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on Labor Markets - Supply, Demand, and Wages |
| By: | Zölitz, Ulf (University of Zurich); Feld, Jan (Victoria University of Wellington) |
| Abstract: | Business degrees are popular and lead to high earnings. Female business graduates, however, earn less than their male counterparts. These gender differences can be traced back to university, where women shy away from majors like finance that lead to high earnings. In this paper, we investigate how the gender composition of peers in business school affects women's and men's major choices and labor market outcomes. We find that women who are randomly assigned to teaching sections with more female peers become less likely to choose male-dominated majors like finance and more likely to choose female-dominated majors like marketing. After graduation, these women end up in jobs where their earnings grow more slowly. Men, on the other hand, become more likely to choose male-dominated majors and less likely to choose female-dominated majors when they had more female peers in business school. However, men's labor market outcomes are not significantly affected. Taken together, our results show that studying with more female peers in business school increases gender segregation in educational choice and affects labor market outcomes. |
| Keywords: | gender composition, major choice, peer effects |
| JEL: | I21 I24 J24 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13396&r=all |
| By: | d'Agostino, Giorgio; Patriarca, Fabrizio; Pieroni, Luca; Scarlato, Margherita |
| Abstract: | This paper evaluates the wage effects of a tax credit policy on new hirings in Southern Italy. We use high-quality administrative data and propose a latent class inverse probability weighting method as a strategy to account for workers' unobserved heterogeneity. We find an unexpected negative effect of the tax cut on the wages of treated workers, which is more marked for women. Our results also provide new insights on the job-segregation dimension of the gender gap. We provide a theoretical model with worker and firm fixed effects to analyse the impact of employer tax cuts as a place-based policy in lagging regions. |
| Keywords: | Regional disparities, place-based policies, hiring credits, wage differentials, gender segregation. |
| JEL: | J16 J31 J38 J42 R58 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:102240&r=all |
| By: | Sem Vandekerckhove (HIVA Onderzoeksinstituut voor Arbeid en Samenleving, KU-Leuven); Sam Desiere (KU-Leuven); Karolien Lenaerts (KU-Leuven) |
| Abstract: | Measuring the effects minimum wages have on wage inequality and employment is complex, and troubled by endogeneity issues. We use a large longitudinal dataset and sectoral minimum wage variation to analyse trends in minimum wages and wage inequality in Belgium. Building on the model of Lee (1999) and the critique by Autor, Manning and Smith (2014), we find that minimum wage increases in Belgium cause a two-sided compression of the wage distribution. Using wage indexation as a natural instrument, we find an additional source of endogeneity in sectoral bargaining. It appears that unions and employer’s representatives prefer increasing lower wages over higher wages. This paper explores several hypotheses that could explain this outcome, including firm proximity to sectoral wage bargaining, and labour supply elasticity. The results suggest that a higher likelihood of firm involvement in the bargaining process indeed enhances ‘endogenous’ wage setting, in which minimum wage levels and wage dispersion are simultaneously determined. A similar finding appears in absence of white-collar workers, pointing to different degrees of internal redistribution in sectors depending on the outside options of workers. The minimum wage effects found when including sectoral characteristics can contribute to understanding different minimum wage effects encountered in other and future research, and advise policy makers to consider the criteria to judiciously set minimum wages at the right level through collective bargaining. |
| Keywords: | Minimum wages; Wage inequality; Collective bargaining, Wage compression. |
| JEL: | J31 J52 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:202007-387&r=all |
| By: | Michael Darden; Julie L. Hotchkiss; M. Melinda Pitts |
| Abstract: | Cigarette smokers earn significantly less than nonsmokers, but the magnitude of the smoking wage gap and the pathways by which it originates are unclear. Proposed mechanisms often focus on spot differences in employee productivity or employer preferences, neglecting the dynamic nature of human capital development and addiction. In this paper, we formulate a dynamic model of young workers as they transition from schooling to the labor market, a period in which the lifetime trajectory of wages is being developed. We estimate the model with data from the National Longitudinal Survey of Youth, 1997 Cohort, and we simulate the model under counterfactual scenarios that isolate the contemporaneous effects of smoking from dynamic differences in human capital accumulation and occupational selection. Results from our preferred model, which accounts for unobserved heterogeneity in the joint determination of smoking, human capital, labor supply, and wages, suggest that continued heavy smoking in young adulthood results in a wage penalty at age 30 of 14.8 percent and 9.3 percent for women and men, respectively. These differences are less than half of the raw mean difference in wages at age 30. We show that the contemporaneous effect of heavy smoking net of any life-cycle effects explains roughly 67 percent of the female smoking wage gap but only 11 percent of the male smoking wage gap. |
