nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2022‒04‒25
thirty papers chosen by
Joseph Marchand
University of Alberta

  1. The Long-Run Labor Market Effects of the Canada-U.S. Free Trade Agreement By Brian K. Kovak; Peter M. Morrow
  2. Estimation of a Life-Cycle Model with Human Capital, Labor Supply and Retirement By Xiaodong Fan; Ananth Seshadri; Christopher R. Taber
  3. How Important are Minimum Wage Increases in Increasing the Wages of Minimum Wage Workers? By Jeffrey Clemens; Michael R. Strain
  4. JAQ of All Trades: Job Mismatch, Firm Productivity and Managerial Quality By Coraggio, Luca; Pagano, Marco; Scognamiglio, Annalisa; Tåg, Joacim
  5. Asset Prices and Unemployment Fluctuations: A Resolution of the Unemployment Volatility Puzzle By Patrick J. Kehoe; Pierlauro Lopez; Virgiliu Midrigan; Elena Pastorino
  6. Reconciling Trends in U.S. Male Earnings Volatility: Results from Survey and Administrative Data By Moffitt, Robert A.; Bollinger, Christopher R.; Hokayem, Charles M.; Wiemers, Emily; Abowd, John M.; Carr, Michael; McKinney, Kevin Lee; Zhang, Sisi; Ziliak, James P.
  7. New Evidence on the Effect of Technology on Employment and Skill Demand By Hirvonen, Johannes; Stenhammar, Aapo; Tuhkuri, Joonas
  8. Child labor bans, employment, and school attendance: Evidence from changes in the minimum working age By Kozhaya, Mireille; Martinez Flores, Fernanda
  9. Personal Increasing Returns: Analytics and Applications By Casey B. Mulligan
  10. Return to skills and urban size: Evidence from the skill requirements of Hungarian firms By László Czaller; Zoltán Hermann
  11. Inequality and Income Dynamics in Germany By Drechsel-Grau, Moritz; Peichl, Andreas; Schmieden, Johannes; Schmid, Kai D.; Walz, Hannes; Wolter, Stefanie
  12. Catholic Censorship and the Demise of Knowledge Production in Early Modern Italy By Fabio Blasutto; David de la Croix
  13. From Epidemic to Pandemic: Effects of the COVID-19 Outbreak on High School Program Choices in Sweden By Aalto, Aino-Maija; Müller, Dagmar; Tilley, J. Lucas
  14. Pollution Pictures: Psychological Exposure to Pollution Impacts Worker Productivity in a Large-scale Field Experiment By Nikolai Cook, Anthony Heyes
  15. Peer Effects in the Workplace: A Network Approach By Lindquist, Matthew J.; Sauermann, Jan; Zenou, Yves
  16. 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
  17. Effects of the Expanded Child Tax Credit on Employment Outcomes: Evidence from Real-World Data from April to December 2021 By Elizabeth Ananat; Benjamin Glasner; Christal Hamilton; Zachary Parolin
  18. Systemic Discrimination: Theory and Measurement By J. Aislinn Bohren; Peter Hull; Alex Imas
  19. Compensating Differentials for Occupational Health and Safety Risks: Implications of Recent Evidence By Kniesner, Thomas J.; Viscusi, W. Kip
  20. Business Cycles and Healthcare Employment By Erkmen G. Aslim; Shin-Yi Chou; Kuhelika De
  21. Progressing Towards Efficiency: The Role for Labor Tax Progression in Reforming Social Security By Makarski, Krzysztof; Tyrowicz, Joanna; Komada, Oliwia
  22. The impact of spatial clustering of occupation on commuting time and employment status By Tamás Bakó; Judit Kálmán
  23. The Long-Run Impacts of Adolescent Drinking: Evidence from Zero Tolerance Laws By Abboud, Tatiana; Bellou, Andriana; Lewis, Joshua
  24. Approaches to Estimating Indirect Costs in Healthcare: Motivations for Choice By Mennini, Francesco Saverio; Gitto, Lara
  25. Ethnic Minority Background and Personality Characteristics: Evidence from a Representative Sample of the Adult Population By Ayaita, Adam
  26. Minimum Wages, Efficiency and Welfare By David W. Berger; Kyle F. Herkenhoff; Simon Mongey
  27. The recognition of prior learning: Validating general competences By Michela Meghnagi; Michele Tuccio
  28. Consumption and Saving after Retirement By Bent Jesper Christensen; Malene Kallestrup-Lamb; John Kennan
  29. Child Labour Theories and Policies By Furio Camillo Rosati
  30. Time for Clean Energy? Cleaner Fuels and Women's Time in Home Production By Afridi, Farzana; Debnath, Sisir; Dinkelman, Taryn; Sareen, Komal

  1. By: Brian K. Kovak; Peter M. Morrow
    Abstract: This paper assesses the long-run effects of the 1988 Canada-U.S. Free Trade Agreement (CUSFTA) on the Canadian labor market using matched longitudinal administrative data for the years 1984-2004. We simultaneously examine the labor market effects of increased export expansion and import competition, generally finding adverse effects of Canadian tariff cuts and favorable effects of U.S. cuts, though both effects are small. Workers initially employed in industries that experienced larger Canadian tariff concessions exhibit a heightened probability of layoffs at large firms, but little impact on long-run cumulative earnings. Lower earnings and years worked at the initial employer are offset by gains in other manufacturing industries, construction, and services. Canadian workers quickly transitioned out of industries facing import competition, with the majority of industry adjustment occurring among new entrants to the labor market.
