nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2019‒12‒02
seventeen papers chosen by
Joseph Marchand
University of Alberta

  1. Is the pay of medical specialists in New Zealand gender biased? By Isabelle Sin; Bronwyn Bruce-Brand
  3. Does Workplace Competition Increase Labor Supply? Evidence from a Field Experiment By Amalia R. Miller; Ragan Petrie; Carmit Segal
  4. Employment Protection and Firm-Provided Training: Quasi-Experimental Evidence from a Labour Market Reform By Bratti, Massimiliano; Conti, Maurizio; Sulis, Giovanni
  5. Parental Labour Supply Responses to the Abolition of Day Care Fees By Huebener, Mathias; Pape, Astrid; Spiess, C. Katharina
  6. Does Intergenerational Mobility Increase Corporate Profits? By James F. Albertus; Michael Smolyansky
  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. Endogenous Local Labour Markets, Regional Aggregation and Agglomeration Economies By Meekes, Jordy; Hassink, Wolter
  9. Opioids and the Labor Market By Aliprantis, Dionissi; Fee, Kyle; Schweitzer, Mark E.
  10. Selection with Variation in Diagnostic Skill: Evidence from Radiologists By David C. Chan Jr; Matthew Gentzkow; Chuan Yu
  11. Measuring the “gig” economy: Challenges and options By Lynn Riggs; Isabelle Sin; Dean Hyslop
  12. Impacts of hospital wait time on patient health and labor supply By Anna Godøy; Venke Furre Haaland; Ingrid Huitfeldt; Mark Votruba
  13. The Myth of Equal Opportunity in Germany? By Valentina S. Consiglio; Denisa M. Sologon
  14. A New Strategy to Identify Causal Relationships: Estimating a Binding Average Treatment Effect By Das, Tirthatanmoy; Polachek, Solomon
  15. The Decomposability of the Nash Bargaining Solution in Labor Markets By Claus-Jochen Haake; Thorsten Upmann; Papatya Duman
  16. The Mental Health Effects of Retirement By Picchio, Matteo; van Ours, Jan C.
  17. What Makes an Employer? By Marco Caliendo; Frank M. Fossen; Alexander S. Kritikos

  1. By: Isabelle Sin (Motu Economic and Public Policy Research); Bronwyn Bruce-Brand (Motu Economic and Public Policy Research)
    Abstract: We use individual-level data from the 2013 New Zealand Census combined with administrative income data from the tax system to estimate the gender gap in hourly pay for the population of medical specialists employed in the New Zealand public health system. Unionisation of these doctors is 90 percent, and their union’s MECA specifies their pay rates, which should limit the opportunities for a gender pay gap to arise. Nevertheless, we find that in their public health system employment female specialists earn an average of 12.5 percent less than their male counterparts of the same age, with the same specialty, and who work the same number of hours each week. This wage gap is larger for older ages, among those who work fewer hours each week, and for parents. Controlling for gender differences in experience at the same age decreases the estimated gender wage gap by no more than 20 percent. Our findings are consistent with male medical specialists being placed on higher salary steps than equally experienced female specialists, or males disproportionately receiving additional payments beyond the MECA minimum.
    Keywords: gender wage gap, gender pay gap, gender inequality, medical specialists, doctors, District Health Boards, New Zealand, Association of Salaried Medical Specialists
    JEL: I11 J16 J31 J45 J52 J71
    Date: 2019–11
  2. By: Claudia Pigini (Dipartimento di Scienze Economiche e Sociali - Universita' Politecnica delle Marche); Stefano Staffolani (Dipartimento di Scienze Economiche e Sociali - Universita' Politecnica delle Marche)
    Abstract: A recent reform in the Italian labour market has modified the permanent contract by reducing firing costs. Using a discontinuity in the application of the reform, we evaluate its the effect on the probability of being still employed 600 days later. In contrast with theoretical predictions, we find that the job survival probability is not smaller for the treated and even significantly larger in some cases. We investigate the composition of permanent workers hired after the reform, as we find evidence of treated firms hiring workers eligible for a significant reduction of non-wage labour costs.
    Keywords: Keywords: Deregulation, Employment Protection Legislation, Graded Security, Open-Ended Contracts
    JEL: J23 J30 J41
    Date: 2019–11
  3. By: Amalia R. Miller (University of Virginia, IZA and NBER); Ragan Petrie (Texas A&M University, Melbourne Institute: Applied Economic and Social Research, The University of Melbourne); Carmit Segal (University of Zurich)
    Abstract: This paper develops a novel field experiment to test the implicit prediction of tournament theory that competition increases work time and can therefore contribute to the long work hours required in elite occupations. A majority of workers in the treatment without explicit financial incentives worked past the minimum time, but awarding a tournament prize increased work time and effort by over 80% and lowered costs of effort or output by over a third. Effort was similar with alternative (piece rate, low-prize tournament) bonuses. Men worked longer than women in the high-prize tournament, but for the same duration in other treatments.
