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on Labor Markets - Supply, Demand, and Wages |
| By: | Adams, Abigail; Boneva, Teodora; Golin, Marta; Rauh, Christopher |
| Abstract: | We present real time survey evidence from the UK, US and Germany showing that the labor market impacts of COVID-19 differ considerably across countries. Employees in Germany, which has a well-established short-time work scheme, are substantially less likely to be affected by the crisis. Within countries, the impacts are highly unequal and exacerbate existing inequalities. Workers in alternative work arrangements and in occupations in which only a small share of tasks can be done from home are more likely to have reduced their hours, lost their jobs and suffered falls in earnings. Less educated workers and women are more affected by the crisis. |
| Keywords: | Coronavirus; inequality; Labor market; Recessions; unemployment |
| JEL: | J21 J22 J24 J33 J63 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14665&r=all |
| By: | Quach, Simon |
| Abstract: | This paper studies the employment and income effects of a federal proposal in 2016 to expand overtime coverage to additionally cover salaried workers earning between $455 and $913 per week ($23,660 and $47,476 per annum). Although the policy was unexpectedly nullified a week before its proposed effective date, using detailed administrative payroll data covering one-sixth of the U.S. workforce, I find clear evidence that firms nevertheless responded to the policy by bunching workers' earnings at the new $913 exemption threshold. On average, the base salary of directly affected workers who remain employed increased by 1.4%. Meanwhile, for every hundred workers who would have gained coverage under the policy, 10 jobs were reclassified from salaried to hourly. Preliminary analysis also suggests that there may have been negative employment effects. Examining the distribution of these margins of adjustments, I find that the positive income effect accrued entirely to workers who were bunched at the $913 threshold but would otherwise have earned between $720 and $913 per week, whereas the reclassification and negative employment effects were spread across jobs paying within the entire range of newly covered base salaries. |
| Keywords: | Overtime, Fair Labor Standards Act, Labor market regulation, Salaried workers |
| JEL: | J23 J31 J33 J38 |
| Date: | 2020–05–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:100613&r=all |
| By: | Dayioglu-Tayfur, Meltem (Middle East Technical University); Kirdar, Murat G. (Bogazici University) |
| Abstract: | We examine the effects of a compulsory schooling reform on child labor in Turkey, which extended the duration of schooling from 5 to 8 years while substantially improving the schooling infrastructure. We employ four rounds of Child Labor Surveys with a very rich set of outcomes. The reform reduces child labor by 4.8 percentage points (28 percent) for 12- to 17-year-olds and by 1.7 percentage points (81-percent) for 7- to 11-year-olds. For girls, the probability of spending long hours on household chores also reduces. We find that school enrollment and child labor are highly substitutable in rural areas, but not as much in urban areas. The policy effect at first increases but then sharply declines in parental income, which is consistent with the luxury axiom. Favorable effects of the reform on a large range of child labor outcomes suggest that incapacitation effects of a compulsory schooling policy (combined with investment in schooling infrastructure) can be more successful than child labor laws in combatting child labor—as monitoring school enrollment is much easier. |
| Keywords: | child labor, compulsory schooling, costs of schooling, program effect, education policy, Turkey |
| JEL: | H52 I21 J21 J22 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13276&r=all |
| By: | Saporta-Eksten, Itay (Tel Aviv University); Shurtz, Ity (Ben Gurion University); Weisburd, Sarit (Tel Aviv University) |
| Abstract: | We study the effects of public pension systems on the retirement timing of older workers and, in turn, the health consequences of delaying retirement by those workers. Causal inference relies on a social security reform in Israel that shifted payments from husbands to their (non-working) wives, thereby substantially reducing the implied tax on the husband's employment while keeping overall household wealth constant. Using administrative social security data, we estimate extensive-margin labor supply elasticities w.r.t. the average net-of-tax rate of about 0.43 for men over 65. Using the reform to instrument for employment, we find that working an additional full year at old age decreases longevity. This mortality effect occurs after age 75 and is driven by workers holding blue-collar jobs. Finally, we evaluate the effect of the reform on earnings. The results imply a small value for an additional year of life, suggesting that workers underestimate the health cost of employment at older ages. |
| Keywords: | labor supply, social security, tax reform, health, mortality |
| JEL: | H55 J14 J17 J22 J26 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13263&r=all |
| By: | Belzil, Christian (Ecole Polytechnique, Paris); Hansen, Jörgen (Concordia University) |
| Abstract: | We estimate a dynamic model of schooling on two cohorts of the NLSY and find that, contrary to conventional wisdom, the effects of real (as opposed to relative) family income on education have practically vanished between the early 1980's and the early 2000's. After conditioning on a cognitive ability measure (AFQT), family background variables and unobserved heterogeneity (allowed to be correlated with observed characteristics), income effects vary substantially with age and have lost between 30% and 80% of their importance on age-specific grade progression probabilities. After conditioning on observed and unobserved characteristics, a $300,000 differential in family income generated more than 2 years of education in the early 1980's, but only one year in the early 2000's. Put differently, a $70,000 differential raised college participation by 10 percentage points in the early 1980's. In the early 2000's, a $330,000 income differential had the same impact. The effects of AFQT scores have lost about 50% of their magnitude but did not vanish. Over the same period, the relative importance of unobserved heterogeneity has expanded significantly, thereby pointing toward the emergence of a new form of educational selectivity reserving an increasing role to noncognitive abilities and/or preferences and a lesser role to cognitive ability and family income. |
