nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2022‒04‒11
seventeen papers chosen by
Joseph Marchand
University of Alberta

  1. Inequality and occupational change in times of Revolution: The Tunisian perspective By Marouani, Mohamed Ali; Le, Phuong Minh
  2. The labor market returns to 'first in family' university graduates By Adamecz-Völgyi, Anna; Henderson, Morag; Shure, Nikki
  3. Do Startups Benefit from Their Investors’ Reputation? Evidence from a Randomized Field Experiment By Shai Bernstein; Kunal Mehta; Richard R. Townsend; Ting Xu
  4. Automation and the fall and rise of the servant economy By Krenz, Astrid; Strulik, Holger
  5. This is Air: The "Non-Health" Effects of Air Pollution By Sandra Aguilar-Gomez; Holt Dwyer; Joshua S. Graff Zivin; Matthew J. Neidell
  6. Returns to Education in European Emerging Markets: A Meta-Analytic Review By Horie, Norio; Iwasaki, Ichiro; 岩﨑, 一郎
  7. Labor Substitutability among Schooling Groups By Mark Bils; Barış Kaymak; Kai-Jie Wu
  8. The economy-wide effects of mandating private retirement incomes By George Kudrna
  9. A health economic theory of occupational choice, aging, and longevity By Strulik, Holger
  10. Monopsony in the U.S. Labor Market By Chen Yeh; Claudia Macaluso; Brah J. Hershbein
  11. A Task-Based Theory of Occupations with Multidimensional Heterogeneity By Sergio Ocampo
  12. Who is Doing the Chores and Childcare in Dual-earner Couples during the COVID-19 Era of Working from Home? By Pabilonia, Sabrina Wulff; Vernon, Victoria
  13. Introducing an Austrian Backpack in Spain By João Brogueira de Sousa; Julián Díaz-Saavedra; Ramon Marimon
  14. Screening and Recruiting Talent at Teacher Colleges Using Pre-College Academic Achievement By Christopher Neilson; Sebastian Gallegos; Franco Calle; Mohit Karnani
  15. In-group Favoritism and Peer Effects in Wrongful Acquittals: NBA Referees as Judges By Naci H. Mocan; Eric Osborne-Christenson
  16. Job Protection and Mortgage Conditions: Evidence from Italian Administrative Data By Paolo Emilio Mistrulli; Tommaso Oliviero; Zeno Rotondi; Alberto Zazzaro
  17. Why Aren’t People Leaving Janesville? Industry Persistence, Trade Shocks, and Mobility By Sebastian Ottinger; Michael Poyker

  1. By: Marouani, Mohamed Ali; Le, Phuong Minh
    Abstract: The public sector plays a large role in many developing economies, but its effect on earnings inequality dynamics has not been widely studied. In this paper, we investigate the earnings inequality trends and their determinants in the decades before and after the Tunisian Revolution, focusing on the impact of public wage and employment policy changes. A recentered-influence function (RIF) decomposition is performed to decompose the change in earnings into wage structure and composition effects and to assess the contribution of various determinants of inequality change. We find that earnings inequality decreased significantly during the period of investigation in Tunisia, mainly due to the decrease in the public-private wage gap and in sector wage gaps on the demand side, and the decreasing education premia on the supply side. The increase in marginal returns to average routine-task intensity jobs, the falling return to experience, and the decreasing regional wage gap also contributed to declining earnings inequality, but to a lesser extent.
    Keywords: wage inequality,Revolution,occupational change,education premium,public wage policy
    JEL: J21 J23 J24 J32 J45
    Date: 2022
  2. By: Adamecz-Völgyi, Anna; Henderson, Morag; Shure, Nikki
    Abstract: The labor market returns to 'first in family' university graduates We examine how first in family (FiF) graduates (those whose parents do not have university degrees) fare on the labor market. We find that among women, FiF graduates earn 7.4% less on average than graduate women whose parents have a university degree. For men, we do not find a FiF wage penalty. A decomposition of the wage difference between FiF and non-FiF graduates reveals two interesting findings. First, two-thirds of the female FiF penalty are explained by certain characteristics, including: having lower attainment in school, attending an elite university, selecting particular degree courses, working in smaller firms, working in jobs that do not require their degree, and motherhood. Second, FiF graduate men also differ in their endowments from non-FiF graduate men; however, FiF men earn higher returns on their endowments than non-FiF men and thus compensate for their relative social disadvantage, while FiF women do not. We also estimate the returns to graduation for potential FiF and non- FiF young people. We find that the wage returns to graduation are not lower among FiF graduates compared to those who match their parents with a degree. The effects of coming from a lower educated family are large and positive for men and large and negative for women in general, irrespective of graduation. We provide some context, offer explanations, and suggest implications of these findings.
