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on Labor Markets - Supply, Demand, and Wages |
| By: | Dorner, Matthias; Görlitz, Katja |
| Abstract: | This study analyzes the effects of a missing high school graduation cohort on firms' training provision and trainees' wages. An exogenous school reform varying at the state and year level caused the missing cohort to occur. Using administrative social security data on all trainees and training firms, we show that firms provide less training by reducing their overall number of hired apprentices. We also show that the pool of firms that offer training in the year of the missing cohort shifts towards a higher share of low wage firms. After keeping firm characteristics constant, the findings indicate that the missing cohort increases training wages measured at the start of training. Further analyses shed light on the opposite case of dual cohorts, which we find to increase training provision and to decrease training wages. The evidence also shows that high and low wage firms differ in how they adjust training provision in response to a dual cohort. |
| Keywords: | training wages,training provision,missing high school graduation cohort,high and low wage firms,dual high school graduation cohort |
| JEL: | J21 J24 J31 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:858&r=all |
| By: | Jonathan Heathcote; Fabrizio Perri; Giovanni L. Violante |
| Abstract: | We document that declining hours worked are the primary driver of widening inequality in the bottom half of the male labor earnings distribution in the United States over the past 52 years. This decline in hours is heavily concentrated in recessions: hours and earnings at the bottom fall sharply in recessions and do not fully recover in subsequent expansions. Motivated by this evidence, we build a structural model to explore the possibility that recessions cause persistent increases in inequality; that is, that the cycle drives the trend. The model features skill-biased technical change, which implies a trend decline in low-skill wages relative to the value of non-market activities. With this adverse trend in the background, recessions imply a potential double-whammy for low skilled men. This group is disproportionately likely to experience unemployment, which further reduces skills and potential earnings via a scarring effect. As unemployed low skilled men give up job search, recessions generate surges in non-participation. Because non-participation is highly persistent, earnings inequality remains elevated long after the recession ends. |
| JEL: | E24 E32 J24 J31 J64 J65 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27345&r=all |
| By: | Gozde Corekcioglu; Marco Francesconi; Astrid Kunze |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8330&r=all |
| By: | Marchand, Joseph (University of Alberta, Department of Economics) |
| Abstract: | Energy booms are most often associated with large increases in employment and earnings, as well as positive local labor market spillovers from energy to non-energy industries. In this study, the large, localized, and positive labor demand shock from an energy price boom in Western Canada was also found to increase the routine and manual task content of employment across the occupational distribution. Both occupation groups involving routine manual tasks (operators, fabricators and laborers; and production, craft, and repair), as well as one occupational group involving non-routine cognitive tasks (technicians), significantly increased their employment shares during this boom. However, these results show that only the routinization of employment had a significant impact on wages; not manualization. This conventional boom evidence illustrates how an energy boom can impact labor, beyond the traditional changes in employment and earnings, and serves as a counterexample to the documented occupational polarization often attributed to technological change. |
| Keywords: | employment; energy boom and bust; labor demand; occupational structure; routine tasks |
| JEL: | J23 J31 Q33 R23 |
| Date: | 2020–07–09 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2020_008&r=all |
| By: | Florian H. Schneider; Fanny Brun; Roberto A. Weber |
| Abstract: | We use surveys, laboratory experiments and administrative labor-market data to study how heterogeneity in the perceived immorality of work and in workers’ aversion to acting immorally interact to impact labor market outcomes. Specifically, we investigate whether those individuals least concerned with acting morally select into jobs generally perceived as immoral and whether the aversion among many individuals to performing such acts contributes to immorality wage premiums, a form of compensating differential. We show that immoral work is associated with higher wages, both using correlational evidence from administrative labor-market data and causal evidence from a laboratory experiment. We also measure individuals’ aversion to performing immoral acts and show that those who find immoral behavior least aversive are more likely to be employed in immoral work in the lab and have a relative preference for work perceived as immoral outside the laboratory. We note that sorting by “immoral” types into jobs that can cause harm may be detrimental for society. Our study highlights the value of employing complementary research methods. |
| Keywords: | Wage premium, immoral behavior, sorting, experiments |
