nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2020‒11‒23
twenty papers chosen by
Joseph Marchand
University of Alberta

  1. workforce aging, pension reforms, and firm outcomes By Francesca Carta; Francesco D'Amuri; Till von Wachter
  2. How Does Working-Time Flexibility Affect Workers' Productivity in a Routine Job? Evidence from a Field Experiment By Boltz, Marie; Cockx, Bart; Diaz, Ana Maria; Salas, Luz
  3. U.S. Robots and their Impacts in the Tropics: Evidence from Colombian Labor Markets By Adriana D. Kugler; Maurice Kugler; Laura Ripani; Rodimiro Rodrigo
  4. Education, Crowding-out, and Black-White Employment Gaps in Youth Labor Markets: Evidence from No Pass, No Drive Policies By Kennedy, Kendall; Shen, Danqing
  5. Productivity Shocks, Long-Term Contracts and Earnings Dynamics By Neele Balke; Thibaut Lamadon
  6. Automation and the Fate of Young Workers: Evidence from Telephone Operation in the Early 20th Century By James Feigenbaum; Daniel P. Gross
  7. COVID-19 School Closures and Parental Labor Supply in the United States By Amuedo-Dorantes, Catalina; Marcén, Miriam; Morales, Marina; Sevilla, Almudena
  8. A question of gender? How promotions affect earnings By Zucco, Aline; Bächmann, Ann-Christin
  9. The Effects of Parental Retirement on Adult Children’s Labor Supply: Evidence From China By Wu, Qi; Gao, Xin
  10. Female Employment and Childcare By Hassani Nezhad, Lena
  11. Winter Weather and Work Hours: Heterogeneous Effects and Regional Adaptation By Liu, Bo; Hirsch, Barry
  12. What drives social returns to education? A meta-analysis By Cuiy, Ying; Martinsz, Pedro S.
  13. The Impact of Employment Quotas on the Economic Lives of Disadvantaged Minorities in India By Prakash, Nishith
  14. A Vicious Cycle of Regional Unemployment and Crime? - Evidence from German Counties By Umbach, Tim
  15. Gender Bias in Agricultural Child Labor: Evidence from Survey Design Experiments By Galdo, Jose C.; Dammert, Ana C.; Abebaw, Degnet
  16. Automation, robots and wage inequality in Germany: A decomposition analysis By Brall, Franziska; Schmid, Ramona
  17. Does Test-Based Teacher Recruitment Work in the Developing World? Experimental Evidence from Ecuador By Araujo, Maria Daniela; Heineck, Guido; Cruz-Aguayo, Yyannú
  18. Socioeconomic Status and the Experience of Pain: An Example from Knees By David M. Cutler; Ellen Meara; Susan Stewart
  19. Risk Preferences and Training Investments By Caliendo, Marco; Cobb-Clark, Deborah A.; Obst, Cosima; Uhlendorff, Arne
  20. The impact of gender and ethnic discrimination on redistribution and productivity By Günther, Isabel

  1. By: Francesca Carta (Bank of Italy); Francesco D'Amuri (Bank of Italy); Till von Wachter (University of California Los Angeles)
    Abstract: Raising statutory retirement ages has been a popular policy to increase the labor supply of older workers in the face of population aging. In this paper, we quantify the effect of a sharp and unexpected increase in retirement ages on firms’ input mix and economic outcomes using Italian administrative and survey data on employment, wages, value added and capital. Exploiting information on lifetime pension contributions for the universe of employees, we are able to quantify the extra number of older workers employed by each firm as a result of the reform. We find that a 10 per cent increase in older workers implies a rise in employment of young and middle-aged workers of 1.8 per cent and 1.3 per cent, respectively. Total labor costs and value added increase broadly in line with employment, with little impact on labor productivity and unit labor costs. These results suggest older workers are valuable to employers and that pension reforms postponing retirement can remove a constraint rather than place a burden on firms.