    JEL: F13 F16 F66 J23 J31
    Date: 2022–02
  2. By: Xiaodong Fan; Ananth Seshadri; Christopher R. Taber
    Abstract: We develop and estimate a life-cycle model in which individuals make decisions about consumption, human capital investment, and labor supply and use it to analyze changes in Social Security rules. The most important aspect of our paper is human capital towards the end of the life cycle which responds to changes in the rules. Retirement arises endogenously as part of the labor supply decision. The model allows for both an endogenous wage process through human capital investment (which is typically assumed exogenous in the retirement literature), an endogenous retirement decision (which is typically assumed exogenous in the human capital literature), and accounts for the Social Security system. We estimate the model using indirect inference to match the life-cycle profiles of employment and measured wages from the SIPP data. The model replicates the main features of the data—in particular the large increase in measured wages and small increase in labor supply at the beginning of the life cycle as well as the small decrease in measured wages but large decrease in labor supply at the end of the life cycle. We use the model to estimate the effects of various changes to tax and Social Security policies and show that allowing for human capital accumulation is critical.
    JEL: J22 J24 J26
    Date: 2022–04
  3. By: Jeffrey Clemens; Michael R. Strain
    Abstract: Popular discussion commonly presumes an outsized role for minimum wage increases as a driver of wage increases for minimum wage workers. In this paper, we investigate the accuracy of this presumption using data from the earnings studies of the Current Population Survey (CPS). CPS wage and earnings data enable us to assess the fraction of minimum wage workers who receive a raise within 12 months of their initial appearance as a minimum wage worker. On average from 2010 to 2019, we find that roughly 75 percent of minimum wage workers who remain employed experience a wage increase within 12 months. This fraction is higher during the later years of the sample, when the labor market has been strong, than in the earlier years. The fraction of minimum wage workers receiving wage increases is moderately higher when states enact minimum wage increases than when they do not. We also find that the fraction of minimum wage workers receiving wage increases is correlated with several measures of labor market tightness. Finally, wage gains are quite commonly associated with industry and/or occupation switches. This highlights the importance of career progression for the growth of earnings among entry-level workers. The vast majority of the wage gains realized by minimum wage workers thus appear to be driven by career progression and increases in labor demand. Minimum wage increases play a modest role as a driver of earnings trajectories beyond shaping the initial, typically short-lived, minimum wage job itself.
    JEL: J23 J3 J58
    Date: 2022–03
  4. By: Coraggio, Luca (University of Naples Federico II); Pagano, Marco (University of Naples Federico II, and); Scognamiglio, Annalisa (University of Naples Federico II, and); Tåg, Joacim (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: 2022–04–01
  5. By: Patrick J. Kehoe; Pierlauro Lopez; Virgiliu Midrigan; Elena Pastorino
    Abstract: Recent work has demonstrated that existing solutions of the unemployment volatility puzzle are at odds with the procylicality of the opportunity cost of employment, the cyclicality of wages, and the volatility of risk-free rates. We propose a model of business cycles that is immune to these critiques by incorporating two key features. First, we allow for preferences that generate time-varying risk over the business cycle to account for observed fluctuations in asset prices. Second, we introduce human capital acquisition consistent with the evidence on how wages grow with experience in the labor market. Our model reproduces the observed fluctuations in unemployment because hiring a worker is a risky investment with long-duration returns. As in the data, the price of risk in our model sharply increases in recessions. The benefit from hiring new workers therefore greatly declines, leading to a large decrease in job vacancies and an increase in unemployment of the same magnitude as in the data. We show that our results extend to versions of the model that include physical capital, a life cycle for workers, and alternative preference structures common in the asset-pricing literature.
