nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2020‒12‒21
fifteen papers chosen by
Joseph Marchand
University of Alberta

  1. Pandemics, Global Supply Chains, and Local Labor Demand: Evidence from 100 Million Posted Jobs in China By Hanming Fang; Chunmian Ge; Hanwei Huang; Hongbin Li
  2. The Impact of ICTs and Digitalization on Productivity and Labor Share: Evidence from French firms By Cette Gilbert; Nevoux Sandra; Py Loriane
  3. Working more for more and working more for less: Labor supply in the gain and loss domains By C. Bram Cadsby; Fei Song; Nick Zubanov
  4. Wages, Hires, and Labor Market Concentration By Ioana Marinescu; Ivan Ouss; Louis-Daniel Pape
  5. Distributional Effects of Macroeconomic Shocks in Real-Time: A Novel Method Applied to the Covid-19 Crisis in Germany By Kerstin Bruckmeier; Andreas Peichl; Martin Popp; Jürgen Wiemers; Timo Wollmershäuser
  6. On the Degree and Consequences of Talent Misallocation for the United States By Almarina Gramozi; Theodore Palivos; Marios Zachariadis
  7. Italian Doctorate Holders and Academic Career. Progression in the Period 1986-2015 By Massimiliano Coda Zabetta; Aldo Geuna
  8. The Labor Market Returns to 'First in Family' University Graduates By Adamecz-Völgyi, Anna; Henderson, Morag; Shure, Nikki
  9. Searching, Recalls, and Tightness: An Interim Report on the COVID Labor Market By Eliza Forsythe; Lisa B. Kahn; Fabian Lange; David G. Wiczer
  10. When outside options bite: Labor demand in the Norwegian salmon farming industry and educational investments By Ole Henning Nyhus
  11. New Technologies, Productivity, and Jobs: The (Heterogeneous) Effects of Electrification on US Manufacturing By Martin Fiszbein; Jeanne Lafortune; Ethan G. Lewis; José Tessada
  12. Organised Labour, Labour Market Imperfections, and Employer Wage Premia By Sabien Dobbelaere; Boris Hirsch; Steffen Mueller; Georg Neuschaeffer
  13. Back to the past: the historical roots of labour-saving automation By Jacopo Staccioli; Maria Enrica Virgillito
  14. Management as the sine qua non for M&A success By Manthos D. Delis; Maria Iosifidi; Pantelis Kazakis; Steven Ongena; Mike G. Tsionas
  15. Banks, debts and workers By Oliver Denk; Priscilla Fialho

  1. By: Hanming Fang; Chunmian Ge; Hanwei Huang; Hongbin Li
    Abstract: This paper studies how the COVID-19 pandemic has affected labor demand using over 100 million posted jobs on one of the largest online platforms in China. Our data reveals that, due to the effects of the pandemic both in China and abroad, the number of newly posted jobs within the first 13 weeks after the Wuhan lockdown on January 23, 2020 was about one third lower than that of the same lunar calendar weeks in 2018 and 2019. Using econometric methods, we show that, via the global supply chain, COVID-19 cases abroad and in particular pandemic-control policies by foreign governments reduced new job creations in China by 11.7%. We also find that Chinese firms most exposed to international trade outperformed other firms at the beginning of the pandemic but underperformed during recovery as the Novel Coronavirus spread throughout the world.
    JEL: F16 J2
    Date: 2020–11
  2. By: Cette Gilbert; Nevoux Sandra; Py Loriane
    Abstract: Taking advantage of an original firm-level survey carried out by the Banque de France, we empirically investigate how the employment of ICT specialists (in-house and external) and the use of digital technologies (cloud and big data) have an impact on firm productivity and labor share. Our analysis relies on the survey responses in 2018 of 1,065 French firms belonging to the manufacturing sector and with at least 20 employees. To tackle potential endogeneity issues, we adopt an instrumental variable approach as proposed by Bartik (1991). The results of our crosssection estimations point to a large effect: ceteris paribus, the employment of ICT specialists and the use of digital technologies improve a firm’s labor productivity by about 23% and its total factor productivity by about 17%. Conversely, the employment of in-house ICT specialists and the use of big data both have a detrimental impact on labor share, of about 2.5 percentage points respectively.
