nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2021‒04‒19
23 papers chosen by
Joseph Marchand
University of Alberta

  1. Minimum Wages in New Zealand: Policy and practice in the 21st century. By Dave Mar?; Dean Hyslop
  2. Labor Market Effects of a Minimum Wage: Evidence from Ecuadorian Monthly Administrative Data By Jaerim Choi; Ivan Rivadeneyra; Kenia Ramirez
  3. Age-Targeted Income Taxation, Labor Supply, and Retirement By Johan Gustafsson
  4. "The Impact of Combining Work with Study on the Labour Market Performance of Graduates: the Joint Role of Work Intensity and Job-Field Match". By Antonio Di Paolo; Alessia Matano
  5. Do You Really Want to Share Everything? The Wellbeing of Work-Linked Couples By Juliane Hennecke; Clemens Hetschko
  6. Publication and Identification Biases in Measuring the Intertemporal Substitution of Labor Supply By Elminejad, Ali; Havranek, Tomas; Horvath, Roman
  7. Do Elite Colleges Matter? The Impact on Entrepreneurship Decisions and Career Dynamics By Naijia Guo; Charles Ka Yui Leung
  8. The Impact of Gender Role Norms on Mothers' Labor Supply By Danilo Cavapozzi; Marco Francesconi; Cheti Nicoletti
  9. "The Impact of Robot Adoption on Global Sourcing". By Akin A. Cilekoglu; Rosina Moreno; Raul Ramos
  10. Is longer education a substitute for job search through social contacts? By Müller, Dagmar
  11. The Political Economy of Child Labor By Dimova, Ralitza
  12. How Do Workers Perceive the Risks from Automation and the Opportunities to Retrain? Evidence from a Survey of Truck Drivers By Shoag, Daniel W.; Strain, Michael R.; Veuger, Stan A.
  13. Productivity effects of processing and ordinary export market entry: A time-varying treatments approach By Girma, Sourafel; Görg, Holger
  14. Can Payroll Tax Cuts Help Firms during Recessions? By Youssef Benzarti; Jarkko Harju
  15. Career trajectories in retail and wholesale - A sequential approach By Backman, Mikaela; Nilsson, Helena; Öner, Özge
  16. Characterizing Life-Cycle Dynamics of Annual Days of Work, Wages, and Cross-Covariances By Koray Aktas
  17. The Labour Market Impact of COVID-19: Early Evidence for a Sample of Enterprises from Southern Europe By Webster, Allan; Khorana, Sangeeta; Pastore, Francesco
  18. Does it pay to go public? Understanding the public-private sector wage gap in Germany By Bonaccolto-Töpfer, Marina; Castagnetti, Carolina; Prümer, Stephanie
  19. The Impact of Paid Family Leave on Employers: Evidence from New York By Bartel, Ann P.; Rossin-Slater, Maya; Ruhm, Christopher J.; Slopen, Meredith; Waldfogel, Jane
  20. Cyclical dynamics and the gender pay gap: A structural VAR approach By Kovalenko, Tim; Töpfer, Marina
  21. Bargaining Shocks and Aggregate Fluctuations By Thorsten Drautzburg; Jesús Fernández-Villaverde; Pablo Guerron-Quintana
  22. Do Workfare Programs Live Up to Their Promises? Experimental Evidence from Cote D’Ivoire By Marianne Bertrand; Bruno Crépon; Alicia Marguerie; Patrick Premand
  23. The interplay between green policy, electricity prices, financial constraints and jobs: firm-level evidence By Bijnens, Gert; Hutchinson, John; Konings, Jozef; Saint-Guilhem, Arthur

  1. By: Dave Mar? (Motu Economic and Public Policy Research); Dean Hyslop (Motu Economic and Public Policy Research)
    Abstract: New Zealand has seen dramatic changes in minimum wage policies since 2000. The adult minimum wage has increased 75% in CPI-adjusted real terms. In addition, the youth minimum wage was abolished in two stages, resulting in a 125% increase in the real minimum wage for 16–19-year-old workers. We review the motivations for minimum wages and the changes and analyse how they have affected workers outcomes. We find that the minimum wage now strongly determines the wages of teenage workers, with the minimum wage now at the median wage of teenagers, and over half of 16–17-year-olds, and about 40% of 18–19-year-olds, earning at or below the minimum. Although we find no clear evidence that increases in the minimum wage have led to adverse employment effects, we expect there are downside risks for youth and low skilled workers’ employment. As minimum wage workers are broadly spread across the household income distribution, we conclude that minimum wages are largely ineffective as a redistributive income support policy.
