nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2020‒01‒06
seventeen papers chosen by
Joseph Marchand
University of Alberta

  1. Firms' Wage Structures, Workers' Fairness Perceptions, Job Satisfaction and Turnover Intentions: Evidence from Linked Employer-Employee Data By Mohrenweiser, Jens; Pfeifer, Christian
  2. Promotions and Training: Do Competitive Firms Set the Bar too High? By Luca Picariello
  3. Minimum Wage Increases and Vacancies By Marianna Kudlyak; Murat Tasci; Didem Tuzemen
  4. The Investment Network, Sectoral Comovement, and the Changing U.S. Business Cycle By Christian vom Lehn; Thomas Winberry
  5. Robots, Labor Markets, and Family Behavior By Anelli, Massimo; Giuntella, Osea; Stella, Luca
  6. Firm and Worker Dynamics in a Frictional Labor Market By Adrien G. Bilal; Niklas Engbom; Simon Mongey; Giovanni L. Violante
  7. Clean Energy Access : Gender Disparity, Health, and Labor Supply By Imelda, Imelda; Verma, Anjali P.
  8. Why are Average Hours Worked Lower in Richer Countries? By Alexander Bick; Nicola Fuchs-Schündeln; David Lagakos; Hitoshi Tsujiyama
  9. Parental Job Loss and Children's Careers By Huttunen, Kristiina; Riukula, Krista
  10. Abandoned by Coal, Swallowed by Opioids? By Gilbert E. Metcalf; Qitong Wang
  11. The effects of the increase in the retirement age in the Netherlands By Egbert Jongen; Simon Rabaté; Tilbe Atav
  12. Older Workers Need Not Apply? Ageist Language in Job Ads and Age Discrimination in Hiring By Ian Burn; Patrick Button; Luis Felipe Munguia Corella; David Neumark
  13. Does a One-Size-Fits-All Minimum Wage Cause Financial Stress for Small Businesses? By Sudheer Chava; Alexander Oettl; Manpreet Singh
  14. Projected Changes in the Distribution of Household Income, 2016 to 2021 By Congressional Budget Office
  15. The Employment Effects of Ethnic Politics By Amodio, Francesco; Chiovelli, Giorgio; Hohmann, Sebastian
  16. The Impact of Bequest Motives on Retirement Behavior in Japan: A Theoretical and Empirical Analysis By Yuji Horioka, Charles; Gahramanov, Emin; Hayat, Aziz; Tang, Xueli
  17. Why do the poor vote for low tax rates? A (real-effort task) experiment on income redistribution. By Natalia Jimenez; Elena Molis-Bañales; Angel Solano-Garcia

  1. By: Mohrenweiser, Jens (Bournemouth University); Pfeifer, Christian (Leuphana University Lüneburg)
    Abstract: The paper uses novel data for Germany linking worker and establishment surveys with administrative social security data for all workers in the surveyed establishments. From these data, four variables are generated that describe a firm's wage structure and the positions of workers within it: (a) workers' own absolute wages, (b) workers' conditional internal reference wages within firms, (c) the conditional wage dispersion in firms, and (d) workers' conditional external reference wages across firms. Three empirical contributions are made: (1) the impact of firms' wage structures on workers' perceived wage fairness as an important organizational justice variable, (2) the impact of firms' wage structures on workers' job satisfaction and turnover intentions, and (3) the contribution of the fairness considerations on the overall effects of the wage structure variables on workers' job satisfaction and turnover intentions. The findings suggest that equity and social status considerations as well as altruistic preferences towards co-workers and inequality aversion are important, whereas the evidence for signal considerations is limited.
