nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2021‒05‒24
nineteen papers chosen by
Joseph Marchand
University of Alberta

  1. What Drives Social Returns to Education? A Meta-Analysis By Cui, Ying; Martins, Pedro S.
  2. Mental disorders and lifetime earnings By Henri Salokangas
  3. The Role of Short-Time Work and Discretionary Policy Measures in Mitigating the Effects of the Covid-19 Crisis in Germany By Michael Christl; Silvia De Poli; Tine Hufkens; Andreas Peichl; Mattia Ricci
  4. Is Public Equity Deadly? Evidence from Workplace Safety and Productivity Tradeoffs in the Coal Industry By Erik P. Gilje; Michael D. Wittry
  5. The Effects of Shortening Potential Benefit Duration: Evidence from Regional Cut-Offs and a Policy Reform By Galecka-Burdziak, Ewa; Góra, Marek; Jessen, Jonas; Jessen, Robin; Kluve, Jochen
  6. Friday Morning Fever. Evidence from a Randomized Experiment on Sick Leave Monitoring in the Public Sector By Boeri, Tito; di Porto, Edoardo; Naticchioni, Paolo; Scrutinio, Vincenzo
  7. "Too Shocked to Search": The COVID-19 Shutdowns' Impact on the Search for Apprenticeships By Goller, Daniel; Wolter, Stefan C.
  9. Air Pollution and Adult Cognition: Evidence from Brain Training By La Nauze, Andrea; Severnini, Edson R.
  10. Stratification of Returns to Higher Education in Peru: The Role of Education Quality and Major Choices By Sanchez, Alan; Favara, Marta; Porter, Catherine
  11. Formation of College Plans: Expected Returns, Preferences and Adjustment Process By Azmat, Ghazala; Kaufmann, Katja Maria
  12. The Economics of Diversity: Innovation, Productivity, and the Labour Market By Ozgen, Ceren
  13. Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals By Gibbs, Michael; Mengel, Friederike; Siemroth, Christoph
  14. Widows’ Time, Time Stress and Happiness: Adjusting to Loss By Hamermesh, Daniel S.; Myck, Michal; Oczkowska, Monika
  15. The Sectoral Innovation Database, 1994-2016.Methodological Notes By Mario Pianta; Andrea Coveri; Jelena Reljic
  16. The Race of Man and Machine: Implications of Technology When Abilities and Demand Constraints Matter By Gries, Thomas; Naudé, Wim
  17. Mechanization, Task Assignment, and Inequality By Yuki, Kazuhiro
  18. The China trade shock and the gender wage gap in India: A District-level analysis By Kajari Saha
  19. Liquidity constraints and free post-secondary education. Evidence from Colombia By Luis Fernando Gamboa, Jaime Millan-Quijano

  1. By: Cui, Ying (Queen Mary, University of London); Martins, Pedro S. (Queen Mary, University of London)
    Abstract: Education can generate important externalities that contribute towards economic growth and convergence. In this paper, we study such externalities and their drivers by conducting the first meta-analysis of the social returns to education literature. We analyse over 1,000 estimates from 32 journal articles published since 1993, covering 15 countries of different levels of development. Our results indicate that: 1) there is publication bias (but not citation bias) in the literature; 2) spillovers slow down with economic development; 3) tertiary schooling and schooling dispersion increase spillovers; and 4) spillovers are smaller under fixed-effects and IV estimators but larger when measured at the firm level.
    Keywords: returns to education, education externalities
    JEL: I26 I28 J24 J31 C36
    Date: 2021–04
  2. By: Henri Salokangas (Turku School of Economics, University of Turku FI-20014, Finland)
    Abstract: In advanced countries in particular, the mental well-being of adolescents and young adults is gaining increased amount of attention. Yet little is known about lifetime labor market costs attributable to mental disorders nor the related heterogeneity by the age of onset of psychiatric conditions. This paper contributes by documenting the lifetime labor market performance deficits related to severe mental healthrelated problems. Using longitudinal socio-economic and health register data with a 45-year follow-up, I document that psychiatric admission history is associated with substantial losses in labor market performance. Age of first admission matters: having the first admission one year earlier than the affected controls is associated with € 10 000-13 000 loss. Overall, results provide an economic rationale for early intervention in mental illnesses as deficits in the labor market are larger, the earlier first psychiatric admissions emerge.