    Keywords: Minimum wages, employment, earnings inequality, income inequality
    JEL: J21 J23 J24 J31 J38
    Date: 2021–03
  2. By: Jaerim Choi; Ivan Rivadeneyra; Kenia Ramirez
    Abstract: When Ecuador raised its monthly Unified Minimum Wage from $170 to $200 in 2008, it affected 35 percent of all private sector workers. We use this unexpected minimum wage hike under former president Rafael Correa to assess the labor market impacts of the minimum wage. We use an administrative dataset that covers all formal sector workers by month. Adopting a differences-in-differences approach at the firm level, we find that the minimum wage hike led to a decrease in labor demand in affected firms by 0.5 percent after one month and by 2.5 percent after four months. The decrease in labor demand resulted from both an increase in job separations and a slowdown in hiring. At the worker level, we find that the minimum wage hike led to a 2.2 percentage point decline in the probability of remaining employed after one month, and the treatment effect rose to 3.9 percentage points after four months. Last, we estimate the effects of the minimum wage hike on wage changes by wage bin throughout the monthly wage distribution. We find that, after one month, wages increased by 17 to 37 percent for workers who were being paid less than $200 and also uncover wage spillover effects up to the 77th percentile of the wage distribution.
    Keywords: minimum wage, job separations, new hires, worker flows, wage distribution, wage spillover effects, differences-in-differences, employment, Ecuador
    JEL: J23 J38 J88
    Date: 2021
  3. By: Johan Gustafsson
    Abstract: This paper studies the life-cycle effects of favorable marginal tax treatment of older workers on their optimal life cycle labor supply, retirement timing, and savings. I develop a structural model in continuous time where the life-cycle of a representative agent is divided into three distinct phases: pre-treatment, post-treatment, and retirement. Solutions for consumption/savings, labor supply/leisure, and retirement timing are then obtained by solving the model as a salvage value problem. I then calibrate the model to Swedish earnings data and find that the increased extensive margin labor supply is partially offset by a reduction in hours worked during the pre-treatment period. The total effect is however an increase in life-cycle labor supply and consumption.
    Keywords: retirement age, life cycle, tax heterogeneity, savings consumption, leisure
    JEL: D15 J22 J26
    Date: 2021
  4. By: Antonio Di Paolo (AQR-IREA Research Group, University of Barcelona.); Alessia Matano (University of Rome "La Sapienza" , Dipartimento di Economia e Diritto, e AQR-IREA, University of Barcelona.)
    Abstract: This paper investigates the effects of working during university education on students' labour market performance. We jointly consider the role of work intensity and the relationship with the field of study in a framework that accounts for self-selection into different types of jobs. The empirical analysis draws on data from three successive cohorts of graduates from the Spanish region of Catalonia. Our results point out that the probability of being employed four years after graduation is significantly higher for students who have worked in jobs well-matched with their degree relative to both full-time students and students who have worked in unrelated jobs. Further, the probability of having a permanent job is generally higher for those who worked before graduation, especially in the case of jobs related to the degree. However, the likelihood of early career job-qualification match is negatively affected by pre-graduation work experiences unrelated to degree's contents.
    Keywords: University Graduates, Pre-graduation Jobs, Employability, Job Quality, Self-Selection. JEL classification: I23, J24, J22.
