nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2022‒04‒04
sixteen papers chosen by
Joseph Marchand
University of Alberta

  1. Taxing the Gender Gap: Labor Market Effects of a Payroll Tax Cut for Women in Italy By Enrico Rubolino
  2. Contribution of Human Capital Accumulation to Canadian Economic Growth By Audra Bowlus; Youngmin Park; Chris Robinson
  3. Firm Productivity Growth and the Knowledge of New Workers By Michael Kirker; Lynda Sanderson
  4. Equality Denied: Tech and African Americans By William Lazonick; Philip Moss; Joshua Weitz
  5. Does Over-education Raise Productivity and Wages Equally ?The Moderating Role of Workers’ Origin and Immigrants’ Background By Valentine Jacobs; François Rycx; Mélanie Volral
  6. Disentangling the attractiveness of telework to employees: a factorial survey experiment By Eline Moens; Elsy Verhofstadt; Luc Van Ootegem; Stijn Baert
  7. JAQ of All Trades: Job Mismatch, Firm Productivity and Managerial Quality By Luca Coraggio; Marco Pagano; Annalisa Scognamiglio; Joacim Tåg
  8. Consumer Bankruptcy, Mortgage Default and Labor Supply By Wenli Li; Costas Meghir; Florian Oswald
  9. Earnings expectations and educational sorting. An ex-ante perspective on returns to university education By Angelov, Nikolay; Johansson, Per; Pihl, Ariel; Lindahl, Mikael
  10. Who benefits from firm success? Heterogeneous rent-sharing in New Zealand By Corey Allan; David C. Maré
  11. Alternative Work Arrangements and Worker Outcomes: Evidence from Payrolling By Bas Scheer; Wiljan van den Berge; Maarten Goos; Alan Manning; Anna Salomons
  12. Fertility and Parental Retirement By Julius Ilciukas
  13. Market Power and Artificial Intelligence Work on Online Labour Markets By DUCH BROWN Nestor; GOMEZ-HERRERA Estrella; MUELLER-LANGER Frank; TOLAN Songul
  14. Aggregate Health Shock and Retirement Decision By Hyunduk Suh; SeEun Jung
  15. Labor Supply Effects of Survivor Insurance: Evidence from Restricted Access to Survivor Benefits in the Netherlands By Simon Rabaté; Julie Tréguier
  16. A Positive Outcome of COVID-19? The Effects of Work from Home on Gender Attitudes and Household Production By Hiromi Hara; Daiji Kawaguchi

  1. By: Enrico Rubolino
    Abstract: This paper studies the labor market effects of a large employer-borne payroll tax cut for unemployed women, introduced in Italy since 2013. I combine social secu- rity data with several empirical approaches, leveraging the time-limited applica- tion of the tax scheme and discontinuities in eligibility criteria across municipali- ties, cohorts, and occupations. I find that the payroll tax cut generates long-lasting growth in female employment, reduces the time spent on welfare, and spurs busi- ness growth, without crowding out male employment. By contrast, the tax cut does not raise net wages, suggesting that tax incidence is mostly on firms. A cost- benefit analysis implies that the net cost of the policy is nearly half of the budgetary cost. These findings suggest that employer-borne payroll tax cuts are an efficient strategy to raise demand for female labor and tackle the gender employment gap, but they are not sufficient for reducing the gender pay gap.
    Keywords: gender gap, female employment, payroll tax, tax incidence
    JEL: H22 J21 J31
    Date: 2022–01
  2. By: Audra Bowlus; Youngmin Park; Chris Robinson
    Abstract: This paper quantifies the contribution of human capital accumulation to the growth of real gross domestic product (GDP) in Canada. GDP growth is decomposed into contributions from physical capital, hours worked, human capital supplied per hour and total factor productivity. Using a “flat spot” identification strategy, we separately estimate the price and quantity of human capital using wage data from the Labour Force Survey. We find that growth in human capital supplied per hour explains around one-fifth of GDP growth and two-thirds of the Solow residual over the period from 1997 to 2018. While growth in hours worked is expected to slow down in the near future, human capital supplied per hour is expected to continue to be an important driver of GDP growth.