    Keywords: pension reform, wages, firms and labor market outcomes
    JEL: H55 J24 J26
    Date: 2020–09
  2. By: Boltz, Marie (Université de Strasbourg); Cockx, Bart (Ghent University); Diaz, Ana Maria (Pontificia Universidad Javeriana); Salas, Luz (Pontificia Universidad Javeriana)
    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: Adriana D. Kugler; Maurice Kugler; Laura Ripani; Rodimiro Rodrigo
    Abstract: Previous studies for developed countries show negative short-run impacts of automation on employment and earnings. In this paper, we instead examine whether automation by a key trading partner can hurt workers in a developing country. We specifically focus in Colombia’s labor market, and how the automation in the U.S. impacts Colombian workers by replacing exports from Colombia for cheaper robot-made U.S. products. We use employer-employee matched data from the Colombian social security records combined with data on U.S. exposure to robots in different sectors from 2011 to 2016 to examine if robots in the U.S. are displacing workers in Colombia. We find that U.S. robots decrease employment and earnings for Colombian workers in those sectors of local labor markets that have high levels of automation -measured as robots per thousand workers- in the U.S. labor market. In terms of turnover, as expected, there is an increase in dismissals and a decrease in hires for workers in sectors highly impacted by robots in the U.S. Moreover, the negative displacement effects of robots are greater for women; older workers; workers employed in small and medium sized enterprises, and workers employed in manufacturing. Importantly, local labor markets which exported the most to the U.S. in the past, are also the most affected by the increased adoption of U.S. robots, suggesting that Colombian workers may be losing employment to automated jobs reshored back to the U.S. Our estimates suggest that during our period of analysis, the adoption of robots in the U.S. led to a cumulative loss of between 63,000 and 100,000 jobs in Colombia.
    JEL: C33 C36 F66 J21 J23 J63
    Date: 2020–10
  4. By: Kennedy, Kendall; Shen, Danqing
    Abstract: We study how educational attainment and school enrollment status differentially affect Black and White teen part-time employment in the context of No Pass, No Drive policies. These policies require that teens maintain enrollment and regular attendance in school in order to hold a driver’s license, and previous research (Barua and Vidal-Fernandez 2014; Kennedy 2020) shows they cause large increases in school enrollment and educational attainment. Using difference-in-differences estimation, we find that No Pass, No Drive policies cause a 5 percentage point increase in Black teen part-time employment, but do not cause an associated change in White teen employment. Rather, this increase in Black teen part-time employment is offset by a 1.7 percentage point decrease in part-time employment for White young adults (aged 18-25). Event study specifications show that these patterns are driven by long-term compositional changes in the young adult workforce. There are no immediate effects of No Pass, No Drive policies on employment, but these policies cause an increase in the educational attainment of teens, who then become less likely to accept part-time work as young adults. This evidence suggests substantial “crowding out” of Black teens by young adults in part-time work, and that efforts to promote full-time work or post-secondary school attendance for young adults may additionally aid Black teens in part-time job finding.
    Keywords: No Pass No Drive, Black-White Discrimination, Teen Employment
    JEL: I28 J24 J71 J78
    Date: 2020–10–26
  5. By: Neele Balke; Thibaut Lamadon
    Abstract: This paper examines how employer- and worker-specific productivity shocks transmit to earnings and employment in an economy with search frictions and firm commitment. We develop an equilibrium search model with worker and firm shocks and characterize the optimal contract offered by competing firms to attract and retain workers. In equilibrium, risk-neutral firms provide only partial insurance against shocks to risk-averse workers and offer contingent contracts, where payments are backloaded in good times and frontloaded in bad times. We prove that there exists a unique spot target wage, which serves as an attraction point for smooth wage adjustments. The structural model is estimated on matched employer-employee data from Sweden. The estimates indicate that firms absorb persistent worker and firm shocks, with respective passthrough values of 27 and 11%, but price permanent worker differences, a large contributor (32%) to variations in wages. A large share of the earnings growth variance can be attributed to job mobility, which interacts with productivity shocks. We evaluate the effects of redistributive policies and find that almost 40% of government-provided insurance is undone by crowding out firm-provided insurance.
    JEL: E24 J31 J41 J64
    Date: 2020–11
  6. By: James Feigenbaum; Daniel P. Gross
    Abstract: Telephone operation, one of the most common jobs for young American women in the early 1900s, provided hundreds of thousands of female workers a pathway into the labor force. Between 1920 and 1940, AT&T adopted mechanical switching technology in more than half of the U.S. telephone network, replacing manual operation. We show that although automation eliminated most of these jobs, it did not affect future cohorts' overall employment: the decline in demand for operators was counteracted by growth in both middle-skill jobs like secretarial work and lower-skill service jobs, which absorbed future generations. Using a new genealogy-based census linking method, we show that incumbent telephone operators were most impacted by automation, and a decade later were more likely to be in lower-paying occupations or have left the labor force entirely.