    Keywords: tournaments, performance pay, long work hours, elite occupations, gender
    JEL: M52 M55 J16 J22 J33 J44 D91
    Date: 2019–11
  4. By: Bratti, Massimiliano (University of Milan); Conti, Maurizio (University of Genova); Sulis, Giovanni (University of Cagliari)
    Abstract: In 2012, a labour market reform in Italy known as the Fornero Law substantially reduced firing restrictions for open-ended contracts in the case of firms with more than 15 employees. The results from a difference in regression discontinuities design that compares firms below versus those above the cut-off before and after the reform demonstrate that after the Fornero Law was introduced, the number of trained workers increased in firms just above the threshold, with an order of magnitude of approximately 1.5 additional workers in our preferred empirical specification. We show that this effect might be partly explained by the reduction in worker turnover and a lower use of temporary contracts at the threshold after the reform. Our study highlights the potentially adverse effects of employment protection legislation (EPL) on training in dual labour markets due to larger firms seeking to avoid the higher costs of EPL via temporary contracts.
    Keywords: employment protection legislation, training, dual labour markets, temporary contracts, Italy
    JEL: J42 J63 J65 M53
    Date: 2019–11
  5. By: Huebener, Mathias (DIW Berlin); Pape, Astrid (affiliation not available); Spiess, C. Katharina (DIW Berlin)
    Abstract: This paper provides evidence that low private contributions to highly subsidised day care constrain mothers from working longer hours. We study the effects of a reform that abolished day care fees in Germany on parental labour supply. The reform removed private contributions to highly subsidised day care in the year before children enter primary school. We exploit the staggered reform across states with a difference-in-differences approach and event studies. Although participation in day care is almost universal for preschoolers, we provide evidence that the reform increases the intensity of day care use and the working time of mothers by about 7.1 percent. Single mothers, mothers with no younger children, mothers in denser local labour markets, and highly educated mothers react strongest. We find no evidence for labour supply responses at the extensive margin, and no evidence of responses in paternal labour supply. The effects on maternal labour supply fade-away by the end of primary school as mothers in the control group also gradually increase their labour supply as their children grow older.
    Keywords: labour supply, child care costs, difference-in-differences, event study
    JEL: J13 J22 J38
    Date: 2019–11
  6. By: James F. Albertus; Michael Smolyansky
    Abstract: We find that firms located in areas with higher intergenerational mobility are more profitable. Building off the work of Chetty and Hendren (2018a and 2018b)—who provide measures of intergenerational mobility for all commuting zones (essentially, metropolitan areas) within the U.S.—we are the first to show the positive association between intergenerational mobility and corporate profitability. Our regressions compare firms in the same industry at the same point in time and fully control for time-varying state-level shocks. As such, our findings cannot be explained by either differences in industry composition across localities or by variation in state-level economic conditions; nor can our results be explained by differences in firm characteristics or by local economic conditions. Rather, we argue that our findings are best explained by intergenerational mobility influencing human capital formation. Areas with higher mobility do a better job in unlocking their residents’ innate talents, which in turn is associated with improved performance by locally headquartered firms. In essence, our results uncover a positive link between greater equality of opportunity and increased corporate profitability.
    Keywords: Intergenerational mobility ; Corporate profitability ; Human capital
    JEL: G30 G32 J24 J62 R10
    Date: 2019–11–20
  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: Meekes, Jordy (University of Melbourne); Hassink, Wolter (Utrecht University)
    Abstract: This paper examines the role of regional aggregation in measuring agglomeration externalities. Using Dutch administrative data, we define local labour markets (LLMs) based on the worker's commuting outcomes, gender and educational attainment, and show that high-educated workers and male workers are characterised by a relatively large LLM. We find that the effect of employment density on workers' wages increases in the level of regional aggregation, explained by larger agglomeration externalities at a higher spatial scale. We quantify subgroup differentials and find that high-educated workers have agglomeration externalities twice as high as low-educated workers. We show that workers who lose their job in denser LLMs experience positive agglomeration externalities on job matching, with more modest losses in wages and again larger density effects at higher levels of regional aggregation.