| Keywords: | wages; smoking; dynamic system of equations |
| JEL: | I10 I12 |
| Date: | 2020–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:88477&r=all |
| By: | Ruhose, Jens ((CEE) Centre D'Ètudes de L'Emploi); Thomsen, Stephan L. (Leibniz University of Hannover); Weilage, Insa (Leibniz University of Hannover) |
| Abstract: | Adult education can mitigate the productivity decline in aging societies if older workers are willing to learn. We examine a generous partial retirement reform in Germany that led to a massive increase in early retirement. Using county-level administrative data on voluntary education activities, we employ a difference-in-differences approach for identification. The estimates show a strong increase in participation in adult education, specifically in cognitively demanding courses, for early retirees who would have continued working in the absence of the reform. This supports the notion of an intrinsic willingness of older individuals to acquire skills and abilities independent of financial incentives. |
| Keywords: | partial retirement, early retirement, older workers, adult education, generalized difference-in-differences |
| JEL: | J14 J24 J26 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13416&r=all |
| By: | Lodefalk, Magnus (The Ratio Institute); 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: | 2020–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0335&r=all |
| By: | Baum, Christopher F.; Lööf, Hans; Stephan, Andreas; Zimmermann, Klaus F. |
| Abstract: | Refugee workers start low and adjust slowly to the wages of comparable natives. The innovative approach in this study using unique Swedish employeremployee data shows that the observed wage gap between established refugees and comparable natives is mainly caused by occupational sorting into cognitive and manual tasks. Within occupations, it can be largely explained by differences in work experience. The identification strategy relies on a control group of matched natives with the same characteristics as the refugees, using panel data for 2003–2013 to capture unobserved heterogeneity. |
| Keywords: | refugees,wage earnings gap,Blinder—Oaxaca decomposition,employer-employee data,coarsened exact matching,correlated random effects model |
| JEL: | C23 F22 J24 J6 O15 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:562r&r=all |
| By: | Stephen R.G. Jones (McMaster University); Fabian Lange (McGill University and CIREQ and NBER and IZA); W. Craig Riddell (University of British Columbia and IZA); Casey Warman (Dalhousie University and NBER) |
| Abstract: | The Canadian labour market is currently emerging from a holding pattern with unusually high numbers in temporary (or “recall”) unemployment, those “employed but absent from work” for unspecified reasons, or not in the labour force while waiting to be recalled. Two encouraging signs are evident. New postings of vacancies have recovered from 50% percent to about 80% of their pre-crisis level. Also, data suggest that the increase in employment in May 2020 is due to some of those waiting to be recalled re-entering employment. These patterns suggest that a reasonably quick rebound of the labour market may be possible. Warning signs are that the shares of the unemployed without job attachment as well as those on recall engaged in job search are beginning to increase. |
| Keywords: | COVID-19, vacancies, unemployment, employment |
| JEL: | J21 J22 J23 J63 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:mtl:montec:17-2020&r=all |
| By: | Kettlewell, Nathan (University of Technology, Sydney); Lam, Jack (University of Queensland) |
| Abstract: | Social support is increasingly acknowledged as an important resource for promoting wellbeing. We test whether social support changes around retirement. We also examine whether social support moderates dynamics in mental wellbeing around retirement and consider both own and spouse's retirement. Using longitudinal data from Australia, we find little effect of own or spouse's retirement on social support. However, in fixed-effects models, dynamics in mental wellbeing are significantly different between those with low/high social support. Using pension eligibility as an instrument, we find that own retirement causally improves mental wellbeing for women (weaker evidence for men) and by a similar degree for those with low/high social support. We also estimate responses to life satisfaction and find evidence that spill-over benefits from spousal retirement are much larger for individuals with low social support. |
| Keywords: | retirement, social support, Australia, couples, mental wellbeing |
| JEL: | I10 H55 J14 J26 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13403&r=all |
| By: | Gordon B. Dahl; Matthew M. Knepper |