    Date: 2021–04
  5. By: Juliane Hennecke (NZ Work Research Institute, Faculty of Business, Economics and Law at AUT University); Clemens Hetschko (School of Economics, Leeds University Business School, University of Leeds)
    Abstract: Work as well as family life are crucial sources of human wellbeing, which however often interfere. This is especially so if partners work in the same occupation or industry. At the same time, being work-linked may benefit their career success. Still, surprisingly little is known about the wellbeing of work-linked couples. Our study fills this gap by examining the satisfaction differences between work-linked and non-work-linked partners. Using data from the German Socio-Economic Panel (SOEP, 2019), we estimate the effect of working in the same occupation and/or industry on life satisfaction as well as satisfaction with four areas of life: income, work, family and leisure. In the process, we employ pooled OLS estimations and instrumental variable strategies, for instance based on the gender disparity in industries and occupations. Our results suggest that being work-linked increases satisfaction with life as well as income and job satisfaction. These findings are consistent with positive assortative matching and mutual career support between work-linked partners. Our conclusions concern hiring couples as a means of recruiting exceptional talent.
    Keywords: work-linked couples, wellbeing, assortative matching, relationship quality, work-life balance, copreneurs, occupational gender disparity, dual career support
    JEL: I31 J12 J21 J44 M51
    Date: 2021–03
  6. By: Elminejad, Ali; Havranek, Tomas; Horvath, Roman
    Abstract: The intertemporal substitution (Frisch) elasticity of labor supply governs the predictions of real business cycle models and models of taxation. We show that, for the extensive margin elasticity, two biases conspire to systematically produce large positive estimates when the elasticity is in fact zero. Among 723 estimates in 36 studies, the mean reported elasticity is 0.5. One half of that number is due to publication bias: larger estimates are reported preferentially. The other half is due to identification bias: studies with less exogenous time variation in wages report larger elasticities. Net of the biases, the literature implies a zero mean elasticity and, with 95% confidence, is inconsistent with calibrations above 0.25. To derive these results we collect 23 variables that reflect the context in which the elasticity was obtained, use nonlinear techniques to correct for publication bias, and employ Bayesian and frequentist model averaging to address model uncertainty.
    Keywords: Frisch elasticity,labor supply,extensive margin,meta-analysis,publication bias,Bayesian model averaging
    JEL: E24 J21
    Date: 2021
  7. By: Naijia Guo (Chinese University of Hong Kong); Charles Ka Yui Leung (City University of Hong Kong)
    Abstract: Elite college attendance significantly impacts students' entrepreneurship decisions and career dynamics. We find that an elite college degree is positively correlated with entrepreneurship (i.e., owning an incorporated business) but not with other self-employment forms. Our overlapping generations model captures self-selection in education and career choices based on heterogeneous ability and family wealth endowments over the life-cycle. Our estimates show that (1) entrepreneurs and other self-employed individuals require different types of human capital, and (2) elite colleges generate considerably more human capital gain than ordinary colleges, particularly for entrepreneurs. Distinguishing between elite and ordinary colleges improves our prediction of entrepreneurship decisions. Providing subsidies for elite colleges is more efficient than subsidizing their ordinary counterparts to encourage entrepreneurship, enhance intergenerational mobility, and enhance welfare. In contrast, although start-up subsidy increases entrepreneurship, it does not improve their performance, and it is inferior to education subsidy in generating efficiency, equality, and intergenerational mobility.
    Keywords: entrepreneurship, elite college, intergenerational transfer
    JEL: D15 I20 J24
    Date: 2021–03–10
  8. By: Danilo Cavapozzi; Marco Francesconi; Cheti Nicoletti
    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
  9. By: Akin A. Cilekoglu (AQR-IREA Research Group, University of Barcelona.); Rosina Moreno (AQR-IREA Research Group, University of Barcelona.); Raul Ramos (AQR-IREA Research Group, University of Barcelona and IZA.)
