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on Labor Markets - Supply, Demand, and Wages |
| By: | Nordström Skans, Oskar (Uppsala University,); Choné, Philippe (CREST-ENSAE, IP Paris); Kramarz, Francis (Crest) |
| Abstract: | This empirical paper analyzes labor market sorting across establishments using Swedish register data on cognitive and non-cognitive abilities. We draw on the theoretical foundations of Choné and Kramarz (2021), in which workers are endowed with sets of multidimensional skills that need to be sold in “bundles” to employers that differ in their use of each of these skills. The theory also outlines how wage and sorting patterns should evolve when innovations “unbundle” the skills through the emergence of markets where each specific skill can be traded s eparately. Our empirical results show that labor is sorted across establishments on both comparative advantage and absolute ability. Furthermore, wage returns to each skill is higher in market segments where employers rely more heavily on workers who specialize in that particular skill. Changes over time are well in line with a process of unbundling; sorting on comparative advantage has increased and the market wages of generalists have risen relative to those of specialists. |
| Keywords: | Cognitive skills; Non-Cognitive Skills; Firms; Technology |
| JEL: | J23 J24 J31 |
| Date: | 2022–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2022_006&r= |
| By: | Alexander Bick; Nicola Fuchs-Schündeln; David Lagakos; Hitoshi Tsujiyama |
| Abstract: | This paper studies how structural change in labor supply along the development spectrum shapes cross-country differences in hours worked. We emphasize two main forces: sectoral reallocation from self-employment to wage work, and declining fixed costs of wage work. We show that these forces are crucial for understanding how the extensive margin (the employment rate) and intensive margin (hours per worker) of aggregate hours worked vary with income per capita. To do so we build and estimate a quantitative model of labor supply featuring a traditional self-employment sector and a modern wage-employment sector. When estimated to match cross-country data, the model predicts that sectoral reallocation explains more than half of the total hours decrease at lower levels of development. Declining fixed costs drive the rise in employment rates at higher levels of income per capita, and imply higher hours in the future, in contrast to the lower hours resulting from income effects and expansions in tax-and-transfer systems. |
| Keywords: | Structural Change; Development; Employment; Hours Worked; Taxation |
| JEL: | E24 H31 J21 J22 L16 O11 |
| Date: | 2022–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:93883&r= |
| By: | Adamecz-Völgyi, Anna (UCL Institute of Education); Shure, Nikki (University College London) |
| Abstract: | There is a large gender gap in the probability of being in a "top job" in mid-career. Top jobs bring higher earnings, and also have more job security and better career trajectories. Recent literature has raised the possibility that some of this gap may be attributable to women not "leaning in" while men are more overconfident in their abilities. We use longitudinal data from childhood into mid-career and construct a measure of overconfidence using multiple measures of objective cognitive ability and subjective estimated ability. Our measure confirms previous findings that men are more overconfident than women. We then use linear regression and decomposition techniques to account for the gender gap in top jobs including our measure of overconfidence. Our results show that men being more overconfident explains 5-11 percent of the gender gap in top job employment. This contribution is statistically significant although small in magnitude. This indicates that while overconfidence matters for gender inequality in the labor market and has implications for how firms recruit and promote workers, other individual, structural, and societal factors play a larger role. |
| Keywords: | gender gaps, inequality, overconfidence, labor market |
| JEL: | I24 I26 J24 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15145&r= |
| By: | Jérémy Hervelin; Pierre Villedieu (Université de Cergy-Pontoise, THEMA) |
| Abstract: | This paper investigates whether work experience gained through a subsidized job program can improve the employment prospects of young school dropouts. Relying on a correspondence study field experiment conducted in France, we find that the chances to be invited for a job interview are more than doubled (from 7.6 percent to 19.3 percent) when youths signal a one-year job-related experience in their résumé - either in the private or public sector; either certified or not - compared to youths who remained mainly inactive after dropping out from high school. We show that this e ect is fairly stable across firm, contract or labor market characteristics, and also when testing another channel of application where resumes were sent spontaneously to firms. |
| Keywords: | School dropouts, Work experience, Subsidized employment, Job Interview, Field experiment |
| JEL: | J08 J24 J71 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2022-07&r= |
| By: | Mansour, Hani (University of Colorado Denver); McKinnish, Terra (University of Colorado, Boulder) |
