nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2020‒03‒23
thirty-two papers chosen by
Joseph Marchand
University of Alberta

  1. Mandated Sick Pay: Coverage, Utilization, and Welfare Effects By Johanna Catherine Maclean; Stefan Pichler; Nicolas R. Ziebarth
  2. Teacher Labor Markets in Developing Countries By Crawfurd, Lee; Pugatch, Todd
  3. The Effects of Income on Children’s Health: Evidence from Supplemental Security Income Eligibility under New York State Medicaid By Hansoo Ko; Renata E. Howland; Sherry A. Glied
  4. Integrating Refugees: Language Training or Work-First Incentives? By Jacob Nielsen Arendt; Iben Bolvig; Mette Foged; Linea Hasager; Giovanni Peri
  5. Searching for STARs: Work Experience as a Job Market Signal for Workers without Bachelor's Degrees By Peter Q. Blair; Tomas G. Castagnino; Erica L. Groshen; Papia Debroy; Byron Auguste; Shad Ahmed; Fernando Garcia Diaz; Cristian Bonavida
  6. Bargaining Shocks and Aggregate Fluctuations By Thorsten Drautzburg; Jesus Fernandez-Villaverde; Pablo Guerron-Quintana
  7. Does working at a start-up pay off? By Fackler, Daniel; Hölscher, Lisa; Schnabel, Claus; Weyh, Antje
  8. Informing employees in small and medium sized firms about training: results of a randomized field experiment By van den Berg, Gerard J.; Dauth, Christine; Homrighausen, Pia; Stephan, Gesine
  9. Between Firm Changes in Earnings Inequality: The Dominant Role of Industry Effects By John C. Haltiwanger; James R. Spletzer
  10. Markups, Labor Market Inequality and the Nature of Work By Greg Kaplan; Piotr Zoch
  11. Across-Country Wage Compression in Multinationals By Jonas Hjort; Xuan Li; Heather Sarsons
  12. The impact of return migration from the U.S. on employment and wages in Mexican cities By Dario Diodato; Ricardo Hausmann; Frank Neffke
  13. Robots, Tasks, and Trade By Erhan Artuc; Paulo Bastos; Bob Rijkers
  14. Network-Based Hiring: Local Benefits; Global Costs By Arun G. Chandrasekhar; Melanie Morten; Alessandra Peter
  15. Mining for Mood Effect in the Field By Samahita, Margaret; H, Håkan J.
  16. The Role of Heterogeneous Risk Preferences, Discount Rates, and Earnings Expectations in College Major Choice By Arpita Patnaik; Joanna Venator; Matthew Wiswall; Basit Zafar
  17. Dynamic Incentives in Retirement Earnings-Replacement Benefits By Dean, Andres; Fleitas, Sebastian; Zerpa, Mariana
  18. Human Capital as Engine of Growth – The Role of Knowledge Transfers in Promoting Balanced Growth Within and Across Countries By Isaac Ehrlich; Yun Pei
  19. What Are the Labor and Product Market Effects of Automation? New Evidence from France By Philippe Aghion; Céline Antonin; Simon Bunel; Xavier Jaravel
  20. Education-Occupation Mismatch and Social Networks for Hispanics in the US: Role of Citizenship By Mundra, Kusum; Rios-Avila, Fernando
  21. Can Low Retirement Savings Be Rationalized? By Jason S. Scott; John B. Shoven; Sita N. Slavov; John G. Watson
  22. Employment-output elasticities determinants: is there difference between Francophone and Anglophone countries from AMEE ? By NEIFAR, MALIKA
  23. Robots and the Origin of Their Labour-Saving Impact By Montobbio, Fabio; Staccioli, Jacopo; Virgillito, Maria Enrica; Vivarelli, Marco
  24. Long-Run Trends in the U.S. SES-Achievement Gap By Hanushek, Eric A.; Peterson, Paul E.; Talpey, Laura M.; Woessmann, Ludger
  25. Analyzing Female Employment Trends in South Asia By Najeeb, Fatima; Morales, Matias; Lopez-Acevedo, Gladys
  26. Life Satisfaction of Employees, Labour Market Tightness and Matching Efficiency By de Pedraza, Pablo; Guzi, Martin; Tijdens, Kea
  27. Administrative Discretion in Scientific Funding: Evidence from a Prestigious Postdoctoral Training Program By Donna K. Ginther; Misty L. Heggeness
  28. Two-Sided Heterogeneity, Endogenous Sharing, and International Matching Markets By Jaerim Choi
  29. Employment-output elasticities determinants: case of cross-section from AMEE By NEIFAR, MALIKA
  30. The Relationship between Female Labor Force Participation and Violent Conflicts in South Asia By Robertson, Raymond; Lopez-Acevedo, Gladys; Morales, Matias
  31. Do Financial Constraints Affect the Composition of Workers in a Firm? By Breunig, Robert; Hourani, Diana; Bakhtiari, Sasan; Magnani, Elisabetta
  32. Natural Disasters and Education By Anousheh Alamir; Tillmann Heidelk

  1. By: Johanna Catherine Maclean; Stefan Pichler; Nicolas R. Ziebarth
    Abstract: This paper evaluates the labor market effects of sick pay mandates in the United States. Using the National Compensation Survey and difference-in-differences models, we estimate their impact on coverage rates, sick leave use, labor costs, and non-mandated fringe benefits. Sick pay mandates increase coverage significantly by 13 percentage points from a baseline level of 66%. Newly covered employees take two additional sick days per year. We find little evidence that mandating sick pay crowds-out other non-mandated fringe benefits. We then develop a model of optimal sick pay provision along with a welfare analysis. Mandating sick pay likely increases welfare.
