nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2021‒08‒23
29 papers chosen by
Joseph Marchand
University of Alberta

  1. The Decline of Drudgery and the Paradox of Hard Work By Brendan Epstein; Miles S. Kimball
  2. Labor Market Returns and the Evolution of Cognitive Skills: Theory and Evidence By Santiago Hermo; Miika M. Päällysaho; David G. Seim; Jesse M. Shapiro
  3. Career Effects of Mental Health By Barbara Biasi; Michael S. Dahl; Petra Moser
  4. Task-Based Discrimination By Erik Hurst; Yona Rubinstein; Kazuatsu Shimizu
  5. The Impact of Covid-19 on Older Workers' Employment and Social Security Spillovers By Gopi Shah Goda; Emilie Jackson; Lauren Hersch Nicholas; Sarah See Stith
  6. Dual Returns to Experience By Garcia-Louzao, Jose; Hospido, Laura; Ruggieri, Alessandro
  7. Internal Labor Markets: A Worker Flow Approach By Huitfeld, Ingrid; Kostol, Andreas Ravndal; Nimczik, Jan Sebastian; Weber, Andrea
  8. Long-Term Consequences of Teaching Gender Roles: Evidence from Desegregating Industrial Arts and Home Economics in Japan By Hara, Hiromi; Rodríguez-Planas, Núria
  9. Systemic Discrimination Among Large U.S. Employers By Patrick M. Kline; Evan K. Rose; Christopher R. Walters
  10. Costly Mistakes: Why and When Spelling Errors in Resumes Jeopardise Interview Chances By Sterkens, Philippe; Caers, Ralf; De Couck, Marijke; Geamanu, Michael; Van Driessche, Victor; Baert, Stijn
  11. Obedience in the Labor Market and Social Mobility: A Socio-Economic Approach By Daron Acemoglu
  12. The Labor Market Earnings of Veterans: Is Military Experience More or Less Valuable than Civilian Experience? By Makridis, Christos A.; Hirsch, Barry
  13. The Big Five Personality Traits and Earnings: A Meta-Analysis By Alderotti, Giammarco; Rapallini, Chiara; Traverso, Silvio
  14. Estimating Time Preferences for Leisure By Bigoni, Maria; Dragone, Davide; Luchini, Stéphane; Prati, Alberto
  15. Preference Signaling and Worker-Firm Matching: Evidence from Interview Auctions By Laschever, Ron A.; Weinstein, Russell
  16. Return on Student Loans in Canada By Lance Lochner; Qian Liu; Martin Gervais
  17. When Is Tinkering with Safety Net Programs Harmful to Beneficiaries? By Jeffrey Clemens; Michael J. Wither
  18. The long shadow of an infection: COVID-19 and performance at work By Fischer, Kai; Reade, J. James; Schmal, W. Benedikt
  19. The Making of Social Democracy: The Economic and Electoral Consequences of Norway's 1936 Folk School Reform By Acemoglu, Daron; Pekkarinen, Tuomas; Salvanes, Kjell G.; Sarvimäki, Matti
  20. The Structure and Incentives of a COVID related Emergency Wage Subsidy By Jules Linden; Cathal O'Donoghue; Denisa M. Sologon
  21. Welfare versus Work under a Negative Income Tax: Evidence from the Gary, Seattle, Denver and Manitoba Income Maintenance Experiments By Riddell, Chris; Riddell, W. Craig
  22. The Impact of Public Transportation and Commuting on Urban Labour Markets: Evidence from the New Survey of London Life and Labour, 1929-32 By Seltzer, Andrew; Wadsworth, Jonathan
  23. The UK Productivity Shortfall in an Era of Rising Labour Supply By Benito, Andrew; Young, Garry
  24. Retirement and Health Outcomes in a Meta-Analytical Framework By Filomena, Mattia; Picchio, Matteo
  25. Teacher Compensation and Structural Inequality: Evidence from Centralized Teacher School Choice in Peru By Matteo Bobba; Tim Ederer; Gianmarco Leon-Ciliotta; Christopher Neilson; Marco G. Nieddu
  26. Economic Effects of the COVID-19 Pandemic on Entrepreneurship and Small Businesses By Belitski, Maksim; Guenther, Christina; Kritikos, Alexander S.; Thurik, Roy