| Abstract: | A key prediction of discrimination models is that competition in the labor market serves as a moderating force on employer discrimination. In the presence of market frictions, however, recessions create excess labor supply and thus generate opportunities to engage in discriminatory behaviors far more cheaply. A natural question arises: does discrimination increase during recessions? We focus on age discrimination and test this hypothesis in two ways. We first use employee discrimination charges filed with the Equal Employment Opportunity Commission (EEOC), along with an objective measure of the quality of those charges. For each one percentage point increase in a state-industry’s monthly unemployment rate, the volume of age discrimination firing and hiring charges increases by 4.8% and 3.4%, respectively. Even though the incentive to file weaker claims is stronger when unemployment is high, the fraction of meritorious claims also increases significantly when labor market conditions deteriorate. This is a sufficient condition for real (versus merely reported) discrimination to be increasing under mild assumptions. Second, we repurpose data from a correspondence study in which fictitious resumes of women were randomly assigned older versus younger ages and circulated across different cities and time periods during the recovery from the Great Recession. Each one percentage point increase in the local unemployment rate reduces the relative callback rate for older women by 14%. |
| JEL: | J23 J64 J71 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27581&r=all |
| By: | Martins, Pedro S. |
| Abstract: | Politicians can use the public sector to give jobs to cronies, at the expense of the efficiency of those organisations and general welfare. In this paper, we regress monthly hires across all firms in Portugal with some degree of public ownership on the country's 1980-2018 political cycle. We find that public-sector appointments increase significantly over the months just after elections but only if the new government is of a different political colour than its predecessor. These results are consistent with a simple model of cronyism and hold in multiple robustness checks. Overall, we find our evidence to be consistent with politically-induced misallocation of public resources. |
| Keywords: | Corruption,matched employer-employee panel data,public-sector employment |
| JEL: | J45 H11 J23 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:624&r=all |
| By: | Baert, Stijn |
| Abstract: | This article introduces the metaphor of the iceberg in the labour market. While policy in most OECD countries has historically focussed on reducing unemployment (the tip of the iceberg), the group of inactive people (below the waterline) is much larger. Therefore, we point to the clear limitations of the unemployment rate as the (single) key macro-economic indicator of the health of the labour market. A parsimonious dashboard approach utilising the unemployment-to-population ratio and the inactivity-topopulation ratio as two highly appropriate and complementary measures is defended. We show that the ratio of these two indices varies greatly between countries, which calls for different policies for different countries. |
| Keywords: | Employment,unemployment,inactivity,labour market policy,labour market indicators |
| JEL: | J64 J08 J23 J24 J68 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:610&r=all |
| By: | Paul, Saumik (Newcastle University); Thomas, Liam (University of Tokyo) |
| Abstract: | We propose a theory-based adjustment to the labor income share to correct for the self-employment bias. Through a two-sector neoclassical framework with agriculture and non-agriculture, we derive the productivity-adjusted aggregate labor income share in terms of the agricultural productivity gap, and the labor income share in non-agriculture and value-added factor shares. We then construct a novel dataset on the labor income share at a sector level comprising of 53 countries. By applying the theory-based adjustment to our data, the average values for the aggregate and agricultural productivity-adjusted labor income share are 0.42 and 0.51, respectively. The gap between the productivity-adjusted and unadjusted figures are statistically significant only in agriculture, which can be attributed to the heavily underreported income from self-employed workers in agriculture. These findings appear robust at a more disaggregated level of non-agricultural sectors, as self-employment explains almost 98% of the variation in this gap. |
| Keywords: | labor income share, cross-country data, income distribution, self-employment |
| JEL: | E24 E25 J30 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13415&r=all |
| By: | Alessio Tomelleri (Free University of Bolzano‐Bozen, Faculty of Economics and Management, Italy) |
