nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2021‒01‒18
23 papers chosen by
Joseph Marchand
University of Alberta

  1. The Impact of Age-Specific Minimum Wages on Youth Employment and Education: A Regression Discontinuity Analysis By Daysal, N. Meltem; Kucukbayrak, Muserref; Tumen, Semih
  2. Thailand’s education system and skills imbalances: Assessment and policy recommendations By Marieke Vandeweyer; Ricardo Espinoza; Laura Reznikova; Miso Lee; Thanit Herabat
  3. The COVID-19 Resilience of a Continental Welfare Regime - Nowcasting the Distributional Impact of the Crisis By Denisa Sologon; Cathal O’Donoghue; Iryna Kyzyma; Jinjing Li; Jules Linden; Raymond Wagener
  4. The Recovery from the Great Recession: A Long, Evolving Expansion By Shambaugh, Jay C.; Strain, Michael R.
  5. Seizing the productive potential of digital change in Estonia By Damien Azzopardi; Patrick Lenain; Margit Molnar; Natia Mosiashvili; Jon Pareliussen
  6. Worker and firm responses to trade shocks: The UK-China case By Josh De Lyon; Joao Paulo Pessoa
  7. Trade-induced Local Labor Market Shocks and Asymmetrical Labor Income Risk By Ursula Mello; Tomas Rodriguez Martinez
  8. Brothers increase women’s gender conformity By Anne Ardila Brenøe
  9. Heterogeneity in the Returns to Tertiary Education for the Disadvantage Youth: Quality vs. Quantity Analysis By Leonardo Fabio Morales; Christian Posso; Luz A. Flórez
  10. Academic Careers and Fertility Decisions By Maria De Paola; Roberto Nisticò; Vincenzo Scoppa
  11. Fertility Decisions and Employment Protection: The Unintended Consequences of the Italian Jobs Act By Maria De Paola; Roberto Nisticò; Vincenzo Scoppa
  12. Wage Risk and Government and Spousal Insurance By Mariacristina De Nardi; Giulio Fella; Gonzalo Paz-Pardo
  13. Does Robotization Affect Job Quality? Evidence from European Regional Labour Markets By Antón, José-Ignacio; Fernández-Macías, Enrique; Winter-Ebmer, Rudolf
  14. CAN FOUNDATIONAL ECONOMY SAVE REGIONS IN CRISIS? By Mikhail Martynovich; Teis Hansen; Karl-Johan Lundquist; ;
  15. Robots and Nonparticipation in the US: Where Have All the Workers Gone? By Benjamin Lerch
  16. Climate Change Mitigation Policies: Aggregate and Distributional Effects By Cezar Santos; Tiago Cavalcanti; Zeina Hasna
  17. Problem on the Plains: College Earnings Premiums in Small Metropolitan Areas By Winters, John V.
  18. Reducing poverty and social disparities in Lithuania By Vassiliki Koutsogeorgopoulou
  19. Labour Market Polarisation, Job Tasks and Monopsony Power By Bachmann, Ronald; Demir, Gökay; Frings, Hanna
  20. Do Inclusive Education Policies Improve Employment Opportunities? Evidence from a Field Experiment By Jorge M. Agüero; Francisco B. Galarza; Gustavo Yamada
  21. Employer Wage Subsidy Caps and Part-Time Work By ; Joel Elvery; Shawn M. Rohlin
  22. High-Ability Influencers? The Heterogeneous Effects of Gifted Classmates By Balestra, Simone; Sallin, Aurélien; Wolter, Stefan C.
