nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2020‒11‒16
sixteen papers chosen by
Joseph Marchand
University of Alberta

  1. Teacher Pension Enhancements and Staffing in an Urban School District By Shawn Ni; Michael Podgursky; Xiqian Wang
  2. How Does Working-Time Flexibility Affect Workers’ Productivity in a Routine Job? Evidence from a Field Experiment By Marie Boltz; Bart Cockx; Ana Maria Diaz; Luz Magdalena Salas
  3. Employment Effects of the Earned Income Tax Credit: Taking the Long View By Schanzenbach, Diane Whitmore; Strain, Michael R.
  4. Firm Financing and the Relative for Labor and Capital By Khalid ElFayoumi
  5. Motherhood, Labor Market Trajectories, and the Allocation of Talent: Harmonized Evidence on 29 Countries By Inés Berniell; Lucila Berniell; Dolores de la Mata; María Edo; Yarine Fawaz; Matilde P. Machado; Mariana Marchionni
  6. The Effect of the 2016 United States Presidential Election on Employment Discrimination By Gorzig, Marina Mileo; Rho, Deborah
  7. Cartel deterrence and manager labor market in US and EU antitrust jurisdictions: theory and experimental data By Miguel A. Fonseca; Ricardo Gonçalves; Joana Pinho; Giovanni Tabacco
  8. Occupational Licensing and the Gender Wage Gap By Maria Koumenta; Mario Pagliero; Davud Rostam-Afschar
  9. Spillovers in pension incentives and the joint retirement behavior of Spanish couples By Sílvia Garcia-Mandicó; Sergi Jiménez-Martín
  10. Career and Technical Education in High School and Postsecondary Career Pathways in Washington State By Cowan, James; Goldhaber, Dan; Holzer, Harry J.; Naito, Natsumi; Xu, Zeyu
  11. Swinging female labor demand – How the public sector influences gender wage gaps in Europe By Paul Ramskogler; Aleksandra Riedl; Florian Schoiswohl
  12. How Teachers Value Pension Wealth: A Reexamination of the Illinois Experience By Shawn Ni; Michael Podgursky; Fangda Wang
  13. Wage Setting Under Targeted Search By Anton A. Cheremukhin
  14. (She)cession: The Colombian female staircase fall By Karen García-Rojas; Paula Herrera-Idárraga; Leonardo Fabio Morales; Natalia Ramírez-Bustamante; Ana María Tribín-Uribe
  15. Female Labor Force Participation in Five Selected Mena Countries: An Age-Period-Cohort Analysis (Algeria, Egypt, Jordan, Palestine and Tunisia) By Lassassi, Moundir; Tansel, Aysit
  16. Risk Preferences and Training Investments By Marco Caliendo; Deborah A. Cobb-Clark; Cosima Obst; Arne Uhlendorff

  1. By: Shawn Ni (Department of Economics, University of Missouri-Columbia); Michael Podgursky (Department of Economics, University of Missouri-Columbia); Xiqian Wang (Department of Economics, University of Missouri-Columbia)
    Abstract: Many states enhanced benefits in teacher retirement plans during the 1990s. This paper examines the school staffing effects of one such enhancement in a major urban school district with mostly high poverty schools. Pension rule changes in 1999 for St. Louis public school teachers resulted in large increases in pension wealth for active teachers, as well as a powerful increase in "push" incentives for earlier retirement. Simple descriptive statistics on retirement patterns before and after the enhancements suggest much earlier retirement resulted. Shorter teaching spells imply a steady state with more teaching vacancies and a larger share of novice teachers in classrooms. To better understand the long run effects of these changes and alternatives policies, the authors estimate a structural model of teacher retirement. Simulations of retirement behavior for a representative senior teacher point to shorter completed teaching spells and earlier retirement age as a result of the enhancements. By contrast, moving from the post-1999 to a DC-type plan would extend the teaching career of a representative senior teacher by roughly two years.