    Keywords: socioeconomic gaps,intergenerational educational mobility,higher education,labor market returns,gender economics
    JEL: I24 I26 J24
    Date: 2022
  3. By: Shai Bernstein; Kunal Mehta; Richard R. Townsend; Ting Xu
    Abstract: We analyze a field experiment conducted on AngelList Talent, a large online search platform for startup jobs. In the experiment, AngelList randomly informed job seekers of whether a startup was funded by a top-tier investor and/or was funded recently. We find that the same startup receives significantly more interest when information about top-tier investors is provided. Information about recent funding has no effect. The effect of top-tier investors is not driven by low-quality candidates and is stronger for earlier-stage startups. The results show that venture capitalists can add value passively, simply by attaching their names to startups.
    JEL: C93 G24 J22 J24 L26
    Date: 2022–03
  4. By: Krenz, Astrid; Strulik, Holger
    Abstract: We develop a macroeconomic theory of the division of household tasks between servants and own work and how it is affected by automation in households and firms. We calibrate the model for the U.S. and apply it to explain the historical development of household time use and the distribution of household tasks from 1900 to 2020. The economy is populated by high-skilled and low-skilled households and household tasks are performed by own work, machines, or servants. For the period 1900-1960, innovations in household automation motivate the decline of the servant economy and the creation of new household tasks motivates an almost constant division of household time between wage work and domestic work. For the period 1960-2020, innovations in firm automation and the implied increase of the skill premium explain the return of the servant economy. We show the robustness of results to the introduction of time trends in skilled-labor supply and the consideration of endogenous demand for leisure. With counterfactual experiments we address the effects of task-dependent disutility of work and of innovations in servant efficiency (the Gig economy). We provide supporting evidence for inequality as a driver of the return of the servant economy in a regional panel of U.S. metropolitan statistical areas for the period 2005-2020.
    Keywords: Automation,Robots,Home production,Inequality,Servants,Maids,Gig economy
    JEL: D13 E24 J22 J24 O11 O30
    Date: 2022
  5. By: Sandra Aguilar-Gomez; Holt Dwyer; Joshua S. Graff Zivin; Matthew J. Neidell
    Abstract: A robust body of evidence shows that air pollution exposure is detrimental to health outcomes, often measured as deaths and hospitalizations. This literature has focused less on subclinical channels that nonetheless impact behavior, performance, and skills. This article reviews the economic research investigating the causal effects of pollution on "non-health" endpoints, including labor productivity, cognitive performance, and multiple forms of decision making. Subclinical effects of pollution can be more challenging to observe than formal health care encounters but may be more pervasive if they affect otherwise healthy people. The wide variety of possible impacts of pollution should be informed by plausible mechanisms and require appropriate hypothesis testing to limit false discovery. Finally, any detected effects of pollution, both in the short and long run, may be dampened by costly efforts to avoid exposure ex-ante and remediate its impacts ex-post; these costs must be considered for a full welfare analysis
    JEL: I12 I31 J22 J24 Q51 Q53
    Date: 2022–03
  6. By: Horie, Norio; Iwasaki, Ichiro; 岩﨑, 一郎
    Abstract: In this paper, we perform a meta-analysis of 1599 estimates extracted from 69 previous studies to identify time-series changes in returns to education in 20 European emerging markets. We also examine possible difference in returns to education across the region. A meta-synthesis of collected estimates suggests a decreasing trend over time in returns to education in European emerging markets as a whole. Synthesis results also indicate that the western part of the region tends to have higher returns to education than the eastern part. Both the meta-regression analysis of literature heterogeneity and the test for publication selection bias produced findings that are highly consistent with the meta-synthesis results.