  23. Risk Preference and Entrepreneurial Investment at the Top of the Wealth Distribution By Fossen, Frank M.; König, Johannes; Schröder, Carsten

  1. By: Daysal, N. Meltem (University of Copenhagen); Kucukbayrak, Muserref (Central Bank of Turkey); Tumen, Semih (TED University)
    Abstract: We exploit an age-specific minimum wage rule – which sets a lower minimum wage for workers of age 15 than that for workers of age 16 and above in Turkey – and its abolition to estimate the causal effect of a minimum wage increase on youth employment and education. Using a regression discontinuity design in tandem with a difference-in-discontinuities analysis, we find that increasing the minimum wage substantially reduces the employment of young males. In terms of magnitudes, the employment probability declines by 2.5-3.1 percentage points at the 16-year-old age cut-off. Moreover, the probability of unemployment increases approximately 2 percentage points. We also document that the minimum wage hike does not generate a major change in high school enrollment, while the likelihood of transitioning into "neither in employment nor in education and training" (NEET) category notably increases among young males. We argue that the effects of the policy have mostly been driven by the demand-side forces rather than the supply side.
    Keywords: age-specific minimum wages, youth employment, education, regression discontinuity design
    JEL: J21 J24 J31 J38
    Date: 2020–12
  2. By: Marieke Vandeweyer; Ricardo Espinoza; Laura Reznikova; Miso Lee; Thanit Herabat
    Abstract: In light of population ageing, globalisation, automation, and the effects of the COVID-19 pandemic, Thailand’s labour market is being significantly reshaped, and so are the skills required for higher employability. This paper analyses the capacity of Thailand’s education and training system to develop relevant skills from the pre-primary to higher education level, and explores the current state of skills imbalances in the country. It identifies accessibility of schooling, provision of relevant teacher training, and sustained competitiveness of higher education institutions as key areas for improvement. It also points to large skills shortages in the education, and health and social work sectors, and prevalent qualification and field-of-study mismatches. The findings highlight that a responsive education system, together with high-quality life-long learning opportunities that are accessible to all and aligned with skill needs, will be essential to equip Thai people with the right skills for navigating the rapidly changing world.
    Keywords: Accessible schooling, Adult education, Education expansion, Education quality, Lifelong learning, Skills imbalances, STEM skills, Thailand
    JEL: A20 I21 I23 I24 I26 J21 J23 J24 J31 F66
    Date: 2020–12–18
  3. By: Denisa Sologon; Cathal O’Donoghue; Iryna Kyzyma; Jinjing Li; Jules Linden; Raymond Wagener
    Abstract: We evaluate the Covid-19 resilience of a Continental welfare regime by nowcasting the implications of the shock and its associated policy responses on the distribution of household incomes. Our approach relies on a dynamic microsimulation approach that combines a household income generation model estimated on the latest EU-SILC wave with novel nowcasting techniques to calibrate the simulations using external macro controls reflecting the macroeconomic climate during the crisis. We focus on Luxembourg, a country that introduced minor tweaks to the existing tax-benefit system which already contained instruments with a strong social insurance focus that gave certainty during the crisis. The income-support policy changes were effective in cushioning household incomes and mitigating an increase in income inequality in the early stages of the pandemic. The share of labour incomes dropped, but was compensated by an increase in benefits, reflecting the cushioning effect of the transfer system. Overall market incomes dropped and became more unequal. Their disequalizing evolution was, however, overpowered by an increase in tax-benefit redistribution. Net redistribution increased, driven by an increase in the generosity of benefits and larger access to benefits. These changes are mainly explained by the labour market shock, signalling the automatic stabilizers embedded in the pre-COVID system. The system was well-equipped ahead of the crisis to cushion household incomes against job losses. The methodology is scalable to other countries and well-designed to explore the impact of later stages in the COVID crisis, both economy-wide and sector-specific. The model is a real-time analysis and decision support tool to monitor the recovery, with high applicability for policymakers.