    JEL: E3 E32 J22 J23 J24
    Date: 2022–02
  6. By: Moffitt, Robert A. (Johns Hopkins University); Bollinger, Christopher R. (University of Kentucky); Hokayem, Charles M. (U.S. Census Bureau); Wiemers, Emily (University of Massachusetts Boston); Abowd, John M. (Cornell University); Carr, Michael (University of Massachusetts Boston); McKinney, Kevin Lee (U.S. Census Bureau); Zhang, Sisi (Jinan University); Ziliak, James P. (University of Kentucky)
    Abstract: There is a large literature on earnings and income volatility in labor economics, household finance, and macroeconomics. One strand of that literature has studied whether individual earnings volatility has risen or fallen in the U.S. over the last several decades. There are strong disagreements in the empirical literature on this important question, with some studies showing upward trends, some showing downward trends, and some showing no trends. Some studies have suggested that the differences are the result of using flawed survey data instead of more accurate administrative data. This paper summarizes the results of a project attempting to reconcile these findings with four different data sets and six different data series--three survey and three administrative data series, including two which match survey respondent data to their administrative data. Using common specifications, measures of volatility, and other treatments of the data, four of the six data series show a lack of any significant long-term trend in male earnings volatility over the last 20-to-30+ years when differences across the data sets are properly accounted for. A fifth data series (the PSID) shows a positive net trend but small in magnitude. A sixth, administrative, data set, available only since 1998, shows no net trend 1998-2011 and only a small decline thereafter. Many of the remaining differences across data series can be explained by differences in their cross-sectional distribution of earnings, particularly differences in the size of the lower tail. We conclude that the data sets we have analyzed, which include many of the most important available, show little evidence of any significant trend in male earnings volatility since the mid-1980s.
    Keywords: administrative data, earnings, volatility
    JEL: J3
    Date: 2022–02
  7. By: Hirvonen, Johannes; Stenhammar, Aapo; Tuhkuri, Joonas
    Abstract: Abstract We present novel evidence on the effects of advanced technologies on employment, skill demand, and firm performance. The main finding is that advanced technologies led to increases in employment and no change in skill composition. Our main research design focuses on a technology subsidy program in Finland that induced sharp increases in technology investment in manufacturing firms. Our data directly measure multiple technologies and skills and track firms and workers over time. We demonstrate novel text analysis and machine learning methods to perform matching and to measure specific technological changes. To explain our findings, we outline a theoretical framework that contrasts two types of technological change: process versus product. We document that firms used new technologies to produce new types of output rather than replace workers with technologies within the same type of production. The results contrast with the ideas that technologies necessarily replace workers or are skill biased.
    Keywords: Technology, Labor, Skills, Industrial policy
    JEL: J23 J24 O33
    Date: 2022–04–11
  8. By: Kozhaya, Mireille; Martinez Flores, Fernanda
    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
  9. By: Casey B. Mulligan
    Abstract: The human capital investment model with endogenous labor supply is generalized to consumer and health behaviors while retaining the tractability of comparative-static analysis of a single first-order condition. Accounting for the endogenous specialization responses is essential to properly distinguish supply and demand factors and to understand how the magnitude of their effects vary across time and circumstances. Even signing effects of policy interventions can hinge on the existence and extent of personal increasing returns. Applications include the gender gap in earnings, the dynamics of substance abuse, effects of taxes on human capital, the tradeoff between product quality and quantity, and unintended consequences of energy regulation. Metrics are provided for assessing the extent of personal increasing returns.
    JEL: D11 I12 J24
    Date: 2022–03
  10. By: László Czaller (Agglomeration and Social Networks Lendület Research Group, Budapest, H-1097, Hungary and Institute of Economics, Centre for Economic and Regional Studies, H-1097, Hungary); Zoltán Hermann (Institute of Economics, Centre for Economic and Regional Studies, Budapest, H-1097, Hungary andInstitute of Economics, Corvinus University, Budapest, HU-1093, Hungary)
    Abstract: While most empirical studies document that cognitive and social skills are strong predictors of individual earnings, their impact is not homogenous in space. We argue that dense urban settings utilize cognitive and social skills more intensively than rural areas, therefore the labour market return to these skills is higher in cities. Using data from a representative survey recording the skills requirements of Hungarian firms, we show that social skills are rewarded more in dense urban areas. Surprisingly, this pattern is not observed for cognitive skills. We use instrumental variables strategy to correct for measurement errors in skills, and to deal with the endogeneity of agglomeration. Our results are robust to alternative agglomeration measures and a large set of controls, however, returns to skills vary considerably across worker groups and industries.