| Abstract: | Previous work shows that higher male wage inequality decreases the share of ever married women in their 20s, consistent with the theoretical prediction that greater male wage dispersion increases the return to marital search. Consequently, male wage inequality should be associated with higher husband quality among those "early-mover" women who choose to forgo these higher returns to search. We confirm using U.S. decennial Census and American Community Survey (ACS) data from 1980-2018 that married women ages 22-30 in marriage markets with greater male wage inequality are more likely to marry up in education and in husband's occupation. We additionally consider whether male wage inequality increases wage uncertainty, leading women to prefer older husbands who can send stronger signals of lifetime earnings. We confirm that higher male wage inequality is also associated with a larger marital age gap. |
| Keywords: | marriage, marital search, marital sorting, inequality, male wages |
| JEL: | J12 J24 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15138&r= |
| By: | Kozhaya, Mireille (University of Wuppertal); Martínez Flores, Fernanda (RWI) |
| Abstract: | This paper investigates the effect of a unique child labor ban regulation on employment and school enrollment. The ban implemented in Mexico in 2015, increased the minimum working age from 14 to 15, introduced restrictions to employ underage individuals, and imposed penalties for the violation of the law. Our identification strategy relies on a DiD approach that exploits the date of birth as a natural cutoff to assign individuals into treatment and control groups. The ban led to a decrease in the probability to work by 1.2 percentage points and an increase in the probability of being enrolled in school by 2.2 percentage points for the treatment group. These results are driven by a reduction in employment in paid activities, and in the secondary and tertiary sectors. The effects are persistent several years after the ban. |
| Keywords: | child labor, ban, minimum working age, schooling |
| JEL: | I38 J22 J23 J82 O12 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15144&r= |
| By: | Castro, Juan Francisco (Universidad del Pacifico); Ortega, Lorena (Universidad de Chile); Yamada, Gustavo (Universidad del Pacifico); Mata, David (Universidad del Pacifico) |
| Abstract: | Occupational mismatch, defined as a discrepancy between workers' qualifications or skills and those required by their job, is a highly debated phenomenon in developed countries, but rarely addressed in developing economies from a comparative perspective. This study investigates the magnitudes of overeducation and overskilling, and their correlates, in four developing Latin American countries that have undergone a rapid and unregulated expansion of tertiary education participation (i.e. Chile, Ecuador, Mexico and Peru). Using a variety of measures derived from PIAAC data, we find that the magnitudes of subjective overeducation, and objective and subjective overskilling are sizable (particularly in Chile and Mexico), albeit lower than OECD estimates. Differences in objective overskilling between the OECD and LAC countries are largely explained by workforce skill levels. We also find that overeducation, overskilling and credential inflation affect those occupations which arguably require less qualifications. Potential supply and demand side explanations for these patterns are discussed. |
| Keywords: | Latin America, PIAAC, occupational mismatch, overeducation, overqualification, overschooling, overskilling |
| JEL: | O54 I26 J24 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15143&r= |
| By: | Daniil Kashkarov |
| Abstract: | I test the contribution of individual human capital responses to earnings inequality arising in the process of the routine-biased technological change (RBTC). I develop a lifecycle model of human capital and occupational choice, calibrate it to the NLSY79 data, using the price series for human capital in abstract and routine occupations estimated from the cross-sectional CPS data with the “flat spot” approach. I then use the model to quantify the effect of a change in human capital prices on earnings inequality. I find that an increase in the price for human capital in abstract occupations and a fall in its price in routine occupations associated with RBTC has a modest contribution to the evolution of variance of log-earnings — up to 10.8 per cent by the end of the working life cycle. However, the contribution of RBTC to an increase in the abstract wage premium over the lifetime of the NLSY79 cohorts is up to 28.6 per cent. The growth of the abstract wage premium is significantly dampened by the human capital responses of workers switching from routine occupations. |
| Keywords: | RBTC; human capital; life-cycle modelling; NLSY79; AFQT; |
| JEL: | J24 J31 D15 O33 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp721&r= |
| By: | Rettl, Daniel A. (University of Georgia); Schandlbauer, Alexander (University of Southern Denmark); Trandafir, Mircea (University of Southern Denmark) |
| Abstract: | When workers are in bad health, their productivity declines. We investigate whether the health of employees affects firm performance, taking advantage of the severity of the seasonal influenza seasons as a source of exogenous variation. We find that firms whose employees are particularly affected by influenza experience reductions in their return on assets and in net income. These results are not driven by firm-specific characteristics, as we find the same relationship between influenza severity and firm performance within firms, at the establishment level. We also document substantial heterogeneity in the effects, with small firms and labor-intensive firms driving our findings. This suggests that labor is an important driver of firm performance and that capital-intensive and larger firms are better able to shift resources in response to temporary shocks to their workforce. Back-of-the-envelope calculations suggest that smaller firms may be better off subsidizing vaccination programs for their employees. |
