nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2022‒02‒21
nineteen papers chosen by
Joseph Marchand
University of Alberta

  1. The impact of robots on labour market transitions in Europe By Bachmann, Ronald; Gonschor, Myrielle; Lewandowski, Piotr; Madoń, Karol
  2. Managers' Risk Preferences and Firm Training Investments By Caliendo, Marco; Cobb-Clark, Deborah A.; Pfeifer, Harald; Uhlendorff, Arne; Wehner, Caroline
  3. The Economic Implications of Training for Firm Performance By Martins, Pedro S.
  4. A decomposition method to evaluate the 'paradox of progress' with evidence for Argentina By Javier Alejo; Leonardo Gasparín; Gabriel Montes Rojas; Walter Sosa Escudero
  5. The Marginal Labor Supply Disincentives of Welfare: Evidence from Administrative Barriers to Participation By Moffitt, Robert A.; Zahn, Matthew V.
  6. Task specialization and the native-foreign wage gap: Evidence from worker-level data By Storm, Eduard
  7. The impact of working conditions on mental health: novel evidence from the UK By Belloni, Michele; Carrino, Ludovico; Meschi, Elena
  8. The urban-rural wage gap in Germany By Brixy, Udo; Brunow, Stephan; Ochsen, Carsten
  9. Does Over-education Raise Productivity and Wages Equally? The Moderating Role of Workers' Origin and Immigrants' Background By Jacobs, Valentine; Rycx, François; Volral, Mélanie
  10. Presenteeism when employers are under pressure: Evidence from a high-stakes environment By Mario Lackner; Hendrik Sonnabend
  11. Extending Pension Policy in Emerging Asia: An Overlapping-Generations Model Analysis for Indonesia By George Kudrna; John Piggott; Phitawat Poonpolkul
  12. How talent reacts to crises - The rationality of high-ability graduates’ response to the financial crisis 2008/09 By Bernd Frick; Fabian Lensing
  13. Who profits from windfalls in oil tax revenue? Inequality, protests, and the role of corruption By Alexeev, Michael; Zakharov, Nikita
  14. When an exchange semester is no longer enough - Why and how the Bologna-reforms changed the behavior of high-ability students By Bernd Frick; Fabian Lensing; Lisa Beck-Werz
  15. Transitions from offline to online labor markets: The relationship between freelancers' prior offline and online work experience By Seifried, Mareike
  16. Inequality and psychological well-being in times of COVID-19: evidence from Spain By Monica Martinez-Bravo; Carlos Sanz
  17. Employer market power in Silicon Valley By Matthew Gibson
  18. The Great Migration and Educational Opportunity By Cavit Baran; Eric Chyn; Bryan Stuart
  19. Recall Bias Revisited: Measure Farm Labor Using Mixed-Mode Surveys and Multiple Imputation By Dang, Hai-Anh H.; Carletto, Calogero

  1. By: Bachmann, Ronald; Gonschor, Myrielle; Lewandowski, Piotr; Madoń, Karol
    Abstract: We study the effects of robot exposure on worker flows in 16 European countries. Overall, we find small negative effects on job separations and small positive effects on job findings. Labour costs are shown to be a major driver of cross-country differences: in countries with lower labour costs, robot exposure had more positive effects on hirings and more negative effects on separations. These effects were particularly pronounced for workers in occupations intensive in routine manual or routine cognitive tasks, but were insignificant in occupations intensive in non-routine cognitive tasks. For young and old workers in countries with lower labour costs, robot exposure had a beneficial effect on transitions. Our results imply that robot adoption increased employment and reduced unemployment in most European countries, mainly through lower job separation rates.