    Keywords: agglomeration, cognitive and social skills, wages, urban labour markets
    JEL: J24 J31 R12
    Date: 2022–02
  11. By: Drechsel-Grau, Moritz (University of Zurich); Peichl, Andreas (Ludwig-Maximilians-Universität München); Schmieden, Johannes (IZA); Schmid, Kai D. (Heilbronn University of Applied Sciences); Walz, Hannes (FAU, Erlangen Nuremberg); Wolter, Stefanie (Institute for Employment Research (IAB), Nuremberg)
    Abstract: We provide a comprehensive analysis of income inequality and income dynamics for Germany over the last two decades. Combining personal income tax and social security data allows us – for the first time – to offer a complete picture of the distribution of annual earnings in Germany. We find that cross-sectional inequality rose until 2009 for men and women. After the Great Recession inequality continued to rise at a slower rate for men and fell slightly for women due to compression at the lower tail. We further document substantial gender differences in average earnings and inequality over the life-cycle. While for men earnings rise and inequality falls as they grow older, many women reduce working hours when starting a family such that average earnings fall and inequality increases. Men's earnings changes are on average smaller than women's but are substantially more affected by the business cycle. During the Great Recession, men's earnings losses become magnified and gains are attenuated. Apart from recession years, earnings changes are significantly right-skewed reflecting the good overall state of the German labor market and increasing labor supply. In the second part of the paper, we study the distribution of total income including incomes of self-employed, business owners, and landlords. We find that total inequality increased significantly more than earnings inequality. Regarding income dynamics, entrepreneurs' income changes are more dispersed, less skewed, less leptokurtic and less dependent on average past income than workers' income changes. Finally, we find that top income earners have become less likely to fall out of the top 1 and 0.1 percent.
    Keywords: inequality, income dynamics, mobility, non-labor income
    JEL: D31 E24 E31 J31
    Date: 2022–02
  12. By: Fabio Blasutto (Department of Economics, Stockholm School of Economics); David de la Croix (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: Censorship makes new ideas less available to others, but also reduces the share of people choosing to develop non-compliant ideas. We propose a new method to measure the effect of censorship on knowledge growth, accounting for the agents' choice between compliant and non-compliant occupations. We apply our method to the Catholic Church's censorship of books written by members of Italian universities and academies over the period 1400-1750. We highlight two new facts: once censorship was introduced, censored authors were of better quality than the non-censored authors, but this gap shrank over time, and the intensity of censorship decreased over time. These facts are used to identify the deep parameters of a novel endogenous growth model linking censorship to knowledge diffusion and occupational choice. We conclude that censorship reduced by 34% the average log publication per scholar in Italy, while adverse macroeoconomic processes are responsible for another 9% reduction. Interestingly, the induced reallocation of talents towards compliant activities explains half the effect of censorship.
    Keywords: Censorship, Upper-Tail Human Capital, Publications, Scholars, Early Modern Italy, Occupational Choice
    JEL: J24 N33 O33 O43
    Date: 2022–04–14
  13. By: Aalto, Aino-Maija (Stockholm University); Müller, Dagmar (Research Institute of Industrial Economics, Stockholm); Tilley, J. Lucas (Stockholm University)
    Abstract: We study whether the onset of the COVID-19 crisis affected the program choices of high school applicants in Sweden. Our analysis exploits the fact that the admission process consists of two stages: a preliminary round in which applicants initially rank programs in order of preference and a final round in which they can alter their preliminary rankings. In 2020, the timing of the two rounds happened to provide a unique pre- and post-crisis snapshot of applicants' field-of-study choices. Using school-level data on applicants' top-ranked programs for all admission rounds between 2016 and 2020, we implement a difference-in-differences method to identify the immediate effect of the crisis on demand for programs. We find no change in demand for academic programs, but a decline in top-ranked applications to some of the vocational programs. The declines are most pronounced and robust for several service-oriented programs, in particular those related to the hotel and restaurant sector, which was the most adversely affected industry during the crisis. This finding suggests that labor market considerations influence the study choices made by relatively young students.