    Keywords: income comparison, inequality, fairness, job satisfaction, turnover
    JEL: D63 I31 J28 J31 J63 M52
    Date: 2019–12
  2. By: Luca Picariello (Università di Napoli Federico II and CSEF.)
    Abstract: Firms use promotions to match workers with jobs that fit their ability, but also to provide incentives to exert on-the-job training effort. As promotions make workers more attractive in the labor market, firms will balance productivity and retention costs. I show that if workers exert firm-specific training effort, profit-maximizing firms that cannot commit to promotion rules promote fewer workers than efficient. Differently, if firms can commit to promotion bars, for instance by means of structured managerial practices, they set the bar efficiently. If workers acquire portable training, this directly increases retention costs. Firms that cannot commit to promotion bars will set them inefficiently high. In this case, workers are discouraged from training when competition for talent is fierce. If firms can commit to promotion bars, they set them lower than without commitment providing strong incentives for workers to acquire portable training. However, in this scenario the promotion bar may be set too low compared with the efficient talent allocation.
    Keywords: Promotions, on-the-job training, poaching, career concerns.
    JEL: D86 M51 M52 M53
    Date: 2019–12–16
  3. By: Marianna Kudlyak (Federal Reserve Bank of San Francisco; Federal Reserve Bank of Richmond); Murat Tasci (Federal Reserve Bank of Cleveland); Didem Tuzemen
    Abstract: We estimate the impact of minimum-wage increases on the quantity of labor demanded as measured by firms’ vacancy postings. We use propriety, county-level vacancy data from the Conference Board’s Help Wanted Online database. Our identification relies on the disproportionate effects of minimum-wage hikes on different occupations, as the wage distribution around the binding minimum wage differs by occupation. We find that minimum-wage increases during the 2005-2018 period have led to substantial declines in vacancy postings in at-risk occupations, occupations with a larger share of employment around the prevailing minimum wage. Our estimate implies that a 10 percent increase in the binding minimum- wage level reduces vacancies by 2.4 percent in this group. The negative effect is concentrated not exclusively in the routine jobs, but more in the manual occupations.
    Keywords: Minimum Wage; Vacancies; Hiring; Search and Matching
    JEL: E24 E32 J30 J41 J63 J64
    Date: 2019–12–23
  4. By: Christian vom Lehn; Thomas Winberry
    Abstract: We argue that the input-output network of investment goods across sectors is an important propagation mechanism for understanding business cycles. First, we show that the empirical network is dominated by a few “investment hubs” that produce the majority of investment goods, are highly volatile, and are strongly correlated with the cycle. Second, we embed this network into a multisector model and show that shocks to investment hubs have large aggregate effects while shocks to non-hubs do not. Finally, we measure realized sector-level productivity shocks in the data, feed them into our model, and find that hub shocks account for a large and increasing share of aggregate fluctuations. This fact allows the model to match the decline in the cyclicality of labor productivity and other business cycle changes since the 1980s. Our model also implies that investment stimulus policies increase employment throughout the economy but have unequal effects across sectors.
    JEL: E22 E23 E24 E32 E62
    Date: 2019–11
  5. By: Anelli, Massimo (Bocconi University); Giuntella, Osea (University of Pittsburgh); Stella, Luca (Bocconi University)
    Abstract: Robots have radically changed the demand for skills and the role of workers in production at an unprecedented pace, with little scope for human capital adjustments. This has affected the job stability and the economic perspectives of large parts of the population in all industrialized countries. Recent evidence on the US labor market has shown negative effects of robots on employment and wages. In this study, we examine how exposure to robots and its consequences on job stability and economic uncertainty have affected individual demographic behavior. To establish this relationship, we use data from the American Community Survey and the International Federation of Robotics and we adopt an empirical strategy that relies on regional industry specialization before the advent of robots combined with the growth of robot adoption by industry. We first document the differential effect of robots on the labor market opportunities of men and women. We find that in regions that were more exposed to robots, the gender-income and labor-force-participation gaps declined. We then show that US regions affected by intense robot penetration experienced a decrease in new marriages, and an increase in both divorce and cohabitation. While there was no change in overall fertility rate, marital fertility declined, and there was an increase in out-of-wedlock births. Our findings are consistent with the hypothesis that the changes in labor markets triggered by robot adoption increased uncertainty, reduced the relative marriage-market value of men, and the willingness to commit for the long term.
