nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2020‒11‒30
twenty-one papers chosen by
Joseph Marchand
University of Alberta

  1. 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
  2. Employment Effects of the Earned Income Tax Credit: Taking the Long View By Diane Whitmore Schanzenbach; Michael R. Strain
  3. Task Supply, Wage Earning, and Segmentation among Natives and Two Generations of Immigrants By Jiang, Shiyu
  4. Suddenly a Stay-At-Home Dad? Short- and Long-term Consequences of Fathers’ Job Loss on Time Investment in the Household By Juliane Hennecke; Astrid Pape
  5. Mandatory Retirement for Judges Improved Performance on U.S. State Supreme Courts By Elliott Ash; W. Bentley MacLeod
  6. Task Specialization, Wage, and Immigration in Canada By Jiang, Shiyu
  7. It's a Woman's World? Occupational Structure and the Rise of Female Employment in Germany By Bachmann, Ronald; Stepanyan, Gayane
  8. Financial Profiles of Workers Most Vulnerable to Coronavirus-Related Earnings Loss in the Spring of 2020 By Brooke Helppie-McFall; Joanne W. Hsu
  9. The effect of group identity on hiring decisions with incomplete information By Fortuna Casoria; Ernesto Reuben; Christina Rott
  10. Talent, Career Choice and Competition: The Gender Wage Gap at the Top By Fredrik Heyman; Pehr-Johan Norbäck; Lars Persson
  11. Firm Heterogeneity in Skill Returns By Michael J. Böhm; Khalil Esmkhani; Giovanni Gallipoli
  12. Towards a life after retail? The relationship between human capital and career outcomes in retail. By Nilsson, Helena; Backman, Mikaela; Öner, Özge
  13. Beyond Labor Market Polarization By Santiago Garcia-Couto
  14. Middle Managers, Personnel Turnover and Performance: A Long-Term Field Experiment in a Retail Chain By Guido Friebel; Matthias Heinz; Nikolay Zubanov
  15. Labor market reform and innovation: Evidence from Spain By García-Vega, María; Kneller, Richard; Stiebale, Joel
  16. "The Palestinian Labor Market over the Last Three Decades" By Sameh Hallaq
  17. Bargaining power and the Phillips curve: a micro-macro analysis By Marco Jacopo Lombardi; Marianna Riggi; Eliana Viviano
  18. Competition, cost structure, and labour leverage: Evidence from the U.S. airline industry By Wagner, Konstantin
  19. Aggregate and Intergenerational Implications of School Closures: A Quantitative Assessment By Youngsoo Jang; Minchul Yum
  20. Crowding-out the in-group bias: a nationalist policy paradox? By Shaun P. Hargreaves Hep; Eugenio Levi; Abhijiit Ramalingam
  21. Job Creation in the Wind Power Sector Through Marshallian and Jacobian Knowledge Spillovers By Aldieri, Luigi; Grafström, Jonas; Paolo Vinci, Concetto

  1. By: Marie Boltz (BETA, University of Strasbourg, France); Bart Cockx (Department of Economics, Ghent University; IZA, Bonn; CESifo, Munich; IRES, Université catholique de Louvain; ROA, Maastricht University); Ana Maria Diaz (Departamento de Economía, Pontificia Universidad Javeriana); Luz Magdalena Salas (Departamento de Economía, 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: 2020–10–16
  2. By: Diane Whitmore Schanzenbach; Michael R. Strain
    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.
    JEL: H2 J08 J2
    Date: 2020–10
  3. By: Jiang, Shiyu
    Abstract: This paper studies the difference in task supplies and economic status between natives and two generations of immigrants. I estimate differences in task supply and earnings between natives and immigrants in 1970 and 2015, which are the beginning and end of the fifth (and current) wave of immigration to Canada. Furthermore, using a three-fold Blinder-Oaxaca decomposition, I link the average weekly wage of workers to their task productivity, and try to find the effects of the returns to tasks as well as different task supplies on the average wage gap between natives and immigrants. Finally, I use ordered probit and logit models to demonstrate and measure the significant effects of immigrant status on an employee’s labor market segment. 1
    Keywords: immigration generations, wage difference decomposition, task specialization
    JEL: J1 J24 J3
    Date: 2020–11–04
  4. By: Juliane Hennecke; Astrid Pape
    Abstract: Commonly described as the “gender care gap”, there is a persistent gender difference in the division of domestic responsibilities in most developed countries. We provide novel evidence on the short- and long-run effects of an exogenous shock on paternal availability, through a job loss, on the allocation of domestic work within couples. We find that paternal child care and housework significantly increase in the short run on weekdays, while we do not see any similar shifts on weekends. Effects are positive and persistent for fathers who remain unemployed or have a working partner, but reverse after re-employment. We also find significant changes for female partners as well as in the cumulative household time investments and the outsourcing of tasks, depending on the labor force statuses of both partners. We theoretically discuss time availability and financial constraints, relative bargaining powers, gender role attitudes, and emotional bonds as potential explanations for the effects.