    Keywords: COVID-19, business cycle, human capital investment, field of study
    JEL: I20 J24
    Date: 2022–02
  14. By: Nikolai Cook, Anthony Heyes (Wilfrid Laurier University)
    Abstract: While contemporaneous exposure to polluted air has been shown to reduce labor supply and worker productivity, little is known about the underlying channels. We present first causal evidence that psychological exposure to pollution - the "thought of pollution" - can influence employment performance. Over 2000 recruits on a leading micro-task platform are exposed to otherwise identical images of polluted (treated) or unpolluted (control) scenes. Randomization across the geographically-dispersed workforce ensures that treatment is orthogonal to physical pollution exposure. Treated workers are less likely to accept a subsequent offer of work (labor supply) despite being offered a piece-rate much higher than is typical for the setting. Conditional on accepting the offer, treated workers complete between 5.1% to 10.1% less work depending on the nature of their assigned task. We nd no effect on work quality. Suggestive evidence points to the role of induced negative sentiment. Decrements to productivity through psychological mechanisms are plausibly additional to any from physical exposure to polluted air.
    Keywords: Air Pollution, Gig Economy, Randomization, Labor Productivity
    JEL: Q53 J24
    Date: 2022
  15. By: Lindquist, Matthew J. (SOFI, Stockholm University); Sauermann, Jan (IFAU); Zenou, Yves (Monash University)
    Abstract: We study both endogenous and exogenous peer effects in worker productivity using an explicit network approach. We apply this method to data from an in-house call center of a multinational mobile network operator that include detailed information on individual performance. We find that a 10% increase in average co-worker current productivity increases worker productivity by 5.3%. A 10% increase in average co-worker permanent productivity decreases worker productivity by 3.2%. Older workers, low tenure workers, and low-permanent productivity workers respond the most to changes in co-worker productivity. These workers free ride in the presence of co-workers from the top quartile of the distribution of permanent productivity. Counterfactual exercises demonstrate how managers could mitigate the problem of free riding by re-shuffling workers into different co-worker networks.
    Keywords: peer effects, endogenous peer effects, exogenous peer effects, social networks, worker productivity
    JEL: J24 M50
    Date: 2022–03
  16. By: Pabilonia, Sabrina Wulff (U.S. Bureau of Labor Statistics); Vernon, Victoria (Empire State College)
    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 on-site, 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: 2022–02
  17. By: Elizabeth Ananat; Benjamin Glasner; Christal Hamilton; Zachary Parolin
    Abstract: Studies have established that the expanded Child Tax Credit (CTC), which provided monthly cash payments to most U.S. families with children from July to December 2021, substantially reduced poverty and food hardship. Other studies posit, however, that the CTC payments may generate negative employment effects that could offset its potential poverty-reduction effects. Scholars have simulated employment scenarios assuming various labor supply elasticities, but less work has empirically assessed how the monthly payments affected employment outcomes using real-world data. To evaluate employment effects, we apply a series of difference-in-differences analyses using data from the monthly Current Population Survey and the Census Pulse, both from April through December 2021. Across both samples and several model specifications, we find very small, inconsistently signed, and statistically insignificant impacts of the CTC both on employment in the prior week and on active participation in the labor force among adults living in households with children. Further, labor supply responses to the policy change do not differ for households for whom the CTC’s expansion eliminated a previous work incentive. Thus, our analyses of real-world data suggest that the expanded CTC did not have negative short-term employment effects that offset its documented reductions in poverty and hardship.
    JEL: H2 J18 J22
    Date: 2022–03
  18. By: J. Aislinn Bohren; Peter Hull; Alex Imas
    Abstract: Economics tends to define and measure discrimination as disparities stemming from the direct (causal) effects of protected group membership. But work in other fields notes that such measures are incomplete, as they can miss important systemic (i.e. indirect) channels. For example, racial disparities in criminal records due to discrimination in policing can lead to disparate outcomes for equally-qualified job applicants despite a race-neutral hiring rule. We develop new tools for modeling and measuring both direct and systemic forms of discrimination. We define systemic discrimination as emerging from group-based differences in non-group characteristics, conditional on a measure of individual qualification. We formalize sources of systemic discrimination as disparities in signaling technologies and opportunities for skill development. Notably, standard tools for measuring direct discrimination, such as audit or correspondence studies, cannot detect systemic discrimination. We propose a measure of systemic discrimination based on a novel decomposition of total discrimination—disparities that condition on underlying qualification—into direct and systemic components. This decomposition highlights the type of data needed to measure systemic discrimination and guides identification strategies in both observational and (quasi-)experimental data. We illustrate these tools in two hiring experiments. Our findings highlight how discrimination in one domain, due to either accurate beliefs or bias, can drive persistent disparities through systemic channels even when direct discrimination is eliminated.