    Keywords: automation, marriage market, divorce, cohabitation, fertility, gender
    JEL: J12 J13 J21 J23 J24
    Date: 2019–12
  6. By: Adrien G. Bilal; Niklas Engbom; Simon Mongey; Giovanni L. Violante
    Abstract: This paper develops a random-matching model of a frictional labor market with firm and worker dynamics. Multi-worker firms choose whether to shrink or expand their employment in response to shocks to their decreasing returns to scale technology. Growing entails posting costly vacancies, which are filled either by the unemployed or by employees poached from other firms. Firms also choose when to enter and exit the market. Tractability is obtained by proving that, under a parsimonious set of assumptions, all workers’ and firm decisions are characterized by their joint marginal surplus, which in turn only depends on the firm’s productivity and size. As frictions vanish, the model converges to a standard competitive model of firm dynamics which allows a quantification of the misallocation cost of labor market frictions. An estimated version of the model yields cross-sectional patterns of net poaching by firm characteristics (e.g., age and size) that are in line with the micro data. The model also generates a drop in job-to-job transitions as firm entry declines, offering an interpretation to U.S. labor market dynamics around the Great Recession. All these outcomes are a reflection of the job ladder in marginal surplus that emerges in equilibrium.
    JEL: E24 E32 J41 J63 J64
    Date: 2019–12
  7. By: Imelda, Imelda; Verma, Anjali P.
    Abstract: Women are known to bear the largest share of health, time and labor supply burden associated with a lack of modern energy. In this paper, we study the impact of clean energy access on adult health and labor supply outcomes by exploiting a nationwide rollout of clean cooking fuel program in Indonesia. This program led to a large-scale fuel switching, from kerosene, a dirty fuel, to liquid petroleum gas, a significantly cleaner and efficient cooking fuel than kerosene. Using rich longitudinal survey data from the Indonesia Family Life Survey and the staggered structure of the program roll-out, we find that access to clean cooking fuel led to a significant improvement in women's health, particularly among those who spend most of their time indoors doing housework. We also find an increase in the labor supplied by these women on both intensive and extensive margins. This suggests that having clean and efficient cooking fuel may not only improve women's health but also improve their productivity, subsequently allowing them to supply more market labor. For men, we find an increase in the labor supplied only along the intensive margin, with a higher increase among men in households where women accrued the largest health and labor benefits from the program. These results highlight the role of clean energy in reducing gender-disparity in health and labor participation and point to the existence of positive externality from improved health and productivity of women on other members of the household.
    Keywords: Indonesia; Labor Supply; Health; Energy Access; Gender Inequality
    JEL: Q53 Q48 O13 J22 I18 I15 H51
    Date: 2019–12–18
  8. By: Alexander Bick; Nicola Fuchs-Schündeln; David Lagakos; Hitoshi Tsujiyama
    Abstract: Why are average hours worked per adult lower in rich countries than in poor countries? Two natural candidates to consider are income effects in preferences, in which leisure becomes more valuable when income rises, and distortionary tax systems, which are more prevalent in richer countries. To assess the importance of these two forces, we build a simple model of labor supply by heterogeneous individuals and calibrate it to match international data on labor income taxation, government transfers relative to GDP, and hours worked per adult. The model predicts that income effects are the main driving force behind the decline of average hours worked with GDP per capita. We reach a similar conclusion in an extended model that matches cross-country patterns of labor supply along the extensive and intensive margins and of the prevalence of subsistence self-employment.
    JEL: E24 H2 O11
    Date: 2019–12
  9. By: Huttunen, Kristiina (VATT, Helsinki); Riukula, Krista (Aalto University)
    Abstract: We study the effect of parental job loss on children's outcomes using administrative data from Finland. We focus on two channels through which parental job loss can affect children's careers: 1) by affecting the child's field of study choices and 2) by weakening social ties to the labor market. We find evidence supporting both mechanisms: a father's job loss decreases the likelihood of the child choosing the father's field of study or finding employment in the father's plant. Children of displaced fathers have lower earnings; however, we find no effects on the outcomes measured before the study choices are made.