    Keywords: Mental disorders, Employment, Wage differentials
    JEL: I10 J21 J31
    Date: 2021–05
  3. By: Michael Christl; Silvia De Poli; Tine Hufkens; Andreas Peichl; Mattia Ricci
    Abstract: In this paper, we investigate the impact of the COVID-19 pandemic on German household income using a micro-level approach. We combine a microsimulation model with labour market transition techniques to simulate the COVID-19 shock on the German labour market. We find the consequences of the labour market shock to be highly regressive with a strong impact on the poorest households. However, this effect is nearly entirely offset by automatic stabilisers and discretionary policy measures. We explore the cushioning effect of these policies in detail, showing that short-time working schemes and especially the one-off payments for children are effective in cushioning the income loss of the poor.
    Keywords: Covid-19, EUROMOD, microsimulation, STW, automatic stabilisers
    JEL: D31 E24 H24
    Date: 2021
  4. By: Erik P. Gilje; Michael D. Wittry
    Abstract: We study how ownership structure, in particular public listing status, affects workplace safety and productivity tradeoffs. Theory offers competing hypotheses on how listing related frictions affect these tradeoffs. We exploit detailed asset-level data in the U.S. coal industry and find that workplace safety deteriorates dramatically under public firm ownership, primarily in mines that experience the largest productivity increases. We find evidence consistent with information asymmetry between managers and shareholders of public firms, and ties of private firm ownership with local communities being first-order drivers of workplace safety and productivity tradeoffs.
    JEL: G30 G32 G34 J24 J38
    Date: 2021–05
  5. By: Galecka-Burdziak, Ewa (Warsaw School of Economics); Góra, Marek (Warsaw School of Economics); Jessen, Jonas (DIW Berlin); Jessen, Robin (RWI); Kluve, Jochen (KfW Development Bank)
    Abstract: This paper quantifies labour market effects of changes in the potential benefit duration (PBD). The empirical approach uses a particular unemployment insurance set-up from Poland that generates two sources of identifying variation: individual workers' PBD depends directly on the county unemployment rate relative to the national average—12 months of PBD above a cut-off of 125 per cent and 6 months below. In addition, this cut-off shifted from 125 to 150 per cent in a 2009 reform. We use i) the natural experiment generated by this reform, and ii) the sharp discontinuity generated by the cut-offs to estimate effects of shortening PBD on exit from benefit receipt, exit from unemployment, and entry into employment. The analysis is based on administrative data covering unemployment spells for prime age workers during the years 2006-2018. A one-month shorter PBD decreases average benefit duration by 0.5 months and average unemployment duration by 0.4 months. The PBD reduction by six months increased the job finding rate within the first 9 months by 6 percentage points. Using the stock of unemployed per county, we find evidence for positive market-level employment effects.
    Keywords: unemployment benefits, extended benefits, spell duration
    JEL: H55 J20 J65
    Date: 2021–04
  6. By: Boeri, Tito (Bocconi University); di Porto, Edoardo (University of Naples Federico II); Naticchioni, Paolo (University of Rome 3); Scrutinio, Vincenzo (University of Bologna)
    Abstract: This paper provides the first analysis of a population-wide controlled field experiment for home visits checking on sick leave in the public sector. The experiment was carried out in Italy, a country with large absenteeism in the public sector, and it concerned the universe of public employees. We exploit unique administrative data from the Italian social security administration (INPS) on sick leave and work histories. We find that receiving a home visit reduces the number of days on sick leave in the following 16 months by about 12% (5.5 days). The effect is stronger for workers who are found irregularly on sick leave (-10.2 days). We interpret our findings as a deterrence effect of home visits: workers being found irregularly on sick leave experience a decline of about 2% of their wage in the following 12 months. Uncertainty aversion (there is no automatism in these sanctions) can play a role in these results. Our estimates suggest that home visits are cost-effective: every Euro spent for the visits involves up to 10 Euros reductions in sick benefits outlays. We estimate the marginal value of public funds (MVPF) spent on home visits at about 1.13, which is significantly lower than estimates of MVPF of income taxes in the US.
    Keywords: sick leave, absenteeism, randomized trial
    JEL: I12 J45
    Date: 2021–04
  7. By: Goller, Daniel (University of St. Gallen); Wolter, Stefan C. (University of Bern)
    Abstract: This study is, to the best of our knowledge, the first analysis of apprenticeship supply that allows us to analyse the effects of the shutdowns triggered by the COVID-19 pandemic before, during and after these shutdowns by means of daily searches for vacant apprenticeships. Analysing over 10 million search queries on the national administrative platform for apprenticeship offers from February 2020 until April 2021 we find a sharp reduction of up to 40% in the daily number of search queries associated to the first shutdown in March 2020, followed by some catch-up effect thereafter. Although we find a strong relationship between the intensity of the politically imposed restrictions due to the COVID-19 pandemic and daily search queries, this relationship weakens over time as the pandemic progresses. Finally, we find a large heterogeneity of effects, but all regions and occupational groups studied show a statistically significant negative effect of the measures on the search intensity for apprenticeships.
