nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2019‒11‒04
sixteen papers chosen by
Joseph Marchand
University of Alberta

  1. O Youth and Beauty: Children’s Looks and Children’s Cognitive Development By Daniel S. Hamermesh; Rachel A. Gordon; Robert Crosnoe
  2. The Return to Education in the Mid-20th Century: Evidence from Twins By James J. Feigenbaum; Hui Ren Tan
  3. Earning dynamics in Sweden: The recent evolution of permanent inequality and earnings volatility By Gustafsson, Johan; Holmberg, Johan
  4. The EITC and the Extensive Margin: A Reappraisal By Henrik Kleven
  5. Political Alignment and Bureaucratic Pay By Jon H. Fiva; Benny Beys; Tom-Reiel Heggedal; Rune J. Sørensen
  6. Child labor under cash and in-kind transfers: evidence from rural Mexico By Federico Tagliati
  7. Do informational nudges alter firms’ hiring behavior of older workers? By Homrighausen, Pia; Lang, Julia
  8. Measuring and Explaining Management in Schools: New Approaches Using Public Data By Clare Leaver; Renata Lemos; Daniela Scur
  9. Behind the headline number: Why not to rely on Frey and Osborne’s predictions of potential job loss from automation By Michael Coelli; Jeff Borland
  10. Demand Conditions and Worker Safety: Evidence from Price Shocks in Mining By Kerwin Kofi Charles; Matthew S. Johnson; Melvin Stephens Jr.; Do Q. Lee
  11. The Impact of the Heterogeneity of Employees’ Qualifications on Firm-level Innovation Evidence from Nigerian Firms By Medase, Kehinde
  12. Early child care and maternal employment: empirical evidence from Germany By Zimmert, Franziska
  13. Women and the labour market in East and West Germany: The role of socialist legacy and pre-socialist tradition By Wyrwich, Michael
  14. Does admission to elite engineering school make a difference? By Kuuppelomäki, Tiina; Kortelainen, Mika; Suhonen, Tuomo; Virtanen, Hanna
  15. Teacher Professional Development around the World: The Gap between Evidence and Practice By Anna Popova; David K. Evans; Mary E. Breeding; Violeta Arancibia
  16. Robots, Reshoring, and the Lot of Low-Skilled Workers By Krenz, Astrid; Strulik, Holger; Prettner, Klaus

  1. By: Daniel S. Hamermesh; Rachel A. Gordon; Robert Crosnoe
    Abstract: We use data from the 11 waves of the U.S. Study of Early Child Care and Youth Development 1991-2005, following children from ages 6 months through 15 years. Observers rated videos of them, obtaining measures of looks at each age. Given their family income, parents’ education, race/ethnicity and gender, being better-looking raised subsequent changes in measurements of objective learning outcomes. The gains imply a long-run impact on cognitive achievement of about 0.04 standard deviations per standard deviation of differences in looks. Similar estimates on changes in reading and arithmetic scores at ages 7, 11 and 16 in the U.K. National Child Development Survey 1958 cohort show larger effects. The extra gains persist when instrumenting children’s looks by their mother’s, and do not work through teachers’ differential treatment of better-looking children, any relation between looks and a child’s behavior, his/her victimization by bullies or self-confidence. Results from both data sets show that a substantial part of the economic returns to beauty result indirectly from its effects on educational attainment. A person whose looks are one standard deviation above average attains 0.4 years more schooling than an otherwise identical average-looking individual.
    JEL: I24 I26 J71
    Date: 2019–10
  2. By: James J. Feigenbaum; Hui Ren Tan
    Abstract: What was the return to education in the United States at mid-century? In 1940, the correlation between years of schooling and earnings was relatively low, less than it had been in 1915 or than it would be in later decades. In this paper, we estimate the causal return to schooling in 1940, constructing a large linked sample of twin brothers to account for differences in unobserved ability and family background. Though imperfect, the twins identification strategy allows us to compare the return to education to recent studies implemented similarly. We find that the return to education was relatively low in 1940, with each additional year of schooling increasing labor earnings by approximately 4%. Returns to education were evident both within and across occupations and were higher for sons born to lower SES families.
