nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2020‒12‒14
twenty papers chosen by
Joseph Marchand
University of Alberta

  1. Welfare, Workfare and Labor Supply: A Unified Ex Post and Ex Ante Evaluation By Francesco Agostinelli; Emilio Borghesan; Giuseppe Sorrenti
  2. Personality Traits and Further Training By Laible, Marie-Christine; Anger, Silke; Baumann, Martina
  3. Robot Imports and Firm-Level Outcomes By Alessandra Bonfiglioli; Rosario Crinò; Harald Fadinger; Gino Gancia
  4. The Impact of Minimum Wages on Wages, Wage Spillovers, and Employment in China: Evidence from Longitudinal Individual-Level Data By Fang, Tony; Gunderson, Morley; Lin, Carl
  5. Employers’ Skills Requirements in the Austrian Labour Market: On the Relative Importance of ICT, Cognitive and Non-cognitive Skills over the Past 15 Years By Sandra M. Leitner; Oliver Reiter
  6. The effects of body-worn cameras on police efficiency: A study of local police agencies in the US. By Alda, Erik
  7. Social Assimilation and Labor Market Outcomes of Migrants in China By Cai, Shu; Zimmermann, Klaus F.
  8. Local economies amidst the COVID-19 crisis in Italy: a tale of diverging trajectories By CERQUA, AUGUSTO; LETTA, MARCO
  9. Climate Change Mitigation Policies: Aggregate and Distributional Effects By Cavalcanti, T.; Hasna, Z.; Santos, C.
  10. Services trade and labour market outcomes in the United Kingdom By Andrea Lassmann; Francesca Spinelli
  11. The Effects of the Child Care Tax Credit on Maternal Labor Supply By Haibin Jiang
  12. How representative are social partners in Europe? The role of dissimilarity By Martínez Matute, Marta; Martins, Pedro S.
  13. The Effect of Group Identity on Hiring Decisions with Incomplete Information By Casoria, Fortuna; Reuben, Ernesto; Rott, Christina
  14. The Impact of ICT on Working from Home: Evidence from EU Countries By Jerbashian, Vahagn; Vilalta-Bufi, Montserrat
  15. Skilled Scalable Services: The New Urban Bias in Economic Growth By Fabian Eckert; Sharat Ganapati; Conor Walsh
  16. Labor Supply Responses to Learning the Tax and Benefit Schedule By Kostol, Andreas Ravndal; Myhre, Andreas S.
  17. Sectoral productivity vis-Ã -vis the US and heterogeneity within the EU27: the role of firm size distribution and firm demographics By David Martinez Turegano
  18. Exporters, Multinationals and Residual Wage Inequality: Evidence and Theory By Sarah Schroeder
  19. To work or to study? Postmigration educational investments of adult refugees in Germany - evidence from a choice experiment By Damelang, Andreas; Kosyakova, Yuliya
  20. Can Unearned Income Make Us Fitter? Evidence from Lottery Wins By Costa-Font, Joan; Gyori, Mario

  1. By: Francesco Agostinelli (University of Pennsylvania); Emilio Borghesan (University of Pennsylvania); Giuseppe Sorrenti (University of Amsterdam)
    Abstract: This paper analyzes the extent to which labor supply adjusts to incentives created by social programs. We find new evidence of highly elastic labor supply for single mothers in the United States, with sizable responses to the Earned Income Tax Credit (EITC) and welfare (AFDC/TANF) reforms during the 1990s. We reconcile some conflicting results in the literature by showing how the difference in differences design fails to identify a meaningful treatment parameter when a reform expands a pre-existing social program and when multiple programs change simultaneously. Finally, we use our quasi-experimental estimates to identify a structural model of labor supply with multiple tax and transfer programs. Model counterfactuals show that the effect of the EITC on labor supply depends on the regime of taxes and transfers in place. We conclude that evidence-based policymaking must explicitly model the tax and transfer system when using past reforms (ex post analysis) to draw inference about the effects of future reforms (ex ante analysis) on the labor market.
