nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2021‒02‒01
twenty-two papers chosen by
Joseph Marchand
University of Alberta

  1. Firms, Jobs, and Gender Disparities in Top Incomes: Evidence from Brazil By Felipe Benguria
  2. Earning structure and heterogeneity of the labor market: Evidence from DR Congo By Douglas Amuli Ibale
  3. Minimum Wage Increases and Vacancies By Marianna Kudlyak; Murat Tasci; Didem Tuzemen
  4. The Gender Gap Among Top Business Executives By Wolfgang Keller; Teresa Molina; William W. Olney
  5. It's a woman's world? Occupational structure and the rise of female employment in Germany By Bachmann, Ronald; Stepanyan, Gayane
  6. Jobs with green potential in Switzerland: Demand and possible skills shortages By Lobsiger, Michael; Rutzer, Christian
  7. The M&A rumor productivity dip By Andres, Christian; Bazhutov, Dmitry; Cumming, Douglas J.; Limbach, Peter
  8. Why do they just do it? A theory of outsourcing and working conditions By Donado, Alejandro
  9. The Career Evolution of the Sex Gap in Wages: Discrimination vs. Human Capital Investment By David Neumark; Giannina Vaccaro
  10. Fluctuations in the wage gap between vocational and general secondary education: lessons from Portugal By Hartog, Joop; Raposo, Pedro S.; Reis, Hugo
  11. ACADEMIC CAREERS AND FERTILITY DECISIONS By Maria De Paola; Roberto Nisticò; Vincenzo Scoppa
  12. Returns to Teamwork and Professional Networks: Evidence from Economic Research By Kevin Devereux
  13. The impact of Artificial Intelligence on the labour market: What do we know so far? By Marguerita Lane; Anne Saint-Martin
  14. The Fall in German Unemployment: A Flow Analysis By Carlos Carrillo-Tudela; Andrey Launov; Jean-Marc Robin
  15. Credit Frictions in the Great Recession By Patrick J. Kehoe; Pierlauro Lopez; Virgiliu Midrigan; Elena Pastorino
  16. Designing the Market for Job Vacancies: A Trust Experiment with Employment Centers Staff By Guglielmo Briscese; Andreas Leibbrandt
  17. Monetary Policy Response to a Migration Shock: An Analysis for a Small Open Economy By Franz Hamann; Cesar Anzola; Oscar Avila-Montealegre; Juan Carlos Castro-Fernandez; Anderson Grajales-Olarte; Alexander Guarín; Juan C Mendez-Vizcaino; Juan J. Ospina-Tejeiro; Mario A. Ramos-Veloza
  18. Liquidity shortfalls during the COVID-19 outbreak: Assessment and policy responses By Lilas Demmou; Guido Franco; Sara Calligaris; Dennis Dlugosch
  19. Moms’ Time—Married or Not By Daniel S. Hamermesh
  20. Labour market polarisation, job tasks and monopsony power By Bachmann, Ronald; Demir, Gökay; Frings, Hanna
  21. Machine Learning and Perceived Age Stereotypes in Job Ads: Evidence from an Experiment By Ian Burn; Daniel Firoozi; Daniel Ladd; David Neumark
  22. How do Physicians Respond to Malpractice Allegations? Evidence from Florida Emergency Departments By Caitlin Carroll; David M. Cutler; Anupam Jena

  1. By: Felipe Benguria (University of Kentucky)
    Abstract: This paper studies the gender disparities among top incomes in Brazil during the period 1994-2013 using administrative data on the universe of formal-sector job spells and detailed information on educational attainment, employers, and occupations performed. Over these two decades, differences in pay and participation between genders have narrowed, yet the process has been slow and women are still severely underrepresented, especially within the very top percentiles of the earnings distribution. The following findings highlight the role of firms and occupations in explaining these patterns. At the start of the period, women in the top percentile of the distribution owe a larger fraction of their earnings to working at high-paying firms than do men, while men’s top incomes are in excess of their firms’ average pay. In addition, belonging to the top percentile is initially much more persistent for men than for women. Both of these differences have vanished over time. I also document that the increase in the share in participation of women in top percentiles is primarily a within-firm and within-occupation phenomenon, which suggests that the evolution of cultural and institutional elements deserves further examination. Finally, I study the careers of female and male top earners, finding that the path to the top percentiles of the distribution is quite different across genders: Top-earning women work in larger firms from the start of their careers. Top-earning men earn large earnings premia above what their firm average pays throughout their career, and after their mid-30s switch employers at a higher frequency than women.
