nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2022‒02‒14
eighteen papers chosen by
Joseph Marchand
University of Alberta

  1. Early Retirement of Employees in Demanding Jobs: Evidence from a German Pension Reform By Johannes Geyer; Svenja Lorenz; Thomas Zwick; Mona Bruns
  2. Labour-saving automation and occupational exposure: A text-similarity measure By Montobbio, Fabio; Staccioli, Jacopo; Maria Enrica Virgillito; Vivarelli, Marco
  3. Health, Personality Disorders, Work Commitment and Training to Employment Transitions By Patzina, Alexander; Dietrich, Hans; Barabasch, Anton
  4. Is there job polarization in developing economies? A review and outlook. By Soares Martins Neto, Antonio; Mathew, Nanditha; Mohnen, Pierre; Treibich, Tania
  5. Sector switching in Germany By Prümer, Stephanie
  6. Broadband and Productivity: Structural Estimates for Germany By Tomaso Duso; Mattia Nardotto; Alexander Schiersch
  7. The old-age pension household replacement rate in Belgium By Brown, Alessio J.G.; Fraikin, Anne-Lore
  8. The impact of working conditions on mental health: novel evidence from the UK By Michele Belloni; Ludovico Carrino; Elena Meschi
  9. The Effects of Leisure Activities on Academic Performance By Laura Urgelles; Bernd Frick
  10. The Effects of an Increase in the Retirement Age on Health: Evidence from Administrative Data By Mara Barschkett; Johannes Geyer; Peter Haan; Anna Hammerschmid
  11. Teachers’ Knowledge and Preparedness for Retirement: Results from a Nationally Representative Teacher Survey By Fuchsman, Dillon; McGee, Josh; Zamarro, Gema
  12. A Note on Evaluating Formal Education for Adults By Stenberg, Anders
  13. Academic Performance and Salary Expectations of Competitive and Recreational Athletes vs. Inactive Students By Laura Urgelles; Bernd Frick
  14. The minimum wage, informal pay and tax enforcement By Anikó Bíró; Daniel Prinz; László Sándor
  15. Spatial Wage Curves for Formal and Informal Workers in Turkey By Badi H. Baltagi; Yusuf Soner Başkaya
  16. Chasing the Shadow: the Evaluation of Unreported Wage Payments in Latvia By Konstantins Benkovskis; Ludmila Fadejeva
  17. The distributional and employment impacts of nationwide Minimum Wage changes By Jonathan Cribb; Giulia Giupponi; Robert Joyce; Attila Lindner; Tom Waters; Thomas Wernham; Xiaowei Xu
  18. Developing international benchmarks of patient safety culture in hospital care: Findings of the OECD patient safety culture pilot data collection and considerations for future work By Katherine de Bienassis; Nicolaas S. Klazinga

  1. By: Johannes Geyer; Svenja Lorenz; Thomas Zwick; Mona Bruns
    Abstract: Early retirement options are usually targeted at employees at risk of not reaching their regular retirement age in employment. An important at-risk group comprises employees who have worked in demanding jobs for many years. This group may be particularly negatively affected by the abolition of early retirement options. To measure differences in labor market reactions of employees in low- and high-demand jobs, we exploit the quasi-natural experiment of a cohort-specific pension reform that increased the early retirement age for women from 60 to 63 years. Based on a large administrative dataset, we use a regression-discontinuity approach to estimate the labor market reactions. Surprisingly, we find the same relative employment increase of about 25% for treated women who were exposed to low and to high job demand. For older women in demanding jobs, we do not find substitution effects into unemployment, partial retirement, disability pension, or inactivity. Eligibility for the pension for women required high labor market attachment; thus, we argue that this eligibility rule induced the positive selection of healthy workers into early retirement. We propose alternative policies that protect workers exposed to high job demand better against the negative consequences of being unable to reach their statutory retirement age in employment.