    JEL: I12 I13 I18 J22 J28 J32
    Date: 2020–03
  2. By: Crawfurd, Lee (Center for Global Development); Pugatch, Todd (Oregon State University)
    Abstract: The types of workers recruited into teaching and their allocation across classrooms can greatly influence a country's stock of human capital. This paper considers how markets and non-market institutions determine the quantity, wages, skills, and spatial distribution of teachers in developing countries. Schools are a major source of employment in developing countries, particularly for women and professionals. Teacher compensation is also a large share of public budgets. Teacher labor markets in developing countries are likely to grow further as teacher quality becomes a greater focus of education policy, including under the United Nations Sustainable Development Goals. Theoretical approaches to teacher labor markets have emphasized the role of non-market institutions, such as government and unions, and other frictions in teacher employment and wages. The evidence supports the existence and importance of such frictions in how teacher labor markets function. In many countries, large gaps in pay and quality exist between teachers and other professionals; teachers in public and private schools; teachers on permanent and temporary contracts; and teachers in urban and rural areas. Teacher supply increases with wages, though teacher quality does not necessarily increase. However, most evidence comes from studies of short-term effects among existing teachers. Evidence on effects in the long-term, on the supply of new teachers, or on changes in non-pecuniary compensation is scarcer.
    Keywords: teacher labor markets, developing countries, public sector labor markets, education, public service delivery
    JEL: J44 J45 J31 J21 J23 I28
    Date: 2020–02
  3. By: Hansoo Ko; Renata E. Howland; Sherry A. Glied
    Abstract: There is a well-established association between income and child health. We examine the Supplemental Security Income (SSI) program, which provides cash assistance to low-income children with disabilities, to assess how this relationship arises. We use a large database of Medicaid administrative records to estimate the causal effects of SSI receipt on children’s health, using a regression discontinuity design that exploits the rule that low-income children born below a birthweight threshold are automatically eligible for SSI. We find that children whose birthweights fall below the threshold are significantly more likely to be awarded SSI. Over the first 8 years of their lives, children with birthweights just below the threshold incur Medicaid expenditures 30% lower than do those born just above the threshold. They are less likely to be admitted to hospital, have shorter hospital stays when admitted, and use fewer specialist services. Eligible children experience reduced rates of diagnosis across a range of conditions, with significantly lower rates of both acute (infection, injury) and chronic (malnutrition, developmental delay) conditions in early life. SSI receipt delays the incidence of new chronic conditions by 1.7 months and reduces the number of new chronic conditions recorded through age 3 by 15%. Past health shocks significantly increase current healthcare utilization, but an interaction term between the SSI eligibility and past health shocks is not statistically significant, a pattern that suggests that increased income derived from SSI reduces the incidence of early health shocks but does not change how families respond to these shocks. Children receiving SSI are more likely to live in higher income neighborhoods mainly because their families are less likely to move out of better neighborhoods. However, we do not find evidence that children’s receipt of SSI affects their mother’s health or fertility. Reductions in Medicaid spending associated with SSI eligibility offset increased cash transfer payments by a ratio of 3.3:1.
    JEL: H55 I10 I38
    Date: 2020–01
  4. By: Jacob Nielsen Arendt; Iben Bolvig; Mette Foged; Linea Hasager; Giovanni Peri
    Abstract: Social and economic integration of refugees are key to their personal fulfillment and to producing positive effects in the host country. We evaluate the impact of a reform that expanded and improved early language classes to refugees in Denmark while also temporarily lowering welfare benefits for a subgroup of them. The policy change applied to those who obtained refugee status in Denmark on or after January 1, 1999. Using a regression discontinuity design around the cutoff date we find that employment and earnings gradually diverged for the treated group after completion of the language program. The effect was significant and resulted in four percentage points permanently higher employment and almost USD 2,510 in extra yearly earnings over eighteen years. We do not find temporary or permanent labor market effects of cutting welfare benefits, but we find evidence of temporarily higher property crime when refugees received lower benefits. We also find that children of refugees who received enhanced language classes were more likely to complete lower secondary school and less likely to commit crime.