    Keywords: Econometric and statistical methods; Labour markets; Potential output; Productivity
    JEL: D24 E24 J24 J31 O47
    Date: 2022–03
  3. By: Michael Kirker; Lynda Sanderson (The Treasury)
    Abstract: Linked employer-employee data from New Zealand is used to study the relationship between a firm’s productivity growth and its exposure to outside knowledge through the hiring of new workers with previous work experience. The estimated relationship between productivity growth and hiring is compared to the predictions implied by two different channels: worker quality and knowledge spillover. Although it is not possible to identify a causal relationship, the productivity of a worker’s previous employer is correlated with subsequent productivity growth at the hiring firm. The patterns of this correlation are consistent with both the worker quality and knowledge spillover channels operating simultaneously. Furthermore, if knowledge spillover is occurring, the results suggest the type of knowledge spilling over relates to technological knowledge allowing firms to become more capital intensive, rather than knowledge that improves the efficiency of utilising existing inputs.
    Keywords: productivity; labour mobility; human capital; knowledge diffusion
    JEL: D24 J24 J62 O33
    Date: 2022–03
  4. By: William Lazonick (The Academic-Industry Research Network); Philip Moss (The Academic-Industry Research Network); Joshua Weitz (The Academic-Industry Research Network)
    Abstract: Thus far in reporting the findings of our project "Fifty Years After: Black Employment in the United States Under the Equal Employment Opportunity Commission," our analysis of what has happened to African American employment over the past half century has documented the importance of manufacturing employment to the upward socioeconomic mobility of Blacks in the 1960s and 1970s and the devastating impact of rationalization - the permanent elimination of blue-collar employment - on their socioeconomic mobility in the 1980s and beyond. The upward mobility of Blacks in the earlier decades was based on the Old Economy business model (OEBM) with its characteristic "career-with-one-company" (CWOC) employment relations. At its launching in 1965, the policy approach of the Equal Employment Opportunity Commission assumed the existence of CWOC, providing corporate employees, Blacks included, with a potential path for upward socioeconomic mobility over the course of their working lives by gaining access to productive opportunities and higher pay through stable employment within companies. It was through these internal employment structures that Blacks could potentially overcome barriers to the long legacy of job and pay discrimination.
    Keywords: African American, Black. Asian, higher education, employment relations, equal employment opportunity, professionals, technology companies, Silicon Valley, Equal Employment Opportunity (EEO-1) data, social networks, employment discrimination.
    JEL: D2 D3 D8 D91 E23 F22 F23 F66 G35 H11 H52 I2 J15 J21 J24 J31 J44 J53 J71 J82 L2 L63 M14 M5 N82 O15 O32 O36 P12
    Date: 2022–02–18
  5. By: Valentine Jacobs; François Rycx; Mélanie Volral
    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: 2022–02–24
  6. By: Eline Moens; Elsy Verhofstadt; Luc Van Ootegem; Stijn Baert (-)
    Abstract: This research adds to the literature on the attractiveness of telework to employees. To this end, we set up an innovative factorial survey experiment in which a high-quality sample of employees evaluates job offers with diverging characteristics, among which a wide variation in telework possibilities. We find that the relationship between the possibility to telework and job attractiveness is approximately linear: 10 percentage points more telework hours yield a rise of 2.2 percentage points in job attractiveness and, therefore, the willingness to give up an increase of 2.3 pp in wage in the new job. Our experimental design also allows us to investigate the underlying mechanisms of this relationship as well as its moderators. We find that the attractiveness of telework is particularly explained by expectations of an improved work-life balance, more work scheduling autonomy, a higher job satisfaction, and more work methods autonomy in jobs with a greater possibility to telework. In addition, our analyses show that less conscientious employees are on average more attracted to jobs with greater telework possibilities, so that it is important that self-selection in jobs with more telework is well-monitored.
