nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2020‒09‒07
forty-six papers chosen by
Joseph Marchand
University of Alberta

  1. Furloughing By Adams-Prassl, A.; Boneva, T.; Golin, M; Rauh, C.
  2. Competition and Career Advancement: The Hidden Costs of Paid Leave By Julian Johnsen; Hyejin Ku; Kjell Salvanes
  3. Labor Market Returns to a Prison GED By Darolia, Rajeev; Mueser, Peter R.; Cronin, Jacob
  4. Altruism and Burnout: Long Hours in the Teaching Profession By Gicheva, Dora
  5. The Human Side of Structural Transformation By Porzio, Tommaso; Rossi, Federico; Santangelo, Gabriella
  6. Long-Run Returns to Field of Study in Secondary School By Dahl, Gordon B.; Rooth, Dan-Olof; Stenberg, Anders
  7. The Dynamics of the Smoking Wage Penalty By Michael E. Darden; Julie L. Hotchkiss; M. Melinda Pitts
  8. Employee Training and Firm Performance: Quasi-experimental evidence from the European Social Fund By Pedro S. Martins
  9. Marginal college wage premiums under selection into employment By Westphal, Matthias; Kamhöfer, Daniel A.; Schmitz, Hendrik
  10. Discrimination and Racial Disparities in Labor Market Outcomes: Evidence from WWII By Anna Aizer; Ryan Boone; Adriana Lleras-Muney; Jonathan Vogel
  11. Positive Health Externalities of Mandating Paid Sick Leave By Pichler, Stefan; Wen, Katherine; Ziebarth, Nicolas R.
  12. The Gendered Division of Paid and Domestic Work under Lockdown By Andrew, Alison; Cattan, Sarah; Costa Dias, Monica; Farquharson, Christine; Kraftman, Lucy; Krutikova, Sonya; Phimister, Angus; Sevilla, Almudena
  13. Video Resumes and Job Search Outcomes: Evidence from a Field Experiment By Charles Bellemare; Marion Goussé; Guy Lacroix; Steeve Marchand
  14. Mysteries of the Trade? Skill-Specific Local Agglomeration Economies By Andersson, Martin; Larsson, Johan P
  15. Challenges of Change: An Experiment Promoting Women to Managerial Roles in the Bangladeshi Garment Sector By Rocco Macchiavello; Andreas Menzel; Atonu Rabbani; Christopher Woodruff
  16. Reconciling Trends in U.S. Male Earnings Volatility: Results from a Four Data Set Project By Robert A. Moffitt
  17. Dream Jobs By Luca David Opromolla; Giordano Mion; Gianmarco I.P. Ottaviano
  18. Relabeling, Retirement and Regret By Jonathan Gruber; Ohto Kanninen; Terhi Ravaska
  19. Waiting for Recovery: The Canadian Labour Market in June 2020 By Jones, Stephen R. G.; Lange, Fabian; Riddell, W. Craig; Warman, Casey
  20. The ifo Tax and Transfer Behavioral Microsimulation Model By Maximilian Blömer; Andreas Peichl; Maximilian Joseph Blömer
  21. Workplace Presenteeism, Job Substitutability and Gender Inequality By Azmat, Ghazala; Hensvik, Lena; Rosenqvist, Olof
  22. Regulatory Arbitrage in Teacher Hiring and Retention: Evidence from Massachusetts Charter Schools By Jesse M. Bruhn; Scott A. Imberman; Marcus A. Winters
  23. The Economics of Babysitting a Robot By Aleksandr Alekseev
  24. Reconciling Trends in Volatility: Evidence from the SIPP Survey and Administrative Data By Michael D. Carr; Robert A. Moffitt; Emily E. Wiemers
  25. Taking It to the Limit: Effects of Increased Student Loan Availability on Attainment, Earnings, and Financial Well-Being By Sandra E. Black; Jeffrey T. Denning; Lisa J. Dettling; Sarena Goodman; Lesley J. Turner
  26. Demographic Origins of the Decline in Labor's Share By Andrew Glover; Jacob Short
  27. Do Non-Compete Clauses Undermine Minimum Wages? By Thomas Kohler; Fabian Schmitz
  28. Is Labour Market Discrimination against Ethnic Minorities Better Explained by Taste or Statistics? A Systematic Review of the Empirical Evidence By Lippens, Louis; Baert, Stijn; Ghekiere, Abel; Verhaeghe, Pieter-Paul; Derous, Eva
  29. Twenty Year Economic Impacts of Deworming By Joan Hamory; Edward Miguel; Michael W. Walker; Michael Kremer; Sarah J. Baird
  30. Estimating Trends in Male Earnings Volatility with the Panel Study of Income Dynamics By Robert A. Moffitt; Sisi Zhang
  31. Job Satisfaction and Work-Life Balance: Differences between Homework and Work at the Workplace of the Company By Bellmann, Lutz; Hübler, Olaf
  32. Selection and Incentives under Time Pressure: The Importance of Framing By De Paola, Maria; Gioia, Francesca; Pupo, Valeria
  33. The New Hazardous Jobs and Worker Reallocation By Basso, Gaetano; Boeri, Tito; Caiumi, Alessandro; Paccagnella, Marco
  34. Measuring the labor market at the onset of the COVID-19 crisis By Alexander W. Bartik; Marianne Bertrand; Feng Lin; Jesse Rothstein; Matt Unrath
  35. Investigation of Employers' Preferences for the Design of Staffing Agency Incentives to Hire Ex-Felons By Hunt, Priscillia E; Smart, Rosanna
  36. Are Teachers in Africa Poorly Paid? Evidence from 15 Countries By David K. Evans; Fei Yuan; Deon Filmer
  37. Designing Disability Insurance Reforms: Tightening Eligibility Rules or Reducing Benefits By Andreas Haller; Stefan Staubli; Josef Zweimüller
  38. Loss of Life and Labour Productivity: The Canadian Opioid Crisis By Cheung, Alexander P.; Marchand, Joseph; Mark, Paddy
  39. Does Automation Technology increase Wage? By Ryosuke Shimizu; Shohei Momoda
  40. Older Workers Need Not Apply? Ageist Language in Job Ads and Age Discrimination in Hiring By Burn, Ian; Button, Patrick; Munguia Corella, Luis; Neumark, David
  41. Economic Preferences across Generations and Family Clusters: A Large-Scale Experiment By Chowdhury, Shyamal; Sutter, Matthias; Zimmermann, Klaus F.
