nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2021‒02‒22
twenty-six papers chosen by
Joseph Marchand
University of Alberta

  1. Green potential of Europe's labour force: Relative share and possible skills imbalances By Lobsiger, Michael; Rutzer, Christian
  2. Auto-Enrollment Retirement Plans for the People: Choices and Outcomes in OregonSaves By John Chalmers; Olivia S. Mitchell; Jonathan Reuter; Mingli Zhong
  3. Artificial Intelligence, Robotics, Work and Productivity: The Role of Firm Heterogeneity By Heyman, Fredrik; Norbäck, Pehr-Johan; Persson, Lars
  4. The firm-level link between productivity dispersion and wage inequality: A symptom of low job mobility? By Chiara Criscuolo; Alexander Hijzen; Michael Koelle; Cyrille Schwellnus; Erling Barth; Wen-Hao Chen; Richard Fabling; Priscilla Fialho; Alfred Garloff; Katharzyna Grabska; Ryo Kambayashi; Valerie Lankester; Balazs Stadler; Oskar Nordström Skans; Satu Nurmi; Balazs Murakozy; Richard Upward; Wouter Zwysen
  5. State dependent government spending multipliers: Downward nominal wage rigidity and sources of business cycle fluctuations By Yoon J. Jo; Sarah Zubairy
  6. The Recovery From The Great Recession: A Long, Evolving Expansion By Jay C. Shambaugh; Michael R. Strain
  7. Unemployment Insurance as a Worker Indiscipline Device? Evidence from Scanner Data By Lusher, Lester; Schnorr, Geoffrey; Taylor, Rebecca L.C.
  8. Should the Federal Government Fund Short-Term Postsecondary Certificate Programs? By Baum, Sandy; Holzer, Harry J.; Luetmer, Grace
  9. Identifying and Producing Effective Teachers By Gershenson, Seth
  10. A Division of Laborers: Identity and Efficiency in India By Guilhem Cassan; Daniel Keniston; Tatjana Kleineberg
  11. The Work-at-Home Technology Boon and its Consequences By Morris A. Davis; Andra C. Ghent; Jesse M. Gregory
  12. Quality and Selection in Regulated Professions By Gaetano Basso; Eleonora Brandimarti; Michele Pellizzari; Giovanni Pica
  13. The retirement age and the pension system, the labor market and the economy By Agnieszka Chlon-Dominczak; Filip Chybalski; Michal Rutkowski
  14. Gender Quotas and Support for Women in Board Elections By Marina Gertsberg; Johanna Mollerstrom; Michaela Pagel
  15. Personality and Public Sector Employment By Maczulskij, Terhi; Viinikainen, Jutta
  16. Kinks as Goals: Accelerating Commissions and the Performance of Sales Teams By Kuhn, Peter J.; Yu, Lizi
  17. Does Marijuana Legalization Affect Work Capacity? Evidence from Workers’ Compensation Benefits By Rahi Abouk; Keshar M. Ghimire; Johanna Catherine Maclean; David Powell
  18. "Mom, Dad: I’m staying”. Initial labor market conditions, housing markets, and welfare By Rodrigo Martínez-Mazza
  19. Gender diversity in corporate boards: Evidence from quota-implied discontinuities By Olga Kuzmina; Valentina Melentyeva
  20. The Relationship Between Nominal Wage and Price Flexibility: New Evidence By Solórzano Diego; Dixon Huw
  21. Covering All the Basics: Reforms for a More Just Society By Green, David; Kesselman, Jonathan Rhys; Tedds, Lindsay M.
