nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2021‒12‒13
twenty-two 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 Clemens, Jeffrey; Strain, Michael R.
  2. Wage Effects of Educational Mismatch According to Workers' Origin: The Role of Demographics and Firm Characteristics By Jacobs, Valentine; Rycx, Francois; Volral, Mélanie
  3. Individualism, Human Capital Formation, and Labor Market Success By Hartinger, Katharina; Resnjanskij, Sven; Ruhose, Jens; Wiederhold, Simon
  4. Why Is Workplace Sexual Harassment Underreported? The Value of outside Options amid the Threat of Retaliation By Dahl, Gordon B.; Knepper, Matthew
  5. The Extent of Downward Nominal Wage Rigidity: New Evidence from Payroll Data By Daniel Schaefer; Carl Singleton
  6. Preferences, Selection, and the Structure of Teacher Pay By Johnston, Andrew C.
  7. The Effect of Work Schedule Control on Volunteering among Early Career Employees By Mantovan, Noemi; Sauer, Robert M.; Wilson, John
  8. Who Benefits from Online Gig Economy Platforms? By Christopher T. Stanton; Catherine Thomas
  9. Labour Mobility with Vocational Skill: Australian Demand and Pacific Supply By Chand, Satish; Clemens, Michael A.
  10. Employment Effects of Economic Sanctions in Iran By Kelishomi, Moghaddasi Ali; Nistico, Roberto
  11. Secondary Schools with Televised Lessons: The Labor Market Returns of the Mexican Telesecundaria By Laia Navarro-Sola
  12. Unemployment transitions and the role of minimum wage: from pre-crisis to crisis and recovery By Eirini Andriopoulou; Alexandros Karakitsios
  13. Capital Investment and Labor Demand By E. Mark Curtis; Daniel G. Garrett; Eric C. Ohrn; Kevin A. Roberts; Juan Carlos Suárez Serrato
  14. The Wage Effects of Offshoring to the East and West: Evidence from Germany By Körner, Konstantin
  15. A decomposition method to evaluate the ‘paradox of progress’ with evidence for Argentina By Javier Alejo; Leonardo Gasparini; Gabriel Montes-Rojas; Walter Sosa-Escudero
  16. Employer Market Power in Silicon Valley By Gibson, Matthew
  17. Carpooling: User Profiles and Well-being By Echeverría, Lucía; Gimenez-Nadal, J. Ignacio; Molina, José Alberto
  18. From Epidemic to Pandemic: Did the COVID-19 Outbreak Affect High School Program Choices in Sweden? By Aalto, Aino-Maija; Müller, Dagmar; Tilley, J. Lucas
  19. The Impact of Body Mass Index on Growth, Schooling, Productivity, and Savings: A Cross-Country Study By Tansel, Aysit; Öztürk, Ceyhan; Erdil, Erkan
  20. Some Welfare Economics of Working Time By FitzRoy, Felix; Jin, Jim
  21. Television, Health, and Happiness: A Natural Experiment in West Germany By Chadi, Adrian; Hoffmann, Manuel
  22. What is the child-related compensational pension system good for and what is not? By Németh, Petra; Szabó-Bakos, Eszter

  1. By: Clemens, Jeffrey (University of California, San Diego); Strain, Michael R. (American Enterprise Institute for Public Policy Research)
    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.
    Keywords: minimum wages, employment, pre-commitment
    JEL: J08 J23 J38
    Date: 2021–09
  2. By: Jacobs, Valentine (Free University of Brussels); Rycx, Francois (Free University of Brussels); Volral, Mélanie (University of Mons)
    Abstract: This paper examines the influence of educational mismatch on wages according to workers' region of birth, taking advantage of our access to rich matched employer-employee data for the Belgian private sector for the period 1999-2010. Using a fine-grained approach to measuring educational mismatch and controlling for a large set of covariates, we first find that workers born in developed countries benefit from positive wage returns to their years of attained-, required and over-education, and that these returns are significantly higher for them than for their peers born in developing countries. Second, our results show that the wage return to a year of over-education is positive but lower than that to a year of required education. This suggests that over-educated workers suffer a wage penalty compared to their well-matched former classmates (i.e. workers with the same level of education in jobs that match their education). However, the magnitude of this wage penalty is found to vary considerably depending on the origin of the workers. Indeed, all else being equal, our estimates show that it is much greater for workers from developing countries – especially for those born in Africa and the Middle and Near East – than for those from developed countries. Regardless of workers' origin, our estimates further indicate that the wage penalty associated with over-education is higher for workers who: i) have attained tertiary education, ii) are male, iii) have more seniority in employment, iv) are employed in smaller firms, and v) are covered by a collective agreement at the firm level. Yet, whatever the moderating variable under consideration, the estimates also show that the wage penalty associated with over-education remains higher for workers born in developing countries.
