nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2021‒03‒29
seventeen papers chosen by
Joseph Marchand
University of Alberta

  1. Do Workers Bargain over Wages? A Test Using Dual Jobholders By Marta Lachowska; Alexandre Mas; Raffaele Saggio; Stephen A. Woodbury
  2. Stop worrying and love the robot: An activity-based approach to assess the impact of robotization on employment dynamics By Caselli, Mauro; Fracasso, Andrea; Scicchitano, Sergio; Traverso, Silvio; Tundis, Enrico
  3. The Impact of Gender Role Norms on Mothers' Labor Supply By Cavapozzi, Danilo; Francesconi, Marco; Nicoletti, Cheti
  4. The Long-Run Economic Consequences of Iodine Supplementation By Araújo, Daniel; Carrillo, Bladimir; Sampaio, Breno
  5. Working life and human capital investment By Niklas Gohl; Peter Haan; Elisabeth Kurz; Felix Weinhardt
  6. Testing Marx. Income inequality, concentration, and socialism in late 19th century Germany By Charlotte Bartels; Felix Kersting; Nikolaus Wolf
  7. Workforce Aging, Pension Reforms, and Firm Outcomes By Francesca Carta; Francesco D'Amuri; Till M. von Wachter
  8. Earnings Inequality in Production Networks By Federico Huneeus; Kory Kroft; Kevin Lim
  9. Does the added worker effect matter? By Nezih Guner; Yuliya A. Kulikova; Arnau Valladares-Esteban
  10. Seeing Beyond the Trees: Using Machine Learning to Estimate the Impact of Minimum Wages on Labor Market Outcomes By Doruk Cengiz; Arindrajit Dube; Attila S. Lindner; David Zentler-Munro
  11. Man Versus Machine? Self-Reports Versus Algorithmic Measurement of Publications By Xuan Jiang; Wan-Ying Chang; Bruce A. Weinberg
  12. Founding Teams and Startup Performance By Joonkyu Choi; Nathan Goldschlag; John C. Haltiwanger; J. Daniel Kim
  13. Uneven Growth: Automation's Impact on Income and Wealth Inequality By Benjamin Moll; Lukasz Rachel; Pascual Restrepo
  14. Performance Pay and Alcohol Use in Germany By Baktash, Mehrzad B.; Heywood, John S.; Jirjahn, Uwe
  15. The Austrian Pay Transparency Law and the Gender Wage Gap By Böheim, René; Gust, Sarah
  16. The Wise, the Politician and the Strongman: National Leaders' Type and Quality of Governance By Julieta Peveri
  17. Productivity-Enhancing Reallocation during the Great Recession:Evidence from Lithuania By Linas Tarasonis; Jose Garcia-Louzao

  1. By: Marta Lachowska; Alexandre Mas; Raffaele Saggio; Stephen A. Woodbury
    Abstract: This paper examines the behavior of dual jobholders to test a simple model of wage bargaining versus wage posting in which workers facing hours constraints in their primary job take a second, flexible-hours job for additional income. When a secondary job offers a sufficiently high wage, a worker either bargains with the primary employer for a wage increase or separates. The bargaining model provides a number of predictions that we test using matched employer-employee administrative data from Washington State. The estimates match the model’s predictions quite well. First, separation probabilities in the primary job are sensitive to wages in the secondary job, but hours are not. Second, hours and separations in the secondary job are sensitive to wages in the primary job due to income effects. Third, wage bargaining takes place mainly among workers in the highest wage quartile; for these workers, wage increases in the secondary job lead to wage increases in the primary job. In contrast, for workers in the lowest wage quartile, wage increases in the secondary job lead to higher separation rates but no significant wage increase in the primary job, consistent with wage posting. These patterns suggest that high-wage workers receive a larger share of the surplus generated by the employment relationship.
    JEL: J0 J2 J3 J41
    Date: 2021–01
  2. By: Caselli, Mauro; Fracasso, Andrea; Scicchitano, Sergio; Traverso, Silvio; Tundis, Enrico
    Abstract: This work investigates the impact that the change in the exposure to robots had on the Italian local employment dynamics over the period 2011-2018. A novel empirical strategy focusing on a match between occupations' activities and robots' applications at a high level of disaggregation makes it possible to assess the impact of robotization on the shares of workers employed as robot operators and in occupations deemed exposed to robots. In a framework consistently centered on workers' and robots' activities, rather than on their industries of employment, the analysis reveals for the first time reinstatement effects among robot operators and heterogeneous results among exposed occupations.