    Keywords: evaluation of social programs, EITC, TANF, tax and transfer
    JEL: I38 J08 H30 J38
    Date: 2020–11
  2. By: Laible, Marie-Christine (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Anger, Silke (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Baumann, Martina (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "The notion of lifelong learning is gaining importance, not only in the labor market but also in other areas of modern societies. Previous research finds variation in occupation-related training participation by worker and workplace characteristics, gender, and education. However, evidence on the individual's socio-emotional skills creating favorable conditions for overall further training is scarce. To close this research gap, we analyze the role of personality for further training participation. First, we compare how the Big Five Personality Dimensions relate to different training types by differentiating between non-formal and informal training measures. Second, we investigate how personality traits affect further training chosen for occupational and private reasons separately. Drawing on a sample of 10,559 individuals from the Adult Stage of the German National Educational Panel Study (NEPS), we find that throughout our estimations, openness to experience positively relates to further training participation and is the most important determinant among the Big Five Personality Dimensions. However, the relationship between personality traits and training participation varies according to the training type and the reason for participating in further training. Moreover, we find gender-specific differences in the association between personality traits and lifelong learning. We conclude that personality is an important predictor of lifelong learning decisions." (Author's abstract, IAB-Doku) ((en)) Additional Information spätere Version (möglw. abweichend) erschienen in: Frontiers in psychology (2020), Art. 510537
    Keywords: Persönlichkeitsmerkmale, Auswirkungen, Weiterbildungsbeteiligung, Nationales Bildungspanel, Weiterbildungsbereitschaft, lebenslanges Lernen, informelles Lernen, Lehrveranstaltung, geschlechtsspezifische Faktoren, soziale Qualifikation
    JEL: D91 J24 M53
    Date: 2020–11–05
  3. By: Alessandra Bonfiglioli; Rosario Crinò; Harald Fadinger; Gino Gancia
    Abstract: We use French data over the 1994-2013 period to study how imports of industrial robots affect fi rm-level outcomes. Compared to other fi rms operating in the same 5- digit sector, robot importers are larger, more productive, and employ a higher share of managers and engineers. Over time, robot import occurs after periods of expansion in fi rm size, and is followed by improvements in effciency and a fall in demand for labor. Guided by a simple model, we develop various empirical strategies to identify the causal effects of robot adoption. Our results suggest that, while demand shocks generate a positive correlation between robot imports and employment, exogenous changes in automation lead to job losses. We also fi nd that robot imports increase productivity and the employment share of high-skill professions, but have a weak effect on total sales. The latter result suggests that productivity gains from automation may not be entirely passed on to consumers in the form of lower prices.
    Keywords: Automation, Displacement, Firms, Robots
    JEL: J23 J24 O33 D22
    Date: 2020–11
  4. By: Fang, Tony (Memorial University of Newfoundland); Gunderson, Morley (University of Toronto); Lin, Carl (Bucknell University)
    Abstract: We use the substantial variation in both the magnitude and frequency of minimum wage changes that have occurred in China since its new minimum wage regulations in 2004 to estimate their impact on wages, wage spillovers, and employment. We use county-level minimum wage data merged with individual-level longitudinal data from the Urban Household Survey for the period 2004–09, spanning the period after the new minimum wage regulations were put in place. Our results indicate that minimum wage increases raise the wages of otherwise low-wage workers by a little less than half (41%) of the minimum wage increases. Depending upon the specification, these wage effects also lead to a 2 to 4 percentage point reduction in the probability of being employed, with a 2.8 percentage point reduction being our preferred estimate. We also find statistically significant but very small wage spillovers for those whose wages are just above the new minimum wage, but they are effectively zero for those higher up in the wage distribution.
    Keywords: minimum wage, China, wages, employment, wage spillovers
    JEL: J38 J88
    Date: 2020–11
  5. By: Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw); Oliver Reiter (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This paper analyses job advertisements to identify the particular skills, abilities and characteristics that are in demand on the Austrian labour market. It takes a novel approach and uses information extracted from over 1.5 million job advertisements over the past 15 years from Austria’s largest online job portal,, to shed light on employers’ skills needs and the relative importance of, and demand for, different skill types over time. It develops a taxonomy which classifies observable skills into information and communications technology (ICT) skills (which are of increasing importance as a result of the ongoing digital revolution), cognitive skills, cognitively based skills and non-cognitive (soft) skills; but it also takes into account other factors that frequently appear in job advertisements, such as previous work experience, physical appearance, and the willingness to travel, work overtime, weekends or shifts, among others. It shows that Austrian employers are quite demanding cognitive skills, previous work experience and ICT skills were the three most frequent requirements, appearing in (almost) every second job advertisement in 2019. Over the years, these categories have also become increasingly important to employers. Among cognitively based skills, language skills were the most important, also appearing in every second job advertisement. The ability to work as part of a team, communication skills, independence, flexibility and accuracy were the top five non-cognitive (soft) skills demanded by employers.