    Keywords: return to education, wages, meta-analysis, publication selection bias, European emerging markets
    JEL: D31 I26 J31 P23 P36
    Date: 2022–01
  7. By: Mark Bils; Barış Kaymak; Kai-Jie Wu
    Abstract: Knowing the degree of substitutability between schooling groups is essential to understanding the role of human capital in income differences and to assessing the economic impact of such policies as schooling subsidies, immigration systems, or redistributive taxes. We derive a lower bound for the substitutability required for worldwide growth in real GDP from 1960 to 2010 to be consistent with a stable wage premium for schooling despite the rapid growth in schooling, assuming no exogenous worldwide regress in the technology frontier for workers with only primary schooling. That lower bound for the long-run elasticity of substitution is about 4, which is far higher than values commonly used in the literature. Given our bound, we reexamine the importance of human capital in cross-country income differences and the roles of school quality versus the skill bias of technology in greater efficiency gains from schooling in richer countries.
    Keywords: Elasticity of Skill Substitution; Aggregate Human Capital; Growth and Development
    JEL: E24 J24 O15 O47
    Date: 2022–03–23
  8. By: George Kudrna
    Abstract: This paper investigates the economy-wide effects of mandating private (employment-related) pensions. It draws on the Australian experience with its Superannuation Guarantee legislation which mandates contributions to private retirement (superannuation) accounts. Our key objective is to quantify the long-run implications of alternative mandatory superannuation contribution rates for household economic decisions over the life cycle, household welfare, and macroeconomic and fiscal aggregates. To that end, we develop a stochastic, overlapping generations (OLG) model with labor choice and endogenous retirement, which distinguishes between (i) ordinary private (liquid) assets and (ii) superannuation (illiquid) assets. The benchmark model is calibrated to the Australian economy, fitted to Australian demographic, household survey and macroeconomic data, and accounting for a detailed representation of Australia’s government policy, including its mandatory superannuation system. The model is then applied to simulate the effects of alternative mandatory superannuation contribution rates, with a specific focus on the counterfactual of a legislated future rate of 12% of gross wages. Based on the model simulations, we show that in the long run, this increased mandate generates larger average household wealth, output and consumption per capita and (rational) household welfare across income distribution.
    Keywords: Private Pension, Social Security, Income Taxation, Labor Supply, Endogenous Retirement, Stochastic General Equilibrium
    JEL: J32 H55 H31 J22 J26 C68
    Date: 2022–03
  9. By: Strulik, Holger
    Abstract: In this paper, I propose a life cycle model of occupational choice with endogenous health behavior, aging, and longevity. Health-demanding work leads to a faster accumulation of health deficits and is remunerated with a hazard markup on wages. Health deficit accumulation is also influenced by unhealthy consumption and health care expenditure. I calibrate the model for a 20 year old average American in 2010 and show the following results, among others. Health-demanding work is ceteris paribus preferred by male, young, and healthy individuals with a relatively low level of education. Health demanding work has a negligible effect on health behavior because income and health investment effects largely offset each other, implying that health effects can be attributed almost fully to the direct health burden of work. Better medical technology induces low-skilled individuals to spend a greater part of their life in health-demanding work and thus increases the health gradient of education. High wealth endowments protect against unhealthy occupational choices. I show robustness of the results in an extension of the model with regard to endogenous retirement.
    Keywords: occupational choice,health behavior,health deficits,aging,longevity,retirement
    JEL: D15 I10 I12 J24 J26
    Date: 2022
  10. By: Chen Yeh (Federal Reserve Bank of Richmond); Claudia Macaluso (Federal Reserve Bank of Richmond); Brah J. Hershbein (W.E. Upjohn Institute for Employment Research)
    Abstract: This paper quantifies the extent to which the U.S. manufacturing labor market is characterized by employer market power and how such market power has changed over time. We find that the vast majority of U.S. manufacturing plants operate in a monopsonistic environment and, at least since the early 2000s, the labor market in U.S. manufacturing has become more monopsonistic. To reach this conclusion, we exploit rich administrative data for U.S. manufacturers and estimate plant-level markdowns—the ratio between a plant’s marginal revenue product of labor and its wage. In a competitive labor market, markdowns would be equal to unity. Instead, we find substantial deviations from perfect competition, as markdowns average 1.53. This result implies that a worker employed at the average manufacturing plant earns 65 cents on each dollar generated on the margin. To investigate long-term trends in employer market power, we propose a novel measure for the aggregate markdown that is consistent with aggregate wedges and also incorporates the local nature of labor markets. We find that the aggregate markdown decreased between the late 1970s and the early 2000s, but has been sharply increasing since.