    Keywords: Pension reform, job demand, early retirement, quasi-experimental variation
    JEL: J14 J18 J22 J26 H31
    Date: 2021
  2. By: Montobbio, Fabio (Università Cattolica del Sacro Cuore, BRICK, Collegio Carlo Alberto, and ICRIOS, Bocconi University); Staccioli, Jacopo (Università Cattolica del Sacro Cuore, and Institute of Economics, Scuola Superiore Sant’Anna); Maria Enrica Virgillito (Institute of Economics, Scuola Superiore Sant’Anna, and Università Cattolica del Sacro Cuore); Vivarelli, Marco (UNU-MERIT, Maastricht University, IZA, and Università Cattolica del Sacro Cuore)
    Abstract: This paper represents one of the first attempts at building a direct measure of occupational exposure to robotic labour-saving technologies. After identifying robotic and LS robotic patents retrieved by Montobbio et al. (2022), the underlying 4-digit CPC definitions are employed in order to detect functions and operations performed by technological artefacts which are more directed to substitute the labour input. This measure allows to obtain fine-grained information on tasks and occupations according to their similarity ranking. Occupational exposure by wage and employment dynamics in the United States is then studied, complemented by investigating industry and geographical penetration rates.
    Keywords: Labour-Saving Technology, Natural Language Processes, Labour Markets, Technological Unemployment
    JEL: O33 J24
    Date: 2021–11–25
  3. By: Patzina, Alexander (Institute for Employment Research (IAB), Nuremberg, Germany); Dietrich, Hans (Institute for Employment Research (IAB), Nuremberg, Germany); Barabasch, Anton (IAB)
    Abstract: "This study analyzes the influence of mental and physical health, coping abilities, cooperativeness, and work commitment on the transition from apprenticeship training to a first job. In doing so, we first investigate transitions to regular employment within six months post-graduation. Second, we analyze gapless transitions from training to a first job. Third, we investigate transitions to a decent first job. This study draws on a unique dataset of 1,061 individuals from Germany that combines rich survey and register data. The baseline survey takes place during the last year of training for these individuals and contains information on their schooling, health, personality disorders and work attitudes. The register data measure the training environment and labor market outcomes. The results from linear probability models reveal that only physical health is associated with finding a first job within six months. Physical and mental health are associated with gapless transitions. Overall health, coping abilities and work commitment are important in terms of finding decent employment. However, when conditioning on individual and training firm characteristics, these associations are weakened and become statistically insignificant. Thus, the constructs under study might drive school graduates into certain training firms and occupations leading to decent first jobs. Fourth, our results indicate that the effect of overall health on gapless transitions is largest for individuals with higher levels of education, while the overall health effect is almost zero for those who are least educated. Thus, this study provides evidence of a cumulative disadvantage of the least educated in the school-to-work transition." (Author's abstract, IAB-Doku) ((en))
    Keywords: IAB-Open-Access-Publikation
    JEL: J24 M53 P46
    Date: 2022–01–28
  4. By: Soares Martins Neto, Antonio (UNU-MERIT, Maastricht University); Mathew, Nanditha (UNU-MERIT, Maastricht University); Mohnen, Pierre (UNU-MERIT, Maastricht University); Treibich, Tania (SBE, Maastricht University)
    Abstract: This paper analyses the evidence of job polarization in developing countries. We carry out an extensive review of the existing empirical literature and examine the primary data sources and measures of routine intensity. The synthesis of results suggests that job polarization in emerging economies is only incipient compared to other advanced economies. We then examine the possible moderating aspects preventing job polarization, discussing the main theoretical channels and the existing empirical literature. Overall, the literature relates the lack of polarization as a natural consequence of limited technology adoption and the offshoring of routine, middle-earning jobs to some host developing economies. In turn, the limited technology adoption results from sub-optimal capabilities in those economies, including the insufficient supply of educated workers. Finally, we present the main gaps in the literature in developing economies and point to the need for more micro-level studies focusing on the impacts of tech- nology adoption on workers’ careers and studies exploring the adoption and use of technologies at the firm level.