  22. The Effects of the Affordable Care Act Dependent Coverage Mandate on Parents' Labor Market Outcomes By Kim, Seonghoon; Koh, Kanghyock
  23. Political economy of labour market institutions in a globalised era By Bhaumik, Sumon Kumar; Frensch, Richard; Huber, Stephan
  24. Homeownership and portfolio choice over the generations By Paz-Pardo, Gonzalo
  25. Linking retirement age to life expectancy does not lessen the demographic implications of unequal lifespans By Jesús-Adrián Álvarez; Malene Kallestrup-Lamb; Søren Kjærgaard
  26. Can Mentoring Alleviate Family Disadvantage in Adolescence? A Field Experiment to Improve Labor-Market Prospects By Resnjanskij, Sven; Ruhose, Jens; Wiederhold, Simon; Woessmann, Ludger

  1. By: Lobsiger, Michael; Rutzer, Christian (University of Basel)
    Abstract: Using a data-driven methodology that allows to quantify the importance of different skills in performing green tasks, we estimate the green potential for 26 European countries. By green potential we mean the share of employed persons in occupations characterised by skills that are important for the exercise of green tasks to total employment. For the countries considered, we estimate a green potential between 7.1% and 16.8%, with the manufacturing and energy & construction sectors having above-average and the resources and services sectors below-average shares. We further examine the green potential with regard to a possible shortage of skilled workers by means of indicators that reflect different dimensions of skills shortages. Estimates of skills short ages related to the green potential reveal considerable heterogeneity among the investigated countries. Nevertheless, occupations with a high green potential are generally characterised by a tense skilled labour situation. Looking at four occupational groups, results reveal that the need for skilled workers with high green potential is particularly pronounced for managers and professionals, while being lower for technicians and smallest for craft & related trades workers.
    Keywords: green transition, labor market, skills shortage
    JEL: J23 J24 Q52
    Date: 2021–01–26
  2. By: John Chalmers; Olivia S. Mitchell; Jonathan Reuter; Mingli Zhong
    Abstract: Oregon recently launched an automatic-enrollment retirement savings program for private sector workers lacking access to other workplace retirement plans. We analyze participation choices, account balances, and inflow/outflow data using administrative records between August 2018 and April 2020. Within the small to mid-sized firms served by OregonSaves, estimated average after-tax earnings are low ($2,365 per month) and turnover rates are high (38.2% per year). Younger employees and employees in larger firms are less likely to opt out, but participation rates fall over time. The most common reason given for opting out is “I can’t afford to save at this time,” but the second most common is “I have my own retirement plan.” As of April 2020, 67,731 accounts had positive account balances, holding $51.1 million in total assets. The average balance is $754, but with considerable dispersion; younger workers accumulating the fewest assets due to higher job turnover. Overall, we conclude that OregonSaves has meaningfully increased employee savings by reducing search costs. The 34.3% of workers with positive account balances in April 2020 is comparable to the marginal increase in participation at larger firms in the private sector. Employees opting out of OregonSaves are often doing so for rational reasons.
    JEL: D14 G5 J26 J32
    Date: 2021–02
  3. By: Heyman, Fredrik (Research Institute of Industrial Economics (IFN)); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN))
    Abstract: We propose a model with asymmetric firms where new technologies displace workers. We show that both leading (low-cost) firms and laggard (high-cost) firms increase productivity when automating but that only laggard firms hire more automation-susceptible workers. The reason for this asymmetry is that in laggard firms, the lower incentive to invest in new technologies implies a weaker displacement effect and thus that the output-expansion effect on labor demand dominates. Using novel firm-level automation workforce probabilities, which reveal the extent to which a firms’ workforce can be replaced by new AI and robotic technology and a new shiftshare instrument to address endogeneity, we find strong empirical evidence for these predictions in Swedish matched employer-employee data.
    Keywords: AI&R Technology; Automation; Job displacement; Firm Heterogeneity; Matched employer-employee data
    JEL: J70 L20 M50
    Date: 2021–02–09
  4. By: Chiara Criscuolo; Alexander Hijzen; Michael Koelle; Cyrille Schwellnus; Erling Barth; Wen-Hao Chen; Richard Fabling; Priscilla Fialho; Alfred Garloff; Katharzyna Grabska; Ryo Kambayashi; Valerie Lankester; Balazs Stadler; Oskar Nordström Skans; Satu Nurmi; Balazs Murakozy; Richard Upward; Wouter Zwysen
    Abstract: Differences in average wages across firms – which account for around one-half of overall wage inequality – are mainly explained by differences in firm wage premia (the part of wages that depends exclusively on characteristics of firms) rather than workforce composition. Using a new cross-country dataset of linked employer-employee data, this paper investigates the role of cross-firm dispersion in productivity in explaining dispersion in firm wage premia, as well as the factors shaping the link between productivity and wages at the firm level. The results suggest that around 15% of cross-firm differences in productivity are passed on to differences in firm wage premia. The degree of pass-through is systematically larger in countries and industries with more limited job mobility, where low-productivity firms can afford to pay lower wage premia relative to high-productivity ones without a substantial fraction of workers quitting their jobs. Stronger product market competition raises pass-through while more centralised bargaining and higher minimum wages constrain firm-level wage setting at any given level of productivity dispersion. From a policy perspective, the results suggest that the key priority should be to promote job mobility, which would reduce wage differences between firms while easing the efficient reallocation of workers across them.