    Keywords: immigrants, educational mismatch, wage gap, linked employer-employee data
    JEL: I24 I26 J15 J24 J31
    Date: 2021–10
  3. By: Hartinger, Katharina (Catholic University of Eichstätt-Ingolstadt); Resnjanskij, Sven (CESifo); Ruhose, Jens (University of Kiel); Wiederhold, Simon (Ifo Institute for Economic Research)
    Abstract: There is an ongoing debate about the economic effects of individualism. We establish that individualism leads to better educational and labor market outcomes. Using data from the largest international adult skill assessment, we identify the effects of individualism by exploiting variation between migrants at the origin country, origin language, and person level. Migrants from more individualistic cultures have higher cognitive skills and larger skill gains over time. They also invest more in their skills over the life-cycle, as they acquire more years of schooling and are more likely to participate in adult education activities. In fact, individualism is more important in explaining adult skill formation than any other cultural trait that has been emphasized in previous literature. In the labor market, more individualistic migrants earn higher wages and are less often unemployed. We show that our results cannot be explained by selective migration or omitted origin-country variables.
    Keywords: cognitive skills, culture, individualism, labor market, international comparisons
    JEL: D91 J24 I20 Z13
    Date: 2021–10
  4. By: Dahl, Gordon B. (University of California, San Diego); Knepper, Matthew (University of Georgia)
    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.
    Keywords: unemployment insurance, unemployment, sexual harassment
    JEL: J71 J78
    Date: 2021–09
  5. By: Daniel Schaefer (Institut für Volkswirtschaftslehre, Johannes-Kepler-Universität Linz); Carl Singleton (Department of Economics, University of Reading)
    Abstract: Low inflation has forced the topic of downward nominal wage rigidity (DNWR) back to the centre stage of macroeconomics. We use over a decade of representative payroll data from Great Britain to document novel facts about wage adjustments. We find that basic wages drive the cyclicality of marginal labour costs, which makes them the most relevant wage measure for macroeconomic models that incorporate wage rigidity. Basic wages show substantially more evidence of downward rigidity than previously documented. Every fifth hourly-paid and every sixth salaried employee normally sees no basic wage change from year-to-year, and very few experience cuts. Wage freezes were more common in the Great Recession and are far more likely in smaller firms. We also find evidence that employers compress wage growth when inflation is low, indicating that DNWR constrains wage setting. Further, we show that the wages of new hires and incumbent employees respond equally to the business cycle. These results all point to the importance of including DNWR in macroeconomic and monetary policy models, and our simulations demonstrate that the empirical extent of DNWR can cause considerable long-run output losses.
    Keywords: Downward nominal wage rigidity, Hiring wages, Unemployment fluctuations, Macroeconomic policy, Marginal labour costs
    JEL: E24 E32 J31 J33
    Date: 2021–11–30
  6. By: Johnston, Andrew C. (University of California, Merced)
    Abstract: I conduct a discrete-choice experiment with responses linked to administrative teacher and student records to examine teacher preferences for compensation structure and working conditions. I calculate willingness-to-pay for a rich set of work attributes. High-performing teachers have similar preferences to other teachers, but they have stronger preferences for performance pay. Taking the preference estimates at face value I explore how schools should structure compensation to meet various objectives. Under each objective, schools appear to underpay in salary and performance pay while overpaying in retirement. Restructuring compensation can increase both teacher welfare and student achievement.
    Keywords: teacher labor markets, compensation structure, teacher quality
    JEL: I20 J32 J45 M50
    Date: 2021–11
  7. By: Mantovan, Noemi (Bangor University); Sauer, Robert M. (Royal Holloway, University of London); Wilson, John (Duke University)
    Abstract: Recent trends in the labor market see increasing numbers of workers having to deal with "schedule precarity" including volatile hours, rotating shift work, unpredictable work hours and lack of choice on the part of the employee. These trends are of concern to those interested in fostering levels of civic engagement because they potentially limit volunteering. This study uses data from the National Longitudinal Survey of Youth 1997 (NLSY97) containing information on work schedules in 2011 and 2013 among employees to determine the effect of changes in work schedules on becoming a volunteer using transition regressions. We investigate interactions between work schedule measures and pay structure because workers paid by the hour have lower volunteer rates than salaried workers. The study finds that, while three of the schedule dimensions are unrelated to volunteering, transitioning towards more schedule control has a positive effect on volunteering. However, interaction analysis shows this positive effect is confined to salaried workers whereas for hourly paid workers the effect is negative. The results support the idea that having more freedom to set one's work schedule reduces work-life conflict but suggest that this positive effect is limited to those who can take advantage of it.