    Keywords: Monopsony, labor market power, markdowns, secular trends
    JEL: E2 J2 J3 J42
    Date: 2022–03
  11. By: Sergio Ocampo (University of Western Ontario)
    Abstract: I develop an assignment model of occupations with multidimensional heterogeneity in production tasks and worker skills. Tasks are distributed continuously in the skill space, whereas workers have a discrete distribution with a finite number of types. Occupations arise endogenously as bundles of tasks optimally assigned to a type of worker. The model allows us to study how occupations respond to changes in the economic environment, making it useful for analyzing the implications of automation, skill-biased technical change, offshoring, and worker training. Using the model, I characterize how wages, the marginal product of workers, the substitutability between worker types, and the labor share depend on the assignment of tasks to workers. I introduce automation as the choice of the optimal size and location of a mass of identical robots in the task space. Automation displaces workers by replacing them in the performance of tasks, generating a cascading effect on other workers as the boundaries of occupations are redrawn.
    Keywords: occupations, tasks, automation, assignment, skill mismatch
    Date: 2022
  12. By: Pabilonia, Sabrina Wulff; Vernon, Victoria
    Abstract: In 2020, parents' work-from-home days increased fourfold following the initial COVID-19 pandemic lockdown period compared to 2015-2019. At the same time, many daycares closed, and the majority of public schools offered virtual or hybrid classrooms, increasing the demand for household-provided childcare. Using time diaries from American Time Use Survey (ATUS) and looking at parents in dual-earner couples, we examine parents' weekday workday time allocated to paid work, chores, and childcare in the COVID-19 era by the couple's joint work location arrangements. We determine the work location of the ATUS respondent directly from their diary and proxy the partner's work-from-home status using the share of workers reporting work from home in their occupation. When their partners worked onsite, mothers and fathers working from home spent more time on childcare, especially mothers, compared to those on-site; fathers spent more time on household chores. However, only mothers' total unpaid and paid work burden was higher. In the fall, fathers working from home worked substantially fewer paid hours and spent even more time on household production. When both parents worked from home compared to both worked on-site, mothers and fathers working from home worked roughly equally fewer paid hours and did more secondary childcare, though fathers did more household production, suggesting they shared the increased work burden resulting from the pandemic more equally. However, in the fall, only mothers did more childcare when both worked from home. We also find that mothers spread their work throughout the day when working from home.
    Keywords: COVID-19,household production,childcare,telework,remote work,working from home,gender care gap,gender inequality,pandemic parenting
    JEL: D13 J22 J29
    Date: 2022
  13. By: João Brogueira de Sousa; Julián Díaz-Saavedra; Ramon Marimon
    Abstract: In an overlapping generations economy with incomplete insurance markets, the introduction of an employment fund -akin to the one introduced in Austria in 2003, also known as 'Austrian backpack'- can enhance production efficiency and social welfare. It complements the two classical systems of public insurance: pay-as-you-go (PAYG) pensions and unemployment insurance (UI). We show this in a calibrated dynamic general equilibrium model with heterogeneous agents of the Spanish economy in 2018. A `backpack' (BP) employment fund is an individual (across jobs) transferable fund, which earns a market interest rate as a return and is financed with a payroll tax (a BP tax). The worker can use the fund while unemployed or retired. Upon retirement, backpack savings can be converted into an (actuarially fair) retirement pension. To complement the existing PAYG pension and UI systems with a welfare maximising 6% BP tax would raise welfare by 0.96% of average consumption at the new steady state, if we model Spain as an open economy. As a closed economy, there are important general equilibrium effects and, as a result, the social value of introducing the backpack is substantially greater: 16.14%, with a BP tax of 18%. In both economies, the annuity retirement option is an important component of the welfare gains.