    Keywords: labour mobility, linked employer-employee data, productivity dispersion, Wage inequality
    JEL: E02 E25 E63 J31 J61
    Date: 2021–02–22
  5. By: Yoon J. Jo (Texas A&M University, Department of Economics); Sarah Zubairy (Texas A&M University, Department of Economics)
    Abstract: This paper shows that the source of business cycle fluctuations matters for determining the size of government spending multipliers. We present a New Keynesian model with downward nominal wage rigidity (DNWR) and show that government spending is much more effective in stimulating output in a demand shock driven recession compared to a supply shock driven recession. Government spending multiplier is large when DNWR binds in a recession, but the nature of recession matters due to the opposing responses of inflation depending on the type of recession. In a demand-driven recession, inflation falls, preventing real wages from falling, leading to consequences for employment, while inflation rises in a supply-driven recession limiting the consequences of DNWR on employment. We document supporting empirical evidence, using both historical time series data and cross-sectional data from U.S. states, that the government spending multiplier for output is larger in a demand-driven recession compared to a supply-driven recession.
    Keywords: Government Spending Multipliers, Source of Fluctuation, Downward Nominal Wage Rigidity.
    JEL: E24 E32 E62
    Date: 2021–01–27
  6. By: Jay C. Shambaugh; Michael R. Strain
    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.
    JEL: E24 E3 E6 J3
    Date: 2021–02
  7. By: Lusher, Lester (University of Hawaii at Manoa); Schnorr, Geoffrey (University of California, Davis); Taylor, Rebecca L.C. (University of Sydney)
    Abstract: We provide causal evidence of an ex ante moral hazard effect of Unemployment Insurance (UI) by matching plausibly exogenous changes in UI benefit duration across state-weeks during the Great Recession to high-frequency productivity measures from individual supermarket cashiers. Estimating models with day and cashier-register fixed effects, we identify a modest but statistically significant negative relationship between UI benefits and worker productivity. This effect is strongest for more experienced and less productive cashiers, for whom UI expansions are especially relevant. Additional analyses from the American Time Use Survey reveal a similar increase in shirking during periods with increased UI benefit durations.
    Keywords: scanner data, shirking, unemployment insurance
    JEL: I38 J24 J38 J65 L81
    Date: 2021–02
  8. By: Baum, Sandy (Urban Institute); Holzer, Harry J. (Georgetown University); Luetmer, Grace (Urban Institute)
    Abstract: We consider whether the US should extend Pell grant eligibility to short-term certificate programs (i.e., below the current floor of 600 hours). We provide new descriptive evidence on who enrolls in certificate programs, who completes them, how students finance them, who defaults on loans, and on their labor market value. We find that certificate holders earn about 10 percent more than high school graduates and 20 percent more than those with GEDs. The variance in their labor market value across fields is very high. But we find no evidence that certificates above and below the current cutoff generate differing labor market value. Thus, reducing the floor for program eligibility would improve the opportunity of low-income workers to receive effective job training.
    Keywords: short-term training, certificates, pell grants, community college
    JEL: J24
    Date: 2021–02
  9. By: Gershenson, Seth (American University)
    Abstract: Teachers are among the most important school-provided determinants of student success. Effective teachers improve students' test scores as well as their attendance, behavior, and earnings as adults. However, students do not enjoy equal access to effective teachers. This article reviews some of the key challenges associated with teacher policy confronted by school leaders and education policymakers, and how the tools of applied economics can help address those challenges. The first challenge is that identifying effective teachers is difficult. Economists use value-added models to estimate teacher effectiveness, which works well in certain circumstances, but should be just one piece of a multi-measure strategy for identifying effective teachers. We also discuss how different policies, incentives, school characteristics, and professional-development interventions can increase teacher effectiveness; this is important, as schools face the daunting challenge of hiring effective teachers, helping teachers to improve, and removing ineffective teachers from the classroom. Finally, we discuss the supply and mobility of teachers, including the consequences of teacher absenteeism, the distribution of initial teaching placements, and the characteristics and preferences of those who enter the profession.