    Keywords: Robots,technological change,tasks,labour market effects,Europe
    JEL: J24 O33 J23
    Date: 2022
  2. By: Caliendo, Marco (University of Potsdam); Cobb-Clark, Deborah A. (University of Sydney); Pfeifer, Harald (BIBB); Uhlendorff, Arne (CREST); Wehner, Caroline (BIBB)
    Abstract: We provide the first estimates of the impact of managers' risk preferences on their training allocation decisions. Our conceptual framework links managers' risk preferences to firms' training decisions through the bonuses they expect to receive. Risk-averse managers are expected to select workers with low turnover risk and invest in specific rather than general training. Empirical evidence supporting these predictions is provided using a novel vignette study embedded in a nationally representative survey of firm managers. Risk-tolerant and risk-averse decision makers have significantly different training preferences. Risk aversion results in increased sensitivity to turnover risk. Managers who are risk-averse offer significantly less general training and, in some cases, are more reluctant to train workers with a history of job mobility. All managers, irrespective of their risk preferences, are sensitive to the investment risk associated with training, avoiding training that is more costly or targets those with less occupational expertise or nearing retirement. This suggests the risks of training are primarily due to the risk that trained workers will leave the firm (turnover risk) rather than the risk that the benefits of training do not outweigh the costs (investment risk).
    Keywords: manager decisions, employee training, risk attitudes, human capital investments
    JEL: J24 D22 D91
    Date: 2022–01
  3. By: Martins, Pedro S.
    Abstract: This paper surveys the emerging economics literature on the relationship between employee training and firm performance. Most studies find very high returns to training, at least from the perspective of firms, indicating that the costs of training can be recouped in short periods of time. These results follow from different identification approaches, including randomised control trials. The training provided is typically of a general nature, which is consistent with employers' labour market power. Several areas for future research are also proposed, including the role of labour market institutions in promoting training and the extent to which the productivity effects of training are shared with employees.
    Keywords: Productivity,Skills,Competences,Human Capital,Lifelong Learning,Employment,Public Policy,Programme Evaluation
    JEL: M53 I26 J24
    Date: 2022
  4. By: Javier Alejo (Departmento de Economía, Universidad de la República, Uruguay); Leonardo Gasparín (Departmento de Economía, Universidad de La Plata); Gabriel Montes Rojas (Departmento de Economía, Universidad de Buenos Aires); Walter Sosa Escudero (Department of Economics, Universidad de San Andrés)
    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.
    Keywords: paradox of progress, quantile regression, inequality, returns to education, Argentina
    JEL: J31 C21 I24 J46 O54
    Date: 2021–12
  5. By: Moffitt, Robert A. (Johns Hopkins University); Zahn, Matthew V. (Johns Hopkins University)
    Abstract: Existing research on the static effects of the manipulation of welfare program benefit parameters on labor supply has allowed only restrictive forms of heterogeneity in preferences. Yet preference heterogeneity implies that the marginal effects on labor supply of welfare expansions and contractions may differ in different time periods with different populations and which sweep out different portions of the distribution of preferences. A new examination of the heavily studied AFDC program uses variation in state-level administrative barriers to entering the program in the late 1980s and early 1990s to estimate the marginal labor supply effects of changes in program participation induced by that variation. The estimates are obtained from a theory-consistent reduced form model which allows for a nonparametric specification of how changes in welfare program participation affect labor supply on the margin. Estimates using a form of local instrumental variables show that the marginal treatment effects are quadratic, rising and then falling as participation rates rise (i.e., becoming more negative then less negative on hours of work). The average work disincentive is not large but that masks some margins where effects are close to zero and some which are sizable. Traditional IV which estimates a weighted average of marginal effects gives a misleading picture of marginal responses. A counterfactual exercise which applies the estimates to three historical reform periods in 1967, 1981, and 1996 when the program tax rate was significantly altered shows that marginal labor supply responses differed in each period because of differences in the level of participation in the period and the composition of who was on the program.
    Keywords: welfare, labor supply, marginal treatment effects
    JEL: I3 J2 C21
    Date: 2022–01
  6. By: Storm, Eduard
    Abstract: Running RIF regressions to decompose wage differences along the distribution, this is the first study documenting that worker-level variation in tasks has played a key role in the widening of the German Native-Foreign Wage Gap. Comparing variation in Individual- vs Occupation-level task measures suggests idiosyncratic differences account for up to 34% of the explained wage gap. Importantly, natives specialize in high-paying interactive activities not only between but also within occupations. In contrast, foreign workers specialize in low-paying manual activities. This enhanced degree of task specialization accounts for 11% of the gap near the top of the distribution and 25% near the bottom, thus offering new insight into sources for imperfect substitution of native and foreign workers in the production function and consequently small migration-induced wage effects.
