nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2021‒11‒15
twelve papers chosen by
Joseph Marchand
University of Alberta

  1. Speaking the same language: A machine learning approach to classify skills in Burning Glass Technologies data By Julie Lassébie; Luca Marcolin; Marieke Vandeweyer; Benjamin Vignal
  2. Is performance affected by the CEO-Employee pay gap? Evidence from Australia By Roya Taherifar; Mark J. Holmes; Gazi M. Hassan
  3. Wage Effects of Educational Mismatch According to Workers’ Origin: The Role of Demographics and Firm Characteristics By Jacobs, Valentine; Rycx, François; Volral, Mélanie
  4. Robots, Marriageable Men, Family, and Fertility By Massimo Anelli; Osea Giuntella; Luca Stella
  5. Reference Points and the Tradeoff between Risk and Incentives By Thomas Dohmen; Arjan Non; Tom Stolp
  6. Dynamics of Managerial Power and CEO Compensation in the Course of Corporate Distress: Evidence from 1992 to 2019 By Sheng Guo; Qiang Kang; Oscar A. Mitnik
  7. The Business Dynamics Statistics: Describing the Evolution of the U.S. Economy from 1978-2019 By Christopher Goetz; Martha Stinson
  8. Technological Diffusion and Productivity Convergence across European Regions: A Spatial Approach over the Period 2000-2015 By Fabio Manca; Giuseppe Piroli
  9. The Effectiveness of Committee Quotas; The Role of Group Dynamics By José J. Domínguez
  10. EU Employment Dynamics: The Pandemic Years and Beyond By Stefan Jestl; Robert Stehrer
  11. Is the Global Competitiveness Index a Reliable Tool for the Design of Labor Market Policies? Evidence from Peru By Vera, Celia; Rendon, Silvio
  12. Lock-In Effects in Online Labor Markets By Fabrizio Ciotti; Lars Hornuf; Eliza Stenzhorn

  1. By: Julie Lassébie; Luca Marcolin; Marieke Vandeweyer; Benjamin Vignal
    Abstract: This report presents a methodology to classify skill requirements in online job postings into a pre-existing expert-driven taxonomy of broader skill categories. The proposed approach uses a semi-supervised Machine Learning algorithm and relies on the actual meaning and definition of the skills. It allows for the classification of more than 17 000 unique skill keywords contained in the Burning Glass dataset into 61 categories. The outcome of the classification exercise is validated using O*NET information on skills by occupations, and by benchmarking the results of some empirical descriptive exercises against the existing literature. Compared to a manual classification, the proposed approach organises large amounts of skills information in an analytically tractable form, and with considerable savings in time and human resources.
    JEL: C45 C55 J23 J24 J63
    Date: 2021–11–11
  2. By: Roya Taherifar (University of Waikato); Mark J. Holmes (University of Waikato); Gazi M. Hassan (University of Waikato)
    Abstract: It is argued that pay inequality between CEOs and employees impacts employee performance, although empirical studies are inconsistent about the directionality of the effect. This paper shows that seemingly contradictory predictions of sociological and economic perspectives about the impact of pay inequality are more complementary than contradictory. Using data from a sample of public companies over the period 2004-2019, we show that pay inequality attributed to individuals’ skills, company characteristics, and labour market is positively associated with employee performance. However, this positive impact on employee performance declines at high levels of pay disparity. In addition, pay inequality based on other unknown factors has a negative impact on employee performance.
    Keywords: CEO compensation;pay inequality;pay ratio;employee performance;productivity
    JEL: D24 G34 J31 M12 M52
    Date: 2021–11–06
  3. By: Jacobs, Valentine; Rycx, François; Volral, Mélanie
    Abstract: This paper analyses the wage effects of educational mismatch by workers’ origin using a sizeable, detailed matched employer-employee dataset for Belgium. Relying on a fine-grained approach to measuring educational mismatch, the results show that over-educated workers, regardless of their origin, suffer a wage penalty compared to their well-matched former classmates. However, the magnitude of this wage penalty is found to vary considerably depending on workers’ origin. In addition, the estimates show that origin-based differences in over-education wage penalties significantly depend on both demographics (workers’ region of birth, education, and gender) and employer characteristics (firm size and collective bargaining).