    Keywords: teacher supply, teacher effectiveness, incentive pay, value-added models
    JEL: I24 I21
    Date: 2021–02
  10. By: Guilhem Cassan; Daniel Keniston; Tatjana Kleineberg
    Abstract: Workers' social identity affects their choice of occupation, and therefore the structure and prosperity of the aggregate economy. We study this phenomenon in a setting where work and identity are particularly intertwined: the Indian caste system. Using a new dataset that combines information on caste, occupation, wages, and historical evidence of subcastes’ traditional occupations, we show that caste members are still greatly overrepresented in their traditional occupations. To quantify the effects of caste-level distortions on aggregate and distributional outcomes, we develop a general equilibrium Roy model of occupational choice. We structurally estimate the model and evaluate counterfactuals in which we remove castes' ties to their traditional occupations: both through their direct preferences, and also via their parental occupations and social networks. We find that the share of workers employed in their traditional occupation decreases substantially. However, effects on aggregate output and productivity are very small–and in some counterfactuals even negative–because gains from a more efficient human capital allocation are offset by productivity losses from weaker caste networks and reduced learning across generations. Our findings emphasize the importance of caste identity in coordinating workers into occupational networks which enable productivity spillovers.
    JEL: E24 E71 J21 J62 O15
    Date: 2021–02
  11. By: Morris A. Davis; Andra C. Ghent; Jesse M. Gregory
    Abstract: We study the impact of widespread adoption of work-at-home technology using an equilibrium model where people choose where to live, how to allocate their time between working at home and at the office, and how much space to use in production. A key parameter is the elasticity of substitution between working at home and in the office that we estimate using cross-sectional time-use data. The model indicates that the pandemic induced a large change to the relative productivity of working at home which will permanently affect incomes, income inequality, and city structure.
    JEL: O33 O41 R12 R33
    Date: 2021–02
  12. By: Gaetano Basso (Banca d’Italia); Eleonora Brandimarti (University of Geneva); Michele Pellizzari (University of Geneva, CEPR and IZA); Giovanni Pica (Universita della Svizzera Italiana, CSEF and LdA)
    Abstract: Entry in many occupations is regulated with the objective to screen out the least able producers and guarantee high quality of output. Unfortunately, the available empirical evidence suggests that in most cases these objectives are not achieved. In this paper we investigate entry into the legal profession in Italy and we document that such a failure is due to the combination of the incomplete anonymity of the entry exam and the intergenerational transmission of business opportunities. We use microdata covering the universe of law school graduates from 2007 to 2013 matched with their careers and earnings up to 5 years after graduation. Variation generated by the random assignment of the entry exam grading commissions allows us to identify the role of family ties in the selection process. We find that connected candidates, i.e. those with relatives already active in the profession, are more likely to pass the exam and eventually earn more, especially those who performed poorly in law school. When we simulate the process of occupational choice assuming family connections did not matter, we find that strong positive selection on ability would emerge.
    JEL: J24 J44 J62
    Date: 2021–01–15
  13. By: Agnieszka Chlon-Dominczak; Filip Chybalski; Michal Rutkowski
    Abstract: European countries face a challenge related to the economic and social consequences of their societies’ aging. Specifically, pension systems must adjust to the coming changes, maintaining both financial stability, connected with equalizing inflows from premiums and spending on pensions, and simultaneously the sufficiency of benefits, protecting retirees against poverty and smoothing consumption over their lives, i.e. ensuring the ability to pay for consumption needs at each stage of life, regardless of income from labor.