| Keywords: | inequality, education, family income |
| JEL: | I2 J1 J3 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13279&r=all |
| By: | Corekcioglu, Gozde (Kadir Has University); Francesconi, Marco (University of Essex); Kunze, Astrid (Norwegian School of Economics) |
| Abstract: | Generous government-mandated parental leave is generally viewed as an effective policy to support women's careers around childbirth. But does it help women to reach top positions in the upper pay echelon of their firms? Using longitudinal employer-employee matched data for the entire Norwegian population, we address this question exploiting a series of reforms that expanded paid leave from 30 weeks in 1989 to 52 weeks in 1993. The representation of women in top positions has only moderately increased over time, and career profiles of female top earners within firms are significantly different from those of their male counterparts. The reforms did not affect, and possibly decreased, the probability for women to be at the top over their life cycle. We discuss some implications of this result to put into perspective the design of new family-friendly policy interventions. |
| Keywords: | top earners, parental leave, women, regression discontinuity |
| JEL: | J18 J21 J22 J24 M14 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13275&r=all |
| By: | Adams-Prassl, A.; Boneva, T.; Golin, M; Rauh, C. |
| Abstract: | Using large geographically representative surveys from the US and UK, we document the variation in the percentage of tasks workers can do from home both within and across occupations and industries. We find that the share of tasks that can be done from home is not constant across workers within occupations or industries, i.e. within an occupation or industry, the information about the distribution of the share of tasks that can be done from home is systematic. The standard deviation of the share of tasks that can be done from home and the share of people reporting to be able to do all or none of their tasks from home within occupations, industries, and occupation-industry pairs is consistent across countries and survey waves. We argue that our measures are important inputs for models considering the possibility to work for home, in particular for those estimating the impact of the pandemic as well as for designing policies targeted at reopening the economy. |
| Keywords: | COVID-19, working from home, occupations, industry, Coronavirus |
| JEL: | J21 J24 |
| Date: | 2020–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2040&r=all |
| By: | Cassandro, Nicola; Centra, Marco; Esposito, Piero; Guarascio, Dario |
| Abstract: | Relying on a unique longitudinal integrated database supplying micro-level information on labor market transitions (concerning the 2011-2017 period) and occupation task characteristics (e.g. routine-task intensity), this paper provides fresh evidence of the determinants of unemployment risk in Italy. We find that workers employed in routine-intensive occupations (measured with the RTI proposed by Acemoglu and Autor, 2011) do not display – on average - higher unemployment risks than the rest of the workforce. However, on distinguishing between cognitive and manual tasks, it turns out that workers employed in occupations entailing a large proportion of routine cognitive tasks (such as workers employed in service occupations as cashiers or call-center operators) are in fact exposed to a relatively higher risk of becoming unemployed. By contrast, a rather lower risk seems to be faced by workers employed in occupations entailing a large proportion of routine-manual tasks. Finally, the distribution of unemployment risk and its relation with routine-task intensity varies significantly across sectors – with higher risk in manufacturing and construction - confirming the importance of industry-level economic, technological and institutional heterogeneities. |
| Keywords: | unemployment,routine-task,worker-level data |
| JEL: | J24 J31 R23 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:563&r=all |
| By: | Joshua D. Rauh; Irina Stefanescu; Stephen P. Zeldes |
| Abstract: | Companies that freeze defined benefit pension plans save the equivalent of 13.5 percent of the long-horizon payroll of current employees. Furthermore, firms with higher prospective accruals are more likely to freeze their plans. Cost savings would not be possible in a benchmark model in which i) all workers receive compensation equal to their marginal product and ii) workers value equally all identical-cost forms of pension benefits. We find evidence consistent both with firms’ reneging on implicit contracts to provide workers with high pension accruals later in their careers and with shifts in employee valuation of different forms of retirement benefits. |
| JEL: | G14 G23 G32 J31 J32 J33 J38 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27251&r=all |
| By: | Herault, Nicolas (Melbourne Institute of Applied Economic and Social Research); Kalb, Guyonne (Melbourne Institute of Applied Economic and Social Research) |
| Abstract: | Female labour force participation has increased tremendously since World War II in developed countries. Prior research provides piecemeal evidence identifying some drivers of change but largely fails to present a consistent story. Using a rare combination of data and modelling capacity available in Australia, we develop a new decomposition approach to explain rising female labour force participation since the mid-1990s. The approach allows us to identify, for the first time, the role of tax and transfer policy reforms as well as three other factors that have been shown to matter by earlier studies. These are (i) changes in real wages, (ii) population composition changes, and (iii) changes in labour supply preference parameters. A key result is that –despite the ongoing emphasis of public policy on improved work incentives for women in Australia and elsewhere– changes in financial incentives due to tax and transfer policy reforms have contributed relatively little to achieve these large increases in participation. Instead, the other three factors drive the increased female labour force participation. |
