individuals.
    Keywords: horizontal mismatch,task-based approach,technological change,vocational education
    JEL: E24 J24 J62 O33
    Date: 2019
  15. By: Mario Alloza (Banco de España); Carlos Sanz (Banco de España)
    Abstract: We estimate the employment effect of a large fiscal stimulus in Spain (PlanE), in which the national government transferred funds to municipalities to carry out local investment projects. Using a difference-in-difference approach by exploiting variation in the timing of the execution of projects across municipalities, we find that 100,000 euros of stimulus reduced unemployment by 0.62 jobs per year. We allow for possible spatial effects, i.e. the propagation of the stimulus to neighboring municipalities, and find that these are sizable, representing 8.4% of the “local” effect. We also present evidence on the transmission mechanism, finding that the effect was: (i) initially concentrated in the construction and industrial sectors, but later spilled over to the broader economy, (ii) larger for males than females, (iii) larger when the shock represented a higher share of the budget, and (iv) not larger for municipalities headed by more educated mayors. Our estimate of the multiplier falls in the lower range of previous work.
    Keywords: fiscal policy, local fiscal multipliers, spillovers
    JEL: E24 E62 H30 H72
    Date: 2019–06
  16. By: Owen Thompson
    Abstract: Prior to the racial integration of schools in the southern United States, predominantly African American schools were staffed almost exclusively by African American teachers as well, and teaching constituted an extraordinarily large share of professional employment among southern blacks. The large-scale desegregation of southern schools occurring after passage of the 1964 Civil Rights Act represented a potential threat to this employment base, and this paper estimates how student integration affected black teacher employment. Using newly assembled archival data from 781 southern school districts observed between 1964 and 1972, I estimate that a school district transitioning from fully segregated to fully integrated education, which approximates the experience of the modal southern district in this period, led to a 31.8% reduction in black teacher employment. A series of tests indicate that these employment reductions were not due to school district self-selection into desegregation or unobserved district characteristics associated with desegregation. Additional analyses estimate changes in the occupational distribution by race in the 1960 and 1970 Decennial Censuses and indicate that displaced southern black teachers either entered lower skill occupations within the South or migrated out of the region to continue teaching, and that southern school districts compensated for reduced black teacher employment by employing fewer total teachers and by increasing their recruitment of white teachers, especially less experienced white teachers and white male teachers.
    JEL: I24 J23 J7
    Date: 2019–06
  17. By: Canaan, Serena (American University of Beirut)
    Abstract: Many countries offer new parents long periods of paid leave. Proponents argue that parental leave programs can reduce gender gaps in the labor market, support marital stability and promote children's well-being. In this paper, I show that lengthy leaves can instead work against several of these intended goals. Using a regression discontinuity design, I find that a 3-year expansion of paid leave in France increases household specialization by inducing mothers to exit the labor force and fathers to raise their work hours. The leave further discourages marriages among cohabiting couples and harms children's verbal development.
    Keywords: parental leave, household specialization, marriage, child development
    JEL: J12 J13 J18 J22
    Date: 2019–06
  18. By: Choe, Chung (Hanyang University); Oaxaca, Ronald L. (University of Arizona); Renna, Francesco (University of Akron)
    Abstract: This paper examines the extent to which the incidence of dual job holding is cyclically sensitive in the context of hours constraints on labor supply. Linear probability models of the incidence of dual job holding are estimated separately for each hours constraint regime. Selection effects are accounted for in a correlated random effects setting in which selection into overemployment, unconstrained hours, and underemployment is separately estimated each year from an ordered probit model. As measured by the local unemployment rate, transitory business cycle movements have no effect on the incidence of dual job holding. However, a sustained change in the local unemployment rate reduces the incidence of dual job holding among workers who are not hours constrained on their main jobs.
    Keywords: dual job, labor supply, hours constraint, business cycle
    JEL: J01 J22 J49
    Date: 2019–06
  19. By: Iader Giraldo; Ricardo Arguello; Nataly Herrera
    Abstract: The idea that a trade-off exists between current levels of consumption and future levels of human capital is modeled. As shocks in international commodity prices affect income and modify the optimal consumption basket, household members adjust their time preferences between school and work. As a result, the dynamics of human-capital accumulation may be affected and, in cases in which commodity production and trade play a significant role in the economy, such dynamics may also have an impact on economic growth and the composition of economic sectors. Using a dynamic CGE model and Colombian macroeconomic data, we showed how shocks in commodity prices determined households’ educational demands and, at the same time, the composition of the labor market.
    Keywords: Commodity Booms, Human Capital, CGE modeling, Colombia
    JEL: C68 I25 J24 O13
    Date: 2019
  20. By: Nir Jaimovich; Sergio Rebelo; Arlene Wong; Miao Ben Zhang
    Abstract: We study the impact on the skill premium of increases in the quality of goods consumed by households (“trading up”). Our empirical work shows that high- quality goods are more intensive in skilled labor than low-quality goods and that household spending on high-quality goods rises with income. We propose a model consistent with these facts. This model accounts for the past rise in the skill premium with more plausible rates of skill-biased technical change than those required by the canonical model. It also implies that an expansion of the skilled labor force reduces the skill premium by much less than in the canonical model.
    JEL: J2 O4
    Date: 2019–06
  21. 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: basic and quality child care; gender gaps; Social norms; women's career choices
    JEL: D13 H23 J16 J22
    Date: 2019–06
  22. By: Nicola Bianchi; Michela Giorcelli
    Abstract: This paper studies the effects of university STEM education on innovation and labor market outcomes by exploiting a change in enrollment requirements in Italian STEM majors. University-level scientific education had two direct effects on the development of patents by students who had acquired a STEM degree. First, the policy changed the direction of their innovation. Second, it allowed these individuals to reach top positions within firms and be more involved in the innovation process. STEM degrees, however, also changed occupational sorting. Some higher-achieving individuals used STEM degrees to enter jobs that required university-level education, but did not focus on patenting.