    Keywords: retirement age, pension system, labor market, pension, aging of the population, Poland
    JEL: J14 J21 J26
    Date: 2021–02–02
  14. By: Marina Gertsberg; Johanna Mollerstrom; Michaela Pagel
    Abstract: We study shareholder support for corporate board nominees in the context of the California gender quota, which was passed in 2018. Using hand-collected data for approximately 600 firms, we show that, prior to the quota, female nominees received greater shareholder support than their male counterparts. This is consistent with a pre-quota environment in which female board nominees were held to a higher standard than male nominees. Second, we show that incumbent female directors in the post-quota environment receive greater support than incumbent men, while support for new (mandated) female nominees decreases to the level of support for new male nominees. This indicates that the quota led to a conversion in the bar for men and women to become board nominees, and that it did not lead to new female board nominees being of lower quality than male nominees. We likewise challenge the notion that the negative stock price reaction to the quota reflects value destruction due to an insufficient supply of female directors. Instead, we provide evidence that dysfunctional board dynamics are driving the reaction, in the sense that stock prices reacted negatively to entrenched boards who failed to turn over the least supported directors when adjusting their boards to comply with the new law.
    JEL: G3 J16 J7
    Date: 2021–02
  15. By: Maczulskij, Terhi (ETLA - The Research Institute of the Finnish Economy); Viinikainen, Jutta (Jyväskylä University School of Business and Economics)
    Abstract: Using a representative survey combined with register data on long-term labour market outcomes, this paper examines how personality traits predict sorting into public and private sector employment among prime working-age individuals. To gain deeper insights into the dynamic dimensions of the sorting process, we also study the role of personality traits in the decisions to enter or exit public sector work. Our robust results show that public sector workers are more social, while private sector workers exhibit more orderly behaviour. The link between orderliness and sectoral sorting is partly explained by the reduced entry of individuals with high levels of orderliness into public sector employment. High sociability is also financially better rewarded in the public sector, which may implicitly indicate a good fit between this trait and job performance in that sector.
    Keywords: personality, public sector, private sector, occupational choice
    JEL: J23 J45
    Date: 2021–02
  16. By: Kuhn, Peter J. (University of California, Santa Barbara); Yu, Lizi (University of Queensland)
    Abstract: We study the performance of small retail sales teams facing an incentive scheme that includes both a lump sum bonus and multiple accelerators (kinks where the piece rate jumps upward). Consistent with standard labor supply models, we find that the presence of an attainable bonus or kink on a work-day raises mean sales, and that sales are highly bunched at the bonus; inconsistent with those models we find that teams bunch at the kinks instead of avoiding them. Teams' responses to the kinks are consistent with models in which the kinks are perceived as symbolic rewards, and inconsistent with reference point models where kinks induce loss aversion.
    Keywords: teams, bonuses, bunching, accelerators, symbolic rewards, loss aversion
    JEL: J33 M12
    Date: 2021–02
  17. By: Rahi Abouk; Keshar M. Ghimire; Johanna Catherine Maclean; David Powell
    Abstract: We study the effect of state recreational marijuana laws (RMLs) on workers’ compensation (WC) benefit receipt among adults 40-62 years. We find that WC receipt declines in response to RML adoption both in terms of the propensity to receive benefits and benefit amount. We estimate complementary declines in non-traumatic workplace injury rates and the incidence of work-limiting disabilities. We offer evidence that the primary driver of these reductions is an improvement in work capacity, likely due to access to an additional form of pain management therapy.
    JEL: H12 I12 I18 J32
    Date: 2021–02
  18. By: Rodrigo Martínez-Mazza (Universitat de Barcelona & IEB)
    Abstract: Young individuals are currently living with their parents more than at any other point in time, while also spending more on housing. In this paper, I first show how labor market entry conditions affect housing tenure and affordability in the long term, by using the unemployment rate at the time of graduation as an exogenous shock to income. I perform this analysis across Europe for the last 25 years. Results indicate that a 1 pp increase in the unemployment rate at the time of graduation leads, one year after, to (1) a 1.50 pp increase in the probability of living with parents, (2) a 1.02 pp decrease in the probability of home-ownership and 0.45 pp decrease in renting, and (3) worse affordability. Second, I develop an OLG model to link income shocks for young agents with changes in housing tenure at the aggregate level. I allow for an outside option for landlords which can introduce rigidity into the rental market. Results show that if rental markets are rigid, an income shock to young agents will translate into a larger share of them living with their parents, worse affordability, and larger welfare losses. Finally, I perform a policy exercise based on the French housing aid system. I show that housing aid policies can help to recover welfare losses for young agents, by enabling them to afford to rent. Recognizing the right scenario for the implementation of these policies is key to ensure welfare gains concentrate on the targeted population.