    Abstract: This paper studies the impact of robot adoption on firms’ global sourcing activities. Using a rich panel dataset of Spanish manufacturing firms, we show that robot adopting firms increased their intermediate input purchases from foreign and domestic suppliers between 2006 and 2016. The effects of robots differ across sourcing strategies: the highest in foreign outsourcing and the lowest in foreign vertical integration. We find that robot adopters fragment their production further by reducing the concentration of purchases from suppliers and the increase in intermediate input purchases is related to quality upgrading to a certain extent. Marginal treatment effects estimates suggest that responses to adoption are heterogeneous: higher probability of adoption intensifies the effects on outsourcing and weakens the effects on vertical integration. In contrast to rising concerns over reshoring, our findings suggest that robots have yet promoted trade in intermediate inputs.
    Keywords: Robots, Reshoring, Trade, Production fragmentation. JEL classification: F14, F23, L23.
    Date: 2021–04
  10. By: Müller, Dagmar (Research Institute of Industrial Economics (IFN),)
    Abstract: This paper investigates whether longer upper secondary education affects the role of parents in the job finding process. Previous research has shown that less educated workers rely more on contacts, and theory suggests that education and social connections can be substituted as signals of ability. I investigate this question by exploiting a Swedish trial that generated exogenous variation across municipalities and student cohorts in the length of vocational upper secondary education. Relying on Swedish matched employer-employee data, I estimate the effect of receiving one more year of education on the probability of being employed at the same establishment as a parent for up to 20 years after graduation. The results indicate that the average impact of a longer education is negative during the early career and non-trivial in magnitude. The overall effect is entirely driven by a large and statistically significant effect within the group of vocational students with high-educated parents. For the group of students where the use of parental ties is most prevalent, students with low-educated parents, the reliance on parental contacts appears resilient to policy-induced changes in the length of education.
    Keywords: social contacts; young workers; labor market transitions; mobility
    JEL: J24 J62
    Date: 2021–04–13
  11. By: Dimova, Ralitza
    Abstract: Concerns about the welfare of working children has over time produced a wide range of international and national interventions in the child labor market, culminating most recently in a commitment to eradicate the worst forms of child work via the attainment of target 8.7 of the Sustainable Development Goals. While the literature on the causes and consequences of child labor is voluminous and well established, research that explores the political economy of such interventions is disproportionately scanter. This chapter puts the relatively less prolific literature on the political economy of child labor under conceptual and empirical scrutiny. It starts by looking briefly into the theoretical case for interventions into the child labor market and then verifies whether such interventions are justified in practice. It then presents two types of political economy explanations of potential mismatches between economic theory and practice, one in the domain of international interventions and a second one in the realm of national policy making.
    Keywords: political economy,child labor,education,minimum age of work,compulsory education
    JEL: P48 O14 O15 J13 J24
    Date: 2021
  12. By: Shoag, Daniel W. (Case Western Reserve University); Strain, Michael R. (American Enterprise Institute for Public Policy Research); Veuger, Stan A. (American Enterprise Institute for Public Policy Research)
    Abstract: How do truck drivers perceive the risk they face from automation and their opportunities to retrain for employment in a different occupation? Autonomous vehicle (AV) technology has made rapid progress in recent years, so these questions are likely salient to truckers. Based on surveys of the new RAND American Truck Driver Panel, we find that those drivers who are most concerned about automation are, counterintuitively, also most likely to say they intend to re-invest in driving by seeking additional endorsements or purchasing their own truck. This zero-sum "arms race" for remaining positions is socially inefficient, and it may be driven by incorrect information about outside options. Specifically, the effect disappears among those drivers who are most familiar with the generally low costs of community college. We show that this is consistent with a simple model in which idiosyncratic noise in the perceived cost of retraining can lead to inefficient outcomes. This mechanism suggests that effective information provision can have large positive externalities and welfare consequences. However, a calibration of labor market prospects suggests that information provision about the true costs of retraining may not be adequate to induce occupational switching if truckers believe wages for survivors will continue to grow. This points to another important role for perceptions about the future, and for a policy of information interventions.