    Keywords: Teacher pensions, teacher compensation, state and local pension finance
    JEL: J32 J26 H72
    Date: 2020–10
  2. By: Marie Boltz; Bart Cockx; Ana Maria Diaz; Luz Magdalena Salas (-)
    Abstract: We conducted an experiment in which we hired workers under different types of contracts to evaluate how flexible working time affects on-the-job productivity in a routine job. Our approach breaks down the global impact on productivity into sorting and behavioral effects. We find that all forms of working-time flexibility reduce the length of workers’ breaks. For part-time work, these positive effects are globally counterbalanced. Yet arrangements that allow workers to decide when to start and stop working increase global productivity by as much as 50 percent, 40 percent of which is induced by sorting.
    Keywords: Flexible work arrangements, part-time work, productivity, labor market flexibility, work–life balance
    JEL: J21 J22 J23 J24 J33
    Date: 2020–10
  3. By: Schanzenbach, Diane Whitmore (Northwestern University); Strain, Michael R. (American Enterprise Institute for Public Policy Research)
    Abstract: The Earned Income Tax Credit (EITC) is the cornerstone U.S. anti-poverty program, typically lifting over 5 million children out of poverty each year. Targeted to low-income households with children, and only available to those who work, the EITC contains strong incentives for non-workers to become employed. Most of the existing economics literature focuses on federal EITC expansions in the 1980s and 1990s. This paper takes a longer view, studying all federal expansions since the program's inception in 1975. We find robust evidence that EITC expansions increase the extensive margin of labor supply.
    Keywords: earned income tax credit, EITC, labor supply
    JEL: J22 J28 H31 I38
    Date: 2020–10
  4. By: Khalid ElFayoumi
    Abstract: During both the 2008 and the COVID crises, aggregate employment in Europe and the US fell despite continuing growth in the aggregate capital stock. Using more than one million firm-year observations of small and medium European firms between 2003 and 2018, this paper introduces new stylized facts on how firms’ relative demand for labor and capital evolved as their capital structure adjusted to the events of the 2008 crisis. It also provides the first micro-level evidence that firms substitute capital for labor when financing costs rise. The empirical evidence lends support to the hypothesis that substitution is driven by an incentive to raise holdings of collateralizable capital. The analysis uses the heterogeneous effects of ECB monetary policy surprises across the firm distribution to identify exogenous firm-level external financing shocks. The results suggest that maintaining a well functioning credit market supports a higher labor share of economic growth.
    Keywords: Labor demand, financial frictions, jobless growth, labor share
    JEL: E3 E5 G3 J2 J3
    Date: 2020
  5. By: Inés Berniell (CEDLAS-IIE-FCE-UNLP); Lucila Berniell (CAF); Dolores de la Mata (CAF); María Edo (Universidad de San Andrés); Yarine Fawaz (CEMFI); Matilde P. Machado (Universidad Carlos III de Madrid); Mariana Marchionni (CEDLAS-IIE-FCE-UNLP and CONICET)
    Abstract: In this paper we assess whether changes in labor market decisions upon motherhood lead to potential inefficient allocations of talent. Using an event study approach with retrospective data drawn from SHARE for 29 European countries we show that motherhood effects go beyond the well studied effects of labor market participation decisions: the arrival of the first child substantially affects the uptaking of alternative modes of employment, such as part-time and self-employment, that are characterized by flexible or reduced work schedules but also lower pay on average. We also show that the size of labor market responses to motherhood are larger in societies with more conservative social-norms or with weak policies regarding work-life balance. To assess the effects of motherhood over the allocation of talent, we explore how labor market responses to parenthood vary by alternative measures of talent or ability. We find that all women, even those with the highest level of ability and abler than their husbands face large motherhood effects, while men show virtually no changes in the labor market when becoming fathers. We also find that mothers who become self-employed after the birth of the first child are those that are less entrepreneurial-able according to cognitive ability and personality traits shown to impair business survival. Overall, our results suggest relevant changes in the allocation of talent caused by gender differences in nonmarket responsibilities that can have sizable impacts on aggregate market productivity.