    Keywords: Job polarization, Routine intensity, Skills, Developing countries
    JEL: J24 J63 O15 O33 E24
    Date: 2021–11–25
  5. By: Prümer, Stephanie
    Abstract: Changes in the employment sector over the course of a career, i.e., employees switching from the private to the public sector or vice versa, are a common phenomenon. These sector switches have hardly been studied so far. Using data from the German Socio-Economic Panel I give insights into sector switching in Germany. Further, I analyze whether individual characteristics or attitudes affect the probability of switching sectors. I show that women are more likely to switch to the public sector than men and that the probability of switching to the public sector is positively related to education. In contrast, attitudes rather than socio-demographic characteristics are relevant for the probability of switching to the private sector. I argue that deepening the knowledge of sector switching can enrich public sector human resource management.
    Keywords: Sector Switching,Public Sector,Germany
    JEL: J45 J69 M5
    Date: 2021
  6. By: Tomaso Duso; Mattia Nardotto; Alexander Schiersch
    Abstract: We study the impact of broadband availability on firms’ total factor productivity (TFP) using German firm-level data between 2010 and 2015. We adopt a control function approach to causally identify and separately estimate productivity for 46 two-digit manufacturing and service sectors. Over the sample period, broadband availability, measured by 16 Mbps transmission rates, more than doubled in German municipalities. While this increased broadband availability has almost no effect on firms’ productivity in manufacturing, it significantly increases TFP in most service sectors. Yet, the size of the effect is heterogenous across industries.
    Keywords: broadband internet, productivity, firm-level data
    JEL: D24 D22 J24 O14 O22 O33
    Date: 2021
  7. By: Brown, Alessio J.G. (UNU-MERIT, Maastricht University, Global Labor Organization (GLO)); Fraikin, Anne-Lore (UNU-MERIT, Maastricht University, Global Labor Organization (GLO), and Liege University)
    Abstract: The objective of the paper is to examine the retirement behaviour of Belgian workers in one-earner households who are automatically granted a more generous old-age pension benefits replacement rate, called the household replacement rate. Following a recommendation of the Belgian Pension Reform Committee, this policy is to be suppressed for new pensioners, except for those receiving the minimum pension. We provide an ex-ante impact evaluation of such reform on both pension sustainability and adequacy measures. Specifically, we test whether the household replacement rate entails a work (dis)incentive mechanism promoting (harming) pension sustainability and furthermore, we analyse the role of the household replacement rate in old-age poverty and inequality measures. To do so, we use the survey dataset SHARE and a discrete time logistic duration model to study the link between retirement and financial retirement incentives created by the social security system. We find that the household replacement rate generates slightly higher retirement incentives through an income effect and we find that the household replacement rate plays an important role in decreasing the elderly poverty rate. Since households with asymmetrical working arrangements are often at the lowest part of the equivalized income distribution, the substantial effect of the household replacement rate on poverty measures is a motive to use such mechanism as a poverty alleviation tool. Nevertheless, we advocate that income redistribution measures should not be tied to a specific household composition and policies such as pensionable earning minima, minimum pension benefits and the inclusion of replacement income periods in the pension benefits calculation effectively serve the income redistribution goal without favouring a certain type of household over another. Overall, despite the positive poverty and distributional aspects of this policy, our analysis supports the reform proposal of removing the household replacement rate.