| Keywords: | female labour force participation, employment rate, tax-transfer policy, behavioural microsimulation, decomposition |
| JEL: | H31 J22 J31 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13288&r=all |
| By: | Kory Kroft; Yao Luo; Magne Mogstad; Bradley Setzler |
| Abstract: | We quantify the importance of imperfect competition in the U.S. construction industry by estimating the size of rents earned by American firms and workers. To obtain a comprehensive measure of the total rents and to understand its sources, we take into account that rents may arise both due to markdown of wages and markup of prices. Our analyses combine the universe of U.S. business and worker tax records with newly collected records from U.S. procurement auctions. We first examine how firms respond to a plausibly exogenous shift in product demand through a difference-in-differences design that compares first-time procurement auction winners to the firms that lose, both before and after the auction. Motivated and guided by these estimates, we next develop, identify, and estimate a model where construction firms compete with one another for projects in the product market and for workers in the labor market. We find that American construction firms have significant wage- and price-setting power. This imperfect competition generates a considerable amount of rents, two-thirds of which is captured by the firms. |
| JEL: | D44 J31 J42 L11 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27325&r=all |
| By: | Mühlemann, Samuel (University of Munich); Pfeifer, Harald (BIBB); Wittek, Bernhard (LMU Munich) |
| Abstract: | A firm's expectation about the future business cycle is an important determinant of the decision to train apprentices. As German firms typically train apprentices to either fill future skilled worker positions, or as a substitute for other types of labor, the current coronavirus crisis will have a strong and negative impact on the German economy according to the current business cycle expectations of German firms. To the extent that the training decision of a firm depends on its perception of the business cycle, we expect a downward shift in the firm's demand for apprentices and consequently also a decrease in the equilibrium number of apprenticeship contracts. We analyze German data on the apprenticeship from 2007 to 2019 and apply firstdifferences regressions to account for unobserved heterogeneity across states and occupations, allowing us to identify the association between changes in two popular measures of business cycle expectations (the ifo Business Climate Index and the ifo Employment Barometer) and subsequent changes in the demand for apprentices, the number of new apprenticeship contracts, unfilled vacancies and unsuccessful applicants. Taking into account the most recent data on business cycle expectations up to May 2020, we estimate that the coronavirus-related decrease in firms' expectations about the business cycle can be associated with a predicted 9% decrease in firm demand for apprentices and an almost 7% decrease in the number of new apprenticeship positions in Germany in 2020 (-34,700 apprenticeship contracts; 95% confidence interval: +/- 8,800). |
| Keywords: | apprenticeship market, COVID-19, coronavirus, business cycle expectations |
| JEL: | J23 J24 M53 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13368&r=all |
| By: | Clemens, Jeffrey (University of California, San Diego); Strain, Michael R. (American Enterprise Institute for Public Policy Research) |
| Abstract: | This paper presents results from the fourth year of a multi-year, pre-committed research design for analyzing recent minimum wage changes. Using ACS and CPS data through 2018, we find that relatively large minimum wage increases reduced employment among low-skilled individuals by roughly 2.5 percentage points. The effects of smaller statutory increases and inflation-indexed increases vary across data sets and specifications, but are generally not distinguishable from zero. The relationship between minimum wage increases and employment is quite strongly negative in states that began enacting substantial increases between 2013 and 2015. In states that began enacting increases later in the economic expansion, estimates are more variable and tend towards zero. |
| Keywords: | minimum wages, employment, pre-commitment |
| JEL: | J08 J23 J38 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13286&r=all |
| By: | Beland, Louis-Philippe; Brodeur, Abel; Wright, Taylor |
| Abstract: | In this paper, we examine the short-term consequences of COVID-19 and evaluate the impacts of stay-at-home orders on employment and wages in the United States. Guided by a pre-analysis plan, we document that COVID-19 increased the unemployment rate, decreased hours of work and labor force participation, especially for younger workers, non-white, not married and less-educated workers. We built four indexes (exposure to disease, proxim- ity to coworkers, work remotely and critical workers) to study the impact of COVID-19. We find that workers that can work remotely are significantly less likely to have their labor market outcomes affected, while workers working in proximity to coworkers are more affected. The unemployment effects are significantly larger for states that implemented stay-at-home orders. Our es- timates suggest that, as of early May, these policies increased unemployment by nearly 4 percentage points, but reduced COVID-19 cases by 186,600{ 311,000, and deaths by 17,851{23,325. We apply our estimates to compute lost income ($18.6{$21.4 billion), reduced government income tax revenues ($3.4{$5.5 billion), increased unemployment insurance benefit payments ($5{ $5.8 billion) and reduced hospital costs ($0.7{$1.2 billion). Despite the jobs lost, age adjusted value of statistical life suggests that stay-at-home orders are cost effective. |
| Keywords: | COVID-19,unemployment,wages,remote work,exposure to disease,essential workers,stay-at-home orders,lockdown |
| JEL: | I15 I18 J21 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:559&r=all |
| By: | Cahuc, Pierre; Hervelin, Jérémy |