    Keywords: telework, job attractiveness, factorial survey experiment
    JEL: J24 J81 J31 J63 I31
    Date: 2022–03
  7. By: Luca Coraggio (Università di Napoli Federico II); Marco Pagano (University of Naples Federico II, CSEF and EIEF.); Annalisa Scognamiglio (Università di Napoli Federico II and CSEF); Joacim Tåg (Research Institute of Industrial Economics (IFN))
    Abstract: Does the matching between workers and jobs help explain productivity differentials across firms? To address this question we develop a job-worker allocation quality measure (JAQ) by combining employer-employee administrative data with machine learning techniques. The proposed measure is positively and significantly associated with labor earnings over workers’ careers. At firm level, it features a robust positive correlation with firm productivity, and with managerial turnover leading to an improvement in the quality and experience of management. JAQ can be constructed for any employer-employee data including workers’ occupations, and used to explore the effect of corporate restructuring on workers’ allocation and careers.
    Keywords: jobs, workers, matching, mismatch, machine learning, productivity, management.
    JEL: D22 D23 D24 G34 J24 J31 J62 L22 L23 M12 M54
    Date: 2022–03–30
  8. By: Wenli Li (Federal Reserve Bank of Philadelphia); Costas Meghir (Cowles Foundation, Yale University, NBER, IZA, CEPR and IFS); Florian Oswald (SciencesPo, Paris)
    Abstract: We specify and estimate a lifecycle model of consumption, housing demand and labor supply in an environment where individuals may file for bankruptcy or default on their mortgage. Uncertainty in the model is driven by house price shocks, education specific productivity shocks, and catastrophic consumption events, while bankruptcy is governed by the basic institutional framework in the US as implied by Chapter 7 and Chapter 13. The model is estimated using micro data on credit reports and mortgages combined with data from the American Community Survey. We use the model to understand the relative importance of the two chapters (7 and 13) for each of our two education groups that differ in both preferences and wage profiles. We also provide an evaluation of the BAPCPA reform. Our paper demonstrates importance of distributional effects of Bankruptcy policy.
    Keywords: Lifecycle, Bankruptcy, Housing, Mortgage Default, Labor Supply, Consumption, Education, Insurance, Moral hazard
    JEL: G33 K35 J22 J31 D14 D18 D52 D53 E21
    Date: 2022–03
  9. By: Angelov, Nikolay (Uppsala Center for Fiscal Studies (UCFS); Johansson, Per (Uppsala University (UCLS and Statistics)); Pihl, Ariel (Department of Economics, University of Gothenburg); Lindahl, Mikael (Department of Economics, University of Gothenburg)
    Abstract: We estimate means and distributions of ex-ante treatment effects for obtaining university education relative to high school. To achieve this, we conducted a survey which elicited earnings expectations associated with counterfactual educational choices for a sample of high-school students in Stockholm. We find average ex-ante returns to university to be 36%, with higher returns for females, those with high SES backgrounds, and high math scores. The returns vary considerably and are highest for those that choose university, but also positive and sizable for those who do not. Our results imply that students sort into education based on their comparative advantage. Nevertheless, our results suggest that an OLS estimator of the returns to university education should be expected to be quite similar to the average treatment on the treated effect for university education. Additionally, we find evidence that the positive ex-ante earnings returns to high paying fields, among those that do not choose these fields, can (partly) be reconciled by individuals expecting to be compensated through higher non-pecuniary returns to those fields.