    Keywords: Job advertisements, online job portal, skills requirements, ICT skills, cognitive skills, non-cognitive skills
    JEL: J23 J24 J63
    Date: 2020–12
  6. By: Alda, Erik
    Abstract: Do Body-Worn Cameras improve police efficiency? This study answers this question in the context of a sample of local police agencies in the US, where the adoption of BWCs by police agencies has increased significantly in recent years. To estimate the effects of BWCs on police efficiency, I exploited the differences in the adoption of BWCs between agencies that acquired them ("acquirers") and agencies that deployed them ("deployers"). Using a multiple stage approach, in the first stage I estimated the efficiency of local police agencies using a robust order-m model. In the second stage, I estimated the effects of BWCs using a range of matching estimators and an instrumental variable model. The first stage results show that police agencies could improve their efficiency by 31 percent from 0.76 to 1. The second stage matching and IV estimates suggest that BWCs can help improve police efficiency between eight and 21 percentage points. The effects are larger for those agencies that fully deployed BWCs with their officers. Overall, this study’s results support the argument that BWCs can help improve police efficiency
    Keywords: Police, Performance, Efficiency, Data Envelopment Analysis, Matching Estimators, Instrumental Variables
    JEL: C26 D24 H11 H44 L23
    Date: 2020–10–31
  7. By: Cai, Shu; Zimmermann, Klaus F.
    Abstract: Previous research has found identity to be relevant for international migration, but has neglected internal mobility as in the case of the Great Chinese Migration. However, the context of the identities of migrants and their adaption in the migration process is likely to be quite different. The gap is closed by examining social assimilation and the effect on the labor market outcomes of migrants in China, the country with the largest record of internal mobility. Using instrumental variable estimation, the study finds that identifying as local residents significantly increase migrants' hourly wages and reduce hours worked, although their monthly earnings remained barely changed. Further findings suggest that migrants with strong local identity are more likely to use local networks in job search, and to obtain jobs with higher average wages and lower average hours worked per day.
    Keywords: Social assimilation,identity,labor market,migration
    JEL: J22 J31 J61 Z13
    Date: 2020
    Abstract: Impact evaluations of the microeconomic effects of the COVID-19 upheavals are essential but nonetheless highly challenging. Data scarcity and identification issues due to the ubiquitous nature of the exogenous shock account for the current dearth of counterfactual studies. To fill this gap, we combine up-to-date quarterly local labor markets (LLMs) data, collected from the Business Register kept by the Italian Chamber of Commerce, with the machine learning control method for counterfactual building. This allows us to shed light on the pandemic impact on the local economic dynamics of one of the hardest-hit countries, Italy. We document that the shock has already caused a moderate drop in employment and firm exit and an abrupt decrease in firm entry at the country level. More importantly, these effects have been dramatically uneven across the Italian territory and spatially uncorrelated with the epidemiological pattern of the first wave. We then use the estimated individual treatment effects to investigate the main predictors of such unbalanced patterns, finding that the heterogeneity of impacts is primarily associated with interactions among the exposure of economic activities to high social aggregation risks and pre-existing labor market fragilities. These results call for immediate place- and sector-based policy responses.
    Keywords: impact evaluation; counterfactual approach; machine learning; local labor markets; firms; COVID-19; Italy
    JEL: C53 D22 E24 R12
    Date: 2020–11–26
  9. By: Cavalcanti, T.; Hasna, Z.; Santos, C.
    Abstract: We evaluate the aggregate and distributional effects of climate change mitigation policies using a multi-sector equilibrium model with intersectoral input–output linkages and worker heterogeneity calibrated to different countries. The introduction of carbon taxes leads to changes in relative prices and inputs reallocation, including labor. For the United States, reaching its Paris Agreement pledge would imply at most a 0.6% drop in output. This impact is distributed asymmetrically across sectors and individuals. Workers with a comparative advantage in dirty energy sectors who do not reallocate bear relatively more of the cost but constitute a small fraction of the labor force.
    Keywords: Climate change, carbon taxes, worker heterogeneity, labor reallocation
    JEL: E13 H23 J24
    Date: 2020–11–30
  10. By: Andrea Lassmann (OECD); Francesca Spinelli (OECD)
    Abstract: Services trade has become increasingly important, yet its impact on employment has been understudied at present. This paper uses fine-grained data on firm- and worker-level information to shed light on the impact of services trade on employment and wages in the United Kingdom. It finds that firms can benefit from services trade, through increased employment, production and productivity. On average, workers’ wages are also positively impacted by increased services trade. The findings suggest that services imports enhance female wages more than those of males, thereby contributing to narrow the gender wage gap. They also suggest that reduction of services trade barriers in foreign markets with which the United Kingdom trades coincides with higher wages for employees of trading firms in the United Kingdom.
