nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2021‒09‒27
twenty-one papers chosen by
Joseph Marchand
University of Alberta

  1. The Heterogeneous Effects of Large and Small Minimum Wage Changes: Evidence over the Short and Medium Run Using a Pre-Analysis Plan By Jeffrey Clemens; Michael R. Strain
  2. Employment quality, economic performance and wages in Europe. Exploring the virtuous circle By Pianta, Mario; Reljic, Jelena
  3. Community Colleges and Upward Mobility By Jack Mountjoy
  4. The Returns to College(s): Relative Value-Added and Match Effects in Higher Education By Jack Mountjoy; Brent R. Hickman
  5. The Affordable Care Act After a Decade: Its Impact on the Labor Market and the Macro Economy By Hanming Fang; Dirk Krueger
  6. Are Industrial Robots a new GPT? A Panel Study of Nine European Countries with Capital and Quality-adjusted Industrial Robots as Drivers of Labour Productivity Growth By Kariem Soliman
  7. Harms of AI By Daron Acemoglu
  8. Matching Workers' Skills and Firms' Technologies: From Bundling to Unbundling By Philippe Choné; Francis Kramarz
  9. Why is Workplace Sexual Harassment Underreported? The Value of Outside Options Amid the Threat of Retaliation By Gordon B. Dahl; Matthew M. Knepper
  10. The Dynamics of Referral Hiring and Racial Inequality: Evidence from Brazil By Conrad Miller; Ian M. Schmutte
  11. Student Employment and Education: A Meta-Analysis By Katerina Kroupova; Tomas Havranek; Zuzana Irsova
  12. Unemployment transitions and the role of minimum wage: from pre-crisis to crisis and recovery By Andriopoulou, Eirini; Karakitsios, Alexandros
  13. Gender differences in re-contesting decisions: New evidence from French municipal elections By Julieta Peveri; Marc Sangnier
  14. Road Capacity, Domestic Trade and Regional Outcomes By A. Kerem Coşar; Banu Demir; Devaki Ghose; Nathaniel Young
  15. Urban Resilience By Edward L. Glaeser
  16. Competitive versus cooperative incentives in team production with heterogeneous agents By E. Glenn Dutcher; Regine Oexl; Dmitry Ryvkin; Tim Salmon
  17. Digital tools for worker management and psycho-social risks in the workplace: evidence from the ESENER survey By Cesira Urzi Brancati; Maurizio Curtarelli
  18. Twenty years of job flows in an emerging country By Rodrigo Ceni; Gabriel Merlo
  19. Share Repurchases and Board Independence By Grosman, Anna; Amore, Mario Daniele
  20. The reassuring effect of firms' technological innovations on workers' job insecurity By Caselli, Mauro; Fracasso, Andrea; Marcolin, Arianna; Scicchitano, Sergio
  21. Police Officer Assignment and Neighborhood Crime By Bocar Ba; Patrick Bayer; Nayoung Rim; Roman Rivera; Modibo Sidibé

  1. By: Jeffrey Clemens; Michael R. Strain
    Abstract: This paper advances the use of pre-analysis plans in non-experimental research settings. In a study of recent minimum wage changes, we demonstrate how analyses of medium- and long-run impacts of policy interventions can be pre-specified as extensions to short-run analyses. Further, our pre-analysis plan includes comparisons of the effects of large vs. small minimum wage increases, which is a theoretically motivated dimension of heterogeneity. We discuss how these use cases harness the strengths of pre-analysis plans while mitigating their weaknesses. This project’s initial analyses explored CPS and ACS data from 2011 through 2015. Alongside these analyses, we pre-committed to analyses incorporating CPS and ACS data extending through 2019. Averaging across the specifications in our pre-analysis plan, we estimate that relatively large minimum wage increases reduced employment rates among low-skilled individuals by just over 2.5 percentage points. Our estimates of the effects of relatively small minimum wage increases vary across data sets and specifications but are, on average, both economically and statistically indistinguishable from zero. We estimate that medium-run effects exceed short-run effects and that the elasticity of employment with respect to the minimum wage is substantially more negative for large minimum wage increases than for small increases.