    Keywords: retirement, pension policy, Belgium, impact assessment
    JEL: H31 H55 J22 J26 O15
    Date: 2022–01–19
  8. By: Michele Belloni; Ludovico Carrino; Elena Meschi
    Abstract: This paper investigates the causal impact of working conditions on mental health in the UK, combining new comprehensive longitudinal data on working conditions from the European Working Condition Survey with microdata from the UK Household Longitudinal Survey (Understanding Society). Our empirical strategy accounts for the endogenous sorting of individuals into occupations by including individual fixed effects. It addresses the potential endogeneity of occupational change over time by focusing only on individuals who remain in the same occupation (same ISCO), exploiting the variation in working conditions within each occupation over time. This variation, determined primarily by general macroeconomic conditions, is likely to be exogenous from the individual point of view. Our results indicate that improvements in working conditions have a beneficial, statistically significant, and clinically meaningful impact on depressive symptoms for women. A one standard deviation increase in the skills and discretion index reduces depression score by 2.84 points, which corresponds to approximately 20% of the GHQ score standard deviation, while a one standard deviation increase in working time quality reduces depression score by 0.97 points. The results differ by age: improvements in skills and discretion benefit younger workers (through increases in decision latitude and training) and older workers (through higher cognitive roles), as do improvements in working time quality; changes in work intensity and physical environment affect only younger and older workers, respectively. Each aspect of job quality impacts different dimensions of mental health. Specifically, skills and discretion primarily affect the loss of confidence and anxiety; working time quality impacts anxiety and social dysfunction; work intensity affects the feeling of social dysfunction among young female workers. Finally, we show that improvements in levels of job control (higher skills and discretion) and job demand (lower intensity) lead to greater health benefits, especially for occupations that are inherently characterised by higher job strain.
    Keywords: mental health, working conditions, job demand, job control.
    JEL: I1 J24 J28 J81
    Date: 2022–01
  9. By: Laura Urgelles (University of Paderborn); Bernd Frick (University of Paderborn)
    Abstract: This paper analyzes the effect of the participation in different leisure activities on university and college students’ average grade. In a first step, we calculate an OLS regression and find that for male students being a member in a fraternity is negatively related with the average grade. Contrarily, being an active member of a political or religious group is posi-tively correlated with the average grade. In a second step we analyze the influence of the two leisure activities most popular among students (music & arts and sports) in more detail. Using an instrumental variables approach, this study finds that the participation in music and arts positively affects female students’ grades. The participation in sports is negatively related with the average grade, although these results are not significant for the female and male subsamples. This paper contributes to the existing knowledge on the subject by providing empirical evidence for the involvement of students in higher education in a range of leisure activities (e.g. music & arts, sports, fraternities, involvement in the university administration, and activity in political and religious groups). Based on these findings, causal inferences about music and arts can be made as well as inferences about participation in sports. As a result, students may rethink their decisions on leisure time allocations. Higher education institutions might also be able to use this information to adapt their funding decisions in order to support academically beneficial activities such as orchestras, theater groups, or musical bands.
    Keywords: leisure activities, higher education, academic performance, instrumental variable regression
    JEL: Z20 Z29 I23 J22 J24 L83 C21 C26
    Date: 2022–02
  10. By: Mara Barschkett; Johannes Geyer; Peter Haan; Anna Hammerschmid
    Abstract: This study analyzes the causal effect of an increase in the retirement age on health. We exploit a sizable cohort-specific pension reform for women using two complementary empirical approaches - a Regression Discontinuity Design and a Difference-in- Differences approach. The analysis is based on official records covering all individuals insured by the public health system in Germany and including all certified diagnoses by practitioners. This enables us to gain a detailed understanding of the multi-dimensionality in these health effects. The empirical findings reflect the multidimensionality but allow for deriving two broader conclusions. We provide evidence that the increase in the retirement age negatively affects health outcomes as the prevalence of several diagnoses, e.g., mental health, musculoskeletal diseases, and obesity, increases. In contrast, we do not find support for an improvement in health related to a prolonged working life since there is no significant evidence for a reduction in the prevalence of any health outcome we consider. These findings hold for both identification strategies, are robust to sensitivity checks, and do not change when correcting for multiple hypothesis testing.
    Keywords: Germany, Retirement, Pension reform, Health, ICD-10, Regression Discontinuity Design, Difference-in-Differences
    JEL: I10 I12 I18 J14 J18 J26
    Date: 2021
  11. By: Fuchsman, Dillon (Sinquefield Center for Applied Economic Research, Saint Louis University); McGee, Josh (University of Arkansas); Zamarro, Gema (University of Arkansas)
    Abstract: Adequately saving for retirement requires both planning and knowledge about available retirement savings options. Teachers participate in a complex set of different plan designs and benefit tiers, and many do not participate in Social Security. While teachers represent a large part of the public workforce, relatively little is known regarding their knowledge about and preparation for retirement. We administered a survey to a nationally representative sample of teachers through RAND’s American Teacher Panel and asked teachers about their retirement planning and their employer sponsored retirement plans. We find that while most teachers are taking steps to prepare for retirement, many teachers lack the basic retirement knowledge necessary to plan effectively. Teachers struggled to identify their plan type, how much they are contributing to their plans, retirement eligibility ages, and who contributes to Social Security. These results suggest that teacher retirement reform may not be disruptive for teachers and that better, simpler, and clearer information about teacher retirement plans would be beneficial.