    Keywords: Ex-ante treatment effects; returns to university; educational sorting; subjective expectations;
    JEL: I26 J24
    Date: 2022–03–18
  10. By: Corey Allan (Ministry of Business, Innovation & Employment); David C. Maré (Motu Economic and Public Policy Research)
    Abstract: We continue our examination of inclusive growth at the firm level by examining heterogeneity in rent sharing in New Zealand using linked employer-employee data. We test for heterogeneity in rent sharing across a range of worker and firm characteristics including gender, ethnicity, age, qualifications, tenure, firm size, firm age, and industry. We also refine our measure of quasi-rents and estimate the level of excess quasi-rents per worker, or the amount of rents above the threshold beyond which rent sharing occurs. We find that between 20% and 30% of workers are in firms that earn zero excess rents. These workers are concentrated in the hospitality, administrative services, and retail industries and are more likely to be women, to be M?ori or Pacific peoples, and have lower-level qualifications. We find an overall rent-sharing elasticity of 0.03, which is equivalent to a $38 increase in annual wages in response to a $1,000 increase in excess rents per worker. We find differences in rent sharing by levels of highest qualification, tenure, and ethnicity. We find no differences in rent sharing by firm size or firm age. Rent sharing is similar across industries, with workers in most industries receiving between $1,500 and $2,000 of rents per year. The auxiliary finance and professional, scientific, and technical services sectors share the most, while grocery retailing, food and beverage manufacturing and utilities share the least. Insurance type behaviour by firms is consistent with the variation in rent sharing across industries, although differences in bargaining power are also likely to play a role in explaining differences in rent sharing across groups.
    Keywords: Wage determination; Rent-sharing; imperfect competition.
    JEL: J3 J71 J10 D22
    Date: 2022–03
  11. By: Bas Scheer (CPB Netherlands Bureau for Economic Policy Analysis); Wiljan van den Berge (CPB Netherlands Bureau for Economic Policy Analysis); Maarten Goos; Alan Manning; Anna Salomons
    Abstract: The rising incidence of alternative work arrangements raises questions about worker outcomes in non-standard labor contracts. However, causal evidence on the effects of flexible contracts on labor market outcomes of individual workers is scarce. We study this question using data on payrolling, a work arrangement where employees are on the payroll of one company while performing their job duties at another firm. Like employment agencies, payroll companies can offer flexible employment contracts. Payrolling is a growing phenomenon on the Dutch labor market, and is particularly prevalent in low-wage jobs in the service sector. We show that employees who receive a payrolling contract subsequently have a reduced chance of employment, a lower incidence of permanent contracts, lower pension contributions, and lower growth in hourly wages. Some of this effect disappears in the three years after payrolling as employees switch jobs. These findings are based on payrolling prior to the 2020 enactment of new labor law in the Netherlands (Wet Arbeidsmarkt in Balans WAB). This law equates the legal protection of employees on payrolling contracts to that of standard contracts, including pension accrual. Future research could consider whether adverse effects for individual employees have indeed been remedied since the introduction of this law.
    JEL: J31 J32 J41 J42
    Date: 2022–03
  12. By: Julius Ilciukas (University of Amsterdam)
    Abstract: I study how retirement delays in one generation affect fertility in the subsequent generation. I use administrative Dutch data and exploit the 2006 Dutch pension reform. The reform induced individuals born from January 1, 1950 onward to de- lay retirement while exempting those born earlier. I find that this reduced fertility among women with reform-affected mothers. The reduction is likely permanent and economically significant. I supplement my analysis with survey evidence and argue that the fertility reduction is driven by reduced grandparental child care supply. My results suggest that delaying retirement may undermine the goal of balancing pension systems through a resulting fertility reduction.
    JEL: J13 H55 J22
    Date: 2022–03–02
  13. By: DUCH BROWN Nestor (European Commission - JRC); GOMEZ-HERRERA Estrella; MUELLER-LANGER Frank; TOLAN Songul (European Commission - JRC)
    Abstract: We investigate three alternative but complementary indicators of market power on one of the largest online labour markets (OLMs) in Europe: (1) the elasticity of labour demand, (2) the elasticity of labour supply, and (3) the concentration of market shares. We explore how these indicators relate to an exogenous change in platform policy. In the middle of the observation period, the platform made it mandatory for employers to signal the rates they were willing to pay as given by the level of experience required to perform a project, i.e., entry, intermediate or expert level. We find a positive labour supply elasticity ranging between 0.06 and 0.15, which is higher for expert-level projects. We also find that the labour demand elasticity increased while the labour supply elasticity decreased after the policy change. Based on this, we argue that market-designing platform providers can influence the labour demand and supply elasticities on OLMs with the terms and conditions they set for the platform. We also explore the demand for and supply of AI-related labour on the OLM under study. We provide evidence for a significantly higher demand for AI-related labour (ranging from +1.4% to +4.1%) and a significantly lower supply of AI-related labour (ranging from -6.8% to -1.6%) than for other types of labour. We also find that workers on AI projects receive 3.0%-3.2% higher wages than workers on non-AI projects.