| Keywords: | seasonal influenza, health shock, firm performance |
| JEL: | L25 I12 G30 J31 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15147&r= |
| By: | Christian Ruzzier (Departamento de Economía, Universidad de San Andrés); Marcelo Woo (University of Nottingham) |
| Abstract: | We examine patterns of discrimination when employers hold incorrect beliefs about the relationship between group membership and productivity, and suffer from confirmation bias when updating their beliefs. As a result, employers do not correct them fully, leading to persistent wage discrimination. Negative stereotypes generate discrimination against minority workers upon entry to the labor market, but are not enough to have discrimination in the long run, and reversals in discrimination are possible. We also discuss whether interventions aimed at reducing discrimination would succeed if confirmation bias is an important source of discrimination, and consider segregation in an extension with heterogeneous employers. |
| Keywords: | learning; confirmation bias; stereotypes; discrimination; segregation; labor market |
| JEL: | D90 D91 J71 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:sad:wpaper:163&r= |
| By: | Juan J. Dolado; Etienne Lalé; Helene Turone |
| Abstract: | We propose a model to evaluate the U.K.’s zero-hours contract (ZHC) – a contract that exempts employers from the requirement to provide any minimum working hours, and allows workers to decline any workload. We find quantitatively mixed welfare effects of ZHCs. On one hand they unlock job creation among firms that face highly volatile business conditions and increase laborforce participation of individuals who prefer flexible work schedules. On the other hand, the use ofZHCs by less volatile firms, where jobs are otherwise viable under regular contracts, reduces welfare and likely explains negative employee reactions to this contract. |
| Date: | 2022–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:bri:uobdis:22/763&r= |
| By: | KITAO Sagiri; MIKOSHIBA Minamo |
| 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. |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:22016&r= |
| By: | Dennis Dlugosch; Michael Abendschein; Eun Jung Kim |
| Abstract: | The economic shock induced by the COVID-19 pandemic is accelerating structural changes and is posing new challenges. Austria faces wider growth opportunities and new adjustment challenges related notably to two major structural transformations: transition to carbonless growth and the generalisation of more advanced forms of digitalisation. These imply new entries and exits in the business sector, more capital and labour re-allocations and greater geographic mobility of labour. A better activation of the existing talent pool, in particular female, elderly and migrant workers is also needed to address the ageing of the society. In this context public policies should aim at further stimulating business dynamism by facilitating market entries; supporting firms’ capacity to invest by helping strengthen their balance sheets; better adapting skills to jobs for all categories of workers; and providing the right incentives to R&D to boost long-term innovation. |
| Keywords: | investment, labour market, potential growth, skill shortages |
| JEL: | O11 O12 O14 E22 E24 J01 J21 J24 J26 |
| Date: | 2022–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1706-en&r= |
| By: | Amaia Palencia-Esteban (University of Vigo) |
| Abstract: | This paper analyzes the effect of immigrants on the women-men gap in several labor market outcomes, focusing on their role as child caretakers and substitutes for women’s domestic work. We use administrative Spanish Social Security records from 1998 to 2008 and follow a spatial correlations approach with instrumental variables, based on the distribution of early migrants across provinces. We exploit the presence of children and its interaction with immigrants share to capture the home-care substitution effect. We find that one percentage point increase in the regional share of immigrants rises the women-men differential in employment probability by 0.6 points in families with children, while the effect equals 0.2 for the childless. The additional effect of 0.4 points on families with children is attributed to the impact of immigrants through the supply of childcare services. This effect also applies to the work intensity (days and hours worked) and labor earnings. Our results are largely driven by individuals below tertiary education. |
| Keywords: | D10, F22, J22, J31 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2022-610&r= |
| By: | Barbara Biasi; Song Ma |
| Abstract: | This paper documents differences across higher-education courses in the coverage of frontier knowledge. Comparing the text of 1.7M syllabi and 20M academic articles, we construct the "education-innovation gap," a syllabus’s relative proximity to old and new knowledge. We show that courses differ greatly in the extent to which they cover frontier knowledge. More selective and better funded schools, and those enrolling socio-economically advantaged students, teach more frontier knowledge. Instructors play a big role in shaping course content; research-active instructors teach more frontier knowledge. Students from schools teaching more frontier knowledge are more likely to complete a PhD, produce more patents, and earn more after graduation. |
| JEL: | I23 I24 I26 J24 O33 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29853&r= |
