nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2021‒11‒08
fifteen papers chosen by
Joseph Marchand
University of Alberta

  1. The Impact of Juvenile Conviction on Human Capital and Labor Market Outcomes By Limor Golan; Rong Hai; Hayley Wabiszewski
  2. The Labor Market Effects of Part-Time Contributions to Social Security: Evidence from Colombia By Brenda Samaniego de la Parra; Andrea Otero-Cortés; Leonardo Fabio Morales
  3. Telework and Time Use By Pabilonia, Sabrina Wulff; Vernon, Victoria
  4. Does pay transparency affect the gender wage gap? Evidence from Austria By Gulyas, Andreas; Seitz, Sebastian; Sinha, Sourav
  5. Early Socialization and the Gender Wage Gap By Getik, Demid; Meier, Armando N.
  6. Fostering innovation in Iceland for the digital era By Vassiliki Koutsogeorgopoulou; Eunha Cho
  7. Optimal Redistribution in the Presence of Signaling By Bastani, Spencer; Blumkin, Tomer; Micheletto, Luca
  8. Do workers share in firm success? Pass-through estimates for New Zealand By Corey Allan; David C Maré
  9. The Impact of Research Independence on PhD Students' Careers: Large-scale Evidence from France By Sofia Patsali; Michele Pezzoni; Fabiana Visentin
  10. Do Conditional Cash Transfers Improve Education and Labour Market Outcomes in the Future Generation? By Anqi Zhang; Katsushi S. Imai
  11. For Whom the Bell Tolls: The Firm-Level Effects of Automation on Wage and Gender Inequality By Giacomo Domini; Marco Grazzi; Daniele Moschella; Tania Treibich
  12. Complementarity between labor and energy: A firm-?level analysis By Lucas Bretschger; Ara Jo
  13. Macro-Welfare Effects of Flexible-Hour Contracts By Carreño Bustos, José; Uras, Burak
  14. From hibernation to reallocation: Loan guarantees and their implications for post-COVID-19 productivity By Lilas Demmou; Guido Franco
  15. Teacher Effects in Germany: Evidence from Elementary School By Araujo P., María Daniela; Quis, Johanna Sophie

  1. By: Limor Golan; Rong Hai; Hayley Wabiszewski
    Abstract: This article documents the long-term relationship among juvenile conviction, occupation choices, employment, wages, and recidivism. Using data from NLSY97, we document that youths who are convicted at or before age 17 have lower full-time employment rate and lower wage growth rate even after 10 years into the labor market. Merging the NSLY97 with occupational characteristics data from O*NET, we show that youths with a juvenile conviction are less likely to be employed in occupations that have a higher on-the-job (OTJ) training requirement and these high OTJ occupations have higher wage and wage growth. The accumulated occupation-specific work experience, general experience, and education are important to explain the gaps in wage and recidivism between youths with and without a juvenile conviction. Our results highlight the important role of occupation choices as a human capital investment vehicle through which juvenile crimes have a long-term impact on wages and recidivism.
    Keywords: Human Capital; On-the-job training; Juvenile Conviction; Recidivism; Occupation choice; Employment
    JEL: J01 J24 J31
    Date: 2021–10–21
  2. By: Brenda Samaniego de la Parra; Andrea Otero-Cortés; Leonardo Fabio Morales
    Abstract: In 2014, Colombia implemented a policy that added flexibilization to labor contracts for part-time workers that reduced the quasi-fixed costs of employing formal workers. We find that the reform increased the probability of entering the formal sector within the targeted population: low-wage, part-time workers. We use administrative employer-employee matched data and leverage variation across cities and industries in demand for part-time work before the reform. We find that, after the tax reform, the change in the total number of formal workers is 6 percentage points higher at firms that use the new contracts relative to their counterparts that choose not to hire low-wage, formal, part-time workers under the new tax form. Mean daily wages temporarily declined after the reform.. **** RESUMEN: En 2014, Colombia implementó una reforma que flexibilizó la contratación de trabajadores formales de tiempo parcial a través de la reducción de los costos cuasi-fijos de contratación formal. Este documento estima los efectos sobre el empleo y los salarios de este cambio en la legislación laboral. Nuestros resultados muestran que la reforma incrementó la probabilidad de ingresar al sector formal dentro de la población objetivo: trabajadores de bajos ingresos laborales y de tiempo parcial. Para la estimación empírica, usamos datos administrativos de aportes a seguridad social (PILA) que nos permiten seguir en el tiempo a empleadores y empleados y una estrategia de identificación que explota la variación entre ciudades e industrias en la demanda por trabajo de tiempo parcial antes de la reforma. Encontramos que después de implementada la reforma, el empleo formal creció, en promedio, 6 puntos porcentuales más en las firmas que usaron el nuevo tipo de contrato de tiempo parcial en comparación con las firmas que no lo usaron. Los salarios diarios medios disminuyeron temporalmente después de la reforma.