    Keywords: automation, autonomous vehicles, retraining
    JEL: J23 J24 J62 J68 O33
    Date: 2021–04
  13. By: Girma, Sourafel; Görg, Holger
    Abstract: China's policy of encouraging export processing has been the topic of much discussion in the academic literature and policy debate. We use a recently developed econometric approach that allows for time varying "treatments" and estimate economically and statistically significant positive causal effects of entering into export processing and ordinary export markets on subsequent firm level productivity. These productivity effects are shown to be larger than those accruing to firms who enter into ordinary exporting. Interestingly, the estimation of quantile treatment effects shows that the positive effects do not accrue similarly to all types of firms, but are strongest for those at the low to medium end of the distribution of the productivity variable. We also find that export processors gain more when entering the industrialised North rather than the South, while this does not appear to matter much for ordinary exporting.
    Keywords: export processing,firm performance,China,time varying treatments
    JEL: F14 F61 O14
    Date: 2021
  14. By: Youssef Benzarti; Jarkko Harju
    Abstract: This paper estimates the effect of payroll tax cuts on firm-level employment and balance-sheet outcomes during economic downturns. We use two regional payroll tax cuts in Finland as well as the onset of the Great Recession to estimate the effect of the recession on firms treated by the payroll tax cuts compared to a similar control group. When implemented, prior to the Great Recession, we estimate that the payroll tax cuts had limited effects on employment and balance-sheet outcomes of firms located in the treated regions. However, when the recession starts, some of its negative effects were substantially hampered by the previously enacted payroll tax cuts in treated firms. These employment effects are exacerbated for men and low-skilled employees. We also find that sales and profits in treated firms respond differently in treated firms during the recession. We provide some evidence showing that firms that are liquidity con-strained are the ones that exhibit the strongest response. This shows that payroll tax cuts can make firms more resilient during downturns, possibly by relaxing liquidity constraints.
    Keywords: labor costs, place-based policies, great recession, payroll taxes, employment, wages, firms, fiscal multipliers
    JEL: H20 H22 H23
    Date: 2021
  15. By: Backman, Mikaela (Center of Entrepreneurship and Spatial Economics (CEnSE), Jönköping International Business School, Jönköping, Sweden.); Nilsson, Helena (Institute of Retail Economics (Handelns Forskningsinstitut)); Öner, Özge (Cambridge University, Cambridge, UK)
    Abstract: High labor turnover imposes costs on a firm and hinders the accumulation of human capital. In an increasingly competitive market, retaining competent employees is a necessity. To avoid excessive labor turnover, it is necessary to identify which characteristics influence career pathways for employees. Becoming employed and/or staying employed within a certain firm or sector is normally not binary, but rather should be studied as employment-related events within a career trajectory. The combination of the timing and the order of distinct events that form a unique career pathway for an individual can be studied by using sequential analysis. In this paper, we systematically identify the common career paths of individuals who work in retail or wholesale.
    Keywords: career trajectories; retail; wholesale; sequential analysis; employee turnover
    JEL: C35 J24 L81
    Date: 2021–03–01
  16. By: Koray Aktas
    Abstract: This paper investigates the dispersions in days worked and wages by adapting a novel semi-parametric specification that minimizes assumptions about life-cycle labor income dynamics. Data for Italy shows a substantial increase in income inequality after age 50 for males over the time span from 1985 to 2012, which is remarkably driven by the variations in days worked rather than wages. Results show that this increase is determined by permanent changes in the number of days worked. I also introduce an empirical strategy to decompose the cross-covariances of wages and working days to quantify the permanent and transitory responses of days worked to wage shocks. A one-percent increase in permanent wages increases the permanent days worked by 0.8% at the age of 28, while this increase is about 0.3% at the age of 55. Despite the strong reaction of days of work to wage shocks early in careers, the correlation coefficients are small, indicating that only a small share of variation in permanent days worked - which shapes the permanent income inequality - is explained by the changes in wages.