    JEL: E64 I30 J18 J24 J60
    Date: 2020–03
  5. By: Peter Q. Blair; Tomas G. Castagnino; Erica L. Groshen; Papia Debroy; Byron Auguste; Shad Ahmed; Fernando Garcia Diaz; Cristian Bonavida
    Abstract: The demand for a skilled workforce is increasing even faster than the supply of workers with college degrees – the result: rising wage inequality by education levels, and firms facing a skills gap. While it is often assumed that increasing the number of college graduates is required to fill this gap, this paper explores the extent to which workers without BA college degrees can help fill this gap. To find workers without BA degrees who are potentially skilled through alternative routes (STARs), we use data on the skill requirements of jobs to compute the “skill distance” between a worker’s current occupation and higher wage occupations with similar skill requirements in their local labor market. Based on our calculations, of the 16 million non-college educated workers with skills for high-wage work (> twice median earnings), 11 million whom we term “Rising STARs” are currently employed in middle-to low-wage work. We propose a general taxonomy for STARs to identify potential job transitions to higher wage work within their current earnings category and across earnings categories.
    JEL: E24 I24 J11 J24 O15
    Date: 2020–03
  6. By: Thorsten Drautzburg; Jesus Fernandez-Villaverde; Pablo Guerron-Quintana
    Abstract: We argue that social and political risk causes significant aggregate fluctuations by changing bargaining power. To that end, we document significant changes in the capital share after large political events, such as political realignments, modifications in collective bargaining rules, or the end of dictatorships, in a sample of developed and emerging economies. These policy changes are associated with significant fluctuations in output. Using a Bayesian proxy-VAR estimated with U.S. data, we show how distribution shocks cause movements in output and unemployment. To quantify the importance of these political shocks for the U.S. as a whole, we extend an otherwise standard neoclassical growth model. We model political shocks as exogenous changes in the bargaining power of workers in a labor market with search and matching. We calibrate the model to the U.S. corporate non-financial business sector and we back out the evolution of the bargaining power of workers over time using a new methodological approach, the partial filter. We show how the estimated shocks agree with the historical narrative evidence. We document that bargaining shocks account for 28% of aggregate fluctuations and have a welfare cost of 2.4%in consumption units.
    Keywords: Redistribution risk; bargaining shocks; aggregate fluctuations; partial filter; histor-ical narrative.
    JEL: E32 E37 E44 J20
    Date: 2020–03–12
  7. By: Fackler, Daniel; Hölscher, Lisa; Schnabel, Claus; Weyh, Antje
    Abstract: Using representative linked employer-employee data for Germany, this paper analyzes short- and long-run differences in labor market performance of workers joining start-ups instead of incumbent firms. Applying entropy balancing and following individuals over ten years, we find huge and long-lasting drawbacks from entering a start-up in terms of wages, yearly income, and (un)employment. These disadvantages hold for all groups of workers and types of start-ups analyzed. Although our analysis of different subsequent career paths highlights important heterogeneities, it does not reveal any strategy through which workers joining start-ups can catch up with the income of similar workers entering incumbent firms.
    Keywords: startups,young firms,wages,linked employer-employee data
    JEL: J31 J63 L26 M51
    Date: 2020
  8. By: van den Berg, Gerard J. (IFAU - Institute for Evaluation of Labour Market and Education Policy); Dauth, Christine (IAB (The Institute for Employment Research); Homrighausen, Pia (IAB (The Institute for Employment Research); Stephan, Gesine (IAB (The Institute for Employment Research)
    Abstract: We mailed brochures to 10,000 randomly chosen employed German workers eligible for a subsizided occupational training program called WeGebAU,informing them about the importance of skill-upgrading occupational training in general and about WeGebAU in particular. Using survey and register data,we estimate effects of the information treatment brochure on awareness of the program, on take-up of WeGebAU and other training,and on subsequent employment. The bRochure more than doubles awareness of the program. There are no effects on WeGebAU take-up but participation in other(unsubsidized) training increasesamong employees aged below 45. Short-term labor market outcomes are not affected.
    Keywords: employment; wages; skills; randomized controlled trial; information treatment
    JEL: J24 J65
    Date: 2020–02–27
  9. By: John C. Haltiwanger; James R. Spletzer
    Abstract: We find that most of the rising between firm earnings inequality that dominates the overall increase in inequality in the U.S. is accounted for by industry effects. These industry effects stem from rising inter-industry earnings differentials and not from changing distribution of employment across industries. We also find the rising inter-industry earnings differentials are almost completely accounted for by occupation effects. These results link together the key findings from separate components of the recent literature: one focuses on firm effects and the other on occupation effects. The link via industry effects challenges conventional wisdom.
    JEL: E24 J24 J31 L22
    Date: 2020–02
  10. By: Greg Kaplan; Piotr Zoch
    Abstract: We demonstrate the importance of distinguishing between the traditional use of labor for production, versus alternative uses of labor for overhead, marketing and other expansionary activities, for studying the distribution of both factor income and labor income. We use our framework to assess the impact of changes in markups on the overall labor share and on labor income inequality across occupations. We identify the production and expansionary content of different occupations from the co-movement of occupational income shares with markup-induced changes in the labor share. We find that around one-fifth of US labor income compensates expansionary activities, and that occupations with larger expansionary content have experienced the fastest wage and employment growth since 1980. Our framework can rationalize a counter-cyclical labor share in the presence of sticky prices and can be used to study the distributional effects of demand shocks, monetary policy and secular changes in competition.