    JEL: J2 J3 N3 N32
    Date: 2019–10
  3. By: Gustafsson, Johan (Department of Economics, Umeå University); Holmberg, Johan (Department of Economics, Umeå University)
    Abstract: This paper analyzes the dynamics of earnings over the life-cycle, based on Swedish data, and the evolution of permanent and transitory earnings inequality for 2002-2015. We use data on earnings from administrative records gathered in the ASTRID database. We find that features of the data does not match the predictions of the heterogeneous or restricted income profile models commonly applied in the earning dynamics literature and estimate an alternative permanent- transitory (PT) error components model. Analyzing the covariance structure of both male and female earnings, controlling for educational background, we find that the upward trend in permanent earnings inequality observed in Sweden during the 1990s does not seem to continue during the 2000s, and the financial crisis of 2008 did not have any major impact on the variability of earnings. We further simulate the accumulation of income pension entitlements and find that variations in pension entitlements is smaller among college educated workers.
    Keywords: Permanent-transitory; Income pension entitlements; earning dynamics; life-cycle inequality
    JEL: D31 H55 J30
    Date: 2019–10–22
  4. By: Henrik Kleven
    Abstract: This paper reconsiders the impact of the Earned Income Tax Credit (EITC) on labor supply at the extensive margin. I investigate every EITC reform at the state and federal level since the inception of the policy in 1975. Based on event studies comparing single women with and without children, or comparing single mothers with different numbers of children, I show that the only EITC reform associated with clear employment increases is the expansion enacted in 1993. The employment increases in the mid-late nineties are very large, but they are influenced by the confounding effects of welfare reform and a booming macroeconomy. Based on different approaches that exploit variation in these confounders across household type, space and time, I show that the employment effects align closely with exposure to welfare reform and the business cycle. Single mothers who were unaffected by welfare reform (but eligible for the EITC) did not respond. Overall and contrary to consensus, the case for sizable extensive margin effects of the EITC is fragile. I highlight the presence of informational frictions, widely documented in the literature, as a natural explanation for the absence of extensive margin responses.
    JEL: H20 H24 H31 J20 J21 J22
    Date: 2019–10
  5. By: Jon H. Fiva; Benny Beys; Tom-Reiel Heggedal; Rune J. Sørensen
    Abstract: We study the private gains to bureaucrats from their political alignment with elected politicians. Whereas existing studies generally rely on proxies for politician-bureaucrat political alignment, a rare feature of our data allows measuring it directly since 27% of bureaucrats ran for political office. We focus explicitly on individuals at the very top of the administrative hierarchy, and are able to separate the intensive margin (i.e. wage increases) from any additional effects at the extensive margin (i.e. new appointments). Using close elections for inference, we find that politician-bureaucrat alignment significantly increases top bureaucrats’ wage even in the Norwegian civil service system. Our results go against predictions from models with policy-motivated bureaucrats, but are consistent with politically aligned principal-agent matches being more productive.
    Keywords: bureaucracy, civil service, remuneration, principal-agent, ally principle
    JEL: D73 H70 J41
    Date: 2019
  6. By: Federico Tagliati (Banco de España)
    Abstract: This paper studies the effects of cash versus in-kind transfers on child labor. Using data from a program which randomly transferred either cash or a basket of food to poor households in Mexico, I find that the cash transfer reduced children’s work participation by a significantly larger margin than the in-kind transfer. Both transfers had large negative effects on child labor among recipients in the middle tertile of the income distribution. However, the in-kind transfer did not reduce child labor among children in the bottom tertile, whereas the cash transfer did. Moreover, transfer recipients in different income tertiles adjust child labor on different margins (extensive versus intensive). I show that the different margins of adjustment across the income distribution can be rationalized by a model in which preferences for schooling respect a luxury axiom and the household could forego child labor earnings only when the transfer pushes consumption above subsistence.
    Keywords: cash transfers, in-kind transfers, child labor, schooling
    JEL: D61 H23 H43 I38
    Date: 2019–10
  7. By: Homrighausen, Pia; Lang, Julia
    JEL: D83 J21 J23 J64 J78
    Date: 2019
  8. By: Clare Leaver; Renata Lemos; Daniela Scur
    Abstract: Why do some students learn more in some schools than others? One consideration receiving growing attention is school management. To study this, researchers need to be able to measure school management accurately and cheaply at scale, and also explain any observed relationship between school management and student learning. This paper introduces a new approach to measurement using existing public data, and applies it to build a management index covering 15,000 schools across 65 countries, and another index covering nearly all public schools in Brazil. Both indices show a strong, positive relationship between school management and student learning. The paper then develops a simple model that formalizes the intuition that strong management practices might be driving learning gains via incentive and selection effects among teachers, students and parents. The paper shows that the predictions of this model hold in public data for Latin America, and draws out implications for policy.