    JEL: J21 J24 J62 J63 M51 M54 N32 O33
    Date: 2020–11
  7. By: Amuedo-Dorantes, Catalina (University of California, Merced); Marcén, Miriam (University of Zaragoza); Morales, Marina (University of Zaragoza); Sevilla, Almudena (University College London)
    Abstract: We examine the role of school closures in contributing to the negative labor market impacts of the COVID-19 pandemic. We collect detailed daily information on school closures at the school-district level, which we merge to individual level data on various employment and socio- demographic characteristics from the monthly Current Population Survey from January 2019 through May 2020. Using a difference-in-differences estimation approach, we gauge how the intensity of school closures affects the labor supply of mothers and fathers of young school-age children. We find evidence of non-negligible labor supply reductions, particularly among mothers. These impacts prove robust to endogeneity checks and persist after accounting for other social-distancing measures in place.
    Keywords: COVID-19, school closures, parental labor supply, United States
    JEL: D1 J1 J16 J2 J23
    Date: 2020–10
  8. By: Zucco, Aline; Bächmann, Ann-Christin
    Abstract: Occupational positions can explain an important part of the differences in pay between men and women. However, a considerable Gender Pay Gap exists even within the same occupational position. In this paper, we aim at understanding the reasons for the gap within occupational positions and, therefore, investigate whether promotions lead to the same effect on earnings growth for men and women. Using administrative data, we are the first to investigate potential gender gaps in earnings increase due to a promotion in Germany. Moreover, we are the first to analyze differences in the gender gap across promotions into different occupational positions. Our results emphasize that women's earnings growth are larger than men's after being promoted to the same position. We find that this effect is mainly due to selection since we compare a highly positively selected group of women to an average group of men. Once, we add firm fixed effects, however, gender differences disappear, which highlights the role of collective agreements.
    Keywords: Gender,Promotions,Wage Growth
    JEL: J16 M51 J31 J24
    Date: 2020
  9. By: Wu, Qi; Gao, Xin
    Abstract: Aging and an increasing retired population are a global challenge. Previous studies suggest that retirement affects economic behaviors of the retiree and his or her spouse, including consumption, health outcome, and time use. However, little is known about the intergenerational effects of parental retirement on adult children. This paper studies the effects of parental retirement on adult children's labor supply through intergenerational time and monetary transfer. We exploit the mandatory retirement age in China as the cut-off point and apply a regression discontinuity (RD) approach to four waves of the China Family Panel Studies (CFPS) Dataset. Our findings suggest that parental retirement reduces adult children's annual hours of labor supply by 3 to 4 percent. This reduction is especially pronounced for female children. We find that the reduction can be explained by parents' increasing demand for time and care from children due to the significant drop in parents' self-rated health upon retirement. Although both male and female children increased their monetary and time transfers to parents, we find that parents tend to make more transfers to sons compared to daughters. Daughters are also more likely to make transfers to parents after they retire, both in terms of money and in terms of time. We therefore urge policy makers to increase formal eldercare provisions and provide workplace amenities such as flexible working hours, especially for female employees.
    Keywords: Retirement, Labor Supply, Intergenerational Transfer, Gender Role
    JEL: D13 D64 J0 J22 J26
    Date: 2020–10–23
  10. By: Hassani Nezhad, Lena (affiliation not available)
    Abstract: Childcare and women's employment decisions are intimately linked. I develop a dynamic model designed to analyse the effects of childcare subsidies on labour supply, fertility, marriage, and childcare decisions in a collective setting. In the model, children are a household good, produced by both parental time and time in childcare. Couples cannot commit to insure one another against the lower wages and lower consumption associated with spending time with a child. I estimate the model using the Panel Study of Income Dynamics in the United States to evaluate the impact of childcare subsidy programmes on various life-cycle outcomes of women and men. Offering a 10 percent childcare subsidy expands the labour supply of single women from lower-education backgrounds by 5.4 percent while married women, and higher-educated single women, respond much less. Finally, I show that there are large increases in childcare take-up associated with childcare subsidies, which improves the quality of children as a household good. This increases gains from marriage and results in an increase in the married fraction of the sample.