  42. The Impact of Social Security on Pension Claiming and Retirement: Active vs. Passive Decisions By Rafael Lalive; Arvind Magesan; Stefan Staubli
  43. Compliance with Social Distancing: Theory and Empirical Evidence from Ontario during COVID-19 By Anastasios Papanastasiou; Bradley J. Ruffle; Angela L. Zheng
  44. As If It Weren't Hard Enough Already: Breaking down Hiring Discrimination Following Burnout By Sterkens, Philippe; Baert, Stijn; Rooman, Claudia; Derous, Eva
  45. Sustainability of Social Security in the Aging Economy from the Perspective of Improving Health By Tomoaki Kotera
  46. Stuck at a Crossroads? The Duration of the Italian School-To-Work Transition By Pastore, Francesco; Quintano, Claudio; Rocca, Antonella

  1. By: Adams-Prassl, A.; Boneva, T.; Golin, M; Rauh, C.
    Abstract: Over 9 million jobs were furloughed in the UK during the Coronavirus pandemic. Using real time survey evidence from the UK in April and May, we document which workers were most likely to be furloughed and analyze variation in the terms on which they furloughed. We find that women were significantly more likely to be furloughed. Inequality in care responsibilities seem to have played a key role: mothers were 10 percentage points more likely than fathers to initiate the decision to be furloughed (as opposed to it being fully or mostly the employer’s decision) but we find no such gender gap amongst childless workers. The prohibition of working whilst furloughed was routinely ignored, especially by men who can do a large percentage of their work tasks from home. Women were less likely to have their salary topped up beyond the 80% subsidy paid for by the government. Considering the future, furloughed workers without employer-provided sick pay have a lower willingness to pay to return to work, as do those in sales and food preparation occupations. Compared to non-furloughed employees, furloughed workers are more pessimistic about keeping their job in the short to medium run and are more likely to be actively searching for a new job even when controlling for detailed job characteristics. These results have important implications for the design of short-time work schemes and the strategy for effectively reopening the economy.
    Keywords: Covid-19, Coronavirus, crisis, recession, short-time work, furlough, inequality
    JEL: J21 J22 J24 J33 J63
    Date: 2020–08–18
  2. By: Julian Johnsen (Norwegian School of Economics); Hyejin Ku (University College London); Kjell Salvanes (Norges Handelshøyskole)
    Abstract: Does leave-taking matter for young workers’ careers? If so, why? We propose the competition effect—relative leave status of workers affecting their relative standing inside the firm—as a new explanation. Exploiting a policy reform that exogenously assigned four-week paid paternity leave to some new fathers, we find evidence consistent with the competition effect: A worker enjoys a better post-child earnings trajectory when a larger share of his colleagues take leave because of the policy. In contrast, we find no direct earnings effect resulting from the worker’s own leave when controlling for their relative leave eligibility status within the firm.
    Keywords: leave of absence, career interruptions, ranking, tournament, promotion, gender gap
    JEL: M51 M52 J16 J22 J24 J31
    Date: 2020–08
  3. By: Darolia, Rajeev (University of Kentucky); Mueser, Peter R. (University of Missouri, Columbia); Cronin, Jacob (University of Central Missouri)
    Abstract: Educational and skill-building programs are commonplace in prisons and have been the focus of recent prominent policy initiatives. These educational programs are expected to increase prisoners' post-release employability, with the hope that these lead to both private and public benefits. One of the most popular programs prepares prisoners to pass the GED exam, which is an academic certification for those without a high-school diploma. We analyze the labor market returns to a GED earned in prison using new administrative data on all released prisoners in the state of Missouri over nearly 25 years, and a matched comparison group difference-in-differences design with individual fixed effects. We find that the GED can lead to higher short-term quarterly earnings and employment, with the largest benefits experienced soon after release. These effects are strongest for those who did not have strong work histories prior to entering prison and for those who had access to post-release support. We also find that the effect of the GED is of a similar magnitude for White and Black formerly incarcerated individuals.
    Keywords: GED, prison, incarceration, returns to education
    JEL: I26 J24 J31 J38
    Date: 2020–07
  4. By: Gicheva, Dora (University of North Carolina at Greensboro, Department of Economics)
    Abstract: This paper addresses the question of why many public school teachers work substantially more hours than required by contract given that the elasticity of earnings with respect to hours is close to zero in this occupation. I introduce a theoretical framework in which some public sector employees are intrinsically motivated to supply effort above the level stipulated by their contract, while others have low productivity and require high effort to maintain the minimally required level of output. In this setting, high levels of effort can be indicative of either altruism or low productivity. Because intrinsically motivated employees derive higher utility from working in the public sector, they are less likely to exit it. Over time, selection makes high levels of effort more strongly predictive of altruism than of low ability. I show empirical evidence consistent with this model from the market for public school teachers, where I define effort as working hours. At very low levels of experience, there is little or no relationship between weekly hours and the probability of remaining in teaching or a subjective measure of intrinsic motivation. These correlations become more positive as teaching experience increases. Similarly, hours are positively relate to self-reported burnout at low levels of experience, but the relationship is reversed for teachers who have been in the profession longer.
    Keywords: intrinsic motivation; working hours; teachers; public sector labor markets;
    JEL: I21 J22 J45
    Date: 2020–08–25
  5. By: Porzio, Tommaso (Columbia Unversity and CEPR); Rossi, Federico (University of Warwick); Santangelo, Gabriella (University of Cambridge)
    Abstract: We show that the global human capital increase during the 20th - century contributed to structural transformation. We document that almost half of the decline in aggregate agricultural employment was driven by new birth cohorts entering the labor market. We use data on educational attainment and compile a comprehensive list of policy reforms to interpret the differences in agricultural employment across cohorts. We find that the increase in schooling led to a sharp reduction in the agricultural labor supply by equipping younger cohorts with skills more valued out of agriculture. Interpreted through a model of frictional labor reallocation, these facts imply that human capital growth accounts for about 20% of the global decline in agricultural employment. JEL codes: J24 ; J43 ; J62 ; L16 ; O11 ; O14 ; O18 ; O41 ; Q11
    Date: 2020
  6. By: Dahl, Gordon B. (University of California, San Diego); Rooth, Dan-Olof (Stockholm University); Stenberg, Anders (SOFI, Stockholm University)
    Abstract: This paper studies whether specialized academic fields of study in secondary school, which are common in many countries, affect earnings as an adult. Identification is challenging, because it requires not just quasi-random variation into fields of study, but also an accounting of individuals' next-best alternatives. Our setting is Sweden, where at the end of ninth grade students rank fields of study and admissions to oversubscribed fields is determined based on a student's GPA. We use a regression discontinuity design which allows for different labor market returns for each combination of preferred versus next-best choice, together with nationwide register data for school cohorts from 1977-1991 linked to their earnings as adults. Our analysis yields four main findings. First, Engineering, Natural Science, and Business yield higher earnings relative to most second-best choices, while Social Science and Humanities result in sizable drops, even relative to non-academic vocational programs. Second, the return to completing a field varies substantially as a function of a student's next-best alternative. The magnitudes are often as large as estimates of the return to two years of additional education. Third, the pattern of returns for individuals with different first and second best choices is consistent with comparative advantage for many field choice combinations, while others exhibit either random sorting or comparative disadvantage. Fourth, most of the differences in adult earnings can be attributed to differences in college major and occupation. Taken together, these results highlight that the field choices students make at age 16, when they may have limited information about their skills and the labor market, have effects which last into adulthood.
