nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2019‒09‒16
twelve papers chosen by
Joseph Marchand
University of Alberta

  1. Are Foreign Stem PhDs More Entrepreneurial? Entrepreneurial Characteristics, Preferences and Employment Outcomes of Native and Foreign Science & Engineering PhD Students By Michael Roach; Henry Sauermann; John Skrentny
  2. Toward an Understanding of Corporate Social Responsibility: Theory and Field Experimental Evidence By Daniel Hedblom; Brent R. Hickman; John A. List
  3. Gender Differences in Self-employment Duration: the Case of Opportunity and Necessity Entrepreneurs By Adela Luque; Maggie R. Jones
  4. Do Digital Skill Certificates Help New Workers Enter the Market? Evidence from an Online Labour Platform By Otto Kässi; Vili Lehdonvirta
  5. Impact of Defaults in Retirement Saving Plans: Public Employee Plans By Robert L. Clark; Denis Pelletier
  6. Restrictions of fixed term employment contracts: Evidence from a German reform By Brüll, Eduard
  7. The Baby Year Parental Leave Reform in the GDR and Its Impact on Children's Long-Term Life Satisfaction By Katharina Heisig; Larissa Zierow
  8. Industrial wages in mid-1880s Sweden: estimations beyond Bagge’s Wages in Sweden. Data, source and methods By Hamark, Jesper; Collin, Kristoffer
  9. Location, industry structure and (the lack of) locally specific knowledge: On the diverging development of rural areas in Germany's East and West By Anne Margarian; Christian Hundt
  10. Leave-out Estimation of Variance Components By Patrick Kline; Raffaele Saggio; Mikkel Sølvsten
  11. Working for a Living? Women and Children’s Labour Inputs in England, 1260-1850 By Sara Horrell; Jane Humphries; Jacob Weisdorf
  12. The Well-meaning Economist By Adam Gorajek

  1. By: Michael Roach; Henry Sauermann; John Skrentny
    Abstract: Prior research has shown that immigrants make important contributions to US innovation and are more likely than natives to become entrepreneurs. However, there is little evidence on how foreign and native high-skilled workers differ prior to entering the workforce. Moreover, little attention has been paid to distinguishing between founders and employees who join startups. We draw on a longitudinal survey of over 5,600 foreign and native STEM PhD students at U.S. research universities to examine entrepreneurial characteristics and career preferences prior to graduation, as well as founding and employment outcomes after graduation. First, we find that foreign PhD students differ from native PhD students with respect to individual characteristics typically associated with entrepreneurship such as risk tolerance, a preference for autonomy, and interest in commercialization. Second, foreign PhD students are more likely to express intentions to become a founder or a startup employee prior to graduation. Third, despite their entrepreneurial career interests, foreign PhDs are less likely to become founders or startup employees in their first industry job after graduation. These patterns call for future research on factors that enable or constrain foreign STEM workers from realizing their entrepreneurial career aspirations.
    JEL: I23 J0 J24 J44 J48 O3
    Date: 2019–09
  2. By: Daniel Hedblom; Brent R. Hickman; John A. List
    Abstract: We develop theory and a tightly-linked field experiment to explore the supply side implications of corporate social responsibility (CSR). Our natural field experiment, in which we created our own firm and hired actual workers, generates a rich data set on worker behavior and responses to both pecuniary and CSR incentives. Making use of a novel identification framework, we use these data to estimate a structural principal-agent model. This approach permits us to compare and contrast treatment and selection effects of both CSR and financial incentives. Using data from more than 1100 job seekers, we find strong evidence that when a firm advertises work as socially-oriented, it attracts employees who are more productive, produce higher quality work, and have more highly valued leisure time. In terms of enhancing the labor pool, for example, CSR increases the number of applicants by 25 percent, an impact comparable to the effect of a 36 percent increase in wages. We also find an economically important complementarity between CSR and wage offers, highlighting the import of using both to hire and motivate workers. Beyond lending insights into the supply side of CSR, our research design serves as a framework for causal inference on other forms of non-pecuniary incentives and amenities in the workplace, or any other domain more generally.