| By: | Titus Galama (University of Southern California); Hans van Kippersluis (Erasmus University Rotterdam) |
| Abstract: | We present a theory of human capital, with its two most essential components, health capital and, what we term, skill capital, endogenously determined within the model. Using the theory, and a calibrated version of it, we uncover and highlight an important economic mechanism driving human-capital formation, socio-economic and health disparities, human-capital based economic growth, and causal relations among the stocks of wealth, skill and health, namely whether individuals can influence their own length of life (endogenous longevity). Without the ability of individuals to influence their longevity, the effects of health, skill and wealth on later-life skill and health are muted. Any additional health, skill or wealth is not used for additional investment, but essentially consumed. These findings have important implications for the modeling of, and our understanding of, human-capital formation, disparities in human capital and health, and human-capital based economic growth. |
| Keywords: | health investment, education, human capital, health capital, dynamic optimal control, longevity |
| JEL: | J24 I12 J00 |
| Date: | 2022–03–24 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20220026&r= |
| By: | Merz, Joachim (Leuphana University Lüneburg) |
| Abstract: | This study contributes to the subjective well-being and retirement literature by quantifying life satisfaction before (4) and after retirement (9+) periods asking: Are retirees more satisfied? Fixed-effects and causal instrumental variables (IV) estimates with individual longitudinal data of the Socio-Economic Panel (SOEP, 33 waves) analyze anticipation and adaptation retirement effects of statutory insured and civil service pensioners in Germany. Main findings: The occupational situation absorbs a positive personal and family influence. There are positive anticipation effects before retirement followed by adaptation instantly when retired both for statutory insured and civil service pensioners. With neutral respectively negative post-retirement adaptation there is no positive retirement effect for both pensioner groups. In short: retirees are not more satisfied, a remarkable result both for statutory insured and civil service pensioners. |
| Keywords: | retirement, statutory insured and civil service pensioners, life satisfaction/subjective well-being, anticipation and adaptation effects, robust fixed-effect regression, causality IV estimates, Socio-Economic Panel (SOEP), Germany |
| JEL: | I31 J26 C21 C23 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15140&r= |
| By: | Sonia FILIPETTO; Ariela MICHA; Francisca PEREYRA; Cecilia POGGI; Martín TROMBETTA |
| Abstract: | The recent growth of the platform economy as a tool for labour exchanges has brought about concerns on the overall quality of jobs created. As labour platforms leave a digital trace, this paper assesses whether platforms can help to increase registered labour in contexts of extended informality as the one for Argentina, asking what does formalization via registration - if any - actually imply for workers and how do they perceive it. The article inspects three on-demand occupations in the Buenos Aires Metropolitan Area: private passengers’ transportation (Uber), domestic work (Zolvers) and home repair services (Home Solution). The main results show that platforms “formalization effect” is dependent on several factors: a platform’s business model, or the company’s interest and need to promote or encourage such process; the pre-existing occupational dynamics in terms of formalization; and general labour market conditions. In the context of an Argentine labour market harmed by a prolongued recession, most transitions to formality via the platform occur to previously unemployed workers who join them. |
| Keywords: | Argentine |
| JEL: | Q |
| Date: | 2022–02–25 |
| URL: | http://d.repec.org/n?u=RePEc:avg:wpaper:en13696&r= |
| By: | Duygu Buyukyazici; Leonardo Mazzoni; Massimo Riccaboni; Francesco Serti |
| Abstract: | We quantify the general equilibrium effects on economic growth of improving the quality of institutions at the regional level in the context of the implementation of the European Cohesion Policy for the European Union and the UK. The direct impact of changes in the quality of government is integrated in a general equilibrium model to analyse the system-wide economic effects resulting from additional endogenous mechanisms and feedback effects. The results reveal a significant direct effect as well as considerable system-wide benefits from improved government quality on economic growth. A small 5% increase in government quality across European Union regions increases the impact of Cohesion investment by up to 7% in the short run and 3% in the long run. The exact magnitude of the gains depends on various local factors, including the initial endowments of public capital, the level of government quality, and the degree of persistence over time. inked to higher mortality. Accounting for a host of potential confounders, we find robust support that regions with lower levels of both social and political trust are associated with higher excess mortality, along with citizen polarization in institutional trust in some models. On the ideological make-up regional parliaments, we find that, ceteris paribus, those that lean more ‘tan’ on the ‘gal-tan’ spectrum yielded higher excess mortality. Moreover, although we find limited evidence of elite polarization driving excess deaths on the left-right or gal-tan spectrums, partisan differences on the attitudes towards the EU demonstrated significantly higher deaths, which we argue proxies for (anti)populism. Overall, we find that both lower citizen-level trust and populist elite-level ideological characteristics of regional parliaments are associated with higher excess mortality in European regions during the first wave of the pandemic. |
