nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2021‒09‒20
sixteen papers chosen by
Joseph Marchand
University of Alberta

  1. Wage Differences According to Workers' Origin: The Role of Working More Upstream in GVCs By Fays, Valentine; Mahy, Benoît; Rycx, Francois
  2. The Employment and Redistributive Effects of Reducing or Eliminating Minimum Wage Tip Credits By David Neumark; Maysen Yen
  3. Between-Group Inequality May Decline despite a Rising Skill Premium By Aziz, Imran; Cortes, Guido Matias
  4. Should Farmers Farm More? Comparing Marginal Products within Malawian Households By Brummund, Peter; Merfeld, Joshua D.
  5. Employer Association in Italy. Trends and Economic Outcomes By Bernardo Fanfani; Claudio Lucifora; Daria Vigani
  6. 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 J.; Wadsworth, Jonathan
  7. Footsie, Yeah! Share Prices and Worker Wellbeing By Bryson, Alex; Clark, Andrew E.; Green, Colin P.
  8. Drivers of Participation Elasticities across Europe: Gender or Earner Role within the Household? By Charlotte Bartels; Cortnie Shupe
  9. The Labour Market Impact of COVID-19 Lockdowns: Evidence from Ghana By Schotte, Simone; Danquah, Michael; Osei, Robert; Sen, Kunal
  10. Student Employment and Education: A Meta-Analysis By Kroupova, Katerina; Havranek, Tomas; Irsova, Zuzana
  11. Autonomy and control in mass remote working during the Covid-19 pandemic. Evidence from a cross-professional and cross-national analysis By Marta Fana; Francesco Sabato Massimo; Angelo Moro
  12. The Legacies of the Soviet Influence in the 1950s: China's 156 Major Industrial Projects By Jin, Zhangfeng
  13. From He-Cession to She-Stimulus? The Labor Market Impact of Fiscal Policy Across Gender By Alica Ida Bonk; Laure Simon
  14. Economics of Marriage Bars By Mosca, Irene; Wright, Robert E.
  15. The Impact of Body Mass Index on Growth, Schooling, Productivity, and Savings: A Cross-Country Study By Tansel, Aysit; Öztürk, Ceyhan; Erdil, Erkan
  16. William J. Baumol: Innovative Contributor to Entrepreneurship Economics By Henrekson, Magnus; Stenkula, Mikael

  1. By: Fays, Valentine (University of Mons); Mahy, Benoît (University of Mons); Rycx, Francois (Free University of Brussels)
    Abstract: This paper is the first to investigate the role of firm-level upstreamness (i.e. the number of steps before the production of a firm meets final demand) in explaining wage differences according to workers' origin. Using unique linked employer-employee data relative to the Belgian manufacturing industry for the period 2002-2010, our estimates show that firms that are further up in the value chain pay significantly higher wages. However, the wage premium associated with upstreamness is also found to vary substantially depending on the origin of the workers. Unconditional quantile estimates suggest that those who benefit the most from being employed in more upstream firms are high-wage workers born in developed countries. In contrast, workers born in developing countries, irrespective of their earnings, appear to be unfairly rewarded. Quantile decompositions further show that, while differences in average values of upstreamness according to workers' origin play a limited role, differences in wage premia associated with upstreamness account for a substantial part of the wage gap between workers born in developed and developing countries, especially at the top of the earnings distribution. These results are shown to be robust to a number of sensitivity tests, including broader or narrower definitions of workers' wages and different firm environments in terms of technological and knowledge intensity.
    Keywords: wage gaps, workers’ origin, global value chains, upstreamness, unconditional quantile estimates and decompositions
    JEL: J15 J31 F16
    Date: 2021–08
  2. By: David Neumark; Maysen Yen
    Abstract: Recent policy debate on minimum wages has focused not only on raising the minimum wage, but on eliminating the tip credit for restaurant workers. We use data on past variation in tip credits – or minimum wages for restaurant workers – to provide evidence on the potential impacts of eliminating (or reducing) the tip credit. Our evidence points to higher tipped minimum wages (smaller tip credits) reducing jobs among tipped restaurant workers, without earnings effects on those who remain employed sufficiently large to raise total earnings in this sector. And most of our evidence provides no indication that higher tipped minimum wages would be well targeted to poor or low-income families or reduce the likelihood of being poor or very low income.
    JEL: J23 J38
    Date: 2021–09
  3. By: Aziz, Imran (Yorkville University); Cortes, Guido Matias (York University, Canada)
    Abstract: A vast literature aimed at understanding the nature and causes of wage inequality focuses on the skill premium as a key object of interest. In an environment where both the skill premium and the share of skilled workers are changing, however, the between-skill-group component of inequality may fall even as the skill premium rises – a pattern that is indeed observed in the U.S. and in many local labor markets during the 2010s. Understanding the evolution of the skill premium is therefore not always useful in terms of understanding why broad inequality measures are changing.