    Keywords: Productivity, ICT, digitalization
    JEL: O3 O4 J24 L11
    Date: 2020
  3. By: C. Bram Cadsby (Department of Economics and Finance, University of Guelph, Guelph ON Canada); Fei Song (Ted Rogers School of Management, Ryerson University, Toronto ON Canada); Nick Zubanov (University of Konstanz, Konstanz, Germany)
    Abstract: We examine the response of labor supply to short-run wage changes with and without a reference wage (RW) that we manipulate experimentally. We find that, in the absence of RW, labor supply increases monotonically with wage. In contrast, when RW is present, people work more both when wages rise and fall relative to RW. These findings suggest a kink in the labor-supply curve, consistent with income targeting by loss-averse individuals. However, the effects of income targeting are sensitive to context: in a treatment where wages could either rise or fall relative to RW, the kink in the labor-supply curve disappears.
    Keywords: labor supply, short-run wage changes, reference wage, loss-aversion, experimental
    JEL: D91 J22 J31 M52
    Date: 2020
  4. By: Ioana Marinescu; Ivan Ouss; Louis-Daniel Pape
    Abstract: How does employer market power affect workers? We compute the concentration of new hires by occupation and commuting zone in France using linked employer-employee data. Using instrumental variables with worker and firm fixed effects, we find that a 10% increase in labor market concentration decreases hires by 12.4% and the wages of new hires by nearly 0.9%, as hypothesized by monopsony theory. Based on a simple merger simulation, we find that a merger between the top two employers in the retail industry would be most damaging, with about 24 million euros in annual lost wages for new hires, and an 8000 decrease in annual hires.
    JEL: J23 J3 J42 K21 L13
    Date: 2020–11
  5. By: Kerstin Bruckmeier; Andreas Peichl; Martin Popp; Jürgen Wiemers; Timo Wollmershäuser
    Abstract: The highly dynamic nature of the COVID-19 crisis poses an unprecedented challenge to policy makers around the world to take appropriate income-stabilizing countermeasures. To properly design such policy measures, it is important to quantify their effects in real-time. However, data on the relevant outcomes at the micro level is usually only available with considerable time lags. In this paper, we propose a novel method to assess the distributional consequences of macroeconomic shocks and policy responses in real-time and provide the first application to Germany in the context of the COVID-19 pandemic. Specifically, our approach combines different economic models estimated on firm- and household-level data: a VAR-model for output expectations, a structural labor demand model, and a tax-benefit microsimulation model. Our findings show that as of September 2020 the COVID-19 shock translates into a noticeable reduction in gross labor income across the entire income distribution. However, the tax benefit system and discretionary policy responses to the crisis act as important income stabilizers, since the effect on the distribution of disposable household incomes turns progressive: the bottom two deciles actually gain income, the middle deciles are hardly affected, and only the upper deciles lose income.
    Keywords: income distribution, inequality, recession, Covid-19, tax-benefit policies, short-time work, business survey, labor demand, microsimulation
    JEL: D31 E24 E37 H24 J23
    Date: 2020
  6. By: Almarina Gramozi; Theodore Palivos; Marios Zachariadis
    Abstract: We develop a search and matching model linking unequal access to employment with wage gaps, labor misallocation, and income losses. We then use microeconomic data for millions of individuals across the United States over the period from 1960 to 2017, to explore the misallocation effects arising due to frictions related to race and gender and to quantify their impact on aggregate economic outcomes. We systematically find that women and non-whites receive lower wages compared to their counterparts with similar individual characteristics. Within our theoretical model, such wage gaps coexist with talent misallocation due to the presence of workers that are underprivileged as a result of their gender or race. State-level misallocation implied by our estimated wage gaps is negatively related to productivity and output at the state level over the period under study. Furthermore, calibrating the theoretical model to match the US economy, we find that a fall in white privilege has a sizeable positive effect on aggregate income.
    Keywords: Economic growth; inefficiencies; wage gaps; race; gender.
    JEL: O4 O51 E0 J31
    Date: 2020–12
  7. By: Massimiliano Coda Zabetta; Aldo Geuna
    Abstract: This paper describes the Italian Doctoral Holder and Academic Career (IDH-AC) database, which includes unique information on the population of doctoral graduates from Italian universities, in all disciplines, in the period from the first cycle of doctorates (1983-86) to 2006. Doctoral graduates who pursued an academic career in Italy were identified by matching with the list of academics active in Italian universities in the period 1990-2015. These original data allows us to shed light on several issues related to the Italian academic labour market, such as gender, inbreeding, mobility, hiring and promotion patterns. The paper i) describes the record linkage between two datasets and ii) presents an exploratory statistical analysis of academic employment outcomes for the population of researchers who were awarded a doctoral degree from an Italian university over a 20 year period.