| Abstract: | Using tax-based longitudinal microdata from 1985 to 2016, I document how the widening income distribution in Italy is driven by younger cohorts. Entry wages started to decrease around the mid-1990s, at the same time returns to experience of new entrants in the labour market declined. Falling wage growth is linked to the institutional changes that occurred in the Italian labour market in the decade across the 2000s. I examine the impact of Italian labour market reforms on cohort-specific wage inequality by looking at the relationship between the number of temporary job spells and individual earnings. Results confirm that young and high-skilled new entrants show higher wage differential in comparison to older workers and that the increase in temporary jobs is a crucial factor in explaining the cohort wage gap. |
| Keywords: | Income inequality; Cohort analysis; Labour market institutions |
| JEL: | J31 J41 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:bzn:wpaper:bemps71&r=all |
| By: | Inez Hillel |
| Abstract: | This report looks at Canada’s social safety net before the onset of the crisis caused by COVID-19 and collapsing oil prices. It sets the stage by reviewing trends in poverty and inequality between 1976 and 2018. The report examines the federal government’s Poverty Reduction Strategy and its success in reducing poverty for children and seniors. Working-age adults without children have experienced the smallest relative decrease in poverty and currently have the highest poverty rates among any age group. The report analyzes general eligibility criteria and work and training requirements for social assistance, and the adequacy of welfare. National trends show that welfare dependency has fallen significantly between 1998 and 2018. Other significant trends show an increase in the percentage of social assistance recipients reporting a disability, a growing proportion of single adults on welfare and a decrease in the number of families with children receiving social assistance. To reduce poverty and improve welfare adequacy, this report recommends increasing social assistance benefits, raising the minimum wage, improving earning supplements for low-wage workers and extending in-kind benefits to all low-income. |
| Keywords: | Poverty, Inequality, Social Assistance, Canada, Welfare, Living Standards, Earning Supplements, Low-Wage Workers |
| JEL: | D63 D61 D84 I38 I31 I32 J18 J30 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:sls:resrep:1912&r=all |
| By: | Gunadi, Christian; Ryu, Hanbyul |
| Abstract: | Technological advancements bring changes to our life, altering our behaviors as well as our role in the economy. In this paper, we examine the potential effect of the rise of robotic technology on health. The results of the analysis suggest that higher penetration of industrial robots in the local labor market is positively related to the health of the low-skilled population. A ten percent increase in robots per 1,000 workers is associated with an approximately 10% reduction in the fraction of low-skilled individuals reporting poor health. Further analysis suggests that reallocation of tasks and reduction in unhealthy behavior partly explain this finding. |
| Keywords: | Automation,Robots,Health |
| JEL: | I10 I13 J24 O33 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:600&r=all |
| By: | Elsayed, Ahmed (IZA); Marie, Olivier (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 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13402&r=all |
| By: | Martina Magli |
| Abstract: | The study proves evidence of five new empirical facts on the impact of services offshoring on local labour markets. First, services offshoring increases average employment and wages within local labour markets, much more so in the manufacturing industry than in the services one. Second, positive effects are both on firms directly offshoring services and on non-offshoring firms located in the same local labour market of offshoring ones. Third, larger firms and those paying higher wages benefit the most from local market services offshoring, rising the gap between firms. Fourth, services offshoring widens the differences between workers with those in managerial and professional occupations or with a higher level of education benefiting the most. Finally, the interpretation of a local labour market is pivotal for the results: local area and sector-local area specifications reveal positive impacts of services offshoring, opposite to sectoral one. |
| Keywords: | services offshoring, local labour market, spillover effect, quantile analysis, Great Britain |
| JEL: | F10 F16 J20 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8413&r=all |
| By: | Gottlieb, Charles (University of St. Gallen); Grobovsek, Jan (University of Edinburgh); Poschke, Markus (McGill University); Saltiel, Fernando (University of Maryland at College Park) |
| Abstract: | We measure the effect of lockdown policies on employment and GDP across countries using individual- and sector-level data. Employment effects depend on the ability to work from home, which ranges from about half of total employment in rich countries to around 35% in poor countries. This gap reflects differences in occupational composition, self-employment levels, and individual characteristics across countries. GDP effects of lockdown policies also depend on countries' sectoral structure. Losses in poor countries are attenuated by their higher value-added share in essential sectors, notably agriculture. Overall, a realistic lockdown policy implies GDP losses of 20-25% on an annualized basis. |
| Keywords: | COVID-19, work from home, structural change |