    Keywords: COVID-19; nowcasting; microsimulation; income inequality; tax-benefit policy
    JEL: D31 H23 J21 J22 J31
    Date: 2020–01
  4. By: Shambaugh, Jay C. (George Washington University); Strain, Michael R. (American Enterprise Institute for Public Policy Research)
    Abstract: Prior to 2020, the Great Recession was the most important macroeconomic shock to the United States economy in generations. Millions lost jobs and homes. At its peak, one in ten workers who wanted a job could not find one. On an annual basis, the economy contracted by more than it had since the Great Depression. A slow and steady recovery followed the Great Recession's official end in the summer of 2009, but because it was slow and the depth of the recession so deep, it took years to reduce slack in labor markets. But because the slow-and-steady recovery lasted so long, many pre-recession peaks were exceeded, and eventually real wage growth began to accumulate for workers across the distribution. In fact, the business cycle (including recession and recovery) beginning in December 2007 was one of the better periods of real wage growth in many decades, with the bulk of that coming in the last years of the recovery. We place the Great Recession in historical context and trace the path of the recovery, studying its different phases and how different groups of workers were impacted in each phase. We also discuss the response of fiscal and monetary policy to the Great Recession, and draw lessons for the future.
    Keywords: Great Recession, economic recovery, wage growth, labor force participation, fiscal policy, monetary policy
    JEL: E00 E24 E3 E6 J21 J31
    Date: 2021–01
  5. By: Damien Azzopardi; Patrick Lenain; Margit Molnar; Natia Mosiashvili; Jon Pareliussen
    Abstract: Technologies such as cloud computing, software to automate supplier- and customer relations, online platforms and artificial intelligence seem to offer a vast potential to boost productivity and living standards. However, aggregate productivity growth has declined sharply across the OECD over the past decades. Estonia is no exception, though it is well placed to gain from digital technology diffusion, with strong digital foundations, including advanced and secure physical and digital infrastructure and world-leading e-government services. Turning this potential into a productivity boost necessitates speeding up digital take-up also outside of the ICT sector and fostering the complementarities between digital technologies, skills and policies. Skills are high in general, and the supply of ICT specialists is picking up. There is still potential to improve digital user skills, and notably to put skills to better use by improving management skills and practices. Business-friendly regulations in general and pioneering attempts in some areas will likely spur the adoption of digital technologies. However, insolvencies are too slow and costly, command-and-control regulations relatively frequent and public ownership in network industries is high. Strengthening collaboration between industry associations, labour unions and industry clusters within technology investments, internationalisation, skill supply and management practices could help the country better realise complementarities between technologies, skills and policies, and thereby tap deeper into the productivity potential offered by digital technologies.
    Keywords: automation, Digitalisation, productivity, skills
    JEL: D24 D47 E22 J24 O33 O38
    Date: 2020–12–16
  6. By: Josh De Lyon; Joao Paulo Pessoa
    Abstract: We exploit the recent surge in Chinese export growth to study the effects of a trade shock on workers and firms in a foreign market, the UK, in the period 2000-2007. We find that individuals initially employed in sectors highly exposed to growth in imports from China experienced lower income growth and remained out of employment longer than workers in sectors that were less exposed to import competition. The effects are heterogeneous, with initially lower-paid workers suffering more in terms of employment and earnings than those initially better-paid, and female workers experiencing a greater relative fall in total earnings than males, mostly through reduced years of employment. Plants in industries more exposed to Chinese products displayed lower employment growth and higher probability of going out of business than plants in sectors more insulated from competition with China, with stronger effects for larger plants.
    Keywords: globalisation, employment, wages, UK economy.
    JEL: F14 F16 J3 J6
    Date: 2021–01
  7. By: Ursula Mello; Tomas Rodriguez Martinez
    Abstract: This paper investigates the relationship between international trade and asymmetrical labor income risk. Using the case study of Brazil, we inspect how an increase in import penetration following the China shock impacted the distribution of idiosyncratic earnings changes across the country’s local labor markets, depending on the initial sectoral composition of each region. We find that an increase in import penetration leads to a more disperse and negatively skewed distribution and that these effects can partially be explained by an increase in the volatility of hours worked following job and industry transitions. Moreover, the effect on dispersion grows larger as the lags between periods increase, suggesting a rise in the permanent risk. Through the lens of an incomplete market model, an unborn individual would be willing to forgo up to 4.4% of consumption to avoid the riskier labor market. The welfare cost is half if the higher-order risk is ignored.