| Abstract: | In France, two years after school completion and getting the same diploma, the employment rate of apprentices is about 15 percentage points higher than that of vocational students. Despite this difference, this paper shows that there is almost no difference between the probability of getting a callback from employers for unemployed youth formerly either apprentices or vocational students. This result indicates that the higher employment rate of apprentices does not rely, in the French context, on better job access of those who do not remain in their training firms. The estimation of a job search and matching model shows that the expansion of apprenticeship has very limited effects on youth unemployment if this is not accompanied by an increase in the retention of apprentices in their training firm. |
| Keywords: | Apprenticeship; field experiment; School-to-work transitions |
| JEL: | J24 M51 M53 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14621&r=all |
| By: | Westphal, Matthias; Kamhöfer, Daniel A.; Schmitz, Hendrik |
| Abstract: | In this paper, we identify female long-term wage returns to college education using the educational expansion between 1960-1990 inWest Germany as exogenous variation for college enrollment. We estimate marginal treatment effects to learn about the underlying behavioral structure of women who decide for or against going to college (e.g., whether there is selection into gains). We propose a simple partial identification technique using an adjusted version of the Lee bounds to account for women who select into employment due to having a college education, which we call college-induced selection into employment (CISE). We find that women are, on average, more than 17 percentage points more likely to be employed due to having a college education than without. Taking this CISE into account, we find wage returns of 6-12 percent per year of education completed (average treatment effects on the treated). |
| Keywords: | Marginal treatment effect,Partial identification,Returns to higher education,Female labor force participation |
| JEL: | C31 I26 J24 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:341&r=all |
| By: | Bastani, Spencer; Waldenström, Daniel |
| Abstract: | We analyze the relationship between cognitive ability and bunching in the context of a large and salient kink point of the Swedish income tax schedule. Using population-wide register data from the Swedish military enlistment and administrative tax records, we find that high-ability individuals bunch more than low-ability individuals. This ability gradient is stronger for the self-employed, but is also present among wage earners. We also use high-school GPA and math grades to analyze gender differences, finding a stronger ability gradient among men. |
| Keywords: | ability; bunching; Complexity; optimal taxation; skills |
| JEL: | H21 H24 J22 J24 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14599&r=all |
| By: | Michael Ewens; Ramana Nanda; Christopher T. Stanton |
| Abstract: | We use individual-level data to shed light on the evolution of founder-CEO compensation in venture capital-backed startups. We document that having a tangible, marketable product is a fundamental milestone in CEOs' compensation contracts, marking the point at which liquid cash compensation begins to increase significantly — well before a liquidity event. “Product market fit” also coincides with key human capital in the startup becoming more replaceable, marking an apparent transition in the firm's lifecycle from ‘differentiation’ to ‘standardization’. Although substantial increases in cash compensation for founder-CEOs in response to milestones improves the certainty equivalent of attempting entrepreneurship relative to flat pay, low cash compensation in the very early years can still deter entrepreneurship for potential entrants. We characterize the types of individuals most likely to be impacted by this constraint and hence those whose ideas are unlikely to be commercialized through VC-backed entrepreneurship. |
| JEL: | G24 G3 G32 J24 J3 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27296&r=all |
| By: | Bellés-Obrero, Cristina; Martin Bassols, Nicolau; Vall Castello, Judit |
| Abstract: | This paper examines the effect of immigration on workplace safety, a new and previously unexplored outcome in the literature. We use a novel administrative dataset of the universe of workplace accidents reported in Spain from 2003 to 2015 and follow an IV strategy based on the distribution of early migrants settlements across provinces. Our results show that the massive inflow of immigrants between 2003 and 2009 reduced the number of workplace accidents by 10,980 for native workers (7% of the overall reduction during that period). This is driven by Spanish-born workers shifting away from manual occupations to those involving more interpersonal interactions. Immigrant flows during the economic crisis (2010-2015) had no impact on natives’ workplace safety. The scarcity of jobs during that period could have prevented shifts between occupations. Finally, we find no effects of immigration on the workplace safety of immigrants. These results add a previously unexplored dimension to the immigration debate that should be taken into account when evaluating the costs and benefits of migration flows. |
| Keywords: | Immigration,Workplace Accidents,Safety at Work |
| JEL: | J61 J28 I1 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:565&r=all |
| By: | Lee, Neil; Rodríguez-Pose, Andrés |
| Abstract: | Entrepreneurship is sometimes portrayed as a cure-all solution for poverty reduction. Proponents argue it leads to job creation, higher incomes, and lower poverty rates in the cities in which it occurs. Others, by contrast, posit that many entrepreneurs are actually creating low-productivity firms serving local markets. Yet, despite this debate, little research has considered the impact of entrepreneurship on poverty in cities. This paper addresses this gap using a panel of US cities for the period between 2005 and 2015. We hypothesise that the impact of entrepreneurship depends on whether it occurs in tradeable sectors – and, therefore, is more likely to have positive local multiplier effects – or non-tradable sectors, which may saturate local markets. We find that entrepreneurship in tradeables reduces poverty and increases incomes for non-entrepreneurs. The result is confirmed using an instrumental variable approach, employing the inheritance of entrepreneurial traits as an instrument. In contrast, while there are some economic benefits from non-tradeable entrepreneurship, we find these are not large enough to reduce poverty. |
| Keywords: | entrepreneurship; poverty; cities; economic development; USA |