    JEL: D63 D83 J16 J71
    Date: 2022–03
  19. By: Kniesner, Thomas J. (Claremont Graduate University); Viscusi, W. Kip (Vanderbilt University)
    Abstract: The most enduring measure of how individuals make personal decisions affecting their health and safety is the compensating wage differential for job safety risk revealed in the labor market via hedonic equilibrium outcomes. The decisions in turn reveal the value of a statistical life (VSL), the value of a statistical injury (VSI), and the value of a statistical life year (VSLY), which have both mortality and morbidity aspects that we describe and apply here. All such tradeoff rates play important roles in policy decisions concerning improving individual welfare. Specifically, we explicate the recent empirical research on VSL and its related concepts and link the empirical results to the on-going examinations of many government policies intended to improve individuals' health and longevity. We pay special attention to recent issues such as the COVID pandemic and newly emerging foci on distributional consequences concerning which demographic groups may benefit most from certain regulations.
    Keywords: value of statistical life, VSL, value of statistical injury, VSI, value of a statistical life year, VSLY, mortality risk, morbidity risk, benefit cost analysis, hedonic labor market equilibrium, compensating wage differential, evaluation of health and safety programs
    JEL: J17 I18 H40 K32 J28
    Date: 2022–02
  20. By: Erkmen G. Aslim; Shin-Yi Chou; Kuhelika De
    Abstract: Is healthcare employment recession proof? We examine the hypothesis that healthcare employment is stable across the business cycle. We explicitly distinguish between negative aggregate demand and supply shocks in studying how healthcare employment responds to recessions, and show that this response depends largely on the type of the exogenous shock triggering the recession. We find that healthcare employment responds procyclically to demand-induced recessions; and the reduction is driven by layoffs and discharges rather than voluntary quits. In evaluating additional mechanisms, we find evidence of a reduction in real personal healthcare expenditures resulting from an adverse demand shock. By contrast, we find that healthcare employment is fairly stable and even responds countercyclically to supply-induced recessions, suggesting compositional changes such as downskilling particularly in nursing sectors. Our findings establish that employment responses during economic downturns are heterogeneous across healthcare sub-sectors. More generally, by isolating the impact of the structural demand shock from supply shock on healthcare employment, we provide new empirical evidence that healthcare employment is not recession proof.
    JEL: C32 E32 I11 J22 J23
    Date: 2022–02
  21. By: Makarski, Krzysztof (Warsaw School of Economics); Tyrowicz, Joanna (University of Warsaw); Komada, Oliwia (GRAPE)
    Abstract: We study interactions between progressive labor taxation and social security reform. Increasing longevity puts fiscal strain that necessitates the social security reform. The current social security is redistributive, thus providing (at least partial) insurance against idiosyncratic income shocks, but at the expense of labor supply distortions. A reform which links pensions to individual incomes reduces distortions associated with social security contributions, but incurs insurance loss. We show that the progressive labor tax can partially substitute for the redistribution in social security, thus reducing the insurance loss.
    Keywords: social security reform, labor income tax, redistribution, insurance, welfare effects
    JEL: C68 D72 E62 H55 J26
    Date: 2022–02
  22. By: Tamás Bakó (Institute of Economics, Centre for Economic and Regional Studies,Budapest, Hungary andBudapest Metropolitan University, Hungary); Judit Kálmán (Institute of Economics, Centre for Economic and Regional Studies,Budapest, Hungary andCorvinus University Budapest, Hungary)
    Abstract: In this study we reveal the impact of spatial clustering of occupations on the probability of employment and commuting time, with particular emphasis on differences between genders and household types. Based on Hungarian 2011 census data our research confirmed previous results of some USA studies according to which women work in less spatially clustered occupations compared to men. Our most important result is that more clustered the occupation, the longer the commuting time, and the lower the probability of employment. The effect of occupational clustering on commuting time is larger for women regardless of household type and for those living in a relationship compared to singles. Our further result is that the greater the occupational diversity of the place of residence, the shorter the commuting time and higher the probability of employment, and the occupational diversity of the place of residence modifies the effect of occupational clustering on commuting time.