    JEL: J08 J23 J38
    Date: 2021–09
  2. By: Pianta, Mario; Reljic, Jelena
    Abstract: This paper investigates the existence of a virtuous circle between industries’ employment quality, the ability to introduce new products, increase labour productivity and pay higher wages. We first present descriptive evidence of these trends in Europe. We then develop a simultaneous four-equation model investigating empirically four related variables: first, the rise of non-standard work as a proxy of low employment quality; second, the success of firms in translating their R&D efforts into new products and services; third, labour productivity growth driven by technological activities; fourth, wage increases and the factors supporting their rise. The model is tested empirically for 41 manufacturing and service sectors of six European economies (Germany, France, Italy, Spain, the Netherlands, and the UK) over the period 1996-2016. The findings provide novel evidence of mutually reinforcing relationships, where higher employment quality complements technological activities, leading to more product innovations that increase productivity growth. In turn, the latter allows wage increases that contribute to higher employment quality, resulting in a good jobs-high innovation virtuous circle.
    Keywords: Non-standard work, Product Innovation, Labour productivity, Wages, Virtuous circles, European industries
    JEL: J23 J24 J31 J50 L6 L8 O31 O33 O52
    Date: 2021–09–19
  3. By: Jack Mountjoy
    Abstract: Two-year community colleges enroll nearly half of all first-time undergraduates in the United States, but to ambiguous effect: low persistence rates and the potential for diverting students from 4-year institutions cast ambiguity over 2-year colleges' contributions to upward mobility. This paper develops a new instrumental variables approach to identifying causal effects along multiple treatment margins, and applies it to linked education and earnings registries to disentangle the net impacts of 2-year college access into two competing causal margins: significant value-added for 2-year entrants who otherwise would not have attended college, but negative impacts on students diverted from immediate 4-year entry.
    JEL: C31 C36 I23 I24 I26 J24 J31
    Date: 2021–09
  4. By: Jack Mountjoy; Brent R. Hickman
    Abstract: Students who attend different colleges in the U.S. end up with vastly different economic outcomes. We study the role of relative value-added across colleges within student choice sets in producing these outcome disparities. Linking high school, college, and earnings registries spanning the state of Texas, we identify relative college value-added by comparing the outcomes of students who apply to and are admitted by the same set of institutions, as this approach strikingly balances observable student potential across college treatments and renders our extensive set of covariates irrelevant as controls. Methodologically, we develop a framework for identifying and interpreting value-added under varying assumptions about match effects and sorting gains. Empirically, we estimate a relatively tight, though non-degenerate, distribution of relative value-added across the wide diversity of Texas public universities. Selectivity poorly predicts value-added within student choice sets, with only a fleeting selectivity earnings premium fading to zero after a few years in the labor market. Non-peer college inputs like instructional spending more strongly predict value-added, especially conditional on selectivity. Colleges that boost BA completion, especially in STEM majors, also tend to boost earnings. Finally, we probe the potential for (mis)match effects by allowing value-added schedules to vary by student characteristics.
    JEL: C21 H75 I23 I24 I26 J24 J31 J62
    Date: 2021–09
  5. By: Hanming Fang; Dirk Krueger
    Abstract: The Affordable Care Act (ACA) is one of the most important reforms of the US health insurance system since the introduction of Medicare. Since employment is a main source of health insurance for the working age population in the United States, this sweeping health insurance reform also has important implications for the labor market and the macro economy. In this paper, we survey the prototype models that are used in the macro and labor literature, extended to integrate health and health insurance, to study the short- and long-run consequences of the ACA. We also suggest open areas for future research.