  27. Job Polarization and the Flattening of the Price Phillips Curve By Siena Daniele,; Zago Riccardo.
  28. The contribution of business dynamics to productivity growth in the Netherlands By Daan Freeman; Leon Bettendorf; Harro van Heuvelen; Gerdien Meijerink
  29. How the Past of Outsourcing and Offshoring is the Future of Post-Pandemic Remote Work: A Typology, a Model, and a Review By Erickson, Christopher; Norlander, Peter

  1. By: Brendan Epstein; Miles S. Kimball
    Abstract: We develop a theory that focuses on the general equilibrium and long-run macroeconomic consequences of trends in job utility—the process benefits and costs of work. Given secular increases in job utility, work hours per population can remain approximately constant over time even if the income effect of higher wages on labor supply exceeds the substitution effect. In addition, secular improvements in job utility can be substantial relative to welfare gains from ordinary technological progress. These two implications are connected by an equation flowing from optimal hours choices: improvements in job utility that have a significant effect on labor supply tend to have large welfare effects.
    JEL: J22 J24 J28 J31 O4
    Date: 2021–07
  2. By: Santiago Hermo; Miika M. Päällysaho; David G. Seim; Jesse M. Shapiro
    Abstract: A large literature in cognitive science studies the puzzling "Flynn effect" of rising fluid intelligence (reasoning skill) in rich countries. We develop an economic model in which a cohort's mix of skills is determined by different skills' relative returns in the labor market and by the technology for producing skills. We estimate the model using administrative data from Sweden. Combining data from exams taken at military enlistment with earnings records from the tax register, we document an increase in the relative labor market return to logical reasoning skill as compared to vocabulary knowledge. The estimated model implies that changes in labor market returns explain 36 percent of the measured increase in reasoning skill, and can also explain the decline in knowledge. An original survey of parents, an analysis of trends in school curricula, and an analysis of occupational characteristics show evidence of increasing emphasis on reasoning as compared to knowledge.
    JEL: J24 J31 O52
    Date: 2021–08
  3. By: Barbara Biasi; Michael S. Dahl; Petra Moser
    Abstract: This paper investigates the career effects of mental health, focusing on depression, schizophrenia, and bipolar disorder (BD). Individual-level registry data from Denmark show that these disorders carry large earnings penalties, ranging from 34 percent for depression and 38 percent for BD to 74 percent for schizophrenia. To investigate the causal effects of mental health on a person’s career, we exploit the approval of lithium as a maintenance treatment for BD in 1976. Baseline estimates compare career outcomes for people with and without access in their 20s, the typical age of onset for BD. These estimates show that access to treatment eliminates one third of the earnings penalty associated with BD and greatly reduces the risks of low or no earnings. Importantly, access to treatment closes more than half of the disability risk associated with BD.
    JEL: I12 J23 J24 O31
    Date: 2021–07
  4. By: Erik Hurst; Yona Rubinstein; Kazuatsu Shimizu
    Abstract: Why did the Black-White wage gap converge from 1960 to 1980 and why has it stagnated since? To answer this question, we introduce a unified model that integrates notions of both taste-based and statistical discrimination into a task-based model of occupational sorting. At the heart of our framework is the idea that discrimination varies by the task requirement of each job. We use this framework to identify and quantify the role of trends in race-specific factors and changing task prices in explaining the evolution of the Black-White wage gap since 1960. In doing so, we highlight a new task measure - Contact tasks – which measures the extent to which individuals interact with others as part of their job. We provide evidence that changes in the racial gap in Contact tasks serves as a good proxy for changes in taste-based discrimination over time. We find that taste-based discrimination has fallen and racial skill gaps have narrowed over the last sixty years in the United States. However, since the 1980s, the effect of declining racial skill gaps and discrimination on the Black-White wage gap were offset by the increasing returns to Abstract tasks which, on average, favored White workers relative to Black workers.