    Keywords: Job loss, paternal child care, fatherhood, domestic labor, intra-household allocation
    JEL: J13 J22 J63
    Date: 2020
  5. By: Elliott Ash; W. Bentley MacLeod
    Abstract: Anecdotal evidence often points to aging as a cause for reduced work performance. This paper provides empirical evidence on this issue in a context where performance is measurable and there is variation in mandatory retirement policies: U.S. state supreme courts. We find that introducing mandatory retirement reduces the average age of working judges and improves court performance, as measured by output (number of published opinions) and legal impact (number of forward citations to those opinions). Consistent with aging effects as a contributing factor, we find that older judges do about the same amount of work as younger judges, but that work is lower-quality as measured by citations. However, the effect of mandatory retirement on performance is much larger than what would be expected from the change in the age distribution, suggesting that the presence of older judges reduces the performance of younger judges.
    JEL: D02 J26 J41 J44 K0 K4
    Date: 2020–10
  6. By: Jiang, Shiyu
    Abstract: This paper uses Canadian census data to undertake research on the effects of immigration onemployees’ performance in the Canadian labor market. By generating a new method to definecommunication and manual tasks, this paper concentrates on changes in task supplies in the labormarket resulting from changes in immigration to Canada. This paper also studies the effects ofa change in the foreign-born worker share on task compensations. In this paper, the Canadianlabor market is separated into two groups based on workers’ educational attainments, and thesetwo groups have different reactions to an increase in the share of immigrant workers in the labormarket. Using a regression model, I estimate compensations for communication and manual tasksrespectively to study how relative compensation variation is affected by the foreign-born workershare. I find some important evidence of immigration effects on the Canadian labor market, andthese effects vary across metropolitan areas and years. The increase in the foreign born share willlead both the relative supply of communication versus manual tasks and the relative compensationsof these tasks to go up in the highly-educated workers group. However, the Canadian immigrationdoes not impact the less-educated group quite significantly because of the smaller size of this groupin the labor market
    Keywords: Immigration, relative wage differences, task specialization
    JEL: J1 J15 J24 J31
    Date: 2020–11–02
  7. By: Bachmann, Ronald; Stepanyan, Gayane
    Abstract: We analyse whether the rise in female labour force participation in Germany over the last decades can be explained by technological progress increasing the demand for non-routine social and cognitive skills, traditionally attributed to women. We do so by examining which task groups and occupations drive the increase in the female share and how this is related to wages at the individual level. Our findings show that the share of women indeed rises most strongly in non-routine occupations requiring strong social and cognitive skills. While the female share in high-paid occupations increases over time, the share of women in the upper parts of the overall wage distribution rises significantly less.
    Keywords: female labour market participation,occupations,tasks,technological progress
    JEL: J21
    Date: 2020
  8. By: Brooke Helppie-McFall; Joanne W. Hsu
    Abstract: In spring 2020, the COVID-19 pandemic and related shutdowns had huge effects on unemployment. Using data from the Survey of Consumer Finances, we describe the financial profiles of US families whose workers were most vulnerable to coronavirus-related earnings losses in the spring of 2020, based on whether a particular worker was deemed "essential" and whether a worker's job could be conducted remotely. We use descriptive analytic techniques to examine how families' baseline financial situations would allow them to weather COVID-shutdown-related earnings losses. We find that families with non-teleworkable workers who were most vulnerable to layoff also had both demographic and financial profiles that are associated with greater vulnerability to income shocks: non-teleworkable families were more likely to be people of color and single wage-earners, and also to have less savings. The median non-teleworkable family, whether in non-essential or essential occupations, held only three weeks of income in savings, underscoring the importance of policy measures to blunt the financial effect of the COVID crisis.