    Keywords: COVID-19, Switzerland, stringency index, apprenticeship
    JEL: I20 J22
    Date: 2021–04
  8. By: Matteo Picchio (Dipartimento di Scienze Economiche e Sociali - Universita' Politecnica delle Marche); Mattia Filomena (Dipartimento di Scienze Economiche e Sociali - Universita' Politecnica delle Marche)
    Abstract: We present a meta-analysis on the debate about the "stepping stone vs. dead end'" hypothesis related to the causal effect of temporary jobs on future labour market performances. We select academic papers published on international peer-reviewed journals from 1990 until 2021. Among 78 observations from 64 articles, 32% support the hypothesis according to which temporary contracts are a port of entry into stable employment positions, 23% report ambiguous or mixed findings, and the remaining 45% provide evidence in favour of the dead end hypothesis. The results from meta-regressions suggest that the stepping stone effect is more likely to emerge when self-selectivity issues are dealt with, especially when using the timing-of-events approach. The studies focusing on temporary work agency jobs and casual/seasonal jobs detect more easily results in favour of the dead end hypothesis. Finally, in more recent years and when the unemployment rate is larger, the dead end hypothesis is more likely to prevail.
    Keywords: Meta-analysis, labour market, temporary jobs, stepping stones, dead ends
    JEL: J08 J41 J42 J81
    Date: 2021–05
  9. By: La Nauze, Andrea (University of Queensland); Severnini, Edson R. (Carnegie Mellon University)
    Abstract: We exploit novel data from brain-training games to examine the impacts of air pollution on a comprehensive set of cognitive skills of adults. We find that exposure to particulate matter (PM2.5) impairs adult cognitive function, and that these effects are largest for those in prime working age. These results confirm a hypothesized mechanism for the impacts of air pollution on productivity. We also find that the cognitive effects are largest for new tasks and for those with low ability, suggesting that air pollution increases inequality in workforce productivity.
    Keywords: air pollution, particulate matter, cognition, cognitive skills
    JEL: Q53 J24 I14 I24
    Date: 2021–05
  10. By: Sanchez, Alan (Group for the Analysis od Development (GRADE)); Favara, Marta (University of Oxford); Porter, Catherine (Lancaster University)
    Abstract: In the last two decades, access to higher education has increased substantially in Latin America. The quantity of new programs available has created concerns about education quality, which has implications for the labor market. We use rich longitudinal data from a Peruvian cohort tracked from ages 8 to 26 (the Young Lives study) to analyze the profile of students enrolled in different 'types' of higher education, and to explore the returns to higher education before and during the COVID-19 crisis. We find evidence of stratification at higher education level: (a) students from the wealthiest households tend to enroll in universities (as opposed to technical institutes), and choose majors and institutions with the highest income rewards; (b) students with higher levels of cognitive skills and socio-emotional competencies tend to attend better quality universities; (c) there are hidden gender gaps: females are more likely to enroll in majors that are the least rewarded in the labor market. In the 2020 labor market, by age 26 we find that: (d) pre-COVID, positive returns to higher education are only observable for those that attended better quality universities; (e) during the pandemic, higher education became a protective factor, with the income premium being higher for everyone that attended this education level; (f) the male income premium doubled during the pandemic.
    Keywords: higher education, returns to higher education, COVID-19, Young Lives, Peru
    JEL: I2 I23 I26
    Date: 2021–04
  11. By: Azmat, Ghazala (Sciences Po, Paris); Kaufmann, Katja Maria (University of Mannheim)
    Abstract: We exploit a large exogenous shock to study the determinants of college attendance and the role played by one's environment. We analyze whether, and how quickly, adolescents' college plans are adapted, explore factors leading to the adjustment, and examine how these factors ultimately impact later educational attainment. Using differences across East German cohorts induced by the timing of the German Reunification (a change for the East from state socialism to capitalist democracy), we show that shortly after relative to before that time, college plans among high-school students increased substantially, which was followed by sizable increases in the completion of the college entrance certificate five years later. Our analysis sheds light on the elasticity of beliefs and preferences of different cohorts of youths in the case of a large shock. Perceived educational returns, economic preferences ("consumerism") and sociopolitical attitudes ("individualism") adapt quickly in response to the shock and are directly linked to changes in plans and outcomes. Cohorts closer to critical educational junctions at the time of Reunification, however, adjusted their plans to a much lesser extent. While they similarly updated the expected returns to education, they exhibited a slower adjustment in their preferences relative to younger cohorts.