    Keywords: volunteer work, precarious employment, work-schedules, pay structure
    JEL: J10 J20 J30
    Date: 2021–09
  8. By: Christopher T. Stanton; Catherine Thomas
    Abstract: This paper estimates the magnitude and distribution of surplus from the knowledge worker gig economy using data from an online labor market. Labor demand elasticities determine workers’ wages, and buyers’ past market experience shapes both their job posting frequency and hiring rates. We find that workers on the supply side capture around 40% of the surplus from filled jobs. Under counterfactual policies that resemble traditional employment regulation, buyers post fewer online jobs and fill posted jobs less often, reducing expected surplus for all market participants. We find negligible substitution on the demand side between online and offline jobs by assessing how changes in local offline minimum wages affect online hiring. The results suggest that neither online or offline knowledge workers will benefit from applying traditional employment regulation to the online gig economy.
    JEL: F66 J23 J8 L24 L51 M5
    Date: 2021–11
  9. By: Chand, Satish (University of New South Wales); Clemens, Michael A. (Center for Global Development)
    Abstract: How many immigrants with less than university education, for a given immigration quota, maximise economic output? The answer is zero in the canonical model of the labour market, where the marginal product of a university-educated immigrant is always higher. We build an alternative model in which national production occurs through a set of Leontief producation functions that shift over time with technological change. This model is used to estimate that the Australian economy growing at historical rates through the year 2050 will demand approximately two million migrant TVET workers, many of which could be supplied from the Pacific Islands.
    Keywords: immigration, labor, low skill, TVET, training, human capital, growth
    JEL: F22 J11 J24
    Date: 2021–11
  10. By: Kelishomi, Moghaddasi Ali (Loughborough University); Nistico, Roberto (University of Naples Federico II)
    Abstract: This paper investigates the effect of economic sanctions on employment. We exploit the imposition of a series of unexpected and unprecedented international economic sanctions on Iran in 2012 and estimate the short-run effects of the change in import exposure on manufacturing employment at the industry level. Our estimates indicate that the sanctions led to an overall decline in the manufacturing employment growth rate by 16.4 percentage points. However, we uncover significant asymmetric effects across industries with different ex-ante import shares. Interestingly, the effects are mostly driven by labor-intensive industries and industries that heavily depend on imported inputs. This suggests that the overall negative impact of the sanctions on employment might be largely due to the decline in productivity experienced by industries with a high propensity to import inputs from abroad.
    Keywords: economic sanctions, employment, import exposure, labor reallocation
    JEL: F16 F51 J21
    Date: 2021–10
  11. By: Laia Navarro-Sola (Northwestern University)
    Abstract: In areas with an insufficient supply of qualified teachers, delivering instruction through technology may be a solution to provide education. This paper analyzes the educational and labor market impacts of an expansion of junior secondary education in Mexico through schools using televised lessons, the telesecundarias. Exploiting their staggered rollout from 1968 to 2000, I show that for every additional telesecundaria per 50 children, ten students enroll in junior secondary education. I find that an additional year of education increases long-run income by 12.5–13.9%, driven partly by increased labor force participation and a shift away from agriculture and the informal sector.
    Keywords: secondary education, educational attainment, returns to education
    JEL: I28 O15 J24
    Date: 2021–12
  12. By: Eirini Andriopoulou (Athens University of Economics and Business); Alexandros Karakitsios (Athens University of Economics and Business)
    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: 2021–11–29
  13. By: E. Mark Curtis; Daniel G. Garrett; Eric C. Ohrn; Kevin A. Roberts; Juan Carlos Suárez Serrato
    Abstract: We study how tax policies that lower the cost of capital impact investment and labor demand. Difference-in-differences estimates using confidential US Census Data on manufacturing establishments show that tax policies increased both investment and employment, but did not lead to wage or productivity gains. Using a structural model, we show that the primary effect of the policy was to increase the use of all inputs by lowering overall costs of production. The policy further stimulated production employment due to the complementarity of production labor and capital. Supporting this conclusion, we find that investment is greater in plants with lower labor costs. Our results show that recent tax policies that incentivize capital investment do not lead manufacturing plants to replace workers with machines.