    Keywords: field of study, secondary education, comparative advantage
    JEL: I26 J24 J31
    Date: 2020–07
  7. By: Michael E. 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% and 9.3% for women and men, respectively. These differences are less than half of the raw difference in means in wages at age 30. We show that the contemporaneous effect of heavy smoking net of any life-cycle effects explains roughly 67% of the female smoking wage gap but only 11% of the male smoking wage gap.
    JEL: I10 I12
    Date: 2020–07
  8. By: Pedro S. Martins
    Abstract: As work changes, firm-provided training may become more relevant; however, there is little causal evidence about the effects of training on firms. This paper studies a large training grants programme in Portugal, contrasting successful firms that received the grants and unsuccessful firms that did not. Combining several rich data sets, we compare a large number of potential outcomes of these firms, while following them over long periods of time before and after the grant decision. Our difference-in-differences models estimate significant positive effects on take up (training hours and expenditure), with limited deadweight; and that such additional training led to increased sales, value added, employment, productivity, and exports. These effects tend to be of at least 5% and, in some cases, 10% or more, and are robust in multiple dimensions of the analysis.
    Keywords: Training subsidies, Productivity, Counterfactual evaluation.
    JEL: J24 H43 M53
    Date: 2020–06
  9. 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 in West 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
  10. By: Anna Aizer; Ryan Boone; Adriana Lleras-Muney; Jonathan Vogel
    Abstract: The 1940s witnessed substantial reductions in the Black-white earnings gap. We study the role that domestic WWII defense production played in reducing this gap. Exploiting variation across labor markets in the allocation of war contracts to private firms, we find that war production contracts resulted in significant increases in the earnings of Black workers and declines in the racial wage gap, with no effect on white workers. This was achieved via occupational upgrading among Black men to skilled occupations. The gains largely persisted through at least 1970. Using a structural model, we show that declines in discrimination (and not migration or changes in productivity) account for all of the occupational upgrading and half of the estimated wage gains associated with the war production effort. Additionally, the war production effort explains one quarter (one seventh) of the overall improvements in racial gaps in occupation allocations (wages) witnessed over this decade. Finally, war spending led to an increase in the high school graduation rate of Black children, suggesting important intergenerational spillovers associated with declines in labor market discrimination.
    JEL: J24 J3 J7 N12 N4
    Date: 2020–08
  11. By: Pichler, Stefan (ETH Zurich); Wen, Katherine (Cornell University); Ziebarth, Nicolas R. (Cornell University)
    Abstract: A growing economic literature studies the optimal design of social insurance systems and the empirical identification of welfare-relevant externalities. In this paper, we test whether mandating employee access to paid sick leave has reduced influenza-like-illness (ILI) transmission rates as well as pneumonia and influenza (P&I) mortality rates in the United States. Using uniquely compiled data from administrative sources at the state-week level from 2010 to 2018 along with difference-in-differences methods, we present quasi-experimental evidence that sick pay mandates have causally reduced doctor-certified ILI rates at the population level. On average, ILI rates fell by about 11 percent or 290 ILI cases per 100,000 patients per week in the first year.
    Keywords: sick pay mandates, population health, flu infection, negative externalities
    JEL: H23 H75 I12 I14 I18 J22 J38 J58
    Date: 2020–07
  12. By: Andrew, Alison (Institute for Fiscal Studies, London); Cattan, Sarah (Institute for Fiscal Studies, London); Costa Dias, Monica (Institute for Fiscal Studies, London); Farquharson, Christine (Institute for Fiscal Studies, London); Kraftman, Lucy (Institute for Fiscal Studies, London); Krutikova, Sonya (Institute for Fiscal Studies, London); Phimister, Angus (Institute for Fiscal Studies, London); Sevilla, Almudena (University College London)
    Abstract: COVID-19 has uprooted many aspects of parents' daily routines, from their jobs to their childcare arrangements. In this paper, we provide a novel description of how parents in England living in two-parent opposite-gender families are spending their time under lockdown. We find that mothers' paid work has taken a larger hit than that of fathers', on both the extensive and intensive margins. We find that mothers are spending substantially longer in childcare and housework than their partners and that they are spending a larger fraction of their paid work hours having to juggle work and childcare. Gender differences in the allocation of domestic work cannot be straightforwardly explained by gender differences in employment rates or earnings. Very large gender asymmetries emerge when one partner has stopped working for pay during the crisis: mothers who have stopped working for pay do far more domestic work than fathers in the equivalent situation do.
    Keywords: COVID-19, gender, childcare, Coronavirus
    JEL: J21 J22 J24 J33 J63
    Date: 2020–07
  13. By: Charles Bellemare; Marion Goussé; Guy Lacroix; Steeve Marchand
    Abstract: We evaluate the efficiency of video resumes using a large scale field experiment. We randomly sent applications to 2021 private firms posting vacancies across the province of Québec (Canada). A subset of these applications included a link inviting firms to view a video resume. We find that video resumes increase callback rates by more than 10 percentage points. We also evaluate the service for individuals with acute visible disabilities (wheelchair users). Although our results support the presence of discrimination in the labor market, we show that they benefit from video resumes as much as applicants without a disability.
    Keywords: Video Resume,Job Search,Disabilities,Discrimination,
    JEL: J71 J68
    Date: 2020–08–25
  14. By: Andersson, Martin (Department of Industrial Economics Blekinge Institute of Technology (BTH)); Larsson, Johan P (University of Cambridge, Department of Land Economy)
    Abstract: Using longitudinal Swedish data, we document robust evidence of highly local spillovers between individuals in similar occupations. The results are consistent with the existence of knowledge spillovers between workers performing similar work tasks in the same city-district. We further demonstrate less distance-sensitive benefits of working in diverse districts and regions, characterized by high density of employees in other occupations. The diversity benefits exist only in metropolitan areas and pertain to workers performing advanced services or non-routine work tasks.