    JEL: J13 J16 J24
    Date: 2020–11
  6. By: Gorzig, Marina Mileo; Rho, Deborah
    Abstract: We examine whether employment discrimination increased after the 2016 presidential election in the United States. We submitted fictitious applications to publicly advertised positions using resumes that are manipulated on perceived race and ethnicity (Somali American, African American, and white American). Prior to the 2016 election, employers contacted Somali American applicants slightly less than white applicants but more than African American applicants. After the election, the difference between white and Somali American applicants increased by 8 percentage points. The increased discrimination predominantly occurred in occupations involving interaction with customers. We continued data collection from July 2017 to March 2018 to test for seasonality in discrimination; there was no substantial increase in discrimination after the 2017 election.
    Keywords: discrimination,race/ethnicity,immigration,resume audit,election
    JEL: J61 J68 J71
    Date: 2020
  7. By: Miguel A. Fonseca (Department of Economics, University of Exeter and NIPE, Universidade do Minho); Ricardo Gonçalves (Universidade Católica Portuguesa, Católica Porto Business School and CEGE); Joana Pinho (Universidade Católica Portuguesa, Católica Porto Business School and CEGE); Giovanni Tabacco
    Abstract: We explore the consequences to contract design if firm shareholders are intent on their managers engaging in price exing activities under different legal regimes. We show that in fine-only legal regimes, optimal contracts must have a fixed wage. In contrast,in fine-plus-prosecution legal regimes optimal contracts must be high-powered,involving a variable component. We test these predictions in a laboratory experiment. We observe contract choices of firm owners, for a given legal regime, as well as the likelihood of managers forming explicit cartels and coordinating on prices in an indefinitely repeated Bertrand oligopoly, taking contract and legal regime as given. The data show that prosecuting managers leads to lower collusion, but high-powered contracts do not incentivize cartel formation or price coordination effectively, irrespective of legal regime. Nevertheless, high-powered contracts were most frequently chosen by firm owners, often with collusive intents.
    Keywords: Straight Bonds; cartel formation, antitrust, managerial compensation, experiment.
    JEL: L44 C90 L13 C70
    Date: 2020–10
  8. By: Maria Koumenta (Queen Mary, University of London); Mario Pagliero (University of Turin, Collegio Carlo Alberto, CEPR); Davud Rostam-Afschar (University of Mannheim)
    Abstract: We use a unique survey of the EU labor force to investigate the relationship between occupational licensing and the gender wage gap. We find that the gender wage gap is canceled for licensed self-employed workers. However, this closure of the gender wage gap is not mirrored by significant changes in the gender gap in hours worked. Our results are robust using decomposition methods, quantile regressions, different datasets, and selection correction.
    Keywords: Licensing, Gender gap, Wages, Female Labour Supply, Quantile regression, Selection
    JEL: J16 J31 J44 J71
    Date: 2020–11
  9. By: Sílvia Garcia-Mandicó; Sergi Jiménez-Martín
    Abstract: This paper explores how husbands’ and wives’ retirement behavior is influenced by their own financial incentives from Social Security and private pensions and by “spillover effects” from their spouses’ incentives. Spillover effects are possible due to income effects and complementarity of leisure; if significant, their omission will bias estimates of the effect of changing Social Security policy on retirement. We estimate conditional and unconditional (to the status of the partner) reduced-form models and document some key results. First, married men are more responsive to their incentives than married women: a ten percentage point higher marginal tax on working results in a 0.9% increase in the baseline probability to exit the labor force for men and a 0.1% for women. Second, men are very responsive to their wives’ financial incentives but that women are not responsive to their husbands’ incentives. Policy simulations, however, indicate that omitting spillover results in very moderate biases when estimating the effect of a policy change on the probability of working.