    Keywords: life-cycle dynamics, income inequality, wage inequality, annual days worked, older workers, contemporaneous covariance of wages and days.
    JEL: C33 D3 J21 J31
    Date: 2021–03
  17. By: Webster, Allan (Bournemouth University); Khorana, Sangeeta (Bournemouth University); Pastore, Francesco (Università della Campania Luigi Vanvitelli)
    Abstract: This study uses evidence from World Bank enterprise surveys of a sample of firms from six countries in Southern Europe. It examines the early evidence of the effects of Covid-19 on labour markets. The evidence and the analysis are provided at a time when the pandemic is still in progress. The future progress of Covid-19 and government containment measures is uncertain, and the full economic consequences will probably continue to emerge after the end of the pandemic. The full extent of the impact on labour will probably not be the first of these. Nonetheless the possibility of learning lessons from the early stages of the pandemic is sufficiently important to make the exercise valuable. The study suggests that, despite efforts to support firms and hoard labour, there is a prospect of a significant number of firm closures with a consequent loss of employment. Temporary firm closures also represent a substantial loss of labour weeks. These are partly related to a significant number of workers subject to furloughs. Both temporary closures and furloughs impose costs that will be borne by firms, workers and government. The effects of Covid-19 on firms differ across sectors. Adverse effects tend to be higher in hospitality, non-essential retail and travel. A degree of gender segregation means that these are sectors with a high proportion of female workers and, in consequence, most of the countries in the sample exhibit an early decline of the share of women in employment. That many firms lack the capacity to survive further temporary closures of a similar duration to those in the earlier stages emphasises that the support provided in the near future is of critical importance to control employment losses through permanent firm closures.
    Keywords: labor demand, temporary closures, furloughs, firm' level data, COVID-19, emergency
    JEL: I18 J23 J28 J65
    Date: 2021–04
  18. By: Bonaccolto-Töpfer, Marina; Castagnetti, Carolina; Prümer, Stephanie
    Abstract: Using data from the German Socio-Economic Panel 1984-2017, this paper provides first evidence on the public-private sector wage gap in Germany based on a fixed effect quantile approach. The results reveal substantial differences in the decomposition of the gap compared to the standard cross-sectional approach. We find that women earn more in public employment, while men are penalized. Our analysis suggests that this penalization is not related to compensating wage differentials. Against the background of demographic change, the public sector may face difficulties to recruit (skilled) men and may need to adjust its pay schemes to fair and merit-based ones.
    Keywords: Public-Private Sector Wage Gap,Quantile Regression for Panel Data,Germany
    JEL: J31 J45 C33
    Date: 2021
  19. By: Bartel, Ann P. (Columbia University); Rossin-Slater, Maya (Stanford University); Ruhm, Christopher J. (University of Virginia); Slopen, Meredith (Columbia University); Waldfogel, Jane (Columbia University)
    Abstract: We designed and fielded a survey of New York and Pennsylvania firms to study the impacts of New York's 2018 Paid Family Leave policy on employer outcomes. We match each NY firm to a comparable PA firm and use difference-in-difference models to analyze within-match-pair changes in outcomes. We find that PFL leads to an improvement in employers' rating of their ease of handling long employee absences, concentrated in the first policy year and among firms with 50–99 employees. We also find an increase in employee leave-taking in the second policy year, driven by smaller firms.