    Keywords: education, social ties, study field, childhood income, job loss, earnings
    JEL: I24 J24 J63
    Date: 2019–11
  10. By: Gilbert E. Metcalf; Qitong Wang
    Abstract: Opioid addition and mortality skyrocketed over the past decade. A casual look at the geographic incidence of opioid mortality shows sharply higher mortality rates in the Appalachian region, especially in coal-mining areas. This has led observers to make a link that was characterized by one newspaper as “abandoned by coal, swallowed by opioids.” We test that theory using restricted death data and mine level coal production data. Specifically, we examine whether higher reliance on coal mining in a county’s economy leads to higher or lower opioid mortality. We find a positive relationship between the share of coal miners among total local labor force and county-level opioid mortality rates. This contradicts the “abandoned by coal, swallowed by opioids” story. Rather our results suggest that the higher rates of injury in underground coal mining (in particular) lead to greater amounts of opioid consumption and mortality. An implication is that the decline in coal mining in the United States may have a positive spillover in the form of reduced mortality from opioid use.
    JEL: I1 Q32 Q35
    Date: 2019–12
  11. By: Egbert Jongen (CPB Netherlands Bureau for Economic Policy Analysis); Simon Rabaté (CPB Netherlands Bureau for Economic Policy Analysis); Tilbe Atav (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: The increase in the statutory retirement age reduced the number of pensioners. About one third of this drop results in additional employment. Net savings for the government are about 80% of direct savings on retirement (AOW) benefits. These are the main findings of the discussion paper ‘The effects of the increase in the retirement age in the Netherlands’. In this paper CPB studies the effects of the recent increases in the statutory retirement age. In the empirical analysis we use differences-in-differences, looking at the labour market outcomes of different birth cohorts that face different statutory retirement ages, and administrative data. The findings of this research have been used in the background document (in Dutch) ` Arbeidsparticipatie en gewerkte uren tot en met 2060 ’.
    JEL: J14 J26
    Date: 2019–12
  12. By: Ian Burn; Patrick Button; Luis Felipe Munguia Corella; David Neumark
    Abstract: We study the relationships between ageist stereotypes – as reflected in the language used in job ads – and age discrimination in hiring, exploiting the text of job ads and differences in callbacks to older and younger job applicants from a previous resume (correspondence study) field experiment (Neumark, Burn, and Button, 2019). Our analysis uses methods from computational linguistics and machine learning to directly identify, in a field-experiment setting, ageist stereotypes that underlie age discrimination in hiring. We find evidence that language related to stereotypes of older workers sometimes predicts discrimination against older workers. For men, our evidence points most strongly to age stereotypes about physical ability, communication skills, and technology predicting age discrimination, and for women, age stereotypes about communication skills and technology. The method we develop provides a framework for applied researchers analyzing textual data, highlighting the usefulness of various computer science techniques for empirical economics research.
    JEL: J14 J23 J7 J78
    Date: 2019–12
  13. By: Sudheer Chava; Alexander Oettl; Manpreet Singh
    Abstract: Do increases in federal minimum wage impact the financial health of small businesses? Using intertemporal variation in whether a state’s minimum wage is bound by the federal rate and credit-score data for approximately 15.2 million establishments for the period 1989–2013, we find that increases in the federal minimum wage worsen the financial health of small businesses in the affected states. Small, young, labor-intensive, minimum-wage sensitive establishments located in the states bound to the federal minimum wage and those located in competitive and low-income areas experience higher financial stress. Increases in the minimum wage also lead to lower bank credit, higher loan defaults, lower employment, a lower entry and a higher exit rate for small businesses. The results are robust to using nearest-neighbor matching and geographic regression discontinuity design. Our results document some potential costs of a one-size-fits-all nationwide minimum wage, and we highlight how it can have an adverse effect on the financial health of some small businesses.
    JEL: G33 G38 J30
    Date: 2019–12
  14. By: Congressional Budget Office
    Abstract: CBO regularly analyzes the distribution of income in the United States and how that distribution has changed over time. In this report, CBO projects the distributions of household income, means-tested transfers, and federal taxes under current law in 2021 and compares them with the actual distributions in 2016.