    Keywords: Savings; COVID-19; Coronavirus; Essential workers
    JEL: D14 E24
    Date: 2020–11–09
  9. By: Fortuna Casoria (Univ Lyon, CNRS, GATE UMR 5824, F-69130 Ecully, France); Ernesto Reuben (New York University Abu Dhabi, Center for Behavioral Institutional Design; Luxembourg Institute of Socio-Economic Research); Christina Rott (Vrije Universiteit Amsterdam, 1081HV Amsterdam, The Netherlands)
    Abstract: We investigate the effects of group identity on hiring decisions with adverse selection problems. We run a laboratory experiment in which employers cannot observe a worker's ability nor verify the veracity of the ability the worker claims to have. We evaluate whether sharing an identity results in employers discriminating in favor of ingroup workers, and whether it helps workers and employers overcome the adverse selection problem. We induce identities using the minimal group paradigm and study two settings: one where workers cannot change their identity and one where they can. Although sharing a common identity does not make the worker's claims more honest, employers strongly discriminate in favor of ingroup workers when identities are fixed. Discrimination cannot be explained by employers' beliefs and hence seems to be taste-based. When possible, few workers change their identity. However, the mere possibility of changing identities erodes the employers' trust towards ingroup workers and eliminates discrimination.
    Keywords: Labor, Discrimination, Identity, Economics: Game Theory and Bargaining Theory, Hiring
    JEL: C9 D82 J71 M51
    Date: 2020
  10. By: Fredrik Heyman; Pehr-Johan Norbäck; Lars Persson
    Abstract: We propose a management career model where females face a gender-specific career hurdle. We show that female managers will, on average, be more skilled than male managers, since females from the low end of the talent distribution will abstain from investing in a career as a manager. The average female manager will then be better at mitigating more intense product market competition. When the intensity of product market competition increases, hirings and wages for female managers will therefore increase relative to those of male managers. Using Swedish matched employer-employee data, we find strong empirical evidence for all these predictions.
    Keywords: career, gender wage-gap, job inflexibility, management, competition
    JEL: J70 L20 M50
    Date: 2020
  11. By: Michael J. Böhm (University of Bonn); Khalil Esmkhani (University of British Columbia); Giovanni Gallipoli (Vancouver School of Economics, UBC)
    Abstract: This paper presents new evidence on worker-firm complementarities. We combine matched employer-employee data with direct measures of workers' cognitive and noncognitive skills, and propose an empirical approach that separately identifies the firm-level return for each attribute. We find that similar skills command different returns across employers and that workers' sorting into firms depends on returns to both attributes. We derive theoretical restrictions that characterize many-to-one matching in employer-employee data, linking within-firm skill dispersion to between-firm differences in average skills. Estimates support these restrictions. Firm heterogeneity in skill returns raises both the average level and dispersion of earnings.
    Keywords: firm heterogeneity, skill returns, sorting, wages, Inequality
    JEL: D30 J23 J24 J31
    Date: 2020–11
  12. By: Nilsson, Helena (Center of Entrepreneurship and Spatial Economics (CEnSE), Jönköping International Business School, Jönköping, Sweden.); Backman, Mikaela (Center of Entrepreneurship and Spatial Economics (CEnSE), Jönköping International Business School, Jönköping, Sweden.); Öner, Özge (Cambridge University, Cambridge, U.K.)
    Abstract: The retail sector accounts for a large share of employment in many economies, and many young individuals regard the retail sector as a steppingstone in the labor market. As the retail sector comprises various types of employment and diverse tasks, those employed in the retail sector are able to transition across different roles. Retail firms, however, often experience high labor turnover, which is costly to firms. This paper addresses how the human capital of full-time retail employees relates to labor turnover. We study individuals working in the retail sector between 1990 and 2018 and analyze how their human capital is associated with their likelihood of remaining in the same establishment and/or in the retail sector at large. Results indicate that firm-specific human capital decreases the probability of quitting, while formal education has the opposite effect. Industry experience and specific retail education, however, decreases the probability of leaving an establishment.