    JEL: C14 C93 J3 J33 J44 L21 M52
    Date: 2019–09
  3. By: Adela Luque; Maggie R. Jones
    Abstract: A strand of the self-employment literature suggests that those “pushed” into self-employment out of necessity may perform differently from those “pulled” into self-employment to pursue a business opportunity. While findings on self-employment outcomes by self-employed type are not unanimous, there is mounting evidence that performance outcomes differ between these two self-employed types. Another strand of the literature has found important gender differences in self-employment entry rates, motivations for entry, and outcomes. Using a unique set of data that links the American Community Survey to administrative data from Form 1040 and W-2 records, we bring together these two strands of the literature. We explore whether there are gender differences in self-employment duration of self-employed types. In particular, we examine the likelihood of self-employment exit towards unemployment versus the wage sector for five consecutive entry cohorts, including two cohorts who entered self-employment during the Great Recession. Severely limited labor-market opportunities may have driven many in the recession cohorts to enter self-employment, while those entering self-employment during the boom may have been pursuing opportunities under favorable market conditions. To more explicitly test the concept of “necessity” versus “opportunity” self-employment, we also examine the wage labor attachment (or weeks worked in the wage sector) in the year prior to becoming self-employed. We find that, within the cohorts we examine, there are gender differences in the rate at which men and women depart self-employment for either wage work or non-participation, but that the patterns are dependent on pre self-employment wage-sector attachment and cohort effects.
    Keywords: Self-employment, gender differences, gender, entrepreneurship, necessity entrepreneur, opportunity entrepreneur, self-employment duration, Great Recession.
    JEL: J15 J20 J24 L26 M13
    Date: 2019–09
  4. By: Otto Kässi; Vili Lehdonvirta
    Abstract: We study the effects of a voluntary skill certification scheme in an online freelancing labour market. We show that obtaining skill certificates increases freelancers’ earnings. This effect is not driven by increased freelancer productivity but by decreased employer uncertainty. The increase in freelancer earnings is mostly realised through an increase in the value of the projects won rather than an increase in the number of projects won. Moreover, we find evidence for negative selection to completing skill certificates, which suggests that the freelancers who complete more skill certificates are in a more disadvantaged position in the labour market.
    Keywords: signaling, human capital, skill validation, skill certificates, micro-credentials, online freelancing, platforms, gig economy, computer-based assessment
    JEL: J21 J23 J24 J31 I20
    Date: 2019
  5. By: Robert L. Clark; Denis Pelletier
    Abstract: This study examines the impact of the adoption automatic enrollment provisions by the state of South Dakota for its supplemental retirement saving plan (SRP). In South Dakota, state and local government employees, including teachers, are also covered by a defined benefit pension plan and by Social Security. Thus, career public employees in South Dakota can expect a life time annuity from these two programs of around 75 percent of their final salary. Prior to the introduction of automatic enrollment, the proportion of newly hired employees who were contributing to the SRP was less than three percent in their first year of employment. After the introduction of automatic enrollment, over 90 percent of newly hired workers who were auto enrolled were participating in the plan. Significant differences compared to earlier studies of auto enrollment include: we are examining public employees who are also covered by a defined benefit retirement plan, prior to the introduction of auto enroll participation were extremely low, and these is no employer match to employee contributions to the SRP. Thus, the key question is whether auto enrollment has the same powerful impact on contributions to a retirement saving plan under these conditions.
    JEL: J18 J26 J45
    Date: 2019–09
  6. By: Brüll, Eduard
    Abstract: This paper examines the impact of legal restrictions on fixed-term contracts on employment, wages and the careers of labour market entrants. Specifically, I analyse a 2001 German reform that made it more difficult for establishments that are not subject to employment protection to hire workers on fixed-term contracts. Using a Difference-in-Differences approach, which compares establishments subject to employment protection with those that are not both before and after the reform, I find that the reform has reduced the use of fixed-term contracts, but has not markedly changed net employment. However, the reform has had positive effects on the career stability of post-reform labour market entrants.
