nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2020‒07‒20
23 papers chosen by
Joseph Marchand
University of Alberta

  1. Labor Market Policies in a Roy-Rosen Bargaining Economy By Hugo Jales; Zhengfei Yu
  2. If Sick-Leave Becomes More Costly, Will I Go Back to Work? Could It Be Too Soon? By Marie, Olivier; Vall-Castello, Judit
  3. Spousal Labor Supply, Caregiving, and the Value of Disability Insurance By Siha Lee
  4. My Home Is my Castle – The Benefits of Working from Home During a Pandemic Crisis Evidence from Germany By Jean-Victor Alipour; Harald Fadinger; Jan Schymik
  5. The Origins of the Division of Labor in Pre-modern Times By Emilio Depetris-Chauvin; Ömer Özak
  6. The Contribution of Payroll Taxation to Wage Inequality in France By Bozio, Antoine; Breda, Thomas; Guillot, Malka
  7. Waiting for My Sentence: Air Pollution and the Productivity of Court Rulings By Luis Sarmiento
  8. Does university performance have an economic payoff for their home regions? Evidence for the Spanish provinces By Joan Crespo; Jesús Peiró-Palomino; Emili Tortosa-Ausina
  9. International Trade and Labor Market Integration of Immigrants By Lodefalk, Magnus; Sjöholm, Fredrik; Tang, Aili
  10. The effect of business cycle expectations on the German apprenticeship market: Estimating the impact of Covid-19 By Muehlemann, Samuel; Pfeifer, Harald; Wittek, Bernhard
  11. Why Didn't the College Premium Rise Everywhere? Employment Protection and On-the-Job Investment in Skills By Doepke, Matthias; Gaetani, Ruben
  12. Make Sure the Kids are OK: Indirect Effects of Ground-Level Ozone on Well-Being By Julia Rechlitz; Luis Sarmiento; Aleksandar Zaklan
  13. Within-Job Wage Inequality: Performance Pay and Job Relatedness By Rongsheng Tang; Yang Tang; Ping Wang
  14. Taxation, Social Welfare, and Labor Market Frictions By Brendan Epstein; Ryan Nunn; Musa Orak; Elena Patel
  15. Are Personality Traits Really Fixed and Does It Matter? By Stillman, Steven; Velamuri, Malathi
  16. Does Minimum Wage Increase Labor Productivity? Evidence from Piece Rate Workers By Ku, Hyejin
  17. On the Link between Self-Employment and Job Satisfaction: What Do Really Change after Becoming a Self-Employee? By Díaz Serrano, Lluís; Teruel, Mercedes
  18. The changing labour market for graduates from medium-level vocational education and training By Marieke Vandeweyer
  19. The Finance of Unemployment Compensation and its Consequence for the Labor Market By Guo, Audrey; Johnston, Andrew C.
  20. Less School (Costs), More (Female) Education? Lessons from Egypt Reducing Years of Compulsory Schooling By Ahmed Elsayed; Olivier Marie
  21. Baby Steps: The Gender Division of Childcare during the COVID-19 Pandemic By Sevilla, Almudena; Smith, Sarah
  22. Cooperation in a Company: A Large-Scale Experiment By Deversi, Marvin; Kocher, Martin G.; Schwieren, Christiane
  23. Should We Cheer Together? Gender Differences in Instantaneous Well-Being during Joint and Solo Activities By Gimenez-Nadal, J. Ignacio; Molina, José Alberto; Velilla, Jorge

  1. By: Hugo Jales (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244); Zhengfei Yu (Faculty of Humanities and Social Sciences, University of Tsukuba)
    Abstract: We study the effects of labor market policies using a bargaining model featuring compensating differentials (Rosen, 1986) and self-selection (Roy, 1951). The framework allows us to create a taxonomy of formal and informal employment. We use the model to estimate the effects of the minimum wage for the Brazilian economy using the “PNAD" dataset for the years 2001-2005. Our results suggest that, although the minimum wage generates unemployment and reallocation of labor to the informal sector, the policy might be desirable if the employment losses are concentrated in jobs characterized by low surplus.