    Keywords: Labor informality, tax policy, part-time work, labor demand, non-wage labor costs, informalidad laboral, política tributaria, empleo de tiempo parcial, demanda laboral, costos no salariales de contratación
    JEL: J23 J24 J32 J46
    Date: 2021–10
  3. By: Pabilonia, Sabrina Wulff; Vernon, Victoria
    Abstract: This chapter reviews the evidence on the relationship between telework and households' time allocation, drawing heavily on the empirical evidence from time diary data, and discusses the implications of telework for workers' productivity, wages, labor force participation, and well-being as well as its impacts on traffic congestion and greenhouse gas emissions. Telework results in significant time savings for workers, as they reduce time on commuting and grooming activities by over one hour on telework days. This time is reallocated to household and leisure activities, but differentially for men and women. Men spend most of their time windfall on leisure activities; however, fathers also increase time on primary child care. Women, on the other hand, increase their household production. Children and parents benefit because they spend more time together; however, average full-time workers spend more time alone when they telework, which leads to an increase in loneliness for some. There is also evidence that telework can increase productivity for some workers and those workers may consequently earn higher wages, except for mothers who are willing to accept lower pay for the option to work from home. Finally, the reduction in commuting due to telework leads to reduced congestion during peak travel times, especially in the morning hours.
    Keywords: working from home,telework,telecommuting,commuting,home-based work,alternative work arrangements,work-life balance,time use,productivity,well-being,wages
    JEL: J22 J31 D13
    Date: 2021
  4. By: Gulyas, Andreas; Seitz, Sebastian; Sinha, Sourav
    Abstract: We study the 2011 Austrian Pay Transparency Law, which requires firms above a size threshold to publish internal reports on the gender pay gap. Using an event-study design, we show that the policy had no discernible effects on male and female wages, thus leaving the gender wage gap unchanged. The effects are precisely estimated and we rule out that the policy narrowed the gender wage gap by more than 0.4 p.p.. Moreover, we do not find evidence for wage compression within establishments. We discuss several possible reasons why the reform did not reduce the gender wage gap.
    Keywords: Gender Pay Gap,Pay Transparency
    JEL: J08 J31 J38 J78
    Date: 2021
  5. By: Getik, Demid (Department of Economics, Lund University); Meier, Armando N. (University of Lausanne, Department of Economics)
    Abstract: We study the impact of early socialization on gender inequality in the labor market. To this end, we link the gender environment in the primary-school cohort to later occupations and wages. We find that women exposed to more girls at this critical age earn more later on, leading to a reduction in the gender wage gap. We explore mechanisms and find that women exposed to a more female-dominated environment select into less gender-stereotypical occupations with higher wage potential. The gender environment at an early age, therefore, shapes career trajectories and lifetime earnings.
    Keywords: Socialization; school environment; peers; occupational sorting; gender wage gap
    JEL: D91 I24 I26 J16 J24 J70
    Date: 2021–10–28
  6. By: Vassiliki Koutsogeorgopoulou; Eunha Cho
    Abstract: Iceland is an innovative country, but has untapped innovation potential. Strengthening innovation, especially in the ICT area, is crucial for strong productivity growth and performance in an increasingly digitalised world, as well as a sustained recovery from the COVID-19 pandemic. Ensuring more effective public support for business R&D is important. The R&D tax incentive scheme is generous by international comparison, but take-up has been low and many smaller firms have not been inclined to innovate. Following increased support, outcomes need to be monitored regularly. Adopting new technologies is also essential for stronger innovation outcomes. Competition-friendly framework conditions are key to sharpening firms’ incentives to adopt advanced technologies. The public sector too could become more digitalised. The education system needs to provide relevant skills. Participation of adult workers, especially the less educated, in re-skilling and up-skilling programmes should increase further. At the same time, business and universities need to collaborate more to maximise knowledge flows, with important benefits for innovation and society.