| JEL: | C92 J31 D03 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:353&r=all |
| By: | Martínez-Correa, Jimmy; Andersen, Steffen; d’Astous, Philippe; H. Shore, Stephen |
| Abstract: | University programs differ in their gender earnings gaps, the difference between the subsequent earnings of the program’s male and female enrollees. A program could have a positive gender earnings gap because the program attracts higher-ability men than women (a selection effect), or because the program increases the earnings of male enrollees more than female enrollees (a causal effect). To understand the source of cross-program differences in gender earnings gaps, we exploit a discontinuity built into the Danish national university admissions system, which provides a quasi-random assignment of similar applicants to different programs. Enrolling in a program with a $1 larger gender earnings gap, holding average earnings constant, does not affect male earnings but reduces female earnings by $0.45. This effect is small as women enter the labor market but increase over time, and cannot be explained by channels related to marriage or childbirth. Our results show that programs that appear worse for women – in the sense of having economically significant gender earnings gaps – are worse for women because they reduce female earnings more than programs with smaller gaps. |
| JEL: | I23 I26 J24 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:rie:riecdt:48&r=all |
| By: | Diego Comin; Ana Danieli (Northwestern University); Martí Mestieri (Northwestern University) |
| Abstract: | We propose a mechanism for labor-market polarization based on the nonhomotheticity of demand that we call the income-driven channel. Our mechanism builds on a novel empirical fact: expenditure elasticities and production intensities in low- and high-skill occupations are positively correlated across sectors. Thus, as income grows, demand shifts towards expenditure-elastic sectors, and the relative demand for low- and high-skill occupations increases, causing labor-market polarization. A calibrated general-equilibrium model suggests this mechanism accounts for 90% and 35% of the increase in the wage-bill share of low- and high-skill occupations observed in the US during 1980-2016, and for 64% and 28% of the rise in the employment shares of low- and high-skill occupations. This mechanism is similarly important for the polarization of labor markets in Western Europe during 1980-2016, as well as in the US during earlier decades and, possibly, the near future. |
| Keywords: | labor-market polarization, nonhomothetic demand |
| JEL: | E21 E23 J23 J31 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2020-050&r=all |
| By: | Müller, Steffen; Neuschäffer, Georg |
| Abstract: | Worker participation in decision-making is often associated with high-wage and high-productivity firm strategies. Using linked-employer-employee data for Germany and worker fixed effects from a two-way fixed effects model of wages capturing observed and unobserved worker quality, we find that establishments with formal worker participation via works councils indeed employ higher-quality workers. We show that worker quality is already higher in plants before council introduction and further increases after the introduction. Importantly, we corroborate previous studies by showing positive productivity and profitability effects even after taking into account worker sorting. |
| Keywords: | works councils,worker sorting,worker quality,between-firm wage inequality,productivity,profits |
| JEL: | J5 J24 J31 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhdps:112020&r=all |
| By: | Wataru Hirata (Bank of Japan); Toshitaka Maruyama (Bank of Japan); Tomohide Mineyama (Bank of Japan) |
| Abstract: | In this paper, we examine from both a theoretical and an empirical perspective the validity of the hypothesis that downward nominal wage rigidity (DNWR) induced upward rigidity in wage setting, thereby contributing to the flattening of the wage Phillips curve. We focus in particular on Japanese regular workers, those workers who are characteristically employed on long-term contracts. Our theoretical study, which incorporates long-term employment contracts, indicates that DNWR induces upward wage rigidity through the following two channels: first, due to the lack of sufficient downward wage adjustments during economic downturns, firms may become reluctant to increase wages in economic recovery phases; second, firms contain wage increases even in economic expansion phases as they take into account the risk of pay cuts in the future. The strength of the latter channel largely depends on expected economic growth and its uncertainty. As a result, the wage Phillips curve becomes flatter than would be the case without DNWR. In line with the theoretical result, our empirical study using the panel data of Japanese regular workers reveals that the slower growth of monthly earnings, which excludes bonuses but includes overtime pay, for workers who display a strong degree of DNWR pushed down the growth of monthly earnings at the aggregate level by 0.4 percentage points per year (a range of 0.2 to 0.6 percentage points, given uncertainty regarding the identification of DNWR) between 2010-17. In particular, the channel arising from future pay cut risks became relatively stronger in the late 2010s, when labor market conditions became markedly tighter. |