    Keywords: Self-Selection, Compensating Wage Differentials, Minimum Wage, Informality, Unemployment
    JEL: J30 J32 J46
    Date: 2020–06
  2. By: Marie, Olivier (Erasmus University Rotterdam); Vall-Castello, Judit (University of Barcelona)
    Abstract: We investigate the impact on work absence of a massive reduction in paid sick leave benefits. We exploit a policy change that only affected public sector workers in Spain and compare changes in the number and length of spells they take relative to unaffected private sector workers. Our results highlight a large drop in frequency mostly offset by increases in average duration. Overall, the policy did reduce number of days lost to sick leave. For some, however, return to work may have been premature as we document huge increases in both the proportion of relapses and working accidents rates.
    Keywords: sickness insurance, paid sick leave, absenteeism, presenteeism, relapses contagious diseases, benefit displacement, working accidents, negative externalities, Spain, COVID-19
    JEL: I12 I13 I18 J22 J28 J32
    Date: 2020–06
  3. By: Siha Lee
    Abstract: For married couples, spousal labor supply can act as a household insurance mechanism against one spouse’s earnings shock. This paper evaluates the insurance value of the Social Security Disability Insurance (SSDI) program among married households when wives face a time allocation problem between market hours and spousal care following their husbands’ disability. Using an event study approach, I find that while there is a sizable increase in wives’ working hours after their husbands’ job displacement, wives’ labor supply responses to their husbands’ disability are small, and instead, a considerable amount of time is spent in spousal care. I develop and estimate a dynamic structural model of married households and find that incorporating time loss due to spousal care increases the insurance value of SSDI relative to its costs. Furthermore, policy reforms such as supplementary caregiving benefits can improve social welfare.
    Keywords: disability; social security; added worker effect; caregiving
    JEL: D13 H53 H55 I38 J22
    Date: 2020–06
  4. By: Jean-Victor Alipour; Harald Fadinger; Jan Schymik
    Abstract: This paper studies the relation between work and public health during the COVID-19 pandemic in Germany. Combining administrative data on SARS-CoV-2 infections and short-time work registrations, firm- and worker-level surveys and cell phone tracking data on mobility patterns, we find that working from home (WFH) is very effective in economic and public health terms. WFH effectively shields workers from short-term work, firms from COVID-19 distress and substantially reduces infection risks. Counties whose occupation structure allows for a larger fraction of work to be done from home experienced (i) much fewer short-time work registrations and (ii) less SARSCoV-2 cases. Health benefits of WFH appeared mostly in the early stage of the pandemic and became smaller once tight confinement rules were implemented. Before confinement, mobility levels were lower in counties with more WFH jobs and counties experienced a convergence in traffic levels once confinement was in place.
    Keywords: COVID-19, SARS-CoV-2, working from home, labor supply shock, infections, mitigation, BIBB-BAuA
    JEL: J22 H12 I18 J68 R12 R23
    Date: 2020
  5. By: Emilio Depetris-Chauvin (Pontificia Universidad Católica de Chile); Ömer Özak (Southern Methodist University)
    Abstract: This research explores the historical roots of the division of labor in pre-industrial societies. Exploiting a variety of identification strategies and a novel ethnic level dataset combining geocoded ethnographic, linguistic and genetic data, it shows that higher levels of intra-ethnic diversity were conducive to economic specialization in the pre-industrial era. The findings are robust to a host of geographical, institutional, cultural and historical confounders, and suggest that variation in intra-ethnic diversity is a key predictor of the division of labor in pre-industrial times.
    Keywords: Economic Comparative Development, Division of Labor, Economic Specialization, Intra-Ethnic Diversity, Cultural Diversity, Population Diversity, Genetic Diversity, Linguistic Diversity, Serial Founder Effect
    JEL: D74 F10 F14 J24 N10 O10 O11 O12 O40 O43 O44 Z10 Z13
    Date: 2020–07
  6. By: Bozio, Antoine (Paris School of Economics); Breda, Thomas (Paris School of Economics); Guillot, Malka (ETH Zurich)
    Abstract: Over the 1967-2015 period, net wage inequality has decreased in France by 25%, in contrast to the significant increase experienced by most developed countries. Less well known is the fact that labor cost inequality has actually increased by 8% over the same period. We show that, (a) standard demand-side explanations for the rise in inequality apply in France when tested using measures of labor cost (as they should be); (b) reforms to payroll taxation, jointly with increases in the minimum wage, can explain a large part of the decrease in net wage inequality, in the context of increasing market inequality.