    Keywords: collaboration, digital, innovation, productivity, R&D, skills, tax incentives, technologies
    JEL: J24 O3 O32 I23
    Date: 2021–11–04
  7. By: Bastani, Spencer (Institute for Evaluation of Labour Market and Education Policy (IFAU), Uppsala); Blumkin, Tomer (Department of Economics, Ben Gurion University); Micheletto, Luca (Department of Law, University of Milan, and Dondena Centre for Research on Social Dynamics and Public Policy, Bocconi University; UCFS; CESifo, Germany)
    Abstract: We analyze optimal redistribution in the presence of labor market signaling where innate productive ability is not only unobserved by the government, but also by prospective employers. Our model features signaling in both one and two dimensions, where in the latter case firms have an informational advantage vis-a-vis the government. Focusing on signals in the context of educational attainment, we analyze the dual role of income taxation in redistributing income and affecting signaling incentives as well as the role of extended tax systems that combine income taxation with direct taxes on the signals in the form of education taxes/subsidies. We demonstrate how the government can achieve redistribution through wage compression and analyze the conditions under which such redistribution is feasible and socially desirable.
    Keywords: Nonlinear taxation; Education; Asymmetric information; Human capital
    JEL: D82 H21 H52 J31
    Date: 2021–11–01
  8. By: Corey Allan (Ministry of Business, Innovation & Employment); David C Maré (Motu Economic and Public Policy Research)
    Abstract: We study the extent to which firm financial performance is passed on to workers in the form of higher wages and the degree to which this pass-through has changed over the period 2002-2018. We use both value added per worker and a measure of quasi-rents as measures of financial performance. Value added per worker is the standard measure used internationally. Quasi-rents better approximate the resources available to be shared between workers and firms as it takes into account the rental cost of capital as well as the reservation wages of workers. We estimate the reservation wage bill for each firm using estimates from a two-way fixed-effect model. We estimate models similar to those typically used in the international literature and further decompose the estimated pass-through into the contribution from worker sorting and the contribution from rent-sharing. Our instrumental variables estimates of pass-through are in the range of 0.12 and 0.19 for value added and 0.11 and 0.07 for quasi-rents. Worker sorting explains between 35% and 50% of pass-through. While the extent of overall pass-through is relatively stable over time, the contribution of worker sorting declines dramatically to explain almost none of the estimated pass-through. We contribute to the literature by demonstrating a method to calculate quasi-rents, by testing for changes over time in pass-through, and examining the relative importance of worker sorting over time.
    Keywords: Wage determination, Rent sharing, Worker sorting
    JEL: J31 J71 E25 D22
    Date: 2021–11
  9. By: Sofia Patsali (Université Côte d'Azur, France; CNRS, GREDEG); Michele Pezzoni (Université Côte d'Azur, France; CNRS, GREDEG); Fabiana Visentin (Maastricht University; UNU-MERIT)
    Abstract: This study investigates the effect of research independence during the PhD period on students' career outcomes. We use a unique and detailed dataset on the French population of STEM PhD students who graduated between 1995 and 2013. To measure research independence, we compare the PhD thesis content with the supervisor's research. We employ advanced neural network text analysis techniques evaluating the similarity between student's thesis abstract and supervisor's publications during the PhD period. After exploring which characteristics of the PhD training experience and supervisor explain the level of research similarity, we estimate how similarity associates with the likelihood of pursuing a research career. We find that the student thesis's similarity with her supervisor's research work is negatively associated with starting a career in academia and patenting probability. Increasing the PhD-supervisor similarity score by one standard deviation is associated with a 2.1 percentage point decrease in the probability of obtaining an academic position and a 0.57 percentage point decrease in the probability of patenting. However, conditional on starting an academic career, PhD-supervisor similarity is associated with a higher student's productivity after graduation as measured by citations received, network size, and probability of moving to a foreign or US-based affiliation.
    Keywords: Research independence, Early career researchers, Scientific career outcomes, Neural network text analysis
    JEL: D22 O30 O33 O38
    Date: 2021–10
  10. By: Anqi Zhang (Institute of Belt & Road and Global Governance, Fudan University, CHINA); Katsushi S. Imai (Department of Economics, The University of Manchester, UK, Research Institute for Economics and Business Administration, Kobe University, JAPAN)
    Abstract: This paper estimates the long-term impacts of PROGRESA, the Mexican conditional cash transfer programme, on the educational attainment and the labour market performance of children aged 18 years or younger in 1997. Based on the household panel in 1997-2017, we utilise the initial experimental design where the programmes were allocated randomly at the village level in a phased manner. After controlling for the attrition bias by Inverse Probability Weights and the unobservable time-invariant household characteristics, we estimate the intent to treat (ITT) effect by Propensity Score Matching and weighted OLS and Probit models. After 20 years, children of the poor eligible households in the early treated villages outperformed the matched children in the control villages. Regardless of age groups and gender, early beneficiaries achieved better educational attainments in both durations and levels and were more likely to work and earn a higher salary in the regular and non-regular labour markets. We also find spillover effects on children of non-poor households in the treated villages for education but not for employment. The study provides robust evidence to support Heckman's (2012) conclusion that the education of disadvantaged children should be prioritised by public policies not only for the sake of fairness and social justice but also for the productivity of the economy.