    JEL: D2 D3 D4 E3 E5 J2 L1
    Date: 2020–02
  11. By: Jonas Hjort; Xuan Li; Heather Sarsons
    Abstract: Many employers link wages at the firm’s establishments outside of the home region to the level at headquarters. Multinationals that anchor-to-the headquarters also transmit wage changes arising from shocks to minimum wages and exchange rates in the home country/state to their foreign establishments. Such multinationals fire more low-skill workers and hire fewer new workers abroad after a permanent (minimum wage-induced) foreign establishment wage increase originating in shocks to headquarter wages, but not after a temporary (exchange rate-induced) one. We show this using data on 1,060 multinationals’ establishments across the world and in employee-level data on the same employers’ establishments in Brazil.
    JEL: F23 J01 J3 J31
    Date: 2020–02
  12. By: Dario Diodato; Ricardo Hausmann; Frank Neffke
    Abstract: We study the effect of return migration from the U.S. to Mexico on the economies of Mexican cities. In principle, returnees increase the local labor supply and therefore put pressure on wages and employment rates of locals. However, having worked in the technologically more advanced US economy, they may also possess skills that complement the skills of local workers or even bring in new organizational and technological know-how that leads to productivity improvements in Mexico. Using an instrument based on involuntary return migration due to deportation by US authorities, we find evidence in support of both effects. Returnees affect wages of locals in different ways: whereas workers who share the returnees' occupations experience a fall in wages, workers in other occupations see their wages rise. However, the latter, positive, effect is easily overlooked, because it is highly localized: it only affects coworkers within the same city-industry cell. Moreover, both, positive and negative, wage effects are transitory and eventually disappear. In contrast, by raising the employment levels of the industry in which they find jobs, returnees permanently alter a city's industry composition.
    Keywords: return migration, skills, employment, wages, Mexico, United States
    JEL: F22 J21 J24 J61
    Date: 2020–03
  13. By: Erhan Artuc; Paulo Bastos; Bob Rijkers
    Abstract: This paper examines the effects of robotization on trade patterns, wages and welfare. It developsa Ricardian model with two-stage production and trade in intermediate and final goods in which robots can take over some tasks previously performed by humans in a subset of industries. An increase in robot adoption in the North reduces the cost of production and thereby impacts trade in final and intermediate goods with the South. The empirical analysis uses ordinary least squaresand instrumental-variable regressions exploiting variation in exposure to robots across countriesand sectors. Both reveal that greater robot intensity in own production leads to: (i) a rise inimports sourced from less developed countries in the same industry; and (ii) an even stronger increase in exports to those countries. Counterfactual simulations indicate that Northern roboti-zation raises domestic welfare, but initially depresses wages. However, this adverse effect is likely to be reversed by further reductions in robot prices. Northern robotization may lead to higherwages and welfare in the South.
    Keywords: Automation, robots, tasks, jobs, wages, trade, intermediate inputs, global valuechains, gains from trade
    JEL: F1 J23 J24 O3 O4
    Date: 2020–03
  14. By: Arun G. Chandrasekhar; Melanie Morten; Alessandra Peter
    Abstract: Entrepreneurs, particularly in the developing world, often hire from their networks: friends, family, and resulting referrals. Network hiring has two benefits, documented extensively in the empirical literature: entrepreneurs know more about the ability of their network (and indeed they are often positively selected), and network members may be less likely to engage in moral hazard. We study theoretically how network hiring affects the size and composition (i.e., whether to hire friends or strangers) of the firm. Our primary result is that network hiring, while locally beneficial, can be globally inefficient. Because of the existence of a network, entrepreneurs set inefficiently low wages, firms are weakly too small, rely too much on networks for hiring, and resulting welfare losses increase in the quality of the network. Further, if entrepreneurs are uncertain about the true quality of the external labor market, the economy may become stuck in an information poverty trap where forward-looking entrepreneurs or even entrepreneurs in a market with social learning never learn the correct distribution of stranger ability, exacerbating welfare losses. We show that the poverty trap can worsen when network referrals are of higher quality.
    JEL: D83 D86 J46 L14 O1
    Date: 2020–02
  15. By: Samahita, Margaret (School of Economics, University College Dublin, Ireland); H, Håkan J. (Department of Economics, Lund University)
    Abstract: We conduct what we believe to be the most methodologically rigorous study of mood effect in the field so far to measure its economic impact and address shortcomings in the existing literature. Using a large dataset containing over 46 million car inspections in Sweden and England in 2016 and 2017, we study whether inspectors are more lenient on days when their mood is predicted to be good, and if car owners exploit the mood effect by selecting these days to inspect low quality cars. Different sources of good mood are studied: Fridays, sunny days, and days following unexpected wins by the local soccer team, with varying degrees of the car owner’s ability to plan for inspection, and hence the likelihood of selection bias. We find limited evidence to support the existence of mood effects in this domain, despite survey results showing belief to the contrary. There is some indication of selection effect on the part of car owners. Our findings cast doubt on previous mood effects found in the field.