    Keywords: Wage Gap,individual job task data,RIF decomposition,task specialization within occupations
    JEL: J15 J21 J24 J31 J61
    Date: 2021
  7. By: Belloni, Michele; Carrino, Ludovico; Meschi, Elena
    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
  8. By: Brixy, Udo (Institute for Employment Research (IAB), Nuremberg, Germany); Brunow, Stephan (HdBA); Ochsen, Carsten (HdBA ; Univ. Rostock)
    Abstract: "We compare real wage differences between centralized and peripheral areas and highly centralized and peripheral areas using vast information of German administrative data that contains more than 2.8 Million individuals and 660,000 firms. We provide substantial empirical evidence that most of the wage gaps can be explained by differences in endowments of individual and firm characteristics, particularly when unobserved individual and firm heterogeneity is appropriately accounted for. Our interpretation is that the selectivity of workers and firms in space explains most of the real wage gap between peripheral and (highly) centralized regions, and returns to characteristics are honoured rather equally in all regional types." (Author's abstract, IAB-Doku) ((en))
    Keywords: IAB-Open-Access-Publikation
    JEL: J31 R12
    Date: 2022–02–14
  9. By: Jacobs, Valentine; Rycx, François; Volral, Mélanie
    Abstract: We provide first evidence of the impact of over-education, among natives and immigrants, on firm-level productivity and wages. We use Belgian linked panel data and rely on the methodology from Hellerstein et al. (1999) to estimate ORU (over-, required, and under-education) equations aggregated at the firm level. Our results show that the over-education wage premium is higher for natives than for immigrants. However, since the differential in productivity gains associated with over-education between natives and immigrants outweighs the corresponding wage premium differential, we conclude - based on OLS and dynamic GMM-SYS estimates - that over-educated native workers are in fact underpaid to a greater extent than their over-educated immigrant counterparts. This conclusion is refined by sensitivity analyses, when testing the role of immigrants' background (e.g. region of birth, immigrant generation, age at arrival in the host country, tenure).
    Keywords: Immigrants,over-education,productivity,wages,linked panel data,Belgium
    JEL: J24 J71
    Date: 2022
  10. By: Mario Lackner; Hendrik Sonnabend (Fernuni Hagen)
    Abstract: This study analyses whether the decision to work while sick can be linked to workload fluctuations. Drawing on data collected from professional soccer, we exploit the dynamics of a season and use additional (national and international) cup games conducted in the second half of a season as a source of exogenous variation. We find robust evidence that players are 6.1 percentage points more likely to return from injuries earlier than expected when their teams are exposed to a high workload. The effect is driven by players who are more important to their teams and those who are less vulnerable to injuries. Finally, we find that presenteeism comes at the cost of an early comeback significantly shortening the time until the next injury by approximately 27 days.
    Keywords: sickness absence; presenteeism; workload variations; soccer
    JEL: I19 J22 Z2
    Date: 2021–12
  11. By: George Kudrna; John Piggott; Phitawat Poonpolkul
    Abstract: This paper examines the economy-wide effects of government policies to extend public pensions in emerging Asia particularly pertinent given the region’s large informal sector and rapid population ageing. We first document stylized facts about Indonesia’s labour force, drawing on the Indonesian Family Life Survey (IFLS). This household survey is then used to calibrate micro behaviours in a stochastic, overlapping-generations (OLG) model with formal and informal labour. The benchmark model is calibrated to the Indonesian economy (2000-2019), fitted to Indonesian demographic, household survey, macroeconomic and fiscal data. The model is applied to simulate pension policy extensions targeted to formal labour (contributory pension extensions to all formal workers with formal retirement age increased from 55 to 65), as well as to informal labour (introduction of non-contributory social pensions to informal 65+). First, abstracting from population ageing, we show that: (i) the first set of pension policy extensions (that have already been legislated and are being implemented in Indonesia) have positive effects on consumption, labour supply and welfare (of formal workers) (due largely to the formal retirement age extension); (ii) the introduction of social pensions targeted to informal workers at older age generates large welfare gains for currently living informal elderly; and (iii) the overall pension reform leads to higher welfare across the employment-skill distribution of households. We then extend the model to account for demographic transition, finding that the overall pension reform makes the contributory pension system more sustainable but the fiscal cost of non-contributory social pensions more than triples to 1:7% of GDP in the long run. As an alternative, we examine application of a means-tested social pension system within the overall pension reform. We show that this counterfactual reduces the fiscal cost (of social pensions) and further increases the welfare for both current and future generations.