    JEL: J24 J7
    Date: 2021–07
  5. By: Gopi Shah Goda; Emilie Jackson; Lauren Hersch Nicholas; Sarah See Stith
    Abstract: The COVID-19 pandemic and associated mitigation strategies exacted a large economic toll on large portions of the United States population. For older and disabled workers, the effects could be more persistent and fiscally costly than the impacts experienced by young, healthy workers due to the spillovers onto Social Security. We use Current Population Survey, Social Security administrative data on applications for retirement and disability benefits, and Google Trends data to assess the impact of COVID-19 on older adults age 50-70. We find that employment for this group dropped substantially more than would have been predicted prior to the pandemic: employment for 50-61 year olds was 5.7 pp (8.3 percent) lower, while employment for 62-70-year- olds was 3.9 pp (10.7 percent) lower. For people aged 50-61, unemployment and labor force exits due to reasons other than disability and retirement represented 63 and 30 percent of the employment decline, respectively. For those aged 62-70, the two largest components of the reduction were unemployment (50 percent) and retirement-driven labor force exits (30 percent). We find evidence of declines in reporting a labor force exit due to disability (4-5 percent), applications for disability insurance (15 percent), and Google search intensity for disability (7 percent). Retirement benefit claiming remains largely unchanged overall, though we find evidence that applicants substituted towards filing for benefits via the internet. We explore potential mechanisms and find evidence for both supply- and demand-side explanations.
    JEL: H53 H55 J22 J23 J26
    Date: 2021–07
  6. By: Garcia-Louzao, Jose (Bank of Lithuania); Hospido, Laura (Bank of Spain); Ruggieri, Alessandro (University of Nottingham)
    Abstract: In this paper we study human capital accumulation and wage trajectories of young workers in a dual labor market. Using rich administrative data for Spain, we follow workers since labor market entry to measure experience accumulated under different contractual arrangements and relate it to current wages. We show that returns to experience accumulated in fixed-term contracts are, on average, lower than the returns to experience acquired in permanent jobs. However, this gap masks significant heterogeneity across individuals. The gap in returns widens along the skill distribution, where workers in the upper tail have the largest difference in returns. Moreover, among equally experienced workers, higher incidence of temporary employment in the past is associated with substantially lower wages. Ultimately, heterogeneous returns to experience translate into significant changes in the position of workers along the distribution of wage growth after 15 years in the labor market, bearing implications for life-cycle wage inequality.
    Keywords: human capital, labor market duality, earnings dynamics
    JEL: J30 J41 J63
    Date: 2021–07
  7. By: Huitfeld, Ingrid (Statistics Norway); Kostol, Andreas Ravndal (Arizona State University); Nimczik, Jan Sebastian (European School of Management and Technology (ESMT)); Weber, Andrea (Central European University)
    Abstract: This paper develops a new method to study how workers’ career and wage profiles are shaped by internal labor markets (ILM) and job hierarchies in firms. Our paper tackles the conceptual challenge of organizing jobs within firms into hierarchy levels by proposing a data-driven ranking method based on observed worker flows between occupations within firms. We apply our method to linked employer-employee data from Norway that records fine-grained occupational codes and tracks contract changes within firms. Our findings confirm existing evidence that is primarily based on case studies for single firms. We expand on this by documenting substantial heterogeneity in the structure and hierarchy of ILMs across a broad range of large firms. Our findings on wage and promotion dynamics in ILMs are consistent with models of careers in organizations.
    Keywords: internal labor markets, organization of labor, wage setting
    JEL: J31 J62 M5
    Date: 2021–08
  8. By: Hara, Hiromi (Japan Women's University); Rodríguez-Planas, Núria (Queens College, CUNY)
    Abstract: We explore whether a 1990 Japanese educational reform that eliminated gender-segregated and gender-stereotyped industrial arts and home economics classes in junior high schools led to behavioral changes among these students some two decades later when they were married and in their early forties. Using a Regression Discontinuity (RD) design and Japanese time-use data from 2016, we find that the reform had a direct impact on Japanese women's attachment to the labor force, which seems to have changed the distribution of gender roles within the household, as we observe both a direct effect of the reform on women spending more time in traditionally male tasks during the weekend and an indirect effect on their husbands, who spend more time in traditionally female tasks. We present suggestive evidence that women's stronger attachment to the labor force may have been driven by changes in beliefs regarding men' and women's gender roles. As for men, the reform only had a direct impact on their weekend home production if they were younger than their wives and had small children. In such relationships, the reform also had the indirect effect of reducing their wives' time spent in weekend home production without increasing their labor-market attachment. Interestingly, the reform increased fertility only when it decreased wives' childcare. Otherwise, the reform delayed fertility.