    Keywords: female labour supply, childcare, collective household models
    JEL: J24 J22 J12 J13 D13
    Date: 2020–11
  11. By: Liu, Bo (Southern New Hampshire University); Hirsch, Barry (Georgia State University)
    Abstract: Winter weather affects hours worked. We examine how work hours reported in the monthly Current Population Survey (CPS) vary with respect to snowfall in 265 metropolitan areas over the years 2004-2014. The effects of snowfall on work hours vary across types of workers, occupation, industry, and region. Losses in work hours due to snow events are particularly large in the South and among construction workers. An average daily inch of snowfall during a reference week reduces work by about an hour. Few of the hours lost from large snowfalls are "made-up" in subsequent weeks. A "back-of-an-envelope" calculation suggests that in an average year, snow leads to a 0.15 percent loss in annual hours worked, a small but nontrivial impact.
    Keywords: work hours and snow, regional adaptation, heterogeneity by industry, occupation, work type
    JEL: J22 O4 Q54
    Date: 2020–10
  12. By: Cuiy, Ying; Martinsz, Pedro S.
    Abstract: Education can generate important externalities that contribute towards economic growth and convergence. In this paper, we study the drivers of such externalities by conducting the first meta- analysis of the social returns to education literature. We analyse over 1,000 estimates from 31 articles published since 1993 that cover 15 countries. Our results indicate that: 1) spillovers slow down with economic development; 2) tertiary schooling and schooling dispersion increase spillovers; 3) spillovers are smaller under fixed-effects and IV estimators but larger when measured at the firm level; and 4) there is publication bias (but not citation bias).
    Keywords: returns to education,education externalities
    JEL: I26 I28 J24 J31 C36
    Date: 2020
  13. By: Prakash, Nishith (University of Connecticut)
    Abstract: India has the world's biggest and arguably most aggressive employment-based affirmative action policy for minorities. This paper exploits the institutional features of a federally mandated employment quota policy to examine its causal impact on the economic lives of the two distinct minority groups (Scheduled Castes and Scheduled Tribes). My main finding is that a 1-percentage point increase in the employment quota for Scheduled Castes increases the likelihood of obtaining a salaried job by 0.6-percentage points for male Scheduled Caste members residing in the rural sector. The employment quota policy has no impact for Scheduled Tribes. Contrary to popular notion, I do not find evidence of "elite-capture" among the Scheduled Castes – the impact is concentrated among members who have completed less than secondary education. Consistent with the employment results, I find that the policy improved the well-being of Scheduled Castes members in rural areas who have completed less than secondary education. Finally, the impact of the employment quota policy varies by state characteristics.
    Keywords: consumption expenditure, Scheduled Tribes, Scheduled Castes, employment quota, public sector, India
    JEL: H40 J21 J31 J45 O10
    Date: 2020–11
  14. By: Umbach, Tim
    Abstract: Much research has been done showing that unemployment can cause crime, and that crime adversely impacts economic activity. However, very few authors have considered a simultaneous relationship. Using an IV-setup and regional panel-data, I find evidence for the possibility of a vicious cycle, with unemployment leading to higher crime rates and crime rates raising unemployment. I further find that especially employment in low-skill service jobs is adversely affected by crime, that many types of crime are impacted by unemployment differently and that both apartment rents and GDP-growth decrease if crime increases. The spatial dependencies found further raise the possibility that these vicious cycles could spill over into neighboring regions.
    Keywords: Crime,Unemployment,Amenities,spatial autregresssive model,SARAR,endogenous regessors.
    JEL: J21 J32 K42 R11 R23 R30
    Date: 2020
  15. By: Galdo, Jose C. (Carleton University); Dammert, Ana C. (Carleton University); Abebaw, Degnet (Ethiopian Economic Policy Research Institute)
    Abstract: Agricultural labor accounts for the largest share of child labor worldwide. Yet, measurement of farm labor statistics is challenging due to its inherent seasonality, variable and irregular work schedules, and the varying saliences of individuals' work activities. The problem is further complicated by the presence of widespread gender stratification of work and social lives. This study reports the findings of three randomized survey design interventions conducted over the agricultural coffee calendar in rural Ethiopia to address whether response by proxy rather than self-report has effects on the measurement of child labor statistics within and across seasons. While the estimates do not report differences for boys across all seasons, the analysis shows sizable self/proxy discrepancies in child labor statistics for girls. Overall, the results highlight concerns on the use of survey proxy respondents in agricultural labor, particularly for girls. The main findings have important implications for policymakers about data collection in rural areas in developing countries.