    Keywords: teacher pensions; retirement knowledge; retirement planning
    JEL: I20 J33
    Date: 2022–01–17
  12. By: Stenberg, Anders (Swedish Institute for Social Research, Stockholm University)
    Abstract: Evaluations of adults in formal education (AE) are typically based on earnings measured 5-10 years from program start. This paper presents estimated returns up to 24 years after program start, and explore results for 15 cohorts of first-time registered in AE 1994-2008 with at least a 10-year follow-up period. For college level AE, results indicate substantially higher payoff in absolute terms after 24 years compared with after 10 years, but there is no support that multiplier effects increase the returns to AE over time. There is some, albeit modest, evidence of human capital depreciation for high school level AE.
    Keywords: Adult education; Self-selection; Propensity score matching
    JEL: H30 H52 I20 J24 O30
    Date: 2022–02–01
  13. By: Laura Urgelles (University of Paderborn); Bernd Frick (University of Paderborn)
    Abstract: The aim of the present study was to find out whether salary expectations vary with the different types of athletic involvements. Previous studies based on high school pupil data show that the involvement in sports is beneficial for the grade but only to a certain degree. That is, during the high season of sport, athletes’ grades deteriorate (Schultz, 2017). At the college and university level, most studies find a positive relation between athletic participation and grades (Fricke et al., 2018). Labor economists have identified numerous positive effects of athletic participation, including a higher salary for athletes (Kuhn & Weinberger, 2005; Lechner & Downward, 2017) and former athletes (Ewing, 2007). We conducted an own survey among German university and college students during the summer semester 2016 and obtained a data set with information on sports participation for 4,592 students. Based on this information we group our participants in three athlete types: inactive students (IS), recreational athletes (RA) and competitive athletes (CA). We analyze three equations in a system of seemingly unrelated regression (SUR) with a three-stage least square estimator. Our (alternative) dependent variables are the current average grade, the number of semesters needed to acquire the degree, and the salary expectations. We find that CA expect a significantly higher salary than their inactive peers. CA tend to study longer until they achieve their degrees. We also find that the higher the weekly hours spent on sports, the lower is the student’s grade. The higher the amount of hours spent studying however, the better the grade and the faster the student achieves the degree.
    Keywords: higher education, academic performance, athlete types, sports, seemingly unrelated regressions
    JEL: C83 I23 J22 J24 L83 Z20 Z29
    Date: 2022–02
  14. By: Anikó Bíró (Institute for Fiscal Studies); Daniel Prinz (Institute for Fiscal Studies); László Sándor (Institute for Fiscal Studies)
    Abstract: We study the taxation of the minimum wage in an environment with imperfect enforcement and informality. We leverage an increase in the audit threat for earnings below a reporting threshold at twice the minimum wage in Hungary and estimate reporting and employment responses with administrative panel data. Using bunching estimators and difference-in-differences methods, we show that a substantial share of those who report earning the minimum wage earn at least the same amount off the books. When enforcement is imperfect, a taxed minimum wage serves as a backstop on underreporting and recovers some revenue but also increases informality.