    Keywords: Fixed-Term Contracts,Employment Protection,Labour Market Segmentation,Germany
    JEL: J21 J41 J68
    Date: 2019
  7. By: Katharina Heisig; Larissa Zierow
    Abstract: This article investigates the effects of an increase in paid parental leave — twelve months instead of six months — on children’s long-term life satisfaction. The historical setting under study, namely the former German Democratic Republic (GDR), allows us to circumvent problems of selection of women into the labor market and an insufficient or heterogeneous non-parental child care supply, which are issues many other studies on parental leave reforms face. Using data from the German Socio-Economic Panel (SOEP) we analyze the birth cohorts from 1980 to 1989 at adult age, and apply a difference-in-difference design making use of the very specific timing of the GDR’s parental leave reforms in 1976 and 1986. We find significant and robust positive parental leave effects on life satisfaction. We also analyze whether the increase in life satisfaction is driven by a positive development of personality, health factors, schooling or labor market outcomes. Our results suggest that the increase in life satisfaction might be partially explained by personality development for individuals from low socioeconomic backgrounds and boys. For individuals from high socioeconomic backgrounds, it might be driven by a better health.
    Keywords: parental leave, child care, child development, well-being, happiness, socio-emotional development
    JEL: J13 J22 I31
    Date: 2019
  8. By: Hamark, Jesper (Department of Economic History, School of Business, Economics and Law, Göteborg University); Collin, Kristoffer (Department of Economic History, School of Business, Economics and Law, Göteborg University)
    Abstract: Most researchers interested in Swedish wages during early industrialization have used the seminal work Wages in Sweden from the 1930s as their point of departure. Whereas the material in Wages in Sweden solidly tracks the movements of wages, it is not suitable for comparisons across industries or counties at a specific point in time. Nor should Wages in Sweden be used to estimate wages in absolute levels. Based on hitherto-unused source material from a large, nationwide public inquiry, we estimate industrial wages in the mid-1880s. The population consists of industrial workers with different experience, skills and firm attachment. Our estimations include a national wage as well as inter-industry and inter-regional wages in both absolute and relative terms, weighted by employment. The findings call for a substantial revision of relative wages across industries. They also indicate that the wage dispersion across industries and counties was lower than previously thought. We estimate the national wage for women as being half the size of that of men.
    Keywords: Sweden 1880s; industrial wages; regional wages; absolute wage levels; relative wages; male and female wages; Gösta Bagge; Wages in Sweden
    JEL: J31 N01 N30
    Date: 2019–09–01
  9. By: Anne Margarian (Thuenen Institute of Rural Studies, Braunschweig); Christian Hundt (Thuenen Institute of Rural Studies, Braunschweig)
    Abstract: Some rural regions in Western Germany have experienced a very positive economic development in terms of employment and incomes in the past decade. This development, however, is in sharp contrast to the the enduring economic lag of many rural regions in Eastern Germany. This paper seeks to find out, to what extent these differences in employment development can be explained by sectoral patterns and region-specific capacities and capabilities. We employ an extended shift-share regression model that explains the employment development in German districts between 2007 and 2016. The model differentiates between Western and Eastern German regions as well as between urban and rural regions by means of spatial location effects. This specification helps us to capture both: the historically evolved differences inherent in the socialist and capitalist past of Eastern and Western Germany and the varying economic environments in urban and rural areas. The extended shift-share regression confirms that simple industry effects, i.e. linear effects of industry shares, only explain a small part of the differences in employment development between rural regions. Most deviations are instead captured in the competitive share effects (CSE) that represents how employment development in a region systematically deviates from the average development of its industries at national level. Further analyses of the CSE reveal that the manufacturing sector, despite its general loss in employment shares, is of crucial importance for rural prosperity. In this regard, the apparent disadvantage of rural districts in Germany’s East can be explained by a lack of locally specific, complementary immobile production capacities and capabilities for manufacturing. These locally specific skills develop endogenously. Urban districts in the East, in contrast, do not have to rely on endogenous factors alone but may overcome their historical disadvantage if they manage to exploit their agglomeration advantages in order to attract knowledge intensive industries and high-skilled workers.