    JEL: I21 I25 I28 J24 O30
    Date: 2019–06
  23. By: J. Aislinn Bohren; Kareem Haggag; Alex Imas; Devin G. Pope
    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. Specifically, 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.
    JEL: D90 J71
    Date: 2019–06
  24. By: Guido Friebel; Matthias Heinz; Mitchell Hoffman; Nick Zubanov
    Abstract: Employee referral programs (ERPs) are randomly introduced in a grocery chain. Larger bonuses increase referrals and decrease referral quality, though the increase in referrals is modest. Still, ERPs are highly profitable, partly, because referrals stay longer than non-referrals, but, mainly, because non-referrals stay longer in treated stores than in control stores. In a post-RCT firmwide ERP rollout, referral rates remain low for grocery jobs, but are high for non-grocery jobs, which are perceived as more attractive. Our results (1) are consistent with referral-making being driven by money and altruism toward friends; (2) show that ERPs can have substantial benefits beyond generating referrals. The most-supported mechanism for (2) is that workers value being involved in hiring.
    JEL: J24 J30 J63 M51
    Date: 2019–06
  25. By: Stuart, Bryan (George Washington University)
    Abstract: This paper examines the long-run effects of the 1980-1982 recession on education and income. Using confidential Census data, I estimate difference-in-differences regressions that exploit variation across counties in recession severity and across cohorts in age at the time of the recession. For individuals age 0-10 in 1979, a 10 percent decrease in earnings per capita in their county of birth reduces four-year college degree attainment by 10 percent and income in adulthood by 3 percent. Simple calculations suggest that, in aggregate, the 1980-1982 recession led to 0.8-1.8 million fewer college graduates and $42-$87 billion less earned income per year.
    Keywords: human capital, education, income, recessions
    JEL: E32 I20 I30 J13 J24
    Date: 2019–06
  26. By: Palermo Kuss, Ana Helena
    Abstract: Inspired by Fröhlich and Oppenheimer (1990), an experimental survey in the lab was designed to find out if preferences for three different redistribution schemes differ under a veil of ignorance. The three schemes are a stylized version of the status quo German welfare state (A), a control scheme without income taxation and redistribution (B) and one in which a flat tax-financed basic income is paid to all (C). Furthermore, the study investigates whether the introduction of a basic income induces a decrease in the time allocation to paid and unpaid work. The results point to no significant difference in allocated working hours between A and C. Concerning preferences, access to information on implications of schemes and self-interest played a central role in their definition.
    Keywords: lab experiment,basic income,welfare state,Germany,time allocation,constitutional economics,labor supply
    JEL: C91 I38 J22
    Date: 2019
  27. By: Fischer, Benjamin; Jessen, Robin; Steiner, Viktor
    Abstract: Using information on desired and actual hours of work, we formulate a discrete choice model of constrained labor supply. Using the German Socio-Economic Panel and the microsimulation model STSM, we find that hours and participation elasticities are substantially smaller than those in the conventional model. We evaluate two reforms for Germany. Both redistribute to the working poor. The first reform is financed through an increase in the effective marginal tax rate for welfare recipients, the second through an increase in taxes. The first reform is desirable with equal weights, the second if the social planner has substantial redistributive taste.
    Keywords: Tax-benefit systems,Household labor supply,Labor market constraints,Involuntary unemployment,Marginal cost of public funds
    JEL: J22 H21 D10
    Date: 2019
  28. By: Meara, Katie; Pastore, Francesco; Webster, Allan
    Abstract: This study examines the gender wage gap in the US using two separate cross-sections from the Current Population Survey (CPS). The extensive literature on this subject includes papers which use wage decompositions to divide gender wag gaps into “explained” and “unexplained” components. Problems with this approach include the heterogeneity of the sample data. In order to address the difficulties of comparing like with like this study uses a number of different matching techniques to obtain estimates of the gap. By controlling for a wide range of other influences, in effect, we estimate the direct effect of simply being female on wages. However, to form a complete picture, one should consider that gender wages are affected by a number of other factors such as parenthood, gender segregation, part-time working and unionization. This means that it is not just the core “like for like” comparison between male and female wages that matters but also how gender wage differences interact with other relevant risk factors which are more common for women. That these interactions exist has already been discussed in the literature but evidence that precisely or systematically estimates such effects remains scarce. The most innovative contribution of this study is to do that. Our findings imply that the idea of a single uniform gender pay gap is perhaps less useful than an understanding of how gender wages are shaped by multiple different forces.
    Keywords: gender pay,Current Population Survey,part-time working,gender segregation,unionization,sample selection bias,matching,IPWRA,USA
    JEL: C31 J16 J31
    Date: 2019
  29. 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.
    JEL: I20 J45 J51
    Date: 2019–06
  30. By: Michael J. Pries; Richard Rogerson
    Abstract: Using the Quarterly Workforce Indicators, we document that a significant amount of the decline in labor market turnover during the last two decades is accounted for by the decline in employment spells that last less than a quarter. Using a search and matching model that incorporates noisy signals about the quality of a worker-firm match, we show that improved candidate screening by firms can account for the decline in short-lived employment spells. Quantitative exercises show that this explanation can account for the observed changes in various labor market outcomes, whereas alternative potential explanations, such as increased hiring costs, cannot.
    JEL: E24 J23
    Date: 2019–06

This nep-lma issue is ©2019 by Joseph Marchand. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.