nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2022‒05‒09
fifteen papers chosen by
Joseph Marchand
University of Alberta

  1. Industries, Mega Firms, and Increasing Inequality By Haltiwanger, John C.; Hyatt, Henry R.; Spletzer, James R.
  2. Earnings instability and non-standard employment: cohort-based evidence from the Italian labour market By Alessio Tomelleri
  3. Wage and Employment Impact of Minimum Wage: Evidence from Lithuania By Jose Garcia-Louzao; Linas Tarasonis
  4. China's Labor Market Demand in the Shadow of COVID-19: Evidence from an Online Job Board By Zeng, Xiangquan; Chu, Shuai; Chen, Xuan
  5. Workers' Moral Hazard and Insurer Effort in Disability Insurance By Koning, Pierre; van Lent, Max
  6. Trade-Induced Adoption of New Work By Kim, Gueyon
  7. Minimum Wage Increases and Vacancies By Marianna Kudlyak; Murat Tasci; Didem Tuzemen
  8. COVID-19 and the Swedish Labor Market – A Register Perspective By Andersson, Fredrik W.; Wadensjö, Eskil
  9. In-Group Favoritism and Peer Effects in Wrongful Acquittals: NBA Referees as Judges By Mocan, Naci; Osborne-Christenson, Eric
  10. People versus Machines: The Impact of Being in an Automatable Job on Australian Worker's Mental Health and Life Satisfaction By Lordan, Grace; Stringer, Eliza-Jane
  11. “Does geographical exposure to language learning centres matter in a bilingual city?” By Antonio Di Paolo; Bernat Mallén
  12. Can the Stochastic Discount Factor Explain Unemployment Fluctuations? By Bingsong Wang
  13. When Opportunity Knocks: China's Open Door Policy and Declining Educational Attainment By Jiang, Xuan; Kennedy, Kendall; Zhong, Jiatong
  14. Urban Exclusion: Rethinking Social Protection in the Wake of the Pandemic in India By Pallavi Choudhuri; Santanu Pramanik; Sonalde Desai
  15. Organizational Hierarchies and Export Destinations By Irene Brambilla; Andrés Cesar; Guillermo Falcone; Guido Porto

  1. By: Haltiwanger, John C. (University of Maryland); Hyatt, Henry R. (U.S. Census Bureau); Spletzer, James R. (U.S. Census Bureau)
    Abstract: Most of the rise in overall earnings inequality is accounted for by rising between-industry dispersion from about ten percent of 4-digit NAICS industries. These thirty industries are in the tails of the earnings distribution, and are clustered especially in high-paying high-tech and low-paying retail sectors. The remaining ninety percent of industries contribute little to between-industry earnings inequality. The rise of employment in mega firms is concentrated in the thirty industries that dominate rising earnings inequality. Among these industries, earnings differentials for the mega firms relative to small firms decline in the low-paying industries but increase in the high-paying industries. We also find that increased sorting and segregation of workers across firms mainly occurs between industries rather than within industries.
    Keywords: inequality, firm size, industry, wage differentials, sorting, segregation, pay premium
    JEL: J31 J21
    Date: 2022–03
  2. By: Alessio Tomelleri
    Abstract: This paper estimates trends in the transitory and permanent variance of male earnings in Italy using social security data from 1990 to 2016. Cohort-specific earnings variability is compared by the number of non-standard contracts to test the extent to which the increase in income instability is related to labour market deregulation for fixed-term contracts. Results show a relationship between the reforms that liberalised temporary contracts and increasing income instability, mainly affecting younger cohorts. In addition, younger workers exhibit an increase in the variance of permanent earnings as the number of atypical contracts increases. This is related to a decline in long-term mobility and an increase in long-term inequality. Results show that the reforms that liberalised temporary arrangements led to a short-run increase in earnings instability and a long-term increase in inequality.