    Keywords: mood effect; selection bias; car inspection
    JEL: D12 D22 D84 D91
    Date: 2020–03–07
  16. By: Arpita Patnaik; Joanna Venator; Matthew Wiswall; Basit Zafar
    Abstract: In this paper, we estimate a rich model of college major choice using a panel of experimentally-derived data. Our estimation strategy combines two types of data: data on self-reported beliefs about future earnings from potential human capital decisions and survey-based measures of risk and time preferences. We show how to use these data to identify a general life-cycle model, allowing for rich patterns of heterogeneous beliefs and preferences. Our data allow us to separate perceptions about the degree of risk or perceptions about the current versus future payoffs for a choice from the individual's preference for risk and patience. Comparing our estimates of the general model to estimates of models which ignore heterogeneity in risk and time preferences, we find that these restricted models are likely to overstate the importance of earnings to major choice. Additionally, we show that while men are less risk averse and patient than women, gender differences in expectations about own-earnings, risk aversion, and patience cannot explain gender gaps in major choice.
    JEL: I23 J16 J24
    Date: 2020–02
  17. By: Dean, Andres (IECON, Universidad de la República); Fleitas, Sebastian (KU Leuven); Zerpa, Mariana (KU Leuven)
    Abstract: Many defined-benefit pension systems in developed and developing countries use a small set of final years of earnings to compute pension benefits. This provides dynamic incentives to report higher earnings in the final years of the career. In this paper, we document the responses of self-employed and employed workers to these incentives, using social security administrative records and household surveys from Uruguay. We implement event studies that leverage the use of a 10-year benefit-calculation window, combined with the discrete change in the probability of retirement at the minimum retirement age. We find that reported earnings of self-employed workers and employees of small firms start increasing sharply 10 years prior to minimum retirement age, reaching a 3% increase on average. This is not the case for employees of large firms, where earnings underreporting is less prevalent. These responses are not explained by changes in total earnings or hours of work, as reported in household surveys, suggesting a change in reporting behavior. Back of the envelope calculations for the self-employed bound the cost of these responses between 1.9% and 2.6% of the total cost of pensions for this group.
    Keywords: earnings replacement benefits, social security, tax compliance
    JEL: J26 H26 H55 O15 O17
    Date: 2020–02
  18. By: Isaac Ehrlich; Yun Pei
    Abstract: Unlike physical capital, human capital has both embodied and disembodied dimensions. It can be perceived of as skill and acquired knowledge, but also as knowledge spillover effects between overlapping generations and across different skill groups within and across countries. We illustrate the roles these characteristics play in the process of economic development; the relation between income growth and income and fertility distributions; and the relevance of human capital in determining the skill distribution of immigrants in a balanced-growth global equilibrium setting. In all three illustrations, knowledge spillover effects play a key role. The analysis offers new insights for understanding the decline in fertility below population replacement rate in many developed countries; the evolution of income and fertility distributions across developing and developed countries; and the often asymmetric effects that endogenous immigration flows and their skill composition exert on the long-term net benefits from immigration to natives in source and destination countries.
    JEL: F22 F43 J11 J24 O15
    Date: 2020–02
  19. By: Philippe Aghion (Collège de France and London School of Economics); Céline Antonin (Sciences Po-OFCE); Simon Bunel (INSEE and Paris School of Economics); Xavier Jaravel (London School of Economics)
    Abstract: We use comprehensive micro data in the French manufacturing sector between 1994 and 2015 to document the effects of automation technologies on employment, wages, prices and profits. Causal effects are estimated with event studies and a shift-share IV design leveraging pre-determined supply linkages and productivity shocks across foreign suppliers of industrial equipment. At all levels of analysis — plant, firm, and industry — the estimated impact of automation on employment is positive, even for unskilled industrial workers. We also find that automation leads to higher profits, lower consumer prices, and higher sales. The estimated elasticity of employment to automation is 0.28, compared with elasticities of 0.78 for profits, -0.05 for prices, and 0.37 for sales. Consistent with the importance of business-stealing across countries, the industry-level employment response to automation is positive and significant only in industries that face international competition. These estimates can be accounted for in a simple monopolistic competition model: firms that automate more increase their profits but pass through some of the productivity gains to consumers, inducing higher scale and higher employment. The results indicate that automation can increase labor demand and can generate productivity gains that are broadly shared across workers, consumers and firm owners. In a globalized world, attempts to curb domestic automation in order to protect domestic employment may be self-defeating due to foreign competition.
    Keywords: Automation, employment, plant-level, firm-level, labor market, product market, manufacturing, France.