    Keywords: labor income risk, international trade, China shock, income process
    JEL: D31 E24 F14 F16 J31
    Date: 2020–12
  8. By: Anne Ardila Brenøe
    Abstract: I examine how one central aspect of the family environment—sibling sex composition—affects women’s gender conformity. Using Danish administrative data, I causally estimate the effect of having a second-born brother relative to a sister for first-born women. I show that women with a brother acquire more traditional gender roles, as measured through their choice of occupation and partner. This results in a stronger response to motherhood in labor market outcomes. As a relevant mechanism, I provide evidence of increased gender-specialized parenting in families with mixed-sex children. Finally, I find persistent effects to the next generation of girls.
    Keywords: Gender norms, gender conformity, sibling sex, occupational choice, motherhood
    JEL: J12 J13 J16 J22 J24 J31
    Date: 2021–01
  9. By: Leonardo Fabio Morales; Christian Posso; Luz A. Flórez
    Abstract: This paper usesadministrative records from different sources to construct a unique data set of low-income students in Colombia born from 1980 to 1990. This data includes cognitive test results, socio-economic information at their high school final year, and information on their labor market results, many years after high school graduation. We evaluate the returns by estimating the Marginal Treatment Effect (MTE) of the tertiary investment decision. The MTE allows estimating a random parameter for tertiary education return, which varies with unobserved heterogeneity across workers. We find sizeable heterogeneity in returns, as recent literature has also identified, to the extent that for a considerable mass of the population,the return is negligible. Using the estimated models, we simulate two types of policies: one that increases the supply of tertiary education and another that enhances secondary education quality. We find thata less costly policy that improvessecondary education qualitygives similar returns than a more ambitious policy that increases tertiary education supply. **** RESUMEN: Este artículo utiliza registros administrativos de diferentes fuentes para construir un base datos de estudiantes de bajos ingresos en Colombia nacidos entre 1980 y 1990. Estos datos incluyen resultados de pruebas cognitivas, información socioeconómica en su último año de secundaria, e información sobre su trabajo, años después de la graduación de la secundaria. Evaluamos los rendimientos de la educación terciaria estimando el “efecto marginal de tratamiento”(MTE) de la inversión en educación terciaria. ElMTE permite estimar un parámetro aleatorio para el rendimiento de la educación, que varía con la heterogeneidad no observada de los trabajadores. Encontramos una heterogeneidad considerable en los retornos, al punto de que, para una masa de la población, el retorno es cercano a cero. Utilizando los modelos estimados, simulamos dos tipos de políticas: una que aumenta la oferta de educación terciaria y otra que mejora la calidad de la educación secundaria. Se encuentra que una política que mejora la calidad de la educación secundaria da rendimientos similares a una política ambiciosa de incrementos en la oferta de educación terciaria.
    Keywords: Returns to tertiary education, marginal treatment effect, university expansion, quality of education, education, wages, Retornos a la educación, MTE, expansión universitaria, Calidad de la educación, Salarios.
    JEL: J31 I21 I26 I28
    Date: 2021–01
  10. By: Maria De Paola (Università della Calabria and IZA); Roberto Nisticò (Università di Napoli Federico II, CSEF and IZA); Vincenzo Scoppa (University of Calabria and IZA)
    Abstract: We investigate how academic promotions affect the propensity of women to have a child. We use administrative data on the universe of female assistant professors employed in Italian universities from 2001 to 2018. We estimate a model with individual fixed effects and find that promotion to associate professor increases the probability of having a child by 0.6 percentage points, which translates into an increase by 12.5% of the mean. This result is robust to employing a Regression Discontinuity Design in which we exploit the eligibility requirements in terms of research productivity introduced since 2012 by the Italian National Scientific Qualification (NSQ) as an instrument for qualification (and therefore promotion) to associate professor. Our finding provides important policy implications in that reducing uncertainty on career prospects may lead to an increase in fertility.
    Keywords: Fertility, Promotion, Academic Career, Career uncertainty.