    Keywords: junior high school, coeducation of industrial arts and home economics, gender gaps, time-use data, employment and labor income, and fertility
    JEL: J22 J24 I2
    Date: 2021–07
  9. By: Patrick M. Kline; Evan K. Rose; Christopher R. Walters
    Abstract: We study the results of a massive nationwide correspondence experiment sending more than 83,000 fictitious applications with randomized characteristics to geographically dispersed jobs posted by 108 of the largest U.S. employers. Distinctively Black names reduce the probability of employer contact by 2.1 percentage points relative to distinctively white names. The magnitude of this racial gap in contact rates differs substantially across firms, exhibiting a between-company standard deviation of 1.9 percentage points. Despite an insignificant average gap in contact rates between male and female applicants, we find a between-company standard deviation in gender contact gaps of 2.7 percentage points, revealing that some firms favor male applicants while others favor women. Company-specific racial contact gaps are temporally and spatially persistent, and negatively correlated with firm profitability, federal contractor status, and a measure of recruiting centralization. Discrimination exhibits little geographical dispersion, but two digit industry explains roughly half of the cross-firm variation in both racial and gender contact gaps. Contact gaps are highly concentrated in particular companies, with firms in the top quintile of racial discrimination responsible for nearly half of lost contacts to Black applicants in the experiment. Controlling false discovery rates to the 5% level, 23 individual companies are found to discriminate against Black applicants. Our findings establish that systemic illegal discrimination is concentrated among a select set of large employers, many of which can be identified with high confidence using large scale inference methods.
    JEL: C11 C9 C93 J7 J71 J78 K31 K42
    Date: 2021–07
  10. By: Sterkens, Philippe (Ghent University); Caers, Ralf (KU Leuven); De Couck, Marijke (Free University of Brussels); Geamanu, Michael (Ghent University); Van Driessche, Victor (Ghent University); Baert, Stijn (Ghent University)
    Abstract: Earlier research has associated spelling errors in resumes with reduced hiring chances. However, the analysis of hiring penalties due to spelling errors has thus far been restricted to white-collar occupations and relatively high numbers of errors per resume. Moreover, the mechanisms underlying the spelling error penalty have remained unclear. To fill these gaps in the peerreviewed literature, we conducted a scenario experiment with 445 genuine recruiters. Results show that, compared to error-free resumes, hiring penalties are being inflicted for both error-laden resumes (18.5 percent points lower interview probability) and resumes with fewer errors (7.3 percent points lower interview probability). Furthermore, we find substantial heterogeneity in penalties inflicted based on various applicant, job and participant characteristics. About half of the spelling error penalty can be explained by the perception that applicants who make spelling errors have lower interpersonal skills (9.0%), conscientiousness (12.1%) and mental abilities (32.2%).
    Keywords: resumes, signalling, hiring experiments, spelling errors
    JEL: C91 I21 J24
    Date: 2021–07
  11. By: Daron Acemoglu
    Abstract: This paper presents an analysis of what types of values, especially in regards to obedience vs. independence, families impart to their children and how these values interact with social mobility. In the model, obedience is a useful characteristic for employers, especially when wages are low, because independent workers require more incentives (when wages are high, these incentives are automatic). Hence, in low-wage environments, low-income families will impart values of obedience to their children to prevent disadvantaging them in the labor market. To the extent that independence is useful for entrepreneurial activities, this then depresses their social mobility. High-income and privileged parents, on the other hand, always impart values of independence, since they expect that their children can enter into higher-income entrepreneurial (or managerial) activities thanks to their family resources and privileges. I also discuss how political activity can be hampered when labor market incentives encourage greater obedience and how this can generate multiple steady states with different patterns of social hierarchy and mobility.
    JEL: A13 J31 J62 P16
    Date: 2021–08
  12. By: Makridis, Christos A. (Arizona State University); Hirsch, Barry (Georgia State University)
    Abstract: We assess the labor market experiences of military veterans, focusing on three major outcomes, among others, controlling for a wide array of demographic characteristics and industry and occupational fixed effects. First, we find that male and female veterans receive civilian earnings nearly equivalent to nonveteran men and women. This finding implies that military experience is valued in the labor market similarly to foregone civilian experience. Second, veterans are clustered in occupations with somewhat lower than average employment and real earnings growth, and in metropolitan areas with lower levels and growth of real GDP per capita. Third, veterans experience lower returns to formal educational investments (e.g., college) than do nonveterans. Veterans realize earnings gains from professional licenses, but their returns are lower than for nonveterans. These gains are concentrated among science, technology, engineering, and math (STEM) jobs, suggesting that veterans could help meet the growing demand for tech talent and artificial intelligence skills.