    JEL: H20 H24 H50 J30
    Date: 2019–12–19
  15. By: Amodio, Francesco (McGill University); Chiovelli, Giorgio (Universidad de Montevideo); Hohmann, Sebastian (Stockholm School of Economics)
    Abstract: This paper studies the labor market consequences of ethnic politics in African democracies. We combine geo-referenced data from 15 countries, 32 parliamentary elections, 62 political parties, 243 ethnic groups, 2,200 electoral constituencies, and 400,000 individuals. We implement a regression discontinuity design that compares individuals from ethnicities connected to parties at the margin of electing a local representative in the national parliament. We find that having a local ethnic politician in parliament increases the likelihood of being employed by 2-3 percentage points. We hypothesize that this effect originates from strategic interactions between ethnic politicians and traditional leaders, the latter retaining the power to allocate land and agricultural jobs in exchange for votes. The available evidence supports this hypothesis. First, the employment effect is concentrated in the historical homelands of ethnicities with strong pre-colonial institutions. Second, individuals from connected ethnicities are more likely to be employed in agriculture, and in those countries where customary land tenure is officially recognized by national legislation. Third, they are also more likely to identify traditional leaders as partisan, and as being mainly responsible for the allocation of land. Evidence shows that ethnic politics shapes the distribution of productive resources across sectors and ethnic groups.
    Keywords: ethnic politics, employment, democracy, traditional leaders, Africa
    JEL: J15 J70 O10 P26 Q15
    Date: 2019–12
  16. By: Yuji Horioka, Charles; Gahramanov, Emin; Hayat, Aziz; Tang, Xueli
    Abstract: In this paper, we conduct a theoretical and empirical analysis of the impact of bequest motives on the work and retirement behavior of households in Japan using micro data from the Preference Parameters Study of Osaka University. Our empirical findings are consistent with our theoretical model and show that respondents with an altruistic or strategic/exchange bequest motive work more at the intensive margin than those without any bequest motive but that respondents with a strategic or exchange bequest motive work less at the extensive margin (i.e., retire earlier) than those without any bequest motive. Our findings for the strategic or exchange motive suggest that respondents with such a motive tend to work harder than others before they retire so that they can earn more, leave a larger bequest to their children, and elicit more care from them but that they tend to retire earlier than others so that they can start receiving care for themselves and their spouses from their children sooner. A policy implication of our findings is that the exchange of bequests for the care of parents by children may be very sensitive to the inheritance tax framework.
    Keywords: Altruistic bequest motive, bequest motives, exchange bequest motive, inheritances, Japan, labor supply, retirement, strategic bequest motive, working hours, D15, D64, J14, J22, J26
    Date: 2019–12
  17. By: Natalia Jimenez (Department of Economics, Universidad Pablo de Olavide & Middlesex University); Elena Molis-Bañales (Departamento de Teoria e Historia Economica, University of Granada & Globe); Angel Solano-Garcia (Departamento de Teoria e Historia Economica, University of Granada & Globe)
    Abstract: The main purpose of this paper is to shed some light on the voting behavior of low-income voters over income redistribution. To this end, we test a model based on Meltzer and Richard’s (1981) framework through a lab experiment in which individuals vote over two exogenous tax rates and their pre-tax income is determined according to their performance in a real-effort task. We classify individuals into high-skilled and low-skilled participants according to their performance in a tournament at the beginning of the experiment. We find that a large proportion of low-skilled workers vote for the lowest tax rate (the one that gives them the lowest payoff), especially when the alternative tax rate is very high. However, this proportion is significantly reduced in treatments in which the subjects are given extra information about how the tax operates in redistributing income. This result suggests that the lack of information about the role of taxes in income redistribution may be an important factor in explaining the counter-intuitive voting behavior of low-income voters over income redistribution. We also find that both the prospect of upward mobility and the belief in the negative effect of taxes on productivity make low-income voters support low tax rates, especially when the alternative tax rate is very high.
    Keywords: income inequality, income redistribution, voting, taxation, real-effort task.
    JEL: C92 D72 H30 J41
    Date: 2019–12

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