    Keywords: urban wage premium, job loss, local labour markets, commuting, agglomeration
    JEL: R12 R23 J31 J6
    Date: 2019–11
  9. By: Aliprantis, Dionissi (Federal Reserve Bank of Cleveland); Fee, Kyle (Federal Reserve Bank of Cleveland); Schweitzer, Mark E. (Federal Reserve Bank of Cleveland)
    Abstract: This paper studies the relationship between local opioid prescription rates and labor market outcomes for prime-age men and women between 2006 and 2016. We estimate the relationship at the most disaggregated level feasible in the American Community Survey in order to provide estimates that include rural areas that have, in some cases, seen particularly high prescription rates. Given the limited time period, it is particularly important to account for geographic variation in both short-term and long-term economic conditions. We estimate three panel models to control for evolving local economic conditions: a difference-in-differences specification, a specification with specific controls for economic conditions, and a model that focuses on a comparison group of place with similar performance in 2000. These modelling approaches find a range of statistically significant and economically substantial results for both prime-age men and women. For example, we find that a 10 percent higher local prescription rate is associated with a decrease in the prime-age labor force participation rate of between 0.15 and 0.47 percentage points for men and between 0.15 and 0.19 percentage points for women, depending on the control strategy. We also estimate effects for narrower demographic groups and find substantially larger estimates for some groups, notably for white and minority men with less than a BA. We also present evidence on reverse causality. We show that a short-term unemployment shock did not increase the share of people misusing prescription opioids and that prescription levels vary substantially within quintiles of longer-term labor market performance. Our estimates are generally robust to estimation within those quintiles of 2000 labor market performance. These results argue against theories of reverse causation that rely on prescriptions rates being higher in labor markets that were already weaker.
    Keywords: Opioid Prescription Rate; Labor Force Participation; Great Recession; Opioid Abuse;
    JEL: I10 J22 J28 R12
    Date: 2019–11–15
  10. By: David C. Chan Jr; Matthew Gentzkow; Chuan Yu
    Abstract: Physicians, judges, teachers, and agents in many other settings differ systematically in the decisions they make when faced with similar cases. Standard approaches to interpreting and exploiting such differences assume they arise solely from variation in preferences. We develop an alternative framework that allows variation in both preferences and diagnostic skill, and show that both dimensions are identified in standard settings under quasi-random assignment. We apply this framework to study pneumonia diagnoses by radiologists. Diagnosis rates vary widely among radiologists, and descriptive evidence suggests that a large component of this variation is due to differences in diagnostic skill. Our estimated model suggests that radiologists view failing to diagnose a patient with pneumonia as more costly than incorrectly diagnosing one without, and that this leads less-skilled radiologists to optimally choose lower diagnosis thresholds. Variation in skill can explain 44 percent of the variation in diagnostic decisions, and policies that improve skill perform better than uniform decision guidelines. Failing to account for skill variation can lead to highly misleading results in research designs that use agent assignments as instruments.
    JEL: C26 D81 I1 J24
    Date: 2019–11
  11. By: Lynn Riggs (Motu Economic and Public Policy Research); Isabelle Sin (Motu Economic and Public Policy Research); Dean Hyslop (Motu Economic and Public Policy Research)
    Abstract: The increase in internet-based services has raised policy interest in gig work, which is work done outside formal employer-employee relationships. Given the dearth of information about the nature and magnitude of gig work and the extent of its growth in New Zealand, it is unclear whether current regulatory institutions adequately regulate it. There is also concern among policymakers about the effect of gig work on the financial stability of gig workers. In this paper we provide a New Zealand-specific typology for identifying gig work, and discuss conceptual and practical issues related to measuring it. We describe how existing New Zealand data can be used to learn more about gig work and make suggestions for improving its measurement in the future.
    Keywords: Gig work, Gig economy
    JEL: J21 J40 J46 J81 J83 J88
    Date: 2019–11
  12. By: Anna Godøy; Venke Furre Haaland; Ingrid Huitfeldt (Statistics Norway); Mark Votruba
    Abstract: We estimate the effects of wait time for orthopedic surgery on health and labor market outcomes of Norwegian workers. Our identification strategy exploits variation in wait times for surgery generated by the idiosyncratic variation in system congestion at the time of referral. While we find no significant evidence of lasting health effects, longer wait times have persistent negative effects on subsequent labor supply. For every 10 days spent waiting for surgery, we estimate health-related workplace absences increase 8.7 days over the five years following referral, and the likelihood of permanent disability insurance increases by 0.4 percentage point. Cost benefit calculations point to sizable fiscal savings from shorter wait times.
    Keywords: Wait time; queues; hospital treatment; health outcomes; labor market attachment; sickness absence
    JEL: I12 J32
    Date: 2019–11
  13. By: Valentina S. Consiglio; Denisa M. Sologon
    Abstract: Providing equal opportunities to all members of society independent of an individual’s socio-economic background is a major objective of German policy makers. However, evidence on the access to education suggests that opportunities of children with a non-academic family background are still unequally obstructed. When analysing the labour market implications of this social disadvantage in human capital, social capital as an additional source of inequality often lacks attention. Drawing on the instrumental value of rather loose contacts (i.e. weak ties) on the labour market as revealed by Mark Granovetter (1974), this research paper goes beyond the human capital approach and includes a measure of instrumental social capital in the form of weak-tie career support in the earnings function. We shed light on the structure of the wage gap between those with and without an academic family background and complement an Oaxaca-Blinder decomposition with quantile regressions to analyse potential capital and return deficits separately. We find that a significant part of the wage gap can be explained by deficits that those from less educated families incur with respect to human and instrumental social capital. While the capital deficit due to educational attainment is larger, a non-academic family background is further associated with a significant deficit in returns to instrumental social capital at some parts of the distribution. As this suggests inequalities of opportunity on the German labour market to occur along the lines of parental education even beyond the education system, it urges policy makers to consider designing equality measures that do the same.