    JEL: J13 J65 J41 M51 C31
    Date: 2021–01–14
  11. By: Maria De Paola (Università della Calabria and IZA); Roberto Nisticò (Università di Napoli Federico II, CSEF and IZA); Vincenzo Scoppa (University of Calabria and IZA)
    Abstract: We study the effect of a reduction in employment protection on fertility decisions. Using data from the Italian Labor Force Survey for the years 2013-2018, we analyze how the propensity to have a child has been affected by the 2015 Labor Market Reform, the so-called “Jobs Act”, which has essentially reduced the employment protection for large-firm employees and leaved largely unchanged that for small-firm ones. We employ a Difference-in-Differences identification strategy and compare the change over time in fertility decisions of women employed in large firms with the change experienced by women employed in small firms. We find that women exposed to the reduction in employment protection have a 1.4 percentage points lower probability of having a child than unexposed women. A battery of robustness checks confirms this finding. We document large heterogeneous effects by age, marital status, parity, geographic areas as well as by the level of education and wage. Our findings help understand the potential unintended consequences that labor market reforms introducing greater flexibility have on fertility decisions by increasing insecurity on career prospects.
    Keywords: Fertility, Employment Protection Legislation, Labor Market Reform, Difference-in-Differences.
    JEL: J13 J65 J41 M51 C31
    Date: 2021–01–14
  12. By: Mariacristina De Nardi; Giulio Fella; Gonzalo Paz-Pardo
    Abstract: The extent to which households can self-insure and the government can help them to do so depends on the wage risk that they face and their family structure. We study wage risk in the UK and show that the persistence and riskiness of wages depends on one's age and position in the wage distribution. We also calibrate a model of couples and singles with two alternative processes for wages: a canonical one and a flexible one that allows for the much richer dynamics that we document in the data. We use our model to show that allowing for rich wage dynamics is important to properly evaluate the effects of benefit reform: relative to the richer process, the canonical process underestimates wage persistence for women and generates a more important role for in-work benefits relative to income support. The optimal benefit configuration under the richer wage process, instead, is similar to that in place in the benchmark UK economy before the Universal Credit reform. The Universal Credit reform generates additional welfare gains by introducing an income disregard for families with children. While families with children are better off, households without children, and particularly single women, are worse off.
    JEL: D1 D12 D14 D15 H11 H2
    Date: 2020–12
  13. By: Antón, José-Ignacio (University of Linz); Fernández-Macías, Enrique (European Commission, Joint Research Centre); Winter-Ebmer, Rudolf (University of Linz)
    Abstract: Whereas there are recent papers on the effect of robot adoption on employment and wages, there is no evidence on how robots affect non-monetary working conditions. We explore the impact of robot adoption on several domains of non-monetary working conditions in Europe over the period 1995–2005 combining information from the World Robotics Survey and the European Working Conditions Survey. In order to deal with the possible endogeneity of robot deployment, we employ an instrumental variables strategy, using the robot exposure by sector in other developed countries as an instrument. Our results indicate that robotization has a negative impact on the quality of work in the dimension of work intensity and no relevant impact on the domains of physical environment or skills and discretion.
    Keywords: robotization, working conditions, job quality, Europe, regional labour markets
    JEL: J24 J81 O33
    Date: 2020–12
  14. By: Mikhail Martynovich; Teis Hansen; Karl-Johan Lundquist; ;
    Abstract: We perform an explorative analysis of employment patterns in the foundational economy producing mundane everyday necessities and providing welfare services across Swedish regional labour markets between 2007 and 2016. We focus specifically on hierarchical patterns in spatial distribution of foundational activities and their association – direct and through integration with other economic activities – with regional employment dynamics in times of crisis, recovery, and growth. Our findings suggest the foundational economy plays an important role as employment provider to a substantial number of Swedish workers, particularly in non-metropolitan regions. Besides, it appears to be associated with improved ability of regions to retain employment in the most acute phases of economic crisis, but only if it is well integrated into regional industrial profiles. However, its overall contribution to regional resilience in the long term appears to be rather limited.