    JEL: D22 H25 H32 J23
    Date: 2021–11
  14. By: Körner, Konstantin (Institute for Employment Research (IAB), Nuremberg, Germany)
    Abstract: "This paper analyzes the labor market effects of offshoring in a high-wage home country and how these effects crucially depend on (1) job complexity and (2) the characteristics of the destination country. It thereby links several sources: rich administrative data on individuals and plants in the German manufacturing sector, information on a job’s task bundle, and the evolution of imported inputs from low- or high-wage destinations, which are represented by Eastern and Western Europe, respectively. Offshoring to these origins has opposing effects on German wages with respect to the relative task complexity of jobs: While offshoring to the West puts pressure on the wages of complex jobs and increases the wages of simple jobs, offshoring to the East entails the opposite effect. The overall effect adds up to a 4.2 percent increase in wages for jobs with high complexity, while low-complexity jobs see a 3.9 percent decrease in wages." (Author's abstract, IAB-Doku) ((en))
    Keywords: Bundesrepublik Deutschland ; Osteuropa ; Westeuropa ; Ausland ; Auswirkungen ; Einkommenseffekte ; Lohnhöhe ; Niedriglohnland ; outsourcing ; Zielgebiet
    JEL: F15 F16 J31
    Date: 2021–10–29
  15. By: Javier Alejo (IECON-Universidad de la Rep´ublica); Leonardo Gasparini (CEDLAS-IIE-FCE-UNLP & CONICET); Gabriel Montes-Rojas (UBA & CONICET); Walter Sosa-Escudero (UdeSA & CONICET)
    Abstract: The ‘paradox of progress’ is an empirical regularity that associates more education with larger income inequality. Two driving and competing factors behind this phenomenon are the convexity of the ‘Mincer equation’ (that links wages and education) and the heterogeneity in its returns, as captured by quantile regressions. We propose a joint least-squares and quantile regression statistical framework to derive a decomposition in order to evaluate the relative contribution of each explanation. The estimators are based on the ‘functional derivative’ approach. We apply the proposed decomposition strategy to the case of Argentina 1992 to 2015.
    JEL: J31 C21 I24 J46 O54
    Date: 2022–01
  16. By: Gibson, Matthew (Williams College)
    Abstract: Adam Smith alleged that secret employer collusion to reduce labor earnings is common. This paper examines an important case of such behavior: no-poach agreements through which technology companies agreed not to compete for each other’s workers. Exploiting the plausibly exogenous timing of a US Department of Justice investigation, I estimate the effects of these agreements using a difference-in-differences design. Data from Glassdoor permit the inclusion of rich employer- and job-level controls. Estimates indicate each agreement cost affected workers approximately 2.5 percent of annual salary. Stock bonuses and ratings of job satisfaction were also negatively affected.
    Keywords: monopsony, oligopsony, employer market power, labor earnings
    JEL: J42 K21 J30 L41
    Date: 2021–11
  17. By: Echeverría, Lucía (University of Zaragoza); Gimenez-Nadal, J. Ignacio (University of Zaragoza); Molina, José Alberto (University of Zaragoza)
    Abstract: Carpooling is a sustainable daily mobility mode, implying significant reductions in energy consumption and CO2 emissions, although it remains an uncommon practice. With the aim of stimulating this green transportation mode, this paper focus on understanding why certain individuals will agree to share a car to a common destination, apart from the obvious environmental benefit in emissions. It first describes the profile of users and then explores the relationship between this transportation mode and the participants' well-being. To that end, we have selected two countries, the UK and the US, where the use of cars represents a high proportion of daily commuting. We use the UK Time Use Survey (UKTUS) from 2014-2015 and the Well-Being Module of the American Time Use Survey (ATUS) from 2010-2012-2013 to identify which groups in the population are more likely to pool their cars, and with whom those individuals enjoy carpooling more. Results indicate that individuals with certain socio-demographic characteristics and occupations are more likely to commute by carpooling, but the profile seems to be country-specific. Furthermore, our evidence reveals a positive relationship between carpooling and well-being during commuting.