    Date: 2021–11–15
  15. By: Badi H. Baltagi (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244); Yusuf Soner Başkaya (Adam Smith Business School, University of Glasgow, G12 8QQ, Glasgow, UK)
    Abstract: This paper estimates spatial wage curves for formal and informal workers in Turkey using individual level data from the Turkish Household Labor Force Survey (THLFS) provided by TURKSTAT for the period 2008-2014. Unlike previous studies on wage curves for formal and informal workers, we extend the analysis to allow for spatial effects. We also consider household characteristics that would affect the selection into formal employment, informal employment, and non-employment. We find that the spatial wage curve relation holds both for formal and informal workers in Turkey for a variety of specifications. In general, the wages of informal workers are more sensitive to the unemployment rates of the same region and other regions than formal workers. We find that accounting for the selection into formal and informal employment affects the magnitudes but not the significance of the spatial wage curves for the formal and informal workers with the latter always being larger in absolute value than that for formal workers.
    Keywords: Spatial Wage Curve, Spatial Weights, Regional Labor Markets, Informal Labor Markets
    JEL: C21 J30 J60
    Date: 2022–02
  16. By: Konstantins Benkovskis (Latvijas Banka, Stockholm School of Economics in Riga); Ludmila Fadejeva (Latvijas Banka)
    Abstract: We develop a novel way to evaluate the size of unreported wage payments at employee level. It is only the reported employer-employee income data combined with firm-level financial statements and survey information on various person-level indicators that are required for this purpose. We estimate the Mincer earning regression by the Stochastic Frontier Analysis approach, proxying the unreported wage payments by the non-negative inefficiency term. Our methodology is tested on the Latvian data: we find that small and young firms engage in illegal wage payments more than other firms. Unofficial payments to employees with small reported wages are more frequent and sizeable, revealing lower wage income inequality in Latvia when the unreported wage is taken into account.
    Keywords: unreported wage, tax evasion, Mincer earning regression, income distribution
    JEL: E26 H26 J08 J31
    Date: 2022–02–09
  17. By: Jonathan Cribb (Institute for Fiscal Studies and Institute for Fiscal Studies); Giulia Giupponi (Institute for Fiscal Studies and Bocconi University); Robert Joyce (Institute for Fiscal Studies and Institute for Fiscal Studies); Attila Lindner (Institute for Fiscal Studies and University College London); Tom Waters (Institute for Fiscal Studies and Institute for Fiscal Studies); Thomas Wernham (Institute for Fiscal Studies); Xiaowei Xu (Institute for Fiscal Studies)
    Abstract: We estimate the effect of the introduction of the UK’s National Living Wage in 2016, and increases in it up to 2019, using a new empirical method. We apply a bunching approach to a setting with no geographical variation in minimum wage rates. We effectively compare employment changes in each part of the wage distribution in low-wage areas to employment changes among similar workers living in higher-wage areas who are less exposed to increases in the national minimum wage because their nominal wages are further above it. We find substantial positive wage effects, including statistically significant spillovers up to around the 20th percentile of wages. Overall we find small negative effects on employment which are not statistically significant. We combine these estimates with a tax and benefit microsimulation model to estimate the impact on household incomes. The largest gains go to the middle of the overall working-age income distribution, though they are more concentrated within the bottom third if we consider only households with someone in paid work. The gains to poorer working households are limited by the withdrawal of means tested benefits as earnings increase. Effects of minimum wages on household incomes are very sensitive to the size of employment effects.
    Date: 2021–12–09
  18. By: Katherine de Bienassis; Nicolaas S. Klazinga
    Abstract: Improving patient safety culture (PSC) is a significant priority for OECD countries as they work to improve healthcare quality and safety—a goal that has increased in importance as countries have faced new safety concerns connected to the COVID-19 pandemic. Findings from benchmarking work in PSC show that there is significant room for improvement. Across included survey findings from OECD countries, less than half (46% ) of surveyed health workers believe that important patient care information is transferred across hospital units and during shift changes. Just two-in-five surveyed health workers in OECD countries believe the staffing levels at their workplace are appropriate for ensuring patient safety (40%) or that mistakes and event reports would not held against them (41%). International benchmarking is a feasible and useful addition to exiting measurement initiatives on safety culture and may help accelerate necessary improvements in patient safety outcomes.
    JEL: I10 I11 I18 J28 J81
    Date: 2022–01–19

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