| Keywords: | Wage Phillips curve; Downward nominal wage rigidity; Long-term employment contracts |
| JEL: | E24 E31 J30 |
| Date: | 2020–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:boj:bojwps:wp20e04&r=all |
| By: | Theodore Papageorgiou (Boston College) |
| Abstract: | In this paper, I document that workers in larger cities have significantly more occupational options than workers in smaller ones. They are able to form better occupational matches and earn higher wages. I also note differences in the occupational reallocation patterns across cities. I develop a dynamic model of occupational choice that microfounds agglomeration economies and captures the empirical patterns. The calibration of the model suggests that better occupational match quality accounts for approximately 35% of the observed wage premium and a third of the greater inequality in larger cities. |
| Keywords: | occupations, agglomeration economies, urban wage premium, multi-armed bandits, geographical mobility, matching theory, wage inequality, job vacancy postings |
| JEL: | J24 J31 R23 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2020-049&r=all |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2020020&r=all |
| By: | Diego Daruich; Raquel Fernández |
| Abstract: | The idea of universal basic income (UBI)—a set income that is given to all without any conditions— is making an important comeback but there is no real evidence regarding its long-term consequences. This paper provides a very inexpensive evaluation of such a policy by studying its dynamic consequences in a general equilibrium model with imperfect capital markets and labor market shocks, in which households make decisions about education, savings, labor supply, and with intergenerational linkages via skill formation. The steady state of the model is estimated to match US household data. We find that a UBI policy that gives all households a yearly income equivalent to the poverty line level has very different welfare implications for those alive when the policy is introduced relative to future generations. While a majority of adults (primarily older non-college workers) would vote in favor of introducing UBI, all future generations (operating behind the veil of ignorance) would prefer to live in an economy without UBI. The expense of the latter leads to lower skill formation and education, requiring even higher tax rates over time. Modeling automation as an increased probability of being hit by an “out-of-work” shock, the model is also used to provide insights on how the benefits of UBI change as the environment becomes riskier. The results suggest that UBI may be a useful transitional policy to help current individuals whose skills are more likely to become obsolete and are unprepared for the increased risk, while, simultaneously, education policies may be implemented to increase the likelihood that future cohorts remain productive and employed. |
| JEL: | H24 H31 I38 J24 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27351&r=all |
| By: | Kseniya Bortnikova (Institute of Economic Studies, Faculty of Social Sciences, Charles University Opletalova 26, 110 00, Prague, Czech Republic) |
| Abstract: | The economics of beauty is now a burgeoning field of research. Not only the magnitude but also the direction of the beauty effect on labor outcomes is a matter of discussion. In this work, I conduct a quantitative synthesis of 418 estimates of the effect of beauty on worker’s productivity, as reported in 37 studies. The estimates are tested for publication selection using informal testing of the funnel plot as well as formal testing methods. The results provide substantial evidence of selective reporting: positive estimates of the beauty effect are preferred in literature. The set of 21 explanatory variables was collected to determine the sources of heterogeneity in the reported estimates. To account for the model uncertainty, I employ the Bayesian and Frequentist model averaging. The results indicate that differences in the reported estimates appear to be driven by choice of study design and sources of real heterogeneity, such as geographical regions and individual characteristics of respondents. The type of occupation and gender of respondents have no impact on the estimates of beauty effect concerning productivity. The average beauty effect is probably much lower than commonly believed based on the available empirical literature. |
| Keywords: | Beauty bias, productivity, discrimination, meta-analysis, publication bias |
| JEL: | C83 J3 J7 M51 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2020_18&r=all |
| By: | Cristina Lion; Vanessa Lupo; Katia Santomieri; Veronica Sciatta |
| Abstract: | Job quality is a key issue in the agenda of policy makers at the international and European level: a strong commitment towards decent work has strengthened and a particular attention to young generation has been devoted. Since 2014 the European Youth Guarantee Program has been strongly investing in active labor market policies, with the aim to combat youth unemployment and inactivity: noncurricular traineeship is one of the most widespread measure supported by the program and the issue of its quality has become more and more relevant. Against this background,the paper has analysed the relationship between the quality of traineeship that young people have experienced and the quality of their job: the hypothesis is that participating in a high quality traineeship entails a better transition towards decent jobs. We use data of a sample survey carried out in 2017 by ANPAL on 20,000 young people who have registered to the Youth Guarantee program. Preliminary results suggest that the quality of traineeship is important in promoting better job for young people. |