    Keywords: Employment, gender pay gap, skills, trade liberalisation, wages, worker and firm level data
    JEL: C26 F13 F16 J31 J40
    Date: 2020–12–03
  11. By: Haibin Jiang (Tulane Economics and Murphy Institute)
    Abstract: The Child Care Tax credit (CCTC) is a child care subsidy pro- gram that allows working parents to claim a tax credit for their child care expenses. I document a comprehensive legislative history of the CCTC at both federal and state levels. Using the exogenous CCTC law changes and focusing on working-age mothers from the Panel Study of Income Dynamics, I use differences-in-differences, triple-differences, and instrumental variables methods to estimate the effects of the CCTC on maternal labor supply. I find that the CCTC significantly increases maternal labor force participation and the effects are more pronounced in married mothers than single mothers.
    Keywords: The Child Care Tax Credit; Maternal Labor Supply; Differences-in-differences; Instrumental Variables.
    JEL: J13 J22 H24
    Date: 2020–11
  12. By: Martínez Matute, Marta; Martins, Pedro S.
    Abstract: Social partners (trade unions and employers' associations) shape labour institutions and economic and social outcomes in many countries. In this paper, we argue that, when examining social partners' representativeness, it is important to consider both affiliation and dissimilarity measures. The latter concerns the extent to which affiliated and non- affiliated firms or workers are distributed similarly across relevant dimensions, including firm size. In our analysis of European Company Survey data, we find that affiliation and dissimilarity measures correlate positively across countries, particularly in the case of employers' associations. This result also holds across employers' associations when we use firm population data for Portugal. Overall, we conclude that higher affiliation rates do not necessarily equate to more representative social partners as they can involve greater dissimilarity between affiliated and non-affiliated firms.
    Keywords: Employers' Associations,Social Dialogue,Collective Bargaining
    JEL: J50 J23 L22
    Date: 2020
  13. By: Casoria, Fortuna (GATE, University of Lyon); Reuben, Ernesto (New York University, Abu Dhabi); Rott, Christina (Vrije Universiteit Amsterdam)
    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: discrimination, hiring, group identity, adverse selection
    JEL: J71 D91 D82
    Date: 2020–11
  14. By: Jerbashian, Vahagn; Vilalta-Bufi, Montserrat
    Abstract: We use data from 14 European countries and provide evidence that the fall in prices of information and communication technologies (ICT) is associated with a significant increase in the share of employees who work from home. Similar results hold within age, gender, and occupation groups. There are notable differences across age groups, however. The effect of the fall in ICT prices on working from home increases with age. A rationale for such a result is that the preference for working from home increases with age.
    Keywords: Working from Home,ICT,Age,Gender,Occupations
    JEL: J23 J24 O33
    Date: 2020
  15. By: Fabian Eckert; Sharat Ganapati; Conor Walsh
    Abstract: Since 1980, economic growth in the U.S. has been fastest in its largest cities. We show that a group of skill- and information-intensive service industries are responsible for all of this new urban bias in recent growth. We then propose a simple explanation centered around the interaction of three factors: the disproportionate reliance of these services on information and communication technology (ICT), the precipitous price decline for ICT capital since 1980, and the preexisting comparative advantage of cities in skilled services. Quantitatively, our mechanism accounts for most of the urban biased growth of the U.S. economy in recent decades.
    Keywords: urban growth, high-skill services, technological change
    JEL: J31 O33 R11 R12
    Date: 2020
  16. By: Kostol, Andreas Ravndal (Arizona State University); Myhre, Andreas S. (Statistics Norway)
    Abstract: While optimization frictions have been shown to attenuate earnings responses to financial incentives, less is understood about the individual factors shaping the response. The main contribution of this paper is to separately quantify the role of learning the tax and benefit schedule versus other kinds of frictions. A unique combination of notches in the tax and benefit schedule and an information policy in a Norwegian welfare reform facilitate our study. The presence of notches allows us to measure overall frictions. Quasi-random assignment of a letter targeting misperceptions about the slope and locations of benefit phase-out regions allows us to pin down the role of information. Our analysis delivers two main findings. First, about 50% do not behave as predicted by standard labor supply models, and optimization frictions are particularly prevalent when financial incentives change. Without adjusting for these overall frictions, estimated elasticities would be attenuated by at least 70%. Second, the observed elasticity among those who receive the information letter is at least twice as large as among the non-informed, suggesting governments can partly offset the attenuation with information policy. Our calculations suggest misperceptions of the tax and benefit schedule account for two-thirds of the attenuation in earnings responses to financial work incentives. The findings have important implications for the effectiveness of tax and transfer policy.