    Keywords: Robots,Employment,Activities,Tasks,Robot applications
    JEL: J21 J23 J24 O33
    Date: 2021
  3. By: Cavapozzi, Danilo (Università Ca’ Foscari di Venezia); Francesconi, Marco (University of Essex); Nicoletti, Cheti (University of York)
    Abstract: We study whether mothers' labor supply is shaped by the gender role attitudes of their peers. Using detailed information on a sample of UK mothers with dependent children, we find that having peers with gender-egalitarian norms leads mothers to be more likely to have a paid job and to have a greater share of the total number of paid hours worked within their household, but has no sizable effect on hours worked. Most of these effects are driven by less educated women. A new decomposition analysis allows us to estimate that approximately half of the impact on labor force participation is due to women conforming gender role attitudes to their peers', with the remaining half being explained by the spillover effect of peers' labor market behavior. These findings suggest that an evolution towards gender-egalitarian attitudes promotes gender convergence in labor market outcomes. In turn, a careful dissemination of statistics on female labor market behavior and attitudes may accelerate this convergence.
    Keywords: culture, norms, gender, identity, peer effects
    JEL: J12 J16 J22 J24 J31 Z13
    Date: 2021–03
  4. By: Araújo, Daniel (Universidade Federal de Pernambuco); Carrillo, Bladimir (Universidade Federal de Pernambuco); Sampaio, Breno (Universidade Federal de Pernambuco)
    Abstract: We present evidence on the impacts of a large-scale iodine supplementation program in Tanzania on individuals' long-term economic outcomes. Exploiting the timing and location of the intervention, we document that in utero exposure to the program increased completed years of education and income scores in adulthood. We find no increase in total employment, but a significant change in the occupational structure. Cohorts exposed to the program are less likely to work in agricultural self-employment and more likely to hold skilled jobs that typically demand higher levels of education. Together, these results demonstrate that iodine deficiency can have long-run implications for occupational choices and labor market incomes in low-income regions.
    Keywords: iodine supplementation, long-run, educational attainment, labor market outcomes
    JEL: I15 I18 J24 N35
    Date: 2021–03
  5. By: Niklas Gohl; Peter Haan; Elisabeth Kurz; Felix Weinhardt
    Abstract: This paper provides a novel test of a key prediction of human capital theory that educational investment decisions depend on the length of the pay-off period. We obtain causal estimates by leveraging a unique reform of the German public pension system that, across a sharp date-of-birth cutoff, increased the early retirement age by three years. Using RDD, DiD, and IV estimation strategies on census and household-panel data, we show that this reform causally increased educational investment in the form of on-the-job training. In contrast, non-job related training before retirement was not affected. We explore heterogeneity and additional outcomes.
    Keywords: human capital, retirement policies, RDD
    JEL: J24 J26 H21
    Date: 2021–03
  6. By: Charlotte Bartels (DIW Berlin); Felix Kersting (Humboldt University Berlin); Nikolaus Wolf (Humboldt University Berlin)
    Abstract: We study the dynamics of income inequality, capital concentration, and voting outcomes before 1914. Based on new panel data for Prussian counties and districts we re-evaluate the key economic debate between Marxists and their critics before 1914. We show that the increase in inequality was strongly correlated with a rising capital share, as predicted by Marxists at the time. In contrast, rising capital concentration was not associated with increasing income inequality. Relying on new sector×county data, we show that increasing strike activity worked as an offsetting factor. Similarly, the socialists did not directly benefit from rising inequality at the polls, but from the activity of trade unions. Overall, we find evidence for a rise in the bargaining power of workers, which limited the increase in inequality before 1914.
    Keywords: Income Inequality, Concentration, Top Incomes, Capital Share, Germany
    JEL: D31 D63 J31 N30
    Date: 2021–03
  7. By: Francesca Carta; Francesco D'Amuri; Till M. von Wachter
    Abstract: This paper quantifies the effect of a policy-induced sharp increase in retirement ages on input mix and economic outcomes of firms using Italian matched worker-firm data. Data on lifetime pension contributions are used to calculate the expected additional number of older workers employed by each firm due to the reform. Resulting instrumental variable estimates show an increase in older workers leads to a precisely estimated rise in employment of younger workers, value added, and total labor costs at constant labor productivity and unit labor costs. The findings suggest rising institutional retirement ages can help firms to retain valuable older employees.
