nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2022‒03‒28
ten papers chosen by
Joseph Marchand
University of Alberta

  1. Why women work the way they do in Japan: Roles of fiscal policies By Sagiri Kitao; Minamo Mikoshiba
  2. Dual Returns to Experience By Laura Hospido; Jose Garcia-Louzao; Alessandro Ruggier
  3. Do immigrants take or create natives' jobs? Evidence of Venezuelan immigration in Peru By Celia P. Vera; Bruno Jiménez
  4. Consequences of zombie businesses: Australia’s experience By Joel Bowman
  5. Human capital and the intertemporal substitution for leisure: empirical evidence for Spain By Antonio Cutanda; Juan A. Sanchis-Llopis
  6. Immigrant labour market outcomes: new insights from a lack of language proficiency in Italy By Pieroni, Luca; d'Agostino, Giorgio; Lanari, Donatella; Scarlato, Margherita
  7. Home Ownership, Labour Market Transitions and Earnings By Carole Brunet; Thierry Kamionka; Guy Lacroix
  8. The Effect of External Innovation on Firm Employment By Guillermo Arenas Díaz; Andrés Barge-Gil; Joost Heijs; Alberto Marzucchi
  9. Identifying the elasticity of substitution between capital and labour. A pooled GMM panel estimator By Thomas von Brasch; Arvid Raknerud; Trond C. Vigtel
  10. Covid19 and Fiscal Policy for Unpaid Care Economy By Chakraborty, Lekha S

  1. By: Sagiri Kitao; Minamo Mikoshiba
    Abstract: Women work less often and earn significantly less than men in Japan. We use panel data to investigate employment and earnings dynamics of single and married women over the life-cycle and build a structural model to study the roles of fiscal policies in accounting for their behavior. We show that eliminating spousal deductions, social insurance premium exemptions and survivors’ pension benefits for low-income spouses would significantly raise the labor supply of women and their earnings. More women would opt for regular jobs rather than contingent jobs, accumulate more human capital, and enjoy higher income growth. The government would earn higher net revenues and there is a welfare gain when additional taxes are transferred back.
    Keywords: Female labor force participation, life-cycle, human capital accumulation, spousal deductions and exemptions, survivors’ benefits, two-tiered employment system, Japan
    JEL: D15 H2 H31 J22 J24
    Date: 2022–03
  2. By: Laura Hospido (Banco de Espana and IZA); Jose Garcia-Louzao (Bank of Lithuania and Vilnius University); Alessandro Ruggier (University of Nottingham)
    Abstract: In this paper we study how labor market duality affects human capital accumulation and wage trajectories of young workers. Using rich administrative data for Spain, we follow workers since their entry into the labor market to measure experience accumulated under different contractual arrangements and we estimate their wage returns. We document lower returns to experience accumulated in fixed-term contracts compared to permanent contracts and show that this difference is not due to unobserved firm heterogeneity or match quality. Instead, we provide evidence that the gap in returns is due to lower human capital accumulation while working under fixed-term contracts. This difference widens with worker ability, in line with skill-learning complementarity. Our results suggest that the widespread use of fixedterm work arrangements reduces skill acquisition of high-skilled workers, holding back life-cycle wage growth by up to 16 percentage points after 15 years since labor market entry.
    Keywords: labor market duality, human capital, earnings dynamics
    JEL: J30 J41 J63
    Date: 2022–02–15
  3. By: Celia P. Vera (Universidad de Piura); Bruno Jiménez (Universidad Nacional de La Plata)
    Abstract: Peru is the second largest host nation of Venezuelan migrants. This paper combines newly available data on Venezuelans residing in Peru and the Peruvian Household Survey to assess the impact of migration on natives? labor market outcomes. We first rely upon education-experience groups to define labor markets and find that immigration does not affect the wages of competing native workers. We then slice the labor market into occupations based on the observation that in Peru, immigrants and natives with similar education and experience are likely to work in different occupations. Our instrumental variable estimates confirm the null effect on wages. We finally examine whether natives respond with changes in employment and find that 10 Venezuelan workers create informal employment for 38 Peruvians and displace 13 Peruvians from formal jobs, suggesting a change in the Peruvian employment composition toward informality.