    Keywords: carpooling, green mobility, user profiles, subjective well-being
    JEL: R40 J22
    Date: 2021–09
  18. By: Aalto, Aino-Maija (Swedish Institute for Social Research (SOFI), Stockholm University); Müller, Dagmar (Research Institute of Industrial Economics (IFN)); Tilley, J. Lucas (Swedish Institute for Social Research (SOFI), Stockholm University)
    Abstract: We study whether the onset of the COVID-19 crisis affected the program choices of high school applicants in Sweden. Our analysis exploits the fact that the admission process consists of two stages: a preliminary round in which applicants rank programs in order of preference and a final round in which they have full flexibility to alter their preliminary rankings. In 2020, the timing of the two rounds happened to provide a unique pre- and postcrisis snapshot of applicants’ preferences for various fields of study. Using school-level data on applicants’ top-ranked programs for all admission rounds between 2016 and 2020, we implement a difference-in-differences method to identify the immediate effect of the crisis on program preferences. We find no change in preferences for academic programs, but a decline in top-ranked applications to some of the vocational programs. The declines are most pronounced and robust for several service-oriented programs, in particular those related to hotel and restaurant, which was the most adversely affected industry during the crisis. This finding suggests that labor market considerations influence the study choices made by relatively young students.
    Keywords: COVID-19; Business cycle; Human capital investment; Field of study
    JEL: I20 J24
    Date: 2021–11–29
  19. By: Tansel, Aysit (Middle East Technical University); Öztürk, Ceyhan (Middle East Technical University); Erdil, Erkan (Middle East Technical University)
    Abstract: We examine the relationship between wealth and health through prominent growth indicators and cognitive ability. Cognitive ability is represented by nutritional status. The proxy variable for nutritional status is BMI. We use the reduced form equation in the cubic specification of time preference rate, strongly related to cognitive ability, to estimate this relationship. 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 the 1980-2009 period. We 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: 2021–09
  20. By: FitzRoy, Felix (University of St. Andrews); Jin, Jim (University of St. Andrews)
    Abstract: Few skilled workers in the UK have flexible working time – GPs are the exception – most can only choose between unemployment, or full-time work, which has changed little in recent years, while part time work is mainly unskilled. This market rigidity imposes major welfare losses, in contrast to flexibility of worktime for all in the Netherlands, which has the best work-life balance. Stagnating real wages and rising employer market power and inequality follow declining unionisation, but a standard four-day week, tax reform, basic income, and flexibility rights for all could reverse these trends and provide major welfare gains.
    Keywords: working hours, relative income, labour share, basic income
    JEL: D63 J22 H23
    Date: 2021–10
  21. By: Chadi, Adrian (University of Konstanz); Hoffmann, Manuel (Texas A&M University)
    Abstract: Watching television is the most time-consuming human activity besides work but its role for individual well-being is unclear. Negative consequences portrayed in the literature raise the question whether this popular pastime constitutes an economic good or bad, and hence serves as a prime example of irrational behavior reducing individual health and happiness. Using rich panel data, we are the first to comprehensively address this question by exploiting a large-scale natural experiment in West Germany, where people in geographically restricted areas received commercial TV via terrestrial frequencies. Contrary to previous research, we find no health impact when TV consumption increases. For life satisfaction, we even find positive effects. Additional analyses support the notion that TV is not an economic bad and that non-experimental evidence seems to be driven by negative self-selection.
    Keywords: health, happiness, well-being, natural experiment, television consumption, time-use, entertainment, CSPT, ArcGIS, mass media
    JEL: C26 D12 I31 H12 J22 L82
    Date: 2021–09
  22. By: Németh, Petra; Szabó-Bakos, Eszter
    Abstract: There is increasing attention to the sustainability and fairness of the pay-as-you-go pension system as a consequence of the aging society and the imbalance between the old and the young generation’s number. In this system, the pension depends only on the previous contribution, which indirectly punishes childbearing. The purpose of this article is to compare the effect of the present Hungarian regulation to a possible child-related compensational pension scheme, where the amount of pension takes into account the childbearing time. The evaluation of the pension systems is based on the lifespan utility of representative agents (with or without children) and the economic effects of the possible pension reform. We built up a dynamic general equilibrium model in an overlapping generations framework (calibrated on the basis of Hungarian data) to investigate the effects of our pension reform proposal. As a result we receive that such a pension system could increases the utility of the consumer who has children by 0.2149% percent, but decrease the steady state utility of childless consumer by 0,0130% percent. The amount of children and the time spent with children increase slightly, but these positive elements that could have raised the output does not compensate the negative effect of the decreasing work-related efforts, so the output falls.
    Keywords: Computable General Equilibrium Models, OLG model, Public Pension, Retirement Policies
    JEL: C68 H55 J26 D15
    Date: 2021–12–04

This nep-lma issue is ©2021 by Joseph Marchand. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.