    JEL: H55 J23 J26
    Date: 2021–01
  8. By: Federico Huneeus; Kory Kroft; Kevin Lim
    Abstract: This paper investigates the importance of firm-to-firm production network linkages for earnings inequality. We develop a quantitative model in which heterogeneous firms hire workers of different abilities in an imperfectly competitive labor market and source intermediates from heterogeneous suppliers in a production network. The model delivers an earnings equation with a firm-specific wage premium that depends endogenously on both firm productivities and firm-to-firm linkages in the production network. We establish identification of the model parameters and estimate them using linked employer-employee and firm-to-firm transactions data from Chile. Counterfactual simulations using our estimated model show that heterogeneity in network linkages explains 21% of log earnings variance, while passthrough of productivity shocks via network linkages explains between 20-25% of earnings volatility. We also examine the effects of a minimum wage policy and find strong spillover effects to worker earnings above the wage floor, with substitution of materials for labor explaining around 40% of these effects.
    JEL: F0 F12 F16 J0 J31 J42
    Date: 2021–02
  9. By: Nezih Guner (CEMFI); Yuliya A. Kulikova (Banco de España); Arnau Valladares-Esteban (University of St. Gallen and Sew)
    Abstract: The added worker effect (AWE) measures the entry of individuals into the labor force due to their partners’ adverse labor market outcomes. We propose a new method to calculate the AWE that allows us to estimate its effect on any labor market outcome. The AWE reduces the fraction of households with two non-employed members by 16% for the 1977-2018 period; 28% in the 1990 recession and 23% during the great recession. The AWE also accounts for why women’s employment is much less cyclical and more symmetric than men’s. Without the AWE, married women’s employment would be as volatile as men and display negative skewness (declining quickly in recessions and recovering slowly in expansions). In recessions, while some women lose their employment, others enter the labor market and find jobs. This keeps female employment relatively stable.
    Keywords: added worker effect, household labor supply, intra-household insurance, female employment, cyclicality, skewness
    JEL: D1 E32 J21 J22
    Date: 2021–03
  10. By: Doruk Cengiz; Arindrajit Dube; Attila S. Lindner; David Zentler-Munro
    Abstract: We assess the effect of the minimum wage on labor market outcomes such as employment, unemployment, and labor force participation for most workers affected by the policy. We apply modern machine learning tools to construct demographically-based treatment groups capturing around 75% of all minimum wage workers—a major improvement over the literature which has focused on fairly narrow subgroups where the policy has a large bite (e.g., teens). By exploiting 172 prominent minimum wages between 1979 and 2019 we find that there is a very clear increase in average wages of workers in these groups following a minimum wage increase, while there is little evidence of employment loss. Furthermore, we find no indication that minimum wage has a negative effect on the unemployment rate, on the labor force participation, or on the labor market transitions. Furthermore, we detect no employment or participation responses even for sub-groups that are likely to have a high extensive margin labor supply elasticity—such as teens, older workers, or single mothers. Overall, these findings provide little evidence for changing search effort in response to a minimum wage increase.
    JEL: J08 J2 J3 J38 J8 J88
    Date: 2021–01
  11. By: Xuan Jiang; Wan-Ying Chang; Bruce A. Weinberg
    Abstract: This paper uses newly available data from Web of Science on publications matched to researchers in Survey of Doctorate Recipients to compare scientific publications collected by surveys and algorithmic approaches. We aim to illustrate the different types of measurement errors in self-reported and machine-generated data by estimating how publication measures from the two approaches are related to career outcomes (e.g. salaries, placements, and faculty rankings). We find that the potential biases in the self-reports are smaller relative to the algorithmic data. Moreover, the errors in the two approaches are quite intuitive: the measurement errors of the algorithmic data are mainly due to the accuracy of matching, which primarily depends on the frequency of names and the data that was available to make matches; while the noise in self reports is expected to increase over the career as researchers’ publication records become more complex, harder to recall, and less immediately relevant for career progress. This paper provides methodological suggestion on evaluating the quality and advantages of two approaches to data construction. It also provides guidance on how to use the new linked data.
    JEL: C26 J24 J3 O31
    Date: 2021–02
  12. By: Joonkyu Choi; Nathan Goldschlag; John C. Haltiwanger; J. Daniel Kim
    Abstract: We explore the role of founding teams in accounting for the post-entry dynamics of startups. While the entrepreneurship literature has largely focused on business founders, we broaden this view by considering founding teams as both the founders and early joiners. We investigate the idea that the success of a startup may derive from the organizational capital that is created at firm formation and is inalienable from the founding team itself. To test this hypothesis, we exploit premature deaths to identify the causal impact of losing a founding team member on startup performance. We find that the exogenous separation of a founding team member due to premature death has a persistently large, negative, and statistically significant impact on post-entry size, survival, and productivity of startups. Consistent with our organizational capital hypothesis, effects are stronger for firms with small founding teams and those operating in business-to-business (B2B) oriented sectors. Moreover, while we find that the loss of a founder has an especially large adverse effect, the loss of an early joiner nonetheless exhibits a significant negative effect, lending support to our inclusive definition of founding teams.