    Keywords: foundational economy; everyday economy; employment; regional resilience; crisis; recovery; Sweden
    JEL: E32 J21 L16 R11 R12 R23
    Date: 2020–12
  15. By: Benjamin Lerch (Department of Economics, Università della Svizzera italiana, Switzerland)
    Abstract: I analyze the impact of one of the leading automation technologies of the last decades – industrial robots – on the declining labor force participation in the US. Exploiting exogenous variation in the adoption of robots across local labor markets and over time, I find that, on average, one additional robot drives two workers out of the labor force. The massive increase in robot adoption between the mid-1990s and 2014 explains about 15 percent of the decline in labor force participation in these years. I next investigate the channels through which automation affects nonparticipation and find that robot adoption leads to rising university enrollment rates among the young, early retirement of older workers and a considerable fraction of middle-aged workers enrolling in disability insurance.
    Keywords: industrial robots, labor force participation, education, disability, early retirement
    JEL: I12 I26 J21 J26
    Date: 2020–11
  16. By: Cezar Santos; Tiago Cavalcanti; Zeina Hasna
    Abstract: We evaluate the aggregate and distributional effects of climate change mitigation policies using a multi-sector equilibrium model with intersectoral inputoutput 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.
    JEL: E13 H23 J24
    Date: 2020
  17. By: Winters, John V. (Iowa State University)
    Abstract: I use the American Community Survey to examine how college earnings premiums differ across small metropolitan statistical areas (MSAs) in the U.S. I document that the West North Central Division (Plains Region) has especially low average college earnings premiums. Controlling for observable MSA characteristics via regression explains some of the difference between the Plains and other regions, but large and important differences remain. The low return to education for small MSAs in the Plains suggests that they will face special challenges building and retaining human capital in the near future. These areas may especially struggle to attract college-educated in-migrants.
    Keywords: college earnings premiums, college graduates, human capital, returns to education
    JEL: J20 J30 R10
    Date: 2020–12
  18. By: Vassiliki Koutsogeorgopoulou
    Abstract: Reducing poverty remains an important challenge, and the COVID-19-crisis may further reinforce social vulnerabilities. Although it has declined lately, relative poverty remains high in international comparison and is distributed unevenly across population groups with the elderly, people with disabilities, lone parents, the low-educated and the unemployed being particularly affected. A comprehensive approach is required to ensure an effective transition out of poverty and social exclusion. Reforms should strengthen income protection by ensuring that cash benefits provide adequate and tailored support to those in need. An individual-based approach is also essential for the provision of social services to reduce deficits in important areas such as social housing and long-term care for the elderly. Equity in educational opportunity and outcomes could be strengthened further, starting at the early school years, as not all children benefit from early childhood education and care services. Progress in this domain is also crucial for striking a better work-family balance and improving work incentives. More and better quality jobs in the formal sector, especially for the low-skilled, are crucial for reducing poverty. Enlarged participation in life-long learning programmes can help re-skilling and up-skilling towards higher incomes. Increased spending on well-designed labour market activation policies is also important for tackling poverty effectively.
    Keywords: active labour market policies, benefits, education, healthcare, long-term care, pensions, poverty, social services, transfer system
    JEL: I32 I38 I14 I24 J26 H55
    Date: 2020–12–22
  19. By: Bachmann, Ronald (RWI); Demir, Gökay (RWI); Frings, Hanna (RWI)
    Abstract: Using a semi-structural approach based on a dynamic monopsony model, we examine to what extent workers performing different job tasks are exposed to different degrees of monopsony power, and whether these differences in monopsony power have changed over the last 30 years. We find that workers performing mostly non-routine cognitive tasks are exposed to a higher degree of monopsony power than workers performing routine or non-routine manual tasks. Job-specific human capital and non-pecuniary job characteristics are the most likely explanations for this result. We find no evidence that labour market polarisation has increased monopsony power over time.