    Keywords: PhD holders, Academic careers, Database, Record linkage.
    JEL: I23 J45 M51
    Date: 2020
  8. By: Adamecz-Völgyi, Anna (UCL Institute of Education); Henderson, Morag (UCL Institute of Education); Shure, Nikki (University College London)
    Abstract: We exploit linked survey-administrative data from England to examine how first in family (FiF) graduates (those whose parents do not have university degrees) fare on the labor market. We find that among graduate women, FiF graduates earn 8.3% less on average than graduate women whose parents have a university degree. For men, we find no such difference. A decomposition of the difference between FiF and non-FiF graduate women reveals that prior academic attainment, whether they attended an 'elite' institution, and whether they needed their degree for their job fully explains this gap. We also estimate returns to graduation for potential FiF and non-FiF young people. We find that although the wage returns to graduation are higher among FiF women compared to women who match their parents with a degree, the negative effects of coming from a lower educated family are so large that they counteract the high returns of graduation.
    Keywords: socioeconomic gaps, intergenerational educational mobility, higher education, entropy balancing, labor market returns, gender economics
    JEL: I24 I26 J24
    Date: 2020–11
  9. By: Eliza Forsythe; Lisa B. Kahn; Fabian Lange; David G. Wiczer
    Abstract: We report on the state of the labor market six months into the COVID recession, focusing particularly on measuring market tightness. As we show using a simple model, tightness is crucial for understanding the relative importance of labor supply or demand side factors in job creation. In tight markets, worker search effort has a relatively larger impact on job creation, while employer profitability looms larger in slack markets. We measure tightness combining job seeker information from the CPS and vacancy postings from Burning Glass Technologies. To parse the former, we develop a taxonomy of the non-employed that identifies job seekers and excludes the large number of those on temporary layoff who are waiting to be recalled. With this taxonomy, we find that effective tightness has declined about 50\% since the onset of the epidemic to levels last seen in 2016, when labor markets generally appeared to be tight. Disaggregating market tightness, we find mismatch has starkly and surprisingly declined in the COVID recession. Despite low aggregate search, the sharp decline in tightness indicates a role for policies that impact profitability, i.e., labor demand. Further, while the level of tightness is high, relative to other recessionary periods, a large reserve of slackness sits among those who lost their jobs but are not currently searching for a range of COVID-related reasons.
    JEL: E3 J2
    Date: 2020–11
  10. By: Ole Henning Nyhus (Department of Economics, Norwegian University of Science and Technology)
    Abstract: This article presents empirical evidence on the effect of the opportunity cost of schooling on youths' educational investment in Norway. The findings suggest that increases in the demand for low-skilled labor originating from the Norwegian salmon farming industry's expansion harms upper secondary graduation rates. The salmon farming industry is an important workplace for low-skilled labor in Norway, and the stock of farming concessions issued by the central government increased by 25 percent in the period 1994-2006. Endogeneity concerns are handled using instruments for the industry's size based on geographical characteristics, such as the coastline of islands and variation in ocean temperature and international salmon prices. Using data on wages for low- and high-skilled workers, I find that salmon farming changes mainly affected low-skilled wages. This confirms that the growth in the industry has increased the demand for low-skilled labor. The findings from a structural model on demand for low-skilled labor, the relative wage gap between low- and high-skilled workers, and upper secondary school graduation support human capital theory.
    Keywords: Return to education; opportunity cost of schooling; high school dropout; human capital; low-skilled labor demand
    JEL: I20 J24
    Date: 2020–11–30
  11. By: Martin Fiszbein; Jeanne Lafortune; Ethan G. Lewis; José Tessada
    Abstract: We use city-industry data from 1890 to 1940 to identify the impact of electricity on manufacturing. We exploit cross-industry variation in pre-electricity energy intensity combined with geographic variation in proximity to early hydroelectric power plants. Labor productivity gains from the arrival of electricity were rapid and long-lasting. Electricity was labor-saving, induced capital deepening, and a hollowing out of the labor skills distribution. We document significant heterogeneity in electricity's effects: in sector-county pairs where the average firm was initially large, we find no significant expansion in employment, while in markets with relatively small firms, output and employment increased.