    JEL: J24 L23 L26
    Date: 2021–01
  13. By: Benjamin Moll; Lukasz Rachel; Pascual Restrepo
    Abstract: The benefits of new technologies accrue not only to high-skilled labor but also to owners of capital in the form of higher capital incomes. This increases inequality. To make this argument, we develop a tractable theory that links technology to the personal income and wealth distributions – and not just that of wages – and use it to study the distributional effects of automation. We isolate a new theoretical mechanism: automation increases inequality via returns to wealth. The flip side of such return movements is that automation is more likely to lead to stagnant wages and therefore stagnant incomes at the bottom of the distribution. We use a multi-asset model extension to confront differing empirical trends in returns to productive and safe assets and show that the relevant return measures have increased over time. Automation accounts for part of the observed trends in income and wealth inequality and macroeconomic aggregates.
    JEL: E21 E22 E24 E25 J31
    Date: 2021–02
  14. By: Baktash, Mehrzad B.; Heywood, John S.; Jirjahn, Uwe
    Abstract: We study the link between performance pay and alcohol use in Germany, a country with mandated health insurance. Previous research from the US argues that alcohol use as a form of "self-medication" may be a natural response to the stress and uncertainty of performance pay when many workers do not have access to health insurance. We find that the likelihood of consuming each of four types of alcohol (beer, wine, spirits, and mixed drinks) is higher for those receiving performance pay even controlling for a long list of economic, social and personality characteristics and in sensible IV estimates. We also show that the total number of types of alcohol consumed is larger for those receiving performance pay. We conclude that even in the face of mandated health insurance, the link found in the US persists in Germany.
    Keywords: Performance Pay,Alcohol,Stress
    JEL: I12 J33
    Date: 2021
  15. By: Böheim, René (University of Linz); Gust, Sarah (Ifo Institute for Economic Research)
    Abstract: In Austria, a gender pay transparency law was introduced in 2011, requiring companies with more than 1,000 employees to publish a pay report every other year. Firms with 500, 250, and 150 employees were subject to this requirement at later years. We estimate the impact of the law on men's wages, women's wages, and the gender pay gap using administrative data. The results from a regression discontinuity design suggest that the wage transparency law did not change wages or the gender wage gap. In larger firms, the wage of newly hired women increased more due to the reform than of newly hired men, suggesting that the gender wage gap decreased among newly hired workers. Our estimates of the effect of the law on employment growth or turnover are small, and statistically insignificant. For larger firms, we estimate that the transparency law led to a lower share of women in treated firms. These results are robust to several additional specifications.
    Keywords: wage transparency, gender wage gap
    JEL: J31
    Date: 2021–03
  16. By: Julieta Peveri (Aix Marseille Univ, CNRS, AMSE, Marseille, France.)
    Abstract: There is strong evidence that national leaders matter for the performance of their nations, but little is known about what drives the direction of their effects. I assess how national leaders' quality of governance, measured by five indicators, varies with their career and education. Using text analysis and a sample of one thousand national leaders between 1932 and 2010, I identify five types of rulers: military leaders, academics, high-level politicians, low-level politicians and lawyers. Military leaders tend to be associated with a decrease in the quality of governance, whereas politicians who have held visible offices before taking power perform better. National leaders with a law background, as well as academics, can have negative effects depending on the political regime they run and on the choice of performance indicator. This highlights the heterogeneity behind the positive effect of holding a university degree, often used as a proxy for politicians' quality.
    Keywords: national leaders, politicians' quality, leaders' characteristics
    JEL: H70 N10 J45
    Date: 2021–03
  17. By: Linas Tarasonis (Bank of Lithuania, Vilnius University); Jose Garcia-Louzao (Bank of Lithuania)
    Abstract: This paper studies the impact of the Great Recession on the relationship between reallocation and productivity dynamics in Lithuania. Using detailed microlevel data, we first document the aggregate contribution of firm exit and employment reallocation to productivity growth. Next, we estimate firm-level regressions to confirm the findings and to perform a heterogeneity analysis. This analysis shows that productivity shielded firms from exit, and that this relationship became stronger during the Great Recession. Moreover, we demonstrate that more productive firms experienced on average lower employment losses, and that this effect was even stronger during the economic slump. Taken together, our results suggest that reallocation was productivityenhancing during the Great Recession. However, the analysis also indicates that reallocation intensity varied with sector's dependence on external financing or international trade as well as market concentration.
    Keywords: firm dynamics, job reallocation, productivity, Great Recession
    JEL: E24 E32 L11 J23
    Date: 2021–03–19

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