    Keywords: Housing, labor markets, long-term effects
    JEL: R20 R21 J24
    Date: 2020
  19. By: Olga Kuzmina (New Economic School); Valentina Melentyeva (ZEW and University of Mannheim)
    Abstract: Using data across European corporate boards, we investigate the effects of quota-induced female representation on firm value and operations. We use quasi-random assignment induced by rounding and find that promoting gender equality is aligned with shareholder interests. This result is in stark contrast with previous work finding large negative effects of women on firm value. This discrepancy arises because these papers considered firms with different pre-quota shares of women to be good counterfactuals to each other. In our data, we see that such firms grew differently already before the regulation, resulting in a negatively biased estimate of the effect. We overcome this bias by considering sharp increases that arise whenever percentage-based regulation applies to a small group of people. We further show that these large positive effects of female directors are not explained by increased risk-taking or changes in board characteristics, but rather by scaling down inefficient operations and empire-"demolishing".
    Keywords: Gender diversity, gender quota, board of directors, firm performance
    JEL: J16 J48 G34 G38 C18
    Date: 2021–02
  20. By: Solórzano Diego; Dixon Huw
    Abstract: The frequencies at which prices and wages are adjusted, interpreted as price and wage flexibility, are key elements in workhorse models used for policy analysis. Yet, there is little evidence regarding the relationship between these two sources of nominal rigidities. Using two large and highly disaggregated price and wage microdata sets, this paper provides evidence that the industries changing more frequently wages reset prices more often. Once the frequency of wage adjustments is accounted for, the share of labor costs becomes less relevant in explaining the frequency of price changes, calling for a reinterpretation on previous findings that the labor share is a robust determinant of the frequency of price adjustments. The results in this study have implications for New Keynesian models' microfoundations, as their predictions have proven to be sensitive to the nominal rigidities assumptions.
    JEL: E31 J31 C26
    Date: 2020–12
  21. By: Green, David; Kesselman, Jonathan Rhys; Tedds, Lindsay M.
    Abstract: On July 3, 2018, the Government of British Columbia announced the creation of an expert committee to “test the feasibility of a basic income in BC and help find ways to make life better for British Columbians.” This is the report of that committee, the Expert Panel on Basic Income. Through this report, we endeavour to present comprehensive, consistent, and evidence-based advice to the B.C. government in response to the tasks set out in the terms of reference. We do this in six parts, which: introduce our task and provide a summary of the report; present a justice-based framework within which we can analyze the alternatives; provide background information used throughout the report ; describe and analyze potential basic income programs; present our vision for the future and a set of recommendations that will move B.C. on the path toward that vision.
    Keywords: Basic income; basic services; targetted programs; poverty reduction; theory of justice; income assistance
    JEL: H23 H4 I32 I38 I39 J38 J88
    Date: 2021–01
  22. By: Kim, Seonghoon (Singapore Management University); Koh, Kanghyock (Korea University)
    Abstract: We examine the labor market impacts of the Affordable Care Act dependent mandate (ACA-DM), which has significantly increased dependent children's health insurance coverage through parents' employer-sponsored health benefits. Using data from the American Community Survey, we find that the ACA-DM reduced parents' annual wages by about $2,600. However, the probability of employment and working hours only decreased marginally. The back-of-the-envelope calculation indicates that the magnitude of the estimated wage impact is similar to the increased insurance premium of a family plan due to the ACA-DM. These findings imply that a deadweight loss associated with the expansion of dependent health coverage is likely to be small as an increase in employers' labor costs is offset by a reduction in parents' wages without significant reductions in labor inputs.