| Keywords: | quality of work, non-curricular traineeship, NEETS, Youth Guarantee |
| JEL: | J24 C38 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:ast:wpaper:0053&r=all |
| By: | Daniela Collazos; Leopoldo Fergusson; Miguel La Rota; Daniel Mejía; Daniel Ortega |
| Abstract: | This paper evaluates the impacts of increased coordination, accountability, and leadership among teams of responsible public officials, with evidence from homicide investigations in Colombia. We randomly assigned the investigations of 66% of the 1,683 homicides occurring in Bogotá, Colombia, during 2016 to a new investigation procedure emphasizing these features. We find a statistically signi ficant 30% increase in the conviction rate in the treatment group relative to the control group. Indicators of the quality of the investigative process also improve, as well as the rate at which a formal accusation is presented before a court. Complementary findings suggest that the treatment produces well-coordinated teams that can communicate more uently. Also, a survey of investigative team members reveal that work motivation, the extent to which they receive feedback on their performance, the pertinence and effectiveness of their roles, and the perceived quality and coordination of the team all improve under the new scheme. |
| Keywords: | Crime, Homicides, Team work, Public sector. |
| JEL: | C93 D73 J45 K14 K42 |
| Date: | 2020–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:018206&r=all |
| By: | Timothy DeStefano; Richard Kneller; Jonathan Timmis |
| Abstract: | Cloud computing enables a shift in the costs of ICT adoption from investment in fixed capital to pay-on-demand services allowing firms to scale and reorganize. Using new firm-level data we examine the impact of cloud on firm growth, using zip-code-level instruments of the timing of high-speed fiber availability and speeds. Cloud leads to the growth of employment and revenue for young firms, but they become concentrated in fewer establishments. For incumbents, we find smaller scale effects but dispersed activity through closing establishments and moving employment farther from the headquarters. Moreover, cloud adoption leads to worker relocation across establishments within firms. |
| Keywords: | cloud, digital, productivity, firms |
| JEL: | J23 J24 L20 O33 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8306&r=all |
| By: | Iris Kesternich; Heiner Schumacher; Bettina Siflinger; Franziska Valder |
| Abstract: | Survey measures of the reservation wage reflect both the consumption-leisure trade-off and job search concerns (the arrival rate of job offers and the wage distribution). We examine what a survey measure of the reservation wage reveals about labor supply when search concerns are absent. To this end, we combine the reservation wage measure from a large labor market survey with the reservation wage for a one-hour job that we elicit in an online experiment. The two measures show a strong positive association. For unemployed individuals, the experimental reservation wage increases on average by around one Euro for every Euro increase in the survey measure. For employed individuals, the association between the two measures is weaker, but still positive and statistically significant. We show that these results are robust to selection into the experiment, and that demographic variables have a similar influence on both reservation wage measures. |
| Keywords: | reservation wage, labor supply, search, validation of survey measures |
| JEL: | C83 C91 J22 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8348&r=all |
| By: | Ann Vourc'h; Coralie Perez |
| Abstract: | The creation of the Compte Personnel de Formation (CPF), an individualised financing scheme for professional training, marked an important step for the French professional training system. Implemented in 2015, it is the only example at the international level of an individual learning account in which training rights are accumulated over time. Born from a compromise between social partners, the CPF has generated significant improvements in training quality. The law of September 5, 2018 “For the freedom to choose one’s professional future” brought significant changes to the account in order to strengthen the role of the individual in the system, to reduce the role of collective actors – in particular sectors – and to increase that of free competition and market forces. After reviewing the design of the CPF before and after the reform, this paper provides evidence on its use in practice, discusses the extent to which it succeeds in reaching groups usually under-represented in training, as well as issues related to the quality of training. It concludes with a discussion of the CPF strengths and weaknesses. |
| JEL: | J24 J58 J62 M53 K31 |
| Date: | 2020–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:245-en&r=all |
| By: | Zeyer-Gliozzo, Birgit |