    Keywords: military veterans, earnings levels and dispersion, work experience, licensing, public sector, occupation growth
    JEL: J3 J4 J44
    Date: 2021–08
  13. By: Alderotti, Giammarco; Rapallini, Chiara; Traverso, Silvio
    Abstract: The past two decades have witnessed an increasing interest in the relationship between personality and labor market outcomes, as well as the emergence of the Five-Factor Model as the reference framework for the study of personality. In this paper, we provide the first meta-analytical review of the empirical literature on the association between personal earnings and the Big Five personality traits. The analysis combines the results of 63 peer-reviewed articles published between 2001-2020, from which we retrieved 896 partial effect sizes. Overall, the primary literature provides robust support for a positive association between personal earnings and the traits of Openness, Conscientiousness, and Extraversion, while simultaneously revealing a negative and significant association between earnings and the traits of Agreeableness and Neuroticism. We find no evidence of a substantial publication bias. Meta-regression estimates suggest that Openness and Conscientiousness are positively associated with earnings even when primary researchers control for individual cognitive abilities and educational attainments. Similarly, the studies that includes labor market control variables exhibit weaker associations between earnings and Extraversion and Agreeableness. The results of the primary studies seem unaffected by the time at which the Big Five are measured, as well as by the scale and number of inventory items. Meta-regression estimates suggest that the results of the primary literature are not stable across cultures and gender, and that the ranking and academic field of the journal matter.
    Keywords: Big Five personality traits,earnings,meta-analysis
    JEL: J24 D91
    Date: 2021
  14. By: Bigoni, Maria (University of Bologna); Dragone, Davide (University of Bologna); Luchini, Stéphane (Aix-Marseille University); Prati, Alberto (Aix-Marseille University)
    Abstract: We study time preferences by means of a longitudinal lab experiment involving both monetary and non-monetary rewards (leisure). Our novel design allows to measure whether participants prefer to anticipate or delay gratification, without imposing any structural assumption on the instantaneous utility, intertemporal utility or the discounting functions. We find that most people prefer to anticipate monetary rewards (positive time preferences for money), but they delay non-monetary rewards (negative time preferences for leisure). These results cannot be explained by personal timetables and heterogeneous preferences only. They invite to reconsider the psychological interpretation of the discount factor, and suggest that the assumption that discounting is consistent across domains can lead to non-negligible prediction errors in models involving non-monetary decisions, such as labor supply models.
    Keywords: consistency across domains, negative discounting, laboratory experiment, non-monetary rewards
    JEL: C91 D01 D91 J22
    Date: 2021–07
  15. By: Laschever, Ron A. (Compass Lexecon); Weinstein, Russell (University of Illinois at Urbana-Champaign)
    Abstract: We study whether there are improvements in worker-firm matching when employers and applicants can credibly signal their interest in a match. Using a detailed résumé dataset of more than 400 applicants from one university over five years, we analyze a matching process in which firms fill some of their inter- view slots by invitation and the remainder are filled by an auction. Consistent with the predictions of a signaling model, we find the auction is valuable for less desirable firms trying to hire high desirability applicants. Second, we find evidence that is consistent with the auction benefiting overlooked applicants. Candidates who are less likely to be invited for an interview (e.g., non-U.S. citizens) are hired after having the opportunity to interview through the auction. Among hires, these candidates are more represented among auction winners than invited interviewees, and this difference is more pronounced at more desirable firms. Finally, counterfactual analysis shows the auction increases the number and quality of hires for less desirable firms, and total hires in the market.
    Keywords: labor markets, signaling, hiring, interview, matching
    JEL: J20 M51 D83
    Date: 2021–07
  16. By: Lance Lochner; Qian Liu; Martin Gervais
    Abstract: This paper uses new administrative data with detailed borrower information and lengthy repayment histories from the Canada Student Loans Program (CSLP) to measure rates of return on undergraduate student loans. We document substantial heterogeneity in returns based on information available at the time loans were disbursed, including province of residence, field of study, and institution of attendance. Field of study is a particularly important determinant of rates of return, explaining 22% of the variation in predicted returns across borrowers. We explore the implications of this variation for CSLP cross-subsidization across borrowers and potential risk-based loan limits. Given the variation in ex ante predicted returns across borrowers, using all available information at the time of loan disbursement, we study the implications of potential cream-skimming of high-return borrowers by private lenders.