    Keywords: Agglomeration economies; Wages; Spillovers; Attenuation; Clusters; Economic proximity; Relatedness
    JEL: J24 R10 R12
    Date: 2020–08–31
  15. By: Rocco Macchiavello; Andreas Menzel; Atonu Rabbani; Christopher Woodruff
    Abstract: Women remain disadvantaged in access to management positions around the world. We conduct a field experiment with 24 large garment factories in Bangladesh to test for inefficient representation of women among line supervisors. We identify the marginal female and male candidates for supervisory positions and randomly assign them to manage production lines. Three sets of results emerge: (i) extensive diagnostic testing at baseline reveal few skill differences between marginal female and male supervisor candidates; (ii) initially, marginal female candidates have lower productivity and evaluations from sub-ordinate workers, though after four to six months, these gaps disappear; and (iii) the share of the female candidates retained as line supervisor after the trial is significantly higher than the share of female supervisors in the factories at baseline. This suggests that factories previously promoted fewer women than would have been optimal. Additional surveys and a lab-in-the-field experiment suggest that the initially worse performance stems from negative beliefs of workers about the abilities of female supervisors.
    JEL: J16 J71 M51 M54 O14 O15
    Date: 2020–07
  16. By: Robert A. Moffitt
    Abstract: There is a large literature on earnings and income volatility in labor economics, household finance, and macroeconomics. One strand of that literature has studied whether individual earnings volatility has risen or fallen in the U.S. over the last several decades. There are strong disagreements in the empirical literature on this important question, with some studies showing upward trends, some downward trends, and some flat trends. Some studies have suggested that the differences are the result of using flawed survey data instead of more accurate administrative data. This paper provides an overview of a project attempting to reconcile these findings with four different data sets and six different data series--three survey and three administrative data series, including two which match survey respondent data to their administrative data. Using common specifications, measures of volatility, and other treatments of the data, the papers show almost uniformly a lack of any significant long-term trend in male earnings volatility over the last 30 years. Moreover, the survey and the administrative data almost entirely agree on that long-term stability when the comparison is done properly. Several possible explanations for the differing finds in past work are suggested by the papers. The stability of earnings volatility raises many questions for future research on trends in the U.S. labor market.
    JEL: C33 J3
    Date: 2020–08
  17. By: Luca David Opromolla; Giordano Mion; Gianmarco I.P. Ottaviano
    Abstract: Understanding why certain jobs are ‘better’ than others and what implications they have for a worker’s career is clearly an important but still relatively unexplored question. We provide both a theoretical framework and a number of empirical results that help distinguishing ‘good’ from ‘bad’ jobs in terms of their impact on a worker’s lifetime wage income profile through wage jumps occurring upon changing job (‘static effects’) or through increases in the wage growth rate (‘dynamic effects’). We find that the distinction between internationally active firms and domestic firms is a meaningful empirical dividing line between employers providing ‘good’ and ‘bad’ jobs. First, in internationally active firms the experience-wage profile is much steeper than in domestic firms, especially for managers as opposed to blue-collar workers. Second, the higher lifetime wage income for managers in internationally active firms relies on the stronger accumulation of experience that these firms allow for and on the (almost) perfect portability of the accumulated dynamic wage gains to other firms. Static effects are instead much more important for blue-collar workers. Finally, the distinction between internationally active and domestic firms is relevant also at a more aggregate level to explain cross-sectional differences in wages among workers and spatial differences in average wages across regions within a country.
    Keywords: Good Jobs; International Experience; Managers; Sorting; Wage Growth; Wage Premium.
    JEL: J30 M12 J62 F16
    Date: 2020–07
  18. By: Jonathan Gruber; Ohto Kanninen; Terhi Ravaska
    Abstract: Focal retirement ages are a central feature of Social Security programs around the world, and provide a potentially powerful tool for policy makers who are interested in reforming retirement systems to address the growing funding shortfalls. But these tools often come hand in hand with significant changes in the financial structure of Social Security that can have independent, and potentially deleterious, impacts on retirees. In this paper, we use a major reformulation of the retirement system in Finland, featuring a relabeling of retirement ages with modest and continuous changes in financial incentives allows us to separately estimate the impact of relabeling from financial incentives in driving retirement decisions. We find that relabeling is particularly powerful as a determinant of date of retirement. Both graphical evidence and estimated hazard models reveal an enormous change in retirement when individuals face a newly defined “normal retirement” age. We also present a new approach to assessing the welfare implications of induced earlier retirement: looking at the impact on return to work. We show that the marginal workers induced to retire by relabeling are much more likely to return to work over the next three years than is the typical worker. This suggests that there is a marginal increase in regret among those who respond to this change in retirement ages.
    JEL: H55 J26
    Date: 2020–07
  19. By: Jones, Stephen R. G. (McMaster University); Lange, Fabian (McGill University); Riddell, W. Craig (University of British Columbia, Vancouver); Warman, Casey (Dalhousie University)
    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 percent 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 the labour market might rebound quickly. 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: 2020–07
  20. By: Maximilian Blömer; Andreas Peichl; Maximilian Joseph Blömer
    Abstract: This paper describes the ifo Tax and Transfer Behavioral Microsimulation Model (ifo-MSM-TTL), a policy microsimulation model for Germany. The model uses household microdata from the German Socio-Economic Panel and firm data from the German Linked Employer-Employee Dataset. This microsimulation model consists of three components: First, a static module simulates the effects of a tax-benefit reform on the budget of the individual household. This includes taxes on income and consumption, social security contributions, and public transfers. Secondly, behavioral labor supply responses are estimated. Thirdly, a demand module takes into account possible restrictions of labor demand and identifies the partial equilibrium of the labor market after the supply reactions. The demand module distinguishes our model from most other microsimulation tools
    Keywords: Tax and benefit systems, labor supply, labor demand, Germany, policy simulation
    JEL: D58 H20 J22 J23
    Date: 2020
  21. By: Azmat, Ghazala (Sciences Po, Paris); Hensvik, Lena (IFAU); Rosenqvist, Olof (Uppsala University)
    Abstract: Following the arrival of the first child, women's absence rates soar and become less predictable due to the greater frequency of their own sickness and the need to care for sick children. In this paper, we argue that this fall in presenteeism in the workplace hurts women's wages, not only indirectly and gradually, through a slower accumulation of human capital, but also immediately, through a direct negative effect on productivity in unique jobs (i.e., jobs with low substitutability). Although both presenteeism and job uniqueness are highly rewarded, we document that women's likelihood of holding jobs with low substitutability decreases substantially relative to men's after the arrival of the first child. This gap persists over time, with important long-run wage implications. We highlight that the parenthood wage penalty for women could be reduced by organizing work in such a way that more employees have tasks that, at least in the short run, can be performed satisfactorily by other employees in the workplace.