    Date: 2020–11
  10. By: Cowan, James (American Institutes for Research); Goldhaber, Dan (University of Washington); Holzer, Harry J. (Georgetown University); Naito, Natsumi (University of Washington); Xu, Zeyu (American Institutes for Research)
    Abstract: In this study, we describe the postsecondary transitions of students taking CTE courses in high school using administrative data on one cohort of high school students from Washington State. Our findings indicate that CTE students are less likely to enroll in college overall, especially four-year college. But among students who do enroll in college, CTE students are significantly more likely to enroll in and complete vocational programs, especially in applied STEM and public safety fields. Among students not enrolled in college, CTE students also are more likely to obtain full-time employment—and to work more intensively—within the first three years following high school graduation. Thus, despite the reduction in four-year college enrollment, the higher completion rates of vocational credentials among CTE concentrators in college indicate some important positive outcomes for this population.
    Keywords: career and technical education, postsecondary education, pathways
    JEL: I21 I23
    Date: 2020–10
  11. By: Paul Ramskogler (Oesterreichische Nationalbank); Aleksandra Riedl (Oesterreichische Nationalbank); Florian Schoiswohl (Bundesministerium für Finanzen)
    Abstract: We incorporate an economy’s sectoral structure into a standard theoretical framework to explain the influence of relative demand and supply effects on the gender wage gap. Using micro data covering 30 European countries over the 2003-2013 period, we construct a unique macro panel of gender wage gaps. We demonstrate that the public sector has causally determined half of the decrease in the gender wage gap over the period, thus acting as a ’swing demander’ for female labor. We further prove that it is exclusively demand factors and not composition effects that are driving this result.
    Keywords: Female net supply, Labor demand in the public sector, Remuneration effect, Wage inequality
    JEL: J3 J5 J7
    Date: 2020–10
  12. By: Shawn Ni (Department of Economics, University of Missouri-Columbia); Michael Podgursky (Department of Economics, University of Missouri-Columbia); Fangda Wang (Department of Economics, University of Missouri-Columbia)
    Abstract: In a widely-cited study, Fitzpatrick (2015) found that more than a quarter of Illinois teachers were unwilling to pay 19 cents for pension enhancements worth one dollar in present value. We revisit this finding by tracking the same cohort of teachers to retirement, which permits exact measurement of the annuity received and service years. The vast majority of teachers purchased the upgrade. Among the teachers who did not, the benefit on average had a negative value given their retirement timing. Our analysis finds that Fitzpatrick's instrumental variables fail to capture the underlying heterogeneity of preferences driving this result.
    Keywords: teacher's value of pension wealth, unobserved heterogeneity, state and local pension finance
    JEL: H75 I21 J26 J45
    Date: 2020–10
  13. By: Anton A. Cheremukhin
    Abstract: When setting initial compensation some firms set a fixed non-negotiable wage while others bargain. In this paper we propose a parsimonious search and matching model with two sided heterogeneity, where search intensity and the degree of randomness in matching are endogenous, and firms decide whether to bargain or post wages. We study the implications of heterogeneous search costs and market tightness on the choice of the wage setting mechanism, as well as the relationship between bargaining prevalence and wage level, residual wage dispersion, and labor market tightness. We find that bargaining prevalence is positively correlated with wages, residual wage dispersion, and labor market tightness, both in the model and in the data.