    JEL: D14 H52 H81 I22 I28 J24
    Date: 2021–08
  17. By: Jeffrey Clemens; Michael J. Wither
    Abstract: Interactions between redistributive policies can confront low-income households with complicated choices. We study one such interaction, namely the relationship between Medicaid eligibility thresholds and the minimum wage. A minimum wage increase reduces the number of hours a low-skilled individual can work while retaining Medicaid eligibility. We show that the empirical and welfare implications of this interaction can depend crucially on the relevance of labor market frictions. Absent frictions, affected workers may maintain Medicaid eligibility through small reductions in hours of work. With frictions, affected workers may lose Medicaid eligibility unless they leave their initial job. Empirically, we find that workers facing this scenario became less likely to participate in Medicaid, less likely to work, and more likely to spend time looking for new jobs, including search while employed. The observed outcomes suggest that low-skilled workers face substantial labor market frictions. Because adjustment is costly, tinkering with safety net program parameters that determine the location of program eligibility notches can be harmful to beneficiaries.
    JEL: H75 I38
    Date: 2021–07
  18. By: Fischer, Kai; Reade, J. James; Schmal, W. Benedikt
    Abstract: The COVID-19 pandemic has caused economic shock waves across the globe. Much research addresses direct health implications of an infection, but to date little is known about how this shapes lasting economic effects. This paper estimates the workplace productivity effects of COVID-19 by studying performance of soccer players after an infection. We construct a dataset that encompasses all traceable infections in the elite leagues of Germany and Italy. Relying on a staggered difference-in-differences design, we identify negative short- and longer-run performance effects. Relative to their preinfection outcomes, infected players' performance temporarily drops by more than 6%. Over half a year later, it is still around 5% lower. The negative effects appear to have notable spillovers on team performance. We argue that our results could have important implications for labor markets and public health in general. Countries and firms with more infections might face economic disadvantages that exceed the temporary pandemic shock due to potentially long-lasting reductions in productivity.
    Keywords: Labor Performance,Economic Costs of COVID-19,Public Health
    JEL: I18 J24 J44
    Date: 2021
  19. By: Acemoglu, Daron (MIT); Pekkarinen, Tuomas (VATT, Helsinki); Salvanes, Kjell G. (Norwegian School of Economics); Sarvimäki, Matti (Aalto University)
    Abstract: Upon assuming power for the first time in 1935, the Norwegian Labour Party delivered on its promise for a major schooling reform. The reform raised minimum instruction time in less developed rural areas and boosted the resources available to rural schools, reducing class size and increasing teacher salaries. We document that cohorts more intensively affected by the reform significantly increased their education and experienced higher labor income. Our main result is that the schooling reform also substantially increased support for the Norwegian Labour Party in subsequent elections. This additional support persisted for several decades and was pivotal in maintaining support for the social democratic coalition in Norway. These results are not driven by the direct impact of education and are not explained by higher turnout, or greater attention or resources from the Labour Party targeted towards the municipalities most affected by the reform. Rather, our evidence suggests that cohorts that benefited from the schooling reform, and their parents, rewarded the party for delivering a major reform that was beneficial to them.
    Keywords: education, human capital, schooling reform, labor, voting, social democracy
    JEL: P16 I28 J26
    Date: 2021–07
  20. By: Jules Linden; Cathal O'Donoghue; Denisa M. Sologon
    Abstract: During recent crisis, wage subsidies played a major role in sheltering firms and households from economic shocks. During COVID-19, most workers were affected and many liberal welfare states introduced new temporary wage subsidies to protected workers' earnings and employment (OECD, 2021). New wage subsidies marked a departure from the structure of traditional income support payments and required reform. This paper uses simulated datasets to assess the structure and incentives of the Irish COVID-19 wage subsidy scheme (CWS) under five designs. We use a nowcasting approach to update 2017 microdata, producing a near real time picture of the labour market at the peak of the crisis. Using microsimulation modelling, we assess the impact of different designs on income replacement, work incentives and income inequality. Our findings suggest that pro rata designs support middle earners more and flat rate designs support low earners more. We find evidence for strong work disincentives under all designs, though flat rate designs perform better. Disincentives are primarily driven by generous unemployment payments and work related costs. The impact of design on income inequality depends on the generosity of payments. Earnings related pro rata designs were associated to higher market earnings inequality. The difference in inequality levels falls once benefits, taxes and work related costs are considered. In our discussion, we turn to transaction costs, the rationale for reform and reintegration of CWS. We find some support for the claim that design changes were motivated by political considerations. We suggest that establishing permanent wage subsidies based on sectorial turnover rules could offer enhanced protection to middle-and high-earners and reduce uncertainty, the need for reform, and the risk of politically motivated designs.