    Keywords: Commuting time, occupations, employment probabilities
    JEL: R12 J22
    Date: 2022–03
  23. By: Abboud, Tatiana (University of Montreal); Bellou, Andriana (University of Montreal); Lewis, Joshua (University of Montreal)
    Abstract: This paper provides the first long-run assessment of adolescent alcohol control policies on later-life health and labor market outcomes. Our analysis exploits cross-state variation in the rollout of "Zero Tolerance" (ZT) Laws, which set strict alcohol limits for drivers under age 21 and led to sharp reductions in youth binge drinking. We adopt a difference-in-differences approach that combines information on state and year of birth to identify individuals exposed to the laws during adolescence and tracks the evolving impacts into middle age. We find that ZT Laws led to significant improvements in later-life health. Individuals exposed to the laws during adolescence were substantially less likely to suffer from cognitive and physical limitations in their 40s. The health effects are mirrored by improved labor market outcomes. These patterns cannot be attributed to changes in educational attainment or marriage. Instead, we find that affected cohorts were significantly less likely to drink heavily by middle age, suggesting an important role for adolescent initiation and habit-formation in affecting long-term substance use.
    Keywords: Zero Tolerance laws, disability, alcohol consumption, labor market
    JEL: I18 I12 J20
    Date: 2022–02
  24. By: Mennini, Francesco Saverio; Gitto, Lara
    Abstract: Abstract When performing health economic evaluations all costs and expected benefits (in terms of clinical effectiveness, utility, monetary benefits) should be taken into account. Costs are direct and indirect: concerning the latter, two main methods have been developed. The Human Capital Approach (HCA) considers the gross salary in the days of absence from work due to a disease; the method based on the Friction Costs (FC), instead, considers equally the value of productivity, but the losses are limited to the period of illness when it is necessary to replace the absent worker. This paper carries out a review of the literature contributions for European countries and aims at identifying common trends within geographical areas; estimation of indirect costs in different European area may reflect the real cost of health services across countries and schematize the conditions under which a certain method should be preferred.Overall, cost analyses applying HCA are the most frequent, while studies based on FC are more common in the Netherlands, where this method has been developed: the reasons to apply HCA or FC may depend on the institutional context, for example the flexibility in the job market, and the epidemiologic environment.
    Keywords: Keywords: Indirect costs; Human Capital Approach (HCA); Friction Costs (FC); European countries. JEL codes: I18; J24; J32; J89; Y50.
    JEL: I18 J24 J32 J89 Y50
    Date: 2022–02–28
  25. By: Ayaita, Adam
    Abstract: In this study, I measure statistical differences in personality characteristics (personality traits, attitudes, and values) between individuals with an ethnic minority vs. ethnic majority background. I analyze (a) overall differences and (b) conditional differences when holding other demographic factors and the qualification level constant. This analysis might inform research on ethnic discrimination, as some researchers have proposed that discrimination might be based on statistical group differences in unobserved characteristics, such as personality characteristics (statistical discrimination). I use data of N = 6,330 individuals from a representative sample of the adult population in Germany. Analogously to field experiments showing discrimination, only individuals who have completed secondary schooling in Germany are considered in the analysis. The results suggest that, overall, ethnic minority individuals score slightly higher in openness and slightly lower in conscientiousness than ethnic majority individuals. These differences are more robust—but still small—when control variables are included. I find no significant group differences in the other Big Five personality traits, feeling of connectedness to the majority population, or gender equality values. The results partially support the theory of statistical discrimination, as some decision makers might discriminate against ethnic minority applicants on the basis of their slightly lower average conscientiousness.
    Keywords: attitudes,ethnic background,discrimination,personality,values
    JEL: J15 J71 M51
    Date: 2022
  26. By: David W. Berger; Kyle F. Herkenhoff; Simon Mongey
    Abstract: It has long been argued that a minimum wage could alleviate efficiency losses from monopsony power. In a general equilibrium framework that quantitatively replicates results from recent empirical studies, we find higher minimum wages can improve welfare, but most welfare gains stem from redistribution rather than efficiency. Our model features oligopsonistic labor markets with heterogeneous workers and firms and yields analytical expressions that characterize the mechanisms by which minimum wages can improve efficiency, and how these deteriorate at higher minimum wages. We provide a method to separate welfare gains into two channels: efficiency and redistribution. Under both channels and Utilitarian social welfare weights the optimal minimum wage is $15, but alternative weights can rationalize anything from $0 to $31. Under only the efficiency channel, the optimal minimum wage is narrowly around $8, robust to social welfare weights, and generates small welfare gains that recover only 2 percent of the efficiency losses from monopsony power.