    Keywords: Top earners, Glass ceiling, Gender wage gap
    JEL: E24 G10 J31
    Date: 2020–12
  2. By: Douglas Amuli Ibale (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: Using a unique broad individual, household and expenditure survey data on the DRC, initial descriptive statistics highlight five different sectors on the labor market with two "higher-paid" that are completely formal and two "lower-paid" that are largely informal. Based on a linear regression result, we report a significant heterogeneity across them when it comes to earnings. With an unconditional quantile regression methodology corrected for selectivity bias we show that, though the effect of education on earnings provides a clear support to the human capital theory, basic education has no significant impact on earnings in higher-paid sectors. Likewise, tertiary education matters for earnings in lower-paid sectors as well. We then decompose the earning gap across sectors and show that workers of the lower-paid sectors earn less not only because they are less skill endowed but also because they earn lower returns on such skills. However, when higher-paid and lower paid sectors are concerned, the coefficient effect at the upper end of the distribution is negative. Implying that the labor market provides an "informal employment earning premium" to some workers of the lower-paid sectors whose, given their characteristics, wouldn't do better in the higher-paid sectors.
    Keywords: Earning, Labor market, Heterogeneity, Earning decomposition
    JEL: E26 J21 J31 J4 J7 J82
    Date: 2020–12–28
  3. By: Marianna Kudlyak; Murat Tasci; Didem Tuzemen
    Abstract: We estimate the impact of minimum wage increases on the quantity of labor demanded as measured by firms’ vacancy postings. We use proprietary, county-level vacancy data from the Conference Board’s Help Wanted Online to analyze the effects of minimum wage increases on the quantity of labor demanded. Our identification relies on the disproportionate effects of minimum wage hikes on different occupations, as the wage distribution around the binding minimum wage differs by occupation. We find that minimum wage increases during the 2005–18 period led to substantial declines in vacancy postings in occupations with a larger share of employment around the prevailing minimum wage. Our estimate implies that a 10 percent increase in the binding minimum wage level reduces vacancies by 2.4 percent in this group.
    Keywords: Minimum Wage; Vacancies; Hiring; Search and Matching
    JEL: E24 E32 J21 J24 J62
    Date: 2020–12–30
  4. By: Wolfgang Keller; Teresa Molina; William W. Olney
    Abstract: This paper examines gender differences among top business executives using a large executive-employer matched data set spanning the last quarter century. Female executives make up 6.2% of the sample and we find they exhibit more labor market churning – both higher entry and higher exit rates. Unconditionally, women earn 26% less than men, which decreases to 7.9% once executive characteristics, firm characteristics, and in particular job title are accounted for. The paper explores the extent to which firm-level temporal flexibility and corporate culture can explain these gender differences. Although we find that women tend to select into firms with temporal flexibility and a female-friendly corporate culture, there is no evidence that this sorting drives the gender pay gap. However, we do find evidence that corporate culture affects pay gaps within firms: the within-firm gender pay gap disappears entirely at female-friendly firms. Overall, while both corporate culture and flexibility affect the female share of employment, only corporate culture influences the gender pay gap.
    JEL: G30 J33 M14 M52
    Date: 2020–12
  5. 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 women's wages. 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 much less which implies significant within-occupation gender wage gaps.
    Keywords: Female labour market participation,occupations,tasks,technological progress
    JEL: J21 J31 O33
    Date: 2020
  6. By: Lobsiger, Michael; Rutzer, Christian (University of Basel)
    Abstract: We use a data-driven methodology to quantify the importance of different skills in performing green tasks. For Switzerland, we estimate the green potential to be 16.7% of the total of employed persons and 18.8% of full-time equivalents in 2017, respectively. Employed persons in jobs with high green potential are, on average, younger, more often men, have a higher level of educational attainment and a higher probability of having immigrated than employed persons in other occupations. Moreover, there is a shortage of skilled labour in the group of jobs with high green potential, particularly pronounced for the occupational groups managers and professionals. In light of the already tense situation for skilled workers in jobs with high green potential and the expected increase in demand for these occupations, increased efforts will be necessary, especially in the area of labour qualication (education as well as post-qualication and upgrading), to meet the demand for skilled workers for the transition to a sustainable economy.
    Keywords: green transition, labor market, skills shortage
    JEL: J23 J24 Q52
    Date: 2021–01–18
  7. By: Andres, Christian; Bazhutov, Dmitry; Cumming, Douglas J.; Limbach, Peter
    Abstract: M&A rumors cause anxiety, distraction, and reduced employee morale due to the implicit threat of job loss. Using an international sample of rumors that do not result in public bids, we show that firm productivity temporarily declines after M&A rumors surface. This productivity dip is more pronounced for target firms and for firms in countries with less employment protection, collective bargaining, and long-term orientation. Stock returns mirror these results, suggesting that rumors destroy shareholder value. The evidence fosters our understanding of the implications of a common phenomenon in financial markets, i.e., rumors, and the dark side of the takeover threat.