    Keywords: Earning instability, Labour market reforms, Cohorts, Income mobility
    JEL: J31 J41
    Date: 2022–04
  3. By: Jose Garcia-Louzao (Bank of Lithuania and Vilnius University); Linas Tarasonis (ank of Lithuania and Vilnius University)
    Abstract: This paper evaluates the worker-level effects of a historically large and permanent increase in the minimum wage in Lithuania. Our identification strategy leverages variation in workers’ exposure to the new minimum wage, and exploits the fact that there has been no increase in the minimum wage in previous years, to account for heterogeneous labor market prospects of low-wage workers relative to high-wage workers. Using detailed administrative records to track workers before and after the policy change, we show that the minimum wage hike significantly increased the earnings of low-wage workers. This direct effect was amplified by wage spillovers reaching the median of the income distribution. Overall, we find no negative effects on the employment prospects of low-wage workers. However, we provide suggestive evidence that young workers, highly exposed municipalities, and tradable sectors may be more negatively affected. Taken together, our findings imply an employment elasticity with respect to the minimum wage of -0.021, and an own-wage elasticity of -0.033, suggesting that wage gains dominated employment losses.
    Keywords: Minimum Wage, Employment, Wages
    JEL: J23 J38 J48
    Date: 2022–03–01
  4. By: Zeng, Xiangquan (Renmin University of China); Chu, Shuai (Renmin University of China); Chen, Xuan (Renmin University of China)
    Abstract: Using data of the largest online job board in China,, we examine the impacts of the lockdown policy on the Chinese labor market demand during the coronavirus disease (COVID-19) pandemic. The analyses reveal that the lockdown policy, which was implemented in Wuhan on January 23, 2020, reduced the labor market demand drastically. Specifically, the "Number of Companies" that posted weekly job vacancies, "Number of Positions," and "Number of Employees" to be recruited reduced rapidly by 18.5%, 21.9%, and 30.0%, respectively. Furthermore, this impact of the lockdown policy began to reduce, thus allowing the labor demand to rebound four weeks after the outbreak. The heterogeneity analyses reveal that the industries with high physical proximity and those manufacturing non-essential products/services, as well as small-size firms, were greatly impacted by the policy. No statistical difference was observed between the impacts on the cities that implemented specific control measures and those that did not. This study quantifies the dynamic impacts of China's stringent control measures on the country's labor demand during the pandemic. These findings indicate that the effective management of public health crises in conjunction with economic policies is critical to revitalizing labor markets.
    Keywords: COVID-19, lockdown, job vacancy, online job board, labor demand
    JEL: J23 J23 J63 I18
    Date: 2022–03
  5. By: Koning, Pierre (Vrije Universiteit Amsterdam); van Lent, Max (Leiden University)
    Abstract: Disability Insurance (DI) may affect workers' outcomes such as their probability to enter DI, to recover, and their employment. Supplementary insurance may increase these moral hazard effects, but also increases the financial gains of private insurers to reduce benefit costs. With increased insurer activities to prevent and reintegrate workers, the overall effects of increased insurance coverage on workers' outcomes are thus ambiguous. This paper aims to separate worker and insurer responses to increased insurance, using unique administrative data on firms' supplementary DI insurance contracts. Using a Two-Way Fixed-Effects model on the sickness and employment rates of worker cohorts with and without supplementary contracts at some point in time, we find that insurer efforts compensate workers' moral hazard effects.
    Keywords: disability insurance, private insurance, moral hazard, insurer effort, return-to-work policies
    JEL: G22 G52 J3 J21
    Date: 2022–03
  6. By: Kim, Gueyon (University of California, Santa Cruz)
    Abstract: I study the trade-induced restructuring process using a novel measure of new work that captures the firm's demand for jobs employing new knowledge, skills, and technologies. To construct measures of new work, I identify newly emerged job titles using word embedding models. Using both regional and firm-level analyses, I find that greater import exposure causes a persistent increase in new work in managerial occupations, but a decrease in new work in other occupations. Examining the activities performed in managerial new work, I find evidence of increased investments in post-production activities such as customer support, marketing, and sales. I further show that the trade-induced increase in managerial new work is driven by college-educated workers, thereby shedding light on the role of new work adoption in the distributional consequences of import shocks.