    Keywords: college plans, perceived returns, economic, social and political preferences
    JEL: I21 D72 D91
    Date: 2021–05
  12. By: Ozgen, Ceren (University of Birmingham)
    Abstract: The empirical evidence on the economic impacts of diversity is mixed. Many studies in the literature present context dependent and data driven results which are challenging to reconcile with each other. This paper offers a systematic synthesis of the empirical findings on the economic impacts of diversity on innovation, productivity, and the labour market. It presents a structured framework which takes the spatial scale of the analysis in the papers as a reference to understand the inconsistency of some previous predictions and the varying magnitudes of the diversity impact. The empirical findings reconcile more meaningfully when diversity effects are documented discretely at the regional, firm and individual levels. The paper further sets out an agenda for future research and links the findings for policy relevance.
    Keywords: innovation, cultural diversity, migration, knowledge production function
    JEL: J24 J15 F22 O15
    Date: 2021–04
  13. By: Gibbs, Michael (University of Chicago); Mengel, Friederike (University of Essex); Siemroth, Christoph (University of Mannheim)
    Abstract: Using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company, we compare productivity before and during the work from home [WFH] period of the Covid-19 pandemic. Total hours worked increased by roughly 30%, including a rise of 18% in working after normal business hours. Average output did not significantly change. Therefore, productivity fell by about 20%. Time spent on coordination activities and meetings increased, but uninterrupted work hours shrank considerably. Employees also spent less time networking, and received less coaching and 1:1 meetings with supervisors. These findings suggest that communication and coordination costs increased substantially during WFH, and constituted an important source of the decline in productivity. Employees with children living at home increased hours worked more than those without children at home, and suffered a bigger decline in productivity than those without children.
    Keywords: collaboration, COVID-19, pandemic, productivity, remote working, telecommuting, working from home, work hours, work time
    JEL: D2 M5
    Date: 2021–04
  14. By: Hamermesh, Daniel S. (Barnard College); Myck, Michal (Centre for Economic Analysis, CenEA); Oczkowska, Monika (Centre for Economic Analysis, CenEA)
    Abstract: By age 77 a plurality of women in wealthy Western societies are widows. Comparing older (aged 70+) married women to widows in the American Time Use Survey 2003-18 and linking the data to the Current Population Survey allow inferring the short- and longer-term effects of an arguably exogenous shock—husband’s death—and measuring the paths of adjustment of time use to it. Widows differ from otherwise similar married women, especially from married women with working husbands, by cutting back on home production, mainly food preparation and housework, mostly by engaging in less of it each day, not doing it less frequently. French, Italian, German, and Dutch widows behave similarly. Widows are alone for 2/3 of the time they had spent with their spouses, with a small increase in time with friends and relatives shortly after becoming widowed. Evidence from the European countries shows that widows feel less time stress than married women but are also less satisfied with their lives. Following older women in 18 European countries before and after a partner’s death shows that widowhood reduces their feelings of time pressure. U.S. longitudinal data demonstrate that it increases feelings of depression. Most of the adjustment of time use in response to widowhood occurs within one year of the husband’s death; but feelings of reduced time pressure and of depression persist much longer.
    Keywords: time use, marital status, time stress, life satisfaction, depression
    JEL: J22 J14 I31
    Date: 2021–04
  15. By: Mario Pianta (Scuola Normale Superiore, Florence); Andrea Coveri (Department of Economics, Society & Politics, Università di Urbino Carlo Bo); Jelena Reljic (Sapienza Università di Roma)
    Abstract: The Sectoral Innovation Database (SID) has been developed at the University of Urbino over the last 20 years and combines several major sources of industry-level data, shedding light on the dynamics of structural change, the nature and impact of innovation, the internationalisation of production, the evolution of the quantity and quality of employment, income distribution patterns and the role of digitalization. The database covers six major European countries – France, Germany, Italy, the Netherlands, Spain and the United Kingdom (representing 75% of EU28’s GDP) – from 1994 to 2016, considering six time periods corresponding to upswings and downswings of business cycles. The first version of the SID provides data for 21 manufacturing and 17 service sectors for two-digit NACE Rev. 1 classes. As statistical surveys have moved to the twodigit NACE Rev. 2 classification, a second version of the Sectoral Innovation Database was produced, providing data for 18 manufacturing and 23 service sectors for two-digit NACE Rev. 2 classes. Major sources of data include the Community Innovation Surveys provided by Eurostat, the OECD’s STAN database, the WIOD database, the Eurostat’s EU Labour Force Surveys, and the EU KLEMS data on digitalization. The integrated information provided by the Sectoral Innovation Database offers a comprehensive view of industries’ dynamics in Europe and allows for an in-depth investigation of key research questions related to technological change, economic performance, international production, income distribution and employment.