    Keywords: Employee rights,Firm productivity,Human capital,M&A rumors,Shareholder value,Threat of job loss
    JEL: D24 G00 G34 J24
    Date: 2021
  8. By: Donado, Alejandro
    Abstract: Nike and other companies have long been criticized for outsourcing their production to contract factories with dismal working conditions. Despite the overwhelming amount of interest, there exists no theory for studying this topic. The current paper fills this gap. In the model, the most productive firms in the North make high profits and outsource their manufacturing production to contract factories in the South. Factories pay wages that can compensate for poor working conditions, but these wages might not meet workers' basic needs. The paper studies an extension under which factory workers are not appropriately compensated for inferior working conditions.
    Keywords: Outsourcing, working conditions, compensating wage differentials, labor standards, subcontracting, Nike, sweatshop
    JEL: F12 F16 F23 F66 J31 J81 J83
    Date: 2020–12–08
  9. By: David Neumark; Giannina Vaccaro
    Abstract: Several studies find that there is little sex gap in wages at labor market entry, and that the sex gap in wages emerges (and grows) with time in the labor market. This evidence is consistent with (i) there is little or no sex discrimination in wages at labor market entry, and (ii) the emergence of the sex gap in wages with time in the labor market reflects differences between men and women in human capital investment (and other decisions), with women investing less early in their careers. Indeed, some economists explicitly interpret the evidence this way. We show that this interpretation ignores two fundamental implications of the human capital model, and that differences in investment can complicate the interpretation of both the starting sex gap in wages (or absence of a gap), and the differences in “returns” to experience. We then estimate stylized structural models of human capital investment and wage growth to identify the effects of discrimination and differences in human capital investment, and find evidence more consistent with discrimination reducing women’s wages at labor market entry.
    JEL: J16 J24 J71
    Date: 2020–12
  10. By: Hartog, Joop; Raposo, Pedro S.; Reis, Hugo
    Abstract: We document and analyse the wage gap between vocational and general secondary education in Portugal between 1994 and 2013. As Portuguese workers have been educated in different school systems, we have to distinguish birth cohorts. Analysing the wage gaps within cohorts, we find no support for the human capital prediction of crossing wage profiles and no support either for the hypothesis that general graduates increasingly outperform vocational graduates in late career. We discover that the lifecycle wage profiles have shifted over time. We link the pattern of shifting cohort profiles to changes in the school system and in the structure of labour demand. We conclude that assessing the relative value of vocational education requires to assess how the vocational curriculum responds to changes in economic structure and technology. We show that the decline in assortative matching between workers and firms has benefitted vocationally educated workers.
    Keywords: returns to education,vocational wage gap,worker-firm allocation
    JEL: J31 I26
    Date: 2021
  11. By: Maria De Paola (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Roberto Nisticò (Dipartimento di Economia e Statistica, Università di Napoli "Federico II"); Vincenzo Scoppa (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)
    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
  12. By: Kevin Devereux
    Abstract: Teamwork is growing in developed economies, and workers in teams are increasingly compensated according to team output. Because parsing individual contributions to teamwork is difficult, I focus on scholarly economics research, which lists contributing authors. I use turnover to identify team value-added: an author's average output quality conditional on the value-added of coauthors. Linking the universe of scholarly economic research output to publicly available payroll records, I study the effect of value-added on salaries. Strikingly, coauthors' value-added has a greater effect on salaries than does own value-added, suggesting the value of professional networks dominates the effect of discounting contributions based on coauthor quality. Moreover, authors are compensated for the solo-authored output of their coauthors - which can not be reasonably attributed to them - demonstrating the value of professional networks.
    Keywords: Human capital; Teamwork; Productivity; Performance pay; Non-partite networks
    JEL: J16 J24 J33 J44
    Date: 2021–01
  13. By: Marguerita Lane; Anne Saint-Martin
    Abstract: This literature review takes stock of what is known about the impact of artificial intelligence on the labour market, including the impact on employment and wages, how AI will transform jobs and skill needs, and the impact on the work environment. The purpose is to identify gaps in the evidence base and inform future OECD research on AI and the labour market.