    Keywords: skill premium, skill-biased technical change, between-group inequality
    JEL: J31 J21 J24
    Date: 2021–08
  4. By: Brummund, Peter (University of Alabama); Merfeld, Joshua D. (KDI School of Public Policy and Management)
    Abstract: According to standard economic theory, households should equate the marginal revenue product of an input across activities within the household. However, this prediction may not hold in the presence of risk. Using data on farm plots and non-farm enterprises in Malawi, we examine the impact of risk on the allocation decisions of agricultural households as they allocate labor across farm and non-farm production. We control for many household and production characteristics, including household fixed effects, and find farm marginal revenue product of labor (MRPL) to be consistently higher than non-farm MRPL. These results hold when restricting estimation to periods of high and low non-farm labor allocation. These results are consistent with farm production being riskier than non-farm production for most households in Malawi. These findings suggest that improved access to insurance of farming activities and wage employment opportunities could increase total household income.
    Keywords: labor productivity, agriculture, non-farm production, risk, efficiency
    JEL: J24 J43 O13 Q12 R23
    Date: 2021–08
  5. By: Bernardo Fanfani; Claudio Lucifora (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Daria Vigani
    Abstract: This paper analyses the characteristics of employer association in Italy, using unique firm-level data with information on employers’ affiliation choices as well as their characteristics. We document that a persistent decline in affiliation rates to employers’ associations has occurred during the last two decades. We show that affiliated companies are positively selected, as they tend to be larger, older, more likely to be located in richer regions, to be export- and innovation-oriented, as well as more likely to provide training. Using longitudinal data and regression decomposition techniques, we show that more fragile and less innovative firms have been more affected by the persistent decline in affiliation rates. Using a firm fixed effect identification strategy, we also show that firms that become members of an employer association tend to experience a faster growth in employment, but there are no significant relationships with productivity dynamics. Finally, the paper analyses whether the level of representativeness of employers’ associations has any effect on bargaining outcomes concerning the level of minimum wages, which are settled by these organizations in national industry-wide collective contracts after a negotiation process with trade unions. Results from this analysis show that a higher representativeness of employers’ organizations has a weak positive relationship with the level of bargained wages.
    Keywords: industrial relations; employer association; collective bargaining; wage setting.
    JEL: J52 J31 J41
    Date: 2021–07
  6. By: Seltzer, Andrew J.; Wadsworth, Jonathan
    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 lowerbound estimate of two percent increase in earnings per kilometre travelled. We also show that commuting was an important contributor to improving quality of life in the early-twentieth century.
    Keywords: Commuting; public transport; labour markets; New Survey of London Life and Labour
    JEL: N34 N94 J31
    Date: 2021–09–01
  7. By: Bryson, Alex (University College London); Clark, Andrew E. (Paris School of Economics); Green, Colin P. (Norwegian University of Science and Technology (NTNU))
    Abstract: A small literature has shown that individual wellbeing varies with the price of company stock, but it is unclear whether this is due to wealth effects among those holding stock, or more general effects on sentiment, with individuals taking rising stock prices as an indicator of improvements in the economy. We contribute to this literature by using two data sets to establish the relationship between share prices on the one hand and worker wellbeing on the other. First, we use data on share price movements and employee stock holding in a single corporation and provide suggestive evidence that an increase in the firm's stock price increases the wellbeing of those who belong to its employee share purchase plan (ESPP), and that these effects are greatest among those making the largest monthly contributions to the program who have the most to gain (or lose) from stock price fluctuations. There is also some tentative evidence that the wellbeing effects of a rise in the share price are greatest among those with the largest shareholdings. We then use almost 30 years of British panel data to show that employee job satisfaction moves with share prices among those whose pay is partly determined by company fortunes. Taken together these results suggest that the well-being effects of share prices work at least partly via changes in wealth.
    Keywords: job satisfaction, wellbeing, share prices, share ownership, profit-sharing
    JEL: J28 J33 J54 J63 J81 M52
    Date: 2021–08
  8. By: Charlotte Bartels; Cortnie Shupe
    Abstract: We compute participation tax rates across the EU and find that work disincentives inherent in tax-benefit systems largely depend on household composition and the individual's earner role within the household. We then estimate participation elasticities using an IV group estimator that enables us to investigate the responsiveness of individuals to work incentives. We contribute to the literature on heterogeneous elasticities by providing estimates for breadwinners and secondary earners separately, according to their potential earnings rather than gender. Our results show an average participation elasticity of 0.0-0.1 among breadwinners and 0.1-0.4 among secondary earners in the EU as well as a high degree of heterogeneity across countries.