    Keywords: wage gap, (non-)academic family background, German labour market, Oaxaca-Blinder decomposition, quantile regression, human capital, instrumental social capital
    JEL: I24 J31 J62
    Date: 2019
  14. By: Das, Tirthatanmoy (Indian Institute of Management); Polachek, Solomon (Binghamton University, New York)
    Abstract: This paper proposes a new strategy to identify causal effects. Instead of finding a conventional instrumental variable correlated with the treatment but not with the confounding effects, we propose an approach which employs an instrument correlated with the confounders, but which itself is not causally related to the direct effect of the treatment. Utilizing such an instrument enables one to estimate the confounding endogeneity bias. This bias can then be utilized in subsequent regressions first to obtain a "binding" causal effect for observations unaffected by institutional barriers that eliminate a treatment's effectiveness, and second to obtain a population-wide treatment effect for all observations independent of institutional restrictions. Both are computed whether the treatment effects are homogeneous or heterogeneous. To illustrate the technique, we apply the approach to estimate sheepskin effects. We find the bias to be approximately equal to the OLS coefficient, meaning that the sheepskin effect is near zero. This result is consistent with Flores-Lagunes and Light (2010) and Clark and Martorell (2014). Our technique expands the econometrician's toolkit by introducing an alternative method that can be used to estimate causality. Further, one potentially can use both the conventional instrumental variable approach in tandem with our alternative approach to test the equality of the two estimators for a conventionally exactly identified causal model, should one claim to already have a valid conventional instrument.
    Keywords: causality, OLS biases, sheepskin effects
    JEL: C18 C36 I26 J24 J33
    Date: 2019–11
  15. By: Claus-Jochen Haake (Paderborn University); Thorsten Upmann (Bielefeld University); Papatya Duman (Paderborn University)
    Abstract: In this paper, we analyze the two-dimensional Nash bargaining solution (NBS) deploying a standard labor market negotiations model (see McDonald and Solow, 1981; Creedy and McDonald, 1991). We show that the two-dimensional bargaining problem can be decomposed into two one-dimensional problems such that the (Cartesian) product of the solutions of these problems replicates the solution of the two-dimensional problem, if the NBS is applied. However, this decomposition fails for any solution concept that does not satisfy the axiom of Independence of Irrelevant Alternatives (IIA axiom). Our decomposition result has significant implications for actual negotiations, as it allows for the decomposition of a multi-issue bargaining problem into a set of simpler problems, in particular a set of single-issue bargaining problems. In this way, the decomposition may help facilitate negotiations in labor markets and also in other environments.
    Keywords: Labor market negotiations; Efficient bargains; Nash bargaining solution; Sequential bargaining; Restricted bargaining games
    JEL: C78 J52 J41
    Date: 2019–11
  16. By: Picchio, Matteo; van Ours, Jan C.
    Abstract: We study the retirement effects on mental health using a fuzzy regression discontinuity design based on the eligibility age to the state pension in the Netherlands. We find that the mental effects are heterogeneous by gender and marital status. Retirement of partnered men positively affects mental health of both themselves and their partners. Single men retiring experience a drop in mental health. Female retirement has hardly any effect on their own mental health or the mental health of their partners. Part of the effects seem to be driven by loneliness after retirement.
    Keywords: Retirement,health,well-being,happiness,regression discontinuity design
    JEL: H55 J14 J26
    Date: 2019
  17. By: Marco Caliendo; Frank M. Fossen; Alexander S. Kritikos
    Abstract: As the policy debate on entrepreneurship increasingly centers on firm growth in terms of job creation, it is important to better understand which variables influence the first hiring decision and which ones influence the subsequent survival as an employer. Using the German Socio-economic Panel (SOEP), we analyze what role individual characteristics of entrepreneurs play in sustainable job creation. While human and social capital variables positively influence the hiring decision and the survival as an employer in the same direction, we show that none of the personality traits affect the two outcomes in the same way. Some traits are only relevant for survival as an employer but do not influence the hiring decision, other traits even unfold a revolving door effect, in the sense that employers tend to fail due to the same characteristics that positively influenced their hiring decision.
    Keywords: Employer, entrepreneurship, business venturing, recruitment, firm growth, employment growth, personality
    JEL: J22 J23 L26
    Date: 2019

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