    JEL: E62 H51 I1 I13 I18 J33
    Date: 2021–09
  6. By: Kariem Soliman (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW))
    Abstract: In recent years, the interest in the field of economic research in studying the effect of robots on economic outcomes, i.e., labour productivity, labour demand and wages, has increased from an individual country perspective as well as for country groups. By using a fixed effects panel modeling approach, this study of nine robot intensive European countries shows that the core characteristics of a general purpose technology (GPT) are already satisfied by industrial robots. In 2019, seven countries in the panel, i.e. Germany, Italy, France, Spain and the UK (top 5), Sweden (7th) and Austria (10th) - in terms of operational stocks - were among the top 10 of robot using European countries (excl. Turkey). Following the understanding of a GPT of Bresnahan/Trajtenberg (1995), six panel regression models were estimated and linked to the four main characteristics of a GPT. Accordingly, two new measures are proposed in this paper; the first one is named the Division of Labour (or DoL) and is constructed by building the ratio of labour productivity inside the manufacturing industry to labour productivity across all industries. The second one is the Robot Task Intensity Index (RTII), which accounts for the number of tasks that a robot was used for in different production processes across the nine European countries. A high level of fulfilled tasks implies a higher quality of robot as the number of potential tasks, which the robot can perform, is an important criterion for the quality of that robot. In accordance with the GPT literature, both measures showed the expected (in) significances. At the bottom line, all six models underlined the economic relevance of industrial robots for the nine European countries included in the analysis and give a strong indication that robots can indeed be seen as a new general purpose technology.
    Keywords: Industrial Robots, General Purpose Technology, Labour Productivity Growth, Robot Task Intensity Index (RTII), Fixed Effects Model, EU KLEMS
    JEL: D24 J24 O11 O14 O33
    Date: 2021–09
  7. By: Daron Acemoglu
    Abstract: This essay discusses several potential economic, political and social costs of the current path of AI technologies. I argue that if AI continues to be deployed along its current trajectory and remains unregulated, it may produce various social, economic and political harms. These include: damaging competition, consumer privacy and consumer choice; excessively automating work, fueling inequality, inefficiently pushing down wages, and failing to improve worker productivity; and damaging political discourse, democracy's most fundamental lifeblood. Although there is no conclusive evidence suggesting that these costs are imminent or substantial, it may be useful to understand them before they are fully realized and become harder or even impossible to reverse, precisely because of AI's promising and wide-reaching potential. I also suggest that these costs are not inherent to the nature of AI technologies, but are related to how they are being used and developed at the moment - to empower corporations and governments against workers and citizens. As a result, efforts to limit and reverse these costs may need to rely on regulation and policies to redirect AI research. Attempts to contain them just by promoting competition may be insufficient.
    JEL: J23 J31 L13 L40 O33 P16
    Date: 2021–09
  8. By: Philippe Choné (CREST-ENSAE, Institut Polytechnique de Paris, France); Francis Kramarz (Department of Economics, Uppsala University, Sweden)
    Abstract: How are workers matched to their employing firms when workers have multi-dimensional skills and firms differ in the importance of each such skill for their production function? When workers' skills cannot be unpacked and sold separately on skill-specific markets, the implicit price of each skill varies across firms. The wage function is shown to be log-additive in worker's quality and a firm-specific effect that reflects the firm's chosen aggregate mix of skills and the associated equilibrium matching. When individual skills can be purchased thanks to new technologies and increasing access to outsourcing, temp agencies and other pro-market institutions, firms reinforce their hires of skills in which they have a comparative advantage yielding a more polarized matching equilibrium. Generalist workers - endowed with a balanced set of skills - are shown to benefit whereas specialists are negatively affected by markets opening. We also examine the case when workers or firms pay a fee to an unbundling platform. Then we discuss the empirical content of our model and present some empirical evidence based on this content, using Swedish data sources on workers' skills and their employing firm and occupation. We conclude by pointing connections between our contribution and various literatures.
    Keywords: bundling; multidimensional skills; matching ; sorting; heterogeneous firms; polarization.