    Keywords: Minimum wages; Oligopsony; Labor markets; Market structure
    JEL: J42 J20 E20
    Date: 2022–04–06
  27. By: Michela Meghnagi (OECD); Michele Tuccio (OECD)
    Abstract: The recognition of prior learning enhances upskilling and reskilling pathways by shortening the duration of training and offering more personalised learning pathways to adults. While the majority of recognition systems focus on professional and technical competences for the purpose of entering and progressing in the labour market, the recognition of adults’ general competences – i.e. cross-field competences that all individuals need for personal fulfilment and development – is less common, despite its clear importance for upskilling pathways, including its positive benefits for the individuals – for whom the validation of their past experiences often becomes a central source of motivation to engage in further learning – and for the society – for which recognition represents a stepping-stone to the spread of upskilling strategies. Thanks to new evidence gathered through desk research and interviews with numerous stakeholders throughout Europe, this paper sheds new light on the characteristics of recognition systems focusing on adults’ general competences.
    Keywords: Adult learning, Competences, Education, Recognition of prior learning, Skills, Training, Validation
    JEL: I24 J24 M53
    Date: 2022–04–15
  28. By: Bent Jesper Christensen; Malene Kallestrup-Lamb; John Kennan
    Abstract: The paper analyzes consumption decisions of retired workers, using Danish register data. A major puzzle, which motivates much of the analysis below, is that wealth actually increases for a large fraction of the people in our data. One would expect that wealth accumulated before retirement would be used to augment consumption in later life, with the implication that wealth should decline over time. The risk of large out-of-pocket medical expenditures is negligible in Denmark, so although explanations associated with such expenditures might explain similar patterns in U.S. data, these explanations are not plausible for Denmark (and therefore also questionable for the U.S.). Our analysis instead attempts to explain wealth paths using a model that emphasizes fluctuations in the marginal utility of consumption. The results show that a latent state variable extension of the standard life-cycle consumption model is quite successful in explaining the curious observed wealth patterns after retirement for singles.
    JEL: E21 J26
    Date: 2022–03
  29. By: Furio Camillo Rosati (CEIS & DEF University of Rome "Tor Vergata", IZA, GLO, ICID)
    Abstract: This chapter presents the main theoretical analyses in the area of child labour and their implications in terms of policy design. The discussion is based on the human capital approach and presents a simplified model that allows to frame the most relevant results present in the literature. It also looks at some of the evidence available about the impact of the different interventions implemented and review their effectiveness and limitations. From the policy point of view, the chapter concludes pointing out the need to integrate child labour interventions in broader human capital and poverty reduction policies and to consider “big push” interventions able to move the economy permanently to a low child labour equilibrium.
    Keywords: child labour, human capital, labour market
    JEL: O15 O22 J2
    Date: 2022–03–15
  30. By: Afridi, Farzana (Indian Statistical Institute); Debnath, Sisir (Indian Institute of Technology Delhi); Dinkelman, Taryn (University of Notre Dame); Sareen, Komal (Indian Institute of Technology Delhi)
    Abstract: In much of the developing world, cooking accounts for most of women's time in home production. Does reliance on biomass for cooking drive this time burden? To assess time-savings from shifting towards cleaner fuels, we revisit a clean energy information experiment in rural India. Treatment villages were randomly assigned to receive information about negative health effects of cooking with solid fuels and about public subsidies for cleaner Liquid Petroleum Gas (LPG). Using rich time use data and a propensity score matching approach, we estimate that switching towards cleaner cooking fuels could potentially save 19-20 minutes of home production time per day. Exploiting the randomized information nudge and endline data collected one year after the intervention, our intent-to-treat estimate of actual time saved is 5 minutes per day. We discuss why nudges towards cleaner energy use at home are unlikely to generate transformative shifts in women's home production time.
    Keywords: time use, home production, energy use, India
    JEL: O13 J22
    Date: 2022–02

This nep-lma issue is ©2022 by Joseph Marchand. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.