    Keywords: Participation elasticities, labor supply, taxation, cross-country comparisons
    JEL: H24 H31 J22 J65
    Date: 2021
  9. By: Schotte, Simone (UNU-WIDER); Danquah, Michael (UNU-WIDER); Osei, Robert (University of Ghana); Sen, Kunal (University of Manchester)
    Abstract: In this paper, we provide causal evidence of the immediate and near-term impact of stringent COVID-19 lockdown policies on employment outcomes, using Ghana as a case study. We take advantage of a specific policy setting, in which strict stay-at-home orders were issued and enforced in two spatially delimited areas, bringing Ghana's major metropolitan centres to a standstill, while in the rest of the country less stringent regulations were in place. Using a difference-in-differences design, we find that the three-week lockdown had a large and significant immediate negative impact on employment in the treated districts, particularly among workers in informal self-employment. While the gap in employment between the treated and control districts had narrowed four months after the lockdown was lifted, we detect a persistent nationwide decline in both earnings and employment, jeopardizing particularly the livelihoods of small business owners mainly operating in the informal economy.
    Keywords: COVID-19, lockdown, employment, informal economy, Ghana
    JEL: I18 J46 J63 O55
    Date: 2021–08
  10. By: Kroupova, Katerina; Havranek, Tomas; Irsova, Zuzana
    Abstract: Educational outcomes have many determinants, but one that most young people can readily control is choosing whether to work while in school. Sixty-nine studies have estimated the effect, but results vary from large negative to positive estimates. We show that the results are systematically driven by context, publication bias, and treatment of endogeneity. Studies ignoring endogeneity suffer from an upward bias, which is almost fully compensated by publication selection in favor of negative estimates. Net of the biases, the literature suggests a negative but economically inconsequential mean effect. The effect is more negative for high-intensity employment and educational outcomes measured as decisions to dropout, but it is positive in Germany. To derive these results we collect 861 previously reported estimates together with 32 variables reflecting estimation context, use recently developed nonlinear techniques to correct for publication bias, and employ Bayesian and frequentist model averaging to assign a pattern to the heterogeneity in the literature.
    Keywords: Student employment,educational outcomes,meta-analysis,publication bias,Bayesian model averaging
    JEL: C83 I21 J22
    Date: 2021
  11. By: Marta Fana; Francesco Sabato Massimo; Angelo Moro
    Abstract: The global pandemic induced by the spread of the Covid-19 acted as an exogenous shock which forced organisations to adopt telework as a daily and common form of work along a relevant fraction of the occupational structure. Indeed, most of the growing contributions on telework focused on the estimation of employment which can work remotely, while less or any attention has been paid to the impact of the ünewý work arrangement on the labour process. Our paper aims at filling this gap. Drawing from a real-time cross-professional, cross-organisational and cross- national qualitative survey, our research investigates two main and interrelated aspects. First, we show how organisations reacted to this shock in terms of autonomy and forms of control including standardisation and teamwork dimensions across different occupations and economic sectors. Second, we describe how and to which extent workers respond: adapting, resisting or appropriating the new organisation of work. More specifically, we study the effect on the above-mentioned dimensions across different occupations to highlight heterogeneity along the vertical division of labour.
    Keywords: Telework; Covid-19; Work organisation; Labour Process; Autonomy; Control.
    Date: 2021–09–08
  12. By: Jin, Zhangfeng
    Abstract: This paper investigates whether and how China's adoption of Soviet-aided industrialization programs in the 1950s has affected its long-run innovation. Focusing on 156 major industrial projects aided by the Soviet Union, combined with an instrumental variable approach, I find that the adoption of these programs substantially discourages local firms to innovate in the long run. A causal mediation analysis of instrumental variable settings shows that the negative effect is entirely driven by local firms' lower intensity of incentive pay. This evidence suggests disadvantages of Soviet-aided industrialization programs for long-run innovation due to firms adopting incentive-incompatible management technology.