    Keywords: AI, Artificial intelligence, Artificial intelligence; AI; technology; literature review; future of work;, Future of Work, Litterature review, Technology
    JEL: J20 J81 J31 O14 O33
    Date: 2021–01–25
  14. By: Carlos Carrillo-Tudela; Andrey Launov; Jean-Marc Robin
    Abstract: In this paper we investigate the recent fall in unemployment, and the rise in part-time work and labour market participation amongst prime-aged Germans. We show that unemployment fell because the Hartz reforms induced a large fraction of the long-term unemployed to deregister as jobseekers. However, labour force participation actually increased because many female non-participants accepted low-paid, part-time jobs. Counterfactual simulations using estimated transition probabilities show that observed changes in the stocks of registered and unregistered unemployment as well as marginal, contributed part-time and full-time employment after 2002 essentially resulted from changes in registered and unregistered unemployment outflows. Yet to obtain the full decrease in registered male unemployment, we need to account for the effect of wage moderation. A calibrated Diamond-Mortensen-Pissarides model suggests that wage moderation is at most half as strong as the unemployment reforms in explaining changes in unemployment, non-participation and part-time employment.
    Keywords: unemployment, part-time work, mini-jobs, non-participation, wage moderation, Hartz reforms
    JEL: J21 J31 J63 J64
    Date: 2020
  15. By: Patrick J. Kehoe; Pierlauro Lopez; Virgiliu Midrigan; Elena Pastorino
    Abstract: Although a credit tightening is commonly recognized as a key determinant of the Great Recession, to date, it is unclear whether a worsening of credit conditions faced by households or by firms was most responsible for the downturn. Some studies have suggested that the household-side credit channel is quantitatively the most important one. Many others contend that the firm-side channel played a crucial role. We propose a model in which both channels are present and explicitly formalized. Our analysis indicates that the household-side credit channel is quantitatively more relevant than the firm-side credit channel. We then evaluate the relative benefits of a fixed-sized transfer to households and to firms that improves each group's access to credit. We find that the effects of such a transfer on employment are substantially larger when the transfer targets households rather than firms. Hence, we provide theoretical and quantitative support to the view that the employment decline during the Great Recession would have been less severe if instead of focusing on easing firms' access to credit, the government had expended an equal amount of resources to alleviate households' credit constraints.
    JEL: E24 E3 E32 E6 E62 G51 J2 J38 J6 J64
    Date: 2020–12
  16. By: Guglielmo Briscese; Andreas Leibbrandt
    Abstract: Trust is a key factor for the well-functioning of labor markets. We experimentally study the behavior of staff at competing employment agencies who serve as matchmakers between labor supply and demand. Employment agents can collaborate by sharing vacancies and job seekers at the risk of the other agent approaching the employer to place their own job seekers. In a framed field experiment with actual employment agents we test mechanisms to increase collaboration. We find that financial incentives to collaborate increase vacancy sharing but also increase the likelihood of the other provider approaching the employer to place their own job seekers. We also find that social incentives can backfire and decrease vacancy sharing unless employment agents have a perfect reputation. However, social incentives have a positive effect in increasing cooperative behavior. We discuss the implications for the design of incentives to increase trust in competitive markets like that of employment agencies.
    Keywords: trust game, labor market, framed field experiment
    JEL: D90 C92 J48
    Date: 2020
  17. By: Franz Hamann; Cesar Anzola; Oscar Avila-Montealegre; Juan Carlos Castro-Fernandez; Anderson Grajales-Olarte; Alexander Guarín; Juan C Mendez-Vizcaino; Juan J. Ospina-Tejeiro; Mario A. Ramos-Veloza
    Abstract: We develop a small open economy model with nominal rigidities and fragmented labor markets to study the response of the monetary policy to a migration shock. Migrants are characterized by their productivity levels, their restrictions to accumulate capital, as well as by the fl exibility of their labor income. Our results show that the monetary policy response depends on the characteristics of migrants and the local labor market. An infl ow of low(high)-productivity workers reduces(increases) marginal costs, lowers(raises) infl ation expectations and pushes the Central Bank to reduce(increase) the interest rate. The model is calibrated to the Colombian economy and used to analyze a migratory in flow of financially constraint workers from Venezuela into a sector with flexible and low wages. **** RESUMEN: En este artículo analizamos la respuesta de política monetaria ante un choque migratorio, mediante el desarrollo de modelo de economía pequeña y abierta con mercados de trabajo fragmentados. Los migrantes se caracterizan por sus bajos niveles de productividad, restricciones de acumulación de capital y la mayor flexibilidad de su ingreso laboral. Los resultados evidencian que la respuesta de política monetaria depende de las características de los migrantes y del mercado laboral. Una entrada de trabajadores de baja(alta) productividad reduce(aumenta) los costos marginales, disminuye(incrementa) las expectativas de in flación y lleva al Banco Central a reducir(aumentar) la tasa de interés. El modelo se calibra para la economía colombiana y se usa para analizar un in flujo migratorio de trabajadores venezolanos en un sector de salarios bajos y flexibles.