    Keywords: management, teacher selection, teacher incentives, cross-country
    JEL: M5 I2 J3
    Date: 2019–10
  9. By: Michael Coelli (Department of Economics, The University of Melbourne); Jeff Borland (Department of Economics, The University of Melbourne)
    Abstract: We review a highly influential study that estimated potential job loss from advances in Artificial Intelligence and robotics: Frey and Osborne (FO) (2013, 2017) concluded that 47 per cent of jobs in the United States were at ‘high risk’ of automation in the next 10 to 20 years. First, we investigate FO’s methodology for estimating job loss. Several major problems and limitations are revealed; especially associated with the subjective designation of occupations as fully automatable. Second, we examine whether FO’s predictions can explain occupation-level changes in employment in the United States from 2013 to 2018. Compared to standard approaches which classify jobs based on their intensity in routine tasks, FO’s predictions do not ‘add value’ for forecasting the impact of technology on employment.
    Keywords: employment; technology; prediction; job loss; AI and robotics
    JEL: J21 O33
    Date: 2019–10
  10. By: Kerwin Kofi Charles; Matthew S. Johnson; Melvin Stephens Jr.; Do Q. Lee
    Abstract: We investigate how demand conditions affect employers' provision of safety - something about which theory is ambivalent. Positive demand shocks relax financial constraints that limit safety investment, but simultaneously raise the opportunity cost of increasing safety rather than production. We study the U.S. metals mining sector, leveraging exogenous demand shocks from short-term variation in global commodity prices. We find that positive price shocks substantially increase workplace injury rates and safety regulation non-compliance. While these results indicate the general dominance of the opportunity cost effect, shocks that only increase mines' cash-flow lower injury rates, illustrating that financial constraints also affect safety.
    JEL: J23 J28
    Date: 2019–10
  11. By: Medase, Kehinde
    JEL: O31 I23 J24 O55
    Date: 2019
  12. By: Zimmert, Franziska
    JEL: J21 J22
    Date: 2019
  13. By: Wyrwich, Michael
    JEL: J16 J22 J23 N34 P25 P30 R23
    Date: 2019
  14. By: Kuuppelomäki, Tiina; Kortelainen, Mika; Suhonen, Tuomo; Virtanen, Hanna
    Abstract: This paper explores the effects of university quality in STEM education by examining the consequences of admission to Finland’s most competitive engineering school for students' performance in their studies and the labor market. Using data from the centralized admission system for engineering degree programs, we estimate these effects for marginally admitted elite school applicants who also applied to and had the opportunity to be admitted to a less competitive engineering school. Our results show that being accepted by the elite engineering school leads to a more advantaged initial peer group and a sharply higher probability of eventually graduating from that elite school but does not, on average, result in significantly better early-career labor market outcomes. However, we find that admission to the elite school significantly increases the earnings of students whose parents are not highly educated.
    Keywords: return to school quality, higher education, STEM, regression discontinuity design, Labour markets and education, I23, I26, J24,
    Date: 2019
  15. By: Anna Popova (Stanford University); David K. Evans (Center for Global Development); Mary E. Breeding (World Bank); Violeta Arancibia (World Bank)
    Abstract: Many teachers in low- and middle-income countries lack the skills to teach effectively, and professional development (PD) programs are the principal tool that governments use to upgrade those skills. At the same time, few PD programs are evaluated, and those that are evaluated show highly varying results. In this paper, we propose a set of indicators—the In-Service Teacher Training Survey Instrument—to standardize reporting on teacher PD programs. Applying the instrument to 33 rigorously evaluated PD programs, we find that programs that link participation to career incentives, have a specific subject focus, incorporate lesson enactment in the training, and include initial face-to-face training tend to show higher student learning gains. In qualitative interviews, program implementers also report follow-up visits as among the most effective characteristics of their professional development programs. We then use the instrument to present novel data on a sample of 139 government-funded, at-scale professional development programs across 14 countries. The attributes of most at-scale teacher professional development programs differ sharply from those of programs that evidence suggests are effective, with fewer incentives to participate in PD, fewer opportunities to practice new skills, and less follow-up once teachers return to their classrooms.
    Keywords: Education quality, teacher training, professional development, economic development
    JEL: I20 J24 O10
    Date: 2019–09–27
  16. By: Krenz, Astrid; Strulik, Holger; Prettner, Klaus
    JEL: F13 F62 J31 O33
    Date: 2019

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.