    Keywords: wage inequality, labor cost, payroll tax, Social Security contributions, tax incidence
    JEL: I24 J24 J31
    Date: 2020–05
  7. By: Luis Sarmiento
    Abstract: I assert that air pollution from nitrogen oxides affects the productivity of employees in Mexican court hearings. This is the first article analyzing this connection and the first to disentangle work-breaks from the productivity of white-collar workers. I merge hourly pollution with granular hearing data under the assumption that the length of the hearing approximates productivity and identify causality from panel and instrumental variable techniques. Results show a loss of 3.83 workdays during the sample period due to the productivity shock stemming from comparing exposure at the hours with the highest and lowest concentration of nitrogen oxides in the data-set.
    Keywords: Air pollution, nitrogen oxides, productivity, labor market effects
    JEL: C23 J24 Q53
    Date: 2020
  8. By: Joan Crespo (Department of Economics, Universitat Jaume I, Castellón, Spain); Jesús Peiró-Palomino (INTECO & Department of Applied Economics II, University of Valencia, Spain); Emili Tortosa-Ausina (IVIE, Valencia and Department of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: This paper analyzes the impact of the university system performance on labor productivity growth for Spanish regions during the period 2009–2016. Using a frontier approach, we decompose changes in university performance into efficiency changes (approximations to the frontier) and changes due to technical progress (shifts of the frontier). Our results show a positive link between university performance and the productivity growth of their home regions. We also find that this impact is driven by shifts in the frontier rather than by approximation to the frontier. This effect is robust across stages of the economic cycle (crisis and recovery), as well as across different estimation methods, and when including spatial spillovers, although it is only significant for provinces with productivity levels above the median. This suggests that the inefficiency of the Spanish university system can be one of the factors slowing down the convergence path of Spanish provinces.
    Keywords: university performance, productivity, provinces
    JEL: C61 J24 R11
    Date: 2020
  9. By: Lodefalk, Magnus (Örebro University); Sjöholm, Fredrik (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: 2020–06–17
  10. By: Muehlemann, Samuel; Pfeifer, Harald; Wittek, Bernhard
    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 first-differences 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).
    JEL: J23 J24 M53
    Date: 2020–07–09
  11. By: Doepke, Matthias (Northwestern University); Gaetani, Ruben (University of Toronto)
    Abstract: Why has the college wage premium risen rapidly in the United States since the 1980s, but not in European economies such as Germany? We argue that differences in employment protection can account for much of the gap. We develop a model in which firms and workers make relationship-specific investments in skill accumulation. The incentive to invest is stronger when employment protection creates an expectation of long-lasting matches. We argue that changes in the economic environment have reduced relationship-specific investment for less-educated workers in the United States, but not for better-protected workers in Germany.
    Keywords: college wage premium, employment protection, job-specific skills
    JEL: E24 J24 J31 O15
    Date: 2020–06
  12. By: Julia Rechlitz; Luis Sarmiento; Aleksandar Zaklan
    Abstract: This paper uses a panel of German individuals and highly granular pollution data to test if air pollution affects adults’ well-being indirectly through the health of their children. Results show that ozone decreases the well-being of individuals with children while not affecting persons without kids. We confirm the same effect for fine particulate matter and sulfur dioxide. Concerning the mechanism, we find that above-median earners drive this effect and that ozone causes losses in workdays to care for a sick child, providing evidence on the children’s health channel to adults’ welfare losses.
    Keywords: Air pollution, ozone, well-being, subjective health, children’s health, parental in- vestments
    JEL: Q53 I31 I18 J22
    Date: 2020
  13. By: Rongsheng Tang; Yang Tang; Ping Wang
    Abstract: Over the past few decades, we find that about 80% of the widening residual wage inequality to be within jobs. We propose performance-pay incidence and job relatedness as two primary factors driving within-job inequality and embed them into a sorting equilibrium framework. We show that equilibrium sorting is positive assortative both within-job and across jobs. While performance-pay position amplifies within-job wage inequality through self-selection, the overall relationship between job relatedness and within-job wage inequality is found generally ambiguous. To quantify the role played by these factors, we calibrate the model to the US economy in 2000, where the model can account around 92% of the changes in within-job inequality among the highly educated from 1990 to 2000. Counterfactual analysis shows the contributions of performance-pay incidence and job relatedness are about 42% and 26%, respectively, both higher than that of job-specific productivity. While performance-pay incidence is particularly crucial for within-job wage dispersion in business/professional industry and professional occupation, job relatedness is the most important for mining/goods/construction industry and sales occupation.