    Keywords: work absence, job substitutability, gender wage inequality
    JEL: J16 J22
    Date: 2020–07
  22. By: Jesse M. Bruhn; Scott A. Imberman; Marcus A. Winters
    Abstract: We study personnel flexibility in charter schools by exploring how teacher retention varies with teacher and school quality in Massachusetts. Charters are more likely to lose their highest and lowest value-added teachers. Low performers tend to exit public education, while high performers tend to switch to traditional public schools. To rationalize these findings, we propose a model in which educators with high fixed-costs use charter schools to explore teaching careers before obtaining licenses required for higher paying public sector jobs. The model suggests charter schools create positive externalities for traditional public schools by increasing the average quality of available teachers.
    JEL: I21 J45 M51
    Date: 2020–07
  23. By: Aleksandr Alekseev (Chapman University)
    Abstract: I study the welfare effect of automation on workers in a setting where technology is complementary but imperfect. Using a modified task-based framework, I argue that imperfect complementary automation can impose non-pecuniary costs on workers via a behavioral channel. The theoretical model suggests that a critical factor determining the welfare effect of imperfect complementary automation is the automatability of the production process. I confirm the model's predictions in an experiment that elicits subjects' revealed preference for automation. Increasing automatability leads to a significant increase in the demand for automation. I explore additional drivers of the demand for automation using machine learning analysis and textual analysis of choice reasons. The analysis reveals that task enjoyment, performance, and cognitive flexibility are the most important predictors of subjects' choices. There is significant heterogeneity in how subjects evaluate imperfect complementary automation. I discuss the implications of my results for workers' welfare, technology adoption, and inequality.
    Keywords: automation, worker welfare, imperfect technology, task-switching, personnel economics, experiment
    JEL: C91 D63 D91 M52 J24 O33
    Date: 2020
  24. By: Michael D. Carr; Robert A. Moffitt; Emily E. Wiemers
    Abstract: As part of a set of papers using the same methods and sample selection criteria to estimate trends in male earnings volatility across a number of survey and administrative datasets, we conduct a new investigation of trends in male earnings volatility from the 1980s to 2014 using data from the Survey of Income and Program Participation (SIPP) survey and the SIPP Gold Standard File (SIPP GSF), which links the SIPP survey to administrative data on earnings. We find that the level of volatility is higher in the SIPP GSF than in the SIPP survey but that the trends are similar. Specifically, over the period where the datasets overlap between 1984 and 2012, volatility in the SIPP survey declines slightly while volatility in the SIPP GSF increases slightly but the differences are small in magnitude. Because the density of low earnings differs considerably across datasets, and volatility may vary across the earnings distribution, we estimate trends in volatility in the SIPP survey and SIPP GSF where we hold the earnings distribution fixed to resemble that in the Panel Study of Income Dynamics (PSID). We find that differences in the underlying earnings distribution explains almost all of the difference in the level of volatility between the SIPP survey and SIPP GSF and it somewhat reduces the small differences in trends.
    JEL: C23 J3
    Date: 2020–08
  25. By: Sandra E. Black; Jeffrey T. Denning; Lisa J. Dettling; Sarena Goodman; Lesley J. Turner
    Abstract: Growing reliance on student loans and repayment difficulties have raised concerns of a student debt crisis in the United States. However, little is known about the effects of student borrowing on human capital and long-run financial well-being. We use variation induced by recent expansions in federal loan limits, together with administrative schooling, earnings, and credit records, to identify the effects of increased student borrowing on credit-constrained students’ educational attainment, earnings, debt, and loan repayment. Increased student loan availability raises student debt and improves degree completion, later-life earnings, and student loan repayment while having no effect on homeownership or other types of debt.
    JEL: D14 H52 H81 I21 I22 I23 I26 I28 J24
    Date: 2020–08
  26. By: Andrew Glover; Jacob Short
    Abstract: Since 1980, the earnings share of older workers has risen in the United States, simultaneous with a historic decline in labor's share of income. We hypothesize that an aging workforce has contributed to the decline in labor's share. We formalize this hypothesis in an on-the-job search model, in which employers of older workers may have substantial monopsony power due to the decline in labor market dynamism that accompanies age. This manifests as a rising wedge between a worker's earnings and marginal product over the life-cycle. We estimate the age profile of these wedges using cross-industry responses of labor shares to changes in the age-distribution of earnings. We find that a sixty-year-old worker receives half of her marginal product relative to when she was twenty, which, together with recent demographic trends, can account for 59% of the recent decline in the U.S. labor share. Industrial heterogeneity in this age profile is consistent with the monopsony-power mechanism: highly unionized industries exhibit no relationship between age and payroll shares.
    Keywords: demographics, labor share, earnings distribution, income distribution
    JEL: J11 J31 E25
    Date: 2020–08
  27. By: Thomas Kohler (Bonn Graduate School of Economics, briq); Fabian Schmitz (Bonn Graduate School of Economics, ECONtribute)
    Abstract: Many low-wage workers in the United States are subject to non-compete clauses, which forbid them to work for competitors. Empirical research has found a link between the prevalence of non-compete clauses and minimum wage legislation. To explain this link, we propose a moral hazard model with minimum wages. Non-compete clauses can be used to punish failure. We characterize the optimal contracts with and without the possibility to use a non-compete clause. We find that the principal only uses a non-compete clause if minimum wages are suciently high. Non-compete clauses transfer utility from the agent to the principal because they increase the equilibrium effort without increasing the wages. If non-compete clauses can be arbitrarily severe, there is no minimum wage for which the agent gets a rent. If non-compete clauses are bounded, both the principal and the agent might be made better off than without non-compete clauses.
    Keywords: non-compete clause, minimum wage, limited liability, moral hazard, rent extraction
    JEL: D86 J32 J41 K31
    Date: 2020–08
  28. By: Lippens, Louis (Ghent University); Baert, Stijn (Ghent University); Ghekiere, Abel (Free University of Brussels); Verhaeghe, Pieter-Paul (Free University of Brussels); Derous, Eva (Ghent University)
    Abstract: Scholars have gone to great lengths to chart the incidence of ethnic labour market discrimination. To effectively mitigate this discrimination, however, we need to understand its underlying mechanisms because different mechanisms lead to different counteracting measures. To this end, we reviewed the recent literature that confronts the seminal theories of taste-based and statistical discrimination against the empirical reality. First, we observed that the measurement operationalisation of the mechanisms varied greatly between studies, necessitating the development of a measurement standard. Second, we found that 20 out of 30 studies examining taste-based discrimination and 18 out of 34 studies assessing statistical discrimination produced supportive evidence for said mechanisms. However, (field) experimental research, which predominantly focuses on hiring outcomes, yielded more evidence in favour of taste-based vis-à-vis statistical discrimination, suggesting that the taste-based mechanism might better explain ethnic discrimination in hiring.