    Date: 2021–08
  21. By: Riddell, Chris (University of Waterloo); Riddell, W. Craig (University of British Columbia, Vancouver)
    Abstract: The Income Maintenance Experiments have received renewed attention due to growing international interest in a Basic Income. Proponents viewed a Negative Income Tax as a replacement for traditional welfare with stronger work incentives and reduced poverty. However, existing labor supply estimates for single parents are uniformly negative. We re-assess the experimental evidence and find randomization failure in two NITs (Gary and Seattle). In Denver and Manitoba, we find a positive labor supply response for those on welfare prior to random assignment. Our results provide strong evidence that a NIT can increase work activity among single parents on welfare.
    Keywords: negative income tax, welfare, income maintenance experiments, labour supply
    JEL: C9 I38 J2
    Date: 2021–07
  22. By: Seltzer, Andrew (Royal Holloway, University of London); Wadsworth, Jonathan (Royal Holloway, University of London)
    Abstract: This paper examines the consequences of the commuter transport revolution on working class labour markets in 1930s London. The ability to commute alleviated urban crowding and increased workers’ choice of potential employers. Using GIS-based data constructed from the New Survey of London Life and Labour, we examine the extent of commuting and estimate the earnings returns to commuting. We obtain a lower-bound estimate of two percent increase in earnings per kilometer travelled. We also show that commuting was an important contributor to improving quality of life in the early-twentieth century.
    Keywords: public transportation, New Survey of London Life and Labour, GIS, earnings
    JEL: N94 J39 N34
    Date: 2021–08
  23. By: Benito, Andrew (University of Warwick); Young, Garry (National Institute of Economic and Social Research (NIESR))
    Abstract: Labour productivity stagnated in the UK in the years between the financial crisis and the emergence of Covid-19. At the same time labour supply and employment grew strongly, driven primarily by net inward migration. While labour productivity should be independent of labour supplied in the long run, this need not be the case in the medium-run. Our evidence suggests that around one-fifth, or 4pp, of the 25 log point fall in productivity from its previous trend can be explained by increased labour supply, with idiosyncratic factors and a slowdown in TFP growth accounting for most of the shortfall.
    Keywords: productivity, labour supply, capital deepening
    JEL: J11 J21 D24
    Date: 2021–07
  24. By: Filomena, Mattia (Marche Polytechnic University); Picchio, Matteo (Università Politecnica delle Marche, Ancona)
    Abstract: This paper presents a meta-analysis on the effects of retirement on health. We select academic papers published between 2000 and 2021 studying the impact of retirement on physical and mental health, self-assessed general health, healthcare utilization and mortality. Among 275 observations from 85 articles, 28% (13%) find positive (negative) effects of retirement on health outcomes. Almost 60% of the observations do not provide statistically significant findings. Using meta-regression analysis, we checked for the presence of publication bias after distinguishing among different journal subject areas and, once correcting for it, we find that the average effect of retirement on health outcomes is small and barely significant. We apply model averaging techniques to explore possible sources of heterogeneity and our results suggest that the different estimated effects can be explained by the differences in both health measurements and retirement schemes.
    Keywords: retirement, health, meta-analysis, meta-regression, publication bias
    JEL: I10 J14 J26
    Date: 2021–07
  25. By: Matteo Bobba; Tim Ederer; Gianmarco Leon-Ciliotta; Christopher Neilson; Marco G. Nieddu
    Abstract: This paper studies how increasing teacher compensation at hard-to-staff schools can reduce inequality in access to qualified teachers. Leveraging an unconditional change in the teacher compensation structure in Peru, we first show causal evidence that increasing salaries at less desirable locations attracts better quality applicants and improves student test scores. We then estimate a model of teacher preferences over local amenities, school characteristics, and wages using geocoded job postings and rich application data from the nationwide centralized teacher assignment system. Our estimated model suggests that the current policy is helpful but both inefficient and not large enough to effectively undo the inequality of initial conditions that hard-to-staff schools and their communities face. Counterfactual analyses that incorporate equilibrium sorting effects characterize alternative wage schedules and quantify the cost of reducing structural inequality in the allocation of teacher talent across schools. Overall our results show that a policy that sets compensation at each job posting using the information generated by the matching platform is more efficient and can help reduce structural inequality in access to learning opportunities. In comparison, a rigid system that ignores teacher preferences will indirectly reinforce such inequalities.