    Keywords: Labour market; CCT; Impact evaluation; Mexico
    JEL: I26 I28 I38 J24
    Date: 2021–10
  11. By: Giacomo Domini (Erasmus University Rotterdam); Marco Grazzi (Universita' Cattolica del Sacro Cuore); Daniele Moschella (Scuola Superiore Sant'Anna); Tania Treibich (Maastricht University)
    Abstract: This paper investigates the impact of investment in automation- and AI- related goods on within-firm wage inequality in the French economy during the period 2002-2017. We document that most of wage inequality in France is accounted for by differences among workers belonging to the same firm, rather than by differences between sectors, firms, and occupations. Using an event-study approach on a sample of firms importing automation and AI-related goods, we find that spike events related to the adoption of automation- or AI-related capital goods are not followed by an increase in within-firm wage nor in gender inequality. Instead, wages increase by 1% three years after the events at different percentiles of the distribution. Our findings are not linked to a rent-sharing behavior of firms obtaining productivity gains from automation or AI adoption. Instead, if the wage gains do not differ across workers along the wage distribution, worker heterogeneity is still present. Indeed, aligned with the framework in Abowd et al.(1999b), most of the overall wage increase is due to the hiring of new employees. This adds to previous findings showing picture of a `labor friendly' effect of the latest wave of new technologies within adopting firms.
    Keywords: Automation, AI, wage inequality, gender pay gap
    Date: 2021–10
  12. By: Lucas Bretschger (Center of Economic Research, ETH Zurich, Zurichbergstrasse 18, 8092 Zurich, Switzerland); Ara Jo (Center of Economic Research, ETH Zurich, Zurichbergstrasse 18, 8092 Zurich, Switzerland)
    Abstract: This paper adds a fresh angle to the on-going debate on the potential negative employment effect of environmental policy by bringing to the fore a key factor that directly regulates its magnitude: the elasticity of substitution between labor and energy. Using firm-level data from the French manufacturing sector, we provide rigorous micro estimates of this parameter that point to strong complementarity between labor and energy. We then provide clear evidence for the empirical, as well as theoretical, relevance of the elasticity of substitution in understanding the effect of environmental policies on employment.
    Keywords: market-based regulation, employment, elasticity of substitution
    JEL: Q40 Q54 Q55 O33
    Date: 2021–10
  13. By: Carreño Bustos, José (Tilburg University, Center For Economic Research); Uras, Burak (Tilburg University, Center For Economic Research)
    Keywords: macroeconomics; wage flexibility; labor market frictions; flexible-hour labor contracts
    Date: 2021
  14. By: Lilas Demmou; Guido Franco
    Abstract: The paper analyses the role of loan guarantee programmes following the COVID-19 outbreak in alleviating firm distress as well as their broader impacts on productivity via reallocation, relying on a simulation model and econometric estimations. The simulation exercise relies on a simple cash-flow accounting model, a large dataset reporting balance sheets of firms located in 14 countries and granular data on the magnitude of the COVID-19 shock. Our findings suggest that i) the COVID-19 shock had the potential to seriously distort market selection; and ii) policy actions corrected up to 30% of the inefficiency of market selection in the short-term, shielding many high productive firms from distress and supporting zombie firms only to a limited extent. The econometric exercise, based on historical data and standard models of dynamic allocative efficiency, examines how loan guarantees may shape the efficiency through which resources are allocated across firms of different productivity levels over the medium-term. Results suggest that, over the 2007-2018 period, increases in large-scale loan guarantee schemes were associated with weaker reallocation of credit and labour from low to high productivity firms. However, these effects are found to be more benign in intangible-intensive sectors and even positive for smaller scale programmes. Overall, engineering an effective exit strategy from these schemes, preserving their benefits while reducing their drawbacks through a gradual and state contingent phasing out, is critical to foster the recovery of the corporate sector. Further, monitoring debt overhang risks and facilitating firms’ entry and digital diffusion are relevant complementary challenges to address once COVID-19 related support is withdrawn.
    Keywords: COVID-19, liquidity, loan guarantees, productivity, reallocation
    JEL: D22 D24 H81 J38 O47
    Date: 2021–11–04
  15. By: Araujo P., María Daniela; Quis, Johanna Sophie
    JEL: I20 J45
    Date: 2021

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