    JEL: J23 J24 L11 O3
    Date: 2020–01
  20. By: Mundra, Kusum (Rutgers University); Rios-Avila, Fernando (Levy Economics Institute)
    Abstract: In this paper we examine the education and occupation mismatch for Hispanics in the US using a novel objective continuous mismatch index and explore the role of immigrants' social networks on this mismatch. We explore whether having a larger social network helps Hispanics in finding jobs that better match with their skill and education levels or whether living in areas with larger concentration of Hispanics leads to more competition for the same jobs in the labor market. Given that the legal status of immigrants influence how the social networks are leveraged and their impact on labor market outcomes, we focus on the citizenship status for Hispanics. The quality of match between Hispanic's college degree major and occupation is measured using one of the continuous indices proposed in Rios-Avila and Saavedra-Caballero (2019) and calculated using pooled data for all college graduates in the US from 2010 to 2017. The Hispanic networks measures are constructed as the share of Hispanic population who are 25 years or older with respect to the total population of the same age and the second measure only includes Hispanics with at least a bachelor's degree using the weighted pooled data from 2010 to 2015. We find that networks have a positive impact on the job-match quality, but mostly for Hispanic citizens and this effect is stronger when the networks constitutes of at least a college degree. This shows that Hispanic citizens living in higher concentration of Hispanic college graduates are better able to leverage their networks or their networks are better able to match them with jobs closer to their field of specialization and skill set.
    Keywords: education-occupation mismatch, horizontal mismatch, social networks, hispanics, citizenship
    JEL: J15 J24 J61
    Date: 2020–02
  21. By: Jason S. Scott; John B. Shoven; Sita N. Slavov; John G. Watson
    Abstract: Simple presentations of the life cycle model often suggest a constant level of real consumption in retirement. Similarly, financial planners commonly suggest that people save for retirement in such a way as to enable them to maintain a level retirement standard of living equal to their standard of living while working. However, constant consumption with age is only optimal under the precise and unlikely condition that the subjective rate of time preference is equal to the real interest rate. Most people exhibit a positive rate of pure time preference and additionally discount the future by both mortality and morbidity risks. In comparison, the real interest rate is roughly zero percent and the term structure of interest rates suggests that this condition is likely to persist. These considerations suggest that optimal consumption in the life cycle model declines with age. This finding has major implications for optimal retirement saving. For instance, we find that for many, perhaps most, people in the bottom half of the lifetime earnings distribution, it is optimal to spend out their retirement wealth well before death and to live on Social Security alone after that. Very low earners may find it optimal to not engage in retirement saving at all.
    JEL: D14 H55 J26
    Date: 2020–02
    Abstract: Employment to production intensity or elasticity is used as indicator for employment. The aim of this paper is to provide new estimates of this indicator by rolling regression and assess the effect of structural policies, macroeocnomic policies, and demographic factors on it. Using an unbalanced panel of 44 countries (20 Francophone and 24 Anglophone countries taken from AMEE (Africa and Middel East Erea) over the period 2000–2017, there is an important difference between Francophone and Anglophone countries. The results suggest that structural policies (Lmp and Pmp) aimed at increasing labor and product market flexibility have a significant and positive impact on employment elasticities for Francophone countries. While for Anglophone countries, macroeconomic policies aimed at promoting Foreign direct investment (FDI) and increasing government size have a significant and positive impact on employment elasticities. In addition for all countries, the results also suggest that in order to maximize the positive impact on the responsiveness of employment to economic activity, structural factors have to be complemented with macroeconomic policies aimed at increasing stability.
    Keywords: Rolling regression, Employment to product elasticity, Panel Data, static model, dynamic model, GMM, AMEE (Africa and Middel East Erea), Francophone countries, Anglophone countries.
    JEL: C23 E24 J21
    Date: 2020–03–05
  23. By: Montobbio, Fabio (Università Cattolica del Sacro Cuore); Staccioli, Jacopo (Università Cattolica del Sacro Cuore); Virgillito, Maria Enrica (Università Cattolica del Sacro Cuore); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: This paper investigates the presence of explicit labour-saving heuristics within robotic patents. It analyses innovative actors engaged in robotic technology and their economic environment (identity, location, industry), and identifies the technological fields particularly exposed to labour-saving innovations. It exploits advanced natural language processing and probabilistic topic modelling techniques on the universe of patent applications at the USPTO between 2009 and 2018, matched with ORBIS (Bureau van Dijk) firm-level dataset. The results show that labour-saving patent holders comprise not only robots producers, but also adopters. Consequently, labour-saving robotic patents appear along the entire supply chain. The paper shows that labour-saving innovations challenge manual activities (e.g. in the logistics sector), activities entailing social intelligence (e.g. in the healthcare sector) and cognitive skills (e.g. learning and predicting).
    Keywords: robotic patents, labour-saving technology, search heuristics, probabilistic topic models
    JEL: O33 J24 C38
    Date: 2020–02
  24. By: Hanushek, Eric A. (Stanford University); Peterson, Paul E. (Harvard University); Talpey, Laura M. (Stanford University); Woessmann, Ludger (Ifo Institute for Economic Research)
    Abstract: Rising inequality in the United States has raised concerns about potentially widening gaps in educational achievement by socio-economic status (SES). Using assessments from LTT-NAEP, Main-NAEP, TIMSS, and PISA that are psychometrically linked over time, we trace trends in achievement for U.S. student cohorts born between 1954 and 2001. Achievement gaps between the top and bottom quartiles of the SES distribution have been large and remarkably constant for a near half century. These unwavering gaps have not been offset by improved achievement levels, which have risen at age 14 but have remained unchanged at age 17 for the past quarter century.