    Keywords: taste-based discrimination, statistical discrimination, ethnicity, race, labour market, systematic review
    JEL: J71 J15 J23
    Date: 2020–07
  29. By: Joan Hamory; Edward Miguel; Michael W. Walker; Michael Kremer; Sarah J. Baird
    Abstract: This study exploits a randomized school health intervention that provided deworming treatment to Kenyan children and utilizes longitudinal data to estimate impacts on economic outcomes up to 20 years later. The effective respondent tracking rate was 84%. Individuals who received 2 to 3 additional years of childhood deworming experience an increase of 14% in consumption expenditure, 13% in hourly earnings, 9% in non-agricultural work hours, and are 9% more likely to live in urban areas. Most effects are concentrated among males and older individuals. Given deworming's low cost, a conservative annualized social internal rate of return estimate is 37%.
    JEL: I15 J24 O15
    Date: 2020–07
  30. By: Robert A. Moffitt; Sisi Zhang
    Abstract: The possible existence of trends in volatility in the U.S. labor market has been an important issue in both labor economics and macroeconomics. The Panel Study of Income Dynamics (PSID) has been the workhorse data set used to estimate trends in earnings volatility at the individual level. Studies using the PSID have generally shown upward trends in volatility. However, trends estimated with the PSID conflict with those reported from some other survey and administrative data sets, many of which have shown flat or declining trends. This paper, which is part of a group project attempting to reconcile estimates across different data sets, presents new estimates of trends in male earnings volatility in the U.S. from 1970 to 2016 from the PSID, and addresses a number of concerns with the data that might lead its estimates to differ from those obtained in other data sets. The analysis shows that upward trends in male earnings volatility were concentrated in the 1970s and 1980s, and that trends after 1990 have been modest or even non-existent, depending on whether volatility is expected to return to its mid-2000s level after jumping up in the Great Recession. Thus, volatility trends in the PSID are roughly consistent with those studies using other data sets which find flat volatility trends in the last three decades. Examinations of potential biases from unit nonresponse (i.e., attrition), item nonresponse (i.e., don’t knows and refusals) and resulting imputation, and from a number of other features of the PSID that might affect its population representativeness show no evidence of significant bias from any of these factors. However, suggestive evidence that declines in volatility estimated in studies using administrative data may be a result of a larger left tail of earnings and of problematic trimming procedures used in those studies.
    JEL: C23 J3
    Date: 2020–08
  31. By: Bellmann, Lutz (Institute for Employment Research (IAB), Nuremberg); Hübler, Olaf (Leibniz University of Hannover)
    Abstract: Working remotely can complement and sometimes completely substitute conventional work at the workplace of the company. Until the COVID-19 crisis the share of remote workers was relatively low and empirical investigations show inconsistent results. The recent work has highlighted a dramatic shift toward working from home The objective of this contribution is to empirically analyze the relationship between working remotely and job satisfaction on the one hand, as well as between working remotely and work-life balance on the other hand, based on three waves of the German Linked Personnel Panel. Our control variables are personality traits, skills, employment and job characteristics. We present average effects and demonstrate under which conditions remote work is advantageous for employees. Work-life imbalance may be induced by job-related causes. A private life can reduce work-life balance under specific conditions, namely, if remote work takes place outside of contracted working hours and during the first phase of remote work. On average, remote work has no significant impact on work-life balance, which is conditioned by private interests. However, the termination of remote work causes a clear imbalance. In contrast, the introduction of remote work increases job satisfaction, although only temporarily. When we compare employees working from home with those who want to work at home, we find that the former are happier. If we consider remote workers only, our results reveal that job satisfaction is higher, and work-life balance is not worse under a strict contractual agreement than under a nonbinding commitment.
    Keywords: job satisfaction, effects on employees, remote work, telecommuting, work-life balance, COVID-19
    JEL: J22 J29 M54 M55
    Date: 2020–07
  32. By: De Paola, Maria (University of Calabria); Gioia, Francesca (University of Milan); Pupo, Valeria (University of Calabria)
    Abstract: In this paper we investigate whether the framing of the incentives used to foster participation into contexts characterized by high degrees of time pressure affects individuals' self-selection. At this aim we run a lab-in-the-field experiment structured in two parts. The first part investigates individual characteristics that affect performance under time pressure, while the second is devoted to analyze how the decision to work under time pressure is affected by the reward/punishment framing of incentives. We find that individuals characterized by a high degree of risk aversion perform worse under time pressure. Nonetheless, when facing a penalty incentive scheme these individuals are more likely to choose to work with strict term limits, suggesting that penalty contracts might generate adverse selection problems.
    Keywords: time pressure, bonus, penalty, incentive schemes, framing, selection, lab-in-the-field experiment
    JEL: C9 C91 D01 D91 J33
    Date: 2020–07
  33. By: Basso, Gaetano (Bank of Italy); Boeri, Tito (Bocconi University); Caiumi, Alessandro (Bocconi University); Paccagnella, Marco (OECD)
    Abstract: This paper analyses several dimensions of workers' safety that are relevant in the context of a pandemic. We provide a classification of occupations according to the risk of contagion: by considering a wider range of job characteristics and a more nuanced assessment of infection risk, we expand on the previous literature that almost exclusively looked at feasibility of working from home. We apply our classification to the United States and to European countries and we find that roughly 50% of jobs in our sample can be considered safe, although a large cross-country variation exists, notably in the potential incidence of remote working. We find that the most economically vulnerable workers (low-educated, low-wage workers, immigrants, workers on temporary contracts, and part-timers) are over-represented in unsafe jobs, notably in non-essential activities. We assess the nature of the reallocation of workers from unsafe to safe jobs that is likely to take place in the years to come, and the policies that could mitigate the social cost of this reallocation.
    Keywords: working conditions, workers' reallocation, COVID-19, pandemic
    JEL: J28 J23 J81
    Date: 2020–07
  34. By: Alexander W. Bartik; Marianne Bertrand; Feng Lin; Jesse Rothstein; Matt Unrath
    Abstract: We use traditional and non-traditional data to measure the collapse and partial recovery of the U.S. labor market from March to early July, contrast this downturn to previous recessions, and provide preliminary evidence on the effects of the policy response. For hourly workers at both small and large businesses, nearly all of the decline in employment occurred between March 14 and 28. It was driven by low-wage services, particularly the retail and leisure and hospitality sectors. A large share of the job losses in small businesses reflected firms that closed entirely, though many subsequently reopened. Firms that were already unhealthy were more likely to close and less likely to reopen, and disadvantaged workers were more likely to be laid off and less likely to return. Most laid off workers expected to be recalled, and this was predictive of rehiring. Shelter-in-place orders drove only a small share of job losses. Last, states that received more small business loans from the Paycheck Protection Program and states with more generous unemployment insurance benefits had milder declines and faster recoveries. We find no evidence that high UI replacement rates drove job losses or slowed rehiring.