    JEL: H52 I20 J3 J45 O15 R23 R58
    Date: 2021–07
  26. By: Belitski, Maksim (University of Reading); Guenther, Christina (WHU Vallendar); Kritikos, Alexander S. (DIW Berlin); Thurik, Roy (Erasmus University Rotterdam)
    Abstract: The existential threat to small businesses, based on their crucial role in the economy, is behind the plethora of scholarly studies in 2020, the first year of the COVID-19 pandemic. Examining the 14 contributions of the special issue on the "Economic Effects of the COVID-19 Pandemic on Entrepreneurship and Small Businesses," the paper comprises four parts: a systematic review of the literature on the effect on entrepreneurship and small businesses; a discussion of four literature strands based on this review; an overview of the contributions in this special issue; and some ideas for post-pandemic economic research.
    Keywords: small businesses, entrepreneurs, COVID-19, economic effects
    JEL: L26 J38 I18
    Date: 2021–08
  27. By: Siena Daniele,; Zago Riccardo.
    Abstract: This paper shows that the change in the occupational composition of the labor market in favour of non-routine jobs -i.e. job polarization- flattens the price Phillips Curve (PC). Using data from the European Monetary Union and exploiting the fact that job polarization accelerates during recessions, we obtain two results. First, countries experiencing a bigger shift in the occupational structure during a downturn exhibit a flatter PC afterward. Second, the occupational shifts experienced during the Great Recession and the Sovereign Debt Crisis explain up to a forth of the flattening of the curve in the 2002-2018 period. We reconcile this evidence through a New Keynesian model with unemployment and search and matching frictions. Heterogeneity in the fluidity across segments of the labor market -i.e. differences in the separation and hiring rate across jobs- is the source of PC flattening.
    Keywords: Phillips Curve, Job Polarization, Occupational Composition, Monetary Policy,Labor Market Fluidity.
    JEL: E31 E32 J21
    Date: 2021
  28. By: Daan Freeman (CPB Netherlands Bureau for Economic Policy Analysis); Leon Bettendorf (CPB Netherlands Bureau for Economic Policy Analysis); Harro van Heuvelen (CPB Netherlands Bureau for Economic Policy Analysis); Gerdien Meijerink (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: This paper analyses the declining firm dynamism in the Netherlands, which may explain part of the slowdown in productivity growth. We use a rich microdata set including nearly all corporations in the Netherlands during 2006-2016, which enables us to evaluate the TFP growth contributions of exiting firms, start-ups and new firms resulting from mergers & acquisitions in different industries. We use a Melitz and Polanec (2015) decomposition to assess TFP growth contributions. We find that in service industries, start-ups, new firms created by M&As and exiting firms all contribute to overall TFP growth, in line with the creative destruction hypothesis. In manufacturing industries, TFP growth is driven mostly by incumbent firms. Here, entry and exit dynamics contribute relatively little or even negatively to TFP growth. In addition, young firms in the manufacturing industries tend to have higher TFP growth than older firms, while in service industries this is not the case. Finally, in general, relatively low productivity entrants are more likely to exit in the first five years after entry, which is in line with an `up-or-out' dynamic.
    JEL: F16 J31 R11
    Date: 2021–08
  29. By: Erickson, Christopher; Norlander, Peter
    Abstract: Information and communication technology (ICT) challenges traditional assumptions about the capacity to manage workers beyond organizational and physical boundaries. A typology connects a variety of non-traditional work organizations made possible by ICT, including offshoring, outsourcing, remote work, virtual companies, and platforms. A model illustrates how new technology serves as a proximate cause for a revision of social contracts between capital, labor and government reached through bargaining, and how external shocks such as the COVID-19 pandemic, the institutional environment, and limitations in practice influence how technology changes the organization of work. An historical case illustrates the general features of the model, and a review of the outsourcing and offshoring literature provides instructive examples of how features of the model will potentially influence the future of post-pandemic remote work.
    Keywords: information and communication technology,institutional change,offshoring,outsourcing,remote work
    JEL: J60 J50 J44 J22 O30 R12
    Date: 2021

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