    JEL: E24 I24 J31
    Date: 2020–06
  14. By: Brendan Epstein; Ryan Nunn; Musa Orak; Elena Patel
    Abstract: Taking inefficiencies from taxation as given, a well-known public finance literature shows that the elasticity of taxable income (ETI) is a sufficient statistic for assessing the deadweight loss (DWL) from taxing labor income in a static neoclassical framework. Using a theoretical approach, we revisit this result from the vantage point of a general equilibrium macroeconomic model with labor search frictions. We show that, in this context, and against the backdrop of inefficient taxation, DWL can be up to 38 percent higher than the ETI under a range of reasonable parametric assumptions. Externalities arising from market participants not taking into account the impact of changes in their search- and vacancy-posting activities on other market participants can amplify this divergence substantially. However, with theoretical precision, we show how the wedge between the ETI and DWL can be controlled for, using readily observable variables.
    Keywords: Social welfare; Deadweight loss from taxation; Search frictions; Elasticity of taxable income; Endogenous amenities
    JEL: H20 J32
    Date: 2020–06–17
  15. By: Stillman, Steven (Free University of Bozen/Bolzano); Velamuri, Malathi (Chennai Mathematical Institute)
    Abstract: A nascent but burgeoning literature examines the importance of non-cognitive skills in determining success across many facets of life. The majority of these papers treat these skills as fixed traits for adults. We estimate the impact of a number of life events on the Big Five personality traits and locus of control. A subset of life events have large impacts on these non-cognitive skills, especially on locus of control. For some events, these impacts persist in the medium-run. We then demonstrate that treating personality traits as fixed can lead to biased estimates of their relationship with socioeconomic outcomes.
    Keywords: personality, non-cognitive skills, life events, fixed
    JEL: J24 C18
    Date: 2020–06
  16. By: Ku, Hyejin (University College London)
    Abstract: We examine worker effort as a potential margin of adjustment to a minimum wage hike using unique data on piece rate workers who perform a homogenous task and whose individual output is rigorously recorded. By employing a difference-in-differences strategy that exploits the increase in Florida's minimum wage from $6.79 to $7.21 on January 1, 2009, and worker location on the pre-2009 productivity distribution, we provide evidence consistent with incumbent workers' positive effort responses.
    Keywords: minimum wage, incentive, effort, labor productivity
    JEL: J20 J38 M50
    Date: 2020–06
  17. By: Díaz Serrano, Lluís; Teruel, Mercedes
    Abstract: This paper studies the impact of the transition from salaried employment to self-employment on job satisfaction. Our analysis differs from previous empirical work in three crucial aspects. First, we consider all types of job-to-job transitions, which allow us to eliminate the pure mobility impact from the pure self-employment impact. Second, we consider not only overall job satisfaction but also satisfaction in a wide variety of job domains. Third, we study the interaction between previous unemployment spells and self-assessed skill mismatch with job transitions in their impact on job satisfaction. To do so, we use the European Community Household Panel covering the period from 1994 to 2001. Our data enable us to compare the same individuals before and after job transitions. Our findings indicate that individuals who transit from salaried employment to self-employment increase their job satisfaction more than workers who carry out other types of job transitions. Furthermore, we find that individuals who experience an unemployment spell or declare themselves to be skill mismatched just before the transition experience a higher increase in job satisfaction after the transition. Keywords: Self-employment, unemployment, skill-mismatch, job satisfaction. JEL Classification: L26, J24, B23
    Keywords: Emprenedoria, Satisfacció en el treball, Econometria, 331 - Treball. Relacions laborals. Ocupació. Organització del treball,
    Date: 2020
  18. By: Marieke Vandeweyer
    Abstract: This working paper looks at the labour market outcomes of individuals who hold a medium-level VET qualification (defined as upper or post-secondary non-tertiary education with vocational orientation) today, as well as how they have changed in the past 10 to 15 years and what can be expected in the medium-term. It looks at indicators of job quality and quantity, and zooms in on the types of occupations that employ VET graduates. The outcomes of VET graduates younger than 35 years old are compared to those of general education graduates (at the same education level), tertiary education graduates and graduates without an upper secondary education degree. Finally, based on these findings, the report discusses key policy directions to improve VET graduates’ access to high-quality jobs.