    JEL: E24 E32 J2 J63
    Date: 2020–07
  35. By: Hunt, Priscillia E (RAND); Smart, Rosanna (RAND)
    Abstract: A criminal record can severely damage labor market prospects. While public and private organizations have developed a host of policies to encourage employers to hire people with a record, research suggests some of the policies may have negative unintended consequences. To explore ways to mitigate these consequences, we conducted a discrete-choice experiment in the summer of 2017 with a nationally representative sample of employers. Employers indicated their preferences for incentives offered by staffing agencies to hire individuals with one non-violent felony conviction. These incentives include: a replacement guarantee, more detailed work history, provision of transportation to/from job site, and a fee discount. The baseline incentive involved a staffing agency verifying that the ex-offender did not have safety or rule violations in previous companies and a fee discount worth the same amount as the federal Work Opportunity Tax Credit for ex-felons (WOTC). At baseline, less than half (43%) of employers would consider hiring an individual with this incentive. The likelihood of hiring an individual with a record increased from the baseline by 69 percent if a staffing agency also provided a guarantee of a replacement worker in the event the individual was deemed unsuitable. Employers were 53 percent more likely to hire an individual providing a certificate of validated positive previous work performance history. Having consistent transportation increased the probability of being considered for hire by 33 percent, and doubling the fee discount increased the baseline probability by 42 percent.
    Keywords: employment, choice experiment, stated preference, criminal record
    JEL: K14 J78 J24
    Date: 2020–07
  36. By: David K. Evans (Center for Global Development); Fei Yuan (Harvard Graduate School of Education); Deon Filmer (World Bank)
    Abstract: Pay levels for public sector workers—and especially teachers—are a constant source of controversy. In many countries in Sub-Saharan Africa, protests and strikes suggest that pay is low, while simple comparisons to average national income per capita suggest that it is high. This study presents data on teacher pay from 15 African countries, along with five comparator countries from other regions. The results suggest that in several (seven) countries, teachers’ monthly salaries are lower than other formal sector workers with comparable levels of education and experience. However, in all of those countries, teachers report working significantly fewer hours than other workers, so that their hourly wage is higher. Teachers who report fewer hours are no more likely to report holding a second job, although teachers overall are nearly two times more likely to hold a second job than other workers. With higher national incomes, the absolute value of teacher salaries rises, but they fall as a percentage of income per capita. The study explores variation across types of teacher contracts, the association between teacher pay and student performance, and the association between teacher pay premia and other aspects of economies.
    Keywords: Education; teachers; public sector; teacher pay
    JEL: I20 I25 J31 O12
    Date: 2020–08–13
  37. By: Andreas Haller; Stefan Staubli; Josef Zweimüller
    Abstract: We study the welfare effects of disability insurance (DI) and derive social-optimality conditions for the two main DI policy parameters: (i) DI eligibility rules and (ii) DI benefits. Causal evidence from two DI reforms in Austria generate fiscal multipliers (total over mechanical cost reductions) of 2.0-2.5 for stricter DI eligibility rules and of 1.3-1.4 for lower DI benefits. Stricter DI eligibility rules generate lower income losses (earnings + transfers), particularly at the lower end of the income distribution. Our analysis suggests that the welfare cost of rolling back the Austrian DI program is lower through tightening eligibility rules than through lowering benefits. Applying our framework to the US DI system suggests that both loosening eligibility rules, and increasing benefits, would be welfare increasing.
    JEL: H53 H55 J14 J21 J65
    Date: 2020–07
  38. By: Cheung, Alexander P. (University of Alberta, Department of Economics); Marchand, Joseph (University of Alberta, Department of Economics); Mark, Paddy (Nanaimo Regional General Hospital)
    Abstract: The purpose of this study is to measure and quantify the losses in labour productivity due to the Canadian opioid crisis. Since 2016, over 15,393 Canadians have lost their lives due to opioid overdose. It is estimated that 10,775 of these overdose victims were employed in the 5 years prior to their death. This study applies public data to a human capital (HC) model to estimate the total lost productivity to the Canadian economy. The HC model mathematically projects forward the future economic output of an individual overdose victim given their occupation and age (at time of death) until retirement. The total estimated productivity loss is at least $5.71 billion dollars. Given this, the opioid crisis has affected a whole working cross-section of society causing irreversible damage to the Canadian economy in addition to an immeasurable human cost. A multidisciplinary review of the literature regarding opioid use disorder was also undertaken to enhance understanding into the nature of the Canadian opioid crisis in relation to premature deaths and the subsequent losses in labor productivity.
    Keywords: opioid crisis; labour productivity; health economics
    JEL: E24 I10 J17 J24 O47
    Date: 2020–08–27
  39. By: Ryosuke Shimizu (Aoyama Gakuin University); Shohei Momoda (Kyoto University)
    Abstract: This paper examines the relationship between automation technology diffusion and the wage. In this model, producers either choose automation or nonautomation technology, whichever is more profitable. When they introduce the automation technology, they have to pay fixed costs, which are different between industries. The main results of this paper are that the productivity improvement of automation technology, which promotes automation diffusion, decreases labor share, and this improvement also decreases the wage when the level of automation technology diffusion is high enough.
    Keywords: automation, the wage, labor share decline, technology choice
    JEL: E24 J23 O3
    Date: 2020–08
  40. By: Burn, Ian (University of Liverpool); Button, Patrick (Tulane University); Munguia Corella, Luis (University of California, Irvine); Neumark, David (University of California, Irvine)
    Abstract: We study the relationships between ageist stereotypes – as reflected in the language used in job ads – and age discrimination in hiring, exploiting the text of job ads and differences in callbacks to older and younger job applicants from a resume (correspondence study) field experiment (Neumark, Burn, and Button, 2019). Our analysis uses methods from computational linguistics and machine learning to directly identify, in a field-experiment setting, ageist stereotypes that underlie age discrimination in hiring. The methods we develop provide a framework for applied researchers analyzing textual data, highlighting the usefulness of various computer science techniques for empirical economics research. We find evidence that language related to stereotypes of older workers sometimes predicts discrimination against older workers. For men, our evidence points to age stereotypes about all three categories we consider – health, personality, and skill – predicting age discrimination, and for women, age stereotypes about personality. In general, the evidence is much stronger for men, and our results for men are quite consistent with the industrial psychology literature on age stereotypes.