    Keywords: Neoclassical Model, Wage Differentials, Informal Labor Markets, Migration, Monetary Policymodelo, neoclásico, diferenciales salariales, mercados informales de trabajo, migración, política monetaria
    JEL: E13 J31 J46 J61 E50
    Date: 2021–01
  18. By: Lilas Demmou; Guido Franco; Sara Calligaris; Dennis Dlugosch
    Abstract: The paper investigates the financial vulnerability of non-financial firms during the Coronavirus (COVID-19) epidemic crisis. In particular, it evaluates the extent to which firms may run into a liquidity crisis following the COVID-19 outbreak and the impact of stylised policy measures to reduce the risks and depth of such crisis. The analysis relies on three ingredients: a simple accounting model, a large dataset reporting firms’ balance sheets for 14 countries and granular data on the magnitude of the shock measuring the impact of confinement measures on economic activity (notably depending on the capacity of each sector to operate by teleworking). Results suggest that, without any policy intervention, up to 38% of firms would face liquidity shortfalls after 10 months since the implementation of confinement measures. Comparing the impact of different policies (tax deferral, debt moratorium and support to wage payments), the analysis shows that government support to relieve wage bills is the most effective tool to reduce liquidity shortages, followed by debt moratorium policies. Finally, the paper zooms into labour market policies and compares the costefficiency of short-term work and wage subsidies schemes, highlighting how their relative efficiency depends on their design.
    Keywords: cash, COVID-19, job retention, liquidity
    JEL: D22 D24 J38 H81
    Date: 2021–01–22
  19. By: Daniel S. Hamermesh
    Abstract: Using time-diary data from the U.S. and six wealthy European countries, I demonstrate that non-partnered mothers spend slightly less time performing childcare, but much less time in other household activities than partnered mothers. Unpartnered mothers’ total work time—paid work and household production—is slightly less than partnered women’s. In the U.S. but not elsewhere they watch more television and engage in fewer other leisure activities. These differences are independent of any differences in age, race/ethnicity, ages and numbers of children, and household incomes. Non-partnered mothers feel slightly more pressured for time and much less satisfied with their lives. Analyses using the NLSY79 show that mothers whose partners left the home in the past two years became more depressed than those whose marriages remained intact. Coupled with evidence that husbands spend substantial time in childcare and with their children, the results suggest that children of non-partnered mothers receive much less parental care—perhaps 40 percent less—than other children; and most of what they receive is from mothers who are less satisfied with their lives.
    JEL: I31 J12 J22
    Date: 2021–01
  20. By: Bachmann, Ronald; Demir, Gökay; Frings, Hanna
    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
  21. By: Ian Burn; Daniel Firoozi; Daniel Ladd; David Neumark
    Abstract: We explore whether ageist stereotypes in job ads are detectable using machine learning methods measuring the linguistic similarity of job-ad language to ageist stereotypes identified by industrial psychologists. We then conduct an experiment to evaluate whether this language is perceived as biased against older workers. We find that language classified by the machine learning algorithm as closely related to ageist stereotypes is perceived as ageist by experimental subjects. The scores assigned to the language related to ageist stereotypes are larger when responses are incentivized by rewarding participants for guessing how other respondents rated the language. These methods could potentially help enforce anti-discrimination laws by using job ads to predict or identify employers more likely to be engaging in age discrimination.
    JEL: J14 J71 K31
    Date: 2021–01
  22. By: Caitlin Carroll; David M. Cutler; Anupam Jena
    Abstract: A substantial literature has studied the influence of malpractice pressure on physician behavior. However, these studies generally focus on malpractice pressure stemming from state laws that govern liability exposure, which may be unknown or not salient to physicians. We test how physicians respond to malpractice allegations made directly against them. Our sample is Emergency Department physicians in Florida, where we have the universe of data on patients and how they are treated along with a census of malpractice complaints. We find that physicians oversee 9% fewer discharges after malpractice allegations and treat each discharge 4% more expensively after an allegation. These effects are true for both allegations that result in money paid and allegations which are dropped. Further, the increase in treatment is generalized, i.e., not limited to patients with conditions similar to what the physician is reported for. The results suggest significant, if modest, impacts of malpractice claims on medical practice.
    JEL: I11 J44 K41
    Date: 2021–01

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