    JEL: J21 J24 J62 I26
    Date: 2020–07–18
  19. By: Guo, Audrey (Santa Clara University); Johnston, Andrew C. (University of California, Merced)
    Abstract: For every payment, there is an equal and opposite tax. In the study of unemployment insurance, economists have developed a substantial literature considering the impact of payments on labor supply. In contrast, they have usually left unexamined the influence on labor demand of the unique tax that finances it. Experience rating in unemployment insurance presents several fascinating questions for economists. This paper marks some of those questions and helps analysts engage them by explaining the unique institutions at play.
    Keywords: unemployment insurance, payrol taxation, experience rating
    JEL: D22 H22 H25 H71 J23 J32 J38 J65
    Date: 2020–06
  20. By: Ahmed Elsayed (IZA); Olivier Marie (Erasmus University Rotterdam)
    Abstract: Exploiting a unique policy reform in Egypt that reduced the number of years of compulsory schooling, we show how it unexpectedly increased education attainment as more students chose to complete the next school stage. This impact is almost entirely driven by girls from more disadvantaged households. Treated women later experienced important positive improvements in labor market opportunity and marriage quality, as measured by bride price received and household bargaining power. We attribute the increased investment in daughters’ human capital to changes in the behavior of credit-constrained families facing reduced school costs combined with strongly non-linear returns to female education.
    Keywords: School Costs, Education Investment, Gender Bias, Female Labor Market, Marriage, Bride Price, Egypt
    JEL: I21 I25 J24 O55
    Date: 2020–06–29
  21. By: Sevilla, Almudena (University College London); Smith, Sarah (University of Bristol)
    Abstract: The COVID19 pandemic has caused shocks to the demand for home childcare (with the closure of schools and nurseries) and the supply of home childcare (with many people not working). We collect real-time data on daily lives to document that UK families with young children have been doing the equivalent of a working week in childcare. Women have been doing the greater share, but overall, the gender childcare gap (the difference between the share of childcare done by women and the share done by men) for the additional, post-COVID19 hours is smaller than that for the allocation of pre-COVID19 childcare. However, the amount of additional childcare provided by men is very sensitive to their employment – the allocation has become more equal in households where men are working from home and where they have been furloughed/ lost their job. There are likely to be long-term implications from these changes – potentially negative for the careers of parents of young children; but also, more positively for some families, for sharing the burden of childcare more equally in the future.
    Keywords: gender, childcare, COVID-19, Coronavirus
    JEL: J21 J22 J24 J33 J63
    Date: 2020–05
  22. By: Deversi, Marvin (University of Munich (LMU)); Kocher, Martin G. (Institute for Advanced Studies, Vienna, University of Vienna, and University of Gothenburg); Schwieren, Christiane (University of Heidelberg)
    Abstract: We analyze cooperation within a company setting in order to study the relationshipbetween cooperative attitudes and financial as well as non-financial rewards. In to-tal, 910 employees of a large software company participate in an incentivized onlineexperiment. We observe high levels of cooperation and the typical conditional con-tribution patterns in a modified public goods game. When linking experiment andcompany record data, we observe that cooperative attitudes of employees do not payoff in terms of financial rewards within the company. Rather, cooperative employeesreceive non-financial benefits such as recognition or friendship as the main rewardmedium. In contrast to most studies in the experimental laboratory, sustained levelsof cooperation in our company setting relate to non-financial values of cooperationrather than solely to financial incentives.
    Keywords: cooperation, social dilemma, field experiment, company
    JEL: C93 D23 H41 J31 J32 M52
    Date: 2020–05
  23. By: Gimenez-Nadal, J. Ignacio (University of Zaragoza); Molina, José Alberto (University of Zaragoza); Velilla, Jorge (University of Zaragoza)
    Abstract: The COVID-19 pandemic has confined millions in their homes, representing an unprecedented case for spending more time together with family members. This situation is a challenge for households, given that more time with the partner or children may not necessarily translate into increased well-being. This paper explores subjective well-being in the uses of time for US and UK workers, differentiating between solo activities and activities done with family members. Using the American and British time use surveys, we compute the instant utility associated with paid work, unpaid work, leisure, and childcare activities. The results show that workers prefer joint leisure to solo leisure, and significant differences exist between female and male workers for solo and joint market work and housework. The conclusions of this paper indicate that there are gender differences in the effects of the COVID-19 pandemic on well-being, affecting the time spent by individuals in both paid and unpaid work.
    Keywords: time allocation, instantaneous well-being, togetherness, gender difference, COVID-19
    JEL: D10 J16 J22
    Date: 2020–05

This nep-lma issue is ©2020 by Joseph Marchand. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.