    Keywords: Immigrants,educational mismatch,wage gap,linked employer-employee data
    JEL: I24 I26 J15 J24 J31
    Date: 2021
  4. By: Massimo Anelli; Osea Giuntella; Luca Stella
    Abstract: Robots have radically changed the demand for skills and the role of workers in production. This phenomenon has replaced routine and mostly physical work of blue collar workers, but it has also created positive employment spillovers in other occupations and sectors that require more social interaction and managing skills. This study examines how the exposure to robots and its heterogeneous effects on the labor market opportunities of men and women affected demographic behavior. We focus on the United States and find that in regions that were more exposed to robots, gender gaps in income and labor force participation declined, reducing the relative economic stature of men. Regions affected by intense robot penetration experienced also an increase in both divorce and cohabitation and a decline –albeit non-significant– in the number of marriages. While there was no change in the overall fertility rate, marital fertility declined, and there was an increase in nonmarital births. Our findings provide support to the hypothesis that changes in labor market structures that affect the absolute and relative prospects of men may reduce their marriage-market value and affect marital and fertility behavior.
    Keywords: automation, marriage market, divorce, cohabitation, fertility, gender
    JEL: J12 J13 J21 J23 J24
    Date: 2021
  5. By: Thomas Dohmen (IZA (Schaumburg-Lippe-Strasse 5-9, 53113 Bonn, Germany), University of Bonn (Institute for Applied Microeconomics, Adenauerallee 24-42, 53113 Bonn, Germany), Maastricht University (Tongersestraat 53, 6211 LM Maastricht, The Netherlands)); Arjan Non (Erasmus University Rotterdam (E building, Burgemeester Oudlaan 50, 3062 PA Rotterdam, The Netherlands)); Tom Stolp (Maastricht University (Tongersestraat 53, 6211 LM Maastricht, The Netherlands))
    Abstract: We conduct laboratory experiments to investigate basic predictions of principal-agent theory about the choice of piece rate contracts in the presence of output risk, and provide novel insights that reference dependent preferences affect the tradeoff between risk and incentives. Subjects in our experiments choose their compensation for performing a real-effort task from a menu of linear piece rate and fixed payment combinations. As classical principal-agent models predict, more risk averse individuals choose lower piece rates. However, in contrast to those predictions, we find that low-productivity risk averse workers choose higher piece rates when the riskiness of the environment increases. We hypothesize that reference points affect piece rate choice in risky environments, such that individuals whose expected earnings would exceed (fall below) the reference point in a risk-free environment behave risk averse (seeking) in risky environments. In a second experiment, we exogenously manipulate reference points and confirm this hypothesis.
    Keywords: Incentive, piece-rate, risk, reference point, laboratory experiment
    JEL: D81 D91 M52
    Date: 2021–11
  6. By: Sheng Guo (Department of Economics, Florida International University); Qiang Kang (Department of Finance, Florida International University); Oscar A. Mitnik (Inter-American Development Bank)
    Abstract: We study the dynamics of two governance constructs, managerial influence over the board of directors and chief executive officer (CEO) compensation, in firms undergoing distress during 1992-2019. Data show a clear trend that governance improves over time, which confounds the inference about the effects of distress on governance. Controlling for the secular changes with a bias-corrected matching estimator, we find that distressed firms reduce managerial board appointments and CEO pay, intensify managerial incentive alignment, and increase CEO turnover. The bulk of CEO compensation changes in distressed firms derives from the performance-related part of compensation, consistent with the "shareholder value" view of CEO compensation.
    Keywords: Corporate distress, Managerial influence, CEO compensation, CEO turnover, Bias-corrected matching estimator
    JEL: G33 G34 J33 J44 M50
    Date: 2021–11
  7. By: Christopher Goetz; Martha Stinson
    Abstract: The U.S. Census Bureau’s Business Dynamics Statistics (BDS) provide annual measures of how many businesses begin, end, or continue their operations and the associated job creation and destruction. The BDS is a valuable resource for information on the U.S. economy because of its long time series (1978-2019), its complete coverage (all private sector, non-farm U.S. businesses), and its tabulations for both individual establishments and the firms that own and control them. In this paper, we use the publicly available BDS data to describe the dynamics of the economy over the past 40 years. We highlight the increasing concentration of employment at old and large firms and describe net job creation trends in the manufacturing, retail, information, food/accommodations, and healthcare industry sectors. We show how the spatial distribution of employment has changed, first moving away from the largest cities and then back again. Finally, we show long-run trends for a group of industries we classify as high-tech and explore how the share of employment at small and young firms has changed for this part of the economy.