    Keywords: new work, trade adjustments, labor market inequality
    JEL: F16 J23 O33 R12
    Date: 2022–03
  7. By: Marianna Kudlyak (FRB San Francisco, Hoover, IZA, CEPR); Murat Tasci (Federal Reserve Bank of Cleveland); Didem Tuzemen (Federal Reserve Bank of Kansas City)
    Abstract: Using a unique data set and a novel identification strategy, we estimate the effect of minimum wage increases on job vacancy postings. Utilizing occupation-specific county level vacancy data from the Conference Board’s Help Wanted Online for 2005-2018, we find that state-level minimum wage increases lead to substantial declines in existing and new vacancy postings in occupations with a larger share of workers who earn close to the prevailing minimum wage. We estimate that a 10 percent increase in the state level effective minimum wage reduces vacancies by 2.4 percent in the same quarter, and the cumulative effect is as large as 4.5 percent a year later. The negative effect on vacancies is more pronounced for occupations where workers typically have lower educational attainment (high school or less) and in counties with higher poverty rates. We argue that our focus on vacancies versus on employment has a distinct advantage of highlighting a mechanism through which minimum wage hikes affect labor demand. Our finding of a negative effect on vacancies is not inconsistent with the wide range of findings in the literature about the effect of minimum wage changes on employment, which is driven by changes in both hiring and separation margins.
    Keywords: Minimum Wage; Vacancies; Hiring; Search and Matching.
    JEL: E24 E32 J30 J41 J63 J64
    Date: 2022–04
  8. By: Andersson, Fredrik W. (Statistics Sweden); Wadensjö, Eskil (Stockholm University)
    Abstract: The pandemic has mainly affected the state of health and mortality, but has also had effects on the economy and the labor market. This article reports what happened to the total number of employees, their distribution by sectors and regions and changes in the number of employees for different groups in 2020 compared with 2019 in Sweden. We do not deal with the development of the number and composition of the self-employed. We also do not go into the development of employees' conditions in terms of wages, working hours and working environment. But we are studying something that is in focus for the general debate: How was the development of the number of employees and their composition in 2020, "the first year of the pandemic"? The main result is that we find large differences in the development for different groups.
    Keywords: Swedish labor market, COVID-19, employment, migrants
    JEL: I15 J15 J21 J23 J61
    Date: 2022–03
  9. By: Mocan, Naci (Louisiana State University); Osborne-Christenson, Eric (Pace University)
    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.
    Keywords: racial bias, judicial decisions, in-group bias, Type-I error, Type-II error, peers, incentives
    JEL: K J71
    Date: 2022–03
  10. By: Lordan, Grace (London School of Economics); Stringer, Eliza-Jane (London School of Economics)
    Abstract: This study explores the effect on mental health and life satisfaction of working in an automatable job. We utilise an Australian panel dataset (HILDA), and estimate models that include individual fixed effects, to estimate the association between automatable work and proxies of wellbeing. Overall, we find evidence that automatable work has a small, detrimental impact on the mental health and life satisfaction of workers within some industries, particularly those with higher levels of job automation risk, such as manufacturing. Furthermore, we find no strong trends to suggest that any particular demographic group is disproportionately impacted across industries. These findings are robust to a variety of specifications. We also find evidence of adaptation to these effects after one-year tenure on the job, indicating a limited role for firm policy.
    Keywords: automation, life satisfaction, mental health, job security
    JEL: I10 J20
    Date: 2022–03
  11. By: Antonio Di Paolo (AQR-IREA, University of Barcelona); Bernat Mallén (AQR-IREA, University of Barcelona)
    Abstract: In this paper, we investigate the effects of geographical exposure to local language training centres in a bilingual urban labour market, the Metropolitan Area of Barcelona, exploiting the implementation of a language policy that provided publicly subsidized language courses for adults. Our variable of interest consists in a measure of spatial availability of language schools that captures potential exposure and its expansion over time. First, we focus on the formation of local language skills, adopting a reduced-form approach. Our results indicate that exposure to language learning opportunities matters for language skills, since individuals residing in neighbourhoods with a higher supply of language centres are more likely to be able to speak and write in Catalan, the local language. The effect is quantitatively modest but very robust to falsification exercises and several sensitivity checks and is strongly heterogeneous in favour of younger individuals born in Catalonia with a low level of education. Second, we analyse whether accessibility to language centres also affects employment, working hours, employment sector, and occupation. The evidence regarding labour market outcomes is inconclusive, possibly due to the fact that the impact of geographical exposure on language skills is too small in size to improve performance in the local labour market.