    Keywords: ageist stereotypes, age discrimination, job ads, machine learning
    JEL: J14 J7
    Date: 2020–07
  41. By: Chowdhury, Shyamal (University of Sydney); Sutter, Matthias (Max Planck Institute for Research on Collective Goods); Zimmermann, Klaus F. (University of Bonn)
    Abstract: Economic preferences are important for lifetime outcomes such as educational achievements, health status, or labor 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, risktolerant 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
  42. By: Rafael Lalive; Arvind Magesan; Stefan Staubli
    Abstract: We exploit a unique Swiss reform to identify the importance of passivity, claiming social security benefits at the Full Retirement Age (FRA). Sharp discontinuities generated by the reform reveal that raising the FRA while imposing small early claiming penalties significantly delays pension claiming and retirement, but imposing large penalties and holding the FRA fixed does not. The nature of the reform allows us to identify that between 47 and 69% of individuals are passive, while imposing additional structure point identifies the fraction at 67%. An original survey of Swiss pensioners reveals that reference-dependent preferences is the main source of passivity.
    JEL: H55 J21 J26
    Date: 2020–07
  43. By: Anastasios Papanastasiou (Department of Economics, McMaster University, Canada); Bradley J. Ruffle (Department of Economics, McMaster University, Canada; Rimini Centre for Economic Analysis); Angela L. Zheng (Department of Economics, McMaster University, Canada)
    Abstract: We study the factors associated with compliance with social-distancing regulations using a unique dataset on the behaviour of Ontarians during the COVID-19 pandemic. To start, we build a simple theoretical model of social distancing in order to understand how some individual and community-level factors influence compliance. We test our model’s predictions by designing and conducting a survey on Ontarians in which we elicit their degree of compliance with current distancing regulations as well as proposed regulations that impose different fine levels on violators or grant wage subsidies to encourage staying at home. In line with the model’s predictions, we show that variables related to one’s risk of infection (e.g., health status, age, necessity of working outside the home, regional COVID-19 cases) are significant predictors of compliance as are gender, political beliefs, risk and time preferences. Furthermore, we demonstrate that fines and wage subsidies can be powerful policy tools for promoting full compliance with regulations.
    Keywords: COVID-19, physical distancing, non-compliance fines, wage subsidies, risk of infection
    JEL: I12 I18 J38
    Date: 2020–08
  44. By: Sterkens, Philippe (Ghent University); Baert, Stijn (Ghent University); Rooman, Claudia (Ghent University); Derous, Eva (Ghent University)
    Abstract: Hiring discrimination towards (former) burnout patients has been extensively documented in the literature. To tackle this problem, it is important to understand the underlying mechanisms of such discrimination. Therefore, we conducted a vignette experiment with 425 genuine recruiters and jointly tested the potential stigma against job candidates with a history of burnout that were mentioned earlier in the literature. We found candidates revealing a history of burnout elicit perceptions of requiring work adaptations, likely having more unpleasant collaborations with others as well as diminished health, autonomy, ability to work under pressure, leadership capacity, manageability, and learning ability, when compared to candidates with a comparable gap in working history due to physical injury. Led by perceptions of a reduced ability to work under pressure, the tested perceptions jointly explained over 90% of the effect of revealing burnout on the probability of being invited to a job interview. In addition, the negative effect on interview probability of revealing burnout was stronger when the job vacancy required higher stress tolerance. In contrast, the negative impact of revealing burnout on interview probability appeared weaker when recruiters were women and when recruiters had previously had personal encounters with burnout.
    Keywords: hiring discrimination, burnout, statistical discrimination, taste-based discrimination
    JEL: J71 I14 C83 C91
    Date: 2020–07
  45. By: Tomoaki Kotera (Economist, Institute for Monetary and Economic Studies, Bank of Japan (currently, Assistant Professor, Graduate School of Economics and Management, Tohoku University, E-mail:
    Abstract: An aging economy is widely believed to increase the recipients of Social Security and thus increase the fiscal burden. However, since the health condition of the elderly today is better than before and may continue to improve in the future, the number of elderly workers may increase. This paper studies the quantitative role of old workers in the sustainability of Social Security in an aging economy by developing a computable overlapping generations model with heterogeneous agents in a general equilibrium framework. The distinctive feature of the model is the incorporation of health status linked to survival probability, medical expenditures, and disutility of labor. The model simulation shows that old workers play a significant role in mitigating the fiscal cost and the effect remains pronounced when Social Security reform is implemented. It also highlights the crucial role of the projected future health status of the population in quantifying the fiscal cost.
    Keywords: Elderly Workers, Health, Social Security Reform, Benefit Claim, Overlapping Generations
    JEL: H55 I13 J22
    Date: 2020–08
  46. By: Pastore, Francesco (Università della Campania Luigi Vanvitelli); Quintano, Claudio (Università degli Studi di Napoli Suor Orsola Benincasa); Rocca, Antonella (University of Naples Parthenope)
    Abstract: There is a long period from completing studies to finding a permanent or temporary (but at least satisfactory) job in all European countries, especially in Mediterranean countries, including Italy. This paper aims to study the determinants of this duration and measure them, for the first time in a systematic way, in the case of Italy. This paper provides several measures of duration, including education level and other criteria. Furthermore, it attempts to identify the main determinants of the long Italian transition, both at a macroeconomic and an individual level. It tests for omitted heterogeneity of those who are stuck at this important crossroads in their life within the context of parametric survival models. The average duration of the school-to-work transition for young people aged 18–34 years was 2.88 years (or 34.56 months) in 2017. A shorter duration was found for the highly educated; they found a job on average 46 months earlier than those with compulsory education. At a macroeconomic level, the duration over the years 2004–2017 was inversely related to spending in the labour market policy and in education, GDP growth, and the degree of trade-union density; however, it was directly related to the proportion of temporary contracts. At the individual level, being a woman, a migrant, or living in a densely populated area in the South are the risk factors for remaining stuck in the transition. After correcting for omitted heterogeneity, there is clear evidence of positive duration dependence. Positive duration dependence suggests that focusing on education and labour policy, rather than labour flexibility, is the best way to smooth the transition. This study develops our understanding of the Italian STWT regime by providing new and detailed evidence of its duration and by studying its determinants.
    Keywords: school-to-work transition, passive and active labour policy, survival models, positive duration dependence, Italy
    JEL: H52 I2 I24 J13 J24
    Date: 2020–07

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