    Keywords: paid family leave, employers, worker absences
    JEL: J21 J23 J32 I38
    Date: 2021–04
  20. By: Kovalenko, Tim; Töpfer, Marina
    Abstract: Gender pay gaps persist worldwide despite political emphasis to close them. The literature found various drivers of the gaps but remained vastly silent about the role of cyclical dynamics. Using quarterly US data over the period 1979-2019, we study the effects of cyclical dynamics on the gender pay gap based on a structural vector auto-regression model with zero and sign restrictions. The results suggest that technology shocks lead to lower levels of the gender pay gap in the medium run, while higher wage bargaining power reduces the gap in the short run. However, these reductions of the gap come at the cost of increased unemployment. As a policy implication, these results imply a trade-off between lower gender pay gaps and higher unemployment.
    Keywords: Gender pay gap,Vector Auto-Regression (VAR) model,Cyclical dynamics,Macroeconomic shocks
    JEL: E24 J16 J23
    Date: 2021
  21. By: Thorsten Drautzburg; Jesús Fernández-Villaverde; Pablo Guerron-Quintana
    Abstract: We argue that social and political risk causes significant aggregate fluctuations by changing workers’ bargaining power. Using a Bayesian proxy-VAR estimated with U.S. data, we show how distribution shocks trigger output and unemployment movements. To quantify the aggregate importance of these distribution shocks, we extend an otherwise standard neoclassical growth economy. We model distribution shocks as exogenous changes in workers’ bargaining power in a labor market with search and matching. We calibrate our economy to the U.S. corporate non-financial business sector, and we back out the evolution of workers’ bargaining power. We show how the estimated shocks agree with the historical narrative evidence. We document that bargaining shocks account for 28% of aggregate fluctuations and have a welfare cost of 2.4% in consumption units.
    Keywords: distribution risk, bargaining shocks, aggregate fluctuations, partial filter, historical narrative
    JEL: E32 E37 E44 J20
    Date: 2021
  22. By: Marianne Bertrand; Bruno Crépon; Alicia Marguerie; Patrick Premand
    Abstract: Workfare programs are one of the most popular social protection and employment policy instruments in the developing world. They evoke the promise of efficient targeting, as well as immediate and lasting impacts on participants’ employment, earnings, skills and behaviors. This paper evaluates contemporaneous and post-program impacts of a public works intervention in Côte d’Ivoire. The program was randomized among urban youths who self-selected to participate and provided seven months of employment at the formal minimum wage. Randomized subsets of beneficiaries also received complementary training on basic entrepreneurship or job search skills. During the program, results show limited impacts on the likelihood of employment, but a shift toward wage jobs, higher earnings and savings, as well as changes in work habits and behaviors. Fifteen months after the program ended, savings stock remain higher, but there are no lasting impacts on employment or behaviors, and only limited impacts on earnings. Machine learning techniques are applied to assess whether program targeting can improve. Significant heterogeneity in impacts on earnings is found during the program but not post-program. Departing from self-targeting improves performance: a range of practical targeting mechanisms achieve impacts close to a machine learning benchmark by maximizing contemporaneous impacts without reducing post-program impacts. Impacts on earnings remain substantially below program costs even under improved targeting.
    JEL: C93 H53 I38 J24 O12
    Date: 2021–04
  23. By: Bijnens, Gert; Hutchinson, John; Konings, Jozef; Saint-Guilhem, Arthur
    Abstract: Increased investment in clean electricity generation or the introduction of a carbon tax will most likely lead to higher electricity prices. We examine the effect from changing electricity prices on manufacturing employment. Analyzing firm-level data, we find that rising electricity prices lead to a negative impact on labor demand and investment in sectors most reliant on electricity as an input factor. Since these sectors are unevenly spread across countries and regions, the labor impact will also be unevenly spread with the highest impact in Southern Germany and Northern Italy. We also identify an additional channel that leads to heterogeneous responses. When electricity prices rise, financially constrained firms reduce employment more than less constrained firms. This implies a potentially mitigating role for monetary policy. JEL Classification: E52, H23, J23, Q48
    Keywords: employment, environmental regulation, labor demand, manufacturing industry, monetary policy
    Date: 2021–04

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