    Keywords: Wage bargaining; wage posting; wage dispersion
    JEL: E24 J3 J41
    Date: 2020–10
  14. By: Karen García-Rojas (Departamento Administrativo Nacional de Estadísticas); Paula Herrera-Idárraga (Pontificia Universidad Javeriana); Leonardo Fabio Morales (Banco de la República de Colombia); Natalia Ramírez-Bustamante (Universidad de los Andes); Ana María Tribín-Uribe (United Nations Development Program in Latin America and the Caribbean)
    Abstract: This article seeks to analyze the Colombian labor market during the COVID-19 crisis to explore its effect on labor market gender gaps. The country offers an interesting setting for analysis because, as most countries in the Global South, it has an employment market that combines formal and informal labor, which complicates the nature of the pandemic's aftermath. Our exploration offers an analysis that highlights the crisis's effects as in a downward staircase fall that mainly affects women compared to men. We document a phenomenon that we will call a "female staircase fall." Women lose status in the labor market; the formal female workers' transition to informal jobs, occupied women fall to unemployment, and the unemployed go to inactivity; therefore, more and more women are relegated to domestic work. We also study how women’s burden of unpaid care has increased due to the crisis, affecting their participation in paid employment. **** RESUMEN: Este artículo busca analizar el mercado laboral colombiano durante la crisis de COVID-19 y el efecto de esta crisis sobre las brechas de género. Colombia ofrece un escenario interesante para el análisis porque, como la mayoría de los países del Sur Global, tiene un mercado laboral que combina trabajo formal e informal, lo que complica las secuelas de la pandemia. Nuestra exploración ofrece un análisis que destaca los efectos de la crisis en términos de una caída de escalera descendente que afecta principalmente a las mujeres. En el trabajo documentamos un fenómeno de "caída de escalera femenina". Muchas mujeres pierden estatus en el mercado laboral; hay una marcada transición de trabajadoras formales a empleos informales, las mujeres ocupadas en empleos formales e informales caen al desempleo y las desempleadas pasan a la inactividad; en consecuencia, cada vez más mujeres se ven relegadas al trabajo doméstico. Finalmente, estudiamos cómo ha aumentado la carga de las mujeres en cuidados no remunerados debido a la crisis, lo que ha afectado su participación en el empleo remunerado.
    Keywords: Gender gap, informality, employment, time use, Colombia, COVID-19, brecha de género, informalidad, empleo, uso del tiempo, Colombia, COVID-19
    JEL: D10 E24 J16 J22
    Date: 2020–11
  15. By: Lassassi, Moundir; Tansel, Aysit
    Abstract: This paper considers the female labor force participation (FLFP) behavior over the past decade in five MENA countries namely, Algeria, Egypt, Jordan, Palestine and Tunisia. Low FLFP rates in these countries, as it is in other MENA countries, are well documented. We conduct synthetic panel analysis using age-period-cohort (APC) methodology and decompose FLFP rates into age, period and cohort effects. We present our results with Hanoch-Honig/Deaton-Paxson normalization and maximum entropy estimation approaches to the APC methodology in order to observe robustness of our results. We first study the aggregate FLFP and note the differentials in age, period and cohort effects across the countries we consider.The analysis is carried also out by rural/urban regional differentiation, marital status and educational attainment. Implications of our results for possible government policies to increase FLFP rates are discussed.
    Keywords: Female labor force participation, synthetic panel analysis, life-cycle profiles, period effects, cohort effects, MENA countries.
    JEL: C23 C25 D1 J2 J21
    Date: 2020–10–24
  16. By: Marco Caliendo (University of Potsdam, IZA Bonn, DIW Berlin, IAB Nuremberg); Deborah A. Cobb-Clark (UUniversity of Sydney, IZA, ARC Centre of Excellence for Families and Children Over the Life Course); Cosima Obst (University of Potsdam); Arne Uhlendorff (CREST, CNRS, IP Paris, IAB, IZA, DIW)
    Abstract: We analyze workers’ risk preferences and training investments. Our conceptual framework differentiates between the investment risk and insurance mechanisms underpinning training decisions. Investment risk leads risk-averse workers to train less; they undertake more training if it insures them against future losses. We use the German Socio-Economic Panel (SOEP) to demonstrate that risk affinity is associated with more training, implying that, on average, investment risks dominate the insurance benefits of training. Crucially, this relationship is evident only for general training; there is no relationship between risk attitudes and specific training. Thus, as expected, risk preferences matter more when skills are transferable – and workers have a vested interest in training outcomes – than when they are not. Finally, we provide evidence that the insurance benefits of training are concentrated among workers with uncertain employment relationships or limited access to public insurance schemes.
    Keywords: Human Capital Investment, Work-related Training, Risk Preferences
    JEL: J24 C23 D81
    Date: 2020–11

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