    Keywords: student achievement, inequality, socio-economic status, United States, NAEP, TIMSS, PISA
    JEL: H4 I24 J24
    Date: 2020–02
  25. By: Najeeb, Fatima; Morales, Matias (World Bank); Lopez-Acevedo, Gladys (World Bank)
    Abstract: This paper studies employment patterns and trends in South Asia to shed light on determinants of extremely low female employment rates in the region. After a comprehensive literature review, we use employment data from about one hundred censuses and surveys from Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan, and Sri Lanka to compare employment trends across countries over time. We work through data inconsistencies to standardize definitions of variables to compare demographic and labor market determinants: age, sector, contract type, location, and education. We find that (i) overall since 2001, women's employment participation across South Asian countries has been low and broadly unchanged; (ii) the gender employment gap emerges more clearly in middle age brackets; (iii) rural female employment is higher than urban; (iv) agriculture is the economic sector accounting for the greatest share of female employment, although this is slowly changing in some countries, and; (v) women with mid-level education tend to have lower employment rates than those with both lower and higher education.
    Keywords: female labor force participation, South Asia
    JEL: J21 O53
    Date: 2020–02
  26. By: de Pedraza, Pablo (European Commission, DG Joint Research Centre); Guzi, Martin (Masaryk University); Tijdens, Kea (University of Amsterdam)
    Abstract: Di Tella et al. (2001) show that temporary fluctuations in life satisfaction (LS) are correlated with macroeconomic circumstances such as gross domestic product, unemployment, and inflation. In this paper, we bring attention to labour market measures from search and matching models (Pissarides 2000). Our analysis follows the two-stage estimation strategy used in Di Tella et al. (2001) to explore sectoral unemployment levels, labour market tightness, and matching efficiency as LS determinants. In the first stage, we use a large sample of individual data collected from a continuous web survey during the 2007-2014 period in the Netherlands to obtain regression-adjusted measures of LS by quarter and economic sector. In the second-stage, we regress LS measures against the unemployment level, labour market tightness, and matching efficiency. Our results are threefold. First, the negative link between unemployment and an employee's LS is confirmed at the sectoral level. Second, labour market tightness, measured as the number of vacancies per job-seeker rather than the number of vacancies per unemployed, is shown to be relevant to the LS of workers. Third, labour market matching efficiency affects the LS of workers differently when they are less satisfied with their job and in temporary employment. No evidence of this relationship has been documented before Our results give support to government interventions aimed at activating demand for labour, improving the matching of job-seekers to vacant jobs, and reducing information frictions by supporting match-making technologies.
    Keywords: life satisfaction, matching efficiency, tightness, unemployment
    JEL: E24 J21
    Date: 2020–02
  27. By: Donna K. Ginther; Misty L. Heggeness
    Abstract: The scientific community is engaged in an active debate on the value of its peer-review system. Does peer review actually serve the role we envision for it—that of helping government agencies predict what ideas have the best chance of contributing to scientific advancement? Many federal agencies use a two-step review process that includes programmatic discretion in selecting awards. This process allows us to determine whether success in a future independent scientific-research career is more accurately predicted by peer-review recommendations or discretion by program staff and institute leaders. Using data from a prestigious training program at the National Institute of Health (NIH), the Ruth L. Kirschstein National Research Service Award (NRSA), we provide evidence on the efficacy of peer review. We find that, despite all current claims to the contrary, the existing peer-review system works as intended. It more closely predicts high-quality science and future research independence than discretion. We discover also that regression discontinuity, the econometric method typically used to examine the effect of scientific funding, does not fit many scientific-funding models and should only be used with caution when studying federal awards for science.
    JEL: J24 O3 O38
    Date: 2020–03
  28. By: Jaerim Choi (University of Hawaii at Manoa)
    Abstract: This paper develops a multi-country, multi-sector, and multi-factor model of two-sided matching between heterogeneous workers and entrepreneurs in which agents in different countries can form cross-country teams. Sorting, matching, and sharing problems are all considered in a unified framework. Equilibrium is characterized by endogenous sharing rules, which break away from competitive marginal productivity theories of factor returns. I illustrate that a reduction in the cost of sector-specific matching can increase welfare for all agents without conflicts of interest, and that a bilateral economic integration agreement can affect the welfare of agents in an unrelated third country. Furthermore, I demonstrate that rising income inequality can be accompanied by strengthening negative assortative matching.