    Keywords: Informal Labour; Population Ageing; Social Security; Taxation; Redistribution; Stochastic General Equilibrium
    JEL: E26 J1 J21 J26 H55 H24 C68
    Date: 2022–01
  12. By: Bernd Frick (University of Paderborn); Fabian Lensing (University of Paderborn)
    Abstract: The 2008/09 financial crisis had a severe impact on the World’s economies and societies. In order to prevent large-scale layoffs, many governments implemented specifically designed labor market policies. However, students graduating during the crisis faced particularly poor labor market conditions as the majority of these policies addressed already existing jobs. Given these circumstances, rational choice theory suggests that individuals adapt their behavior accordingly. Using a unique dataset with detailed information on 27,813 German high-ability students, we find – in line with rational choice theory – a massive increase in the percentage of graduates pursuing a Ph.D. during the crisis. The choice of other potential reactions (to defer graduation, to take a short-term/part-time job or to take a full-time job below one’s aspirations) remains unaffected by the crisis. Controlling for socio-demographic factors, we find that the likelihood to pursue a Ph.D. increases by 18-21% points when graduating during the crisis. In the first year after the crisis, the share of students pursing a Ph.D. decreases again – a consistent pattern across the three majors we consider in our analysis (business & economics, engineering, and law). Data reflecting the changes in behavior of the overall German student population confirm this pattern, but effect sizes appear to be much smaller. Thus, we see rational choice theory confirmed when looking at the behavior of German high-ability students graduating during the financial crisis 2008/09.
    Keywords: Labor Economics, High-ability Students, Rational Choice Theory, Financial Crisis, Individual Behavior
    JEL: I23 J24
    Date: 2022–01
  13. By: Alexeev, Michael; Zakharov, Nikita
    Abstract: We investigate the relationship between oil windfalls and income inequality using the subnational data of one of the resource-richest and most unequal countries in the world – Russia. While previous literature produced contradictory findings due to the use of an aggregate measure of oil rents mainly in cross-national settings, we focus exclusively on oil rents that accrue to the subnational governments across one country. Our estimation strategy takes advantage of the two specific features of Russian oil taxation: 1) the policy change when sharing oil extraction taxes with local budgets was discontinued; and 2) the oil tax formula being tied directly to the international oil prices making oil price shocks an exogenous measure of change in oil rents. When we look at the period with oil tax revenues shared with the regional governments, we find that oil windfalls had increased income inequality and benefited the wealthiest quintile of the population in regions with more intense rent-seeking. Further, positive price shocks combined with greater rent-seeking reduced the share of labor income but increased the income share from unidentified sources traditionally associated with corruption. These effects of oil windfalls disappeared after the Russian government discontinued oil tax revenue sharing with regional governments. Finally, we examine some political implications of rising inequality due to the appropriation of oil windfalls. We find a positive effect of rising inequality on the frequency of protests associated with grievances among the poor and disadvantaged social groups; this effect, however, exists only in relatively democratic regions.
    JEL: D63 D73 Q35 Q38 P48
    Date: 2022–01–25
  14. By: Bernd Frick (University of Paderborn); Fabian Lensing (University of Paderborn); Lisa Beck-Werz (University of Paderborn)
    Abstract: Signaling theory has shaped our understanding of how high-ability individuals try to distinguish themselves in the labor market: High-ability individuals benefit from a relative cost advantage compared to low-ability individuals when producing a credible signal of superior ability. When this cost advantage decreases, the signal’s value also decreases. We analyze how the signal ‘international qualification’ has changed due to increasing overall student mobility, driven by the effect of a massive change in the institutional framework, namely the implementation of the Bologna-reforms. Using a large and hitherto not accessible dataset with detailed information on 9,096 German high-ability students, we find that following the Bologna-reforms, high-ability students extended their stays and completed degrees abroad (instead of doing exchange semesters). No such changes in behavior are to be observed in the overall student population. We conclude that completing a degree abroad is the new labor market signal for ‘international qualification’ of high-ability students.