    Keywords: Immigration, education-experience cells, occupation cells, informality
    JEL: J24 J31 J46
    Date: 2022–03
  4. By: Joel Bowman
    Abstract: This paper assesses the consequences of zombie businesses in Australia between 2001/02 to 2018/19. Zombie businesses are broadly defined as businesses whose ability to meet interest expenses from current profits is less compared with other firms operating within the same industry. This work finds that an increasing share of labour sunk into zombie businesses is correlated with weaker activity for viable businesses operating within the same industry. However, it does not find that zombie firms adversely affect the allocative efficiency of labour and capital and does not reduce the responsiveness of business exits to productivity. Further, the spillover effect of zombie firms does not appear to be propagated by the crowding out of financing or the imposition of additional entry barriers for firms operating within the same industry. Overall, the stable share of labour allocated to zombie firms at an aggregate level since 2007 suggests that it is unlikely that the adverse effects of zombie firms explain the slowdown in Australia’s economic activity since the mid 2000s.
    Keywords: Zombie Firms, Labour Productivity, Firm Dynamics, Resource Allocation
    JEL: D24 E22 G33 J24 L25
    Date: 2022–03
  5. By: Antonio Cutanda (Universidad de Valencia, Valencia, Spain ORCID number: 0000-0003-2066-4632); Juan A. Sanchis-Llopis (Universidad de Valencia and ERICES, Valencia, Spain ORCID number: 0000-0001-9664-4668)
    Abstract: Spain. Further, we will study whether human capital accumulation affects this key elasticity. For this purpose, we estimate the equation for the intertemporal substitution without accounting for human capital and introducing it. We build a pseudo-panel data set combining the Spanish Family Expenditure Survey and the Labour Survey over the period 1987-1997. From our results the estimate of the intertemporal elasticity of leisure is about 0.25, that is comparable to estimates found for other economies. Further, considering the effect of human capital significantly increases the estimated elasticity of intertemporal substitution for leisure, obtaining an estimate about 0.5, what confirms the existence of a bias if we do not consider human capital. Finally, this bias is larger for the younger cohorts than for the older ones.
    Keywords: Euler equation, Instrumental variables, Intertemporal Substitution for leisure, Panel data.
    JEL: C33 C36 E24 J22
    Date: 2022–02
  6. By: Pieroni, Luca; d'Agostino, Giorgio; Lanari, Donatella; Scarlato, Margherita
    Abstract: In this paper, we examine how immigrants' proficiency in the Italian language affects their labour market performance using hitherto unexploited immigration survey published by the Italian Institute of Statistics. With respect to immigrants with good proficiency in the Italian language, our empirical findings suggest that weak language proficiency reduces employment by about 25-30 percentage points. Language proficiency in Italian also significantly affects the hourly wages of immigrants. The point estimates suggest an hourly wage gap of more than 30% between immigrants with good proficiency in the Italian language compared to those with weak proficiency, irrespective of gender. Robustness checks confirmed our estimates.
    Keywords: Immigrants, Language skills, Employment, Hourly wages
    JEL: J15 J20 J31
    Date: 2022
  7. By: Carole Brunet (; Thierry Kamionka (; Guy Lacroix (
    Abstract: The paper investigates the links between home ownership, employment and earnings. The motivation stems from the lack of consensus in the literature linking these outcomes. Our analysis is cast within a dynamic setting and the endogeneity of each outcome is assessed through the estimation of a flexible panel multivariate model with random effects. The data we use are drawn from the French sample of the EU Survey on Income and Living Conditions for the years 2004–2013. Our results show that while homeowners have longer employment and unemployment spells, they must contend with lower earnings than tenants upon reemployment. Importantly, our results highlight the importance of distinguishing between outright and indebted home owners. Indeed, the latter are found to behave more or less like tenants on the labour market. At the aggregate level, thus, the positive relationship between home ownership and unemployment rate, known as Oswald’s conjecture, might thus depend on the share of leveraged homeowners in the population.