    Keywords: Two-Sided Matching, Sorting, Matching, Offshoring, Economic Integration Agreement
    JEL: F23 F66 C78 D33 D50 J20 J31
    Date: 2020–03
    Abstract: Employment to production intensity is used as indicator for employment. The aim of this paper is to provide new estimates of employment-output elasticities and assess the effect of structural and macroeocnomic policies and demographic indicators on the employment-intensity of growth. Having a sample of 44 countries taken from AMEE (Africa and Middel East Erea; 20 francophone et 24 anglophone countries) over the priod 2000-2017, we propose linear and non linear specifications to assess the role of considered variables. Linear models results in majority do not confirm previous empirical results except that of Trade openness saying it contributes to explain cross-country variations in employment elasticities which tend to be higher in more open economies for Francophone countries. While for Anglophone countries, elasticities are effected only by 15 to 24 years old participant in active population (Tx1524). With non linear specifications (Quadratic, Cubic, and/or Augmented Cubic), Structural Policy variables (Labor market policy, Lmp, and Product market policy, Pmp) have increasing effect on elasticities. Structural reforms have to be complemented by macroeconomic stability policies (less GDP volatility) to maximize the effect of structural policies on employment responsiveness. In addition, macroeconomic policies aimed at promoting Foreign direct investment (FDI) have significant and positive impact on employment elasticities.
    Keywords: Employment to product elasticity, Linear model, Cubic model, Quadratic model, Cross section, Africa and Middel East Erea (AMEE).
    JEL: E2 E24 J21
    Date: 2020–03–05
  30. By: Robertson, Raymond (Texas A&M University); Lopez-Acevedo, Gladys (World Bank); Morales, Matias (World Bank)
    Abstract: This paper explores the link between the prevalence of violent conflicts and extremely low female labor force participation rates (FLFPR) in South Asia. We merge Labor Force Surveys (LFSs) from Bangladesh, Sri-Lanka, India, and Pakistan to the Global Terrorism Database (GTD) to estimate the relationship between terrorist attacks and female labor supply. We exploit the availability of geographical level data on exposure to violence, comparing administrative units exposed to attacks with administrative units not exposed. We find that one additional attack reduces FLFP rates by about 0.008 percentage points, on average. Violence has less impact on male labor participation, thus widening the gender labor participation gap. Also, one extra wounded person or one extra killed person reduces FLFP rates by 0.0015 and 0.0048 percentage points on average, respectively. We test the added-worker effect theory - which posits that violence might increase FLFP as women try to make up for lost household income - and find mixed evidence: greater prevalence of attacks may encourage married women to exert more working hours, but when the environment gets more risky as number of dead and wounded people increase, all women work less hours. We also test the non- linearity of various violence effects, finding that violence decreases FLFP less where FLFP was already higher before the advent of violence, and that violence has a progressively greater impact on lowering FLFP where the number of attacks is higher.
    Keywords: conflict, terrorism, female labor force participation, added-worker effect, South Asia
    JEL: J21 F51 O53
    Date: 2020–02
  31. By: Breunig, Robert (Australian National University); Hourani, Diana (Australian National University); Bakhtiari, Sasan (Department of Industry, Innovation and Science Australia); Magnani, Elisabetta (Macquarie University, Sydney)
    Abstract: We study the relationship between financing constraints and the work- force composition of firms that employ both casual and non-casual workers. We use data on Australian firms from 2009-2014 and a more direct measure of firm financial constraint than previous studies. We show that the proportion of casual workers in firms grew over the time period being analysed. This was the case regardless of whether a firm was financially constrained or not. However, the magnitude of this change differed between financially constrained and unconstrained firms. We find that of firms whose workforces were growing, financially constrained firms hired relatively fewer casual workers than financially unconstrained firms did. This is consistent with firms using internal financing to cope with a lack of access to credit and equity.
    Keywords: financial constraints, firm behaviour, employment patterns, casual work, Australia
    JEL: D22 L23 J29 J49
    Date: 2020–02
  32. By: Anousheh Alamir; Tillmann Heidelk
    Abstract: It is well established that natural disasters can have a negative effect on human capital accumulation. However, a comparison of the differential impacts of distinct disaster classes is missing. Using census data and information from DesInventar and EMDAT, two large disaster databases, this paper assesses how geological disasters and climatic shocks affect the upper secondary degree attainment of adolescents. The paper focuses on Mexico, given its diverse disaster landscape and lack of obligatory upper secondary education over the observed time period. While all disaster types are found to impede attainment, climatic disasters that are not infrastructure-destructive (e.g. droughts) have the strongest negative effect, decreasing educational expansion by over 40%. The effects seem largely driven by demand-side changes such as increases in school dropouts and fertility, especially for young women. The results may also be influenced by deteriorated parental labor market outcomes. Supply-side effects appear to be solely driven by infrastructure-destructive climatic shocks (e.g. floods). These findings thus call for differential public measures according to specific disaster types and an enhanced attention to climatic events given their potentially stronger impact on younger generations.
    Keywords: Local labor markets; Natural disasters; Climate change; Urbanization; Educational attainment; Degree completion; Teen pregnancies; Individual preferences
    JEL: I25 J20 N36 Q54
    Date: 2020–03

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