    JEL: J24 L11 O33
    Date: 2020–11
  12. By: Sabien Dobbelaere (Vrije Universiteit Amsterdam); Boris Hirsch (Halle Institute for Economic Research (IWH)); Steffen Mueller (Halle Institute for Economic Research (IWH)); Georg Neuschaeffer (Halle Institute for Economic Research (IWH))
    Abstract: This paper examines how collective bargaining through unions and workplace co-determination through works councils shape labour market imperfections and how labour market imperfections matter for employer wage premia. Based on representative German plant data for the years 1999-2016, we document that labour market imperfections are the norm rather than the exception. Wage mark-downs, that is wages below the marginal revenue product of labour rooted in employers' monopsony power, are the most prevalent outcome. We further find that both types of organised labour are accompanied by a smaller prevalence and intensity of wage mark-downs whereas the opposite holds for wage mark-ups, that is wages above the marginal revenue product of labour rooted in workers' monopoly power. Finally, we document a close link between our production-based labour market imperfection measures and employer wage premia. The prevalence and intensity of wage mark-downs are associated with a smaller level and larger dispersion of premia whereas wage mark-ups are only accompanied by a higher premium level.
    Keywords: Wage mark-downs, wage mark-ups, collective wage agreements, works councils, employer wage premia
    JEL: D22 J42 J50 J31
    Date: 2020–12–07
  13. By: Jacopo Staccioli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore – Institute of Economics, Scuola Superiore Sant’Anna, Pisa); Maria Enrica Virgillito (Institute of Economics, Scuola Superiore Sant’Anna, Pisa – Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore)
    Abstract: This paper, relying on a still relatively unexplored long-term dataset on U.S. patenting activity, provides empirical evidence on the history of labour-saving innovations back to early 19th century. The identification of mechanisation/automation heuristics, retrieved via textual content analysis on current robotic technologies by Montobbio et al. (2020), allows to focus on a limited set of CPC codes where mechanisation and automation technologies are more prevalent. We track their time evolution, clustering, eventual emergence of wavy behaviour, and their comovements with long-term GDP growth. Our results challenge both the general-purpose technology approach and the strict 50-year Kondratiev cycle, while provide evidence of the emergence of erratic constellations of heterogeneous technological artefacts, in line with the development-block approach enabled by autocatalytic systems.
    Keywords: Labour-Saving Technologies, Search Heuristics, Industrial Revolutions, Wavelet analysis
    JEL: O3 C38 J24
    Date: 2020–11
  14. By: Manthos D. Delis (Montpellier Business School); Maria Iosifidi (University of Surrey - Surrey Business School); Pantelis Kazakis (University of Glasgow - Adam Smith Business School); Steven Ongena (University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR)); Mike G. Tsionas (Montpellier Business School)
    Abstract: This paper studies whether management quality in acquiring firms determines merger and acquisition (M&A) success. We model management practices as an unobserved (latent) variable in a standard microeconomic model of the firm and derive firm-year management estimates. We show that our measure is among the most important determinants of value creation in M&A deals. Our results are robust to the inclusion of acquirer fixed effects, to a large set of control variables, and to several other sensitivity tests. We also show that management explains, albeit to a lesser extent, acquirers’ return on equity and Tobin’s q.
    Keywords: Mergers and acquisitions; Management practices; Acquirer returns
    JEL: G14 G34 J24
    Date: 2020–12
  15. By: Oliver Denk; Priscilla Fialho
    Abstract: Private debt owed to banks and other financial institutions has been at unprecedented high levels. This paper studies the role of these high levels of debt for workers, based on an assembled micro-dataset that harmonises household surveys from 29 OECD countries. High debt is found to be associated with two bad outcomes for workers: weaker wage growth and an increased risk that they encounter a sharp fall in their wages. People who tend to be particularly affected are the low-skilled, individuals with unstable employment paths and financially vulnerable households. Strong bank supervision and macroprudential measures that aim to avoid credit overexpansion are two policies that can improve the links of private debt with labour income growth and risk. Overall, the evidence in this paper points to finance as one factor behind wage stagnation and the social divisions in today’s labour markets.
    Keywords: credit, finance, income growth, income risk, labour earnings
    JEL: E24 G21 G28 J31
    Date: 2020–12–15

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