    Keywords: monopsony, labour-supply elasticities, technological change, task approach, routine intensity
    JEL: J24 J42 J62
    Date: 2020–12
  20. By: Jorge M. Agüero (University of Connecticut); Francisco B. Galarza (Universidad del Pacífico); Gustavo Yamada (Universidad del Pacífico)
    Abstract: In labor markets where disadvantaged students are discriminated against, merit-based college scholarships targeting these students could convey two opposing signals to employers. There is a positive signal reflecting the candidate’s cognitive ability (talented in high-school and able to maintain a high GPA in college) as well as her soft skills (overcoming poverty). There is also a possible negative signal as the targeting of the scholarship indicates that the beneficiary comes from a disadvantaged household. We conduct a correspondence study to analyze the labor market impact of an inclusive education program. Beca 18 provides merit-based scholarships to talented poor students admitted to 3-year and 5-year colleges in Peru. We find that the positive signal dominates. Including information of being a scholarship recipient increases the likelihood of getting a callback for a job interview by 20%. However, the effect is much smaller in jobs and careers where the poor are under-represented, suggesting that the negative signal of the scholarship is not zero.
    Keywords: Employment, inclusive education, correspondence study, discrimination.
    JEL: C93 I23 J7 J15
    Date: 2020–12
  21. By: ; Joel Elvery; Shawn M. Rohlin
    Abstract: Hiring credits and employer wage subsidies are tools that policymakers have available to attempt to improve labor market conditions for workers. This study explores how capped-wage subsidies affect firms’ labor market decisions, in particular, their reliance on part-time and low-skill workers. We focus on the federal Empowerment Zone program, which offers firms in targeted areas a 20 percent wage subsidy (capped at $3,000 per year) for each employee who also resides in the Empowerment Zone. Results using different methods of identification suggest that firms respond to capped-wage subsidies by expanding their use of part-time workers, particularly where the subsidy cap is likely to bind. We also provide evidence of a shift toward lower-skill workers.
    Keywords: wage subsidies; hiring credits; part-time work
    JEL: H25 J23 J48
    Date: 2021–01–06
  22. By: Balestra, Simone (University of St. Gallen); Sallin, Aurélien (University of St. Gallen); Wolter, Stefan C. (University of Bern)
    Abstract: This paper examines how exposure to students identified as gifted (IQ ≥ 130) affects achievement in secondary school, enrollment in post-compulsory education, and occupational choices. By using student-level administrative data on achievement combined with psychological examination records, we study the causal impact of gifted students on their classmates in unprecedented detail. We find a positive and significant effect of the exposure to gifted students on school achievement in both math and language. The impact of gifted students is, however, highly heterogeneous along three dimensions. First, we observe the strongest effects among male students and high achievers. Second, we show that male students benefit from the presence of gifted peers in all subjects regardless of their gender, whereas female students seem to benefit primarily from the presence of female gifted students. Third, we find that gifted students diagnosed with emotional or behavioral disorders have zero-to-negative effects on their classmates' performance, a detrimental effect more pronounced for female students. Finally, exposure to gifted students in school has consequences that extend beyond the classroom: it increases the likelihood of choosing a selective academic track as well as occupations in STEM fields.
    Keywords: gifted students, peer quality, gender, math, peer effects
    JEL: I21 I24 I26 J24
    Date: 2020–12
  23. By: Fossen, Frank M. (University of Nevada, Reno); König, Johannes (DIW Berlin); Schröder, Carsten (DIW Berlin)
    Abstract: We present first evidence how individual risk preferences shape entrepreneurial investment among the very wealthy using novel survey data from the top of the wealth distribution, which have been added to the 2019 German Socio-economic Panel Study. The data include private wealth balance sheets, in particular the value of own private business assets, and a standard measure of risk tolerance. We find that wealthy individuals are more likely to be entrepreneurs and invest a larger share of their wealth in their own businesses when they are more willing to take risks. These associations are stronger among wealthy than among less wealthy individuals. The results imply that policies affecting the riskiness of income and wealth, such as tax policy and bankruptcy law, affect risky investment decisions at the top of the wealth distribution in ways strongly determined by individual risk tolerance. Since the wealthy dominate aggregate risky investment, their risk preferences must be taken into account for theory development, empirical analysis, and policy evaluations.
    Keywords: wealth, entrepreneurship, risk, portfolio choice
    JEL: J22 J23 L26 D14
    Date: 2020–12

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