    JEL: D20 D40 D51 J20 J24 J30
    Date: 2021–07–20
  9. By: Gordon B. Dahl; Matthew M. Knepper
    Abstract: Why is workplace sexual harassment chronically underreported? We hypothesize that employers coerce victims into silence through the threat of a retaliatory firing, and test this theory by estimating whether external shocks that reduce the value of a worker's outside options exacerbate underreporting. Under mild assumptions, a rise in the severity of formal complaints is indicative of increased underreporting. Combining this insight with an objective measure of the quality of charges filed with the Equal Employment Opportunity Commission (EEOC), we perform two analyses. First, we assess whether workers report sexual harassment more selectively during recessions, when outside labor market options are limited. We estimate the fraction of sexual harassment charges deemed to have merit by the EEOC increases by 0.5-0.7% for each one percentage point increase in a state-industry's monthly unemployment rate. The effect is amplified in industries employing a larger fraction of men and in establishments with a higher share of male managers. Second, we test whether less generous UI benefits create economic incentives for victims of workplace sexual harassment to remain silent. We find the selectivity of sexual harassment charges increases by more than 30% in response to a 50% cut to North Carolina's Unemployment Insurance (UI) program following the Great Recession.
    JEL: J71 J78
    Date: 2021–09
  10. By: Conrad Miller; Ian M. Schmutte
    Abstract: We study how referral hiring contributes to racial inequality in firm-level labor demand over the firm's life cycle using data from Brazil. We consider a search model where referral networks are segregated, firms are more informed about the match quality of referred candidates, and some referrals are made by non-referred employees. Consistent with the model, we find that firms are more likely to hire candidates and less likely to dismiss employees of the same race as the founder, but these differences diminish as firms' cumulative hires increase. Referral hiring helps to explain racial differences in dismissals, seniority, and employer size.
    JEL: J71 M51 Z13
    Date: 2021–09
  11. By: Katerina Kroupova (Charles University, Prague, Czech Republic); Tomas Havranek (Charles University, Prague, Czech Republic & CEPR); Zuzana Irsova (Charles University, Prague, Czech Republic)
    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 a sign 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: 2021–09
  12. By: Andriopoulou, Eirini; Karakitsios, Alexandros
    Abstract: During the last decade, unemployment in Greece climbed up to 28%, almost quadrupling due to the economic crisis that hit Greece. In the present paper, we examine the determinants of the unemployment dynamics and the impact of the minimum wage on the probability of making a transition into and out of unemployment. We use micro-level data from the Greek Labour Force Survey for the period 2004-2019 and control for several demographic factors, macro-economic conditions, regional differences and changes in statutory minimum wage. The results suggest that individual-level characteristics play an important role in making a transition into or out of unemployment. Changes in the real minimum wage are estimated to have either a statistically insignificant or a very small impact on unemployment entries and exits. Further, the impact of economy's growth rate follows the theoretical predictions as higher growth rates increase unemployment outflows and decrease inflows, while the regional differences are also important. Our findings persist even when we split the sample in three periods (pre-crisis, crisis, recovery). The results have important policy implications. Given that the disemployment effect of the minimum wage seems to be very limited in the Greek labour market, while the socioeconomic characteristics and regional characteristics play an important role, improving the skills of individuals through the educational system and reskilling or up-skilling programs, while targeting specific regions, may facilitate labour market mobility.
    Keywords: minimum wage,unemployment transitions,labour mobility,Greek crisis
    JEL: J08 J21 J38 I38
    Date: 2021
  13. By: Julieta Peveri (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.); Marc Sangnier (University of Namur & Aix-Marseille Univ, CNRS, AMSE, Marseille, France.)
    Abstract: This paper studies differences across genders in the re-contesting decisions of politicians following electoral wins or defeats. Using close races in mixed-gender French local elections, we show that women are less likely to persist in competition when they lose compared to male runners-up, but are equally or more prone than male winners to re-contest when they win. Differences in observable characteristics or in the expected electoral returns of running again cannot fully account for these gender gaps in persistence. In contrast, the heterogeneity of the results across political ideology, age, experience and occupation suggests that behavioural explanations are at play. Additionally, we provide evidence that a woman's victory encourages former female challengers to re-contest but does not trigger the entry of new female candidates.