    Keywords: Innovation, Industries, Databases, Demand, Offshoring, Labour market
    JEL: F15 J31 J51 L16 O33
    Date: 2021
  16. By: Gries, Thomas (University of Paderborn); Naudé, Wim (University College Cork)
    Abstract: In "The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment," Acemoglu and Restrepo (2018b) combine the task-based model of the labor market with an endogenous growth model to model the economic consequences of artificial intelligence (AI). This paper provides an alternative endogenous growth model that addresses two shortcomings of their model. First, we replace the assumption of a representative household with the premise of two groups of households with different preferences. This allows our model to be demand constrained and able to model the consequences of higher income inequality due to AI. Second, we model AI as providing abilities, arguing that "abilities" better characterises the nature of the services that AI provide, rather than tasks or skills. The dynamics of the model regarding the impact of AI on jobs, inequality, wages, labor productivity and long-run GDP growth are explored.
    Keywords: technology, artificial intelligence, productivity, labor demand, income distribution, growth theory
    JEL: O47 O33 J24 E21 E25
    Date: 2021–04
  17. By: Yuki, Kazuhiro
    Abstract: Mechanization (or automation) has proceeded continuously since the Industrial Revolution and seems to have accelerated recently due to the rapid advancement of information technology. This paper theoretically examines long-run trends of mechanization, shifts of tasks humans perform, and earnings levels and inequality. Specifically, the paper develops a Ricardian model of task assignment and analyzes how improvements of productivities of machines and an increase in the relative supply of skilled workers affect task assignment (which factor performs which task), earnings levels and inequality, and aggregate output. The model succeeds in capturing the great majority of the long-run trends. The paper also explores possible future trends of the variables when information technology continues to grow rapidly.
    Keywords: mechanization, automation, task assignment, earnings inequality, information technology
    JEL: J24 J31 N30 O14 O33
    Date: 2021–05
  18. By: Kajari Saha (Indira Gandhi Institute of Development Research)
    Abstract: This study provides new evidence on the debate surrounding international trade and the gender wage gap in a developing country context. It asks whether increased competition from trade has any causal effect on the district-level gender wage gap in India. Changes in competition from trade are measured using changes in imports from China, owing to the dramatic rise in Chinese imports into India in recent years. An instrumental variable (IV) based estimation strategy is used following Autor, Dorn, and anson (2016), to delineate causality. Results indicate a positive and statistically significant impact of an increase in Chinese imports on the gender wage gap over time. In addition to the economy-wide ample of workers, this effect holds true for the sub-samples of casual laborers and rural sector workers where the majority of women workers in India are concentrated. Unlike previous studies using industry-level data, the district-level focus of this study allows us to capture micro-level effects, as well as the net effects of trade in the surrounding district.
    Keywords: International trade, Gender wage gap, Competition, Imports, China, District
    JEL: F16 D63 J16 J31
    Date: 2021–04
  19. By: Luis Fernando Gamboa, Jaime Millan-Quijano
    Abstract: This paper provides new evidence on the importance of short-run liquidity constraints in a tuition-free post- secondary education setting. We exploit two sources of exogenous variation in enrollment in free tertiary education to disentangle the role played by liquidity constraints, and show that eligibility for financial aid increases enrollment by 11.9 percentage points. We show that individuals with larger returns to education are more affected by the availability of grants. In contrast, when variation in enrollment is not derived from changes in the relative cost of education, compliers to such variation are not necessarily individuals with large returns to education. Our results support the hypothesis that low-income youths encounter liquidity constraints, even when entering free tertiary education.
    Keywords: Liquidity constraints, tertiary education, regression discontinuity.
    JEL: I26 C36 J21
    Date: 2021–05

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.