| Keywords: | Skill relatedness; Economic complexity; Industrial specialisation; Regional capabilities; Regional diversification. |
| JEL: | J24 O18 R10 R23 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2207&r= |
| By: | Dudek, Thomas (Victoria University of Wellington); Brenøe, Anne Ardila (University of Zurich); Feld, Jan (Victoria University of Wellington); Rohrer, Julia (University of Leipzig) |
| Abstract: | Does growing up with a sister rather than a brother affect personality? In this paper, we provide a comprehensive analysis of the effects of siblings' gender on adults' personality, using data from 85,887 people from 12 large representative surveys covering 9 countries (the United States, the United Kingdom, the Netherlands, Germany, Switzerland, Australia, Mexico, China, and Indonesia). We investigated the personality traits risk tolerance, trust, patience, locus of control, and the Big Five. We found no meaningful causal effects of the gender of the next younger sibling, and no associations with the gender of the next older sibling. Based on high statistical power and consistent results in the overall sample and relevant subsamples, our results suggest that siblings' gender does not systematically affect personality. |
| Keywords: | personality, economic preferences, sibling gender, sibling sex |
| JEL: | J12 J16 J24 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15137&r= |
| By: | Christodoulopoulou, Styliani; Kouvavas, Omiros |
| Abstract: | During the Great Recession, unemployment increased substantially across several euro area countries, with wages exhibiting a muted response. As low skilled workers lose their jobs first during a recession, the remaining employed workers result in a relatively more skilled employment pool. This change in the composition of the employed workers inflates the aggregate wage mechanically, even in the case of no actual pay rises. This paper uses individual level data to control for the effect of changes in the composition of workers on wages and wage cyclicality. We find that compositional effects are highly correlated with the severity of the business cycle, being significant in countries where employment losses were larger. Thus, the results partially explain the muted response of the observed wages to the business cycle, as wages decreased more than what the aggregate numbers suggest during the downturn, a picture that is reversed somewhat during the recent recovery. JEL Classification: J30, E32 |
| Keywords: | Compositional effects, Wage cyclicality, Wages |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20222653&r= |
| By: | von Borries, Alvaro (CIRCLE, Lund University); Grillitsch, Markus (CIRCLE, Lund University); Lundquist, Karl-Johan (CIRCLE, Lund University) |
| Abstract: | In this paper we explore the (changing) spatial concentration of low-income jobs throughout the last 30 years in Sweden, a period that has been characterized by the rise of what has become known as the knowledge economy. In particular, we describe (map) and try to understand what drives the concentration of low-income jobs in certain regions and how that has changed in time. We observe an overall decrease of the prevalence of low-income jobs during the last three decades. Moreover, regions have also converged, meaning that the great differentiator between places is less and less about how many low-income jobs they host, but how many very well paid there are. We also find that labor market polarization does not seem to lead to a greater incidence of low-income jobs when measured against a threshold related to the national income distribution, but, as expected, it does when we move towards a regional threshold, thus accounting for regional income differences. Finally, regions with a larger knowledge economy have tended to have a lower incidence of low-income jobs, both measured with respect to the national and to the regional income. This points towards the knowledge economy being a source of regional prosperity either through the upgrading of jobs or rising the wages of low- income workers. Despite all the discourse about the degradation of the Nordic model, we provide some evidence for it to be still working in Sweden under this new and complex knowledge-dominated era. |
| Keywords: | low-income jobs; regional development; inequality; knowledge economy; labor market polarization |
| JEL: | D31 J21 P25 R12 R23 |
| Date: | 2022–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2022_004&r= |
| By: | Alexander Bick; Adam Blandin; Karel Mertens |
| Abstract: | Based on novel survey data, we document a persistent rise in work from home (WFH) over the course of the COVID-19 pandemic. Using theory and direct survey evidence, we argue that three quarters of this increase reflects adoption of new work arrangements that will likely be permanent for many workers. A quantitative model matched to survey data predicts that twice as many workers will WFH full-time post-pandemic compared to pre-pandemic, and that one in every five instead of seven workdays will be WFH. These model predictions are consistent with survey evidence on workers' own expectations about WFH in the future. |
| Keywords: | working from home; telecommuting; telework; remote work; COVID-19 |
| JEL: | J1 J2 J22 I18 R4 |
| Date: | 2022–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:93893&r= |