| Abstract: | The automation of work tasks due to technological change increases the pressure on employees whose workplaces consist largely of such activities. Further training is an important way of adapting skills and enabling the performance of tasks that cannot be automated and are required in modern labour markets. Therefore, it should help to reduce the number of substitutable tasks performed and the risk of automation. These returns to training are highly relevant, but as yet little studied. Using data from the German National Educational Panel Study (NEPS), this paper examines the effect of formal, non-formal and informal training on work tasks and the automation probability for workers at risk of automation. The results show that nonformal and informal training in the form of media use actually helps to reduce the intensity of routine tasks. The effects of training on analytic, interactive and manual tasks as well as the probability of automation differ depending on the type of training, but are in many cases not significant. Furthermore, the results indicate that the impact of training on tasks partly varies with the degree of computerisation, a change of job and the level of education. |
| Keywords: | further training,returns to education,automation,job tasks |
| JEL: | I26 J24 M53 O33 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:857&r=all |
| By: | Chowdhury, Shyamal (University of Sydney, IZA Bonn); Sutter, Matthias (Max Planck Institute for Research on Collective Goods Bonn, University of Cologne and University of Innsbruck); Zimmermann, Klaus F. (Maastricht University, UNU-MERIT and GLO) |
| Abstract: | Economic preferences are important for lifetime outcomes such as educational achievements, health status, or labour market success. We present a holistic view of how economic preferences are related within families. In an experiment with 544 families (and 1,999 individuals) from rural Bangladesh we find a large degree of intergenerational persistence of economic preferences. Both mothers’ and fathers’ risk, time and social preferences are significantly (and largely to the same degree) positively correlated with their children’s economic preferences, even when controlling for personality traits and socio-economic background data. We discuss possible transmission channels for these relationships within families and find indications that there is more than pure genetics at work. Moving beyond an individual level analysis, we are the first to classify a whole family into one of two clusters, with either relatively patient, risk-tolerant and pro-social members or relatively impatient, risk averse and spiteful members. Socio-economic background variables correlate with the cluster to which a family belongs to. |
| Keywords: | Economic preferences within families, intergenerational transmission of preferences, time preferences, risk preferences, social preferences, family clusters, socio-economic status, Bangladesh, experiment |
| JEL: | C90 D1 D90 D81 D64 J13 J24 J62 |
| Date: | 2020–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2020030&r=all |
| By: | Surajeet Chakravarty (University of Exeter); Sumedh Dalwai (University of Exeter); Pradeep Kumar (University of Exeter) |
| Abstract: | An important aspect of providing credit to the poor is the mechanism adopted by the credit institutions to do so. Most microfinance banks use field agents to acquire new borrowers, manage the account and collect repayments. How does the supply of credit change with a change in incentives provided to such field agents? Mann Deshi Bank, a microfinance bank in India, changed its remuneration scheme from a pure commission based to a mixed scheme with a combination of a base salary and other incentives. This paper examines the effect it had on the effort and the performance of the agents by using a rich panel data on the bankÕs joint liability lending product. The results show that the change in the contract form with a large flat wage and reduced incentives improved performance of the agents in terms of the quantity (increase in the number of borrowers acquired) and quality (the borrowers acquired had fewer delays in repayments). We find evidence of mixed contract agents exerting significantly more effort than the pure commission agents to ascertain borrower quality. |
| Keywords: | Micro-finance institutions, joint liability loans, labor contracts, moral hazard |
| JEL: | G21 O12 J41 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:exe:wpaper:2002&r=all |
| By: | Teresa Farinha; ; Raphaël |
| Abstract: | Workers that become automated may transfer productivity gains to their co-workers or make it easier to automate their jobs too. In this paper, I empirically investigate how automatable jobs have diffused impacts to neighbouring jobs in North American cities between 2007 and 2016. Results indicate that jobs that share similarities with neighbouring high-risk jobs grew less, even when controlling for their own technical risk of automation. Conversely, jobs that share complementarities with neighbouring high-risk jobs grew faster, possibly indicating productivity gains from working with recently automated jobs. In addition to the analysis in this paper, I provide an adjusted index of job automation risk that accounts for local diffusion of impacts (negative and positive) in US cities. |
| Keywords: | automation, diffusion, jobs, cities, similarity, complementarity |
| JEL: | J21 O20 O33 R10 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2029&r=all |