    Keywords: The Affordable Care Act dependent mandate, dependent health insurance coverage, parents’ labor market outcomes, deadweight loss
    JEL: I18 J32 H51
    Date: 2021–02
  23. By: Bhaumik, Sumon Kumar; Frensch, Richard; Huber, Stephan
    Abstract: The paper extends the literature on the political economy of labour market institutions by developing a framework in which owners of capital can benefit from both greater labour market flexibility and better rule of law. Their choice of location of manufacturing centres can, therefore, by influenced both by reduction in expropriation that is associated with better rule of law and greater bargaining power vis-à-vis workers by way of greater labour market flexibility. It follows that where owners of capital are better placed to influence government choices of these institutions, labour market flexibility is influenced by both labour market institutions intensity of exports and as well as rule of law intensity of exports. These predictions are borne out by a cross-country empirical analysis.
    Keywords: Labour market institutions,Political economy,Globalisation
    JEL: D72 J41
    Date: 2021
  24. By: Paz-Pardo, Gonzalo
    Abstract: Earnings are riskier and more unequal for households born in the 1960s and 1980s than for those born in the 1940s. Despite the improvements in financial conditions, younger generations are less likely to be living in their own homes than older generations at the same age. By using a life-cycle model with housing and portfolio choice that includes flexible earnings risk and aggregate asset price risk, I show that changes in earnings dynamics account for a large part of the reduction in homeownership across generations. Lower-income households find it harder to buy housing, and as a result accumulate less wealth. JEL Classification: D31, E21, E24, G11, J31
    Keywords: earnings risk, housing demand, intergenerational inequality, wealth accumulation
    Date: 2021–02
  25. By: Jesús-Adrián Álvarez (University of Southern Denmark); Malene Kallestrup-Lamb (Aarhus University and CREATES); Søren Kjærgaard (IST, EBB, Epidemiology, Biostatistics and Biodemography,)
    Abstract: The fact that individuals are living longer and thus spending more time in retirement challenges the sustainability of pension systems. This has forced policy makers to rethink the design of pension plans to mitigate the burden of increased longevity. Countries such as the Netherlands, Estonia, Denmark and Finland have implemented reforms that link retirement age to changes in life expectancy. However, the demographic and financial implications of such linkages are not well understood. This study analyses the Danish case, using high-quality data from population registers during the period 1985-2016. We identify trends in demographic and actuarial measures after retirement by sex and socio-economic group. We also introduce a new decomposition method to disentangle the demographic sources of socio-economic disparities in pension costs per year of expected benefits. We reach two main results. First, linking retirement age to life expectancy increases uncertainty about length of life after retirement, with the financial cost becoming more sensitive to changes in mortality. Second, socio-economic disparities in lifespans persist regardless of the age at which individuals retire. Males from lower socio-economic groups are at a greater disadvantage, because they spend fewer years in retirement, pay higher pension costs per year of expected benefits and are exposed to higher longevity risk than the rest of the population. This disadvantageous setting is magnified when retirement age is linked to life expectancy.
    Keywords: Danish pension system, longevity, socio-economic disparities, lifespan inequality, pensions, mortality heterogeneity
    JEL: J26 J11 H55
    Date: 2020–12–16
  26. By: Resnjanskij, Sven (CESifo); Ruhose, Jens ((CEE) Centre D'Ètudes de L'Emploi); Wiederhold, Simon (Ifo Institute for Economic Research); Woessmann, Ludger (University of Munich)
    Abstract: We study a mentoring program that aims to improve the labor-market prospects of school- attending adolescents from disadvantaged families by offering them a university-student mentor. Our RCT investigates program effectiveness on three outcome dimensions that are highly predictive of adolescents' later labor-market success: math grades, patience/social skills, and labor-market orientation. For low-SES adolescents, the one-to-one mentoring increases a combined index of the outcomes by half a standard deviation after one year, with significant increases in each dimension. Part of the treatment effect is mediated by establishing mentors as attachment figures who provide guidance for the future. The mentoring is not effective for higher-SES adolescents. The results show that substituting lacking family support by other adults can help disadvantaged children at adolescent age.
    Keywords: mentoring, disadvantaged youths, adolescence, school performance, patience, social skills, labor-market orientation, field experiment
    JEL: I24 J24 H52
    Date: 2021–02

This nep-lma issue is ©2021 by Joseph Marchand. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.