    Keywords: Local language training, Language skills, Bilingualism, Labour market outcomes. JEL classification: I38, J24, R23, Z13
    Date: 2022–05
  12. By: Bingsong Wang (Department of Economics, University of Sheffield, UK)
    Abstract: Recent developments in Macro-labor show that discount rates may play an important role in unemployment fluctuations. This paper examines this hypothesis by using a standard search model of equilibrium unemployment with the canonical consumption-based stochastic discount factor. When the discount rate is inferred from data on real consumption in the U.S., little fluctuations in unemployment are generated from the model. Moreover, a counterfactual positive correlation between consumption growth and unemployment emerges from the model. This contradicts the post-war U.S. data. Those results hold even if the model contains habit formation in consumption and the wage is assumed to be invariant to discounts. The paper also studies the role of other factors in amplifying the impact of the discount rate shock, including endogenous job separation, variations in firms’ profit per worker and the risk premium.
    Keywords: search frictions; discount rates; unemployment fluctuations
    JEL: E23 E24 E32 J24 J31 J41 J63
    Date: 2022–04
  13. By: Jiang, Xuan (Ohio State University); Kennedy, Kendall (Mississippi State University); Zhong, Jiatong (University of Alberta, Department of Economics)
    Abstract: In 1978, China opened its door to the outside world. This study investigates how the Open Door Policy affected the educational choices of workers born 1960-1970. Using measures of local labor markets' export exposure, we find the Open Door Policy decreased educational attainment; youths born from 1965-70 facing the mean export exposure were 5.6-13.3 p.p. less likely to complete high school than those born in 1960. Our findings suggest a complicated relationship between Chinese human capital accumulation and economic growth during the industrialization of the 1980s and 1990s, as the Open Door Policy reduced skilled labor in the most export-exposed regions.
    Keywords: Open Door Policy; educational attainment; high school completion
    JEL: F16 I20 J20 O15
    Date: 2022–03–24
  14. By: Pallavi Choudhuri (National Council of Applied Economic Research); Santanu Pramanik (National Council of Applied Economic Research); Sonalde Desai (National Council of Applied Economic Research)
    Abstract: The COVID-19 pandemic, and the consequent nationwide lockdown in India that began on March 25, 2020, caused a major disruption in the labour market, leading to the widespread loss of livelihoods and food insecurity. The findings from a telephonic survey of a representative sample of more than 3,000 households in the National Capital Region (NCR) also reveal a dramatic loss in earning capacity. The place of residence and occupation mediated the impact of the lockdown, with greater vulnerabilities witnessed amongst those engaged in informal employment, especially in urban areas. The Government rolled out a series of welfare measures in response to the widespread economic distress, with the provision of free foodgrains and cash transfers aimed at rehabilitating those who were the most affected. While the use of prior social registries enabled quick disbursement, our analysis points to the presence of unmet need, with such exclusion being exacerbated in the urban areas. The findings also reveal that the likelihood of receiving benefits increases with improvements in targeting at the local level and is vital for building social registries.
    Keywords: Informal Employment, Income, Social Protection, COVID-19, India
    JEL: I38 J21 O17
    Date: 2022–03–03
  15. By: Irene Brambilla (IIE-FCE-UNLP); Andrés Cesar (CEDLAS-IIE-FCE-UNLP); Guillermo Falcone (CEDLAS-IIE-FCE-UNLP); Guido Porto (IIE-FCE-UNLP)
    Abstract: This paper proposes a new link relating export destinations and the organization of the firm. We claim that the production of higher-quality varieties exported to rich destinations induces firms to re-structure their production processes, becoming organizationally more complex. We introduce a theoretical model with these features and we explore the mechanisms using a panel of Chilean manufacturing plants. Our identification strategy relies on falling tariffs on Chilean products across destinations caused by the signature of Free Trade Agreements with high-income countries (the European Union, the United States, and South Korea). We find that Chilean plants that were induced by these tariff reductions to start exporting to high-income destinations increased the number of hierarchical layers and upgraded the quality of their products. This involved the addition of qualified supervisors that facilitated the provision of higher product quality. These effects took place at new high-income exporting firms.
    JEL: F14 F16 J24
    Date: 2022–05

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