    Keywords: computable general equilibrium, welfare state, social security reform, Retirement
    JEL: C68 H55 J26
    Date: 2022–03
  14. By: Christopher Neilson (Princeton University); Sebastian Gallegos (Universidad Adolfo Ibáñez); Franco Calle (University of Chicago); Mohit Karnani (MIT)
    Abstract: This paper studies screening and recruiting policies that restrict or incentivize entry to teacher-colleges. Using historical records of college entrance exam scores since 1967 and linking them to administrative data on the population of teachers in Chile, we first document a robust positive and concave relationship between precollege academic achievement and several short and long run measures of teacher productivity. We use an RD design to evaluate two recent policies that increased the share of high-scoring students studying to become teachers. We then show how data-driven algorithms and administrative data can enhance similar teacher screening and recruiting policies.
    Keywords: incentives, college entrance exams, administrative data
    JEL: I23 J24 C21
    Date: 2022–02
  15. By: Naci H. Mocan; Eric Osborne-Christenson
    Abstract: We provide the first analysis of racial in-group bias in Type-I and Type-II errors. Using player-referee matched data from NBA games we show that there is no overall racial bias or in-group bias in foul calls made by referees. Similarly, there is no racial bias or in-group bias in Type-I errors (incorrect foul calls). On the other hand, there is significant in-group favoritism in Type-II errors. These are wrongful acquittals where the referee did not blow the whistle although a foul was committed. We also analyze peer effects and find that black referees’ proclivity to make Type-II errors in favor of black players exists as long black referees have at least one black peer referee on the court, and that the bias disappears only if black referees have two white peers. In case of white referees, in-group favoritism in Type-II errors emerges if white referees have two black peers with them on the court. We provide evidence showing that the results are not attributable to skill differences between referees. We also show that a higher Type-I error rate during the season lowers referees’ probability to be selected to officiate a game in the playoffs, whereas variations in the rate of Type-II errors have no impact on the likelihood of a playoff assignment. These results indicate that in-group favoritism takes place in a domain which is not costly (making Type-II errors), and that bias is eliminated when it is costly to the decisionmaker.
    JEL: D03 D9 J70 K0
    Date: 2022–03
  16. By: Paolo Emilio Mistrulli (Bank of Italy); Tommaso Oliviero (Università di Napoli Federico II and CSEF); Zeno Rotondi (Unicredit); Alberto Zazzaro (University of Naples Federico II, CSEF and MoFiR.)
    Abstract: In this paper we combine administrative data from the Italian National Institute for Social Security and proprietary data from a major Italian commercial bank to analyse the impact of job protection legislation on mortgage conditions. An exogenous change in the degree of job protection against individual dismissals of workers with open-ended contracts is identified by exploiting the 2015 Labor market reform, the so-called Jobs Act, which reduced employment protection of newly hired employees in medium and large private firms. We find that the weaker job security induced by the 2015 legislation change leads to a lower mortgage amount and a lower leveraging capacity, as measured by the loan-to-value ratio. Furthermore, the effect of job insecurity is mitigated by the presence of co-mortgagors while it is amplified for young and low-income mortgagors.
    Keywords: Employment protection law; job stability; mortgage market.
    JEL: C21 G51 J41
    Date: 2022–03–31
  17. By: Sebastian Ottinger (Northwestern University); Michael Poyker (University of Nottingham)
    Abstract: Particular industries have dominated many locations in the United States for more than a century. We show that individuals residing in such locations were systematically less likely to move away from there during the past few decades. By identifying locations with sizable employment shares in the same manufacturing industries in 1870 and 1980, we documented less out-migration in the decades following 1980 than earlier. In response to the largest shock affecting manufacturing employment since then, these locations adjusted differently: the “China shock” led to higher unemployment in their communities, but fewer people moved away. Drawing on rich data of social links across counties and surveys of individuals residing there, we document that these individuals have stronger local friendship networks than residents of more thriving communities and exhibit systematic differences in their job-market search behavior. We hypothesize that when local opportunities narrow, residents of these locations both lack information about job opportunities elsewhere and benefit from the amenity value of extended social networks in their location of origin. Instrumental variable results based on a historical shock to local industries’ chances of survival suggest that the effect of dominant manufacturing industries on migration is causal. Mediation analysis reveals that the emergence of strong local ties primarily drives such migration.
    Keywords: Employment persistence, labor mobility, local ties
    JEL: J23 N31 N32 N71 N72 R12 Z1
    Date: 2022–02

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