    Keywords: Soviet Aid,Technology Transfers,Incentive Pay,Innovation,China
    JEL: O10 O30 L20 M52
    Date: 2021
  13. By: Alica Ida Bonk; Laure Simon
    Abstract: Men, especially those that are young and less educated, typically bear the brunt of recessions because of the stronger cyclicality of their employment and wages relative to women's. We study the extent to which fiscal policy may offset or worsen these asymmetric effects across gender. Using micro-level data for the U.S. from the Current Population Survey, we find that the effects of fiscal policy shocks on labor market outcomes depend on the type of public expenditure. Women benefit most from increases in the government wage bill, while men are the main beneficiaries of higher investment spending. Our analysis further reveals that the fiscal component most efficient at closing gender gaps is least suitable for offsetting inequitable business cycle effects across other socioeconomic dimensions
    Keywords: Business fluctuations and cycles; Fiscal policy; Labour markets
    JEL: E32 E62 J21 J16
    Date: 2021–09
  14. By: Mosca, Irene; Wright, Robert E.
    Abstract: A Marriage Bar is the requirement that women working in certain jobs must leave that job when they marry. In the twentieth century, Marriage Bars were not unusual internationally. In the late 1800s to early 1900s, legislative provisions that required women to resign at marriage were introduced in several countries around the world, including Australia, Canada, Ireland, the Netherlands and the UK. Spill-overs to jobs not strictly covered by the Marriage Bar were also common. This chapter critically reviews, from an economics perspective, the background, the history and the impacts of Marriage Bars. This chapter has four aims. The first is to summarise the arguments provided by government officials and employers to justify both the introduction and the retention of Marriage Bars. The second is to provide a cross-country comparison of Marriage Bars. The third is to investigate the potential impacts of the Marriage Bar on women's behavior with respect to employment, marriage and education. The fourth is to highlight potential avenues for future research. Although Marriage Bars do not exist anymore, they are still a serious topic of current debate. Much more can be learned about important topics, such as discrimination, from carrying out research focused on Marriage Bars.
    Keywords: Marriage Bar,international,women,behavior
    JEL: J2 J4 J7
    Date: 2021
  15. By: Tansel, Aysit; Öztürk, Ceyhan; Erdil, Erkan
    Abstract: We examine the relationship between wealth and health through prominent growth indicators and cognitive ability. Cognitive ability is represented by nutritional status. In this study, the proxy variable for nutritional status is BMI since there is a strong relationship between cognitive ability and nutrition. We use the reduced form equation in the cubic specification of time preference rate to estimate this relationship. We assume that the time preference rate is one of the outputs of cognitive ability. The growth indicators utilized are GDP per capita, schooling, overall and manufacturing productivities, and savings. We estimate our models using the FE, GMM estimators, and long difference OLS and IV estimation through balanced panel data for 47 countries for the 1980-2009 period, which is a representative period of the neo-liberal and globalization economic policy implications. Furthermore, by using the 1980-2009 period, we may eliminate the ripple effects of the 2007-2009 financial crisis. Although there is ample evidence that the association between GDP per capita, overall and manufacturing productivities, and BMI could be cubic, we take the results of the long-difference quadratic specification into consideration and conclude that the relationship between all prominent growth indicators and BMI is inverse U-shaped. In other words, cognitive ability has a significant potential to progress growth and economic development only in a healthy status.
    Keywords: Cognitive ability,time preference rate,BMI,productivity,health,schooling,growth,economic development
    JEL: E21 I15 I25 J24 O11 Q18
    Date: 2021
  16. By: Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Stenkula, Mikael (Research Institute of Industrial Economics (IFN))
    Abstract: William J. Baumol was one of the most prolific economists of his generation, analyzing a broad range of central economic issues addressing real problems of the world. In this essay, we present and critically evaluate Baumol’s research contributions in entrepreneurship economics and point to areas for future research. Baumol contributed an impressive number of important insights, increasing our understanding of entrepreneurship from both a macro and a micro perspective. He also devoted a large part of his writings to discussing public policy, linking his theoretical insights with policy issues in practice. His analyses are rooted in contemporary mainstream neoclassical economics, and one of his main objectives was to integrate the entrepreneur into this tradition. Today, Baumol is best known for his tripartite distinction between productive, unproductive, and destructive entrepreneurship and his associated idea that the institutional framework, “the rules of the game,” will determine how entrepreneurs allocate their time and effort across different—productive or unproductive—activities. An institutional environment that encourages productive entrepreneurship and spontaneous experimentation while disincentivizing unproductive activities becomes, through this insightful lens, the driving force of economic growth. As an economist, Baumol was knowledgeable and well acquainted with earlier scholars and their writings about entrepreneurship. Baumol’s writings were greatly inspired by Joseph Schumpeter’s views on entrepreneurship, and he made several attempts to formalize Schumpeter’s concept of the innovative entrepreneur. Baumol was in all senses an innovative contributor to entrepreneurship economics. His work has inspired the research community of entrepreneurship scholars, but like all great scientists, he also encountered criticism.
    Keywords: Entrepreneurship; Innovation; Institutions; Rent seeking
    JEL: B41 D02 J48 L26 L53 O31 Z10
    Date: 2021–09–10

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