    Keywords: Online labour markets, artificial intelligence, market power, exogenous change in platform policy
    Date: 2022–02
  14. By: Hyunduk Suh (Inha University); SeEun Jung (Inha University)
    Abstract: The retirement of old workers increased during the COVID-19 pandemic, and health concerns are considered as a critical factor. To isolate the effect of pure health concerns during the pandemic, we analyze the impact of the aggregate health shock on retirement decisions using a life-cycle model. The aggregate health shock changes the economy from the normal state to the pandemic state, where the probability of adverse idiosyncratic health shock increases, especially if agents are working. Simulation results suggest that the shock accelerates the retirement of agents aged between 60 and 64. Its impact is quantitatively greater than the effect of a five percent reduction in labor income. The retirement response is heterogeneous across agent types, influenced by various factors, including preference, income, health status, and health expenditure. The negative effect of the aggregate health shock is significant even though the shock is expected to be temporary. Also, the effect hinges on the assumption that working poses a greater risk of receiving a negative health shock than retiring.
    Keywords: Retirement, Health shock, COVID-19, Life-cycle model
    JEL: J26 I18 E24
    Date: 2022–03
  15. By: Simon Rabaté (CPB Netherlands Bureau for Economic Policy Analysis); Julie Tréguier (Ined)
    Abstract: The ANW reform of 1996 in the Netherlands reduced the eligibility to survivor benefits for cohorts born after 1950. We find an increase in personal income (+23%) and labor force participation (+16%) for the widowers three years after spousal death. We also find an increase in the take up of welfare and disability benefits (+1.5pp +6pp and +6pp, respectively) as a result of the reform. These are the key findings of recent research on the impact of survival insurance on labor market outcomes for widows. In this Discussion Paper, we evaluate the effect of changes in (public) survivor insurance on surviving spouses’ labor supply. We use a natural experiment to estimate the effect: the cut in eligibility for first pillar survivor insurance benefits on the labor supply of widowers, implemented in 1996. The reform considerably reduced eligibility to survivor benefits for individuals born after January 1st, 1950. This provides a clean quasi-experimental setting as it induced a large and discontinuous drop in survivor benefits for adjacent birth cohorts. Using a regression discontinuity approach and high quality administrative data on the full universe of Dutch widows, we estimate the causal effect of survivors benefits on female income and labor force participation, as well as substitution towards other forms of social insurance.
    JEL: D3
    Date: 2022–03
  16. By: Hiromi Hara (Japan Women's University); Daiji Kawaguchi (University of Tokyo)
    Abstract: One of the more substantial changes brought by the COVID-19 pandemic has been the work from home (WfH) movement. However, as countries now prepare to move beyond the pandemic, the longevity of WfH remains unclear, as it involves not only the operations of businesses but of households as well. A further question is whether this pandemic-induced behavioral change might lead to more long-lasting societal effects such as a shift in gender norms. This study draws on an original panel survey dataset in Japan covering the periods before and after the onset of the pandemic to explore how engagement in WfH affects a couple's allocation of household production, work hours, and attitudes toward traditional gender norms. We find that husbands who adopt WfH increase their share of household production and also form more gender-neutral views of traditional gender roles. We also discuss the potential impact of this shift in gender attitudes on the future of WfH and the labor market.
    Keywords: Work from Home; Household Production; Gender Attitudes; COVID-19; Japan
    JEL: J12 J16 J22 J81

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