| JEL: | O11 O14 J21 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13397&r=all |
| By: | Byrne, Stephen (Central Bank of Ireland); Zakipour-Saber, Shayan (Central Bank of Ireland) |
| Abstract: | Contrary to the predictions of the traditional Phillips curve model, the euro-area experienced subdued wage growth despite a tightening labour market during the period 2013 to 2017. This has led to a debate around whether the standard unemployment rate, or indeed currently used broader measures, adequately capture the level of labour slack in an economy. In this paper, we construct a measure of labour market slack for twelve European countries, the Non-Employment Index (NEI). The NEI weighs each group outside the labour force by their relative probability of transitioning into employment. Using pseudo out-of-sample conditional forecasts, we show that the NEI is a better predictor of wage dynamics during the period 2013-2017 than other traditional measures of slack in countries exposed to the european sovereign debt crisis. The improvement is seen both in terms of point and density forecasts. We confirm this result in a panel framework, controlling for expectations, external factors, and productivity. |
| JEL: | J21 J30 J21 E37 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:cbi:wpaper:05/rt/20&r=all |
| By: | Adriana Peluffo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía) |
| Abstract: | The objective of this work is to analyze the effect of innovation on labor demand, particularly, the level of employment and the skills composition of the labor force, in level and growth rates. Additionally, we analyze the ratio of skilled to unskilled labor and wages. The data for this study come from the Innovation Surveys for Uruguayan manufacturing and service firms over the 2000-2015 period matched with the Industrial Surveys of Economic Activity. We analyze the whole sample and each sector according to technological/knowledge intensity and firm size. Our results for ordinary least squares, instrumental variables, and generalized method of moments show positive effects of innovation in the level of total employment and skilled workers, its rate of growth, and wages. Product and Enhancing productivity innovation show positive impact on employment. Splitting by manufacturing firms we observe that product innovation affect growth in employment for high-tech firms while organizational innovation and productivity enhancing innovation affects growth in skilled labor with a greater effect for low-tech firms, while organizational innovation affects growth in skilled labor and in the share of skilled labor. Small manufacturing and service firms are less responsive to innovation. Growth in employment of service firms are affected mainly by organizational innovation and productivity enhancing innovation. Thus, enhancing productivity innovation and its component of organizational innovation seems to play an important role on employment growth. |
| Keywords: | Employment, Skilled Labor, Product Innovation, Process Innovation |
| JEL: | D2 J23 L1 O31 O33 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:ulr:wpaper:dt-13-20&r=all |
| By: | Hao Wang; Yuemei Ji; Qi Luo |
| Abstract: | This study investigates the long-term influence of colonial legacy on the nexus between inward foreign direct investment (FDI) and labor market. We construct a panel dataset containing 285 Chinese cities 2011 to 2017 along with detailed information about Chinese modern history during 1842-1955). Our results show that the inward FDI has a positive effect on employment and such an effect is more pronounced in the regions with colonial influence than their counterparts. Further, we find that the experience of Western colonization strengthens the positive effect of inward FDI on employment whereas the experience of Japanese colonization weakens or even overturns this positive effect. These findings are robust to controlling for the endogeneity between inward FDI and employment as well as employing alternative measures for the colonization. |
| Keywords: | colonial legacy, foreign direct investment, employment, Chinese modern history |
| JEL: | N01 F21 J23 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8392&r=all |
| By: | Brodeur, Abel (University of Ottawa); Gray, David M. (University of Ottawa); Islam, Anik (University of Ottawa); Bhuiyan, Suraiya Jabeen (University of Ottawa) |
| Abstract: | The goal of this piece is to survey the emerging and rapidly growing literature on the economic consequences of COVID-19 and government response, and to synthetize the insights emerging from a very large number of studies. This survey (i) provides an overview of the data sets used to measure social distancing and COVID-19 cases and deaths; (ii) reviews the literature on the determinants of compliance and effectiveness of social distancing; (iii) summarizes the literature on the socio-economic consequences of COVID-19 and government interventions, focusing on labor, health, gender, discrimination and environmental aspects; and (iv) discusses policy proposals. |
| Keywords: | COVID-19, coronavirus, employment, lockdowns |
| JEL: | E00 I15 I18 J20 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13411&r=all |