    Keywords: gender, competition, persistence, candidates, self-selection, elections
    JEL: D72 J24
    Date: 2021–09
  14. By: A. Kerem Coşar; Banu Demir; Devaki Ghose; Nathaniel Young
    Abstract: What is the impact on intra-national trade and regional economic outcomes when the quality and lane-capacity of an existing paved road network is expanded significantly? We investigate this question for the case of Turkey, which undertook a large-scale public investment in roads during the 2000s. Using spatially disaggregated data on road upgrades and domestic transactions, we estimate a large positive impact of reduced travel times on trade as well as local manufacturing employment and wages. A quantitative exercise using a workhorse model of spatial equilibrium implies heterogeneous effects across locations, with aggregate real income gains reaching 2-3 percent in the long-run. Reductions in travel times increased local employment-to-population ratio but had no effect on local population. We extend the model by endogenizing the labor supply decision to capture this finding. The model-implied elasticity of employment rates to travel time reductions captures about one-third of the empirical elasticity.
    JEL: F14 R11 R41
    Date: 2021–09
  15. By: Edward L. Glaeser
    Abstract: Will COVID-19 end the urban renaissance that many cities have experienced since the 1980s? This essay selectively reviews the copious literature that now exists on the long-term impact of natural disasters. At this point, the long-run resilience of cities to many forms of physical destruction, including bombing, earthquakes and fires, has been well-documented. The destruction of human capital may leave a longer imprint, but cities have persisted through many plagues over the past millennia. By contrast, economic and political shocks, including deindustrialization or the loss of capital city status, can enormously harm an urban area. These facts suggest that the COVID-19 pandemic will only significantly alter urban fortunes, if it is accompanied by a major economic shift, such as widespread adoption of remote work, or political shifts that could lead businesses and the wealthy to leave urban areas. The combination of an increased ability to relocate with increased local redistribution or deterioration of local amenity levels or both could recreate some of the key attributes of the urban crisis of the 1970s.
    JEL: R11 R23 R28 R5 R53 R58
    Date: 2021–09
  16. By: E. Glenn Dutcher; Regine Oexl; Dmitry Ryvkin; Tim Salmon
    Abstract: A debate among practicing managers is whether to use cooperative or competitive incentives for team production. While competitive incentives may drive individual effort higher, they may also lead to less help and more sabotage; an issue exacerbated when team members' abilities are varied. Using a lab experiment, we examine how increasing competitive incentives affects performance as team composition changes. We find that competitive incentives generally underperform noncompetitive incentives and a larger bonus does not generate enough effort to compensate for a loss in help. Our results help understand better how to balance out individual versus team rewards and how firms could structure teams when employees have heterogeneous abilities.
    Keywords: contest, help and sabotage, team composition, incentive structure
    JEL: C92 D01
    Date: 2021
  17. By: Cesira Urzi Brancati (European Commission – JRC); Maurizio Curtarelli (EU-OSHA)
    Abstract: This article explores the association between digital technologies that enable new forms of management and the presence of psychosocial risks in the workplace, drawing on a representative survey of European establishments (ESENER 2019). It also ascertains whether occupational safety and health (OSH) preventive measures and policies may play a mitigating role in managing risks and reducing the potentially negative impact of technology. In line with the literature and with prior expectations, our analysis reveals that digital technologies enabling the new forms of management are associated to increased psychosocial risks, which in turn can result in work-related stress and other mental health issues. It also confirmed that OSH measures, such as having an action plan to prevent work related stress, help reducing psychosocial risks in the workplace, but do not mitigate the relationship between psychosocial risks and management technologies.