| JEL: | M13 J21 J31 O18 R11 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:104384&r=all |
| By: | Karen Arulsamy (School of Economics & Geary Institute for Public Policy, University College Dublin); Liam Delaney (School of Economics & Geary Institute for Public Policy, University College Dublin) |
| Abstract: | A large body of evidence shows that individuals with poor mental health have lower income over the lifespan but a dearth of evidence exists on how poor mental health affects savings behaviour. In this paper, we provide novel evidence of a mental health gap in pension participation in the UK using nationally representative longitudinal data from Understanding Society (UKHLS). Beginning in 2012, the UK government introduced automatic enrolment enabling us to assess the impact of one of the largest pension policy reforms in the world on this mental health gap. We measure mental health using the General Health Questionnaire (GHQ-12) which is a commonly used tool for measuring psychological distress. Prior to automatic enrolment, we find that male private sector employees with poor mental health are 3.2 percentage points less likely to participate in a workplace pension scheme while female private sector employees with poor mental health are 2.6 percentage points less likely to participate in a workplace pension scheme after controlling for key observables including age, education, race, marital status, number of children, occupation type, industry type, presence of a physical health condition and cognitive ability. The implementation of automatic enrolment completely removes the mental health gap in pension participation. By documenting the impact of automatic enrolment on the mental health gap in pension participation, we provide additional support for automatic enrolment policies which have already been shown to reduce gaps in pension participation among female and low income employees. |
| Keywords: | Mental health; psychological distress; pensions; savings; automatic enrolment; financial security; longitudinal studies |
| JEL: | J32 D91 |
| Date: | 2020–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:202004&r=all |
| By: | Lodefalk, Magnus (Örebro University); Sjöholm, Fredrik (Department of Economics, Lund University); Tang, Aili (Örebro University) |
| Abstract: | We examine if international trade improves labor market integration of immigrants in Sweden. Immigrants participate substantially less than natives in the labor market. However, trading with a foreign country is expected to increase the demand for immigrants from that country. By hiring immigrants, a firm may access foreign knowledge and networks needed to overcome information frictions in trade. Using granular longitudinal matched employer–employee data and an instrumental variable approach, we estimate the causal effects of a firm’s bilateral trade on employment and wages of immigrants from that country. We find a positive, yet heterogeneous, effect of trade on immigrant employment but no effect on immigrant wages. |
| Keywords: | Export; Import; Immigrants; Employment; Wages |
| JEL: | F16 F22 J21 J31 J61 |
| Date: | 2020–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2020_012&r=all |
| By: | Belzil, Christian (Ecole Polytechnique, Paris); Hansen, Jörgen (Concordia University) |
| Abstract: | We estimate a structural dynamic Roy model of education, labor supply and earnings on the 1979 and 1997 cohorts of males taken from the National Longitudinal Survey of Youth (NLSY) and evaluate to what extent changes in education and labor supply decisions across cohorts have been explained by changes in i) the college premium, ii) the utility of attending higher education, iii) grade progression standards, and iv) the value of non-market time. We quantify the evolution of the relative and absolute qualities of both college graduates and college attendants (associates). We find that it is impossible to rationalize changes in observed schooling decisions without appealing to a large increase in intrinsic taste for education, despite a doubling of the cost of college and its impact on debt-load. The population distribution of the college premium has shifted to the right, going from 50% to 58%, while the premium of actual college graduates has shifted to the left, going from 72% to 54%, thereby pointing toward a reduction of the relative quality of college graduates. The absolute quality (human capital) of college graduates has however remained stable. For college attendants (associates), both relative and absolute quality dropped. One implication of the relative flattening of age earnings profiles is the removal of the negative effect of late college graduation on early life-cycle wages. Our estimates indicate it moved from a 4% penalty per year of delay to an insignificant quantity by the early 2000's. |
| Keywords: | wage inequality, educational selectivity, wage distribution, college premium, dynamic discrete choice |
| JEL: | I2 J1 J3 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13356&r=all |
| By: | Ge, Suqin; Moro, Andrea; Zhu, Beibei |
| Abstract: | We test if firms statistically discriminate workers based on race when employer learning is asymmetric. Using data from the NLSY79, we find evidence of asymmetric employer learning. In addition, employers statistically discriminate against non-college educated black workers at time of hiring. We also find that employers directly observe most of the productivity of college graduates at hiring and learn very little over time about these workers. |
| Keywords: | statistical discrimination,employer learning,asymmetric learning |
| JEL: | J71 D82 J31 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:569&r=all |
| By: | Pabilonia, Sabrina Wulff (U.S. Bureau of Labor Statistics); Vernon, Victoria (Empire State College) |
| Abstract: | Remote work is rapidly increasing in the United States. Using data on full-time wage and salary workers from the 2017–2018 American Time Use Survey Leave and Job Flexibilities Module, this paper examines the characteristics of teleworkers, the effects of teleworking on wages, and differences in time-use patterns between office and work-at-home workdays. We find that some teleworkers earn a wage premium, but it varies by occupation, gender, parental status, and teleworking intensity. Teleworkers also spend less time on commuting and grooming activities but more time on leisure and household production activities and more time with family on work-at-home days. |