    Date: 2021–10
  8. By: Fabio Manca; Giuseppe Piroli
    Abstract: What are the drivers of growth and convergence in productivity at regional level? Differences in the stock of human capital across regions are hypothesized to be the major cause of differences in the speed by which following regions converge and catch-up with the most advanced ones. In addition, we test the role played by R&D expenditures and institutions exploiting a database covering European regions from 1995 to 2015, which includes regional total factor productivity (TFP) computed by the conventional residual approach. We find robust empirical evidence for these hypotheses in terms of both model specifications and sectoral disaggregation.
    Keywords: Regional Studies, European Regions, Catching-up, Total Factor Productivity
    JEL: P48 D24 J24 E02 C31 C33
    Date: 2021–10–07
  9. By: José J. Domínguez (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: Committee quotas have been introduced during the last years for combatting the underrepresentation of women in male-stereotyped environments. However, the unclear effect of evaluators’ gender and the gender differences in group dynamics in mixed-gender committees question the effectiveness of the policy. I provide experimental evidence in both directions; a) how the gender composition of the committees affects the probability of female candidates of being recruited in a hiring process, and b) how men and women behave in group dynamics as a mechanism explaining the outcome of the policy. I designed a laboratory experiment in which groups of three subjects have to jointly select two candidates in a pool of six to perform a task. The probability of success of female candidates does not improve as the number of women in the committee increases. I found that malemajority committees were the most beneficial for female candidates. In these groups, men and women exhibited a similar level of voice and influence during deliberations, proposing male and female candidates for recruitment. Female-majority groups were, in contrast, the most detrimental for female candidates. Women in female-majority groups presented a higher level of voice but men, who proposed only male candidates as a modal proposal, were more influential, what limited the contribution of women. The paper suggests that more women in the committee do not necessarily benefit female candidates and examines some reasons that question the effectiveness of this policy.
    Keywords: Committee Quotas; Gender Gap; Group Dynamics; Laboratory Experiment.
    JEL: D03 C92 J71
    Date: 2021–11–02
  10. By: Stefan Jestl (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The economic shock induced by the pandemic has plunged European economies into a recession. Lockdowns and social distancing measures have affected economic life in a substantial way, with industries and population groups facing varying difficulties. This study explores potential future employment dynamics across European industries and employment groups for the period up to 2026 by drawing on past sectoral trends and the latest macroeconomic forecast results from the International Monetary Fund (IMF) and the European Commission. A scenario analysis is also carried out, taking into account the great uncertainty and risks that are related to the baseline forecasts.
    Keywords: EU employment dynamics, forecasts, pandemic, recovery
    JEL: C53 J21
    Date: 2021–11
  11. By: Vera, Celia (Zirve University); Rendon, Silvio (Independent Researcher)
    Abstract: Peru's national policy on productivity and competitiveness relies on the Global Competitiveness Index (GCI) by the World Economic Forum. We analyze the subjective component of GCI and show that, in the labor market area, this index has been largely constructed with opinion data coming from a particular group of the business sector. The opinion data is based on a survey of 98 business executives, which mainly represent firms with 100 or more employees and account for only 1% of total firms in Peru. Further, the questionnaire exhibits obvious flaws, and the underlying viewpoint that less employment protection promotes productive and formal work is not aligned with the evidence. Thus, we do not find that GCI provides a solid base for policy advice.
    Keywords: labor markets, competitiveness, subjective data
    JEL: J08 J32 O43
    Date: 2021–09
  12. By: Fabrizio Ciotti; Lars Hornuf; Eliza Stenzhorn
    Abstract: This article reports on an investigation of the role of lock-in exploitation and the impact of reputation portability on workers’ switching behaviors in online labor markets. Online platforms using reputation mechanisms typically prevent users from transferring their ratings to other platforms, inducing lock-in effects and high switching costs and leaving users vulnerable to platform exploitation. With a theoretical model, in which workers in online labor markets are locked-in by their reputational data, we test the effects using an online lab-in-the-field decision experiment. In addition to comparing a policy regime with and without reputation portability, we vary lock-in exploitation using platform fees to consider how switching behavior might differ according to monetary motives and fairness preferences. Theoretically, this study reveals how reputational investments can produce switching costs that platforms can exploit. Experimentally, the results suggest that reputation portability mitigates lock-in effects, making users less susceptible to lock-in exploitation. The data further show that switching is driven primarily by monetary motives, but perceiving the fee as unfair also has a significant role.
    Keywords: crowdsourcing, online markets, online labor, reputation portability, switching costs
    JEL: J24 D91 L51
    Date: 2021

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