    Keywords: algorithmic management; digitalisation; workplace monitoring; psychosocial risks; work related stress
    JEL: I10 I12 I18 O33
    Date: 2021–09
  18. By: Rodrigo Ceni (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Gabriel Merlo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: In a market economy, firms are continuously exposed to economic shocks that affect their performance and results. In response to these shocks, firms react by reallocating their productive factors, such as capital and labor, to more productive uses. We estimate the job flows over a twenty-year period in Uruguay, exploring firm and worker characteristics. We use panel data from social security administrative records that match employers and employees in formal firms between 1996 and 2015. Job flow levels and their cycles are consistent with international evidence. Entry and exit of firms from the market play an important role, explaining about 30% of the total number of jobs created and destroyed for the whole period with high heterogeneity across industries, firm age, and firm size. In particular, the smallest firms are not as relevant in explaining net growth as political and popular beliefs would suggest, and it is start-ups that have the main role in job creation in Uruguay. Despite representing only 5% of total employment, they created more than one-quarter of new jobs and maintained this role in a fully saturated regression. Among worker characteristics, we found no differences in job flows by gender, but female workers gain participation in the period; there are bigger flow rates among workers under 25 and workers in the first and third wage terciles.
    Keywords: job flows; employer employee match data; formal jobs; Uruguay
    JEL: J23 J63 L25
    Date: 2021–07
  19. By: Grosman, Anna; Amore, Mario Daniele
    Abstract: Share repurchases have come under criticism as they may be used for earnings management and take capital away from productive investment. However, share repurchases can also reduce the agency costs of free cash flow and offset the dilution of current shareholders. Whether firms engage in good or manipulative share repurchases can crucially hinge on the quality of corporate governance. Using UK firm panel data, we study the effect of independent directors on repurchase policies. Our results indicate that board independence increases the propensity to engage in share repurchases. Moreover, board independence attenuates the harmful effect of manipulative share repurchases on employment growth. Our approach exploits the passage of a corporate governance reform which provided a unique opportunity to tease out the causal impact of independent directors on share repurchases. Our findings advocate in favor of more active involvement of independent directors in payout policies.
    Keywords: corporate governance; boards; share repurchases; independent directors; employment; earnings management; UK
    JEL: G30 G35 J3
    Date: 2021–09–19
  20. By: Caselli, Mauro; Fracasso, Andrea; Marcolin, Arianna; Scicchitano, Sergio
    Abstract: We analyse how the adoption of technological innovations correlates with workers' perceived levels of job insecurity, and what factors mediate such relationship, by exploiting a recent, large and dedicated survey distributed to a representative sam- ple of Italian workers. The dedicated survey allows us to look at both cognitive and affective job insecurity as well as different technological innovations actually adopted by the companies where the workers are employed. The results show that the adoption of technological innovations by companies is related to a reduction in the level of job insecurity perceived by their workers and suggest that technological innovation is perceived by active workers as a signal of firms' health and of their commitment to preserving the activity. We also find that the reassuring effect of technological innovations is differentiated across companies and workers, due to the mediating role played by a number of factors, such as specific training and signifi- cant changes in workers' usual activities.
    Keywords: job insecurity,technology,innovation,automation
    JEL: J28 O33
    Date: 2021
  21. By: Bocar Ba; Patrick Bayer; Nayoung Rim; Roman Rivera; Modibo Sidibé
    Abstract: We develop an empirical model of the mechanism used to assign police officers to Chicago districts and examine the efficiency and equity of alternative allocations. We document that the current bidding process, which grants priority based on seniority, results in the assignment of more experienced officers to less violent and high-income neighborhoods. Our empirical model combines estimates of heterogeneous officer preferences underlying the bidding process with causal estimates of the effects of officer experience on neighborhood crime. Equalizing officer seniority across districts would reduce violent crime rate by 4.6 percent and significantly decrease inequality in crime, discretionary arrests, and officer use of force across neighborhoods. Moreover, this assignment can be achieved in a revenue-neutral way while resulting in small welfare gains for police officers, implying that it is more equitable and efficient.
    JEL: H4 H72 J3 K4 K42
    Date: 2021–09

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