    Keywords: labor supply, information, optimization frictions, social security, disability insurance
    JEL: H20 H31 H55 J22 J26
    Date: 2020–11
  17. By: David Martinez Turegano (European Commission - JRC)
    Abstract: Labour productivity growth in developed economies has slowed down during the last decade relative to the pre-Great Recession period. The EU27 has been no exception to this trend, keeping both a large negative gap relative to the US and strong country heterogeneity following an uneven convergence process between Member States. Based on these stylized facts, in this paper we investigate which are the main explanatory variables accounting for productivity heterogeneity within the EU, both in level and growth terms. From a policy perspective, our findings suggest a number of areas in which action seems to be warranted, improving technological adoption, increasing innovation intensity, boosting the capital triad (human, tangible and intangible assets), and, with respect to the two micro-structural characteristics we put a focus on, eliminating barriers to growth in firm size and facilitating the entry and exit of enterprises. These same recommendations are even more valid in the specific case of business services, for which productivity performance and convergence seem more sensitive to progress in those policy areas.
    Keywords: Productivity, convergence, sectoral heterogeneity, firm structure, business demographics.
    JEL: E24 J24 L11 O47
    Date: 2020–11
  18. By: Sarah Schroeder
    Abstract: This paper studies the implications for wage inequality of two distinct forms of globalisation, namely trade and foreign direct investment. I use German linked employer-employee data to (1) jointly estimate the exporter and the multinational wage premium and (2) to further distinguish between wage premia of multinational firms that are foreign owned (inward FDI) and domestically owned (outward FDI). My findings exhibit a clear hierarchy of firms’ international activities with regard to wage premia and workforce ability. I interpret these patterns using a theoretical framework, which incorporates ex-ante homogeneous workers, heterogeneous firms and search and matching frictions into a multi-region model of trade and FDI with monopolistic competition. The model allows me to account for the observed empirical patterns, and delivers novel insights about the interplay between trade, FDI and labour market institutions.
    Keywords: wage inequality, trade, fdi, labour market frictions
    JEL: F14 F16 J31
    Date: 2020
  19. By: Damelang, Andreas; Kosyakova, Yuliya (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "In this article, we analyze individual factors and situational conditions under which immigrants are more or less likely to invest in host country-specific human capital. Theoretically, we root our ex-pectations in a strand of the immigrant human capital investment model combined with a basic model of educational decisions. Using a choice experiment, we simulate a decision process among refugees in Germany and examine the determinants of investment decisions into host country-specific credentials such as vocational education. The choice experiment was introduced in the IAB-BAMF-SOEP Survey of Refugees (2020), a representative longitudinal survey of recently arrived refugees in Germany. We find that refugees' probability of investing in vocational education is guided by the transferability of foreign human capital, the time horizon to reap investments, and rational cost-benefit considerations. The probability of success is influential on its own but also bolsters the relevance of costs and benefits in educational choices." (Author's abstract, IAB-Doku) ((en))
    Keywords: Geflüchtete, Bildungsinvestitionen, berufliche Integration, Entscheidungsfindung, Berufsausbildung, IAB-BAMF-SOEP-Befragung von Geflüchteten, Kosten-Nutzen-Analyse, berufliche Qualifikation, Gleichwertigkeit, Determinanten, Erwartung, Aufenthaltsdauer, Rückwanderungsbereitschaft
    JEL: I24 I26 J24 J61 F22
    Date: 2020–10–19
  20. By: Costa-Font, Joan (London School of Economics); Gyori, Mario (London School of Economics)
    Abstract: Although lower income is associated with overweight (and obesity), such an association is explained by a number of other confounding effects such as omitted variables (e.g., time preferences) explaining that income effect on overweight. We study the effect of unearned income shocks resulting from a lottery win (windfall income) on both overweight (alongside obesity and body mass index) distribution. We draw upon longitudinal data from the United Kingdom, a country where about half of a population plays the lottery. Our results suggest no evidence of contemporaneous effects of income on overweight, but a significant lagged effect. We find a reduction in overweight 12 months after a lottery win. A 10,000-sterling win reduces overweight by 2-3 percentage points. Furthermore, we document a nonlinear effect up to 36 months after the lottery win, suggesting that small wins increase overweight and large wins reduce it. The effect of a lottery win varies depending on an individual's working hours and educational attainment. A lottery win among low education individuals decreases the risk of overweight.
    Keywords: obesity, overweight, income, windfall income, lottery wins, body mass index (BMI)
    JEL: I12 I18 J30
    Date: 2020–11

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