| Keywords: | working from home, telework, telecommuting, commuting, home-based work, alternative work arrangements, work-life balance, time use, wages |
| JEL: | J22 J31 D13 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13260&r=all |
| By: | Ali, Umair (Arizona State University); Herbst, Chris M. (Arizona State University); Makridis, Christos A. (Arizona State University) |
| Abstract: | Stay-at-home orders (SAHOs) have been implemented in most U.S. states to mitigate the spread of COVID-19. This paper quantifies the short-run impact of these containment policies on the supply of and demand for child care. The child care market may be particularly vulnerable to a SAHO-type policy shock, given that many providers are liquidity-constrained. Using plausibly exogenous variation from the staggered adoption of SAHOs across states, we find that online job postings for early care and education teachers declined by 13% after enactment. This effect is driven exclusively by private-sector services. Indeed, hiring by public programs like Head Start and pre-kindergarten has not been influenced by SAHOs. In addition, we find little evidence that child care search behavior among households has been altered. Because forced supply-side changes appear to be at play, our results suggest that households may not be well-equipped to insure against the rapid transition to the production of child care. We discuss the implications of these results for child development and parental employment decisions. |
| Keywords: | child care, coronavirus, COVID-19, early care and education, stay-at-home orders |
| JEL: | H75 J21 I28 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13261&r=all |
| By: | Collischon, Matthias (University of Erlangen-Nuremberg); Kühnle, Daniel (University of Duisburg-Essen); Oberfichtner, Michael (Institute for Employment Research (IAB), Nuremberg) |
| Abstract: | How parents respond to changes in the price of childcare is an important, though not fully understood, public policy question. Our paper provides new comprehensive evidence on how a home care subsidy jointly affects maternal labour market outcomes, childcare choices, and children's development. We examine a German reform from 2013 which introduced a home care subsidy of initially 100 Euros per month for families who do not use subsidised childcare. Exploiting a date-of-birth cut-off in eligibility and using administrative data on employment and child development alongside survey data on childcare usage, we show that the reform reduced mothers' likelihood to return to work within three years by only 1.4 percentage points, but decreased childcare enrolment for one- and two-year olds by 5 percentage points. We find no effect on children's skill development at age six. Our findings imply that the subsidy accrued almost completely as windfall gains to families who would not have used formal childcare anyway. |
| Keywords: | childcare choices, maternal labour supply, cash-for-care, home care subsidy, children's development, windfalls gains |
| JEL: | J13 J18 J22 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13271&r=all |
| By: | Hensvik, Lena (Uppsala University); Le Barbanchon, Thomas (Bocconi University); Rathelot, Roland (University of Warwick) |
| Abstract: | This paper measures the job-search responses to the COVID-19 pandemic using realtime data on vacancy postings and ad views on Sweden’s largest online job board. First, the labour demand shock in Sweden is as large as in the US, and affects industries and occupations heterogeneously. Second, the scope and direction of search change. Job seekers respond to the shock by searching less intensively and by redirecting their search towards less severely hit occupations, beyond what changes in labour demand would predict. The redirection of job search changes relative hiring costs, and has the potential to amplify labour demand shifts. |
| Keywords: | coronavirus, search intensity, search direction, labour demand shock, job vacancies, online job board JEL Classification: J22, J23, J21, J62, J63, J64, E24 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:473&r=all |
| By: | Maximiliano Lauletta (Department of Economics, University of California, Berkeley); Martín Rossi (Department of Economics, Universidad de San Andres); Christian Ruzzier (Department of Economics, Universidad de San Andres) |
| Abstract: | We exploit the well-documented random assignment of Brazilian municipalities to an audit program to explore the link between audits and the quality of government. We find that audited municipalities employ less labor to provide a given level of public services, and change the way in which they screen their employees—relying less on discretion and more on merit. These improvements in bureaucratic efficiency and professionalization imply an increase in the quality of municipal governments. |
| Keywords: | bureaucracy, corruption, audits, efficiency, public sector employment |
| JEL: | D73 D78 H11 H70 J45 O12 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:sad:wpaper:141&r=all |
| By: | Michaela Benzeval (ISER, University of Essex and Understanding Society); Jon Burton (ISER, University of Essex and Understanding Society); Thomas F. Crossley (European University Institute, IFS, ESCoE and Understanding Society); Paul Fisher (ISER, University of Essex and Understanding Society); Annette Jäckle (ISER, University of Essex and Understanding Society); Hamish Low (University of Oxford, IFS and Understanding Society); Brendan Read (ISER, University of Essex and Understanding Society) |
| Abstract: | Using new data from the Understanding Society: COVID 19 survey collected in April 2020, we show how the aggregate shock caused by the pandemic affects individuals across the distribution. The survey collects data from existing members of the Understanding Society panel survey who have been followed for up to 10 years. Understanding society is based on probability samples and the Understanding Society Covid19 Survey is carefully constructed to support valid population inferences. Further the panel allows comparisons with a pre-pandemic baseline. We document how the shock of the pandemic translates into different economic shocks for different types of worker: those with less education and precarious employment face the biggest economic shocks. Some of those affected are able to mitigate the impact of the economic shocks: universal credit protects those in the bottom quintile, for example. We estimate the prevalence of the different measures individuals and households take to mitigate the shocks. We show that the opportunities for mitigation are most limited for those most in need. |