    Keywords: Home Ownership, Unemployment, Earnings, Heterogeneity, Simulation base destimation, Paneldata
    JEL: J21 J64 J31 C33 C35
    Date: 2022–03–14
  8. By: Guillermo Arenas Díaz (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore); Andrés Barge-Gil (Department of Economic Analysis, Complutense University of Madrid, ICAE and GRIPICO, Madrid, Spain); Joost Heijs (Department of Applied Economics, Structure and History, Complutense University of Madrid, Madrid, Spain); Alberto Marzucchi (Gran Sasso Science Institute, Social Sciences, L'Aquila, Italia)
    Abstract: This paper analyses the effects of product innovations introduced by firms in upstream and downstream sectors and firms in the same sector on firm employment. To this aim, we extend the Harrison et al. (2014) model to analyse the relationship between firm innovation and employment to account for innovation in the same and related sectors. We employ panel data for the innovation activities of Spanish firms together with input–output data. The results show that product innovation by firms in the same sector harms the firm's employment, which is consistent with a business-stealing mechanism. A negative effect on employment is found for the introduction of new products in upstream sectors, which results in the reduction of labour in the focal firm. The type of labour that is displaced by innovations introduced by both same-sector and upstream firms is predominantly low-skilled. No significant effects are found for innovations introduced in downstream industries.
    Keywords: same sector, downstream and upstream sectors, product innovation, employment growth
    JEL: J23 O31 O33 L6
    Date: 2022–02
  9. By: Thomas von Brasch; Arvid Raknerud; Trond C. Vigtel (Statistics Norway)
    Abstract: Simultaneity represents a fundamental problem when estimating the elasticity of substitution between capital and labour. To overcome this problem, a wide variety of external instruments has been applied in the literature. However, the use of instruments may lead to wrong inference if they are either weak, or endogenous to the system being estimated. In this paper, we extend the widely used Feenstra (1994) estimator, which does not depend on external instruments, to make it applicable to the problem of estimating the elasticity of substitution between capital and labour. We propose a pooled GMM (PGMM) estimator, examine its properties in a Monte Carlo study and apply it to a Norwegian sample of manufacturing firms. We identify the conditions under which P-GMM yields unbiased estimates and compare it to a fixed effects estimator which is unbiased when factor prices are exogenous – a typical assumption in the literature. We find that the fixed effects estimator is heavily downward biased in the presence of simultaneity. In contrast, the P-GMM estimator is nearly unbiased provided the number of time periods (T) is not too small (say, more than 10). In our application, with an unbalanced sample and T = 12, we estimate the elasticity of substitution to be 1.8 using P-GMM and 1.0 using a fixed effects estimator. Hence, neglecting simultaneity may lead to the conclusion that capital and labour are complements when, in fact, they are substitutes
    Keywords: Elasticity of Substitution; Simultaneity; Factor Demand; Non-Linear GMM; Pooled Estimator
    JEL: C13 C15 C33 C51
    Date: 2022–03
  10. By: Chakraborty, Lekha S
    Abstract: Against the backdrop of covid19 pandemic, measuring unpaid care economy is significant to capture the roles and well-being of men and women. This paper analyses the unpaid care sector in India using the recent Time Use Survey 2020 and explores the fiscal policy measures to address the sector. Time poverty affects income poverty. The evidence from the time use survey across Indian States revealed the gender and geographic differentials in the time use pattern across men and women. The allocation and efficiency of nonmarket working time in the unpaid care economy is important for economic growth along with market working time. As the macro policies are constructed only on the basis of market economy, the nonmarket work in the unpaid care economy continues to remain statistically invisible. The link between fiscal policy and time allocation suggest that worsening public infrastructure investment affects the market work with evident gender differentials. The broad conclusion is that fiscal policies designed to redress income poverty can be partial if they do not take into account the aspects of time poverty.
    Keywords: Time Use Poverty , Public Infrastructure Investment, Private Time Costs, Unpaid Care Economy
    JEL: H10 H30 H70
    Date: 2022–02

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