    Keywords: Educational Economics, Signaling Theory, International Student Mobility, Degree Mobility, High-ability students, Bologna-reforms
    JEL: I23 J24
    Date: 2022–02
  15. By: Seifried, Mareike
    Abstract: An emerging stream of research from various disciplines studies online labor market (OLM) platforms as an alternative way of accomplishing work compared to traditional (offline) labor markets. Although prior work has increased our understanding of how OLM platforms function, we so far know very little about the relationship between what workers have done before entering the platform and the skill content of their online jobs. However, the question of why workers do the jobs they do in an online context and what drives their decision is fundamental to understanding how these markets function and are used by workers. Using data on 4,771 freelancers working on, the world's leading freelancing website, we compare the skill content of their online jobs with their last reported offline prior to platform entry. Based on prior work on occupational mobility (Gathmann & Schönberg, 2010) and human capital investments (Becker, 1962), we hypothesize and find that workers with more valuable skillsets adjust their skill portfolios less while working online, i.e. the distance between their offline and online skill portfolio is lower. We further show that being female, coming from an advanced economy and reporting having current offline employment moderates the relationship between skill value and skill distance.
    Keywords: Online labor markets,gig economy,labor mobility,occupational mobility,human capital,task-based approach,digital platforms,knowledge work
    JEL: J24 J6 J44
    Date: 2021
  16. By: Monica Martinez-Bravo (CEMFI); Carlos Sanz (Banco de España)
    Abstract: Using two novel online surveys collected in May and November 2020, we study the consequences of the first stages of the COVID-19 pandemic on Spanish households. We document a large and negative effect on household income. By May 2020 the average individual lived in a household that had lost 16% of their pre-pandemic monthly income. Furthermore, this drop was highly unequal: while households in the richest quintile lost 6.8% of their income, those in the poorest quintile lost 27%. We also document that the pandemic deepened the gender-income gap: on average, women experienced a three-percentage-point larger income loss than men. While this is consistent with previous findings in the literature, in this paper we document that this effect is driven by women from middle-income households with kids. Finally, we provide evidence that Spanish individuals experienced moderate declines in their levels of psychological well-being. This effect is not different for individuals living in rich or poor households, but the reasons behind well-being losses do differ: richer individuals are more concerned about loss of contact with dear ones, while low-income individuals are more likely to mention loss of income and employment as a key source of emotional distress.
    Keywords: inequality, COVID-19, well-being
    JEL: D31 I14 J31
    Date: 2022–01
  17. By: Matthew Gibson (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 eects 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: ,
    JEL: J42 K21 J30 L41
    Date: 2021–10–15
  18. By: Cavit Baran; Eric Chyn; Bryan Stuart
    Abstract: This paper studies the impact of the First Great Migration on children. We use the complete count 1940 Census to estimate selection-corrected place effects on education for children of Black migrants. On average, Black children gained 0.8 years of schooling (12 percent) by moving from the South to the North. Many counties that had the strongest positive impacts on children during the 1940s offer relatively poor opportunities for Black youth today. Opportunities for Black children were greater in places with more schooling investment, stronger labor market opportunities for Black adults, more social capital, and less crime.
    Keywords: Great Migration; human capital; education; place effect.
    JEL: N32 J15 J24 H75
    Date: 2022–02–08
  19. By: Dang, Hai-Anh H.; Carletto, Calogero
    Abstract: Smallholder farming dominates agriculture in poorer countries. Yet, traditional recall-based surveys on smallholder farming in these countries face challenges with seasonal variations, high survey costs, poor record-keeping, and technical capacity constraints resulting in significant recall bias. We offer the first study that employs a less-costly, imputation-based alternative using mixed modes of data collection to obtain estimates on smallholder farm labor. Using data from Tanzania, we find that parsimonious imputation models based on small samples of a benchmark weekly in-person survey can offer reasonably accurate estimates. Furthermore, we also show how less accurate, but also less resource-intensive, imputation-based measures using a weekly phone survey may provide a viable alternative for the more costly weekly in-person survey. If replicated in other contexts, including for other types of variables that suffer from similar recall bias, these results could open up a new and cost-effective way to collect more accurate data at scale.
    Keywords: farm labor,agricultural productivity,multiple imputation,missing data,survey data,Tanzania
    JEL: C8 J2 O12 Q12
    Date: 2022

This nep-lma issue is ©2022 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.