    Keywords: survey design, farm labor, gender, labor statistics, child labor
    JEL: C8 J22 Q12
    Date: 2020–10
  16. By: Brall, Franziska; Schmid, Ramona
    Abstract: We analyze how and through which channels wage inequality is affected by the rise in automation and robotization in the manufacturing sector in Germany from 1996 to 2017. Combining rich linked employer-employee data accounting for a variety of different individual, firm and industry characteristics with data on industrial robots and automation probabilities of occupations, we are able to disentangle different potential causes behind changes in wage inequality in Germany. We apply the recentered influence function (RIF) regression based Oaxaca-Blinder (OB) decomposition on several inequality indices and find evidence that besides personal characteristics like age and education the rise in automation and robotization contributes significantly to wage inequality in Germany. Structural shifts in the workforce composition towards occupations with lower or medium automation threat lead to higher wage inequality, which is observable over the whole considered time period. The effect of automation on the wage structure results in higher inequality in the 1990s and 2000s, while it has a significant decreasing inequality effect for the upper part of the wage distribution in the more recent time period.
    Keywords: Wage Inequality,Automation,Robots,Decomposition Method,RIFregression,Linked employer - employee data,Germany
    JEL: J31 C21 D63 O30
    Date: 2020
  17. By: Araujo, Maria Daniela (University of Bamberg); Heineck, Guido (University of Bamberg); Cruz-Aguayo, Yyannú (Inter-American Development Bank)
    Abstract: Since 2007, the Ecuadorian government has required teacher candidates to pass national skill and content knowledge tests before they are allowed to participate in merit-based selection competitions for tenured positions at public schools in an attempt to raise teacher quality. We evaluate the impact of this policy using linked administrative teacher information to data from a unique experimental study where almost 15,000 kindergarten children were randomly assigned to their teachers in the 2012-2013 school year in Ecuador. We find positive and significant effects of test-screened tenured teachers of at least a 0.105 standard deviation for language and a 0.085 standard deviation for math, which persist even after controlling for teacher education, experience, cognitive ability, personality traits and classroom practices.
    Keywords: teacher quality, education policy evaluation, Latin America
    JEL: I20 I21 I25 I28 J45
    Date: 2020–10
  18. By: David M. Cutler; Ellen Meara; Susan Stewart
    Abstract: Reports of pain differ markedly across socioeconomic groups and are correlated with outcomes such as functional limitations and disability insurance receipt. This paper examines the differential experience of pain by education. We focus on knee pain, the most common musculoskeletal complaint. Comparing clinical interpretation of knee x-rays of people with and without pain, there are few differences in presence or clinical severity of arthritis across education groups. In contrast, less educated people report more pain for any given objective measure of arthritis. After confirming that reported pain maps to objective measures like walking speed and range of motion, we test four theories for differential experience of pain: differences in obesity, physically demanding occupations, psychological factors, and medical treatment differences. We find that physical demands on the job and obesity each explain about one-third of the education gradient in knee pain. There is an interaction between the two; physical requirements on the job are associated with knee pain primarily in those who are obese. In contrast, psychological traits and access to medical care explain little of the difference in reported pain by education level. These findings imply that educational gradients in pain are likely to persist or even widen as the need for physically demanding occupations—like home health aides and personal service workers—grows in importance with the aging population, and the working population continues to be obese.
    JEL: I1 J21
    Date: 2020–10
  19. By: Caliendo, Marco (University of Potsdam); Cobb-Clark, Deborah A. (University of Sydney); Obst, Cosima (University of Potsdam); Uhlendorff, Arne (CREST)
    Abstract: We analyze workers' risk preferences and training investments. Our conceptual frame- work differentiates between the investment risk and insurance mechanisms underpin- ning 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: 2020–10
  20. By: Günther, Isabel
    Abstract: This study analyzes the impact of gender and ethnic discrimination on redistributive preferences and productivity using a large online experiment with US citizens on Amazon's Mechanical Turk. Participants are randomly allocated to different payment schemes for a real-effort task. Four payment schemes discriminate against women, men, whites, or people of color. Men's productivity slightly increases when they are discriminated against whereas productivity slightly decreases for women and people of color when they are discriminated against. After the task and revealing earnings, participants are given the chance to redistribute earnings by voting on a tax rate for the group. Discrimination against women highly increases preferred tax rates and discrimination against whites or people of color moderately increases the demand for redistribution. The results indicate that different forms of economic discrimination - even if financially indistinguishable - lead to very different reactions amongst the entire population and sub-groups. The results also indicate that brute luck of gender or ethnicity occurring at birth is perceived as different from brute luck experienced later in life.
    Keywords: luck,gender,ethnicity,discrimination,inequality,productivity,tax rate,demand for redistribution
    JEL: J71 D63 D91
    Date: 2020

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