    Keywords: retail; human capital; experience; education; career outcomes; Sweden
    JEL: J24 J62 L81
    Date: 2020–11–17
  13. By: Santiago Garcia-Couto
    Abstract: It is well documented that routine-biased technical change ("RBTC") led to labor market polarization during 1980-2000. In particular, the employment and wages of non-routine occupations, which include low-wage manual and high-wage cognitive ones, increased relative to routine occupations. I document that during 2000-2016, wage polarization stopped in that the wages of non-routine manual occupations fell in relative and absolute terms. I study the end of wage polarization through the lens of a dynamic general equilibrium model with RBTC, human capital accumulation, and occupational mobility. I find that during 2000-2016, RBTC continued to take place, but human capital accumulation and occupational mobility changed. In particular, compared to workers in routine occupations, workers in non-routine manual occupations had lower initial human capital and accumulated less human capital whereas workers in cognitive occupations had more initial human capital and accumulated more human capital than before. During 1980-2000 the changes in the human capital accumulation of the occupations were similar to those during 2000-2016, but during the second period mobility across occupations fell, which magnified the differences in human capital accumulation and led to the end of wage polarization.
    JEL: E24 J24 J31 J62
    Date: 2020–11–15
  14. By: Guido Friebel (Department of Management and Microeconomics, Goethe-University Frankfurt, 60323 Frankfurt/Main, Germany); Matthias Heinz (Department of Management, University of Cologne, 50923 Cologne, Germany); Nikolay Zubanov (Department of Economics, University of Konstanz, 78464 Konstanz, Germany)
    Abstract: In an RCT, a large retail chain’s CEO sets new goals for the managers of the treated stores by asking them “to do what they can” to reduce the employee quit rate. The treatment decreases the quit rate by a fifth to a quarter, lasting nine months before petering out, but reappearing after a reminder. There is no treatment effect on sales. Further analysis reveals that treated store managers spend more time on HR and less on customer service. Our findings show that middle managers are instrumental in reducing personnel turnover, but they face a tradeoff between investing in different activities in a multitasking environment with limited resources. The treatment does produce efficiency gains. However, these occur only at the firm level.
    Keywords: organizations, randomized controlled trial (RCT), insider econometrics, goal-setting, communication, HR, personnel turnover and firm performance
    JEL: L2 M1 M12 M5
    Date: 2020–11
  15. By: García-Vega, María; Kneller, Richard; Stiebale, Joel
    Abstract: We analyze the effect of a labor market reform on firms' product innovation. The re- form, which amounts to a natural experiment, differentially reduced firing costs for some firms, thereby lowering adjustment costs in the presence of demand uncertainty. Using a difference-in- differences framework, we show that the reform increased product innovations. We also provide evidence that the reform induced upgrading of product quality and enabled firms to grow faster and enter new markets. The effects are concentrated in industries with high levels of demand volatility and R&D intensity, where exible adjustments to unexpected shocks are important.
    Keywords: Innovation,New products,Productivity,Labor market reform,EPL
    JEL: D22 J3 O31 G31
    Date: 2020
  16. By: Sameh Hallaq
    Abstract: This paper consists of three economic literature review essays that survey the Palestinian labor market during the last three decades. The first essay examines the economic return to schooling since 1981 until the recent period, taking into consideration the major shocks that the Palestinian economy experienced, such as the First and Second Palestinian Intifadas (1987-93 and 2000-5), respectively, and the establishment of the Palestinian National Authority in 1993. A special focus is laid on overcoming the potential endogeneity arising from the schooling coefficient. The second essay discusses the economic costs of several conflict measures (e.g., time and geographical variation in fatalities and other conflict incidents, days under curfews, checkpoints, movement restrictions, and substitution of foreigner workers for Palestinian labor) on the labor market and human capital. Earnings and unemployment are the main labor market indicators, while the human capital impact was assessed by educational attainment. The third essay sheds light on the wage differential in the Palestinian labor market due to geographical and employment sector factors.
    Keywords: Returns to Schooling; Israeli-Palestinian Conflict; Wage Differential
    JEL: E24 J31 J24 J40 J61
    Date: 2020–11
  17. By: Marco Jacopo Lombardi; Marianna Riggi; Eliana Viviano
    Abstract: We use a general equilibrium model to show that a decrease in workers' bargaining power amplifies the relative contribution to the output gap of adjustments along the extensive margin of labour utilization. This mechanism reduces the cyclical movements of marginal cost (and inflation) relative to those of the output gap. We show that the relationship between bargaining power and adjustments along the extensive margin (relative to the intensive margin) is supported by microdata. Our analysis relies on panel data from the Italian survey of industrial firms. The Bayesian estimation of the model using euro-area aggregate data covering the 1970-1990 and 1991-2016 samples confirms that the decline in workers' bargaining power has weakened the inflation-output gap relationship.