| Keywords: | COVID-19, job loss, inequality, mitigation, financial distress JEL codes: C83, D31, G51, I31, J31, J63 |
| Date: | 2020–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:nuf:econwp:2007&r=all |
| By: | Bryan, M.; Rice, N.; Roberts, J.; Sechel, C. |
| Abstract: | The disability employment gap is an issue of concern in most Western developed economies. This paper provides important empirical evidence on the influence of mental health on the probability of being in employment for prime age workers. We use longitudinal data and recently developed techniques, which use selection on observable characteristics to provide information on selection along unobservable factors, to estimate an unbiased effect of changes in mental health. Our results suggest that selection into mental health is almost entirely based on time-invariant characteristics, and hence fixed effects estimates are unbiased in this context. Our results indicate that transitioning into poor mental health leads to a reduction of 1.6 percentage points in the probability of employment. This is approximately 10 per cent of the raw employment gap. This effect is substantially smaller than the typical instrumental variable estimates, which dominate the literature, and often provide very specific estimates of a local average treatment effect based on an arbitrary exogenous shock. These findings should provide some reassurance to practitioners using fixed effects methods to investigate the impacts of health on work. They should also be useful to policy makers as the average effect of mental health on employment for those whose mental health changes is a highly relevant policy parameter. |
| Keywords: | mental health; employment; fixed effects; Oster bounds; UKHLS; |
| JEL: | I12 J14 J24 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:20/12&r=all |
| By: | Anna Stansbury; Lawrence H. Summers |
| Abstract: | Rising profitability and market valuations of US businesses, sluggish wage growth and a declining labor share of income, and reduced unemployment and inflation, have defined the macroeconomic environment of the last generation. This paper offers a unified explanation for these phenomena based on reduced worker power. Using individual, industry, and state-level data, we demonstrate that measures of reduced worker power are associated with lower wage levels, higher profit shares, and reductions in measures of the NAIRU. We argue that the declining worker power hypothesis is more compelling as an explanation for observed changes than increases in firms’ market power, both because it can simultaneously explain a falling labor share and a reduced NAIRU, and because it is more directly supported by the data. |
| JEL: | E02 E2 E25 J01 J3 J31 J42 J51 L12 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27193&r=all |
| By: | Rota, Mauro; Weisdorf, Jacob |
| Abstract: | We provide a first-ever long-run index of wages of stable rural workers in early-modern Tuscany. These wages speak to two longstanding debates. The first concerns whether Italy's early-modern downturn was an urban phenomenon only or an all-embracing one. Our data lend support to the former, since we do not detect any downturn in our early-modern rural wages. The second debate concerns whether high-waged workers prompted the Industrial Revolution. Earlier studies in this debate have been criticised for comparing urban wages when early factories emerged in rural areas. By comparing rural wages, we find that English labour cost only 10 per cent more than their Italian counterparts in 1650, but a staggering 150 per cent more in 1800. The revised timing of the divergence between England and Italy, and its overlap with England's early mechanisation, raise a significant identification problem. Did high wages encourage mechanisation, or did mechanisation boost wages? |
| Keywords: | economic growth; Great Divergence; industrial revolution; living standards; prices; Stable Employment; Wage premia; wages |
| JEL: | I3 J3 J4 J8 N33 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14652&r=all |
| By: | Westerhout, Ed (Tilburg University, Center For Economic Research) |
| Keywords: | pensions; Front-loaded pension contributions; Labour supply; retirment; Distortionary taxes |
| JEL: | H21 H31 J22 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:25806b9b-8208-4ae6-b309-4c2af552b893&r=all |
| By: | Seah, Kelvin (National University of Singapore); Pan, Jessica (National University of Singapore); Tan, Poh Lin (National University of Singapore) |
| Abstract: | We explore whether the choice of broad versus specialized university curricula affects subsequent labor market outcomes, as measured by earnings, full-time permanent employment, and unemployment six months after university graduation. We exploit a unique episode in the history of the National University of Singapore, in which a university-wide revision in graduation requirements in 2007 prompted students in one of the largest faculties to read a narrower, more specialized, curriculum. Using a difference-in-differences strategy, we compare changes in the labor market outcomes of graduate cohorts from the affected faculty, before-and-after the curriculum revision, to changes in the labor market outcomes of graduate cohorts from the other faculties. We do not find evidence that curriculum breadth matters for these labor market outcomes. Similar conclusions are obtained using regression-control strategies and rich administrative data on student characteristics and academic ability for the broader population of undergraduates at NUS. |
| Keywords: | university curriculum, curriculum breadth, difference-in-differences, earnings, employment |
| JEL: | I21 J31 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13364&r=all |
| By: | Grossbard, Shoshana (San Diego State University); Vernon, Victoria (Empire State College) |