    Keywords: rural regions, urban regions, East Germany, West Germany, employment development, structural change, industry structure, spatial externalities, shift share regression
    JEL: O14 O18 R11
    Date: 2019–09
  10. By: Patrick Kline; Raffaele Saggio; Mikkel Sølvsten
    Abstract: We propose leave-out estimators of quadratic forms designed for the study of linear models with unrestricted heteroscedasticity. Applications include analysis of variance and tests of linear restrictions in models with many regressors. An approximation algorithm is provided that enables accurate computation of the estimator in very large datasets. We study the large sample properties of our estimator allowing the number of regressors to grow in proportion to the number of observations. Consistency is established in a variety of settings where plug-in methods and estimators predicated on homoscedasticity exhibit first-order biases. For quadratic forms of increasing rank, the limiting distribution can be represented by a linear combination of normal and non-central χ 2 random variables, with normality ensuing under strong identification. Standard error estimators are proposed that enable tests of linear restrictions and the construction of uniformly valid confidence intervals for quadratic forms of interest. We find in Italian social security records that leave-out estimates of a variance decomposition in a two-way fixed effects model of wage determination yield substantially different conclusions regarding the relative contribution of workers, firms, and worker-firm sorting to wage inequality than conventional methods. Monte Carlo exercises corroborate the accuracy of our asymptotic approximations, with clear evidence of non-normality emerging when worker mobility between blocks of firms is limited.
    JEL: C1 J31
    Date: 2019–09
  11. By: Sara Horrell; Jane Humphries; Jacob Weisdorf
    Abstract: We use new estimates of men, women, and children’s wages in combination with cost-of-living indices to explore family living standards across six centuries of English history. A family perspective enables us to quantify the labour inputs required from women and children in circumstances when men’s earnings alone were insufficient to secure a decent standard of living, and so to register the historical relevance of the male breadwinner model. We employ a life-cycle approach where pre-marital savings help married couples manage increasing numbers of dependent children as well as other periods of economic pressure. We find that the male breadwinner model was generally insufficient for a ‘respectable’ standard of living; women and sometimes children were required to contribute and, even then, couples still faced poverty during old age. However, with the exception of the pre-Black Death period and the first half of the 17th-century, child labour was not essential and in the early modern era and old-age poverty was in retreat. We reconcile our findings with evidence of a surge in child-labour in the late 1700s and early 1800s, with reference to early modern economic growth, and its association with industriousness and consumerism, twin developments which served to stimulate the Industrial Revolution.
    Keywords: Living Standards; Prices, Wages
    JEL: J22 N13 O10
    Date: 2019–08–30
  12. By: Adam Gorajek (Reserve Bank of Australia)
    Abstract: Economists usually inform policymakers with conclusions that come from studying the conditional expectation, i.e. arithmetic mean, of some potential outcome. But there are other means to study, from the same 'quasilinear' family. And they can support very different conclusions. In trade research, for instance, studying other means can transform the perceived roles of colonial history, geography, and trade wars. In wages research, studying other means can reverse perceived earnings differentials between groups. Similar scenarios will be common in other tasks of policy evaluation and forecasting. To choose means well I propose selection criteria, which also consider options that are outside of the quasilinear family, such as quantiles. Optimal choices are application-specific and ideally accommodate the preferences of the relevant policymaker. In the wages case, policymaker aversion to inequality makes it sensible to reject the arithmetic mean for another quasilinear one.
    Keywords: policy evaluation; forecasting; quasilinear mean; expected utility; loss function; power transformation; gravity model; inverse hyperbolic sine
    JEL: C10 F10 J30
    Date: 2019–09

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