    Keywords: low inflation, bargaining power, Phillips curve
    JEL: E31 E32 J23 J60
    Date: 2020–11
  18. By: Wagner, Konstantin
    Abstract: I study the effect of increasing competition on financial performance through labour leverage. To capture competition, I exploit variation in product market contestability in the U.S. airline industry. First, I find that increasing competitive pressure leads to increasing labour leverage, proxied by labour share. This explains the decrease in operating profitability through labour rigidities. Second, by exploiting variation in human capital specificity, I show that contestability of product markets induces labour market contestability. Whereas affected firms might experience more stress through higher wages or loss of skilled human capital, more mobile employee groups benefit from competitions through higher labour shares.
    Keywords: competition,labour leverage,labour share,threat of entry
    JEL: G39 J31 L93
    Date: 2020
  19. By: Youngsoo Jang; Minchul Yum
    Abstract: A majority of governments around the world unprecedentedly closed schools in response to the COVID-19 pandemic. This paper quantitatively investigates the macroeconomic and distributional consequences of school closures through intergenerational channels in the medium- and long-term. The model economy is a dynastic overlapping generations general equilibrium model in which schools, in the form of public education investments, complement parental investments in producing children's human capital. We calibrate the stationary equilibrium of the model to the U.S. economy and compute the equilibrium responses following unexpected school closure shocks. We find that school closures have moderate long-lasting adverse effects on macroeconomic aggregates such as output. In addition, we find that school closures reduce intergenerational mobility, especially among older children. Finally, we find that lower substitutability between public and parental investments induces larger damages in the aggregate economy and overall lifetime incomes of the affected children, while mitigating negative impacts on intergenerational mobility. In all findings, heterogeneous parental responses to school closures play a key role. Our results provide a quantitatively relevant dimension to consider for policymakers assessing potential costs of school closures.
    Keywords: Intergenerational mobility, lifetime income, parental investments, aggregate loss, substitutability
    JEL: E24 I24 J22
    Date: 2020–11
  20. By: Shaun P. Hargreaves Hep; Eugenio Levi; Abhijiit Ramalingam
    Abstract: Using a dictator game experiment, we investigate if a policy of introducing material incentives to favour one’s own group members will be effective in raising the in-group bias in behaviour. It is not: the introduction of the material incentives in our experiment crowds-out the in-group bias in our subjects’ social preferences. Specifically, we find evidence that is consistent with the social identification with own group members weakening through the introduction of material incentives towards the in-group bias. This result potentially creates a nationalist policy paradox whereby policies like tariffs and discriminatory employment regulations designed to encourage materially the employment of home rather than foreign workers will, on the evidence of this experiment, weaken individuals’ preferences for favouring home over foreign workers. Key Words: experiment, dictator game, social identification, in-group bias, incentives, crowding-out
    JEL: C72 C91 D31 D63 D91 J70 Z18
    Date: 2020
  21. By: Aldieri, Luigi (University of Salerno); Grafström, Jonas (The Ratio Institute); Paolo Vinci, Concetto (University of Salerno)
    Abstract: The empirical evidence concerning the job-creation impact of wind power technology through knowledge spillovers is yet poor. Our objective is to contribute to the literature and bridge this gap. Specifically, our analysis explores to what extent investments in innovation activities of one firm affect the neighbouring firms’ generation of knowledge spillovers in the same sector (intra-industry) or to different sectors (inter-industry) and how this complex knowledge diffusion process impacts the employment dynamics. The econometric analysis relies on a sector-based panel dataset for the USA, Europe, and Japan between 2002 and 2017. The empirical findings suggest that there were negative employment spillovers from the same technology sector (Marshallian externalities) while the spillovers from more diversified activity (Jacobian externalities) have a positive impact on job-creation. The findings have relevant policy implications for governments who are developing an industrial strategy for wind power technology.
    Keywords: Employment; knowledge spillovers; patents; renewable energy; wind power
    JEL: J21 O33 Q20 Q40 Q42
    Date: 2020–11–11

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