| Abstract: | Using the American Time Use Survey for the years 2003-18 we compare the allocation of time of native men and women married to immigrants with that of their counterparts in all-native couples. We find that when intermarried to a native some immigrant women pay an assimilation price to the extent that, compared to native women in all-native marriages, they work longer hours at paid work, household chores or both, while their husbands do no extra work. In some cases they work an extra hour per day. Immigrant men don't pay such price. Some work 34 minutes less at household chores than native men in all-native marriages, while the native women who marry immigrant men seem to pay a price relatively to what their situation would be in an all-native marriage. An explanation based on the operation of competitive marriage markets works for immigrant women but not for immigrant men. Traditional gender-based privileges may allow immigrant men to prevent native women from capturing a price for the value that intermarriage generates for their husbands. Such 'male dominance' scenario also helps explain why immigrant men married to native daughters of immigrants from the same region get more benefits from intermarriage than other immigrants. |
| Keywords: | time use, immigration, household production, intermarriage, marriage market |
| JEL: | D13 J12 J22 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13340&r=all |
| By: | Siddique, Abu (University of Southampton); Vlassopoulos, Michael (University of Southampton); Zenou, Yves (Monash University) |
| Abstract: | This paper studies the effect of competition on ethnic discrimination by carrying out a field experiment in the context of the rice market in Bangladesh. We recruit professional rice buyers (middlemen) to act as judges in a rice competition by providing a quality rating and a price quote for rice samples that we randomly associate with farmers bearing ethnic majority or minority names. First, we find that there is no ethnic difference in buyers' evaluation of rice quality. Second, we find that local buyers, who have local monopsony power, discriminate against ethnic minority farmers by quoting a lower price for their rice relative to that of ethnic majority farmers. Third, we find that wholesale buyers, who face fierce competition in the marketplace, do not price discriminate against ethnic minority farmers. A second lab-in-the-field experiment and survey information indicate that local and wholesale buyers do not have different tastes for discrimination. This suggests that market competition can eliminate the discrimination of wholesale buyers. |
| Keywords: | discrimination, market competition, ethnicity, rice market, Bangladesh, field experiments |
| JEL: | C93 J15 J43 J71 Q13 Z13 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13269&r=all |
| By: | Horrell, Sara; Humphries, Jane; Weisdorf, Jacob |
| Abstract: | We consider the living standards, supplies of child-labour, and poor-relief needs among intact and broken working-class families of various sizes in historical England. We estimate family incomes without resort to the usual day wages and ahistorical assumptions about male labour inputs. We also incorporate women and children's wages and labour alongside consumption smoothing using a life-cycle approach. Living standards varied considerably over time and by family structure and dependency ratio. Small and intact families enjoyed high and rising living standards after 1700. Large and broken families depended on child labour and poor relief up until 1830. |
| Keywords: | Child labour; Consumption Smoothing; Costs-of-Living; Dependency Ratio; Life Cycle; living standards; Poor Relief; prices; wages |
| JEL: | J22 N13 O10 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14651&r=all |
| By: | Olivier Coibion; Yuriy Gorodnichenko; Michael Weber; Michael Weber |
| Abstract: | We study how the differential timing of local lockdowns due to COVID-19 causally affects households’ spending and macroeconomic expectations at the local level using several waves of a customized survey with more than 10,000 respondents. About 50% of survey participants report income and wealth losses due to the corona virus, with the average losses being $5,293 and $33,482 respectively. Aggregate consumer spending dropped by 31 log percentage points with the largest drops in travel and clothing. We find that households living in counties that went into lockdown earlier expect the unemployment rate over the next twelve months to be 13 percentage points higher and continue to expect higher unemployment at horizons of three to five years. They also expect lower future inflation, report higher uncertainty, expect lower mortgage rates for up to 10 years, and have moved out of foreign stocks into liquid forms of savings. The imposition of lockdowns can account for much of the decline in employment in recent months as well as declines in consumer spending. While lockdowns have pronounced effects on local economic conditions and households’ expectations, they have little impact on approval ratings of Congress, the Fed, or the Treasury but lead to declines in the approval of the President. |
| Keywords: | subjective expectations, consumer spending, labor market, employment, COVID-19, surveys |
| JEL: | E31 C83 D84 J26 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8292&r=all |
| By: | Adriana Lleras-Muney; Matthew Miller; Shuyang Sheng; Veronica T. Sovero |
| Abstract: | A person’s schooling years are a formative time for cognitive development, and also a period of intense social interaction and friendship formation. In this paper, we estimate the production of social capital during adolescence and its effect on wages. We develop a model where homophily and coordination play crucial roles in the decision to socialize and study, which in turn determine educational attainment, network formation, and labor market outcomes. We document that individuals make investments to accumulate friends and other forms of social capital. Sometimes these investments compete with schooling investments (particularly when they involve alcohol consumption), but not always. These social investments have payoffs in the labor market and cannot be thought of as pure leisure. We estimate that receiving five to six friend nominations in adolescence has an impact on wage earnings of approximately 10%, comparable to a broad set of estimates of the return to an additional year of schooling. Therefore, policies that alter the schooling environment should be evaluated by their impacts on social capital as well as their impact on education. |
| JEL: | I20 J31 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27337&r=all |